MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 1
THIRD DIVISION would not substantially change the cause of action in the complaint.
EUGENIO ENCINARES, G.R. No. 161419
Petitioner,
Present:
CARPIO
MORALES, J.,*
CHICO-
- versus - NAZARIO,**
Acting Chairperson,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
DOMINGA ACHERO, Promulgated:
Respondent.
August 25, 2009
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45
of the Rules of Civil Procedure, seeking the reversal of the Court of
Appeals (CA) Decision[2] dated April 28, 2003 which reversed and set
aside the Decision[3] dated January 20, 2000 of the Regional Trial Court
(RTC) of Sorsogon, Sorsogon, Branch 52.
The Facts
On July 13, 1989, petitioner Eugenio Encinares (petitioner) filed a
Complaint[4] for Quieting of Title and Reconveyance against respondent
Dominga Achero[5] (respondent). Petitioner alleged that he bought several
parcels of land from Roger U. Lim as evidenced by a Deed of Absolute
Sale of Real Properties[6] dated April 9, 1980. Among these was the
subject property, a parcel of land dedicated to abaca production,
containing 16,826 square meters, known as Lot No. 1623, and situated in
Sitio Maricot, Barangay Buraburan, Juban, Sorsogon (subject
property). He, however, discovered that, sometime in June 1987,
respondent was able to register the said property and cause it to be titled
under the Free Patent System.
Petitioner asseverated that he is the owner and actual possessor of the
subject property which is covered by Tax Declaration No. 07132. He
claimed that, for more than thirty (30) years, he had been in actual,
continuous, adverse, and open possession in the concept of an owner of
the subject property, tacking the possession of his predecessors-in-
interest. However, sometime in June 1987, the respondent, by means of
misrepresentation, fraud, deceit, and machination, caused one-half portion
of the subject property to be titled in her name under the Free Patent
System. Petitioner alleged that, despite the fact that respondents
application has no legal basis as she is not the owner and actual possessor
of the subject property, a free patent was issued in her favor and Original
Certificate of Title (OCT) No. P-23505, covering an area of 23,271 square
meters, was issued in her name.Thus, petitioner postulated that, with the
inclusion of one-half portion of his property, the issuance of said title casts
doubt on his ownership over the same. Moreover, petitioner demanded
that respondent execute in his favor a deed of reconveyance involving the
portion of his land, which is now covered by respondents title, but the
latter refused, compelling him to file this case. Petitioner, therefore,
prayed that he be declared the owner and actual possessor of the subject
property and that respondent be ordered to execute a deed of reconveyance
in his favor.
In her Answer[7] dated September 7, 1989, respondent denied petitioner's
material allegations and, by way of affirmative defense, averred that the
complaint constituted an indirect and collateral attack on her title, which
is not allowed, and rendered the complaint defective, thereby requiring its
dismissal. Respondent alleged that OCT No. P-23505 was issued under
her name and the property covered by the OCT is exclusively hers and
does not include petitioner's property.
Upon joint motion of the parties, the RTC issued an Order[8] dated March
9, 1990, directing a duly authorized representative/surveyor of the Bureau
of Lands to conduct a relocation survey on the two (2) parcels of land
involved in the case, namely: Lot No. 1623 and the lot covered by OCT
No. P-23505.
Subsequently, Engineer Eduardo P. Sabater submitted his Commissioners
Report[9] (Report) on August 3, 1993. The Report stated that the limits of
the common boundaries of the parties were defined by large trees and
stones marked by X. The Report also stated that the actual area as claimed
by petitioner contained 19,290 square meters, while that of respondent
contained 3,981 square meters.
On September 21, 1994, petitioner filed a Motion for Leave to Amend
Complaint,[10] alleging that there were some mistaken and inadequate
allegations in the original complaint, and that the amendments to be made
Because no objection was interposed by respondents counsel, the Motion
was granted by the RTC in an Order[11] dated October 18, 1994.
On October 20, 1994, petitioner filed the Amended
Complaint,[12] inserting the word ENTIRE in paragraph four (4) thereof.
Thus, petitioner averred that respondent, through fraud, caused
the ENTIRE area of the above-described land to be titled under the Free
Patent System. For her part, respondent manifested that she would no
longer file an answer to the Amended Complaint. Thereafter, trial on the
merits ensued. In January 1996, respondent passed away.[13] Respondent
was duly substituted by her son, Vicente Achero (Vicente).[14]
The RTC's Ruling
On January 20, 2000, the RTC rendered a Decision in favor of petitioner,
declaring him as the absolute owner of Lot 1623-B, containing an area of
19,290 square meters. The RTC declared that while Section 32 [15] of
Presidential Decree (P.D.) No. 1529 (The Property Registration Decree)
provides that a decree of registration and certificate of title become
incontrovertible after the lapse of one year, the aggrieved party whose
land has been registered through fraud in the name of another person may
file an ordinary civil action for reconveyance of his property, provided
that the same had not been transferred to innocent purchasers for value.
Thus, the RTC disposed of the case in this wise:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiff and against
the defendant, to wit:
1. Declaring plaintiff Eugenio Encinares the
absolute owner of Lot 1623-B
containing an area of 19,290 sq. m.
which is a portion included in OCT No.
P-23505 in the name of Dominga
Achero of the Registry of Deeds of
Sorsogon;
2. Declaring OCT No. P-23505 covering Lot 1623
with an area of 19,290 sq. m. in the
name of the defendant Dominga Achero
as null and void[;]
3. Ordering the defendant Dominga Achero and/or
Vicente Achero to reconvey that
portion found in the Relocation Survey
Report marked as Exh. R and
denominated as Lot 1623-B as surveyed
for Eugenio Encinares and Dominga
Achero[;]
4. Ordering the Register of Deeds of Sorsogon to
make an annotation on the Certificate of
Title No. P-23505 covering the land in
question as the same was fraudulently
procured[;]
5. Dismissing the counterclaim of the defendants[;]
[6.] Ordering the defendant to pay the costs.
SO ORDERED.[16]
Aggrieved, respondent appealed to the CA.[17]
The CA's Ruling
On April 28, 2003, the CA reversed and set aside the RTC's ruling, upheld
the validity of OCT No. P-23505, and dismissed the complaint for
quieting of title and reconveyance filed by petitioner. The CA held that
the RTC erred in declaring OCT No. P-23505 as null and void because in
an action for reconveyance, the decree of registration is respected as
incontrovertible. Moreover, the CA held that petitioner failed to prove by
clear and convincing evidence his title to the subject property and the fact
of fraud. Petitioner's evidence, consisting of tax declarations and deeds of
sale, acknowledged that the subject property had not been registered.
Likewise, the CA noted that petitioner's evidence showed that the
possession of his predecessors-in-interest started only sometime in 1951;
thus, petitioner could be presumed to have acquired a title pursuant to
Section 48(b)[18]of Commonwealth Act 141 (The Public Land Act) as
amended by P.D. No. 1073. The CA opined that it was erroneous for the
RTC to award 19,290 square meters to petitioner when the Deed of
Absolute Sale of Real Properties, from which he allegedly derived his
rights, stated that the lot sold to him consisted only of 16,826 square
meters. Lastly, the CA found no irregularity in the issuance of the Free
Patent and OCT No. P-23505.
Undaunted, petitioner filed a Motion for Reconsideration,[19] which the
CA, however, denied in its Resolution[20] dated December 19, 2003.
Hence this Petition, raising the following issues:
I.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 2
WHETHER THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN REVERSING
AND SETTING ASIDE THE DECISION OF
THE REGIONAL TRIAL COURT.
II.
WHETHER THE PETITIONER HAS THE
RIGHT TO SEEK THE RECONVEYANCE OF
THE SUBJECT LAND WHICH WAS
WRONGFULLY REGISTERED IN THE NAME
OF THE RESPONDENT.[21]
Petitioner claims that the subject property was sold by Simeon Achero
(Simeon),[22] eldest son of Eustaqio Achero[23] (Eustaqio), to Cecilia Grajo
who, in turn, sold the same to Cipriano Bardilo.[24] Subsequently, Cipriano
Bardilo sold the subject property to Pedro Guevarra,[25] who then sold the
same to Roger Lim,[26] from whom petitioner bought the subject property
in 1980. Petitioner asserts that he has been in actual, continuous, adverse,
and open possession in the concept of an owner thereof for more than
thirty (30) years when tacked with the length of possession of his
predecessors-in-interest; and that he has introduced some improvements
on the subject property and has been enjoying its produce. Petitioner
argues that contrary to the CA's findings, he was able to prove by
preponderance of evidence that he is the true and actual owner of the
subject property; that he has equitable title thereto; and that there was
fraud in the acquisition of the Free Patent. Petitioner also argues that, as
pointed out by the RTC, the tax declarations[27] of petitioner and his
predecessors-in-interest show that, in fact, petitioner, as well as his
predecessors-in-interest, has been in actual possession of the subject
property since 1951 or even prior thereto; that the factual findings of the
RTC in this case should not have been disturbed by the CA, as the former's
findings were clearly based on evidence; and that the law protects only
holders of title in good faith and does not permit its provisions to be used
as a shield for the commission of fraud or for ones enrichment at the
expense of another.[28]
On the other hand, respondent avers that the subject property had been
originally claimed, occupied and cultivated since 1928 by Eustaqio, father
of Simeon and father-in-law of respondent. Before Eustaqio died in 1942,
he gave the subject property to respondent, as evidenced by the Joint
Affidavit[29] of Dalmacio Venus and Elias Aurelio. Respondent continued
the possession, occupation and cultivation of the subject property in the
concept of an owner up to the present. On October 1, 1986, respondent
executed a Deed of Ratification and Confirmation of
Ownership.[30] Documents were submitted to the Bureau of Lands, which
conducted an ocular inspection and relocation survey and issued a Final
Investigation Report.[31] Finding respondent's application for a Free Patent
to be proper in form and substance, and in accordance with law, the same
was granted per Order: Approval of Applications and Issuance of
Patent.[32] Subsequently, OCT No. P-23505, covering the subject property
with a total area of 23,271 square meters, was issued in favor of
respondent. Respondent manifested that she was unlettered, and that her
only preoccupation was working on the land like other ordinary tillers. As
such, in the absence of evidence, petitioner could not validly claim that
respondent employed fraud in the application and issuance of a Free
Patent, in the same way that no fraud attended the issuance of OCT No.
P-23505. Respondent relied on the presumption of regularity in the
performance of official functions of the personnel of the Bureau of
Lands.[33]
Simply put, the main issue is who, between petitioner and respondent, has
a better right over the subject property.
Our Ruling
The instant Petition is bereft of merit.
While factual issues are not within the province of this Court, as it is not
a trier of facts and is not required to examine or contrast the oral and
documentary evidence de novo, this Court has the authority to review and,
in proper cases, reverse the factual findings of lower courts when the
findings of fact of the trial court are in conflict with those of the appellate
court.[34] In this light, our review of the records of this case is justified.
In essence, petitioner seeks relief before this Court, on the contention that
the registered Free Patent from which respondent derived her title had
been issued through fraud.
We reject petitioner's contention.
A Free Patent may be issued where the applicant is a natural-born citizen
of the Philippines; is not the owner of more than twelve (12) hectares of
land; has continuously occupied and cultivated, either by himself or
through his predecessors-in-interest, a tract or tracts of agricultural public
land subject to disposition, for at least 30 years prior to the effectivity of
Republic Act No. 6940; and has paid the real taxes thereon while the same
has not been occupied by any other person.[35]
Once a patent is registered and the corresponding certificate of title is
issued, the land covered thereby ceases to be part of public domain,
becomes private property, and the Torrens Title issued pursuant to the
patent becomes indefeasible upon the expiration of one year from the date
of such issuance. However, a title emanating from a free patent which was
secured through fraud does not become indefeasible, precisely because
the patent from whence the title sprung is itself void and of no effect
whatsoever.[36]
On this point, our ruling in Republic v. Guerrero,[37] is instructive:
Fraud is of two kinds: actual or
constructive. Actual or positive fraud proceeds
from an intentional deception practiced by
means of the misrepresentation or concealment
of a material fact. Constructive fraud is construed
as a fraud because of its detrimental effect upon
public interests and public or private confidence,
even though the act is not done with an actual
design to commit positive fraud or injury upon
other persons.
Fraud may also be either extrinsic or intrinsic.
Fraud is regarded as intrinsic where the fraudulent
acts pertain to an issue involved in the original
action, or where the acts constituting the fraud
were or could have been litigated therein. The
fraud is extrinsic if it is employed to deprive
parties of their day in court and thus prevent
them from asserting their right to the property
registered in the name of the applicant.
The distinctions assume significance
because only actual and extrinsic fraud had
been accepted and is contemplated by the law
as a ground to review or reopen a decree of
registration. Thus, relief is granted to a party
deprived of his interest in land where the fraud
consists in a deliberate misrepresentation that the
lots are not contested when in fact they are; or in
willfully misrepresenting that there are no other
claims; or in deliberately failing to notify the party
entitled to notice; or in inducing him not to oppose
an application; or in misrepresenting about the
identity of the lot to the true owner by the
applicant causing the former to withdraw his
application. In all these examples, the overriding
consideration is that the fraudulent scheme of the
prevailing litigant prevented a party from having
his day in court or from presenting his case. The
fraud, therefore, is one that affects and goes into
the jurisdiction of the court.
We have repeatedly held that relief on the ground
of fraud will not be granted where the alleged
fraud goes into the merits of the case, is intrinsic
and not collateral, and has been controverted and
decided. Thus, we have underscored the denial of
relief where it appears that the fraud consisted in
the presentation at the trial of a supposed forged
document, or a false and perjured testimony, or in
basing the judgment on a fraudulent compromise
agreement, or in the alleged fraudulent acts or
omissions of the counsel which prevented the
petitioner from properly presenting the case.[38]
No actual and extrinsic fraud existed in this case; at least, no convincing
proof of such fraud was adduced. Other than his bare allegations,
petitioner failed to prove that there was fraud in the application,
processing and grant of the Free Patent, as well as in the issuance of OCT
No. P-23505. Neither was it proven that respondent actually took part in
the alleged fraud. We agree with the judicious findings of the CA, to wit:
It must be mentioned though that the records of
the case do not show that there has been any
irregularity in the issuance of the Free Patent or
the OCT for that matter, as, despite the posting of
the notice of appellants application for Free
Patent, the appellee filed his opposition/protest
(Exhibit O, Record[s], p. 31) thereto only after the
same had already been issued in favor the
appellant. The fact that appellee is in possession
of several tax declarations and deeds of sale over
the property, the earliest of which was in the year
1951, does not in any way refute appellants
allegation in her application that she inherited the
property and that her predecessor-in-interest
possessed the property even before the Japanese
occupation. Moreover, the evidence also show
that the Bureau of Lands conducted an
investigation (Investigation Report, Exhibit
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 3
9, Record[s], p. 195) of the application and found
that the appellant was entitled to the parcel of land
she was applying for.[39]
Petitioner's heavy reliance on the tax declarations in his name and in the
names of his predecessors-in-interest is unavailing. We hold that while it
is true that tax declarations and tax receipts are good indicia of possession
in the concept of an owner, the same must be accompanied by possession
for a period sufficient for acquisitive prescription to set in. By themselves,
tax declarations and tax receipts do not conclusively prove ownership.[40]
It was established that respondent was clearly in possession of the subject
property.[41] Thus, notwithstanding the existence of the tax declarations
issued in favor of petitioner, it was not refuted that respondent and her
successors were and are still in actual possession and cultivation of the
subject property, and, in fact, the respondent also declared in her name the
subject property for taxation purposes. These circumstances further boost
respondent's claim that, from the start, she believed that the subject
property was exclusively hers.
We reiterate our recent ruling in Rabaja Ranch Development Corporation
v. AFP Retirement and Separation Benefits System,[42] to wit:
The Torrens system is not a mode of acquiring
titles to lands; it is merely a system of registration
of titles to lands, x x x justice and equity demand
that the titleholder should not be made to bear the
unfavorable effect of the mistake or negligence of
the State's agents, in the absence of proof of his
complicity in a fraud or of manifest damage to
third persons. The real purpose of
the Torrens system is to quiet title to land and put
a stop forever to any question as to the legality of
the title, except claims that were noted in the
certificate at the time of the registration or that
may arise subsequent thereto. Otherwise, the
integrity of the Torrens system shall forever be
sullied by the ineptitude and inefficiency of land
registration officials, who are ordinarily presumed
to have regularly performed their duties.
The general rule that the direct result of a previous
void contract cannot be valid[, is inapplicable] in
this case as it will directly contravene
the Torrens system of registration. Where
innocent third persons, relying on the correctness
of the certificate of title thus issued, acquire rights
over the property, this Court cannot disregard such
rights and order the cancellation of the certificate.
The effect of such outright cancellation will be to
impair public confidence in the certificate of title.
The sanctity of the Torrens system must be
preserved; otherwise, everyone dealing with the
property registered under the system will have to
inquire in every instance as to whether the title had
been regularly or irregularly issued, contrary to
the evident purpose of the law. Every person
dealing with the 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.
All told, we find no reversible error which will justify our having to
disturb, much less, reverse the assailed CA Decision.
WHEREFORE, the instant Petition is DENIED and the assailed Court
of Appeals Decision is AFFIRMED. Costs against petitioner.
SO ORDERED.
SECOND DIVISION
METROPOLITAN BANK AND G.R. No. 162218
TRUST COMPANY,
Petitioner,
Present:
CARPIO, J., Chairperson,
- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
EDGARDO D. VIRAY, Promulgated:
Respondent. February 25, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
--x
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review on certiorari [1] assailing the
Decision[2] dated 21 August 2003 and Resolution[3] dated 13 February
2004 of the Court of Appeals (CA) in CA-G.R. CV No. 43926, which
reversed the Decision[4] dated 21 September 2003 of the Regional Trial
Court (RTC) of Cagayan de Oro City, Misamis Oriental, Branch 23, in
Civil Case No. 91-309.
The Facts
On 7 July 1979, Rico Shipping, Inc., represented by its President, Erlinda
Viray-Jarque, together with respondent Edgardo D. Viray (Viray), in their
own personal capacity and as solidary obligors (the three parties
collectively known as the debtors), obtained two separate loans from
petitioner Metropolitan Bank and Trust Company (MBTC) in the total
amount of P250,000. The debtors executed a promissory note promising
to pay in four semi-annual installments of P62,500 starting on 23 January
1980, with 15% interest and 2% credit evaluation and supervision fee
per annum. The two loans were subsequently renewed and secured by one
promissory note. Under the note, the debtors made a total payment
of P134,054 leaving a balance of P115,946 which remained unpaid
despite demands by MBTC.
On 5 June 1981, the debtors executed another promissory note and
obtained a loan from MBTC in the amount of P50,000, payable on 2
November 1981, with 16% interest and 2% credit evaluation and
supervision fee per annum. On the due date, the debtors again failed to
pay the loan despite demands to pay by MBTC.
On 3 September 1981, the debtors obtained a third loan from MBTC in
the amount of P50,000 payable on 14 November 1981, with 16% interest
and 2% credit evaluation and supervision fee per annum. Again, the
debtors failed and refused to pay on due date.
MBTC filed a complaint for sum of money against the debtors with the
RTC of Manila, Branch 4.[5] On 28 April 1983, the RTC of Manila
rendered a judgment in favor of MBTC.[6] The dispositive portion of the
decision states:
WHEREFORE, judgment is hereby rendered
ordering defendants to pay jointly and severally
plaintiff the following:
I On the first cause of action:
(a) The sum of P50,000 with interest thereon
at the rate of 16% per annum from date
of filing of the complaint until fully
paid;
(b) The sum equivalent to 1% per month of
the principal obligation as penalty
charge, computed likewise from the
filing of the complaint;
II On the second cause of action:
(a) The sum of P50,000 with interest thereon
at the rate of 16% per annum from date
of filing of the complaint until fully
paid;
(b) The sum equivalent to 1% per month of the principal sum as penalty
charge, computed from date of filing of the complaint;
III On the third cause of action:
(a) The sum of P115,946.00 with interest
thereon at the rate of 1%
per annum from date of filing of the
complaint until fully paid;
(b) The sum equivalent to 1% per month of the sum of P115,946.00 as
penalty charge, computed from date of filing of the complaint;
IV
(1) The sum
of P15,000.00 as
attorneys fees; and
(2) To pay the costs of
suit.
SO ORDERED.
Meanwhile, on 29 December 1982, the government issued Free Patents in
favor of Viray over three parcels of land (lots) designated as (1) Lot No.
26275, Cad-237 with an area of 500 square meters; (2) Lot No. 26276,
Cad-237, with an area of 888 square meters; and (3) Lot No. 26277, Cad-
237 with an area of 886 square meters, all situated in Barangay Bulua,
Cagayan de Oro City, Misamis Oriental. Original Certificate of Title
(OCT) Nos. P-2324, P-2325 and P-2326 were issued covering Free Patent
Nos. [X-1] 10525, [X-1] 10526 and [X-1] 10527, respectively.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 4
The OCTs containing the free patents were registered with the Registry
of Deeds of Cagayan de Oro City on 18 January 1983. Written across the
face of the OCTs were the following:
x x x To have and to hold said tract of land, with the
appurtenances thereunto of right belonging unto the
said EDGARDO D. VIRAY and to his heirs and
assigns forever, subject to the provisions of
Sections 118, 119, 121 as amended by P.D. No.
763, 122 and 124 of Commonwealth Act No. 141,
as amended, which provide that except in favor of
the Government or any of its branches, units or
institutions, the land thereby acquired shall be
inalienable and shall not be subject to encumbrance
for a period of five (5) years from the date of this
patent, and shall not be liable for the satisfaction of
any debt contracted prior to the expiration of said
period x x x.[7]
On 6 March 1984, the RTC of Manila issued a writ of execution over the
lots owned by Viray. On 12 October 1984, pursuant to the writ of
execution, the City Sheriff of Cagayan de Oro sold the lots at public
auction in favor of MBTC as the winning bidder. The next day, the sheriff
issued a Certificate of Sale to MBTC.[8]
On 23 August 1990, the sheriff executed a Deed of Final Conveyance to
MBTC. The Register of Deeds of Cagayan de Oro City cancelled OCT
Nos. P-2324, P-2325 and P-2326 and issued in MBTCs name
Transfer Certificate of Title (TCT) Nos. T-59171, T-59172 and T-
59173,[9] respectively.
On 30 July 1991, Viray filed an action for annulment of sale against the
sheriff and MBTC with the RTC of Cagayan de Oro City, Misamis
Oriental, Branch 23.[10] Viray sought the declaration of nullity of the
execution sale, the sheriffs certificate of sale, the sheriffs deed of final
conveyance and the TCT's issued by the Register of Deeds.
On 21 September 1993, the RTC of Cagayan de Oro City rendered its
decision in favor of MBTC.[11] The dispositive portion states:
Wherefore, based on facts and jurisprudence, the
Auction Sale by the Sheriff of the then lots of
plaintiff covered by [free] patents to satisfy the
judgment in favor of Defendant Bank is considered
valid. While plaintiff had until April 2, 1991 to
redeem the property, the former never attempted to
show interest in redeeming the properties, and
therefore such right has prescribed.Defendant Bank
therefore is declared as the lawful transferee of the
three (3) lots now covered by Titles in the name of
Defendant Bank.
SO ORDERED.[12]
Viray filed an appeal with the CA alleging that the RTC of Cagayan de
Oro City committed reversible error in ruling solely on the issue of
redemption instead of the issue of validity of the auction sale, being the lis
mota[13] of the action.
The Ruling of the Court of Appeals
On 21 August 2003, the appellate court reversed the decision of the
RTC of Cagayan de Oro City. The CA ruled that the auction sale
conducted by the sheriff was null and void ab initio since the sale was
made during the five-year prohibition period in violation of Section
118 of Commonwealth Act No. 141 (CA 141) or the Public Land
Act. The dispositive portion states:
WHEREFORE, in view of the foregoing
considerations, the decision appealed from is
hereby REVERSED, and plaintiff-appellant
Edgardo Viray is declared entitled to the return and
possession of the three (3) parcels of land covered
by O.C.T. Nos. P-2324, P-2325 and P-2326,
without prejudice to his continuing obligation to
pay the judgment debt, and expenses connected
therewith.
Accordingly, the Register of Deeds of Cagayan de Oro City is ordered to
cancel TCT Nos. T-59171, T-59172 and T-59173 in the name of
defendant-appellee Metrobank, and to restore O.C.T. Nos. P-2324, P-
2325 and P-2326 in the name of plaintiff-appellant Edgardo Viray.
No pronouncement as to costs.
SO ORDERED.[14]
MBTC filed a Motion for Reconsideration which was denied in a
Resolution dated 13 February 2004.
Hence, the instant petition.
The Issue
The main issue is whether the auction sale falls within the five-year
prohibition period laid down in Section 118 of CA 141.
The Courts Ruling
The petition lacks merit.
Petitioner MBTC insists that the five-year prohibition period against the
alienation or sale of the property provided in Section 118 of CA 141 does
not apply to an obligation contracted before the grant or issuance of the
free patent or homestead. The alienation or sale stated in the law pertains
to voluntary sales and not to forced or execution sales.
Respondent Viray, on the other hand, maintains that the express
prohibition in Section 118 of CA 141 does not qualify or distinguish
whether the debt was contracted prior to the date of the issuance of the
free patent or within five years following the date of such
issuance. Further, respondent asserts that Section 118 of CA 141
absolutely prohibits any and all sales, whether voluntary or not, of lands
acquired under free patent or homestead, made within the five-year
prohibition period.
Section 118 of CA 141 states:
SECTION 118. Except in favor of the Government
or any of its branches, units, or instruction, lands
acquired under free patent or homestead provisions
shall not be subject to encumbrance or alienation
from the date of the approval of the application and
for a term of five years from and after the date of
issuance of the patent and grant, nor shall they
become liable to the satisfaction of any debt
contracted prior to the expiration of said period, but
the improvements or crops on the land may be
mortgaged or pledged to qualified persons,
associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years
and before twenty-five years after issuance of title shall be valid without
the approval of the Secretary of Agriculture and Natural Resources,
which approval shall not be denied except on constitutional and legal
grounds.
The law clearly provides that lands which have been acquired under free
patent or homestead shall not be encumbered or alienated within five years
from the date of issuance of the patent or be liable for the satisfaction of
any debt contracted prior to the expiration of the period.
In the present case, the three loans were obtained on separate dates 7
July 1979, 5 June 1981 and 3 September 1981, or several years before
the free patents on the lots were issued by the government to respondent
on 29 December 1982. The RTC of Manila, in a Decision dated 28 April
1983, ruled in favor of petitioner ordering the debtors, including
respondent, to pay jointly and severally certain amounts of money. The
public auction conducted by the sheriff on the lots owned by respondent
occurred on 12 October 1984.
For a period of five years or from 29 December 1982 up to 28 December
1987, Section 118 of CA 141 provides that the lots comprising the free
patents shall not be made liable for the payment of any debt until the
period of five years expires. In this case, the execution sale of the lots
occurred less than two years after the date of the issuance of the
patents. This clearly falls within the five-year prohibition period
provided in the law, regardless of the dates when the loans were
incurred.
In Artates v. Urbi,[15] we held that a civil obligation cannot be enforced
against, or satisfied out of, the sale of the homestead lot acquired by the
patentee less than five years before the obligation accrued even if the sale
is involuntary. For purposes of complying with the law, it is immaterial
that the satisfaction of the debt by the encumbrance or alienation of the
land grant was made voluntarily, as in the case of an ordinary sale, or
involuntarily, such as that effected through levy on the property and
consequent sale at public auction. In both instances, the law would have
been violated.
Likewise, in Beach v. Pacific Commercial Company and Sheriff of Nueva
Ecija,[16] we held that to subject the land to the satisfaction of debts would
violate Section 116 of Act No. 2874 (now Section 118 of CA 141).
As correctly observed by the CA in the present case:
It is argued by defendant-appellee, however, that the debt
referred to in the law must have been contracted
within the five-year prohibitory period; any debt
contracted before or after the five-year prohibitory
period is definitely not covered by the law. This
argument is weakest on two points. Firstly,
because the provision of law does not say that the
debt referred to therein should be contracted before
the five-year prohibitory period but before the
expiration of the five-year prohibitory
period.(Defendant-appellee deliberately omitted
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 5
the word expiration to suit its defense.) This simply
means that it is not material whether the debt is
contracted before the five-year prohibitory period;
what is material is that the debt must be contracted
before or prior to the expiration of the five-year
prohibitory period from the date of the issuance
and approval of the patent or grant. x x x
And secondly, while it is true that the debt in this case was
contracted prior to the five-year prohibitory period,
the same is of no consequence, for as held
in Artates vs. Urbi, supra, such indebtedness has
to be reckoned from the date said obligation was
adjudicated and decreed by the court. x x x[17]
It must be emphasized that the main purpose in the grant of a free patent
or homestead is to preserve and keep in the family of the homesteader that
portion of public land which the State has given to him so he may have a
place to live with his family and become a happy citizen and a useful
member of the society.[18] In Jocson v. Soriano,[19] we held that the
conservation of a family home is the purpose of homestead laws. The
policy of the state is to foster families as the foundation of society, and
thus promote general welfare.The sentiment of patriotism and
independence, the spirit of free citizenship, the feeling of interest in public
affairs, are cultivated and fostered more readily when the citizen lives
permanently in his own home, with a sense of its protection and durability.
Section 118 of CA 141, therefore, is predicated on public policy. Its
violation gives rise to the cancellation of the grant and the reversion of the
land and its improvements to the government at the instance of the
latter.[20] The provision that nor shall they become liable to the satisfaction
of any debt contracted prior to the expiration of the five-year period is
mandatory[21] and any sale made in violation of such provision is
void[22] and produces no effect whatsoever, just like what transpired in this
case. Clearly, it is not within the competence of any citizen to barter away
what public policy by law seeks to preserve.[23]
WHEREFORE, we DENY the petition. We AFFIRM the Decision
dated 21 August 2003 and Resolution dated 13 February 2004 of the Court
of Appeals in CA-G.R. CV No. 43926.
SO ORDERED.
Republic of the Philippines
Supreme Court
Baguio City
SECOND DIVISION
JOSE ABELGAS, JR. and LETECIA JUSAYAN DE ABELGAS,
Petitioners,
- versus -
SERVILLANO COMIA, RURAL BANK OF SOCORRO INC. And
RURAL BANK OF PINAMALAYAN, INC.
Respondents.
x--------------------------------------------------------------------------------------
---x
DECISION
SERENO, J.:
Before this Court is a Petition for Review on Certiorari under
Rule 45 of the Revised Rules of Court, seeking to review the Court of
Appeals (CA) 20 March 2003 Decision and 31 March 2004 Resolution in
CA-G.R. CV No. 46241. The assailed Decision nullified the Deed of
Relinquishment, Renunciation of Rights and Quitclaim executed by
respondent Servillano Comia in favor of petitioner spouses Jose Abelgas,
Jr. and Letecia Jusayan de Abelgas, as well as the encumbrances executed
by the spouses in favor of respondent banks.
The pertinent facts are as follows:
On 4 April 1971, Comia obtained a free patent over Lot No.
919-B situated in Pinamalayan, Oriental Mindoro with an area of 6,790
square meters.[1] Pursuant to this free patent, Lot No. 919-B was originally
registered on 26 April 1976 as Original Certificate of Title (OCT) No. P-
8553.
Subsequently, on 1 May 1971, by virtue of a notarized Deed
of Relinquishment, Renunciation of Rights and Quitclaim, Comia
voluntarily conveyed a 3,000-square-meter (3,000-sqm) portion of Lot
No. 919-B to the spouses Abelgas. It was stated in the said Deed that the
subject portion was the sole property of the spouses; and that it had only
been included in the title of Comia for it adjoined his land. Indeed, based
on the Subdivision Survey, the 3,000-sqm portion of Lot No. 919-B
bordered Lot No. 919-E owned by Jose Abelgas, Jr.[2]
By virtue of this subsequent voluntary dealing over the
property, the Register of Deeds cancelled OCT No. P-8553 in the name of
Comia and Transfer Certificate of Title (TCT) No. T-46030[3] was issued
on 3 May 1971 in the names of CO-OWNERS, (1) SERVILLANO
COMIA, married to Estelita Amaria, and (2) SPS. JOSE ABELGAS, JR.
AND LETECIA JUSAYAN DE ABELGAS[4] as co-owners of Lot No.
919-B. There is no explanation in the records on how TCT No. T-46030
came about to be recorded in the names of these people when the subject
portion should have been, as a consequence of the 1971 Deed of
Relinquishment, Renunciation of Rights and Quitclaim, in the name of the
spouses Abelgas only.
Thereafter, the spouses subdivided their 3,000-sqm portion
into twelve (12) lots as evidenced by TCT Nos. T-46374 to
46375.[5] Using their TCTs, they used the lots to secure their loan
obligations with Rural Bank of Pinamalayan, Inc. (RBPI), Rural Bank of
Socorro, Inc. (RBSI), and the Philippine National Bank (PNB).
Specifically, on 6 July 1971, the spouses Abelgas constituted
a mortgage on TCT No. 46366 to secure a loan for ₱1,000. Then, to secure
another loan for ₱600, the spouses mortgaged on 23 August 1971 the lot
covered by TCT No. T-46367. Petitioners defaulted on their obligations
and hence, the lots were sold at a public auction, wherein RBPI prevailed
as the winning bidder.[6] After the lapse of the redemption period, TCT
Nos. T-17448 and T-17445 were issued in the name of RBPI.[7]
As for the remaining lots, the spouses mortgaged most[8] of
these to RBSI in 1971 to 1972 as security for the spouses various loans.
Petitioners defaulted on their obligations, and, thus, the mortgagee bank
foreclosed the securities wherein it emerged as the winning bidder.
Thus:[9]
G.R. No. 163125
Loan
Present:
TCT Nos. Security Date Auction Date (₱)
04 September 19 December
CARPIO,
46364 J., Chairperson, 1971 1974 800
BRION,
46365
PEREZ, 15 June 1971 26 January 1976 1,000
SERENO,
46369 &and 13 November 21 December
REYES,
46370JJ. 1971 1973 1,000
46372 & 21 December
46373 19 April 1972 1973 2,000
Promulgated:Of these properties, lots covered by TCT Nos. 46369 and
46370 had certificates that were cancelled and a new one, TCT No.
April 18,[10]2012
71198, was issued in RBSIs name.
Comia contested the issuance of these titles. He claimed that
he was the sole owner of Lot No. 919-B; and that the Deed of
Relinquishment, Renunciation of Rights and Quitclaim, which resulted in
the issuance of TCT Nos. T-46030, and T-4634 to 46375, is fictitious and
nonexisting.[11] Thus, Comia demanded the recovery of Lot No. 919-B
under OCT No. P-8553 and the cancellation of the subsequent titles.[12]
He pursued his action before the Regional Trial Court (RTC)
by filing a Complaint for cancellation and recovery of, and/or quieting of
title to real property and damages against the Abelgas spouses, RBPI,
RBSI, and PNB.[13] For their answer, the spouses asserted that they had
been in possession of the 3,000-sqm portion of Lot No. 919-B.[14]During
trial, Jose Abelgas Jr. testified that before 1971, he had already purchased
the said portion from respondent.[15]
In turn, the mortgagee banks, RBPI and RBSI, filed cross-
claims against the spouses for them to pay their obligations in the event
that the TCTs offered as security for their loans would be declared as null
and void. Respondent assailed the encumbrances in favor of the
mortgagee banks as void ab initio and obtained in bad faith as these were
executed within the period of prohibition to dispose lands subject of a free
patent under Section 118 of the Public Land Act (CA 141). Claiming lack
of notice of any defect in the certificates, both banks denied Comias
allegations.
Section 118 of CA 141[16] prohibits the alienation of lands
subject to a free patent within five years from the issuance of the grant.
Additionally, any disposition made after the prohibited period must be
with the consent of the Secretary of Environment and Natural Resources.
Evidently, the Deed and the mortgages were executed within the
prohibited period and without the Secretarys consent.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 6
The RTC dismissed the Complaint of Comia.[17] It found that
the Deed as signed by him voluntarily relinquished the subject parcel of
land in favor of its rightful owner and possessors the spouses
Abelgas.[18] The trial court also upheld the validity of the mortgages, since
encumbrances made in favor of banks are exempted according to the
amendatory laws of the Public Land Act. [19] Moreover, based
on Decolongon v. CA,[20] the approval of the Secretary of Environment
and Natural Resources is only directory.
Accordingly, the dispositive portion reads:[21]
WHEREFORE, premises considered, judgment is
hereby rendered in favor of defendants spouses
JOSE ABELGAS, Jr. and LETECIA JUSAYAN
DE ABELGAS; RURAL BANKS OF SOCORRO,
INC. and RURAL BANK OF PINAMALAYAN,
INC., against plaintiff SERVILLANO COMIA, as
follows:
1. Dismissing plaintiffs Amended
Complaint;
2. Declaring Transfer Certificate of
Title No. T-46030, and Transfer
Certificates of Title Nos. T-46364
to T-46375 and subsequent
certificates of title thereto in the
name of defendants Rural Bank of
Socorro, Inc. or defendant Rural
Bank of Pinamalayan, Inc. as
valid and existing;
3. Ordering the plaintiff to pay the
following:
(a) Defendants spouse (sic) Jose
Abelgas, Jr. and Letecia
Jusayan de Abelgas the sum
of ₱5,000.00 as attorneys
fees;
(b) Defendant Rural Bank of
Socorro, Inc., the sum of
₱50,000.00 as damages for
besmirched reputation being
a bank institution with good
standing; ₱2,000.00 as
attorneys fee, and ₱1,000.00
as litigation expenses;
(c) Defendant Rural Bank of
Pinamalayan, Inc., the sum
of ₱50,000.00 as damages
for besmirched reputation
being a bank institution with
good standing; ₱2,000.00 as
attorneys fee, and ₱1,000.00
as litigation expenses; and
4. The costs.
SO ORDERED.
Comia appealed to the CA, which modified the RTCs
Decision. While the appellate court sustained the due execution of the
Deed of Relinquishment, Renunciation of Rights and Quitclaim, it
construed the document as an alienation prohibited by CA 141. The CA
pronounced that in an attempt to circumvent the law, it was made to
appear that the 3,000 square meters adjoining the land of Comia was
owned by the spouses. However, based on testimonial evidence, Abelgas
purchased the said portion contrary to law.[22]
Likewise, the CA nullified the mortgages, as the exemption of
the banks had been removed by Commonwealth Act 456[23] amending
Section 118 of Commonwealth Act 141, which took effect on 8 June
1939.[24] Nevertheless, the banks may recover the value of the loans with
interest.[25]
In view of the Deeds nullity, and in the absence of escheat
proceedings, the CA restored to Comia Lot No. 919-B. The appellate court
ruled thus:[26]
WHEREFORE, the Decision appealed
from is REVERSED and SET ASIDE, and
another one entered as follows:
1. Declaring the deed of
relinquishment and renunciation
of rights and quitclaim as null and
void;
2. Declaring the deeds of real estate
mortgage executed by
defendants-appellees Jose
Abelgas, Jr. and Letecia Jusayan
de Abelgas in favor of Rural Bank
Pinamalayan, Inc. and Rural Bank
of Socorro, Inc., as well as the
foreclosure proceedings and
certificates of sale, null and void;
3. Ordering the Register of Deeds of
the Province of Oriental Mindoro
to cancel TCT nos. T-46030,
465364 to 465375, 46821, 71171
and 71198 and to reinstate OCT
No. P-8553 in the name of
plaintiff-appellant Servillano
Comia;
4. Ordering defendants-appellees
Jose Abelgas, Jr. and Letecia
Jusayan de Abelgas to pay Rural
Bank of Pinamalayan, Inc., their
indebtedness in the total amount
of ₱1,600.00 plus interest thereon
at the legal rate from the date of
maturity of promissory notes,
attached as Annexes 1-A, and 2-
A to its cross-claim, and the
amount of ₱3,000.00 as attorneys
fees.
5. Ordering defendants-appellees
Jose Abelgas, Jr. and Letecia
Jusayan de Abelgas to pay Rural
Bank of Socorro, Inc. their
indebtedness in the total amount
of ₱5,600.00, plus interest thereon
at the legal rate from the date of
maturity of the promissory notes,
attached as Annexes 1, 2, 3 and 4
to its cross-claim, and the amount
of ₱3,000.00 as attorneys fees.
SO ORDERED.
Hence, the central issue in this Petition filed by the aggrieved
spouses is whether the CA gravely erred in declaring the Deed of
Relinquishment, Renunciation of Rights and Quitclaim and the mortgages
in favor of mortgagee banks, as null and void for being contrary to the
provisions of CA 141 and its amendatory laws.
Section 118 of CA 141[27] requires that before the five year
prohibition applies, there should be an alienation or encumbrance of
the land acquired under free patent or homestead.
Section 118. Except in favor of the
Government or any of its branches, units, or
institutions, lands acquired under free patent or
homestead provisions shall not be subject to
encumbrance or alienation from the date of the
approval of the application and for a term of five
years from and after the date of issuance of the patent
or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the
expiration of said period, but the improvements or
crops on the land may be mortgaged or pledged to
qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of
any homestead after five years and before twenty-
five years after issuance of title shall be valid without
the approval of the Secretary of Agriculture and
Commerce, which approval shall not be denied
except on constitutional and legal grounds.
Thus, to ascertain the correctness of the CAs Decision, there is
a need to verify whether in executing the Deed of Relinquishment,
Renunciation of Rights and Quitclaim, Comia alienated the 3,000-
sqm portion after the grant of the free patent. Although this is a finding
of fact generally beyond this Courts jurisdiction,[28] this Court will
consider the issue, considering the conflicting factual and legal
conclusions of the lower courts.
In real property law, alienation is defined as the transfer of the
property and possession of lands, tenements, or other things from one
person to another. It is the act by which the title to real estate is voluntarily
resigned by one person to another and accepted by the latter, in the forms
prescribed by law.[29] In this case, Comia did not transfer, convey or cede
the property; but rather, he relinquished, renounced and quitclaimed the
property considering that the property already belonged to the spouses.
The voluntary renunciation by Comia of that portion was not an act of
alienation, but an act of correcting the inclusion of the property in his
free patent.
The evidence on record reveals that prior the grant of the free
patent, the spouses already owned the property. This fact can be inferred
from the following testimony of Jose Abelgas, Jr.:[30]
A: It was in 1971 when he (Servillano Comia)
went to our house bringing with him an
Original Certificate of Title issued to
him by the Bureau of Lands.
Q: What was his purpose of bringing to you
Original Certificate of Title (sic) issued
by the Bureau of Lands?
A: He wants to segregate the 3,000 square meters
out of 6,790 square meters from the
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 7
Original Certificate of Title which I
bought from him, sir. (Emphasis
supplied.)
This testimony was not contested or objected to by Comia.
Neither did he put in evidence that he sold the property during the period
of the prohibition as he would have been deemed to be in violation of the
law. Rather, his argument has always been the non-existence of the said
Deed which both lower courts have already concluded otherwise. [31]
More important, Comia failed to dispute by clear and
convincing evidence[32] the presumption that the spouses owned the
property prior to the grant of his free patent. This presumption is present
in this case since the Deed of Relinquishment and Renunciation of Right
was annotated in a public document, specifically, the original certificate
of title. Documents consisting of entries in public records made in the
performance of a duty by a public officer are prima facie evidence of the
facts therein stated. [33] Entry No. 81908 annotating OCT No. P-8553 reads
as:[34]
MEMORANDUM OF
INCUMBRANCES (sic)
Entry No. 81908; Doc. No. xxx [not
legible] RENUNCIATION OF RIGHTS AND
QUITCLAIMS In favor of the espouses (sic): JOSE
ABELGAS JR. AND LETECIA JUSAYAN DE
ABELGAS, of legal age, filipinos, (sic) and residing
at Poblacion, Gloria, Oriental Mindoro, Philippines,
- covering this Original Certificate of Title No. P-
8553, in conformity with the conditions stipulated in
the Deed of Renunciation of Rights and Quitclaim
executed by SERVILLANO COMIA married to
ESTELITA AIMARIA, of legal age, filipino, (sic)
and residing at Socorro, Oriental Mindoro,
Philippines, on file in this registry.
Date of Instrument -------------------------
May 1, 1971
Date of Inscription -------------------------
May 3, 1971 at 8:10 a.m.
(Sgd.)
REYNALDO M. MAMBIL
REGISTER OF DEEDS
The Deed of Relinquishment, Renunciation of Rights and
Quitclaim, as referred in the title, recognizes the ownership of the spouses.
Comia explicitly declared in the said Deed that the subject portion
belonging to the spouses Abelgas had been included in his title for it
adjoins his land. The Deed reads thus: [35]
That I hereby relinquish, renounce, and
quitclaim, and by these presents have
RELINQUISHED, RENOUNCED, and
QUITCLAIMED, all my rights, interests,
possession, occupation, and participation of a
portion of THREE THOUSAND (3,000) SQUARE
METERS, of the parcel of land described above, free
from all liens and encumbrances, together with all its
existing improvements that may be found there unto
the ESPOUSES (sic) JOSE A. ABELGAS Jr. and
LETECIA JUSAYAN DE ABELGAS, likewise of
legal ages, filipinos (sic) and a resident of Poblacion,
Gloria, Province of Oriental Mindoro, Philippines,
their heirs, executors, administrators, and assigns,
and agreeing further to warrant and forever defend
the title and peaceful possession of the herein
espouses (sic): JOSE A. ABELGAS JR. and
LETECIA JUSAYAN DE ABELGAS, their heirs,
executors, administrators, and assigns against the
just and lawful claims of any or all persons
whomsoever.
That the above described property, with
an area of THREE THOUSAND (3000) SQ.
METERS, is the sole property of the above
described espouses (sic) and it had only been
included in my title for it adjoins my land situated in
the barrio of Quinabigan, Pinamalayan Oriental
Mindoro and it was not my fault therefore so it being
not mine (sic). I have voluntarily renounced the area
of three thousand (3000) square meters, in favor of
the said JOSE ABELGAS JR. and LETECIA
JUSAYAN DE ABELGAS. (Emphasis and
underscoring in the original).
In support of the fact that the alienation transpired prior to the
grant of a free patent, it is remarkable that Comia never contested that the
spouses had been in actual possession of the subject portion even before
his patent application. The private ownership of land as when there is
a prima facie proof of ownership like a duly registered possessory
information or a clear showing of open, continuous, exclusive, and
notorious possession is not affected by the issuance of a free patent over
the same land.[36]
A prima facie proof of ownership is not necessarily defeated
by a free patent, especially if the title covers a portion not belonging to the
grantee. Where an applicant has illegally included portions of an adjoining
land that does not form part of the applicants homestead, the title issued
by virtue thereof should be cancelled.[37] In Angeles v. Samia[38], this Court
explained that:
The Land Registration Act as well as the
Cadastral Act protects only the holders of a title in
good faith and does not permit its provisions to be
used as a shield for the commission of fraud, or that
one should enrich himself at the expense of another
(Gustilo vs. Maravilla, 48 Phil., 442; Angelo vs.
Director of Lands, 49 Phil., 838). The above-stated
Acts do not give anybody, who resorts to the
provisions thereof, a better title than he really and
lawfully has. If he happened to obtain it by
mistake or to secure, to the prejudice of his
neighbor, more land than he really owns, with or
without bad faith on his part, the certificate of
title, which may have been issued to him under
the circumstances, may and should be cancelled
or corrected(Legarda and Prieto vs. Saleeby, 31
Phil., 590). (Emphasis supplied.)
Seeing that there is no alienation to begin with, this Court finds
that the prohibition is not applicable. Thus, the Deed of Relinquishment,
Renunciation of Rights and Quitclaim is not null and void for being
contrary to the Public Land Act.
In a similar case, in Heirs of Manlapat v. Court of
Appeals, this Court held that where the alienation or transfer took place
before the filing of a free patent application, the prohibition should not be
applied. In that situation, neither the prohibition nor the rationale therefor
which is to keep in the family of the patentee that portion of the public
land which the government has gratuitously given him, by shielding him
from the temptation to dispose of his landholding, could be relevant.[39]
Consequently, this Court rules against the cancellation of TCT
Nos. T-46030, and T-46364 to 46375. Indeed, these subsequent
certificates were issued based on a duly executed instrument sanctioned
by law.
As for the encumbrances, Comia also unsuccessfully assailed
the mortgages by virtue of an alleged violation of the Public Land Act.
For the prohibition in Section 118 of CA 141 to apply, the
subject property must be acquired by virtue of either a free patent or a
homestead patent. In this case, the 3,000-sqm portion subdivided into
twelve (12) lots as evidenced by TCT Nos. T-4634 to 46375 has not been
shown to be under a free patent. As it appears, what was submitted to the
mortgagee banks were TCTs not derived from a free patent.
Thus, the encumbrances thereon are not null and void, as these
do not fall within the ambit of the prohibition. This being the case, it
cannot be said that the banks were in bad faith for accepting the
encumbered properties that did not originate from a free patent. In any
event, at the time of the mortgage, the Rural Banks Act (Republic Act No.
720), as amended by Republic Act No. 5939, [40] already allows banks to
accept free patents as security for loan obligations.[41]
Absent any finding of nullity, we sustain the RTCs ruling that
the alienation and encumbrances are valid. Consequently, there is no
cause to cancel the subsequent TCTs and the resulting mortgages thereon.
IN VIEW THEREOF, the Petition is GRANTED and the assailed 20
March 2003 Decision and 31 March 2004 Resolution of the Court of
Appeals are REVERSED and SET ASIDE.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4641 March 13, 1911
THE SEMINARY OF SAN CARLOS, by Pedro Julia, Rector of
the Seminary of San Carlos of Cebu, petitioner-appellee,
vs.
THE MUNICIPALITY OF CEBU, opponent-appellant.
Rafael Del-Pan and Celestino Rodriguez, for appellant.
J.H. Junquera, for appellee.
MORELAND, J.:
The petition in this case, made by the Seminary of San Carlos,
asks for the registration of two pieces of land, included in one
plan, petitioner's Exhibit J, located in the city of Cebu, alleging as
its source of little a royal cession from the King of Spain.
The opponent of the registration, the city of Cebu, denies the title
of the petitioner and alleges in itself ownership of the land in
question, stating that its title is based upon possession thereof of
the kind and for the period required by law to effect a little by
prescription.
The petitioner succeeded in the court below and a judgment was
entered declaring it the owner of said land and ordering the same
registered in its name. The opponent made a motion for a new
trial upon the ground that the decision was clearly against the
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 8
evidence and was contrary to law. This motion was denied and
the opponent duly excepted and perfected its appeal to this court.
The land in controversy is situated in the city of Cebu. It is
claimed by the seminary that it includes a portion of one of the
public squares of that city. Aside from that of the ownership of the
land, there are two questions raised on the trial and presented for
review on this appeal. The first one relates to the quantity of the
land claimed by the seminary, and the second to its
precise location. The claim of the city is that, even admitting
petitioner's ownership of the land described in its muniments of
title, still the city must have a judgment in its favor for the reason
that, from the description presented in said muniments, it appears
clearly that the land in question does not extend into or include
any portion of the plaza occupied by the city. The city asserts that
there is, and for many years has been, a well-defined boundary,
formerly a wall, latterly an iron fence (enverjada), separating from
the public square the land upon which stands the church
belonging to the seminary, and that the lands mentioned and
described in the documents of title presented by the seminary lie
between the church and the iron fence and do not, therefore,
extend into the plaza.
The land in dispute in this case admittedly lies to the south of the
church belonging to the seminary. This church, according to the
plans and the evidence, is located upon a plot of ground adjoining
the public square on its north side. So that the land in question, if
it does not extend into the plaza, necessarily lies between it and
the church. This clearly appears from the plan, Exhibit J,
presented by the petitioner and is a fact undisputed in the record.
The first question to be determined, then, is whether the land in
question lies within the inclosure, the southern boundary of which
is formed by the iron fence, or whether it or any portion of it lies
beyond said fence, thereby including a portion of the land used as
a public square. The problem as to the quantity of the land will
resolve itself at the same time with the determination of the
present question.
The petitioner has introduced in evidence in this case certified
copies of two documents, the one, Exhibit E, bearing date the
12th day of November, 1783, and the other, Exhibit F, of the date
the 4th day of May, 1784. These documents contain the acts and
manifestations of the Audencia de Manila performed and made
for the purpose of formally delivering the property which, by royal
decree previously published, had been transferred from the
ownership of the expatriated Jesuits to that of the Seminary of
San Carlos, or its antecessor. These actuacionespresent
inventories of all the property thus transferred to the seminary,
among such property being the lands in question. Each one
contains a description of such lands. The description contained in
Exhibit E is:
Siguese una huerta grande que esta al lado de la
Iglesia hacia el sur, tiene de largo cuarenta y nueve
brazas castellanas y de ancho treinta y ocho brazas.
The description contained in Exhibit F of that which was intended
to be the same property is:
Ciudad. Primerante. Dos solares vacios por no vivir en
ellos persona alguna lindan por la parte del norte con la
Iglesia que era dichos regulares la que al presente
sirve de Catedral contiguos a dicha Iglesia; por la del
sur con la Plaza de la Real Fuerza del San Pedro y
casa Real; por la del este con la Marino inmediatos a
ellos; y por la del oeste calle en medio para dicha casa
Real con dos solares, que asimismo pertenecian a
dichos regulares y en uno de dichos dos solares, se
halla plantada la casa de mi dicho castellano Don
Manuel Ignacio del Corro. El motivo por que dichos dos
solares se hallan vacios, es por que los habian
ocupado los anunciados regulares con una huerta que
tenian la que en el dia ya no existe.
Exhibit E gives the following as indicating the size of said lots:
Diez y nueve solares y medio de a veinticinco brazas
en cuadro cada solar entero que se hallan los quince y
medio en la plaza de esta referida cuidad, y las cuatro
restantes en la Isla de Tinago.
In dealing with the question whether or not the above description
include a portion of the public square or plaza, we must not lose
sight of the fact, already noted, that the city of Cebu asserts that
the lands described by these exhibits lie between the church
building and the iron fence to the south of the church, which iron
fence marks, as the city alleges, the termination of petitioner's
land and the beginning of the opponent's. Looking at the plan of
the lands in question, Exhibit J, we observe that the church
building is somewhat close to the iron fence (line A B), being in
one place less than 4 meters distant, in another less than 16
meters, and in another less than 21 meters. Now, if the limits of
the lands lying in front of the church and between it and the iron
fence should be continued so that they would extend as far east
and west as does the line A B, and then lines should be drawn to
inclose the land thus comprehended between the church and the
line A B, there would be within that inclosure all of the land which
the city claims is described by the petitioners muniments of title.
Simple arithmetic will determine whether the city's contention in
this regard is correct or not. The line A B, which is the southern
