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SECOND DIVISION

G.R. No. L-28021 December 15, 1977

JULIAN SANTULAN substituted by his children named PATROCINIO, ADORACION, ARTURO, CONSTANCIA, and PEPITA, all surnamed SANTULAN
and minor grandchildren, JOCELYN, ROSAURO and ROBERTO, all surnamed SANTULAN assisted by their guardian ad litem, PATROCINIO
SANTULAN petitioners-appellants,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, THE DIRECTOR OF LANDS, and ANTONIO LUSIN,
substituted by his Heirs named TEODOSIA BALANZA (widow) and Children LEOPOLDO, ARMANDO. ALFONSO, EMILIANO, MAGDALENA, ERLINDA
and ESTRELLA (ESTER), all surnamed LUSIN, and Heirs of CAROLINA LUSIN-LUCERO named MANOLITO LUCERO and MARIO
LUCERO, respondents-appellees.

AQUINO, J.

This case is about the lease of a parcel of foreshore land of the public domain with an area of about four and one-half hectares located at Barrio
Kaingin, Kawit, Cavite abutting on Bacoor Bay and the Ankaw Creek.

It is protracted controversy that has been pending for more than thirty years between the rival claimants Julian Santulan plan and Antonio Lusin,
who have been succeeded by their heirs.

Santulan claimed that foreshore land was an extension of his land, Lot No. 986 of the Kawit cadastre, with an area of 17,301 square meters,
registered in his name in 1937 under Original Certificate of Title No. 6 which was issued by virtue of a free patent. The northern boundary of Lot
No. 986 is Bacoor (Manila) Bay (Exh. A). The said foreshore land was allegedly formed by soil deposits accumulated by the alluvial action of the sea.

On December 5, 1942 Santulan caused the said land to be surveyed. The survey plan was approved by the Director of Lands in 1944 (Exh. B). On
December 29, 1942 Santulan, pursuant to Lands Administrative Order No. 7-1, filed an application, F.L.A. No. V 562, to lease for five years for
agricultural purposes an area of 36,120 square meters of the said foreshore land (Exh. F).

On that same date, December 29, 1942, Santulan, pursuant to Act No. 3077 and Lands Administrative Order No. 8-3, filed with the Bureau of Lands
an application for a revocable permit to occupy the said land. He indicated therein that he would use the land for 11 capiz beds and oyster beds,
the planting of bakawan and pagatpat and later to be developed into a fishpond" (Exh. G).

Seven years later, or on December 22, 1949, Santulan filed with the Bureau of Fisheries an application for an ordinary fishpond permit or lease of
the said foreshore land (Special Use Permit, pp. A. No. 5114, Exh. H).

At the instance of the Director of Fisheries, the Director of Forestry investigated the condition of the said foreshore land. The latter in his first
indorsement dated June 19, 1950 found that it was swampy "and not an improved fishpond as alleged by Antonio Lusin" and that it is within the
disposable areas for agricultural purposes under the jurisdiction of the Bureau of Lands (Exh. L-1).

The chief of the division of commercial fisheries sent a letter to Lusin dated April 28, 1950 apprising him that he was reported to have illegally
entered the area covered by Santulan's fishpond permit application and directing him to refrain from introducing improvements, with the warning
that court proceedings would be taken against him (Exh. J).

On January 12, 1951 an attorney, acting for the Director of Lands wrote the following letter to Lusin advising him to vacate the disputed land and
maintain the status quo:

Mr. Antonio Lusin


Caiñgin, Kawit, Cavite

S i r:

We have been informed that the area which is presently controverted by and between you and Julian Santulan, under the
applications noted above, was recently entered by you and some companion and that you are destroying the dikes and other
improvements previously constructed thereon by said Julian Santulan.

If this information is true, and inasmuch as you are aware that the controversy is still pending final adjudgment in this Office, is
desired that you take proper advice and leave the area and its existing improvements in status quo in order to avoid possible
confusion of rights which ma delay the final disposition of the area in question.

You are advised further that the acts imputed to you may make you liable to prosecution and punishment under the law; and
that whatever improvements you may make for yourself in the premises will not legally accrue to your benefit, nor will they
serve as basis for a claim to preferential rights. (Paragraphing supplied, Exh, J-1).

Santulan declared the said foreshore land in his name for tax purposes. Tax Declaration No. 2923, which took effect in 1948 and which cancelled
Tax Declaration No. 13816 also in Santulan's name, shows that the land was assessed at P460. He paid the realty taxes due on the said land for the
years 1945-46, 1948-55 and 195760 (Exh. C, D and E, el seq.).

On the other hand, Antonio Lusin in 1942 and 1945 (he died in 1962) filed with the Bureau of Lands applications for a revocable-permit and lease of
a foreshore land, respectively, for the purpose of producing salt on the said land. He claimed that he had been in the continuous and exclusive
possession of the land since 1920, when it was still under water, and that he had used it as a site of his fish corrals.
He allegedly converted two hectares of the said land into a fishpond. The entire area was enclosed with mud dikes and provided with a concrete
sluice gate and another sluice gate made of wood On the northern part of the land bordering the bay were bamboo stakes placed at close intervals
to serve as water breakers to protect the mud dikes from being washed away by the action of the sea. Lusin introduced the alleged improvements
from 1951 to 1953.

The 1942 foreshore lease applications of Santulan and Lusin gave rise to Bureau of Lands Conflict No. 8 (N). The Director of Lands in his decision in
that case dated February 1, 1951 found that the disputed land is foreshore land covered and uncovered by the flow and ebb of the ordinary tides
that it is an extension of Santulan's Lot No. 986 and it was formerly a part of the sea; that Santulan was the first to enter the land and to make dikes
thereon, and that Lusin entered the land later and made dikes also (Exh. K made a part hereof for reference as Annex A).

The Director ruled that the disputed foreshore land was subject "to reparian rights which may he invoked by Santulan as owner of the upland in
accordance with section 32 of Lands Administrative Order No. 7-1" (Exh. K). Hence the Director rejected Lusin's application for a foreshore lease
and for a revocable permit and gave due course to Santulan's foreshore lease application.

Lusin filed a motion for reconsideration. The Director in his order of October 19, 1951 denied that motion. lie found that Lusin was a possessor in
bad faith: that it is not true that Lusin had improved and possessed the said foreshore land for twenty years, that the disputed area is covered by
water, two to three feet deep during ordinary tides and is exposed land after the ebb of the tides, and that Lusin's alleged possession and
improvements could not nullify Santulan's preferential right to lease the land by reason of his riparian rights. The Director ordered Lusin to vacate
the land within sixty days from notice (Exh. L made a part hereof for reference as Annex B).

Lusin appealed to the Acting Secretary of Agriculture and Natural Resources who in his decision of October 13, 1952 dismissed the appeal and
affirmed the Director's 1951 decision (Exh. M made a part hereof for reference as Annex C). Lusin's motion for reconsideration was denied in the
Secretary's order of February 28, 1953 (Exh. N made a part hereof for reference as Annex D).

Lusin asked for a reinvestigation of the case. His request was granted. The Department ordered a reinvestigation on May 12, 1953.

After receipt of the report of reinvestigation, the Undersecretary of Agriculture and Natural Resources, by authority of the Secretary, in his order of
December 14, 1954, reaffirmed the rejection of Lusin's revocable permit and foreshore lease applications but ordered Santulan to reimburse to
Lusin the appraised value of his improvements (Exh. O made a part hereof for reference as Annex E).

Lusin appealed to the President of the Philippines after his motion for reconsideration was denied in the Undersecretary's order of May 19, 1955
(Exh. OO made a part hereof for reference as Annex F).

Executive Secretary Juan C. Pajo, by authority of the President, held in his decision of April 10, 1958 that section 32 of Lands Administrative Order
No. 7-1 (promulgated by the Secretary of Agriculture and Natural Resources on April 30, 1936 pursuant to Acts Nos. 2874 and 3038) was "rendered
obsolete" by section 67 of the Public Land Law which took effect on December 1, 1936 (Exh. P made a part hereof for reference as Annex G).

On the basis of the foregoing ruling and since the record is silent as to whether or not the land in question has been declared by the President as
not necessary for the public service and as open to disposition (Sec. 61, Public Land Law), the Executive Secretary sustained Lusin's appeal and
reversed the orders of the Director of Lands and the Secretary of Agriculture and Natural Resources in favor of Santulan. Secretary Pajo decided the
case in the alternative as follows:

On the assumption that the land in question has been declared open for disposition and is not necessary for the public service,
this Office directs that an oral bidding for the leasing thereof to interested parties pursuant to the provisions of Section 67 of
Commonwealth Act .No. 141 be conducted and the contract of lease awarded to the highest bidder whoever shall be the
highest bidder, if other than the appellant, shall be required to pay to the appellant the appraised value of the improvements
introduced by him on the land to be determined by that Department.

If the land in question has not been so declared, this Office directs that a revocable permit under Section 68 of Commonwealth
Act No. 141 be Id to the appellant requiring him to pay permit fees since the year 1951.

Accordingly, the orders and decisions of that Department and the Bureau of Lands are hereby revoked.

Santulan's case was distinguished from that of Gonzalo Monzon whose Lot No. 987 adjoins Santulan's Lot No. 986. Executive Secretary Fred Ruiz
Castro (now Chief Justice) in his decision of May 10, 1954 upheld the preferential right of Monzon to lease the foreshore land north of his lot, which
foreshore land is adjacent to the foreshore land now in dispute in this case (Exh. Q made a part hereof for reference as Annex H).

Santulan's motion for reconsideration was denied in the letter of the Acting Executive Secretary dated August 20, 1959 (Exh. W).

On October 22, 1959 Santulan filed in the Court of First Instance of Cavite a petition for certiorari wherein he alleged that the Executive Secretary
committed a grave abuse of discretion in misinterpreting certain provisions of Act No. 2874, Commonwealth Act No. 141, and Lands Administrative
Order No. 7-1.

In the lower court the parties agreed that the case Involves only a question of law. On August 18. 1961 the lower court dismissed the petition and
affirmed the Executive Secretary's decision. Santulan appealed to the Court of Appeals which in its resolution of July 21, 1967 elevated the record
to this Court on the ground that Santulan in his brief raised only the legal questions of whether the Public Land Law repealed section 32 of Lands
Administrative Order No. 7 1 and whether the Executive Secretary's decision is "legally sound and correct" (CA-G. R. No. 30708-R).

It should be emphasized that. as found by tile investigators of the Bureau of Lands, Santulan was the prior possessor of the foreshore land in
question. lie had it surveyed in 1942. The survey plan Psu-115357) was approved by the Director of Lands in 1944. Santulan paid the realty taxes on
that land .
It should further be underscored that the regulations pie him a preferential right to lease the land as a riparian owner. Lands Administrative Order
No. 7-1 dated April 30. 1936. which was issued by the Secretary of Agriculture and Natural Resources upon the recommendation of the Director of
Lands for the disposition of alienable lands of the public domain, provides:

32. Preference of the Reparian Owner — The owner of the property adjoining foreshore lands, marshy lands or lands covered
with water bordering upon shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands
adjoining his property as may not be needed for the public service, subject to the laws and regulations governing lands of this
nature, provided that he applies therefor within sixty (60) days from the date he receives a communication from the Director of
Lands advising him of his preferential right.

Paragraph 32 quoted above is a substantial copy of paragraph 4 of Lands Administrative Order No. 8-3 dated April 20, 1936, which was
promulgated by the Secretary of Agriculture and Natural Resources upon the recommendation of the Director of Lands for issuance of temporary
permits of occupation and use of agricultural lands of the public domain.

The word "riparian" in paragraphs 32 and 4 of the departmental regulations is used in a broad sense as referring to any property having a water
frontage (Shepard's Point Land Co. vs. Atlantic Hotel, 44 S. E. 39, 45, 132 N. C. 517, 65 C. J. S. 143, note 84). Strictly speaking, "riparian" refers to
rivers. A riparian owner is a person who owns land situated on the bank of a river.

But in paragraphs 32 and 4, the term "riparian owner" embraces not only the owners of lands on the banks of rivers but also the littoral owners,
meaning the owners of lands bordering the shore of the sea or lake or other tidal waters. The littoral is the coastal region including both the land
along the coast and the water near the coast or the shore zone between the high and low watermarks.

Therefore, on the basis of paragraphs 32 and 4 of the said administrative regulations, Santulan or his heirs Should be allowed to leased or occupy
the said foreshore land.

But the Executive Secretary ruled that paragraph 32 was rendered obsolete by Commonwealth Act No. 141 or, as held by the trial court, Lands
Administrative Order No. 7-1 was repealed by the Public Land Law. Is that conclusion correct? We hold that it is wrong.

It is true that Lands Administrative Orders Nos. 7-1 and 8-3 were issued when the 1919 Public Land Act was in force or before the present Public
Land Law took effect on December 1, 1936. But that circumstance would not necessarily mean that the said departmental regulations are not good
under the 1936 Public Land Law.

In rationalizing the alleged repeal of paragraph 32, the Executive Secretary cited the following provisions of Act No. 2874, the 1919 Public Land Act
(15 Public Land laws 24):

SEC. 64. The lease or sale shall be adjudicated to the highest bidder; and if there is no bidder besides the applicant, it shall be
adjudicated to him. The provisions of section twenty-seven of this Act shall be applied wherever applicable. If all or part of the
lots remain unleased or unsold the Director of Lands Shall from time to time announce in the Offcial Gazette or otherwise the
lease or sale of those lots if necessary . (Section 27 refers to sealedbidding).

The Executive Secretary held that the above-quoted section 64 was by the for provisions of on wealth Act No. 141 which took effect on December
1, 1936:

SEC. 67. The lease or sale shall be made through oral bidding-, and ajudication shall be made to the highest bidder. However,
where m applicant has made improvements on the land by virtue of a permit issued to him by competent authority, the sale or
lease shall be made by sealed bidding as prescribed in section twenty-six of this Act, the provisions of which shall be applied
wherever applicable. If all or Dart of the lots remain unleased or unsold. the Director of Lands shall from time to time announce
in the Official Gazzate, or in any other newspapers of general circulation, the lease or sale of those lots, if necessary. (Section
26, like section 27 of Act No. 2874, refers to sealed bidding).

The Executive Secretary noted that under section 64 of Act No. 2874 sealed bidding was the general rule of procedure in an award of a lease of
foreshore land and that the t is entitled to equal the bid of the highest bidder. On the other hand, under 67, oral bidding is the general rule.

Hence, the Executive Secretary assumed that, while under section 64 of the 1919 old Public Land Act, the fact that the applicant has a preferential
right to lease foreshore land was a crucial factor it is thus under section 67 of the 1936 Public Land Law because in oral bidding the appellant is not
entitled to equal the bid of the highest bidder.

The Executive Secretary concluded that, because the preferential right of the applicant to lease foreshore land was immaterial under 67 of the
present Public Land Law, paragraph 32 of Lands Administrative Order No. 7-1, which gives such preference. had become "idle and useless".

That conclusion is wrong because it is based on the erroneous hypothesis that section 64 of the 1919 Public Land Act is different from section 67 of
the 1936 Public Land Law. They are not different. The truth is that section 64 was amended by Act No. 3517 which took effect on February 4, 1919
(24 Public Laws 416). Section 64, as thus amended, is substantially the same as section 67 of the 1936 Public Land Law.

That fact was overlooked by the Executive Secretary. Hence, his conclusion, that paragraph 32 of Lands Administrative Order No. 71 was repealed
or rendered obsolete by section 67 of the present Public Land Law, is wrong because its premise is wrong.

In other words, paragraph 32 of Lands Administrative Order No. 7-1, issued on April 30, 1936, was promulgated under section 64 of the old Public
Land Law, as amended. And since the amended section 64 was substantially reproduced in section 67 of the 1936 Public Land Law, it is glaringly
incorrect to say that section 67 rendered obsolete the said paragraph 32. Paragraph 32 is still in force and is good under the existing Public Land
Law.
The foregoing discussion reveals that the Executive Summary's rationalization of the alleged repeal of paragraph 32 of Lands Administrative Order
No. 7-1 (identical to paragraph 4 of Lands Administrative Order No. 8-3) is not only deficient in clarity and cogency but is predicated on the false
assumption that section 64 of the 1919 Public Land Act is different from section 67 of the present Public Land Law. Consequently, the
aforementioned decision of Executive Secretary Juan C. Pajo under review bas to be set aside.

This case is governed by the precedent established in the case of Gonzalo Monzon, which, as already noted, is similar to this cm since the foreshore
land involved in the Monzon case is adjacent to the foreshore land involved in this case.

In the Monzon case, the Office of the President, applying the oft-cited paragraph 32 of Lands Administrative Order No. 7-1 held that Monzon, the
littoral owner of the registered land abutting upon the foreshore land, has the preferential right to lease the foreshore land,

The location of the lots of Santulan and Monzon and the foreshore lands abutting thereon is shown in the following sketch bawd on the plan, Psu-
115357 (Exh. B):

Manila Bay or Bacoor Bay

Disputed Area

Psu-1 15357 Psu- 1 15358

Foreshore land Forshore land

claimed by leased to

Julian Santulan Gonzalo Monzon

and

Antonio Lusin

Lot No. 986 Lot no. 987

Belonging to Belonging to

Julian Santulan Gonzalo Monzon

Considering that the foreshore land abutting upon Santolan's lot is in the same situation as the foreshore land abutting upon Monzon's lot, there is
no reason why Santulan should not enjoy, with respect to the disputed foreshore land, the rights given to Monzon over the foreshore land adjacent
to his lot.

Now, then, is there any justification for giving to the littoral owner the preferential right to lease the foreshore land abutting on his land?

That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866 which provides that, while lands added to the shores
by accretions and alluvial deposits caused by the action of the sea form part of the public domain, such lands, "when they are no longer washed by
the waters of the sea and are not necessary for purposes of public utility, or for the establishment of special industries, or for the coast guard
service", shall be declared by the Government "to be the property of the owner of the estates adjacent thereto and as increment thereof" (cited in
Ignacio vs. Director of Lands, 108 Phil. 335, 338).

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

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

That preferential right is recognized in American jurisprudence where the rule is that the owner of the land adjacent to navigable waters has
certain riparian or littoral rights of a proprietary nature not possessed by the general public which rights are incident to the ownership of the banks
or the uplands: riparian as respects the waters of a river and littoral as to sea waters or the waters of a lake (65 C.J. S. 143-145).

It may be mentioned that the Director of Lands stated in his manifestation of October 26, 1977 that Lands Administrative Orders Nos. 7-1 and 8-3
are still in force and have not been superseded by any later regulations and that the directive of the President of the Philippines to the Director of
Lands dated May 24, 1966, stopping the grant of foreshore leases all along Manila Bay, towards Cavite and Bataan, has not rendered the instant
case moot and academic "because the foreshore lease application involved is pending award."

In view of the foregoing considerations, the trial court's decision and the decision of the Executive Secretary dated April 10, 1958 are reversed and
set aside and the order of the Undersecretary of Agriculture and Natural Resources dated December 14, 1954 and the orders of the Director of
Lands dated February I and October 19, 1951 are affirmed.

The lease application of Julian Santulan mentioned in the order of February 1, 1951 should be recorded in the names of his heirs and the obligation
to make reimbursement mentioned in the dispositive part of the Undersecretary's order should now devolve upon the heirs of Santolan. The
reimbursement should be made to the heirs of the late Antonio Lusin The obligation to vacate the disputed land, as required in the Director's order
of October 19, 1951 devolves upon the heirs of Lusin Costs in both instances against respondent heirs of Lusin (As amended by Resolution of
February 17, 1977.

SO ORDERED.
FIRST DIVISION

G.R. No. L-39473 April 30, 1979

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
HON. COURT OF APPEALS and ISABEL LASTIMADO, respondents.

MELENCIO-HERRERA, J.:

This is a Petition for Review (Appeal) by certiorari filed by the Republic of the Philippines from the Decision of the Court of Appeals promulgated on
September 30, 1974 in CA-G.R. No. Sp-01504 denying the State's Petition for certiorari and Mandamus.

Briefly, the facts of the case are as follows:

Private respondent, Isabel Lastimado, filed on September 11, 1967, in the Court of First Instance of Bataan, Branch I, a Petition for the reopening of
cadastral proceedings over a portion of Lot No. 626 of the Mariveles Cadastre, consisting of 971.0569 hectares, pursuant to Republic Act No. 931,
as amended by Republic Act No. 2061, docketed as Cad. Case No. 19, LRC Cad. Rec. No. 1097. In the absence of any opposition, whether from the
Government or from private individuals, private respondent was allowed to present her evidence ex-parte. On October 14, 1967, the trial Court
rendered a Decision granting the Petition and adjudicating the land in favor of private respondent. The trial Court issued an order for the issuance
of a decree of registration on November 20, 1967, and on November 21, 1967, the Land Registration Commission issued Decree No. N-117573 in
favor of private respondent. Eventually, Original Certificate of Title No. N-144 was also issued in her favor. Private respondent thereafter
subdivided the land into ten lots, and the corresponding titles. Transfer Certificates of Title Nos. 18905 to 18914 inclusive, were issued by the
Register of Deeds.

On June 3, 1968, or within one year from the entry of the decree of registration, petitioner filed a Petition for Review pursuant to Sec. 38, Act No.
496, on the ground of fraud alleging that during the period of alleged adverse possession by private respondent, said parcel of land was part of the
U.S. Military Reservation in Bataan. which was formally turned over to the Republic of the Philippines only on December 22, 1965, and that the
same is inside the public forest of Mariveles, Bataan and, therefore, not subject to disposition or acquisition under the Public Land Law.
Respondent field an Opposition thereto, which was considered by the trial Court, as a Motion to Dismiss, and on December 20,1968, said Court
(Judge Tito V. Tizon, presiding) issued an Order dismissing the Petition for Review mainly on the ground that the Solicitor General had failed to file
opposition to the original Petition for reopening of the cadastral proceedings and was, therefore, estopped from questioning the decree of
registration ordered issued therein. On January 28, 1969, petitioner moved for reconsideration, which was denied by the trial Court in its Order
dated May 20, 1969, for lack of merit.

Petitioner seasonably filed a Notice of Appeal and a Record on Appeal, which was objected to by private respondent. On July 15, 1972, or three
years later, * the trial Court (Judge Abraham P. Vera, presiding) refused to give due course to the appeal. Petitioner filed a Motion for
Reconsideration but the trial Court denied it in its Order of October 14, 1972 on the ground that the proper remedy of petitioner was a certiorari
petition, not an ordinary appeal, and that the Order sought to be appealed from had long become final and executory as petitioner's Motion for
Reconsideration was pro-forma and did not suspend the running of the reglementary period of appeal.

On November 9, 1972, petitioner filed a Petition for certiorari and mandamus with the Court of Appeals claiming that the trial Court gravely abused
its discretion, amounting to lack of jurisdiction when, without the benefit of hearing, it summarily dismissed the Petition for Review; and since said
Petition raised certain issues of fact which cannot be decided except in a trial on the merits, the dismissal of the Petition on the basis of private
respondent's Opposition, considered as a Motion to Dismiss, constituted a denial of due process of law. Petitioner then prayed that the Order of
the trial Court, dated December 20, 1968 dismissing the Petition for Review, be declared null and void, and that said trial Court be directed to give
due course to the Petition for Review; or, in the alternative, to give due course to petitioner's appeal.

On September 30, 1974, the Court of Appeals upheld the trial Court's dismissal of the Petition for Review stating:

... We cannot find any allegation in the petition for review which shows that private respondent had committed fraud against
petitioner. Its representations and officials were duly notified of private respondent's petition for reopening and registration of
title in her name. In said petition, the technical descriptions of the portion of Lot No. 626 of the Mariveles (Bataan) Cadastre,
subject-matter of the petition were expressly stated, the boundaries, specifically delineated. The alleged ground that the land
forms part of a forest land exists at the time petitioner was duly notified of said petition. Failure to file opposition is in effect, an
admission that the petition is actually not part of a forest land. Indubitably, therefore, no justifiable reason exists for the
annulment of the Order, dated December 20, 1968 (Annex D-Petition) of the lower court dismissing herein petitioner's petition
for review of the decree issued in favor of private respondent Lastimado. 1

The Court of Appeals then disposed as follows:

WHEREFORE, finding that the respondent Judge has not committed any grave abuse of discretion amounting to lack of
jurisdiction in the issuance of an Order, dated December 20, 1968 (Annex D-Petition) dismissing herein petitioner's petition for
review, the present petition for review is hereby denied.

The issuance of the writ of mandamus as prayed for in the petition is no longer necessary as this Court, in the exercise of its
appellate jurisdiction and authority to supervise orderly administration of justice, has already resolved on the merits the
question whether or not the dismissal of the petition for review had been done with grave abuse of discretion amounting to
lack of jurisdiction. 2

From this Decision, petitioner filed the present Petition for Review (Appeal) by certiorari assigning the following errors to the Court of Appeals and
to the trial Court:
1. The Lower Court as well as the Court of Appeals erred in finding that there can be possession, even for the purpose of
claiming title, of land which at the time of possession is subject to a military reservation.

2. The Lower Court as well as the Court of Appeals erred in finding that such land which is subject to a government reservation,
may appropriately be the subject of cadastral proceedings, and hence. also of a petition to reopen cadastral proceedings.

3. The Lower Court as well as the Court of Appeals erred in finding that a parcel of land which is part of the public forest is
susceptible of occupation and registration in favor of private individual.

4. The Lower Court as well as the Court of Appeals erred in not finding that the Republic of the Philippines is not estopped from
questioning the decree of registration and the title issued pursuant thereto in favor of respondent Lastimado over the parcel of
land in question.

5. The Lower Court erred in dismissing the petition for review of the Republic of the Philippines.

6. The Court of Appeals erred in denying Petitioner's petition for certiorari and mandamus.

Section 38 of the Land Registration Act (Act 496) provides:

Section 38. Decree of registration, and remedies after entry of decree.

If the court after hearing finds that the applicant or adverse claimant has title as stated in his application or adverse claim and
proper for registration, a decree of confirmation and registration shall be entered. Every decree of registration shall bind the
land, and quiet title thereto. subject only to the exceptions stated in the following section. It shall be conclusive upon and
against all persons, including the Insular Government and all the branches thereof, whether mentioned by name in the
application, notice of citation, or included in the general description "To all whom it may concern". Such decree shall not be
opened by reason of the absence, infancy, or other disability of any person affect thereby, nor by any proceeding in any court
for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the competent Court of First Instance a petition for review within
one year after entry of the decree provided no innocent purchaser for value has acquired an interest. ... 3

The essential elements for the allowance of the reopening or review of a decree are: a) that the petitioner has a real and dominical right; b) that he
has been deprived thereof; c) through fraud; d) that the petition is filed within one year from the issuance of the decree; and e) that the property
has not as yet been transferred to an innocent purchaser. 4

However, for fraud to justify the review of a decree, it must be extrinsic or collateral and the facts upon which it is based have not been
controverted or resolved in the case where the judgment sought to be annulled was rendered. 5 The following ruling spells out the difference
between extrinsic and intrinsic fraud:

Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any fraudulent scheme executed by a prevailing
litigant "outside the trial of a case against the defeated party, or his agents, attorneys or witnesses, whereby said defeated
party is prevented from presenting fully and fairly his side of the case." But intrinsic fraud takes the form of "acts of a party in a
litigation during the trial such as the use of forged instruments or perjured testimony, which did not affect the present action of
the case, but did prevent a fair and just determination of the case. 6

The fraud is one that affects and goes into the jurisdiction of the Court. 7

In its Petition for Review filed before the trial Court, petitioner alleged that fraud was committed by private respondent when she misrepresented
that she and her predecessors-in-interest had been in possession of the land publicly, peacefully, exclusively and adversely against the whole world
as owner for more than forty years when, in fact, the subject land was in. side the former U.S. Military Reservation, which was formally turned over
to the Republic of the Philippines only on December 22, 1965, and that she likewise contended that her rights, as derived from the original and
primitive occupants of the land in question, are capable of judicial confirmation under existing laws, when the truth is, said parcel of land is within
the public forest of Mariveles, Bataan, and is not subject to disposition or acquisition by private persons under the Public Land Law.

The trial Court ruled, and was upheld by the Court of Appeals, that no fraud was committed by private respondent, which deprived petitioner of its
day in Court as there was no showing that she was aware of the facts alleged by the Government, so that she could not have suppressed them with
intent to deceive. The trial Court also noted that petitioner had failed to file an opposition to the reopening of the cadastral proceedings despite
notices sent not only to the Solicitor General as required by Republic Act No. 931. but to the Bureau of Lands and the Bureau of Forestry as well. It
then concluded that "the remedy granted by section 38 of the Land Registration Act is designed to give relief to victims of fraud, not to those who
are victims of their own neglect, inaction or carelessness, especially when no attempt is ever made to excuse or justify the neglect." With the
foregoing as the essential basis, the trial Court dismissed the Petition for Review.

We find reversible error. Although there was an agreement by the parties to submit for resolution the Opposition to the Petition for Review, which
was treated as a motion to dismiss, the trial Court, in the exercise of sound judicial discretion, should not have dismissed the Petition outright but
should have afforded petitioner an opportunity to present evidence in support of the facts alleged to constitute actual and extrinsic fraud
committed by private respondent. Thus, in the case of Republic vs. Sioson, et al., 8 it was held that "the action of the lower Court in denying the
petition for review of a decree of registration filed within one year from entry of the d without hearing the evidence in support of the allegation
and claim that actual and extrinsic fraud upon which the petition is predicated, is held to be in error, because the lower Court should have afforded
the petitioner an opportunity to prove it."

If the allegation of petitioner that the land in question was inside the military reservation at the time it was claimed is true, then, it cannot be the
object of any cadastral p nor can it be the object of reopening under Republic Act No. 931. 9 Similarly, if the land in question, indeed forms part of
the public forest, then, possession thereof, however long, cannot convert it into private property as it is within the exclusive jurisdiction of the
Bureau of Forestry and beyond the power and jurisdiction of the Cadastral Court to register under the Torrens System. 10

Even assuming that the government agencies can be faulted for inaction and neglect (although the Solicitor General claims that it received no
notice), yet, the same cannot operate to bar action by the State as it cannot be estopped by the mistake or error of its officials or agents. 11 Further,
we cannot lose sight of the cardinal consideration that "the State as persona in law is the juridical entity, which is the source of any asserted right
to ownership in land" under basic Constitutional Precepts, and that it is moreover charged with the conservation of such patrimony. 12

WHEREFORE, the Decision of the Court of Appeals dated September 30, 1974, dismissing the Petition for certiorari and mandamus filed before it,
as well as the Order of the Court of First Instance of Bataan (Branch I) dated December 20, 1968, dismissing the Petition for Review, are hereby set
aside and the records of this case hereby ed to the latter Court for further proceedings to enable petitioner to present evidence in support of its
Petition for Review.

No pronouncement as to costs.

SO ORDERED.
EN BANC

G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,


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

CARPIO, J.:

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

The Facts

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

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

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

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

xxx

(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of PEA, all of the rights, title,
interest and participation of CDCP in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have
not yet been sold, transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine
Thousand Four Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by land pledge No. 5 and
approximately Three Million Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed
areas at varying elevations above Mean Low Water Level located outside the Financial Center Area and the First Neighborhood Unit."3

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

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

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

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to conduct a
study on the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary of
Justice,8 the Chief Presidential Legal Counsel,9 and the Government Corporate Counsel.10 The Legal Task Force upheld the legality of the JVA,
contrary to the conclusions reached by the Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA and AMARI
under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and
retired Navy Officer Sergio Cruz composed the negotiating panel of PEA.

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

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

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

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

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

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

The Issues

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

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

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

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

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

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

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

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

The Court's Ruling

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

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

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

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

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

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

Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of the 1987 Constitution, or
its counterpart provision in the 1973 Constitution,18 covered agricultural lands sold to private corporations which acquired the lands from private
parties. The transferors of the private corporations claimed or could claim the right to judicial confirmation of their imperfect titles19 under Title
II of Commonwealth Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed
lands and submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain
undertakings by AMARI under the Amended JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim judicial
confirmation of their titles because the lands covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation of
imperfect title requires open, continuous, exclusive and notorious occupation of agricultural lands of the public domain for at least thirty years
since June 12, 1945 or earlier. Besides, the deadline for filing applications for judicial confirmation of imperfect title expired on December 31,
1987.20

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

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

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

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

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

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

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

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

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

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

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

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

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

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

xxx

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

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

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

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

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

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

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

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

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

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

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

"An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government
and the people. It is in the interest of the State that the channels for free political discussion be maintained to the end that the
government may perceive and be responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the
citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues
and have access to information relating thereto can such bear fruit."
PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to information is limited to "definite propositions of the
government." PEA maintains the right does not include access to "intra-agency or inter-agency recommendations or communications during the
stage when common assertions are still in the process of being formulated or are in the 'exploratory stage'."

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

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

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

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

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

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

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

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

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

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

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

Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly disadvantageous to the government or
even illegal, becomes a fait accompli. This negates the State policy of full transparency on matters of public concern, a situation which the framers
of the Constitution could not have intended. Such a requirement will prevent the citizenry from participating in the public discussion of
any proposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional
right, nor a retreat by the State of its avowed "policy of full disclosure of all its transactions involving public interest."

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

The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations, legal and expert
opinions, minutes of meetings, terms of reference and other documents attached to such reports or minutes, all relating to the JVA. However, the
right to information does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA.34 The right
only affords access to records, documents and papers, which means the opportunity to inspect and copy them. One who exercises the right must
copy the records, documents and papers at his expense. The exercise of the right is also subject to reasonable regulations to protect the integrity of
the public records and to minimize disruption to government operations, like rules specifying when and how to conduct the inspection and
copying.35
The right to information, however, does not extend to matters recognized as privileged information under the separation of powers.36 The right
does not also apply to information on military and diplomatic secrets, information affecting national security, and information on investigations of
crimes by law enforcement agencies before the prosecution of the accused, which courts have long recognized as confidential. 37 The right may also
be subject to other limitations that Congress may impose by law.

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

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

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

The Regalian Doctrine

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

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

Ownership and Disposition of Reclaimed Lands

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

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

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

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

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

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

"Art. 339. Property of public dominion is –

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

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

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

Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop the
national wealth. This class of property constituted property of public dominion although employed for some economic or commercial activity to
increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property, to wit:

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

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

Act No. 1654 of the Philippine Commission

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

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

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

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

xxx

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

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

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

Act No. 2874 of the Philippine Legislature

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

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

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands, x x x.

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

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

xxx

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

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

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

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

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

x x x.

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

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

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

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

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

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

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

Dispositions under the 1935 Constitution

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

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

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

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

"Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in excess of one thousand and
twenty four hectares, nor may any individual acquire such lands by purchase in excess of one hundred and forty hectares, or by lease in
excess of one thousand and twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not
exceeding two thousand hectares, may be leased to an individual, private corporation, or association." (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale to private parties
government reclaimed and marshy lands of the public domain. On the contrary, the legislature continued the long established State policy of
retaining for the government title and ownership of government reclaimed and marshy lands of the public domain.

Commonwealth Act No. 141 of the Philippine National Assembly

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

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

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

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands,

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

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

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

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

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

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

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

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

(b) Foreshore;

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

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

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

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

Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874 prohibiting the sale of government
reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are intended for residential, commercial, industrial or other
non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The government could sell to private
parties only lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not classified as government reclaimed,
foreshore and marshy disposable lands of the public domain. Foreshore lands, however, became inalienable under the 1935 Constitution which
only allowed the lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential, commercial, industrial or other
productive purposes other than agricultural "shall be disposed of under the provisions of this chapter and not otherwise." Under Section 10 of CA
No. 141, the term "disposition" includes lease of the land. Any disposition of government reclaimed, foreshore and marshy disposable lands for
non-agricultural purposes must comply with Chapter IX, Title III of CA No. 141,54 unless a subsequent law amended or repealed these provisions.

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

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

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

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

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

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

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

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

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

One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from the maximum area of
public lands that could be acquired from the State. These government units and entities should not just turn around and sell these lands to private
parties in violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to government units and
entities could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In the same
manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy lands
of the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these lands. 57

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

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

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

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

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

The Civil Code of 1950


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

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

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

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

x x x.

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

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

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

Dispositions under the 1973 Constitution

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

"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries,
wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease
for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding
twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the
grant." (Emphasis supplied)

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

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

"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements of the natural resources,
shall determine by law the size of land of the public domain which may be developed, held or acquired by, or leased to, any qualified
individual, corporation, or association, and the conditions therefor.No private corporation or association may hold alienable lands of the
public domain except by 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.

xxx

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

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

xxx

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

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

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

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

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

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

Dispositions under the 1987 Constitution

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Amended Joint Venture Agreement

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

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

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

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

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

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

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

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

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

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

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

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

The Threshold Issue

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

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

xxx

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

Classification of Reclaimed Foreshore and Submerged Areas

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

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

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

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

x x x.'" (Emphasis supplied)

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

"D. Conclusion

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

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

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the "lands of the public domain,
waters x x x and other natural resources" and consequently "owned by the State." As such, foreshore and submerged areas "shall not be
alienated," unless they are classified as "agricultural lands" of the public domain. The mere reclamation of these areas by PEA does not convert
these inalienable natural resources of the State into alienable or disposable lands of the public domain. There must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or concession. Moreover, these
reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some public or quasi-public use.71
Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession which have been officially delimited
and classified."72 The President has the authority to classify inalienable lands of the public domain into alienable or disposable lands of the public
domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,73 the Executive Department attempted to sell the Roppongi property in Tokyo,
Japan, which was acquired by the Philippine Government for use as the Chancery of the Philippine Embassy. Although the Chancery had transferred
to another location thirteen years earlier, the Court still ruled that, under Article 42274 of the Civil Code, a property of public dominion retains such
character until formally declared otherwise. The Court ruled that –

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

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

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

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

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

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

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

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

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

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

x x x."

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

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

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

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

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

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

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

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

(1) x x x

xxx

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

xxx

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

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

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

DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR decides whether reclaimed lands of
PEA should be classified as alienable under Sections 681 and 782 of CA No. 141. Once DENR decides that the reclaimed lands should be so classified,
it then recommends to the President the issuance of a proclamation classifying the lands as alienable or disposable lands of the public domain open
to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake the
physical reclamation of areas under water, whether directly or through private contractors. DENR is also empowered to classify lands of the public
domain into alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public domain.

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

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

PEA's Authority to Sell Reclaimed Lands

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

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

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

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

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

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

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

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

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

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

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

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

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

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085 merely transferred
"ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong to
or be owned by PEA." EO No. 525 expressly states that PEA should dispose of its reclaimed lands "in accordance with the provisions of Presidential
Decree No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds
of lands x x x owned, managed, controlled and/or operated by the government." 87(Emphasis supplied) There is, therefore, legislative authority
granted to PEA to sell its lands, whether patrimonial or alienable lands of the public domain. PEA may sell to private parties its patrimonial
propertiesin accordance with the PEA charter free from constitutional limitations. The constitutional ban on private corporations from acquiring
alienable lands of the public domain does not apply to the sale of PEA's patrimonial lands.

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

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

The requirement of public auction in the sale of reclaimed lands

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

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

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

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

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

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

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

Reclamation under the BOT Law and the Local Government Code

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

"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any infrastructure projects undertaken
through the build-operate-and-transfer arrangement or any of its variations pursuant to the provisions of this Act, the project proponent
x x x may likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not
limited to, the grant of a portion or percentage of the reclaimed land, subject to the constitutional requirements with respect to the
ownership of the land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire reclaimed alienable lands of
the public domain in view of the constitutional ban.

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

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

xxx

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

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

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

Registration of lands of the public domain

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

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

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

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

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

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

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

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

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

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

The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titles issued to private parties. These
four cases uniformly hold that the Director of Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the land
automatically comes under the Torrens System. The fifth case cited involves the registration under the Torrens System of a 12.8-hectare public land
granted by the National Government to Mindanao Medical Center, a government unit under the Department of Health. The National Government
transferred the 12.8-hectare public land to serve as the site for the hospital buildings and other facilities of Mindanao Medical Center, which
performed a public service. The Court affirmed the registration of the 12.8-hectare public land in the name of Mindanao Medical Center under
Section 122 of Act No. 496. This fifth case is an example of a public land being registered under Act No. 496 without the land losing its character as
a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government owned corporation
performing public as well as proprietary functions. No patent or certificate of title has been issued to any private party. No one is asking the
Director of Lands to cancel PEA's patent or certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of title should
remain with PEA, and the land covered by these certificates, being alienable lands of the public domain, should not be sold to a private corporation.

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

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

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

Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section 60 of CA No. 141 prohibits,
"except when authorized by Congress," the sale of alienable lands of the public domain that are transferred to government units or entities.
Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of the registered land even if not annotated
on the certificate of title.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. In the hands of
the government agency tasked and authorized to dispose of alienable of disposable lands of the public domain, these lands are still public, not
private lands.

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

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

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

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

Act No. 496

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

PD No. 1529

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

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

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

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

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

(1) x x x

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

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

Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of the public domain.
Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National Government new certificates of title
covering such expropriated lands. Section 85 of PD No. 1529 states –
"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated or taken by eminent domain,
the National Government, province, city or municipality, or any other agency or instrumentality exercising such right shall file for
registration in the proper Registry a certified copy of the judgment which shall state definitely by an adequate description, the particular
property or interest expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of the right or
interest taken shall be made on each certificate of title by the Register of Deeds, and where the fee simple is taken, a new certificate
shall be issued in favor of the National Government, province, city, municipality, or any other agency or instrumentality exercising such
right for the land so taken. The legal expenses incident to the memorandum of registration or issuance of a new certificate of title shall be
for the account of the authority taking the land or interest therein." (Emphasis supplied)

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

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

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

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

We can now summarize our conclusions as follows:

1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, 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 hectares110of the Freedom Islands, such
transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.

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

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

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

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

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

SO ORDERED.
EN BANC

G.R. No. 164527 August 15, 2007

FRANCISCO I. CHAVEZ, Petitioner,


vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II HOLDINGS, INC., HARBOUR CENTRE PORT TERMINAL, INC., and MR. REGHIS ROMERO
II, Respondents.

DECISION

VELASCO, JR., J.:

In this Petition for Prohibition and Mandamus with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction under Rule 65,
petitioner, in his capacity as taxpayer, seeks:

to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993 between the National Housing Authority and R-II Builders, Inc.
and the Smokey Mountain Development and Reclamation Project embodied therein; the subsequent amendments to the said JVA; and all other
agreements signed and executed in relation thereto – including, but not limited to the Smokey Mountain Asset Pool Agreement dated 26
September 1994 and the separate agreements for Phase I and Phase II of the Project––as well as all other transactions which emanated therefrom,
for being UNCONSTITUTIONAL and INVALID;

to enjoin respondents—particularly respondent NHA—from further implementing and/or enforcing the said project and other agreements related
thereto, and from further deriving and/or enjoying any rights, privileges and interest therefrom x x x; and

to compel respondents to disclose all documents and information relating to the project––including, but not limited to, any subsequent
agreements with respect to the different phases of the project, the revisions over the original plan, the additional works incurred thereon, the
current financial condition of respondent R-II Builders, Inc., and the transactions made respecting the project.1

The Facts

On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO) 1612 approving and directing the implementation of the
Comprehensive and Integrated Metropolitan Manila Waste Management Plan (the Plan). The Metro Manila Commission, in coordination with
various government agencies, was tasked as the lead agency to implement the Plan as formulated by the Presidential Task Force on Waste
Management created by Memorandum Circular No. 39. A day after, on March 2, 1988, MO 161-A3 was issued, containing the guidelines which
prescribed the functions and responsibilities of fifteen (15) various government departments and offices tasked to implement the Plan, namely:
Department of Public Works and Highway (DPWH), Department of Health (DOH), Department of Environment and Natural Resources (DENR),
Department of Transportation and Communication, Department of Budget and Management, National Economic and Development Authority
(NEDA), Philippine Constabulary Integrated National Police, Philippine Information Agency and the Local Government Unit (referring to the City of
Manila), Department of Social Welfare and Development, Presidential Commission for Urban Poor, National Housing Authority (NHA), Department
of Labor and Employment, Department of Education, Culture and Sports (now Department of Education), and Presidential Management Staff.

Specifically, respondent NHA was ordered to "conduct feasibility studies and develop low-cost housing projects at the dumpsite and absorb
scavengers in NHA resettlement/low-cost housing projects."4 On the other hand, the DENR was tasked to "review and evaluate proposed projects
under the Plan with regard to their environmental impact, conduct regular monitoring of activities of the Plan to ensure compliance with
environmental standards and assist DOH in the conduct of the study on hospital waste management."5

At the time MO 161-A was issued by President Aquino, Smokey Mountain was a wasteland in Balut, Tondo, Manila, where numerous Filipinos
resided in subhuman conditions, collecting items that may have some monetary value from the garbage. The Smokey Mountain dumpsite is
bounded on the north by the Estero Marala, on the south by the property of the National Government, on the east by the property of B and I
Realty Co., and on the west by Radial Road 10 (R-10).

Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey Mountain low-cost housing project which resulted in the formulation of
the "Smokey Mountain Development Plan and Reclamation of the Area Across R-10" or the Smokey Mountain Development and Reclamation
Project (SMDRP; the Project). The Project aimed to convert the Smokey Mountain dumpsite into a habitable housing project, inclusive of the
reclamation of the area across R-10, adjacent to the Smokey Mountain as the enabling component of the project.6 Once finalized, the Plan was
submitted to President Aquino for her approval.

On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No. [RA] 6957) was enacted.7 Its declared policy under Section 1 is "[t]o
recognize the indispensable role of the private sector as the main engine for national growth and development and provide the most appropriate
favorable incentives to mobilize private resources for the purpose." Sec. 3 authorized and empowered "[a]ll government infrastructure agencies,
including government-owned and controlled corporations and local government units x x x to enter into contract with any duly pre-qualified
private contractor for the financing, construction, operation and maintenance of any financially viable infrastructure facilities through the build-
operate-transfer or build and transfer scheme."

