Land Titles and Deeds |1
G.R. No. 68946 May 22, 1992
DIRECTOR OF LANDS, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and ANGELINA SARMIENTO, respondents.
DAVIDE, JR., J.:
Petitioner urges this Court to review and set aside the decision of 12 October 1984 of the then
Intermediate Appellate Court 1 (now Court of Appeals) in A.C.-G.R. CV No. 00126 which affirmed the
decision of 2 June 1982 of the Regional Trial Court of Bulacan in Land Registration Case No. (SM) N-
167 granting the registration of a parcel of land with an area of 376,397 square meters, located in San
Jose del Monte, Bulacan, in favor of private respondent.
After the filing of private respondent's Comment, this Court, in its resolution of 27 February 1985, 2 gave
due course to the petition, considered the Comment as the Answer and required the parties to submit
their respective Memoranda. The petitioner moved for leave to adopt the petition as his
Memorandum 3 which this Court noted in its resolution of 17 April 1985. 4 Private respondent filed her
Memorandum only on 8 December 1986, 5 after her attorneys were held in contempt of court and fined
in the amount of P300.00.
The pleadings of the parties disclose the following factual antecedents in this case:
On 13 August 1970, private respondent and the spouses Placer A. Velasco and Socorro Busuego filed
with the then Court of First Instance (now Regional Trial Court) of Bulacan, Branch V, at Sta. Maria,
Bulacan, an application for the registration of title over Lot No. 1005 of the Cadastral Survey of San Jose
del Monte, Bulacan, with an area of 376,397 square meters.
On 18 January 1971, private oppositors Angeles and Cirilo Amador filed their opposition on the ground
that the land belongs to them.
On 19 January 1971, an Order of special default against the whole world, with the exception of oppositors
Angeles and Cirilo Amador and the municipal mayor of San Jose del Monte, was issued by the trial
court.
Upon the filing of an Opposition by the petitioner and upon motion by the Provincial Fiscal for the lifting
of the order of special default and for the admission of the Opposition, the trial court issued an Order on
24 August 1971 granting the motion and admitting said Opposition. 6 Separate oppositions filed by
Feliciano Santos, Ciriaco Maningas and Simeon Albarico were also admitted by the court after the lifting
of the order of special default. 7
Subsequently, private respondent moved to drop as co-applicants spouses Placer Velasco and Socorro
Busuego on the ground that they were made co-applicants because of a contract of services 8 between
her and the spouses under which the latter agreed to shoulder all the litigation expenses and the cost of
survey and attorney's fees in this case; the spouses failed to comply with their commitment. The trial
court deemed said agreement validly rescinded by private respondent and considered her as "the only
applicant in this case." 9
After hearing the application on its merits, the trial court handed down on 2 June 1982 a decision in favor
of private respondent granting the registration of the lot in question, together with all the improvements
thereon, in her name:
. . . with the exception of the three (3) houses erected therein owned and possessed by
her predecessors-in-interest, who are claimed (sic) to be tenants of the property,
namely: Macario Cruz, Juan Reyes and Mariano Castillo. . . . subject, however, to the
payment of real property taxes in arrears since 1971 as well as to the provisions of
Presidential Decree Nos. 65 and 296, with respect to those portions of the perimeter
bounded by the river, barrio and provincial roads, respectively.
The decision is based on the trial court's findings of fact, to wit:

. . . That the subject parcel of land was declared for taxation purposes in the name of
Angelina Sarmiento as early as 1965, under Tax Declaration No. 8388 (Exhibit J), with
an assessed value of P10,350.00. That the real property taxes from 1965 to 1970 were
paid in full (Exhibit K). That a small portion of the subject parcel of land consisting of
94,000 sq. m. is devoted to agriculture while the rest is cogonland. That the subject
parcel land was acquired by applicant Angelina Sarmiento from:
1) Juan Reyes, married to Avelina Emocling, who had been in
possession of a portion of the subject land consisting of 168,000 sq.
m. for 41 years prior to the transfer of their rights, interests, and
participation over the same in favor of applicant Angelina
Sarmiento, which transfer was made through a deed of absolute
sale (Bilihang Lampasan at Patuluyan — Exhibits G and G-1),
executed on April 7, 1969, for and in consideration of P42,000.00.
2) Mariano Castillo, married to Petronila Robes, who had been in
possession of a portion of the subject land, consisting of 14 hectares
since 1948, until on August 16, 1965 said spouses transferred their
rights, interests and participation over the eastern 1/2 portion of said
14-hectare property, in favor of applicant Angelina Sarmiento, for
and in consideration of P1,500.00 (Exhibits I and I-1 — Bilihang
Lampasan at Patuluyan).
3) Mariano Castillo, married to Petronila Robes, who, by virtue of a
deed if (sic) absolute sale executed by them on November 15, 1965,
sold the remaining 7-hectare property covered by Exhibits I and I-1,
to applicant Angelina Sarmiento, for and in consideration of
P21,000.00; which deed of absolute sale, having been lost, was
confirmed by vendor Mariano Castillo thru a Confirmatory Deed of
Sale executed on April 18, 1969 (Exhibits H and H-1).
Land Titles and Deeds |2
4) Macario Cruz, married to Antonia Guilalas, who had been in
possession of a portion of the subject land, consisting of 73,000 sq.
m. more or less prior to the transfer of their rights, interest and
participation in favor of applicant Angelina Sarmiento on March 31,
1969, for and in consideration of P18,750.00.
xxx xxx xxx
The testimonial evidence shows that the subject parcel of land was originally owned
and possessed by Macario Cruz, spouses Juan Reyes and Avelina Emocling, the
spouses Mariano Castillo and Petronila Robes, the two latter sets of spouses having
been in possession as early as 1928 and 1948, respectively, during which time they
possessed, occupied and cultivated their respective portions unmolested, openly,
continuously, and in the concept of owners. That by virtue of the aforesaid deeds of
sale (Exhibits G, G-1, H, H-1, I and I-1), possessions over the same were transferred
to the herein applicant. That, thereafter, said spouses remained in the same property,
maintaining their houses and acting as tenants for the new owner, applicant Angelina
Sarmiento. That applicant likewise introduced improvements on the property by
fencing the same with barbed wire, planting crops and other fruit trees, and by
constructing there a house of her own. The oral testimony of applicant Angelina
Sarmiento, insofar as location, possession and ownership over the said parcel of land
is concerned, was corroborated by the testimony (sic) of Victor Jarvinia and Enrique
Buco, both claiming that they were with the group who conducted the survey of the
subject property; and said Enrique Buco also declaring that he had known the subject
land since 1932, he being the owner of an adjoining titled property. Witness Enrique
Buco likewise claimed that the subject land is way beyond the perimeter of the titled
property of oppositor 2nd Manila Newtown City Development Corporation, the latter's
land being situated far from the subject land.
xxx xxx xxx

The subject parcel of land appears not to be within any military, naval, civil or a
government reservation; nor is it traversed by any road, river or creek, except that it is
bounded on the North and East, along lines 4 to 33 by the Katitinga River; and on the
Southeast, along lines 34 to 40 by Dean Kabayo Barrio Road; on the South by Igay
10
Provincial Road, along lines 40 to 44.
The Director of Lands, through the Office of the Solicitor General, seasonably appealed from said
decision to the then Intermediate Appellate Court which docketed the appeal as A.C.-G.R. CV No.
00126. The Director raised before it the following assignment of error:
The lower court gravely erred in holding that the applicant and her predecessors-in-
interest have been in open, continuous, and adverse possession in the concept of owner
of the land applied for more than 30 years prior to the filing of the application. 11
In its decision promulgated on 12 October 1984, the Intermediate Appellate Court found no merit in the
appeal and dismissed the same. It held follows:
We find no merit in the appeal. While it may be true that the vendors of the portion of
the land in question to the herein applicant did not show tax declaration, it has been
clearly established that Macario Cruz and spouses Juan Reyes and Avelina Sarmiento
(sic) and also spouses Mariano Castillo and Petronila Robes were in possession of the
land in 1928 and 1948, respectively in concept of owners, without anybody molesting
them. They introduced improvements by planting different kinds of trees and
constructing houses thereon. When a person occupied (sic) a parcel of land under a
claim of ownership making improvements and generally held (sic) himself out as
owner of the land, it is only upon the most convincing testimony, in the absence of any
competent documentary evidence, that the courts would be justified in declaring him
to be the real owner thereof.
Land Titles and Deeds |3
A person in the open, continuous, exclusive and notorious possession and occupation
of a certain lands (sic) for more than thirty years, in the concept of owner, is entitled
to a confirmation of his title to said land. (Molina vs. De Bacud, L-20195, April 27,
1967, 19 SCRA 956).
Accordingly, herein applicant continued the possession in concept of owner from her
predecessors-in-interest.
Moreover, the land in question was surveyed as Lot 1005 for the herein applicant for
the cadastral survey of San Jose del Monte, without anybody else claiming ownership
of said land.
It further appears that the land in question is within the alienable and disposable land
as certified to by the officials of the Bureau of Forest Development. It is for this reason
that the oppositor Director of Lands did not introduce any evidence opposition (sic)
and merely submitted the case for decision.
We reiterate what we have said in previous decisions in similar cases that unless the
government has serious grounds of opposition such as the fact that the land applied for
is within a forest zone or government reservation, registration of agricultural lands
within the alienable or disposable area should be encouraged to give more value to the
land and this promotes their development rather than remain as idle lands. 12
Undaunted by this second defeat, the Director filed on 5 December 1984 this petition asserting that the
respondent Court had decided a question of substance in a way not in accord with law and the applicable
decisions of this Court. 13
The petition is impressed with merit. This Court will have to overturn the challenged decision, as well
as that of the trial court.

While the rule is well settled that findings of fact of the appellate court are conclusive upon this
14
Court, there are recognized exceptions thereto, among which is where the findings of fact are not
supported by the record or are so glaringly erroneous as to constitute a serious abuse of discretion. 15 This
exception is present in this case insofar as the findings of the respondent Court and the trial court on the
character of possession are concerned.
It is not disputed that private respondent seeks registration of the questioned lot on the basis of paragraph
(b), Section 48 of the Public Land
Act, 16 as amended by R.A. No. 1942, 17 which reads as follows:
Sec. 48. The following described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein, but whose titles
have not been perfected or completed, may apply to the Court of First Instance of the
province where the land is located for confirmation of their claims and the issuance of
a certificate of title therefor, under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors in
interest have been in open, continuous, exclusive and notorious
possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, for at
least thirty years immediately preceding the filing of the application
for confirmation of title except when prevented by war of force
majeure. These shall be conclusively presumed to have performed
all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter. 18
This section is the law on judicial confirmation of imperfect or incomplete titles. By its very nature, the
burden of proof is on the applicant to show that he as an imperfect or incomplete title. Such is the duty
Land Titles and Deeds |4
of one who holds the affirmative side of an issue In Heirs of Jose Amunategui vs. Director of
Forestry, 19 this Court, speaking through Mr. Justice Hugo E. Gutierrez, Jr., held:
In confirmation of imperfect title cases, the applicant shoulders the burden of proving
that he meets the requirements of Section 48, Commonwealth Act No. 141, as amended
by Republic Act No. 1942. . . .
Specifically, under paragraph (b) thereof, the applicant must prove that: (a) he or his predecessors-in-
interest have been in open, continuous, exclusive and notirious possession and occupation of an
agricultural land of the public domain; (b) such possession and occupation must be for a least thirty (30)
years preceding the filing of the application; and (c) such possession and occupation must be under
a bona fide claim of acquisition of ownership.
It must be underscored that the law speaks of "possession and occupation." Since these words are
separated by the conjunction and, the clear intention of the law is not to make one synonymous with the
order. Possession is broader than occupation because it includes constructive possession. When,
therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and notorious, the
word occupation serves to highlight the fact that for one to qualify under paragraph (b) of the aforesaid
section, his possession of the land must not be mere fiction. As this Court stated, through then Mr. Justice
Jose P. Laurel, in Lasam vs. The Director of Lands: 20
. . . Counsel for the applicant invokes the doctrine laid down by us in Ramos
vs. Director of Lands (39 Phil. 175, 180). (See also Roales vs. Director of Lands, 51
Phil. 302, 304). But it should be observed that the application of the doctrine of
constructive possession in that case is subject to certain qualifications, and this court
was careful to observe that among these qualifications is "one particularly relating to
the size of the tract in controversy with reference to the portion actually in possession
of the claimant." While, therefore, "possession in the eyes of the law does not mean
that a man has to have his feet on every square meter of ground before it can be said

that he is in possession", possession under paragraph 6 of section 54 of Act No. 926,
as amended by paragraph (b) of section 45 of Act No. 2874, is not gained by mere
nominal claim. The mere planting of a sign or symbol of possession cannot justify a
Magellan-like claim of dominion over an immense tract of territory. Possession as a
means of acquiring ownership, while it may be constructive, is not a mere fiction. . . .
21
Earlier, in Ramirez vs. The Director of Lands, this Court noted:
. . . The mere fact of declaring uncultivated land for taxation purposes and visiting it
every once in a while, as was done by him, does not constitute acts of possession.
In the case of The Director of Lands vs. Reyes, 22 this Court also stated:
A mere casual cultivation of portions of the land by the claimant, and the raising
thereon of cattle, do not constitute possession under claim of ownership. In that sense,
possession is not exclusive and notorious so as to give rise to a presumptive grant from
the State.
Possession is open when it is patent, visible, apparent, notorious and not clandestine. 23 It is continuous
when uninterrupted, unbroken and not intermittent or occasional; 24 exclusive when the adverse
possessor can show exclusive dominion over the land and an appropriation of it to his own use and
benefit; 25 and notorious when it is so conspicuous that it is generally known and talked of by the public
or the people in the neighborhood. 26
Use of land is adverse when it is open and notorious. 27
Under the law, the only kind of interruption which does not affect the continuity of possession is that
caused by war or force majeure.
Private respondent does not pretend to be the original possessor of the property in question. She relies
on the alleged possession of her predecessors-in-interest, namely: Juan Reyes, Mariano Castillo, Macario
Land Titles and Deeds |5
Cruz and Feliciano Santos. From Juan Reyes, she acquired a parcel of land located in Karahumi, San
Jose del Monte, Bulacan, with an area of 168,000 square meters as evidenced in a deed of sale executed
on 7 April 1969. 28 From Mariano Castillo, she first acquired a portion, consisting of 7 hectares, of a
parcel of land located in Licau-licau, San Jose del Monte, Bulacan, per a deed of sale executed on 16
August 1965. 29 She purchased the remaining portion thereof, with an area of 7 hectares, allegedly on 15
November 1965, but she lost the deed of sale; however, Mariano Castillo subsequently executed a so-
called Confirmatory Deed of Sale on 8 April 1969. 30 Per the findings of the trial court, the property
31
purchased from Cruz on 31 March 1969 for P18,750.00 consists of 73,000 square meters. No deed of
sale was presented to prove this acquisition. There is no proof as to the area of the property allegedly
purchased from Santos.
None of private respondent's predecessors-in-interest declared for taxation purposes their alleged land
holdings. Accordingly, they had never paid taxes thereon. It was only the private respondent who
32
declared them in one (1) tax declaration, Tax Declaration No. 8388, on 18 September 1969. Per this
tax declaration, the land covered is located at Gaya-Gaya, San Jose del Monte, Bulacan, with an area of
37.6 hectares, of which 9.4 hectares are ricelands while the remaining 28.2 hectares are cogonal.
Juan Reyes, Mariano Castillo, Macario Cruz and Feliciano Santos were not presented by private
respondent as witnesses during the hearing of her application. There can be no question that they were
the best witnesses to identify the parcel they sold to the private respondent and prove the character of
their possession thereof. Instead, she presented Victor Jarvina and Enrique Buco, whose testimonies on
direct and cross examinations are partly summarized by the petitioner as follows:
Victor Jarvina testified that he knew the applicant (p. 4, tsn, June 20, 1977) who bought
a parcel of land with an area of more than 37 hectares, located in Licau-Licau, San
Jose del Monte, Bulacan, from Macario Castillo and Juan Reyes (pp. 5-6, ibid); that
he was with the surveyor when the survey was done; no person contested the survey;
he identified the survey plan, Exhibit "F", the deed of sale executed by Juan Reyes,
Exhibits "G" and "G-1", the deeds of sale executed by Mariano Castillo, Exhibits "H"
and "H-1" and Exhibits "I" and "I-1" (pp. 7-11, ibid); the land was declared for taxation

purposes by Angelina Sarmiento and the taxes were paid; he identified Exhibit "J", the
tax declaration, and Exhibit "K", the tax receipt (pp. 12-13, ibid); after the properties
were purchased by the applicant, her possession was never disturbed by any other
person (pp. 4-7, tsn, July 29, 1977). On cross-examination, Victor Jarvina stated that
he could no longer recall the date when the survey was made (pp. 14-19, ibid); the land
was bought by the applicant from different persons, including Mariano Castillo, Juan
Reyes, Macario Cruz and Feliciano Santos; he was present when the sales were made,
and the vendors did not show any written document to prove that they owned the
property, but they claimed to have been in possession of the same for ten (10) years
(pp. 14-16, tsn, Sept. 16, 1977); the property is hilly and rolling and full of cogon, but
a portion was planted with camote, corn and seasonal crops by the vendors; he came
to know the (sic) property three (3) years before Angelina Sarmiento bought it in 1969
(pp. 20-22, ibid); Castillo had a house on the land but it was wrecked by a storn (sic),
so that there was no more house existing on the land (p. 25, ibid).
Enrique Buco testified that he had known the land subject of the case since 1932
because he owned a parcel of land adjoining it; he had known Angelina Sarmiento
since 1950; since 1932, the land was in the possession of the parents of Juan Reyes,
Luis Pascual, Macario Cruz, Feliciano Santos, Mariano Castillo, and a certain Arsenio,
whose family name he did not know; the possession by the parents of Mariano Castillo
and Juan Reyes was never disturbed by anyone; Mariano Castillo and his parents
planted bananas, mango trees, palay and sweet potatoes, but he did not know how
many hectares were cultivated (pp. 2-7, tsn, October 24, 1977); Juan Reyes and his
parents planted two (2) hectares with palay, and the rest of the area with mango,
caimito, avocado and langka trees, some of which were already fruit bearing; Mariano
Castillo and Juan Reyes sold their rights over the land to Angelina Sarmiento; the land
was surveyed by the cadastral team, and Mariano Castillo and Juan Reyes were present
during the survey; and Castillo and Reyes remained in possession of the land as tenants
of Angelina Sarmiento (pp. 7-13, ibid). On cross-examination, he admitted that in
1932, he and the parents of Mariano Castillo and Juan Reyes were just starting to clear
Land Titles and Deeds |6
up the area, and that only around three (3) hectares were cleared up by the parents of
Castillo and Reyes (pp. 13-16, ibid); that Feliciano Santos was still in possession of a
small portion of the land in question; they were not able to take possession of the land
in question because it was already occupied by the Japanese forces; they returned to
the land only after liberation (pp. 16-18, ibid); that his land adjoined the land in
question on the east, adjoining the property of Isidro Cabacang and Roman Reyes, who
were the ones appearing as adjoining owners in Exhibit "F", the plan of lot 1005; that
he left his land and stayed in Quezon City in 1973 because the security men of Puyat
Enterprises were mauling many persons in the community; to avoid trouble he
transferred his family to Quezon City (pp. 19-23, ibid); that the parents of Juan Reyes
and Mariano Castillo cleared up a portion of the wooded area in 1932 and that was
how they came into possession of their respective portions of the property; that he did
not know the extent, in terms of square meters, of the land possessed by Castillo and
Reyes; that the subject land was no longer occupied since two years ago because the
people ran away (pp. 27-30, ibid). On redirect examination, Enrique Buco stated that
at present only Mariano Castillo is staying on the land in question as an overseer of
Angelina Sarmiento; and that the last time he went there was in April, 1978 (pp. 3-5,
tsn, August 18, 1978). On re-cross-examination, he admitted that when he went to the
land in question in April, 1978, he did not see anyone cultivating the property, and that
Puyat Enterprises had built a factory near the property (pp. 6-7, ibid). 33
It was further established that from the Land Classification Report dated 8 August 1971, 34 only one-half
(.5) of a hectare is planted with banana and fruit trees, while 36 hectares are "grass land."
From the foregoing, serious doubts are cast on the claim of open, continuous, exclusive and notorious
possession and occupation by the predecessors-in-interest of private respondent. As earlier stated, none
of them even thought of declaring their respective areas for taxation purposes. While it is true that tax
receipts and declarations are not incontrovertible evidence of ownership, they constitute at least proof
that the holder has a claim of title over the property. 35 The voluntary declaration of a piece of property
for taxation purposes manifests not only one's sincere and honest desire to obtain title to the property

and announces his adverse claim against the State and all other interested parties, but also the intention
to contribute needed revenues to the Government. Such an act strengthens one's bona fide claim of
acquisition of ownership. Added to this, as certified to by Jarvina, who claimed to have been present
when the sales were made to private respondent, none of the vendors could show any written document
to prove their ownership of land; they merely alleged that they have been possession of the same for ten
(10) years. In the case of the 73,000 square meters (7.3 hectares) purportedly purchased from Macario
Cruz, no deed of sale from the latter was presented. Interestingly enough, without this acquisition, private
respondent would only have more or less 308,000 square meters, or 30.8 hectares, which she acquired
from Juan Reyes and Mariano Castillo, and not the 376,397 square meters, or 37.6 hectares which she
applied for. No plausible explanation was offered as to why Macario Cruz did not or could not execute
a deed of sale. There is as well no evidence concerning the area of the property purchased from Feliciano
Santos and no explanation why no deed of sale was executed by him. Then too, there is absolutely no
credible testimony describing the boundaries and extent of the areas each vendor had allegedly occupied
before the sale to the private respondent. On the contrary, the testimony of Enrique Buco throws more
doubts thereon. He claims that the land applied for was, since 1932, in the possession of the parents of
Juan Reyes, Luis Pascual, Macario Cruz, Feliciano Santos, Mariano Castillo and a certain Arsenio. If
that be so, then the parents of Luis Pascual and Arsenio have a claim on portions of the property applied
for. Private respondent miserably failed to show that she also acquired such portions or that they were
earlier sold to any of her vendors.
Respondent Court considered the year 1932 as the starting point of the possession of the predecessors-
in-interest of private respondent. In the light of the aforesaid testimony of Enrique Buco, such a
conclusion has no basis. As a matter of fact, the trial court itself found and so held as follows:
The testimonial evidence shows that the subject parcel of land was originally owned
and possessed by Macario Cruz, spouses Juan Reyes and Avelina Emocling, and
spouses Mariano Castillo and Petronila Robes, the two latter sets spouses having been
in possession as early as 1928 and 1948, respectively, during which time they
possessed, occupied and cultivated their respective portions unmolested, openly,
36
continuously, and in the concept of owners. . . .
Land Titles and Deeds |7
If the Castillo spouses' possession actually commenced in 1948, as found by the trial court, it goes
without saying that their possession of the 14-hectare portion was only for seventeen (17) years since
they sold the same to the private respondent in 1965. Tacking this possession to that of the latter as of
the time the application was filed on 13 August 1970, it is obvious that the 30-year possession required
by paragraph (b), Section 48 of the Public Land Act was not satisfied.
Further, if indeed private respondent has a genuine claim of possession over the property in question,
We find no reason why, as reflected in the Land Classification Report dated 8 August 1971, 37 or barely
a year after the filing of the application, only one-half (1/2) hectare of the vast area applied for was in
fact planted with nothing but banana and fruit trees while thirty-six (36) hectares thereof are "grass land".
These fruit trees are not identified. If the testimony of private respondent to be believed, these could be
kamias, santol and mangoes which, according to her, were existing at the time she bought the property.
Also, if the testimony of Enrique Buco is to be believed, these fruit trees could be mango trees allegedly
planted by Mariano Castillo and his parents or, mango, kaimito, avocado and langka trees planted by
Juan Reyes and his parents. This Court can not accept these testimonies at face value. The respondent
court and the trial court should not have been credulous enough to have given them full faith and credit.
In her own Tax Declaration No. 8388 dated 18 September 1966 and which she secured sometime after
she allegedly purchased the property and almost a year before she filed the application, private
respondent merely declared that the property is comprised of riceland with an area of 9.4 hectares and
cogonal land with an area of 28.2 hectares. the existence of this 9.4-hectare riceland is even doubtful.
Private respondent herself admitted that the land is not conducive to the planting of palay, 38 the portions
cultivated by her vendors Castillo, Reyes and Cruz were scattered in different places and the area each
cultivated could not be more than one (1) hectare. 39 Upon the other hand, as earlier mentioned, Enrique
Buco only mentioned two (2) hectares planted to palay by Juan Reyes and his parents.
Another factor which impairs the bona fides of private respondent is her failure to pay the real estate
taxes after the filing of the application. She made a payment on 26 September 1969 40 after declaring the
property for taxation purposes on 18 September 1969, 41 and only for the taxable years 1965 to 1969.
Evidently, such payment was made only for purposes of the application. A picayune amount was
involved annually. For the period beginning in 1965 and ending in 1969, she paid P517.50 only. She did
 Land Titles and Deeds |8

not want to part with any sum thereafter until it would become certain that the court would award the
property to her. Such an attitude is an execration of good faith.
One last point which bears heavily against the claim of private respondent is the fact that she had the
temerity to make it appear in the application that she and the spouses Placer Velasco and Socorro
Busuego are co-owners of the property who have registerable title thereto and who must, therefore, be
awarded the property. This claim is of course deliberate falsehood for, as private respondent later
revealed when she decided to drop the spouses as co-applicants, the latter do not have any claim of either
WHEREFORE, the petition is GRANTED and the decision of the respondent Court of 12 October 1984
in A.C.-G.R. CV No. 00126 is hereby REVERSED. The decision of the trial court of 2 June 1982 in
Land Registration Case No. (SM) N-167, LRC Record No. N-39192 is likewise REVERSED and said
case it hereby ordered DISMISSED.
Costs against private respondent.
SO ORDERED.

possession or ownership over the property. They were made co-applicants only because they agree to
shoulder all the expenses of litigation, including the cost of survey and attorney's fees. Even granting,
for the sake of argument, that such an agreement was in fact made with the spouses, it was not necessary
G.R. No. 82680 August 15, 1994
that they be made co-applicants. The interest of the spouses could still be effectively protected without
sacrificing the truth. To this Court's mind, there was a clear attempt on the part of the private respondent NICANOR SOMODIO, petitioner,
and the spouses to deceive the trial court. Unfortunately, the trial court glossed over this point and vs.
impliedly declared as validly rescinded the contract with the said spouses. COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO, respondents.

The foregoing disquisitions sufficiently prove that private respondent is a smart land speculator who saw QUIASON, J.:
in the land applied for not just the blades of cogon grass, the color of which changes from green during
the rainy season to brown during summer, but huge profits as business, industry and the general This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set
population move outward from the metropolitan area. It is incumbent upon land registration courts to aside the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the Court of
exercise extreme caution and prudent care in deciding so-called applications for judicial confirmation of Appeals in CA-G.R. SP No. 11602.
imperfect titles over lands of the public domain; if they are lax in these proceedings, they may, wittingly
or unwittingly, be used by unscrupulous land speculators in their raid of the public domain. I

More deserving citizens should be given priority in the acquisition of idle lands of the public domain. On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights, conveying
These could serve as relocation sites for the urban poor. They may be disturbed to landless farm workers. to Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula, General Santos
In so doing, the ends of social justice, appropriately the centerpiece of the 1987 Constitution, could be City and described in the said instrument as:
further enhanced.

Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by
Customs Zone (Sarangani Bay), on the East by Public Land, and on the West by Public
Land.
Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22, 1974,
Mabugat executed an Affidavit of Trust expressly recognizing the right of petitioner over one-half
undivided portion of the lot. Later, petitioner discovered in the District Land Office that the lot was
numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat partitioned the property into two
portions, with petitioner taking the western part. Immediately after the partition, petitioner took
possession of his portion and planted thereon ipil-ipil trees, coconut trees and other fruit-bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His
employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure to
the case of his uncle. He would visit the property every three months or on weekened when he had time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to
petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises but such
demand proved futile. Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with
damages against respondent Ayco before the Municipal Trial Court, Branch I, General Santos, docketed
as Civil Case No. 2032-II.
Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a house
thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible entry before
the same court docketed as Civil Case No. 2013-I. Said case was later consolidated with Civil Case No.
2032-II.
In his answer, respondent Purisima averred that the lot was a portion of the land subject of his application
for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in question as:
Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the North
by 6328-X; on the South by Sarangani Bay; on the East by a Municipal Road; and on
Land Titles and Deeds |9
the West by Lot No. 6328-W, containing an area of 1,095 square meters and covered
by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied).
Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of land
comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in February
1958, and that his father's survey plan was approved by the Director of Lands in 1960. Respondent Ayco,
on the other hand, did not present any evidence but merely anchored his right to possess the property on
the evidence of Purisima.
On April 30, 1986, the trial court rendered a decision finding that respondent Purisima built his house
"almost on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not knowing
that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said respondent was
claiming (Rollo, p. 43). The court went on to state that:
. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had
sometimes stayed with Mrs. Maturan in Judge Purisima's house on the adjoining lots,
and could not have remained unaware of the possession of Somodio. He must have
depended on the thought that it was his father who made the subdivision survey and
had fenced an area which he had claimed. He did not exactly verify that the area fenced
by his father had an area of only 1,095 square meters, which did not include the are
Lot No. 6328-X could eventually be standing on his property, for Lot No. 6328-X is
not claimed by him and has not been applied for even by his father. His father has been
abroad and has not taken steps to apply for Lot No. 6328-X. This lot is not declared
for taxation purposes in the name of any claimant-applicant. Unless and until there
would be an administrative proceedings and the title ultimately issued in favor of an
applicant, the possession of the actual claimant and occupant has to be respected and
maintained in the interest of public order . . . (Rollo, pp. 43-44).
The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X. The
court did not believe respondent Ayco's claim that the administratrix of the estate of respondent

Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the court said
that respondent Ayco was willing to vacate the premises provided he be given financial assistance to do
so (Rollo, pp. 43-44).
Nothing that the ocular inspection of the area showed that the houses of respondents Purisima and Ayco
were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the case
became one which entailed mere removal of the houses from the lot in question. Accordingly, the court
ordered private respondents to remove their respective houses, to deliver the land to petitioner, and to
pay attorney's fees and litigation expenses.
On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of
the Municipal Trial Court. Respondent then elevated the cases on a petition for review to the Court of
Appeals, which, in its decision dated September 27, 1987, set aside the decisions of the two trial courts
and ordered the dismissal of the two complaints filed by petitioner.
The Court of Appeals held that herein petitioner had not "clearly and conclusively established physical,
prior possession over Lot No. 6328-X."
Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been denied,
he filed the instant petition for review on certiorari.
We grant the petition.
II
The procedural issue raised by private respondents should first be resolved. The issue is whether the
instant petition is proper considering that petitioner "merely touch(es) upon questions of fact which had
been carefully considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the findings of fact
of the Court of Appeals are binding on this Court. This rule, however, is not without exceptions, one of
which is when the factual findings of the Court of Appeals and the trial court are contrary to each other.
In such a case, this Court may scrutinize the evidence on record in order to arrive at the correct findings
L a n d T i t l e s a n d D e e d s | 10
based on the record (Valenzuela v. Court of Appeals, 191 SCRA 1 [1990]; Roman Catholic Bishop of
Malolos, Inc. v. Intermediate Appellate Court, 191 SCRA 411 [1990]).
Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession
over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.
In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession
of the property involved, independent of any claim of ownership set forth by any of the party-litigants.
Anyone of them who can prove prior possession de facto may recover such possession even from the
owner himself. This rule holds true regardless of the character of a party's possession, provided, that he
has in his favor priority of time which entitles him to stay on the property until he is lawfully ejected by
a person having a better right by either accion publiciana or accion reivindicatoria (De Luna v. Court
of Appeals, 212 SCRA 276 [1992]).
Petitioner took possession of the property sometime in 1974 when he planted the property to coconut
trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the property. It
is immaterial that the building was unfinished and that he left for Kidapawan for employment reasons
and visited the property only intermittently. Possession in the eyes of the law does not mean that a man
has to have his feet on every square meter of ground before it can be said that he is in possession (Ramos
v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject the property
to the action of his will.
Article 531 of the Civil Code of the Philippines provides:
Possession is acquired by the material occupation of a thing or the exercise of a right,
or by the fact that it is subject to the action of our will, or by the proper acts and legal
formalities established for acquiring such right.
Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements on
the land only in 1981, he still enjoyed priority of possession because respondent Purisima entered the
premises only in 1983.
 L a n d T i t l e s a n d D e e d s | 11

It should be emphasized that the Court of Appeals noted that none of the parties had produced tax issue of ownership. Forcible entry is merely a quieting process and never determines the actual title to
declarations or applications as public land claimants. As such, what should have been scrutinized is who an estate (German Management & Services, Inc. v. Court of Appeals, 177 SCRA 495 [1989]; Manuel v.
between the claimants had priority of possession. Court of Appeals, 199 SCRA 603 [1991].

Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his cause. WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the
As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small Farmers trial courts REINSTATED. Costs against private respondents.
Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that Lot No.
6328-X was in payment of his fee for the services of his father and that he caused the construction of a SO ORDERED.

perimeter wall in the area, these facts do not mean that respondent Purisima himself had prior possession.
He did not present any proof that his father had authorized him to enter the land as his successor-in-
interest. Neither did he present proof that between 1958, when his father allegedly took possession of
the land, and 1983, when said respondent himself entered the land, his father ever exercised whatever
right of possession he should have over the property. Under these circumstances, priority in time should
G.R. No. L-27594 November 28, 1975
be the pivotal cog in resolving the issue of possession.
THE DIRECTOR OF LANDS, THE DIRECTOR OF FORESTRY, and the ARMED FORCES
The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The
OF THE PHILIPPINES, petitioners,
matter of identification of the land, however, had been resolved by respondent Purisima's admission in
vs.
his pleadings, as well as by two ocular inspections.
HON. SALVADOR C. REYES, as Judge of the Court of First Instance of Nueva Ecija, Branch
III, PARAÑAQUE INVESTMENT and DEVELOPMENT CORPORATION, ROMAN C.
In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while
TAMAYO, THE COMMISIONER OF THE LAND REGISTRATION COMMISSION and the
petitioner identified the lot adjacent to it, Lot
REGISTER OF DEEDS OF NUEVA ECIJA, respondents.
NO. 6328-X, as the area where private respondents built their houses. That these two lots are distinct
from one another was resolved by the ocular inspection conducted by a Senior Geodetic Engineer of the
G.R. No. L-28144 November 28, 1975
Office of the City Engineer, who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-
Y and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge himself ALIPIO ALINSUNURIN, now substituted by PARAÑAQUE INVESTMENT and
went to the premises in question and discovered that aside from the houses of respondents Purisima and DEVELOPMENT CORPORATION, applicant-appellee,
Ayco, five other houses had been built on Lot No. 6328-X. vs.
THE DIRECTOR OF LANDS, THE DIRECTOR OF FORESTRY and the ARMED FORCES
Petitioner's prior possession over the property, however, is not synonymous with his right of ownership
OF THE PHILIPPINES, oppositors-appellants.
over the same. As earlier stated, resolution of the issue of possession is far from the resolution of the

Acting Solicitor General Hugo E. Gutierrez, Jr. and Assistant Solicitor General Reynato S. Puno for The
Director of Lands, etc.
Jaime B. Lumasag Jr. and Jose J. Roy and Associates Law Office for Roman C. Tamayo.
Nemesio P. Diaz and Celso B. Fernandez, Jr. for Alipio Alinsunurin, etc.
ANTONIO, J.:
These cases are interrelated, and so are decided jointly.
In his application originally filed on February 24, 1964 with the Court of First Instance of Nueva Ecija,
the applicant Alipio Alinsunurin, claiming ownership in fee simple by inheritance from the late Maria
Padilla, sought the registration of title under Act 496, as amended, of a vast tract of land, containing an
area of 16,800 hectares, more or less, situated at the municipality of Laur, province of Nueva Ecija,
admittedly inside the boundary of the military reservation of Fort Magsaysay. 1
On May 5, 1966, the Director of Lands, Director of Forestry, and the Armed Forces of the Philippines
opposed the application, claiming that the applicant was without sufficient title and was not in open,
exclusive, continuous and notorious possession and occupation of the land in question for at least thirty
(30) years immediately preceding the filing of the application; that approximately 13,957 hectares of
said land consist of the military reservation of Fort Magsaysay established under Proclamation No. 237,
dated December 10, 1955 of the President.2
On May 10, 1966, the applicant Alipio Alinsunurin filed a motion for substitution of parties, requesting
that the Parañaque Investment and Development Corporation be considered as the applicant in his place,
it having acquired all his rights, interests, ownership and dominion over the property subject matter of
the application.3 The motion was granted by the lower court in its order dated June 10, 1966. 4
L a n d T i t l e s a n d D e e d s | 12
It is beyond dispute that the land subject of the application is included within the area reserved for
military purposes under Proclamation No. 237, dated December 19, 1955, of the President. The land is
largely uncultivated, mountainous and thickly forested with a heavy growth of timber of commercial
quantities.5 Except for a small area cultivated for vegetation by homesteaders issued patents by the
Director of Lands, there were no occupants on the land. 6
It is claimed by the applicant that Melecio Padilla acquired the land by virtue of a possessory information
title issued during the Spanish regime on March 5, 1895, and upon his death in 1900, he transmitted the
ownership and possession thereof to his daughter and sole heir, Maria Padilla. The latter in turn continued
to cultivate the land thru tenants and utilized portions for pasture, until her death sometime in 1944.
On November 19, 1966, the lower court rendered decision holding that the parcel of land applied for,
described in the technical description Plan II-6752, is adjudicated to and ordered to be registered in favor
of (a) Parañaque Investment and Development Corporation, a Philippine corporation wholly owned by
Filipino citizens, with address at Manila, Philippines, two-thirds (2/3) portion, subject to the rights of
Ariosto Santos per Joint Manifestation of Alipio Alinsunurin and Encarnacion Caballero-Alinsunurin,
Ariosto Santos and Parañaque Investment and Development Corporation dated July 19, 1966 and marked
as Exhibit "AA-4 "7 and (b) Roman C. Tamayo, Filipino citizen, married, resident of Cullit, Lallo,
Cagayan, one-third (1/3) portion of the said property.
On December 12, 1966, the oppositors Director of Lands, Director of Forestry and the Armed Forces of
the Philippines filed a Notice of Appeal from the said decision to the Supreme Court, 8 copy of which
notice was furnished counsel for the applicant Parañaque Investment and Development Corporation;
however, no copy was furnished to counsel for Roman C. Tamayo, to whom one-third (1/3) portion of
the land was adjudicated.
On January 18, 1967, within the extended period granted by the court, the oppositors-appellants filed the
corresponding Record on Appeal, copy of which was duly served upon appellees Parañaque Investment
and Development Corporation and Roman C. Tamayo.

By an order dated March 8, 1967, the lower court required the Provincial Fiscal to file an Amended
Record on Appeal, so as to include therein certain orders and pleadings, within ten (10) days from receipt
of the order. 9
On March 16, 1967, the Amended Record on Appeal was duly filed and copies served upon the appellees.
Pending the approval of the Record on Appeal, the applicant Parañaque Investment and Development
Corporation filed a motion for the issuance of a decree of registration pending appeal. Likewise, Roman
C. Tamayo, thru counsel, filed a motion for the issuance of a decree of registration. Both motions were
opposed by the Government.
On March 11, 1967, the lower court, ruling that its decision of November 19, 1966 had become final as
to the share of Roman C. Tamayo, directed the issuance of a decree of registration of the entire land,
one-third (1/3) pro-indivisoin favor of Roman C. Tamayo, and two-thirds (2/3) pro indiviso in favor of
Parañaque Investment and Development Corporation, subject to the final outcome of the appeal.
On March 14, 1967, the Commissioner of Land Registration forthwith issued Decree No. 113485
pursuant to the said order, and, on March 15, 1967, the Register of Deeds issued Original Certificate of
Title No. 0-3151 of the Register of Deeds of the Province of Nueva Ecija.
On April 12, 1967, the lower court approved the Amended Record on Appeal which, together with the
evidence and transcripts, was forwarded to this Court in due course of appeal.
As the lower court denied reconsideration of the order directing the issuance of a decree of registration,
on May 29, 1967, the Director of Lands, Director of Forestry and the Armed Forces of the Philippines
instituted before this Court a special civil action for certiorari and mandamus with preliminary injunction
(L-27594), seeking to nullify the order dated March 11, 1967, the decree of registration issued pursuant
thereto (Decree No. 113485 dated March 14, 1967) and Original Certificate of Title No. 0-3151 of the
Register of Deeds for the province of Nueva Ecija, and to command the respondent court to certify the
entire proceedings and to allow appeal to the Supreme Court from its decision in toto in LRC Case No.
N-675, LRC Rec. No. N-25545.
L a n d T i t l e s a n d D e e d s | 13
On June 5, 1967, We issued a writ of preliminary injunction as follows:
NOW, THEREFORE, until further orders from this Court, You (respondent Judge) are
hereby restrained from issuing a writ of possession in Land Registration Case No. N-
675, LRC Rec. No. 25545 of the Court of First Instance of Nueva Ecija, entitled
"Parañaque Investment and Development Corporation versus Director of Lands, et
al."; You (respondent Parañaque Investment and Development Corporation and
Roman C. Tamayo), your agents or representatives are hereby restrained from taking
possession and/or excercising acts of ownership, occupancy or possession over the
property in question subject matter of Land Registration Case No. N-675, LRC Rec.
No. N-25545; and You (respondent Register of Deeds) are hereby restrained from
accepting for registration documents referring to the subject land until petitioners shall
have filed a notice of lis pendens as to the title certificates of Roman Tamayo and
Parañaque Investment and Development Corporation, under Sec. 24, Rule 14, Rules
of Court, subject of the above-mentioned Land Registration Case No. N-675, LRC
Rec. No. N-25545.
Accordingly, petitioners-appellants caused the entry of a notice of lis pendens to be duly inscribed in the
primary entry book of the Registry of Deeds of Nueva Ecija and annotated in the memorandum of
encumbrances in Original Certificate of Title No. 0-3151.
In due time, the respondents filed their answers to the petition for certiorari. The parties having filed
their respective memoranda, the case is deemed submitted for decision.
At the outset, We shall resolve the petition for certiorari and mandamus
(L-27594).
I
Under the circumstances of this case, the failure of the appellants to serve a copy of their Notice of
Appeal to the counsel for adjudicatee Roman C. Tamayo is not fatal to the appeal because, admittedly,

he was served with a copy of the original, as well as the Amended Record on Appeal in both of which
11
the Notice of Appeal is embodied. 10 Hence, such failure cannot impair the right of appeal.
What is more, the appeal taken by the Government was from the entire decision, which is not severable.
Thus, the appeal affects the whole decision. 12
In any event, We rule that execution pending appeal is not applicable in a land registration proceeding.
It is fraught with dangerous consequences. Innocent purchasers may be misled into purchasing real
properties upon reliance on a judgment which may be reversed on appeal.
A Torrens title issued on the basis of a judgment that is not final is a nullity, as it is violative of the
explicit provisions of the Land Registration Act which requires that a decree shall be issued only after
the decision adjudicating the title becomes final and executory, and it is on the basis of said decree that
the Register of Deeds concerned issues the corresponding certificate of title.
Consequently, the lower court acted without jurisdiction or exceeded its jurisdiction in ordering the
issuance of a decree of registration despite the appeal timely taken from the entire decision a quo.
II
In the instant case, as a precaution, oppositors-appellants caused notice of lis pendens to be duly
inscribed in Original Certificate of Title No. 0-3151 of the Register of Deeds of Nueva Ecija, thereby
keeping the whole land subject matter of the appeal within the power of the court until the litigation is
terminated. 13
Such entry of notice of lis pendens cannot be cancelled until the final termination of the litigation. The
notice of lis pendens must be carried over in all titles subsequently issued, which will yield to the ultimate
result of the appeal. 14
During the pendency of the appeal, it appears that Honofre A. Andrada, et al., filed with the Court of
First Instance of Nueva Ecija (Branch I, not the land registration court), a complaint against the appellee
L a n d T i t l e s a n d D e e d s | 14
Parañaque Investment and Development Corporation, Rodolfo A. Cenidoza and Roman C. Tamayo, for
reconveyance of a portion of the land in question (Civil Case No. 4696). The trial court assumed
jurisdiction over the case despite the pendency of the appeal involving the same land, and decided the
case in favor of plaintiffs. In violation of Our injunction adverted to above, Parañaque Investment and
Development Corporation executed a subdivision plan of the original single parcel of land subject of the
land registration proceedings covered by Original Certificate of Title No.
0-3151, and deeded over six (6) lots of the subdivision plan to plaintiffs Honofre A. Andrada and
Nemesio P. Diaz. By an order dated September 23, 1968, entered in Civil Case No. 4696, the Register
of Deeds of Nueva Ecija was directed to cancel Original Certificate of title No. 0-3151 and to issue new
titles to the above-named transferees "free from all liens and encumbrances." Immediately, transfer
certificates of title were issued to them and other transferees in which the Register of Deeds of Nueva
Ecija did not carry over the notice of lis pendens originally inscribed in Original Certificate of Title No.
0-3151. Subsequently, other transactions were entered into involving portions of the land reconveyed in
Civil Case No. 4696, including a transfer of about 4,000 hectares to the Land Bank of the Philippines in
consideration of P8,940,000.00.
We find the order to cancel Original Certificate of Title No. 03151 and to issue subsequent titles free
from all liens and encumbrances to be void ab initio.
Civil Case No. 4696 is an action in personam to which the appellants are not parties; its object was to
decree reconveyance to plaintiffs of a portion of the area adjudicated to the Parañaque Investment and
Development Corporation and Roman C. Tamayo in Land Registration Case No. N-675, LRC Rec. No.
N-25545, which is subject to the outcome of the appeal. Such action is barred by the pendency of the
appeal. In that case, the court is without jurisdiction to order the Register of Deeds to cancel Original
Certificate of title No. 0-3151 and to issue titles to transferees "free from all liens and encumbrances
." 15 Nor can such order be construed to authorize the Register of Deeds to cancel the notice of lis
pendens, which was not entered by virtue of the reconveyance case. Thus, the Register of Deeds was
duty bound to carry over the said notice of lis pendens on all titles subsequently issued. But, in plain
violation of lis pendens in said titles; such act constitutes misfeasance in the performance of his duties
for which he may be held civilly and even criminally liable for any prejudice caused to innocent third

parties, but cannot affect the petitioners-appellants who are protected by Our writ of injunction and the
notice of lis pendens inscribed in the original title. It must be remembered that Our injunction restrained
the Register of Deeds "from accepting for registration documents referring to the subject land until the
petitioners shall have filed a notice of lis pendens as to the title certificates of Roman C. Tamayo and
Parañaque Investment and Development Corporation under section 24, Rule 14, Rules of Court, subject
of the above-mentioned Land Registration Case No. N-675, LRC Rec. No. 25545." Its plain meaning is
to enjoin registration of documents and transactions unless the notice of lis pendens is annotated and so
subject the same to the outcome of the litigation. In such case, subsequent transferees cannot be
considered innocent purchasers for value.
On the other hand, the lower court's order dated September 23, 1968, in Civil Case No. 4696, cannot
overrule an injunction of this Court (in L-27594). As a result, We consider the notice of lis
pendens entered in virtue of this litigation to remain in full force and effect, and affects all subsequent
transferees of the title of the land subject of this appeal.
At any rate, it is well-settled that entry of the notice of lis pendens in the day book (primary entry book)
is sufficient to constitute registration and such entry is notice to all persons of such adverse claim. 16
III
We now consider the appeal on the merits.
1. To begin with, the original tracing cloth plan of the land applied for, which must be approved by the
Director of Lands, was not submitted in evidence. The submission of such plan is a statutory requirement
of mandatory character. 17 Unless a plan and its technical description are duly approved by the Director
of Lands, the same are not of much value. 18
It is true that blueprints of two survey plans were presented before the trial court (both marked Exhibit
"D"). The first blueprint copy of a plan of land as surveyed for Maria Padilla (Exhibit "D", p. 4, Exhibits
of Applicant), was not formally offered in evidence. The second plan of the land, as surveyed for
L a n d T i t l e s a n d D e e d s | 15
Parañaque Investment and Development Corporation (also marked as Exhibit "D", p. 3, Exhibits of
Applicant) was submitted by the said applicant, but it lacks the approval of the Director of Lands.
Of course, the applicant attempts to justify the non-submission of the original tracing cloth plan by
claiming that the same must be with the Land Registration Commission which checked or verified the
survey plan and the technical descriptions thereof. It is not the function of the LRC to check the original
survey plan as it has no authority to approve original survey plans. If, for any reason, the original tracing
cloth plan was forwarded there, the applicant may easily retrieve the same therefrom and submit the
same in evidence. This was not done.
It is also asserted that a blue print copy of the plan (Exhibit "D", p. 5, Exhibits of Applicant) was
superimposed in the military plan of the reservation under Proclamation No. 237, which military plan
was presented in evidence by the oppositors-appellants (Exhibit "6"), and it was agreed by the parties
that the plan, Exhibit "D", superimposed in the plan of the area covered by the proclamation, is the plan
of the land applied for (p. 15, Brief for Applicant-Appellee).
Obviously, the superimposition of the copy of the survey plan of land as surveyed for applicant in the
military map of the area under Proclamation No. 237 was for the sole purpose of showing that the land
applied for is situated within the area covered by the military reservation of Fort Magsaysay
appropriately indicated in the perimeter map of said reservation (Exhibit "6"). But the applicant is not
relieved from the original tracing cloth plan approved by the Director of Lands as required by law. One
of the distinguishing marks of the Torrens System is the absolute certainty of the identity of a registered
land. Consequently the primary purpose of the aforesaid requirement is to fix the exact or definite identity
of the land as shown in the plan and technical descriptions. Hence, the applicant is not relieved of his
duty of submitting the original tracing cloth of the survey plan of the land duly approved by the Director
of Lands.
It will be noticed that the plan (Exhibit "D", p. 5, Exhibits of Applicant) does not bear the approval of
any officer authorized by law.

In similar manner, the surveyor's certificate, also required in original land registration proceedings, was
not offered in evidence.
2. We next consider the question of whether the applicant has a registerable title to the land applied for.
The applicant relies on a purported titulo de informacion posesoria issued in the name of Melecio Padilla
(Exhibit "T" pp. 64-68, Exhibits of Applicant). However, neither the original of the said titulo de
informacion posesoria, nor a duly authenticated copy thereof, was submitted in evidence, and there are
serious flaws on the faces of the alleged copies of the document, as in the circumstances surrounding
their execution. Thus, the two (2) purported photostat copies of the said informacion posesoria title
materially differ on the date when said informacion posesoria was issued. One copy showed that the said
document was issued on March 5, 1895 (Exhibit "T") while the other indicated that it was issued twelve
(12) years earlier, or on March 5, 1883 (Exhibit "2").
Moreover, according to the official records of the Register of Deeds of Nueva Ecija, on the basis of the
"List of Possessory Information Titles (Spanish Titles) of Nueva Ecija", the corresponding supporting
documents of which are kept in the vault of said office, the name of Melecio Padilla does not appear
among those listed as holders of informacion posesoria titles as of the year 1898 covering lands situated
in Santor (now Laur) Nueva Ecija. According to said document, the name Melecio Padilla appears only
in the list of holders of possessory information titles over lands situated in Peñaranda, Nueva Ecija, but
of a substantially smaller acreage. 19 Thus, the seven (7) parcels recorded in the name of Melecio Padilla
covered only a total area of 49 hectares, 18 acres and 325 centares. 20 In addition, the list of property
owners in Santor (now Laur), Nueva Ecija existing in the Division of Archives does not include the name
21
of Melecio Padilla. It is true that an alleged copy of an informacion posesoria in the name of Melecio
Padilla, was recorded in the office of the Register of Deeds on November 10, 1942 by one Rodolfo
Baltazar, Register of Deeds (Exhibit "H"), but the Register of Deeds of Nueva Ecija could not certify to
its veracity, as the supposed document does not exist in their records. 22 There is another factor which
weighs heavily against the claim of the applicant. The alleged informacion posesoria covers an area of
"seis mil quiñiones, poco mas e menos" or an equivalent of 16,800 hectares. Under the Royal Decrees
in force at the time of the supposed acquisition, no one could acquire public land in excess of 1,000
L a n d T i t l e s a n d D e e d s | 16
hectares. Thus, the Royal Decrees of November 25, 1880 and October 26, 1881, prohibited any grant of
public land in excess of one thousand (1,000) hectares. 23
Besides, the document described in Exhibit "H" is not the titulo de informacion posesoria, because it
was merely a certification of possession of Melecio Padilla over the property, and was issued without
prejudice to a third party or parties having a better
right. 24
Thus, it states: "En su virtud habiendo examinado el Registro nuevamente formado por la
perdida o destruccion del mismo y no hallando en ningun asiento contrario a lo relacionado reinscribe la
posesion de la finca de este numero a favor de Don Melecio Padilla sin perjuicio de tercero que puede
tener mejor derecho a la propiedad." Under Spanish law, in order that an informacion posesoria may be
considered as title of ownership, it must be proven that the holder thereof has complied with the
provisions of Article 393 of the Spanish Mortgage Law.
It cannot be claimed that the registration of possession has been legally converted into a registration of
ownership because Melecio Padilla had not complied with the requirements of Article 393 of the Spanish
Mortgage Law, to wit: "that the applicant has been in open possession of the land; that an application to
this effect be filed after the expiration of 20 years from the date of such registration; that such conversion
be announced by means of a proclamation in a proper official bulletin; that the Court order the conversion
of the registration of possession into a record of ownership; and that the Registrar make the proper record
thereof in the Registry." 25 Evidently, Melecio Padilla, having died on February 9, 1900, barely five (5)
years after the inscription of the informacion posesoria, could not have converted the same into a record
of ownership twenty (20) years after such inscription, pursuant to Article 393 of the Spanish Mortgage
Law.
One year after the promulgation of the Maura Law, or on April 17, 1895, the right to perfect possessory
information title under the law expired. After that date, full property right of the land reverted to the
government and the right of the cultivator and possessor to obtain gratuitous title was extinguished. 26
Before the military reservation was established, the evidence is inconclusive as to possession, for it is
shown by the evidence that the land involved is largely mountainous and forested. As a matter of fact, at

the time of the hearing, it was conceded that approximately 13,957 hectares of said land consist of public
forest. During the lifetime of Melecio Padilla, only a small portion thereof was cleared and cultivated
under the "kaingin" system, while some portions were used as grazing land. After his death, his daughter,
Maria Padilla, caused the planting of vegetables and had about forty (40) tenants for the
27
purpose. During the Japanese occupation, Maria Padilla died. Alipio Alinsunurin and Encarnacion
Caballero took possession of the land approximately in 1950, but they had to abandon the place due to
the unsettled peace and order conditions in the area. In 1955, entry by them was prevented by the Army.
It seems obvious, on the basis of the facts in the record, that neither applicant Parañaque Investment and
Development Corporation nor Alipio Alinsunurin nor the latter's predecessors-in-interest have been "in
open, continuous, exclusive, and notorious possession and occupation" of the property in question,
"under a bona fideclaim of acquisition or ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title." 28
A mere casual cultivation of portions of the land by the claimant, and the raising thereon of cattle, do not
constitute possession under claim of ownership. In that sense, possession is not exclusive and notorious
29
so as to give rise to a presumptive grant from the State. While grazing livestock over land is of course
to be considered with other acts of dominion to show possession, the mere occupancy of land by grazing
livestock upon it, without substantial inclosures or other permanent improvements, is not sufficient to
support a claim of title thru acquisitive prescription. 30 The possession of public land, however long the
period may have extended, never confers title thereto upon the possessor because the statute of
limitations with regard to public land does not operate against the State, unless the occupant can prove
possession and occupation of the same under claim of ownership for the required number of years to
constitute a grant from the State. 31
Apart from the aforesaid inconclusive evidence of possession to support the applicant's claim of title, it
does not appear that the said property has ever been declared for taxation purposes by either applicant or
applicant's predecessors-in-interest. Thus, the only tax declarations submitted were those of Mamerto
Garcia and Honofre Andrada, et al. (Exhibit "G", Tax Declaration No. 5576, covering an area of 7,340
hectares) and Mamerto Garcia, et al. (Exhibit "H-1", Tax Declaration No. 5577, over an area of 9,547
L a n d T i t l e s a n d D e e d s | 17
hectares) but both were filed only in 1958. The latter declaration contains an annotation that the property
described therein is an unidentified property, as the declarant failed to identify the same, and it "was only
through his insistence" that it was assessed. Neither applicant Parañaque Investment and Development
Corporation nor its predecessor, Alipio Alinsunurin had submitted any tax declaration supporting its/his
claim over the property. It is true that tax receipts and declarations of ownership for taxation purposes
are not incontrovertible evidence of ownership, but they constitute at least proof that the holder had a
claim of title over the property.
It is obvious that the applicant has failed to submit convincing proof of actual, peaceful and adverse
possession in the concept of owner of the entire area in question during the period required by law. This
is especially true in view of the basic presumption that lands of whatever classification belong to the
State and evidence of a land grant must be "well-nigh incontrovertible." 32
Even more important, Section 48[b] of CA No. 141, as amended, applies exclusively to public
agricultural land. Forest lands or areas covered with forest are excluded. 33 It is well-settled that forest
land is incapable of registration; and its inclusion in a title, whether such title be one issued during the
Spanish sovereignty or under the present Torrens system of registration, nullifies the title. 34
Finally, the applicant urges that Proclamation No. 237 recognizes the existence of private property within
the military reservation. It is true that the proclamation states that the same is subject "to private rights,
if any there be", but applicant must prove its private rights over the property, which said party failed to
do. 35 For it is well-settled that, unless the applicant has shown by clear and convincing evidence that the
property in question was ever acquired by the applicant or his ancestors either by composition title from
the Spanish Government or by possessory information title, or any other means for the acquisition of
public lands, the property must be held to be part of the public domain. 36
WHEREFORE, decision in the above case is hereby rendered:
(1) in G. R. No. L-27594, the petition for certiorari is granted; the order dated March 11, 1967 in LRC
Case No. N-675, LRC Rec. No. N-25545, the decree of registration issued pursuant thereto (Decree No.