boundary of the land thus inclosed, is 87.40 meters long. The
north boundary line of said land is, under the city's contention, the
line of the walls of the church building. From the plan it will be
readily seen that said line is very broken, following, as the city
claims it does, the walls of the church. The strip of land inclosed
as above set forth, therefore, varies in width, growing narrower as
the walls of the church approach the iron fence and wider as they
recede from it. At its widest place it can not exceed, as we have
before seen, 21 meters. In some places it is less than 4 meters
wide, and still others less than 16. This being so, it will be more
than fair to the contention of the city to assume, for the purposes
of a mathematical demonstration, that the strip of land
comprehended between the church and the iron fence (line A B)
is 87.40 meters long and 21 meters wide. The area of the strip is,
therefore, 1,835.4 square meters. This is in reality a larger area
than any piece of land lying between the church and the iron
fence could possibly have, and, therefore, as we have before
said, our assumption is more than fair to the city's contention.
Now, if we take the description of land as found in one of the
petitioner's exhibits wherein it speaks of it being 49 Spanish
brazas long and 38 Spanish brazas wide, we have a parcel of
land containing more than 4,000 square meters, or more than
twice the size of the largest parcel that could possibly be
contained between the church and the iron fence. If, on the other
hand, we take the description as it is found in the other exhibit of
the petitioner, wherein the land is described as two parcels of
land, each 25 brazas square, we readily see that such a parcel of
land could not possibly be contained between the church and the
iron fence, as its area would be more than 3,000 square meters.
Inasmuch as the strip of land comprehended between the church
and the iron fence could not, as we have seen contain more than
1,835.4 square meters, it is, therefore, evident that the land
described in petitioner's exhibits far exceeds in extent that lying
between the church and the iron fence into what is known as the
public plaza, it being admitted that the iron fence marks the
northern boundary of said plaza.
The correctness of the plan, Exhibit J, as prevented by the
petitioner, has not been impugned by the evidence in any manner
which is beneficial to the city. There appears to be a large
difference between the amount of land as described in one of the
petitioner's exhibits and that included within the plan, the latter
containing considerably less than the amount set out in the
description in said exhibit. Apart from this inconsistency, an
inconsistency by which the city seems to profit, the correctness of
the plan is not questioned in the record. As to the discrepancy
existing between the amount of land as described in the other
exhibit of the petitioner and that presented by the plan, the
difference is so slight as to be substantially negligible. The land
described in the plan contains 3, 576 square meters; while under
the description in petitioner's Exhibit F the land contains about
3,494.4 square meters, a difference of only 82.4 square meters.
Even though what we have already said be taken in its broadest
sense, it does not entirely dispose of the city's contention. Even
though it be admitted, as we have found, that the land shown be
petitioner's muniments of title to have belonged once, to it
includes a portion of the public square referred to, the query
naturally suggests itself, how much of the plaza does it include.
While we have already intimated that the amount of the public
square included in the description of petitioner's land is so much
thereof as is described in the plan Exhibit J, such intimation,
embracing, as it does, a conclusion from facts not presented,
needs some explanation to make it clear; for, even though it be
conceded that such land extends into public square, still it will be
found to extend thereinto more or less, depending upon whether
the measurement be taken from the iron fence or from the walls of
the church building. In other words, if the measurement be made
from the iron fence southward, there will be included more of the
square than if it be made from the walls of the church building. It
is the city's contention that, in measuring the lands claimed by the
petitioner and described in its exhibits, such measurement must
be taken from the very walls of the church building and not from
the iron fence. For this reason the city asserts that it is one of the
vices of Exhibit J that its measurements begin with the iron fence
and not the walls of the church, thereby including much more of
the public square than would be included if the measurements
were taken from the iron fence. In support of this claim the city
refers to the wording of the descriptions of the land as shown in
the two exhibits, already presented, wherein the land is spoken of
as "una huerta grande que esta al lado de la Iglesia hacia el sur,"
and also as a parcel of land "linda por la parte del norte con la
Iglesia."
We do not believe that this contention is sound. In the first place,
under the general rules regulating the construction of words and
phrases in cases of this character, the word "church," as used in
the description, refers to the land upon which the church stands,
and not to the church building itself. In the second place, it is
unquestioned that, under the description referred to, the north line
of the lands in question, as well as the other lines, is straight, the
lots being each 25 Spanish brazas square. But, as we have
already seen, the line made by the south wall of the church,
which, under the city's contention, would be the northern
boundary line of the land in question, is extremely broken an
crooked. This is clearly shown by the plan Exhibit J, in which the
line of the said south wall presents no less than six angles. It is,
therefore, impossible that the northern boundary line of the land in
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 9
question be the line of the church wall, the one being a straight
line and the other a crooked one. Such lines can not be
coincident. For the same reason it would be impossible to
determine from which the portion of the wall the measurement of
the land in question should be taken. Should it be taken from the
eastern end of the wall, or from the western end, which is about
15 meters farther south, or from the central portion of the wall,
which is about 10 meters still farther south? It is apparent that, if
the point of departure for measuring the 25 brazas is to be the
wall of the building itself, that point is variable in its location,
depending upon which portion of the wall is taken as the point
from which the measurement is made. The mere statement of this
contention shows its weakness. Lastly: The witness for the city,
Sr. Rallos, stated that, in his boyhood, there was, at the south of
the church and at a considerable distance therefrom a wall which
ran along the premises upon which the church was located,
forming, apparently, the southern boundary line thereof; that
between that wall, the place of which was later taken by the iron
fence several times referred to, and the fence which surrounded
the monument of Magellan there intervened a distance of from 25
to 30 brazas. The wall referred to by the witness is clearly not the
wall of the church building. It appears from his testimony also
that paseo de Dolores was located to the south of the wall or iron
fence; and that, therefore, the land in dispute, which includes
said paseo, could not have been located between the church
building and the iron fence. The same facts appear from the
testimony of other witnesses of the city.
Under the evidence, then we must conclude, with the learned trial
court, that a portion of the land now occupied by the city of Cebu
as a public plaza is land described in the petitioner's exhibits, and
is so much of said land as is contained in the plan marked
petitioner's Exhibit J. As to a paper title to said land so occupied
as a public square, the city has presented none. To that land it
shows no documentary or record title whatever. The paper title of
the petitioner to such land is entirely unmet and uncontradicted.
The city presents no rights to or interest in the same except that
acquired by long years of actual occupation. It signifies no source
from which comes any right or interest and asserts no ability to
disclose any. Its ownership is based upon prescription solely.
Were it not for petitioner's Exhibit K, we would be inclined to hold,
the record, that the opponent's occupation had ripened into a title
by prescription. We would be disposed to say that the proof's
show that the city has occupied the lands in question adversely
since the year 1863, and that, by reason thereof, it has acquired
title under the provisions of the Civil Code relating to prescription.
In view of that Exhibit, however, we do not find it necessary to
determine that question, inasmuch as, in our judgment that exhibit
demonstrates conclusively that such occupation was permissive
and not adverse, was under license and not under claim of right,
and could not, therefore, be made the basis of a prescriptive title.
Before presenting that exhibit, it should be said that the proofs
uncontradictedly demonstrate that the possession by the city of
the land in question was initiated and maintained, down to the
year 1980, when the ayuntamiento of Cebu was formed, by the
political and military governor of Cebu; that every act of
possession and dominion exercised during that time over said
land was exercised by his orders; that the improvements made
thereon were made by his direction and with provincial moneys;
that, so far as appears from the record, not a single act of
possession or dominion over said land was exercised except
through him during all the years from 1863 down to 1890. From
the latter year to the time of the American occupation,
the ayuntamiento, according to the evidence, seems to have
maintained the possession.
As to said exhibit: On or about the 18th day of June, 1869, there
seems to have arisen a controversy over the possession of the
land in question. Although, apart from the document when
executed, the evidence is somewhat uncertain and vague as to
what actually happened, nevertheless, from what appears, it is a
necessary deduction that the seminary, on or about that date,
interferred with the possession of the city and requested that the
matter be adjusted to the end that the rights of the parties in the
land might be made clear. The political and military governor of
Cebu being, as we have seen, the official under whose orders
and directions possession of the land had been taken and
maintained, the officials of the seminary naturally went to him for
an adjustment. As a result of that adjustment the following
document, petitioner's Exhibit K, was executed by the political and
military governor of Cebu, Joaquin Monet:
PETITIONER'S EXHIBIT K.
Don Joaquin Monet y Estevez, military and political
governor, with the assistance of the attesting witnesses,
etc., does hereby certify, in due form, that part of the
Plaza Urbiztondo included in the work which is now
being done for a public promenade to be known as
"Dolores" belongs to the Seminary of San Carlos and
the Chaplaincy of the Cathedral, according to the
topographical plan of this city on file in the archives of
the said Seminary, which said land has been ceded by
the rector, Jose Casaramona, and the devout parish
priest, Leon Esequiel, the persons charged with the
preservation of the property belonging to their
respective trusts, this as long as the said promenade
which embellishes the town exists as such.
In testimony thereof, and at the request of the
interested parties, I issue these presents in triplicate at
Cebu this eight day of June, one thousand eight
hundred and sixty-nine,
(Signed) JOAQUIN MONET.
(Signed) LORENZO ESPINA.
(Signed) CALIXTO DEL CAPA.
The instrument, in our opinion, conclusively
characterizes the occupation of the land in question and
renders untenable the position of the city that its
possession was adverse and under claim of right and
should be made the basis of prescriptive title under the
Civil Code. That code provides:
ART. 1941. Possession must be in the capacity of an
owner, public, peaceful, uninterpreted.
ART. 1942. Acts of a possessory character, performed
by virtue of a license, or be mere tolerance on the part
of the owner, are of no effect for establishing
possession.
ART. 1948. Any express or implied acknowledgment
which the possessor may make with regard to the right
of the owner also interrupts possession.
The law presented by these articles is substantially the
same as that laid down by the American courts. It is
there generally held that "any act of recognition or
acknowledgment of a superior title in another during the
period of adverse possession, will, as a general rule,
amount to an interruption of the continuity of the
possession and defeat the operation of the statute.
The political and military governor of Cebu, being the official by
whose acts the possession of the land in question was begun and
maintained on behalf of the city, particularly prior to at the time of
the execution of the above instrument, all acts and words of his
giving color to that possession are binding upon the city and
conclusive as to the guilty thereof.
The city seeks to evade the legal effects of this document in two
ways: First, by asserting that it has not been properly proved for
admission as evidence, in that the signature of Joaquin Monet
was not shown to be genuine; and, second, be contending that
said Joaquin Monet was not, as a matter of fact, political and
military governor of Cebu at the time that the document bears
date.
Neither of these contentions can be maintained. The document in
question having been executed in the year 1869, and having
subsequently been generally acted upon as genuine by persons
having an interest in the subject matter involved, and its custody
having been presumed satisfactorily explained, its genuineness
must be presumed under the provisions of section 334, paragraph
34, of the Code of Civil Procedure. Moreover, section, 326 and
327 of said Code provide that:
SEC. 326. When other evidence of the execution of
writing need not be produced. — Where a writing is
more than thirty years old, and evidence is given that
the party against execution, or where the writing is one
produced from the custody of the adverse party, and
has been acted upon by him as genuine, no other
evidence of the execution need be given.
SEC. 327. Proof of handwriting. — The handwriting of a
person may be proved by anyone who believes it to be
his, and has seen him write, or has seen writing
purporting to be his, upon which he has acted, or been
charged, and he has thus acquired knowledge of his
handwriting. Evidence respecting the handwriting may
also be given by comparison, made by the court, with
writings admitted or treated as genuine by the party
against whom evidence is offered, or proved to be
genuine to the satisfaction of the judge. Where the
writing is more than thirty years old, the comparisons
may be made with writings purported to be genuine,
and generally respected and acted upon as such by
persons having an interest and knowing the fact.
For the purpose of making the comparisons mentioned in the last
section, the petitioner offered in evidence a bound volume of
official communications from the political and military governor of
Cebu to the Bishop of Cebu. Several of said official
communications, bearing dates November 20, 1867, December
14, 1867, January 9, 1968, February 13, 1868, February 17,
1868, February 22, 1868, and November 11, 1868, are signed by
said Joaquin Monet as "El gobernador interino" of the politico-
military government of the Visayas. The signatures to those
documents are genuine. From a comparison of the signature on
Exhibit K with those on the official communications, it is manifest,
as the learned trial court found, that the signature on the exhibit is
genuine. Moreover, that document, as a whole, bears every
evidence of being genuine.
As to the second contention of the city that Joaquin Monet was
not, in reality, political-military governor of Cebu at the time said
instrument was executed, it also must be rejected. We are
confident that the said document is a genuine document and that
Joaquin Monet was governor of Cebu at the time the same was
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 10
signed. That he was such governor at such time is clearly
demonstrated by the official "Gaceta de Manila," dated June 22,
1869, in which, on page 1207, appears the name of Joaquin
Monet as political and military governor of Cebu. On that page is
seen an official document formulated and signed by him as such
governor on the 5th day of June 22, 1869, at page 164, appears
another official document formulated and signed by said Joaquin
Monet, as governor of Cebu, which document bears date the 5th
day of July, 1869. Both of these writings were official documents
made and signed by him in the course of the performance of his
official duties as political and military governor of Cebu. In this
connection it must be remembered that the disputed document,
Exhibit K, bears date the 8th day of June, 1869, only three days
after the date borne by said document of June 5th above
mentioned. It should also be noted that, in writing the official
communications found in Exhibit L, bound volume of official
communications, Joaquin Monet was acting as
governor interino of the politico-military government of
the Visayan Islands. In signing the disputed document he acted
as the political-military governor (not interino) of Cebu, not the
Visayan Islands. Most of the argument of the learned counsel for
the city in relation to the second contention is founded in a failure
to observe the distinction between the official character of Joaquin
Monet as manifested in Exhibit L and that shown in Exhibit K.
Exhibit K, however, must be taken as it reads. Its benefits and its
obligations go hand in hand. If the seminary asks the advantages
which it confers it can not escape the obligations which it
imposes. That instrument not only gives character to the
possession which the city then had and thereafter claimed to have
of the land in dispute, rendering that possession incapable of
being used as the basis of prescriptive rights, but it also gives the
city the right to continue in that possession as long as it remains
of the kind described therein, namely, "as long as the said
promenade which embellishes the town exists as such." In other
words, it makes, or, at least, recognizes as already made, a
cession of the use of the land in question to the city of Cebu so
long as the same continues to be used in the manner in which it
was then being used or for the purposes for which it was then
being prepared to be used. There was a legal consideration for
this obligation, thus rendering it enforceable, even though it be
urged that the transaction could not have been called a voluntary
dedication to public use. Nor may it now be contended that the
church officials who appear to have taken part in the transaction
were not authorized and had no power to bind the seminary or the
church. That instrument has long been record of the church,
known to it through all its officials, and has been presented by the
church in this litigation as an efficacious and enforceable
instrument. Its benefits may not be interpreted to bind and loose
at the same time to the same party.
For these reason it is our opinion that the petitioner has the legal
title to the land in dispute, but that the city of Cebu has the right to
the possession, occupation and use of said land for the purposes
above expressed and presented in said Exhibit K, above quoted,
to be so occupied and possessed so long as said land is
dedicated to the uses and purposes therein expressed.
The judgment of the court below is modified and the land
described in Exhibit J is hereby ordered registered in the name of
the petitioner, but such registration is subject to and must
affirmatively show the rights of the City of Cebu to the possession,
occupation and use of said land as hereinabove set forth. As
modified, said judgment is affirmed.
Arellano, C.J., Mapa, Carson and Trent, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46345 January 30, 1990
RESTITUTO CENIZA and JESUS CENIZA, petitioners,
vs.
THE HON. COURT OF APPEALS, MAGNO DABON, VICENTA
DABON, TERESITA DABON, EUGENIA DABON, and TOMAS
DABON, respondents.
Vicente P. Valera and Pedro Rosito & Jesus F. Balicanta for
petitioners.
Victorino U. Montecillo for respondents.
GRINO-AQUINO, J.:
This is a petition for review of the order dated October 29, 1976,
of the Court of Appeals in CA-G.R. No. 48546 entitled, "Restituto
Ceniza, et al. vs. Magno Dabon, et al.," dismissing the petitioners'
complaint for reconveyance of their shares in co-ownership
property and reversing the decision of the trial court in their favor.
On June 14, 1967, the petitioners filed against private
respondents, an action in the Court of First Instance of Cebu for
recovery of their title to Lots Nos. 627-B and 627-C (being
portions of Lot No. 627 with an area of approximately 5,306
square meters) situated in Casuntingan, Mandaue, Cebu (now
Mandaue City), which originally formed part of "Hacienda de
Mandaue" of the Seminario de San Carlos de Cebu. The Property
is covered by reconstituted Original Certificate of Title No. RO-
10996 issued on February 8, 1939 (formerly Decree No. 694438
issued on February 27, 1934) in the name of "Vicente Dabon
married to Marcela [or Marcelina] Ceniza." (pp. 7 and 19, Record
on Appeal).
Petitioners are the descendants of Manuel Ceniza while the
private respondents are the descendants of his sister, Sofia
Ceniza. Sofia Ceniza was childless but she had an adopted
daughter named Flaviana Ceniza, who begot a daughter named
Marced Ceniza and who in turn had a daughter named Marcelina
(or Marcela) Ceniza who married Vicente Dabon. Private
respondents are the children of this marriage and they are the
great-great-grandchildren of Sofia Ceniza.
On the other hand, Manuel Ceniza had an only son, Pablo, who
had two sons, Santiago and Jose Ceniza. Petitioners Restituto
and Jesus Ceniza and a certain Nemesia Ceniza-Albina are their
children and the great-grandchildren of Manuel Ceniza.
The records disclose that when Hacienda de Mandaue was
subdivided for resale to the occupants in 1929, Jose Ceniza and
Vicente Dabon, who were residing in the hacienda, jointly
purchased Lot 627 on installment basis and they agreed, for
convenience, to have the land registered in the name of Dabon.
Since then, Jose Ceniza, Vicente Dabon, and their heirs have
possessed their respective portions of the land, declared the
same for taxation, paid real estate taxes on their respective
shares, and made their respective installment payments to the
Seminario de San Carlos de Cebu.
After Dabon died in 1954, his seven (7) children, named Magno,
Jacinta, Tomas, Flaviana, Soledad, Teresita and Eugenia,
succeeded to his possession of a portion of the land.
On November 4, 1961, a private land surveyor, Espiritu Bunagan,
on the request of Jacinta Dabon and Restituto Ceniza who jointly
defrayed the cost, divided Lot 627 into three parts, namely:
(1) Lot No. 627-A with 3,538 square meters for Marcela
Ceniza;
(2) Lot No. 627-B with 884 square meters for Restituto
Ceniza; and
(3) Lot No. 627-C with 834 square meters for Nemesia
Ceniza-Albina, who later bequeathed her share to her
brother, Jesus Ceniza. (p. 19, Record on Appeal).
The present controversy arose because the private respondents
refused to convey Lots Nos. 627-B and 627-C to the petitioners.
They claimed that their predecessor-in-interest, Vicente Dabon,
was the sole and exclusive owner of Lot 627, by purchase from
the Seminario de San Carlos de Cebu. In their answer to the
petitioners' complaint for reconveyance in June 1967, they alleged
that the petitioners' right of action had already prescribed.
Petitioners replied that Vicente Dabon held the land in trust for
them, as co-owners, hence, their action for reconveyance was
imprescriptible.
On August 31, 1970, the trial court rendered judgment for the
petitioners. Finding that there existed a co-ownership among the
parties, it ordered the private respondents to execute deeds of
conveyance of Lots Nos. 627-B and 627-C in favor of the
plaintiffs, Restituto and Jesus Ceniza, respectively (p. 35, Record
on Appeal).
On appeal by the defendants (now private respondents) the Court
of Appeals on October 29, 1976, reversed that decision of the trial
court. It ruled that the petitioners' right of action had prescribed
after the lapse of 20 years from the date of registration of the land
on February 8, 1939 in Vicente Dabon's name (p. 32, Rollo).
The petitioners have appealed to this Court by a petition for
review under Rule 45 of the Rules of Court.
The legal issue presented by the petition is whether the
registration of the title of the land in the name of one of the co-
owner, constituted a repudiation of the co-ownership for purposes
of acquisitive prescription.
We find merit in the petition for review.
The trial court correctly ruled that since a trust relation and co-
ownership were proven to exist between the predecessors- in-
interest of both petitioners and private respondents, prescription
did not run in favor of Dabon's heirs except from the time that they
repudiated the co-ownership and made the repudiation known to
the other co-owners, Restituto and Jesus Ceniza (Cortes vs.
Oliva, 33 Phil. 480).
Paragraph 5 of Article 494 of the Civil Code provides-
No prescription shall run in favor of a co-owner or co-
heir against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-ownership.
The registration of Lot No. 627 in the name of Vicente Dabon
created a trust in favor of his co-owner Jose Ceniza, and the
latter's heirs. Article 1452 of the Civil Code states:
If two or more persons agree to purchase property and
common consent the legal title is taken in the name of
one of them for the benefit of all, a trust is created by
force of law in favor of the others in proportion to the
interest of each.
This Court has ruled in numerous cases involving fiduciary
relations that, as a general rule, the trustee's possession is not
adverse and therefore cannot ripen into a title by prescription.
Adverse possession requires the concurrence of the following
circumstances:
a) that the trustee has performed unequivocal acts of
repudiation amounting to the ouster of the cestui que
trust;
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 11
b) that such positive acts of repudiation have been
made known to the cestui que trust; and
c) that the evidence thereon should be clear and
conclusive.
The above elements are not present here for the petitioners/ co-
owners have not been ousted from the land. They continue to
possess their respective shares of Lot 627 and they have been
paying the realty taxes thereon. Restituto's house stands on his
portion of the Land. Assuming that the private respondents'
rejection of the subdivision plan for the partition of the land was
an act of repudiation of the co-ownership, prescription had not yet
set in when the petitioners instituted the present action for
reconveyance. These circumstances were overlooked by the
Court of Appeals.
In Custodio v. Casiano 9 SCRA 841, we ruled that:
Where title to land was issued in the name of a co-heir
merely with the understanding that he would act as a
trustee of his sisters, and there is no evidence that this
trust relation had ever been repudiated by said trustee,
it is held that a reaction of co-ownership existed
between such trustee and his sisters and the right of
the successors-in-interest of said sisters to bring the
present action for recovery of their shares therein
against the successors-in-interest of said trustee cannot
barred by prescription, despite the, lapse of 25 years
from the date of registration of the land in the trustee's
name. (Emphasis supplied.)
In Escobar v. Locsin, 74 Phil. 86, we affirmed the duty of the
courts to shield fiduciary relations "against every manner of
chicanery or detestable design cloaked by legal technicalities"
and to guard against misuse of the Torrens system "to foment
betrayal in the performance of a trust."
In this case, since the statutory period of limitation within which to
file an action for reconveyance, after the defendants had
repudiated the co-ownership in 1961, had not yet run its course
when the petitioners filed said action in 1967, the action was not
barred by prescription.
WHEREFORE. the decision of the Court of appeals is hereby
REVERSED AND SET ASIDE and the decision dated August 31,
1970 of the then Court of First Instance of Cebu, Branch VI, in
Civil Case No. R-10030 is reinstated. Costs against the private
respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 124354 December 29, 1999
ROGELIO E. RAMOS and ERLINDA RAMOS, in their own
behalf and as natural guardians of the minors, ROMMEL
RAMOS, ROY RODERICK RAMOS and RON RAYMOND
RAMOS, petitioners,
vs.
COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER,
DR. ORLINO HOSAKA and DRA. PERFECTA
GUTIERREZ, respondents.
KAPUNAN, J.:
The Hippocratic Oath mandates physicians to give primordial
consideration to the health and welfare of their patients. If a
doctor fails to live up to this precept, he is made accountable for
his acts. A mistake, through gross negligence or incompetence or
plain human error, may spell the difference between life and
death. In this sense, the doctor plays God on his patient's fate. 1
In the case at bar, the Court is called upon to rule whether a
surgeon, an anesthesiologist and a hospital should be made liable
for the unfortunate comatose condition of a patient scheduled for
cholecystectomy. 2
Petitioners seek the reversal of the decision 3 of the Court of
Appeals, dated 29 May 1995, which overturned the decision 4 of
the Regional Trial Court, dated 30 January 1992, finding private
respondents liable for damages arising from negligence in the
performance of their professional duties towards petitioner Erlinda
Ramos resulting in her comatose condition.
The antecedent facts as summarized by the trial court are
reproduced hereunder:
Plaintiff Erlinda Ramos was, until the
afternoon of June 17, 1985, a 47-year old
(Exh. "A") robust woman (TSN, October 19,
1989, p. 10). Except for occasional
complaints of discomfort due to pains
allegedly caused by the presence of a stone
in her gall bladder (TSN, January 13, 1988,
pp. 4-5), she was as normal as any other
woman. Married to Rogelio E. Ramos, an
executive of Philippine Long Distance
Telephone Company, she has three children
whose names are Rommel Ramos, Roy
Roderick Ramos and Ron Raymond Ramos
(TSN, October 19, 1989, pp. 5-6).
Because the discomforts somehow interfered
with her normal ways, she sought
professional advice. She was advised to
undergo an operation for the removal of a
stone in her gall bladder (TSN, January 13,
1988, p. 5). She underwent a series of
examinations which included blood and urine
tests (Exhs. "A" and "C") which indicated she
was fit for surgery.
Through the intercession of a mutual friend,
Dr. Buenviaje (TSN, January 13, 1988, p. 7),
she and her husband Rogelio met for the first
time Dr. Orlino Hozaka (should be
Hosaka; see TSN, February 20, 1990, p. 3),
one of the defendants in this case, on June
10, 1985. They agreed that their date at the
operating table at the DLSMC (another
defendant), would be on June 17, 1985 at
9:00 A.M.. Dr. Hosaka decided that she
should undergo a "cholecystectomy"
operation after examining the documents
(findings from the Capitol Medical Center,
FEU Hospital and DLSMC) presented to him.
Rogelio E. Ramos, however, asked Dr.
Hosaka to look for a good anesthesiologist.
Dr. Hosaka, in turn, assured Rogelio that he
will get a good anesthesiologist. Dr. Hosaka
charged a fee of P16,000.00, which was to
include the anesthesiologist's fee and which
was to be paid after the operation (TSN,
October 19, 1989, pp. 14-15, 22-23, 31-33;
TSN, February 27, 1990, p. 13; and TSN,
November 9, 1989, pp. 3-4, 10, 17).
A day before the scheduled date of operation,
she was admitted at one of the rooms of the
DLSMC, located along E. Rodriguez Avenue,
Quezon City (TSN, October 19,1989, p. 11).
At around 7:30 A.M. of June 17, 1985 and
while still in her room, she was prepared for
the operation by the hospital staff. Her sister-
in-law, Herminda Cruz, who was the Dean of
the College of Nursing at the Capitol Medical
Center, was also there for moral support. She
reiterated her previous request for Herminda
to be with her even during the operation.
After praying, she was given injections. Her
hands were held by Herminda as they went
down from her room to the operating room
(TSN, January 13, 1988, pp. 9-11). Her
husband, Rogelio, was also with her (TSN,
October 19, 1989, p. 18). At the operating
room, Herminda saw about two or three
nurses and Dr. Perfecta Gutierrez, the other
defendant, who was to administer
anesthesia. Although not a member of the
hospital staff, Herminda introduced herself as
Dean of the College of Nursing at the Capitol
Medical Center who was to provide moral
support to the patient, to them. Herminda was
allowed to stay inside the operating room.
At around 9:30 A.M., Dr. Gutierrez reached a
nearby phone to look for Dr. Hosaka who was
not yet in (TSN, January 13, 1988, pp. 11-
12). Dr. Gutierrez thereafter informed
Herminda Cruz about the prospect of a delay
in the arrival of Dr. Hosaka. Herminda then
went back to the patient who asked, "Mindy,
wala pa ba ang Doctor"? The former replied,
"Huwag kang mag-alaala, darating na iyon"
(Ibid.).
Thereafter, Herminda went out of the
operating room and informed the patient's
husband, Rogelio, that the doctor was not yet
around (id., p. 13). When she returned to the
operating room, the patient told her, "Mindy,
inip na inip na ako, ikuha mo ako ng ibang
Doctor." So, she went out again and told
Rogelio about what the patient said (id., p.
15). Thereafter, she returned to the operating
room.
At around 10:00 A.M., Rogelio E. Ramos was
"already dying [and] waiting for the arrival of
the doctor" even as he did his best to find
somebody who will allow him to pull out his
wife from the operating room (TSN, October
19, 1989, pp. 19-20). He also thought of the
feeling of his wife, who was inside the
operating room waiting for the doctor to arrive
(ibid.). At almost 12:00 noon, he met Dr.
Garcia who remarked that he (Dr. Garcia)
was also tired of waiting for Dr. Hosaka to
arrive (id., p. 21). While talking to Dr. Garcia
at around 12:10 P.M., he came to know that
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 12
Dr. Hosaka arrived as a nurse remarked,
"Nandiyan na si Dr. Hosaka, dumating na
raw." Upon hearing those words, he went
down to the lobby and waited for the
operation to be completed (id., pp. 16, 29-
30).
At about 12:15 P.M., Herminda Cruz, who
was inside the operating room with the
patient, heard somebody say that "Dr.
Hosaka is already here." She then saw
people inside the operating room "moving,
doing this and that, [and] preparing the
patient for the operation" (TSN, January 13,
1988, p. 16). As she held the hand of Erlinda
Ramos, she then saw Dr. Gutierrez intubating
the hapless patient. She thereafter heard Dr.
Gutierrez say, "ang hirap ma-intubate nito,
mali yata ang pagkakapasok. O lumalaki ang
tiyan" (id., p. 17). Because of the remarks of
Dra. Gutierrez, she focused her attention on
what Dr. Gutierrez was doing. She thereafter
noticed bluish discoloration of the nailbeds of
the left hand of the hapless Erlinda even as
Dr. Hosaka approached her. She then heard
Dr. Hosaka issue an order for someone to
call Dr. Calderon, another anesthesiologist
(id., p. 19). After Dr. Calderon arrived at the
operating room, she saw this anesthesiologist
trying to intubate the patient. The patient's
nailbed became bluish and the patient was
placed in a trendelenburg position — a
position where the head of the patient is
placed in a position lower than her feet which
is an indication that there is a decrease of
blood supply to the patient's brain (Id., pp. 19-
20). Immediately thereafter, she went out of
the operating room, and she told Rogelio E.
Ramos "that something wrong was . . .
happening" (Ibid.). Dr. Calderon was then
able to intubate the patient (TSN, July 25,
1991, p. 9).
Meanwhile, Rogelio, who was outside the
operating room, saw a respiratory machine
being rushed towards the door of the
operating room. He also saw several doctors
rushing towards the operating room. When
informed by Herminda Cruz that something
wrong was happening, he told her
(Herminda) to be back with the patient inside
the operating room (TSN, October 19, 1989,
pp. 25-28).
Herminda Cruz immediately rushed back, and
saw that the patient was still in trendelenburg
position (TSN, January 13, 1988, p. 20). At
almost 3:00 P.M. of that fateful day, she saw
the patient taken to the Intensive Care Unit
(ICU).
About two days thereafter, Rogelio E. Ramos
was able to talk to Dr. Hosaka. The latter
informed the former that something went
wrong during the intubation. Reacting to what
was told to him, Rogelio reminded the doctor
that the condition of his wife would not have
happened, had he (Dr. Hosaka) looked for a
good anesthesiologist (TSN, October 19,
1989, p. 31).
Doctors Gutierrez and Hosaka were also
asked by the hospital to explain what
happened to the patient. The doctors
explained that the patient had bronchospasm
(TSN, November 15, 1990, pp. 26-27).
Erlinda Ramos stayed at the ICU for a month.
About four months thereafter or on November
15, 1985, the patient was released from the
hospital.
During the whole period of her confinement,
she incurred hospital bills amounting to
P93,542.25 which is the subject of a
promissory note and affidavit of undertaking
executed by Rogelio E. Ramos in favor of
DLSMC. Since that fateful afternoon of June
17, 1985, she has been in a comatose
condition. She cannot do anything. She
cannot move any part of her body. She
cannot see or hear. She is living on
mechanical means. She suffered brain
damage as a result of the absence of oxygen
in her brain for four to five minutes (TSN,
November 9, 1989, pp. 21-22). After being
discharged from the hospital, she has been
staying in their residence, still needing
constant medical attention, with her husband
Rogelio incurring a monthly expense ranging
from P8,000.00 to P10,000.00 (TSN, October
19, 1989, pp. 32-34). She was also
diagnosed to be suffering from "diffuse
cerebral parenchymal damage" (Exh.
"G"; see also TSN, December 21, 1989,
p. 6). 5
Thus, on 8 January 1986, petitioners filed a civil case 6 for
damages with the Regional Trial Court of Quezon City against
herein private respondents alleging negligence in the
management and care of Erlinda Ramos.
During the trial, both parties presented evidence as to the
possible cause of Erlinda's injury. Plaintiff presented the
testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to
prove that the sustained by Erlinda was due to lack of oxygen in
her brain caused by the faulty management of her airway by
private respondents during the anesthesia phase. On the other
hand, private respondents primarily relied on the expert testimony
of Dr. Eduardo Jamora, a pulmonologist, to the effect that the
cause of brain damage was Erlinda's allergic reaction to the
anesthetic agent, Thiopental Sodium (Pentothal).
After considering the evidence from both sides, the Regional Trial
Court rendered judgment in favor of petitioners, to wit:
After evaluating the evidence as shown in the
finding of facts set forth earlier, and applying
the aforecited provisions of law and
jurisprudence to the case at bar, this Court
finds and so holds that defendants are liable
to plaintiffs for damages. The defendants
were guilty of, at the very least, negligence in
the performance of their duty to plaintiff-
patient Erlinda Ramos.
On the part of Dr. Perfecta Gutierrez, this
Court finds that she omitted to exercise
reasonable care in not only intubating the
patient, but also in not repeating the
administration of atropine (TSN, August 20,
1991, pp. 5-10), without due regard to the
fact that the patient was inside the operating
room for almost three (3) hours. For after she
committed a mistake in intubating [the]
patient, the patient's nailbed became bluish
and the patient, thereafter, was placed in
trendelenburg position, because of the
decrease of blood supply to the patient's
brain. The evidence further shows that the
hapless patient suffered brain damage
because of the absence of oxygen in her
(patient's) brain for approximately four to five
minutes which, in turn, caused the patient to
become comatose.
On the part of Dr. Orlino Hosaka, this Court
finds that he is liable for the acts of Dr.
Perfecta Gutierrez whom he had chosen to
administer anesthesia on the patient as part
of his obligation to provide the patient a good
anesthesiologist', and for arriving for the
scheduled operation almost three (3) hours
late.
On the part of DLSMC (the hospital), this
Court finds that it is liable for the acts of
negligence of the doctors in their "practice of
medicine" in the operating room. Moreover,
the hospital is liable for failing through its
responsible officials, to cancel the scheduled
operation after Dr. Hosaka inexcusably failed
to arrive on time.
In having held thus, this Court rejects the
defense raised by defendants that they have
acted with due care and prudence in
rendering medical services to plaintiff-patient.
For if the patient was properly intubated as
claimed by them, the patient would not have
become comatose. And, the fact that another
anesthesiologist was called to try to intubate
the patient after her (the patient's) nailbed
turned bluish, belie their claim. Furthermore,
the defendants should have rescheduled the
operation to a later date. This, they should
have done, if defendants acted with due care
and prudence as the patient's case was an
elective, not an emergency case.
xxx xxx xxx
WHEREFORE, and in view of the foregoing,
judgment is rendered in favor of the plaintiffs
and against the defendants. Accordingly, the
latter are ordered to pay, jointly and severally,
the former the following sums of money, to
wit:
1) the sum of P8,000.00
as actual monthly
expenses for the plaintiff
Erlinda Ramos reckoned
from November 15, 1985
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 13
or in the total sum of
P632,000.00 as of April
15, 1992, subject to its
being updated;
2) the sum of
P100,000.00 as
reasonable attorney's
fees;
3) the sum of
P800,000.00 by way of
moral damages and the
further sum of
P200,000,00 by way of
exemplary damages;
and,
4) the costs of the suit.
SO ORDERED. 7
Private respondents seasonably interposed an appeal to the
Court of Appeals. The appellate court rendered a Decision, dated
29 May 1995, reversing the findings of the trial court. The decretal
portion of the decision of the appellate court reads:
WHEREFORE, for the foregoing premises
the appealed decision is hereby REVERSED,
and the complaint below against the
appellants is hereby ordered DISMISSED.
The counterclaim of appellant De Los Santos
Medical Center is GRANTED but only insofar
as appellees are hereby ordered to pay the
unpaid hospital bills amounting to
P93,542.25, plus legal interest for justice
must be tempered with mercy.
SO ORDERED. 8
The decision of the Court of Appeals was received on 9 June
1995 by petitioner Rogelio Ramos who was mistakenly addressed
as "Atty. Rogelio Ramos." No copy of the decision, however, was
sent nor received by the Coronel Law Office, then counsel on
record of petitioners. Rogelio referred the decision of the
appellate court to a new lawyer, Atty. Ligsay, only on 20 June
1995, or four (4) days before the expiration of the reglementary
period for filing a motion for reconsideration. On the same day,
Atty. Ligsay, filed with the appellate court a motion for extension
of time to file a motion for reconsideration. The motion for
reconsideration was submitted on 4 July 1995. However, the
appellate court denied the motion for extension of time in its
Resolution dated 25 July 1995. 9Meanwhile, petitioners engaged
the services of another counsel, Atty. Sillano, to replace Atty.
Ligsay. Atty. Sillano filed on 7 August 1995 a motion to admit the
motion for reconsideration contending that the period to file the
appropriate pleading on the assailed decision had not yet
commenced to run as the Division Clerk of Court of the Court of
Appeals had not yet served a copy thereof to the counsel on
record. Despite this explanation, the appellate court still denied
the motion to admit the motion for reconsideration of petitioners in
its Resolution, dated 29 March 1996, primarily on the ground that
the fifteen-day (15) period for filing a motion for reconsideration
had already expired, to wit:
We said in our Resolution on July 25, 1995,
that the filing of a Motion for Reconsideration
cannot be extended; precisely, the Motion for
Extension (Rollo, p. 12) was denied. It is, on
the other hand, admitted in the latter Motion
that plaintiffs/appellees received a copy of the
decision as early as June 9, 1995.
Computation wise, the period to file a Motion
for Reconsideration expired on June 24. The
Motion for Reconsideration, in turn, was
received by the Court of Appeals already on
July 4, necessarily, the 15-day period already
passed. For that alone, the latter should be
denied.
Even assuming admissibility of the Motion for
the Reconsideration, but after considering the
Comment/Opposition, the former, for lack of
merit, is hereby DENIED.
SO ORDERED. 10
A copy of the above resolution was received by Atty. Sillano on 11
April 1996. The next day, or on 12 April 1996, Atty. Sillano filed
before this Court a motion for extension of time to file the present
petition for certiorari under Rule 45. The Court granted the motion
for extension of time and gave petitioners additional thirty (30)
days after the expiration of the fifteen-day (15) period counted
from the receipt of the resolution of the Court of Appeals within
which to submit the petition. The due date fell on 27 May 1996.
The petition was filed on 9 May 1996, well within the extended
period given by the Court.
Petitioners assail the decision of the Court of Appeals on the
following grounds:
I doctrine, creating an inference or presumption of negligence, and
IN PUTTING MUCH RELIANCE ON THE
TESTIMONIES OF RESPONDENTS DRA.
GUTIERREZ, DRA. CALDERON AND DR.
JAMORA;
II
IN FINDING THAT THE NEGLIGENCE OF
THE RESPONDENTS DID NOT CAUSE THE
UNFORTUNATE COMATOSE CONDITION
OF PETITIONER ERLINDA RAMOS;
III
IN NOT APPLYING THE DOCTRINE
OF RES IPSA LOQUITUR. 11
Before we discuss the merits of the case, we shall first dispose of
the procedural issue on the timeliness of the petition in relation to
the motion for reconsideration filed by petitioners with the Court of
Appeals. In their
Comment, 12 private respondents contend that the petition should
not be given due course since the motion for reconsideration of
the petitioners on the decision of the Court of Appeals was validly
dismissed by the appellate court for having been filed beyond the
reglementary period. We do not agree.
A careful review of the records reveals that the reason behind the
delay in filing the motion for reconsideration is attributable to the
fact that the decision of the Court of Appeals was not sent to then
counsel on record of petitioners, the Coronel Law Office. In fact, a
copy of the decision of the appellate court was instead sent to and
received by petitioner Rogelio Ramos on 9 June 1995 wherein he
was mistakenly addressed as Atty. Rogelio Ramos. Based on the
other communications received by petitioner Rogelio Ramos, the
appellate court apparently mistook him for the counsel on record.
Thus, no copy of the decision of the counsel on record. Petitioner,
not being a lawyer and unaware of the prescriptive period for filing
a motion for reconsideration, referred the same to a legal counsel
only on 20 June 1995.
It is elementary that when a party is represented by counsel, all
notices should be sent to the party's lawyer at his given address.
With a few exceptions, notice to a litigant without notice to his
counsel on record is no notice at all. In the present case, since a
copy of the decision of the appellate court was not sent to the
counsel on record of petitioner, there can be no sufficient notice to
speak of. Hence, the delay in the filing of the motion for
reconsideration cannot be taken against petitioner. Moreover,
since the Court of Appeals already issued a second Resolution,
dated 29 March 1996, which superseded the earlier resolution
issued on 25 July 1995, and denied the motion for reconsideration
of petitioner, we believed that the receipt of the former should be
considered in determining the timeliness of the filing of the
present petition. Based on this, the petition before us was
submitted on time.
After resolving the foregoing procedural issue, we shall now look
into the merits of the case. For a more logical presentation of the
discussion we shall first consider the issue on the applicability of
the doctrine of res ipsa loquiturto the instant case. Thereafter, the
first two assigned errors shall be tackled in relation to the res ipsa
loquiturdoctrine.
Res ipsa loquitur is a Latin phrase which literally means "the thing
or the transaction speaks for itself." The phrase "res ipsa loquitur''
is a maxim for the rule that the fact of the occurrence of an injury,
taken with the surrounding circumstances, may permit an
inference or raise a presumption of negligence, or make out a
plaintiff's prima facie case, and present a question of fact for
defendant to meet with an explanation. 13 Where the thing which
caused the injury complained of is shown to be under the
management of the defendant or his servants and the accident is
such as in ordinary course of things does not happen if those who
have its management or control use proper care, it affords
reasonable evidence, in the absence of explanation by the
defendant, that the accident arose from or was caused by the
defendant's want of care. 14
The doctrine of res ipsa loquitur is simply a recognition of the
postulate that, as a matter of common knowledge and experience,
the very nature of certain types of occurrences may justify an
inference of negligence on the part of the person who controls the
instrumentality causing the injury in the absence of some
explanation by the defendant who is charged with negligence. 15 It
is grounded in the superior logic of ordinary human experience
and on the basis of such experience or common knowledge,
negligence may be deduced from the mere occurrence of the
accident itself. 16 Hence, res ipsa loquitur is applied in conjunction
with the doctrine of common knowledge.
However, much has been said that res ipsa loquitur is not a rule
of substantive law and, as such, does not create or constitute an
independent or separate ground of liability. 17 Instead, it is
considered as merely evidentiary or in the nature of a procedural
rule. 18 It is regarded as a mode of proof, or a mere procedural of
convenience since it furnishes a substitute for, and relieves a
plaintiff of, the burden of producing specific proof of
negligence. 19 In other words, mere invocation and application of
the doctrine does not dispense with the requirement of proof of
negligence. It is simply a step in the process of such proof,
permitting the plaintiff to present along with the proof of the
accident, enough of the attending circumstances to invoke the
to thereby place on the defendant the burden of going forward
with the proof. 20 Still, before resort to the doctrine may be
allowed, the following requisites must be satisfactorily shown:
1. The accident is of a
kind which ordinarily
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 14
does not occur in the
absence of someone's
negligence;
2. It is caused by an
instrumentality within the
exclusive control of the
defendant or defendants;
and
3. The possibility of
contributing conduct
which would make the
plaintiff responsible is
eliminated. 21
In the above requisites, the fundamental element is the "control of
instrumentality" which caused the damage. 22Such element of
control must be shown to be within the dominion of the defendant.
In order to have the benefit of the rule, a plaintiff, in addition to
proving injury or damage, must show a situation where it is
applicable, and must establish that the essential elements of the
doctrine were present in a particular incident. 23
Medical malpractice 24 cases do not escape the application of this
doctrine. Thus, res ipsa loquitur has been applied when the
circumstances attendant upon the harm are themselves of such a
character as to justify an inference of negligence as the cause of
that harm. 25 The application of res ipsa loquitur in medical
negligence cases presents a question of law since it is a judicial
function to determine whether a certain set of circumstances
does, as a matter of law, permit a given inference. 26
Although generally, expert medical testimony is relied upon in
malpractice suits to prove that a physician has done a negligent
act or that he has deviated from the standard medical procedure,
when the doctrine of res ipsa loquitur is availed by the plaintiff, the
need for expert medical testimony is dispensed with because the
injury itself provides the proof of negligence. 27 The reason is that
the general rule on the necessity of expert testimony applies only
to such matters clearly within the domain of medical science, and
not to matters that are within the common knowledge of mankind
which may be testified to by anyone familiar with the
facts. 28 Ordinarily, only physicians and surgeons of skill and
experience are competent to testify as to whether a patient has
been treated or operated upon with a reasonable degree of skill
and care. However, testimony as to the statements and acts of
physicians and surgeons, external appearances, and manifest
conditions which are observable by any one may be given by non-
expert witnesses. 29 Hence, in cases where the res ipsa loquitur is
applicable, the court is permitted to find a physician negligent
upon proper proof of injury to the patient, without the aid of expert
testimony, where the court from its fund of common knowledge
can determine the proper standard of care. 30 Where common
knowledge and experience teach that a resulting injury would not
have occurred to the patient if due care had been exercised, an
inference of negligence may be drawn giving rise to an application
of the doctrine of res ipsa loquitur without medical evidence,
which is ordinarily required to show not only what occurred but
how and why it occurred. 31 When the doctrine is appropriate, all
that the patient must do is prove a nexus between the particular
act or omission complained of and the injury sustained while
under the custody and management of the defendant without
need to produce expert medical testimony to establish the
standard of care. Resort to res ipsa loquitur is allowed because
there is no other way, under usual and ordinary conditions, by
which the patient can obtain redress for injury suffered by him.
Thus, courts of other jurisdictions have applied the doctrine in the
following situations: leaving of a foreign object in the body of the
patient after an operation, 32 injuries sustained on a healthy part of
the body which was not under, or in the area, of
treatment, 33 removal of the wrong part of the body when another
part was intended, 34 knocking out a tooth while a patient's jaw
was under anesthetic for the removal of his tonsils, 35 and loss of
an eye while the patient plaintiff was under the influence of
anesthetic, during or following an operation for
appendicitis, 36 among others.
Nevertheless, despite the fact that the scope of res ipsa
loquitur has been measurably enlarged, it does not automatically
apply to all cases of medical negligence as to mechanically shift
the burden of proof to the defendant to show that he is not guilty
of the ascribed negligence. Res ipsa loquitur is not a rigid or
ordinary doctrine to be perfunctorily used but a rule to be
cautiously applied, depending upon the circumstances of each
case. It is generally restricted to situations in malpractice cases
where a layman is able to say, as a matter of common knowledge
and observation, that the consequences of professional care were
not as such as would ordinarily have followed if due care had
been
exercised. 37 A distinction must be made between the failure to
secure results, and the occurrence of something more unusual
and not ordinarily found if the service or treatment rendered
followed the usual procedure of those skilled in that particular
practice. It must be conceded that the doctrine of res ipsa
loquitur can have no application in a suit against a physician or
surgeon which involves the merits of a diagnosis or of a scientific
treatment. 38 The physician or surgeon is not required at his peril
to explain why any particular diagnosis was not correct, or why
any particular scientific treatment did not produce the desired
result. 39 Thus, res ipsa loquitur is not available in a malpractice
suit if the only showing is that the desired result of an operation or
treatment was not accomplished. 40The real question, therefore, is
whether or not in the process of the operation any extraordinary
incident or unusual event outside of the routine performance
occurred which is beyond the regular scope of customary
professional activity in such operations, which, if unexplained
would themselves reasonably speak to the average man as the
negligent cause or causes of the untoward consequence. 41 If
there was such extraneous interventions, the doctrine of res ipsa
loquitur may be utilized and the defendant is called upon to
explain the matter, by evidence of exculpation, if he could. 42
We find the doctrine of res ipsa loquitur appropriate in the case at
bar. As will hereinafter be explained, the damage sustained by
Erlinda in her brain prior to a scheduled gall bladder operation
presents a case for the application of res ipsa loquitur.
A case strikingly similar to the one before us is Voss
vs. Bridwell, 43 where the Kansas Supreme Court in applying
the res ipsa loquitur stated:
The plaintiff herein submitted himself for a
mastoid operation and delivered his person
over to the care, custody and control of his
physician who had complete and exclusive
control over him, but the operation was never
performed. At the time of submission he was
neurologically sound and physically fit in mind
and body, but he suffered irreparable
damage and injury rendering him decerebrate
and totally incapacitated. The injury was one
which does not ordinarily occur in the process
of a mastoid operation or in the absence of
negligence in the administration of an
anesthetic, and in the use and employment of
an endoctracheal tube. Ordinarily a person
being put under anesthesia is not rendered
decerebrate as a consequence of
administering such anesthesia in the absence
of negligence. Upon these facts and under
these circumstances a layman would be able
to say, as a matter of common knowledge
and observation, that the consequences of
professional treatment were not as such as
would ordinarily have followed if due care had
been exercised.
Here the plaintiff could not have been guilty
of contributory negligence because he was
under the influence of anesthetics and
unconscious, and the circumstances are such
that the true explanation of event is more
accessible to the defendants than to the
plaintiff for they had the exclusive control of
the instrumentalities of anesthesia.
Upon all the facts, conditions and
circumstances alleged in Count II it is held
that a cause of action is stated under the
doctrine of res ipsa loquitur. 44
Indeed, the principles enunciated in the aforequoted case apply
with equal force here. In the present case, Erlinda submitted
herself for cholecystectomy and expected a routine general
surgery to be performed on her gall bladder. On that fateful day
she delivered her person over to the care, custody and control of
private respondents who exercised complete and exclusive
control over her. At the time of submission, Erlinda was
neurologically sound and, except for a few minor discomforts, was
likewise physically fit in mind and body. However, during the
administration of anesthesia and prior to the performance of
cholecystectomy she suffered irreparable damage to her brain.
Thus, without undergoing surgery, she went out of the operating
room already decerebrate and totally incapacitated. Obviously,
brain damage, which Erlinda sustained, is an injury which does
not normally occur in the process of a gall bladder operation. In
fact, this kind of situation does not in the absence of negligence of
someone in the administration of anesthesia and in the use of
endotracheal tube. Normally, a person being put under
anesthesia is not rendered decerebrate as a consequence of
administering such anesthesia if the proper procedure was
followed. Furthermore, the instruments used in the administration
of anesthesia, including the endotracheal tube, were all under the
exclusive control of private respondents, who are the physicians-
in-charge. Likewise, petitioner Erlinda could not have been guilty
of contributory negligence because she was under the influence
of anesthetics which rendered her unconscious.
Considering that a sound and unaffected member of the body (the
brain) is injured or destroyed while the patient is unconscious and
under the immediate and exclusive control of the physicians, we
hold that a practical administration of justice dictates the
application of res ipsa loquitur. Upon these facts and under these
circumstances the Court would be able to say, as a matter of
common knowledge and observation, if negligence attended the
management and care of the patient. Moreover, the liability of the
physicians and the hospital in this case is not predicated upon an
alleged failure to secure the desired results of an operation nor on
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 15