RA 6957 defined "build-and-transfer" scheme as "[a] contractual arrangement whereby the contractor undertakes the construction, including
financing, of a given infrastructure facility, and its turnover after the completion to the government agency or local government unit concerned
which shall pay the contractor its total investment expended on the project, plus reasonable rate of return thereon." The last paragraph of Sec. 6 of
the BOT Law provides that the repayment scheme in the case of "land reclamation or the building of industrial estates" may consist of "[t]he grant
of a portion or percentage of the reclaimed land or industrial estate built, subject to the constitutional requirements with respect to the ownership
of lands."
On February 10, 1992, Joint Resolution No. 038 was passed by both houses of Congress. Sec. 1 of this resolution provided, among other things, that:

Section 1. There is hereby approved the following national infrastructure projects for implementation under the provisions of Republic Act No.
6957 and its implementing rules and regulations:

xxxx

(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service and related facilities;

xxxx

(k) Land reclamation, dredging and other related development facilities;

(l) Industrial estates, regional industrial centers and export processing zones including steel mills, iron-making and petrochemical complexes and
related infrastructure and utilities;

xxxx

(p) Environmental and solid waste management-related facilities such as collection equipment, composting plants, incinerators, landfill and tidal
barriers, among others; and

(q) Development of new townsites and communities and related facilities.

This resolution complied with and conformed to Sec. 4 of the BOT Law requiring the approval of all national infrastructure projects by the Congress.

On January 17, 1992, President Aquino proclaimed MO 4159 approving and directing the implementation of the SMDRP. Secs. 3 and 4 of the
Memorandum Order stated:

Section 3. The National Housing Authority is hereby directed to implement the Smokey Mountain Development Plan and Reclamation of the Area
Across R-10 through a private sector joint venture scheme at the least cost to the government.

Section 4. The land area covered by the Smokey Mountain dumpsite is hereby conveyed to the National Housing Authority as well as the area to be
reclaimed across R-10. (Emphasis supplied.)

In addition, the Public Estates Authority (PEA) was directed to assist in the evaluation of proposals regarding the technical feasibility of reclamation,
while the DENR was directed to (1) facilitate titling of Smokey Mountain and of the area to be reclaimed and (2) assist in the technical evaluation of
proposals regarding environmental impact statements.10

In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee the implementation of the Plan, chaired by the
National Capital Region-Cabinet Officer for Regional Development (NCR-CORD) with the heads of the NHA, City of Manila, DPWH, PEA, Philippine
Ports Authority (PPA), DENR, and Development Bank of the Philippines (DBP) as members. 11 The NEDA subsequently became a member of the
EXECOM. Notably, in a September 2, 1994 Letter,12 PEA General Manager Amado Lagdameo approved the plans for the reclamation project
prepared by the NHA.

In conformity with Sec. 5 of MO 415, an inter-agency technical committee (TECHCOM) was created composed of the technical representatives of
the EXECOM "[t]o assist the NHA in the evaluation of the project proposals, assist in the resolution of all issues and problems in the project to
ensure that all aspects of the development from squatter relocation, waste management, reclamation, environmental protection, land and house
construction meet governing regulation of the region and to facilitate the completion of the project." 13

Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify and Bid for the right to become NHA’s joint venture partner in the
implementation of the SMDRP. The notices were published in newspapers of general circulation on January 23 and 26 and February 1, 14, 16, and
23, 1992, respectively. Out of the thirteen (13) contractors who responded, only five (5) contractors fully complied with the required pre-
qualification documents. Based on the evaluation of the pre-qualification documents, the EXECOM declared the New San Jose Builders, Inc. and R-II
Builders, Inc. (RBI) as the top two contractors.14

Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility Study and Financing Plan) of the top two (2) contractors in this
manner:

(1) The DBP, as financial advisor to the Project, evaluated their Financial Proposals;

(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the Housing Construction and Reclamation;

(3) The DENR evaluated Technical Proposals on Waste Management and Disposal by conducting the Environmental Impact Analysis; and

(4) The NHA and the City of Manila evaluated the socio-economic benefits presented by the proposals.

On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of the Philippines.

On August 31, 1992, the TECHCOM submitted its recommendation to the EXECOM to approve the R-II Builders, Inc. (RBI) proposal which garnered
the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to President Ramos. As a result, President Ramos issued Proclamation No. 3915 on September 9,
1992, which reads:

WHEREAS, the National Housing Authority has presented a viable conceptual plan to convert the Smokey Mountain dumpsite into a habitable
housing project, inclusive of the reclamation of the area across Road Radial 10 (R-10) adjacent to the Smokey Mountain as the enabling component
of the project;

xxxx

These parcels of land of public domain are hereby placed under the administration and disposition of the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries, as well as its development for mix land use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas for port-related activities.

In order to facilitate the early development of the area for disposition, the Department of Environment and Natural Resources, through the Lands
and Management Bureau, is hereby directed to approve the boundary and subdivision survey and to issue a special patent and title in the name of
the National Housing Authority, subject to final survey and private rights, if any there be. (Emphasis supplied.)

On October 7, 1992, President Ramos authorized NHA to enter into a Joint Venture Agreement with RBI "[s]ubject to final review and approval of
the Joint Venture Agreement by the Office of the President."16

On March 19, 1993, the NHA and RBI entered into a Joint Venture Agreement 17 (JVA) for the development of the Smokey Mountain dumpsite and
the reclamation of the area across R-10 based on Presidential Decree No. (PD) 75718which mandated NHA "[t]o undertake the physical and socio-
economic upgrading and development of lands of the public domain identified for housing," MO 161-A which required NHA to conduct the
feasibility studies and develop a low-cost housing project at the Smokey Mountain, and MO 415 as amended by MO 415-A which approved the
Conceptual Plan for Smokey Mountain and creation of the EXECOM and TECHCOM. Under the JVA, the Project "involves the clearing of Smokey
Mountain for eventual development into a low cost medium rise housing complex and industrial/commercial site with the reclamation of the area
directly across [R-10] to act as the enabling component of the Project."19 The JVA covered a lot in Tondo, Manila with an area of two hundred
twelve thousand two hundred thirty-four (212,234) square meters and another lot to be reclaimed also in Tondo with an area of four hundred
thousand (400,000) square meters.

The Scope of Work of RBI under Article II of the JVA is as follows:

a) To fully finance all aspects of development of Smokey Mountain and reclamation of no more than 40 hectares of Manila Bay area
across Radial Road 10.

b) To immediately commence on the preparation of feasibility report and detailed engineering with emphasis to the expedient
acquisition of the Environmental Clearance Certificate (ECC) from the DENR.

c) The construction activities will only commence after the acquisition of the ECC, and

d) Final details of the contract, including construction, duration and delivery timetables, shall be based on the approved feasibility report
and detailed engineering.

Other obligations of RBI are as follows:

2.02 The [RBI] shall develop the PROJECT based on the Final Report and Detailed Engineering as approved by the Office of the President.
All costs and expenses for hiring technical personnel, date gathering, permits, licenses, appraisals, clearances, testing and similar
undertaking shall be for the account of the [RBI].

2.03 The [RBI] shall undertake the construction of 3,500 temporary housing units complete with basic amenities such as plumbing,
electrical and sewerage facilities within the temporary housing project as staging area to temporarily house the squatter families from
the Smokey Mountain while development is being undertaken. These temporary housing units shall be turned over to the [NHA] for
disposition.

2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing units on the leveled Smokey Mountain complete with basic
utilities and amenities, in accordance with the plans and specifications set forth in the Final Report approved by the [NHA]. Completed
units ready for mortgage take out shall be turned over by the [RBI] to NHA on agreed schedule.

2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly across [R-10] as contained in Proclamation No. 39 as the
enabling component of the project and payment to the [RBI] as its asset share.

2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary to complete all herein development works to be
undertaken on a phase to phase basis in accordance with the work program stipulated therein.

The profit sharing shall be based on the approved pre-feasibility report submitted to the EXECOM, viz:

For the developer (RBI):

1. To own the forty (40) hectares of reclaimed land.


2. To own the commercial area at the Smokey Mountain area composed of 1.3 hectares, and

3. To own all the constructed units of medium rise low cost permanent housing units beyond the 3,500 units share of the [NHA].

For the NHA:

1. To own the temporary housing consisting of 3,500 units.

2. To own the cleared and fenced incinerator site consisting of 5 hectares situated at the Smokey Mountain area.

3. To own the 3,500 units of permanent housing to be constructed by [RBI] at the Smokey Mountain area to be awarded to qualified on
site residents.

4. To own the Industrial Area site consisting of 3.2 hectares, and

5. To own the open spaces, roads and facilities within the Smokey Mountain area.

In the event of "extraordinary increase in labor, materials, fuel and non-recoverability of total project expenses,"20 the OP, upon recommendation
of the NHA, may approve a corresponding adjustment in the enabling component.

The functions and responsibilities of RBI and NHA are as follows:

For RBI:

4.01 Immediately commence on the preparation of the FINAL REPORT with emphasis to the expedient acquisition, with the assistance of the [NHA]
of Environmental Compliance Certificate (ECC) from the Environmental Management Bureau (EMB) of the [DENR]. Construction shall only
commence after the acquisition of the ECC. The Environment Compliance Certificate (ECC) shall form part of the FINAL REPORT.

The FINAL REPORT shall provide the necessary subdivision and housing plans, detailed engineering and architectural drawings, technical
specifications and other related and required documents relative to the Smokey Mountain area.

With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion to develop the same in a manner that it deems necessary to
recover the [RBI’s] investment, subject to environmental and zoning rules.

4.02 Finance the total project cost for land development, housing construction and reclamation of the PROJECT.

4.03 Warrant that all developments shall be in compliance with the requirements of the FINAL REPORT.

4.04 Provide all administrative resources for the submission of project accomplishment reports to the [NHA] for proper evaluation and supervision
on the actual implementation.

4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights of way to the PROJECT, from the owners of the adjacent lots for
access road, water, electrical power connections and drainage facilities.

4.06 Provide temporary field office and transportation vehicles (2 units), one (1) complete set of computer and one (1) unit electric typewriter for
the [NHA’s] field personnel to be charged to the PROJECT.

For the NHA:

4.07 The [NHA] shall be responsible for the removal and relocation of all squatters within Smokey Mountain to the Temporary Housing Complex or
to other areas prepared as relocation areas with the assistance of the [RBI]. The [RBI] shall be responsible in releasing the funds allocated and
committed for relocation as detailed in the FINAL REPORT.

4.08 Assist the [RBI] and shall endorse granting of exemption fees in the acquisition of all necessary permits, licenses, appraisals, clearances and
accreditations for the PROJECT subject to existing laws, rules and regulations.

4.09 The [NHA] shall inspect, evaluate and monitor all works at the Smokey Mountain and Reclamation Area while the land development and
construction of housing units are in progress to determine whether the development and construction works are undertaken in accordance with
the FINAL REPORT. If in its judgment, the PROJECT is not pursued in accordance with the FINAL REPORT, the [NHA] shall require the [RBI] to
undertake necessary remedial works. All expenses, charges and penalties incurred for such remedial, if any, shall be for the account of the [RBI].

4.10 The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT. x x x

4.11 Handle the processing and documentation of all sales transactions related to its assets shares from the venture such as the 3,500 units of
permanent housing and the allotted industrial area of 3.2 hectares.

4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall be deducted from the proceeds due to the [NHA].
4.13 The [NHA] shall be responsible for the acquisition of the Mother Title for the Smokey Mountain and Reclamation Area within 90 days upon
submission of Survey returns to the Land Management Sector. The land titles to the 40-hectare reclaimed land, the 1.3 hectare commercial area at
the Smokey Mountain area and the constructed units of medium-rise permanent housing units beyond the 3,500 units share of the [NHA] shall be
issued in the name of the [RBI] upon completion of the project. However, the [RBI] shall have the authority to pre-sell its share as indicated in this
agreement.

The final details of the JVA, which will include the construction duration, costs, extent of reclamation, and delivery timetables, shall be based on the
FINAL REPORT which will be contained in a Supplemental Agreement to be executed later by the parties.

The JVA may be modified or revised by written agreement between the NHA and RBI specifying the clauses to be revised or modified and the
corresponding amendments.

If the Project is revoked or terminated by the Government through no fault of RBI or by mutual agreement, the Government shall compensate RBI
for its actual expenses incurred in the Project plus a reasonable rate of return not exceeding that stated in the feasibility study and in the contract
as of the date of such revocation, cancellation, or termination on a schedule to be agreed upon by both parties.

As a preliminary step in the project implementation, consultations and dialogues were conducted with the settlers of the Smokey Mountain
Dumpsite Area. At the same time, DENR started processing the application for the Environmental Clearance Certificate (ECC) of the SMDRP. As a
result however of the consultative dialogues, public hearings, the report on the on-site field conditions, the Environmental Impact Statement (EIS)
published on April 29 and May 12, 1993 as required by the Environmental Management Bureau of DENR, the evaluation of the DENR, and the
recommendations from other government agencies, it was discovered that design changes and additional work have to be undertaken to
successfully implement the Project.21

Thus, on February 21, 1994, the parties entered into another agreement denominated as the Amended and Restated Joint Venture
Agreement22 (ARJVA) which delineated the different phases of the Project. Phase I of the Project involves the construction of temporary housing
units for the current residents of the Smokey Mountain dumpsite, the clearing and leveling-off of the dumpsite, and the construction of medium-
rise low-cost housing units at the cleared and leveled dumpsite.23 Phase II of the Project involves the construction of an incineration area for the
on-site disposal of the garbage at the dumpsite.24 The enabling component or consideration for Phase I of the Project was increased from 40
hectares of reclaimed lands across R-10 to 79 hectares.25 The revision also provided for the enabling component for Phase II of 119 hectares of
reclaimed lands contiguous to the 79 hectares of reclaimed lands for Phase I.26Furthermore, the amended contract delineated the scope of works
and the terms and conditions of Phases I and II, thus:

The PROJECT shall consist of Phase I and Phase II.

Phase I shall involve the following:

a. the construction of 2,992 units of temporary housing for the affected residents while clearing and development of Smokey Mountain
[are] being undertaken

b. the clearing of Smokey Mountain and the subsequent construction of 3,520 units of medium rise housing and the development of the
industrial/commercial site within the Smokey Mountain area

c. the reclamation and development of a 79 hectare area directly across Radial Road 10 to serve as the enabling component of Phase I

Phase II shall involve the following:

a. the construction and operation of an incinerator plant that will conform to the emission standards of the DENR

b. the reclamation and development of 119-hectare area contiguous to that to be reclaimed under Phase I to serve as the enabling
component of Phase II.

Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500 units under the JVA. 27However, it was required to
construct 3,520 medium-rise low-cost permanent housing units instead of 3,500 units under the JVA. There was a substantial change in the design
of the permanent housing units such that a "loft shall be incorporated in each unit so as to increase the living space from 20 to 32 square meters.
The additions and changes in the Original Project Component are as follows:

ORIGINAL CHANGES/REVISIONS

1. TEMPORARY HOUSING

Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable life of 3 years, gauge 26 G.I. roofing sheets future 12
SM floor area. use as permanent structures for factory and warehouses mixed 17 sm & 12 sm floor area.

2. MEDIUM RISE MASS

HOUSING

Box type precast Shelter Conventional and precast component 20 square meter concrete structures, 32 square floor area with
2.4 meter meter floor area with loft floor height; bare type, 160 units/ (sleeping quarter) 3.6 m. floor building. height, painted
and improved
architectural façade, 80 units/building.

3. MITIGATING MEASURES

3.1 For reclamation work Use of clean dredgefill material below the MLLW and SM material mixed with dredgefill above MLLW.

a. 100% use of Smokey Mountain material as dredgefill Use of Steel Sheet Piles needed for longer depth of
embedment.

b. Concrete Sheet Piles short depth of embedment

c. Silt removal approximately Need to remove more than 3.0

1.0 meter only meters of silt after sub-soil investigation.28

These material and substantial modifications served as justifications for the increase in the share of RBI from 40 hectares to 79 hectares
of reclaimed land.

Under the JVA, the specific costs of the Project were not stipulated but under the ARJVA, the stipulated cost for Phase I was pegged at six
billion six hundred ninety-three million three hundred eighty-seven thousand three hundred sixty-four pesos (PhP 6,693,387,364).

In his February 10, 1994 Memorandum, the Chairperson of the SMDRP EXECOM submitted the ARJVA for approval by the OP. After
review of said agreement, the OP directed that certain terms and conditions of the ARJVA be further clarified or amended preparatory to
its approval. Pursuant to the President’s directive, the parties reached an agreement on the clarifications and amendments required to be
made on the ARJVA.

On August 11, 1994, the NHA and RBI executed an Amendment To the Amended and Restated Joint Venture Agreement
(AARJVA)29 clarifying certain terms and condition of the ARJVA, which was submitted to President Ramos for approval, to wit:

Phase II shall involve the following:

a. the construction and operation of an incinerator plant that will conform to the emission standards of the DENR

b. the reclamation and development of 119-hectare area contiguous to that to be reclaimed under Phase I to serve as the
enabling component of Phase II, the exact size and configuration of which shall be approved by the SMDRP Committee 30

Other substantial amendments are the following:

4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as follows:

2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the Manila Bay area directly across Radial Road 10 (R-10) to serve as
payment to the DEVELOPER as its asset share for Phase I and to develop such land into commercial area with port facilities; provided, that
the port plan shall be integrated with the Philippine Port Authority’s North Harbor plan for the Manila Bay area and provided further, that
the final reclamation and port plan for said reclaimed area shall be submitted for approval by the Public Estates Authority and the
Philippine Ports Authority, respectively: provided finally, that subject to par. 2.02 above, actual reclamation work may commence upon
approval of the final reclamation plan by the Public Estates Authority.

xxxx

9. A new paragraph to be numbered 5.05 shall be added to Article V of the ARJVA, and shall read as follows:

5.05. In the event this Agreement is revoked, cancelled or terminated by the AUTHORITY through no fault of the DEVELOPER, the AUTHORITY shall
compensate the DEVELOPER for the value of the completed portions of, and actual expenditures on the PROJECT plus a reasonable rate of return
thereon, not exceeding that stated in the Cost Estimates of Items of Work previously approved by the SMDRP Executive Committee and the
AUTHORITY and stated in this Agreement, as of the date of such revocation, cancellation, or termination, on a schedule to be agreed upon by the
parties, provided that said completed portions of Phase I are in accordance with the approved FINAL REPORT.

Afterwards, President Ramos issued Proclamation No. 465 dated August 31, 199431 increasing the proposed area for reclamation across R-10 from
40 hectares to 79 hectares,32 to wit:

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the law, and as
recommended by the SMDRP Executive Committee, do hereby authorize the increase of the area of foreshore or submerged lands of Manila Bay to
be reclaimed, as previously authorized under Proclamation No. 39 (s. 1992) and Memorandum Order No. 415 (s. 1992), from Four Hundred
Thousand (400,000) square meters, more or less, to Seven Hundred Ninety Thousand (790,000) square meters, more or less.

On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued Special Patent No. 3591 conveying in favor of NHA an area of 211,975
square meters covering the Smokey Mountain Dumpsite.

In its September 7, 1994 letter to the EXECOM, the OP through then Executive Secretary Teofisto T. Guingona, Jr., approved the ARJVA as amended
by the AARJVA.
On September 8, 1994, the DENR issued Special Patent 3592 pursuant to Proclamation No. 39, conveying in favor of NHA a 401,485-square meter
area.

On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty Corporation (HIGC), now known as the Home Guaranty Corporation, and the
Philippine National Bank (PNB)33 executed the Smokey Mountain Asset Pool Formation Trust Agreement (Asset Pool Agreement).34 Thereafter, a
Guaranty Contract was entered into by NHA, RBI, and HIGC.

On June 23, 1994, the Legislature passed the Clean Air Act.35 The Act made the establishment of an incinerator illegal and effectively barred the
implementation of the planned incinerator project under Phase II. Thus, the off-site disposal of the garbage at the Smokey Mountain became
necessary.36

The land reclamation was completed in August 1996.37

Sometime later in 1996, pursuant likewise to Proclamation No. 39, the DENR issued Special Patent No. 3598 conveying in favor of NHA an
additional 390,000 square meter area.

During the actual construction and implementation of Phase I of the SMDRP, the Inter-Agency Technical Committee found and recommended to
the EXECOM on December 17, 1997 that additional works were necessary for the completion and viability of the Project. The EXECOM approved
the recommendation and so, NHA instructed RBI to implement the change orders or necessary works.38

Such necessary works comprised more than 25% of the original contract price and as a result, the Asset Pool incurred direct and indirect costs.
Based on C1 12 A of the Implementing Rules and Regulations of PD 1594, a supplemental agreement is required for "all change orders and extra
work orders, the total aggregate cost of which being more than twenty-five (25%) of the escalated original contract price."

The EXECOM requested an opinion from the Department of Justice (DOJ) to determine whether a bidding was required for the change orders
and/or necessary works. The DOJ, through DOJ Opinion Nos. 119 and 155 dated August 26, 1993 and November 12, 1993, opined that "a rebidding,
pursuant to the aforequoted provisions of the implementing rules (referring to PD 1594) would not be necessary where the change orders
inseparable from the original scope of the project, in which case, a negotiation with the incumbent contractor may be allowed."

Thus, on February 19, 1998, the EXECOM issued a resolution directing NHA to enter into a supplemental agreement covering said necessary works.

On March 20, 1998, the NHA and RBI entered into a Supplemental Agreement covering the aforementioned necessary works and submitted it to
the President on March 24, 1998 for approval.

Outgoing President Ramos decided to endorse the consideration of the Supplemental Agreement to incoming President Joseph E. Estrada. On June
30, 1998, Estrada became the 13th Philippine President.

However, the approval of the Supplemental Agreement was unacted upon for five months. As a result, the utilities and the road networks were
constructed to cover only the 79-hectare original enabling component granted under the ARJVA. The 220-hectare extension of the 79-hectare area
was no longer technically feasible. Moreover, the financial crises and unreliable real estate situation made it difficult to sell the remaining
reclaimed lots. The devaluation of the peso and the increase in interest cost led to the substantial increase in the cost of reclamation.

On August 1, 1998, the NHA granted RBI’s request to suspend work on the SMDRP due to "the delay in the approval of the Supplemental
Agreement, the consequent absence of an enabling component to cover the cost of the necessary works for the project, and the resulting inability
to replenish the Asset Pool funds partially used for the completion of the necessary works."39

As of August 1, 1998 when the project was suspended, RBI had "already accomplished a portion of the necessary works and change orders which
resulted in [RBI] and the Asset Pool incurring advances for direct and indirect cost which amount can no longer be covered by the 79-hectare
enabling component under the ARJVA."40

Repeated demands were made by RBI in its own capacity and on behalf of the asset pool on NHA for payment for the advances for direct and
indirect costs subject to NHA validation.

In November 1998, President Estrada issued Memorandum Order No. 33 reconstituting the SMDRP EXECOM and further directed it to review the
Supplemental Agreement and submit its recommendation on the completion of the SMDRP.

The reconstituted EXECOM conducted a review of the project and recommended the amendment of the March 20, 1998 Supplemental Agreement
"to make it more feasible and to identify and provide new sources of funds for the project and provide for a new enabling component to cover the
payment for the necessary works that cannot be covered by the 79-hectare enabling component under the ARJVA."41

The EXECOM passed Resolution Nos. 99-16-01 and 99-16-0242 which approved the modification of the Supplemental Agreement, to wit:

a) Approval of 150 hectares additional reclamation in order to make the reclamation feasible as part of the enabling component.

b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares based on surveys) to the SMDRP Asset Pool.

c) The inclusion in the total development cost of other additional, necessary and indispensable infrastructure works and the revision of
the original cost stated in the Supplemental Agreement dated March 20, 1998 from PhP 2,953,984,941.40 to PhP 2,969,134,053.13.

d) Revision in the sharing agreement between the parties.


In the March 23, 2000 OP Memorandum, the EXECOM was authorized to proceed and complete the SMDRP subject to certain guidelines and
directives.

After the parties in the case at bar had complied with the March 23, 2000 Memorandum, the NHA November 9, 2000 Resolution No. 4323
approved "the conveyance of the 17-hectare Vitas property in favor of the existing or a newly created Asset Pool of the project to be developed
into a mixed commercial-industrial area, subject to certain conditions."

On January 20, 2001, then President Estrada was considered resigned. On the same day, President Gloria M. Arroyo took her oath as the 14th
President of the Philippines.

As of February 28, 2001, "the estimated total project cost of the SMDRP has reached P8.65 billion comprising of P4.78 billion in direct cost and
P3.87 billion in indirect cost,"43 subject to validation by the NHA.

On August 28, 2001, NHA issued Resolution No. 4436 to pay for "the various necessary works/change orders to SMDRP, to effect the corresponding
enabling component consisting of the conveyance of the NHA’s Vitas Property and an additional 150-hectare reclamation area" and to authorize
the release by NHA of PhP 480 million "as advance to the project to make the Permanent Housing habitable, subject to reimbursement from the
proceeds of the expanded enabling component."44

On November 19, 2001, the Amended Supplemental Agreement (ASA) was signed by the parties, and on February 28, 2002, the Housing and Urban
Development Coordinating Council (HUDCC) submitted the agreement to the OP for approval.

In the July 20, 2002 Cabinet Meeting, HUDCC was directed "to submit the works covered by the PhP 480 million [advance to the Project] and the
ASA to public bidding."45 On August 28, 2002, the HUDCC informed RBI of the decision of the Cabinet.

In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the decision of the government "to bid out the remaining works under the
ASA thereby unilaterally terminating the Project with RBI and all the agreements related thereto." RBI demanded the payment of just
compensation "for all accomplishments and costs incurred in developing the SMDRP plus a reasonable rate of return thereon pursuant to Section
5.05 of the ARJVA and Section 6.2 of the ASA."46

Consequently, the parties negotiated the terms of the termination of the JVA and other subsequent agreements.

On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) whereby both parties agreed to terminate the JVA and other
subsequent agreements, thus:

1. TERMINATION

1.1 In compliance with the Cabinet directive dated 30 July 2002 to submit the works covered by the P480 Million and the ASA to
public bidding, the following agreements executed by and between the NHA and the DEVELOPER are hereby terminated, to wit:

a. Joint Venture Agreement (JVA) dated 19 March 1993

b. Amended and Restated Joint Venture Agreement (ARJVA) dated 21 February 1994

c. Amendment and Restated Joint Venture Agreement dated 11 August 1994

d. Supplemental Agreement dated 24 March 1998

e. Amended Supplemental Agreement (ASA) dated 19 November 2001.

xxxx

5. SETTLEMENT OF CLAIMS

5.1 Subject to the validation of the DEVELOPER’s claims, the NHA hereby agrees to initially compensate the Developer for the
abovementioned costs as follows:

a. Direct payment to DEVELOPER of the amounts herein listed in the following manner:

a.1 P250 Million in cash from the escrow account in accordance with Section 2 herewith;

a.2 Conveyance of a 3 hectare portion of the Vitas Industrial area immediately after joint determination of the
appraised value of the said property in accordance with the procedure herein set forth in the last paragraph of
Section 5.3. For purposes of all payments to be made through conveyance of real properties, the parties shall secure
from the NHA Board of Directors all documents necessary and sufficient to effect the transfer of title over the
properties to be conveyed to RBI, which documents shall be issued within a reasonable period.

5.2 Any unpaid balance of the DEVELOPERS claims determined after the validation process referred to in Section 4 hereof, may be paid in
cash, bonds or through the conveyance of properties or any combination thereof. The manner, terms and conditions of payment of the
balance shall be specified and agreed upon later within a period of three months from the time a substantial amount representing the
unpaid balance has been validated pursuant hereto including, but not limited to the programming of quarterly cash payments to be
sourced by the NHA from its budget for debt servicing, from its income or from any other sources.

5.3 In any case the unpaid balance is agreed to be paid, either partially or totally through conveyance of properties, the parties shall
agree on which properties shall be subject to conveyance. The NHA and DEVELOPER hereby agree to determine the valuation of the
properties to be conveyed by getting the average of the appraisals to be made by two (2) mutually acceptable independent appraisers.

Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into an agreement with the asset pool for the development and
operations of a port in the Smokey Mountain Area which is a major component of SMDRP to provide a source of livelihood and employment for
Smokey Mountain residents and spur economic growth. A Subscription Agreement was executed between the Asset Pool and HCPTI whereby the
asset pool subscribed to 607 million common shares and 1,143 million preferred shares of HCPTI. The HCPTI preferred shares had a premium and
penalty interest of 7.5% per annum and a mandatory redemption feature. The asset pool paid the subscription by conveying to HCPTI a 10-hectare
land which it acquired from the NHA being a portion of the reclaimed land of the SMDRP. Corresponding certificates of titles were issued to HCPTI,
namely: TCT Nos. 251355, 251356, 251357, and 251358.

Due to HCPTI’s failure to obtain a license to handle foreign containerized cargo from PPA, it suffered a net income loss of PhP 132,621,548 in 2002
and a net loss of PhP 15,540,063 in 2003. The Project Governing Board of the Asset Pool later conveyed by way of dacion en pago a number of
HCPTI shares to RBI in lieu of cash payment for the latter’s work in SMDRP.

On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant petition which impleaded as respondents the NHA, RBI, R-II
Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II, raising constitutional issues.

The NHA reported that thirty-four (34) temporary housing structures and twenty-one (21) permanent housing structures had been turned over by
respondent RBI. It claimed that 2,510 beneficiary-families belonging to the poorest of the poor had been transferred to their permanent homes
and benefited from the Project.

The Issues

The grounds presented in the instant petition are:

Neither respondent NHA nor respondent R-II builders may validly reclaim foreshore and submerged land because:

1. Respondent NHA and R-II builders were never granted any power and authority to reclaim lands of the public domain as this power is
vested exclusively with the PEA.

2. Even assuming that respondents NHA and R-II builders were given the power and authority to reclaim foreshore and submerged land,
they were never given the authority by the denr to do so.

II

Respondent R-II builders cannot acquire the reclaimed foreshore and submerged land areas because:

1. The reclaimed foreshore and submerged parcels of land are inalienable public lands which are beyond the commerce of man.

2. Assuming arguendo that the subject reclaimed foreshore and submerged parcels of land were already declared alienable lands of the
public domain, respondent R-II builders still could not acquire the same because there was never any declaration that the said lands were
no longer needed for public use.

3. Even assuming that the subject reclaimed lands are alienable and no longer needed for public use, respondent R-II builders still cannot
acquire the same because there was never any law authorizing the sale thereof.

4. There was never any public bidding awarding ownership of the subject land to respondent R-II builders.

5. Assuming that all the requirements for a valid transfer of alienable public had been performed, respondent R-II Builders, being private
corporation is nonetheless expresslyprohibited by the Philippine Constitution to acquire lands of the public domain.

III

Respondent harbour, being a private corporation whose majority stocks are owned and controlled by respondent Romero’s Corporations – R-II
builders and R-II Holdings – is disqualified from being a transferee of public land.

IV

Respondents must be compelled to disclose all information related to the smokey mountain development and reclamation project.

The Court’s Ruling

Before we delve into the substantive issues raised in this petition, we will first deal with several procedural matters raised by respondents.
Whether petitioner has the requisite locus standi to file this case

Respondents argue that petitioner Chavez has no legal standing to file the petition.

Only a person who stands to be benefited or injured by the judgment in the suit or entitled to the avails of the suit can file a complaint or
petition.47 Respondents claim that petitioner is not a proper party-in-interest as he was unable to show that "he has sustained or is in immediate or
imminent danger of sustaining some direct and personal injury as a result of the execution and enforcement of the assailed contracts or
agreements."48 Moreover, they assert that not all government contracts can justify a taxpayer’s suit especially when no public funds were utilized
in contravention of the Constitution or a law.

We explicated in Chavez v. PCGG49 that in cases where issues of transcendental public importance are presented, there is no necessity to show that
petitioner has experienced or is in actual danger of suffering direct and personal injury as the requisite injury is assumed. We find our ruling in
Chavez v. PEA50 as conclusive authority on locus standi in the case at bar since the issues raised in this petition are averred to be in breach of the
fair diffusion of the country’s natural resources and the constitutional right of a citizen to information which have been declared to be matters of
transcendental public importance. Moreover, the pleadings especially those of respondents readily reveal that public funds have been indirectly
utilized in the Project by means of Smokey Mountain Project Participation Certificates (SMPPCs) bought by some government agencies.

Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the court.

Whether petitioner’s direct recourse to this Court was proper

Respondents are one in asserting that petitioner circumvents the principle of hierarchy of courts in his petition. Judicial hierarchy was made clear in
the case of People v. Cuaresma, thus:

There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and should also serve as a general determinant of
the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the
latter, with the Court of Appeals. A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a policy that is
necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court’s docket.51 x x x

The OSG claims that the jurisdiction over petitions for prohibition and mandamus is concurrent with other lower courts like the Regional Trial
Courts and the Court of Appeals. Respondent NHA argues that the instant petition is misfiled because it does not introduce special and important
reasons or exceptional and compelling circumstances to warrant direct recourse to this Court and that the lower courts are more equipped for
factual issues since this Court is not a trier of facts. Respondents RBI and RHI question the filing of the petition as this Court should not be unduly
burdened with "repetitions, invocation of jurisdiction over constitutional questions it had previously resolved and settled."

In the light of existing jurisprudence, we find paucity of merit in respondents’ postulation.

While direct recourse to this Court is generally frowned upon and discouraged, we have however ruled in Santiago v. Vasquez that such resort to us
may be allowed in certain situations, wherein this Court ruled that petitions for certiorari, prohibition, or mandamus, though cognizable by other
courts, may directly be filed with us if "the redress desired cannot be obtained in the appropriate courts or where exceptional compelling
circumstances justify availment of a remedy within and calling for the exercise of [this Court’s] primary jurisdiction."521avvphi1

The instant petition challenges the constitutionality and legality of the SMDRP involving several hectares of government land and hundreds of
millions of funds of several government agencies. Moreover, serious constitutional challenges are made on the different aspects of the Project
which allegedly affect the right of Filipinos to the distribution of natural resources in the country and the right to information of a citizen—matters
which have been considered to be of extraordinary significance and grave consequence to the public in general. These concerns in the instant
action compel us to turn a blind eye to the judicial structure meant to provide an orderly dispensation of justice and consider the instant petition as
a justified deviation from an established precept.

Core factual matters undisputed

Respondents next challenge the projected review by this Court of the alleged factual issues intertwined in the issues propounded by petitioner.
They listed a copious number of questions seemingly factual in nature which would make this Court a trier of facts. 53

We find the position of respondents bereft of merit.

For one, we already gave due course to the instant petition in our January 18, 2005 Resolution. 54 In said issuance, the parties were required to
make clear and concise statements of established facts upon which our decision will be based.

Secondly, we agree with petitioner that there is no necessity for us to make any factual findings since the facts needed to decide the instant
petition are well established from the admissions of the parties in their pleadings55 and those derived from the documents appended to said
submissions. Indeed, the core facts which are the subject matter of the numerous issues raised in this petition are undisputed.

Now we will tackle the issues that prop up the instant petition.

Since petitioner has cited our decision in PEA as basis for his postulations in a number of issues, we first resolve the query—is PEA applicable to the
case at bar?
A juxtaposition of the facts in the two cases constrains the Court to rule in the negative.

The Court finds that PEA is not a binding precedent to the instant petition because the facts in said case are substantially different from the facts
and circumstances in the case at bar, thus:

(1) The reclamation project in PEA was undertaken through a JVA entered into between PEA and AMARI. The reclamation project in the
instant NHA case was undertaken by the NHA, a national government agency in consultation with PEA and with the approval of two
Philippine Presidents;

(2) In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and reclaim submerged areas without public bidding on April
25, 1995. In the instant NHA case, the NHA and RBI executed a JVA after RBI was declared the winning bidder on August 31, 1992 as the
JVA partner of the NHA in the SMDRP after compliance with the requisite public bidding.

(3) In PEA, there was no law or presidential proclamation classifying the lands to be reclaimed as alienable and disposal lands of public
domain. In this RBI case, MO 415 of former President Aquino and Proclamation No. 39 of then President Ramos, coupled with Special
Patents Nos. 3591, 3592, and 3598, classified the reclaimed lands as alienable and disposable;

(4) In PEA, the Chavez petition was filed before the amended JVA was executed by PEA and AMARI.1avvphi1 In this NHA case, the JVA and
subsequent amendments were already substantially implemented. Subsequently, the Project was terminated through a MOA signed on
August 27, 2003. Almost one year later on August 5, 2004, the Chavez petition was filed;

(5) In PEA, AMARI was considered to be in bad faith as it signed the amended JVA after the Chavez petition was filed with the Court and
after Senate Committee Report No. 560 was issued finding that the subject lands are inalienable lands of public domain. In the instant
petition, RBI and other respondents are considered to have signed the agreements in good faith as the Project was terminated even
before the Chavez petition was filed;

(6) The PEA-AMARI JVA was executed as a result of direct negotiation between the parties and not in accordance with the BOT Law. The
NHA-RBI JVA and subsequent amendments constitute a BOT contract governed by the BOT Law; and

(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a government entity tasked to dispose of public lands
under Executive Order No. (EO) 525.56 In the NHA case, the reclaimed lands were transferred to NHA, a government entity NOT tasked to
dispose of public land and therefore said alienable lands were converted to patrimonial lands upon their transfer to NHA.57

Thus the PEA Decision58 cannot be considered an authority or precedent to the instant case. The principle of stare decisis59 has no application to
the different factual setting of the instant case.

We will now dwell on the substantive issues raised by petitioner. After a perusal of the grounds raised in this petition, we find that most of these
issues are moored on our PEA Decision which, as earlier discussed, has no application to the instant petition. For this reason alone, the petition can
already be rejected. Nevertheless, on the premise of the applicability of said decision to the case at bar, we will proceed to resolve said issues.

First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner

Petitioner contends that neither respondent NHA nor respondent RBI may validly reclaim foreshore and submerged land because they were not
given any power and authority to reclaim lands of the public domain as this power was delegated by law to PEA.

Asserting that existing laws did not empower the NHA and RBI to reclaim lands of public domain, the Public Estates Authority (PEA), petitioner
claims, is "the primary authority for the reclamation of all foreshore and submerged lands of public domain," and relies on PEA where this Court
held:

Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government." The same section also states that "[A]ll reclamation projects shall be approved
by the President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity; x x x." Thus, under EO No. 525, in relation to PD No. 3-A and PD No. 1084, PEA became the primary implementing agency of the
National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the government entity "to
undertake the reclamation of lands and ensure their maximum utilization in promoting public welfare and interests." Since large portions of these
reclaimed lands would obviously be needed for public service, there must be a formal declaration segregating reclaimed lands no longer needed for
public service from those still needed for public service.60

In the Smokey Mountain Project, petitioner clarifies that the reclamation was not done by PEA or through a contract executed by PEA with another
person or entity but by the NHA through an agreement with respondent RBI. Therefore, he concludes that the reclamation is null and void.

Petitioner’s contention has no merit.

EO 525 reads:

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

The aforequoted provision points to three (3) requisites for a legal and valid reclamation project, viz:

(1) approval by the President;

(2) favorable recommendation of PEA; and

(3) undertaken by any of the following:

a. by PEA

b. by any person or entity pursuant to a contract it executed with PEA

c. by the National Government agency or entity authorized under its charter to reclaim lands subject to consultation with PEA

Without doubt, PEA under EO 525 was designated as the agency primarily responsible for integrating, directing, and coordinating all reclamation
projects. Primarily means "mainly, principally, mostly, generally." Thus, not all reclamation projects fall under PEA’s authority of supervision,
integration, and coordination. The very charter of PEA, PD 1084,61does not mention that PEA has the exclusive and sole power and authority to
reclaim lands of public domain. EO 525 even reveals the exception—reclamation projects by a national government agency or entity authorized by
its charter to reclaim land. One example is EO 405 which authorized the Philippine Ports Authority (PPA) to reclaim and develop submerged areas
for port related purposes. Under its charter, PD 857, PPA has the power "to reclaim, excavate, enclose or raise any of the lands" vested in it.

Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525 is primarily responsible for integrating, directing and coordinating
reclamation projects, such authority is NOT exclusive and such power to reclaim may be granted or delegated to another government agency or
entity or may even be undertaken by the National Government itself, PEA being only an agency and a part of the National Government.

Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of SMDRP. After a scrutiny of the facts culled from the records, we find
that the project met all the three (3) requirements, thus:

1. There was ample approval by the President of the Philippines; as a matter of fact, two Philippine Presidents approved the same, namely:
Presidents Aquino and Ramos. President Aquino sanctioned the reclamation of both the SMDRP housing and commercial-industrial sites through
MO 415 (s. 1992) which approved the SMDRP under Sec. 1 and directed NHA "x x x to implement the Smokey Mountain Development Plan and
Reclamation of the Area across R-10 through a private sector joint venture scheme at the least cost to government" under Section 3.

For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which expressly reserved the Smokey Mountain Area and the Reclamation
Area for a housing project and related commercial/industrial development.

Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which authorized the increase of the Reclamation Area from 40 hectares of
foreshore and submerged land of the Manila Bay to 79 hectares. It speaks of the reclamation of 400,000 square meters, more or less, of the
foreshore and submerged lands of Manila Bay adjoining R-10 as an enabling component of the SMDRP.

As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering 211,975 square meters of Smokey Mountain, Special Patent No.
3592 covering 401,485 square meters of reclaimed land, and Special Patent No. 3598 covering another 390,000 square meters of reclaimed land
were issued by the DENR.

Thus, the first requirement of presidential imprimatur on the SMDRP has been satisfied.

2. The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA. President Aquino saw to it that there was
coordination of the project with PEA by designating its general manager as member of the EXECOM tasked to supervise the project
implementation. The assignment was made in Sec. 2 of MO 415 which provides:

Section 2. An Executive Committee is hereby created to oversee the implementation of the Plan, chaired by the NCR-CORD, with the heads of the
following agencies as members: The National Housing Authority, the City of Manila, the Department of Public Works and Highways, the Public
Estates Authority, the Philippine Ports Authority, the Department of Environment and Natural Resources and the Development Bank of the
Philippines. (Emphasis supplied.)

The favorable recommendation by PEA of the JVA and subsequent amendments were incorporated as part of the recommendations of the
EXECOM created under MO 415. While there was no specific recommendation on the SMDRP emanating solely from PEA, we find that the
approbation of the Project and the land reclamation as an essential component by the EXECOM of which PEA is a member, and its submission of
the SMDRP and the agreements on the Project to the President for approval amply met the second requirement of EO 525.

3. The third element was also present—the reclamation was undertaken either by PEA or any person or entity under contract with PEA or by the
National Government agency or entity authorized under its charter to reclaim lands subject to consultation with PEA. It cannot be disputed that the
reclamation phase was not done by PEA or any person or entity under contract with PEA. However, the reclamation was implemented by the NHA,
a national government agency whose authority to reclaim lands under consultation with PEA is derived from its charter—PD 727 and other
pertinent laws—RA 727962 and RA 6957 as amended by RA 7718.

While the authority of NHA to reclaim lands is challenged by petitioner, we find that the NHA had more than enough authority to do so under
existing laws. While PD 757, the charter of NHA, does not explicitly mention "reclamation" in any of the listed powers of the agency, we rule that
the NHA has an implied power to reclaim land as this is vital or incidental to effectively, logically, and successfully implement an urban land reform
and housing program enunciated in Sec. 9 of Article XIII of the 1987 Constitution.

Basic in administrative law is the doctrine that a government agency or office has express and implied powers based on its charter and other
pertinent statutes. Express powers are those powers granted, allocated, and delegated to a government agency or office by express provisions of
law. On the other hand, implied powers are those that can be inferred or are implicit in the wordings of the law 63 or conferred by necessary or fair
implication in the enabling act.64 In Angara v. Electoral Commission, the Court clarified and stressed that when a general grant of power is
conferred or duty enjoined, every particular power necessary for the exercise of the one or the performance of the other is also conferred by
necessary implication.65 It was also explicated that when the statute does not specify the particular method to be followed or used by a
government agency in the exercise of the power vested in it by law, said agency has the authority to adopt any reasonable method to carry out its
functions.66

The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279, MO 415, RA 6957, and PD 3-A,67viz:

1. NHA’s power to reclaim derived from PD 757 provisions:

a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain the goals of NHA:

Section 3. Progress and Objectives. The Authority shall have the following purposes and objectives:

xxxx

b) To undertake housing, development, resettlement or other activities as would enhance the provision of housing to every Filipino;

c) To harness and promote private participation in housing ventures in terms of capital expenditures, land, expertise, financing and other
facilities for the sustained growth of the housing industry. (Emphasis supplied.)

Land reclamation is an integral part of the development of resources for some of the housing requirements of the NHA. Private participation in
housing projects may also take the form of land reclamation.

b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo Foreshore Development Authority (TFDA), has the power to reclaim,
thus:

Section 5. Dissolution of Existing Housing Agencies. The People's Homesite and Housing Corporation (PHHC), the Presidential Assistant on Housing
Resettlement Agency (PAHRA), the Tondo Foreshore Development Authority (TFDA), the Central Institute for the Training and Relocation of Urban
Squatters (CITRUS), the Presidential Committee for Housing and Urban Resettlement (PRECHUR), Sapang Palay Development Committee, Inter-
Agency Task Force to Undertake the Relocation of Families in Barrio Nabacaan, Villanueva, Misamis Oriental and all other existing government
housing and resettlement agencies, task forces and ad-hoc committees, are hereby dissolved. Their powers and functions, balance of
appropriations, records, assets, rights, and choses in action, are transferred to, vested in, and assumed by the Authority. x x x (Emphasis supplied.)

PD 570 dated October 30, 1974 created the TFDA, which defined its objectives, powers, and functions. Sec. 2 provides:

Section 2. Objectives and Purposes. The Authority shall have the following purposes and objectives:

a) To undertake all manner of activity, business or development projects for the establishment of harmonious, comprehensive,
integrated and healthy living community in the Tondo Foreshoreland and its resettlement site;

b) To undertake and promote the physical and socio-economic amelioration of the Tondo Foreshore residents in particular and the nation
in general (Emphasis supplied.)