113485 dated March 14, 1967), and Original Certificate of Title No. 0-3151 of the Registry of Deeds of
Nueva Ecija are all declared void; the Registry of Deeds of Nueva Ecija is ordered to recall and cancel
all transfer certificates of title, including owners' duplicates and mortgagees' copies, if any, arising out
of Original Certificate of Title No. 0-3151; the preliminary injunction issued on June 5, 1967 and the
temporary restraining order issued on June 1, 1973 are made final and permanent, with costs against
respondents (except respondent Judge); and
(2) in G. R. No. L-28144, the appealed decision is hereby reversed and set aside, and judgment is
rendered dismissing the application for registration. Costs against appellee.
G.R. No. L-14518 August 29, 1960
EUGENIA NELAYAN, ET AL., plaintiffs-appellants,
vs.
CECILIA NELAYAN, ET AL., defendants-appellees.
Antonio Pandes for appellants.
Reyes and Dy-Liacco for appellees.
REYES, J.B.L., J.:
On December 15, 1952, plaintiffs filed versus Cecilia Nelayan and the Director of Lands a complaint
with the Court of First Instance of Camarines Sur for "Cancellation of Title and Reconveyance ", alleging
that they (plaintiffs) have been since time immemorial, in actual possession as owners, respectively, of
various parcels of land described therein; that such possession has been public, uninterrupted and in the
concept of owner; that on October 23, 1952, Original Certificate of Title No. 518 was issued in the name
of defendant Cecilia Nelayan as a result of her application for free patent over the parcels of land in
L a n d T i t l e s a n d D e e d s | 18
dispute; that said certificate of title is null and void with respect to the parcels claimed by plaintiffs, as
the same were no longer part of the public domain, and that the Director of Lands was without
jurisdiction in entertaining the application for, and in granting the free patent; that plaintiffs were never
informed nor had they any knowledge of the survey of the said lands or of the proceedings instituted by
Cecilia Nelayan; and that the latter, who very well knew that said parcels of land were being possessed
by the plaintiffs as owners thereof, is guilty of fraud in failing to notify them of the said proceedings.
Plaintiffs, therefore, prayed that Original Certificate of Title No. 518 be annulled and that they be
declared owners of the parcels of land in question. They further asked for such other relief as the court
might deem just and equitable.
Answering the complaint, defendant Cecilia Nelayan denied all material allegations of the complaint,
and by way of special defense, asserted ownership over the disputed parcels, having been in continuous,
peaceful, public, adverse and material possession over it for a period of over 50 years. Defendant Director
of Lands, in his answer, likewise denied the material allegations of the complaint and attested, as special
defense, to the regularity of the proceedings leading to the issuance in Cecilia's favor of the certificate
of title in question.
On February 11, 1957, defendant Cecilia Nelayan filed a motion to dismiss the complaint on the ground
that (1) the complaint failed to state facts sufficient to constitute a cause of action and (2) that the lower
court had no jurisdiction to annul or set aside the certificate of title already issued to her. Over plaintiff's
objections, the lower court ordered the dismissal of the case for lack of jurisdiction (Order of April 30,
1957). From this order of dismissal and from the orders denying their motions for reconsideration and
another motion for leave to amend the complaint so as to add a specific prayer for reconveyance, 36 3
plaintiffs interposed the present appeal to the Court of Appeals, that certified the same to us, because it
involves only questions of law.
Appellants contend, while appellees deny (1) that the Court of First Instance of Camarines Sur,
notwithstanding the certificate of title under free patent already issued to defendant Nelayan, still had
the right to exercise its jurisdiction to try the case; (2) that the complaint stated good cause of action

against the defendant; and lastly, (3) that the lower court erred in denying plaintiffs' motion for leave to
accept the amended complaint.
Pertinent to the first issue is the rule that once a patent is issued, the land acquires the character of
registered property under section 122 of Act No. 496, and is, therefore, deemed brought within the
*
operation of the said Land Registration Act (see Tomas Roco, et al., vs. Juan Gimeda, 55 Off. Gaz. [37]
7922). It follows that after issuance of the patent, an aggrieved party is accorded the same or similar
remedies as are extended in ordinary registration proceedings after entry of the decree of confirmation
or registration. One of such remedies may be found under section 38 of Act 496, which, in part provides:
. . . subject, however, to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the competent Court of First
Instance a petition for review within one year after entry of the decree provided no innocent
purchaser for value has acquired an interest. Upon expiration of said term of one year, every
decree of certificate of title issued in accordance with this section shall be incontrovertible. . . .
In Diwaling Sumail vs. Court of First Instance of Cotabato, et al., 96 Phil., 946; 51 Off. Gaz.[5] 2413,
this Court opined that the one-year period provided under section 38 should, in the case of public land
grants (patents), be counted from the issuance of the patent by the Government under the Public Land
Act (C.A. 141). Free Patent No. V-2371 was issued only on October 9, 1952, while the complaint in the
case at bar was filed on December 15, 1952, or after a period of only two months and six days. Having
been filed in due time, the case should have been given its regular course by the lower court, instead of
having been ordered dismissed outright.
Neither is the complaint insufficient in stating a cause of action. Among other matters, it contains
allegations to the effect that the plaintiffs have been, since time immemorial, in possession as owners of
the disputed parcels of land, but that through actual fraud, defendant Cecilia Nelayan succeeded in
securing for herself the certificate of title in question. Defendants-appellees must base their claim of
ownership or right of action on Section 48 (B) of the Public Land Act, providing that:
L a n d T i t l e s a n d D e e d s | 19
Those who by themselves or through their predecessors in interest have been in the open,
continuous, exclusive and notorious possession and occupation of agricultural lands of the
public domain, under a bona fide claim of acquisition of ownership for at least thirty years
immediately filing of the application for confirmation of title, except when prevented by war or
force majeure. These shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to certificate of title under the provisions
of this chapter. (As amended by Republic Act No. 1942, June 22, 1957)1
under which they may ask for the judicial confirmation of their imperfect or incomplete title; but which
course of action, appellees argue, is no longer available to the appellants because section 48, in
connection with section 47 of the Public Land Act ceased to become operative on the day following
December 31, 1938, the original period fixed in the said Act within which possessors or occupants of
public lands could avail of its benefits. Appellees evidently overlook that this period has been extended
from time to time by the legislature, the latest prorogation being by Republic Act No. 2061, which
extends the terms of its effectivity until December 31, 1968.
There is likewise no merit in appellees' contention that the complaint does not aver sufficient facts of
ownership to hold against either the appellee Nelayan or the government.
Plaintiffs' allegation that they have been in continued possession of the properties in dispute since time
immemorial as owners thereof is a sufficient averment of private ownership.2 It should be remembered
that possession since time immemorial carries the presumption that the land had never been part of the
public domain or that it had been a private property even before the Spanish conquest. And so, we said
in one case —
... All lands that were not acquired from the Government, either by purchase or by grant, belong
to the public domain. An exception to the rule would be any land that should have been in the
possession of an occupant and of his predecessors in interest since time immemorial for such
possession would justify the presumption that the land had never been part of the public domain
or that it had been a private property even before the Spanish conquest. (Oh Cho vs. Director

of Lands, 75 Phil., 890 892, Citing Cariño vs. Insular Government, 212 U.S. 449, 53 L. ed. 394).
(Emphasis supplied).
Whether this presumption should hold as a fact or not is a question appropriately determinable only after
the parties have already adduced, or at least, are given the opportunity to adduce, their respective
evidence.
The ruling of this Court in Susi vs. Razon, and Director of Lands, 48 Phil., 424, 428 (reaffirmed in
Mesina vs.Pineda, 108 Phil., 251; 58 Off. Gaz [25] 4603), is also conclusive in favor of appellants herein.
It said:
In favor of Valentin Susi, there is moreover, the presumption juris et de jure established in
paragraph (b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary
requirements for a grant by the Government were complied with, for he has been in actual and
physical possession, personally and through his predecessors, of an agricultural land of the
public domain openly, continuously, exclusively and publicly since July 26, 1894, with a right
to a certificate of title to said land under the provisions of Chapter VIII of said Act. So that
when Angela Razon applied for the grant in her favor, Valentin Susi had already acquired, by
operation of law, not only a right to grant, but a grant of the Government for it is not necessary
that certificate of title should be issued in order that said grant may be sanctioned by the courts,
an application therefor is sufficient, under the provisions of section 47 of Act No. 2874. If by a
legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had
already at least by presumption, of Valentin Susi, beyond the control of the Director of Lands.
Consequently, in selling the land in question to Angela Razon, the Director of Lands disposed
of a land over which he had no longer any title or control, and the sale thus made was void and
of no effect, and Angela did not thereby acquire any right.
The Director of Lands contends that the land in question being of the public domain, the
plaintiff-appellee cannot maintain an action to recover possession thereof.
L a n d T i t l e s a n d D e e d s | 20
If, as above-stated, the land, the possession of which is in dispute, had already become, by
operation of law, private property of the plaintiff, there lacking only the judicial sanction of his
title, Valentin Susi has the right to bring an action to recover the possession thereof and hold it.
The case of Reyes, et al., vs. Rodriguez, et al., 62 Phil., 771, cited by the appellees, is not the authority
to the contrary. In said case, there was a trial and upon the evidence at hand, it did not appear that the
appellant really had any title or interest in the land in question, presumed or proven, to hold against the
appellee or the government. The presumption of ownership could not likewise hold because appellants'
possession was neither alleged nor proven to be since time immemorial. In fact, the averment made there,
that the claimant's possession started in 1883, was not even believed by the Court. For similar reasons, Li
Seng Giap and Co. vs. Director of Lands, 59 Phil., 687 does not govern the case at bar, considering that
the possession therein averred started only during the Spanish regime.
It may not be amiss to state, furthermore, that the remedial provisions of section 38 of the Land
Registration Act, prescribing a mode by which a decree may be set aside upon petition by private
individuals, are expressly made applicable even to those who may have been deprived merely of
an estate or interest in (not necessarily ownership of) the land.
The fraud averred by plaintiffs is actual fraud, consisting in the alleged concealment from the plaintiffs
of the proceedings leading to the issuance of defendant Nelayan of the questioned free patent,
notwithstanding her knowledge that the land covered under her application was being possessed by the
appellants as the owners thereof. This is fraud as contemplated under section 38 of the Land Registration
Act (Angelo vs. Director of Lands, et al., 49 Phil., 838).
The third issue, presented by the parties in this appeal, is whether or not the amended complaint should
have been admitted by the court a quo. No discussion is called for, since in substance and in contents,
the original complaint (which has been captioned "For Cancellation of Title and Reconveyance"), as
shown in the preceding discussion, contains sufficient averments for either the cancellation of defendant
Nelayan's title or the reconveyance of the property, thereby negating further need for an amendment. As
authorized by the Rules (Section 9, Rule 15, Rules of Court; see also Section 1, Rule 2, ibid), plaintiff
 L a n d T i t l e s a n d D e e d s | 21

may allege causes of action in the alternative, be they compatible with each other or not, to the end that and that defendant Eusebio Nuñez in turn sold the land to his co-defendant Diego Belga, who took the
the real matter in the controversy may be resolved and determined. property with the knowledge that it belonged, not to Nuñez, but to plaintiffs.

Wherefore the order of dismissal appealed from is hereby set aside, and the case ordered remanded to Upon a demurrer to the evidence, filed by defendants after plaintiffs had rested their case, the lower
the lower court for further proceedings. Costs in this appeal against appellee Cecilia Nelayan. Court dismissed the complaint on the ground that the period of ten years within which plaintiffs could
have filed an action for recovery thereof under section 40 of Act 190 (computed from the time plaintiffs
lost possession of the land in 1940), had already elapsed, hence their action had prescribed; and that
G.R. No. L-8018 October 26, 1955 furthermore, plaintiffs failed to prove their alleged ownership of the land in question, so that the
presumption that defendants, being possessors, are the lawful owners thereof, had not been overcome.
GIL ATUN, ET AL., plaintiffs-appellants,
Plaintiffs' motion for reconsideration of the order of dismissal of the complaint having been denied, they
vs.
appealed to the Court of Appeals, which forwarded the case to us because the appeal raises question of
EUSEBIO NUÑEZ, ET AL., defendants-appellees.
law.

Doroteo L. Serrano for appellants.

The sole issue herein is whether the trial court erred in dismissing plaintiffs-appellants' complaint on the
Alfredo S. Rebueno for appellees.
ground of prescription of action.

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

The dismissal is erroneous. The land in question is admittedly covered by a Torrens title in the name of
Estefania Atun, deceased aunt of plaintiffs. Section 40 of Act 496 expressly provides that no title to
Appeal from an order of the Court of First Instance of Albay dismissing the complaint for recovery of a
registered land in derogation to that of the registered owner shall be acquired by prescription or adverse
parcel of registered land upon a motion to dismiss filed by defendants after plaintiffs had closed their
possession. And this Court has repeatedly held that the right of the registered owner to recover possession
evidence. The land in question is located in Legaspi City and registered in the name of Estefania Atun,
of the registered property is equally imprescriptible, since possession is a mere consequence of
deceased aunt of plaintiffs, under Original Certificate of Title No. 11696 of the Registry of Property of
ownership. (Manlapas vs. Llorente, 48 Phil., 298, 308; Eugenio vs. Perdido, supra, p. 41; J. M. Tuason
Albay. The complaint was filed on August 7, 1950.
& Co., Inc. vs. Bolaños, 95 Phil., 106.)

The evidence for the plaintiffs-appellants shows that they inherited the land in question from their
We are aware, of course, that title by adverse possession (acquisitive prescription) is distinct
widowed aunt Estefania Atun (sister of their deceased father Nicolas Atun), who died without any issue;
from the statute of limitations (extinctive prescription) and the operation and effects of such
that they had possessed the land from 1927 to 1930, when plaintiff Gil Atun delivered the same to
distinction has been explored during the discussions of this petition for review.
Silvestra Nuñez (sister of defendant-appellee Eusebio Nuñez) for cultivation, for which Silvestra paid
the Atuns a part of the harvest as rental; that in 1940, Silvestra turned over the land to defendant Eusebio
But we have finally agreed that, as to the lands registered under the Torrens system, ten years'
Nuñez, who thereafter refused to recognize plaintiffs' ownership or to deliver their share of the produce;
adverse possession may not be permitted to defeat the owners' right to possession—which is
 L a n d T i t l e s a n d D e e d s | 22

the necessary incident of ownership. Otherwise loss of the land by prescription would be indemnify the latter in the amount of P500 by way of damages. Costs against defendants-appellees in
indirectly approved, in violation of sec. 46 of the Land Registration Act. This statute, being a both instances. So ordered.
later enactment, may be said to have partially amended the Statute of Limitations established in
Act No. 190 in so far as the registered lands are concerned. (Juan Eugenio, et al. vs. Silvina
Perdido, et al., L-7083, May 19, 1955.)

And if prescription is unavailing against the registered owner, it must be equally unavailing against the
G.R. No. 121157 July 31, 1997
latter's hereditary successors, because they merely step into the shoes of the decedent by operation of
law (new Civil Code, Art. 777; Art. 657, old), the title or right undergoing no change by its
HEIRS OF SEGUNDA MANINGDING, represented by DELFIN, GIL, EMMA, MANUEL,
transmission mortis causa.
RACQUEL, ESTER, REMEDIOS and JESSIE, all surnamed PARAYNO, MAXIMA PARAYNO,
LEONARDO PARAYNO and FELICISIMA PARAYNO, petitioners,
The lower Court also erred in ruling that plaintiffs-appellants have failed to show a better title than that
vs.
of defendants who are presumed to possess with just title. As the land in question still stands registered
COURT OF APPEALS and ROQUE BAUZON (deceased), represented by his heirs and co-
in the name of Estefania Atun, now deceased, the present owners thereof would be her legal heirs. It is
defendants Luis and Eriberta Bauzon; LUIS BAUZON, ERIBERTA BAUZON (deceased),
of record that Estefania Atun died without any issue or ascendants and left as her only surviving heirs
substituted by her husband PLACIDO ZULUETA, and JOSE PARAYNO, respondents.
the children of her brother Nicolas, plaintiffs herein; and the rule is settled that the legal heirs of a
deceased may file an action arising out of a right belonging to their ancestor, without a separate judicial
declaration of their status as such, provided there is no pending special proceeding for the settlement of
the decedent's estate (Mendoza Vda. de Bonnevie vs. Cecilia Vda. de Pardo, 59 Phil., 486; Gov't. of BELLOSILLO, J.:
P.I. vs. Serafica, 61 Phil., 93; Uy Coque vs. Sioca, 45 Phil., 430).
This is an action for annulment of documents, accounting and partition of two (2) parcels of land, a
Pursuant to the rule that reversal on appeal of a ruling upholding a defendant's demurrer to the evidence riceland and a sugarland, situated in Calasiao, Pangasinan. Petitioners claim that they, together with
imports in civil cases loss of his right to submit evidence in his behalf, in order to discourage prolonged private respondents Luis and Eriberta Bauzon, own the disputed lots in common and pro-indiviso. Luis
litigations (Arroyo vs. Azur, 76 Phil., 493, and cases therein cited), judgment must be rendered according and Eriberta, the latter represented by her husband Placido Zulueta, aver that their father Roque Bauzon
to plaintiffs' evidence, which supports their claim of ownership of the land in question, and for damages was the owner of the subject lots by virtue of a deed of donation propter nuptias. Roque, together with
in the amount of P500 (t. s. n., p. 21). Juan Maningding, Maria Maningding and Segunda Maningding were the surviving children of Ramon
Bauzon y Untalan who died intestate in 1948. According to petitioners, Roque Bauzon repudiated the
Wherefore, the order appealed from is reversed; plaintiffs-appellants Gil Atun, Camila Atun, and
co-ownership over the sugarland in 1965 and adjudicated it to himself,1 and that in 1970 Juan and Maria
Dorotea Atun are declared the lawful owners in common of the lot in question; and defendants-appellees
Maningding renounced and quitclaimed their shares over the riceland in favor of Roque Bauzon by
Eusebio Nuñez and Diego Belga are ordered to surrender possession thereof to the plaintiffs, and to
virtue of an Affidavit of Quitclaim and Renunciation.2 Subsequently, Roque Bauzon transferred the

riceland to his son Luis Bauzon and the sugarland to his daughter Eriberta Bauzon, both transactions
being evidenced by deeds of sale.
On 31 July 1979 Segunda Maningding died. Her heirs allegedly discovered the transfers made by Roque
Bauzon in favor of his children only in 1986. Consequently, the heirs sought the partition of the
properties as well as the accounting of the produce but were unsuccessful.
On the other hand private respondents aver that the Affidavit of Quitclaim and Renunciation over
the riceland was executed not only by Juan Maningding and Maria Maningding but also by Segunda
Maningding. With regard to the sugarland, Roque Bauzon denied having executed the Affidavit of Self-
Adjudication presented by petitioners. He claimed that he acquired ownership over both
the sugarland and the riceland by donation propter nuptias from his parents Ramon Bauzon and Sotera
Zulueta on 21 April 1926 in consideration of his marriage to Petra Loresco. Since the death of Ramon
Bauzon in 1948, Roque had been in open, continuous, notorious, adverse and actual possession of the
subject properties.
The trial court found that the parcels of land formed part of the estate of Ramon Bauzon and his wife
Sotera Zulueta which, upon their death, devolved by right of succession to their children Segunda
Maningding, Maria Maningding, Juan Maningding and Roque Bauzon in equal pro-indiviso shares. The
court a quo however awarded both parcels to Segunda Maningding and Roque Bauzon as co-owners in
equal shares after finding that Juan Maningding and Maria Maningding had already executed an Affidavit
of Quitclaim and Renunciation. It rejected the deed of donation for failure to prove its due execution and
authenticity and ruled that the same was negated by the Affidavit of Quitclaim and Renunciation of Juan
Maningding and Maria Maningding in favor of Roque Bauzon and nullified the deed of sale by Roque
Bauzon in favor of Luis Bauzon as regards the riceland and to Eriberta Bauzon with respect to the
sugarland. It concluded that Roque Bauzon could not have validly conveyed both parcels as one-half
(1/2) of each parcel rightfully belonged to Segunda Maningding and her heirs.
The Court of Appeals however ruled that the properties validly pertained to Roque Bauzon by virtue of
the donationpropter nuptias. Consequently, the transfers made by Roque Bauzon must be given effect.
L a n d T i t l e s a n d D e e d s | 23
However, upon motion for reconsideration, the same deed of donation was declared null and void by the
appellate court for failure to comply with Art. 633 of the old Civil Code, the law then applicable, which
required for the validity of the deed of donation to be in a public instrument. Nevertheless, the same
court maintained that the properties belonged to Roque Bauzon by virtue of acquisitive prescription.
We agree with the Court of Appeals. Rogue Bauzon acquired ownership over the subject properties by
acquisitive prescription. Prescription, in general, is a mode of acquiring (or losing) ownership and other
real rights through the lapse of time in the manner and under conditions laid down by law, namely, that
the possession should be in the concept of an owner, public, peaceful, uninterrupted and
adverse.3 Acquisitive prescription is either ordinary or extraordinary. 4 Ordinary acquisitive prescription
requires possession in good faith and with just title for ten (10) years. In extraordinary prescription
ownership and other real rights over immovable property are acquired through uninterrupted adverse
possession thereof for thirty (30) years, without need of title or of good faith.5
The disputed lots are unregistered lands, both parcels being covered only by tax declarations formerly in
the name of Ramon Bauzon and now transferred to Luis and Eriberta Bauzon. While tax declarations
and receipts are not conclusive evidence of ownership, yet, when coupled with proof of actual
possession, as in the instant case, tax declarations and receipts are strong evidence of ownership. 6
Even assuming that the donation proper nuptias is void for failure to comply with formal requisites, 7 it
could still constitute a legal basis for adverse possession. With clear and convincing evidence of
possession, a private document of donation may serve as basis for a claim of ownership. 8 In Pensader
v. Pensader9 we ruled that while the verbal donation under which the defendant and his predecessors-in-
interest have been in possession of the lands in question is not effective as a transfer of title, still it is a
circumstance which may explain the adverse and exclusive character of the possession. In Espique
v. Espique10 we held —
There is no question that the donation in question is invalid because it involves an immovable
property and the donation was not made in a public document as required by Article 633 of the
old Civil Code, in connection with Article 1328 of the same Code (concerning gifts propter

nuptias), but it does not follow that said donation may not serve as basis of acquisitive
prescription when on the strength thereof the done has taken possession of the property
adversely and in the concept of owner, or, as this Court well said: "While the verbal donation,
under which the defendants and his predecessors-in-interest have been in possession of the lands
in question, is not effective as a transfer of title, yet it is a circumstances which may explain the
adverse and exclusive character of the possession' (Pensader v. Pensader, 47 Phil. 673, 680).
This also an action for partition. It was shown that the donation of the property was made not
even in a private document but only verbally. It was also shown that the defendants, through
their predecessors-in-interest, were in adverse and continuous possession of the lands for a
period of over 30 years. Yet, the court decided the case in favor of defendants on the ground of
acquisitive prescription. There is a close parallelism between the facts of this case and the
present.
xxx xxx xxx
We do not need to stretch our mind to see that under such allegations plaintiffs intended to
convey the idea that defendant has possessed the lands openly, adversely and without
interruption from 1916 to 1949 for he is the one who has possessed and reaped the whole benefit
thereof. As to the character of the possession held by defendant during that period one cannot
also deny that it is in the concept of owner considering that the lands were donated to him by
his predecessors-in-interest on the occasion of his marriage even if the same was not embodied
in a public instrument. The essential elements constituting acquisitive prescription are therefore
present which negative the right of plaintiffs to ask for partition of said properties. On this point
we find pertinent the following observation of the trial court; "Any person who claims right of
ownership over immovable properties and does not invoke that right but instead tolerated others
in possession for thirty years is guilty of laches and negligence and he must suffer the
consequence of his acts."
In the instant case, Roque Bauzon possessed the subject parcels of land in the concept of owner by virtue
of the donation propter nuptias. The possession was public as it was Roque Bauzon who personally tilled
L a n d T i t l e s a n d D e e d s | 24
and cultivated the lots. The acts of reaping the benefits of ownership were manifest and visible to all.
These acts were made more pronounced and public considering that the parcels of land are located in a
municipality wherein ownership and possession are particularly and normally known to the community.
Roque peacefully possessed the properties as he was never ousted therefrom nor prevented from enjoying
their fruits. His possession was uninterrupted and in good faith because of his well-founded belief that
the donation propter nuptias was properly executed and the grantors were legally allowed to convey
their respective shares in his favor. He likewise appropriated to himself the whole produce of the parcels
of land to the exclusion of all others.
The donation propter nuptias was effected as early as 21 April 1926. It was only in 1986 when the heirs
of Segunda Maningding demanded partition of the properties and conveyance of the produce. Sixty (60)
years have already elapsed. Even granting that Roque Bauzon possessed the properties only upon the
death of his father in 1948, more than thirty (30) years have already passed. In either case, acquisitive
prescription has already set in in favor of Roque Bauzon.
Again, even if we assume the absence of good faith and just title, the ownership of the two (2) parcels
would still appertain to Roque Bauzon. As testified to by Delfin Parayno, one of petitioners, Roque
Bauzon and his heirs had been in continuous, adverse and public possession of the property since 1948
up to 1986, or a period of thirty-six (36) years, which is more than the required thirty-year extraordinary
prescription.
Prescription, as a rule, does not run in favor of a co-heir or co-owner as long as he expressly or impliedly
recognizes the co-ownership.11 Co-owners cannot acquire by prescription the share of the other co-
owners, absent a clear repudiation of the co-ownership. In order that title may prescribe in favor of one
of the co-owners, it must be clearly shown that he has repudiated the claims of the others, and that they
were apprised of his claim of adverse and exclusive ownership, before the prescriptive period would
begin to run. Mere refusal to accede to a partition, without specifying the grounds for such refusal, cannot
be considered as notice to the other co-owners of the occupant's claim of title in himself in repudiation
of the co-ownership. The evidence relative to the possession, as a fact upon which the alleged
prescription is based, must be clear, complete and conclusive in order to establish said prescription

without any shadow of doubt; and when upon trial it is not shown that the possession of the claimant has
been adverse and exclusive and opposed to the rights of the others, the case is not one of ownership, and
partition will lie.12
Therefore while prescription among co-owners cannot take place when the acts of ownership exercised
are vague and uncertain, such prescription arises and produces all its effects when the acts of ownership
13
do not evince any doubt as to the ouster of the rights of the other co-owners. As disclosed by the
records, Roque Bauzon and his heirs possessed the property from 1948 to 1986 to the exclusion of
petitioners who were never given their shares of the fruits of the properties, for which reason they
demanded an accounting of the produce and the conveyance to them of their shares. Unfortunately they
slept on their rights and allowed almost thirty-six (36) years to lapse before attempting to assert their
right. Perforce, they must suffer the consequence of their inaction.
WHEREFORE, the petition is DENIED. The Resolution of the Court of Appeals of 7 July 1995 which
modified its Decision of 29 November 1994 and holding that the deceased Roque Bauzon acquired the
disputed two (2) parcels of land by acquisitive prescription is AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 98045 June 26, 1996
DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners,
vs.
THE COURT OF APPEALS, MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA,
AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I. IGNACIO, ALBERTO M.
GILLERA and HON. ABELARDO G. PALAD, JR., in their official and/or private
capacities, respondents.
L a n d T i t l e s a n d D e e d s | 25
ROMERO, J.:p
Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the decision of the
Court of Appeals which affirmed the dismissal of petitioners' complaint by the Regional Trial Court of
Misamis Oriental, Branch 22. The complaint was for annulment of the verification, report and
recommendation, decision and order of the Bureau of Lands regarding a parcel of public land.
The only issue involved in this petition is whether or not petitioners exhausted administrative remedies
before having recourse to the courts.
The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de Oro City.
Said land was formed as a result of sawdust dumped into the dried-up Balacanas Creek and along the
banks of the Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject lots on which
their houses stood from one Antonio Nazareno, petitioners' predecessor-in-interest. In the latter part of
1982, private respondents allegedly stopped paying rentals. As a result, Antonio Nazareno and
petitioners filed a case for ejectment with the Municipal Trial Court of Cagayan de Oro City, Branch 4.
A decision was rendered against private respondents, which decision was affirmed by the Regional Trial
Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of judgment after the same became
final and executory. Private respondents filed a case for annulment of judgment before the Regional Trial
Court of Misamis Oriental, Branch 24 which dismissed the same. Antonio Nazareno and petitioners
again moved for execution of judgment but private respondents filed another case for certiorari with
prayer for restraining order and/or writ of preliminary injunction with the Regional Trial Court of
Misamis Oriental, Branch 25 which was likewise dismissed. The decision of the lower court was finally
enforced with the private respondents being ejected from portions of the subject lots they occupied..
Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey plan
designated as Plan Csd-106-00571 with a view to perfecting his title over the accretion area being

claimed by him. Before the approved survey plan could be released to the applicant, however, it was
protested by private respondents before the Bureau of Lands.
In compliance with the order of respondent District Land Officer Alberto M. Gillera, respondent Land
Investigator Avelino G. Labis conducted an investigation and rendered a report to the Regional Director
recommending that Survey Plan No. MSI-10-06-000571-D (equivalent to Lot No. 36302, Cad. 237) in
the name of Antonio Nazareno, be cancelled and that private respondents be directed to file appropriate
public land applications.
Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario rendered a
decision ordering the amendment of the survey plan in the name of Antonio Nazareno by segregating
therefrom the areas occupied by the private respondents who, if qualified, may file public land
applications covering their respective portions.
Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio, Undersecretary of
the Department of Natural Resources and Officer-in-Charge of the Bureau of Lands who denied the
motion. Respondent Director of Lands Abelardo Palad then ordered him to vacate the portions
adjudicated to private respondents and remove whatever improvements they have introduced thereon.
He also ordered that private respondents be placed in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners Desamparado
Vda. de Nazareno and Leticia Tapia Nazareno, filed a case before the RTC, Branch 22 for annulment of
the following: order of investigation by respondent Gillera, report and recommendation by respondent
Labis, decision by respondent Hilario, order by respondent Ignacio affirming the decision of respondent
Hilario and order of execution by respondent Palad. The RTC dismissed the complaint for failure to
exhaust administrative remedies which resulted in the finality of the administrative decision of the
Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the complaint. Applying
Section 4 of C.A. No. 141, as amended, it contended that the approval of the survey plan belongs
L a n d T i t l e s a n d D e e d s | 26
exclusively to the Director of Lands. Hence, factual findings made by the Metropolitan Trial Court
respecting the subject land cannot be held to be controlling as the preparation and approval of said survey
plans belong to the Director of Lands and the same shall be conclusive when approved by the Secretary
of Agriculture and Natural resources. 1
Furthermore, the appellate court contended that the motion for reconsideration filed by Antonio
Nazareno cannot be considered as an appeal to the Office of the Secretary of Agriculture and Natural
Resources, as mandated by C.A. No. 141 inasmuch as the same had been acted upon by respondent
Undersecretary Ignacio in his capacity as Officer-in-charge of the Bureau of Lands and not as
Undersecretary acting for the Secretary of Agriculture and Natural Resources. For the failure of Antonio
Nazareno to appeal to the Secretary of Agriculture and Natural Resources, the present case does not fall
within the exception to the doctrine of exhaustion of administrative remedies. It also held that there was
no showing of oppressiveness in the manner in which the orders were issued and executed..
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,
ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF
THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING FACTS
AND THE LAW ON THE MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,
ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF
THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH FAILED TO
CONSIDER THAT THE EXECUTION ORDER OF PUBLIC RESPONDENT
ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA, PRACTICALLY
CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO,
REGIONAL DIRECTOR, BUREAU OF LANDS, REGION 10, THUS MAKING
 L a n d T i t l e s a n d D e e d s | 27

THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE Application constituted an admission that the land being applied for was public land, having been the
JURISDICTION OF THE LOWER COURT. subject of Survey Plan No. MSi-10-06-000571-D (Equivalent to Lot No. 36302, Cad-237) which was
conducted as a consequence of Antonio Nazareno's Miscellaneous Sales Application wherein said land
The resolution of the above issues, however, hinges on the question of whether or not the subject land is was described as an orchard. Said description by Antonio Nazareno was, however, controverted by
public land. Petitioners claim that the subject land is private land being an accretion to his titled property, respondent Labis in his investigation report to respondent Hilario based on the findings of his ocular
applying Article 457 of the Civil Code which provides: inspection that said land actually covers a dry portion of Balacanas Creek and a swampy portion of
Cagayan River. The investigation report also states that, except for the swampy portion which is fully
To the owners of lands adjoining the banks of rivers belong the accretion which they
planted to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of petitioners
gradually receive from the effects of the current of the waters.
and several residential houses made of light materials, including those of private respondents which were
erected by themselves sometime in the early part of 1978. 6
In the case of Meneses v. CA, 2 this Court held that accretion, as a mode of acquiring property under Art.
457 of the Civil Code, requires the concurrence of these requisites : (1) that the deposition of soil or
Furthermore, the Bureau of Lands classified the subject land as an accretion area which was formed by
sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or
deposits of sawdust in the Balacanas Creek and the Cagayan river, in accordance with the ocular
sea); and (3) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast).
inspection conducted by the Bureau of Lands. 7 This Court has often enough held that findings of
These are called the rules on alluvion which if present in a case, give to the owners of lands adjoining
administrative agencies which have acquired expertise because their jurisdiction is confined to specific
the banks of rivers or streams any accretion gradually received from the effects of the current of waters.
matters are generally accorded not only respect but even finality. 8 Again, when said factual findings are
affirmed by the Court of Appeals, the same are conclusive on the parties and not reviewable by this
For petitioners to insist on the application of these rules on alluvion to their case, the above-mentioned
Court. 9
requisites must be present. However, they admit that the accretion was formed by the dumping of
boulders, soil and other filling materials on portions of the Balacanas Creek and the Cagayan River
It is this Court's irresistible conclusion, therefore, that the accretion was man-made or artificial.
bounding their land. 3 It cannot be claimed, therefore, that the accumulation of such boulders, soil and
In Republic v. CA, 10this Court ruled that the requirement that the deposit should be due to the effect of
other filling materials was gradual and imperceptible, resulting from the action of the waters or the
the current of the river is indispensable. This excludes from Art. 457 of the Civil Code all deposits caused
current of the Balacanas Creek and the Cagayan River. In Hilario v. City of Manila, 4 this Court held that
by human intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus,
the word "current" indicates the participation of the body of water in the ebb and flow of waters due to
in Tiongco v. Director of Lands, et al., 11 where the land was not formed solely by the natural effect of
high and low tide. Petitioners' submission not having met the first and second requirements of the rules
the water current of the river bordering said land but is also the consequence of the direct and deliberate
on alluvion, they cannot claim the rights of a riparian owner.
intervention of man, it was deemed a man-made accretion and, as such, part of the public domain.

In any case, this court agrees with private respondents that petitioners are estopped from denying the
In the case at bar, the subject land was the direct result of the dumping of sawdust by the Sun Valley
public character of the subject land, as well as the jurisdiction of the Bureau of Lands when the late
Lumber Co. consequent to its sawmill
Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6) 571. 5 The mere filing of said
operations. 12 Even if this Court were to take into consideration petitioners' submission that the accretion

site was the result of the late Antonio Nazareno's labor consisting in the dumping of boulders, soil and
13
other filling materials into the Balacanas Creek and Cagayan River bounding his land, the same would
still be part of the public domain.
Having determined that the subject land is public land, a fortiori, the Bureau of Lands, as well as the
Office of the Secretary of Agriculture and Natural Resources have jurisdiction over the same in
accordance with the Public Land Law. Accordingly, the court a quo dismissed petitioners' complaint for
non-exhaustion of administrative remedies which ruling the Court of Appeals affirmed.
However, this Court agrees with petitioners that administrative remedies have been exhausted.
Petitioners could not have intended to appeal to respondent Ignacio as an Officer-In-Charge of the
Bureau of Lands. The decision being appealed from was the decision of respondent Hilario who was the
Regional Director of the Bureau of Lands. Said decision was made "for and by authority of the Director
14
of Lands". It would be incongruous to appeal the decision of the Regional Director of the Bureau of
Lands acting for the Director of the Bureau of Lands to an Officer-In-Charge of the Bureau of Lands.
In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the Department of
Agriculture and Natural Resources." He was only an "Officer-In-Charge" of the Bureau of Lands. When
he acted on the late Antonio Nazareno's motion for reconsideration by affirming or adopting respondent
Hilario's decision, he was acting on said motion as an Undersecretary on behalf of the Secretary of the
Department. In the case of Hamoy v. Secretary of Agriculture and Natural Resources, 15 this Court held
that the Undersecretary of Agriculture and Natural Resources may modify, adopt, or set aside the orders
or decisions of the Director of Lands with respect to questions involving public lands under the
administration and control of the Bureau of Lands and the Department of Agriculture and Natural
Resources. He cannot, therefore, be said to have acted beyond the bounds of his jurisdiction under
16
Sections 3, 4 and 5 of Commonwealth Act No. 141
As borne out by the administrative findings, the controverted land is public land, being an artificial
accretion of sawdust. As such, the Director of Lands has jurisdiction, authority and control over the same,
as mandated under Sections 3 and 4 of the Public Land Law (C.A. No. 141) which states, thus:
L a n d T i t l e s a n d D e e d s | 28
Sec. 3. The Secretary of Agriculture and Natural Resources shall be the exclusive
officer charged with carrying out the provisions of this Act through the Director of
Lands who shall act under his immediate control.
Sec. 4. Subject to said control, the Director of Lands shall have 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, and his decisions as to questions
of fact shall be conclusive when approved by the Secretary of Agriculture and Natural
Resources.
In connection with the second issue, petitioners ascribe whim, arbitrariness or capriciousness in the
execution order of public respondent Abelardo G. Palad, the Director of Lands. This Court finds
otherwise since said decision was based on the conclusive finding that the subject land was public land.
Thus, this Court agrees with the Court of Appeals that the Director of Lands acted within his rights when
he issued the assailed execution order, as mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order directing them to vacate the subject land
practically changed respondent Hilario's decision is baseless. It is incorrect for petitioners to assume that
respondent Palad awarded portions of the subject land to private respondents Salasalans and Rabayas as
they had not yet been issued patents or titles over the subject land. The execution order merely directed
the segregation of petitioners' titled lot from the subject land which was actually being occupied by
private respondents before they were ejected from it. Based on the finding that private respondents were
actually in possession or were actually occupying the subject land instead of petitioners, respondent
Palad, being the Director of Lands and in the exercise of his administrative discretion, directed petitioners
to vacate the subject land on the ground that private respondents have a preferential right, being the
occupants thereof.
While private respondents may not have filed their application over the land occupied by them, they
nevertheless filed their protest or opposition to petitioners' Miscellaneous Sales Application, the same
being preparatory to the filing of an application as they were in fact directed to do so. In any case,

respondent Palad's execution order merely implements respondent Hilario's order. It should be noted that
1
petitioners' own application still has to be given due course. 7
As Director of Lands, respondent Palad is authorized to exercise executive control over any form of
18
concession, disposition and management of the lands of the public domain. He may issue decisions
and orders as he may see fit under the circumstances as long as they are based on the findings of fact.
In the case of Calibo v. Ballesteros, 19 this Court held that where, in the disposition of public lands, the
Director of Lands bases his decision on the evidence thus presented, he clearly acts within his
jurisdiction, and if he errs in appraising the evidence, the error is one of judgment, but not an act of grave
abuse of discretion annullable by certiorari. Thus, except for the issue of non-exhaustion of
administrative remedies, this Court finds no reversible error nor grave abuse of discretion in the decision
of the Court of Appeals.
WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED.
G.R. No. L-12730 August 22, 1960
C.N. HODGES, plaintiff-appellant,
vs.
AMADOR D. GARCIA, defendant-appellee.
Gellada, Mirasol and Vallar for appellant.
Roque E. Evidente for appellee.
GUTIERREZ DAVID, J.:
This is an action filed with the Court of First Instance of Iloilo for the recovery of the possession of a
portion of land designated as Lot No. 908-Q with an area of 5,931 square meters, which is alleged to
have been seperated from plaintiff's lands by the "natural change" in the course of a river. The case
having been decided adversely against the plaintiff, the latter appealed to the Court of Appeals. The
L a n d T i t l e s a n d D e e d s | 29
court, however, certified the caseto this Court on the ground that it was decided upon a stipulation of
facts and for that reason questions of fact can no longer be raised on appeal.
It appears that the land in dispute was formerly a part of Lot No. 908 of the Cadastral Survey of Jaro,
Iloilo, which lot was acquired by plaintiff C.N. Hodges from Salustiano Mirasol in January, 1950, and
subsequently registered in his name as evidenced by Transfer Certificate of Title No. T-2504 issued by
the Register of Deeds of Iloilo. This property was bounded on the north by the Salog River. Adjoining
that river on the other side is Lot No. 2290, which was purchased by defendant Amador D. Garcia from
Dr. Manuel Hechanova on April 15, 1950. On July 12 of that same year, defendant had the land, which
was originally surveyed in 1912 and was then bounded on the SE and SW by the Salog river, had inreased
in area by the river bank, and that the added area, which bounds the land on the SE and SW, is in turn
bounded on the SE and SW by the Salog river. In due time, defendant applied for the registration of the
additional area under the Land Registration Act, and on March 22, 1952, the cadastral court rendered a
decision holding that the land sought to be registered is an accretion to Lot No. 2290 and decreeing that
the land be registered in his name. On June 30, 1952, the corresponding Original Certificate of Title No.
O-229 was issued in favor of the defendant.
Plaintiff claims in these proceedings that the Salog river changed its course and that the land in dispute
— which appears to be a portion of the area added to Lot No. 2290 as above mentioned — was separated
from his Lot No. 908 by the current of the river, and the separation was abrupt, like in avulsion, so that
under Art. 374 of the Civil Code (Art. 463 of the new) he retains ownership thereof. No evidence,
however, was presented by plaintiff to show that the change in the course of the river was sudden or that
it occurred through avulsion. In the absence of such evidence, the presumption is that the change was
gradual and caused by accretion and erosion. (Payatas Estate Improvement Co. vs. Tuason, 53 Phil., 55)
In any event, it was agreed upon by the parties in open court that "from the year 1917 until the
construction of the dike (in 1939) along the river . . ., the course of the Salog river, starting from the edge
of lot 2290, gradually ate up the bank towards the side of the poblacion of Jaro and at the same time
gradually deposited sediments towards the side of Lot No. 2290;" that "when the defendant bought lot
No. 2290 from Dr. Manuel Hechanova in 1950, he found out that there was an accretion along one side
of said lot, as now shown on this plan, PSU-12743-A;" that "by virtue of such accretion towards lot 2290,

the defendant applied for its registration under the Land Registration Act, and decision was on March
22, 1950 by the Court of First Instance of Iloilo;" that "effectively, original certificate of title No. O-229,
dated June 30, 1952, was issued to the defendant;" and that "because of the gradual deposit of sediments
of the Salog River along his land, lot 2290, the defendant has been in possession of said land since 1950
until now, while the plaintiff and his predecessors in interest since the gradual loss of lot No 908-Q,
covered by water, has never been in actual possession of the said lot." The foregoing facts have never
been denied or contradicted by plaintiff, and they clearly show that the increase in area of Lot No. 2290
by the river bank was due to alluvion or accretions which it gradually received (from 1917 to 1939, or
for a period of 22 years) from the effects of the current of the river.
It should here be stated that in the cadastral proceedings wherein the land object of this action was sought
to be registered by herein defendant Amador D. Garcia, plaintiff C.N. Hodges did not file any opposition
despite due publication of the notice of the application and hearing. The record also shows that the land
now being claimed by plaintiff had been litigated in three civil cases. (Exhs. "4", "5" and "6".) In those
cases, herein defendant was recognized as the owner of the land and held legally entitled to its possession.
In fact, the land in question had been adjudged to be owned by him as an accretion to his lot No. 2290.
(See exh. "6" decision of the Court of Appeals in Candelaria Efe, et al. vs. Amador D. Garcia, CA-G.R.
No. 9306-R, October 28, 1952, Reyes, J.B.L., J., ponente.)
It clearly appearing that the land in question has become part of defendant's estate as a result of accretion,
it follows that said land now belongs to him. The fact that the accretion to his land used to pertain to
plaintiff's estate, which is covered by a Torrens certificate of title, cannot preclude him (defendant) from
being the owner thereof. Registration does not protect the riparian owner against the diminution of the
area of his land through gradual changes in the course of the adjoining stream. Accretions which the
banks of rivers may gradually receive from the effect of the current become the property of the owners
of the banks. (Art. 366 of the old Civil Code; art. 457 of the new.) Such accretions are natural incidents
to land bordering on running streams and the provisions of the Civil Code in that respect are not affected
by the Land Registration Act. (Payatas Estate Improvement Co. vs. Tuason, supra).
L a n d T i t l e s a n d D e e d s | 30
G.R. No. L-30067 March 23, 1929
PAYATAS ESTATE IMPROVEMENT CO., petitioner-appellant,
vs.
MARIANO TUASON, AUGUSTO TUASON, ET AL., oppositors-appellees.
Eusebio Orenso, Vicente Santiago and Nicolas Belmonte for appellant.
Araneta and Zaragoza for appellees.
OSTRAND, J.:
Maria de la Concepcion Martinez Canas was originally the owner of the so-called Payatas estate, the
principal part of which was bounded on the east by the Mariquina river. The so-called Mariquina estate
adjoined the river on the other side and belonged to the Tuasons.
In 1904, shortly after the initiation of the Torrens system of land registration, Maria de la Concepcion
Canas had the property surveyed and obtained the certificate of title to the sale. Later on, the land,
consisting of 3 parcels, A, B and C, was sold by her to the Payatas Estate Improvement Company. In
1920 another survey was made for subdivision purposes, and on October 15, 1924, the subdivision plans
were submitted to the Court of First Instance of Rizal for approval. In the motion accompanying the
plans, it was stated:
1. That as shown by the transfer certificate of title no. 8691 issued by the register of deeds of Rizal,
Philippine Islands, said company (the Payatas Estate Improvement Company) is the owner of
the hacienda, known under the name of "Payatas," situated in the municipality of San Mateo and
Montalban of said province.
2. That in 1920 and 1921 said hacienda was surveyed by the surveyor Salvador N. Tolentino, dividing
it in two parcels, the first portion being subdivided in 124 lots according to plan P. S. U. 24733, and the

second portion being subdivided in 149 lots according to plan P.S.U. 32686. Both lands had already been
approved by the Director of Lands.
Before action on the motion was taken by the court, the plans were submitted to the General Law
Registration Office for examination. After such examination, attention was called to the fact that the
rivers, esteros, roads and some portions of land which were within the original plan had been excluded
and that the total area of the land included in the subdivision plans was only 4,839 hectares, 88 ares and
3 centares instead of 5,122 hectares, 84 ares and 25 centares as shown by the plan upon which the original
decree was issued. The surveyor who prepared the plans explained that the difference in area was due
"(1) to his conforming to the adjoining decreed old surveys, (2) to the exclusion of rivers and creeks
inside the estate, and (3) to the erosion on the bank of Montalban-San Mateo river before the new survey,
P.S.U. 24733, was executed."
On October 25, 1924, the Payatas Estate Improvement Company filed another motion in which it asked
that transfer certificate of title no. 8691 be cancelled as to parcels A and C but not in regard to parcel B,
the latter not being included in the subdivision. Two days later, the Court of First Instance approved the
subdivision and gave instructions to the register of deeds in accordance with the Improvement
Company's last motion.
The register of deeds compiled fully with order of the court, and certificates of title were issued
accordingly, but on March 18, 1925, the Payatas Estate Improvement Co., filed another motion alleging
that the area of the subdivided land parcels A and C together with parcel B did not include all the land
to which the company was entitled and which was included in the plan Exhibit A upon which the final
decree was issued in 1905. The motion was accompanied by a plan (P.S.U. 45292) of two strips of land
situated along the eastern side of the Mariquina River and embracing a little over 22 hectares, and the
company asked that a certificate of title be issued in its favor in accordance with that plan.
The motion was opposed by the Tuasons and after hearing, the court below denied it, principally on the
ground that a motion in the land registration record was not the proper action i a case such as this. From
this order the Payatas Estate Improvement Co. appealed.
L a n d T i t l e s a n d D e e d s | 31
The controversy in the present case seems to be due to the erroneous conception that Article 366 of the
Civil Code does not apply the Torrens registered land. That article provides that "any accretions which
the banks of rivers may gradually receive from the effect of the current belong to the owners of the
estates bordering thereon." Accretions of that character are natural incidents to land bordering on running
streams and are not affected by the registration laws. It follows that registration does not protect the
riparian owner against diminution of the area of his land through gradual changes in the course of the
adjoining stream.
At the points where the land now in question is situated, the Mariquina river separates the Payatas estate
from the Mariquina estate and constitutes the boundary bet. the two estates. According to plan P.S.U.
45292, the river has changed its course to the prejudice of the Payatas estate on the western side of the
stream and to the benefit of Mariquina estate by increasing the latter's area, and the 22 hectares now in
controversy which formerly were on the Payatas side of the river are now on the Mariquina estate side.
Assuming this to be true — and it will not be denied by the appellant — the case reduces itself into the
question whether the change in the course of the direction of the river was caused by erosion and
accretion or whether it has occurred through avulsion. There is no direct evidence on this point, but
according to the decision of this court in the case of Martinez Canas vs. Tuason (5 Phil., 688), the
presumption is that the change is gradual and caused by the erosion of the Payatas bank of the river and
consequent accretion to the Mariquina estate. It follows that the land in question is now a part of the
estate and no longer pertains to the Payatas estate.
We may say in passing the Martinez Canas vs. Tuason case was also a boundary dispute between the
owners of the two estates, in which dispute the Tuasons claimed 30 hectares of land which had been
swifted over to the Payatas estate side of the Mariquina River. Though the evidence for the owners of
the Mariquina estate was much stronger than that for the owner of the Payatas estate in the present case,
this court, nevertheless, held that the owner of the Payatas estate had acquired title to the land by
accretion.
We cannot quite agree with the court below that the manner before us may not be properly dealt with
and determined under section 112 of the Land Registration Act; that section covers a wide range and

undoubtedly embraces questions such as those raised in this case. That, however, does not necessarily
mean that said questions might not also have been ventilated in a separate action.
For the reasons stated, the motion in question is denied, and it is declared that the land in dispute is now
an integral part of the aforesaid Mariquina estate. The appellant will pay the costs of this instance. So
ordered.
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
L a n d T i t l e s a n d D e e d s | 32
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
3
Financial Center Area and the First Neighborhood Unit."
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
7
of their investigation in Senate Committee Report No. 560 dated September 16, 1997. 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.
L a n d T i t l e s a n d D e e d s | 33
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;
L a n d T i t l e s a n d D e e d s | 34
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
L a n d T i t l e s a n d D e e d s | 35
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.
23
PEA distinguishes the instant case from Tañada v. Tuvera 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.
L a n d T i t l e s a n d D e e d s | 36
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.
L a n d T i t l e s a n d D e e d s | 37
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."
31
PEA asserts, citing Chavez v. PCGG, 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:
L a n d T i t l e s a n d D e e d s | 38
"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
L a n d T i t l e s a n d D e e d s | 39
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
38
Court and other collegiate courts, or executive sessions of either house of Congress, 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
L a n d T i t l e s a n d D e e d s | 40
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
45
government could lease or alienate the property to private parties.
Act No. 1654 of the Philippine Commission
L a n d T i t l e s a n d D e e d s | 41
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
L a n d T i t l e s a n d D e e d s | 42
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
L a n d T i t l e s a n d D e e d s | 43
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
 L a n d T i t l e s a n d D e e d s | 44

government reclaimed and marshy lands of the public domain that were classified as agricultural lands (a) Alienable or disposable,
under existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
(b) Timber, and
"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 (c) Mineral lands,

individual acquire such lands by purchase in excess of one hundred and forty hectares, or by
and may at any time and in like manner transfer such lands from one class to another, 53 for the
lease in excess of one thousand and twenty-four hectares, or by homestead in excess of
purpose of their administration and disposition.
twenty-four hectares. Lands adapted to grazing, not exceeding two thousand hectares, may be
leased to an individual, private corporation, or association." (Emphasis supplied)
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,
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No.
shall from time to time declare what lands are open to disposition or concession under this
2874 to open for sale to private parties government reclaimed and marshy lands of the public domain.
Act.
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.
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
Commonwealth Act No. 141 of the Philippine National Assembly
reserved for public or quasi-public uses, nor appropriated by the Government, nor in any

On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as manner become private property, nor those on which a private right authorized and recognized

the Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, by this Act or any other valid law may be claimed, or which, having been reserved or

as amended, remains to this day the existing general law governing the classification and disposition of appropriated, have ceased to be so. x x x."

lands of the public domain other than timber and mineral lands.51
Thus, before the government could alienate or dispose of lands of the public domain, the President must

Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable first officially classify these lands as alienable or disposable, and then declare them open to disposition

or disposable"52 lands of the public domain, which prior to such classification are inalienable and outside or concession. There must be no law reserving these lands for public or quasi-public uses.

the commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands are open
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the
to disposition or concession." Section 8 of CA No. 141 states that the government can declare open for
public domain, are as follows:
disposition or concession only lands that are "officially delimited and classified." Sections 6, 7 and 8 of
CA No. 141 read 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
"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 –

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
L a n d T i t l e s a n d D e e d s | 45
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,55Justice 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,
L a n d T i t l e s a n d D e e d s | 46
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.
L a n d T i t l e s a n d D e e d s | 47
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.
 L a n d T i t l e s a n d D e e d s | 48

The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who "Sec. 4. Purpose. The Authority is hereby created for the following purposes:
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 (a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other

11, Article XIV of the 1973 Constitution declared that – means, or to acquire reclaimed land;

"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and (b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any

development requirements of the natural resources, shall determine by law the size of land of and all kinds of lands, buildings, estates and other forms of real property, owned, managed,

the public domain which may be developed, held or acquired by, or leased to, any qualified controlled and/or operated by the government;

individual, corporation, or association, and the conditions therefor. No private corporation or

(c) To provide for, operate or administer such service as may be necessary for the efficient,
association may hold alienable lands of the public domain except by lease not to exceed one
economical and beneficial utilization of the above properties.
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
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes
private corporation or association may hold by lease, concession, license or permit, timber or
for which it is created, have the following powers and functions:
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 (a)To prescribe its by-laws.
National Economic and Development Authority." (Emphasis supplied)
xxx
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 (i) To hold lands of the public domain in excess of the area permitted to private corporations
corporations became absolutely barred from acquiring any kind of alienable land of the public by statute.
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 (j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal,
lands of the public domain. ditch, flume x x x.

PD No. 1084 Creating the Public Estates Authority xxx

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating (o) To perform such acts and exercise such functions as may be necessary for the attainment of
PEA, a wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of the purposes and objectives herein specified." (Emphasis supplied)
PD No. 1084, vests PEA with the following purposes and powers:
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
63
areas indisputably belong to the public domain 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
L a n d T i t l e s a n d D e e d s | 49
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
L a n d T i t l e s a n d D e e d s | 50
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
L a n d T i t l e s a n d D e e d s | 51
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)
68
Likewise, the Legal Task Force 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
L a n d T i t l e s a n d D e e d s | 52
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.
L a n d T i t l e s a n d D e e d s | 53
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
L a n d T i t l e s a n d D e e d s | 54
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
L a n d T i t l e s a n d D e e d s | 55
natural resources; cancel or cause to cancel such privileges upon failure, non-compliance or
violations of any regulation, order, and for all other causes which are in furtherance of the
conservation of natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the
public domain and serve as the sole agency responsible for classification, sub-classification,
surveying and titling of lands in consultation with appropriate agencies." 80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision
and control over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on
the management and disposition of all lands of the public domain." Thus, DENR decides whether areas
under water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means
that PEA needs authorization from DENR before PEA can undertake reclamation projects in Manila
Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence,
DENR decides whether reclaimed lands of PEA should be classified as alienable under Sections 6 81 and
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
85
title, except when authorized by Congress: x x x." (Emphasis by PEA)
86
In Laurel vs. Garcia, 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 -
L a n d T i t l e s a n d D e e d s | 56
"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
87
operated by the government." (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
L a n d T i t l e s a n d D e e d s | 57
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
L a n d T i t l e s a n d D e e d s | 58
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
L a n d T i t l e s a n d D e e d s | 59
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.
L a n d T i t l e s a n d D e e d s | 60
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.104Alienable 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;
L a n d T i t l e s a n d D e e d s | 61
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.
 L a n d T i t l e s a n d D e e d s | 62

Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well Act No. 496
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 "Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government

and issued land patents or certificates of title in PEA's name does not automatically make such lands of the Philippine Islands are alienated, granted, or conveyed to persons or the public or private

private. corporations, the same shall be brought forthwith under the operation of this Act and shall
become registered lands."
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 PD No. 1529

of alienable land of the public domain. PEA will simply turn around, as PEA has now done under the
"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated,
Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed
granted or conveyed to any person, the same shall be brought forthwith under the operation of
lands to a single private corporation in only one transaction. This scheme will effectively nullify the
this Decree." (Emphasis supplied)
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
Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529
80 million strong.
includes conveyances of public lands to public corporations.