an alleged lack of skill in the diagnosis or treatment as in fact no A: From Dra. Perfecta
operation or treatment was ever performed on Erlinda. Thus, Gutierrez.
upon all these initial determination a case is made out for the xxx xxx xxx
application of the doctrine of res ipsa loquitur. Q: After hearing the
Nonetheless, in holding that res ipsa loquitur is available to the phrase "lumalaki ang
present case we are not saying that the doctrine is applicable in tiyan," what did you
any and all cases where injury occurs to a patient while under notice on the person of
anesthesia, or to any and all anesthesia cases. Each case must the patient?
be viewed in its own light and scrutinized in order to be within A: I notice (sic) some
the res ipsa loquitur coverage. bluish discoloration on
Having in mind the applicability of the res ipsa loquitur doctrine the nailbeds of the left
and the presumption of negligence allowed therein, the Court now hand where I was at.
comes to the issue of whether the Court of Appeals erred in Q: Where was Dr. Orlino
finding that private respondents were not negligent in the care of Ho[s]aka then at that
Erlinda during the anesthesia phase of the operation and, if in the particular time?
affirmative, whether the alleged negligence was the proximate A: I saw him approaching
cause of Erlinda's comatose condition. Corollary thereto, we shall the patient during that
also determine if the Court of Appeals erred in relying on the time.
testimonies of the witnesses for the private respondents. Q: When he approached
In sustaining the position of private respondents, the Court of the patient, what did he
Appeals relied on the testimonies of Dra. Gutierrez, Dra. Calderon do, if any?
and Dr. Jamora. In giving weight to the testimony of Dra. A: He made an order to
Gutierrez, the Court of Appeals rationalized that she was candid call on the
enough to admit that she experienced some difficulty in the anesthesiologist in the
endotracheal intubation 45 of the patient and thus, cannot be said person of Dr. Calderon.
to be covering her negligence with falsehood. The appellate court Q: Did Dr. Calderon,
likewise opined that private respondents were able to show that upon being called, arrive
the brain damage sustained by Erlinda was not caused by the inside the operating
alleged faulty intubation but was due to the allergic reaction of the room?
patient to the drug Thiopental Sodium (Pentothal), a short-acting A: Yes sir.
barbiturate, as testified on by their expert witness, Dr. Jamora. On Q: What did [s]he do, if
the other hand, the appellate court rejected the testimony of Dean any?
Herminda Cruz offered in favor of petitioners that the cause of the A: [S]he tried to intubate
brain injury was traceable to the wrongful insertion of the tube the patient.
since the latter, being a nurse, was allegedly not knowledgeable Q: What happened to the
in the process of intubation. In so holding, the appellate court patient?
returned a verdict in favor of respondents physicians and hospital A: When Dr. Calderon try
and absolved them of any liability towards Erlinda and her family. (sic) to intubate the
We disagree with the findings of the Court of Appeals. We hold patient, after a while the
that private respondents were unable to disprove the presumption patient's nailbed became
of negligence on their part in the care of Erlinda and their bluish and I saw the
negligence was the proximate cause of her piteous condition. patient was placed in
In the instant case, the records are helpful in furnishing not only trendelenburg position.
the logical scientific evidence of the pathogenesis of the injury but xxx xxx xxx
also in providing the Court the legal nexus upon which liability is Q: Do you know the
based. As will be shown hereinafter, private respondents' own reason why the patient
testimonies which are reflected in the transcript of stenographic was placed in that
notes are replete of signposts indicative of their negligence in the trendelenburg position?
care and management of Erlinda. A: As far as I know, when
With regard to Dra. Gutierrez, we find her negligent in the care of a patient is in that
Erlinda during the anesthesia phase. As borne by the records, position, there is a
respondent Dra. Gutierrez failed to properly intubate the patient. decrease of blood supply
This fact was attested to by Prof. Herminda Cruz, Dean of the to the brain. 46
Capitol Medical Center School of Nursing and petitioner's sister- xxx xxx xxx
in-law, who was in the operating room right beside the patient The appellate court, however, disbelieved Dean Cruz's testimony
when the tragic event occurred. Witness Cruz testified to this in the trial court by declaring that:
effect: A perusal of the standard nursing curriculum
ATTY. PAJARES: in our country will show that intubation is not
Q: In particular, what did taught as part of nursing procedures and
Dra. Perfecta Gutierrez techniques. Indeed, we take judicial notice of
do, if any on the patient? the fact that nurses do not, and cannot,
A: In particular, I could intubate. Even on the assumption that she is
see that she was fully capable of determining whether or not a
intubating the patient. patient is properly intubated, witness
Q: Do you know what Herminda Cruz, admittedly, did not peep into
happened to that the throat of the patient. (TSN, July 25, 1991,
intubation process p. 13). More importantly, there is no evidence
administered by Dra. that she ever auscultated the patient or that
Gutierrez? she conducted any type of examination to
ATTY. ALCERA: check if the endotracheal tube was in its
She will be incompetent proper place, and to determine the condition
Your Honor. of the heart, lungs, and other organs. Thus,
COURT: witness Cruz's categorical statements that
Witness may answer if appellant Dra. Gutierrez failed to intubate the
she knows. appellee Erlinda Ramos and that it was Dra.
A: As have said, I was Calderon who succeeded in doing so clearly
with the patient, I was suffer from lack of sufficient factual bases. 47
beside the stretcher In other words, what the Court of Appeals is trying to impress is
holding the left hand of that being a nurse, and considered a layman in the process of
the patient and all of a intubation, witness Cruz is not competent to testify on whether or
sudden heard some not the intubation was a success.
remarks coming from We do not agree with the above reasoning of the appellate court.
Dra. Perfecta Gutierrez Although witness Cruz is not an anesthesiologist, she can very
herself. She was saying well testify upon matters on which she is capable of observing
"Ang hirap ma-intubate such as, the statements and acts of the physician and surgeon,
nito, mali yata ang external appearances, and manifest conditions which are
pagkakapasok. O observable by any one. 48 This is precisely allowed under the
lumalaki ang tiyan. doctrine of res ipsa loquitur where the testimony of expert
xxx xxx xxx witnesses is not required. It is the accepted rule that expert
ATTY. PAJARES: testimony is not necessary for the proof of negligence in non-
Q: From whom did you technical matters or those of which an ordinary person may be
hear those words expected to have knowledge, or where the lack of skill or want of
"lumalaki ang tiyan"? care is so obvious as to render expert testimony
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 16
unnecessary. 49 We take judicial notice of the fact that anesthesia
procedures have become so common, that even an ordinary
person can tell if it was administered properly. As such, it would
not be too difficult to tell if the tube was properly inserted. This
kind of observation, we believe, does not require a medical
degree to be acceptable.
At any rate, without doubt, petitioner's witness, an experienced
clinical nurse whose long experience and scholarship led to her
appointment as Dean of the Capitol Medical Center School at
Nursing, was fully capable of determining whether or not the
intubation was a success. She had extensive clinical experience
starting as a staff nurse in Chicago, Illinois; staff nurse and clinical
instructor in a teaching hospital, the FEU-NRMF; Dean of the
Laguna College of Nursing in San Pablo City; and then Dean of
the Capitol Medical Center School of Nursing. 50Reviewing
witness Cruz' statements, we find that the same were delivered in
a straightforward manner, with the kind of detail, clarity,
consistency and spontaneity which would have been difficult to
fabricate. With her clinical background as a nurse, the Court is
satisfied that she was able to demonstrate through her testimony
what truly transpired on that fateful day.
Most of all, her testimony was affirmed by no less than
respondent Dra. Gutierrez who admitted that she experienced
difficulty in inserting the tube into Erlinda's trachea, to wit:
ATTY. LIGSAY:
Q: In this particular case,
Doctora, while you were
intubating at your first
attempt (sic), you did not
immediately see the
trachea?
DRA. GUTIERREZ:
A: Yes sir.
Q: Did you pull away the
tube immediately?
A: You do not pull the . . .
Q: Did you or did you
not?
A: I did not pull the tube.
Q: When you said
"mahirap yata ito," what
were you referring to?
A: "Mahirap yata itong i-
intubate," that was the
patient.
Q: So, you found some
difficulty in inserting the
tube?
A: Yes, because of (sic)
my first attempt, I did not
see right away. 51
Curiously in the case at bar, respondent Dra. Gutierrez made the
haphazard defense that she encountered hardship in the insertion
of the tube in the trachea of Erlinda because it was positioned
more anteriorly (slightly deviated from the normal anatomy of a
person) 52 making it harder to locate and, since Erlinda is obese
and has a short neck and protruding teeth, it made intubation
even more difficult.
The argument does not convince us. If this was indeed observed,
private respondents adduced no evidence demonstrating that
they proceeded to make a thorough assessment of Erlinda's
airway, prior to the induction of anesthesia, even if this would
mean postponing the procedure. From their testimonies, it
appears that the observation was made only as an afterthought,
as a means of defense.
The pre-operative evaluation of a patient prior to the
administration of anesthesia is universally observed to lessen the
possibility of anesthetic accidents. Pre-operative evaluation and
preparation for anesthesia begins when the anesthesiologist
reviews the patient's medical records and visits with the patient,
traditionally, the day before elective surgery. 53 It includes taking
the patient's medical history, review of current drug therapy,
physical examination and interpretation of laboratory data. 54 The
physical examination performed by the anesthesiologist is
directed primarily toward the central nervous system,
cardiovascular system, lungs and upper airway. 55 A thorough
analysis of the patient's airway normally involves investigating the
following: cervical spine mobility, temporomandibular mobility,
prominent central incisors, diseased or artificial teeth, ability to
visualize uvula and the thyromental distance. 56Thus, physical
characteristics of the patient's upper airway that could make
tracheal intubation difficult should be studied. 57 Where the need
arises, as when initial assessment indicates possible problems
(such as the alleged short neck and protruding teeth of Erlinda) a
thorough examination of the patient's airway would go a long way
towards decreasing patient morbidity and mortality.
In the case at bar, respondent Dra. Gutierrez admitted that she
saw Erlinda for the first time on the day of the operation itself, on
17 June 1985. Before this date, no prior consultations with, or pre-
operative evaluation of Erlinda was done by her. Until the day of
the operation, respondent Dra. Gutierrez was unaware of the
physiological make-up and needs of Erlinda. She was likewise not
properly informed of the possible difficulties she would face during
the administration of anesthesia to Erlinda. Respondent Dra.
Gutierrez' act of seeing her patient for the first time only an hour
before the scheduled operative procedure was, therefore, an act
of exceptional negligence and professional irresponsibility. The
measures cautioning prudence and vigilance in dealing with
human lives lie at the core of the physician's centuries-old
Hippocratic Oath. Her failure to follow this medical procedure is,
therefore, a clear indicia of her negligence.
Respondent Dra. Gutierrez, however, attempts to gloss over this
omission by playing around with the trial court's ignorance of
clinical procedure, hoping that she could get away with it.
Respondent Dra. Gutierrez tried to muddle the difference between
an elective surgery and an emergency surgery just so her failure
to perform the required pre-operative evaluation would escape
unnoticed. In her testimony she asserted:
ATTY. LIGSAY:
Q: Would you agree,
Doctor, that it is good
medical practice to see
the patient a day before
so you can introduce
yourself to establish
good doctor-patient
relationship and gain the
trust and confidence of
the patient?
DRA. GUTIERREZ:
A: As I said in my
previous statement, it
depends on the operative
procedure of the
anesthesiologist and in
my case, with elective
cases and normal cardio-
pulmonary clearance like
that, I usually don't do it
except on emergency
and on cases that have
an abnormalities (sic). 58
However, the exact opposite is true. In an emergency procedure,
there is hardly enough time available for the fastidious demands
of pre-operative procedure so that an anesthesiologist is able to
see the patient only a few minutes before surgery, if at all.
Elective procedures, on the other hand, are operative procedures
that can wait for days, weeks or even months. Hence, in these
cases, the anesthesiologist possesses the luxury of time to be at
the patient's beside to do a proper interview and clinical
evaluation. There is ample time to explain the method of
anesthesia, the drugs to be used, and their possible hazards for
purposes of informed consent. Usually, the pre-operative
assessment is conducted at least one day before the intended
surgery, when the patient is relaxed and cooperative.
Erlinda's case was elective and this was known to respondent
Dra. Gutierrez. Thus, she had all the time to make a thorough
evaluation of Erlinda's case prior to the operation and prepare her
for anesthesia. However, she never saw the patient at the
bedside. She herself admitted that she had seen petitioner only in
the operating room, and only on the actual date of the
cholecystectomy. She negligently failed to take advantage of this
important opportunity. As such, her attempt to exculpate herself
must fail.
Having established that respondent Dra. Gutierrez failed to
perform pre-operative evaluation of the patient which, in turn,
resulted to a wrongful intubation, we now determine if the faulty
intubation is truly the proximate cause of Erlinda's comatose
condition.
Private respondents repeatedly hammered the view that the
cerebral anoxia which led to Erlinda's coma was due to
bronchospasm 59 mediated by her allergic response to the drug,
Thiopental Sodium, introduced into her system. Towards this end,
they presented Dr. Jamora, a Fellow of the Philippine College of
Physicians and Diplomate of the Philippine Specialty Board of
Internal Medicine, who advanced private respondents' theory that
the oxygen deprivation which led to anoxic
encephalopathy, 60 was due to an unpredictable drug reaction to
the short-acting barbiturate. We find the theory of private
respondents unacceptable.
First of all, Dr. Jamora cannot be considered an authority in the
field of anesthesiology simply because he is not an
anesthesiologist. Since Dr. Jamora is a pulmonologist, he could
not have been capable of properly enlightening the court about
anesthesia practice and procedure and their complications. Dr.
Jamora is likewise not an allergologist and could not therefore
properly advance expert opinion on allergic-mediated processes.
Moreover, he is not a pharmacologist and, as such, could not
have been capable, as an expert would, of explaining to the court
the pharmacologic and toxic effects of the supposed culprit,
Thiopental Sodium (Pentothal).
The inappropriateness and absurdity of accepting Dr. Jamora's
testimony as an expert witness in the anesthetic practice of
Pentothal administration is further supported by his own
admission that he formulated his opinions on the drug not from
the practical experience gained by a specialist or expert in the
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 17
administration and use of Sodium Pentothal on patients, but only
from reading certain references, to wit:
ATTY. LIGSAY:
Q: In your line of
expertise on
pulmonology, did you
have any occasion to use
pentothal as a method of
management?
DR. JAMORA:
A: We do it in conjunction
with the anesthesiologist
when they have to
intubate our patient.
Q: But not in particular
when you practice
pulmonology?
A: No.
Q: In other words, your
knowledge about
pentothal is based only
on what you have read
from books and not by
your own personal
application of the
medicine pentothal?
A: Based on my personal
experience also on
pentothal.
Q: How many times have
you used pentothal?
A: They used it on me. I
went into bronchospasm
during my
appendectomy.
Q: And because they
have used it on you and
on account of your own
personal experience you
feel that you can testify
on pentothal here with
medical authority?
A: No. That is why I used
references to support my
claims. 61
An anesthetic accident caused by a rare drug-induced
bronchospasm properly falls within the fields of anesthesia,
internal medicine-allergy, and clinical pharmacology. The resulting
anoxic encephalopathy belongs to the field of neurology. While
admittedly, many bronchospastic-mediated pulmonary diseases
are within the expertise of pulmonary medicine, Dr. Jamora's field,
the anesthetic drug-induced, allergic mediated bronchospasm
alleged in this case is within the disciplines of anesthesiology,
allergology and pharmacology. On the basis of the foregoing
transcript, in which the pulmonologist himself admitted that he
could not testify about the drug with medical authority, it is clear
that the appellate court erred in giving weight to Dr. Jamora's
testimony as an expert in the administration of Thiopental
Sodium.
The provision in the rules of evidence 62 regarding expert
witnesses states:
Sec. 49. Opinion of expert witness. — The
opinion of a witness on a matter requiring
special knowledge, skill, experience or
training which he is shown to possess, may
be received in evidence.
Generally, to qualify as an expert witness, one must have
acquired special knowledge of the subject matter about which he
or she is to testify, either by the study of recognized authorities on
the subject or by practical experience. 63Clearly, Dr. Jamora does
not qualify as an expert witness based on the above standard
since he lacks the necessary knowledge, skill, and training in the
field of anesthesiology. Oddly, apart from submitting testimony
from a specialist in the wrong field, private respondents'
intentionally avoided providing testimony by competent and
independent experts in the proper areas.
Moreover, private respondents' theory, that Thiopental Sodium
may have produced Erlinda's coma by triggering an allergic
mediated response, has no support in evidence. No evidence of
stridor, skin reactions, or wheezing — some of the more common
accompanying signs of an allergic reaction — appears on record.
No laboratory data were ever presented to the court.
In any case, private respondents themselves admit that
Thiopental induced, allergic-mediated bronchospasm happens
only very rarely. If courts were to accept private respondents'
hypothesis without supporting medical proof, and against the
weight of available evidence, then every anesthetic accident
would be an act of God. Evidently, the Thiopental-allergy theory
vigorously asserted by private respondents was a mere
afterthought. Such an explanation was advanced in order to
advanced in order to absolve them of any and all responsibility for
the patient's condition.
In view of the evidence at hand, we are inclined to believe
petitioners' stand that it was the faulty intubation which was the
proximate cause of Erlinda's comatose condition.
Proximate cause has been defined as that which, in natural and
continuous sequence, unbroken by any efficient intervening
cause, produces injury, and without which the result would not
have occurred. 64 An injury or damage is proximately caused by
an act or a failure to act, whenever it appears from the evidence
in the case, that the act or omission played a substantial part in
bringing about or actually causing the injury or damage; and that
the injury or damage was either a direct result or a reasonably
probable consequence of the act or omission. 65 It is the
dominant, moving or producing cause.
Applying the above definition in relation to the evidence at hand,
faulty intubation is undeniably the proximate cause which
triggered the chain of events leading to Erlinda's brain damage
and, ultimately, her comatosed condition.
Private respondents themselves admitted in their testimony that
the first intubation was a failure. This fact was likewise observed
by witness Cruz when she heard respondent Dra. Gutierrez
remarked, "Ang hirap ma-intubate nito, mali yata ang
pagkakapasok. O lumalaki ang tiyan." Thereafter, witness Cruz
noticed abdominal distention on the body of Erlinda. The
development of abdominal distention, together with respiratory
embarrassment indicates that the endotracheal tube entered the
esophagus instead of the respiratory tree. In other words, instead
of the intended endotracheal intubation what actually took place
was an esophageal intubation. During intubation, such distention
indicates that air has entered the gastrointestinal tract through the
esophagus instead of the lungs through the trachea. Entry into the
esophagus would certainly cause some delay in oxygen delivery
into the lungs as the tube which carries oxygen is in the wrong
place. That abdominal distention had been observed during the
first intubation suggests that the length of time utilized in inserting
the endotracheal tube (up to the time the tube was withdrawn for
the second attempt) was fairly significant. Due to the delay in the
delivery of oxygen in her lungs Erlinda showed signs of
cyanosis. 66 As stated in the testimony of Dr. Hosaka, the lack of
oxygen became apparent only after he noticed that the nailbeds
of Erlinda were already blue. 67 However, private respondents
contend that a second intubation was executed on Erlinda and
this one was successfully done. We do not think so. No evidence
exists on record, beyond private respondents' bare claims, which
supports the contention that the second intubation was
successful. Assuming that the endotracheal tube finally found its
way into the proper orifice of the trachea, the same gave no
guarantee of oxygen delivery, the hallmark of a successful
intubation. In fact, cyanosis was again observed immediately after
the second intubation. Proceeding from this event (cyanosis), it
could not be claimed, as private respondents insist, that the
second intubation was accomplished. Even granting that the tube
was successfully inserted during the second attempt, it was
obviously too late. As aptly explained by the trial court, Erlinda
already suffered brain damage as a result of the inadequate
oxygenation of her brain for about four to five minutes. 68
The above conclusion is not without basis. Scientific studies point
out that intubation problems are responsible for one-third (1/3) of
deaths and serious injuries associated with
anesthesia. 69 Nevertheless, ninety-eight percent (98%) or the
vast majority of difficult intubations may be anticipated by
performing a thorough evaluation of the patient's airway prior to
the operation. 70 As stated beforehand, respondent Dra. Gutierrez
failed to observe the proper pre-operative protocol which could
have prevented this unfortunate incident. Had appropriate
diligence and reasonable care been used in the pre-operative
evaluation, respondent physician could have been much more
prepared to meet the contingency brought about by the perceived
anatomic variations in the patient's neck and oral area, defects
which would have been easily overcome by a prior knowledge of
those variations together with a change in technique. 71 In other
words, an experienced anesthesiologist, adequately alerted by a
thorough pre-operative evaluation, would have had little difficulty
going around the short neck and protruding teeth. 72 Having failed
to observe common medical standards in pre-operative
management and intubation, respondent Dra. Gutierrez'
negligence resulted in cerebral anoxia and eventual coma of
Erlinda.
We now determine the responsibility of respondent Dr. Orlino
Hosaka as the head of the surgical team. As the so-called
"captain of the ship," 73 it is the surgeon's responsibility to see to it
that those under him perform their task in the proper manner.
Respondent Dr. Hosaka's negligence can be found in his failure to
exercise the proper authority (as the "captain" of the operative
team) in not determining if his anesthesiologist observed proper
anesthesia protocols. In fact, no evidence on record exists to
show that respondent Dr. Hosaka verified if respondent Dra.
Gutierrez properly intubated the patient. Furthermore, it does not
escape us that respondent Dr. Hosaka had scheduled another
procedure in a different hospital at the same time as Erlinda's
cholecystectomy, and was in fact over three hours late for the
latter's operation. Because of this, he had little or no time to
confer with his anesthesiologist regarding the anesthesia delivery.
This indicates that he was remiss in his professional duties
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 18
towards his patient. Thus, he shares equal responsibility for the
events which resulted in Erlinda's condition.
We now discuss the responsibility of the hospital in this particular
incident. The unique practice (among private hospitals) of filling
up specialist staff with attending and visiting "consultants," 74 who
are allegedly not hospital employees, presents problems in
apportioning responsibility for negligence in medical malpractice
cases. However, the difficulty is only more apparent than real.
In the first place, hospitals exercise significant control in the hiring
and firing of consultants and in the conduct of their work within the
hospital premises. Doctors who apply for "consultant" slots,
visiting or attending, are required to submit proof of completion of
residency, their educational qualifications; generally, evidence of
accreditation by the appropriate board (diplomate), evidence of
fellowship in most cases, and references. These requirements are
carefully scrutinized by members of the hospital administration or
by a review committee set up by the hospital who either accept or
reject the application. 75 This is particularly true with respondent
hospital.
After a physician is accepted, either as a visiting or attending
consultant, he is normally required to attend clinico-pathological
conferences, conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits and perform
other tasks and responsibilities, for the privilege of being able to
maintain a clinic in the hospital, and/or for the privilege of
admitting patients into the hospital. In addition to these, the
physician's performance as a specialist is generally evaluated by
a peer review committee on the basis of mortality and morbidity
statistics, and feedback from patients, nurses, interns and
residents. A consultant remiss in his duties, or a consultant who
regularly falls short of the minimum standards acceptable to the
hospital or its peer review committee, is normally politely
terminated.
In other words, private hospitals, hire, fire and exercise real
control over their attending and visiting "consultant" staff. While
"consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the
patient's condition, the control exercised, the hiring, and the right
to terminate consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of the
payment of wages. In assessing whether such a relationship in
fact exists, the control test is determining. Accordingly, on the
basis of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-
employee relationship in effect exists between hospitals and their
attending and visiting physicians. This being the case, the
question now arises as to whether or not respondent hospital is
solidarily liable with respondent doctors for petitioner's
condition. 76
The basis for holding an employer solidarily responsible for the
negligence of its employee is found in Article 2180 of the Civil
Code which considers a person accountable not only for his own
acts but also for those of others based on the former's
responsibility under a relationship of patria potestas. 77 Such
responsibility ceases when the persons or entity concerned prove
that they have observed the diligence of a good father of the
family to prevent damage. 78 In other words, while the burden of
proving negligence rests on the plaintiffs, once negligence is
shown, the burden shifts to the respondents (parent, guardian,
teacher or employer) who should prove that they observed the
diligence of a good father of a family to prevent damage.
In the instant case, respondent hospital, apart from a general
denial of its responsibility over respondent physicians, failed to
adduce evidence showing that it exercised the diligence of a good
father of a family in the hiring and supervision of the latter. It failed
to adduce evidence with regard to the degree of supervision
which it exercised over its physicians. In neglecting to offer such
proof, or proof of a similar nature, respondent hospital thereby
failed to discharge its burden under the last paragraph of Article
2180. Having failed to do this, respondent hospital is
consequently solidarily responsible with its physicians for Erlinda's
condition.
Based on the foregoing, we hold that the Court of Appeals erred
in accepting and relying on the testimonies of the witnesses for
the private respondents. Indeed, as shown by the above
discussions, private respondents were unable to rebut the
presumption of negligence. Upon these disquisitions we hold that
private respondents are solidarily liable for damages under Article
2176 79 of the Civil Code.
We now come to the amount of damages due petitioners. The trial
court awarded a total of P632,000.00 pesos (should be
P616,000.00) in compensatory damages to the plaintiff, "subject
to its being updated" covering the period from 15 November 1985
up to 15 April 1992, based on monthly expenses for the care of
the patient estimated at P8,000.00.
At current levels, the P8000/monthly amount established by the
trial court at the time of its decision would be grossly inadequate
to cover the actual costs of home-based care for a comatose
individual. The calculated amount was not even arrived at by
looking at the actual cost of proper hospice care for the patient.
What it reflected were the actual expenses incurred and proved
by the petitioners after they were forced to bring home the patient
to avoid mounting hospital bills.
And yet ideally, a comatose patient should remain in a hospital or
be transferred to a hospice specializing in the care of the
chronically ill for the purpose of providing a proper milieu
adequate to meet minimum standards of care. In the instant case
for instance, Erlinda has to be constantly turned from side to side
to prevent bedsores and hypostatic pneumonia. Feeding is done
by nasogastric tube. Food preparation should be normally made
by a dietitian to provide her with the correct daily caloric
requirements and vitamin supplements. Furthermore, she has to
be seen on a regular basis by a physical therapist to avoid muscle
atrophy, and by a pulmonary therapist to prevent the
accumulation of secretions which can lead to respiratory
complications.
Given these considerations, the amount of actual damages
recoverable in suits arising from negligence should at least reflect
the correct minimum cost of proper care, not the cost of the care
the family is usually compelled to undertake at home to avoid
bankruptcy. However, the provisions of the Civil Code on actual or
compensatory damages present us with some difficulties.
Well-settled is the rule that actual damages which may be claimed
by the plaintiff are those suffered by him as he has duly proved.
The Civil Code provides:
Art. 2199. — Except as provided by law or by
stipulation, one is entitled to an adequate
compensation only for such pecuniary loss
suffered by him as he has duly proved. Such
compensation is referred to as actual or
compensatory damages.
Our rules on actual or compensatory damages generally assume
that at the time of litigation, the injury suffered as a consequence
of an act of negligence has been completed and that the cost can
be liquidated. However, these provisions neglect to take into
account those situations, as in this case, where the resulting
injury might be continuing and possible future complications
directly arising from the injury, while certain to occur, are difficult
to predict.
In these cases, the amount of damages which should be
awarded, if they are to adequately and correctly respond to the
injury caused, should be one which compensates for pecuniary
loss incurred and proved, up to the time of trial; and one which
would meet pecuniary loss certain to be suffered but which could
not, from the nature of the case, be made with certainty. 80 In
other words, temperate damages can and should be awarded on
top of actual or compensatory damages in instances where the
injury is chronic and continuing. And because of the unique nature
of such cases, no incompatibility arises when both actual and
temperate damages are provided for. The reason is that these
damages cover two distinct phases.
As it would not be equitable — and certainly not in the best
interests of the administration of justice — for the victim in such
cases to constantly come before the courts and invoke their aid in
seeking adjustments to the compensatory damages previously
awarded — temperate damages are appropriate. The amount
given as temperate damages, though to a certain extent
speculative, should take into account the cost of proper care.
In the instant case, petitioners were able to provide only home-
based nursing care for a comatose patient who has remained in
that condition for over a decade. Having premised our award for
compensatory damages on the amount provided by petitioners at
the onset of litigation, it would be now much more in step with the
interests of justice if the value awarded for temperate damages
would allow petitioners to provide optimal care for their loved one
in a facility which generally specializes in such care. They should
not be compelled by dire circumstances to provide substandard
care at home without the aid of professionals, for anything less
would be grossly inadequate. Under the circumstances, an award
of P1,500,000.00 in temperate damages would therefore be
reasonable. 81
In Valenzuela vs. Court of Appeals, 82 this Court was confronted
with a situation where the injury suffered by the plaintiff would
have led to expenses which were difficult to estimate because
while they would have been a direct result of the injury
(amputation), and were certain to be incurred by the plaintiff, they
were likely to arise only in the future. We awarded P1,000,000.00
in moral damages in that case.
Describing the nature of the injury, the Court therein stated:
As a result of the accident, Ma. Lourdes
Valenzuela underwent a traumatic
amputation of her left lower extremity at the
distal left thigh just above the knee. Because
of this, Valenzuela will forever be deprived of
the full ambulatory functions of her left
extremity, even with the use of state of the art
prosthetic technology. Well beyond the period
of hospitalization (which was paid for by Li),
she will be required to undergo adjustments
in her prosthetic devise due to the shrinkage
of the stump from the process of healing.
These adjustments entail costs, prosthetic
replacements and months of physical and
occupational rehabilitation and therapy.
During the lifetime, the prosthetic devise will
have to be replaced and readjusted to
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 19
changes in the size of her lower limb effected
by the biological changes of middle-age,
menopause and aging. Assuming she
reaches menopause, for example, the
prosthetic will have to be adjusted to respond
to the changes in bone resulting from a
precipitate decrease in calcium levels
observed in the bones of all post-menopausal
women. In other words, the damage done to
her would not only be permanent and lasting,
it would also be permanently changing and
adjusting to the physiologic changes which
her body would normally undergo through the
years. The replacements, changes, and
adjustments will require corresponding
adjustive physical and occupational therapy.
All of these adjustments, it has been
documented, are painful.
xxx xxx xxx
A prosthetic devise, however technologically
advanced, will only allow a reasonable
amount of functional restoration of the motor
functions of the lower limb. The sensory
functions are forever lost. The resultant
anxiety, sleeplessness, psychological injury,
mental and physical pain are inestimable. 83
The injury suffered by Erlinda as a consequence of private
respondents' negligence is certainly much more serious than the
amputation in the Valenzuela case.
Petitioner Erlinda Ramos was in her mid-forties when the incident
occurred. She has been in a comatose state for over fourteen
years now. The burden of care has so far been heroically
shouldered by her husband and children, who, in the intervening
years have been deprived of the love of a wife and a mother.
Meanwhile, the actual physical, emotional and financial cost of the
care of petitioner would be virtually impossible to quantify. Even
the temperate damages herein awarded would be inadequate if
petitioner's condition remains unchanged for the next ten years.
We recognized, in Valenzuela that a discussion of the victim's
actual injury would not even scratch the surface of the resulting
moral damage because it would be highly speculative to estimate
the amount of emotional and moral pain, psychological damage
and injury suffered by the victim or those actually affected by the
victim's condition. 84 The husband and the children, all petitioners
in this case, will have to live with the day to day uncertainty of the
patient's illness, knowing any hope of recovery is close to nil.
They have fashioned their daily lives around the nursing care of
petitioner, altering their long term goals to take into account their
life with a comatose patient. They, not the respondents, are
charged with the moral responsibility of the care of the victim. The
family's moral injury and suffering in this case is clearly a real one.
For the foregoing reasons, an award of P2,000,000.00 in moral
damages would be appropriate.
Finally, by way of example, exemplary damages in the amount of
P100,000.00 are hereby awarded. Considering the length and
nature of the instant suit we are of the opinion that attorney's fees
valued at P100,000.00 are likewise proper.
Our courts face unique difficulty in adjudicating medical
negligence cases because physicians are not insurers of life and,
they rarely set out to intentionally cause injury or death to their
patients. However, intent is immaterial in negligence cases
because where negligence exists and is proven, the same
automatically gives the injured a right to reparation for the
damage caused.
Established medical procedures and practices, though in constant
flux are devised for the purpose of preventing complications. A
physician's experience with his patients would sometimes tempt
him to deviate from established community practices, and he may
end a distinguished career using unorthodox methods without
incident. However, when failure to follow established procedure
results in the evil precisely sought to be averted by observance of
the procedure and a nexus is made between the deviation and
the injury or damage, the physician would necessarily be called to
account for it. In the case at bar, the failure to observe pre-
operative assessment protocol which would have influenced the
intubation in a salutary way was fatal to private respondents'
case.
WHEREFORE, the decision and resolution of the appellate court
appealed from are hereby modified so as to award in favor of
petitioners, and solidarily against private respondents the
following: 1) P1,352,000.00 as actual damages computed as of
the date of promulgation of this decision plus a monthly payment
of P8,000.00 up to the time that petitioner Erlinda Ramos expires
or miraculously survives; 2) P2,000,000.00 as moral damages, 3)
P1,500,000.00 as temperate damages; 4) P100,000.00 each as
exemplary damages and attorney's fees; and, 5) the costs of the
suit.
SO ORDERED.
Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.
HIRD DIVISION
HEIRS OF FLORES RESTAR namely: ESMENIA R. G.R. No. 161720
RESTAR, BERNARDITA R. RENTINO, LUCIA RESTAR,
RODOLFO RESTAR, JANET R. RELOJERO, LORNA R. Present:
RAMOS, MANUEL RESTAR, NENITA R. BELLEZA,
MIRASOL R. DELA CRUZ, ROSELLE R. MATORRE, PANGANIBAN,
POLICARPIO RESTAR and ADOLFO RESTAR SANDOVAL-GU
Petitioners, CORONA,
- versus - CARPIO MORAL
GARCIA, JJ.
HEIRS OF DOLORES R. CICHON, namely: RUDY R.
CICHON, NORMA C. LACHICA, NILDA C. JUMAYAO,
LYDIA C. SANTOS, and NELSON R. CICHON; HEIRS OF
PERPETUA R. STA. MARIA, namely GEORGE STA.
MARIA, LILIA M. MANIAGO, DERLY M. CONCEPCION,
GERVY STA. MARIA, DORY M. INDULO; HEIRS OF
MARIA R. ROSE, namely: TERESITA R. MALOCO,
ROLANDO ROSE, EDELYN R. PALACIO and MINERVA
R. PASTRANA, DOMINICA RESTAR-RELOJERO and
PACIENCIA RESTAR MANARES,
Respondents.
Promulgated:
November 22, 200
xx- - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -xx
DECISION
CARPIO MORALES, J.:
In 1935, Emilio Restar (Restar) died intestate, leaving eight (8) children-
compulsory heirs, namely: Flores Restar, Dolores Restar-Cichon, Perpetua
Restar-Sta. Maria, Paciencia Restar-Manares, Dominica Restar-Relojero,
Policarpio Restar, Maria Restar-Rose and Adolfo Restar.
In 1960, Restars eldest child, Flores, on the basis of a July 12, 1959 Joint
Affidavit[1] he executed with one Helen Restar, caused the cancellation of
Tax Declaration No. 6696[2]in Restars name covering a 5,918[3] square
meter parcel of land, Lot 3177 (the lot), located at Barangay Carugdog,
Lezo, Aklan which was among the properties left by Restar, and the
issuance of Tax Declaration No. 11134 in his name.
Flores died on June 10, 1989.
On November 5, 1998, the co-heirs of Flores discovered the cancellation
of Restars Tax Declaration No. 6696 and the issuance in lieu thereof of Tax
Declaration No. 11134[4] in his name.
On January 21, 1999, the heirs of Flores sisters Dolores R. Cichon,
Perpetua Sta. Maria, and Maria Rose who had in the meantime died,
together with Flores surviving sisters Dominica Restar-Relojero and
Paciencia Restar-Manares, filed a Complaint[5] against Flores heirs for
partition [of the lot], declaration of nullity of documents, ownership with
damages and preliminary injunction before the Regional Trial Court
(RTC) of Aklan.
Flores brothers Policarpio and Adolfo were impleaded also as defendants,
they being unwilling co-plaintiffs.
The plaintiffs, herein respondents, alleged that, inter alia, during the
lifetime of Flores, they were given their shares of palay from the lot and
even after Flores death up to 1991; after Flores death in 1989, his widow
Esmenia appealed to them to allow her to hold on to the lot to finance the
education of her children, to which they (the plaintiffs) agreed on the
condition that after the children had finished their education, it would be
divided into eight (8) equal parts; and upon their demand for partition of
the lot, the defendants Heirs of Flores refused, they claiming that they were
the lawful owners thereof as they had inherited it from Flores.
By Answer[6] filed February 23, 1999, the defendants-herein petitioners
Heirs of Flores claimed that they had been in possession of the lot in the
concept of owner for more than thirty (30) years and have been paying
realty taxes since time immemorial. And they denied having shared with
the plaintiffs the produce of the lot or that upon Flores death in 1989,
Esmenia requested the plaintiffs to allow her to hold on to it to finance her
childrens education, they contending that by 1977, the children had already
finished their respective courses.[7]
The defendants Heirs of Flores further claimed that after World War II and
under the new Tax Declaration in 1945, Flores caused the transfer of
parcels of ricelands situated in Carugdog, Lezo, Aklan to his siblings as
their shares from the estate of their father Restar;[8] and an extra-judicial
partition was subsequently executed on September 28, 1973 by Restars
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 20
heirs, which was notarized by one Atty. Jose Igtanloc, dividing and
apportioning among themselves four (4) parcels of land. [9]
The defendant Adolfo Restar, by separate Answer, [10] alleged that the
complaint did not state a cause of action as against him for he interposed
no objection to the partition of the lot among the heirs of Restar.
As for the defendant Policarpio Restar, he in his Amended
Answer[11] acknowledged Flores as the owner of the lot but claimed that a
portion of it, 1,315 square meters, was sold to him as shown by a Deed of
Absolute Sale dated May 14, 1981.[12] He thus prayed that, among other
things, an order for the partition of the lot among Restars heirs be issued
excluding, however, that portion sold to him by Flores.[13]
After trial, Branch 3 of the RTC of Kalibo, Aklan held that Flores share in
Restars estate was not the lot but that covered by Cadastral Lot No. 3183.
Nevertheless, the trial court, holding that Flores and his heirs had
performed acts sufficient to constitute repudiation of the co-ownership,
concluded that they had acquired the lot by prescription.[14]
Respecting the defendant Policarpios claim that a portion of the lot was
sold to him, the trial court discredited the same upon noting that Flores
signature in the purported Deed of Sale differed from those appearing in
other documents submitted by the parties; in 1981, when the said Deed of
Sale was alleged to have been executed, Flores was admittedly paralyzed
and bedridden and could not have written his name in a straight manner, as
in fact his signature appearing in at least two documents dated 1980 was
crooked, and there existed discrepancies in the spelling of Flores wifes
signature which read Esmea in the deed, and not as Esmenia.[15]
The trial court thus dismissed the complaint by Decision of June 30,
1999.[16]
On appeal by the defendants Heirs of Flores and Policarpio Restar, the
appellate court, by Decision of October 29, 2002.[17] reversed the decision
of the trial court, it finding that the defendants Heirs of Flores failed to
prove that their possession of the lot excluded their co-owners or that they
derived title to it from a separate conveyance to them by Restar.
The appellate court further found that there was no adequate notice by
Flores to his other co-heirs/co-owners of the repudiation of the co-
ownership and neither was there a categorical assertion by the defendants
of their exclusive right to the entire lot that barred the
plaintiffs claim of ownership.[18]
And the appellate court found it credible for the plaintiffs to have failed to
immediately take legal action to protect their rights on account of
forbearance towards their eldest brother who had asked them to continue
cultivating the lot to support his childrens education.[19]
Respecting the defendant Policarpios claim that part of the lot had been
sold to him by Flores, the appellate court sustained the trial courts rejection
thereof.
Accordingly, the appellate court disposed:
WHEREFORE, in view of all the foregoing, the appeal is
hereby GRANTED in so far as plaintiffs-appellants
Heirs of Dolores Cichon, et al., are concerned
and DENIED in so far as defendant-appellant
Policarpio Restar. The decision of the Regional
Trial Court of Kalibo, Aklan, Branch 3, dated June
30, 1999 is MODIFIED. The ruling of the said
court that the heirs of Flores Restar have acquired
ownership by adverse possession of the land in
question, Cadastral Lot No. 6686, is
hereby REVERSED.
SO ORDERED. (Emphasis in the original)
The appellate court having denied reconsideration of its decision, only the
defendants Heirs of Flores filed the present petition, assigning the
following errors:
A. THE COURT OF APPEALS
PATENTLY ERRED IN
REVERSING THE RULING OF
THE LOWER COURT THAT THE
PETITIONERS AS HEIRS OF
FLORES RESTAR HAVE
ACQUIRED OWNERSHIP BY
ADVERSE POSSESSION OF THE
LAND IN QUESTION.
B. THE COURT OF APPEALS
PATENTLY ERRED IN NOT
RULING THAT THERE WAS
ACQUISITIVE PRESCRIPTION ON
THE LAND IN QUESTION
NOTWITHSTANDING THAT THE
LAND IN QUESTION HAS BEEN
DECLARED IN THE NAME OF
FLORES RESTAR, FATHER OF
PETITIONERS, AS EARLY AS 1960
AND THAT PETITIONERS AND
THEIR PREDECESSOR-IN-
INTEREST HAVE BEEN IN OPEN,
CONTINUOUS, EXCLUSIVE AND
NOTORIOUS POSSESSION OF
THE LAND IN QUESTION IN THE
CONCEPT OF OWNER FOR MORE
THAN THIRTY (30) YEARS.[20]
The petition is impressed with merit.
Article 494 of the New Civil Code expressly provides:
ART. 494. No co-owner shall be obliged to remain in the co-
ownership. Each co-owner may demand at any
time the partition of the thing owned in common,
insofar as his share is concerned.
xxx
No prescription shall run in favor of a co-owner or co-heir
against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-
ownership.
While the action to demand partition of a co-owned property does not
prescribe, a co-owner may acquire ownership thereof by
prescription[21] where there exists a clear repudiation of the co-ownership,
and the co-owners are apprised of the claim of adverse and exclusive
ownership.[22]
Acquisitive prescription of dominion and other real rights may be ordinary
or extraordinary. Ordinary acquisitive prescription requires possession of
things in good faith and with just title for a period of ten years. Without
good faith and just title, acquisitive prescription can only be extraordinary
in character which requires uninterrupted adverse possession for thirty
years.
Thus, the New Civil Code provides:
ART. 1117. Acquisitive prescription of
dominion and other real rights may be ordinary
or extraordinary.
Ordinary acquisitive prescription requires
possession of things in good faith and with just title
for the time fixed by law.
ART. 1134. Ownership and other real rights over
immovable property are acquired by ordinary
prescription through possession of ten years.
ART. 1137. Ownership and other real rights over immovables
also prescribe through uninterrupted adverse
possession thereof for thirty years, without need of
title or of good faith.
Resolving the main issue of whether petitioners acquired ownership over
the lot by extraordinary prescription, the appellate court held in the
negative.
While this Court is not a trier of facts, if the inference drawn
by the appellate court from the facts is manifestly mistaken, it may, in the
interest of justice, review the evidence in order to arrive at the correct
factual conclusions based on the record.[23]
Contrary to the findings of the appellate court, the records of
the case amply support petitioners claim that the requirements for
extraordinary prescription had been duly met.
When Restar died in 1935, his eight children became pro
indiviso co-owners of the lot by intestate succession. Respondents never
possessed the lot, however, much less asserted their claim thereto until
January 21, 1999 when they filed the complaint for partition subject of the
present petition.
In contrast, Flores took possession of the lot after Restars death
and exercised acts of dominion thereon tilling and cultivating the land,
introducing improvements, and enjoying the produce thereof.
The statutory period of prescription, however, commenced not
in 1935 but in 1960 when Flores, who had neither title nor good faith,
secured a tax declaration in his name and may, therefore, be said to have
adversely claimed ownership of the lot. And respondents were also
deemed to have been on said date become aware of the adverse claim.[24]
Flores possession thus ripened into ownership through
acquisitive prescription after the lapse of thirty years in accordance with
the earlier quoted Article 1137 of the New Civil Code.
The following observations of the trial court thus merit this
Courts approval.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 21