The powers and functions are contained in Sec. 3, to wit:

a) To develop and implement comprehensive and integrated urban renewal programs for the Tondo Foreshore and Dagat-dagatan lagoon
and/or any other additional/alternative resettlement site and to formulate and enforce general and specific policies for its development
which shall ensure reasonable degree of compliance with environmental standards.

b) To prescribe guidelines and standards for the reservation, conservation and utilization of public lands covering the Tondo Foreshore
land and its resettlement sites;

c) To construct, acquire, own, lease, operate and maintain infrastructure facilities, housing complex, sites and services;

d) To determine, regulate and supervise the establishment and operation of housing, sites, services and commercial and industrial
complexes and any other enterprises to be constructed or established within the Tondo Foreshore and its resettlement sites;

e) To undertake and develop, by itself or through joint ventures with other public or private entities, all or any of the different phases of
development of the Tondo Foreshore land and its resettlement sites;

f) To acquire and own property, property-rights and interests, and encumber or otherwise dispose of the same as it may deem
appropriate (Emphasis supplied.)
From the foregoing provisions, it is readily apparent that the TFDA has the explicit power to develop public lands covering the Tondo foreshore land
and any other additional and alternative resettlement sites under letter b, Sec. 3 of PD 570. Since the additional and/or alternative sites adjacent to
Tondo foreshore land cover foreshore and submerged areas, the reclamation of said areas is necessary in order to convert them into a
comprehensive and integrated resettlement housing project for the slum dwellers and squatters of Tondo. Since the powers of TFDA were
assumed by the NHA, then the NHA has the power to reclaim lands in the Tondo foreshore area which covers the 79-hectare land subject of
Proclamations Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.

c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which embrace the authority to reclaim land, thus:

Sec. 6. Powers and functions of the Authority.—The Authority shall have the following powers and functions to be exercised by the Board in
accordance with its established national human settlements plan prepared by the Human Settlements Commission:

(a) Develop and implement the comprehensive and integrated housing program provided for in Section hereof;

xxxx

(c) Prescribe guidelines and standards for the reservation, conservation and utilization of public lands identified for housing and resettlement;

xxxx

(e) Develop and undertake housing development and/or resettlement projects through joint ventures or other arrangements with public and
private entities;

xxxx

(k) Enter into contracts whenever necessary under such terms and conditions as it may deem proper and reasonable;

(l) Acquire property rights and interests and encumber or otherwise dispose the same as it may deem appropriate;

xxxx

(s) Perform such other acts not inconsistent with this Decree, as may be necessary to effect the policies and objectives herein declared. (Emphasis
supplied.)

The NHA’s authority to reclaim land can be inferred from the aforequoted provisions. It can make use of public lands under letter (c) of Sec. 6
which includes reclaimed land as site for its comprehensive and integrated housing projects under letter (a) which can be undertaken through joint
ventures with private entities under letter (e). Taken together with letter (s) which authorizes NHA to perform such other activities "necessary to
effect the policies and objectives" of PD 757, it is safe to conclude that the NHA’s power to reclaim lands is a power that is implied from the
exercise of its explicit powers under Sec. 6 in order to effectively accomplish its policies and objectives under Sec. 3 of its charter. Thus, the
reclamation of land is an indispensable component for the development and construction of the SMDRP housing facilities.

2. NHA’s implied power to reclaim land is enhanced by RA 7279.

PD 757 identifies NHA’s mandate to "[d]evelop and undertake housing development and/or resettlement projects through joint ventures or other
arrangements with public and private entities."

The power of the NHA to undertake reclamation of land can be inferred from Secs. 12 and 29 of RA 7279, which provide:

Section 12. Disposition of Lands for Socialized Housing.—The National Housing Authority, with respect to lands belonging to the National
Government, and the local government units with respect to other lands within their respective localities, shall coordinate with each other to
formulate and make available various alternative schemes for the disposition of lands to the beneficiaries of the Program. These schemes shall not
be limited to those involving transfer of ownership in fee simple but shall include lease, with option to purchase, usufruct or such other variations
as the local government units or the National Housing Authority may deem most expedient in carrying out the purposes of this Act.

xxxx

Section 29. Resettlement.—With two (2) years from the effectivity of this Act, the local government units, in coordination with the National
Housing Authority, shall implement the relocation and resettlement of persons living in danger areas such as esteros, railroad tracks, garbage
dumps, riverbanks, shorelines, waterways, and in other public places as sidewalks, roads, parks, and playgrounds. The local government unit, in
coordination with the National Housing Authority, shall provide relocation or resettlement sites with basic services and facilities and access to
employment and livelihood opportunities sufficient to meet the basic needs of the affected families. (Emphasis supplied.)

Lands belonging to the National Government include foreshore and submerged lands which can be reclaimed to undertake housing development
and resettlement projects.

3. MO 415 explains the undertaking of the NHA in SMDRP:

WHEREAS, Memorandum Order No. 161-A mandated the National Housing Authority to conduct feasibility studies and develop low-cost housing
projects at the dumpsites of Metro Manila;
WHEREAS, the National Housing Authority has presented a viable Conceptual Plan to convert the Smokey Mountain dumpsite into a habitable
housing project inclusive of the reclamation area across R-10 as enabling component of the Project;

WHEREAS, the said Plan requires the coordinated and synchronized efforts of the City of Manila and other government agencies and
instrumentalities to ensure effective and efficient implementation;

WHEREAS, the government encourages private sector initiative in the implementation of its projects. (Emphasis supplied.)

Proceeding from these "whereas" clauses, it is unequivocal that reclamation of land in the Smokey Mountain area is an essential and vital power of
the NHA to effectively implement its avowed goal of developing low-cost housing units at the Smokey Mountain dumpsites. The interpretation
made by no less than the President of the Philippines as Chief of the Executive Branch, of which the NHA is a part, must necessarily command
respect and much weight and credit.

4. RA 6957 as amended by RA 7718—the BOT Law—serves as an exception to PD 1084 and EO 525.

Based on the provisions of the BOT Law and Implementing Rules and Regulations, it is unequivocal that all government infrastructure agencies like
the NHA can undertake infrastructure or development projects using the contractual arrangements prescribed by the law, and land reclamation is
one of the projects that can be resorted to in the BOT project implementation under the February 10, 1992 Joint Resolution No. 3 of the 8th
Congress.

From the foregoing considerations, we find that the NHA has ample implied authority to undertake reclamation projects.

Even without an implied power to reclaim lands under NHA’s charter, we rule that the authority granted to NHA, a national government agency, by
the President under PD 3-A reinforced by EO 525 is more than sufficient statutory basis for the reclamation of lands under the SMDRP.

PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial law powers on September 23, 1972. It provided that "[t]he
provisions of any law to the contrary notwithstanding, the reclamation of areas, underwater, whether foreshore or inland, shall be limited to the
National Government or any person authorized by it under the proper contract." It repealed, in effect, RA 1899 which previously delegated the
right to reclaim lands to municipalities and chartered cities and revested it to the National Government.68 Under PD 3-A, "national government"
can only mean the Executive Branch headed by the President. It cannot refer to Congress as it was dissolved and abolished at the time of the
issuance of PD 3-A on September 23, 1972. Moreover, the Executive Branch is the only implementing arm in the government with the equipment,
manpower, expertise, and capability by the very nature of its assigned powers and functions to undertake reclamation projects. Thus, under PD 3-
A, the Executive Branch through the President can implement reclamation of lands through any of its departments, agencies, or offices.

Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the PEA, which was granted, among others, the power "to reclaim
land, including foreshore and submerged areas by dredging, filling or other means or to acquire reclaimed lands." The PEA’s power to reclaim is not
however exclusive as can be gleaned from its charter, as the President retained his power under PD 3-A to designate another agency to reclaim
lands.

On February 14, 1979, EO 525 was issued. It granted PEA primary responsibility for integrating, directing, and coordinating reclamation projects for
and on behalf of the National Government although other national government agencies can be designated by the President to reclaim lands in
coordination with the PEA. Despite the issuance of EO 525, PD 3-A remained valid and subsisting. Thus, the National Government through the
President still retained the power and control over all reclamation projects in the country.

The power of the National Government through the President over reclamation of areas, that is, underwater whether foreshore or inland, was
made clear in EO 54369 which took effect on June 24, 2006. Under EO 543, PEA was renamed the Philippine Reclamation Authority (PRA) and was
granted the authority to approve reclamation projects, a power previously reposed in the President under EO 525. EO 543 reads:

Section 1. The power of the President to approve reclamation projects is hereby delegated to the Philippine Reclamation Authority [formerly PEA],
through its governing board, subject to compliance with existing laws and rules and subject to the condition that reclamation contracts to be
executed with any person or entity go through public bidding.

Section 2. Nothing in the Order shall be construed as diminishing the President’s authority to modify, amend or nullify PRA’s action.

Section 3. All executive issuances inconsistent with this Executive Order are hereby repealed or amended accordingly. (Emphasis supplied.)

Sec. 2 of EO 543 strengthened the power of control and supervision of the President over reclamation of lands as s/he can modify, amend, or
nullify the action of PEA (now PRA).

From the foregoing issuances, we conclude that the President’s delegation to NHA, a national government agency, to reclaim lands under the
SMDRP, is legal and valid, firmly anchored on PD 3-A buttressed by EO 525 notwithstanding the absence of any specific grant of power under its
charter, PD 757.

Second Issue: Whether respondents NHA and RBI were given the

power and authority by DENR to reclaim foreshore and submerged

lands

Petitioner Chavez puts forth the view that even if the NHA and RBI were granted the authority to reclaim, they were not authorized to do so by the
DENR.
Again, reliance is made on our ruling in PEA where it was held that the DENR’s authority is necessary in order for the government to validly reclaim
foreshore and submerged lands. In PEA, we expounded in this manner:

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

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

In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake the
physical reclamation of areas under water, whether directly or through private contractors. DENR is also empowered to classify lands of the public
domain into alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public domain.70

Despite our finding that PEA is not a precedent to the case at bar, we find after all that under existing laws, the NHA is still required to procure
DENR’s authorization before a reclamation project in Manila Bay or in any part of the Philippines can be undertaken. The requirement applies to
PEA, NHA, or any other government agency or office granted with such power under the law.

Notwithstanding the need for DENR permission, we nevertheless find petitioner’s position bereft of merit.

The DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project for the following reasons:

1. Sec. 17, Art. VII of the Constitution provides that "the President shall have control of all executive departments, bureaus and offices." The
President is assigned the task of seeing to it that all laws are faithfully executed. "Control," in administrative law, means "the power of an officer to
alter, modify, nullify or set aside what a subordinate officer has done in the performance of his duties and to substitute the judgment of the former
for that of the latter."71

As such, the President can exercise executive power motu proprio and can supplant the act or decision of a subordinate with the President’s own.
The DENR is a department in the executive branch under the President, and it is only an alter ego of the latter. Ordinarily the proposed action and
the staff work are initially done by a department like the DENR and then submitted to the President for approval. However, there is nothing infirm
or unconstitutional if the President decides on the implementation of a certain project or activity and requires said department to implement it.
Such is a presidential prerogative as long as it involves the department or office authorized by law to supervise or execute the Project. Thus, as in
this case, when the President approved and ordered the development of a housing project with the corresponding reclamation work, making DENR
a member of the committee tasked to implement the project, the required authorization from the DENR to reclaim land can be deemed satisfied. It
cannot be disputed that the ultimate power over alienable and disposable public lands is reposed in the President of the Philippines and not the
DENR Secretary. To still require a DENR authorization on the Smokey Mountain when the President has already authorized and ordered the
implementation of the Project would be a derogation of the powers of the President as the head of the executive branch. Otherwise, any
department head can defy or oppose the implementation of a project approved by the head of the executive branch, which is patently illegal and
unconstitutional.

In Chavez v. Romulo, we stated that when a statute imposes a specific duty on the executive department, the President may act directly or order
the said department to undertake an activity, thus:

[A]t the apex of the entire executive officialdom is the President. Section 17, Article VII of the Constitution specifies [her] power as Chief executive
departments, bureaus and offices. [She] shall ensure that the laws be faithfully executed. As Chief Executive, President Arroyo holds the steering
wheel that controls the course of her government. She lays down policies in the execution of her plans and programs. Whatever policy she
chooses, she has her subordinates to implement them. In short, she has the power of control. Whenever a specific function is entrusted by law or
regulation to her subordinate, she may act directly or merely direct the performance of a duty x x x. Such act is well within the prerogative of her
office (emphasis supplied).72

Moreover, the power to order the reclamation of lands of public domain is reposed first in the Philippine President. The Revised Administrative
Code of 1987 grants authority to the President to reserve lands of public domain for settlement for any specific purpose, thus:

Section 14. Power to Reserve Lands of the Public and Private Domain of the Government.—(1) The President shall have the power to reserve for
settlement or public use, and for specific public purposes, any of the lands of the public domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise provided by law or proclamation.
(Emphasis supplied.)

President Aquino reserved the area of the Smokey Mountain dumpsite for settlement and issued MO 415 authorizing the implementation of the
Smokey Mountain Development Project plus the reclamation of the area across R-10. Then President Ramos issued Proclamation No. 39 covering
the 21-hectare dumpsite and the 40-hectare commercial/industrial area, and Proclamation No. 465 and MO 415 increasing the area of foreshore
and submerged lands of Manila Bay to be reclaimed from 40 to 79 hectares. Having supervision and control over the DENR, both Presidents directly
assumed and exercised the power granted by the Revised Administrative Code to the DENR Secretary to authorize the NHA to reclaim said lands.
What can be done indirectly by the DENR can be done directly by the President. It would be absurd if the power of the President cannot be
exercised simply because the head of a department in the executive branch has not acted favorably on a project already approved by the
President. If such arrangement is allowed then the department head will become more powerful than the President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the NCR-CORD to oversee the implementation of the
Project. The EXECOM was the one which recommended approval of the project plan and the joint venture agreements. Clearly, the DENR retained
its power of supervision and control over the laws affected by the Project since it was tasked to "facilitate the titling of the Smokey Mountain and
of the area to be reclaimed," which shows that it had tacitly given its authority to the NHA to undertake the reclamation.

3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and 3592 while then Secretary Victor O. Ramos issued Special Patent No.
3598 that embraced the areas covered by the reclamation. These patents conveyed the lands to be reclaimed to the NHA and granted to said
agency the administration and disposition of said lands for subdivision and disposition to qualified beneficiaries and for development for mix land
use (commercial/industrial) "to provide employment opportunities to on-site families and additional areas for port related activities." Such grant of
authority to administer and dispose of lands of public domain under the SMDRP is of course subject to the powers of the EXECOM of SMDRP, of
which the DENR is a member.

4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its power of supervision and control over the lands of public domain covered
by the Project.

Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified and confirmed the reclamation of the subject lands for
the purposes laid down in Proclamations Nos. 39 and 465.

Third Issue: Whether respondent RBI can acquire reclaimed

foreshore and submerged lands considered as inalienable and

outside the commerce of man

Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore and submerged areas as these are inalienable public lands
beyond the commerce of man based on Art. 1409 of the Civil Code which provides:

Article 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;

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(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.

Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are owned by the State and they cannot be alienated except for
alienable agricultural lands of the public domain. One of the State’s natural resources are lands of public domain which include reclaimed lands.

Petitioner contends that for these reclaimed lands to be alienable, there must be a law or presidential proclamation officially classifying these
reclaimed lands as alienable and disposable and open to disposition or concession. Absent such law or proclamation, the reclaimed lands cannot be
the enabling component or consideration to be paid to RBI as these are beyond the commerce of man.

We are not convinced of petitioner’s postulation.

The reclaimed lands across R-10 were classified alienable and disposable lands of public domain of the State for the following reasons, viz:

First, there were three (3) presidential proclamations classifying the reclaimed lands across R-10 as alienable or disposable hence open to
disposition or concession, to wit:

(1) MO 415 issued by President Aquino, of which Sec. 4 states that "[t]he land covered by the Smokey Mountain Dumpsite is hereby
conveyed to the National Housing Authority as well as the area to be reclaimed across R-10."

The directive to transfer the lands once reclaimed to the NHA implicitly carries with it the declaration that said lands are alienable and
disposable. Otherwise, the NHA cannot effectively use them in its housing and resettlement project.

(2) Proclamation No. 39 issued by then President Ramos by which the reclaimed lands were conveyed to NHA for subdivision and
disposition to qualified beneficiaries and for development into a mixed land use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas for port-related activities. Said directive carries with it the pronouncement that said
lands have been transformed to alienable and disposable lands. Otherwise, there is no legal way to convey it to the beneficiaries.

(3) Proclamation No. 465 likewise issued by President Ramos enlarged the reclaimed area to 79 hectares to be developed and disposed of
in the implementation of the SMDRP. The authority put into the hands of the NHA to dispose of the reclaimed lands tacitly sustains the
conversion to alienable and disposable lands.

Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on Proclamations Nos. 39 and 465 issued by President Ramos,
without doubt, classified the reclaimed areas as alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that the lands to be reclaimed are classified as
alienable and disposable. We find however that such conclusion is derived and implicit from the authority given to the NHA to transfer the
reclaimed lands to qualified beneficiaries.

The query is, when did the declaration take effect? It did so only after the special patents covering the reclaimed areas were issued. It is only on
such date that the reclaimed lands became alienable and disposable lands of the public domain. This is in line with the ruling in PEA where said
issue was clarified and stressed:

PD No. 1085, coupled with President Aquino’s actual issuance of a special patent covering the Freedom Islands, is equivalent to an official
proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085 and President Aquino’s issuance of
a land patent also constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom Islands are thus alienable
or disposable lands of the public domain, open to disposition or concession to qualified parties.73 (Emphasis supplied.)

Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly taken together with Special Patent Nos. 3591, 3592, and 3598 more
than satisfy the requirement in PEA that "[t]here must be a law or presidential proclamation officially classifying these reclaimed lands as alienable
or disposable and open to disposition or concession (emphasis supplied)."74

Apropos the requisite law categorizing reclaimed land as alienable or disposable, we find that RA 6957 as amended by RA 7718 provides ample
authority for the classification of reclaimed land in the SMDRP for the repayment scheme of the BOT project as alienable and disposable lands of
public domain. Sec. 6 of RA 6957 as amended by RA 7718 provides:

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

While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that shall serve as payment to the project proponent
have become alienable and disposable lands and opened for disposition; nonetheless, this conclusion is necessarily implied, for how else can the
land be used as the enabling component for the Project if such classification is not deemed made?

It may be argued that the grant of authority to sell public lands, pursuant to PEA, does not convert alienable lands of public domain into private or
patrimonial lands. We ruled in PEA that "alienable lands of public domain must be transferred to qualified private parties, or to government entities
not tasked to dispose of public lands, before these lands can become private or patrimonial lands (emphasis supplied)." 75 To lands reclaimed by
PEA or through a contract with a private person or entity, such reclaimed lands still remain alienable lands of public domain which can be
transferred only to Filipino citizens but not to a private corporation. This is because PEA under PD 1084 and EO 525 is tasked to hold and dispose of
alienable lands of public domain and it is only when it is transferred to Filipino citizens that it becomes patrimonial property. On the other hand,
the NHA is a government agency not tasked to dispose of public lands under its charter—The Revised Administrative Code of 1987. The NHA is an
"end-user agency" authorized by law to administer and dispose of reclaimed lands. The moment titles over reclaimed lands based on the special
patents are transferred to the NHA by the Register of Deeds, they are automatically converted to patrimonial properties of the State which can be
sold to Filipino citizens and private corporations, 60% of which are owned by Filipinos. The reason is obvious: if the reclaimed land is not converted
to patrimonial land once transferred to NHA, then it would be useless to transfer it to the NHA since it cannot legally transfer or alienate lands of
public domain. More importantly, it cannot attain its avowed purposes and goals since it can only transfer patrimonial lands to qualified
beneficiaries and prospective buyers to raise funds for the SMDRP.

From the foregoing considerations, we find that the 79-hectare reclaimed land has been declared alienable and disposable land of the public
domain; and in the hands of NHA, it has been reclassified as patrimonial property.

Petitioner, however, contends that the reclaimed lands were inexistent prior to the three (3) Presidential Acts (MO 415 and Proclamations Nos. 39
and 465) and hence, the declaration that such areas are alienable and disposable land of the public domain, citing PEA, has no legal basis.

Petitioner’s contention is not well-taken.

Petitioner’s sole reliance on Proclamations Nos. 39 and 465 without taking into consideration the special patents issued by the DENR demonstrates
the inherent weakness of his proposition. As was ruled in PEA cited by petitioner himself, "PD No. 1085, coupled with President Aquino’s actual
issuance of a special patent covering the Freedom Islands is equivalent to an official proclamation classifying the Freedom islands as alienable or
disposable lands of public domain." In a similar vein, the combined and collective effect of Proclamations Nos. 39 and 465 with Special Patents Nos.
3592 and 3598 is tantamount to and can be considered to be an official declaration that the reclaimed lots are alienable or disposable lands of the
public domain.

The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598, which evidence transfer of ownership of reclaimed lands to the NHA,
are official acts of the DENR Secretary in the exercise of his power of supervision and control over alienable and disposable public lands and his
exclusive jurisdiction over the management and disposition of all lands of public domain under the Revised Administrative Code of 1987. Special
Patent No. 3592 speaks of the transfer of Lots 1 and 2, and RI-003901-000012-D with an area of 401,485 square meters based on the survey and
technical description approved by the Bureau of Lands. Lastly, Special Patent No. 3598 was issued in favor of the NHA transferring to said agency a
tract of land described in Plan RL-00-000013 with an area of 390,000 square meters based on the survey and technical descriptions approved by
the Bureau of Lands.

The conduct of the survey, the preparation of the survey plan, the computation of the technical description, and the processing and preparation of
the special patent are matters within the technical area of expertise of administrative agencies like the DENR and the Land Management Bureau
and are generally accorded not only respect but at times even finality.76 Preparation of special patents calls for technical examination and a
specialized review of calculations and specific details which the courts are ill-equipped to undertake; hence, the latter defer to the administrative
agency which is trained and knowledgeable on such matters.77
Subsequently, the special patents in the name of the NHA were submitted to the Register of Deeds of the City of Manila for registration, and
corresponding certificates of titles over the reclaimed lots were issued based on said special patents. The issuance of certificates of titles in NHA’s
name automatically converts the reclaimed lands to patrimonial properties of the NHA. Otherwise, the lots would not be of use to the NHA’s
housing projects or as payment to the BOT contractor as the enabling component of the BOT contract. The laws of the land have to be applied and
interpreted depending on the changing conditions and times. Tempora mutantur et legis mutantur in illis (time changes and laws change with it).
One such law that should be treated differently is the BOT Law (RA 6957) which brought about a novel way of implementing government contracts
by allowing reclaimed land as part or full payment to the contractor of a government project to satisfy the huge financial requirements of the
undertaking. The NHA holds the lands covered by Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP undertaken by authority
of the BOT Law and for disposition in accordance with said special law. The lands become alienable and disposable lands of public domain upon
issuance of the special patents and become patrimonial properties of the Government from the time the titles are issued to the NHA.

As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence that:

It is true that, once a patent is registered and the corresponding certificate of title is issued, the land covered by them ceases to be part of the
public domain and becomes private property, and the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one
year from the date of issuance of such patent.78

The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,79 Heirs of Carlos Alcaraz v. Republic,80 and the more recent case of Doris
Chiongbian-Oliva v. Republic of the Philippines.81 Thus, the 79-hectare reclaimed land became patrimonial property after the issuance of
certificates of titles to the NHA based on Special Patents Nos. 3592 and 3598.

One last point. The ruling in PEA cannot even be applied retroactively to the lots covered by Special Patents Nos. 3592 (40 hectare reclaimed land)
and 3598 (39-hectare reclaimed land). The reclamation of the land under SMDRP was completed in August 1996 while the PEA decision was
rendered on July 9, 2002. In the meantime, subdivided lots forming parts of the reclaimed land were already sold to private corporations for value
and separate titles issued to the buyers. The Project was terminated through a Memorandum of Agreement signed on August 27, 2003. The PEA
decision became final through the November 11, 2003 Resolution. It is a settled precept that decisions of the Supreme Court can only be applied
prospectively as they may prejudice vested rights if applied retroactively.

In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective application of its decisions based on considerations of equity and
fair play, thus:

At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that enunciated in Monge and Tupas cited above.
The petitioners Benzonan and respondent Pe and the DBP are bound by these decisions for pursuant to Article 8 of the Civil Code "judicial decisions
applying or interpreting the laws of the Constitution shall form a part of the legal system of the Philippines." But while our decisions form part of
the law of the land, they are also subject to Article 4 of the Civil Code which provides that "laws shall have no retroactive effect unless the contrary
is provided." This is expressed in the familiar legal maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against
retroactivity is easy to perceive. The retroactive application of a law usually divests rights that have already become vested or impairs the
obligations of contract and hence, is unconstitutional.

The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines. Thus, we emphasized in People
v. Jabinal, 55 SCRA 607 [1974] "x x x when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied
prospectively and should not apply to parties who had relied on the old doctrine and acted on the faith thereof. 82

Fourth Issue: Whether respondent RBI can acquire reclaimed

lands when there was no declaration that said lands are no

longer needed for public use

Petitioner Chavez avers that despite the declaration that the reclaimed areas are alienable lands of the public domain, still, the reclamation is
flawed for there was never any declaration that said lands are no longer needed for public use.

We are not moved by petitioner’s submission.

Even if it is conceded that there was no explicit declaration that the lands are no longer needed for public use or public service, there was however
an implicit executive declaration that the reclaimed areas R-10 are not necessary anymore for public use or public service when President Aquino
through MO 415 conveyed the same to the NHA partly for housing project and related commercial/industrial development intended for disposition
to and enjoyment of certain beneficiaries and not the public in general and partly as enabling component to finance the project.

President Ramos, in issuing Proclamation No. 39, declared, though indirectly, that the reclaimed lands of the Smokey Mountain project are no
longer required for public use or service, thus:

These parcels of land of public domain are hereby placed under the administration and disposition of the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries, as well as its development for mix land use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas for port related activities. (Emphasis supplied.)

While numerical count of the persons to be benefited is not the determinant whether the property is to be devoted to public use, the declaration
in Proclamation No. 39 undeniably identifies only particular individuals as beneficiaries to whom the reclaimed lands can be sold, namely—the
Smokey Mountain dwellers. The rest of the Filipinos are not qualified; hence, said lands are no longer essential for the use of the public in general.

In addition, President Ramos issued on August 31, 1994 Proclamation No. 465 increasing the area to be reclaimed from forty (40) hectares to
seventy-nine (79) hectares, elucidating that said lands are undoubtedly set aside for the beneficiaries of SMDRP and not the public—declaring the
power of NHA to dispose of land to be reclaimed, thus: "The authority to administer, develop, or dispose lands identified and reserved by this
Proclamation and Proclamation No. 39 (s.1992), in accordance with the SMDRP, as enhance, is vested with the NHA, subject to the provisions of
existing laws." (Emphasis supplied.)

MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the non-use of the reclaimed areas for public use or service as the
Project cannot be successfully implemented without the withdrawal of said lands from public use or service. Certainly, the devotion of the
reclaimed land to public use or service conflicts with the intended use of the Smokey Mountain areas for housing and employment of the Smokey
Mountain scavengers and for financing the Project because the latter cannot be accomplished without abandoning the public use of the subject
land. Without doubt, the presidential proclamations on SMDRP together with the issuance of the special patents had effectively removed the
reclaimed lands from public use.

More decisive and not in so many words is the ruling in PEA which we earlier cited, that "PD No. 1085 and President Aquino’s issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer needed for public service." Consequently, we ruled in that case that the
reclaimed lands are "open to disposition or concession to qualified parties." 83

In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the special patents have classified the reclaimed lands as alienable and
disposable and open to disposition or concession as they would be devoted to units for Smokey Mountain beneficiaries. Hence, said lands are no
longer intended for public use or service and shall form part of the patrimonial properties of the State under Art. 422 of the Civil Code.84 As
discussed a priori, the lands were classified as patrimonial properties of the NHA ready for disposition when the titles were registered in its name
by the Register of Deeds.

Moreover, reclaimed lands that are made the enabling components of a BOT infrastructure project are necessarily reclassified as alienable and
disposable lands under the BOT Law; otherwise, absurd and illogical consequences would naturally result. Undoubtedly, the BOT contract will not
be accepted by the BOT contractor since there will be no consideration for its contractual obligations. Since reclaimed land will be conveyed to the
contractor pursuant to the BOT Law, then there is an implied declaration that such land is no longer intended for public use or public service and,
hence, considered patrimonial property of the State.

Fifth Issue: Whether there is a law authorizing sale of

reclaimed lands

Petitioner next claims that RBI cannot acquire the reclaimed lands because there was no law authorizing their sale. He argues that unlike PEA, no
legislative authority was granted to the NHA to sell reclaimed land.

This position is misplaced.

Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view that the NHA is not empowered by any law to sell reclaimed land,
thus:

Section 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person, corporation or association
authorized to purchase or lease public lands for agricultural purposes. The area of the land so leased or sold shall be such as shall, in the judgment
of the Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or lease if requested and shall
in no case exceed one hundred and forty-four hectares: Provided, however, That this limitation shall not apply to grants, donations, transfers,
made to a province, municipality or branch or subdivision of the Government for the purposes deemed by said entities conducive to the public
interest; but the land so granted donated or transferred to a province, municipality, or branch or subdivision of the Government shall not be
alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress; Provided, further, That any
person, corporation, association or partnership disqualified from purchasing public land for agricultural purposes under the provisions of this Act,
may lease land included under this title suitable for industrial or residential purposes, but the lease granted shall only be valid while such land is
used for the purposes referred to. (Emphasis supplied.)

Reliance on said provision is incorrect as the same applies only to "a province, municipality or branch or subdivision of the Government." The NHA
is not a government unit but a government corporation performing governmental and proprietary functions.

In addition, PD 757 is clear that the NHA is empowered by law to transfer properties acquired by it under the law to other parties, thus:

Section 6. Powers and functions of the Authority. The Authority shall have the following powers and functions to be exercised by the Boards in
accordance with the established national human settlements plan prepared by the Human Settlements Commission:

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(k) Enter into contracts whenever necessary under such terms and conditions as it may deem proper and reasonable;

(l) Acquire property rights and interests, and encumber or otherwise dispose the same as it may deem appropriate (Emphasis supplied.)

Letter (l) is emphatic that the NHA can acquire property rights and interests and encumber or otherwise dispose of them as it may deem
appropriate. The transfer of the reclaimed lands by the National Government to the NHA for housing, commercial, and industrial purposes
transformed them into patrimonial lands which are of course owned by the State in its private or proprietary capacity. Perforce, the NHA can sell
the reclaimed lands to any Filipino citizen or qualified corporation.

Sixth Issue: Whether the transfer of reclaimed lands to RBI


was done by public bidding

Petitioner also contends that there was no public bidding but an awarding of ownership of said reclaimed lands to RBI. Public bidding, he says, is
required under Secs. 63 and 67 of CA 141 which read:

Section 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the Director of Lands shall ask the
Secretary of Agriculture and Commerce for authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall give notice
by public advertisement in the same manner as in the case of leases or sales of agricultural public land, that the Government will lease or sell, as
the case may be, the lots or blocks specified in the advertisement, for the purpose stated in the notice and subject to the conditions specified in
this chapter.

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Section 67. The lease or sale shall be made through oral bidding; and adjudication shall be made to the highest bidder. However, where an
applicant has made improvements on the land by virtue of a permit issued to him by competent authority, the sale or lease shall be made by sealed
bidding as prescribed in section twenty-six of this Act, the provisions of which shall be applied whenever applicable. If all or part of the lots remain
unleased or unsold, the Director of Lands shall from time to time announce in the Official Gazette or in any other newspapers of general
circulation, the lease of sale of those lots, if necessary.

He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the reclaimed lands were conveyed to RBI by negotiated contract and not by
public bidding as required by law.

This stand is devoid of merit.

There is no doubt that respondent NHA conducted a public bidding of the right to become its joint venture partner in the Smokey Mountain
Project. Notices or Invitations to Bid were published in the national dailies on January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992. The
bidding proper was done by the Bids and Awards Committee (BAC) on May 18, 1992. On August 31, 1992, the Inter-Agency Techcom made up of
the NHA, PEA, DPWH, PPA, DBP, and DENR opened the bids and evaluated them, resulting in the award of the contract to respondent RBI on
October 7, 1992.

On March 19, 1993, respondents NHA and RBI signed the JVA. On February 23, 1994, said JVA was amended and restated into the ARJVA. On
August 11, 1994, the ARJVA was again amended. On September 7, 1994, the OP approved the ARJVA and the amendments to the ARJVA. From
these factual settings, it cannot be gainsaid that there was full compliance with the laws and regulations governing public biddings involving a right,
concession, or property of the government.

Petitioner concedes that he does not question the public bidding on the right to be a joint venture partner of the NHA, but the absence of bidding
in the sale of alienable and disposable lands of public domain pursuant to CA 141 as amended.

Petitioner’s theory is incorrect.

Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government sale by the Director of Lands of alienable and disposable lands of
public domain. This is not present in the case at bar. The lands reclaimed by and conveyed to the NHA are no longer lands of public domain. These
lands became proprietary lands or patrimonial properties of the State upon transfer of the titles over the reclaimed lands to the NHA and hence
outside the ambit of CA 141. The NHA can therefore legally transfer patrimonial land to RBI or to any other interested qualified buyer without any
bidding conducted by the Director of Lands because the NHA, unlike PEA, is a government agency not tasked to sell lands of public domain. Hence,
it can only hold patrimonial lands and can dispose of such lands by sale without need of public bidding.

Petitioner likewise relies on Sec. 79 of PD 1445 which requires public bidding "when government property has become unserviceable for any cause
or is no longer needed." It appears from the Handbook on Property and Supply Management System, Chapter 6, that reclaimed lands which have
become patrimonial properties of the State, whose titles are conveyed to government agencies like the NHA, which it will use for its projects or
programs, are not within the ambit of Sec. 79. We quote the determining factors in the Disposal of Unserviceable Property, thus:

Determining Factors in the Disposal of Unserviceable Property

 Property, which can no longer be repaired or reconditioned;


 Property whose maintenance costs of repair more than outweigh the benefits and services that will be derived from its continued use;
 Property that has become obsolete or outmoded because of changes in technology;
 Serviceable property that has been rendered unnecessary due to change in the agency’s function or mandate;
 Unused supplies, materials and spare parts that were procured in excess of requirements; and
 Unused supplies and materials that [have] become dangerous to use because of long storage or use of which is determined to be
hazardous.85

Reclaimed lands cannot be considered unserviceable properties. The reclaimed lands in question are very much needed by the NHA for the Smokey
Mountain Project because without it, then the projects will not be successfully implemented. Since the reclaimed lands are not unserviceable
properties and are very much needed by NHA, then Sec. 79 of PD 1445 does not apply.

More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties like reclaimed lands transferred to a government agency like the
NHA which has entered into a BOT contract with a private firm. The reason is obvious. If the patrimonial property will be subject to public bidding
as the only way of disposing of said property, then Sec. 6 of RA 6957 on the repayment scheme is almost impossible or extremely difficult to
implement considering the uncertainty of a winning bid during public auction. Moreover, the repayment scheme of a BOT contract may be in the
form of non-monetary payment like the grant of a portion or percentage of reclaimed land. Even if the BOT partner participates in the public
bidding, there is no assurance that he will win the bid and therefore the payment in kind as agreed to by the parties cannot be performed or the
winning bid prize might be below the estimated valuation of the land. The only way to harmonize Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to
consider Sec. 79 of PD 1445 as inapplicable to BOT contracts involving patrimonial lands. The law does not intend anything impossible (lex non
intendit aliquid impossibile).

Seventh Issue: Whether RBI, being a private corporation,


is barred by the Constitution to acquire lands of public domain

Petitioner maintains that RBI, being a private corporation, is expressly prohibited by the 1987 Constitution from acquiring lands of public domain.

Petitioner’s proposition has no legal mooring for the following reasons:

1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid "a portion as percentage of the reclaimed land" subject
to the constitutional requirement that only Filipino citizens or corporations with at least 60% Filipino equity can acquire the same. It
cannot be denied that RBI is a private corporation, where Filipino citizens own at least 60% of the stocks. Thus, the transfer to RBI is valid
and constitutional.

2. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said proclamations were converted to alienable and
disposable lands of public domain. When the titles to the reclaimed lands were transferred to the NHA, said alienable and disposable
lands of public domain were automatically classified as lands of the private domain or patrimonial properties of the State because the
NHA is an agency NOT tasked to dispose of alienable or disposable lands of public domain. The only way it can transfer the reclaimed land
in conjunction with its projects and to attain its goals is when it is automatically converted to patrimonial properties of the State. Being
patrimonial or private properties of the State, then it has the power to sell the same to any qualified person—under the Constitution,
Filipino citizens as private corporations, 60% of which is owned by Filipino citizens like RBI.

3. The NHA is an end-user entity such that when alienable lands of public domain are transferred to said agency, they are automatically
classified as patrimonial properties. The NHA is similarly situated as BCDA which was granted the authority to dispose of patrimonial
lands of the government under RA 7227. The nature of the property holdings conveyed to BCDA is elucidated and stressed in the May 6,
2003 Resolution in Chavez v. PEA, thus:

BCDA is an entirely different government entity. BCDA is authorized by law to sell specific government lands that have long been declared by
presidential proclamations as military reservations for use by the different services of the armed forces under the Department of National Defense.
BCDA’s mandate is specific and limited in area, while PEA’s mandate is general and national. BCDA holds government lands that have been granted
to end-user government entities––the military services of the armed forces. In contrast, under Executive Order No. 525, PEA holds the reclaimed
public lands, not as an end-user entity, but as the government agency "primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government."

x x x Well-settled is the doctrine that public land granted to an end-user government agency for a specific public use may subsequently be
withdrawn by Congress from public use and declared patrimonial property to be sold to private parties. R.A. No. 7227 creating the BCDA is a law
that declares specific military reservations no longer needed for defense or military purposes and reclassifies such lands as patrimonial property for
sale to private parties.

Government owned lands, as long as they are patrimonial property, can be sold to private parties, whether Filipino citizens or qualified private
corporations. Thus, the so-called Friar Lands acquired by the government under Act No. 1120 are patrimonial property which even private
corporations can acquire by purchase. Likewise, reclaimed alienable lands of the public domain if sold or transferred to a public or municipal
corporation for a monetary consideration become patrimonial property in the hands of the public or municipal corporation. Once converted to
patrimonial property, the land may be sold by the public or municipal corporation to private parties, whether Filipino citizens or qualified private
corporations.86 (Emphasis supplied.)

The foregoing Resolution makes it clear that the SMDRP was a program adopted by the Government under Republic Act No. 6957 (An Act
Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and For Other Purposes), as
amended by RA 7718, which is a special law similar to RA 7227. Moreover, since the implementation was assigned to the NHA, an end-user agency
under PD 757 and RA 7279, the reclaimed lands registered under the NHA are automatically classified as patrimonial lands ready for disposition to
qualified beneficiaries.

The foregoing reasons likewise apply to the contention of petitioner that HCPTI, being a private corporation, is disqualified from being a transferee
of public land. What was transferred to HCPTI is a 10-hectare lot which is already classified as patrimonial property in the hands of the NHA. HCPTI,
being a qualified corporation under the 1987 Constitution, the transfer of the subject lot to it is valid and constitutional.

Eighth Issue: Whether respondents can be compelled to disclose

all information related to the SMDRP

Petitioner asserts his right to information on all documents such as contracts, reports, memoranda, and the like relative to SMDRP.

Petitioner asserts that matters relative to the SMDRP have not been disclosed to the public like the current stage of the Project, the present
financial capacity of RBI, the complete list of investors in the asset pool, the exact amount of investments in the asset pool and other similar
important information regarding the Project.

He prays that respondents be compelled to disclose all information regarding the SMDRP and furnish him with originals or at least certified true
copies of all relevant documents relating to the said project including, but not limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool
Agreement.
This relief must be granted.

The right of the Filipino people to information on matters of public concern is enshrined in the 1987 Constitution, thus:

ARTICLE II

xxxx

SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions
involving public interest.

ARTICLE III

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

In Valmonte v. Belmonte, Jr., this Court explicated this way:

[A]n essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the
people. It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may perceive
and be responsive to the 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.87

In PEA, this Court elucidated the rationale behind the right to information:

These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the government, as well as
provide the people sufficient information to exercise effectively other constitutional rights. These twin provisions are essential to the exercise of
freedom of expression. If the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens say, even if
expressed without any restraint, will be speculative and amount to nothing. These twin provisions are also essential to hold public officials "at all
times x x x accountable to the people," for unless citizens have the proper information, they cannot hold public officials accountable for anything.
Armed with the right information, citizens can participate in public discussions leading to the formulation of government policies and their effective
implementation. An informed citizenry is essential to the existence and proper functioning of any democracy. 88

Sec. 28, Art. II compels the State and its agencies to fully disclose "all of its transactions involving public interest." Thus, the government agencies,
without need of demand from anyone, must bring into public view all the steps and negotiations leading to the consummation of the transaction
and the contents of the perfected contract.89 Such information must pertain to "definite propositions of the government," meaning official
recommendations or final positions reached on the different matters subject of negotiation. The government agency, however, need not disclose
"intra-agency or inter-agency recommendations or communications during the stage when common assertions are still in the process of being
formulated or are in the exploratory stage." The limitation also covers privileged communication like information on military and diplomatic
secrets; information affecting national security; information on investigations of crimes by law enforcement agencies before the prosecution of the
accused; information on foreign relations, intelligence, and other classified information.

It is unfortunate, however, that after almost twenty (20) years from birth of the 1987 Constitution, there is still no enabling law that provides the
mechanics for the compulsory duty of government agencies to disclose information on government transactions. Hopefully, the desired enabling
law will finally see the light of day if and when Congress decides to approve the proposed "Freedom of Access to Information Act." In the
meantime, it would suffice that government agencies post on their bulletin boards the documents incorporating the information on the steps and
negotiations that produced the agreements and the agreements themselves, and if finances permit, to upload said information on their respective
websites for easy access by interested parties. Without any law or regulation governing the right to disclose information, the NHA or any of the
respondents cannot be faulted if they were not able to disclose information relative to the SMDRP to the public in general.

The other aspect of the people’s right to know apart from the duty to disclose is the duty to allow access to information on matters of public
concern under Sec. 7, Art. III of the Constitution. The gateway to information opens to the public the following: (1) official records; (2) documents
and papers pertaining to official acts, transactions, or decisions; and (3) government research data used as a basis for policy development.

Thus, the duty to disclose information should be differentiated from the duty to permit access to information. There is no need to demand from
the government agency disclosure of information as this is mandatory under the Constitution; failing that, legal remedies are available. On the
other hand, the interested party must first request or even demand that he be allowed access to documents and papers in the particular agency. A
request or demand is required; otherwise, the government office or agency will not know of the desire of the interested party to gain access to
such papers and what papers are needed. The duty to disclose covers only transactions involving public interest, while the duty to allow access has
a broader scope of information which embraces not only transactions involving public interest, but any matter contained in official communications
and public documents of the government agency.

We find that although petitioner did not make any demand on the NHA to allow access to information, we treat the petition as a written request or
demand. We order the NHA to allow petitioner access to its official records, documents, and papers relating to official acts, transactions, and
decisions that are relevant to the said JVA and subsequent agreements relative to the SMDRP.

Ninth Issue: Whether the operative fact doctrine applies to the instant petition

Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because it is an equitable doctrine which could not be
used to countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of the various agreements implementing the SMDRP is an operative
fact that can no longer be disturbed or simply ignored, citing Rieta v. People of the Philippines. 90

The argument of the Solicitor General is meritorious.

The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a legislative or executive act, prior to its
being declared as unconstitutional by the courts, is valid and must be complied with, thus:

As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall
govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution." It is
understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot
survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of doubt that
prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as
until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and
may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such
legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified,
its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ
which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the
power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be
no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination [of unconstitutionality], is
an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The
effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and
corporate, and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta v. Hill and the
decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v.
Cuerva and Co.91 (Emphasis supplied.)

This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein we ruled that:

Moreover, we certainly cannot nullify the City Government’s order of suspension, as we have no reason to do so, much less retroactively apply
such nullification to deprive private respondent of a compelling and valid reason for not filing the leave application. For as we have held, a void act
though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions done in reliance thereof. Consequently, the
existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached. It would
indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a formal leave application.92(Emphasis
supplied.)

The principle was further explicated in the case of Rieta v. People of the Philippines, thus:

In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank
to wit:

The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. x x x It is quite clear, however,
that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a
statute, prior to [the determination of its invalidity], is an operative fact and may have consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various
aspects –with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior
determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous
application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and
federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified.

In the May 6, 2003 Resolution in Chavez v. PEA,93 we ruled that De Agbayani94 is not applicable to the case considering that the prevailing law did
not authorize private corporations from owning land. The prevailing law at the time was the 1935 Constitution as no statute dealt with the same
issue.

In the instant case, RA 6957 was the prevailing law at the time that the joint venture agreement was signed. RA 6957, entitled "An Act Authorizing
The Financing, Construction, Operation And Maintenance Of Infrastructure Projects By The Private Sector And For Other Purposes," which was
passed by Congress on July 24, 1989, allows repayment to the private contractor of reclaimed lands.95 Such law was relied upon by respondents,
along with the above-mentioned executive issuances in pushing through with the Project. The existence of such law and issuances is an "operative
fact" to which legal consequences have attached. This Court is constrained to give legal effect to the acts done in consonance with such executive
and legislative acts; to do otherwise would work patent injustice on respondents.

Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain cases, the transfer of land, although illegal or unconstitutional, will
not be invalidated on considerations of equity and social justice. However, in that case, we did not apply the same considering that PEA,
respondent in said case, was not entitled to equity principles there being bad faith on its part, thus:

There are, moreover, special circumstances that disqualify Amari from invoking equity principles. Amari cannot claim good faith because even
before Amari signed the Amended JVA on March 30, 1999, petitioner had already filed the instant case on April 27, 1998 questioning precisely the
qualification of Amari to acquire the Freedom Islands. Even before the filing of this petition, two Senate Committees had already approved on
September 16, 1997 Senate Committee Report No. 560. This Report concluded, after a well-publicized investigation into PEA’s sale of the Freedom
Islands to Amari, that the Freedom Islands are inalienable lands of the public domain. Thus, Amari signed the Amended JVA knowing and assuming
all the attendant risks, including the annulment of the Amended JVA.96

Such indicia of bad faith are not present in the instant case. When the ruling in PEA was rendered by this Court on July 9, 2002, the JVAs were all
executed. Furthermore, when petitioner filed the instant case against respondents on August 5, 2004, the JVAs were already terminated by virtue
of the MOA between the NHA and RBI. The respondents had no reason to think that their agreements were unconstitutional or even questionable,
as in fact, the concurrent acts of the executive department lent validity to the implementation of the Project. The SMDRP agreements have
produced vested rights in favor of the slum dwellers, the buyers of reclaimed land who were issued titles over said land, and the agencies and
investors who made investments in the project or who bought SMPPCs. These properties and rights cannot be disturbed or questioned after the
passage of around ten (10) years from the start of the SMDRP implementation. Evidently, the "operative fact" principle has set in. The titles to the
lands in the hands of the buyers can no longer be invalidated.