This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since
Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or
PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and
branch or subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered
even individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise
under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is
that in the hands of PEA these lands are private lands. This will result in corporations amassing huge
expressly subject to the condition in Section 60 of CA No. 141 that the land "shall not be alienated,
landholdings never before seen in this country - creating the very evil that the constitutional ban was
encumbered or otherwise disposed of in a manner affecting its title, except when authorized by
designed to prevent. This will completely reverse the clear direction of constitutional development in
Congress." This provision refers to government reclaimed, foreshore and marshy lands of the public
this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares
domain that have been titled but still cannot be alienated or encumbered unless expressly authorized by
of public lands.105 The 1973 Constitution prohibited private corporations from acquiring any kind of
Congress. The need for legislative authority prevents the registered land of the public domain from
public land, and the 1987 Constitution has unequivocally reiterated this prohibition.
becoming private land that can be disposed of to qualified private parties.

The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be
1529, automatically become private lands is contrary to existing laws. Several laws authorize lands of
registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states –
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:

"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
106
as a town plaza or public school site may likewise be titled in the name of the municipality. 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
L a n d T i t l e s a n d D e e d s | 63
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
110
77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares111 of still submerged areas of Manila Bay, such transfer is void for being contrary to
L a n d T i t l e s a n d D e e d s | 64
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.

G.R. No. 133250 May 6, 2003
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
RESOLUTION
CARPIO, J.:
For resolution of the Court are the following motions: (1) Motion to Inhibit and for Re-Deliberation filed
by respondent Amari Coastal Bay Development Corporation ("Amari" for brevity) on September 13,
2002; (2) Motion to Set Case for Hearing on Oral Argument filed by Amari on August 20, 2002; (3)
Motion for Reconsideration and Supplement to Motion for Reconsideration filed by Amari on July 26,
2002 and August 20, 2002, respectively; (4) Motion for Reconsideration and Supplement to Motion for
Reconsideration filed by respondent Public Estates Authority ("PEA" for brevity) on July 26, 2002 and
August 8, 2002, respectively; and (5) Motion for Reconsideration and/or Clarification filed by the Office
of the Solicitor General on July 25, 2002. Petitioner Francisco I. Chavez filed on November 13, 2002 his
Consolidated Opposition to the main and supplemental motions for reconsideration.
To recall, the Court’s decision of July 9, 2002 ("Decision" for brevity) on the instant case states in its
summary:
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.
L a n d T i t l e s a n d D e e d s | 65
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources
of the public domain until classified as alienable or disposable lands open to disposition and
declared no longer needed for public service. The government can make such classification and
declaration only after PEA has reclaimed these submerged areas. Only then can these lands
qualify as agricultural lands of the public domain, which are the only natural resources the
government can alienate. In their present state, the 592.15 hectares of submerged areas are
inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of
still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article
XII of the 1987 Constitution which prohibits the alienation of natural resources other than
agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter,
the government can classify the reclaimed lands as alienable or disposable, and further declare
them no longer needed for public service. Still, the transfer of such reclaimed alienable lands
of the public domain to AMARI will be void in view of Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any kind of alienable land of
the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution.
Under Article 1409 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.
Amari seeks the inhibition of Justice Antonio T. Carpio, ponente of the Decision, on the ground that
Justice Carpio, before his appointment to the Court, wrote in his Manila Times column of July 1, 1997,
"I have always maintained that the law requires the public bidding of reclamation projects." Justice
Carpio, then a private law practitioner, also stated in the same column, "The Amari-PEA reclamation
contract is legally flawed because it was not bid out by the PEA." Amari claims that because of these
statements Justice Carpio should inhibit himself "on the grounds of bias and prejudgment" and that the
instant case should be "re-deliberated" after being assigned to a new ponente.
The motion to inhibit Justice Carpio must be denied for three reasons. First, the motion to inhibit came
after Justice Carpio had already rendered his opinion on the merits of the case. The rule is that a motion
to inhibit must be denied if filed after a member of the Court had already given an opinion on the merits
of the case,1 the rationale being that "a litigant cannot be permitted to speculate upon the action of the
Court xxx (only to) raise an objection of this sort after a decision has been rendered." Second, as can be
readily gleaned from the summary of the Decision quoted above, the absence of public bidding is not

one of the ratio decidendi of the Decision which is anchored on violation of specific provisions of the
Constitution. The absence of public bidding was not raised as an issue by the parties. The absence of
public bidding was mentioned in the Decision only to complete the discussion on the law affecting
reclamation contracts for the guidance of public officials. At any rate, the Office of the Solicitor General
in its Motion for Reconsideration concedes that the absence of public bidding in the disposition of the
Freedom Islands rendered the Amended JVA null and void. 2 Third, judges and justices are not
disqualified from participating in a case just because they have written legal articles on the law involved
in the case. As stated by the Court in Republic v. Cocofed, 3 -
The mere fact that, as a former columnist, Justice Carpio has written on the coconut levy will
not disqualify him, in the same manner that jurists will not be disqualified just because they
may have given their opinions as textbook writers on the question involved in a case.
Besides, the subject and title of the column in question was "The CCP reclamation project" and the
column referred to the Amari-PEA contract only in passing in one sentence.
Amari’s motion to set the case for oral argument must also be denied since the pleadings of the parties
have discussed exhaustively the issues involved in the case.
The motions for reconsideration reiterate mainly the arguments already discussed in the Decision. We
shall consider in this Resolution only the new arguments raised by respondents.
In its Supplement to Motion for Reconsideration, Amari argues that the Decision should be made to
apply prospectively, not retroactively to cover the Amended JVA. Amari argues that the existence of a
statute or executive order prior to its being adjudged void is an operative fact to which legal consequences
are attached, citing De Agbayani v. PNB,4 thus:
x x x. 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
L a n d T i t l e s a n d D e e d s | 66
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. x x x.
xxx
x x x That before the decision they were not constitutionally infirm was admitted expressly.
There is all the more reason then to yield assent to the now prevailing principle that the existence
of a statute or executive order prior to its being adjudged void is an operative fact to which legal
consequences are attached.
Amari now claims that "assuming arguendo that Presidential Decree Nos. 1084 and 1085, and
Executive Order Nos. 525 and 654 are inconsistent with the 1987 Constitution, the limitation
imposed by the Decision on these decrees and executive orders should only be applied
prospectively from the finality of the Decision."
Amari likewise asserts that a new doctrine of the Court cannot operate retroactively if it impairs vested
rights. Amari maintains that the new doctrine embodied in the Decision cannot apply retroactively on
those who relied on the old doctrine in good faith, citing Spouses Benzonan v. Court of Appeals, 5 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 or 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 (Francisco
v. Certeza, 3 SCRA 565 [1961]).
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.
There may be special cases where weighty considerations of equity and social justice will warrant a
retroactive application of doctrine to temper the harshness of statutory law as it applies to poor farmers
or their widows and orphans. In the present petitions, however, we find no such equitable considerations.

Not only did the private respondent apply for free agricultural land when he did not need it and he had
no intentions of applying it to the noble purposes behind the law, he would now repurchase for
only P327,995.00, the property purchased by the petitioners in good faith for P1,650,000.00 in 1979 and
which, because of improvements and the appreciating value of land must be worth more than that amount
now.
The buyers in good faith from DBP had a right to rely on our rulings in Monge and Tupas when they
purchased the property from DBP in 1979 or thirteen (13) years ago. Under the rulings in these two
cases, the period to repurchase the disputed lot given to respondent Pe expired on June 18, 1982. He
failed to exercise his right. His lost right cannot be revived by relying on the 1988 case of Belisario. The
right of petitioners over the subject lot had already become vested as of that time and cannot be impaired
by the retroactive application of the Belisario ruling.
Amari’s reliance on De Agbayani and Spouses Benzonan is misplaced. These cases would apply if the
prevailing law or doctrine at the time of the signing of the Amended JVA was that a private corporation
could acquire alienable lands of the public domain, and the Decision annulled the law or reversed this
doctrine. Obviously, this is not the case here.
Under the 1935 Constitution, private corporations were allowed to acquire alienable lands of the public
domain. But since the effectivity of the 1973 Constitution, private corporations were banned from
holding, except by lease, alienable lands of the public domain. The 1987 Constitution continued this
constitutional prohibition. The prevailing law before, during and after the signing of the Amended JVA
is that private corporations cannot hold, except by lease, alienable lands of the public domain. The
Decision has not annulled or in any way changed the law on this matter. The Decision, whether made
retroactive or not, does not change the law since the Decision merely reiterates the law that prevailed
since the effectivity of the 1973 Constitution. Thus, De Agbayani, which refers to a law that is invalidated
by a decision of the Court, has no application to the instant case.
Likewise, Spouses Benzonan is inapplicable because it refers to a doctrine of the Court that is overruled
by a subsequent decision which adopts a new doctrine. In the instant case, there is no previous doctrine
that is overruled by the Decision. Since the case of Manila Electric Company v. Judge Castro-
Bartolome,6 decided on June 29, 1982, the Court has applied consistently the constitutional provision
that private corporations cannot hold, except by lease, alienable lands of the public domain. The Court
reiterated this in numerous cases, and the only dispute in the application of this constitutional provision
is whether the land in question had already become private property before the effectivity of the 1973
Constitution.7 If the land was already private land before the 1973 Constitution because the corporation
had possessed it openly, continuously, exclusively and adversely for at least thirty years since June 12,
1945 or earlier, then the corporation could apply for judicial confirmation of its imperfect title. But if the
land remained public land upon the effectivity of the 1973 Constitution, then the corporation could never
hold, except by lease, such public land. Indisputably, the Decision does not overrule any previous
doctrine of the Court.
L a n d T i t l e s a n d D e e d s | 67
The prevailing doctrine before, during and after the signing of the Amended JVA is that private
corporations cannot hold, except by lease, alienable lands of the public domain. This is one of the two
main reasons why the Decision annulled the Amended JVA. The other main reason is that submerged
areas of Manila Bay, being part of the sea, are inalienable and beyond the commerce of man, a doctrine
that has remained immutable since the Spanish Law on Waters of 1886. Clearly, the Decision merely
reiterates, and does not overrule, any existing judicial doctrine.
Even on the characterization of foreshore lands reclaimed by the government, the Decision does not
overrule existing law or doctrine. Since the adoption of the Regalian doctrine in this jurisdiction, the sea
and its foreshore areas have always been part of the public domain. And since the enactment of Act No.
1654 on May 18, 1907 until the effectivity of the 1973 Constitution, statutory law never allowed
foreshore lands reclaimed by the government to be sold to private corporations. The 1973 and 1987
Constitution enshrined and expanded the ban to include any alienable land of the public domain.
There are, of course, decisions of the Court which, while recognizing a violation of the law or
Constitution, hold that the sale or transfer of the land may no longer be invalidated because of "weighty
considerations of equity and social justice." 8 The invalidation of the sale or transfer may also be
superfluous if the purpose of the statutory or constitutional ban has been achieved. But none of these
cases apply to Amari.
Thus, the Court has ruled consistently that where a Filipino citizen sells land to an alien who later sells
the land to a Filipino, the invalidity of the first transfer is corrected by the subsequent sale to a
citizen.9 Similarly, where the alien who buys the land subsequently acquires Philippine citizenship, the
sale is validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been
achieved.10 In short, the law disregards the constitutional disqualification of the buyer to hold land if the
land is subsequently transferred to a qualified party, or the buyer himself becomes a qualified party. In
the instant case, however, Amari has not transferred the Freedom Islands, or any portion of it, to any
qualified party. In fact, Amari admits that title to the Freedom Islands still remains with PEA. 11
The Court has also ruled consistently that a sale or transfer of the land may no longer be questioned
under the principle of res judicata, provided the requisites for res judicata are present.12 Under this
principle, the courts and the parties are bound by a prior final decision, otherwise there will be no end to
litigation. As the Court declared in Toledo-Banaga v. Court of Appeals,13 "once a judgement has become
final and executory, it can no longer be disturbed no matter how erroneous it may be." In the instant case,
there is no prior final decision adjudicating the Freedom Islands to Amari.
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
Committees14 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.
Amari has also not paid to PEA the full reimbursement cost incurred by PEA in reclaiming the Freedom
Islands. Amari states that it has paid PEA only P300,000,000.0015 out of the P1,894,129,200.00 total
reimbursement cost agreed upon in the Amended JVA. Moreover, Amari does not claim to have even
initiated the reclamation of the 592.15 hectares of submerged areas covered in the Amended JVA, or to
have started to construct any permanent infrastructure on the Freedom Islands. In short, Amari does not
claim to have introduced any physical improvement or development on the reclamation project that is
the subject of the Amended JVA. And yet Amari claims that it had already spent a
"whopping P9,876,108,638.00" as its total development cost as of June 30, 2002. 16 Amari does not
explain how it spent the rest of the P9,876,108,638.00 total project cost after paying
PEA P300,000,000.00. Certainly, Amari cannot claim to be an innocent purchaser in good faith and for
value.
In its Supplement to Motion for Reconsideration, PEA claims that it is "similarly situated" as the Bases
Conversion Development Authority (BCDA) which under R.A. No. 7227 is tasked to sell portions of the
Metro Manila military camps and other military reservations. PEA’s comparison is incorrect. The
Decision states as follows:
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 or
disposable lands of the public domain, these lands are still public, not private lands.
PEA is the central implementing agency tasked to undertake reclamation projects nationwide.
PEA took the place of Department of Environment and Natural Resources ("DENR" for brevity)
as the government agency charged with leasing or selling all reclaimed lands of the public
domain. In the hands of PEA, which took over the leasing and selling functions of DENR,
reclaimed foreshore lands are public lands in the same manner that these same lands
would have been public lands in the hands of DENR. 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
L a n d T i t l e s a n d D e e d s | 68
integrating, directing, and coordinating all reclamation projects for and on behalf of the National
Government."
In Laurel v. Garcia,17 cited in the Decision, the Court ruled that land devoted to public use by the
Department of Foreign Affairs, when no longer needed for public use, may be declared patrimonial
property for sale to private parties provided there is a law authorizing such act. 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 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 property18 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.
We reiterate what we stated in the Decision is the rationale for treating PEA in the same manner as
DENR with respect to reclaimed foreshore lands, thus:
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, if not thousands, 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. The 1973 Constitution prohibited private
corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally
reiterated this prohibition.

Finally, the Office of the Solicitor General and PEA argue that the cost of reclaiming deeply submerged
areas is "enormous" and "it would be difficult for PEA to accomplish such project without the
participation of private corporations." 19 The Decision does not bar private corporations from
participating in reclamation projects and being paid for their services in reclaiming lands. What the
Decision prohibits, following the explicit constitutional mandate, is for private corporations to acquire
reclaimed lands of the public domain. There is no prohibition on the directors, officers and stockholders
of private corporations, if they are Filipino citizens, from acquiring at public auction reclaimed alienable
lands of the public domain. They can acquire not more than 12 hectares per individual, and the land thus
acquired becomes private land.
Despite the nullity of the Amended JVA, Amari is not precluded from recovering from PEA in the proper
proceedings, on a quantum meruit basis, whatever Amari may have incurred in implementing the
Amended JVA prior to its declaration of nullity.
WHEREFORE, finding the Motions for Reconsideration to be without merit, the same are hereby
DENIED with FINALITY. The Motion to Inhibit and for Re-Deliberation and the Motion to Set Case
for Hearing on Oral Argument are likewise DENIED.
SO ORDERED.
SECOND DIVISION
G.R. No. 174191 : January 30, 2013
NENITA QUALITY FOODS CORPORATION, Petitioner, v. CRISOSTOMO GALABO,
ADELAIDA GALABO, and ZENAIDA GALABO-ALMACBAR, Respondent.
DECISION
BRION, J.:
1
We resolve the petition for review on certiorari of petitioner Nenita Quality Foods Corporation (NQFC)
to nullity the February 22, 2006 Decision2 and the July 13, 2006 resolution3 of the Court of Appeals
(CA) in CA-G.R. SP No. 77006. The CA reversed the decision4 of the Regional Trial Court (RTC) of
Davao City, Branch 17, which affirmed in toto the decision5 of the Municipal Trial Court in Cities
(MTCC), Davao City, Branch 5, in Civil Case No. 10,958-E-01. The MTCC dismissed the complaint for
forcible entry and damages, which respondents Crisostomo Galabo, Adelaida Galabo, and Zenaida
Galabo-Almachar filed against NQFC.
L a n d T i t l e s a n d D e e d s | 69
The Factual Antecedents
The dispute in the case relates to the possession of a parcel of land described as Lot No. 102, PSD-40060,
the former Arakaki Plantation in Marapangi, Toril, Davao City with an area of six thousand seventy-four
square meters (6,074 sq. m.).
As the CA summarized in the assailed decision, the respondents are the heirs of Donato Galabo. In 1948,
Donato obtained Lot No. 722, Cad-102, a portion of the Arakaki Plantation in Marapangi, Toril, Davao
City, owned by National Abaca and Other Fibers Corporation. Donato and the respondents assumed that
Lot No. 722 included Lot No. 102, per the original survey of 1916 to 1920.
When the Board of Liquidators (BOL) took over the administration of the Arakaki Plantation in the
1950s, it had Lot No. 722 resurveyed. Allegedly, the resurvey did not include Lot No. 102; thus, when
Donato acquired Transfer Certificate of Title No. T-214966 for Lot No. 722 on April 26, 1953, Lot No.
102 was not included. The respondents, however, continue to posses, occupy and cultivate Lot No. 102.
When NQFC opened its business in Marapangi, Toril, Davao City in the late 1950s, it allegedly offered
to buy Lot No. 102. Donato declined and to ward off further offers, put up "Not For Sale" and "No
Trespassing" signs on the property. In the 1970s, Crisostomo fenced off the entire perimeter of Lot No.
102 and built his house on it.
On August 19, 1994, the respondents received a letter from Santos Nantin demanding that they vacate
Lot No. 102. Santos claimed ownership of this lot per the Deed of Transfer of Rights (Deed of
Transfer)7dated July 10, 1972, which the respondents and their mother allegedly executed in Santos
favor. The respondents denied this claim and maintained that they had been occupying Lot No. 102,
which the BOL itself recognized per its letters8 and the Certification9 dated April 12, 2000 confirming
Donato as the long-time occupant and awardee of the property. To perfect their title, the respondents
applied for free patent over Lot No. 102 on September 6, 2000.
On January 3, 2001 and again on a later date, NQFCs workers, with armed policemen of Toril, Davao
City, entered by force Lot No. 102 to fence it. The respondents reported the entry to the authorities. On
April 16, 2001, Crisostomo received a letter from NQFCs counsel demanding that he remove his house
from Lot No. 102. NQFC subsequently removed the existing fence and cut down various trees that the
respondents had planted on the property.
NQFC, for its part, claimed that Santos immediately occupied and possessed Lot No. 102 after he
purchased it from the respondents in 1972 and declared it under his name for taxation purposes. Santos
was also granted Free Patent over the property by the Bureau of Lands, and obtained Original Certificate

of Title No. (OCT) P-403510 on June 18, 1974. On December 29, 2000, the heirs of Santos conveyed Lot
No. 102 to NQFC via the Deed of Absolute Sale11 of even date. NQFC then filed a petition for
cancellation of the respondents patent application over Lot No. 102, which the BOL-Manila granted on
April 19, 2001, on the ground that Donato failed to perfect his title over Lot No. 102 which has long
been titled in Santos name.
When conciliation failed, the respondents filed on September 17, 2001 a complaint12 for forcible entry
with damages before the MTCC against NQFC, alleging that: (1) they had been in prior physical
possession of Lot No. 102; and (2) NQFC deprived them of possession through force, intimidation,
strategy, threats and stealth.
The Ruling of the MTCC
Relying on the ruling of the BOL-Manila, the MTCC dismissed the respondents complaint,13 explaining
that the questions raised before it required technical determination by the administrative agency with the
expertise to determine such matters, which the BOL-Manila did in this case.14?r?l1
The MTCC held that the pieces of evidence NQFC presented the Deed of Transfer the respondents
executed in Santos favor, Santos OCT P-4035 over Lot No. 102, the Deed of Absolute Sale in NQFCs
favor, and the findings of the BOL-Manila established NQFCs rightful possession over the property. It
further held that: (1) the respondents relinquished their rights over Lot No. 102 when they executed the
Deed of Transfer in Santos favor; (2) the certificate of title over Lot No. 102 in Santos name shows that
he was in actual physical possession since actual occupation is required before an application for free
patent can be approved; and (3) NQFC validly acquired ownership over Lot No. 102 when it purchased
it from Santos, entitling it to the right, among others, to possess the property as ancillary to such
ownership.
The Ruling of the RTC
The respondents appealed the MTCC decision to the RTC but the latter court denied the appeal.15 As the
MTCC did, the RTC relied on the findings of the BOL-Manila. It held that: (1) the respondents failed to
perfect whatever right they might have had over Lot No. 102; and (2) they are estopped from asserting
any right over Lot No. 102 since they have long transferred the property and their right thereto, to Santos
in 1972.
In resolving the issue of possession of Lot No. 102, the RTC also resolved the question of ownership, as
justified under the Rules, explaining that the NQFCs possession of Lot No. 102 was anchored on a Deed
L a n d T i t l e s a n d D e e d s | 70
of Absolute Sale, while that of the respondents was based merely on the allegation of possession and
occupation by Donato, and not on any title.16?r?l1
Thus, the question of concurrent possession of Lot No. 102 between NQFC and the respondents should
tilt in NQFCs favor.
When the RTC denied the respondents motion for reconsideration in an order17 dated March 5, 2003, the
respondents elevated their case to the CA via a petition for review. 18?r?l1
The Ruling of the CA
The respondents claimed before the CA that the RTC erred when it held that NQFC had prior possession
of Lot No. 102, based solely on its Deed of Absolute Sale. They argued, among others, that: (1) Santos
should have taken the necessary steps to oust the respondents had he been in possession of Lot No. 102
beginning 1972; (2) Santos could not have validly obtained title over Lot No. 102 since it was still in the
name of the Republic of the Philippines (Republic) as of 1980;19 and (3) NQFC no longer had to forcibly
evict the respondents in January 2001 if it had been in possession of Lot No. 102 after it bought this land
from Santos in 2000.
The CA found reversible error in the RTCs decision; thus, it granted the respondents petition and ordered
NQFC to vacate Lot No. 102. The CA explained that a plaintiff, in a forcible entry case, only has to
prove prior material and physical possession of the property in litigation and undue deprivation of it by
means of force, intimidation, threat, strategy or stealth. These, the respondents averred in the complaint
and sufficiently proved, thus entitling them to recover possession of Lot No. 102. Relying on the doctrine
of presumption of regularity in the performance of official duty, the CA especially took note of the letters
and the Certification which the BOL sent to the respondents acknowledging Donato as the awardee of
Lot No. 102 and the respondents as the actual occupants and possessors.
In brushing aside the RTCs findings, the CA ruled that: (1) Donatos failure to perfect his title over Lot
No. 102 should not weigh against the respondents as the issue in a forcible entry case is one of possession
de facto and not of possession de jure; and (2) NQFCs ownership of Lot No. 102 is beside the point as
ownership is beyond the purview of an ejectment case. The title or right of possession, it stressed, is
never an issue in a forcible entry suit. The CA, however, denied the respondents prayer for moral
damages and attorneys fees, and rejected the other issues raised for being irrelevant.
In its July 13, 2006 resolution,20 the CA denied NQFCs motion for reconsideration, prompting the
NQFCs present recourse.

The Petition
NQFC argues that the CA erred in holding that the respondents had prior physical possession of Lot No.
102.21 It claims that, first, in reversing the RTC findings, the CA relied solely on the letters and the
Certification of the BOL,22 which has been controverted by the following pieces of evidence, among
others: (1) the Deed of Transfer that the respondents executed in favor of Santos; (2) the order of the
Bureau of Lands approving Santos patent application; (3) Santos OCT P-4035; and (4) the Deed of
Absolute Sale that Santos executed in favor of NQFC.
NQFC maintains that the Bureau of Lands would not have granted Santos free patent application had he
not been in possession of Lot No. 102 because continued occupation and cultivation, either by himself
or by his predecessor-in-interest, of the property is a requirement for such grant under the Public Land
Act. By the very definition of "occupy," Santos is therefore deemed to have possessed Lot No. 102 prior
to 1974, the year his free patent application was granted, 23 and under the principle of tacking of
possession, he is deemed to have had possession of Lot No. 102 not only from 1972, when the
respondents transferred it to him, but also from the time Donato acquired the lot in 1948. Thus, Santos
had no reason to oust the respondents since he had been in possession of Lot No. 102 beginning 1972,
by virtue of the transfer.24?r?l1
Second, the respondents had no documents to prove that they were in actual occupation and cultivation
of Lot No. 102 the reason they did not heed the BOLs request to perfect their title over it. Finally, citing
jurisprudence,25 NQFC argues that the RTC rightly ruled on the issue of its ownership over Lot No. 102
in deciding the issue of prior physical possession as the Rules allow this, by way of exception. 26?r?l1
The Case for Respondents
The respondents arguments closely adhere to the CAs ruling. They argue that NQFC, rather than meeting
the issues, focused on its alleged ownership of Lot No. 102 and the possession flowing out of its
ownership. They deny ever meeting Santos and they maintain that their continued possession and
occupation of Lot No. 102 belie this supposed sale. Even granting that this sale occurred, Santos could
still not have acquired any right over Lot No. 102 for as of 1980, it was still in the name of the
Republic.27Thus, they could not have transferred ownership of Lot No. 102 to Santos, and he cannot
claim ownership of Lot No. 102 by reason of this sale. 28?r?l1
On the other hand, the respondents open, continuous, exclusive, notorious and adverse possession of Lot
No. 102 for three decades, coupled by a claim of ownership, gave them vested right or interest over the
property.29 This vested right is equivalent to an actually issued certificate of title so that the execution
and delivery of the title is a mere formality. To say the least, NQFC did not have to send them a formal
L a n d T i t l e s a n d D e e d s | 71
demand to vacate30 and violently oust them from the premises had it been in actual possession of the
property as claimed.31?r?l1
Lastly, the respondents invoked the settled rule that the Courts jurisdiction in a Rule 45 petition is limited
only to reviewing errors of law. NQFC failed to show misapprehension of facts in the CAs findings to
justify a departure from this rule.32?r?l1
The Courts Ruling
We first address the procedural issue raised. Resolving the contentions raised necessarily requires us to
delve into factual issues, a course not proper in a petition for review on certiorari, for a Rule 45 petition
resolves only questions of law, not questions of fact. 33 This rule is read with the equally settled dictum
that factual findings of the CA are generally conclusive on the parties and are therefore not reviewable
by this Court.34 By way of exception, we resolve factual issues when, as here, conflict attended the
findings of the MTCC and of the RTC, on one hand, and of the CA, on the other. Of minor note, but
which we deem important to point, the petition needlessly impleaded the CA, in breach of Section 4,
Rule 45 of the Rules of Court.35?r?l1
Substantively, the key issue this case presents is prior physical possession whether NQFC had been in
prior physical possession of Lot No. 102.
We rule in the negative.
First, on the reliance on the BOL letters and Certification and the CAs alleged disregard of NQFCs
evidence. To prove prior physical possession of Lot No. 102, NQFC presented the Deed of Transfer,
Santos OCT P-4035, the Deed of Absolute Sale, and the Order of the Bureau of Lands approving Santos
free patent application. In presenting these pieces of evidence, NQFC is apparently mistaken as it may
have equated possession that is at issue as an attribute of ownership to actual possession. The latter type
of possession is, however, different from and has different legal implications than the former. While
these documents may bear weight and are material in contests over ownership of Lot No. 102, they do
not per se show NQFCs actual possession of this property.
We agree that ownership carries the right of possession, but the possession contemplated by the concept
of ownership is not exactly the same as the possession in issue in a forcible entry case. Possession in
forcible entry suits refers only to possession de facto, or actual or material possession, and not possession
flowing out of ownership; these are different legal concepts36 for which the law provides different
remedies for recovery of possession.37 As we explained in Pajuyo v. Court of Appeals,38 and again in the
more recent cases of Gonzaga v. Court of Appeals,39 De Grano v. Lacaba,40 and Lagazo v. Soriano,41 the

word "possession" in forcible entry suits refers to nothing more than prior physical possession or
possession de facto, not possession de jure42 or legal possession in the sense contemplated in civil
law.43Title is not the issue,44 and the absence of it "is not a ground for the courts to withhold relief from
the parties in an ejectment case."45?r?l1
Thus, in a forcible entry case, "a party who can prove prior possession can recover such possession even
against the owner himself. Whatever may be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to remain on the property until a person with a
better right lawfully ejects him." 46 He cannot be ejected by force, violence or terror -- not even by its
owners.47 For these reasons, an action for forcible entry is summary in nature aimed only at providing
an expeditious means of protecting actual possession.48 Ejectment suits are intended to "prevent breach
of x x x peace and criminal disorder and to compel the party out of possession to respect and resort to
the law alone to obtain what he claims is his."49 Thus, lest the purpose of these summary proceedings be
defeated, any discussion or issue of ownership is avoided unless it is necessary to resolve the issue of de
facto possession.
We agree with the respondents that instead of squarely addressing the issue of possession and presenting
evidence showing that NQFC or Santos had been in actual possession of Lot No. 102, the former merely
narrated how it acquired ownership of Lot No. 102 and presented documents to this effect. Its allegation
that Santos occupied Lot No. 102 in 1972 is uncorroborated. Even the tax declarations under Santos
name are hardly of weight; "tax declarations and realty tax payments are not conclusive proof of
possession. They are merely good indicia of possession in the concept of owner" 50 but not necessarily of
the actual possession required in forcible entry cases.
Section 1, Rule 70 of the Rules of Court provides when an action for forcible entry, and unlawful
detainer, is proper:cralawlibrary
SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding
section, a person deprived of the possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land
or building is unlawfully withheld after the expiration or termination of the right to hold possession, by
virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor,
vendor, vendee, or other person may at any time within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper Municipal Trial Court against the person or
persons unlawfully withholding or depriving of possession, or any person or persons claiming under
them, for the restitution of such possession, together with damages and costs. [emphasis ours; italics
supplied]
L a n d T i t l e s a n d D e e d s | 72
Under this provision, for a forcible entry suit to prosper, the plaintiff must allege and prove: (1) prior
physical possession of the property; and (2) unlawful deprivation of it by the defendant through force,
intimidation, strategy, threat or stealth.51 As in any civil case, the burden of proof lies with the
complainants (the respondents in this case) who must establish their case by preponderance of evidence.
In the present case, the respondents sufficiently alleged and proved the required elements.
To support its position, NQFC invokes the principle of tacking of possession, that is, when it bought Lot
No. 102 from Santos on December 29, 2000, its possession is, by operation of law, tacked to that of
Santos and even earlier, or at the time Donato acquired Lot No. 102 in 1948.
NQFCs reliance on this principle is misplaced. True, the law52 allows a present possessor to tack his
possession to that of his predecessor-in-interest to be deemed in possession of the property for the period
required by law. Possession in this regard, however, pertains to possession de jure and the tacking is
made for the purpose of completing the time required for acquiring or losing ownership through
prescription. We reiterate possession in forcible entry suits refers to nothing more than physical
possession, not legal possession.
The CA brushed aside NQFCs argument on the respondents failure to perfect their title over Lot No.
102. It held that the issue in this case is not of possession de jure, let alone ownership or title, but of
possession de facto. We agree with the CA; the discussions above are clear on this point.
We agree, too, as we have indicated in passing above, that the issue of ownership can be material and
relevant in resolving the issue of possession. The Rules in fact expressly allow this: Section 16, Rule 70
of the Rules of Court53 provides that the issue of ownership shall be resolved in deciding the issue of
possession if the question of possession is intertwined with the issue of ownership. But this provision is
only an exception and is allowed only in this limited instance-- to determine the issue of possession and
only if the question of possession cannot be resolved without deciding the issue of ownership.54 Save for
this instance, evidence of ownership is not at all material, as in the present case. 55?r?l1
As a final reiterative note, this Decision deals only with de facto possession and is without prejudice to
an appropriate action for recovery of possession based on ownership.
WHEREFORE, in light of these considerations, we hereby DENY the petition; the decision dated
February 22, 2006 and the resolution dated July 13, 2006 of the Court of Appeals in CA-G.R. SP No.
77006 are hereby AFFIRMED.
SO ORDERED.
 L a n d T i t l e s a n d D e e d s | 73