The evidence proved that as far back as 1959, Flores
Restar adjudicated unto himself the whole land in
question as his share from his father by means of a
joint affidavit which he executed with one Helen
Restar, and he requested the Provincial
Treasurer/Assessor to have the land declared in his
name. It was admitted by the parties during the pre-
trial that this affidavit was the basis of the transfer
of Tax Declaration No. 6686 from Emilio Restar to
Flores Restar. So that from 1960 the land was
declared in the name of Flores Restar (Exhibit 10).
This was the first concrete act of repudiation made
by Flores of the co-ownership over the land in
question. x x x
The trial courts finding and conclusion that Flores and his heirs
had for more than 38 years possessed the land in open, adverse and
continuous possession in the concept of owner − which length of
possession had never been questioned, rebutted or disputed by any of
respondents, being thus duly supported by substantial evidence, he and his
heirs have become owner of the lot by extraordinary prescription. It is
unfortunate that respondents slept on their rights. Dura lex sed lex.
WHEREFORE, the petition is GRANTED. The decision of
the Court of Appeals is REVERSED and SET ASIDE and the June 30,
1999 decision of the trial court is REINSTATED.
No pronouncement as to costs.
SO ORDERED.

Plaintiffs did not deny that aside from the verbal CONCHITA CARPIO MORALES
partition of one parcel of land in Carugdog, Lezo, Associate Justice
Aklan way back in 1945, they also had an amicable
partition of the lands of Emilio Restar in Cerrudo
and Palale, Banga Aklan on September 28, 1973
(exhibit 20). If they were able to demand the
partition, why then did they not demand the
inclusion of the land in question in order to settle
once and for all the inheritance from their father
Emilio Restar, considering that at that time all of the
brothers and sisters, the eight heirs of Emilio Restar,
were still alive and participated in the signing of the
extra-judicial partition?

Also it was admitted that Flores died only in 1989.

Plaintiffs had all the chances (sic) to file a case
against him from 1960, or a period of 29 years when
he was still alive, yet they failed to do so. They filed
the instant case only on January 22, 1999, almost ten
(10) years after Flores death.

From the foregoing evidence, it can be

seen that the adverse possession of Flores started in
1960, the time when the tax declaration was
transferred in his name. The period of acquisitive
prescription started to run from this date. Hence, the
adverse possession of Flores Restar from 1960
vested in him exclusive ownership of the land
considering the lapse of more than 38 years.
Acquisitive prescription of ownership, laches and
prescription of the action for partition should be
considered in favor of Flores Restar and his heirs. [25]

While tax declarations and receipts are not conclusive evidence

of ownership and do not prove title to the land, nevertheless, when coupled
with actual possession, they constitute evidence of great weight [26] and can
be the basis of a claim of ownership through prescription. [27]

As for respondents claim that they have been receiving shares

from the produce of the land, it was correctly discredited by the trial court.

[P]laintiffs claim that Flores Restar gave them five

to eight gantas each as their shares in the produce
cannot be sustained. A few gantas cannot be
considered one-eight share of sixty (60) cavans of
palay produced per cropping. One eight of sixty
cavans would be at least six cavans, not merely
gantas after excluding expenses for cultivation and
production. If plaintiffs were to be believed, their
whole 7/8 share of the produce would total two
cavans, six gantas only at the usual rate of 25 gantas
per cavan.[28]

Unless there are strong and impelling reasons to disturb the trial courts
findings of facts which must, as a matter of judicial policy, be accorded
with the highest respect, they must remain. Respondents have not,
however, proffered any reason warranting the disturbance of the trial
courts findings of facts.

Indeed, the following acts of Flores show possession adverse

to his co-heirs: the cancellation of the tax declaration certificate in the
name of Restar and securing another in his name; the execution of a Joint
Affidavit stating that he is the owner and possessor thereof to the
exclusion of respondents; payment of real estate tax and irrigation fees
without respondents having ever contributed any share therein; and
continued enjoyment of the property and its produce to the exclusion of
respondents. And Flores adverse possession was continued by his heirs.