The Court’s Dispositions

Based on the issues raised in this petition, we find that the March 19, 1993 JVA between NHA and RBI and the SMDRP embodied in the JVA, the
subsequent amendments to the JVA and all other agreements signed and executed in relation to it, including, but not limited to, the September 26,
1994 Smokey Mountain Asset Pool Agreement and the agreement on Phase I of the Project as well as all other transactions which emanated from
the Project, have been shown to be valid, legal, and constitutional. Phase II has been struck down by the Clean Air Act.

With regard to the prayer for prohibition, enjoining respondents particularly respondent NHA from further implementing and/or enforcing the said
Project and other agreements related to it, and from further deriving and/or enjoying any rights, privileges and interest from the Project, we find
the same prayer meritless.

Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:

Sec. 2. Petition for prohibition.—When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-
judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may
file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to
desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may
require.

It has not been shown that the NHA exercised judicial or quasi-judicial functions in relation to the SMDRP and the agreements relative to it.
Likewise, it has not been shown what ministerial functions the NHA has with regard to the SMDRP.

A ministerial duty is one which is so clear and specific as to leave no room for the exercise of discretion in its performance. It is a duty which an
officer performs in a given state of facts in a prescribed manner in obedience to the mandate of legal authority, without regard to the exercise of
his/her own judgment upon the propriety of the act done.97

Whatever is left to be done in relation to the August 27, 2003 MOA, terminating the JVA and other related agreements, certainly does not involve
ministerial functions of the NHA but instead requires exercise of judgment. In fact, Item No. 4 of the MOA terminating the JVAs provides for
validation of the developer’s (RBI’s) claims arising from the termination of the SMDRP through the various government agencies. 98 Such validation
requires the exercise of discretion.

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

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

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

WHEREFORE, the petition is partially granted.

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

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

No costs.

SO ORDERED.
THIRD DIVISION

G.R. No. 113549 July 5, 1996

REPUBLIC OF THE PHILIPPINES, (Represented by the DIRECTOR OF LANDS), petitioner,


vs.
COURT OF APPEALS and HEIRS OF LUIS RIBAYA, namely, ANDREA RIBAYA BUENVIAJE, LUIS RIBAYA, ANTONIA RIBAYA-CONDE, and JOHN DOE
RIBAYA, all represented by ANDREA RIBAYA BUENVIAJE as Administratrix of the Estate of Luis Ribaya, respondents.

DAVIDE, JR., J.:p

Petitioner seeks the reversal of the Resolution 1 of 24 January 1994 of the Court of Appeals in CA-G.R. CV No. 17351, which set aside its earlier
decision 2 of 9 January 1991. The latter affirmed the decision 3 of 11 November 1987 of the Regional Trial Court (RTC), Branch 7, Legazpi City, in Civil
Case No. 6198 which declared null and void an original certificate of title issued pursuant to a decree and a decision in a land registration case
decided on 18 September 1925.

After the private respondents filed their Comment and the petitioner their Reply, we gave due course to the petition and required the parties to
submit their respective memoranda.

The Court of Appeals' reversal was primarily due to its disagreement with the trial court's findings of fact. Hence, such removes this case from the
general rule that factual findings of the Court of Appeals bind us in a petition for review under Rule 45 of the Rules of Court. 4 We are thus
compelled to review the factual antecedents.

From the decisions of the trial court and the Court of Appeals and the pleadings of the parties, the following were established:

On the basis of the private respondents' exhibits, 5 on 9, 10, 12-16, 23, 24, 26, and 27 July 1920, a parcel of land located in the barrio of
Magragondong, Municipality of Ligao, Province of Albay, was survived for the spouses Luis Ribaya and Agustina Revatoris (hereinafter the spouses
Ribaya) by Telesforo Untalan, a Bureau of Lands surveyor. The parcel of land was found to comprise an area of 25,542,603 square meters. The
survey plan was denominated as Plan II-13961 and allegedly approved by the Acting Director of Lands on 3 January 1922. However, as noted by the
Court of Appeals in its 9 January 1991 1 decision, 6 these exhibits do not at all show the surveyor's signature. Moreover, its per Land Classification
Map No. 871 of the Bureau of Forestry, the above parcel of land was considered part of the public forest and released for disposition only on 31
December 1930. 7

In 1925, the spouses Ribaya applied for registration and confirmation of title of the lot covered by Plan II-13961 before the then Court of First
Instance (CFI) of Albay. The case was docketed as LRC Case No. 52, G.L.R.O. Record No. 26050. Notice of the application and hearing thereof were
published in the 17 March 1925 issue of the Official Gazette, 8 and in its decision of 18 September 1925, 9 the CFI granted the said application.

Sometime later, or on 18-21 November and 23-30 November 1925, a resurvey of the parcel of land covered by Plan II-13961 was conducted at the
instance of the spouses Ribaya. This gave rise to Plan II-13961-Amd., which embraced, inter alia, four different parcels of land with an aggregate
area of only 10,975,022 square meters, instead of the original 25,542,603 square meters. Plan II-13961-Amd. appeared to have been approved by
the Director of Lands on 26 February 1926. 10 The application was not amended to reflect the resurvey and the amended plan was not published.

On 31 July 1926, the corresponding decree of registration was issued, 11 while on 19 August 1926, Original Certificate of Title (OCT) No. 3947
covering the four lots embraced by Plan II-13961-Amd. was issued in the names of the spouses Ribaya. 12

On 11 September 1958, OCT No. 3947 was administratively reconstituted from the owner's duplicate copy thereof and the reconstituted title was
denominated as OCT No. P0-10848 (3947). 13

In 1964, the heirs of Luis Ribaya (herein private respondents) received compensation from the Foreign Claims Settlement Commission of the United
States for damages sustained by the land during the war. 14

In 1968, pursuant to a deed of partition executed by the private respondents herein, the land covered by OCT No. RO-10848 (3947) was subdivided
per Subdivision Plan LRC Psd-96075, approved on 16 December 1968. 15 Then, OCT No. RO-10848 (3947) was cancelled and separate Transfer
Certificates of Title (TCT) were issued to the private respondents. 16

In a letter dated 6 January 1977, sixty-two (62) farmers occupying the land 17 and claiming ownership thereof, requested the Director of Lands to
institute an action to annul OCT No. RO-10848 (3947). 18 Finding merit in the request, herein petitioner filed a verified complaint, dated 17 August
1978, with the CFI (now Regional Trial Court) of Albay, Branch V, for the declaration of nullity of OCT No. 3947, OCT No. RO-10848 (3947), and all
subsequent titles emanating from the original title, viz., TCT Nos. T-31333 to T-31358, inclusive. The case was docketed as Civil Case No. 6198.

The petitioner claimed therein that OCT No. 3947 was obtained through fraud and that the land registration court did not acquire jurisdiction over
the land for lack of republication of the amended plan, neither did the spouses-applicants comply with Section 45 (],) of Act No. 2874. 19 The
petitioner further alleged that at the time the petition for registration was filed, the land covered therein was forest land, and therefore,
inalienable.

On 27 October 1979, the aforementioned 62 farmers filed a complaint-in-intervention and prayed that the land revert to the petitioner and their
titles over the portions respectively occupied by them confirmed.

In its decision of 11 November 1987, 20 the Regional Trial Court (RTC) held for the petitioner as follows:

WHEREFORE, decision is hereby rendered as follows:


1. Declaring Original Certificate of Title No. 3947 and administratively reconstituted Original Certificate of Title No. RO-10848
(3947) as null and void ab initio and without force and effect;

2. Declaring separate Transfer Certificates of Title, to wit: T-31333, T-31334, T-31335, T-31336, T-31337, T-31338, T-31339, T-
31340, T-31341, T-31342, T-31343, T-31344, T-31345, T-31346, T-31347, T-31348, T-31349, T-31350, T-31351, T-31352, T-
31353, T-31354, T-31355, T-31356, T-31357 and T-31358, emanating from OCT No. 3947 and OCT No. RO-10848 (3947), all
issued to the heirs of Luis Ribaya and Agustina Revatoris, as likewise null and void and without force and effect.

3. Ordering [respondents] Heirs of Luis Ribaya and Agustina Revatoris to surrender their copy of OCT No. RO-10848 (3947) as
well as their separate transfer certificates of title to the Register of Deeds of Albay, who (sic) is thereafter directed or ordered
to cancel the same.

4. Ordering the reversion of the land to [petitioner] Republic of the Philippines, as alienable and disposable land of the public
domain.

5. And ordering the dismissal of the counterclaim.

The trial court found that at the time the spouses Ribaya filed their petition for registration, the land was already classified as alienable and
disposable agricultural land; however, the then CFI, as a land registration court, did not acquire jurisdiction over the said lot due to lack of
publication or republication in the Official Gazette of Plan II-13961-Amd., which was the basis of the decree of registration and OCT No. 3947.
Consequently, said OCT No. 3947 and its derivative titles were void. 21 In so finding, it relied on Fewkes vs. Vasquez, 22 where it was held that any
amendment or alteration in the description of the land after its publication and decree of registration was not permissible unless coupled with
republication.

The trial court likewise ruled that there was no evidence that the possession of the spouses Ribaya and their predecessors-in-interests was open,
continuous, and adverse under a bona fide claim of ownership for the required number of years; moreover, they failed to present any tax
declarations. It then concluded that the said spouses may have occupied portions of the land at a later time, but not in the concept of bona
fide owners, for mere casual cultivation and raising of cattle on the land did not constitute "possession" as contemplated by law. 23

The private respondents appealed to the Court of Appeals (CA-G.R. CV No. 17351), which, in its decision 24 of 9 January 1991, affirmed in toto the
appealed decision of the trial court. The appellate court further pointed out another reason why the registration in favor of the applicants was
invalid, thus:

[W]hen [the] spouses [Luis Ribaya and Agustina Revatoris] applied for registration thereof in their names said land was still part
of the public forest. The land was released for public disposition only on December 31, 1930 as shown by the Land Classification
Map No. 871 of the Bureau of Forestry (Exhs. K, K-5). Consequently, OCT No. 3947 as reconstituted by OCT No. RO-10848 is
void ab initio.

It is well-settled that lands of the public domain classified as forest or timber lands, are incapable of registration in the names of
private persons and their inclusion in a title nullifies the title (Director of Lands vs. Reyes, 68 SCRA 177 and cases cited
therein.) 25

In refuting the claim of the private respondents that publication of the amended survey plan was unnecessary in light of the decision of
this Court in Benin vs. Tuazon, 26 the Court of Appeals held that the facts in Benin were different. In Benin, an approved survey plan was
submitted before the property was decreed for registration, while in the present case:

[T]he land was decreed for registration on September 18, 1925 while its survey was performed sometime
in November and December 1925. The amended survey plan (plan II-13961-Amd.) thereof was approved by the Director of
Lands on February 26, 1926. In other words, the survey plan (plan II-13961-Amd.) of the land in the instant case was approved
when the land was already decreed for registration. . . . 27

There was then, the Court of Appeals concluded, a violation of Sections 23 and 26 of Act No. 496. 28

The private respondents seasonably moved for a reconsideration of this decision.

In its resolution 29 of 24 January 1994, the Court of Appeals granted the motion for reconsideration and set aside its decision of 9 January 1991,
reversed that of the trial court of 11 November 1987, and dismissed the complaint and the complaint-in-intervention in Civil Case No. 6198 of
Branch 7 of the RTC of Legazpi City. In overturning its previous decision, the Court of Appeals ruled that OCT No. 3947 "is conclusive upon and
against all persons, including the Government and all its branches (Sec. 38, Act No. 496) as to all matters contained therein (Sec. 47, Act No. 496).
One (1) year after its transcription which is the date of its effectivity (Sec. 42, Act No. 496), said certificate of title became incontrovertible (Sec. 38,
Act No. 496)." 30

It further applied the presumption of regularity in the grant of the land applied for by the spouses Ribaya, and even extended said presumption to
their compliance with all conditions required by law, in particular, their "open, continuous, exclusive and notorious possession and occupation of
the land under a bona fide claim of ownership since July 26, 1894." It thus burdened the Republic "to prove otherwise." 31

It likewise ruled that the failure of the spouses Ribaya to present tax receipts was not fatal, and that although they actually lived in Gas, Albay, such
did not negate the character of their possession for "[p]ossession in the eyes of the law does not mean that a men has to have his feet on every
square meter of ground before he can be said that he is in possession." 32

The Court of Appeals also rejected the application of the Fewkes case and applied, instead, the decision in Benin, where this Court held that
republication could be dispensed with in an amendment in the application or in the survey plan, where such amendment consisted of the exclusion
of a portion covered by the original application and the original survey plan as published. Accordingly, the land registration court retained its
jurisdiction.

Finally, the Court of Appeals withdrew its earlier finding that the land in question still formed part of the public forest at the time of the application
for registration. It asserted, instead, that there was insufficient basis to conclude that a parcel of land only became open to disposition on the basis
of the date of approval of the land classification map, because such approval may have been made later by authority of a prior executive
declaration. 33

Unsatisfied, the petitioner filed the instant petition and asserts that: (1) the indefeasibility of title does not lie against the State in an action for
reversion of land; (2) the spouses-applicants failed to prove possession of the land for the period required by law, and the evidence shows that
their possession was not open, continuous, exclusive, and notorious under a bona fide claim of ownership; (3) the amended survey plan was not
published; (4) the land covered by OCT No. 3947 was then part of the forest land, hence, inalienable; and (5) the accuracy of the land survey was
doubtful. 34

In their Comment, the private respondents allege that the petition merely raises factual matters and argue that OCT No. 3947 is absolutely
incontestable, considering that the land was no longer part of the public forest when it was decreed in favor of their parents. They further contend,
invoking Benin, that the issue of republication is inapplicable since the publication of the original survey plan was already had in compliance with
law. Moreover, possession of the land by their parents, the spouses-applicants, was duly proven, i.e., donations of portions thereof in favor of the
government and the compensation they received from the Foreign Claims Settlement Commission of the United States for damages sustained by
the land during the war sufficiently proved that they were the legitimate owners of the land. Finally, the original survey plan could no longer be
questioned by the petitioner. 35

As the Court sees it, only two relevant issues need be resolved, to wit:

1. Whether the Republic of the Philippines is barred by prescription to bring the action for annulment of OCT No. 3947 and all
its derivative certificates of title; and

2. Whether the land registration court acquired jurisdiction over the four parcels of land subject of the amended survey plan
(Plan II-13961-Amd.) and covered by the decree issued on 31 July 1926 by the General Land Registration Office pursuant to the
decision of the said court of 18 September 1925.

As to the first issue, we find that the Court of Appeals erred in holding that OCT No. 3947 was, to repeat:

[C]onclusive upon and against all persons, including the Government and all its branches (Sec. 38, Act No. 496) as to all matters
contained therein (Sec. 47, Act No. 496). One (1) year after its transcription which is the date of its effectivity (Sec. 42, Act No.
496), said certificate of title became incontrovertible (Sec. 38, Act No. 496). 36

First, the one-year period provided for in Section 38 of Act No. 496 merely refers to a petition for review and is reckoned from the entry
of the decree. In the second place, there are other remedies available to an aggrieved party after the said one-year period, e.g.,
reconveyance, covered by Section 65 of Act No. 496 which, inter alia, provides that "in all cases of registration procured by fraud, the
owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any
innocent holder for value of a certificate of title." 37 Likewise, an action for damages is sanctioned in cases where the property has been
transferred to an innocent purchaser for value, which may be filed within four years from discovery of the fraud. 38 Recourse may also be
had against the Assurance Fund. 39

Finally, prescription never lies against the State for the reversion of property which is part of the public forest or of a forest reservation which was
registered in favor of any party. Then too, public land registered under the Land Registration Act may be recovered by the State at any time.
In Republic vs. Animas, 40 we ruled:

Public land fraudulently included in patents or certificates of title may be recovered or reverted to the state in accordance with
Section 101 of the Public Land Act. Prescription does not lie against the state in such cases for the Statute of Limitations does
not run against the state. The right of reversion or reconveyance to the state is not barred by prescription.

We therefore hold that since the land applied for by the spouses Ribaya was part of the public forest and released only on 31 December
1930, 41 the land registration court acquired no jurisdiction over the land, which was not yet alienable and disposable. Hence, the State's action to
annul the certificates of title issued thereunder and for the reversion of the land is not barred by prescription.

Anent the second issue, we hold that the land registration court in LRC Case No. 52, G.L.R.O. Record No. 26050 never acquired jurisdiction over the
land covered by either the original plan (Plan II-13961) or the amended plan (Plan II-13961-Amd.) for lack of sufficient publication of the first and
total want of publication of the second.

As found by both the trial court in Civil Case No. 6198 and the Court of Appeals, the notice of the hearing of application of the spouses Ribaya for
the registration of the land covered by the original plan was published in the 17 March 1925 issue of the Official Gazette. In short, there was only
one publication thereof. Section 31 of Act No. 496, the governing law then, required two publications. Hence, the decision of 18 September 1925 of
the land registration court was void for want of the required publications. The requirement of dual publication is one of the essential bases of the
jurisdiction of the registration court; 42 it is a jurisdictional requisite. 43 Land registration is a proceeding in rem and jurisdiction in rem cannot be
acquired unless there be constructive seizure of the land through publication and service of notice. 44

Worse, the decision of 18 September 1925 was entirely based on an alleged original survey plan. The fact remains, however, that in November of
that year that original plan was amended (Plan II-13961-Amd.) and the amended plan was not published at all. There is no evidence that the court
amended its decision to conform to the amended plan, neither is there a showing that the parties even attempted publication thereof. However,
the decree that was subsequently issued was based on the amended plan insofar as the four lots were concerned.
A decree of registration is required to recite the description of the land. 45 On the basis of the decree, OCT No. 3947 was issued. It follows then that
the land registration court may have attended its decision to conform to the amended plan for the four lots which ultimately found their way into
the decree issued by the General Land Registration Office, and finally, into OCT No. 3947. Whether it did so or not and the General Land
Registration Office merely adjusted the decree to conform to the amended plan, such aims were fatally flawed due to the absence of publication of
the amended plan. As such, the land registration court acquired no jurisdiction over the land embraced by the amended plan.

The Court of Appeals in its challenged resolution of 24 January 1994 and the private respondents, however, maintain that the publication of the
amended plan was unnecessary under our pronouncements in Benin vs. Tuazon. 46 This case reiterates our rulings in Philippine Manufacturing
Co. vs. Imperial, 47 Juan and Chuongco vs. Ortiz, 48 Bank of the Philippine Islands vs. Acuna, 49 Lichauco vs. Herederos de Corpus, 50 and Director of
Lands vs. Benitez, 51 that only where the original survey plan is amended during the registration proceedings, by the addition of land not previously
included in the original plan, should publication be made in order to confer jurisdiction on the court to order the registration of the area added
after the publication of the original plan. Conversely, if the amendment does not involve an addition, but on the contrary, a reduction of the
original area that was published, no new publication is required.

Reliance on Benin and its predecessors is misplaced. In the first place, the amendment of the original survey plan for the land applied for by the
spouses Ribaya was made after the land registration court rendered its decision. It follows then that a re-opening of the case was indispensable;
however, no such re-opening appears to have been done therein. Second, as earlier shown, the land registration court acquired no jurisdiction over
the land covered by the original plan because of insufficient publication in the Official Gazette. Third, it has not been sufficiently shown that the
four parcels of land covered by OCT No. 3947, which are based on the amended plan, are but a small part of the same land covered by the original
survey plan. This conclusion is thoroughly discussed below.

In the 24 January 1994 resolution of the Court of Appeals, it found the original areas covered by Plan II-13961 to be 25,542,603 square meters and
the four parcels of land embraced in the amended plan, Plan II-13961-Amd., to be in the aggregate of 10,975,022 square meters. Thus:

In the case at bar, in 1925, the spouses Ribaya sought for a judicial confirmation of imperfect or incomplete title of the land
described as follows:

Parcel of Land (plan II-13961) containing an area of 25,542,603 square meters, with the buildings and
improvements thereon, situated in the Barrio Magragondong, Municipality of Ligao, Province of Albay, P.I. .
. . (Emphasis supplied).

Said 25,542,603 square meter land was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 by Telesforo Untalan, a surveyor
of the Bureau of Lands which survey was approved by the Acting Director of Lands on January 3, 1922. (Exh. 6).

The notice of application and hearing of the land as aforedescribed, was published in the March 17, 1925 issue of the Official
Gazette (Exhs. J and J-1).

The land registration court issued a decision in favor of the spouses Ribaya on September 18, 1925 but for a smaller parcel of
land than the 25,542,603 square meters are applied for. On November 23 and 30, 1925, said smaller parcel of land was
surveyed by Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands on February 26, 1926 as Plan II-
13961-Amd. (Exh. H and series).

Plan II-13961-Amd. embraced 4 parcels of land in the aggregate area of 10,975,022 square meters separately described as
follows:

1. A parcel of land (Lot No. 1 Plan II-13961-Amd.), containing an area of 3,318,454 square meters, more or
less;

2. A parcel of land (Lot No. 2 Plan II-13961-Amd.), containing an area of 1,575,195 square meters, more or
less;

3. A parcel of land (Lot No. 3 Plan II-13961-Amd.), containing an area of 4,844,205 square meters, more or
less;

4. A parcel of land (Lot No. 4 Plan II-13961-Amd.), containing an area of 1,237,368 square meters, more or
less. 52

This was also its finding in its earlier decision of 9 January 1991. 53

In their Comment of 30 May 1994, the private respondents do not, for obvious reasons, dispute such finding and so they not only quoted it
therein, 54 they also explicitly assert that:

The undisputed facts are that the original plan of the land applied for which was published in the Official Gazette contained an
area of 25,542,603 square meters. The land actually embraced in the decree of registration contained only 10,975,022 square
meters. 55 (emphasis supplied).

In hectares, the 25,542,603 square meters means Two Thousand Five Hundred and Fifty Four Hectares, two ares, and six hundred and
three centares (2,554 has., 2 ares, and 603 centares); and the 10,975,022 square meters means one thousand and ninety seven hectares,
five ares, and twenty-two centares (1,097 has., 5 ares, and 22 centares).
However, the trial court is somewhat confused as to the area of the land covered by Plan II-13961, as well as that covered by the
amended plan (Plan II-13961-Amd.). Thus:

[A]nd on March 7, 1978 Land Investigator Selecio San Felipe wrote the Director of Lands that the report of the ocular inspection
and investigation conducted on May 14, 15 and 16, 1977 was true and correct, . . . that Plan II-13961-Amd., Sheet no. 1,
surveyed for Luis Ribaya, with an area of 489.3649 hectares, located at Magragondong, Ligao, Albay, was surveyed on
November 18-21, December 8-9, 1925 by Private Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands
on February 26, 1926 (Exhibits G, G-1 and G-2 for plaintiff and Exhibits GG, GG-1 and GG-2 for Intervenors); that Plan II-13961-
Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area of 608.1373 hectares, located at Magragondong, Ligao, Albay, was
surveyed on November 23-30, 1925 by Private Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands
on February 26, 1926 (Exhibits H, H-1 and H-2 for plaintiff and Exhibits HH, HH-1 and HH-2 for intervenors); . . . that Original
Certificate of Title No. RO-10848 (3947) covers 4 parcels of land, to wit: Lot No. 1, plan II-13961-Amd.), containing an area
of 3,318.454 square meters more or less, Lot No. 2, plan II-13961-Amd.), containing an area of 1,575.195 square meters more or
less, Lot No. 3, plan II-13961-Amd.), containing an area of 4,844.005 square meters more or less, and Lot No. 4, plan II-13961-
Amd.), containing an area of 1,237.368 square meters more or less, with a total of 10,975.022 square meters more or less; . . .
that plan II-13961 of property as surveyed for Luis Ribaya, situated in the barrio of Magragondong, Municipality of Ligao,
province of Albay, containing an area of 25,542.603 square meters, was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 in
accordance with Section 45 of Act 2874 by Telesforo Untalan, a surveyor of the Bureau of Lands, and the said plan was
approved by the Acting Director of Lands on January 3, 1922 (Exhibits 6 and 6-A). . . . 56 (emphasis supplied)

Note that instead of a comma (,) before the last three digits in the areas of the four lots covered by the amended plan, as well as the
areas embraced in the original plan, the trial court placed a period (.). The change from a comma to aperiod is of vital significance. For,
translated into hectares, the 25,542.603 square meters would be only Two (2) hectares, five (5) ares, and five hundred and forty-two (542)
centares; and the aggregate of 10,975.022 square metersfor the four lots embraced in Plan II-13961-Amd. would be one (1) hectare and
nine hundred seventy-five (975) centares.

Indeed, the disagreement between the Court of Appeals and the trial court as to the land area of the original survey plan (Plan II-13961), i.e.,
whether it was 25,542,603 square meters, (twenty-five million, five hundred and forty-two thousand and six hundred three square meters) as found
by the former, or 25,542.603 square meters (twenty-five thousand, five hundred forty-two point six hundred and three square meters) as found by
the latter, only shows the unreliability of the original plan sought to be established through Exhibits "6" and "6-A." The Court of Appeals itself so
found it to be in its decision of 9 January 1991 because these exhibits did not show that the survey plan was signed by the surveyor. Thus:

Although the trial court said so (decision, p. 4) its basis, which is (original) plan II-13961 (Exhs. 6, 6-A), did not indubitably
establish the same. In the first place, said original plan (plan II-13961) does not bear the signature of the surveyor thereof,
thereof casting doubt on its genuiness and due execution. . . . 57 (emphasis supplied).

Such doubt gains strength if we consider that if indeed the area embraced therein was that found by the Court of
Appeals, i.e., 25,542,603 square meters - with a comma before the last three digits - it would have been physically impossible to finish the
survey thereof in only eleven days (9, 10, 12-16, 23, 24, 26, and 27 July 1920). Plainly, the present-day sophisticated survey instruments
were not then available. Furthermore, the trial court indicated in its findings of fact that in addition to the four lots covered by OCT No.
3947, there were other large tracts covered by the amended survey plan (Plan II-13961-Amd.), viz.:

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

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

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

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

Costs against the private respondents.

SO ORDERED.
THIRD DIVISION

G.R. No. 173289 February 17, 2010

ELAND PHILIPPINES, INC., Petitioner,


vs.
AZUCENA GARCIA, ELINO FAJARDO, AND HEIR OF TIBURCIO MALABANAN NAMED TERESA MALABANAN, Respondents.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse and set aside the decision1 dated February 28,
2006 of the Court of Appeals (CA) in CA-G.R. CV No. 67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the
Resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, Regional Trial Court (RTC) of Tagaytay City.

The facts of the case, as shown in the records, are the following:

Respondents Azucena Garcia, Elino Fajardo, and Teresa Malabanan, the heir of Tiburcio Malabanan, filed a Complaint 2 dated March 2, 1998 for
Quieting of Title with Writ of Preliminary Injunction with the RTC, Branch XVIII, Tagaytay City against petitioner Eland Philippines, Inc. Respondents
claimed that they are the owners, in fee simple title, of a parcel of land identified as Lot 9250 Cad-355, Tagaytay Cadastre, Plan Ap-04-008367,
situated in Barangay Iruhin, Tagaytay City, containing an area of Two Hundred Forty-Four Thousand One Hundred Twelve (244,112) square meters,
by occupation and possession under the provisions of Sec. 48 (b)3 of the Public Land Law or Commonwealth Act No. 141, as amended.

For having been in continuous, public, and adverse possession as owners of the said lot for at least thirty years, respondents stated that they were
not aware of any person or entity who had a legal or equitable interest or claim on the same lot until the time they were requesting that the lot be
declared for tax purposes. They found out that the lot was the subject of a land registration proceeding that had already been decided by the same
court4 where their complaint was filed. They also found out that Decree No. N-217313, LRC Record No. N-62686, was already issued on August 20,
1997 to the petitioner pursuant to the Decision dated June 7, 1994 of the same court. They averred that they were not notified of the said land
registration case; thus, they claimed the presence of misrepresentation amounting to actual or extrinsic fraud. Thus, they argued that they were
also entitled to a writ of preliminary injunction in order to restrain or enjoin petitioner, its privies, agents, representatives, and all other persons
acting on its behalf, to refrain from committing acts of dispossession on the subject lot.

Summons, together with a copy of the complaint, were served on the petitioner on April 7, 1998. On April 29, 1998, petitioner filed an Entry of
Appearance with Motion for Extension of Time,5 which the trial court granted6 for a period of ten (10) days within which to file a responsive
pleading. Petitioner filed a Second Motion for Extension of Time to File Answer7 dated April 29, 1998, which the trial court likewise granted.8

Thereafter, petitioner filed a Motion to Dismiss9 dated May 9, 1998, stating that the pleading asserting the claim of respondents stated no cause of
action, and that the latter were not entitled to the issuance of a writ of preliminary injunction, setting the same for hearing on May 21, 1998. On
the date of the hearing, the trial court issued an Order,10which granted the respondents ten (10) days from that day to file a comment, and set the
date of the hearing on July 23, 1998. Respondents filed a Motion to Admit Comment/Opposition to Defendant Eland, 11 together with the
corresponding Comment/Opposition12 dated June 8, 1998.

On the scheduled hearing of September 23, 1998, the trial court issued an Order,13 considering the Motion to Dismiss submitted for resolution due
to the non-appearance of the parties and their respective counsels. The said motion was eventually denied by the trial court in an Order 14 dated
September 25, 1998, ruling that the allegations in the complaint established a cause of action and enjoined petitioner Eland to file its answer to the
complaint within ten (10) days from receipt of the same. Petitioner then filed two Motions for Extension to File an Answer.15

Petitioner, on November 9, 1998, filed a Motion for Reconsideration16 of the trial court's Order dated September 25, 1998, denying the former's
Motion to Dismiss. Again, petitioner filed a Motion for Final Extension of Time to File Answer17 dated November 6, 1998. Respondents filed their
Comment/Opposition to Motion for Reconsideration dated November 24, 1998. Subsequently, the trial court denied petitioner's motion for
reconsideration in an Order18dated January 11, 1999.

Meanwhile, respondents filed a Motion to Declare Defendant Eland in Default 19 dated November 17, 1998. On December 4, 1998 Petitioner Eland
filed its Comment (on Plaintiff's Motion to Declare Defendant Eland in Default)20dated December 2, 1998, while respondents filed a Reply to
Comment (on Plaintiff's Motion to Declare Defendant Eland in Default)21 dated December 29, 1998. Thereafter, the trial court issued an
Order22 dated January 11, 1999 declaring the petitioner in default and allowed the respondents to present evidence ex parte. Petitioner filed a
Motion for Reconsideration (of the Order dated 11 January 1999)23 dated February 5, 1999 on the trial court's denial of its motion to dismiss and in
declaring it in default. The trial court in an Order24 dated March 18, 1999, denied the former and granted the latter. In the same Order, the trial
court admitted petitioner's Answer Ad Cautelam.

Earlier, petitioner filed its Answer Ad Cautelam (With Compulsory Counterclaim)25 dated November 12, 1998. Respondents countered by filing a
Motion to Expunge Eland's Answer from the Records26 dated December 2, 1998. Petitioner filed its Opposition (to Plaintiff's Motion to Expunge
Eland's Answer from the Records)27 dated December 21, 1998, as well as a Comment (on Plaintiff's Motion to Expunge Eland's Answer from the
Records)28 dated January 26, 1999.

Consequently, respondents filed a Motion to Set Presentation of Evidence Ex Parte29 dated January 18, 1999, which was granted in an
Order30 dated January 22, 1999.

On January 28, 1999, respondents presented their evidence before the Clerk of Court of the trial court which ended on February 3, 1999; and, on
February 10, 1999, respondents filed their Formal Offer of Evidence.31 However, petitioner filed an Urgent Motion to Suspend Plaintiff's Ex
Parte Presentation of Evidence32 dated February 8, 1999. In that regard, the trial court issued an Order33 dated February 11, 1999 directing the
Clerk of Court to suspend the proceedings.

On May 14, 1999, respondents filed a Motion for Clarification34 as to whether or not the evidence presented ex partewas nullified by the admission
of petitioner's Answer Ad Cautelam. Petitioner filed its Comment35 dated May 13, 1999 on the said motion for clarification.

A pre-trial conference was scheduled on May 27, 1999, wherein the parties submitted their pre-trial briefs.36 However, petitioner filed a Motion to
Suspend Proceedings37 dated May 24, 1999 on the ground that the same petitioner had filed a petition for certiorari with the CA, asking for the
nullification of the Order dated March 18, 1999 of the trial court and for the affirmation of its earlier Order denying petitioner's Motion to Dismiss.
The petition for certiorari was subsequently denied; and a copy of the Resolution38 dated June 14, 1999 was received by the trial court. Hence, in
an Order39 dated July 7, 1999, the trial court ruled that the reception of evidence already presented by the respondents before the Clerk of Court
remained as part of the records of the case, and that the petitioner had the right to cross-examine the witness and to comment on the
documentary exhibits already presented. Consequently, petitioner filed a Motion for Reconsideration40 dated July 19, 1999, but it was denied by
the trial court in an Omnibus Order41 dated September 14, 1999.

Eventually, respondents filed a Motion for Summary Judgment42 dated August 5, 1999, while petitioner filed its Opposition43 to the Motion dated
August 31, 1999. In its Resolution44 dated November 3, 1999, the trial court found favor on the respondents. The dispositive portion of the
Resolution reads:

WHEREFORE, premises considered, the motion for summary judgment is hereby GRANTED and it is hereby adjudged that:

1. Plaintiffs are the absolute owners and rightful possessors of Lot 9250, CAD-355, Tagaytay Cadastre, subject to the rights of occupancy
of the farm workers on the one-third area thereof;

2. The Judgment dated June 7, 1994 in Land Registration Case No. TG-423 is set aside and the Decree No. N-217313, LRC Record No. N-
62686 dated August 20, 1997 is null and void;

3. The Original Transfer Certificate of Title is ordered to be canceled, as well as tax declaration covering Lot 9250, Cad-355.

SO ORDERED.

Petitioner appealed the Resolution of the trial court with the CA, which dismissed it in a Decision dated February 28, 2006, which reads:

WHEREFORE, for lack of merit, the appeal is DISMISSED. The assailed Resolution dated November 3, 1999, of the RTC, Branch 18, Tagaytay City, in
Civil Case No. TG-1784, is AFFIRMED. No pronouncement as to cost.

SO ORDERED.

Hence, the present petition.

The grounds relied upon by the petitioner are the following:

5.1 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT RULED THAT RESPONDENTS' MOTION FOR SUMMARY JUDGMENT DATED AUGUST 05, 1999 DID NOT
VIOLATE THE TEN (10)-DAY NOTICE RULE UNDER SECTION 3, RULE 35 OF THE 1997 RULES OF CIVIL PROCEDURE.

5.2 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT RULED THAT A MOTION FOR SUMMARY JUDGMENT IS PROPER IN AN ACTION FOR QUIETING OF TITLE.

5.3 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT RULED THAT THERE ARE NO GENUINE FACTUAL AND TRIABLE ISSUES IN CIVIL CASE NO. TG-1784.

5.4 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT UPHELD THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO, BASED ON TESTIMONIES OF
RESPONDENTS' WITNESSES TAKEN WITHOUT GRANTING HEREIN PETITIONER THE RIGHT TO CROSS-EXAMINE AND UPON DOCUMENTARY
EXHIBITS PRESENTED BUT NOT ADMITTED AS EVIDENCE.

5.5 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT UPHELD THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO BASED ON FALSIFIED
"EVIDENCE."

5.6 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT FAILED TO RULE THAT THE COURT A QUO PATENTLY DEPRIVED PETITIONER OF ITS RIGHT TO DUE PROCESS
IN RENDERING ITS SUMMARY JUDGMENT.

5.7 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT HELD THAT THE COURT A QUO HAS JURISDICTION TO CANCEL PETITIONER'S ORIGINAL CERTIFICATE OF
TITLE (OCT) NO. 0-660 IN AN ACTION TO QUIET TITLE.
According to the petitioner, a motion for summary judgment must be served at least ten (10) days before the date set for hearing thereof, and that
a hearing must be held to hear the parties on the propriety of a summary judgment, per Sec. 3 of Rule 35 of the Revised Rules of Court, which was
not observed because the petitioner received a copy of the respondents' motion for summary judgment only on August 20, 1999, or the very same
day that the motion was set for hearing. Petitioner further claims that the trial court never conducted any hearing on the motion for summary
judgment.

Petitioner also argued that a summary judgment is only available to a claimant seeking to recover upon a claim, counterclaim or cross-claim or to
obtain a declaratory relief, and does not include cases for quieting of title. Furthermore, petitioner also averred that a summary judgment has no
place in a case where genuine factual and triable issues exist, like in the present case. It added that the genuine and triable issues were all raised in
its Answer Ad Cautelam.

Another ground relied upon by petitioner is its failure to cross-examine the witnesses for the respondents without fault on its part. It also stated
that the trial court did not issue any order admitting in evidence the documentary exhibits presented by the respondents. Hence, according to the
petitioner, the trial court gravely erred in relying upon the testimonies of the witnesses for the respondents, without having the latter cross-
examined; and upon the documentary exhibits presented but not admitted as evidence.

Petitioner further claimed that the trial court based its Resolution dated November 3, 1999 on falsified evidence.

Lastly, petitioner raised the issue that by rendering summary judgment, the trial court deprived the former of its right to due process.

Respondents, in their Comment45 dated October 16, 2006, countered the first issue raised by the petitioner, stating that their filing of the motion
for summary judgment fourteen (14) days before the requested hearing of the same motion was in compliance with Sec. 3, Rule 35 of the Rules of
Court.

As to the second and third issues, respondents argued that petitioner had a constricted perception of the coverage of the Rules of Summary
Judgment, and that the latter's citation of cases decided by this Court showed the diverse causes of action that could be the subject matters of
summary judgment. Respondents also posited that petitioner's statements in its Answer Ad Cautelam, although denominated as Specific Denial,
were really general denials that did not comply with the provisions of Section 10, Rule 8 of the Rules of Court.

Anent the fourth and fifth issues, respondents claimed that despite the opportunity, or the right allowed in the Order dated July 17, 1999 of the
trial court, for the petitioner to cross-examine respondents' witnesses and to comment on the documentary evidence presented ex parte after the
default order against the same petitioner, the latter evasively moved to set aside respondents' evidence in order to suspend further proceedings
that were intended to abort the pre-trial conference. They added that petitioner neglected to avail itself of, or to comply with, the prescription of
the rules found in Rule 35 of the Rules of Court by opting not to avail itself of the hearing of its opposition to the summary judgment after receiving
the Order dated August 20, 1999; by failing to serve opposing affidavit, deposition or admission in the records; and by not objecting to the decretal
portion of the said Order dated August 20, 1999, which stated that the motion for summary judgment has been submitted for resolution without
further argument. With regard to the contention of the petitioner that the trial court wrongly appreciated falsified evidence, respondents asserted
that petitioner's counsel failed to study carefully the records of the proceedings for the presentation of the evidence ex parte to be able to know
that it was not only a single-day proceeding, and that more than one witness had been presented. They further averred that the trial court did not
only rely on the photographs of the houses of the occupants of the property in question.

Finally, as to the sixth and seventh issues, respondents asseverated that their complaint alleged joint causes of action for quieting of title under Art.
476 of the New Civil Code and for the review of the decree of registration pursuant to Sec. 32 of the Property Registration Decree or P.D. No. 1529,
because they are complimentary with each other.

The petition is impressed with merit.

The basic contention that must be resolved by this Court is the propriety of the summary judgment in this particular case of quieting of title.

Rule 35 of the 1997 Rules of Civil Procedure provides:

SEC. 1. Summary judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief
may, at any time after the pleading in answer thereto has been served, move with supporting affidavits for a summary judgment in his favor upon
all or any part thereof

SEC. 3. Motion and proceedings thereon. - The motion shall be served at least ten (10) days before the time specified for the hearing. The adverse
party prior to the day of hearing may serve opposing affidavits. After the hearing, the judgment sought shall be rendered forthwith if the pleading,
depositions, and admissions on file together with the affidavits, show that, except as to the amount of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law.46

In the present case, it was the respondents who moved for a summary judgment.

Petitioner contended that the ten-day notice rule was violated, because the copy of the motion for summary judgment was served only on August
20, 1999 or on the same day it was set for hearing. It also added that even if the petitioner received a copy of the motion only on August 20, 1999,
there was no hearing conducted on that date because the trial court issued an order giving petitioner 10 days within which to file its comment or
opposition.

The above specific contention, however, is misguided. The CA was correct in its observation that there was substantial compliance with due
process. The CA ruled, as the records show, that the ten-day notice rule was substantially complied with because when the respondents filed the
motion for summary judgment on August 9, 1999, they furnished petitioner with a copy thereof on the same day as shown in the registry receipt
and that the motion was set for hearing on August 20, 1999, or 10 days from the date of the filing thereof.
Due process, a constitutional precept, does not, therefore, always and in all situations a trial-type proceeding. The essence of due process is found
in the reasonable opportunity to be heard and submit one's evidence in support of his defense. What the law prohibits is not merely the absence of
previous notice, but the absence thereof and the lack of opportunity to be heard.47

Petitioner further argues that summary judgment is not proper in an action for quieting of title. This particular argument, however, is misplaced.
This Court has already ruled that any action can be the subject of a summary judgment with the sole exception of actions for annulment of
marriage or declaration of its nullity or for legal separation.48

Proceeding to the main issue, this Court finds that the grant of summary judgment was not proper. A summary judgment is permitted only if there
is no genuine issue as to any material fact and a moving party is entitled to a judgment as a matter of law. A summary judgment is proper if, while
the pleadings on their face appear to raise issues, the affidavits, depositions, and admissions presented by the moving party show that such issues
are not genuine.49

It must be remembered that the non-existence of a genuine issue is the determining factor in granting a motion for summary judgment, and
the movant has the burden of proving such nonexistence. The trial court found no genuine issue as to any material fact that would necessitate
conducting a full-blown trial. However, a careful study of the case shows otherwise.

In their motion for summary judgment, the respondents failed to clearly demonstrate the absence of any genuine issue of fact. They merely
reiterated their averments in the complaint for quieting of title and opposed some issues raised by the petitioner in its Answer Ad Cautelam, to wit:

Nonetheless, going by the records of the admitted and uncontroverted facts and facts established there is no more litigious or genuine issue of
basic fact to be the subject of further trial on the merits.

The first defense as to the identity of the subject property, the issue has already become nil because of not only the lack of seriousness in the
allegations but also because the identity of the subject parcel of land Lot 9250 was proven by the approved plan Ap-04-008367 that was already
presented and offered in evidence as Exhibit "B" for the plaintiffs.

The second defense that plaintiffs' claim of the property is barred by prior judgment rule is unavailing considering that the vital documentary
evidence they presented in Land Registration Case No. TG-423 before this Honorable Court the markings and descriptions of such documents are
stated in the Judgment quoted as follows:

(1) Tax Declaration No. 015224-A (Exhibit "Q"; x x x.

(2) Tax Declaration No. 05019-B (Exhibit "R"; x x x.

(3) Tax Declaration No. 01926-B (Exhibit "S"; x x x.

(4) Tax Declaration No. GR-007-0007 (Exhibit "T" x x x.

are the very documentary evidence adopted and relied upon by the plaintiffs in seeking the review and nullity of the Decree No. 217313 issued on
August 20, 1997 under LRC Record No. N-62686 pursuant to the Judgment dated June 7, 1994 rendered by this Honorable Court penned by the
acting presiding Judge Eleuterio F. Guerrero in said Land Registration Case No. TG-423.

On the other hand, as to the gravamen of the claims in the complaint, the plaintiffs have presented clear and convincing evidence as the well-nigh
or almost incontrovertible evidence of a registerable title to the subject land in the proceedings conducted on the reception of evidence ex-parte
for the plaintiffs establishing in detail the specifications of continuous, open, exclusive possession as aspects of acquisitive prescription as
confirmed in the affidavit herein attached as Annex "A";

In ruling that there was indeed no genuine issue involved, the trial court merely stated that:

This Court, going by the records, observed keenly that plaintiffs’ cause of action for quieting of title on the disputed parcel of land is based on the
alleged fraud in the substitution of their landholdings of Lot 9250, Cad 355, Tagaytay Cadastre containing only an area of 244,112 square meters
with Lot 9121, Cad 335, Tagaytay Cadastre, containing only an area of 19,356 square meters. While defendant Eland in its answer practically and
mainly interposed the defenses of: (a) the parcel of land being claimed by the plaintiffs is not the parcel of land subject matter of Land Registration
Case No. TG-423; (b) the claim of the plaintiffs is barred by prior judgment of this Court in said Land Registration Case; and (c) plaintiffs' complaint
is barred by the Statute of Limitation since Original Certificate of Title No. 0-660 has become incontrovertible.

Cross-reference of the above-cited Land Registration Case No. TG-423 that was decided previously by this Court with the case at bench was
imperatively made by this Court. Being minded that the Court has and can take judicial notice of the said land registration case, this Court observed
that there is no genuine issue of fact to be tried on the merits. Firstly, because the supposed identity crisis of the controverted parcel of land
covered by the Land Registration Case No. TG-423 with the subject parcel of land is established by Plan Ap-04-006275 (Exhibit "N") LRC Case No.
423 and by Plan A04 008367 (Exhibit "B" of the plaintiffs) and the Technical Description of Lot 9250, Cad 355 (Exhibit "B-1" of the plaintiffs).
Secondly, the prior judgment rule cannot be availed of by defendant Eland since not only intrinsic fraud but extrinsic fraud were alleged in and
established by the records. (Heirs of Manuel Roxas v. Court of Appeals, G. R. No. 1184436, pro. March 21, 1997). Thirdly, it is incontrovertible that
the complaint in this case seeking to review the judgment and annul the decree was filed on March 5, 1998 or within one (1) year from August 20,
1997 or the date of issuance of Decree No. 217313, LRC Record No. N-62686, hence, the Original Certificate of Title No. 0-660 issued to defendant
Eland has not attained incontrovertibility. (Heirs of Manuel Roxas v. Court of Appeals, G.R. No. 118436, prom. March 21, 1997).