G.R. No. 73465 September 7, 1989 Cureg); on the south by Antonio Carniyan; and on the West by Sabina Mola, ... (p. 2,
Record)
LEONIDA CUREG, ROMEO, PEPITO, HERNANDO, MANUEL, ANTONIO AND
ELPIDIO (ALL SURNAMED CARNIYAN) petitioner, that said land was declared for taxation purposes under Tax Declaration No. 08-3023 in the name of
vs. Francisco Gerardo, which cancels Tax Declaration No. C-9669, also in the name of Francisco Gerardo;
INTERMEDIATE APPELLATE COURT, (4TH CIVIL CASES DIVISION), DOMINGO that upon the death of Francisco Gerardo, the ownership and possession of the "motherland" was
APOSTOL, SOLEDAD GERARDO, ROSA GERARDO, NIEVES GERARDO,
succeeded by his only issue, Domingo Gerardo who, together with three (3) legal or forced heirs, namely
FLORDELIZA GERARDO, AND LILIA MAQUINAD, respondent.
Soledad Gerardo, one of private respondents herein, Primo Gerardo and Salud Gerardo, both deceased,
have also been in actual, open, peaceful and continuous possession of the same; that Primo Gerardo is
MEDIALDEA, J.:
survived by herein respondents, Rosa, Nieves and Flordeliza, all surnamed Gerardo and Salud Gerardo
is survived by respondent Lilia Maquinad; that in 1979, respondents Soledad Gerardo, Rosa Gerardo,
This petition under Rule 45 of the Rules of Court, seeks the reversal of the decision of the Intermediate
Nieves Gerardo, Flordeliza Gerardo and Lilia Maquinad verbally sold the "motherland" to co-respondent
Appellate Court (now Court of Appeals) dated October 15,1985 in AC-G.R. CV No. 03852
Domingo Apostol; that on September 10, 1982, the verbal sale and conveyance was reduced into writing
entitled "Domingo Apostol, et al., Plaintiffs-Appellees, v. Leonida Cureg, et al., Defendants-Appellants",
by the vendors who executed an "Extra-Judicial Partition with Voluntary Reconveyance (Exhibit "Q",
which affirmed the decision of the Regional Trial Court of Isabela, Branch XXII declaring private
p. 206, Rollo); that about the time of the execution of the Extra-Judicial Partition, their "motherland"
respondent Domingo Apostol the absolute owner of a parcel of land, situated in Barangay Casibarag-
already showed/manifested signs of accretion of about three (3) hectares on the north caused by the
Cajel, Cabagan, Isabela, more particularly described as follows:
northward movement of the Cagayan River; that Domingo Apostol declared the motherland and its
accretion for tax purposes under Tax Declaration No. 08-13281 on September 15, 1982.
... containing an area of 5.5000 hectares, and bounded, on the north, by Cagayan
River; on the east, by Domingo Guingab; on the south, by Antonio Carniyan; and on
The complaint also stated that sometime about the last week of September and/or the first week of
the west, by Sabina Mola, with an assessed value of P3,520. (par. 9 of complaint, p. 4,
October 1982, when private respondents were about to cultivate their "motherland" together with its
Record; Emphasis supplied)
accretion, they were prevented and threatened by defendants (petitioners herein) from continuing to do
so. Named defendants in said case are herein petitioners Leonida Cureg and Romeo, Pepito, Hernando,
On November 5, 1982, private respondents Domingo Apostol, Soledad Gerardo, Rosa Gerardo, Nieves
Manuel, Antonio and Elpidio, all surnamed Carniyan, surviving spouse and children, respectively, of
Gerardo, Flordeliza Gerardo and Lilia Maquinad, filed a complaint for quieting of title and damages with
Antonio Carniyan. Further, the complaint stated that Antonio Carniyan was the owner of a piece of land
preliminary injunction against herein petitioners Leonida, Romeo, Pepito, Hernando, Manuel, Antonio
situated in Casibarag-Cajel, Cabagan, Isabela and more particularly described as follows:
and Elpidio, all surnamed Carniyan with the Regional Trial Court of Isabela and docketed as Civil Case
No. Br. 111-373. A temporary restraining order was issued by the trial court on November 12, 1982.
... containing an area of 2,790 sq. m., more or less bounded on the north by Domingo
Gerardo; on the East, by Domingo Guingab; on the south, by Pelagio Camayo; and on
The complaint alleged that private respondents, except Domingo Apostol, are the legal and/or the forced
the west by Marcos Cureg, declared for taxation purposes under Tax Declaration No.
heirs of the late Domingo Gerardo, who died in February 1944, the latter being the only issue of the late
13131, with an assessed value of P70.00. (P. 5, Record)
Francisco Gerardo, who died before the outbreak of the second world war; that since time immemorial
and/or before July 26, 1894, the late Francisco Gerardo, together with his predecessors-in-interest have
that deceased Antonio Carniyan revised on November 28, 1968 his Tax Declaration No. 13131 dated
been in actual, open, peaceful and continuous possession, under a bona fide claim of ownership and
July 24, 1961 to conform with the correct area and boundaries of his Original Certificate of Title No. P-
adverse to all other claimants, of a parcel of land (referred to as their "motherland"), situated in
19093 issued on November 25, 1968; that the area under the new Tax Declaration No.15663 was
Casibarag-Cajel, Cabagan, Isabela, more particularly described as follows:
increased from 2,790 square meters to 4,584 square meters and the boundary on the north became
Cagayan River, purposely eliminating completely the original boundary on the north which is Domingo
... containing an area of 2.5000 hectares, more or less, and bounded on
Gerardo.
the North, by Cagayan River;on the East, by Domingo Guingab (formerly Rosa

Petitioners' answer alleged that the "motherland" claimed by private respondents is non-existent; that
Antonio Carniyan, petitioners' predecessor-in-interest, was the owner of a piece of land bounded on the
north by Cagayan River and not by the land of Francisco Gerardo as claimed by private respondents;
that the "subject land" is an accretion to their registered land and that petitioners have been in possession
and cultivation of the "accretion" for many years now.
The application for the issuance of a writ of preliminary injunction was denied on July 28,1983 (pp. 244-
250, Rollo) on the ground that the defendants were in actual possession of the land in litigation prior to
September 1982. In a decision rendered on July 6, 1984, the trial court held that respondent Domingo
Apostol, thru his predecessors-in-interest had already acquired an imperfect title to the subject land and
accordingly, rendered judgment: 1. declaring Domingo Apostol its absolute owner; 2. ordering the
issuance of a writ of preliminary injunction against herein petitioners; 3. ordering that the writ be made
permanent; and 4. ordering herein petitioners to pay private respondents a reasonable attorney's fee of
P5,000.00, litigation expenses of P1,500.00 and costs (pp. 143-145, Rollo).
On July 17, 1984, petitioners appealed to the then Intermediate Appellate Court which affirmed the
decision of the trial court on October 15, 1985. Petitioners' Motion for Reconsideration was denied on
January 8, 1986. Hence, this petition for review on the following assigned errors:
A. It erred in ruling that the subject land or "accretion" (which is bounded on the north
by the Cagayan River) belongs to the private respondents and not to the petitioners
when the petitioners "Original Certificate of " Title No. 19093 states clearly that the
petitioners' land is bounded on its north by the Cagayan River.
B. It erred in construing the tax declarations against the interest of the herein
petitioners who are only the heirs of the late Antonio Carniyan since the late Francisco
(supposed predecessor of the respondents) could not have executed the recently
acquired tax declarations (Exhibits "A" to "A-2") as he died long before World War II
and since the late Antonio Carniyan could no longer stand up to explain his side.
C. Contrary to the evidence and the finding of the Regional Trial Court, it wrongly
ruled that petitioners have never been in possession of the land (p. 7 of Annex
"A", ibid.).
D. It erred in awarding the accretion of 3.5 hectares to the private respondents who
incredibly claimed that the accretion occurred only in 1982 and is a "gift from the
Lord. (pp. 24-25, Rollo)
L a n d T i t l e s a n d D e e d s | 74
This petition is impressed with merit.
The object of the controversy in this case is the alleged "motherland" of private respondents together
with the accretion of about 3.5 hectares, the totality of which is referred to in this decision as the "subject
land."
In this case, petitioners claimed to be riparian owners who are entitled to the "subject land" which is an
accretion to the registered land while private respondents claimed to be entitled to the 3.5 hectares
accretion attached to their "motherland."
It should be noted that the herein private respondents' claim of ownership of their alleged two and a half
(2 & ½) hectare "motherland" is anchored mainly on four (4) tax declarations (Exhibits "A", "A-1", "A-
2" and "B", pp. 191, 192, 193, 194, Rollo). This Court has repeatedly held that the declaration of
ownership for purposes of assessment on the payment of the tax is not sufficient evidence to prove
ownership. (Evangelista v. Tabayuyong, 7 Phil. 607; Elumbaring v. Elumbaring, 12 Phil. 384; cited in
Camo v. Riosa Bayco, 29 Phil. 437, 444). For their part, petitioners relied on the indefeasibility and
incontrovertibility of their Original Certificate of Title No. P-19093, dated November 25, 1968 (Exhibit
"3", p. 189, Rollo) issued in the name of Antonio Carniyan (petitioners' predecessor-in-interest) pursuant
to Free Patent No. 399431 dated May 21, 1968, clearly showing that the boundary of petitioners' land on
the north is Cagayan River and not the "motherland" claimed by respondents. The said registered land
was bought by the late Antonio Carniyan from his father-in-law, Marcos Cureg, on October 5, 1956, as
evidenced by an Absolute Deed of Sale (Exhibit "8", p. 195, Rollo) which states that the land is bounded
on the north by Cagayan River.
In the case of Ferrer-Lopez v. Court of Appeals, G.R. No. 50420, May 29, 1987, 150 SCRA 393,401-
402, We ruled that as against an array of proofs consisting of tax declarations and/or tax receipts which
are not conclusive evidence of ownership nor proof of the area covered therein, an original certificate of
title indicates true and legal ownership by the registered owners over the disputed premises. Petitioners'
OCT No.P-19093 should be accorded greater weight as against the tax declarations (Exhibit "A', dated
1979; Exhibit "A-1 " undated and Exhibit "A2" dated 1967, pp. 191, 192, 193, Rollo) offered by private
respondents in support of their claim, which declarations are all in the name of private respondents'
predecessor-in-interest, Francisco Gerardo, and appear to have been subscribed by him after the last war,
when it was established during the trial that Francisco Gerardo died long before the outbreak of the last
war.
Anent Tax Declaration No. 13131, in the name of Antonio Carniyan (Exhibit "C", p. 203, Rollo), which
the appellate court considered as an admission by him that his land is bounded on the north by the land
of Domingo Gerardo and that he (Carniyan) is now estopped from claiming otherwise, We hold that said

tax declaration, being of an earlier date cannot defeat an original certificate of title which is of a later
date. Since petitioner's original certificate of title clearly stated that subject land is bounded on the north
by the Cagayan River, private respondents" claim over their "motherland," allegedly existing between
petitioners" land and the Cagayan River, is deemed barred and nullified with the issuance of the original
certificate of title.
It is an elemental rule that a decree of registration bars all claims and rights which arose or may have
existed prior to the decree of registration (Ferrer-Lopez v. CA, supra., p. 404). By the issuance of the
decree, the land is bound and title thereto quieted, subject only to exceptions stated in Section 39, Act
496 (now Sec. 44 of PD No. 1529). Moreover, the tax declarations of the late Antonio Camiyan
subsequent to the issuance of OCT P-19093 (Exhibit "D", p. 204, Rollo) already states that its northern
boundary is Cagayan River. In effect, he has repudiated any previous acknowledgment by him, granting
that he caused the accomplishment of the tax declarations in his name before the issuance of OCT No.
P- 19093, of the existence of Francisco Gerardo's land.
Finally, the trial court concluded that petitioners have never been in possession of the "subject land" but
the evidence on record proves otherwise. First, the trial court on page 11 of its Decision (p. 121, Rollo),
stated the reason for denying private respondents' petition for the issuance of a preliminary injunction,
that is, "... the defendants (petitioners herein) were in actual possession of the land in litigation prior to
September, 1982" (p. 121, Rollo). Second, witness for private respondents, Esteban Guingab, boundary
owner on the east of the land in question and whose own land is bounded on the north of Cagayan River,
on cross-examination, revealed that when his property was only more than one (1) hectare in 1958, (now
more than 4 hectares) his boundary on the west is the land of Antonio Carniyan (T.S.N., 5 May 1983,
pp. 19-20). Third, witness Rogelio C. Albano, a geodetic engineer, on direct examination stated that in
1974, the late Antonio Carniyan requested him to survey the land covered by his title and the accretion
attached to it, but he did not pursue the same because he learned from the Office of the Director of the
Bureau of Lands that the same accretion is the subject of an application for homestead patent of one
Democrata Aguila, (T.S.N., May 18, 1984, pp. 12-13) contrary to the statement of the trial court and the
appellate court that Albano "made three attempts to survey the land but he did not continue to survey
because persons other than defendants were in possession of the land," which statement appears only to
be a conclusion (p. 7, Rollo). Fourth, We note Exhibit "20" (p. 273, Rollo) for petitioners which is an
order by the Director of Lands dated August 14,1980 in connection with the Homestead Application of
Democrata Aguila of an accretion situated in Catabayungan, Cabagan, Isabela. Aguila's application was
disapproved because in an investigation conducted by the Bureau of Lands of the area applied for which
is an accretion, the same was found to be occupied and cultivated by, among others, Antonio Carniyan,
who claimed it as an accretion to his land. It is worthy to note that none of the private respondents nor
their predecessors-in-interest appeared as one of those found occupying and cultivating said accretion.
L a n d T i t l e s a n d D e e d s | 75
On the other hand, the allegation of private respondents that they were in possession of the "motherland"
through their predecessors- in-interest had not been proved by substantial evidence. The assailed decision
of the respondent court, which affirmed the decision of the trial court, stated that since the "motherland"
exists, it is also presumed that private respondents were in possession of the "subject land" through their
predecessors- in-interest since prior to July 26, 1894. The trial court relied on the testimony of Soledad
Gerardo, one of the private respondents in this case, an interested and biased witness, regarding their
possession of the "motherland." From her testimony on pedigree, the trial court presumed that the source
of the property, the late Francisco Gerardo, was in possession of the same since prior to July 26, 1894
(pp. 137-140, Rollo).
The foregoing considerations indubitably show that the alleged "motherland" claimed by private
respondents is nonexistent. The "subject land" is an alluvial deposit left by the northward movement of
the Cagayan River and pursuant to Article 457 of the New Civil Code:
To the owners of land adjoining the banks of river belong the accretion which they
gradually receive from the effects of the current of the waters.
However, it should be noted that the area covered by OCT No. P-19093 is only four thousand five
hundred eighty four (4,584) square meters. The accretion attached to said land is approximately five and
a half (5.5) hectares. The increase in the area of petitioners'land, being an accretion left by the change of
course or the northward movement of the Cagayan River does not automatically become registered land
just because the lot which receives such accretion is covered by a Torrens title. (See Grande v. Court of
Appeals, L-17652, June 30, 1962). As such, it must also be placed under the operation of the Torrens
System. ACCORDINGLY, the petition is hereby GRANTED. The decision appealed from is
REVERSED and SET ASIDE and judgment is hereby rendered DISMISSING Civil Case No. Br. III-
373 for quieting of title and damages.
Costs against private respondents.
SO ORDERED.
G.R. No. 117897 May 14, 1997
ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F. PEREA and SECURITIES
& EXCHANGE COMMISSION, petitioners,
vs.
COURT OF APPEALS and IGLESIA NI CRISTO, respondents.
 L a n d T i t l e s a n d D e e d s | 76

HERMOSISIMA, JR., J.:
1 Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi Abbas. Both groups claimed to be the
The subject of this petition for review is the Decision of the public respondent Court of Appeals, dated
October 28, 1994, setting aside the portion of the Decision of the Securities and Exchange Commission
(SEC, for short) in SEC Case No. 4012 which declared null and void the sale of two (2) parcels of land
in Quezon City covered by the Deed of Absolute Sale entered into by and between private respondent
Iglesia Ni Cristo (INC, for short) and the Islamic Directorate of the Philippines, Inc., Carpizo Group,
(IDP, for short).
The following facts appear of record.
Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic leaders of all Muslim major tribal
groups in the Philippines headed by Dean Cesar Adib Majul organized and incorporated the ISLAMIC
DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of which is to establish an Islamic
Center in Quezon City for the construction of a "Mosque (prayer place), Madrasah (Arabic School), and
other religious infrastructures" so as to facilitate the effective practice of Islamic faith in the area. 2
Towards this end, that is, in the same year, the Libyan government donated money to the IDP to purchase
land at Culiat, Tandang Sora, Quezon City, to be used as a Center for the Islamic populace. The land,
with an area of 49,652 square meters, was covered by two titles: Transfer Certificate of Title Nos. RT-
26520 (176616) 3 and RT-26521 (170567), 4 both registered in the name of IDP.
It appears that in 1971, the Board of Trustees of the IDP was composed of the following per Article 6 of
its Articles of Incorporation:
1971 Board of Trustees like Senators Mamintal Tamano, Salipada Pendatun, Ahmad Alonto, and
Congressman Al-Rashid Lucman flew to the Middle East to escape political persecution.
Thereafter, two Muslim groups sprung, the Carpizo Group, headed by Engineer Farouk Carpizo, and the
legitimate IDP. Significantly, on October 3, 1986, the SEC, in a suit between these two contending
groups, came out with a Decision in SEC Case No. 2687 declaring the election of both the Carpizo Group
and the Abbas Group as IDP board members to be null and void. The dispositive portion of the SEC
Decision reads:
WHEREFORE, judgment is hereby rendered declaring the elections of both the
petitioners 7 and respondents 8 as null and void for being violative of the Articles of
Incorporation of petitioner corporation. With the nullification of the election of the
respondents, the approved by-laws which they certified to this Commission as
members of the Board of Trustees must necessarily be likewise declared null and void.
However, before any election of the members of the Board of Trustees could be
conducted, there must be an approved by-laws to govern the internal government of
the association including the conduct of election. And since the election of both
petitioners and respondents have been declared null and void, a vacuum is created as
to who should adopt the by-laws and certify its adoption. To remedy this unfortunate
situation that the association has found itself in, the members of the petitioning
corporation are hereby authorized to prepare and adopt their by-laws for submission
to the Commission. Once approved, an election of the members of the Board of
Trustees shall immediately be called pursuant to the approved by-laws.
SO ORDERED. 9

Senator Mamintal Tamano 5 Neither group, however, took the necessary steps prescribed by the SEC in its October 3, 1986 Decision,
Congressman Ali Dimaporo and, thus, no valid election of the members of the Board of Trustees of IDP was ever called. Although
Congressman Salipada Pendatun the Carpizo Group 10attempted to submit a set of by-laws, the SEC found that, aside from Engineer
Dean Cesar Adib Majul Farouk Carpizo and Atty. Musib Buat, those who prepared and adopted the by-laws were not bona
Sultan Harun Al-Rashid Lucman fide members of the IDP, thus rendering the adoption of the by-laws likewise null and void.
Delegate Ahmad Alonto
Commissioner Datu Mama Sinsuat On April 20, 1989, without having been properly elected as new members of the Board of Trustee of
Mayor Aminkadra Abubakar 6 IDP, the Carpizo Group caused to be signed an alleged Board Resolution 11 of the IDP, authorizing the
sale of the subject two parcels of land to the private respondent INC for a consideration of
According to the petitioner, in 1972, after the purchase of the land by the Libyan government in the name P22,343,400.00, which sale was evidenced by a Deed of Absolute Sale 12 dated April 20, 1989.
of IDP, Martial Law was declared by the late President Ferdinand Marcos. Most of the members of the

On May 30, 1991, the petitioner 1971 IDP Board of Trustees headed by former Senator Mamintal
Tamano, or the Tamano Group, filed a petition before the SEC, docketed as SEC Case No. 4012, seeking
to declare null and void the Deed of Absolute Sale signed by the Carpizo Group and the INC since the
group of Engineer Carpizo was not the legitimate Board of Trustees of the IDP.
Meanwhile, private respondent INC, pursuant to the Deed of Absolute Sale executed in its favor, filed
an action for Specific Performance with Damages against the vendor, Carpizo Group, before Branch 81
of the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-90-6937, to compel said group
to clear the property of squatters and deliver complete and full physical possession thereof to INC.
Likewise, INC filed a motion in the same case to compel one Mrs. Leticia P. Ligon to produce and
surrender to the Register of Deeds of Quezon City the owner's duplicate copy of TCT Nos. RT-26521
and RT-26520 covering the aforementioned two parcels of land, so that the sale in INC's favor may be
registered and new titles issued in the name of INC. Mrs. Ligon was alleged to be the mortgagee of the
two parcels of land executed in her favor by certain Abdulrahman R.T. Linzag and Rowaida Busran-
Sampaco claimed to be in behalf of the Carpizo Group.
The IDP-Tamano Group, on June 11, 1991, sought to intervene in Civil Case No. Q-90-6937
averring, inter alia:
xxx xxx xxx
2. That the Intervenor has filed a case before the Securities and Exchange Commission
(SEC) against Mr. Farouk Carpizo, et. al., who, through false schemes and
machinations, succeeded in executing the Deed of Sale between the IDP and the Iglesia
Ni Kristo (plaintiff in the instant case) and which Deed of Sale is the subject of the
case at bar;
3. That the said case before the SEC is docketed as Case No. 04012, the main issue of
which is whether or not the aforesaid Deed of Sale between IDP and the Iglesia ni
Kristo is null and void, hence, Intervenor's legal interest in the instant case. A copy of
the said case is hereto attached as Annex "A";
4. That, furthermore, Intervenor herein is the duly constituted body which can lawfully
and legally represent the Islamic Directorate of the Philippines;
xxx xxx xxx 13
L a n d T i t l e s a n d D e e d s | 77
Private respondent INC opposed the motion arguing, inter alia, that the issue sought to be litigated by
way of intervention is an intra-corporate dispute which falls under the jurisdiction of the SEC. 14
Judge Celia Lipana-Reyes of Branch 81, Regional Trial Court of Quezon City, denied petitioner's motion
to intervene on the ground of lack of juridical personality of the IDP-Tamano Group and that the issues
being raised by way of intervention are intra-corporate in nature, jurisdiction thereto properly pertaining
to the SEC. 15
Apprised of the pendency of SEC Case No. 4012 involving the controverted status of the IDP-Carpizo
Group but without waiting for the outcome of said case, Judge Reyes, on September 12, 1991, rendered
Partial Judgment in Civil Case No. Q-90-6937 ordering the IDP-Carpizo Group to comply with its
obligation under the Deed of Sale of clearing the subject lots of squatters and of delivering the actual
possession thereof to INC. 16
Thereupon, Judge Reyes in another Order, dated March 2, 1992, pertaining also to Civil Case No. Q-90-
6937, treated INC as the rightful owner of the real properties and disposed as follows:
WHEREFORE, Leticia P. Ligon is hereby ordered to produce and/or surrender to
plaintiff 17 the owner's copy of RT-26521 (170567) and RT-26520 (176616) in open
court for the registration of the Deed of Absolute Sale in the latter's name and the
annotation of the mortgage executed in her favor by herein defendant Islamic
Directorate of the Philippines on the new transfer certificate of title to be issued to
plaintiff.
SO ORDERED. 18
On April 6, 1992, the above Order was amended by Judge Reyes directing Ligon "to deliver the owner's
duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of
Quezon City for the purposes stated in the Order of March 2, 1992." 19
Mortgagee Ligon went to the Court of Appeals, thru a petition for certiorari, docketed as CA-G.R No.
SP-27973, assailing the foregoing Orders of Judge Reyes. The appellate court dismissed her petition on
October 28, 1992. 20
Undaunted, Ligon filed a petition for review before the Supreme Court which was docketed as G.R. No.
107751.