The appellate courts crediting of respondents justification for

failing to immediately take legal action to protect their rights forbearance
toward Flores and/or his wife who asked to be allowed to cultivate the land
to support their childrens education does not impress. For assuming such
justification to be true, why did not any of respondents assail Flores
continuous possession after his children completed their college education
in 1977?
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 22
FIRST DIVISION
[G.R. No. 68166. February 12, 1997]
HEIRS OF EMILIANO NAVARRO, petitioner,
vs. INTERMEDIATE APPELLATE COURT AND HEIRS
OF SINFOROSO PASCUAL, respondents.
DECISION
HERMOSISIMA, JR., J.:
Unique is the legal question visited upon the claim of an
applicant in a Land Registration case by oppositors thereto, the
Government and a Government lessee, involving as it does
ownership of land formed by alluvium.
The applicant owns the property immediately adjoining the
land sought to be registered. His registered property is bounded on
the east by the Talisay River, on the west by the Bulacan River,
and on the north by the Manila Bay. The Talisay River and the
Bulacan River flow down towards the Manila Bay and act as
boundaries of the applicant's registered land on the east and on the
west.
The land sought to be registered was formed at the northern
tip of the applicant's land. Applicant's registered property is
bounded on the north by the Manila Bay.
The issue: May the land sought to be registered be deemed
an accretion in the sense that it naturally accrues in favor of the
riparian owner or should the land be considered as foreshore land?
Before us is a petition for review of: (1) the decision[1] and (2)
two subsequent resolutions[2] of the Intermediate Appellate
Court[3] (now the Court of Appeals) in Land Registration Case No.
N-84,[4] the application over which was filed by private respondents'
predecessor-in-interest, Sinforoso Pascual, now deceased, before
the Court of First Instance[5] (now the Regional Trial Court) of
Balanga, Bataan.
There is no dispute as to the following facts:
On October 3, 1946, Sinforoso Pascual, now deceased, filed an
application for foreshore lease covering a tract of foreshore land in
Sibocon, Balanga, Bataan, having an area of approximately seventeen
(17) hectares. This application was denied on January 15, 1953. So was
his motion for reconsideration.
Subsequently, petitioners' predecessor-in-interest, also now deceased,
Emiliano Navarro, filed a fishpond application with the Bureau of
Fisheries covering twenty five (25) hectares of foreshore land also in
Sibocon, Balanga, Bataan. Initially, such application was denied by the
Director of Fisheries on the ground that the property formed part of the
public domain. Upon motion for reconsideration, the Director of
Fisheries, on May 27, 1988, gave due course to his application but only
to the extent of seven (7) hectares of the property as may be certified by
the Bureau of Forestry as suitable for fishpond purposes.
The Municipal Council of Balanga, Bataan, had opposed Emiliano
Navarro's application. Aggrieved by the decision of the Director of
Fisheries, it appealed to the Secretary of Natural Resources who,
however, affirmed the grant. The then Executive Secretary, acting in
behalf of the President of the Philippines, similarly affirmed the grant.
On the other hand, sometime in the early part of 1960, Sinforoso Pascual
filed an application to register and confirm his title to a parcel of land,
situated in Sibocon, Balanga, Bataan, described in Plan Psu-175181 and
said to have an area of 146,611 square meters. Pascual claimed that this
land is an accretion to his property, situated in Barrio Puerto Rivas,
Balanga, Bataan, and covered by Original Certificate of Title No.
6830. It is bounded on the eastern side by the Talisay River, on the
western side by the Bulacan River, and on the northern side by the
Manila Bay. The Talisay River as well as the Bulacan River flow
downstream and meet at the Manila Bay thereby depositing sand and silt
on Pascual's property resulting in an accretion thereon. Sinforoso
Pascual claimed the accretion as the riparian owner.
On March 25, 1960, the Director of Lands, represented by the Assistant
Solicitor General, filed an opposition thereto stating that neither Pascual
nor his predecessors-in-interest possessed sufficient title to the subject
property, the same being a portion of the public domain and, therefore, it
belongs to the Republic of the Philippines. The Director of Forestry,
through the Provincial Fiscal, similarly opposed Pascual's application for
the same reason as that advanced by the Director of Lands. Later on,
however, the Director of Lands withdrew his opposition. The Director of
Forestry become the sole oppositor.
On June 2, 1960, the court a quo issued an order of general default
excepting the Director of Lands and the Director of Forestry.
Upon motion of Emiliano Navarro, however, the order of general default
was lifted and, on February 13, 1961, Navarro thereupon filed an
opposition to Pascual's application. Navarro claimed that the land sought
to be registered has always been part of the public domain, it being a
part of the foreshore of Manila Bay; that he was a lessee and in
possession of a part of the subject property by virtue of a fishpond
permit issued by the Bureau of Fisheries and confirmed by the Office of
the President; and that he had already converted the area covered by the
lease into a fishpond.
During the pendency of the land registration case, that is, on November
6, 1960, Sinforoso Pascual filed a complaint for ejectment against
Emiliano Navarro, one Marcelo Lopez and their privies, alleged by
Pascual to have unlawfully claimed and possessed, through stealth, force
and strategy, a portion of the subject property covered by Plan Psu-
175181. The defendants in the case were alleged to have built a
provisional dike thereon: thus they have thereby deprived Pascual of the
premises sought to be registered. This, notwithstanding repeated
demands for defendants to vacate the property.
The case was decided adversely against Pascual. Thus, Pascual appealed
to the Court of First Instance (now Regional Trial Court) of Balanga,
Bataan, the appeal having been docketed as Civil Case No. 2873.
Because of the similarity of the parties and the subject matter, the
appealed case for ejectment was consolidated with the land registration
case and was jointly tried by the court a quo.
During the pendency of the trial of the consolidated cases, Emiliano
Navarro died on November 1, 1961 and was substituted by his heirs, the
herein petitioners.
Subsequently, on August 26, 1962, Pascual died and was substituted by
his heirs, the herein private respondents.
On November 10, 1975, the court a quo rendered judgment finding the
subject property to be foreshore land and, being a part of the public
domain, it cannot be the subject of land registration proceedings.
The decision's dispositive portion reads:
"WHEREFORE, judgment is rendered:
(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's
complaint for ejectment in Civil Case No. 2873;
(2) Denying the application of Sinforoso Pascual for land registration
over the land in question; and
(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in
Civil Case No. 2873 and as applicant in Land Registration Case No. N-
84 to pay costs in both instances."[6]
The heirs of Pascual appealed and, before the respondent
appellate court, assigned the following errors:
"1. The lower court erred in not finding the land in question as an
accretion by the action of the Talisay and Bulacan Rivers to the land
admittedly owned by applicants-appellants [private respondents].
2. The lower court erred in holding that the land in question is foreshore
land.
3. The lower court erred in not ordering the registration of the and is
controversy in favor of applicants-appellants [private respondents].
4. The lower court erred in not finding that the applicants-appellants
[private respondents] are entitled to eject the oppositor-appellee
[petitioners]."[7]
On appeal, the respondent court reversed the findings of the
court a quo and granted the petition for registration of the subject
property but excluding therefrom fifty (50) meters from corner 2
towards corner 1; and fifty meters (50) meters from corner 5
towards corner 6 of the Psu-175181.
The respondent appellate court explained the reversal in this
wise:
"The paramount issue to be resolved in this appeal as set forth by the
parties in their respective briefs is whether or not the land sought to be
registered is accretion or foreshore land, or, whether or not said land was
formed by the action of the two rivers of Talisay and Bulacan or by the
action of the Manila Bay. If formed by the action of the Talisay and
Bulacan rivers, the subject land is accretion but if formed by the action
of the Manila Bay then it is foreshore land.
xxx
It is undisputed that applicants-appellants [private respondents] owned
the land immediately adjoining the land sought to be registered. Their
property which is covered by OCT No. 6830 is bounded on the east by
the Talisay River, on the west by the Bulacan River, and on the north by
the Manila Bay. The Talisay and Bulacan rivers come from inland
flowing downstream towards the Manila Bay. In other words, between
the Talisay River and the Bulacan River is the property of applicants
with both rivers acting as the boundary to said land and the flow of both
rivers meeting and emptying into the Manila Bay. The subject land was
formed at the tip or apex of appellants' [private respondents'] land adding
thereto the land now sought to be registered.
This makes this case quite unique because while it is undisputed that the
subject land is immediately attached to appellants' [private respondents']
land and forms the tip thereof, at the same time, said land immediately
faces the Manila Bay which is part of the sea. We can understand
therefore the confusion this case might have caused the lower court,
faced as it was with the uneasy problem of deciding whether or not the
subject land was formed by the action of the two rivers or by the action
of the sea. Since the subject land is found at the shore of the Manila Bay
facing appellants' [private respondents'] land, it would be quite easy to
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 23
conclude that it is foreshore and therefore part of the patrimonial
property of the State as the lower court did in fact rule x x x .
xxx
It is however undisputed that appellants' [private respondents'] land lies
between these two rivers and it is precisely appellants' [private
respondents'] land which acts as a barricade preventing these two rivers
to meet. Thus, since the flow of the two rivers is downwards to the
Manila Bay the sediments of sand and silt are deposited at their mouths.
It is, therefore, difficult to see how the Manila Bay could have been the
cause of the deposit thereat for in the natural course of things, the waves
of the sea eat the land on the shore, as they suge [sic] inland. It would
not therefore add anything to the land but instead subtract from it due to
the action of the waves and the wind. It is then more logical to believe
that the two rivers flowing towards the bay emptied their cargo of sand,
silt and clay at their mouths, thus causing appellants' [private
respondents'] land to accumulate therein.
However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic]
not seem to accept this theory and stated that the subject land arose only
when x x x Pascual planted 'palapat' and 'bakawan' trees thereat to serve
as a boundary or strainer. But we do not see how this act of planting
trees by Pascual would explain how the land mass came into
being. Much less will it prove that the same came from the
sea. Following Mr. Justice Serrano's argument that it were the few trees
that acted as strainers or blocks, then the land that grew would have
stopped at the place where the said trees were planted. But this is not so
because the land mass went far beyond the boundary, or where the trees
were planted.
On the other hand, the picture-exhibits of appellants' [private
respondents'] clearly show that the land that accumulated beyond the so-
called boundary, as well as the entire area being applied for is dry land,
above sea level, and bearing innumerable trees x x x. The existence of
vegetation on the land could only confirm that the soil thereat came from
inland rather than from the sea, for what could the sea bring to the shore
but sand, pebbles, stones, rocks and corrals? On the other hand, the two
rivers would be bringing soil on their downward flow which they
brought along from the eroded mountains, the lands along their path, and
dumped them all on the northern portion of appellants' [private
respondents'] land.
In view of the foregoing, we have to deviate from the lower court's
finding. While it is true that the subject land is found at the shore of the
Manila Bay fronting appellants' [private respondents'] land, said land is
not foreshore but an accretion from the action of the Talisay and Bulacan
rivers. In fact, this is exactly what the Bureau of Lands found out, as
shown in the following report of the Acting Provincial Officer, Jesus M.
Orozco, to wit:
'Upon ocular inspection of the land subject of this registration made on
June 11, 1960, it was found out that the said land is x x x sandwitched
[sic] by two big rivers x x x These two rivers bring down considerable
amount of soil and sediments during floods every year thus raising the
soil of the land adjoining the private property of the applicant [private
respondents]. About four-fifth [sic] of the area applied for is now dry
land whereon are planted palapat trees thickly growing thereon. It is the
natural action of these two rivers that has caused the formation of said
land x x x subject of this registration case. It has been formed, therefore,
by accretion. And having been formed by accretion, the said land may be
considered the private property of the riparian owner who is the
applicant herein [private respondents'] x x x .
In view of the above, the opposition hereto filed by the government
should be withdrawn, except for the portion recommended by the land
investigator in his report dated May 2, 1960, to be excluded and
considered foreshore. x x x'
Because of this report, no less than the Solicitor General representing the
Bureau of Lands withdrew his opposition dated March 25, 1960, and
limited 'the same to the northern portion of the land applied for,
compromising a strip 50 meters wide along the Manila Bay, which
should be declared public land as part of the foreshore' x x x.[8]
Pursuant to the aforecited decision, the respondent appellate court
ordered the issuance of the corresponding decree of registration in
the name of private respondents and the reversion to private
respondents of the possession of the portion of the subject property
included in Navarro's fishpond permit.
On December 20, 1978, petitioners filed a motion for
reconsideration of the aforecited decision. The Director of Forestry
also moved for the reconsideration of the same decision. Both
motions were opposed by private respondents on January 27,
1979.
On November 21, 1980, respondent appellate court
promulgated a resolution denying the motion for reconsideration
filed by the Director of Forestry. It, however, modified its decision,
to read, viz:
"(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate
that portion included in their fishpond permit covered by Plan Psu-
175181 and hand over possession of said portion to applicants-
appellants, if the said portion is not within the strip of land fifty (50)
meters wide along Manila Bay on the northern portion of the land
subject of the registration proceedings and which area is more
particularly referred to as fifty (50) meters from corner 2 towards corner
1; and fifty (50) meters from corner 5 towards corner 6 of Plan Psu-
175181. x x x[9]
On December 15, 1980, we granted the Solicitor General,
acting as counsel for the Director of Forestry, an extension of time
within which to file in this court, a petition for review of the decision
dated November 29, 1978 of the respondent appellate court and of
the aforecited resolution dated November 21, 1980.
Thereafter, the Solicitor General, in behalf of the Director of
Forestry, filed a petition for review entitled, "The Director of Forestry
vs. the Court of Appeals."[10] We, however, denied the same in a
minute resolution dated July 20, 1981, such petition having been
prematurely filed at a time when the Court of Appeals was yet to
resolve petitioners' pending motion to set aside the resolution dated
November 21, 1980.
On October 9, 1981, respondent appellate court denied
petitioners' motion for reconsideration of the decision dated
November 29, 1978.
On October 17, 1981, respondent appellate court made an
entry of judgment stating that the decision dated November 29,
1978 had become final and executory as against herein petitioners
as oppositors in L.R.C. Case No. N-84 and Civil Case No. 2873 of
the Court of First Instance (now the Regional Trial Court) of
Balanga, Bataan.
On October 26, 1981, a second motion for reconsideration of
the decision dated November 29, 1978 was filed by petitioners' new
counsel.
On March 26, 1982, respondent appellate court issued a
resolution granting petitioners' request for leave to file a second
motion for reconsideration.
On July 13, 1984, after hearing, respondent appellate court
denied petitioners' second motion for reconsideration on the
ground that the same was filed out of time, citing Rule 52, Section
1 of the Rules of Court which provides that a motion for
reconsideration shall be made ex-parte and filed within fifteen (15)
days from the notice of the final order or judgment.
Hence this petition where the respondent appellate court is
imputed to have palpably erred in appreciating the facts of the case
and to have gravely misapplied statutory and case law relating to
accretion, specifically, Article 457 of the Civil Code.
We find merit in the petition.
The disputed property was brought forth by both the
withdrawal of the waters of Manila Bay and the accretion formed
on the exposed foreshore land by the action of the sea which
brought soil and sand sediments in turn trapped by the palapat and
bakawan trees planted thereon by petitioner Sulpicio Pascual in
1948.
Anchoring their claim of ownership on Article 457 of the Civil
Code, private respondents vigorously argue that the disputed 14-
hectare land is an accretion caused by the joint action of the Talisay
and Bulacan Rivers which run their course on the eastern and
western boundaries, respectively, of private respondents' own tract
of land.
Accretion as a mode of acquiring property under said Article
457, requires the concurrence of the following requisites: (1) that
the accumulation of soil or sediment be gradual and imperceptible;
(2) that it be the result of the action of the waters of the river; and
(3) that the land where the accretion takes place is adjacent to the
bank of the river.[11] Accretion is the process whereby the soil is
deposited, while alluvium is the soil deposited on the estate fronting
the river bank;[12] the owner of such estate is called the riparian
owner. Riparian owners are, strictly speaking, distinct from littoral
owners, the latter being owners of lands bordering the shore of the
sea or lake or other tidal waters.[13] The alluvium, by mandate of
Article 457 of the Civil Code, is automatically owned by the riparian
owner from the moment the soil deposit can be seen [14] but is not
automatically registered property, hence, subject to acquisition
through prescription by third persons.[15]
Private respondents' claim of ownership over the disputed
property under the principle of accretion, is misplaced.
First, the title of private respondents' own tract of land reveals
its northeastern boundary to be Manila Bay. Private respondents'
land, therefore, used to adjoin, border or front the Manila Bay and
not any of the two rivers whose torrential action, private
respondents insist, is to account for the accretion on their land. In
fact, one of the private respondents, Sulpicio Pascual, testified in
open court that the waves of Manila Bay used to hit the disputed
land being part of the bay's foreshore but, after he had planted
palapat and bakawan trees thereon in 1948, the land began to
rise.[16]
Moreover, there is no dispute as to the location of: (a) the
disputed land; (b) private respondents' own tract of land; (c) the
Manila Bay; and, (d) the Talisay and Bulacan Rivers. Private
respondents' own land lies between the Talisay and Bulacan
Rivers; in front of their land on the northern side lies now the
disputed land where before 1948, there lay the Manila Bay. If the
accretion were to be attributed to the action of either or both of the
Talisay and Bulacan Rivers, the alluvium should have been
deposited on either or both of the eastern and western boundaries
of private respondents' own tract of land, not on the northern portion
thereof which is adjacent to the Manila Bay. Clearly lacking, thus,
is the third requisite of accretion, which is, that the alluvium is
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 24

deposited on the portion of claimant's land which is adjacent to the
river bank.
Second, there is no dispute as to the fact that private
respondents' own tract of land adjoins the Manila Bay. Manila Bay
is obviously not a river, and jurisprudence is already settled as to
what kind of body of water the Manila Bay is. It is to be remembered
that we held that:
"Appellant next contends that x x x Manila Bay cannot be considered as
a sea. We find said contention untenable. A bay is part of the sea, being
a mere indentation of the same:
'Bay. An opening into the land where the water is shut in on all sides
except at the entrance; an inlet of the sea; an arm of the sea, distinct from
a river, a bending or curbing of the shore of the sea or of a lake.' 7 C.J.
1013-1014."[17]
The disputed land, thus, is an accretion not on a river bank
but on a sea bank, or on what used to be the foreshore of Manila
Bay which adjoined private respindents' own tract of land on the
northern side. As such, the applicable law is not Article 457 of the
Civil Code but Article 4 of the Spanish Law of Waters of 1866.
The process by which the disputed land was formed, is not
difficult to discern from the facts of the case. As the trial court
correctly observed:
planted palapat and bakawan trees in the land involved, inasmuch as
these trees were yet small, the waves of the sea could still reach the
dike. This must be so because in x x x the survey plan of the titled
property approved in 1918, said titled land was bounded on the north by
Manila Bay. So Manila Bay was adjacent to it on the north. It was only
after the planting of the aforesaid trees in 1948 that the land in question
began to rise or to get higher in elevation.
The trees planted by appellants in 1948 became a sort of strainer of the
sea water and at the same time a kind of block to the strained sediments
from being carried back to the sea by the very waves that brought them
to the former shore at the end of the dike, which must have caused the
shoreline to recede and dry up eventually raising the former shore
leading to the formation of the land in question."[19]
In other words, the combined and interactive effect of the planting
of palapat and bakawan trees, the withdrawal of the waters of
Manila Bay eventually resulting in the drying up of its former
foreshore, and the regular torrential action of the waters of Manila
Bay, is the formation of the disputed land on the northern boundary
of private respondents' own tract of land.
The disputed property is an accretion on a sea bank, Manila Bay being
an inlet or an arm of the sea; as such, the disputed property is, under
Article 4 of the Spanish Law of Waters of 1866, part of the public
domain.