Notwithstanding, the issue of possession is a question of fact by the interaction of the basic pleadings, the observation of this Court is that the
plaintiffs were able to prove by the well-nigh incontrovertible evidence, the aspects of possession in accordance with Section 48 (b) of
Commonwealth Act 141, as amended, as hereinafter illustrated.
The CA, in affirming the above Resolution of the trial court, propounded thus:

The contention of defendant-appellant is untenable. Summary judgment is not only limited to solving actions involving money claims. Under Rule
35 of the 1997 Rules of Court, except as to the amount of damages, when there is no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law, summary judgment may be allowed. The term "genuine issue" has been defined as an issue of fact which
calls for the presentation of evidence as distinguished from an issue which is sham, fictitious, contrived, set up in bad faith and patently
unsubstantial so as not to constitute a genuine issue for trial.

Thus, under the aforecited rule, summary judgment is appropriate when there are no genuine issues of fact, which call for the presentation of
evidence in a full-blown trial. Thus, even if on their face the pleadings appear to raise issues, but when the affidavits, depositions and admissions
show that such issues are not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law.

It should be stressed that the court a quo which rendered the assailed resolution in Civil Case No. TG-1784 was the very court that decided the LRC
Case No. TG-423. Such being the case, the court a quo was privy to all relevant facts and rulings pertaining to LRC Case No. TG-423 which it
considered and applied to this case. Thus, where all the facts are within the judicial knowledge of the court, summary judgment may be granted as
a matter of right.

On the contrary, in petitioner's Answer Ad Cautelam, genuine, factual and triable issues were raised, aside from specifically denying all the
allegations in the complaint, thus:

2. SPECIFIC DENIALS

2.1 Answering defendant specifically denies the allegations contained in paragraphs 1 and 3 of the Complaint insofar as it alleges the
personal circumstances of the plaintiff and one A. F. Development Corporation for lack of knowledge or information sufficient to form a
belief as to the truth thereof.

2.2 Answering defendant specifically denies the allegations contained in paragraphs 4, 5, 6 and 7 of the Complaint for lack of knowledge
or information sufficient to form a belief as to the truth of said allegations. And if the property referred to in said paragraphs is that
parcel of land which was the subject matter of Land Registration Case No. TG-423 which was previously decided by this Honorable Court
with finality, said allegations are likewise specifically denied for the obvious reason that the said property had already been adjudged
with finality by no less than this Honorable Court as absolutely owned by herein answering defendant as will be further discussed
hereunder.

2.3 Answering defendant specifically denies the allegations contained in paragraph 8 of the Complaint insofar as it alleged that "(u)pon
exercise of further circumspection, counsel for the plaintiffs once followed-up in writing the 1994 request of the plaintiffs to have the
subject parcel of land be declared for taxation purposes" and insofar as it is made to appear that parcel of land being claimed by the
plaintiffs is the same parcel of land subject matter of Land Registration Case No. TG-423 for lack of knowledge or information sufficient to
form a belief as to the truth thereof and for the reason that the names of the herein plaintiffs were never mentioned during the entire
proceedings in said land registration case and by reason of the Affirmative Allegations contained hereunder.

2.4 Answering defendant specifically denies the allegations contained in paragraphs 9, 10, 10 (a), 10 (b), 10 (c), 10 (d), 10 (e), 10 (f), 10 (g),
10 (h), and 11 for the reason that there is no showing that the parcel of land being claimed by the plaintiff is the same parcel of land
which was the subject matter of Land Registration Case No. TG- 423, and in the remote possibility that the parcel of land being claimed by
the plaintiffs is the same as that parcel of land subject of Land Registration Case No. TG-423, the allegations contained in said paragraphs
are still specifically denied for the reason that no less than the Honorable Court had decided with finality that the parcel of land is
absolutely owned by herein defendant to the exclusion of all other persons as attested to by the subsequent issuance of an Original
Certificate of Title in favor of answering defendant and for reasons stated in the Affirmative Allegations.

2.5 Answering defendant specifically denies the allegations contained in paragraph 12 of the Complaint for the obvious reason that it was
the plaintiffs who appear to have been sleeping on their rights considering that up to the present they still do not have any certificate of
title covering the parcel of land they are claiming in the instant case, while on the part of herein defendant, no less than the Honorable
Court had adjudged with finality that the parcel of land subject matter of Land Registration Case No. TG-423 is absolutely owned by
herein defendant.

2.6 Answering defendant specifically denies the allegations contained in paragraph 13 of the complaint for the reason that defendant has
never ladgrabbed any parcel of land belonging to others, much less from the plaintiffs, and further, answering defendant specifically
denies the allegations therein that plaintiffs engaged the services of a lawyer for a fee for lack of knowledge r information sufficient to
form a belief as to the truth thereof.

2.7 Answering defendant specifically denies the allegations contained in paragraphs 14, 15, 16, 17 and 18 of the Complaint for lack of
knowledge or information sufficient to form a belief as the truth thereof.

2.8 Answering defendant specifically denies the allegations contained in paragraphs IV (a) to IV (c) for the reason that, as above-stated, if
the parcel of land being claimed by the plaintiffs is the same as that parcel of land subject matter of Land Registration Case No. TG-423,
this Honorable Court had already decided with finality that said parcel of land is absolutely owned by herein answering defendant and
additionally, for those reasons stated in defendant's Motion to Dismiss.

2.9 Answering defendant specifically denies the allegations contained in paragraph IV (d) of the Complaint for lack of knowledge or
information sufficient to form a belief as to the truth thereof.

Special and affirmative defenses were also raised in the same Answer Ad Cautelam, to wit:
xxxx

4.1 The pleading asserting the claim of the plaintiff states no cause of action as asserted in the Motion To Dismiss filed by herein
answering defendant and for the reason that there is no evidence whatsoever showing or attesting to the fact that the parcel of land
being claimed by the plaintiffs in the Complaint is the same parcel of land which was the subject matter of Land Registration Case No. TG-
423.

4.2 The complaint was barred by the prior judgment rendered by this Honorable in Land Registration Case No. TG-423.

4.3 The complaint is barred by the Statute of Limitation in that OCT No. 0-660 had become incontrovertible by virtue of the Torrens
System of Registration; and to allow plaintiffs to question the validity of answering defendant's title through the instant complaint would
be a collateral of OCT No. 0-660 which is not permissible under the law.

4.4 Plaintiffs are barred by their own acts and/or omission from filing the present complaint under the principles of estoppel and laches.

4.5 Plaintiffs does not to the Court with clean hands as they appear to be well aware of the proceedings in said Land Registration Case
No. TG- 423 and inspite of such knowledge, plaintiffs never bothered to present their alleged claims in the proceedings.

4.6 Answering defendant has always acted with justice, given everyone his due, and observed honesty and good faith in his dealings.

Clearly, the facts pleaded by the respondents in their motion for summary judgment have been duly disputed and contested by petitioner, raising
genuine issues that must be resolved only after a full-blown trial. When the facts as pleaded by the parties are disputed or contested, proceedings
for summary judgment cannot take the place of trial.50 In the present case, the petitioner was able to point out the genuine issues. A "genuine
issue" is an issue of fact that requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.51

It is of utmost importance to remember that petitioner is already the registered owner (Original Certificate of Title [OCT] No. 0-660 issued by the
Register of Deeds) of the parcel of land in question, pursuant to a decree of registration (Decree No. N-217313, LRC Record No. 62686) based on
the ruling of the same court that granted the summary judgment for the quieting of title.

Incidentally, the findings of the trial court contained in the disputed summary judgment were obtained through judicial notice of the facts and
rulings pertaining to that earlier case (LRC Case No. TG-423) wherein the same trial court ruled in favor of the petitioner. It is, therefore,
disorienting that the same trial court reversed its earlier ruling, which categorically stated that:

x x x There is overwhelming evidence or proof on record that the vendors listed in Exhibit "HH," with submarkings, are the previous owners of the
parcel of land mentioned in the same deed of sale and aside form the tax declarations covering the same property (Exhibits "Q" to "T," inclusive),
the uncontroverted testimony of Atty. Ruben Roxas establishes beyond any shadow of doubt that applicant's (referring to herein defendant-
appellant) sellers/predecessors-in-interest are the grandchildren, great grandchildren and great great grandchildren of the spouses Lucio Petate
and Maria Pobleta Petate, the former owners of the same property, whose ownership is further bolstered by tax receipts showing payments of
realty taxes (Exhibits "U" to "GG," inclusive, with submarkings).

xxx

On the basis of the foregoing facts and circumstances, and considering that applicant is a domestic corporation not otherwise disqualified from
owning real properties in the Philippines, this Court finds that applicant has satisfied all the conditions/requirements essential to the grant of its
application pursuant to the provisions of the Land Registration Law, as amended, inspite of the opposition filed by the Heirs of the late Doroteo
Miranda. Hence, the grant of applicant's petition appears to be inevitable.

WHEREFORE, this Court hereby approves the instant petition for land registration and, thus, places under the operation of Act 141, Act 496 and/or
P.D. 1529, otherwise known as the Property Registration Law, the land described in Plan Ap-04-006275 and containing an area of Two Hundred
Forty-Two Thousand Seven Hundred Ninety-Four (242,794) square meters, as supported by its technical description now forming part of the record
of this case, in addition to other proofs adduced in the name of the applicant, ELAND PHILIPPINES, INC., with principal office at No. 43 E. Rodriguez
Ave. (España Extension), Quezon City, Metro Manila.

Once this decision becomes final and executory, the corresponding decree of registration shall forthwith issue.

SO ORDERED.

By granting the summary judgment, the trial court has in effect annulled its former ruling based on a claim of possession and ownership of the
same land for more than thirty years without the benefit of a full-blown trial. The fact that the respondents seek to nullify the original certificate of
title issued to the petitioner on the claim that the former were in possession of the same land for a number of years, is already a clear indicium that
a genuine issue of a material fact exists. This, together with the failure of the respondents to show that there were no genuine issues involved,
should have been enough for the trial court to give the motion for summary judgment, filed by respondents, scant consideration. Trial courts have
limited authority to render summary judgments and may do so only when there is clearly no genuine issue as to any material fact.52

Based on the foregoing, this Court deems it necessary to delve briefly on the nature of the action of quieting of title as applied in this case. This
Court's ruling in Calacala, et al. v. Republic, et al.53 is instructive on this matter, thus:

To begin with, it bears emphasis that an action for quieting of title is essentially a common law remedy grounded on equity. As we held
in Baricuatro, Jr. vs. CA:54
Regarding the nature of the action filed before the trial court, quieting of title is a common law remedy for the removal of any cloud upon or doubt
or uncertainty with respect to title to real property. Originating in equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a claim of
title to or an interest in property, adverse to that of the complainant, is invalid, so that the complainant and those claiming under him may be
forever afterward free from any danger of hostile claim.’ In an action for quieting of title, the competent court is tasked to determine the
respective rights of the complainant and other claimants, ‘x x x not only to place things in their proper place, to make the one who has no rights to
said immovable respect and not disturb the other, but also for the benefit of both, so that he who has the right would see every cloud of doubt
over the property dissipated, and he could afterwards without fear introduce the improvements he may desire, to use, and even to abuse the
property as he deems best xxx.

Under Article 476 of the New Civil Code, the remedy may be availed of only when, by reason of any instrument, record, claim, encumbrance or
proceeding, which appears valid but is, in fact, invalid, ineffective, voidable, or unenforceable, a cloud is thereby cast on the complainant’s title to
real property or any interest therein. The codal provision reads:

Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

In turn, Article 477 of the same Code identifies the party who may bring an action to quiet title, thus:

Article 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject-matter of the action. He need not
be in possession of said property.

It can thus be seen that for an action for quieting of title to prosper, the plaintiff must first have a legal, or, at least, an equitable title on the real
property subject of the action and that the alleged cloud on his title must be shown to be in fact invalid. So it is that in Robles, et al. vs. CA,55 we
ruled:

It is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest in the real property which is the subject matter
of the action. Also, the deed, claim, encumbrance or proceeding that is being alleged as a cloud on plaintiff’s title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

Verily, for an action to quiet title to prosper, two (2) indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or
an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be
casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

Respondents, in their Complaint, claim that they have become the owners in fee-simple title of the subject land by occupation and possession
under the provisions of Sec. 48 (b) of the Public Land Law or Commonwealth Act No. 141, as amended. Thus, it appears that the first requisite has
been satisfied. Anent the second requisite, respondents enumerated several facts that would tend to prove the invalidity of the claim of the
petitioner. All of these claims, which would correspond to the two requisites for the quieting of title, are factual; and, as discussed earlier, the
petitioner interposed its objections and duly disputed the said claims, thus, presenting genuine issues that can only be resolved through a full-
blown trial.

Anent the propriety of the filing of an action for the quieting of title, the indefeasibility and incontrovertibility of the decree of registration come
into question. Under Sec. 32 of P.D. No. 1529 or the Property Registration Decree:

Section 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest
therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening
and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case
shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights
may be prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to
include an innocent lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any
person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other
persons responsible for the fraud.

As borne out by the records and undisputed by the parties, OCT No. 0-660 of petitioner was issued on August 29, 1997 pursuant to a Decree issued
on August 20, 1997, while the complaint for the quieting of title in Civil Case No. TG-1784 was filed and docketed on March 5, 1998; hence,
applying the above provisions, it would seem that the period of one (1) year from the issuance of the decree of registration has not elapsed for the
review thereof. However, a closer examination of the above provisions would clearly indicate that the action filed, which was for quieting of title,
was not the proper remedy.

Courts may reopen proceedings already closed by final decision or decree when an application for review is filed by the party aggrieved within one
year from the issuance of the decree of registration.56 However, the basis of the aggrieved party must be anchored solely on actual fraud. Shedding
light on the matter is a discussion presented in one of the recognized textbooks on property registration,57 citing decisions of this Court, thus:

The right of a person deprived of land or of any estate or interest therein by adjudication or confirmation of title obtained by actual fraud is
recognized by law as a valid and legal basis for reopening and revising a decree of registration.58 One of the remedies available to him is a petition
for review. To avail of a petition for review, the following requisites must be satisfied:
(a) The petitioner must have an estate or interest in the land;

(b) He must show actual fraud in the procurement of the decree of registration;

(c) The petition must be filed within one year from the issuance of the decree by the Land Registration Authority; and

(d) The property has not yet passed to an innocent purchaser for value.59

A mere claim of ownership is not sufficient to avoid a certificate of title obtained under the Torrens system. An important feature of a certificate
of title is its finality. The proceedings whereby such a title is obtained are directed against all persons, known or unknown, whether actually served
with notice or not, and includes all who have an interest in the land. If they do not appear and oppose the registration of their own estate or
interest in the property in the name of another, judgment is rendered against them by default, and, in the absence of fraud, such judgment is
conclusive. If an interest in the land will not by itself operate to vacate a decree of registration, a fortiori, fraud is not alone sufficient to do so.60

As further pointed out in the same book,61 the petition for review must be filed within one year from entry of the decree of registration. As written:

As long as a final decree has not been entered by the Land Registration Authority and period of one year has not elapsed from the date of entry of
such decree, the title is not finally adjudicated and the decision in the registration case continues to be under the control and sound discretion of
the registration court.62 After the lapse of said period, the decree becomes incontrovertible and no longer subject to reopening or review.

Section 32 provides that a petition for review of the decree of registration may be filed "not later than one year from and after the date of entry
of such decree of registration." Giving this provision a literal interpretation, it may at first blush seem that the petition for review cannot be
presented until the final decree has been entered. However, it has been ruled that the petition may be filed at any time after the rendition of the
court's decision and before the expiration of one year from the entry of the final decree of registration for, as noted in Rivera v. Moran,63 there
can be no possible reason requiring the complaining party to wait until the final decree is entered before urging his claim for fraud.

The one-year period stated in Sec. 32 within which a petition to re-open and review the decree of registration refers to the decree of registration
described in Section 31, which decree is prepared and issued by the Land Registration Administrator. 64

The provision of Section 31 that every decree of registration shall bind the land, quiet title thereto, and be conclusive upon and against all persons,
including the national government, and Sec. 32 that the decree shall not be reopened or revised by reason of absence, minority or other disability
or by any proceeding in court, save only in cases of actual fraud and then only for one year from the entry of the decree, must be understood as
referring to final and unappealable decrees of registration. A decision or, as it is sometimes called after entry, a decree of a registration court, does
not become final and unappealable until fifteen days after the interested parties have been notified of its entry, and during that period may be set
aside by the trial judge on motion for new trial, upon any of the grounds stated in the Rules of Court.65 An appeal from the decision of the trial
court prevents the judgment from becoming final until that decree is affirmed by the judgment of the appellate court.66

A petition for review under Section 32 is a remedy separate and distinct from a motion for new trial and the right to the remedy is not affected
by the denial of such a motion irrespective of the grounds upon which it may have been presented. Thus, where petitioners acquired their
interest in the land before any final decree had been entered, the litigation was therefore in effect still pending and, in these circumstances, they
can hardly be considered innocent purchasers in good faith.671avvphi1

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

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

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

WHEREFORE, the petition for review on certiorari of petitioner Eland Philippines, Inc. is hereby GRANTED, and the decision dated February 28,
2006 of the Court of Appeals (CA) in CA-G.R. CV No. 67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the
resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, RTC of Tagaytay City, is hereby REVERSED and SET ASIDE. Consequently, the
resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, RTC of Tagaytay City in Civil Case No. TG-1784 are hereby
declared NULL and VOID.

SO ORDERED.
FIRST DIVISION

G.R. No. 124605 June 18, 1999

ENRIQUITO SERNA and AMPARO RASCA, petitioners,


vs.
COURT OF APPEALS, SANTIAGO FONTANILLA, and RAFAELA RASING, respondents.

PARDO, J.:

The petition for review on certiorari before us seeks to review the decision of the Court of Appeals, 1 which affirmed that of the Regional Trial
Court, Alaminos, Pangasinan, 2 declaring respondents as the absolute and lawful owners of the land covered by Original Certificate of Title No. 139
of the Registry of Deeds of Pangasinan.

The antecedent facts are as follows:

Dionisio Fontanilla had four (4) children, namely, Rosa, Antonio, Jose and Lorenza, all surnamed Fontanilla. Rosa married Estanislao Pajaro and their
union produced Fructoso and Paciencia. Lorenza married Alberto Rasca and they had a daughter, petitioner Amparo Rasca (married to Enriquito
Serna). Jose had a son, respondent Santiago Fontanilla (married to Rafaela Rasing). Hence, the parties involved are first cousins.

Dionisio Fontanilla was the original owner and possessor of a parcel of land, containing an area of twelve thousand five hundred eight square
meters (12,508 sq. m.), located in Barangay Lucap, Alaminos, Pangasinan. 3

In 1921, the property was declared in his name for taxation purposes. In the same year, Turner Land Surveying Company surveyed the land for
Dionisio Fontanilla, with the agreement that the cost of survey would be paid upon approval of the plan by the Bureau of Lands. On March 2, 1923,
the Bureau of Lands approved the survey plan.

In 1938, for failing to pay the survey costs and to prevent foreclosure, Dionisio Fontanilla sold the land to his daughter, Rosa Fontanilla. In 1939,
Rosa began paying the real estate property tax thereon.

On August 21, 1955, for a consideration of one thousand seven hundred pesos (P1,700.00), Rosa sold the land to her nephew, respondent Santiago
Fontanilla, evidenced by a notarized deed of absolute sale, signed by Rosa. The instrument was not registered.

In 1955, respondents constructed their house of strong materials on the lot in question, which was completed in 1957.

On December 16, 1957, Rosa's heirs, Estanislao Pajaro and his two (2) children, Fructoso and Paciencia, executed another deed of absolute sale
over the same land in favor of respondent Santiago Fontanilla.

In 1978, respondents went to the United States to visit their daughter Mila Fontanilla Borillo. They stayed there until 1981.

On December 20, 1978, talking advantage of respondents' absence from the country, petitioners Enriquito and Amparo Serna applied to the land
registration court of Pangasinan for registration 4 of the said parcel of land in their name.

In 1979, the land registration court approved the application, and pursuant to Decree N-176768, the Register of Deeds of Pangasinan issued
Original Certificate of Title No. 139 to petitioners. On January 10, 1980, the title was transcribed in the registration book of the Register of Deeds of
Pangasinan.

On May 27, 1981, respondents filed with the Court of First Instance, Branch XIII, Alaminos, Pangasinan, an action for reconveyance with damages,
and sought the annulment of O.C.T. No. 139. 5

In the trial court, petitioners admitted that Dionisio Fontanilla originally owned the land in dispute. However, they claimed that in 1978 they
bought the property for three thousand pesos (P3,000.00) from Lorenza Fontanilla-Rasca. Lorenza, in turn, traced her title from her husband,
Alberto Rasca.

Petitioner Amparo said that when Dionisio failed to pay the survey costs in 1921, Turner Land Surveying Company took the property in question as
payment for services. Her father, Alberto Rasca, redeemed the property from Turner evidenced by a deed of sale, which, however, Amparo could
not produce in court. When her father died, Santiago Fontanilla borrowed from her mother the deed covering the transfer of the property, which
Santiago did not return. She said that the property was first declared in Alberto's name for taxation purposes in 1951. Later, the property was
ceded to her.

After due trial and consideration of the evidence presented before the trial court and in the land registration case, on June 5, 1992, the trial court
rendered judgment in favor of the plaintiffs (herein respondents) spouses Santiago Fontanilla and Rafaela Rasing, decreeing:

WHEREFORE, judgment is hereby rendered:

(a) Declaring the plaintiffs as the absolute and legal owners of the land in question particularly described and bounded and
stated in paragraph two (2) of the complaint;

(b) Ordering the defendants to Transfer and Recover [sic] Original Certificate of Title No. 139 to the plaintiffs;
(c) Ordering the defendants to pay plaintiffs the amount of P5,000.00 as attorney's fees;

(d) Ordering the defendants to pay the plaintiffs the amount of P5,000.00 as exemplary damages;

(e) And to pay the costs, without pronouncement as to moral damages.

Done at Alaminos, Pangasinan, this 5th day of August, 1992

(t/s) Vivencio A. Bantugan

Judge 6

From the decision of the trial court, both parties appealed to the Court of Appeals. Respondents questioned the court a quo'sfailure to grant their
claim for moral damages. On the other hand, petitioners claimed that the trial court committed serious error in the appreciation of facts and
application of law and jurisprudence.

On August 22, 1995, the Court of Appeals rendered decision affirming that of the trial court.

In a resolution dated February 26, 1996, 7 the Court of Appeals denied petitioners' motion for reconsideration.

Hence, this petition for review.

Petitioners submit these issues for resolution: (1) whether or not the appealed decision is supported by evidence; (2) whether or not the decision is
in accordance with law and jurisprudence. 8

The first issue is factual, which we cannot review on appeal. 9 However, petitioners make an issue of the fact that the judge who penned the
decision was not the one who presided over the proceedings.

"We have ruled in People vs. Rayray, 10 that the fact that the judge who heard the evidence is not himself the one who prepared, signed and
promulgated the decision constitutes no compelling reason to jettison his findings and conclusions, and does not per se render his decision void.
While it is true that the trial judge who conducted the hearing would be in a better position to ascertain the truth or falsity of the testimonies of
the witnesses, it does not necessarily follow that a judge who was not present during the trial cannot render a valid and just decision. For a judge
who was not present during the trial can rely on the transcript of stenographic notes taken during the trial as basis of his decision. Such reliance
does not violate substantive and procedural due process." 11

As a general rule, findings of fact of the Court of Appeals are binding and conclusive upon us, and we will not normally disturb such factual findings.
This is because in an appeal by certiorari to this Court, only questions of law may be raised. 12 And "for a question to be one of law it must involve
no examination of the probative value of the evidence presented by the litigants or any of them." 13 "To reiterate the distinction between the two
types of questions: there is a question of law in a given case when the doubt or difference arises as to what the law is pertaining to a certain state
of facts, and there is a question of fact when the doubt arises as to the truth or the falsity of alleged facts." 14

Petitioners claim ownership of the land based on the deed of sale executed by Turner Land Surveying Co. in favor of Alberto Rasca, which,
however, they failed to present in court. The truth or falsity of this claim is a question of fact, which, as aforesaid, is not reviewable in this appeal.

On the other hand, respondents proved that they were enjoying open, continuous and adverse possession of the property for more than sixty (60)
years tacking in the possession of their predecessors in interest, Dionisio Fontanilla and Rosa Pajaro. As early as 1921, Dionisio Fontanilla was in
adverse possession and paying taxes over the land. Rosa in turn, paid taxes for the first time in 1939, 15 while respondents began paying taxes in
1967. 16 They had their residential house built in 1955, which was completed in 1957. In 1980, Santiago executed a tenancy agreement 17 with Sixto
Fontanilla. Until 1984, Santiago paid the taxes together with his tenant Sixto.1âwphi1.nêt

Though mere tax declaration does not prove ownership of the property of the declarant, 18 tax declarations and receipts can be strong evidence of
ownership of land when accompanied by possession for a period sufficient for prescription. 19

Going to the second issue that the appellate court's decision is not supported by law and jurisprudence, we find this to be vague and without merit
as well.

At the time material hereto, registration of untitled land was pursuant to Act No. 496, as amended. Later, Presidential Decree 1529, the Property
Registration Decree, amended and codified laws relative to registration of property. "Adjudication of land in a registration (or cadastral) case does
not become final and incontrovertible until the expiration of one (1) year after the entry of the final decree." 20 After the lapse of said period, the
decree becomes incontrovertible and no longer subject to reopening or review.

However, the right of a person deprived of land or of any estate or interest therein by adjudication or confirmation of title obtained by actual fraud
is recognized by law 21 as a valid and legal basis for reopening and revising a decree of registration.

The fraud contemplated by the law is actual and extrinsic fraud, which includes an intentional omission of a fact required by law. For fraud to justify
a review of a decree, it must be extrinsic or collateral, and the facts upon which it is based have not been controverted or resolved in the case
where the judgment sought to be annulled was rendered. Persons who were fraudulently deprived of their opportunity to be heard in the original
registration case are entitled to a review of a decree of registration. 22
"An action based on implied or constructive trust prescribes in ten (10) years. This means that petitioners should have enforced the trust within ten
(10) years from the time of its creation or upon the alleged fraudulent registration of the property." 23 Discovery of the fraud must be deemed to
have taken place from the issuance of the certificate of title "because registration of real property is considered a "constructive notice to all
persons" and it shall be counted "from the time of such registering, filing or entering." 24

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

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

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

No costs.

SO ORDERED.
SECOND DIVISION

G.R. No. 193787 April 7, 2014

SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE, with deceased Jose C. Roque represented by his substitute heir JOVETTE ROQUE-
LIBREA, Petitioners,
vs.
MA. PAMELA P. AGUADO, FRUCTUOSO C. SABUG, JR., NATIONAL COUNCIL OF CHURCHES IN THE PHILIPPINES (NCCP), represented by its
Secretary General SHARON ROSE JOY RUIZ-DUREMDES, LAND BANK OF THE PHILIPPINES (LBP), represented by Branch Manager EVELYN M.
MONTERO, ATTY. MARIO S.P. DIAZ, in his Official Capacity as Register of Deeds for Rizal, Morong Branch, and CECILIO U. PULAN, in his Official
Capacity as Sheriff, Office of the Clerk of Court, Regional Trial Court, Binangonan, Rizal, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated May 12, 2010 and the Resolution3 dated September 15, 2010 of the Court
of Appeals (CA) in CA G.R. CV No. 92113 which affirmed the Decision4 dated July 8, 2008 of the Regional Trial Court of Binangonan, Rizal, Branch 69
(RTC) that dismissed Civil Case Nos. 03-022 and 05-003 for reconveyance, annulment of sale, deed of real estate mortgage, foreclosure and
certificate of sale, and damages.

The Facts

The property subject of this case is a parcel of land with an area of 20,862 square meters (sq. m.), located in Sitio Tagpos, Barangay Tayuman,
Binangonan, Rizal, known as Lot 18089.5

On July 21, 1977, petitioners-spouses Jose C. Roque and Beatriz dela Cruz Roque (Sps. Roque) and the original owners of the then unregistered Lot
18089 – namely, Velia R. Rivero (Rivero), Magdalena Aguilar, Angela Gonzales, Herminia R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R.
Topacio, and Augusto Rivero (Rivero, et al.) – executed a Deed of Conditional Sale of Real Property6 (1977 Deed of Conditional Sale) over a 1,231-
sq. m. portion of Lot 18089 (subject portion) for a consideration of P30,775.00. The parties agreed that Sps. Roque shall make an initial payment
of P15,387.50 upon signing, while the remaining balance of the purchase price shall be payable upon the registration of Lot 18089, as well as the
segregation and the concomitant issuance of a separate title over the subject portion in their names. After the deed’s execution, Sps. Roque took
possession and introduced improvements on the subject portion which they utilized as a balut factory.7

On August 12, 1991, Fructuoso Sabug, Jr. (Sabug, Jr.), former Treasurer of the National Council of Churches in the Philippines (NCCP), applied for a
free patent over the entire Lot 18089 and was eventually issued Original Certificate of Title (OCT) No. M-59558 in his name on October 21, 1991.
On June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in representation of Rivero, et al., executed a Joint Affidavit9 (1993 Joint
Affidavit), acknowledging that the subject portion belongs to Sps. Roque and expressed their willingness to segregate the same from the entire
area of Lot 18089.

On December 8, 1999, however, Sabug, Jr., through a Deed of Absolute Sale10 (1999 Deed of Absolute Sale), sold Lot 18089 to one Ma. Pamela P.
Aguado (Aguado) for P2,500,000.00, who, in turn, caused the cancellation of OCT No. M-5955 and the issuance of Transfer Certificate of Title (TCT)
No. M-96692 dated December 17, 199911 in her name.

Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank of the Philippines (Land Bank) secured by a mortgage over Lot
18089.12 When she failed to pay her loan obligation, Land Bank commenced extra-judicial foreclosure proceedings and eventually tendered the
highest bid in the auction sale. Upon Aguado’s failure to redeem the subject property, Land Bank consolidated its ownership, and TCT No. M-
11589513 was issued in its name on July 21, 2003.14

On June 16, 2003, Sps. Roque filed a complaint15 for reconveyance, annulment of sale, deed of real estate mortgage, foreclosure, and certificate of
sale, and damages before the RTC, docketed as Civil Case No. 03-022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of
Morong, Rizal, and Sheriff Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been erroneously included
in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land Bank, both covering Lot 18089 in its entirety.

In defense, NCCP and Sabug, Jr. denied any knowledge of the 1977 Deed of Conditional Sale through which the subject portion had been
purportedly conveyed to Sps. Roque.16

For her part, Aguado raised the defense of an innocent purchaser for value as she allegedly derived her title (through the 1999 Deed of Absolute
Sale) from Sabug, Jr., the registered owner in OCT No. M-5955, covering Lot 18089, which certificate of title at the time of sale was free from any
lien and/or encumbrances. She also claimed that Sps. Roque’s cause of action had already prescribed because their adverse claim was made only
on April 21, 2003, or four (4) years from the date OCT No. M-5955 was issued in Sabug, Jr.’s name on December 17, 1999.17

On the other hand, Land Bank averred that it had no knowledge of Sps. Roque’s claim relative to the subject portion, considering that at the time
the loan was taken out, Lot 18089 in its entirety was registered in Aguado’s name and no lien and/or encumbrance was annotated on her
certificate of title.18

Meanwhile, on January 18, 2005, NCCP filed a separate complaint19 also for declaration of nullity of documents and certificates of title and
damages, docketed as Civil Case No. 05-003. It claimed to be the real owner of Lot 18089 which it supposedly acquired from Sabug, Jr. through an
oral contract of sale20 in the early part of 1998, followed by the execution of a Deed of Absolute Sale on December 2, 1998 (1998 Deed of Absolute
Sale).21 NCCP also alleged that in October of the same year, it entered into a Joint Venture Agreement (JVA) with Pilipinas Norin Construction
Development Corporation (PNCDC), a company owned by Aguado’s parents, for the development of its real properties, including Lot 18089, into a
subdivision project, and as such, turned over its copy of OCT No. M-5955 to PNCDC.22 Upon knowledge of the purported sale of Lot 18089 to
Aguado, Sabug, Jr. denied the transaction and alleged forgery. Claiming that the Aguados23 and PNCDC conspired to defraud NCCP, it prayed that
PNCDC’s corporate veil be pierced and that the Aguados be ordered to pay the amount of ₱38,092,002.00 representing the unrealized profit from
the JVA.24 Moreover, NCCP averred that Land Bank failed to exercise the diligence required to ascertain the true owners of Lot 18089. Hence, it
further prayed that: (a) all acts of ownership and dominion over Lot 18089 that the bank might have done or caused to be done be declared null
and void; (b) it be declared the true and real owners of Lot 18089; and (c) the Register of Deeds of Morong, Rizal be ordered to cancel any and all
certificates of title covering the lot, and a new one be issued in its name.25 In its answer, Land Bank reiterated its stance that Lot 18089 was used
as collateral for the P8,000,000.00 loan obtained by the Countryside Rural Bank, Aguado, and one Bella Palasaga. There being no lien and/ or
encumbrance annotated on its certificate of title, i.e., TCT No. M-115895, it cannot be held liable for NCCP’s claims. Thus, it prayed for the dismissal
of NCCP’s complaint.26

On September 7, 2005, Civil Case Nos. 02-022 and 05-003 were ordered consolidated.27

The RTC Ruling

After due proceedings, the RTC rendered a Decision28 dated July 8, 2008, dismissing the complaints of Sps. Roque and NCCP.

With respect to Sps. Roque’s complaint, the RTC found that the latter failed to establish their ownership over the subject portion, considering the
following: (a) the supposed owners-vendors, i.e., Rivero, et al., who executed the 1977 Deed of Conditional Sale, had no proof of their title over Lot
18089; (b) the 1977 Deed of Conditional Sale was not registered with the Office of the Register of Deeds;29 (c) the 1977 Deed of Conditional Sale is
neither a deed of conveyance nor a transfer document, as it only gives the holder the right to compel the supposed vendors to execute a deed of
absolute sale upon full payment of the consideration; (d) neither Sps. Roque nor the alleged owners-vendors, i.e., Rivero, et al., have paid real
property taxes in relation to Lot 18089; and (e) Sps. Roque’s occupation of the subject portion did not ripen into ownership that can be considered
superior to the ownership of Land Bank.30Moreover, the RTC ruled that Sps. Roque’s action for reconveyance had already prescribed, having been
filed ten (10) years after the issuance of OCT No. M-5955.31

On the other hand, regarding NCCP’s complaint, the RTC observed that while it anchored its claim of ownership over Lot 18089 on the 1998 Deed
of Absolute Sale, the said deed was not annotated on OCT No. M-5955. Neither was any certificate of title issued in its name nor did it take
possession of Lot 18089 or paid the real property taxes therefor. Hence, NCCP’s claim cannot prevail against Land Bank’s title, which was adjudged
by the RTC as an innocent purchaser for value. Also, the RTC disregarded NCCP’s allegation that the signature of Sabug, Jr. on the 1999 Deed of
Absolute Sale in favor of Aguado was forged because his signatures on both instruments bear semblances of similarity and appear genuine.
Besides, the examiner from the National Bureau of Investigation, who purportedly found that Sabug, Jr.’s signature thereon was spurious leading to
the dismissal of a criminal case against him, was not presented as a witness in the civil action.32

Finally, the RTC denied the parties’ respective claims for damages.33

The CA Ruling

On appeal, the Court of Appeals (CA) affirmed the foregoing RTC findings in a Decision34 dated May 12, 2010. While Land Bank was not regarded as
a mortgagee/purchaser in good faith with respect to the subject portion considering Sps. Roque’s possession thereof,35 the CA did not order its
reconveyance or segregation in the latter’s favor because of Sps. Roque’s failure to pay the remaining balance of the purchase price. Hence, it only
directed Land Bank to respect Sps. Roque’s possession with the option to appropriate the improvements introduced thereon upon payment of
compensation.36

As regards NCCP, the CA found that it failed to establish its right over Lot 18089 for the following reasons: (a) the sale to it of the lot by Sabug, Jr.
was never registered; and (b) there is no showing that it was in possession of Lot 18089 or any portion thereof from 1998. Thus, as far as NCCP is
concerned, Land Bank is a mortgagee/purchaser in good faith.37

Aggrieved, both Sps. Roque38 and NCCP39 moved for reconsideration but were denied by the CA in a Resolution40dated September 15, 2010,
prompting them to seek further recourse before the Court.

The Issue Before the Court

The central issue in this case is whether or not the CA erred in not ordering the reconveyance of the subject portion in Sps. Roque’s favor.

Sps. Roque maintain that the CA erred in not declaring them as the lawful owners of the subject portion despite having possessed the same since
the execution of the 1977 Deed of Conditional Sale, sufficient for acquisitive prescription to set in in their favor.41 To bolster their claim, they also
point to the 1993 Joint Affidavit whereby Sabug, Jr. and Rivero acknowledged their ownership thereof.42 Being the first purchasers and in actual
possession of the disputed portion, they assert that they have a better right over the 1,231- sq. m. portion of Lot 18089 and, hence, cannot be
ousted therefrom by Land Bank, which was adjudged as a ortgagee/purchaser in bad faith, pursuant to Article 1544 of the Civil Code.43

In opposition, Land Bank espouses that the instant petition should be dismissed for raising questions of fact, in violation of the proscription under
Rule 45 of the Rules of Court which allows only pure questions of law to be raised.44Moreover, it denied that ownership over the subject portion
had been acquired by Sps. Roque who admittedly failed to pay the remaining balance of the purchase price.45 Besides, Land Bank points out that
Sps. Roque’s action for reconveyance had already prescribed.46

Instead of traversing the arguments of Sps. Roque, NCCP, in its Comment47 dated December 19, 2011, advanced its own case, arguing that the CA
erred in holding that it failed to establish its claimed ownership over Lot 18089 in its entirety. Incidentally, NCCP’s appeal from the CA Decision
dated May 12, 2010 was already denied by the Court,48and hence, will no longer be dealt with in this case.

The Court’s Ruling

The petition lacks merit.


The essence of an action for reconveyance is to seek the transfer of the property which was wrongfully or erroneously registered in another
person’s name to its rightful owner or to one with a better right.49 Thus, it is incumbent upon the aggrieved party to show that he has a legal claim
on the property superior to that of the registered owner and that the property has not yet passed to the hands of an innocent purchaser for
value.50

Sps. Roque claim that the subject portion covered by the 1977 Deed of Conditional Sale between them and Rivero, et al. was wrongfully included in
the certificates of title covering Lot 18089, and, hence, must be segregated therefrom and their ownership thereof be confirmed. The salient
portions of the said deed state:

DEED OF CONDITIONAL SALE OF REAL PROPERTY

KNOW ALL MEN BY THESE PRESENTS:

xxxx

That for and in consideration of the sum of THIRTY THOUSAND SEVEN HUNDRED SEVENTY FIVE PESOS (P30,775.00), Philippine Currency, payable in
the manner hereinbelow specified, the VENDORS do hereby sell, transfer and convey unto the VENDEE, or their heirs, executors, administrators, or
assignors, that unsegregated portion of the above lot, x x x.

That the aforesaid amount shall be paid in two installments, the first installment which is in the amount of __________ (P15,387.50) and the
balance in the amount of __________ (P15,387.50), shall be paid as soon as the described portion of the property shall have been registered under
the Land Registration Act and a Certificate of Title issued accordingly;

That as soon as the total amount of the property has been paid and the Certificate of Title has been issued, an absolute deed of sale shall be
executed accordingly;

x x x x51

Examining its provisions, the Court finds that the stipulation above-highlighted shows that the 1977 Deed of Conditional Sale is actually in the
nature of a contract to sell and not one of sale contrary to Sps. Roque’s belief.52 In this relation, it has been consistently ruled that where the seller
promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the purchase price, the contract is only a contract
to sell even if their agreement is denominated as a Deed of Conditional Sale,53 as in this case. This treatment stems from the legal characterization
of a contract to sell, that is, a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property
despite delivery thereof to the prospective buyer, binds himself to sell the subject property exclusively to the prospective buyer upon fulfillment of
the condition agreed upon, such as, the full payment of the purchase price.54Elsewise stated, in a contract to sell, ownership is retained by the
vendor and is not to pass to the vendee until full payment of the purchase price.55 Explaining the subject matter further, the Court, in Ursal v.
CA,56 held that:

[I]n contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the suspensive condition, that is, the full
payment of the purchase price by the buyer. It is only upon the existence of the contract of sale that the seller becomes obligated to transfer the
ownership of the thing sold to the buyer. Prior to the existence of the contract of sale, the seller is not obligated to transfer the ownership to the
buyer, even if there is a contract to sell between them.

Here, it is undisputed that Sps. Roque have not paid the final installment of the purchase price.57 As such, the condition which would have
triggered the parties’ obligation to enter into and thereby perfect a contract of sale in order to effectively transfer the ownership of the subject
portion from the sellers (i.e., Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter cannot
validly claim ownership over the subject portion even if they had made an initial payment and even took possession of the same.58

The Court further notes that Sps. Roque did not even take any active steps to protect their claim over the disputed portion. This remains evident
from the following circumstances appearing on record: (a) the 1977 Deed of Conditional Sale was never registered; (b) they did not seek the
actual/physical segregation of the disputed portion despite their knowledge of the fact that, as early as 1993, the entire Lot 18089 was registered in
Sabug, Jr.’s name under OCT No. M-5955; and (c) while they signified their willingness to pay the balance of the purchase price,59 Sps. Roque
neither compelled Rivero et al., and/or Sabug, Jr. to accept the same nor did they consign any amount to the court, the proper application of which
would have effectively fulfilled their obligation to pay the purchase price.60 Instead, Sps. Roque waited 26 years, reckoned from the execution of
the 1977 Deed of Conditional Sale, to institute an action for reconveyance (in 2003), and only after Lot 18089 was sold to Land Bank in the
foreclosure sale and title thereto was consolidated in its name. Thus, in view of the foregoing, Sabug, Jr. – as the registered owner of Lot 18089
borne by the grant of his free patent application – could validly convey said property in its entirety to Aguado who, in turn, mortgaged the same to
Land Bank. Besides, as aptly observed by the RTC, Sps. Roque failed to establish that the parties who sold the property to them, i.e., Rivero, et al.,
were indeed its true and lawful owners.61 In fine, Sps. Roque failed to establish any superior right over the subject portion as against the registered
owner of Lot 18089, i.e., Land Bank, thereby warranting the dismissal of their reconveyance action, without prejudice to their right to seek
damages against the vendors, i.e., Rivero et al.62 As applied in the case of Coronel v. CA:63

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of
the property, a third person buying such property despite the fulfilment of the suspensive condition such as the full payment of the purchase price,
for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.

There is no double sale in such case.1âwphi1 Title to the property will transfer to the buyer after registration because there is no defect in the
owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer. (Emphasis supplied)
On the matter of double sales, suffice it to state that Sps. Roque’s reliance64 on Article 154465 of the Civil Code has been misplaced since the
contract they base their claim of ownership on is, as earlier stated, a contract to sell, and not one of sale. In Cheng v. Genato,66 the Court stated
the circumstances which must concur in order to determine the applicability of Article 1544, none of which are obtaining in this case, viz.:

(a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter, and must be valid sales transactions;

(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the same seller.

Finally, regarding Sps. Roque’s claims of acquisitive prescription and reimbursement for the value of the improvements they have introduced on
the subject property,67 it is keenly observed that none of the arguments therefor were raised before the trial court or the CA.68 Accordingly, the
Court applies the well-settled rule that litigants cannot raise an issue for the first time on appeal as this would contravene the basic rules of fair
play and justice. In any event, such claims appear to involve questions of fact which are generally prohibited under a Rule 45 petition.69

With the conclusions herein reached, the Court need not belabor on the other points raised by the parties, and ultimately finds it proper to
proceed with the denial of the petition.

WHEREFORE, the petition is DENIED. The Decision dated May 12, 2010 and the Resolution dated September 15, 2010 of the Court of Appeals in
CAG.R. CV No. 92113 are hereby AFFIRMED.

SO ORDERED.
THIRD DIVISION

G.R. No. 166516 September 3, 2009

EMMA VER REYES and RAMON REYES, Petitioners,


vs.
IRENE MONTEMAYOR and THE REGISTER OF DEEDS OF CAVITE, Respondents.

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1 dated 20 May 2004, rendered by the Court of
Appeals in CA-G.R. CV No. 54517, which affirmed the Decision2 dated 7 October 1996, of the Regional Trial Court (RTC), Branch 21, of Imus, Cavite,
in Civil Case No. 878-94, dismissing the Complaint for Reconveyance of petitioners, spouses Emma Ver-Reyes (Emma) and Ramon Reyes (Ramon),
and declaring private respondent Irene Montemayor as the owner of the subject property.

On 18 February 1994, petitioners filed before the RTC a Complaint for Reconveyance3 against private respondent and the Register of Deeds of
Cavite. The Complaint was docketed as Civil Case No. 878-94. Petitioners alleged in their Complaint that they were the owners of a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-584594situated in Paliparan, Dasmariñas, Cavite (subject property). They bought the subject
property from the previous owner, Marciano Cuevas (Marciano), as evidenced by a Deed of Absolute Sale dated 8 October 1976. 5 Thereafter,
Marciano surrendered to petitioners the Owner’s Duplicate Copy of TCT No. T-58459. Petitioners accordingly paid the taxes on the sale of the
subject property. However, they were unable to register the sale and effect the transfer of the certificate of title to the subject property to their
names.

Petitioners claimed that they had consistently paid the real estate taxes on the subject property since their acquisition of the same in 1976 until
1991. In 1993, when they went to the Office of the Register of Deeds of Cavite to pay their real estate taxes for the years 1992 and 1993, they were
informed that the subject property was sold by Marciano to private respondent on 10 November 1992, and TCT No. T-369793 covering it was
issued in private respondent’s name on 4 January 1993.