In the meantime, the SEC, on July 5, 1993, finally came out with a Decision in SEC Case No. 4012 in
this wise:
1. Declaring the by-laws submitted by the respondents 21 as unauthorized, and hence,
null and void.
2. Declaring the sale of the two (2) parcels of land in Quezon City covered by the Deed
of Absolute Sale entered into by Iglesia ni Kristo and the Islamic Directorate of the
Philippines, Inc. 22 null and void;
3. Declaring the election of the Board of Directors, 23 of the corporation from 1986 to
1991 as null and void;
4. Declaring the acceptance of the respondents, except Farouk Carpizo and Musnib
Buat, as members of the IDP null and void.
No pronouncement as to cost.
SO ORDERED. 24
Private respondent INC filed a Motion for Intervention, dated September 7, 1993, in SEC Case No. 4012,
but the same was denied on account of the fact that the decision of the case had become final and
executory, no appeal having been taken therefrom. 25
INC elevated SEC Case No. 4012 to the public respondent Court of Appeals by way of a special civil
action for certiorari, docketed as CA-G.R SP No. 33295. On October 28, 1994, the court a
quo promulgated a Decision in CA-G.R. SP No. 33295 granting INC's petition. The portion of the SEC
Decision in SEC Case No. 4012 which declared the sale of the two (2) lots in question to INC as void
was ordered set aside by the Court of Appeals.
Thus, the IDP-Tamano Group brought the instant petition for review, dated December 21, 1994,
submitting that the Court of Appeals gravely erred in:
1) Not upholding the jurisdiction of the SEC to declare the nullity of the sale;
2) Encouraging multiplicity of suits; and
3) Not applying the principles of estoppel and laches. 26
L a n d T i t l e s a n d D e e d s | 78
While the above petition was pending, however, the Supreme Court rendered judgment in G.R. No.
107751 on the petition filed by Mrs. Leticia P. Ligon. The Decision, dated June 1, 1995, denied the Ligon
petition and affirmed the October 28, 1992 Decision of the Court of Appeals in CA-G.R. No. SP-27973
which sustained the Order of Judge Reyes compelling mortgagee Ligon to surrender the owner's
duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of
Quezon City so that the Deed of Absolute Sale in INC's favor may be properly registered.
Before we rule upon the main issue posited in this petition, we would like to point out that our disposition
in G.R. No. 107751 entitled, "Ligon v. Court of Appeals," promulgated on June 1, 1995, in no wise
constitutes res judicata such that the petition under consideration would be barred if it were the ease.
Quite the contrary, the requisites or res judicata do not obtain in the case at bench.
Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of res judicata in actions in
personam, to wit:
Effect of judgment. — The effect of a judgment or final order rendered by a court or
judge of the Philippines, having jurisdiction to pronounce the judgment or order, may
be as follows:
xxx xxx xxx
(b) In other cases the judgment or order is, with respect to the matter directly adjudged
or as to any other matter that could have been raised in relation thereto, conclusive
between the parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for the same thing and
under the same title and in the same capacity;
(c) In any other litigation between the same parties or their successors in interest, that
only is deemed to have been adjudged in a former judgment which appears upon its
face to have been so adjudged, or which was actually and necessarily included therein
or necessary thereto.
Section 49(b) enunciates the first concept of res judicata known as "bar by prior judgment," whereas,
Section 49(c) is referred to as "conclusiveness of judgment."
There is "bar by former judgment" when, between the first case where the judgment was rendered, and
the second case where such judgment is invoked, there is identity of parties, subject matter and cause of
action. When the three identities are present, the judgment on the merits rendered in the first constitutes

an absolute bar to the subsequent action. But where between the first case wherein judgment is rendered
and the second case wherein such judgment is invoked, there is only identity of parties but there is no
identity of cause of action, the judgment is conclusive in the second case, only as to those matters actually
and directly controverted and determined, and not as to matters merely involved therein. This is what is
termed "conclusiveness of judgment." 27
Neither of these concepts of res judicata find relevant application in the case at bench. While there may
be identity of subject matter (IDP property) in both cases, there is no identity of parties. The principal
parties in G.R. No. 107751 were mortgagee Leticia P. Ligon, as petitioner, and the Iglesia Ni Cristo, as
private respondent. The IDP, as represented by the 1971 Board of Trustees or the Tamano Group, was
only made an ancillary party in G.R. No. 107751 as intervenor. 28 It was never originally a principal
party thereto. It must be noted that intervention is not an independent action, but is merely collateral,
accessory, or ancillary to the principal action. It is just an interlocutory proceeding dependent on or
subsidiary to the case between the original
parties. 29 Indeed, the IDP-Tamano Group cannot be considered a principal party in G.R. No. 107751 for
purposes of applying the principle of res judicata since the contrary goes against the true import of the
action of intervention as a mere subsidiary proceeding without an independent life apart from the
principal action as well as the intrinsic character of the intervenor as a mere subordinate party in the main
case whose right may be said to be only in aid of the right of the original party. 30 It is only in the present
case, actually, where the IDP-Tamano Group became a principal party, as petitioner, with the Iglesia Ni
Cristo, as private respondent. Clearly, there is no identity of parties in both cases.
In this connection, although it is true that Civil Case No. Q-90-6937, which gave rise to G.R. No. 107751,
was entitled, "Iglesia Ni Kristo, Plaintiff v. Islamic Directorate of the Philippines, Defendant," 31 the IDP
can not be considered essentially a formal party thereto for the simple reason that it was not duly
represented by a legitimate Board of Trustees in that case. As a necessary consequence, Civil Case No.
Q-90-6937, a case for Specific Performance with Damages, a mere action in personam, did not become
final and executory insofar as the true IDP is concerned since petitioner corporation, for want of
legitimate representation, was effectively deprived of its day in court in said case. Res inter alios
judicatae nullum allis praejudicium faciunt. Matters adjudged in a cause do not prejudice those who
were not parties to it. 32 Elsewise put, no person (natural or juridical) shall be affected by a proceeding
to which he is a stranger. 33
Granting arguendo, that IDP may be considered a principal party in Ligon, res judicata as a "bar by
former judgment" will still not set in on the ground that the cause of action in the two cases are different.
The cause of action in G.R. No. 107751 is the surrender of the owner's duplicate copy of the transfer
certificates of title to the rightful possessor thereof, whereas the cause of action in the present case is the
validity of the Carpizo Group-INC Deed of Absolute Sale.
L a n d T i t l e s a n d D e e d s | 79
Res Judicata in the form of "conclusiveness of judgment" cannot likewise apply for the reason that any
mention at all in Ligon as to the validity of the disputed Carpizo Board-INC sale may only be deemed
incidental to the resolution of the primary issue posed in said case which is: Who between Ligon and
INC has the better right of possession over the owner's duplicate copy of the TCTs covering the IDP
property? G.R. No. 107751 cannot be considered determinative and conclusive on the matter of the
validity of the sale for this particular issue was not the principal thrust of Ligon. To rule otherwise would
be to cause grave and irreparable injustice to IDP which never gave its consent to the sale, thru a
legitimate Board of Trustees.
In any case, while it is true that the principle of res judicata is a fundamental component of our judicial
system, it should be disregarded if its rigid application would involve the sacrifice of justice to
technicality. 34
The main question though in this petition is: Did the Court of Appeals commit reversible error in setting
aside that portion of the SEC's Decision in SEC Case No. 4012 which declared the sale of two (2) parcels
of land in Quezon City between the IDP-Carpizo Group and private respondent INC null and void?
We rule in the affirmative.
There can be no question as to the authority of the SEC to pass upon the issue as to who among the
different contending groups is the legitimate Board of Trustees of the IDP since this is a matter properly
falling within the original and exclusive jurisdiction of the SEC by virtue of Sections 3 and 5(c) of
Presidential Decree No. 902-A:
Sec. 3. The Commission shall have absolute jurisdiction, supervision and control over
all corporations, partnership or associations, who are the grantees of primary
franchises and/or a license or permit issued by the government to operate in the
Philippines . . . .
xxx xxx xxx
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases involving:
xxx xxx xxx

c) Controversies in the selection or appointment of directors, trustees, officers, or
managers of such corporations, partnerships or associations. . . . .
If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also
declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case
No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to
be null and
void. 35 By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo
Group is a bogus Board of Trustees. Consequently, the Carpizo Group is bereft of any authority
whatsoever to bind IDP in any kind of transaction including the sale or disposition of ID
property.
It must be noted that SEC Case No. 4012 is not the first case wherein the SEC had the opportunity to
pass upon the status of the Carpizo Group. As far back as October 3, 1986, the SEC, in Case No.
2687, 36 in a suit between the Carpizo Group and the Abbas Group, already declared the election of the
Carpizo Group (as well as the Abbas Group) to the IDP Board as null and void for being violative of the
Articles of Incorporation. 37 Nothing thus becomes more settled than that the IDP-Carpizo Group with
whom private respondent INC contracted is a fake Board.
Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora
property, allegedly in the name of the IDP, have to be struck down for having been done without the
consent of the IDP thru a legitimate Board of Trustees. Article 1318 of the New Civil Code lays down
the essential requisites of contracts:
There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
All these elements must be present to constitute a valid contract. For, where even one is absent,
the contract is void. As succinctly put by Tolentino, consent is essential for the existence of a
contract, and where it is wanting, the contract is non-existent. 38 In this case, the IDP, owner of
the subject parcels of land, never gave its consent, thru a legitimate Board of Trustees, to the
disputed Deed of Absolute Sale executed in favor of INC. This is, therefore, a case not only of
L a n d T i t l e s a n d D e e d s | 80
vitiated consent, but one where consent on the part of one of the supposed contracting parties
is totally wanting. Ineluctably, the subject sale is void and produces no effect whatsoever.
The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Group's
failure to comply with Section 40 of the Corporation Code pertaining to the disposition of all or
substantially all assets of the corporation:
Sec. 40. Sale or other disposition of assets. — Subject to the provisions of existing
laws on illegal combinations and monopolies, a corporation may, by a majority vote
of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or
otherwise dispose of all or substantially all of its property and assets, including its
goodwill, upon terms and conditions and for such consideration, which may be money,
stocks, bonds or other instruments for the payment of money or other property or
consideration, as its board of directors or trustees may deem expedient, when
authorized by the vote of the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock; or in case of non-stock corporation, by the vote of at least
two-thirds (2/3) of the members, in a stockholders' or members' meeting duly called
for the purpose. Written notice of the proposed action and of the time and place of the
meeting shall be addressed to each stockholder or member at his place of residence as
shown on the books of the corporation and deposited to the addressee in the post office
with postage prepaid, or served personally: Provided, That any dissenting stockholder
may exercise his appraisal right under the conditions provided in this Code.
A sale or other disposition shall be deemed to cover substantially all the corporate
property and assets if thereby the corporation would be rendered incapable of
continuing the business or accomplishing the purpose for which it was incorporated.
xxx xxx xxx
The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence,
its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling
squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of
the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the
corporation should have been obtained. These twin requirements were not met as the Carpizo Group
which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose names and
signatures were affixed by the Carpizo Group together with the sham Board Resolution authorizing the
negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made

to appear to be. Apparently, there are only fifteen (15) official members of the petitioner corporation
including the eight (8) members of the Board of Trustees. 39
All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent
INC was intrinsically void ab initio.
Private respondent INC nevertheless questions the authority of the SEC to nullify the sale for being made
outside of its jurisdiction, the same not being an intra-corporate dispute.
The resolution of the question as to whether or not the SEC had jurisdiction to declare the subject sale
null and void is rendered moot and academic by the inherent nullity of the highly dubious sale due to
lack of consent of the IDP, owner of the subject property. No end of substantial justice will be served if
we reverse the SEC's conclusion on the matter, and remand the case to the regular courts for further
litigation over an issue which is already determinable based on what we have in the records.
It is unfortunate that private respondent INC opposed the motion for intervention filed by the 1971 Board
of Trustees in Civil Case. No. Q-90-6937, a case for Specific Performance with Damages between INC
and the Carpizo Group on the subject Deed of Absolute Sale. The legitimate IDP Board could have been
granted ample opportunity before the regional trial court to shed light on the true status of the Carpizo
Board and settled the matter as to the validity of the sale then and there. But INC, wanting to acquire the
property at all costs and threatened by the participation of the legitimate IDP Board in the civil suit,
argued for the denial of the motion averring, inter alia, that the issue sought to be litigated by the movant
is intra-corporate in nature and outside the jurisdiction of the regional trial court. 40 As a result, the
motion for intervention was denied. When the Decision in SEC Case No. 4012 came out nullifying the
sale, INC came forward, this time, quibbling over the issue that it is the regional trial court, and not the
SEC, which has jurisdiction to rule on the validity of the sale. INC is here trifling with the courts. We
cannot put a premium on this clever legal maneuverings of private respondent which, if countenanced,
would result in a failure of justice.
Furthermore, the Court observes that the INC bought the questioned property from the Carpizo Group
without even seeing the owner's duplicate copy of the titles covering the property. This is very strange
considering that the subject lot is a large piece of real property in Quezon City worth millions, and that
under the Torrens System of Registration, the minimum requirement for one to be a good faith buyer for
value is that the vendee at least sees the owner's duplicate copy of the title and relies upon the
same. 41 The private respondent, presumably knowledgeable on the aforesaid workings of the Torrens
System, did not take heed of this and nevertheless went through with the sale with undue haste. The
unexplained eagerness of INC to buy this valuable piece of land in Quezon City without even being
L a n d T i t l e s a n d D e e d s | 81
presented with the owner's copy of the titles casts very serious doubt on the rightfulness of its position
as vendee in the transaction.
WHEREFORE, the petition is GRANTED. The Decision of the public respondent Court of Appeals
dated October 28, 1994 in CA-G.R. SP No. 33295 is SET ASIDE. The Decision of the Securities and
Exchange Commission dated July 5, 1993 in SEC Case No. 4012 is REINSTATED. The Register of
Deeds of Quezon City is hereby ordered to cancel the registration of the Deed of Absolute Sale in the
name of respondent Iglesia Ni Cristo, if one has already been made. If new titles have been issued in the
name of Iglesia Ni Cristo, the Register of Deeds is hereby ordered to cancel the same, and issue new
ones in the name of petitioner Islamic Directorate of the Philippines. Petitioner corporation is ordered to
return to private respondent whatever amount has been initially paid by INC as consideration for the
property with legal interest, if the same was actually received by IDP. Otherwise, INC may run after
Engineer Farouk Carpizo and his group for the amount of money paid.
SO ORDERED.
G.R. No. 145982 July 3, 2003
FRANK N. LIU, deceased, substituted by his surviving spouse Diana Liu, and
children, namely: Walter, Milton, Frank, Jr., Henry and Jockson, all surnamed Liu,
Rebecca Liu Shui and Pearl Liu Rodriguez, petitioners,
vs.
ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAÑO, respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 13 June 2000 and the Resolution dated
14 November 2002 of the Court of Appeals which affirmed the Decision2 of the Regional Trial Court,
Branch 14, Cebu City. The Court of Appeals agreed with the trial court that the sales by the late Teodoro
Vaño to respondents Alfredo Loy, Jr. and Teresita A. Loy of Lot Nos. 5 and 6, respectively, were valid.
The Court of Appeals also agreed with the trial court that the unilateral extrajudicial rescission by the
late Teodoro Vaño of the contract to sell involving five lots, including Lot Nos. 5 and 6, between him
and Benito Liu (predecessor-in-interest of Frank Liu) was valid.

The Facts
On 13 January 1950, Teodoro Vaño, as attorney-in-fact of Jose Vaño, sold seven lots of the Banilad
Estate located in Cebu City to Benito Liu and Cirilo Pangalo. 3 Teodoro Vaño dealt with Frank Liu, the
brother of Benito Liu, in the sale of the lots to Benito Liu and Cirilo Pangalo. The lots sold to Benito Liu
were Lot Nos. 5, 6, 13, 14, and 15 of Block 12 for a total price of P4,900. Benito Liu gave a down
payment of P1,000, undertaking to pay the balance of P3,900 in monthly installments of P100 beginning
at the end of January 1950. The lots sold to Cirilo Pangalo were Lot Nos. 14 and 15 of Block 11 for a
total price of P1,967.50. Cirilo Pangalo gave P400 as down payment, undertaking to pay the balance of
P1,567.50 in monthly installments of P400 beginning at the end of January 1950. Meanwhile, Jose Vaño
passed away.
Benito Liu subsequently paid installments totaling P2,900, leaving a balance of P1,000. 4 Apparently,
Benito Liu stopped further payments because Teodoro Vaño admitted his inability to transfer the lot
titles to Benito Liu. Later, in a letter5 dated 16 October 1954, Teodoro Vaño informed Frank Liu6 that
the Supreme Court had already declared valid the will of his father Jose Vaño. Thus, Teodoro Vaño
could transfer the titles to the buyers’ names upon payment of the balance of the purchase price.
When Frank Liu failed to reply, Teodoro Vaño sent him another letter,7 dated 1 January 1955, reminding
him of his outstanding balance. It appears that it was only after nine years that Frank Liu responded
through a letter,8 dated 25 January 1964. In the letter, Frank Liu informed Teodoro Vaño that he was
ready to pay the balance of the purchase price of the seven lots. He requested for the execution of a deed
of sale of the lots in his name and the delivery of the titles to him.
On 22 April 1966, Benito Liu sold to Frank Liu the five lots (Lot Nos. 5, 6, 13, 14 and 15 of Block 12)
which Benito Liu purchased from Teodoro Vaño.9 Frank Liu assumed the balance of P1,000 for the five
lots. Cirilo Pangalo likewise sold to Frank Liu the two lots (Lot Nos. 14 and 15 of Block 11) that Pangalo
purchased from Teodoro Vaño. Frank Liu likewise assumed the balance of P417 for the two lots.
On 21 March 1968, Frank Liu reiterated in a letter10 his request for Teodoro Vaño to execute the deed of
sale covering the seven lots so he could secure the corresponding certificates of title in his name. He also
requested for the construction of the subdivision roads pursuant to the original contract. In the letter,
Frank Liu referred to another letter, dated 25 June 1966, which he allegedly sent to Teodoro Vaño.
According to Frank Liu, he enclosed PBC Check No. D-782290 dated 6 May 1966 for P1,417, which is
the total balance of the accounts of Benito Liu and Cirilo Pangalo on the seven lots. However, Frank Liu
did not offer in evidence the letter or the check. Frank Liu sent two other letters, 11 dated 7 June 1968 and
29 July 1968, to Teodoro Vaño reiterating his request for the execution of the deed of sale in his favor
but to no avail.
On 19 August 1968, Teodoro Vaño sold Lot No. 6 to respondent Teresita Loy for P3,930. 12 The Register
of Deeds of Cebu City entered this sale in the Daybook on 24 February 1969. 13
L a n d T i t l e s a n d D e e d s | 82
On 2 December 1968, Frank Liu filed a complaint against Teodoro Vaño for specific performance,
execution of deed of absolute sale, issuance of certificates of title and construction of subdivision roads,
before the Court of First Instance of Davao. The case was docketed as Civil Case No. 6300. 14
On 19 December 1968, Frank Liu filed with the Register of Deeds of Cebu City a notice of lis pendens on
the seven lots due to the pendency of Civil Case No. 6300.15 However, the Register of Deeds denied the
registration of the lis pendens "on the ground that the property is under administration and said claim
must be filed in court."16
On 16 December 1969, Teodoro Vaño sold Lot No. 5 to respondent Alfredo Loy for P3,910. 17 The
Register of Deeds of Cebu City entered this sale in the Daybook on 16 January 1970. 18
On 3 October 1970, the Court of First Instance of Davao, on motion of Teodoro Vaño, dismissed Civil
Case No. 6300 on the ground that Frank Liu should have filed the claim with the probate court. 19 Thus,
on 17 February 1972, Frank Liu filed before the probate court a claim against the Estate of Jose Vaño
for "Specific Performance, Execution of Deed of Absolute Sale, Issuance of Certificate of Title, and
Construction of Subdivision Roads." 20
During the proceedings, Teodoro Vaño died. His widow, Milagros Vaño, succeeded as administratrix of
the Estate of Jose Vaño.
On 24 February 1976, the probate court approved the claim of Frank Liu. On 5 March 1976, Milagros
Vaño executed a deed of conveyance covering the seven lots in favor of Frank Liu, in compliance with
the probate court’s order.21The deed of conveyance included Lot Nos. 5 and 6, the same lots Teodoro
Vaño sold respectively to Alfredo Loy, Jr. on 16 December 1969 and to Teresita Loy on 19 August 1968.
On 19 March 1976, the probate court, upon an ex-parte motion filed by Teresita Loy, issued an
Order22 approving the 16 August 1968 sale by Teodoro Vaño of Lot No. 6 in her favor. Likewise, upon
an ex-parte motion filed by Alfredo Loy, Jr., the probate court issued on 23 March 1976 an
Order23 approving the 16 December 1969 sale of Lot No. 5 by Teodoro Vaño in his favor.
On 10 May 1976, the Register of Deeds of Cebu City cancelled TCT No. 44204 in the name of the Estate
of Jose Vaño covering Lot No. 5 and issued a new title, TCT No. 64522, in the name of Alfredo Loy, Jr.
and Perfeccion V. Loy.24 Likewise, on the same date, the Register of Deeds cancelled TCT No. 44205
in the name of the Estate of Jose Vaño covering Lot No. 6, and issued TCT No. 64523 in the name of
Teresita A. Loy.25
On 3 June 1976, Milagros Vaño, as administratrix of the estate, filed a motion for reconsideration of the
Orders of the probate court dated 19 and 23 March 1976. She contended that she already complied with
the probate court’s Order dated 24 February 1976 to execute a deed of sale covering the seven lots,
including Lot Nos. 5 and 6, in favor of Frank Liu. She also stated that no one notified her of the motion

of the Loys, and if the Loys or the court notified her, she would have objected to the sale of the same
lots to the Loys.
On 4 June 1976, Frank Liu filed a complaint for reconveyance or annulment of title of Lot Nos. 5 and 6.
Frank Liu filed the case in the Regional Trial Court of Cebu City, Branch 14, which docketed it as Civil
Case No. R-15342.
On 5 August 1978, the probate court denied the motion for reconsideration of Milagros Vaño on the
ground that the conflicting claims regarding the ownership of Lot Nos. 5 and 6 were already under
litigation in Civil Case No. R-15342.
On 8 April 1991, the Regional Trial Court of Cebu City ("trial court"), Branch 14, rendered judgment
against Frank Liu as follows:
WHEREFORE, judgment is hereby rendered:
(1) Dismissing the complaint at bar; and
(2) Confirming the unilateral extrajudicial rescission of the contract Exhibit A by the
late Teodoro Vaño, conditioned upon the refund by the Estate of Jose Vaño of one-
half (1/2) of what the plaintiff had paid under that contract.
The counterclaims by the defendants Alfredo A. Loy, Jr. and Teresita A. Loy and by the
defendant Estate of Jose Vaño, not having been substantiated, are hereby denied.
Without special pronouncement as to costs.
SO ORDERED.26
Frank Liu appealed to the Court of Appeals, which affirmed in toto the decision of the trial court. Frank
Liu27 filed a motion for reconsideration but the Court of Appeals denied the same.
Hence, the instant petition.
The Trial Court’s Ruling
The trial court held that the contract between Teodoro Vaño and Benito Liu was a contract to sell. Since
title to Lot Nos. 5 and 6 never passed to Benito Liu due to non-payment of the balance of the purchase
price, ownership of the lots remained with the vendor. Therefore, the trial cour ruled that the subsequent
sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6, respectively, were valid.
L a n d T i t l e s a n d D e e d s | 83
The trial court viewed the letter of Teodoro Vaño dated 1 January 1995 addressed to Frank Liu as a
unilateral extrajudicial rescission of the contract to sell. The trial court upheld the unilateral rescission
subject to refund by the Estate of Jose Vaño of one-half (1/2) of what Frank Liu paid under the contract.
The trial court ruled that Teodoro Vaño, as administrator of the Estate of Jose Vaño and as sole heir of
Jose Vaño, acted both as principal and as agent when he sold the lots to Alfredo Loy, Jr. and Teresita
Loy. The probate court subsequently approved the sales. The trial court also found that Alfredo Loy, Jr.
and Teresita Loy were purchasers in good faith.
The Court of Appeals’ Ruling
In affirming in toto the trial court’s decision, the appellate court found no evidence of fraud or ill-motive
on the part of Alfredo Loy, Jr. and Teresita Loy. The Court of Appeals cited the rule that "the law always
presumes good faith such that any person who seeks to be awarded damages due to the acts of another
has the burden of proving that the latter acted in bad faith or ill-motive."
The Court of Appeals also held that the sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6,
respectively, were valid despite lack of prior approval by the probate court. The Court of Appeals
declared that Teodoro Vaño sold the lots in his capacity as heir of Jose Vaño. The appellate court ruled
that an heir has a right to dispose of the decedent’s property, even if the same is under administration,
because the hereditary property is deemed transmitted to the heir without interruption from the moment
of the death of the decedent.
The Court of Appeals held that there is no basis for the claim of moral damages and attorney’s fees. The
appellate court found that Frank Liu failed to prove that he suffered mental anguish due to the actuations
of the Loys. The Court of Appeals likewise disallowed the award of attorney’s fees. The fact alone that
a party was compelled to litigate and incur expenses to protect his claim does not justify an award of
attorney’s fees. Besides, the Court of Appeals held that where there is no basis to award moral damages,
there is also no basis to award attorney’s fees.
The Issues
Petitioners28 raise the following issues:29
1. Whether prior approval of the probate court is necessary to validate the sale of Lot Nos. 5
and 6 to Loys;
2. Whether the Loys can be considered buyers and registrants in good faith despite the notice
of lis pendens;
3. Whether Frank Liu has a superior right over Lot Nos. 5 and 6;

4. Whether the Court of Appeals erred in not passing upon the trial court’s declaration that the
extra-judicial rescission by Teodoro Vaño of the sale in favor of Frank Liu is valid;
5.Whether petitioners are entitled to moral damages and attorney’s fees.
The Court’s Ruling
The petition is meritorious.
Whether there was a valid cancellation of the contract to sell
There was no valid cancellation of the contract to sell because there was no written notice of the
cancellation to Benito Liu or Frank Liu. There was even no implied cancellation of the contract to sell.
The trial court merely "viewed" the alleged "unilateral extrajudicial rescission" from the letter of Teodoro
Vaño, dated 1 January 1955, addressed to Frank Liu, stating that:
Two months, I believe, is ample for the allowance of delays caused by your (sic) either too
busy, or having been some place else, or for consultations. These are the only reasons I can
think of that could have caused the delay in your answer, unless you do not think an answer is
necessary at all, as you are not the party concerned in the matter.
I shall therefor (sic) appreciate it very much, if you will write me within ten days from receipt
of this letter, or enterprete (sic) your silence as my mistake in having written to the wrong party,
and therefor (sic) proceed to write Misters: B. Liu and C. Pangalo. 30 (Emphasis supplied)
Obviously, we cannot construe this letter as a unilateral extrajudicial rescission of the contract to sell.
As clearly stated in the letter, the only action that Teodoro Vaño would take if Frank Liu did not reply
was that Teodoro Vaño would write directly to Benito Liu and Cirilo Pangalo. The letter does not
mention anything about rescinding or cancelling the contract to sell.
Although the law allows the extra-judicial cancellation of a contract to sell upon failure of one party to
comply with his obligation, notice of such cancellation must still be given to the party who is at
fault.31 The notice of cancellation to the other party is one of the requirements for a valid cancellation of
a contract to sell, aside from the existence of a lawful cause. Even the case cited by the trial court
emphasizes the importance of such notice:
Of course, it must be understood that the act of a party in treating a contract as cancelled or
resolved on account of infractions by the other contracting party must be made known to the
other and is always provisional, being ever subject to scrutiny and review by the proper court.
If the other party denies that rescission is justified, it is free to resort to judicial action in its own
behalf, and bring the matter to court. Then, should the court, after due hearing, decide that the
resolution of the contract was not warranted, the responsible party will be sentenced to damages;
L a n d T i t l e s a n d D e e d s | 84
in the contrary case, the resolution will be affirmed, and the consequent indemnity awarded to
the party prejudiced.32 (Emphasis supplied)
The fact that Teodoro Vaño advised Frank Liu to file his claim with the probate court is certainly not the
conduct of one who supposedly unilaterally rescinded the contract with Frank Liu. 33
In this case, there was prior delay or default by the seller. As admitted by Teodoro Vaño, he could not
deliver the titles because of a case questioning the authenticity of the will of his father. In a letter33 to
Frank Liu dated 16 October 1954, Teodoro Vaño stated:
Some time last May, if I remember correctly, you offered to settle the whole balance of your
account if I can have the Titles transferred immediately in your brother’s name, and to that of
Mr. Pangalo’s. I cannot blame you if you were disappointed then, to know that I could not have
the titles transferred, even should you have paid in full. (Emphasis supplied)
In the same letter of 16 October 1954, Teodoro Vaño informed Frank Liu that the titles were ready for
transfer, thus:
However, last June 30, of this year, the Supreme Court, unanimously concurred in the reversal
of the decision of the Court of First Instance, as regard the legality of the Will of my father.
Now that the Will of my Father has been declared Legal, my opponents have lost their
personality in the case, and with it their power to harass me in court. Also, sometime in the
middle of July, also this year, the Supreme Court again declared that all the sales I have made
of the properties of my Father, were Legal, and that I should be empowered to have the Titles
transferred in the buyer’s names, should they have paid in full. A few have already received
their Titles. And yours can be had too in two days time from the time you have paid in full.
Nevertheless, the subsequent approval by the probate court of the sale of Lot Nos. 5 and 6 to
Frank Liu rendered moot any question on the continuing validity of the contract to sell.
Whether the lis pendens in the Davao case served as notice to the Loys
The lis pendens in the Davao case did not serve as notice to the Loys. The Register of Deeds of Cebu
City denied registration of the lis pendens on 19 December 1968.35 Frank Liu did not appeal to the Land
Registration Commission36 to keep alive the lis pendens. Republic Act No. 1151,37 which took effect 17
June 1954, provides:
SEC. 4. Reference of doubtful matters to Commissioner of Land Registration.— When the
Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be
made in pursuance of any deed, mortgage, or other instrument presented to him for registration,
or where any party in interest does not agree with the Register of Deeds with reference to any
such matter, the question shall be submitted to the Commissioner of Land Registration either