At the outset, there is a need to distinguish between Manila

"A perusal of the survey plan x x x of the land subject matter of these
Bay and Laguna de Bay.
cases shows that on the eastern side, the property is bounded by Talisay
While we held in the case of Ignacio v. Director of Lands and
River, on the western side by Bulacan River, on the southern side by Lot
Valeriano[20] that Manila Bay is considered a sea for purposes of
1436 and on the northern side by Manila Bay. It is not correct to state
determining which law on accretion is to be applied in multifarious
that the Talisay and Bulacan Rivers meet a certain portion because the
situations, we have ruled differently insofar as accretions on lands
two rivers both flow towards Manila Bay. The Talisay River is straight
adjoining the Laguna de Bay are concerned.
while the Bulacan River is a little bit meandering and there is no portion
In the cases of Government of the P.I v. Colegio de San
where the two rivers meet before they end up at Manila Bay. The land
Jose,[21] Republic v. Court of Appeals,[22] Republic v.
which is adjacent to the property belonging to Pascual cannot be
Alagad[23], and Meneses v. Court of Appeals,[24] we categorically
considered an accretion [caused by the action of the two rivers].
ruled that Laguna de Bay is a lake the accretion on which, by the
Applicant Pascual x x x has not presented proofs to convince the Court
mandate of Article 84 of the Spanish Law of Waters of 1866,
that the land he has applied for registration is the result of the settling
belongs to the owner of the land contiguous thereto.
down on his registered land of soil, earth or other deposits so as to be
The instant controversy, however, brings a situation calling
rightfully be considered as an accretion [caused by the action of the two
for the application of Article 4 of the Spanish Law of Waters of 1866,
rivers]. Said Art. 457 finds no applicability where the accretion must
the disputed land being an accretion on the foreshore of Manila Bay
have been caused by action of the bay."[18]
which is, for all legal purposes, considered a sea.
Article 4 of the Spanish Law of Waters of August 3, 1866
The conclusion formed by the trial court on the basis of the provides as follows:
foregoing observation is that the disputed land is part of the
foreshore of Manila Bay and therefore, part of the public
"Lands added to the shores by accretions and alluvial deposits caused by
domain. The respondent appellate court, however, perceived the
the action of the sea, form part of the public domain. When they are no
fact that petitioners' own land lies between the Talisay and Bulacan
longer washed by the waters of the sea and are not necessary for
Rivers, to be basis to conclude that the disputed land must be an
purposes of public utility, or for the establishment of special industries,
accretion formed by the action of the two rivers because private
or for the coast-guard service, the Government shall declare them to be
respondents' own land acted as a barricade preventing the two
the property of the owners of the estates adjacent thereto and as
rivers to meet and that the current of the two rivers carried
increment thereof."
sediments of sand and silt downwards to the Manila Bay which
accumulated somehow to a 14-hectare land. These conclusions,
however, are fatally incongruous in the light of the one undisputed In the light of the aforecited vintage but still valid law,
critical fact: the accretion was deposited, not on either the eastern unequivocal is the public nature of the disputed land in this
or western portion of private respondents' land where a river each controversy, the same being an accretion on a sea bank which, for
runs, but on the northern portion of petitioners' land which adjoins all legal purposes, the foreshore of Manila Bay is. As part of the
the Manila Bay. Worse, such conclusions are further eroded of their public domain, the herein disputed land is intended for public uses,
practical logic and consonance with natural experience in the light and "so long as the land in litigation belongs to the national domain
of Sulpicio Pascual's admission as to having planted palapat and and is reserved for public uses, it is not capable of being
bakawan trees on the northern boundary of their own land. In appropriated by any private person, except through express
amplification of this, plainly more reasonable and valid are Justice authorization granted in due form by a competent authority."[25]Only
Mariano Serrano's observations in his dissenting opinion when he the executive and possibly the legislative departments have the
stated that: right and the power to make the declaration that the lands so
gained by action of the sea is no longer necessary for purposes of
public utility or for the cause of establishment of special industries
"As appellants' (titled) land x x x acts as a barricade that prevents the
or for coast guard services.[26] Petitioners utterly fail to show that
two rivers to meet, and considering the wide expanse of the boundary
either the executive or legislative department has already declared
between said land and the Manila Bay, measuring some 593.00 meters x
the disputed land as qualified, under Article 4 of the Spanish Law
x x it is believed rather farfetched for the land in question to have been
of Waters of 1866, to be the property of private respondents as
formed through 'sediments of sand and salt [sic] . . . deposited at their
owners of the estates adjacent thereto.
[rivers'] mouths.' Moreover, if 'since the flow of the two rivers is
WHEREFORE, the instant Petition for Review is hereby
downwards to the Manila Bay the sediments of sand and silt are
GRANTED.
deposited at their mouths,' why then would the alleged cargo of sand, silt
The decision of the Intermediate Appellate Court (now Court
and clay accumulate at the northern portion of appellants' titled land
of Appeals) in CA G.R. No. 59044-R dated November 29, 1978 is
facing Manila Bay instead of merely at the mouths and banks of these
hereby REVERSED and SET ASIDE. The resolution dated
two rivers? That being the case, the accretion formed at said portion of
November 21, 1980 and March 28, 1982, respectively,
appellants' titled [land] was not caused by the current of the two rivers
promulgated by the Intermediate Appellate Court are likewise
but by the action of the sea (Manila Bay) into which the rivers empty.
REVERSED and SET ASIDE.
The conclusion x x x is not supported by any reference to the evidence
The decision of the Court of First Instance (now the Regional
which, on the contrary, shows that the disputed land was formed by the
Trial Court), Branch 1, Balanga, Bataan, is hereby ORDERED
action of the sea. Thus, no less than Sulpicio Pascual, one of the heirs of
REINSTATED.
the original applicant, testified on cross-examination that the land in
Costs against private respondents.
dispute was part of the shore and it was only in 1948 that he noticed that
the land was beginning to get higher after he had planted trees thereon in SO ORDERED.
1948. x x x
x x x it is established that before 1948 sea water from the Manila Bay at Padilla, (Chairman), Bellosillo and Kapunan, JJ., concur.
high tide could reach as far as the dike of appellants' fishpond within Vitug, J., concurs; The amendatory provisions of the Water
their titled property, which dike now separates this titled property from Code (P.D. 1067) did not affect Article 4 of the Spanish Law of
the land in question. Even in 1948 when appellants had already Waters of 1866.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 25
G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of
preliminary injunction and a temporary restraining order. The
petition seeks to compel the Public Estates Authority ("PEA" for
brevity) to disclose all facts on PEA's then on-going renegotiations
with Amari Coastal Bay and Development Corporation ("AMARI"
for brevity) to reclaim portions of Manila Bay. The petition further
seeks to enjoin PEA from signing a new agreement with AMARI
involving such reclamation.
The Facts
On November 20, 1973, the government, through the
Commissioner of Public Highways, signed a contract with the
Construction and Development Corporation of the Philippines
("CDCP" for brevity) to reclaim certain foreshore and offshore
areas of Manila Bay. The contract also included the construction
of Phases I and II of the Manila-Cavite Coastal Road. CDCP
obligated itself to carry out all the works in consideration of fifty
percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked
PEA "to reclaim land, including foreshore and submerged areas,"
and "to develop, improve, acquire, x x x lease and sell any and all
kinds of lands."1 On the same date, then President Marcos issued
Presidential Decree No. 1085 transferring to PEA the "lands
reclaimed in the foreshore and offshore of the Manila Bay"2 under
the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP).
On December 29, 1981, then President Marcos issued a
memorandum directing PEA to amend its contract with CDCP, so
that "[A]ll future works in MCCRRP x x x shall be funded and
owned by PEA." Accordingly, PEA and CDCP executed a
Memorandum of Agreement dated December 29, 1981, which
stated:
"(i) CDCP shall undertake all reclamation, construction,
and such other works in the MCCRRP as may be
agreed upon by the parties, to be paid according to
progress of works on a unit price/lump sum basis for
items of work to be agreed upon, subject to price
escalation, retention and other terms and conditions
provided for in Presidential Decree No. 1594. All the
financing required for such works shall be provided by
PEA.
xxx
(iii) x x x CDCP shall give up all its development rights
and hereby agrees to cede and transfer in favor of PEA,
all of the rights, title, interest and participation of CDCP
in and to all the areas of land reclaimed by CDCP in the
MCCRRP as of December 30, 1981 which have not yet
been sold, transferred or otherwise disposed of by
CDCP as of said date, which areas consist of
approximately Ninety-Nine Thousand Four Hundred
Seventy Three (99,473) square meters in the Financial
Center Area covered by land pledge No. 5 and
approximately Three Million Three Hundred Eighty Two
Thousand Eight Hundred Eighty Eight (3,382,888)
square meters of reclaimed areas at varying elevations
above Mean Low Water Level located outside the
Financial Center Area and the First Neighborhood
Unit."3
On January 19, 1988, then President Corazon C. Aquino issued
Special Patent No. 3517, granting and transferring to PEA "the
parcels of land so reclaimed under the Manila-Cavite Coastal
Road and Reclamation Project (MCCRRP) containing a total area
of one million nine hundred fifteen thousand eight hundred ninety
four (1,915,894) square meters." Subsequently, on April 9, 1988,
the Register of Deeds of the Municipality of Parañaque issued
Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the
name of PEA, covering the three reclaimed islands known as the
"Freedom Islands" located at the southern portion of the Manila-
Cavite Coastal Road, Parañaque City. The Freedom Islands have
a total land area of One Million Five Hundred Seventy Eight
Thousand Four Hundred and Forty One (1,578,441) square
meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement
("JVA" for brevity) with AMARI, a private corporation, to develop
the Freedom Islands. The JVA also required the reclamation of an
additional 250 hectares of submerged areas surrounding these
islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-MCCRRP. PEA and
AMARI entered into the JVA through negotiation without public
bidding.4 On April 28, 1995, the Board of Directors of PEA, in its
Resolution No. 1245, confirmed the JVA.5 On June 8, 1995, then
President Fidel V. Ramos, through then Executive Secretary
Ruben Torres, approved the JVA.6
On November 29, 1996, then Senate President Ernesto Maceda
delivered a privilege speech in the Senate and denounced the
JVA as the "grandmother of all scams." As a result, the Senate
Committee on Government Corporations and Public Enterprises,
and the Committee on Accountability of Public Officers and
Investigations, conducted a joint investigation. The Senate
Committees reported the results of their investigation in Senate
Committee Report No. 560 dated September 16, 1997.7 Among
the conclusions of their report are: (1) the reclaimed lands PEA
seeks to transfer to AMARI under the JVA are lands of the public
domain which the government has not classified as alienable
lands and therefore PEA cannot alienate these lands; (2) the
certificates of title covering the Freedom Islands are thus void,
and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued
Presidential Administrative Order No. 365 creating a Legal Task
Force to conduct a study on the legality of the JVA in view of
Senate Committee Report No. 560. The members of the Legal
Task Force were the Secretary of Justice,8 the Chief Presidential
Legal Counsel,9 and the Government Corporate Counsel.10 The
Legal Task Force upheld the legality of the JVA, contrary to the
conclusions reached by the Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily
Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued
by then President Fidel V. Ramos. According to these reports,
PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and
retired Navy Officer Sergio Cruz composed the negotiating panel
of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court
a Petition for Prohibition with Application for the Issuance of a
Temporary Restraining Order and Preliminary Injunction docketed
as G.R. No. 132994 seeking to nullify the JVA. The Court
dismissed the petition "for unwarranted disregard of judicial
hierarchy, without prejudice to the refiling of the case before the
proper court."12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for
brevity) as a taxpayer, filed the instant Petition for Mandamus with
Prayer for the Issuance of a Writ of Preliminary Injunction and
Temporary Restraining Order. Petitioner contends the
government stands to lose billions of pesos in the sale by PEA of
the reclaimed lands to AMARI. Petitioner prays that PEA publicly
disclose the terms of any renegotiation of the JVA, invoking
Section 28, Article II, and Section 7, Article III, of the 1987
Constitution on the right of the people to information on matters of
public concern. Petitioner assails the sale to AMARI of lands of
the public domain as a blatant violation of Section 3, Article XII of
the 1987 Constitution prohibiting the sale of alienable lands of the
public domain to private corporations. Finally, petitioner asserts
that he seeks to enjoin the loss of billions of pesos in properties of
the State that are of public dominion.
After several motions for extension of time,13 PEA and AMARI
filed their Comments on October 19, 1998 and June 25, 1998,
respectively. Meanwhile, on December 28, 1998, petitioner filed
an Omnibus Motion: (a) to require PEA to submit the terms of the
renegotiated PEA-AMARI contract; (b) for issuance of a
temporary restraining order; and (c) to set the case for hearing on
oral argument. Petitioner filed a Reiterative Motion for Issuance of
a TRO dated May 26, 1999, which the Court denied in a
Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course
to the petition and required the parties to file their respective
memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint
Venture Agreement ("Amended JVA," for brevity). On May 28,
1999, the Office of the President under the administration of then
President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the
President, petitioner now prays that on "constitutional and
statutory grounds the renegotiated contract be declared null and
void."14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as
follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED
FOR IN THE PETITION ARE MOOT AND ACADEMIC
BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL
FOR FAILING TO OBSERVE THE PRINCIPLE
GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL
FOR NON-EXHAUSTION OF ADMINISTRATIVE
REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO
BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO
INFORMATION INCLUDES OFFICIAL INFORMATION
ON ON-GOING NEGOTIATIONS BEFORE A FINAL
AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE
AMENDED JOINT VENTURE AGREEMENT FOR THE
TRANSFER TO AMARI OF CERTAIN LANDS,
RECLAIMED AND STILL TO BE RECLAIMED,
VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER
FORUM FOR RAISING THE ISSUE OF WHETHER
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 26
THE AMENDED JOINT VENTURE AGREEMENT IS
GROSSLY DISADVANTAGEOUS TO THE
GOVERNMENT.
The Court's Ruling
First issue: whether the principal reliefs prayed for in the
petition are moot and academic because of subsequent
events.
The petition prays that PEA publicly disclose the "terms and
conditions of the on-going negotiations for a new agreement." The
petition also prays that the Court enjoin PEA from "privately
entering into, perfecting and/or executing any new agreement with
AMARI."
PEA and AMARI claim the petition is now moot and academic
because AMARI furnished petitioner on June 21, 1999 a copy of
the signed Amended JVA containing the terms and conditions
agreed upon in the renegotiations. Thus, PEA has satisfied
petitioner's prayer for a public disclosure of the renegotiations.
Likewise, petitioner's prayer to enjoin the signing of the Amended
JVA is now moot because PEA and AMARI have already signed
the Amended JVA on March 30, 1999. Moreover, the Office of the
President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the
constitutional issue by simply fast-tracking the signing and
approval of the Amended JVA before the Court could act on the
issue. Presidential approval does not resolve the constitutional
issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI
and its approval by the President cannot operate to moot the
petition and divest the Court of its jurisdiction. PEA and AMARI
have still to implement the Amended JVA. The prayer to enjoin
the signing of the Amended JVA on constitutional grounds
necessarily includes preventing its implementation if in the
meantime PEA and AMARI have signed one in violation of the
Constitution. Petitioner's principal basis in assailing the
renegotiation of the JVA is its violation of Section 3, Article XII of
the Constitution, which prohibits the government from alienating
lands of the public domain to private corporations. If the Amended
JVA indeed violates the Constitution, it is the duty of the Court to
enjoin its implementation, and if already implemented, to annul
the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one
which seeks to transfer title and ownership to 367.5 hectares
of reclaimed lands and submerged areas of Manila Bay to a
single private corporation. It now becomes more compelling for
the Court to resolve the issue to insure the government itself does
not violate a provision of the Constitution intended to safeguard
the national patrimony. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if
there is a grave violation of the Constitution. In the instant case, if
the Amended JVA runs counter to the Constitution, the Court can
still prevent the transfer of title and ownership of alienable lands
of the public domain in the name of AMARI. Even in cases where
supervening events had made the cases moot, the Court did not
hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and the
public.17
Also, the instant petition is a case of first impression. All previous
decisions of the Court involving Section 3, Article XII of the 1987
Constitution, or its counterpart provision in the 1973
Constitution,18 covered agricultural lands sold to private
corporations which acquired the lands from private parties. The
transferors of the private corporations claimed or could claim the
right to judicial confirmation of their imperfect
titles19 under Title II of Commonwealth Act. 141 ("CA No. 141" for
brevity). In the instant case, AMARI seeks to acquire from PEA, a
public corporation, reclaimed lands and submerged areas
for non-agricultural purposes by purchase under PD No. 1084
(charter of PEA) and Title III of CA No. 141. Certain undertakings
by AMARI under the Amended JVA constitute the consideration
for the purchase. Neither AMARI nor PEA can claim judicial
confirmation of their titles because the lands covered by the
Amended JVA are newly reclaimed or still to be reclaimed.
Judicial confirmation of imperfect title requires open, continuous,
exclusive and notorious occupation of agricultural lands of the
public domain for at least thirty years since June 12, 1945 or
earlier. Besides, the deadline for filing applications for judicial
confirmation of imperfect title expired on December 31, 1987. 20
Lastly, there is a need to resolve immediately the constitutional
issue raised in this petition because of the possible transfer at any
time by PEA to AMARI of title and ownership to portions of the
reclaimed lands. Under the Amended JVA, PEA is obligated to
transfer to AMARI the latter's seventy percent proportionate share
in the reclaimed areas as the reclamation progresses. The
Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation
project.21
Second issue: whether the petition merits dismissal for
failing to observe the principle governing the hierarchy of
courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by
seeking relief directly from the Court. The principle of hierarchy of
courts applies generally to cases involving factual questions. As it
is not a trier of facts, the Court cannot entertain cases involving
factual issues. The instant case, however, raises constitutional
issues of transcendental importance to the public.22 The Court can
resolve this case without determining any factual issue related to
the case. Also, the instant case is a petition for mandamus which
falls under the original jurisdiction of the Court under Section 5,
Article VIII of the Constitution. We resolve to exercise primary
jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-
exhaustion of administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling
PEA to disclose publicly certain information without first asking
PEA the needed information. PEA claims petitioner's direct resort
to the Court violates the principle of exhaustion of administrative
remedies. It also violates the rule that mandamus may issue only
if there is no other plain, speedy and adequate remedy in the
ordinary course of law.
PEA distinguishes the instant case from Tañada v.
Tuvera23 where the Court granted the petition for mandamus even
if the petitioners there did not initially demand from the Office of
the President the publication of the presidential decrees. PEA
points out that in Tañada, the Executive Department had
an affirmative statutory duty under Article 2 of the Civil
Code24 and Section 1 of Commonwealth Act No. 63825 to publish
the presidential decrees. There was, therefore, no need for the
petitioners in Tañada to make an initial demand from the Office of
the President. In the instant case, PEA claims it has no affirmative
statutory duty to disclose publicly information about its
renegotiation of the JVA. Thus, PEA asserts that the Court must
apply the principle of exhaustion of administrative remedies to the
instant case in view of the failure of petitioner here to demand
initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by
PEA, a government corporation. Under Section 79 of the
Government Auditing Code,26 the disposition of government lands
to private parties requires public bidding. PEA was under a
positive legal duty to disclose to the public the terms and
conditions for the sale of its lands. The law obligated PEA to
make this public disclosure even without demand from petitioner
or from anyone. PEA failed to make this public disclosure
because the original JVA, like the Amended JVA, was the result
of a negotiated contract, not of a public bidding. Considering
that PEA had an affirmative statutory duty to make the public
disclosure, and was even in breach of this legal duty, petitioner
had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the
principle of exhaustion of administrative remedies does not apply
when the issue involved is a purely legal or constitutional
question.27 The principal issue in the instant case is the capacity
of AMARI to acquire lands held by PEA in view of the
constitutional ban prohibiting the alienation of lands of the public
domain to private corporations. We rule that the principle of
exhaustion of administrative remedies does not apply in the
instant case.
Fourth issue: whether petitioner has locus standi to bring
this suit
PEA argues that petitioner has no standing to
institute mandamus proceedings to enforce his constitutional right
to information without a showing that PEA refused to perform an
affirmative duty imposed on PEA by the Constitution. PEA also
claims that petitioner has not shown that he will suffer any
concrete injury because of the signing or implementation of the
Amended JVA. Thus, there is no actual controversy requiring the
exercise of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because
the petition seeks to compel PEA to comply with its constitutional
duties. There are two constitutional issues involved here. First is
the right of citizens to information on matters of public concern.
Second is the application of a constitutional provision intended to
insure the equitable distribution of alienable lands of the public
domain among Filipino citizens. The thrust of the first issue is to
compel PEA to disclose publicly information on the sale of
government lands worth billions of pesos, information which the
Constitution and statutory law mandate PEA to disclose. The
thrust of the second issue is to prevent PEA from alienating
hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a
constitutional duty to the nation.
Moreover, the petition raises matters of transcendental
importance to the public. In Chavez v. PCGG,28 the Court upheld
the right of a citizen to bring a taxpayer's suit on matters of
transcendental importance to the public, thus -
"Besides, petitioner emphasizes, the matter of
recovering the ill-gotten wealth of the Marcoses is an
issue of 'transcendental importance to the public.' He
asserts that ordinary taxpayers have a right to initiate
and prosecute actions questioning the validity of acts or
orders of government agencies or instrumentalities, if
the issues raised are of 'paramount public interest,' and
if they 'immediately affect the social, economic and
moral well being of the people.'
Moreover, the mere fact that he is a citizen satisfies the
requirement of personal interest, when the proceeding
involves the assertion of a public right, such as in this
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 27
case. He invokes several decisions of this Court which
have set aside the procedural matter of locus standi,
when the subject of the case involved public interest.
xxx
In Tañada v. Tuvera, the Court asserted that when the
issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public
duty, the people are regarded as the real parties in
interest; and because it is sufficient that petitioner is a
citizen and as such is interested in the execution of the
laws, he need not show that he has any legal or special
interest in the result of the action. In the aforesaid case,
the petitioners sought to enforce their right to be
informed on matters of public concern, a right then
recognized in Section 6, Article IV of the 1973
Constitution, in connection with the rule that laws in
order to be valid and enforceable must be published in
the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing,
the Court declared that the right they sought to be
enforced 'is a public right recognized by no less than
the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating
Tañada, further declared that 'when a mandamus
proceeding involves the assertion of a public right, the
requirement of personal interest is satisfied by the mere
fact that petitioner is a citizen and, therefore, part of the
general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while
expenditure of public funds may not have been involved
under the questioned contract for the development,
management and operation of the Manila International
Container Terminal, 'public interest [was] definitely
involved considering the important role [of the subject
contract] . . . in the economic development of the
country and the magnitude of the financial
consideration involved.' We concluded that, as a
consequence, the disclosure provision in the
Constitution would constitute sufficient authority for
upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of
the people to information and access to official records,
documents and papers — a right guaranteed under
Section 7, Article III of the 1987 Constitution. Petitioner,
a former solicitor general, is a Filipino citizen. Because
of the satisfaction of the two basic requisites laid down
by decisional law to sustain petitioner's legal standing,
i.e. (1) the enforcement of a public right (2) espoused
by a Filipino citizen, we rule that the petition at bar
should be allowed."
We rule that since the instant petition, brought by a citizen,
involves the enforcement of constitutional rights - to information
and to the equitable diffusion of natural resources - matters of
transcendental public importance, the petitioner has the
requisite locus standi.
Fifth issue: whether the constitutional right to information
includes official information on on-going negotiations before
a final agreement.
Section 7, Article III of the Constitution explains the people's right
to information on matters of public concern in this manner:
"Sec. 7. The right of the people to information on
matters of public concern shall be recognized. Access
to official records, and to documents, and papers
pertaining to official acts, transactions, or
decisions, as well as to government research data
used as basis for policy development, shall be afforded
the citizen, subject to such limitations as may be
provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving
public interest reinforces the people's right to information on
matters of public concern. This State policy is expressed in
Section 28, Article II of the Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed
by law, the State adopts and implements a policy of
full public disclosure of all its transactions
involving public interest." (Emphasis supplied)
These twin provisions of the Constitution seek to promote
transparency in policy-making and in the operations of the
government, as well as provide the people sufficient information
to exercise effectively other constitutional rights. These twin
provisions are essential to the exercise of freedom of expression.
If the government does not disclose its official acts, transactions
and decisions to citizens, whatever citizens say, even if
expressed without any restraint, will be speculative and amount to
nothing. These twin provisions are also essential to hold public
officials "at all times x x x accountable to the people,"29 for unless
citizens have the proper information, they cannot hold public
officials accountable for anything. Armed with the right
information, citizens can participate in public discussions leading
to the formulation of government policies and their effective
implementation. An informed citizenry is essential to the existence
and proper functioning of any democracy. As explained by the
Court in Valmonte v. Belmonte, Jr.30 –
"An essential element of these freedoms is to keep
open a continuing dialogue or process of
communication between the government and the
people. It is in the interest of the State that the channels
for free political discussion be maintained to the end
that the government may perceive and be responsive to
the people's will. Yet, this open dialogue can be
effective only to the extent that the citizenry is informed
and thus able to formulate its will intelligently. Only
when the participants in the discussion are aware of the
issues and have access to information relating thereto
can such bear fruit."
PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going
negotiations the right to information is limited to "definite
propositions of the government." PEA maintains the right does not
include access to "intra-agency or inter-agency recommendations
or communications during the stage when common assertions are
still in the process of being formulated or are in the 'exploratory
stage'."
Also, AMARI contends that petitioner cannot invoke the right at
the pre-decisional stage or before the closing of the transaction.
To support its contention, AMARI cites the following discussion in
the 1986 Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which
should be distinguished from contracts, agreements, or
treaties or whatever, does the Gentleman refer to the
steps leading to the consummation of the contract, or
does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is
generic and therefore, it can cover both steps
leading to a contract and already a consummated
contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of
negotiations leading to the consummation of the
transaction.
Mr. Ople: Yes, subject only to reasonable
safeguards on the national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract before
petitioner can invoke the right. Requiring government officials to
reveal their deliberations at the pre-decisional stage will degrade
the quality of decision-making in government agencies.
Government officials will hesitate to express their real sentiments
during deliberations if there is immediate public dissemination of
their discussions, putting them under all kinds of pressure before
they decide.
We must first distinguish between information the law on public
bidding requires PEA to disclose publicly, and information the
constitutional right to information requires PEA to release to the
public. Before the consummation of the contract, PEA must, on its
own and without demand from anyone, disclose to the public
matters relating to the disposition of its property. These include
the size, location, technical description and nature of the property
being disposed of, the terms and conditions of the disposition, the
parties qualified to bid, the minimum price and similar information.
PEA must prepare all these data and disclose them to the public
at the start of the disposition process, long before the
consummation of the contract, because the Government Auditing
Code requires public bidding. If PEA fails to make this
disclosure, any citizen can demand from PEA this information at
any time during the bidding process.
Information, however, on on-going evaluation or review of bids
or proposals being undertaken by the bidding or review committee
is not immediately accessible under the right to information. While
the evaluation or review is still on-going, there are no "official acts,
transactions, or decisions" on the bids or proposals. However,
once the committee makes its official recommendation, there
arises a "definite proposition" on the part of the government.
From this moment, the public's right to information attaches, and
any citizen can access all the non-proprietary information leading
to such definite proposition. In Chavez v. PCGG,33 the Court ruled
as follows:
"Considering the intent of the framers of the
Constitution, we believe that it is incumbent upon the
PCGG and its officers, as well as other government
representatives, to disclose sufficient public information
on any proposed settlement they have decided to take
up with the ostensible owners and holders of ill-gotten
wealth. Such information, though, must pertain
to definite propositions of the government, not
necessarily to intra-agency or inter-agency
recommendations or communications during the stage
when common assertions are still in the process of
being formulated or are in the "exploratory" stage.
There is need, of course, to observe the same
restrictions on disclosure of information in general, as
discussed earlier – such as on matters involving
national security, diplomatic or foreign relations,
intelligence and other classified information." (Emphasis
supplied)
Contrary to AMARI's contention, the commissioners of the 1986
Constitutional Commission understood that the right to
information "contemplates inclusion of negotiations leading to
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 28
the consummation of the transaction."Certainly, a
consummated contract is not a requirement for the exercise of the
right to information. Otherwise, the people can never exercise the
right if no contract is consummated, and if one is consummated, it
may be too late for the public to expose its defects.1âwphi1.nêt
Requiring a consummated contract will keep the public in the dark
until the contract, which may be grossly disadvantageous to the
government or even illegal, becomes a fait accompli. This
negates the State policy of full transparency on matters of public
concern, a situation which the framers of the Constitution could
not have intended. Such a requirement will prevent the citizenry
from participating in the public discussion of
any proposed contract, effectively truncating a basic right
enshrined in the Bill of Rights. We can allow neither an
emasculation of a constitutional right, nor a retreat by the State of
its avowed "policy of full disclosure of all its transactions involving
public interest."
The right covers three categories of information which are
"matters of public concern," namely: (1) official records; (2)
documents and papers pertaining to official acts, transactions and
decisions; and (3) government research data used in formulating
policies. The first category refers to any document that is part of
the public records in the custody of government agencies or
officials. The second category refers to documents and papers
recording, evidencing, establishing, confirming, supporting,
justifying or explaining official acts, transactions or decisions of
government agencies or officials. The third category refers to
research data, whether raw, collated or processed, owned by the
government and used in formulating government policies.
The information that petitioner may access on the renegotiation of
the JVA includes evaluation reports, recommendations, legal and
expert opinions, minutes of meetings, terms of reference and
other documents attached to such reports or minutes, all relating
to the JVA. However, the right to information does not compel
PEA to prepare lists, abstracts, summaries and the like relating to
the renegotiation of the JVA.34 The right only affords access to
records, documents and papers, which means the opportunity to
inspect and copy them. One who exercises the right must copy
the records, documents and papers at his expense. The exercise
of the right is also subject to reasonable regulations to protect the
integrity of the public records and to minimize disruption to
government operations, like rules specifying when and how to
conduct the inspection and copying.35
The right to information, however, does not extend to matters
recognized as privileged information under the separation of
powers.36 The right does not also apply to information on military
and diplomatic secrets, information affecting national security, and
information on investigations of crimes by law enforcement
agencies before the prosecution of the accused, which courts
have long recognized as confidential.37 The right may also be
subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by
petitioner is privileged information rooted in the separation of
powers. The information does not cover Presidential
conversations, correspondences, or discussions during closed-
door Cabinet meetings which, like internal deliberations of the
Supreme Court and other collegiate courts, or executive sessions
of either house of Congress,38 are recognized as confidential. This
kind of information cannot be pried open by a co-equal branch of
government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by
interested parties, is essential to protect the independence of
decision-making of those tasked to exercise Presidential,
Legislative and Judicial power.39 This is not the situation in the
instant case.
We rule, therefore, that the constitutional right to information
includes official information on on-going negotiationsbefore a
final contract. The information, however, must constitute definite
propositions by the government and should not cover recognized
exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public
order.40 Congress has also prescribed other limitations on the
right to information in several legislations.41
Sixth issue: whether stipulations in the Amended JVA for the
transfer to AMARI of lands, reclaimed or to be reclaimed,
violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged
areas is rooted in the Regalian doctrine which holds that the State
owns all lands and waters of the public domain. Upon the Spanish
conquest of the Philippines, ownership of all "lands, territories and
possessions" in the Philippines passed to the Spanish
Crown.42 The King, as the sovereign ruler and representative of
the people, acquired and owned all lands and territories in the
Philippines except those he disposed of by grant or sale to private
individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian
doctrine substituting, however, the State, in lieu of the King, as
the owner of all lands and waters of the public domain. The
Regalian doctrine is the foundation of the time-honored principle
of land ownership that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public
domain."43 Article 339 of the Civil Code of 1889, which is now
Article 420 of the Civil Code of 1950, incorporated the Regalian
doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law
governing the ownership and disposition of reclaimed lands in the
Philippines. On May 18, 1907, the Philippine Commission enacted
Act No. 1654 which provided for the lease, but not the sale, of
reclaimed lands of the government to corporations and
individuals. Later, on November 29, 1919, the Philippine
Legislature approved Act No. 2874, the Public Land Act, which
authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. On
November 7, 1936, the National Assembly passed
Commonwealth Act No. 141, also known as the Public Land Act,
which authorized the lease, but not the sale, of reclaimed
lands of the government to corporations and individuals. CA
No. 141 continues to this day as the general law governing the
classification and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of
1889
Under the Spanish Law of Waters of 1866, the shores, bays,
coves, inlets and all waters within the maritime zone of the
Spanish territory belonged to the public domain for public
use.44 The Spanish Law of Waters of 1866 allowed the
reclamation of the sea under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in
consequence of works constructed by the State, or by
the provinces, pueblos or private persons, with proper
permission, shall become the property of the party
constructing such works, unless otherwise provided by
the terms of the grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea
belonged to the party undertaking the reclamation, provided the
government issued the necessary permit and did not reserve
ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public
dominion as follows:
"Art. 339. Property of public dominion is –
1. That devoted to public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the
State, riverbanks, shores, roadsteads, and that of a
similar character;
2. That belonging exclusively to the State which,
without being of general public use, is employed in
some public service, or in the development of the
national wealth, such as walls, fortresses, and other
works for the defense of the territory, and mines, until
granted to private individuals."
Property devoted to public use referred to property open for use
by the public. In contrast, property devoted to public service
referred to property used for some specific public service and
open only to those authorized to use the property.
Property of public dominion referred not only to property devoted
to public use, but also to property not so used but employed to
develop the national wealth. This class of property constituted
property of public dominion although employed for some
economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification
of property of public dominion into private property, to wit:
"Art. 341. Property of public dominion, when no longer
devoted to public use or to the defense of the territory,
shall become a part of the private property of the State."
This provision, however, was not self-executing. The legislature,
or the executive department pursuant to law, must declare the
property no longer needed for public use or territorial defense
before the government could lease or alienate the property to
private parties.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No.
1654 which regulated the lease of reclaimed and foreshore lands.
The salient provisions of this law were as follows:
"Section 1. The control and disposition of the
foreshore as defined in existing law, and the title to all
Government or public lands made or reclaimed by
the Government by dredging or filling or otherwise
throughout the Philippine Islands, shall be retained by
the Government without prejudice to vested rights and
without prejudice to rights conceded to the City of
Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause
all Government or public lands made or reclaimed by
the Government by dredging or filling or otherwise to be
divided into lots or blocks, with the necessary streets
and alleyways located thereon, and shall cause plats
and plans of such surveys to be prepared and filed with
the Bureau of Lands.
(b) Upon completion of such plats and plans
the Governor-General shall give notice to the public
that such parts of the lands so made or reclaimed
as are not needed for public purposes will be
leased for commercial and business purposes, x x
x.
xxx
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 29
(e) The leases above provided for shall be disposed
of to the highest and best bidder therefore, subject to
such regulations and safeguards as the Governor-
General may by executive order prescribe." (Emphasis
supplied)
Act No. 1654 mandated that the government should retain title
to all lands reclaimed by the government. The Act also vested
in the government control and disposition of foreshore lands.
Private parties could lease lands reclaimed by the government
only if these lands were no longer needed for public purpose. Act
No. 1654 mandated public bidding in the lease of government
reclaimed lands. Act No. 1654 made government reclaimed
lands sui generis in that unlike other public lands which the
government could sell to private parties, these reclaimed lands
were available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish
Law of Waters of 1866. Act No. 1654 did not prohibit private
parties from reclaiming parts of the sea under Section 5 of the
Spanish Law of Waters. Lands reclaimed from the sea by private
parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act
No. 2874, the Public Land Act.46 The salient provisions of Act No.
2874, on reclaimed lands, were as follows:
"Sec. 6. The Governor-General, upon the
recommendation of the Secretary of Agriculture and
Natural Resources, shall from time to time classify
the lands of the public domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and
disposition of alienable or disposable public lands, the
Governor-General, upon recommendation by the
Secretary of Agriculture and Natural Resources,
shall from time to time declare what lands are open
to disposition or concession under this Act."
Sec. 8. Only those lands shall be declared open to
disposition or concession which have been
officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which,
being neither timber nor mineral land, shall be classified
as suitable for residential purposes or for
commercial, industrial, or other productive
purposes other than agricultural purposes, and shall
be open to disposition or concession, shall be disposed
of under the provisions of this chapter, and not
otherwise.
Sec. 56. The lands disposable under this title shall
be classified as follows:
(a) Lands reclaimed by the Government by
dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with
water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing
classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and
(c) of section fifty-six shall be disposed of to private
parties by lease only and not otherwise, as soon
as the Governor-General, upon recommendation by
the Secretary of Agriculture and Natural Resources,
shall declare that the same are not necessary for
the public service and are open to disposition under
this chapter. The lands included in class (d) may be
disposed of by sale or lease under the provisions of
this Act." (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to
"classify lands of the public domain into x x x alienable or
disposable"47 lands. Section 7 of the Act empowered the
Governor-General to "declare what lands are open to disposition
or concession." Section 8 of the Act limited alienable or
disposable lands only to those lands which have been "officially
delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under
this title48 shall be classified" as government reclaimed, foreshore
and marshy lands, as well as other lands. All these lands,
however, must be suitable for residential, commercial, industrial
or other productive non-agricultural purposes. These provisions
vested upon the Governor-General the power to classify
inalienable lands of the public domain into disposable lands of the
public domain. These provisions also empowered the Governor-
General to classify further such disposable lands of the public
domain into government reclaimed, foreshore or marshy lands of
the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that
disposable lands of the public domain classified as government
reclaimed, foreshore and marshy lands "shall be disposed of to
private parties by lease only and not otherwise." The
Governor-General, before allowing the lease of these lands to
private parties, must formally declare that the lands were "not
necessary for the public service." Act No. 2874 reiterated the
State policy to lease and not to sell government reclaimed,
foreshore and marshy lands of the public domain, a policy first
enunciated in 1907 in Act No. 1654. Government reclaimed,
foreshore and marshy lands remained sui generis, as the only
alienable or disposable lands of the public domain that the
government could not sell to private parties.
The rationale behind this State policy is obvious. Government
reclaimed, foreshore and marshy public lands for non-agricultural
purposes retain their inherent potential as areas for public service.
This is the reason the government prohibited the sale, and only
allowed the lease, of these lands to private parties. The State
always reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government
reclaimed, foreshore and marshy lands into other non-agricultural
lands under Section 56 (d). Lands falling under Section 56 (d)
were the only lands for non-agricultural purposes the government
could sell to private parties. Thus, under Act No. 2874, the
government could not sell government reclaimed, foreshore and
marshy lands to private parties, unless the legislature passed a
law allowing their sale.49
Act No. 2874 did not prohibit private parties from reclaiming parts
of the sea pursuant to Section 5 of the Spanish Law of Waters of
1866. Lands reclaimed from the sea by private parties with
government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its
ratification by the Filipino people. The 1935 Constitution, in
adopting the Regalian doctrine, declared in Section 1, Article XIII,
that –
"Section 1. All agricultural, timber, and mineral lands of
the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy and
other natural resources of the Philippines belong to the
State, and their disposition, exploitation, development,
or utilization shall be limited to citizens of the
Philippines or to corporations or associations at least
sixty per centum of the capital of which is owned by
such citizens, subject to any existing right, grant, lease,
or concession at the time of the inauguration of the
Government established under this
Constitution. Natural resources, with the exception
of public agricultural land, shall not be alienated,
and no license, concession, or lease for the
exploitation, development, or utilization of any of the
natural resources shall be granted for a period
exceeding twenty-five years, renewable for another
twenty-five years, except as to water rights for irrigation,
water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial
use may be the measure and limit of the grant."
(Emphasis supplied)
The 1935 Constitution barred the alienation of all natural
resources except public agricultural lands, which were the only
natural resources the State could alienate. Thus, foreshore lands,
considered part of the State's natural resources, became
inalienable by constitutional fiat, available only for lease for 25
years, renewable for another 25 years. The government could
alienate foreshore lands only after these lands were reclaimed
and classified as alienable agricultural lands of the public domain.
Government reclaimed and marshy lands of the public domain,
being neither timber nor mineral lands, fell under the classification
of public agricultural lands.50 However, government reclaimed and
marshy lands, although subject to classification as disposable
public agricultural lands, could only be leased and not sold to
private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of
government reclaimed and marshy lands of the public domain
was only a statutory prohibition and the legislature could therefore
remove such prohibition. The 1935 Constitution did not prohibit
individuals and corporations from acquiring government reclaimed
and marshy lands of the public domain that were classified as
agricultural lands under existing public land laws. Section 2,
Article XIII of the 1935 Constitution provided as follows:
"Section 2. No private corporation or association
may acquire, lease, or hold public agricultural lands
in excess of one thousand and twenty four
hectares, nor may any individual acquire such
lands by purchase in excess of one hundred and
forty hectares, or by lease in excess of one
thousand and twenty-four hectares, or by homestead
in excess of twenty-four hectares. Lands adapted to
grazing, not exceeding two thousand hectares, may be
leased to an individual, private corporation, or
association." (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature
did not repeal Section 58 of Act No. 2874 to open for sale to
private parties government reclaimed and marshy lands of the
public domain. On the contrary, the legislature continued the long
established State policy of retaining for the government title and
ownership of government reclaimed and marshy lands of the
public domain.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 30
Commonwealth Act No. 141 of the Philippine National
Assembly
On November 7, 1936, the National Assembly approved
Commonwealth Act No. 141, also known as the Public Land Act,
which compiled the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to this day
the existing general law governing the classification and
disposition of lands of the public domain other than timber and
mineral lands.51
Section 6 of CA No. 141 empowers the President to classify lands
of the public domain into "alienable or disposable"52 lands of the
public domain, which prior to such classification are inalienable
and outside the commerce of man. Section 7 of CA No. 141
authorizes the President to "declare what lands are open to
disposition or concession." Section 8 of CA No. 141 states that
the government can declare open for disposition or concession
only lands that are "officially delimited and classified." Sections 6,
7 and 8 of CA No. 141 read as follows:
"Sec. 6. The President, upon the recommendation of
the Secretary of Agriculture and Commerce, shall
from time to time classify the lands of the public
domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such
lands from one class to another,53 for the purpose of
their administration and disposition.
Sec. 7. For the purposes of the administration and
disposition of alienable or disposable public lands, the
President, upon recommendation by the Secretary
of Agriculture and Commerce, shall from time to
time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to
disposition or concession which have been
officially delimited and classified and, when
practicable, surveyed, and which have not been
reserved for public or quasi-public uses, nor
appropriated by the Government, nor in any manner
become private property, nor those on which a private
right authorized and recognized by this Act or any other
valid law may be claimed, or which, having been
reserved or appropriated, have ceased to be so. x x x."
Thus, before the government could alienate or dispose of lands of
the public domain, the President must first officially classify these
lands as alienable or disposable, and then declare them open to
disposition or concession. There must be no law reserving these
lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed,
foreshore and marshy lands of the public domain, are as follows:
"Sec. 58. Any tract of land of the public domain
which, being neither timber nor mineral land, is
intended to be used for residential purposes or for
commercial, industrial, or other productive
purposes other than agricultural, and is open to
disposition or concession, shall be disposed of
under the provisions of this chapter and not
otherwise.
Sec. 59. The lands disposable under this title shall
be classified as follows:
(a) Lands reclaimed by the Government by
dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with
water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing
classes.
Sec. 60. Any tract of land comprised under this title may
be leased or sold, as the case may be, to any person,
corporation, or association authorized to purchase or
lease public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and
(c) of section fifty-nine shall be disposed of to
private parties by lease only and not otherwise, as
soon as the President, upon recommendation by the
Secretary of Agriculture, shall declare that the same
are not necessary for the public service and are
open to disposition under this chapter. The lands
included in class (d) may be disposed of by sale or
lease under the provisions of this Act." (Emphasis
supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the
1935 Constitution, Section 58 of Act No. 2874 prohibiting the sale
of government reclaimed, foreshore and marshy disposable lands
of the public domain. All these lands are intended for residential,
commercial, industrial or other non-agricultural purposes. As
before, Section 61 allowed only the lease of such lands to private
parties. The government could sell to private parties only lands
falling under Section 59 (d) of CA No. 141, or those lands for non-
agricultural purposes not classified as government reclaimed,
foreshore and marshy disposable lands of the public domain.
Foreshore lands, however, became inalienable under the 1935
Constitution which only allowed the lease of these lands to
qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands
of the public domain intended for residential, commercial,
industrial or other productive purposes other than agricultural
"shall be disposed of under the provisions of this chapter
and not otherwise." Under Section 10 of CA No. 141, the term
"disposition" includes lease of the land. Any disposition of
government reclaimed, foreshore and marshy disposable lands
for non-agricultural purposes must comply with Chapter IX, Title
III of CA No. 141,54 unless a subsequent law amended or
repealed these provisions.
In his concurring opinion in the landmark case of Republic Real
Estate Corporation v. Court of Appeals,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, 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
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 31
lands for non-agricultural purposes to government units and
entities could be used to circumvent constitutional limitations on
ownership of alienable or disposable lands of the public domain.
In the same manner, such transfers could also be used to evade
the statutory prohibition in CA No. 141 on the sale of government
reclaimed and marshy lands of the public domain to private
parties. Section 60 of CA No. 141 constitutes by operation of law
a lien on these lands.57
In case of sale or lease of disposable lands of the public domain
falling under Section 59 of CA No. 141, Sections 63 and 67
require a public bidding. Sections 63 and 67 of CA No. 141
provide as follows:
"Sec. 63. Whenever it is decided that lands covered by
this chapter are not needed for public purposes, the
Director of Lands shall ask the Secretary of Agriculture
and Commerce (now the Secretary of Natural
Resources) for authority to dispose of the same. Upon
receipt of such authority, the Director of Lands shall
give notice by public advertisement in the same manner
as in the case of leases or sales of agricultural public
land, x x x.
Sec. 67. The lease or sale shall be made by oral
bidding; and adjudication shall be made to the
highest bidder. x x x." (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public
auction all leases or sales of alienable or disposable lands of the
public domain.58
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not
repeal Section 5 of the Spanish Law of Waters of 1866. Private
parties could still reclaim portions of the sea with government
permission. However, the reclaimed land could become private
land only if classified as alienable agricultural land of the
public domain open to disposition under CA No. 141. The 1935
Constitution prohibited the alienation of all natural resources
except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of
property of public dominion found in the Civil Code of 1889.
Articles 420 and 422 of the Civil Code of 1950 state that –
"Art. 420. The following things are property of public
dominion:
(1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed
by the State, banks, shores, roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for
public use, and are intended for some public service or
for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer
intended for public use or for public service, shall form
part of the patrimonial property of the State."
Again, the government must formally declare that the property of
public dominion is no longer needed for public use or public
service, before the same could be classified as patrimonial
property of the State.59 In the case of government reclaimed and
marshy lands of the public domain, the declaration of their being
disposable, as well as the manner of their disposition, is governed
by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as
property of public dominion those properties of the State which,
without being for public use, are intended for public service or the
"development of the national wealth." Thus, government
reclaimed and marshy lands of the State, even if not employed for
public use or public service, if developed to enhance the national
wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973,
likewise adopted the Regalian doctrine. Section 8, Article XIV of
the 1973 Constitution stated that –
"Sec. 8. All lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other
natural resources of the Philippines belong to the
State. With the exception of agricultural, industrial
or commercial, residential, and resettlement lands
of the public domain, natural resources shall not be
alienated, and no license, concession, or lease for the
exploration, development, exploitation, or utilization of
any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for not
more than twenty-five years, except as to water rights
for irrigation, water supply, fisheries, or industrial uses
other than the development of water power, in which
cases, beneficial use may be the measure and the limit
of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural
resources with the exception of "agricultural, industrial or
commercial, residential, and resettlement lands of the public
domain." In contrast, the 1935 Constitution barred the alienation
of all natural resources except "public agricultural lands."
However, the term "public agricultural lands" in the 1935
Constitution encompassed industrial, commercial, residential and
resettlement lands of the public domain.60 If the land of public
domain were neither timber nor mineral land, it would fall under
the classification of agricultural land of the public domain. Both
the 1935 and 1973 Constitutions, therefore, prohibited the
alienation of all natural resources except agricultural lands of
the public domain.
The 1973 Constitution, however, limited the alienation of lands of
the public domain to individuals who were citizens of the
Philippines. Private corporations, even if wholly owned by
Philippine citizens, were no longer allowed to acquire alienable
lands of the public domain unlike in the 1935 Constitution. Section
11, Article XIV of the 1973 Constitution declared that –
"Sec. 11. The Batasang Pambansa, taking into account
conservation, ecological, and development
requirements of the natural resources, shall determine
by law the size of land of the public domain which may
be developed, held or acquired by, or leased to, any
qualified individual, corporation, or association, and the
conditions therefor. No private corporation or
association may hold alienable lands of the public
domain except by lease not to exceed one thousand
hectares in area nor may any citizen hold such lands by
lease in excess of five hundred hectares or acquire by
purchase, homestead or grant, in excess of twenty-four
hectares. No private corporation or association may
hold by lease, concession, license or permit, timber or
forest lands and other timber or forest resources in
excess of one hundred thousand hectares. However,
such area may be increased by the Batasang
Pambansa upon recommendation of the National
Economic and Development Authority." (Emphasis
supplied)
Thus, under the 1973 Constitution, private corporations could hold
alienable lands of the public domain only through lease. Only
individuals could now acquire alienable lands of the public
domain, and private corporations became absolutely barred
from acquiring any kind of alienable land of the public
domain. The constitutional ban extended to all kinds of alienable
lands of the public domain, while the statutory ban under CA No.
141 applied only to government reclaimed, foreshore and marshy
alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued
Presidential Decree No. 1084 creating PEA, a wholly government
owned and controlled corporation with a special charter. Sections
4 and 8 of PD No. 1084, vests PEA with the following purposes
and powers:
"Sec. 4. Purpose. The Authority is hereby created for
the following purposes:
(a) To reclaim land, including foreshore and
submerged areas, by dredging, filling or other
means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds
of lands, buildings, estates and other forms of real
property, owned, managed, controlled and/or operated
by the government;
(c) To provide for, operate or administer such service
as may be necessary for the efficient, economical and
beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The
Authority shall, in carrying out the purposes for which it
is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of
the area permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or
otherwise, any stream, watercourse, canal, ditch, flume
x x x.
xxx
(o) To perform such acts and exercise such functions
as may be necessary for the attainment of the purposes
and objectives herein specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and
submerged areas of the public domain. Foreshore areas are
those covered and uncovered by the ebb and flow of the
tide.61 Submerged areas are those permanently under water
regardless of the ebb and flow of the tide.62 Foreshore and
submerged areas indisputably belong to the public domain63 and
are inalienable unless reclaimed, classified as alienable lands
open to disposition, and further declared no longer needed for
public service.
The ban in the 1973 Constitution on private corporations from
acquiring alienable lands of the public domain did not apply to
PEA since it was then, and until today, a fully owned government
corporation. The constitutional ban applied then, as it still applies
now, only to "private corporations and associations." PD No. 1084
expressly empowers PEA "to hold lands of the public domain"
even "in excess of the area permitted to private corporations by
statute." Thus, PEA can hold title to private lands, as well as
title to lands of the public domain.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 32
In order for PEA to sell its reclaimed foreshore and submerged
alienable lands of the public domain, there must be legislative
authority empowering PEA to sell these lands. This legislative
authority is necessary in view of Section 60 of CA No.141, which
states –
"Sec. 60. x x x; but the land so granted, donated or
transferred to a province, municipality, or branch or
subdivision of the Government shall not be alienated,
encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by
Congress; x x x." (Emphasis supplied)
Without such legislative authority, PEA could not sell but only
lease its reclaimed foreshore and submerged alienable lands of
the public domain. Nevertheless, any legislative authority granted
to PEA to sell its reclaimed alienable lands of the public domain
would be subject to the constitutional ban on private corporations
from acquiring alienable lands of the public domain. Hence, such
legislative authority could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions
before it, has adopted the Regalian doctrine. The 1987
Constitution declares that all natural resources are "owned by
the State," and except for alienable agricultural lands of the public
domain, natural resources cannot be alienated. Sections 2 and 3,
Article XII of the 1987 Constitution state that –
"Section 2. All lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources
are owned by the State. With the exception of
agricultural lands, all other natural resources shall
not be alienated. The exploration, development, and
utilization of natural resources shall be under the full
control and supervision of the State. x x x.
Section 3. Lands of the public domain are classified into
agricultural, forest or timber, mineral lands, and national
parks. Agricultural lands of the public domain may be
further classified by law according to the uses which
they may be devoted. Alienable lands of the public
domain shall be limited to agricultural lands. Private
corporations or associations may not hold such
alienable lands of the public domain except by
lease, for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and
not to exceed one thousand hectares in area.
Citizens of the Philippines may lease not more than five
hundred hectares, or acquire not more than twelve
hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation,
ecology, and development, and subject to the
requirements of agrarian reform, the Congress shall
determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or
leased and the conditions therefor." (Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973
Constitution banning private corporations from acquiring any
kind of alienable land of the public domain. Like the 1973
Constitution, the 1987 Constitution allows private corporations to
hold alienable lands of the public domain only through lease. As
in the 1935 and 1973 Constitutions, the general law governing the
lease to private corporations of reclaimed, foreshore and marshy
alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from
acquiring, except through lease, alienable lands of the public
domain is not well understood. During the deliberations of the
1986 Constitutional Commission, the commissioners probed the
rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have
reference to page 3, line 5 which says:
`No private corporation or association may hold
alienable lands of the public domain except by lease,
not to exceed one thousand hectares in area.'
If we recall, this provision did not exist under the 1935
Constitution, but this was introduced in the 1973
Constitution. In effect, it prohibits private corporations
from acquiring alienable public lands. But it has not
been very clear in jurisprudence what the reason
for this is. In some of the cases decided in 1982 and
1983, it was indicated that the purpose of this is to
prevent large landholdings. Is that the intent of this
provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia
ni Cristo, there were instances where the Iglesia ni
Cristo was not allowed to acquire a mere 313-square
meter land where a chapel stood because the Supreme
Court said it would be in violation of this." (Emphasis
supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind this
constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition
against purchases of public agricultural lands by private
corporations is to equitably diffuse land ownership or to
encourage 'owner-cultivatorship and the economic
family-size farm' and to prevent a recurrence of cases
like the instant case. Huge landholdings by corporations
or private persons had spawned social unrest."
However, if the constitutional intent is to prevent huge
landholdings, the Constitution could have simply limited the size
of alienable lands of the public domain that corporations could
acquire. The Constitution could have followed the limitations on
individuals, who could acquire not more than 24 hectares of
alienable lands of the public domain under the 1973 Constitution,
and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size
farms, placing the land in the name of a corporation would be
more effective in preventing the break-up of farmlands. If the
farmland is registered in the name of a corporation, upon the
death of the owner, his heirs would inherit shares in the
corporation instead of subdivided parcels of the farmland. This
would prevent the continuing break-up of farmlands into smaller
and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the
constitutional limitation on individuals from acquiring more than
the allowed area of alienable lands of the public domain. Without
the constitutional ban, individuals who already acquired the
maximum area of alienable lands of the public domain could
easily set up corporations to acquire more alienable public lands.
An individual could own as many corporations as his means
would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the
corporation. The corporation is a convenient vehicle to circumvent
the constitutional limitation on acquisition by individuals of
alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions,
is to transfer ownership of only a limited area of alienable land of
the public domain to a qualified individual. This constitutional
intent is safeguarded by the provision prohibiting corporations
from acquiring alienable lands of the public domain, since the
vehicle to circumvent the constitutional intent is removed. The
available alienable public lands are gradually decreasing in the
face of an ever-growing population. The most effective way to
insure faithful adherence to this constitutional intent is to grant or
sell alienable lands of the public domain only to individuals. This,
it would seem, is the practical benefit arising from the
constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second
Whereas clause, consists of three properties, namely:
1. "[T]hree partially reclaimed and substantially eroded
islands along Emilio Aguinaldo Boulevard in Paranaque
and Las Pinas, Metro Manila, with a combined titled
area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters
contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an
additional 350 hectares more or less to regularize the
configuration of the reclaimed area."65
PEA confirms that the Amended JVA involves "the development
of the Freedom Islands and further reclamation of about 250
hectares x x x," plus an option "granted to AMARI to subsequently
reclaim another 350 hectares x x x."66
In short, the Amended JVA covers a reclamation area of 750
hectares. Only 157.84 hectares of the 750-hectare reclamation
project have been reclaimed, and the rest of the 592.15
hectares are still submerged areas forming part of Manila
Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of
P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming
the Freedom Islands. AMARI will also complete, at its own
expense, the reclamation of the Freedom Islands. AMARI will
further shoulder all the reclamation costs of all the other areas,
totaling 592.15 hectares, still to be reclaimed. AMARI and PEA
will share, in the proportion of 70 percent and 30 percent,
respectively, the total net usable area which is defined in the
Amended JVA as the total reclaimed area less 30 percent
earmarked for common areas. Title to AMARI's share in the net
usable area, totaling 367.5 hectares, will be issued in the name of
AMARI. Section 5.2 (c) of the Amended JVA provides that –
"x x x, PEA shall have the duty to execute without delay
the necessary deed of transfer or conveyance of the
title pertaining to AMARI's Land share based on the
Land Allocation Plan. PEA, when requested in writing
by AMARI, shall then cause the issuance and
delivery of the proper certificates of title covering
AMARI's Land Share in the name of AMARI, x x x;
provided, that if more than seventy percent (70%) of the
titled area at any given time pertains to AMARI, PEA
shall deliver to AMARI only seventy percent (70%) of
the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land
pertaining to PEA has been titled." (Emphasis supplied)
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 33
Indisputably, under the Amended JVA AMARI will acquire
and own a maximum of 367.5 hectares of reclaimed land
which will be titled in its name.
To implement the Amended JVA, PEA delegated to the
unincorporated PEA-AMARI joint venture PEA's statutory
authority, rights and privileges to reclaim foreshore and
submerged areas in Manila Bay. Section 3.2.a of the Amended
JVA states that –
"PEA hereby contributes to the joint venture its rights
and privileges to perform Rawland Reclamation and
Horizontal Development as well as own the
Reclamation Area, thereby granting the Joint Venture
the full and exclusive right, authority and privilege to
undertake the Project in accordance with the Master
Development Plan."
The Amended JVA is the product of a renegotiation of the original
JVA dated April 25, 1995 and its supplemental agreement dated
August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can
acquire and own under the Amended JVA 367.5 hectares of
reclaimed foreshore and submerged areas in Manila Bay in view
of Sections 2 and 3, Article XII of the 1987 Constitution which
state that:
"Section 2. All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of
agricultural lands, all other natural resources shall
not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain
shall be limited to agricultural lands. Private
corporations or associations may not hold such
alienable lands of the public domain except by
lease, x x x."(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or
submerged areas of Manila Bay are alienable or disposable lands
of the public domain. In its Memorandum,67 PEA admits that –
"Under the Public Land Act (CA 141, as
amended), reclaimed lands are classified as
alienable and disposable lands of the public
domain:
'Sec. 59. The lands disposable under this title
shall be classified as follows:
(a) Lands reclaimed by the government by
dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 constituted under Presidential
Administrative Order No. 365 admitted in its Report and
Recommendation to then President Fidel V.
Ramos, "[R]eclaimed lands are classified as alienable and
disposable lands of the public domain."69 The Legal Task
Force concluded that –
"D. Conclusion
Reclaimed lands are lands of the public domain.
However, by statutory authority, the rights of ownership
and disposition over reclaimed lands have been
transferred to PEA, by virtue of which PEA, as owner,
may validly convey the same to any qualified person
without violating the Constitution or any statute.
The constitutional provision prohibiting private
corporations from holding public land, except by lease
(Sec. 3, Art. XVII,70 1987 Constitution), does not apply
to reclaimed lands whose ownership has passed on to
PEA by statutory grant."
Under Section 2, Article XII of the 1987 Constitution, the
foreshore and submerged areas of Manila Bay are part of the
"lands of the public domain, waters x x x and other natural
resources" and consequently "owned by the State." As such,
foreshore and submerged areas "shall not be alienated," unless
they are classified as "agricultural lands" of the public domain.
The mere reclamation of these areas by PEA does not convert
these inalienable natural resources of the State into alienable or
disposable lands of the public domain. There must be a law or
presidential proclamation officially classifying these reclaimed
lands as alienable or disposable and open to disposition or
concession. Moreover, these reclaimed lands cannot be classified
as alienable or disposable if the law has reserved them for some
public or quasi-public use.71
Section 8 of CA No. 141 provides that "only those lands shall be
declared open to disposition or concession which have
been officially delimited and classified."72 The President has
the authority to classify inalienable lands of the public domain into
alienable or disposable lands of the public domain, pursuant to
Section 6 of CA No. 141. In Laurel vs. Garcia,73 the Executive
Department attempted to sell the Roppongi property in Tokyo,
Japan, which was acquired by the Philippine Government for use
as the Chancery of the Philippine Embassy. Although the
Chancery had transferred to another location thirteen years
earlier, the Court still ruled that, under Article 42274 of the Civil
Code, a property of public dominion retains such character until
formally declared otherwise. The Court ruled that –
"The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not
automatically convert it to patrimonial property. Any
such conversion happens only if the property is
withdrawn from public use (Cebu Oxygen and
Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A
property continues to be part of the public domain,
not available for private appropriation or ownership
'until there is a formal declaration on the part of the
government to withdraw it from being such' (Ignacio
v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis
supplied)
PD No. 1085, issued on February 4, 1977, authorized the
issuance of special land patents for lands reclaimed by PEA from
the foreshore or submerged areas of Manila Bay. On January 19,
1988 then President Corazon C. Aquino issued Special Patent
No. 3517 in the name of PEA for the 157.84 hectares comprising
the partially reclaimed Freedom Islands. Subsequently, on April 9,
1999 the Register of Deeds of the Municipality of Paranaque
issued TCT Nos. 7309, 7311 and 7312 in the name of PEA
pursuant to Section 103 of PD No. 1529 authorizing the issuance
of certificates of title corresponding to land patents. To this day,
these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of
a special patent covering the Freedom Islands, is equivalent to an
official proclamation classifying the Freedom Islands as alienable
or disposable lands of the public domain. PD No. 1085 and
President Aquino's issuance of a land patent also constitute a
declaration that the Freedom Islands are no longer needed for
public service. The Freedom Islands are thus alienable or
disposable lands of the public domain, open to disposition or
concession to qualified parties.
At the time then President Aquino issued Special Patent No.
3517, PEA had already reclaimed the Freedom Islands although
subsequently there were partial erosions on some areas. The
government had also completed the necessary surveys on these
islands. Thus, the Freedom Islands were no longer part of Manila
Bay but part of the land mass. Section 3, Article XII of the 1987
Constitution classifies lands of the public domain into "agricultural,
forest or timber, mineral lands, and national parks." Being neither
timber, mineral, nor national park lands, the reclaimed Freedom
Islands necessarily fall under the classification of agricultural
lands of the public domain. Under the 1987 Constitution,
agricultural lands of the public domain are the only natural
resources that the State may alienate to qualified private parties.
All other natural resources, such as the seas or bays, are "waters
x x x owned by the State" forming part of the public domain, and
are inalienable pursuant to Section 2, Article XII of the 1987
Constitution.
AMARI claims that the Freedom Islands are private lands
because CDCP, then a private corporation, reclaimed the islands
under a contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI, citing Article 5 of the
Spanish Law of Waters of 1866, argues that "if the ownership of
reclaimed lands may be given to the party constructing the works,
then it cannot be said that reclaimed lands are lands of the public
domain which the State may not alienate."75 Article 5 of the
Spanish Law of Waters reads as follows:
"Article 5. Lands reclaimed from the sea in
consequence of works constructed by the State, or by
the provinces, pueblos or private persons, with proper
permission, shall become the property of the party
constructing such works, unless otherwise provided
by the terms of the grant of authority." (Emphasis
supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private
parties could reclaim from the sea only with "proper permission"
from the State. Private parties could own the reclaimed land only
if not "otherwise provided by the terms of the grant of authority."
This clearly meant that no one could reclaim from the sea without
permission from the State because the sea is property of public
dominion. It also meant that the State could grant or withhold
ownership of the reclaimed land because any reclaimed land, like
the sea from which it emerged, belonged to the State. Thus, a
private person reclaiming from the sea without permission from
the State could not acquire ownership of the reclaimed land which
would remain property of public dominion like the sea it
replaced.76 Article 5 of the Spanish Law of Waters of 1866
adopted the time-honored principle of land ownership that "all
lands that were not acquired from the government, either by
purchase or by grant, belong to the public domain."77
Article 5 of the Spanish Law of Waters must be read together with
laws subsequently enacted on the disposition of public lands. In
particular, CA No. 141 requires that lands of the public domain
must first be classified as alienable or disposable before the
government can alienate them. These lands must not be reserved
for public or quasi-public purposes.78 Moreover, the contract
between CDCP and the government was executed after the
effectivity of the 1973 Constitution which barred private
corporations from acquiring any kind of alienable land of the
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 34
public domain. This contract could not have converted the
Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973,
revoked all laws authorizing the reclamation of areas under water
and revested solely in the National Government the power to
reclaim lands. Section 1 of PD No. 3-A declared that –
"The provisions of any law to the contrary
notwithstanding, the reclamation of areas under
water, whether foreshore or inland, shall be limited to
the National Government or any person authorized
by it under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of
1866 because reclamation of areas under water could now be
undertaken only by the National Government or by a person
contracted by the National Government. Private parties may
reclaim from the sea only under a contract with the National
Government, and no longer by grant or permission as provided in
Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979,
designated PEA as the National Government's implementing arm
to undertake "all reclamation projects of the government," which
"shall be undertaken by the PEA or through a proper contract
executed by it with any person or entity." Under such contract,
a private party receives compensation for reclamation services
rendered to PEA. Payment to the contractor may be in cash, or in
kind consisting of portions of the reclaimed land, subject to the
constitutional ban on private corporations from acquiring alienable
lands of the public domain. The reclaimed land can be used as
payment in kind only if the reclaimed land is first classified as
alienable or disposable land open to disposition, and then
declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also
an additional 592.15 hectares which are still submerged and
forming part of Manila Bay. There is no legislative or
Presidential act classifying these submerged areas as
alienable or disposable lands of the public domain open to
disposition. These submerged areas are not covered by any
patent or certificate of title. There can be no dispute that these
submerged areas form part of the public domain, and in their
present state are inalienable and outside the commerce of
man. Until reclaimed from the sea, these submerged areas are,
under the Constitution, "waters x x x owned by the State," forming
part of the public domain and consequently inalienable. Only
when actually reclaimed from the sea can these submerged areas
be classified as public agricultural lands, which under the
Constitution are the only natural resources that the State may
alienate. Once reclaimed and transformed into public agricultural
lands, the government may then officially classify these lands as
alienable or disposable lands open to disposition. Thereafter, the
government may declare these lands no longer needed for public
service. Only then can these reclaimed lands be considered
alienable or disposable lands of the public domain and within the
commerce of man.
The classification of PEA's reclaimed foreshore and submerged
lands into alienable or disposable lands open to disposition is
necessary because PEA is tasked under its charter to undertake
public services that require the use of lands of the public domain.
Under Section 5 of PD No. 1084, the functions of PEA include the
following: "[T]o own or operate railroads, tramways and other
kinds of land transportation, x x x; [T]o construct, maintain and
operate such systems of sanitary sewers as may be necessary;
[T]o construct, maintain and operate such storm drains as may be
necessary." PEA is empowered to issue "rules and regulations as
may be necessary for the proper use by private parties of any or
all of the highways, roads, utilities, buildings and/or any of its
properties and to impose or collect fees or tolls for their use."
Thus, part of the reclaimed foreshore and submerged lands held
by the PEA would actually be needed for public use or service
since many of the functions imposed on PEA by its charter
constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that
PEA "shall be primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the
National Government." The same section also states that "[A]ll
reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA
or through a proper contract executed by it with any person or
entity; x x x." Thus, under EO No. 525, in relation to PD No. 3-A
and PD No.1084, PEA became the primary implementing agency
of the National Government to reclaim foreshore and submerged
lands of the public domain. EO No. 525 recognized PEA as the
government entity "to undertake the reclamation of lands and
ensure their maximum utilization in promoting public welfare
and interests."79 Since large portions of these reclaimed lands
would obviously be needed for public service, there must be a
formal declaration segregating reclaimed lands no longer needed
for public service from those still needed for public
service.1âwphi1.nêt
Section 3 of EO No. 525, by declaring that all lands reclaimed by
PEA "shall belong to or be owned by the PEA," could not
automatically operate to classify inalienable lands into alienable or
disposable lands of the public domain. Otherwise, reclaimed
foreshore and submerged lands of the public domain would
automatically become alienable once reclaimed by PEA, whether
or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either
PD No. 1084 or EO No. 525, vests in the Department of
Environment and Natural Resources ("DENR" for brevity) the
following powers and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest
lands, alienable and disposable public lands, mineral
resources and, in the process of exercising such
control, impose appropriate taxes, fees, charges,
rentals and any such form of levy and collect such
revenues for the exploration, development, utilization or
gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines
on the issuance of licenses, permits, concessions,
lease agreements and such other privileges
concerning the development, exploration and
utilization of the country's marine, freshwater, and
brackish water and over all aquatic resources of the
country and shall continue to oversee, supervise
and police our natural resources; cancel or cause to
cancel such privileges upon failure, non-compliance or
violations of any regulation, order, and for all other
causes which are in furtherance of the conservation of
natural resources and supportive of the national
interest;
(15) Exercise exclusive jurisdiction on the
management and disposition of all lands of the
public domain and serve as the sole agency
responsible for classification, sub-classification,
surveying and titling of lands in consultation with
appropriate agencies."80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of
the State, DENR exercises "supervision and control over
alienable and disposable public lands." DENR also exercises
"exclusive jurisdiction on the management and disposition of all
lands of the public domain." Thus, DENR decides whether areas
under water, like foreshore or submerged areas of Manila Bay,
should be reclaimed or not. This means that PEA needs
authorization from DENR before PEA can undertake reclamation
projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of
all lands of the public domain. Hence, DENR decides whether
reclaimed lands of PEA should be classified as alienable under
Sections 681 and 782 of CA No. 141. Once DENR decides that the
reclaimed lands should be so classified, it then recommends to
the President the issuance of a proclamation classifying the lands
as alienable or disposable lands of the public domain open to
disposition. We note that then DENR Secretary Fulgencio S.
Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6
and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the
reclamation of areas under water, while PEA is vested with the
power to undertake the physical reclamation of areas under
water, whether directly or through private contractors. DENR is
also empowered to classify lands of the public domain into
alienable or disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to develop, sell or
lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore
or submerged areas does not make the reclaimed lands alienable
or disposable lands of the public domain, much less patrimonial
lands of PEA. Likewise, the mere transfer by the National
Government of lands of the public domain to PEA does not make
the lands alienable or disposable lands of the public domain,
much less patrimonial lands of PEA.
Absent two official acts – a classification that these lands are
alienable or disposable and open to disposition and a declaration
that these lands are not needed for public service, lands
reclaimed by PEA remain inalienable lands of the public domain.
Only such an official classification and formal declaration can
convert reclaimed lands into alienable or disposable lands of the
public domain, open to disposition under the Constitution, Title I
and Title III83 of CA No. 141 and other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or
disposable lands of the public domain, the reclaimed lands shall
be disposed of in accordance with CA No. 141, the Public Land
Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed
lands transferred to a branch or subdivision of the government
"shall not be alienated, encumbered, or otherwise disposed of in a
manner affecting its title, except when authorized by Congress:
x x x."85 (Emphasis by PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised
Administrative Code of 1987, which states that –
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 35
authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the
government by the following: x x x."
Thus, the Court concluded that a law is needed to convey any
real property belonging to the Government. The Court declared
that -
"It is not for the President to convey real property of the
government on his or her own sole will. Any such
conveyance must be authorized and approved by a
law enacted by the Congress. It requires executive
and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the
legislative authority allowing PEA to sell its reclaimed lands. PD
No. 1085, issued on February 4, 1977, provides that –
"The land reclaimed in the foreshore and offshore
area of Manila Bay pursuant to the contract for the
reclamation and construction of the Manila-Cavite
Coastal Road Project between the Republic of the
Philippines and the Construction and Development
Corporation of the Philippines dated November 20,
1973 and/or any other contract or reclamation covering
the same area is hereby transferred, conveyed and
assigned to the ownership and administration of
the Public Estates Authority established pursuant to
PD No. 1084; Provided, however, That the rights and
interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise
the rights and assume the obligations of the Republic of
the Philippines (Department of Public Highways) arising
from, or incident to, the aforesaid contract between the
Republic of the Philippines and the Construction and
Development Corporation of the Philippines.
In consideration of the foregoing transfer and
assignment, the Public Estates Authority shall issue in
favor of the Republic of the Philippines the
corresponding shares of stock in said entity with an
issued value of said shares of stock (which) shall be
deemed fully paid and non-assessable.
The Secretary of Public Highways and the General
Manager of the Public Estates Authority shall execute
such contracts or agreements, including appropriate
agreements with the Construction and Development
Corporation of the Philippines, as may be necessary to
implement the above.
Special land patent/patents shall be issued by the
Secretary of Natural Resources in favor of the
Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his
assignees of such portion or portions of the land
reclaimed or to be reclaimed as provided for in the
above-mentioned contract. On the basis of such
patents, the Land Registration Commission shall
issue the corresponding certificate of title."
(Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February
14, 1979, provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to
or be owned by the PEA which shall be responsible
for its administration, development, utilization or
disposition in accordance with the provisions of
Presidential Decree No. 1084. Any and all income that
the PEA may derive from the sale, lease or use of
reclaimed lands shall be used in accordance with the
provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No.
525 for PEA to sell its reclaimed lands. PD No. 1085 merely
transferred "ownership and administration" of lands reclaimed
from Manila Bay to PEA, while EO No. 525 declared that lands
reclaimed by PEA "shall belong to or be owned by PEA." EO No.
525 expressly states that PEA should dispose of its reclaimed
lands "in accordance with the provisions of Presidential Decree
No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop,
improve, acquire, administer, deal in, subdivide, dispose, lease
and sell any and all kinds of lands x x x owned, managed,
controlled and/or operated by the government."87(Emphasis
supplied) There is, therefore, legislative authority granted to
PEA to sell its lands, whether patrimonial or alienable lands
of the public domain. PEA may sell to private parties
its patrimonial propertiesin accordance with the PEA charter
free from constitutional limitations. The constitutional ban on
private corporations from acquiring alienable lands of the public
domain does not apply to the sale of PEA's patrimonial lands.
PEA may also sell its alienable or disposable lands of the
public domain to private individuals since, with the legislative
authority, there is no longer any statutory prohibition against such
sales and the constitutional ban does not apply to individuals.
PEA, however, cannot sell any of its alienable or disposable lands
of the public domain to private corporations since Section 3,
Article XII of the 1987 Constitution expressly prohibits such sales.
The legislative authority benefits only individuals. Private
corporations remain barred from acquiring any kind of alienable
land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the
reclaimed lands could be transferred by PEA to the "contractor or
his assignees" (Emphasis supplied) would not apply to private
corporations but only to individuals because of the constitutional
ban. Otherwise, the provisions of PD No. 1085 would violate both
the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed
lands
Assuming the reclaimed lands of PEA are classified as alienable
or disposable lands open to disposition, and further declared no
longer needed for public service, PEA would have to conduct a
public bidding in selling or leasing these lands. PEA must observe
the provisions of Sections 63 and 67 of CA No. 141 requiring
public auction, in the absence of a law exempting PEA from
holding a public auction.88 Special Patent No. 3517 expressly
states that the patent is issued by authority of the Constitution and
PD No. 1084, "supplemented by Commonwealth Act No. 141, as
amended." This is an acknowledgment that the provisions of CA
No. 141 apply to the disposition of reclaimed alienable lands of
the public domain unless otherwise provided by law. Executive
Order No. 654,89 which authorizes PEA "to determine the kind and
manner of payment for the transfer" of its assets and properties,
does not exempt PEA from the requirement of public auction. EO
No. 654 merely authorizes PEA to decide the mode of payment,
whether in kind and in installment, but does not authorize PEA to
dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as
the Government Auditing Code, the government is required to sell
valuable government property through public bidding. Section 79
of PD No. 1445 mandates that –
"Section 79. When government property has become
unserviceable for any cause, or is no longer needed, it
shall, upon application of the officer accountable
therefor, be inspected by the head of the agency or his
duly authorized representative in the presence of the
auditor concerned and, if found to be valueless or
unsaleable, it may be destroyed in their presence. If
found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of
the proper committee on award or similar body in the
presence of the auditor concerned or other authorized
representative of the Commission, after advertising by
printed notice in the Official Gazette, or for not less
than three consecutive days in any newspaper of
general circulation, or where the value of the property
does not warrant the expense of publication, by notices
posted for a like period in at least three public places in
the locality where the property is to be sold. In the
event that the public auction fails, the property may
be sold at a private sale at such price as may be
fixed by the same committee or body concerned
and approved by the Commission."
It is only when the public auction fails that a negotiated sale is
allowed, in which case the Commission on Audit must approve
the selling price.90 The Commission on Audit implements Section
79 of the Government Auditing Code through Circular No. 89-
29691 dated January 27, 1989. This circular emphasizes that
government assets must be disposed of only through public
auction, and a negotiated sale can be resorted to only in case of
"failure of public auction."
At the public auction sale, only Philippine citizens are qualified to
bid for PEA's reclaimed foreshore and submerged alienable lands
of the public domain. Private corporations are barred from bidding
at the auction sale of any kind of alienable land of the public
domain.
PEA originally scheduled a public bidding for the Freedom Islands
on December 10, 1991. PEA imposed a condition that the winning
bidder should reclaim another 250 hectares of submerged areas
to regularize the shape of the Freedom Islands, under a 60-40
sharing of the additional reclaimed areas in favor of the winning
bidder.92 No one, however, submitted a bid. On December 23,
1994, the Government Corporate Counsel advised PEA it could
sell the Freedom Islands through negotiation, without need of
another public bidding, because of the failure of the public bidding
on December 10, 1991.93
However, the original JVA dated April 25, 1995 covered not only
the Freedom Islands and the additional 250 hectares still to be
reclaimed, it also granted an option to AMARI to reclaim another
350 hectares. The original JVA, a negotiated contract, enlarged
the reclamation area to 750 hectares.94 The failure of public
bidding on December 10, 1991, involving only 407.84
hectares,95 is not a valid justification for a negotiated sale of 750
hectares, almost double the area publicly auctioned. Besides, the
failure of public bidding happened on December 10, 1991, more
than three years before the signing of the original JVA on April 25,
1995. The economic situation in the country had greatly improved
during the intervening period.
Reclamation under the BOT Law and the Local Government
Code
The constitutional prohibition in Section 3, Article XII of the 1987
Constitution is absolute and clear: "Private corporations or
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 36
associations may not hold such alienable lands of the public
domain except by lease, x x x." Even Republic Act No. 6957
("BOT Law," for brevity), cited by PEA and AMARI as legislative
authority to sell reclaimed lands to private parties, recognizes the
constitutional ban. Section 6 of RA No. 6957 states –
"Sec. 6. Repayment Scheme. - For the financing,
construction, operation and maintenance of any
infrastructure projects undertaken through the build-
operate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the
form of a share in the revenue of the project or other
non-monetary payments, such as, but not limited to, the
grant of a portion or percentage of the reclaimed
land, subject to the constitutional requirements with
respect to the ownership of the land: x x x."
(Emphasis supplied)
A private corporation, even one that undertakes the physical
reclamation of a government BOT project, cannot acquire
reclaimed alienable lands of the public domain in view of the
constitutional ban.
Section 302 of the Local Government Code, also mentioned by
PEA and AMARI, authorizes local governments in land
reclamation projects to pay the contractor or developer in kind
consisting of a percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance,
Operation, and Management of Infrastructure Projects
by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial
estates, the repayment plan may consist of the grant of
a portion or percentage of the reclaimed land or the
industrial estate constructed."
Although Section 302 of the Local Government Code does not
contain a proviso similar to that of the BOT Law, the constitutional
restrictions on land ownership automatically apply even though
not expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code,
the contractor or developer, if a corporate entity, can only be paid
with leaseholds on portions of the reclaimed land. If the contractor
or developer is an individual, portions of the reclaimed land, not
exceeding 12 hectares96 of non-agricultural lands, may be
conveyed to him in ownership in view of the legislative authority
allowing such conveyance. This is the only way these provisions
of the BOT Law and the Local Government Code can avoid a
direct collision with Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of
the reclaimed lands to public respondent PEA transformed such
lands of the public domain to private lands." This theory is echoed
by AMARI which maintains that the "issuance of the special
patent leading to the eventual issuance of title takes the subject
land away from the land of public domain and converts the
property into patrimonial or private property." In short, PEA and
AMARI contend that with the issuance of Special Patent No. 3517
and the corresponding certificates of titles, the 157.84 hectares
comprising the Freedom Islands have become private lands of
PEA. In support of their theory, PEA and AMARI cite the following
rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the
Court held –
"Once the patent was granted and the corresponding
certificate of title was issued, the land ceased to be part
of the public domain and became private property over
which the Director of Lands has neither control nor
jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared -
"After the registration and issuance of the certificate
and duplicate certificate of title based on a public land
patent, the land covered thereby automatically comes
under the operation of Republic Act 496 subject to all
the safeguards provided therein."3. Heirs of Gregorio
Tengco v. Heirs of Jose Aliwalas,99 where the Court
ruled -
"While the Director of Lands has the power to review
homestead patents, he may do so only so long as the
land remains part of the public domain and continues to
be under his exclusive control; but once the patent is
registered and a certificate of title is issued, the land
ceases to be part of the public domain and becomes
private property over which the Director of Lands has
neither control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,100 where the
Court held –
"When the lots in dispute were certified as disposable
on May 19, 1971, and free patents were issued
covering the same in favor of the private respondents,
the said lots ceased to be part of the public domain
and, therefore, the Director of Lands lost jurisdiction
over the same."
5.Republic v. Court of Appeals,101 where the Court
stated –
"Proclamation No. 350, dated October 9, 1956, of
President Magsaysay legally effected a land grant to
the Mindanao Medical Center, Bureau of Medical
Services, Department of Health, of the whole lot, validly
sufficient for initial registration under the Land
Registration Act. Such land grant is constitutive of a 'fee
simple' title or absolute title in favor of petitioner
Mindanao Medical Center. Thus, Section 122 of the
Act, which governs the registration of grants or patents
involving public lands, provides that 'Whenever public
lands in the Philippine Islands belonging to the
Government of the United States or to the Government
of the Philippines are alienated, granted or conveyed to
persons or to public or private corporations, the same
shall be brought forthwith under the operation of this
Act (Land Registration Act, Act 496) and shall become
registered lands.'"
The first four cases cited involve petitions to cancel the land
patents and the corresponding certificates of titles issued to
private parties. These four cases uniformly hold that the Director
of Lands has no jurisdiction over private lands or that upon
issuance of the certificate of title the land automatically comes
under the Torrens System. The fifth case cited involves the
registration under the Torrens System of a 12.8-hectare public
land granted by the National Government to Mindanao Medical
Center, a government unit under the Department of Health. The
National Government transferred the 12.8-hectare public land to
serve as the site for the hospital buildings and other facilities of
Mindanao Medical Center, which performed a public service. The
Court affirmed the registration of the 12.8-hectare public land in
the name of Mindanao Medical Center under Section 122 of Act
No. 496. This fifth case is an example of a public land being
registered under Act No. 496 without the land losing its character
as a property of public dominion.
In the instant case, the only patent and certificates of title issued
are those in the name of PEA, a wholly government owned
corporation performing public as well as proprietary functions. No
patent or certificate of title has been issued to any private party.
No one is asking the Director of Lands to cancel PEA's patent or
certificates of title. In fact, the thrust of the instant petition is that
PEA's certificates of title should remain with PEA, and the land
covered by these certificates, being alienable lands of the public
domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not
vest in the registrant private or public ownership of the land.
Registration is not a mode of acquiring ownership but is merely
evidence of ownership previously conferred by any of the
recognized modes of acquiring ownership. Registration does not
give the registrant a better right than what the registrant had prior
to the registration.102 The registration of lands of the public domain
under the Torrens system, by itself, cannot convert public lands
into private lands.103
Jurisprudence holding that upon the grant of the patent or
issuance of the certificate of title the alienable land of the public
domain automatically becomes private land cannot apply to
government units and entities like PEA. The transfer of the
Freedom Islands to PEA was made subject to the provisions of
CA No. 141 as expressly stated in Special Patent No. 3517
issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of
the Constitution of the Philippines and in conformity
with the provisions of Presidential Decree No. 1084,
supplemented by Commonwealth Act No. 141, as
amended, there are hereby granted and conveyed unto
the Public Estates Authority the aforesaid tracts of land
containing a total area of one million nine hundred
fifteen thousand eight hundred ninety four (1,915,894)
square meters; the technical description of which are
hereto attached and made an integral part hereof."
(Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands
on matters not covered by PD No. 1084. Section 60 of CA No.
141 prohibits, "except when authorized by Congress," the sale of
alienable lands of the public domain that are transferred to
government units or entities. Section 60 of CA No. 141
constitutes, under Section 44 of PD No. 1529, a "statutory lien
affecting title" of the registered land even if not annotated on the
certificate of title.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
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 37
public domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands. This will
allow private corporations to acquire directly from government
agencies limitless areas of lands which, prior to such law, are
concededly public lands.
Under EO No. 525, PEA became the central implementing
agency of the National Government to reclaim foreshore and
submerged areas of the public domain. Thus, EO No. 525
declares that –
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency
Primarily Responsible for all Reclamation Projects
Whereas, there are several reclamation projects which
are ongoing or being proposed to be undertaken in
various parts of the country which need to be evaluated
for consistency with national programs;
Whereas, there is a need to give further institutional
support to the Government's declared policy to provide
for a coordinated, economical and efficient reclamation
of lands;
Whereas, Presidential Decree No. 3-A requires that all
reclamation of areas shall be limited to the National
Government or any person authorized by it under
proper contract;
Whereas, a central authority is needed to act on
behalf of the National Government which shall
ensure a coordinated and integrated approach in
the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the
Public Estates Authority as a government
corporation to undertake reclamation of lands and
ensure their maximum utilization in promoting
public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the
President with continuing authority to reorganize the
national government including the transfer, abolition, or
merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS,
President of the Philippines, by virtue of the powers
vested in me by the Constitution and pursuant to
Presidential Decree No. 1416, do hereby order and
direct the following:
Section 1. The Public Estates Authority (PEA) shall
be primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on
behalf of the National Government. All reclamation
projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken
by the PEA or through a proper contract executed by it
with any person or entity; Provided, that, reclamation
projects of any national government agency or entity
authorized under its charter shall be undertaken in
consultation with the PEA upon approval of the
President.
x x x ."
As the central implementing agency tasked to undertake
reclamation projects nationwide, with authority to sell reclaimed
lands, PEA took the place of DENR as the government agency
charged with leasing or selling reclaimed lands of the public
domain. The reclaimed lands being leased or sold by PEA are not
private lands, in the same manner that DENR, when it disposes of
other alienable lands, does not dispose of private lands but
alienable lands of the public domain. Only when qualified private
parties acquire these lands will the lands become private lands. In
the hands of the government agency tasked and authorized
to dispose of alienable of disposable lands of the public
domain, these lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold
lands of the public domain" as well as "any and all kinds of
lands." PEA can hold both lands of the public domain and private
lands. Thus, the mere fact that alienable lands of the public
domain like the Freedom Islands are transferred to PEA and
issued land patents or certificates of title in PEA's name does not
automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation
of the constitutional ban on private corporations from acquiring
any kind of alienable land of the public domain. PEA will simply
turn around, as PEA has now done under the Amended JVA,
and transfer several hundreds of hectares of these reclaimed and
still to be reclaimed lands to a single private corporation in only
one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution
which was intended to diffuse equitably the ownership of alienable
lands of the public domain among Filipinos, now numbering over
80 million strong.
This scheme, if allowed, can even be applied to alienable
agricultural lands of the public domain since PEA can "acquire x x
x any and all kinds of lands." This will open the floodgates to
corporations and even individuals acquiring hundreds of hectares
of alienable lands of the public domain under the guise that in the
hands of PEA these lands are private lands. This will result in
corporations amassing huge landholdings never before seen in
this country - creating the very evil that the constitutional ban was
designed to prevent. This will completely reverse the clear
direction of constitutional development in this country. The 1935
Constitution allowed private corporations to acquire not more than
1,024 hectares of public lands.105 The 1973 Constitution
prohibited private corporations from acquiring any kind of public
land, and the 1987 Constitution has unequivocally reiterated this
prohibition.
The contention of PEA and AMARI that public lands, once
registered under Act No. 496 or PD No. 1529, automatically
become private lands is contrary to existing laws. Several laws
authorize lands of the public domain to be registered under the
Torrens System or Act No. 496, now PD No. 1529, without losing
their character as public lands. Section 122 of Act No. 496, and
Section 103 of PD No. 1529, respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine
Islands belonging to the x x x Government of the
Philippine Islands are alienated, granted, or conveyed
to persons or the public or private corporations, the
same shall be brought forthwith under the operation of
this Act and shall become registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever
public land is by the Government alienated, granted or
conveyed to any person, the same shall be brought
forthwith under the operation of this Decree."
(Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any
person" in Section 103 of PD No. 1529 includes conveyances of
public lands to public corporations.
Alienable lands of the public domain "granted, donated, or
transferred to a province, municipality, or branch or subdivision of
the Government," as provided in Section 60 of CA No. 141, may
be registered under the Torrens System pursuant to Section 103
of PD No. 1529. Such registration, however, is expressly subject
to the condition in Section 60 of CA No. 141 that the land "shall
not be alienated, encumbered or otherwise disposed of in a
manner affecting its title, except when authorized by
Congress." This provision refers to government reclaimed,
foreshore and marshy lands of the public domain that have been
titled but still cannot be alienated or encumbered unless expressly
authorized by Congress. The need for legislative authority
prevents the registered land of the public domain from becoming
private land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that
lands of the public domain may be registered under the Torrens
System. Section 48, Chapter 12, Book I of the Code states –
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is
authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the
government by the following:
(1) x x x
(2) For property belonging to the Republic of the
Philippines, but titled in the name of any political
subdivision or of any corporate agency or
instrumentality, by the executive head of the agency
or instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for
expansion of a public wharf may be titled in the name of a
government corporation regulating port operations in the country.
Private property purchased by the National Government for
expansion of an airport may also be titled in the name of the
government agency tasked to administer the airport. Private
property donated to a municipality for use as a town plaza or
public school site may likewise be titled in the name of the
municipality.106 All these properties become properties of the
public domain, and if already registered under Act No. 496 or PD
No. 1529, remain registered land. There is no requirement or
provision in any existing law for the de-registration of land from
the Torrens System.
Private lands taken by the Government for public use under its
power of eminent domain become unquestionably part of the
public domain. Nevertheless, Section 85 of PD No. 1529
authorizes the Register of Deeds to issue in the name of the
National Government new certificates of title covering such
expropriated lands. Section 85 of PD No. 1529 states –
"Sec. 85. Land taken by eminent domain. Whenever
any registered land, or interest therein, is expropriated
or taken by eminent domain, the National Government,
province, city or municipality, or any other agency or
instrumentality exercising such right shall file for
registration in the proper Registry a certified copy of the
judgment which shall state definitely by an adequate
description, the particular property or interest
expropriated, the number of the certificate of title, and
the nature of the public use. A memorandum of the right
or interest taken shall be made on each certificate of
title by the Register of Deeds, and where the fee simple
is taken, a new certificate shall be issued in favor of
the National Government, province, city,
municipality, or any other agency or instrumentality
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 38
exercising such right for the land so taken. The legal
expenses incident to the memorandum of registration or
issuance of a new certificate of title shall be for the
account of the authority taking the land or interest
therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No.
1529 are not exclusively private or patrimonial lands. Lands of the
public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale
to AMARI of the Freedom Islands or of the lands to be reclaimed
from submerged areas of Manila Bay. In the words of AMARI, the
Amended JVA "is not a sale but a joint venture with a stipulation
for reimbursement of the original cost incurred by PEA for the
earlier reclamation and construction works performed by the
CDCP under its 1973 contract with the Republic." Whether the
Amended JVA is a sale or a joint venture, the fact remains that
the Amended JVA requires PEA to "cause the issuance and
delivery of the certificates of title conveying AMARI's Land Share
in the name of AMARI."107
This stipulation still contravenes Section 3, Article XII of the 1987
Constitution which provides that private corporations "shall not
hold such alienable lands of the public domain except by lease."
The transfer of title and ownership to AMARI clearly means that
AMARI will "hold" the reclaimed lands other than by lease. The
transfer of title and ownership is a "disposition" of the reclaimed
lands, a transaction considered a sale or alienation under CA No.
141,108 the Government Auditing Code,109 and Section 3, Article
XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system.
Foreshore and submerged areas form part of the public domain
and are inalienable. Lands reclaimed from foreshore and
submerged areas also form part of the public domain and are also
inalienable, unless converted pursuant to law into alienable or
disposable lands of the public domain. Historically, lands
reclaimed by the government are sui generis, not available for
sale to private parties unlike other alienable public lands.
Reclaimed lands retain their inherent potential as areas for public
use or public service. Alienable lands of the public domain,
increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To
insure such equitable distribution, the 1973 and 1987
Constitutions have barred private corporations from acquiring any
kind of alienable land of the public domain. Those who attempt to
dispose of inalienable natural resources of the State, or seek to
circumvent the constitutional ban on alienation of lands of the
public domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising
the Freedom Islands, now covered by certificates of title
in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private
corporations but may not sell or transfer ownership of
these lands to private corporations. PEA may only sell
these lands to Philippine citizens, subject to the
ownership limitations in the 1987 Constitution and
existing laws.
2. The 592.15 hectares of submerged areas of Manila
Bay remain inalienable natural resources of the public
domain until classified as alienable or disposable lands
open to disposition and declared no longer needed for
public service. The government can make such
classification and declaration only after PEA has
reclaimed these submerged areas. Only then can these
lands qualify as agricultural lands of the public domain,
which are the only natural resources the government
can alienate. In their present state, the 592.15 hectares
of submerged areas are inalienable and outside the
commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI,
a private corporation, ownership of 77.34 hectares110of
the Freedom Islands, such transfer is void for being
contrary to Section 3, Article XII of the 1987
Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public
domain.
4. Since the Amended JVA also seeks to transfer to
AMARI ownership of 290.156 hectares111 of still
submerged areas of Manila Bay, such transfer is void
for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural
resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas.
Thereafter, the government can classify the reclaimed
lands as alienable or disposable, and further declare
them no longer needed for public service. Still, the
transfer of such reclaimed alienable lands of the public
domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits
private corporations from acquiring any kind of
alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3,
Article XII of the 1987 Constitution. Under Article 1409112 of the
Civil Code, contracts whose "object or purpose is contrary to law,"
or whose "object is outside the commerce of men," are "inexistent
and void from the beginning." The Court must perform its duty to
defend and uphold the Constitution, and therefore declares the
Amended JVA null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise
the issue of whether the Amended JVA is grossly
disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there
is no necessity to rule on this last issue. Besides, the Court is not
a trier of facts, and this last issue involves a determination of
factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates
Authority and Amari Coastal Bay Development Corporation
are PERMANENTLY ENJOINED from implementing the
Amended Joint Venture Agreement which is hereby
declared NULL and VOID ab initio.
SO ORDERED.
EN BANC
[G. R. No. 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 Courts 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.
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
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 39
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.
Amaris 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 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.
Amaris 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.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 40
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.
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 Committees[14] had already approved on September
16, 1997 Senate Committee Report No. 560. This Report
concluded, after a well-publicized investigation into PEAs sale of
the Freedom Islands to Amari, that the Freedom Islands are
inalienable lands of the public domain. Thus, Amari signed the
Amended JVA knowing and assuming all the attendant risks,
including the annulment of the Amended JVA.
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 P300,000,000.00[15] 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. PEAs 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. BCDAs
mandate is specific and limited in area, while PEAs mandate is
general and national. BCDA holds government lands that have
been granted to end-user government entities the military services
of the armed forces. In contrast, under Executive Order No. 525,
PEA holds the reclaimed public lands, not as an end-user entity,
but as the government agency primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on
behalf of the National Government.
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
property[18] 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
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 41