Petitioners asserted that private respondent was able to cause the issuance of TCT No. T-369793 in her name by presenting a simulated and
fictitious Deed of Absolute Sale dated 10 November 1992. The signatures of the sellers, spouses Virginia (Virginia) and Marciano Cuevas (spouses
Cuevas), were forged in the said Deed.6

Hence, petitioners prayed for the cancellation of TCT No. T-369793 in private respondent’s name; the issuance of a new certificate of title in
petitioners’ names; the award of nominal damages of P50,000.00 and exemplary damages of P100,000.00, by reason of the fraud employed by
private respondent in having the subject property registered in her name; the award of attorney’s fees of not less than P50,000; and the costs of
suit. 7

On 18 April 1994, private respondent filed with the RTC her Answer with Counterclaim, wherein she denied petitioners’ allegation that the
signatures of the spouses Cuevas in the Deed of Absolute Sale dated 10 November 1992 were forged. Private respondent averred that the subject
property was offered to her for sale, but she did not disclose who actually made the offer. She discovered that there was no adverse claim or any
kind of encumbrance annotated on the certificate of title of the spouses Cuevas covering the subject property. She had purchased the subject
property for value and in good faith and had been in possession thereof. Private respondent insisted that she had a better title to the subject
property, since she was the first registrant of its sale. Private respondent thus prayed for the award of moral damages in the amount of not less
than P100,000.00 for the mental anguish, serious anxiety, and besmirched reputation she suffered by reason of the unjustified filing by petitioners
of the case; the award of exemplary damages in the amount of P100,000.00 for petitioners’ malicious filing of the case; and the award of attorney’s
fees, and costs of suit. 8

After the conduct of pre-trial, petitioners offered the testimonies of Marciano, petitioner Emma, and Carolyn Moldez-Pitoy (Carolyn).

Marciano testified that he and his wife Virginia signed, on 8 October 1976, a Deed of Absolute Sale covering the subject property in petitioner
Emma’s favor. He denied selling the subject property to any other person, including private respondent. Marciano, when shown the Deed of
Absolute Sale dated 10 November 1992, involving the same property, in private respondent’s favor, flatly stated that the signatures found therein
were not his or his wife’s. 9

Petitioner Emma personally confirmed that Marciano sold the subject property to her in 1976. She had faithfully paid the real property taxes on it
from 1976 until 1993, when she learned that it had been registered in private respondent’s name. Upon examining the Deed of Absolute Sale dated
10 November 1992, supposedly executed by the spouses Cuevas over the subject property in private respondent’s favor, petitioner Emma
observed that the spouses Cuevas’ signatures found therein appeared to have been forged. She further claimed that after finding that the subject
property had been registered in private respondent’s name, she suffered from nervousness and the aggravation of her rheumatoid arthritis. She
was compelled to engage the services of a lawyer to prosecute her case against private respondent, which could cost her P100,000.00 or more.
During the cross-examination and re-direct examination, petitioner Emma explained that she had not been able to register the subject property in
her name because of her diabetes and rheumatoid arthritis.10

Carolyn introduced herself as a Senior Document Examiner in the National Bureau of Investigation (NBI), performing, among her other duties,
handwriting analysis. She admitted to preparing Questioned Documents Report No. 548-795, dated 18 July 1995.11

Questioned Documents Report No. 548-795, prepared by Carolyn, was submitted by petitioners as evidence and was marked as Exhibit "G".12 They
had obtained the report for the purpose of finding out whether (1) the signatures of the spouses Cuevas in the Deed of Absolute Sale dated 10
November 1992, which they purportedly executed in private respondent’s favor; and (2) the signature of Escolastico Cuevas (Escolastico), Registrar
of Deeds (ROD) of Cavite, in the Owner’s Duplicate Copy of TCT No. T-58459, which Mariano surrendered to petitioners in 1972, were forged, by
comparing them with the specimen signatures given by the spouses Cuevas and ROD Escolastico. As stated in her Report, Carolyn found that:
1. The questioned and the standard/specimen signatures VIRGINIA M. CUEVAS were not written by one and the same person.

2. The questioned and the standard /specimen signatures of ESCOLASTICO CUEVAS were written by one and the same person.

3. No definite opinion on MARCIANO CUEVAS per above stated findings no. 3.13

On the other hand, private respondent offered the testimonies of Jaime Laudato (Jaime) and Angelina Cortez (Angelina) in support of her version of
events.

Jaime disclosed that it was Vice-Mayor Lauro Carungcong (Carungcong) of Dasmariñas who supposedly brokered the sale of the subject property,
and who instructed Jaime to verify with the Register of Deeds the existence of the Original Copy of TCT No. T-58459, and to check for any
encumbrances thereon. Three weeks thereafter, Vice-Mayor Carungcong gave Jaime a copy of the Deed of Absolute Sale dated 10 November 1992
executed by the spouses Cuevas over the subject property in private respondent’s favor, and directed Jaime to pay the obligatory taxes and to
register the subject property in private respondent’s name. On cross-examination, Jaime admitted that he had never met nor was he acquainted
with either of the spouses Cuevas, the alleged vendors of the subject property.14

Angelina, employed as a Deeds Examiner in the Register of Deeds of Cavite, was tasked, as part of her duties, to examine the documents related to
the transfer of the subject property in private respondent’s name before issuing the corresponding certificate of title. However, she admitted
during cross-examination that she was not in a position to determine the authenticity of the documents presented to her.15

The RTC rendered a Decision16 in Civil Case No. 878-94 on 7 October 1996, dismissing petitioners’ Complaint. The RTC found that the statements of
their witness Marciano and the results of Questioned Documents Report No. 548-795 issued by the NBI were contradictory. The RTC noted that
Marciano testified that the signatures found in the Deed of Absolute Sale dated 8 October 1976 and the Kasunduan sa Bilihan ng Lupa17 dated 15
June 1971 were Virginia’s; but the NBI Report stated that "the questioned and the standard/specimen signatures VIRGINIA M. CUEVAS were not
written by one and the same person." The RTC also gave little credence to Marciano’s denial of the sale of the subject property to private
respondent, on the ground that it was self-serving. Although the RTC did observe differences in Marciano’s signature in the Kasunduan ng Bilihan
ng Lupa dated 15 June 1971 and the Deed of Absolute Sale dated 10 November 1992, the trial court dismissed the same as mere changes in a
person’s penmanship or signature that could occur over the years. The RTC concluded that Civil Case No. 878-94 involved a double sale of the
subject property, wherein private respondent, an innocent purchaser for value who first registered the property in her name, should be adjudged
to have a better title. The dispositive part of the RTC Decision dated 7 October 1996 reads:

WHEREFORE, judgment is hereby rendered dismissing this case and declaring that the true and lawful owner of the subject property as described
in, and covered by, TCT No. T-369793 is [herein respondent] Irene Montemayor.

All other claims of the parties are dismissed for inadequate substantiation.18

On 11 July 1997, petitioners filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 54517, which challenged the afore-mentioned
RTC judgment.

During the pendency of CA-G.R. CV No. 54517, petitioners filed with the Court of Appeals an Urgent Manifestation19on 20 October 1998. According
to them, they obtained information that private respondent’s TCT No. T-369793 covering the subject property had already been canceled; that a
new certificate of title, TCT No. T-784707, had been issued in the name of another person, Engracia Isip (Engracia); and that a mortgage was
constituted on the subject property. It began with private respondent executing a Waiver and Quitclaim on 15 January 1998, wherein she
confessed to obtaining TCT No. T-369793 over the subject property in bad faith. In the same document, private respondent recognized Engracia’s
title to the subject property and, thus, private respondent relinquished her right over it to Engracia and the latter’s heirs and successors-in-interest.
The Register of Deeds, impleaded as a party in CA-G.R. CV No. 54517, canceled TCT No. T-369793 in private respondent’s name; issued TCT No. T-
784707 in the names of Engracia’s heirs; and annotated on the latest certificate of title private respondent’s Waiver and Quitclaim dated 15
January 1998.

On 18 November 1998, Perfecto Dumay-as, Deputy ROD of Trece Martires City, Cavite, filed a Comment/Manifestation stating that Civil Case No.
878-94 was not inscribed on private respondent’s TCT No. T-369793, since the case before the RTC had already been resolved in favor of private
respondent, thus, the presentation of the owner’s original certificate of title along with the Waiver/Quitclaim, dated 15 January 1998, complied
with the requirements of a voluntary transaction, justifying the issuance of TCT No. T-784707 in the name of Engracia’s heirs.20

In its Decision dated 20 May 2004 in CA-G.R. CV No. 54517, the Court of Appeals denied petitioners’ appeal and affirmed the RTC Decision dated 7
October 1996 in Civil Case No. 878-94. The appellate court held that petitioners were negligent in failing to register the subject property in their
names. And, just like the RTC, the Court of Appeals declared Marciano’s denial of the sale of the subject property in private respondent’s favor as
self-serving. The appellate court also pointed out that the findings of the NBI were not definite as regards the alleged forgery of Marciano’s
signature in the Deed of Absolute Sale dated 10 November 1992. Lastly, the Court of Appeals took judicial notice of the Comment/Manifestation of
Perfecto Dumay-as, Deputy ROD of Trece Martires City, Cavite, stating that Civil Case No. 878-94 was not inscribed on private respondent’s TCT No.
T-369793, since the case before the RTC had already been resolved in favor of private respondent, and the acquisition by Engracia’s heirs of the
subject property and TCT No. T-784707 over the same was in good faith and, therefore, valid. The Court of Appeals decreed:

WHEREFORE, premises considered, the appealed Decision dated October 7, 1996 of the Regional Trial Court of Cavite is hereby AFFIRMED.21

Petitioners filed a Motion for Reconsideration22 of the foregoing Decision on 25 June 2004, which the Court of Appeals denied in a
Resolution23 dated 28 December 2004.

Hence, the present Petition, where petitioners made the following assignment of errors:

I
RESPONDENT COURT COMMITTED SERIOUS ERROR IN RENDERING THE DECISION AND RESOLUTION IN QUESTION IN COMPLETE DISREGARD OF
LAW AND JURISPRUDENCE BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT (BRANCH 21) OF CAVITE NOTWITHSTANDING THE CLEAR
AND AUTHENTIC RECORDS PRESENTED DURING TRIAL WHICH NEGATE AND CONTRADICT ITS FINDINGS.

II

RESPONDENT COURT COMMITED GRAVE AND REVERSIBLE ERROR IN RENDERING THE DECISION AND RESOLUTION IN QUESTION IN VIOLATION OF
LAW AND JURISPRUDENCE BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT (BRANCH 21) OF CAVITE THEREBY IGNORING THE
EVIDENCE ON RECORD SHOWING THE PETITIONERS’ CLEAR RIGHTS OF OWNERSHIP OVER THE SUBJECT PROPERTY.

III

RESPONDENT COURT COMMITTED SERIOUS ERROR IN AFFIRMING THAT THE TRUE AND LAWFUL OWNER OVER (sic) THE SUBJECT PROPERTY AS
DESCRIBED IN AND COVERED BY TCT NO. T-369793 IS PRIVATE RESPONDENT IRENE MONTEMAYOR DESPITE DOCUMENTARY AND TESTIMONIAL
EVIDENCE TO THE CONTRARY.24

The fundamental issue for resolution of this Court in this case is who has better right to the subject property. Before the Court can settle the same,
it must first determine the question of whether there was a double sale of the subject property to both petitioners and private respondent, which
is essentially a question of fact requiring the Court to review, examine and evaluate, or weigh the probative value of the evidence presented by the
parties.

Rule 45 of the Rules of Court provides that only questions of law shall be raised in a Petition for Review before this Court. This rule, however,
admits of certain exceptions, namely, (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misappreciation of facts; (5) when the findings of fact are conflicting; (6) when, in making its findings, the same are contrary to the admissions of
both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not
disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record.25

While as a general rule appellate courts do not usually disturb the lower court's findings of fact, unless said findings are not supported by or are
totally devoid of or inconsistent with the evidence on record, such finding must of necessity be modified to conform with the evidence if the
reviewing tribunal were to arrive at the proper and just resolution of the controversy.26 Thus, although the findings of fact of the Court of Appeals
are generally conclusive on this Court, which is not a trier of facts, if said factual findings do not conform to the evidence on record, this Court will
not hesitate to review and reverse the factual findings of the lower courts. In the instant case, the Court finds sufficient basis to deviate from the
rule since the extant evidence and prevailing law support a finding different from the conclusion of the Court of Appeals and the RTC.27

Contrary to the findings of both the Court of Appeals and the RTC, the evidence on record reveals that the spouses Cuevas, the previous owners of
the subject property, did not sell the said property to private respondent.

Marciano’s explicit statements, made under oath before the trial court, that he did not sell the subject property to anyone other than petitioners,
and that the signatures of the vendors appearing in the Deed of Absolute Sale dated 10 November 1992 were not made by him and his wife, were
not refuted. Private respondent’s witness, Jaime, who was tasked to verify if there was no encumbrance on the spouses Cuevas’ title to the subject
property and to register it in private respondent’s name after the alleged sale, admitted that he had never met the supposed vendors of the subject
property and, thus, could not competently testify on whether it was actually the spouses Cuevas who executed the Deed of Absolute Sale dated 10
November 1992 in private respondent’s favor.

The pronouncement of the RTC, affirmed by the Court of Appeals, that Marciano’s testimony was self-serving was utterly baseless. Neither the RTC
nor the Court of Appeals explained how Marciano’s confirmation of the sale of the subject property to petitioners, and his renunciation of the
supposed sale of the same property to private respondent, would accrue to Marciano’s benefit. In giving such a testimony in 1994, Marciano did
not stand to gain back the subject property, which he had already admitted to selling to petitioners 18 years prior, in 1976. On the other hand, if
Marciano falsely testified in open court that he and his wife did not sell the subject property to private respondent, Marciano was risking
prosecution for the crime of perjury and liability for damages.

Additionally, although Questioned Documents Report No. 548-795 of the NBI did not make a definitive finding on whether Marciano’s purported
signature on the Deed of Sale dated 10 November 1992 was actually his or a forgery, the same Report did unqualifiedly state that the signature
that Virginia supposedly affixed to the said Deed and the specimen signatures that she provided the NBI were not written by the same person.
Clearly, Questioned Documents Report No. 548-795 of the NBI established that her purported signature in the Deed of Absolute Sale dated 10
November 1992 was forged.

It is true that a finding of forgery does not depend exclusively on the testimonies of expert witnesses and that judges must use their own judgment,
through an independent examination of the questioned signature, in determining the authenticity of the handwriting. 28 However, it is important to
note that in this case neither the RTC nor the Court of Appeals made any finding through an independent examination of Virginia’s signatures. The
RTC gave credence to Questioned Documents Report No. 548-795 of the NBI, but misread it as saying that the two specimen signatures given by
Virginia were not written by the same person. Hence, Questioned Documents Report No. 548-795 of the NBI, finding that the signature of Virginia
in the Deed of Absolute Sale dated 10 November 1992 is a forgery, stands unquestioned.

That at least one of the signatures of the alleged vendors was indubitably established as a forgery should have already raised serious doubts as to
the authenticity and validity of the Deed of Absolute Sale dated 10 November 1992. This, taken together with Marciano’s candid and categorical
testimony that he and his wife did not sell the subject property to private respondent or executed any deed to evidence the same, strongly
militates against the existence of a second sale of the subject property to private respondent.
In comparison, the circumstances surrounding the alleged second sale of the subject property by the spouses Cuevas to private respondent are
sketchy at best. Vice Mayor Carungcong, who allegedly brokered the sale, had already died during the pendency of the case and was not presented
as witness. It was not made clear whether he was duly authorized by the spouses Cuevas to broker such sale. Private respondent’s witness, Jaime,
did not claim to have been present during the negotiations or in any part of the sale transaction, and had not even met the spouses Cuevas. All he
was able to testify on was that he verified with the Register of Deeds that there was no encumbrance annotated on TCT No. T-58459 of the spouses
Cuevas, and eventually, he was able to cause the cancellation of TCT No. T-58459 in the spouses Cuevas’ names and the issuance of TCT No. T-
369793 in private respondent’s name based on the questionable Deed of Absolute Sale dated 10 November 1992. Similarly ambiguous was how
Jaime was able to have TCT No. T-58459 of the spouses Cuevas cancelled when the Owner’s Duplicate Copy thereof was with petitioners. When a
certificate of title is cancelled, the owner’s duplicate must also be surrendered to the Register of Deeds for cancellation, in accordance with Section
5329 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, as amended.

Other than the forged Deed of Absolute Sale dated 10 November 1992, private respondent’s bad faith in registering the subject property in her
name and her dishonest scheme in appropriating the land for herself are further evidenced by her own admissions in the Waiver and Quitclaim
dated 15 January 1998, which she executed in favor of Engracia’s heirs, to wit30:

1. That, I am the holder of Transfer Certificate of Title No. 369793 covering a parcel of land (Lot No. 6961-N) with an area of Forty One
Thousand Eight Hundred and Thirty Seven square meters (41, 837 sq. m.) situated in Barangay Paliparan, Dasmariñas, Cavite and declared
for taxation purposes under Tax Declaration No. 151746 Dasmariñas, Cavite;

2. That, I know (sic) from the very beginning the dubiousness of my title to the above described roperty (sic);

3. That, I have neither legal or equitable title to the said property as the previous document (Deed of Conveyance) which is the basis of
immediate transfer from OCT No. 1002 is of questionable origin;

4. That, all documents relative to the issuance of subsequent transfer certificate of titles including TCT No. 369793 under my name were
in reality, entirely simulated and fictitious;

5. That, I am recognizing the genuineness of Transfer Certificate of Title No. 769357-3911 in the name of ENGRACIA ISIP with Tax
Declaration No. 151745, which has been transferred to her heirs, APOLONIA I.R. ALCARAZ, ELIZA I. REYES-GLORIA, VICTOR ISIP REYES and
EPITACIO ISIP REYES, covered by TCT. No. T-784707;

6. That, in the light of the foregoing, I do hereby waive and renounce, now and forever, all claims of whatever nature to the said property
in favor of the said ENGRACIA ISIP, her heirs, executors, administrator or assigns.

Private respondent’s unabashed confession that she knew of the dubiousness of her title from the very beginning is contrary to the concept of
good faith. Good faith consists in the belief of the possessors that the persons from whom they received the thing are its rightful owners who could
convey their title.31

Based on the foregoing, the preponderance of evidence in this case is in petitioners’ favor. The spouses Cuevas only sold the subject property to
them in 1976, and did not sell it a second time to private respondent in 1992. As a consequence, the rules on the double sale of registered property
are not relevant herein. The Court then proceeds to rule on the consequence of private respondent’s fraudulent registration of the subject
property in her name.

The Deed of Absolute Sale dated 10 November 1992, a forged deed, is a nullity and conveys no title. 32 Paragraph 2 of Section 53 of Presidential
Decree No. 1529 reads:

In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without
prejudice, however, to the rights of any innocent holder for value of a certificate of title. After the entry of the decree of registration on the original
petition or application, any subsequent registration procured by the presentation of a forged duplicate certificate of title, or of a forged deed or
other instrument, shall be null and void.

Insofar as a person who fraudulently obtained a property is concerned, the registration of the property in said person’s name would not be
sufficient to vest in him or her the title to the property. A certificate of title merely confirms or records title already existing and vested. The
indefeasibility of the Torrens title should not be used as a means to perpetrate fraud against the rightful owner of real property. Good faith must
concur with registration because, otherwise, registration would be an exercise in futility.33 A Torrens title does not furnish a shield for fraud,
notwithstanding the long-standing rule that registration is a constructive notice of title binding upon the whole world. The legal principle is that if
the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee. 34

It has long been established that the sole remedy of the landowner whose property has been wrongfully or erroneously registered in another's
name is to bring an ordinary action in an ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent
purchaser for value, for damages. "It is one thing to protect an innocent third party; it is entirely a different matter and one devoid of justification if
deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious deed."35 Reconveyance is all about the transfer of the
property, in this case the title thereto, which has been wrongfully or erroneously registered in another person's name, to its rightful and legal
owner, or to one with a better right.36 Evidently, petitioners, being the rightful owners of the subject property, are entitled to the reconveyance of
the title over the same.

However, as a further demonstration of private respondent’s continuing bad faith and persistent effort to unlawfully deprive petitioners of the
subject property, private respondent executed the Waiver and Quitclaim dated 15 January 1998, in which she admitted that her title to the said
property was void and, instead, recognized the title of Engracia, who owned the subject property prior to the spouses Cuevas. Pursuant to said
Waiver and Quitclaim, the Register of Deeds cancelled TCT No. T-369793 in private respondent’s name and issued TCT No. T-784707 in the names
of Engracia’s heirs.
It must be stressed that Engracia, whose TCT No. T-13105 over the subject property was already cancelled on 26 April 1965, had never filed a case
questioning the cancellation of said certificate of title during her lifetime.37 There is also nothing in the records that would show that after
Engracia’s death in 1981, her heirs attempted to recover title to the subject property.

The Waiver and Quitclaim dated 15 January 1998 deserves little evidentiary weight as to the truth or veracity of the statements contained therein,
considering that they were unilaterally made by private respondent. There is no independent evidence that all certificates of title subsequent to
OCT No. 1002 covering the subject property were simulated and fictitious. In fact, private respondent contradicted herself by acknowledging in the
very same document that Engracia’s title, which was transferred to her heirs, was genuine. The only fact that said Waiver and Quitclaim established
was private respondent’s bad faith in having the subject property registered in her name. For the Court to make such finding of bad faith on private
respondent’s part, it need not actually be true that all titles to the subject property, prior to private respondent’s, were simulated and fictitious,
only, private respondent believed them to be so, but still persisted in acquiring and registering in her name what she already knew was a dubious
title.

What is apparent to this Court is that private respondent executed the Waiver and Quitclaim dated 15 January 1998 so as to effect the transfer of
the subject property to third persons, i.e., Engracia’s heirs, and defeat any judgment granting the petitioners the remedy of reconveyance of the
subject property.

In connection therewith, this Court expresses its disfavor over the cavalier attitude of the Register of Deeds of Cavite in canceling TCT No. T-369793
in private respondent’s name and issuing TCT No. T-784707 in the names of Engracia’s heirs, on the sole basis of the Waiver and Quitclaim dated 15
January 1998, executed by private respondent. The Register of Deeds of Cavite, who was a party to petitioners’ case for reconveyance, and was
undoubtedly aware of the issues involved in the said case and the pendency of the same. Yet it blindly allowed the registration of the alleged title
to the subject property of Engracia and her heirs, in effect, reviving a title that had already been cancelled way back in 1965, and disregarding all
other titles issued in between, based entirely on the unilateral claims of a self-confessed fraud. Moreover, in placing its faith in the unsupported
statements of the private respondent, who had confessed to having acquired and registered the property in bad faith, against the presumed good
faith of the former owners, the Register of Deeds acted in a manner that was highly irregular.1avvphi1

This having been said, an action for reconveyance is an action in personam available to a person whose property has been wrongfully registered
under the Torrens system in another’s name. Reconveyance is always available as long as the property has not passed to an innocent person for
value.38

Engracia’s heirs cannot be considered "innocent" persons or persons who acquired the subject property "for value." Engracia’s heirs "re-acquired"
the subject property by virtue of the private respondent’s Waiver and Quitclaim dated 15 January 1998. That the said document was executed by
private respondent, who admitted to holding a dubious title to the subject property, should be sufficient to put Engracia’s heirs on notice and to
cause the latter to investigate the other transfers and titles issued for the subject property. The Waiver and Quitclaim dated 15 January 1998 also
does not establish that the subject property was transferred to Engracia’s heirs for value, it appearing to have been executed by private respondent
in favor of Engracia’s heirs without any consideration at all. Hence, the cancellation of TCT No. T-369793 in private respondent’s name and the
issuance of TCT No. T-784707 in the names of Engracia’s heirs cannot bar the reconveyance of the subject property to petitioners.

A judgment directing a party to deliver possession of a property to another is in personam; it is binding only against the parties and their successors
in interest by title subsequent to the commencement of the action.39 The Court may deem Engracia’s heirs as private respondent’s successors-in-
interest, having acquired title to the subject property through private respondent after the commencement of petitioners’ action for reconveyance
of the same property.

Since private respondent’s fraudulent registration of the subject property in her name violated petitioners’ right to remain in peaceful possession
of the subject property, petitioners are entitled to nominal damages under Article 2221 of the Civil Code, which provides:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

This Court finds that petitioners’ prayer for nominal damages in the amount of P50,000.00 is proper and reasonable.

The award of attorney’s fees is also in order because private respondent acted in gross and evident bad faith in refusing to satisfy petitioners’
plainly valid, just and demandable claim.40 Given the time spent on the present case, which lasted for more than 15 years, the extent of services
rendered by petitioners’ lawyers, the benefits resulting in favor of the client, as well as said lawyer’s professional standing, the award
of P100,000.00 is proper.41

However, exemplary damages cannot be imposed in this case, where petitioners only prayed for the award of nominal damages and attorney’s
fees, but not for moral, temperate, liquidated, or compensatory damages. Article 2229 of the Civil Code imposes exemplary damages only under
the following circumstances:

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for public good, in addition to the moral, temperate,
liquidated or compensatory damages.

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision dated 20 May 2004 of the Court of Appeals in CA-G.R. CV No.
54517 is REVERSED and SET ASIDE. The Register of Deeds is ORDERED to (1) CANCEL TCT No. T-784707 over the subject property in the name of
Engracia’s heirs, which was derived, not in good faith or for value, but from the fraudulently procured TCT No. T-369793 in private respondent’s
name; and (2) ISSUE a new certificate of title over the subject property in the name of petitioners, the rightful owners thereof. Private respondent
is ORDERED to PAY petitioners nominal damages in the amount of P50,000.00 and attorneys fees in the amount of P100,000.00. Costs against
private respondent.

SO ORDERED.
FIRST DIVISION

G.R. No. 148147 February 16, 2007

JESSIE GASATAYA, Petitioner,


vs.
EDITHA MABASA, Respondent.

CORONA, J.:

Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the decision 1 of the Court of Appeals (CA) in CA-G.R.
CV No. 55055 which, in turn, affirmed the decision of the Regional Trial Court (RTC) of Lanao del Norte, Branch 7. 2

The facts follow.

Respondent Editha Mabasa’s father, Buenaventura Mabasa, was granted a homestead patent on Lots 279, 272 and 972 located in Lala, Lanao del
Norte. Buenaventura Mabasa mortgaged these lots to secure a loan from the Development Bank of the Philippines (DBP). Because of his failure to
pay his indebtedness, DBP foreclosed on the lots and sold them at public auction where it emerged as the highest bidder. DBP then obtained titles
to the lots: Lot 279 under TCT No. T-2247 and consolidated Lots 272 and 972 under TCT No. T-2448.

When Buenaventura Mabasa died, respondent’s siblings authorized her to negotiate with DBP for the repurchase of the lots. DBP allowed
respondent to reacquire the foreclosed properties through a deed of conditional sale for P25,875.3

Subsequently, respondent entered into an agreement with petitioner’s father, Sabas Gasataya, for the latter to assume payment of her obligation
to DBP. They further agreed that Sabas Gasataya would take possession of the lots for 20 years and develop them into a fishpond. As consideration
thereof, respondent received P10,000 cash, in addition to the P25,000 that Sabas Gasataya had to pay DBP on her behalf.

Upon representation by Sabas Gasataya that respondent’s obligation to DBP had already been settled, they entered into another agreement
denominated as "Deed of Sale of Fishpond Lands with Right to Repurchase."

Eight years after the execution of the above deed of sale with right to repurchase, respondent discovered that Sabas Gasataya had stopped paying
DBP. As a result, DBP revoked her right to repurchase the subject lots.1awphi1.net

DBP later on held a public auction of the properties where petitioner participated and bid the highest price of P27,200. Eventually, he acquired
titles to the lots for which he was issued TCT No. T-11720 in lieu of TCT No. T-2447 (Lot 279) and TCT No. T-11721 for TCT No. T-2448 (Lots 272 and
972).

Respondent then filed a complaint in the RTC for reconveyance of titles of lands with damages 4 against petitioner and Sabas Gasataya (Gasatayas).
She claimed that the latter deliberately reneged on his commitment to pay DBP to: (1) revoke her right to repurchase the lots under the deed of
conditional sale and (2) subject the properties to another public auction where petitioner could bid.

Petitioner and his father denied the allegations saying that the deed of conditional sale assumed by the latter from respondent was rendered
ineffective by DBP’s refusal to accept payments thereon.

The trial court ruled in favor of respondent finding that the Gasatayas failed to controvert her claim that they defrauded her just so petitioner could
acquire the lots at public auction.5 According to the trial court, the Gasatayas failed to prove that DBP indeed rejected payments from Sabas
Gasataya. The trial court ruled:

WHEREFORE, judgment is hereby rendered in favor of the [respondent] and against [the Gasatayas] ordering [them] to wit:

a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720] and TCT No. T-11721, both of the Registry of Deeds for the
Province of Lanao del Norte, upon tender to and receipt by [petitioner] of the amount of P37,200.00 Philippine money;

b. Ordering the Registrar of Deeds for the Province of Lanao del Norte to procure and cause the transfer and registration of the aforesaid
transfer certificates of title in favor and in the name of herein [respondent] Editha S. Mabasa;

c. Ordering [the Gasatayas] to cede, transfer and reconvey to [respondent] the physical possession and occupancy of Lot 279, 272 and Lot
972…as covered by the aforesaid certificates of title;

d. Ordering [the Gasatayas] to pay [respondent] the sum of P5,000.00 for attorney’s fees; P5,000.00 as litigation expenses;

e. Ordering [the Gasatayas] to pay costs of this proceeding[s].

SO ORDERED.6

Petitioner and his father appealed to the CA which affirmed the RTC’s decision and dismissed their appeal for lack of merit. The CA declared:

The contention of [respondent] that [the Gasatayas] deliberately chose not to pay DBP as agreed, in order for them to acquire said properties in a
fraudulent and treacherous manner, was not fully controverted by [them]. [The Gasatayas] failed to produce evidence to support their defenses.
xxx xxx xxx

Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a Deed of Sale with a Right to Repurchase and not because the DBP granted
it to them…[T]o facilitate their acquisition of the land in question, [they] deliberately defaulted in the payment of the assumed obligation to the
damage and prejudice of [respondent]. Consequently, the lands in question were subjected to public bidding wherein [petitioner] participated and
eventually won…[the Gasatayas] committed a breach of trust amounting to fraud which would warrant an action for reconveyance. 7

Petitioner alone came to us via this appeal by certiorari seeking the reversal of the CA decision.

Before us, petitioner contests the CA decision affirming the trial court’s order to reconvey his titles on the disputed lots to respondent who,
according to him, is not the owner thereof.

We affirm the CA.

Reconveyance is available not only to the legal owner of a property but also to the person with a better right than the person under whose name
said property was erroneously registered.8 While respondent is not the legal owner of the disputed lots, she has a better right than petitioner to
the contested lots on the following grounds: first, the deed of conditional sale executed by DBP vested on her the right to repurchase the lots
and second, her right to repurchase them would have subsisted had they (the Gasatayas) not defrauded her.

The trial court’s findings, as affirmed by the CA, that petitioner and his father deceived respondent to acquire the disputed lots bind us. Well-
settled is the rule that factual conclusions of the trial court deserve respect and become irrefutable especially when affirmed by the CA.9 Absent
any evidence that the CA overlooked salient matters that could justify a reversal of the outcome of this case, we decline to disturb such factual
conclusions.

Petitioner, however, insists that respondent had no right to the disputed lots since the conditional sale agreement where such right was based had
long been cancelled by DBP. According to petitioner, a void and inexistent deed cannot override his right as registered owner of the lots.

We disagree.

Petitioner cannot discredit the deed of conditional sale just so he can to keep his titles to the lots. Petitioner should be reminded that DBP revoked
respondent’s right to repurchase the lots under said deed because of the deceitful maneuverings that he and his father employed. If we were to
sustain petitioner’s argument, then we would, in effect, reward him for his misdeed.

Neither can this Court uphold petitioner’s contention that his titles are unsullied on the mere fact that he purchased the properties at public
auction. Fraud overthrows the presumption that the public sale was attended with regularity. The public sale did not vest petitioner with any valid
title to the properties since it was but the consequence of his and his father’s fraudulent schemes.

The registration of the properties in petitioner’s name did not obliterate the fact that fraud preceded and facilitated such registration. Actual or
positive fraud proceeds from an intentional deception practiced by means of misrepresentation of material facts,10 which in this case was the
conscious representation by petitioner’s father (Sabas Gasataya) that respondent’s obligation to DBP had already been settled. It is fraud to
knowingly omit or conceal a fact, upon which benefit is obtained, to the prejudice of another. 11 Consequently, fraud is a ground for
reconveyance.12

Moreover, the law only protects an innocent purchaser for value and not one who has knowledge of and participation in the employment of fraud.
An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that
same property, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim.13 Obviously,
petitioner was not an innocent purchaser for value.

As a final point, the Court takes significant note of the fact that respondent’s father originally acquired the subject lots through homestead grant.
Commonwealth Act 141 (Public Land Act) aims to confine and preserve to the homesteader and his kin the homestead lots. We, therefore, agree
with the CA’s disquisition that courts should "lend a stout shoulder to help keep a homestead in the homesteader’s family" for the stern reality
cannot be belied that "homesteaders and their families are generally in the lower stratum of life" and most likely, when they alienate the
homestead, it is "out of dire necessity."14 According to the CA, desperation does not allow much of a choice, hence homesteaders and their kin
should be given every opportunity to repurchase their homestead.

WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No. 55055 is hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.
SECOND DIVISION

G.R. No. L-33261 September 30, 1987

LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL, DIBARATUN, MATABALAO, MINDALANO DIBARATUN,
DIPUNDUGUN MORO, and MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.

SARMIENTO, J.:

This is a petition for review on certiorari of the decision 1 of the then Court of First Instance of Lanao del Sur, Branch III, Marawi City, in Civil Case
No. 1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under Republic Act No. 5400, "as only question of law is raised." 2

The only issue for resolution is the prescriptive period of an action for reconveyance of real property which has been wrongfully or erroneously
registered under the Torrens System in another's name. In other words, what is the prescriptive period for the action to reconvey the title to real
property arising from an implied or constructive trust and, corrolarily reference. The petitioners herein, defendants in the trial court, assert that
they have ten years to bring the action, while the respondent, plaintiff in the court below, claims the prescriptive period is four years. The trial
court ruled tor the plaintiff, now respondent.

We reverse. We hold that the prescriptive period for such an action for reconveyance, as this case, is ten years. The point of reference is, or the
ten-year prescriptive period commences to run from, the. date of the issuance of the certificate of title over the real property.

There is no issue as to the facts, this case having been elevated to this Court, as aforestated, on purely a question of law. Be that as it may, in order
to satisfy constitutional requirements as well as to place the question of law in proper perspective, there is need to state the facts of the case. On
this regard, the findings of the trial court would best serve the stated purposes.

xxx xxx xxx

From the evidence submitted during the trial there is no dispute concerning the fact relative to the Identity of the land in
litigation. It is commonly known as Lot No. 524, Pls-126 and technically described and bounded in the sketch (Exh. "7 "). This is
the very tract of land alleged by the plaintiff to have been forcibly entered into by the defendants and which plaintiff now w&s
to recover possession thereof. It has also been proven that the same lot was covered by two free patent applications: — (l) that
of defendant Liwalug Datomanong (erroneously surnamed Amerol) which he filed on the 4th day of September, 1953, and (2)
that of Molok Bagumbaran which was filed on December 27, 1954. There is also no question regarding the fact that as to these
two free patent applications, that of plaintiff Molok Bagumbaran was given due course as a result of which Free Patent No. V-
19050 was issued on August 16,1955 by authority of the President of the Philippines Ramon Magsaysay, by Jaime Ferrer,
Undersecretary of Agriculture and Natural Resources and duly registered with the office of the Register of Deeds of the
Province of Lanao (now Lanao del Sur) in the mm year whereupon Original Certificate of Title No. P-466 was duly issued,
owner's duplicate certificate having been furnished the herein plaintiff.

This court is also inclined to believe that defendant Liwalug Datomanong had never known of plaintiff's free patent application
on the land in question nor was he ever notified or participated in the administrative proceedings relative to plaintiff's free
patent application. In the meantime, since the date he purchased the land from Mandal Tondo, said defendant has been and up
to the present in con. tinuous occupation and cultivation of the same. His co-defendants named in the complaint are merely his
tenants.

It is also incontrovertible fact that said defendant did not take appropriate action to annul the patent and title of the plaintiff
within one year from issuance thereof and that the first step taken by him to contest said patent and title was a formal protest
(Exh. "12", p. 408, Record) dated April 24, 1964, filed before the Bureau of Lands after the lapse of Nine (9) long years from the
issuance of patent in favor of the plaintiff. The second step he took was his counterclaim contained in his answer to the
complaint in the above entitled case, which answer was filed with this court on December 4, 1964. In said counterclaim,
defendant reiterated his stand that plaintiff secured patent on the land by means of deceit and fraud, wherefore, defendant
prayed that said title be annulled, or, alternatively, plaintiff be ordered to reconvey the said land to the said defendant Liwalug
Datomanong.

First question to be resolved is whether or not the plaintiff is guilty of fraud or misrepresentation in securing the Free Patent
No. V-19050 covering the land in question.

Upon a thorough examination of the evidence, proofs are sufficient to support defendant's contention that plaintiff is guilty of
fraud and misrepresentation. In the first place, proofs are abundant tending to show that since 1952 when Mandal Tando
transferred the land to said defendant, the latter occupied, took possession thereof and cultivated the same continuously,
publicly, adversely against any claimant and in the concept of owner up to the present; that said defendant had introduced
considerable improvements such as coconut and coffee plantations and other fruit trees besides his farm house, a mosque,
cassava plantation and clearing and full cultivation of the entire area. The fact of possession on the part of said defendant has
been attested to by competent and creditable witnesses like Mandal Tando who conveyed the land to the defendant; Hadji
Sirad Gomandang, the barrio captain of Montay, Malabang, Lanao del Sur, Hadji Rasol Maruhom and Hadji Abdulcadir
Pagayawan, both of Pialot, Malabang, Lanao del Sur who are farmers and barrio-mates of said defendant; and also Disomnong
Dimna Macabuat, an employee in the office of the District Land Officer at Marawi City who had officially conducted occular
inspection and investigation of the premises in connection with the protest of said defendant found thereon the above-
mentioned improvements introduced by the said defendant.
What is more, on or before filing his free patent application, plaintiff knew that the land in question which was covered by his
free patent application was then actually occupied and cultivated by defendant Liwalug Datomanong if not by Mandal Tando,
the original occupant. Be it remembered that Mandal Tando had transferred to defendant Liwalug Datomanong Twenty Four
(24) hectares, more than eleven hectares of which is (sic) outside the military reservation and designated as Lot No. 524, Pls-
126 and the rest which is in the southern portion lies within the military reservation. Now, immediately adjacent thereto on the
south is the land claimed and occupied by the herein plaintiff also consisting of Twenty Four (24) hectares but wholly within the
military reservation. It appears that plaintiff declared this Twenty four hectares for the first time on October 24, 1950 for
taxation purposes (Tax Declaration No. 1529, Record) and stated in said tax declaration (Exhs. "8" and "8-A," p. 414, Record)
regarding the boundaries that the adjacent owner on the north is Mandal Tando. In other words, plaintiff had expressly
recognized the fact that Mandal Tando is an adjacent land owner north of plaintiff's property. On February 19, 1951 herein
plaintiff revised the above-stated tax declaration and secured another (Tax Declaration No. 1794, Exh. "9" and "9-A," p. 413,
Record) and still plaintiff stated therein that his boundary land owner on the north is Hadji Abdul Gani. 3 [a.k.a.Liwalug
Datomanong(Amerol)]. 4

xxx xxx xxx

Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial court denied the counterclaim of the defendants, now petitioners,
for the affirmative relief of reconveyance on the ground of prescription. Said the court:

xxx xxx xxx

The patent of the plaintiff having been registered back in 1955 and in contemplation of law registration thereof is notice to the
whole world and yet defendant exerted no effort whatsoever either to annul the title or institute proceedings for reconveyance
except in his counterclaim contained in his answer to the complaint in this case at bar which answer and counter-claim was
filed on December 4, 1964, some nine long years from the date of registration of the patent, defendant unfortunately lost his
right to reconveyance within the period of four (4) years from the date of registration of said patent. 5

xxx xxx xxx

Thus, the dispositive portion of the assailed decision stated:

xxx xxx xxx

PREMISES CONSIDERED, judgment is hereby rendered as follows: (1) declaring the herein plaintiff the registered owner of Lot
No. 524, Pls-126 and sustaining and respecting the validity of the plaintiff's Original Certificate of Title No. P-466 covering the
said land; (2) ordering the defendants to vacate the premises of Lot No. 524; Pls-126 and deliver possession thereof to the
herein plaintiff under certain terms and conditions herein below stated; (3) denying and hereby dismissing the counterclaim of
the herein defendants and consequently the prayer to annul the title and/or for reconveyance of the land to said defendant
Liwalug Datomanong must Likewise be denied; (4) that before plaintiff could take possession of said premises he must
reimburse defendant Liwalug Datomanong the total sum of Six Thousand Seven Hundred Fifty-Two Pesos and Sixty-Two
Centavos (P6,752.62) which he incurred for the necessary and useful expenses on the land in question with the right of said
defendant to retain possession of the premises if said reimbursement be not completely made. No pronouncement as to
costs. 6

xxx xxx xxx

Hence, this petition. 7

The petitioners in their Brief 8 assign the following two errors allegedly committed by the trial court:

I.

THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT PETITIONERS RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION OF AN
IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS FROM THE REGISTRATION OF THE PATENT OF RESPONDENT.

II.

THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS BASIS IN THE ASSESSMENT OF THE FAIR MARKET VALUE OF THE
IMPROVEMENT INTRODUCED ON THE LAND IN GOOD FAITH BY PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT UPON PURE AND SIMPLE
GUESS WORKS AND WILD ESTIMATIONS.

The first assignment of error is well-taken as adverted to at the outset.

Indubitably, the act of respondent in misrepresenting that he was in actual possession and occupation of the property in question, obtaining a
patent and Original Certificate of Title No. P- 466 in his name, created an implied trust in favor of the actual possessor of the said property. The Civil
Code provides:

ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is by force of law, considered a trustee
of an implied trust for the benefit of the person from whom the property comes.
In this case, the land in question was patented and titled in respondent's name by and through his false pretenses. Molok Bagumbaran fraudulently
misrepresented that he was the occupant and actual possessor of the land in question when he was not because it was Liwalug Datomanong.
Bagumbaran falsely pretended that there was no prior applicant for a free patent over the land but there was — Liwalug Datomanong. By such
fraudulent acts, Molok Bagumbaran is deemed to hold the title of the property in trust and for the benefit of petitioner Liwalug Datomanong.
Notwithstanding the irrevocability of the Torrens title already issued in the name of respondent, he, even being already the registered owner under
the Torrens system, may still be compelled under the law to reconvey the subject property to Liwalug Datomanong. After all, the Torrens system
was not designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad faith. Further, contrary to
the erroneous claim of the respondent, 9 reconveyance does not work to set aside and put under review anew the findings of facts of the Bureau of
Lands. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the
property, in this case the title thereof, which has been wrongfully or erroneously registered in another person's name, to its rightful and legal
owner, 10 or to one with a better right. That is what reconveyance is all about.

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject to extinctive prescription. 11 Happily,
both parties agree on this point. The seeming impediment however, is that while the petitioners assert that the action prescribes in ten years, the
respondent avers that it does in only four years.

In support of his submission, the respondent invokes several cases. We have examined the invocations and find them inapplicable. For instance,
the case of Fabian vs. Fabian, 12 relied on by the respondent, does not square with the present case. In Fabian, the party who prayed for
reconveyance was not in actual possession and occupation of the property. It was instead the party to whom title over the property had been
issued who occupied and possessed it. Further, the litigated property had been in the adverse possession of the registered owner for well-nigh over
twenty-nine big years, hence, reconveyance had been irretrievably lost.

Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual occupant and possessor of the controverted parcel of land, after
having been enticed by Leonor Reyes, an ambulatory notary public, with promise of help, engaged and retained the services of the latter to
facilitate the issuance of a patent for the said land in his (Miguel's) favor. Thus, there existed between the parties a relationship very much akin to
that of lawyer-client and which is similarly fiduciary in character. But Reyes, inspite of his compensation of one-fifth of the yearly produce of the
property, still violated the trust reposed on him and instead worked for the issuance of the patent in the name of his own wife. So, after the demise
of Leonor Reyes, the property was fraudulently patented and titled in his widow's favor. The reconveyance of the property was decreed by the
Court based on "breach of fiduciary relations and/or fraud." It was shown that the parties were legally bound to each other by a bond of fiduciary
trust, a bond lacking in the case at bar.

Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of because the period of prescription was not there definitely and squarely
settled. In fact, Ramirez underscores a vacillation between the four-year and the ten-year rule. There it was stated that "an action for relief on the
ground of fraud — to which class the remedy prayed for by Paguia belong — scan only be brought within four years after accrual of the right of
action, or from the discovery of the fraud." If the decision just stayed pat on that statement, there would be merit in the respondent's
presentation. But Ramirez continues: "(I)ndepedently, however, of the alleged fraud on the part of Ramirez, the right to demand a reconveyance
prescribes after 10 years from accrual of the cause of action, June 22, 1944, the date of registration of the patent and of the issuance of OCT No.
282- A in his name." 15

Significantly, the three cases cited by the respondent to buttress his position and support the ruling of the trial court have a common denominator,
so to speak. The cause of action assailing the frauds committed and impugning the Torrens titles issued in those cases, all accrued prior to the
effectivity of the present Civil Code. The accrual of the cause of action in Fabian was in 1928, in Miguel, February, 1950, and in Ramirez, 1944. It
must be remembered that before August 30, 1950, the date of the effectivity of the new Civil Code, the old Code of Civil Procedure (Act No. 190)
governed prescription. It provided:

SEC. 43. Other civil actions; how limited-Civil actions other than for the recovery of real property can only be brought within the
following periods after the right of action accrues:

xxx xxx xxx

3. Within four years: x x x An action for relief on the ground of fraud, but the right of action in such case shall not be deemed to
have accrued until the discovery of the fraud;

xxx xxx xxx

In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is
the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription,
Article 1144 of the Civil Code is applicable.