upon the certification of the Register of Deeds, stating the question upon which he is in doubt,
or upon the suggestion in writing by the party in interest; and thereupon the Commissioner,
after consideration of the matter shown by the records certified to him, and in case of registered
lands, after notice to the parties and hearing, shall enter an order prescribing the step to be taken
or memorandum to be made. His decision in such cases shall be conclusive and binding upon
all Registers of Deeds: Provided, however, That when a party in interest disagrees with a ruling
or resolution of the Commissioner and the issue involves a question of law, said decision may
be appealed to the Supreme Court within thirty days from and after receipt of the notice thereof.
(Emphasis supplied)
Frank Liu’s failure to appeal38 the denial of the registration rendered the lis pendens ineffective. The
Court of First Instance of Davao City eventually dismissed Frank Liu’s complaint on 3 October 1970.
Whether the registration by the Loys of their contracts of sale made them the first registrants in
good faith to defeat prior buyers
The registration by the Loys of their contracts of sale did not defeat the right of prior buyers because the
person who signed the Loys’ contracts was not the registered owner. The registered owner of Lot Nos.
5 and 6 was the "Estate of Jose Vaño." Teodoro Vaño was the seller in the contract of sale with Alfredo
Loy, Jr. The Estate of Jose Vaño was the seller in the contract of sale with Teresita Loy. Teodoro Vaño
signed both contracts of sale. The rule is well-settled that "one who buys from a person who is not the
registered owner is not a purchaser in good faith." 39 As held in Toledo-Banaga v. Court of Appeals:40
To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither the
registered owner nor was the former authorized by the latter to sell the same. She knew she was not
dealing with the registered owner or a representative of the latter. One who buys property with full
knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith and cannot
claim that he acquired title in good faith as against the owner or of an interest therein. When she
nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of litigation. She is bound by
the outcome of her indifference with no one to blame except herself if she looses her claim as against
one who has a superior right or interest over the property. x x x.
The Loys were under notice to inquire why the land was not registered in the name of the person who
executed the contracts of sale. They were under notice that the lots belonged to the "Estate of Jose Vaño"
and any sale of the lots required court approval. Any disposition would be subject to the claims of
creditors of the estate who filed claims before the probate court. 41
The contracts of the Loys did not convey ownership of the lots to them as against third persons. The
contracts were binding only on the seller, Teodoro Vaño. The contracts of the Loys would become
binding against third persons only upon approval of the sale by the probate court and registration with
the Register of Deeds. Registration of the contracts without court approval would be ineffective to bind
third persons, especially creditors of the estate. Otherwise, this will open the door to fraud on creditors
of the estate.
L a n d T i t l e s a n d D e e d s | 85
Whether the probate court’s ex-parte approval of the contracts of the Loys was valid
Section 8, Rule 89 of the 1964 Rules of Court42 specifically requires notice to all interested parties in
any application for court approval to convey property contracted by the decedent in his lifetime. Thus:
SECTION 8. When court may authorize conveyance of realty which deceased contracted to
convey. Notice. Effect of deed. — Where the deceased was in his lifetime under contract,
binding in law, to deed real property, or an interest therein, the court having jurisdiction of the
estate may, on application for that purpose, authorize the executor or administrator to convey
such property according to such contract, or with such modifications as are agreed upon by the
parties and approved by the court; and if the contract is to convey real property to the executor
or administrator, the clerk of the court shall execute the deed. The deed executed by such
executor, administrator, or clerk of court shall be as effectual to convey the property as if
executed by the deceased in his lifetime; but no such conveyance shall be authorized until notice
of the application for that purpose has been given personally or by mail to all persons interested,
and such further notice has been given, by publication or otherwise, as the court deems proper;
nor if the assets in the hands of the executor or administrator will thereby be reduced so as to
prevent a creditor from receiving his full debt or diminish his dividend. (Rule 89, 1964 Rules
of Court) (Emphasis supplied)
Despite the clear requirement of Section 8 of Rule 89, the Loys did not notify the administratrix of the
motion and hearing to approve the sale of the lots to them. The administratrix, who had already signed
the deed of sale to Frank Liu as directed by the same probate court, objected to the sale of the same lots
to the Loys. Thus, as found by the trial court:
On June 3, 1976, Milagros H. Vaño moved for the reconsideration of the Order issued by Judge Ramolete
on March 19, 1976 and March 23, 1976, contending that she had not been personally served with copies
of the motions presented to the Court by Alfredo Loy, Jr. and by Teresita Loy seeking the approval of
the sales of the lots in their favor, as well as the Orders that were issued by the Court pursuant thereto;
that the Court in its Order of February 24, 1976 had ordered her (Milagros H. Vaño), to execute a deed
of absolute sale in favor of the plaintiff, which sale had been approved by the Court; that she had not
known of the sale of Lots 5 and 6 to any other person except to the plaintiff; that the sale of the two lots
in favor of plaintiff was made earlier, when there was yet no litigation with the Bureau of Internal
Revenue, while those in favor of the defendant Loys were made when there was already a prohibition
by the Court against any sale thereof; that the sales in favor of the Loys were made without Court
authority; and that if the approval of the sales had not been obtained ex-parte she would have informed
the Court of the complication arising therefrom, and she would not have executed the sale in favor of
plaintiff, and she would have asked the Court to decide first as to who had preference over said lots. 43
The failure to notify the administratrix and other interested persons rendered the sale to the Loys void.
As explained by Justice J.B.L. Reyes in De Jesus v. De Jesus:44

Section 9, Rule 90, however, provides that authority can be given by the probate court to the
administrator to convey property held in trust by the deceased to the beneficiaries of the trust
only "after notice given as required in the last preceding section"; i.e., that "no such conveyance
shall be authorized until notice of the application for that purpose has been given personally or
by mail to all persons interested, and such further notice has been given, by publication or
otherwise, as the court deems proper" (sec. 8, Rule 90). This rule makes it mandatory that notice
be served on the heirs and other interested persons of the application for approval of any
conveyance of property held in trust by the deceased, and where no such notice is given, the
order authorizing the conveyance, as well as the conveyance itself, is completely void.
(Emphasis supplied)
In this case, the administratrix, the wife of the deceased Teodoro Vaño, was not notified of the motion
and hearing to approve the sale of the lots to the Loys. Frank Liu did not also receive any notice, although
he obviously was an interested party. The issuance of new titles to the Loys on 10 May 1976 by the
Registry of Deeds did not vest title to the Loys because the "conveyance itself" was "completely void."
The consequences for the failure to notify the administratrix and other interested parties must be borne
by the Loys.
Necessity of court approval of sales
Indisputably, an heir can sell his interest in the estate of the decedent, or even his interest in specific
properties of the estate. However, for such disposition to take effect against third parties, the court must
approve such disposition to protect the rights of creditors of the estate. What the deceased can transfer
to his heirs is only the net estate, that is, the gross estate less the liabilities. As held in Baun v. Heirs of
Baun:45
The heir legally succeeds the deceased, from whom he derives his right and title, but only after
the liquidation of the estate, the payment of the debts of the same, and the adjudication of the
residue of the estate of the deceased; and in the meantime the only person in charge by law to
attend to all claims against the estate of the deceased debtor is the executor or administrator
appointed by the court.
In Opulencia v. Court of Appeals,46 an heir agreed to convey in a contract to sell her share in the estate
then under probate settlement. In an action for specific performance filed by the buyers, the seller-heir
resisted on the ground that there was no approval of the contract by the probate court. The Court ruled
that the contract to sell was binding between the parties, but subject to the outcome of the testate
proceedings. The Court declared:
x x x Consequently, although the Contract to Sell was perfected between the petitioner (seller-
heir) and private respondents (buyers) during the pendency of the probate proceedings, the
consummation of the sale or the transfer of ownership over the parcel of land to the private
respondents is subject to the full payment of the purchase price and to the termination and
outcome of the testate proceedings. x x x Indeed, it is settled that ‘the sale made by an heir of
L a n d T i t l e s a n d D e e d s | 86
his share in an inheritance, subject to the pending administration, in no wise stands in the way
of such administration.’ (Emphasis supplied)
In Alfredo Loy’s case, his seller executed the contract of sale after the death of the registered owner Jose
Vaño. The seller was Teodoro Vaño who sold the lot in his capacity as sole heir of the deceased Jose
Vaño. Thus, Opulencia applies to the sale of the lot to Alfredo Loy, Jr., which means that the contract of
sale was binding between Teodoro Vaño and Alfredo Loy, Jr., but subject to the outcome of the probate
proceedings.
In Frank Liu’s case, as successor-in-interest of Benito Liu, his seller was Jose Vaño, who during his
lifetime executed the contract to sell through an attorney-in-fact, Teodoro Vaño. This is a disposition of
property contracted by the decedent during his lifetime. Section 8 of Rule 89 specifically governs this
sale:
SECTION 8. When court may authorize conveyance of realty which deceased contracted to
convey. Notice. Effect of deed. — Where the deceased was in his lifetime under contract,
binding in law, to deed real property, or an interest therein, the court having jurisdiction of the
estate may, on application for that purpose, authorize the executor or administrator to convey
such property according to such contract, or with such modifications as are agreed upon by the
parties and approved by the court; x x x
Thus, Frank Liu applied to the probate court for the grant of authority to the administratrix to convey the
lots in accordance with the contract made by the decedent Jose Vaño during his lifetime. The probate
court approved the application.
In Teresita Loy’s case, her seller was the Estate of Jose Vaño. Teodoro Vaño executed the contract of
sale in his capacity as administrator of the Estate of Jose Vaño, the registered owner of the lots. The
Court has held that a sale of estate property made by an administrator without court authority is void and
does not confer on the purchaser a title that is available against a succeeding administrator. 47
Manotok Realty, Inc. v. Court of Appeals48 emphasizes the need for court approval in the sale by an
administrator of estate property. The Court held in Manotok Realty:
We also find that the appellate court committed an error of law when it held that the sale of the
lot in question did not need the approval of the probate court.
Although the Rules of Court do not specifically state that the sale of an immovable property belonging
to an estate of a decedent, in a special proceeding, should be made with the approval of the court, this
authority is necessarily included in its capacity as a probate court.

An administrator under the circumstances of this case cannot enjoy blanket authority to dispose of real
estate as he pleases, especially where he ignores specific directives to execute proper documents and get
court approval for the sale’s validity.
Section 91 of Act No. 496 (Land Registration Act) specifically requires court approval for any sale of
registered land by an executor or administrator, thus:
SEC. 91. Except in case of a will devising the land to an executor to his own use or upon some
trust or giving to the executor power to sell, no sale or transfer of registered land shall be made
by an executor or by an administrator in the course of administration for the payment of debts
or for any other purpose, except in pursuance of an order of a court of competent jurisdiction
obtained as provided by law. (Emphasis supplied)
Similarly, Section 88 of Presidential Decree No. 1529 (Property Registration Decree) provides:
SEC. 88. Dealings by administrator subject to court approval. — After a memorandum of the
will, if any, and order allowing the same, and letters testamentary or letters of administration
have been entered upon the certificate of title as hereinabove provided, the executor or
administrator may alienate or encumber registered land belonging to the estate, or any interest
therein, upon approval of the court obtained as provided by the Rules of Court. (Emphasis
supplied)
Clearly, both the law and jurisprudence expressly require court approval before any sale of estate
property by an executor or administrator can take effect.
Moreover, when the Loys filed in March 1976 their ex-parte motions for approval of their contracts of
sale, there was already a prior order of the probate court dated 24 February 1976 approving the sale of
Lot Nos. 5 and 6 to Frank Liu. In fact, the administratrix had signed the deed of sale in favor of Frank
Liu on 5 March 1976 pursuant to the court approval. This deed of sale was notarized on 5 March 1976,
which transferred ownership of Lot Nos. 5 and 6 to Frank Liu on the same date.49
Thus, when the probate court approved the contracts of the Loys on 19 and 23 March 1976, the probate
court had already lost jurisdiction over Lot Nos. 5 and 6 because the lots no longer formed part of the
Estate of Jose Vaño.
In Dolar v. Sundiam,50 an heir sold parcels of land that were part of the estate of the decedent. The
probate court approved the sale. Thereafter, the probate court authorized the administrator to sell again
the same parcels of land to another person. The Court ruled that the probate court had already lost
jurisdiction to authorize the further sale of the parcels of land to another person because such property
no longer formed part of the estate of the decedent. The Court declared:
L a n d T i t l e s a n d D e e d s | 87
In our opinion, where, as in this case, a piece of property which originally is a part of the estate
of a deceased person is sold by an heir of the deceased having a valid claim thereto, and said
piece of property is, by mistake, subsequently inventoried or considered part of the deceased’s
estate subject to settlement, and, thereafter, with the authority and approval of the probate court,
it sold once more to another person, a receiver of the property so sold may, during the pendency
of a motion to set aside the second sale, be appointed by the court when in its sound judgment
the grant of such temporary relief is reasonably necessary to secure and protect the rights of its
real owner against any danger of loss or material injury to him arising from the use and
enjoyment thereof by another who manifestly cannot acquire any right of dominion thereon
because the approving surrogate court had already lost jurisdiction to authorize the further sale
of such property. (Emphasis supplied)
Similarly, in this case, the Loys cannot acquire any right of dominion over Lot Nos. 5 and 6 because the
probate court had already lost jurisdiction to authorize the second sale of the same lots. Moreover, the
probate court’s approval of the sale to the Loys was completely void due to the failure to notify the
administratrix of the motion and hearing on the sale.
Whether the Loys were in good faith when they built on the Lots.
The Civil Code describes a possessor in good faith as follows:
Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title
or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom
he received the thing was the owner thereof, and could transmit his ownership.
In Duran v. Intermediate Appellate Court,51 the Court explained possession in good faith in this manner:
Guided by previous decisions of this Court, good faith consists in the possessor’s belief that the
person from whom he received the thing was the owner of the same and could convey his title
(Arriola vs. Gomez de la Serna, 14 Phil. 627). Good faith, while it is always presumed in the
absence of proof to the contrary, requires a well-founded belief that the person from whom title
was received was himself the owner of the land, with the right to convey it (Santiago vs. Cruz,
19 Phil. 148). There is good faith where there is an honest intention to abstain from taking
unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351).

The Loys were not in good faith when they built on the lots because they knew that they bought from
someone who was not the registered owner. The registered owner on the TCTs of the lots was the "Estate
of Jose Vaño," clearly indicating that the sale required probate court approval. Teodoro Vaño did not
show any court approval to the Loys when they purchased the lots because there was none. To repeat,
any one who buys from a person who is not the registered owner is not a purchaser in good faith. 52 If the
Loys built on the lots before the court approval, then they took the risk.
Contract to sell versus contract of sale
A prior contract to sell made by the decedent prevails over the subsequent contract of sale made by the
administrator without probate court approval. The administrator cannot unilaterally cancel a contract to
sell made by the decedent in his lifetime.53 Any cancellation must observe all legal requisites, like written
notice of cancellation based on lawful cause.54
It is immaterial if the prior contract is a mere contract to sell and does not immediately convey
ownership.55 If it is valid, then it binds the estate to convey the property in accordance with Section 8 of
Rule 89 upon full payment of the consideration.
Frank Liu’s contract to sell became valid and effective upon its execution. 56 The seller, Jose Vaño, was
then alive and thus there was no need for court approval for the immediate effectivity of the contract to
sell. In contrast, the execution of the contracts of sale of the Loys took place after the death of the
registered owner of the lots. The law requires court approval for the effectivity of the Loys’ contracts of
sale against third parties. The probate court did not validly give this approval since it failed to notify all
interested parties of the Loy’s motion for court approval of the sale. Besides, the probate court had lost
jurisdiction over the lots after it approved the earlier sale to Frank Liu. Clearly, Frank Liu’s contract to
sell prevails over the Loys’ contracts of sale.
Whether petitioners are entitled to award of moral damages and attorney’s fees.
The Court upholds the ruling of the trial and appellate courts that petitioners are not entitled to moral
damages. Moral damages should not enrich a complainant at the expense of the defendant. 57
Likewise, as found by the trial court and the appellate court, there is no basis to award attorney’s fees.
The policy of the law is to put no premium on the right to litigate. 58 The court may award attorney’s fees
only in the instances mentioned in Article 2208 of the Civil Code. The award of attorney’s fees is the
exception rather than the rule.59None of the instances mentioned in Article 2208 apply to this case.
Conclusion
Since the Loys have no contract of sale validly approved by the probate court, while Frank Liu has a
contract of sale approved by the probate court in accordance with Section 8 of Rule 89, Lot Nos. 5 and
6 belong to Frank Liu. The Estate of Jose Vaño should reimburse the Loys their payments on Lot Nos.
L a n d T i t l e s a n d D e e d s | 88
5 and 6, with annual interest at 6% from 4 June 1976, the date of filing of the complaint, until finality of
this decision, and 12% thereafter until full payment.60
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and a new one is RENDERED:
1. Declaring null and void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro Vaño in
favor of Alfredo Loy, Jr. and Teresita Loy, respectively.
2.Ordering the Register of Deeds of Cebu City to cancel TCT Nos. 64522 and 64523 and to
issue a new one in the name of petitioner Frank N. Liu;
3. Ordering the Estate of Jose Vaño to reimburse to respondent Loys the amounts paid on Lot
Nos. 5 and 6, with interest at 6% per annum from 4 June 1976 until finality of this decision, and
12% per annum thereafter until full payment.
SO ORDERED.
FIRST DIVISION
[G.R. NO. 160748. July 14, 2004]
SPOUSES ANTONIO and LUCY VERA CRUZ, Petitioners, v. LUCY CALDERON, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Court of Appeals Decision1 dated August 20, 2003 in CA-G.R. CV No. 57900 which affirmed with
modifications the Decision of the Regional Trial Court of Laguna, Branch 31. Likewise,
challenged is the Resolution dated November 10, 2003 of the Court of Appeals denying
petitioners motion for reconsideration.2 cra lawred
The antecedent facts are as follows: cha nro blesvi rtua 1awlib rary
Lucy Calderon and Avelino Belisario, Jr. were married on January 31, 1967.3 On October 23,
1970,4 they bought a parcel of land with an area of 248 square meters, located on Mabini
Street, Poblacion, Bian, Laguna, from Avelinos aunt, Margarita Arguelles. Accordingly, Transfer
Certificate of Title No. 10744 was issued in the name of Avelino Belizario, Jr., married to Lucy
Calderon. The spouses separated in 1981 and Lucy resided with her children in Garcia
Subdivision, San Antonio, Bian, Laguna.

On June 3, 1986, Avelino sold the subject property to petitioner spouses Antonio and Lucy Vera
Cruz.5The Vera Cruz spouses registered the sale on July 30, 1986 and TCT No. T-143101 was
issued in their name.6 When Avelino died on November 20, 1993, his wife, respondent Lucy
Calderon, discovered that their conjugal property had been sold by her husband without her
knowledge and consent and that her signature on the Deed of Sale had been forged. Hence, she
filed a complaint against the Vera Cruz spouses for annulment of Deed of Absolute Sale and TCT
No. T-143101 with the Regional Trial Court of San Pedro, Laguna, Branch 31, which case was
docketed as Civil Case No. B-4488.
In their answer, petitioner spouses assert that they purchased the property in good faith and for
value. In 1984, Avelino offered to lease the land to Antonios brother, Joselito Vera Cruz.7 The
latter, as manager of the store and vice-president of VeraCruz, Inc., entered into a verbal lease
agreement with Avelino for a period of two (2) years.8 In May 1986, at about the time the lease
expired, Avelino and Joselito visited petitioners in Marikina. Avelino offered to sell the land to
them.9 He showed them the owners duplicate title of the property as well as the Deed of Sale
executed by Margarita Arguelles, which were both in his name. Thus, petitioners were convinced
that the lot was Avelinos exclusive property.10 This notwithstanding, they asked Avelino to bring
his wife during the execution of the deed of sale.11 cralawre d
On June 3, 1986, Joselito and petitioner spouses, along with Avelino and a woman, whom he
introduced as his wife, Lucy Calderon, met and executed the deed of sale before Notary Public
Atty. Democlito J. Angeles.12 Thereafter, petitioners filed the Deed of Sale with the Registry of
Deeds of Laguna.
After trial, the trial court rendered a Decision in favor of respondent Lucy Calderon,13 the
dispositive portion of which states:
chanrob lesvi rtua1aw lib rary
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendants:
1.declaring null and void the Deed of Absolute Sale dated June 3, 1986 (Exhibits D and 4) as
null and void (sic) insofar as the share of plaintiff on the lot in litigation is concerned;
2.ordering the Register of Deeds of Laguna, Calamba Branch to cancel TCT No. T-14101
(Exhibits B and 5) in the name of defendants Antonio Vera Cruz and Lucy Vera Cruz and issue a
new one in lieu thereof in the names of the said defendant spouses over the undivided share
and in the name of plaintiff over the other half of the subject lot; and cra lawlib rary
3.ordering the defendant spouses to pay plaintiff P20,000 for and as attorneys fees.
Costs against the defendants.
SO ORDERED.
L a n d T i t l e s a n d D e e d s | 89
In so ruling, the trial court declared that the subject parcel of land was presumed conjugal
under Article 160 of the Civil Code,14 and that petitioners were negligent in failing to inquire into
the ownership of the property purchased.
Petitioners appealed to the Court of Appeals, which affirmed the decision of the trial court with
modification, and ruled:
chan rob lesvi rtua1aw lib rary
WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED with modification.
We find the appellants purchasers in good faith and We delete the award of attorneys fees and
costs:
chanrob lesvi rtua 1awlib rary
1.Declaring null and void the Deed of Absolute Sale dated June 3, 1986 (Exhibits D and 4) as
null and void insofar as the share of plaintiff on the lot in litigation is concerned; and,
2.Ordering the Register of Deeds of Laguna, Calamba Branch to cancel TCT No. 14101 (Exhibits
B and 5) in the name of defendants Antonio Vera Cruz and Lucy Vera Cruz and issue a new one
in lieu thereof in the names of the said defendant spouses over the undivided share and in the
name of the plaintiff over the other half of the subject lot.
No costs.
SO ORDERED.
Hence this petition anchored on the sole ground that:
chanroble svirtua1awl ibra ry
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR IN EXCESS OF JURISDICTION IN HOLDING THAT ALTHOUGH PETITIONERS ARE
chanroble svirtua1awl ibra ry
BUYERS IN GOOD FAITH AND FOR VALUE OF THE LAND IN QUESTION, THEY ARE ONLY
ENTITLED TO OWN ONE HALF PORTION THEREOF AND THAT RESPONDENT LUCY CALDERON IS
chan roblesv irtuallawl ib rary
ENTITLED TO THE OTHER HALF PORTION.
As a general rule, only questions of law may be raised in a Petition for Review on Certiorari to
the Supreme Court. Although it has long been settled that findings of fact are conclusive upon
this Court, there are exceptional circumstances which would require us to review findings of fact
of the Court of Appeals,15 to wit: chan roble svirtua1awl ibra ry
It is well settled that the findings of facts of the Court of Appeals are conclusive on the parties
and on this Court, unless (1) the conclusion is a finding grounded entirely on speculation,
surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave
abuse of discretion; (4) the judgment is based on misapprehension of facts; (5) the findings of
fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings
are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the
Court of Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions
without citation of specific evidence on which they are based; (9) the facts set forth in the
decision as well as in the petitioners main and reply briefs are not disputed by the respondents;

(10) the finding of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by evidence on record. (Emphasis supplied) c ralawl ibra ry
The case at bar falls under one of the exceptions, it appearing that there was a disparity
between the findings of the trial court and those of the Court of Appeals on the issue of whether
petitioners were purchasers in good faith.
Reviewing the contradicting factual findings of the courts below, we agree with the following
findings of the Court of Appeals that petitioners are purchasers in good faith:
chanrob lesvi rtua1aw lib rary
Under the circumstances of the case, they are entitled to claim the status of innocent
purchasers for value. They exercised the necessary diligence in ascertaining the credentials of
the seller, the registered owner himself, Avelino Belisario, Jr.
We cannot charge said appellants with negligence since, at the time of the sale to them, the
land was registered in the name of the vendor and the tax declaration was also issued in the
latters name.It was also clearly indicated at the back of the transfer certificate of title that
Avelino acquired ownership over the said land by virtue of the Deed of Sale. Even appellee
confirmed that they bought the property.There is no annotation, defect or flaw in the title that
would have aroused any suspicion as to its authenticity.Such being the case, appellants had the
right to rely on what appeared on the face of the certificate of title.
Based on the records, it was the registered owner who sold the land to them. Avelino validly
possessed the title since he was the administrator thereof. Avelino presented his title as well as
the deed of sale in his favor to show how he acquired said property. It was Avelino himself who
brought and introduced another woman as Lucy Calderon. Joselito testified that Avelino and this
woman were living together as husband and wife. Even plaintiff-appellee Lucy Calderon
admitted that she knew her husband was living with another woman.16 cralawred
Indeed, petitioners were dealing with the registered owner of the property and they had no
reason to suspect that the woman whom he introduced to them as his wife, Lucy Calderon, was
an impostor.
We have long settled the rule that an innocent purchaser for value is one who buys the property
of another, without notice that some other person has a right or interest in such property and
pays the full price for the same, at the time of such purchase or before he has notice of the
claims or interest of some other person in the property.17 A person dealing with registered land
may safely rely on the correctness of the certificate of title issued therefor and the law will in no
way oblige him to go behind the certificate to determine the condition of the property.18
Anent the issue that the respondents are entitled to only one half () of the portion of the
conjugal property corresponding to the share of Avelino, the pertinent provisions involved are
Articles 165, 166 and 173 of the Civil Code, the law at the time the sale was contracted in
1986.
Art. 165. The husband is the administrator of the conjugal partnership.
L a n d T i t l e s a n d D e e d s | 90
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under
civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any
real property of the conjugal partnership without the wifes consent. If she refuses unreasonably
to give her consent, the court may compel her to grant the same. x x x.
Art. 173. The wife may, during the marriage, and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership property. Should
the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the husband.
In the recent case of Heirs of Ignacia Aguilar-Reyes v. Spouses Mijares ,19 we reiterated the rule
that the husband cannot alienate or encumber any conjugal real property without the consent,
express or implied, of the wife, otherwise, the contract is voidable. To wit:
chan roble svirtua1awl ibra ry
Indeed, in several cases the Court has ruled that such alienation or encumbrance by the
husband is void. The better view, however, is to consider the transaction as merely voidable
and not void. This is consistent with Article 173 of the Civil Code pursuant to which the wife
could, during the marriage and within 10 years from the questioned transaction, seek its
annulment.
Likewise, in the case of heirs of Christina Ayuste v. Court of Appeals,20 we declared that: chanroble svi rtua1awl ib rary
There is no ambiguity in the wording of the law. A sale of real property of the conjugal
partnership made by the husband without the consent of his wife is voidable. The action for
annulment must be brought during the marriage and within ten years from the questioned
transaction by the wife. Where the law speaks in clear and categorical language, there is no
room for interpretation there is room only for application.
In the present case, the deed of sale was executed on February 27, 1987. Rafael Ayuste died on
October 13, 1989. However, it was only on March 2, 1990 that Christina Ayuste filed her
complaint with the lower court asking for the annulment of the sale. Although the action was
filed within ten years from the questioned transaction, it was not brought during the existence
of the marriage which was dissolved upon the death of Rafael Ayuste in 1989.Clearly, the action
for annulment filed by Christina Ayuste was barred for having been filed out of time.
The fact that Christina Ayuste only learned of the sale after the death of her husband is not
cralawre d material. We affirm public respondents ruling that registration of the sale with the Register of
Deeds constitutes a notice to the whole world. Precisely, the purpose of the legislature in
providing a system of registration is to afford a means of publicity so that persons dealing with
real property may search the records and thereby acquire security against instruments the
execution of which have not been revealed to them. Since the deed of sale was registered on
March 5, 1987, Christina Ayuste is presumed to have constructive notice of the sale from such
date.
 L a n d T i t l e s a n d D e e d s | 91

This case is on all fours with the above-quoted Ayuste case.Under Article 173 of the Civil Code,
an action for the annulment of any contract entered into by the husband without the wifes
consent must be filed (1) during the marriage; and (2) within ten years from the transaction
questioned. Where any one of these two conditions is lacking, the action will be considered as
having been filed out of time. In the case at bar, while respondent filed her complaint for
annulment of the deed of sale on July 8, 1994, i.e., within the ten-year period counted from the
execution of the deed of sale of the property on June 3, 1986, the marriage between her and
Avelino had already been dissolved by the death of the latter on November 20, 1993. In other
words, her marriage to Avelino was no longer subsisting at the time she filed her complaint.
Therefore, the civil case had already been barred by prescription.

Actions prescribe by the mere lapse of time fixed by law.21 The registration of the deed of sale
executed by Avelino in favor of petitioners served as constructive notice thereof.As such,
respondent is chargeable with knowledge of the sale as to let the prescriptive period run against
her.Her complaint must, therefore, be ordered dismissed.

WHEREFORE, the instant petition is GRANTED. Civil Case No. B-4488 is ordered DISMISSED on
the ground of prescription.

No pronouncement as to costs.

SO ORDERED.