completely reverse the clear direction of constitutional development in

this country. The 1935 Constitution allowed private corporations to to compel respondents to disclose all documents
acquire not more than 1,024 hectares of public lands. The 1973 and information relating to the projectincluding,
Constitution prohibited private corporations from acquiring any kind of but not limited to, any subsequent agreements with
public land, and the 1987 Constitution has unequivocally reiterated this respect to the different phases of the project, the
prohibition. revisions over the original plan, the additional
works incurred thereon, the current financial
condition of respondent R-II Builders, Inc., and the
Finally, the Office of the Solicitor General and PEA argue that
transactions made respecting the project.[1]
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
The Facts
private corporations from participating in reclamation projects and
being paid for their services in reclaiming lands. What the Decision
On March 1, 1988, then President Corazon C. Aquino issued
prohibits, following the explicit constitutional mandate, is for private
Memorandum Order No. (MO) 161[2] approving and directing the
corporations to acquire reclaimed lands of the public domain. There
implementation of the Comprehensive and Integrated Metropolitan
is no prohibition on the directors, officers and stockholders of
Manila Waste Management Plan (the Plan). The Metro Manila
private corporations, if they are Filipino citizens, from acquiring at
Commission, in coordination with various government agencies, was
public auction reclaimed alienable lands of the public domain. They
tasked as the lead agency to implement the Plan as formulated by the
can acquire not more than 12 hectares per individual, and the land
Presidential Task Force on Waste Management created by Memorandum
thus acquired becomes private land.
Circular No. 39. A day after, on March 2, 1988, MO 161-A[3] was issued,
Despite the nullity of the Amended JVA, Amari is not
containing the guidelines which prescribed the functions and
precluded from recovering from PEA in the proper proceedings, on
responsibilities of fifteen (15) various government departments and
a quantum meruit basis, whatever Amari may have incurred in
offices tasked to implement the Plan, namely: Department of Public
implementing the Amended JVA prior to its declaration of nullity.
Works and Highway (DPWH), Department of Health (DOH), Department
WHEREFORE, finding the Motions for Reconsideration to be
of Environment and Natural Resources (DENR), Department of
without merit, the same are hereby DENIED with FINALITY. The
Transportation and Communication, Department of Budget and
Motion to Inhibit and for Re-Deliberation and the Motion to Set
Management, National Economic and Development Authority (NEDA),
Case for Hearing on Oral Argument are likewise DENIED.
Philippine Constabulary Integrated National Police, Philippine
SO ORDERED. Information Agency and the Local Government Unit (referring to the City
of Manila), Department of Social Welfare and Development, Presidential
Republic of the Philippines Commission for Urban Poor, National Housing Authority (NHA),
SUPREME COURT Department of Labor and Employment, Department of Education, Culture
Manila and Sports (now Department of Education), and Presidential Management
Staff.