Article 1144. The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

xxx xxx xxx

(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must perforce prescribed in ten years and not otherwise. A long line of
decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance
based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. 16 The only discordant
note, it seems, is Balbin vs. Medalla, 17 which states that the prescriptive period for a reconveyance action is four years. However, this variance can
be explained by the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the fraud was discovered on June 25, 1948, hence Section
43(3) of Act No. 190, was applied, the new Civil Code not coming into effect until August 30, 1950 as mentioned earlier. It must be stressed, at this
juncture, that Article 1144 and Article 1456, are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil
Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period for an action for reconveyance of title of real
property acquired under false pretenses.

It is abundantly clear from all the foregoing that the action of petitioner Datomanong for reconveyance, in the nature of a counterclaim interposed
in his Answer, filed on December 4, 1964, to the complaint for recovery of possession instituted by the respondent, has not yet prescribed.
Between August 16, 1955, the date of reference, being the date of the issuance of the Original Certificate of Title in the name of the respondent,
and December 4, 1964, when the period of prescription was interrupted by the filing of the Answer cum Counterclaim, is less than ten years.

The respondent also interposed as a deterrent to reconveyance the existence of a mortgage on the property. It is claimed by the respondent that
reconveyance would not be legally possible because the property under litigation has already been mortgaged by him to the Development Bank of
the Philippines. 19 This claim is untenable otherwise the judgment for reconveyance could be negated at the will of the holder of the title. By the
simple expedient of constituting a mortgage or other encumbrance on the property, the remedy of reconveyance would become illusory. In the
instant case, the respondent being doubly in bad faith — for applying for and obtaining a patent and the Original Certificate of Title therefor
without being in possession of the land and for mortgaging it to the Development Bank knowing that his Original Certificate of Title was issued
under false pretenses — must alone suffer the consequences.

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

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

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

SO ORDERED.
SECOND DIVISION

G.R. No. 140457 January 19, 2005

HEIRS OF MAXIMO SANJORJO, namely, VICENTE SANJORJO, MACARIA SANJORJO, DOMINGO SANJORJO, ALFREDO CASTRO, and SPOUSES
SANTOS AND LOLITA INOT, petitioners,
vs.
HEIRS OF MANUEL Y. QUIJANO, namely, ROSA Q. LEDESMA, MILAGROS Q. YULIONGSIU, ALAN P. QUIJANO AND GWENDOLYN P. ENRIQUEZ, and
VICENTE Z. GULBE, respondents.

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision1 dated February 17, 1999 of the Court of
Appeals (CA) in CA-G.R. CV No. 50246 and its Resolution2 dated October 12, 1999 denying the petitioners’ motion for reconsideration.

The Antecedents

On August 29, 1988, Free Patent No. VII-4-2974 was issued to Alan P. Quijano, married to Mila Matutina, over a parcel of land located in Antipolo,
Medellin, Cebu, with an area of 14,197 square meters identified as Lot 374, Cadastre 374-D. Based on the said patent, Original Certificate of Title
(OCT) No. OP-38221 was issued by the Register of Deeds to and in the name of Alan P. Quijano on September 6, 1988.3 On November 11, 1988,
Free Patent No. VII-4-3088 was issued to and in favor of Gwendolyn Q. Enriquez, married to Eugenio G. Enriquez, over a parcel of land located in
Antipolo, Medellin, Cebu, identified as Lot 379, Cadastre 374-D, with an area of 6,640 square meters. Based on the said patent, OCT No. OP-39847
was issued in her favor on February 11, 1989.4

In the meantime, Gwendolyn Enriquez filed an application for a free patent over Lot 376 of Cadastre 374-D with the Department of Environment
and Natural Resources (DENR). The application was docketed as Free Patent Application (F.P.A.) No. VII-4-3152. She also filed an application for a
free patent over Lot 378, docketed as F.P.A. No. VII-4-3152-A. However, the heirs of Guillermo Sanjorjo, namely, Tranquilina, Pablo, Boir, Erlinda,
Josefina, Maria, Maximo, Isabel, Jose, Dario, Vicente, Noel, Albina, Ramon, Domingo, Adriano and Celedonia, all surnamed Sanjorjo, filed a
protest/complaint with the DENR on May 22, 1991, praying for the cancellation of Free Patent No. VII-4-2974, as well as Free Patent No. VII-4-3088,
and for the dismissal of the free patent applications over Lots 376 and 378.5 The complaint was docketed as PENRO Claim No. PN 072231-4, and
was assigned to the Regional Executive Director for hearing and decision.

The protestants/claimants alleged that the said parcels of land were originally owned by Ananias Ursal but were exchanged for a parcel of land
located in San Remegio, Cebu, owned by their predecessor, Guillermo Sanjorjo, married to Maria Ursal, and from whom they inherited the
property. They prayed that:

WHEREFORE, premises considered and after hearing on the merits, it is most respectfully prayed of this most Honorable Office to render judgment
ordering:

1. The cancellation of Free Patent Titles Nos. VII-4-2974 and VII-4-3088 issued to respondents Alan P. Quijano and Gwendolyn Quijano
Enriquez concerning Lot Nos. 374 and 379, respectively.

2. The cancellation of Free Patent Application Nos. VII-4-3152, VII-4-3152-A, and VII-1-18277-I of respondents concerning Lot Nos. 376
and 378.

3. The return of possession and ownership of these lots to the complainants/protestants who are the rightful owners by inheritance.

Protestants further pray for other relief, just and equitable, under the premises.6

During the pre-trial conference of August 2, 1991, the protestants/claimants manifested that they were withdrawing their protest/complaint. Thus,
on April 14, 1992, the Regional Executive Director rendered a decision7 giving due course to the applications. However, he ruled that the free
patents over Lots 374 and 379 could no longer be disturbed since the complaint for the cancellation was filed more than one year from their
issuance. The dispositive portion of the decision reads:

WHEREFORE, it is hereby ordered that the above-entitled administrative case be dismissed and dropped from the records. It is further ordered that
the Free Patent Application of applicants-respondents over Lot Nos. 376 and 378 be given due course for being in the actual adverse and
continuous possession of the land in controversy. Patent/Titles already issued and entered in the Registry Book in favor of applicants-respondents
on Lot Nos. 374 and 379 in 1988 and 1989 need not be disturbed anymore, for failure to show evidence of actual fraud in the procurement of such
titles.8

On September 13, 1993, Vicente Sanjorjo, the heirs of Maximo Sanjorjo, namely, Macaria Sanjorjo, Domingo Sanjorjo, Alfredo Castro, and the
Spouses Santos and Lolita Inot, herein petitioners, filed a complaint for cancellation of titles under tax declarations and reconveyance of possession
of real property covering Lots 374, 376, 378 and 379 located in Medellin, Cebu, against the private respondents, the heirs of Manuel Quijano,
namely, Rosa Q. Ledesma, Milagros Q. Yuliongsiu, Alan P. Quijano and Gwendolyn P. Enriquez, and Vicente Gulbe. The petitioners did not implead
the rest of the heirs of Guillermo Sanjorjo, including his daughter Tranquilina Sanjorjo, as parties-plaintiffs, and alleged, inter alia –

3. That the plaintiffs are the owners of several parcels of land in Antipolo, Medellin, Cebu, which are more particularly described as
follows:

(a) Lot No. 374 with an area of 14,179 sq.m. and covered by Tax Declaration No. 00718 in the name of PONCIANO DEMIAR and
Tax Declaration No. 01042 in the name of TRANQUILINA SANJORJO;
(b) Lot No. 376 with an area of 6,177 sq.m. and covered by Tax Declaration No. 01038 in the name of MAURO SANJORJO;

(c) Lot No. 378 with an area of 3,201 sq.m. and covered by Tax Declaration No. 01035 in the name of FLORENTINO SANJORJO;

(d) Lot No. 379 with an area of 6,640 sq.m. and covered by Tax Declaration No. 00772 in the name of SANTOS INOT and Tax
Declaration No. 01039 in the name of SABINIANO SANJORJO;

The said Tax Declarations are hereto attached and marked as Annexes "A," "B," "C," "D," "E" and "F," respectively, and made integral
parts of this complaint;

4. That the aforestated lots originally belonged to the late MAXIMO SANJORJO who died during World War II. His children MAURO,
FLORENTINO, SABINIANO, TRANQUILINA and RAYMUNDA, all surnamed SANJORJO, inherited the said properties. They have also passed
away and the plaintiffs, who are the children of MAXIMO SANJORJO’s children are now the rightful heirs of the aforementioned parcels of
land;

5. That sometime in 1983, the parcels of land in question were leased to MANUEL QUIJANO for a two (2) year period at the rate
of P4,500.00 per year. However, the lease was never paid for nor was possession of the said properties ever returned to the plaintiffs,
despite repeated demands on QUIJANO to return the same;

6. That MANUEL QUIJANO died in 1987 and the herein defendants, the heirs of MANUEL QUIJANO, divided among themselves the land
belonging to the plaintiffs. Titles and Tax Declarations were then issued on the said lots in the name of the defendants, as follows:

(a) Lot No. 374 is now covered by OCT No. OP-38221 in the name of defendant ALAN P. QUIJANO. A copy of the title is hereto
attached and marked as Annex "G" and made an integral part of this complaint;

(b) Lot No. 376 is now covered by Tax Declaration No. 10015 in the name of MANUEL Y. QUIJANO married to FLAVIANA P.
QUIJANO. A copy of the said tax declaration is hereto attached and marked as Annex "H" and made an integral part of this
complaint;

(c) Lot No. 379 is now covered by OCT No. OP-39847 in the name of GWENDOLYN Q. ENRIQUEZ. A copy of the title is hereto
attached and marked as Annex "I" and made an integral part of this complaint;

7. That the plaintiffs nor their ascendants have never sold, donated, or mortgaged any of these lots in question to the defendants or their
ascendants;

8. That sometime in September 1991, the defendant ALAN QUIJANO charged plaintiff ALFREDO CASTRO with QUALIFIED THEFT for
allegedly having stolen the coconuts on the properties in question. Subsequently, the Municipal Court of Medellin acquitted CASTRO on
the ground that he was the real owner of the lot. It was only on that time that plaintiffs discovered that defendants had already titled
their lots. Furthermore, in 1992, the herein plaintiffs were sued by the defendants for Quieting of Title, which case they subsequently
withdrew. This case made the plaintiffs realize that all their properties had already been titled in defendants’ names;

9. That, at present, defendants have leased these lots to a certain VICENTE GULBE, who is named as a defendant in this case. Plaintiffs
also demanded from defendant GULBE the return of their possession over these lots but to no avail. The Certification to File Action from
the barangay captain of Antipolo, Medellin, Cebu, is hereto attached and marked as Annex "J" and made an integral part of this
complaint;

10. That upon their discovery of defendants’ fraudulent acts, plaintiffs demanded the return of their properties but the defendants have
failed and refused and continue to fail and refuse to do so.9

The petitioners prayed that, after due proceedings, judgment be rendered in their favor:

(a) Ordering the cancellation of OCT Nos. OP-38221 and OP-39847 and Tax Declaration No. 10015;

(b) Ordering the defendants to pay rentals to the plaintiffs in the amount of P4,500.00 per year from 1983 up to the time the properties
are returned to the plaintiffs; and

(c) Ordering the defendants to pay the plaintiffs moral damages in the amount of not less than P20,000.00.

Plaintiffs further pray for such other relief and remedies as this Court may deem just and equitable under the premises. 10

The private respondents filed a motion to dismiss the complaint on the ground of res judicata based on the decision of the Regional Executive
Director on April 14, 1992. They maintained that the decision of the Regional Executive Director had become final and executory and, as such,
barred the petitioners’ action.

The petitioners opposed the motion. In their reply to such opposition, the private respondents invoked another ground – that the petitioners’
action was barred by the issuance of OCT No. OP-38221 covering Lot 374 on August 29, 1988, and OCT No. OP-39847 covering Lot 379 on
November 11, 1988.

On September 13, 1994, the trial court issued an Order dismissing the complaint on the ground of res judicata. The petitioners appealed the order
to the CA.
We note that the petitioners limited the issues to the two titled lots, Lots 374 and 379, arguing that there can be no res judicata in this case
because one of its elements, i.e., that the former judgment is a judgment on the merits, was lacking. The petitioners did not assail the trial court’s
order dismissing the complaint insofar as Lots 376 and 378 are concerned. Moreover, according to the petitioners, the April 14, 1992 Decision of
the Regional Executive Director was not a decision on the merits of the complaint, as they had yet to prove their allegation of fraud as regards the
said lots.

In its Decision promulgated on February 17, 1999, the appellate court affirmed the assailed order of the trial court, albeit for a different reason, i.e.,
prescription. Citing Section 32 of Presidential Decree No. 1529,11 it held that the OCTs issued to the respondents on the basis of their respective
free patents became as indefeasible as one which was judicially secured upon the expiration of one year from the date of the issuance of the
patent. The CA did not deem it necessary to rule on the issue of res judicata since it dismissed the case on the ground of prescription.12

When their motion for reconsideration of the said decision of the CA was denied,13 the petitioners filed the instant petition for review, contending
that:

THE HONORABLE COURT OF APPEALS (THIRD DIVISION) GRAVELY ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 13,
CEBU CITY, DATED SEPTEMBER 13, 1994.

PETITIONERS BEG THAT THIS PETITION BE GIVEN DUE COURSE IN THE INTEREST OF SUBSTANTIAL JUSTICE, [SINCE] THE DECISION OF THE COURT OF
APPEALS, IF NOT CORRECTED, WOULD CAUSE IRREPARABLE INJURY TO THE PREJUDICE OF HEREIN PETITIONERS WHO ARE THE REAL OWNERS OF
THE LOTS IN QUESTION.14

The petitioners maintain that the appellate court erred in holding that their action in Civil Case No. CEB 14580 was barred by the Decision dated
April 14, 1992 of the DENR Regional Executive Director. They contend that the latter decision is not a decision on its merits so as to bar their
complaint.

We agree.

The elements of res judicata are the following: (1) the previous judgment has become final; (2) the prior judgment was rendered by a court having
jurisdiction over the subject matter and the parties; (3) the first judgment was made on the merits; and (4) there was substantial identity of parties,
subject matter and causes of action, as between the prior and subsequent actions. 15

A judgment on the merits is one rendered after argument and investigation, and when there is determination which party is right, as distinguished
from a judgment rendered upon some preliminary or formal or merely technical point, or by default and without trial.16

As gleaned from the decision of the DENR Regional Executive Director, he dismissed the petitioners’ complaint for the cancellation of Free Patent
Nos. VII-4-2974 and VII-4-3088 on the ground that it was filed only on May 22, 1991, more than three years from the issuance of the said patents
on August 29, 1988 and November 11, 1988, respectively. In the said decision, the Regional Executive Director declared that after the lapse of one
year from the issuance of patent and registry thereof in the Registry Book of the Register of Deeds, Cebu Province, only the regular courts of justice
have jurisdiction on the matter of cancellation of title.17 The petitioners agreed with the Regional Executive Director and withdrew their complaint,
opting to file an appropriate action in court for the nullification of the said patents and titles. Hence, the decision of the Regional Executive Director
was not a decision on the merits of the petitioners’ complaint.

On the second issue, we agree with the petitioners that their action against the private respondents for the reconveyance of Lots 374 and 379,
covered by OCT No. OP-38221 issued on September 6, 1988 and OCT No. OP-39847 issued on February 11, 1989, respectively, was not barred by
Section 32 of P.D. No. 1529, which reads:

SEC. 32. Review of decree of registration; Innocent purchaser for value. – The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest
therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening
and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case
shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights
may be prejudiced. Whenever the phrase "innocent purchaser for value" or any equivalent phrase occurs in this Decree, it shall be deemed to
include an innocent lessee, mortgagee, or other encumbrancer for value.18

We agree with the ruling of the CA that the torrens title issued on the basis of the free patents became as indefeasible as one which was judicially
secured upon the expiration of one year from date of issuance of the patent.19 The order or decision of the DENR granting an application for a free
patent can be reviewed only within one year thereafter, on the ground of actual fraud via a petition for review in the Regional Trial Court (RTC)
provided that no innocent purchaser for value has acquired the property or any interest thereon. However, an aggrieved party may still file an
action for reconveyance based on implied or constructive trust, which prescribes in ten years from the date of the issuance of the Certificate of
Title over the property provided that the property has not been acquired by an innocent purchaser for value. Thus:

… The basic rule is that after the lapse of one (1) year, a decree of registration is no longer open to review or attack although its issuance is
attended with actual fraud. This does not mean, however, that the aggrieved party is without a remedy at law. If the property has not yet passed to
an innocent purchaser for value, an action for reconveyance is still available. The decree becomes incontrovertible and can no longer be reviewed
after one (1) year from the date of the decree so that the only remedy of the landowner whose property has been wrongfully or erroneously
registered in another’s name is to bring an ordinary action in court for reconveyance, which is an action in personam and is always available as long
as the property has not passed to an innocent third party for value. If the property has passed into the hands of an innocent purchaser for value,
the remedy is an action for damages. In this case, the disputed property is still registered in the name of respondent Demetrio Caringal, so that
petitioner was correct in availing himself of the procedural remedy of reconveyance.20
An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner.21 All that must
be alleged in the complaint are two (2) facts which, admitting them to be true, would entitle the plaintiff to recover title to the disputed land,
namely, (1) that the plaintiff was the owner of the land and, (2) that the defendant had illegally dispossessed him of the same.22 The body of the
pleading or complaint determines the nature of an action, not its title or heading.23 In their complaint, the petitioners clearly asserted that their
predecessors-in-interest have long been the absolute and exclusive owners of the lots in question and that they were fraudulently deprived of
ownership thereof when the private respondents obtained free patents and certificates of title in their names. 24 These allegations certainly
measure up to the requisite statement of facts to constitute an action for reconveyance.

Article 1456 of the New Civil Code provides that a person acquiring property through fraud becomes by operation of law a trustee of an implied
trust for the benefit of the real owner of the property. The presence of fraud in this case created an implied trust in favor of the petitioners, giving
them the right to seek reconveyance of the property from the private respondents. However, because of the trial court’s dismissal order adverted
to above, the petitioners have been unable to prove their charges of fraud and misrepresentation.

The petitioners’ action for reconveyance may not be said to have prescribed, for, basing the present action on implied trust, the prescriptive period
is ten years.25 The questioned titles were obtained on August 29, 1988 and November 11, 1988, in OCT Nos. OP-38221 and OP-39847, respectively.
The petitioners commenced their action for reconveyance on September 13, 1993. Since the petitioners’ cause of action is based on fraud, deemed
to have taken place when the certificates of title were issued,26 the complaint filed on September 13, 1993 is, therefore, well within the
prescriptive period.

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals is MODIFIED. Accordingly, the Regional
Trial Court of Cebu City, Branch 13, is DIRECTED to reinstate the complaint insofar as Lots 374 and 379 are concerned. No costs.

SO ORDERED.
EN BANC

G.R. No. L-21362 November 29, 1968

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,


vs.
LOURDES GASPAR BAUTISTA, THE DIRECTOR OF THE LANDS and THE NATIONAL TREASURER OF THE PHILIPPINES, defendants-appellees.

FERNANDO, J.:

The question this appeal from a judgment of a lower court presents is one that possesses both novelty and significance. It is this: What is the right,
if any, of a creditor which previously satisfied its claim by foreclosing extrajudicially on a mortgage executed by the debtor, whose title was
thereafter nullified in a judicial proceeding where she was not brought in as a party?

As creditor, the Development Bank of the Philippines now appellant, filed a complaint against one of its debtors, Lourdes Gaspar Bautista, now
appellee, for the recovery of a sum of money representing the unpaid mortgage indebtedness, which previously had been wiped out with the
creditor bank acquiring the title of the mortgaged property in an extrajudicial sale. Thereafter, the title was nullified in a judicial proceeding, the
land in question being adjudged as belonging to another claimant, without, however, such debtor, as above noted, having been cited to appear in
such court action.

The Development Bank was unsuccessful, the lower court being of the view that with the due process requirement thus flagrantly disregarded,
since she was not a party in such action where her title was set aside, such a judgment could in no wise be binding on her and be the source of a
claim by the appellant bank. The complaint was thus dismissed by the lower court, then presided by Judge, now Justice, Magno Gatmaitan of the
Court of Appeals. Hence, this appeal by appellant bank.

Such dismissal is in accordance with law. There is no occasion for us to repudiate the lower court.

From the very statement of facts in the brief for appellant bank, the following appears: "On or before May 31, 1949, the defendant-appellee,
Lourdes Gaspar Bautista, who shall hereafter be referred to as Bautista, applied to the Government for the sale favor of a parcel of land with an
area of 12 has., 44 ares, and 22 centares, located at Bo. Barbara, San Jose, Nueva Ecija. After proper investigation, Sales Patent no. V-132 covering
said property was issued in her favor on June 1, 1949 (Exh. A-1) by the Director of Lands. Sales Patent No. V-132 was registered in the office of the
Register of Deeds of Nueva Ecija pursuant to Section 122 of Act 496 on June 3, 1949 (Exh. A), as a result of which Original Certificate of Title No. P-
389 was issued in her favor."1

How the loan was contracted by now appellee Bautista was therein set forth. Thus: "On July 16, 1949, Bautista applied for a loan with the
Rehabilitation Finance Corporation (RFC), predecessor in interest of the plaintiff-appellee Development Bank of the Philippines (DBP), offering as
security the parcel of land covered by O.C.T. No. P-389. Aside from her certificate of title, Bautista also submitted to the RFC other documents to
show her ownership and possession of the land in question, namely, Tax Declaration No. 5153 (Exh. A-4) in her name and the blueprint plan of the
land. On the basis of the documents mentioned and the appraisal of the property by its appraiser, the RFC approved a loan of P4,000.00 in favor of
Bautista. On July 16, 1949, Bautista executed the mortgage contract over the property covered by O.C.T. No. P-389 and the promissory note for
P4,000.00 in favor of RFC (Exhs. C and C-1), after which the proceeds of the loan were released." 2

The satisfaction of the mortgage debt with the acquisition of the title to such property by appellant Bank, by virtue of an extrajudicial foreclosure
sale, and such title losing its validity in view of a court proceeding, where however, appellee Bautista, was not made a party, was next taken up in
the brief of plaintiff-appellant. Thus: "Bautista failed to pay the amortization on the loan so that the RFC took steps to foreclose the mortgage
extra-judicially under Act 3135, as amended. In the ensuing auction sale conducted by the sheriff of Nueva Ecija on June 27, 1951, the RFC acquired
the mortgaged property as the highest bidder (Exh. D). On the date of the sale, the total obligation of Bautista with the RFC was P4,858.48 (Exh. I).
On July 21, 1952, upon failure of Bautista to redeem the property within the one (1) year period as provided bylaw, plaintiff-appellant RFC
consolidated its ownership thereon (Exhs. E and E-I). On July 26, 1952, the Register of Deeds of Nueva Ecija cancelled O.C.T. No. P-389 and replaced
it with T.C.T. No. NT-12108 in the name of the RFC (Exhs. F and F-1). On or about this time, however, an action (Civil Case No. 870) was filed by
Rufino Ramos and Juan Ramos in the Court of First Instance of Nueva Ecija against the Government of the Republic of the Philippines and the RFC
(as successor in interest of Bautista) claiming ownership of the land in question and seeking the annulment of T.C.T. No. 2336 in the name of the
Government, O.C.T. No. P-389 in the name of Bautista and T.C.TG. No. NT-12108 in the name of the RFC. A decision thereon was rendered on June
27, 1955 (Exhs. G, G-1, and G-3) whereby the aformentioned certificates of title were declared null and void."3

Why the complaint had to be dismissed was explained thus in the decision now on appeal: "The Court after examining the proofs, is constrained to
sustain her on that; it will really appear that she had never been placed within the jurisdiction of the Nueva Ecija Court; as the action there was one
to annual the title, it was an action strictly in personam, if that was the case as it was, the judgment there could not in any way bind Lourdes who
had not acquired in said decision in any way for what only happened is that as to the mortgage, the Bank foreclosed, and then sold unto Conrada
and when the title had been annulled, the Bank reimbursed Conrada; stated otherwise, the annulment of Lourdes' title was a proceeding ex parte
as far as she was concerned and could not bind her at all; and her mortgage was foreclosed an the Bank realized on it, when the Bank afterwards
acquiesced in the annulment of the title and took it upon itself to reimburse Conrada, the Bank was acting on its own peril because it could not
have by that, bound Lourdes at all."4

As stated at the outset, the decision must be affirmed. The fundamental due process requirement having been disregarded, appellee Bautista could
not in any wise be made to suffer, whether directly or indirectly, from the effects of such decision. After appellant bank had acquired her title by
such extrajudicial foreclosure sale and thus, through its own act, seen to it that her obligation had been satisfied, it could not thereafter, seek to
revive the same on the allegation that the title in question was subsequently annulled, considering that she was not made a party on the occasion
of such nullification.

If it were otherwise, then the cardinal requirement that no party should be made to suffer in person or property without being given a hearing
would be brushed aside. The doctrine consistently adhered to by this Court whenever such a question arises in a series of decisions is that a denial
of due process suffices to cast on the official act taken by whatever branch of the government the impress of nullity.5
A recent decision, Macabingkil v. Yatco,6 possesses relevance. "A 1957 decision, Cruzcosa v. Concepcion, is even more illuminating in so far as the
availability of the remedy sought is concerned. In the language of this Court, speaking through Justice J.B.L. Reyes: 'The petition is clearly
meritorious. Petitioners were conclusively found by the Court of Appeals to be co-owners of the building in question. Having an interest therein,
they should have been made parties to the ejectment proceedings to give them a chance to protect their rights: and not having been made parties
thereto, they are not bound and can not be affected by the judgment rendered therein against their co-owner Catalino Cruzcosa. Jr. ....' Two due
process cases deal specifically with a writ of execution that could not validly be enforced against a party who was not given his day in court, Sicat v.
Reyes, and Hamoy v. Batingoplo. According to the former: 'The above agreement, which served as basis for the ejectment of Alipio Sicat, cannot be
binding and conclusive upon the latter, who is not a party to the case. Indeed, that order, as well as the writ of execution, cannot legally be
enforced against Alipio Sicat for the simple reason that he was not given his day in court.' From the latter: 'The issue raised in the motion of Rangar
is not involved in the appeal for it concerns a right which he claims over the property which has not so far been litigated for the reason that he was
not made a party to the case either as plaintiff for a defendant. He only came to know of the litigation when he was forced out of the property by
the sheriff, and so he filed the present motion to be heard and prove his title to the property. This he has the right to do as the most expeditious
manner to protect his interest instead of filing a separate action which generally is long, tedious and protracted.'"

Reinforcement to the above conclusion comes from a codal provision. According to the Civil Code: 7 "The vendor shall not be obliged to make good
the proper warranty, unless he is summoned in the suit for eviction at the instance of the vendee. "While not directly in point, the principle on
which the above requirement is based sustains the decision of the lower court. In effect, appellant bank would hold appellee Bautista liable for the
warranty on her title, its annullment having the same effect as that of an eviction. In such a case, it is wisely provided by the Civil Code that
appellee Bautista, as vendor, should have been summoned and given the opportunity to defend herself. In view of her being denied her day in
court, it would to be respected, that she is not "obliged to made good the proper warranty."

In the suit before the lower court, the Director of Lands and the National Treasurer of the Philippines were likewise made defendants by appellant
bank because of its belief that if no right existed as against appellee Bautista, recovery could be had from the Assurance Fund. Such a belief finds
no support in the applicable, law, which allows recovery only upon a showing that there be no negligence on the part of the party sustaining any
loss or damage or being deprived of any land or interest therein by the operation of the Land Registration Act. 8 This certainly is not the case here,
plaintiff-appellant being solely responsible for the light in which it now finds itself. Accordingly, the Director of Lands and the National Treasurer of
the Philippines are likewise exempt from any liability.

WHEREFORE, the judgment appealed from is affirmed, with costs against the Development Bank of the Philippines.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Capistrano, JJ., concur.
SECOND DIVISION

G.R. No. 170207 April 19, 2010

VICENTE CAWIS (substituted by his son, EMILIO CAWIS), PEDRO BACLANGEN, FELIZA DOMILIES, IVAN MANDI-IT a.k.a. IVAN MANDI-IT LUPADIT,
DOMINGO CAWIS and GERARD LIBATIQUE, Petitioners,
vs.
HON. ANTONIO CERILLES, in his capacity as the DENR Secretary, HON. MANUEL GEROCHI, in his capacity as the Director, Lands, Management
Bureau, and MA. EDELIZA PERALTA, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 17 February 2005 Decision2 and the 6 September 2005 Resolution3 of the Court of Appeals (appellate court) in
CA-G.R. CV No. 66685. In its 17 February 2005 Decision, the appellate court affirmed the 3 November 1999 Resolution 4 of Branch 61 of the Regional
Trial Court of Baguio City (trial court), which dismissed the complaint filed by Vicente Cawis, Pedro Baclangen, Feliza Domilies, Ivan Mandi-it,
Domingo Cawis, and Gerard Libatique (collectively petitioners). In its 6 September 2005 Resolution, the appellate court denied petitioners’ motion
for reconsideration.

The Facts

On 23 September 1957, the Department of Environment and Natural Resources (DENR), pursuant to Section 79 5 of the Public Land Act,6 approved
the sales patent application of Jose V. Andrada (Andrada) for Lot No. 47 with an area of 1,339 square meters situated within Holy Ghost Hill
Subdivision in Baguio City. Sales Patent No. 1319 was issued to Andrada upon full payment of the purchase price of the lot on 20 November 1968,
as evidenced by O.R. No. 459651.7

On 4 August 1969, Republic Act No. 60998 took effect. It provided that subject to certain conditions, parcels of land within the Holy Ghost Hill
Subdivision, which included Lot No. 47, would be sold to the actual occupants without the necessity of a public bidding, in accordance with the
provisions of Republic Act No. 730.9

Claiming to be the actual occupants referred to in R.A. No. 6099, petitioners protested the sales patent awarded to Andrada. The Bureau of Lands
denied their protest on the ground that R.A. No. 6099, being of later passage, could no longer affect the earlier award of sales patent to Andrada.
Petitioners sought reconsideration, but the Bureau of Lands denied it on 19 May 1987. Petitioners failed to appeal the adverse decision of the
Bureau of Lands to any higher administrative authority or to the courts. Thus, the decision had attained finality.10

Sometime in 1987, private respondent Ma. Edeliza S. Peralta (Peralta) purchased Lot No. 47 from Andrada. On 28 October 1987, the Deputy Public
Land Inspector, in his final report of investigation,11 found that neither Andrada nor Peralta had constructed a residential house on the lot, which
was required in the Order of Award and set as a condition precedent for the issuance of the sales patent. Apparently, it was Vicente Cawis, one of
the petitioners, who had built a house on Lot No. 47.

On 13 November 1987, Sales Patent No. 1319 was nonetheless transferred to Peralta. In the Order for the Issuance of Patent, 12 the Assistant
Director of Lands verified the investigation conducted by the Land Inspector, whose report was fully endorsed by the District Land Officer, that
Peralta had complied with the requirements of the law regarding the construction of improvements on the land applied for. In the Order for
Transfer of Sales Rights,13 the Director of Lands confirmed that before the transfer of the sales patent to Peralta, Andrada had complied with the
construction requirement. On 4 December 1987, Original Certificate of Title (OCT) No. P-160414 was duly issued in Peralta’s name.

On 8 September 1998, petitioners filed a complaint15 before the trial court alleging fraud, deceit, and misrepresentation in the issuance of the sales
patent and the original certificate of title over Lot No. 47. They claimed they had interest in the lot as qualified beneficiaries of R.A. No. 6099 who
met the conditions prescribed in R.A. No. 730. They argued that upon the enactment of R.A. No. 6099, Andrada’s sales patent was deemed
cancelled and revoked in their favor.

In her answer with a motion to dismiss,16 Peralta averred that petitioners have no cause of action against her, that she obtained her title after
compliance with the legal requirements, that her title was issued more than ten years prior to the filing of the complaint, that the action was a
collateral attack on a title, and that even if the action was a direct attack, petitioners were not the proper parties.

The Ruling of the Trial Court

The trial court issued a Resolution dated 3 November 1999 dismissing the complaint filed by petitioners. The trial court held that reversion of title
on the ground of fraud must be initiated by the government through the Office of the Solicitor General (OSG). In its 13 January 2000 Order,17 the
trial court denied petitioners’ motion for reconsideration.

The Ruling of the Appellate Court

In its 17 February 2005 Decision, the appellate court affirmed the resolution of the trial court. The appellate court explained that under Section
218 of R.A. No. 6099, ownership of public land within the Holy Ghost Hill Subdivision was not automatically conferred on petitioners as occupants.
The appellate court stated that petitioners must first apply for a sales patent in order to avail of the benefits of the law. The appellate court agreed
with the trial court that petitioners had no standing to file a suit for annulment of Sales Patent No. 1319 and OCT No. P-1604. It cited Section
10119 of the Public Land Act, which provides that only the government, through the OSG, could file an action for reversion. In its 6 September 2005
Resolution, the appellate court denied petitioners’ motion for reconsideration.

The Issues

The twin issues raised by petitioners are (1) whether the actual occupants of parcels of land covered by R.A. No. 6099, which includes Lot No. 47,
have standing to question the validity of the sales patent and the original certificate of title issued over Lot No. 47; and (2) whether the suit for
annulment of title allegedly issued through fraud, deceit, or misrepresentation, has prescribed.

The Court’s Ruling

The petition has no merit.

Petitioners contend private respondent misrepresented that there was no improvement on Lot No. 47 at the time she filed her sales patent
application when in fact, there were numerous improvements consisting of residential houses erected by them. Petitioners argue neither private
respondent nor her predecessor-in-interest has introduced any improvement on Lot No. 47, which is a condition precedent before she can be a
qualified awardee. Petitioners take exception to the rule that only the OSG is allowed to file a suit questioning the validity of the sales patent and
the original certificate of title. As to the second issue, petitioners argue that since the sales patent and the original certificate of title are void from
the beginning, the complaint filed by petitioners cannot be deemed to have prescribed.

In her Comment, private respondent asserts that petitioners have no personality to question the validity of the sales patent and the original
certificate of title issued in her name. She maintains that only the government, through the OSG, may file an action for reversion on the ground of
fraud, deceit, or misrepresentation. As to the second issue, private respondent claims that petitioners’ annulment suit has prescribed pursuant to
Section 3220 of Presidential Decree No. 1529.21

At the outset, we must point out that petitioners’ complaint questioning the validity of the sales patent and the original certificate of title over Lot
No. 47 is, in reality, a reversion suit. The objective of an action for reversion of public land is the cancellation of the certificate of title and the
resulting reversion of the land covered by the title to the State. This is why an action for reversion is oftentimes designated as an annulment suit or
a cancellation suit.

Coming now to the first issue, Section 101 of the Public Land Act22 clearly states:

SEC. 101. All actions for the reversion to the Government of lands of the public domain or improvements thereon shall be instituted by the Solicitor
General or the officer acting in his stead, in the proper courts, in the name of the Republic of the Philippines.

Even assuming that private respondent indeed acquired title to Lot No. 47 in bad faith, only the State can institute reversion proceedings, pursuant
to Section 101 of the Public Land Act and our ruling in Alvarico v. Sola.23 Private persons may not bring an action for reversion or any action which
would have the effect of canceling a land patent and the corresponding certificate of title issued on the basis of the patent, such that the land
covered thereby will again form part of the public domain.24 Only the OSG or the officer acting in his stead may do so. Since the title originated
from a grant by the government, its cancellation is a matter between the grantor and the grantee.251avvphi1

Similarly, in Urquiaga v. CA,26 this Court held that there is no need to pass upon any allegation of actual fraud in the acquisition of a title based on a
sales patent. Private persons have no right or interest over land considered public at the time the sales application was filed. They have no
personality to question the validity of the title. We further stated that granting, for the sake of argument, that fraud was committed in obtaining
the title, it is the State, in a reversion case, which is the proper party to file the necessary action. 27

In this case, it is clear that Lot No. 47 was public land when Andrada filed the sales patent application. Any subsequent action questioning the
validity of the award of sales patent on the ground of fraud, deceit, or misrepresentation should thus be initiated by the State. The State has not
done so and thus, we have to uphold the validity and regularity of the sales patent as well as the corresponding original certificate of title issued
based on the patent.

At any rate, the Court, in the exercise of its equity jurisdiction, may directly resolve the issue of alleged fraud in the acquisition of a sales patent
although the action is instituted by a private person. In this connection, the 19 May 1987 letter of the Director of Lands to petitioner Vicente Cawis
is instructive:

As to your allegation that the award in favor of applicant-respondent (Andrada) should be cancelled as he failed to introduce improvements on the
land, we find the said contention to be untenable. Somewhere in your letter dated July 11, 1983, you stated that you took possession of the lot in
question in the early 1950’s, introduced improvements thereon, and resided therein continuously up to the present. By your own admission, it
would appear that you were the ones who made it impossible for Mr. Andrada to take possession of the said lot and to improve the same. This
being the case, the failure of the applicant-respondent (Andrada) to introduce improvements on the land in question is not attributable to him.

In view of the foregoing facts and circumstances, we regret to inform you that we cannot reconsider our position on this matter. It is further
advised that you vacate the premises and remove all your improvements thereon so that the applicant-awardee (Andrada) can take immediate
possession of the land in question.28

Clearly then, fraud cannot be imputed to Andrada. His supposed failure to introduce improvements on Lot No. 47 is simply due to petitioners’
refusal to vacate the lot. It appears from the factual finding of the Director of Lands that petitioners are the ones in bad faith. Contrary to
petitioners’ claim, R.A. No. 6099 did not automatically confer on them ownership of the public land within Holy Ghost Hill Subdivision. The law
itself, Section 2 of R.A. No. 6099, provides that the occupants must first apply for a sales patent in order to avail of the benefits of the law, thus:
SEC. 2. Except those contrary to the provisions of Republic Act Numbered Seven Hundred and Thirty, all other provisions of Commonwealth Act
Numbered One hundred and Forty-One governing the procedure of issuing titles shall apply in the disposition of the parcels above-described to the
beneficiaries of this Act.

The complaint filed by petitioners did not state that they had filed an application for a sales patent over Lot No. 47. Even if it did, an application for
a sales patent could only create, at most, an inchoate right. Not being the real parties-in-interest, petitioners have no personality to file the
reversion suit in this case.

Consequently, the prescription issue pertaining to the action for reversion initiated by petitioners who could not have successfully initiated the
reversion suit in the first place, is now moot.

WHEREFORE, we DENY the petition for review. We AFFIRM the 17 February 2005 Decision and the 6 September 2005 Resolution of the Court of
Appeals in CA-G.R. CV No. 66685.

Costs against petitioners.

SO ORDERED.
FIRST DIVISION

G.R. No. L-45202 September 11, 1980

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
THE HONORABLE COURT OF APPEALS, LANDOLINO ALPUERTO, PAZ ALPUERTO, NORMA ALPUERTO, FRANCISCA ALPUERTO, in their capacity as
heirs of PERPETUO ALPUERTO, HENRY O. ANTONIO ANGELES, AUREA ANGELES, INDUSTRIAL MARKETING & INVESTMENT CORP., LANDOLINO
ALPUERTO, LUCILA UNLAYAO, ARTEMIO CALUSIN, LUCIANO POTESTADES, ELPIDIO BANAGAN, LUZ OLIVEROS, DIONISIO LLAMAS, ALICIA
CAPARROS, CORAZON ALFUENTE, EMILIO CALIWARA, ANDRES LARIEDO, LAND REGISTRATION COMMISSIONER and REGISTER OF DEEDS OF
QUEZON, respondents.

MAKASIAR, J.:

Appeal by certiorari from the decision of the Court of Appeals in CA-G.R. No. 52323-R, entitled Republic of the Philippines, vs. Landolino Alpuerto, et
al., affirming the order of the Court of First Instance of Quezon which dismissed the complaint for annulment and cancellation of titles and
reversion of lands filed by petitioner, as well as from the resolution dated November 22, 1976 of the Court of Appeals, denying petitioner's motion
for reconsideration.

This case involves Lot No. 7718 of the cadastral survey of Mauban, Quezon, containing an area of 19,873,835 square meters, more or less.

On May 16, 1966, Perpetuo Alpuerto, now deceased, filed with the Court of First Instance of Quezon (Branch II), a motion to reopen Cadastral Case
No. 97, LCR Cad. Rec. No. 1555, and to admit his answer over Lot No. 7718 of the Mauban (Quezon) cadastre. After trial, the lower court rendered
its decision dated August 3, 1966, adjudicating to said Perpetuo Alpuerto Lot No. 7718 together with its improvements, and ordering the issuance
in his favor of the corresponding decree of registration. On September 22, 1966, the lower court issued an order for the issuance of a decree of
registration over the said lot, and pursuant thereto, the Land Registration Commission issued Decree No. 127177 which was subsequently
transcribed in the Registration book of the Register of Deeds of Quezon on November 18, 1969. This was the basis of the issuance of Original
Certificate of Title No. 0-13541 in favor of Perpetuo Alpuerto. Portions of the lot were subsequently transferred to various persons who were
issued their respective transfer certificates of title, among whom are private respondents Henry O. Antonio Angeles, Industrial Marketing &
Investment Corporation, Landolino Alpuerto, Artemio Calusin, Luciano Potestades, Alpidio Banagan, Dionisio Llamas, Corazon Alpuente and Andres
Laredo.

On September 26, 1966, the Provincial Fiscal of Quezon filed a Motion for Reconsideration (pp. 78-80, rec.) of the decision dated August 3, 1966,
on the ground that the said decision was obtained through fraud, misrepresentation and deceit. Then on March 14, 1967, Attys. Amado Aquino and
Francisco Lopez, special attorneys of the Office of the Solicitor General, filed, also for the Director of Lands, a Supplemental Motion for
Reconsideration and/or for New Trial (pp. 82-87, rec.), alleging that the cadastral case was improperly reopened despite the absence of the
necessary conditions for such reopening, and that the Director of Lands was not duly notified of the hearing and therefore denied his day in court.
Both these motions were denied by the lower court on June 19, 1970. (Please note that no copy of said order of denial is found in the record).

Before the issuance of the order of denial dated June 18, 1970, the Provincial Fiscal of Quezon again filed on May 25, 1970 a motion for
cancellation of titles and for preliminary injunction (pp. 89-90, rec.), assailing the order for the issuance of the decree of registration dated
September 22, 1966 for being illegal, invalid and without effect because it was issued when the decision of August 3, 1966 had not yet become final
and his timely motion for reconsideration was still pending. On July 14, 1970, the Director of Lands, again through Attys. Aquino and Lopez, filed a
motion for reconsideration (pp. 91-92, rec.) of the order dated June 18, 1970 on the ground that the same was issued on the wrong premise, i.e.,
that the decision of the court had already become final and executory when in fact it had not. These two motions were likewise denied by the court
in its order of July 27, 1970 (Note: no copy of said order in the records).

On April 6, 1971, the Solicitor General filed for the government a complaint for annulment, cancellation of titles and for reversion of Lot No. 7718
of Cadastral Survey of Mauban, Quezon to the State (pp. 96-100, rec.), on the ground that the decision of the court dated August 3, 1966
adjudicating Lot No. 7718 to Perpetuo Alpuerto, its order for the issuance of the decree of registration dated September 22, 1966, as well as the
Original Certificate of Title No. 013541 and all the transfer certificates of title derived therefrom, are all null and void and without legal effect
because the court had no jurisdiction to allocate the subject land, which is inalienable.

On May 11, 1971, defendants Industrial Marketing and Investments Corporation, Henry O. Antonio Angeles and Aurea Angeles filed a motion to
dismiss the complaint (pp. 103-105, rec.), alleging that the action is barred by a prior judgment and that the court lacks jurisdiction over the nature
of the action or suit. Another defendant, Andres Laredo, likewise on May 17, 1971, filed a motion for dismissal of the complaint, based on the
grounds that the complaint states no cause of action and that venue is improperly laid.

After hearing the motions for dismissal and the opposition thereto, the lower court, on September 28, 1971, issued an order denying the motion to
dismiss filed by defendant Andres Laredo, but granting the motion to dismiss tied by defendants Industrial Marketing and Investments Corporation,
Henry O. Antonio Angeles and Aurea Angeles and dismissing the complaint filed by petitioner.

Petitioner filed on October 29, 1971 a motion seeking to reconsider the lower court's order of dismissal (pp. 119-124, rec.) which, however, was
denied by the said court in an order dated December 24, 1971 (pp. 130-134, rec.). Consequently, petitioner appealed the case to the Court of
Appeals which, on August 25, 1976, promulgated a decision (pp. 27-37, rec.), affirming the order of dismissal by the lower court. Petitioner again
filed a motion for reconsideration, but the same was likewise denied (p. 38, rec.).

Forthwith, petitioner elevated the matter to US through the present petition, which WE find to be meritorious.

In the first place, the land in question is not within the jurisdiction of the Director of Lands but of the Director of Forestry. Although the Public Land
Act vests upon the Director of Lands, subject to the immediate control of the Secretary of Agriculture and Commerce, direct executive control of
the survey, classification, lease, sale or any other form of concession or disposition and management of the lands of the public domain (Sec. 4,
Commonwealth Act No. 141), the same law explicitly states that timber and mineral lands shall be governed by special laws. And the Forestry Law
(Secs. 1814-1842, Revised Administrative Code, as amended) now vests in the Director of Forestry (now Director of Forest Development under P.D.
No. 705) the jurisdiction and authority over forest or timberland.

As held in the case of Mejia Vda. de Alfafara vs. Mapa, et al. (95 Phil. 125) wherein WE upheld the findings of the Secretary of Agriculture and
Natural Resources thus: "Where the land covered by the homestead application of petitioner was still within the forest zone or under the
jurisdiction of the Bureau of Forestry, the Director of Lands had no jurisdiction to dispose of said land under the provisions of the Public Land Law,
and the petitioner acquired no right to the land." It follows that "if a person obtains a title under the Public Land Act which includes, by oversight,
lands which cannot be registered under the Torrens system, or when the Director of Lands did not have jurisdiction over the same because it is a
public forest, the grantee does not, by virtue of the said certificate of title alone, become the owner of the land illegally included" (Republic vs.
Animas, 56 SCRA 499, 503; Ledesma vs. Municipality of Iloilo, 49 Phil. 769).

The patent or title thus issued is void at law, since the officer who issued it had no authority to do so (Republic vs. de la Cruz, 67 SCRA, 221).

Under these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et al., supra), and the cancellation may be
pursued through an ordinary action therefor. This action cannot be barred by the prior judgment of the land registration court, since the said court
had no jurisdiction over the subject matter. And if there was no such jurisdiction, then the principle of res judicata does not apply. For it is a well-
settled rule that for a prior judgment to constitute a bar to a subsequent case, the following requisites must concur; (1) it must be a final judgment;
(2) it must have been rendered by a court having jurisdiction over the subject matter and over the parties; (3) it must be a judgment on the merits;
and (4) there must be, between the first and second actions, Identity of parties, Identity of subject matter and Identity of cause of action
(Municipality of Daet vs. CA, 93 SCRA 503; Mendoza vs. Arrieta, et al., 91 SCRA 113). Certainly, one of the essential requisites, i.e., jurisdiction over
the subject matter, is absent in this case.

The argument that the subject land being a timberland is urged only now, is not well-taken. So also is the contention that it is not enough for the
land to be within a timberland in the absence of evidence showing conclusively that it is covered by natural growth of trees of such considerable
extent to bring it within the definition of forest land. This is because the Director of Forestry was not notified of the proceedings. Under the law,
the Director of Forestry is the official clothed with jurisdiction and authority over the demarcation, protection, management, reproduction,
reforestation, occupancy, and use of all forests and forest resources (Sec. 1816, Revised Administrative Code, as amended).

In any case, even granting that the said official was negligent, the doctrine of estoppel cannot operate against the State. "It is a well-settled rule in
our jurisdiction that the Republic or its government is usually not estopped by mistake or error on the part of its officials or agents (Manila Lodge
No. 761 vs. CA, 73 SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244; Luciano vs. Estrella, 34 SCRA 769).

Consequently, the State may still seek the cancellation of the title issued to Perpetuo Alpuerto and his successors-interest pursuant to Section 101
of the Public Land Act. Such title has not become indefeasible, for prescription cannot be invoked against the State (Republic vs. Animas, supra).

WHEREFORE, THE INSTANT PETITION IS GRANTED, THE DECISION OF THE RESPONDENT COURT DATED AUGUST 25, 1976 AND ITS RESOLUTION OF
NOVEMBER 22, 1976 ARE HEREBY VACATED AND SET ASIDE. LET THIS CASE BE REMANDED TO THE COURT OF FIRST INSTANCE OF QUEZON FOR
FURTHER PROCEEDINGS.

Teehankee (Chairman), Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ., concur.


SECOND DIVISION

G.R. No. 168661 October 26, 2007

ESTATE OF THE LATE JESUS S. YUJUICO, represented by ADMINISTRATORS BENEDICTO V. YUJUICO and EDILBERTO V. YUJUICO; and AUGUSTO Y.
CARPIO, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES and the COURT OF APPEALS, Respondents.

DECISION

VELASCO, JR., J.:

In 1973, Fermina Castro filed an application for the registration and confirmation of her title over a parcel of land with an area of 17,343 square
meters covered by plan (LRC) Psu-964 located in the Municipality of Parañaque, Province of Rizal (now Parañaque City), in the Pasig-Rizal Court of
First Instance (CFI), Branch 22. The application was docketed LRC Case No. N-8239. The application was opposed by the Office of the Solicitor
General (OSG) on behalf of the Director of Lands, and by Mercedes Dizon, a private party. Both oppositions were stricken from the records since
the opposition of Dizon was filed after the expiration of the period given by the court, and the opposition of the Director of Lands was filed after
the entry of the order of general default. After considering the evidence, the trial court rendered its April 26, 1974 Decision. The dispositive portion
reads:

____________________________
* As per September 3, 2007 raffle.

WHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal age, single, Filipino and a resident of 1515 F. Agoncillo St., Corner J.
Escoda St., Ermita, Manila, the true and absolute owner of the land applied for situated in the Municipality of Parañaque, Province of Rizal, with an
area of 17,343 square meters and covered by plan (LRC) Psu-964 and orders the registration of said parcel of land in her name with her
aforementioned personal circumstances.

Once this decision becomes final and executory, let the corresponding order for the issuance of the decree be issued.

SO ORDERED.1

The Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-Rizal CFI. Thus, the order for the issuance of a
decree of registration became final, and Decree No. N-150912 was issued by the Land Registration Commission (LRC).2 Original Certificate of Title
(OCT) No. 10215 was issued in the name of Fermina Castro by the Register of Deeds for the Province of Rizal on May 29, 1974.3

The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On May 31, 1974,4 Transfer Certificate of Title (TCT) No. 445863 was
issued in Yujuico’s name, who subdivided the land into two lots. TCT No. 4463865 over Lot 1 was issued in his name, while TCT No. S-293616 over
Lot 2 was issued in the name of petitioner Augusto Y. Carpio.

Annotations at the back of TCT No. 446386 show that Yujuico had, at one time or another, mortgaged the lot to the Philippine Investments System
Organization (PISO) and Citibank, N.A. Annotations in the title of petitioner Carpio reveal the lot was mortgaged in favor of Private Development
Corporation (PDC), Rizal Commercial Banking Corporation (RCBC) and then Philippine Commercial and Industrial Bank (PCIB) and the Development
Bank of the Philippines (DBP) to secure various loans.

Sometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the Foreshore and Offshore of the Manila Bay (The
Manila-Cavite Coastal Road Project) as Property of the Public Estates Authority as well as Rights and Interests with Assumptions of Obligations in
the Reclamation Contract Covering Areas of the Manila Bay between the Republic of the Philippines and the Construction and Development
Corporation of the Philippines (1977) was issued. Land reclaimed in the foreshore and offshore areas of Manila Bay became the properties of the
Public Estates Authority (PEA), a government corporation that undertook the reclamation of lands or the acquisition of reclaimed lands. On January
13, 1989, OCT No. SP 02 was issued in favor of PEA. The PEA also acquired ownership of other parcels of land along the Manila Bay coast, some of
which were subsequently sold to the Manila Bay Development Corporation (MBDC), which in turn leased portions to Uniwide Holdings, Inc.7

The PEA undertook the construction of the Manila Coastal Road. As this was being planned, Yujuico and Carpio discovered that a verification survey
they commissioned showed that the road directly overlapped their property, and that they owned a portion of the land sold by the PEA to the
MBDC.

On July 24, 1996, Yujuico and Carpio filed before the Parañaque City Regional Trial Court (RTC), a complaint for the Removal of Cloud and
Annulment of Title with Damages docketed as Civil Case No. 96-0317 against the PEA. On May 15, 1998 the parties entered into a compromise
agreement approved by the trial court in a Resolution dated May 18, 1998. On June 17, 1998, the parties executed a Deed of Exchange of Real
Property, pursuant to the compromise agreement, where the PEA property with an area of 1.4007 hectares would be conveyed to Jesus Yujuico
and petitioner Carpio in exchange for their property with a combined area of 1.7343 hectares.

On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the new PEA board and management had reviewed
the compromise agreement and had decided to defer its implementation and hold it in abeyance following the view of the former PEA General
Manager, Atty. Arsenio Yulo, Jr., that the compromise agreement did not reflect a condition of the previous PEA Board, requiring the approval of
the Office of the President. The new PEA management then filed a petition for relief from the resolution approving the compromise agreement on
the ground of mistake and excusable negligence.

The petition was dismissed by the trial court on the ground that it was filed out of time and that the allegation of mistake and excusable negligence
lacked basis.
The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for failure to pay the required docket fees and for lack of merit.

The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico 8 but PEA’s petition was denied, upholding the trial court’s
dismissal of the petition for relief for having been filed out of time. The allegation of fraud in the titling of the subject property in the name of
Fermina Castro was not taken up by the Court.

On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its Derivative Titles, entitled Republic of the
Philippines v. Fermina Castro, Jesus S. Yujuico, August Y. Carpio and the Registry of Deeds of Parañaque City docketed as Civil Case No. 01-0222,
filed with the Parañaque City RTC, respondent Republic of the Philippines, through the OSG, alleged that when the land registered to Castro was
surveyed by Engr. H. Obreto on August 3, 1972 and subsequently approved by the LRC on April 23, 1973, the land was still a portion of Manila Bay
as evidenced by Namria Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January 9/61: Revised 80-11-2; that Roman Mataverde, the then OIC
of the Surveys Division, Bureau of Lands, informed the OIC of the Legal Division that "[w]hen projected on Cadastral Maps CM 14 deg. 13’ N-120
deg, 59’E, Sec.2-A of Parañaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside Cad. 299"; that then Acting Regional Lands
Director Narciso V. Villapando issued a Report dated November 15, 1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay; that then
Officer-in-Charge, Assistant Director of Lands, Ernesto C. Mendiola, submitted his Comment and Recommendation re: Application for Registration
of Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, praying that the instant registration case be dismissed; and that Fermina
Castro had no registrable rights over the property.

More significantly, respondent Republic argued that, first, since the subject land was still underwater, it could not be registered in the name of
Fermina Castro. Second, the land registration court did not have jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the
subject parcel of land to Fermina Castro was void. And third, the titles of Yujuico and Carpio, being derived from a void title, were likewise void.9

On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of Notice of Lis Pendens), 10on the grounds that: (1) the
cause of action was barred by prior judgment; (2) the claim had been waived, abandoned, or otherwise extinguished; (3) a condition precedent for
the filing of the complaint was not complied with; and (4) the complaint was not verified and the certification against forum shopping was not duly
executed by the plaintiff or principal party.

On November 27, 2001, respondent Republic filed an Opposition11 to the motion to dismiss to which defendants filed a Reply12 on January 14,
2002, reiterating the grounds for the motion to dismiss.

In the August 7, 2002 Order of the RTC,13 Civil Case No. 01-0222 was dismissed. The trial court stated that the matter had already been decided in
LRC Case No. N-8239, and that after 28 years without being contested, the case had already become final and executory.1âwphi1 The trial court
also found that the OSG had participated in the LRC case, and could have questioned the validity of the decision but did not. Civil Case No. 01-0222
was thus found barred by prior judgment.

On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial court erred in disregarding that appellant had evidence to
prove that the subject parcel of land used to be foreshore land of the Manila Bay and that the trial court erred in dismissing Civil Case No. 01-0222
on the ground of res judicata.14

The CA observed that shores are properties of the public domain intended for public use and, therefore, not registrable and their inclusion in a
certificate of title does not convert the same into properties of private ownership or confer title upon the registrant.

Further, according to the appellate court res judicata does not apply to lands of public domain, nor does possession of the land automatically divest
the land of its public character.

The appellate court explained that rulings of the Supreme Court have made exceptions in cases where the findings of the Director of Lands and the
Department of Environment and Natural Resources (DENR) were conflicting as to the true nature of the land in as much as reversion efforts
pertaining foreshore lands are embued with public interest.

The dispositive portion of the CA decision reads,

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Order dated August 7, 2002 of the trial court in Civil Case
No. 01-0222 is hereby REVERSED and SET ASIDE. The case is hereby REMANDED to said court for further proceedings and a full-blown trial on the
merits with utmost dispatch.15

Hence, this petition.

The Issues

Petitioners now raise the following issues before this Court:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW
AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS NECESSITATING THE HONORABLE COURT’S EXERCISE OF ITS POWER OF SUPERVISION CONSIDERING THAT:

I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL COURT’S APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN THE INSTANT CASE IS
BASED ON ITS ERRONEOUS ASSUMPTION THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA BAY.

A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE PRINCIPLE OF RES JUDICATA NOTWITHSTANDING
ALLEGATIONS OF LACK OF JURISDICTION OF A LAND REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT BY
RESPONDENT THEREIN, AS IN THE INSTANT CASE, TO RESURRECT A LONG-SETTLED JUDICIAL DETERMINATION OF
REGISTRABILITY OF A PARCEL OF LAND BASED ON THE SHEER ALLEGATION THAT THE SAME IS PART OF THE PUBLIC DOMAIN.

B. THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE WHETHER THE SUBJECT LAND WAS PART OF THE
PUBLIC DOMAIN.

C. RESPONDENT’S REVERSION CASE SEEKS TO RETRY THE VERY SAME FACTUAL ISSUES THAT HAVE ALREADY BEEN JUDICIALLY
DETERMINED OVER THIRTY (30) YEARS AGO.

D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS IN ITS QUESTIONED DECISION ARE MISPLACED,
CONSIDERING THAT THEY ARE ALL PREDICATED ON THE ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE SUBJECT
LAND IS PART OF THE PUBLIC DOMAIN.

II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND LACHES FROM QUESTIONING THE JURISDICTION OF THE LAND REGISTRATION
COURT.

III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA CASE IS UNWARRANTED
AND MISLEADING CONSIDERING THAT THE MATTER OF WHETHER RES JUDICATA APPLIES WITH RESPECT TO THE LAND REGISTRATION COURT’S
DECISION IN 1974 WAS NOT IN ISSUE IN SAID CASE.

A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.

B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT 15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY THE
HONORABLE COURT IN THE PEA CASE.

IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION OF THE RULE ON ORDINARY ESTOPPEL AND LACHES IN THE INSTANT CASE AGAINST
RESPONDENT.

V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR TRANSGRESSING RULES OF PROCEDURE. 16

Essentially, the issues boil down to three: (1) Is a reversion suit proper in this case? (2) Is the present petition estopped by laches? (3) Did the CA
erroneously apply the principle of res judicata?

An action for reversion seeks to restore public land fraudulently awarded and disposed of to private individuals or corporations to the mass of
public domain.17 This remedy is provided under Commonwealth Act (CA) No. 141 (Public Land Act) which became effective on December 1, 1936.
Said law recognized the power of the state to recover lands of public domain. Section 124 of CA No. 141 reads:

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 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. (Emphasis supplied.)

Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following instances, to wit:

1. Alienations of land acquired under free patent or homestead provisions in violation of Section 118, CA No. 141;

2. Conveyances made by non-Christians in violation of Section 120, CA No. 141; and

3. Alienations of lands acquired under CA No. 141 in favor of persons not qualified under Sections 121, 122, and 123 of CA No. 141.

From the foregoing, an action for reversion to cancel titles derived from homestead patents or free patents based on transfers and conveyances in
violation of CA No. 141 is filed by the OSG pursuant to its authority under the Administrative Code with the RTC. It is clear therefore that reversion
suits were originally utilized to annul titles or patents administratively issued by the Director of the Land Management Bureau or the Secretary of
the DENR.

While CA No. 141 did not specify whether judicial confirmation of titles by a land registration court can be subject of a reversion suit, the
government availed of such remedy by filing actions with the RTC to cancel titles and decrees granted in land registration applications.

The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg. 129 which gave the Intermediate Appellate Court the
exclusive original jurisdiction over actions for annulment of judgments of RTCs.

When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated Rule 47 on annulment of judgments or final orders and
resolutions of the RTCs. The two grounds for annulment under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction. If based on extrinsic fraud,
the action must be filed within four (4) years from its discovery, and if based on lack of jurisdiction, before it is barred by laches or estoppel as
provided by Section 3, Rule 47. Thus, effective July 1, 1997, any action for reversion of public land instituted by the Government was already
covered by Rule 47.

The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-150912 and its derivative titles was filed on June 8, 2001 with
the Parañaque City RTC. It is clear therefore that the reversion suit was erroneously instituted in the Parañaque RTC and should have been
dismissed for lack of jurisdiction. The proper court is the CA which is the body mandated by BP Blg. 129 and prescribed by Rule 47 to handle
annulment of judgments of RTCs.

In Collado v. Court of Appeals,18 the government, represented by the Solicitor General pursuant to Section 9(2) of BP Blg. 129, filed a petition for
annulment of judgment with the CA. Similarly in the case of Republic v. Court of Appeals, 19the Solicitor General correctly filed the annulment of
judgment with the said appellate court.

This was not done in this case. The Republic misfiled the reversion suit with the Parañaque RTC. It should have been filed with the CA as required
by Rule 47. Evidently, the Parañaque RTC had no jurisdiction over the instant reversion case.

Assuming that the Parañaque RTC has jurisdiction over the reversion case, still the lapse of almost three decades in filing the instant case, the
inexplicable lack of action of the Republic and the injury this would cause constrain us to rule for petitioners. While it may be true that estoppel
does not operate against the state or its agents,20 deviations have been allowed. In Manila Lodge No. 761 v. Court of Appeals, we said:

Estoppels against the public are little favored. They should not be invoked except in rare and unusual circumstances, and may not be invoked
where they would operate to defeat the effective operation of a policy adopted to protect the public. They must be applied with circumspection
and should be applied only in those special cases where the interests of justice clearly require it. Nevertheless, the government must not be
allowed to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a shabby thing; and subject to limitations x x
x, the doctrine of equitable estoppel may be invoked against public authorities as well as against private individuals. 21 (Emphasis supplied.)

Equitable estoppel may be invoked against public authorities when as in this case, the lot was already alienated to innocent buyers for value and
the government did not undertake any act to contest the title for an unreasonable length of time.

In Republic v. Court of Appeals, where the title of an innocent purchaser for value who relied on the clean certificates of the title was sought to be
cancelled and the excess land to be reverted to the Government, we ruled that "[i]t is only fair and reasonable to apply the equitable principle of
estoppel by laches against the government to avoid an injustice to innocent purchasers for value (emphasis supplied)." 22 We explained:

Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of the certificate of title, acquire rights over the
property, courts cannot disregard such rights and order the cancellation of the certificate. Such cancellation would impair public confidence in the
certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the
title has been regularly issued or not. This would be contrary to the very purpose of the law, which is to stabilize land titles. Verily, all persons
dealing with registered land may safely rely on the correctness of the certificate of title issued therefore, and the law or the courts do not oblige
them to go behind the certificate in order to investigate again the true condition of the property. They are only charged with notice of the liens and
encumbrances on the property that are noted on the certificate.23

xxxx

But in the interest of justice and equity, neither may the titleholder be made to bear the unfavorable effect of the mistake or negligence of the
State’s agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. First, the real purpose of the Torrens
system is to quiet title to land to put a stop forever to any question as to the legality of the title, except claims that were noted in the certificate at
the time of the registration or that may arise subsequent thereto. Second, as we discussed earlier, estoppel by laches now bars petitioner from
questioning private respondents’ titles to the subdivision lots. Third, it was never proven that Private Respondent St. Jude was a party to the fraud
that led to the increase in the area of the property after its subdivision. Finally, because petitioner even failed to give sufficient proof of any error
that might have been committed by its agents who had surveyed the property, the presumption of regularity in the performance of their functions
must be respected. Otherwise, the integrity of the Torrens system, which petitioner purportedly aims to protect by filing this case, shall forever be
sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties.24

Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,25 where, in a reversion case, we held that even if the original grantee of
a patent and title has obtained the same through fraud, reversion will no longer prosper as the land had become private land and the fraudulent
acquisition cannot affect the titles of innocent purchasers for value.

Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more than 27 years had elapsed before the action for reversion
was filed, then said action is now barred by laches.

While the general rule is that an action to recover lands of public domain is imprescriptible, said right can be barred by laches or estoppel. Section
32 of PD 1592 recognized the rights of an innocent purchaser for value over and above the interests of the government. Section 32 provides:

SEC. 32. Review of decree of registration; Innocent purchaser for value.—The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest
therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening
and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case
shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights
may be prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to
include an innocent lessee, mortgagee, or other encumbrances for value. (Emphasis supplied.)

In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in favor of Fermina Castro and OCT No. 10215 was issued by the
Rizal Registrar of Deeds on May 29, 1974. OCT No. 10215 does not show any annotation, lien, or encumbrance on its face. Relying on the clean title,
Yujuico bought the same in good faith and for value from her. He was issued TCT No. 445863 on May 31, 1974. There is no allegation that Yujuico
was a buyer in bad faith, nor did he acquire the land fraudulently. He thus had the protection of the Torrens System that every subsequent
purchaser of registered land taking a certificate of title for value and in good faith shall hold the same free from all encumbrances except those
noted on the certificate and any of the x x x encumbrances which may be subsisting.26 The same legal shield redounds to his successors-in-interest,
the Yujuicos and Carpio, more particularly the latter since Carpio bought the lot from Jesus Y. Yujuico for value and in good faith.

Likewise protected are the rights of innocent mortgagees for value, the PISO, Citibank, N.A., PDC, RCBC, PCIB, and DBP. Even if the mortgagor’s title
was proved fraudulent and the title declared null and void, such declaration cannot nullify the mortgage rights of a mortgagee in good faith.27

All told, a reversion suit will no longer be allowed at this stage.

More on the issue of laches. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due
diligence could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption
that the party entitled thereto has either abandoned or declined to assert it.28

When respondent government filed the reversion case in 2001, 27 years had already elapsed from the time the late Jesus Yujuico purchased the
land from the original owner Castro. After the issuance of OCT No. 10215 to Castro, no further action was taken by the government to question the
issuance of the title to Castro until the case of Public Estates Authority, brought up in the oral argument before this Court on September 6,
2000.29 We then held that allegation of fraud in the issuance of the title was not proper for consideration and determination at that stage of the
case.

From the undisputed facts of the case, it is easily revealed that respondent Republic took its sweet time to nullify Castro’s title, notwithstanding the
easy access to ample remedies which were readily available after OCT No. 10215 was registered in the name of Castro. First, it could have appealed
to the CA when the Pasig-Rizal CFI rendered a decision ordering the registration of title in the name of applicant Castro on April 26, 1974. Had it
done so, it could have elevated the matter to this Court if the appellate court affirms the decision of the land registration court. Second, when the
entry of Decree No. N-150912 was made on May 29, 1974 by the Rizal Register of Deeds, the Republic had one (1) year from said date or up to May
28, 1975 to file a petition for the reopening and review of Decree No. N-150912 with the Rizal CFI (now RTC) on the ground of actual fraud under
section 32 of PD 1592. Again, respondent Republic did not avail of such remedy. Third, when Jesus Yujuico filed a complaint for Removal of Cloud
and Annulment of Title with Damages against PEA before the Parañaque RTC in Civil Case No. 96-0317, respondent could have persevered to
question and nullify Castro’s title. Instead, PEA undertook a compromise agreement on which the May 18, 1998 Resolution 30 was issued. PEA in
effect admitted that the disputed land was owned by the predecessors-in-interest of petitioners and their title legal and valid; and impliedly waived
its right to contest the validity of said title; respondent Republic even filed the petition for relief from judgment beyond the time frames allowed by
the rules, a fact even acknowledged by this Court in Public Estates Authority. Lastly, respondent only filed the reversion suit on June 8, 2001 after
the passage of 27 years from the date the decree of registration was issued to Fermina Castro.

Such a Rip Van Winkle, coupled with the signing of the settlement with PEA, understandably misled petitioners to believe that the government no
longer had any right or interest in the disputed lot to the extent that the two lots were even mortgaged to several banks including a government
financing institution. Any nullification of title at this stage would unsettle and prejudice the rights and obligations of innocent parties. All told, we
are constrained to conclude that laches had set in.

Even granting arguendo that respondent Republic is not precluded by laches from challenging the title of petitioners in the case at bar, still we find
that the instant action for reversion is already barred by res judicata.

Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals31 as a precedent to the case at bar contend that the instant reversion suit is now
barred by res judicata.

We agree with petitioners.

The doctrine on precedents is expressed in the latin maxim—Stare decisis et non quieta movere. Follow past precedents and do not disturb what
has been settled.32 In order however that a case can be considered as a precedent to another case which is pending consideration, the facts of the
first case should be similar or analogous to the second case.

A perusal of the facts of the Firestone case and those of the case at bar reveals that the facts in the two (2) cases are parallel. First, in Firestone and
in this case, the claimants filed land registration applications with the CFI; both claimants obtained decrees for registration of lots applied for and
were issued OCTs. Second, in Firestone, the Republic filed a reversion case alleging that the land covered by the OCT was still inalienable forest land
at the time of the application and hence the Land Registration Court did not acquire jurisdiction to adjudicate the property to the claimant. In the
instant case, respondent Republic contend that the land applied for by Yujuico was within Manila Bay at the time of application and therefore the
CFI had no jurisdiction over the subject matter of the complaint. Third, in Firestone, the validity of the title of the claimant was favorably ruled upon
by this Court in G.R. No. 109490 entitled Patrocinio E. Margolles v. CA. In the case at bar, the validity of the compromise agreement involving the
disputed lot was in effect upheld when this Court in Public Estates Authority v. Yujuico dismissed the petition of PEA seeking to reinstate the
petition for relief from the May 18, 1998 Resolution approving said compromise agreement. With the dismissal of the petition, the May 18, 1998
Resolution became final and executory and herein respondent Republic through PEA was deemed to have recognized Castro’s title over the
disputed land as legal and valid. In Romero v. Tan,33 we ruled that "a judicial compromise has the effect of res judicata." We also made clear that a
judgment based on a compromise agreement is a judgment on the merits, wherein the parties have validly entered into stipulations and the
evidence was duly considered by the trial court that approved the agreement. In the instant case, the May 18, 1998 Resolution approving the
compromise agreement confirmed the favorable decision directing the registration of the lot to Castro’s name in LRC Case No. N-8239. Similarly,
in Firestone, the Margolles case confirmed the decision rendered in favor of Gana in Land Registration Case No. 672 ordering the issuance of the
decree to said applicant. Fourth, in Firestone, the Supreme Court relied on the letter of then Solicitor General Francisco Chavez that the evidence of
the Bureau of Lands and the LRC was not sufficient to support an action for cancellation of OCT No. 4216. In the instant case, both the Solicitor
General and the Government Corporate Counsel opined that the Yujuico land was not under water and that "there appears to be no sufficient basis
for the Government to institute the action for annulment." Fifth, in Firestone, we ruled that "the Margolles case had long become final, thus the
validity of OCT No. 4216 should no longer be disturbed and should be applied in the instant case (reversion suit) based on the principle of res
judicata or, otherwise, the rule on conclusiveness of judgment."34

Clearly from the above, Firestone is a precedent case. The Public Estates Authority had become final and thus the validity of OCT No. 10215 issued
to Castro could no longer be questioned.
While we said in Public Estates Authority that the court does not foreclose the right of the Republic from pursuing the proper recourse in a separate
proceedings as it may deem warranted, the statement was obiter dictum since the inquiry on whether or not the disputed land was still under
water at the time of its registration was a non-issue in the said case.

Even granting for the sake of argument that Firestone is not squarely applicable, still we find the reversion suit already barred by res judicata.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) there must be a final judgment or
order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits;
and (4) there must be between the two cases, identity of parties, subject matter and causes of action. 35

There is no question as to the first, third and last requisites. The threshold question pertains to the second requisite, whether or not the then Pasig-
Rizal CFI, Branch 22 had jurisdiction over the subject matter in LRC Case No. N-8239. In Civil Case No. 01-0222, the Parañaque City RTC, Branch 257
held that the CFI had jurisdiction. The CA reversed the decision of the Parañaque City RTC based on the assertion of respondent Republic that the
Pasig-Rizal CFI had no jurisdiction over the subject matter, and that there was a need to determine the character of the land in question.

The Parañaque City RTC Order dismissing the case for res judicata must be upheld.

The CA, in rejecting the dismissal of the reversion case by the Parañaque RTC, relied on two cases, namely: Municipality of Antipolo v.
Zapanta36 and Republic v. Vda. De Castillo.37

In Municipality of Antipolo, we held that the land registration court had no jurisdiction to entertain any land registration application if the land was
public property, thus:

Since the Land Registration Court had no jurisdiction to entertain the application for registration of public property of ANTIPOLO, its Decision
adjudicating the DISPUTED PROPERTY as of private ownership is null and void. It never attained finality, and can be attacked at any time. It was not
a bar to the action brought by ANTIPOLO for its annulment by reason of res judicata.

"[x x x] the want of jurisdiction by a court over the subject matter renders the judgment void and a mere nullity, and considering that a void
judgment is in legal effect no judgment, by which no rights are divested, from which no rights can be obtained, which neither binds nor bars any
one, and under which all acts performed and all claims flowing out of are void, and considering, further, that the decision, for want of jurisdiction of
the court, is not a decision in contemplation of law, and hence, can never become executory, it follows that such a void judgment cannot constitute
a bar to another case by reason of res judicata."

xxxx

"It follows that ‘if a person obtains a title under the Public Land Act which includes, by oversight, lands which cannot be registered under the
Torrens System, or when the Director of Lands did not have jurisdiction over the same because it is a public forest, the grantee does not, by virtue
of the said certificate of title alone, become the owner of the land illegally included’ (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs.
Municipality of Iloilo, 49 Phil. 769)."

[x x x x]

"Under these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et al., supra), and the cancellation maybe
pursued through an ordinary action therefore. This action cannot be barred by the prior judgment of the land registration court, since the said
court had no jurisdiction over the subject matter. And if there was no such jurisdiction, then the principle of res judicata does not apply. [x x x]
Certainly, one of the essential requisites, i.e., jurisdiction over the subject matter, is absent in this case." (Italics supplied).38

The plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has no jurisdiction over the subject matter of the
application which respondent Republic claims is public land. This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by law.39 Consequently, the proper CFI (now the RTC) under
Section 14 of PD 152940 (Property Registration Decree) has jurisdiction over applications for registration of title to land.

Section 14 of PD 1592 provides:

SEC. 14. Who may apply.—The following persons may file in the proper Court of First Instance an application for registration of title to land,
whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and
occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. (Emphasis
supplied.)

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land registration case filed by Fermina Castro,
petitioners’ predecessor-in-interest, since jurisdiction over the subject matter is determined by the allegations of the initiatory pleading¾the
application.41 Settled is the rule that "the authority to decide a case and not the decision rendered therein is what makes up jurisdiction. When
there is jurisdiction, the decision of all questions arising in the case is but an exercise of jurisdiction."42

In our view, it was imprecise to state in Municipality of Antipolo that the "Land Registration Court [has] no jurisdiction to entertain the application
for registration of public property x x x" for such court precisely has the jurisdiction to entertain land registration applications since that is
conferred by PD 1529. The applicant in a land registration case usually claims the land subject matter of the application as his/her private property,
as in the case of the application of Castro. Thus, the conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the
application of Castro has no legal mooring. The land registration court initially has jurisdiction over the land applied for at the time of the filing of
the application. After trial, the court, in the exercise of its jurisdiction, can determine whether the title to the land applied for is registrable and can
be confirmed. In the event that the subject matter of the application turns out to be inalienable public land, then it has no jurisdiction to order the
registration of the land and perforce must dismiss the application.

Based on our ruling in Antipolo, the threshold question is whether the land covered by the titles of petitioners is under water and forms part of
Manila Bay at the time of the land registration application in 1974. If the land was within Manila Bay, then res judicata does not apply. Otherwise,
the decision of the land registration court is a bar to the instant reversion suit.

After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239 and in the instant petition, we rule that the land of Fermina
Castro is registrable and not part of Manila Bay at the time of the filing of the land registration application.

The trial court’s Decision in 1974 easily reveals the basis for its conclusion that the subject matter was a dry land, thus:

On February 1, 1974, the applicant presented her evidence before the Deputy Clerk of this Court and among the evidence presented by her were
certain documents which were marked as Exhibits D to J, inclusive. The applicant testified in her behalf and substantially declared that: she was 62
years old, single, housekeeper and residing at 1550 J. Escoda, Ermita, Manila; that she was born on June 3, 1911; that she first came to know of the
land applied for which is situated in the Municipality of Parañaque, province of Rizal, with an area of 17,343 square meters and covered by plan
(LRC) Psu-964 while she was still ten (10) years old or sometime in 1921; that when she first came to know of the land applied for, the person who
was in possession and owner of said land was her father, Catalino Castro; that during that time her father used to plant on said land various crops
like pechay, mustard, eggplant, etc.; that during that time, her father built a house on said land which was used by her father and the other
members of the family, including the applicant, as their residential house; that the land applied for was inherited by her father from her
grandfather Sergio Castro; that Catalino Castro continuously possessed and owned the land in question from 1921 up to the time of his death in
1952; and that during that period of time nobody ever disturbed the possession and ownership of her father over the said parcel of land; that after
the death of her father in 1952 she left the place and transferred her place of residence but she had also occasions to visit said land twice or thrice
a week and sometimes once a week; that after she left the land in question in 1952, she still continued possessing said land, through her caretaker
Eliseo Salonga; that her possession over the land in question from the time she inherited it up to the time of the filing of the application has been
continuous, public, adverse against the whole world and in the concept of an owner; that it was never encumbered, mortgaged, or disposed of by
her father during his lifetime and neither did she ever encumber or sell the same; that it was declared for taxation purposes by her father when he
was still alive and her father also paid the real estate taxes due to the government although the receipt evidencing the payment of said real estate
taxes for the property applied for have been lost and could no longer be found inspite of diligent effort exerted to locate the same.

The other witness presented by the applicant was Emiliano de Leon, who declared that he was 70 years old, married, farmer and residing at San
Jose, Baliwag, Bulacan; that he knew Catalino Castro, the father of the applicant because said Catalino Castro was his neighbor in Tambo,
Parañaque, Rizal, he had a house erected on the land of Catalino Castro; that he was born in 1903 and he first came to know of the land in question
when in 1918 when he was about 18 years old; that the area of the land owned and possessed by Catalino Castro where he constructed a
residential house has an area of more than one and one-half (1 ½) hectares; that the possession of Catalino Castro over the land in question was
peaceful, continuous, notorious, adverse against the whole world and in the concept of an owner; that during the time that Catalino Castro was in
possession of the land applied for he planted on said parcel of land mango, coconut and banana, etc.; that Catalino Castro continuously possessed
and owned said parcel of land up to the year 1952 when he died; that during the time that Catalino Castro was in possession of said land, nobody
ever laid claim over the said property; that said land is not within any military or naval reservation; that upon the death of Catalino Castro, the
applicant took possession of the land applied for and that up to the present the applicant is in possession of said land; that he resided in the land in
question from 1918 up to the time he transferred his place of residence in Baliwag, Bulacan in the year 1958.

On February 11, 1974, the Court, pursuant to the provision of Presidential Decree No. 230 issued by his Excellency, Ferdinand E. Marcos dated July
9, 1973 held in abeyance the rendition of a decision in this case and directed the applicant to submit a white print copy of plan (LRC) Psu-964 to the
Director of lands who was directed by the Court to submit his comment and recommendation thereon.

The property in question is declared for taxation purposes under Tax Declaration No. 51842 (Exhibit G) and real estate taxes due thereon have
been paid up to the year 1973 (Exhibit H).

In compliance with the Order of this Court February 11, 1974, the Director of Lands, thru Special Attorney Saturnino A. Pacubas, submitted a report
to this Court dated April 25, 1974, stating among other things, that upon ocular inspection conducted by Land Inspector Adelino G. Gorospe and
the subsequent joint ocular inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro G. Berania, it was
established that the parcel of land covered by plan (LRC) Psu-964 no longer forms part of the Manila Bay but is definitely solid and dry land.

In this connection, it should be noted that Administrative Assistant Lazaro G. Berania and Geodetic Engineer Manuel A. Cervantes, in their report
dated March 22, 1974 have also stated that the land applied for cannot be reached by water even in the highest tide and that the said land is
occupied by squatter families who have erected makeshift shanties and a basketball court which only prove that the same is dry and solid land
away from the shores of Manila Bay.

Furthermore, Land Inspector Adelino G. Gorospe in his letter-report dated November 28, 1973 has also stated that there is a house of pre-war
vintage owned by the applicant on the land in question which in effect corroborates the testimony of the applicant and her witness that they have
lived on the land in question even prior to the outbreak of the second world war and that the applicant has been in possession of the land in
question long time ago.43

To counter the evidence of applicant Castro, and bolster its claim that she has no valid title, respondent Republic relies on the July 18, 1973 Office
Memorandum44 of Roman Mataverde, OIC, Surveys Division, to the OIC, Legal Division, of the Bureau of Lands, stating that "when projected on
cadastral maps CM 14º 13’N - 120º 59’ E., Sec. 3-D and CM 14º 30’N - 120º 59’E., Sec. 2-A of Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-964 falls
inside Manila Bay, outside Cad-299."45

The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando, Acting Regional Lands Director to the Chief, Legal Division,
Bureau of Lands and in the Comment and Recommendation of Ernesto C. Mendiola, Assistant Director, also of the Bureau of Lands.
Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to support its position that Castro’s lot is a portion of Manila Bay.

The burden of proving these averments falls to the shoulders of respondent Republic. The difficulty is locating the witnesses of the government.
Roman Mataverde, then OIC of the Surveys Division retired from the government service in 1982. He should by this time be in his 90s. Moreover,
Asst. Regional Director Narciso Villapando and Asst. Director Ernesto C. Mendiola are no longer connected with the Bureau of Lands since 1986.

Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and Assistant Director Ernesto C. Mendiola are still available as
witnesses, the projections made on the cadastral maps of the then Bureau of Lands cannot prevail over the results of the two ocular inspections by
several Bureau of Lands officials that the disputed lot is definitely "dry and solid land" and not part of Manila Bay. Special Attorney Saturnino A.
Pacubas, Land Inspector Adelino G. Gorospe, Geodetic Engineer Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana, all officials of the
Bureau of Lands, were positive that the disputed land is solid and dry land and no longer forms part of Manila Bay. Evidence gathered from the
ocular inspection is considered direct and firsthand information entitled to great weight and credit while the Mataverde and Villapando reports are
evidence weak in probative value, being merely based on theoretical projections "in the cadastral map or table surveys." 46 Said projections must be
confirmed by the actual inspection and verification survey by the land inspectors and geodetic engineers of the Bureau of Lands. Unfortunately for
respondent Republic, the bureau land inspectors attested and affirmed that the disputed land is already dry land and not within Manila Bay.

On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion of Manila Bay was Castro’s lot located in 1974. Moreover,
a hydrographic map is not the best evidence to show the nature and location of the lot subject of a land registration application. It is derived from a
hydrographic survey which is mainly used for navigation purposes, thus:

Surveys whose principal purpose is the determination of data relating to bodies of water. A hydrographic survey may consist of the determination
of one or several of the following classes of data: depth water; configuration and nature of the bottom; directions and force of currents; heights
and times of tides and water stages; and location of fixed objects for survey and navigation purposes.47

Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney Pacubas and others that Castro’s lot is dry land in 1974,
Namria Hydrographic Map No. 4243 is therefore inferior evidence and lacking in probative force.

Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde based on the alleged projection on cadastral maps and the
Villapando report dated November 15, 1973 are put to serious doubt in the face of the opinion dated October 13, 1997 of the Government
Corporate Counsel, the lawyer of the PEA, which upheld the validity of the titles of petitioners, thus:

We maintain to agree with the findings of the court that the property of Fermina Castro was registrable land, as based on the two (2) ocular
inspections conducted on March 22, 1974 by Lands Administrative Assistant Lazaro G. Berania and Lands Geodetic Engr. Manuel Cervantes, finding
‘… the same no longer forms part of Manila Bay but is definitely solid land which cannot be reached by water even in the highest of tides’. This
Berania-Cervantes report based on ocular inspections literally overturned the findings and recommendations of Land Director Narciso V. Villapando
dated November 15, 1973, and that of Director Ernesto C. Mendiola dated December 1, 1977, and the fact that the Villapando-Mendiola reports
were merely based on projections in the cadastral map or table surveys.

xxxx

A. The Legal prognosis of the case is not promising in favor of PEA.

4.1 LRC Case No. N-8239 has already become final and executory and OCT No. 10215 was already issued in favor of Fermina Castro. Any
and all attempts to question its validity can only be entertained in a quo warranto proceedings (sic), assuming that there are legal
grounds (not factual grounds) to support its nullification. Subjecting it to a collateral attack is not allowed under the Torrens Title System.
In Calalang vs. Register of Deeds of Quezon City, 208 SCRA 215, the Supreme Court held that the present petition is not the proper
remedy in challenging the validity of certificates of titles since the judicial action required is a direct and not a collateral attack (refer also
to: Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).

4.2 OCT No. 10215 in favor of Fermina Castro was issued pursuant to a cadastral proceeding, hence is a rem proceedings which is
translated as a constructive notice to the whole world, as held in Adez Realty Incorporated vs. CA, 212 SCRA 623.

4.3 From the cursory and intent reading of the decision of Judge Sison in LRC Case No. N-8239, we cannot find any iota of fraud having
been committed by the court and the parties. In fact, due process was observed when the Office of the Solicitor General represented ably
the Bureau of Lands. In Balangcad vs. Justices of the Court of Appeals, 206 SCRA 169, the Supreme Court held that title to registered
property becomes indefeasible after one-year from date of registration except where there is actual fraud in which case it may be
challenged in a direct proceeding within that period. This is also the ruling in Bishop vs. CA, 208 SCRA 636, that to sustain an action for
annulment of a torrens certificate for being void ab initio, it must be shown that the registration court had not acquired jurisdiction over
the case and there was actual fraud in securing the title.

4.4 As to priority of torrens title, PEA has no defense, assuming that both PEA and Yujuico titles are valid, as held in Metropolitan
Waterworks and Sewerage System vs. CA, 215 SCRA 783, where two (2) certificates purport to include the same land, the earlier in date
prevails.

4.5 The documents so far submitted by the parties to the court indicate that the mother title of the Yujuico land when registered in 1974
was not underwater. This was shown in the two (2) ocular inspections conducted by the officials of the Land Bureau.

4.6 The provision of P.D. 239 that no decree of registration may be issued by the court unless upon approval and recommendation of the
Bureau of Lands was substantially complied with in the Report of Lands Special Attorney Saturnino Pacubas, submitted to the court.48

Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is no sufficient legal basis for said respondent to institute
action to annul the titles of petitioners, thus:
It may be stated at the outset that a petition for annulment of certificate of title or reconveyance of land may be based on fraud which attended
the issuance of the decree of registration and the corresponding certificate of title.

Based on the decision in the LRC Case No. N-8239 involving the petition for registration and confirmation of title filed by Fermina Castro, there is no
showing that fraud attended the issuance of OCT No. 10215. it appears that the evidence presented by Fermina Castro was sufficient for the trial
court to grant her petition.

The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that she and her predecessors-in-interest had been in possession of
the land for more than thirty (30) years sufficiently established her vested right over the property initially covered by OCT No. 10215. The report
dated April 25, 1974 which was submitted to the trial court by the Director of Lands through Special Attorney Saturnino Pacubas showed that the
parcel of land was solid and dry land when Fermina Castro’s application for registration of title was filed. It was based on the ocular inspection
conducted by Land Inspector Adelino Gorospe and the joint circular inspection conducted by Geodetic Engineer Manuel A. Cervantes and
Administrative Assistant Lazaro Berania on November 28, 1973 and March 22, 1974 respectively.

The aforesaid report must be requested unless there is a concrete proof that there was an irregularity in the issuance thereof. In the absence of
evidence to the contrary, the ocular inspection of the parcel of land, which was made the basis of said report, is presumed to be in order.

Based on the available records, there appears to be no sufficient basis for the Government to institute an action for the annulment of OCT No.
10215 and its derivative titles. It is opined that a petition for cancellation/annulment of Decree No. N-150912 and OCT No. 10215 and all its
derivative titles will not prosper unless there is convincing evidence to negate the report of the then Land Management Bureau through Special
Attorney Pacubas. Should the Government pursue the filing of such an action, the possibility of winning the case is remote.49

More so, respondent Government, through its counsel, admits that the land applied by Fermina Castro in 1973 was solid and dry land, negating the
nebulous allegation that said land is underwater. The only conclusion that can be derived from the admissions of the Solicitor General and
Government Corporate Counsel is that the land subject of the titles of petitioners is alienable land beyond the reach of the reversion suit of the
state.

Notably, the land in question has been the subject of a compromise agreement upheld by this Court in Public Estates Authority.50 In that
compromise agreement, among other provisions, it was held that the property covered by TCT Nos. 446386 and S-29361, the land subject of the
instant case, would be exchanged for PEA property. The fact that PEA signed the May 15, 1998 Compromise Agreement is already a clear admission
that it recognized petitioners as true and legal owners of the land subject of this controversy.

Moreover, PEA has waived its right to contest the legality and validity of Castro’s title. Such waiver is clearly within the powers of PEA since it was
created by PD 1084 as a body corporate "which shall have the attribute of perpetual succession and possessed of the powers of the corporations,
to be exercised in conformity with the provisions of this Charter [PD 1084]."51 It has the power "to enter into, make, perform and carry out
contracts of every class and description, including loan agreements, mortgages and other types of security arrangements, necessary or incidental to
the realization of its purposes with any person, firm or corporation, private or public, and with any foreign government or entity."52 It also has the
power to sue and be sued in its corporate name.53 Thus, the Compromise Agreement and the Deed of Exchange of Real Property signed by PEA
with the petitioners are legal, valid and binding on PEA. In the Compromise Agreement, it is provided that it "settles in full all the
claims/counterclaims of the parties against each other."54 The waiver by PEA of its right to question petitioners’ title is fortified by the
manifestation by PEA in the Joint Motion for Judgment based on Compromise Agreement that

4. The parties herein hereto waive and abandon any and all other claims and counterclaims which they may have against each other arising from
this case or related thereto.55

Thus, there was a valid waiver of the right of respondent Republic through PEA to challenge petitioners’ titles.

The recognition of petitioners’ legal ownership of the land is further bolstered by the categorical and unequivocal acknowledgment made by PEA in
its September 30, 2003 letter where it stated that: "Your ownership thereof was acknowledged by PEA when it did not object to your membership
in the CBP-IA Association, in which an owner of a piece of land in CBP-IA automatically becomes a member thereof."56 Section 26, Rule 130
provides that "the act, declaration or omission of a party as to a relevant fact may be given in evidence against him." The admissions of PEA which
is the real party-in-interest in this case on the nature of the land of Fermina Castro are valid and binding on respondent Republic. Respondent’s
claim that the disputed land is underwater falls flat in the face of the admissions of PEA against its interests. Hence, res judicata now effectively
precludes the relitigation of the issue of registrability of petitioners’ lot.

In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction on the part of the Parañaque RTC. Even if we treat said
case as a petition for annulment of judgment under Rule 47 of the 1997 Rules of Civil Procedure, the dismissal of the case nevertheless has to be
upheld because it is already barred by laches. Even if laches is disregarded, still the suit is already precluded by res judicata in view of the peculiar
facts and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 76212 is REVERSED and SET
ASIDE, and the August 7, 2002 Order of the Parañaque City RTC, Branch 257 in Civil Case No. 01-0222 entitled Republic of the Philippines v. Fermina
Castro, et al. dismissing the complaint is AFFIRMED.

No costs.

SO ORDERED.