EN BANC Specifically, respondent NHA was ordered to conduct feasibility studies

and develop low-cost housing projects at the dumpsite and absorb
scavengers in NHA resettlement/low-cost housing projects.[4] On the
FRANCISCO I. CHAVEZ, G.R. No. 164527 other hand, the DENR was tasked to review and evaluate proposed
Petitioner, projects under the Plan with regard to their environmental impact, conduct
Present: regular monitoring of activities of the Plan to ensure compliance with
environmental standards and assist DOH in the conduct of the study on
PUNO, CJ, hospital waste management.[5]
QUISUMBING,
YNARES-SANTIAGO, At the time MO 161-A was issued by President
SANDOVAL-GUTIERREZ, Aquino, Smokey Mountain was a wasteland in Balut, Tondo, Manila,
- versus - CARPIO, where numerous Filipinos resided in subhuman conditions, collecting
AUSTRIA-MARTINEZ, items that may have some monetary value from the
CORONA, garbage. The Smokey Mountain dumpsite is bounded on the north by the
CARPIO MORALES, Estero Marala, on the south by the property of the National Government,
AZCUNA, on the east by the property of B and I Realty Co., and on the west by
TINGA, Radial Road 10 (R-10).
CHICO-NAZARIO,
GARCIA, Pursuant to MO 161-A, NHA prepared the feasibility studies of the
NATIONAL HOUSING VELASCO, Smokey Mountain low-cost housing project which resulted in the
AUTHORITY, R-II BUILDERS, NACHURA, and formulation of the Smokey Mountain Development Plan and Reclamation
INC., R-II HOLDINGS, INC., REYES, JJ. of the Area Across R-10 or the Smokey Mountain Development and
HARBOUR CENTRE PORT Reclamation Project (SMDRP; the Project). The Project aimed to convert
TERMINAL, INC., and Promulgated: the Smokey Mountain dumpsite into a habitable housing project,
MR. REGHIS ROMERO II, inclusive of the reclamation of the area across R-10, adjacent to
Respondents. August 15, 2007 the Smokey Mountain as the enabling component of the project.[6] Once
x-------------------------------------------------------------------------------------- finalized, the Plan was submitted to President Aquino for her approval.
---x
On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic
DECISION Act No. [RA] 6957) was enacted.[7] Its declared policy under Section 1 is
VELASCO, JR., J.: [t]o recognize the indispensable role of the private sector as the main
engine for national growth and development and provide the most
appropriate favorable incentives to mobilize private resources for the
In this Petition for Prohibition and Mandamus with Prayer for Temporary purpose. Sec. 3 authorized and empowered [a]ll government infrastructure
Restraining Order and/or Writ of Preliminary Injunction under Rule 65, agencies, including government-owned and controlled corporations and
petitioner, in his capacity as taxpayer, seeks: local government units x x x to enter into contract with any duly pre-
qualified private contractor for the financing, construction, operation and
to declare NULL AND VOID the Joint Venture maintenance of any financially viable infrastructure facilities through the
Agreement (JVA) dated March 9, 1993 between build-operate-transfer or build and transfer scheme.
the National Housing Authority and R-II Builders,
Inc. and the Smokey Mountain Development and RA 6957 defined build-and-transfer scheme as [a] contractual
Reclamation Project embodied therein; the arrangement whereby the contractor undertakes the construction,
subsequent amendments to the said JVA; and all including financing, of a given infrastructure facility, and its turnover after
other agreements signed and executed in relation the completion to the government agency or local government unit
thereto including, but not limited to the Smokey concerned which shall pay the contractor its total investment expended on
Mountain Asset Pool Agreement dated 26 the project, plus reasonable rate of return thereon. The last paragraph of
September 1994 and the separate agreements for Sec. 6 of the BOT Law provides that the repayment scheme in the case of
Phase I and Phase II of the Projectas well as all land reclamation or the building of industrial estates may consist of [t]he
other transactions which emanated therefrom, for grant of a portion or percentage of the reclaimed land or industrial estate
being UNCONSTITUTIONAL and INVALID; built, subject to the constitutional requirements with respect to the
ownership of lands.
to enjoin respondentsparticularly respondent
NHAfrom further implementing and/or enforcing On February 10, 1992, Joint Resolution No. 03 [8] was passed
the said project and other agreements related by both houses of Congress. Sec. 1 of this resolution provided, among
thereto, and from further deriving and/or enjoying other things, that:
any rights, privileges and interest therefrom x x x;
and
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 42
Section 1. There is hereby approved the following
national infrastructure projects for implementation
under the provisions of Republic Act No. 6957 and
its implementing rules and regulations:
xxxx
(d) Port infrastructure like piers, wharves, quays,
storage handling, ferry service and related
facilities;
xxxx
(k) Land reclamation, dredging and other related
development facilities;
(l) Industrial estates, regional industrial centers and
export processing zones including steel mills, iron-
making and petrochemical complexes and related
infrastructure and utilities;
xxxx
(p) Environmental and solid waste management-
related facilities such as collection equipment,
composting plants, incinerators, landfill and tidal
barriers, among others; and
(q) Development of new townsites and
communities and related facilities.
This resolution complied with and conformed to Sec. 4 of the BOT Law
requiring the approval of all national infrastructure projects by the
Congress.
On January 17, 1992, President Aquino proclaimed MO 415[9] approving
and directing the implementation of the SMDRP. Secs. 3 and 4 of the
Memorandum Order stated:
Section 3. The National Housing Authority is
hereby directed to implement the Smokey
Mountain Development Plan and Reclamation of
the Area Across R-10 through a private sector
joint venture scheme at the least cost to the
government.
Section 4. The land area covered by
the Smokey Mountain dumpsite is hereby
conveyed to the National Housing Authority as
well as the area to be reclaimed across R-
10. (Emphasis supplied.)
In addition, the Public Estates Authority (PEA) was directed to assist in
the evaluation of proposals regarding the technical feasibility of
reclamation, while the DENR was directed to (1) facilitate titling
of Smokey Mountain and of the area to be reclaimed and (2) assist in the
technical evaluation of proposals regarding environmental impact
statements.[10]
In the same MO 415, President Aquino created an Executive Committee
(EXECOM) to oversee the implementation of the Plan, chaired by the
National Capital Region-Cabinet Officer for Regional Development
(NCR-CORD) with the heads of the NHA, City of Manila, DPWH, PEA,
Philippine Ports Authority (PPA), DENR, and Development Bank of the
Philippines (DBP) as members.[11] The NEDA subsequently became a
member of the EXECOM. Notably, in a September 2,
1994 Letter,[12] PEA General Manager Amado Lagdameo approved the
plans for the reclamation project prepared by the NHA.
In conformity with Sec. 5 of MO 415, an inter-agency technical committee
(TECHCOM) was created composed of the technical representatives of
the EXECOM [t]o assist the NHA in the evaluation of the project
proposals, assist in the resolution of all issues and problems in the project
to ensure that all aspects of the development from squatter relocation,
waste management, reclamation, environmental protection, land and
house construction meet governing regulation of the region and to
facilitate the completion of the project.[13]
Subsequently, the TECHCOM put out the Public Notice and Notice to
Pre-Qualify and Bid for the right to become NHAs joint venture partner
in the implementation of the SMDRP. The notices were published in
newspapers of general circulation on January 23 and 26 and February 1,
14, 16, and 23, 1992, respectively. Out of the thirteen (13) contractors who
responded, only five (5) contractors fully complied with the required pre-
qualification documents. Based on the evaluation of the pre-qualification
documents, the EXECOM declared the New San Jose Builders, Inc. and
R-II Builders, Inc. (RBI) as the top two contractors.[14]
Thereafter, the TECHCOM evaluated the bids (which include the Pre-
feasibility Study and Financing Plan) of the top two (2) contractors in this
manner:
(1) The DBP, as financial advisor to the Project, evaluated their Financial
Proposals;
(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals
for the Housing Construction and Reclamation;
(3) The DENR evaluated Technical Proposals on Waste Management and
Disposal by conducting the Environmental Impact Analysis; and
(4) The NHA and the City of Manila evaluated the socio-economic
benefits presented by the proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the President
(OP) of the Philippines.
On August 31, 1992, the TECHCOM submitted its recommendation to
the EXECOM to approve the R-II Builders, Inc. (RBI) proposal which
garnered the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to
President Ramos. As a result, President Ramos issued Proclamation No.
[15]
39 on September 9, 1992, which reads:
WHEREAS, the National Housing Authority has
presented a viable conceptual plan to convert the
Smokey Mountain dumpsite into a habitable
housing project, inclusive of the reclamation of the
area across Road Radial 10 (R-10) adjacent to the
Smokey Mountain as the enabling component of
the project;
xxxx
These parcels of land of public domain are
hereby placed under the administration and
disposition of the National Housing Authority to
develop, subdivide and dispose to qualified
beneficiaries, as well as its development for mix
land use (commercial/industrial) to provide
employment opportunities to on-site families
and additional areas for port-related activities.
In order to facilitate the early development of the
area for disposition, the Department of
Environment and Natural Resources, through the
Lands and Management Bureau, is hereby directed
to approve the boundary and subdivision survey
and to issue a special patent and title in the name of
the National Housing Authority, subject to final
survey and private rights, if any there be.(Emphasis
supplied.)
On October 7, 1992, President Ramos authorized NHA to enter into a
Joint Venture Agreement with RBI [s]ubject to final review and approval
of the Joint Venture Agreement by the Office of the President. [16]
On March 19, 1993, the NHA and RBI entered into a Joint Venture
Agreement[17] (JVA) for the development of
the Smokey Mountain dumpsite and the reclamation of the area across R-
10 based on Presidential Decree No. (PD) 757[18] which mandated NHA
[t]o undertake the physical and socio-economic upgrading and
development of lands of the public domain identified for housing, MO
161-A which required NHA to conduct the feasibility studies and develop
a low-cost housing project at the Smokey Mountain, and MO 415 as
amended by MO 415-A which approved the Conceptual Plan for Smokey
Mountain and creation of the EXECOM and TECHCOM. Under the JVA,
the Project involves the clearing of Smokey Mountain for eventual
development into a low cost medium rise housing complex and
industrial/commercial site with the reclamation of the area directly across
[R-10] to act as the enabling component of the Project.[19] The JVA
covered a lot in Tondo, Manila with an area of two hundred twelve
thousand two hundred thirty-four (212,234) square meters and another lot
to be reclaimed also in Tondo with an area of four hundred thousand
(400,000) square meters.
The Scope of Work of RBI under Article II of the JVA is as follows:
a) To fully finance all aspects of development
of Smokey Mountain and reclamation of no more
than 40 hectares of Manila Bay area across Radial
Road 10.
b) To immediately commence on the preparation of
feasibility report and detailed engineering with
emphasis to the expedient acquisition of the
Environmental Clearance Certificate (ECC) from
the DENR.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 43
c) The construction activities will only commence
after the acquisition of the ECC, and
d) Final details of the contract, including
construction, duration and delivery timetables,
shall be based on the approved feasibility report
and detailed engineering.
Other obligations of RBI are as follows:
2.02 The [RBI] shall develop the PROJECT based
on the Final Report and Detailed Engineering as
approved by the Office of the President. All costs
and expenses for hiring technical personnel, date
gathering, permits, licenses, appraisals, clearances,
testing and similar undertaking shall be for the
account of the [RBI].
2.03 The [RBI] shall undertake the construction of
3,500 temporary housing units complete with basic
amenities such as plumbing, electrical and
sewerage facilities within the temporary housing
project as staging area to temporarily house the
squatter families from the Smokey Mountain while
development is being undertaken. These temporary
housing units shall be turned over to the [NHA] for
disposition.
2.04 The [RBI] shall construct 3,500 medium rise
low cost permanent housing units on the
leveled Smokey Mountain complete with basic
utilities and amenities, in accordance with the plans
and specifications set forth in the Final Report
approved by the [NHA]. Completed units ready for
mortgage take out shall be turned over by the [RBI]
to NHA on agreed schedule.
2.05 The [RBI] shall reclaim forty (40) hectares
of Manila Bay area directly across [R-10] as
contained in Proclamation No. 39 as the enabling
component of the project and payment to the [RBI]
as its asset share.
2.06 The [RBI] shall likewise furnish all labor
materials and equipment necessary to complete all
herein development works to be undertaken on a
phase to phase basis in accordance with the work
program stipulated therein.
The profit sharing shall be based on the approved pre-feasibility report
submitted to the EXECOM, viz:
For the developer (RBI):
1. To own the forty (40) hectares of reclaimed land.
2. To own the commercial area at
the Smokey Mountain area composed of 1.3
hectares, and
3. To own all the constructed units of medium rise
low cost permanent housing units beyond the 3,500
units share of the [NHA].
For the NHA:
1. To own the temporary housing consisting of
3,500 units.
2. To own the cleared and fenced incinerator site
consisting of 5 hectares situated at
the Smokey Mountain area.
3. To own the 3,500 units of permanent housing to
be constructed by [RBI] at
the Smokey Mountain area to be awarded to
qualified on site residents.
4. To own the Industrial Area site consisting of 3.2
hectares, and
5. To own the open spaces, roads and facilities
within the Smokey Mountain area.
In the event of extraordinary increase in labor, materials, fuel and non-
recoverability of total project expenses,[20] the OP, upon recommendation
of the NHA, may approve a corresponding adjustment in the enabling
component.
The functions and responsibilities of RBI and NHA are as follows:
For RBI:
4.01 Immediately commence on the preparation of
the FINAL REPORT with emphasis to the
expedient acquisition, with the assistance of the
[NHA] of Environmental Compliance Certificate
(ECC) from the Environmental Management
Bureau (EMB) of the [DENR]. Construction shall
only commence after the acquisition of the
ECC. The Environment Compliance Certificate
(ECC) shall form part of the FINAL REPORT.
The FINAL REPORT shall provide the necessary
subdivision and housing plans, detailed
engineering and architectural drawings, technical
specifications and other related and required
documents relative to the Smokey Mountain area.
With respect to the 40-hectare reclamation area, the
[RBI] shall have the discretion to develop the same
in a manner that it deems necessary to recover the
[RBIs] investment, subject to environmental and
zoning rules.
4.02 Finance the total project cost for land
development, housing construction and
reclamation of the PROJECT.
4.03 Warrant that all developments shall be in
compliance with the requirements of the FINAL
REPORT.
4.04 Provide all administrative resources for the
submission of project accomplishment reports to
the [NHA] for proper evaluation and supervision
on the actual implementation.
4.05 Negotiate and secure, with the assistance of
the [NHA] the grant of rights of way to the
PROJECT, from the owners of the adjacent lots for
access road, water, electrical power connections
and drainage facilities.
4.06 Provide temporary field office and
transportation vehicles (2 units), one (1) complete
set of computer and one (1) unit electric typewriter
for the [NHAs] field personnel to be charged to the
PROJECT.
For the NHA:
4.07 The [NHA] shall be responsible for the
removal and relocation of all squatters
within Smokey Mountain to the Temporary
Housing Complex or to other areas prepared as
relocation areas with the assistance of the
[RBI]. The [RBI] shall be responsible in releasing
the funds allocated and committed for relocation as
detailed in the FINAL REPORT.
4.08 Assist the [RBI] and shall endorse granting of
exemption fees in the acquisition of all necessary
permits, licenses, appraisals, clearances and
accreditations for the PROJECT subject to existing
laws, rules and regulations.
4.09 The [NHA] shall inspect, evaluate and
monitor all works at the Smokey Mountain and
Reclamation Area while the land development and
construction of housing units are in progress to
determine whether the development and
construction works are undertaken in accordance
with the FINAL REPORT. If in its judgment, the
PROJECT is not pursued in accordance with the
FINAL REPORT, the [NHA] shall require the
[RBI] to undertake necessary remedial works. All
expenses, charges and penalties incurred for such
remedial, if any, shall be for the account of the
[RBI].
4.10 The [NHA] shall assist the [RBI] in the
complete electrification of the PROJECT. x x x
4.11 Handle the processing and documentation of
all sales transactions related to its assets shares
from the venture such as the 3,500 units of
permanent housing and the allotted industrial area
of 3.2 hectares.
4.12 All advances outside of project costs made by
the [RBI] to the [NHA] shall be deducted from the
proceeds due to the [NHA].
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 44

Under the ARJVA, RBI shall construct 2,992 temporary housing units, a
4.13 The [NHA] shall be responsible for the reduction from 3,500 units under the JVA.[27] However, it was required to
acquisition of the Mother Title for construct 3,520 medium-rise low-cost permanent housing units instead of
the Smokey Mountain and Reclamation Area 3,500 units under the JVA. There was a substantial change in the design
within 90 days upon submission of Survey returns of the permanent housing units such that a loft shall be incorporated in
to the Land Management Sector. The land titles to each unit so as to increase the living space from 20 to 32 square meters.
the 40-hectare reclaimed land, the 1.3 hectare The additions and changes in the Original Project Component are as
commercial area at the Smokey Mountain area and follows:
the constructed units of medium-rise permanent
housing units beyond the 3,500 units share of the ORIGINAL CHANGES/REVISIONS
[NHA] shall be issued in the name of the [RBI]
upon completion of the project. However, the 1. TEMPORARY HOUSING
[RBI] shall have the authority to pre-sell its share
as indicated in this agreement. Wood/Plywood, ga. 31
G.I. Concrete/Steel Frame Structure
Sheet usable life of 3 years, gauge 26
G.I. roofing sheets future 12 SM
The final details of the JVA, which will include the construction duration, floor area. use as permanent
costs, extent of reclamation, and delivery timetables, shall be based on the structures for factory and
FINAL REPORT which will be contained in a Supplemental Agreement warehouses mixed 17 sm & 12 sm
to be executed later by the parties. floor area.

The JVA may be modified or revised by written agreement between the 2. MEDIUM RISE MASS
NHA and RBI specifying the clauses to be revised or modified and the HOUSING
corresponding amendments.
Box type precast Shelter Conventio
If the Project is revoked or terminated by the Government through no fault nal and precast component 20 square
of RBI or by mutual agreement, the Government shall compensate RBI meter concrete structures, 32 square
for its actual expenses incurred in the Project plus a reasonable rate of floor area with 2.4 meter meter floor
return not exceeding that stated in the feasibility study and in the contract area with loft floor height; bare type,
as of the date of such revocation, cancellation, or termination on a 160 units/ (sleeping quarter) 3.6 m.
schedule to be agreed upon by both parties. floor
building. height, painted and improv
As a preliminary step in the project implementation, consultations and ed
dialogues were conducted with the settlers of the Smokey Mountain architectural faade, 80 units/
Dumpsite Area. At the same time, DENR started processing the building.
application for the Environmental Clearance Certificate (ECC) of the 3
SMDRP. As a result however of the consultative dialogues, public .
hearings, the report on the on-site field conditions, the Environmental M
Impact Statement (EIS) published on April 29 and May 12, 1993 as I
required by the Environmental Management Bureau of DENR, the T
evaluation of the DENR, and the recommendations from other I
government agencies, it was discovered that design changes and G
additional work have to be undertaken to successfully implement the A
Project.[21] T
I
Thus, on February 21, 1994, the parties entered into another agreement N
denominated as the Amended and Restated Joint Venture G
Agreement[22] (ARJVA) which delineated the different phases of the M
Project. Phase I of the Project involves the construction of temporary E
housing units for the current residents of the Smokey Mountain dumpsite, A
the clearing and leveling-off of the dumpsite, and the construction of S
medium-rise low-cost housing units at the cleared and leveled U
dumpsite.[23] Phase II of the Project involves the construction of an R
incineration area for the on-site disposal of the garbage at the E
dumpsite.[24] The enabling component or consideration for Phase I of the S
Project was increased from 40 hectares of reclaimed lands across R-10 to
79 hectares.[25] The revision also provided for the enabling component for 3.1 For reclamation work Use of
Phase II of 119 hectares of reclaimed lands contiguous to the 79 hectares c
of reclaimed lands for Phase I.[26] Furthermore, the amended contract l
delineated the scope of works and the terms and conditions of Phases I e
and II, thus: a
n
The PROJECT shall consist of Phase I and Phase d
II. r
e
Phase I shall involve the following: d
g
a. the construction of 2,992 units of e
temporary housing for the affected residents while f
clearing and development of Smokey Mountain i
[are] being undertaken l
l
b. the clearing of Smokey Mountain and m
the subsequent construction of 3,520 units of a
medium rise housing and the development of the t
industrial/commercial site within e
the SmokeyMountain area r
i
c. the reclamation and development of a a
79 hectare area directly across Radial Road 10 to l
serve as the enabling component of Phase I b
e
Phase II shall involve the following: l
o
a. the construction and operation of an w
incinerator plant that will conform to the emission t
standards of the DENR h
e
b. the reclamation and development of 119-hectare M
area contiguous to that to be reclaimed under Phase L
I to serve as the enabling component of Phase II. L
W
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 45

a
n 4. Paragraph 2.05 of Article II of the ARJVA is
d hereby amended to read as follows:
S
M 2.05. The DEVELOPER shall reclaim
m seventy nine (79) hectares of the Manila
a Bay area directly across Radial Road 10
t (R-10) to serve as payment to the
e DEVELOPER as its asset share for
r Phase I and to develop such land into
i commercial area with port facilities;
a provided, that the port plan shall be
l integrated with the Philippine Port
m Authoritys North Harbor plan for the
i Manila Bay area and provided further,
x that the final reclamation and port plan
e for said reclaimed area shall be
d submitted for approval by the Public
w Estates Authority and the Philippine
i Ports Authority, respectively: provided
t finally, that subject to par. 2.02 above,
h actual reclamation work may
d commence upon approval of the final
r reclamation plan by the Public Estates
e Authority.
d
g xxxx
e
f 9. A new paragraph to be numbered 5.05 shall be
i added to Article V of the ARJVA, and shall read as
l follows:
l
a 5.05. In the event this
b Agreement is revoked, cancelled or
o terminated by the AUTHORITY
v through no fault of the DEVELOPER,
e the AUTHORITY shall compensate the
M DEVELOPER for the value of the
L completed portions of, and actual
L expenditures on the PROJECT plus a
W reasonable rate of return thereon, not
. exceeding that stated in the Cost
Estimates of Items of Work previously
a. 100% use of Smokey approved by the SMDRP Executive
Mountain material as Committee and the AUTHORITY and
dredgefill Use of Steel Sheet Piles stated in this Agreement, as of the date
needed of such revocation, cancellation, or
for longer depth of embedment. termination, on a schedule to be agreed
b. Concrete Sheet Piles upon by the parties, provided that said
short depth of completed portions of Phase I are in
embedment accordance with the approved FINAL
REPORT.
c. Silt removal approximately Need
to remove more than 3.0
1.0 meter only meters of silt after sub-soil investigation.[28]
These material and substantial modifications served as Afterwards, President Ramos issued Proclamation No. 465
justifications for the increase in the share of RBI from 40 hectares to 79 dated August 31, 1994[31] increasing the proposed area for reclamation
hectares of reclaimed land. across R-10 from 40 hectares to 79 hectares,[32] to wit:

Under the JVA, the specific costs of the Project were not stipulated but
under the ARJVA, the stipulated cost for Phase I
was pegged at six billion six hundred ninety-three
million three hundred eighty-seven thousand three
hundred sixty-four pesos (PhP 6,693,387,364).
In his February 10, 1994 Memorandum, the Chairperson of the
SMDRP EXECOM submitted the ARJVA for approval by the OP. After
review of said agreement, the OP directed that certain terms and
conditions of the ARJVA be further clarified or amended preparatory to
its approval. Pursuant to the Presidents directive, the parties reached an
agreement on the clarifications and amendments required to be made on
the ARJVA.
NOW, THEREFORE, I, FIDEL V.
RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me
by the law, and as recommended by the SMDRP
Executive Committee, do hereby authorize the
increase of the area of foreshore or submerged
lands of Manila Bay to be reclaimed, as previously
authorized under Proclamation No. 39 (s. 1992)
and Memorandum Order No. 415 (s. 1992), from
Four Hundred Thousand (400,000) square meters,
more or less, to Seven Hundred Ninety Thousand
(790,000) square meters, more or less.

On August 11, 1994, the NHA and RBI executed an Amendment To the On September 1, 1994, pursuant to Proclamation No. 39, the
Amended and Restated Joint Venture Agreement DENR issued Special Patent No. 3591 conveying in favor of NHA an area
(AARJVA)[29] clarifying certain terms and condition of the ARJVA, of 211,975 square meters covering the Smokey Mountain Dumpsite.
which was submitted to President Ramos for approval, to wit:
In its September 7, 1994 letter to the EXECOM, the OP
through then Executive Secretary Teofisto T. Guingona, Jr., approved the
Phase II shall involve the following: ARJVA as amended by the AARJVA.

a. the construction and operation of an On September 8, 1994, the DENR issued Special Patent 3592
incinerator plant that will conform to the pursuant to Proclamation No. 39, conveying in favor of NHA a 401,485-
emission standards of the DENR square meter area.

b. the reclamation and development of 119-hectare
area contiguous to that to be reclaimed under
Phase I to serve as the enabling component of
Phase II, the exact size and configuration of
which shall be approved by the SMDRP
Committee[30]
On September 26, 1994, the NHA, RBI, Home Insurance and
Guaranty Corporation (HIGC), now known as the Home Guaranty
Corporation, and the Philippine National Bank (PNB)[33] executed the
Smokey Mountain Asset Pool Formation Trust Agreement (Asset Pool
Agreement).[34] Thereafter, a Guaranty Contract was entered into by
NHA, RBI, and HIGC.

Other substantial amendments are the following:

MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 46
On June 23, 1994, the Legislature passed the Clean Air
Act.[35] The Act made the establishment of an incinerator illegal and
effectively barred the implementation of the planned incinerator project
under Phase II. Thus, the off-site disposal of the garbage at
the Smokey Mountain became necessary.[36]
The land reclamation was completed in August 1996.[37]
Sometime later in 1996, pursuant likewise to Proclamation No.
39, the DENR issued Special Patent No. 3598 conveying in favor of NHA
an additional 390,000 square meter area.
During the actual construction and implementation of Phase I
of the SMDRP, the Inter-Agency Technical Committee found and
recommended to the EXECOM on December 17, 1997 that additional
works were necessary for the completion and viability of the Project. The
EXECOM approved the recommendation and so, NHA instructed RBI to
implement the change orders or necessary works.[38]
Such necessary works comprised more than 25% of the
original contract price and as a result, the Asset Pool incurred direct and
indirect costs. Based on C1 12 A of the Implementing Rules and
Regulations of PD 1594, a supplemental agreement is required for all
change orders and extra work orders, the total aggregate cost of which
being more than twenty-five (25%) of the escalated original contract price.
The EXECOM requested an opinion from the Department of
Justice (DOJ) to determine whether a bidding was required for the change
orders and/or necessary works. The DOJ, through DOJ Opinion Nos. 119
and 155 dated August 26, 1993 and November 12, 1993, opined that a
rebidding, pursuant to the aforequoted provisions of the implementing
rules (referring to PD 1594) would not be necessary where the change
orders inseparable from the original scope of the project, in which case, a
negotiation with the incumbent contractor may be allowed.
Thus, on February 19, 1998, the EXECOM issued a resolution
directing NHA to enter into a supplemental agreement covering said
necessary works.
On March 20, 1998, the NHA and RBI entered into a
Supplemental Agreement covering the aforementioned necessary works
and submitted it to the President on March 24, 1998 for approval.
Outgoing President Ramos decided to endorse the
consideration of the Supplemental Agreement to incoming President
Joseph E. Estrada. On June 30, 1998, Estrada became the 13th Philippine
President.
However, the approval of the Supplemental Agreement was
unacted upon for five months. As a result, the utilities and the road
networks were constructed to cover only the 79-hectare original enabling
component granted under the ARJVA. The 220-hectare extension of the
79-hectare area was no longer technically feasible. Moreover, the
financial crises and unreliable real estate situation made it difficult to sell
the remaining reclaimed lots. The devaluation of the peso and the increase
in interest cost led to the substantial increase in the cost of reclamation.
On August 1, 1998, the NHA granted RBIs request to suspend
work on the SMDRP due to the delay in the approval of the Supplemental
Agreement, the consequent absence of an enabling component to cover
the cost of the necessary works for the project, and the resulting inability
to replenish the Asset Pool funds partially used for the completion of the
necessary works.[39]
As of August 1, 1998 when the project was suspended, RBI
had already accomplished a portion of the necessary works and change
orders which resulted in [RBI] and the Asset Pool incurring advances for
direct and indirect cost which amount can no longer be covered by the 79-
hectare enabling component under the ARJVA.[40]
Repeated demands were made by RBI in its own capacity and
on behalf of the asset pool on NHA for payment for the advances for direct
and indirect costs subject to NHA validation.
In November 1998, President Estrada issued Memorandum
Order No. 33 reconstituting the SMDRP EXECOM and further directed
it to review the Supplemental Agreement and submit its recommendation
on the completion of the SMDRP.
The reconstituted EXECOM conducted a review of the project
and recommended the amendment of the March 20, 1998 Supplemental
Agreement to make it more feasible and to identify and provide new
sources of funds for the project and provide for a new enabling component
to cover the payment for the necessary works that cannot be covered by
the 79-hectare enabling component under the ARJVA.[41]
The EXECOM passed Resolution Nos. 99-16-01 and 99-16-
02[42] which approved the modification of the Supplemental Agreement,
to wit:
a) Approval of 150 hectares additional reclamation
in order to make the reclamation feasible as part of
the enabling component.
b) The conveyance of the 15-hectare NHA Vitas
property (actually 17 hectares based on surveys) to
the SMDRP Asset Pool.
c) The inclusion in the total development cost of
other additional, necessary and indispensable
infrastructure works and the revision of the original
cost stated in the Supplemental Agreement
dated March 20, 1998 from PhP
2,953,984,941.40 to PhP 2,969,134,053.13.
d) Revision in the sharing agreement between the
parties.
In the March 23, 2000 OP Memorandum, the EXECOM was
authorized to proceed and complete the SMDRP subject to certain
guidelines and directives.
After the parties in the case at bar had complied with the March
23, 2000 Memorandum, the NHA November 9, 2000 Resolution No. 4323
approved the conveyance of the 17-hectare Vitas property in favor of the
existing or a newly created Asset Pool of the project to be developed into
a mixed commercial-industrial area, subject to certain conditions.
On January 20, 2001, then President Estrada was considered
resigned. On the same day, President Gloria M. Arroyo took her oath as
the 14th President of the Philippines.
As of February 28, 2001, the estimated total project cost of the
SMDRP has reached P8.65 billion comprising of P4.78 billion in direct
cost and P3.87 billion in indirect cost,[43] subject to validation by the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay
for the various necessary works/change orders to SMDRP, to effect the
corresponding enabling component consisting of the conveyance of the
NHAs Vitas Property and an additional 150-hectare reclamation area and
to authorize the release by NHA of PhP 480 million as advance to the
project to make the Permanent Housing habitable, subject to
reimbursement from the proceeds of the expanded enabling component.[44]
On November 19, 2001, the Amended Supplemental
Agreement (ASA) was signed by the parties, and on February 28, 2002,
the Housing and Urban Development Coordinating Council (HUDCC)
submitted the agreement to the OP for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed
to submit the works covered by the PhP 480 million [advance to the
Project] and the ASA to public bidding.[45] On August 28, 2002, the
HUDCC informed RBI of the decision of the Cabinet.
In its September 2, 2002 letter to the HUDCC Chairman, RBI
lamented the decision of the government to bid out the remaining works
under the ASA thereby unilaterally terminating the Project with RBI and
all the agreements related thereto. RBI demanded the payment of just
compensation for all accomplishments and costs incurred in developing
the SMDRP plus a reasonable rate of return thereon pursuant to Section
5.05 of the ARJVA and Section 6.2 of the ASA.[46]
Consequently, the parties negotiated the terms of the
termination of the JVA and other subsequent agreements.
On August 27, 2003, the NHA and RBI executed a
Memorandum of Agreement (MOA) whereby both parties agreed to
terminate the JVA and other subsequent agreements, thus:
1. TERMINATION
1.1 In compliance with the Cabinet
directive dated 30 July
2002 to submit the
works covered by the
P480 Million and the
ASA to public bidding,
the following
agreements executed by
and between the NHA
and the DEVELOPER
are hereby terminated,
to wit:
a. Joint Venture
Agreement
(JVA)
dated 19
March 1993
b. Amended and
Restated
Joint
Venture
Agreement
(ARJVA)
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 47

dated 21 last
February paragr
1994 aph of
c. Amendment and Sectio
Restated n 5.3.
Joint For
Venture purpos
Agreement es of
dated 11 all
August payme
1994 nts to
d. Supplemental be
Agreement dated 24 March made
1998 throug
e. Amended h
Supplement conve
al yance
Agreement of real
(ASA) proper
dated 19 ties,
November the
2001. parties
xxxx shall
secure
5. SETTLEMENT OF CLAIMS from
the
5.1 Subject to the validation of the NHA
DEVELOPERs claims, Board
the NHA hereby agrees of
to initially compensate Direct
the Developer for the ors all
abovementioned costs docum
as follows: ents
necess
a. Direct payment to ary
DEVELOPER and
of the amounts suffici
herein listed in ent to
the following effect
manner: the
a.1 P250 Million in transfe
cash r of
from title
the over
escro the
w proper
accou ties to
nt in be
accord conve
ance yed to
with RBI,
Sectio which
n 2 docum
herewi ents
th; shall
be
a.2 Conveyanc issued
e of a within
3 a
hectar reason
e able
portio period
n of .
the
Vitas 5.2 Any unpaid balance of the
Indust DEVELOPERS claims
rial determined after the
area validation process
imme referred to in Section 4
diately hereof, may be paid in
after cash, bonds or through
joint the conveyance of
deter properties or any
minati combination
on of thereof. The manner,
the terms and conditions of
apprai payment of the balance
sed shall be specified and
value agreed upon later
of the within a period of three
said months from the time a
proper substantial amount
ty in representing the unpaid
accord balance has been
ance validated pursuant
with hereto including, but
the not limited to the
proced programming of
ure quarterly cash
herein payments to be sourced
set by the NHA from its
forth budget for debt
in the servicing, from its
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 48

income or from any

other sources. 2. ASSUMING ARGUENDO THAT THE
SUBJECT RECLAIMED
5.3 In any case the unpaid balance FORESHORE AND SUBMERGED
is agreed to be paid, PARCELS OF LAND WERE
either partially or ALREADY DECLARED
totally through ALIENABLE LANDS OF THE
conveyance of PUBLIC DOMAIN, RESPONDENT
properties, the parties R-II BUILDERS STILL COULD NOT
shall agree on which ACQUIRE THE SAME BECAUSE
properties shall be THERE WAS NEVER ANY
subject to conveyance. DECLARATION THAT THE SAID
The NHA and LANDS WERE NO LONGER
DEVELOPER hereby NEEDED FOR PUBLIC USE.
agree to determine the
valuation of the 3. EVEN ASSUMING THAT THE SUBJECT
properties to be RECLAIMED LANDS ARE ALIENABLE AND
conveyed by getting the NO LONGER NEEDED FOR PUBLIC USE,
average of the RESPONDENT R-II BUILDERS
appraisals to be made STILL CANNOT ACQUIRE THE SAME
by two (2) mutually BECAUSE THERE WAS NEVER ANY LAW
acceptable independent AUTHORIZING THE SALE THEREOF.
appraisers.
4. THERE WAS NEVER ANY PUBLIC
BIDDING AWARDING OWNERSHIP OF
Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) THE SUBJECT LAND TO RESPONDENT R-II
entered into an agreement with the asset pool for the development and BUILDERS.
operations of a port in the Smokey Mountain Area which is a major
component of SMDRP to provide a source of livelihood and employment 5. ASSUMING THAT ALL THE
for Smokey Mountain residents and spur economic growth. A REQUIREMENTS FOR A VALID
Subscription Agreement was executed between the Asset Pool and HCPTI TRANSFER OF ALIENABLE
whereby the asset pool subscribed to 607 million common shares and PUBLIC HAD BEEN PERFORMED,
1,143 million preferred shares of HCPTI. The HCPTI preferred shares had RESPONDENT R-II BUILDERS,
a premium and penalty interest of 7.5% per annum and a mandatory BEING PRIVATE CORPORATION
redemption feature. The asset pool paid the subscription by conveying to IS NONETHELESS
HCPTI a 10-hectare land which it acquired from the NHA being a portion EXPRESSLYPROHIBITED BY THE
of the reclaimed land of the SMDRP. Corresponding certificates of titles PHILIPPINE CONSTITUTION TO
were issued to HCPTI, namely: TCT Nos. 251355, 251356, 251357, and ACQUIRE LANDS OF THE PUBLIC
251358. DOMAIN.

Due to HCPTIs failure to obtain a license to handle foreign containerized III

cargo from PPA, it suffered a net income loss of PhP 132,621,548 in 2002
and a net loss of PhP 15,540,063 in 2003. The Project Governing Board RESPONDENT HARBOUR, BEING A
of the Asset Pool later conveyed by way of dacion en pago a number of PRIVATE CORPORATION WHOSE
HCPTI shares to RBI in lieu of cash payment for the latters work in MAJORITY STOCKS ARE OWNED AND
SMDRP. CONTROLLED BY RESPONDENT ROMEROS
CORPORATIONS R-II BUILDERS AND R-II
On August 5, 2004, former Solicitor General Francisco I. Chavez, filed HOLDINGS IS DISQUALIFIED FROM BEING
the instant petition which impleaded as respondents the NHA, RBI, R-II A TRANSFEREE OF PUBLIC LAND.
Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II, raising
constitutional issues. IV

The NHA reported that thirty-four (34) temporary housing structures and RESPONDENTS MUST BE COMPELLED TO
twenty-one (21) permanent housing structures had been turned over by DISCLOSE ALL INFORMATION RELATED
respondent RBI. It claimed that 2,510 beneficiary-families belonging to TO THE SMOKEY MOUNTAIN
the poorest of the poor had been transferred to their permanent homes and DEVELOPMENT AND RECLAMATION
benefited from the Project. PROJECT.

The Courts Ruling

The Issues Before we delve into the substantive issues raised in this petition, we will
first deal with several procedural matters raised by respondents.
The grounds presented in the instant petition are:
I Whether petitioner has the requisite locus standi to file this case

NEITHER RESPONDENT NHA NOR Respondents argue that petitioner Chavez has no legal standing to file the
RESPONDENT R-II BUILDERS MAY petition.
VALIDLY RECLAIM FORESHORE AND
SUBMERGED LAND BECAUSE: Only a person who stands to be benefited or injured by the
judgment in the suit or entitled to the avails of the suit can file a complaint
1. RESPONDENT NHA AND R-II BUILDERS or petition.[47] Respondents claim that petitioner is not a proper party-in-
WERE NEVER GRANTED ANY POWER AND interest as he was unable to show that he has sustained or is in immediate
AUTHORITY TO RECLAIM LANDS OF THE or imminent danger of sustaining some direct and personal injury as a
PUBLIC DOMAIN AS THIS POWER result of the execution and enforcement of the assailed contracts or
IS VESTED EXCLUSIVELY WITH THE PEA. agreements.[48] Moreover, they assert that not all government contracts
can justify a taxpayers suit especially when no public funds were utilized
2. EVEN ASSUMING THAT RESPONDENTS in contravention of the Constitution or a law.
NHA AND R-II BUILDERS WERE GIVEN THE We explicated in Chavez v. PCGG[49] that in cases where
POWER AND AUTHORITY TO RECLAIM issues of transcendental public importance are presented, there is no
FORESHORE AND SUBMERGED necessity to show that petitioner has experienced or is in actual danger of
LAND, THEY WERE NEVER GIVEN THE suffering direct and personal injury as the requisite injury is assumed. We
AUTHORITY BY THE DENR TO DO SO. find our ruling in Chavez v. PEA[50] as conclusive authority on locus
standi in the case at bar since the issues raised in this petition are averred
II to be in breach of the fair diffusion of the countrys natural resources and
the constitutional right of a citizen to information which have been
RESPONDENT R-II BUILDERS CANNOT declared to be matters of transcendental public importance. Moreover, the
ACQUIRE THE RECLAIMED FORESHORE pleadings especially those of respondents readily reveal that public funds
AND SUBMERGED LAND AREAS BECAUSE: have been indirectly utilized in the Project by means of Smokey Mountain
Project Participation Certificates (SMPPCs) bought by some government
1. THE RECLAIMED FORESHORE AND agencies.
SUBMERGED PARCELS OF LAND ARE Hence, petitioner, as a taxpayer, is a proper party to the instant petition
INALIENABLE PUBLIC LANDS WHICH ARE before the court.
BEYOND THE COMMERCE OF MAN.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 49
Whether petitioners direct recourse to this Court was proper
Respondents are one in asserting that petitioner circumvents the principle
of hierarchy of courts in his petition. Judicial hierarchy was made clear in
the case of People v. Cuaresma, thus:
There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals,
and should also serve as a general determinant of
the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that
judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs
against first level (inferior) courts should be filed
with the Regional Trial Court, and those against the
latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original
jurisdiction to issue these writs should be allowed
only when there are special and important reasons
therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy
that is necessary to prevent inordinate demands
upon the Courts time and attention which are better
devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding
of the Courts docket.[51] x x x
The OSG claims that the jurisdiction over petitions for
prohibition and mandamus is concurrent with other lower courts like the
Regional Trial Courts and the Court of Appeals. Respondent NHA argues
that the instant petition is misfiled because it does not introduce special
and important reasons or exceptional and compelling circumstances to
warrant direct recourse to this Court and that the lower courts are more
equipped for factual issues since this Court is not a trier of
facts. Respondents RBI and RHI question the filing of the petition as this
Court should not be unduly burdened with repetitions, invocation of
jurisdiction over constitutional questions it had previously resolved and
settled.
In the light of existing jurisprudence, we find paucity of merit in
respondents postulation.
While direct recourse to this Court is generally frowned upon and
discouraged, we have however ruled in Santiago v. Vasquez that such
resort to us may be allowed in certain situations, wherein this Court ruled
that petitions for certiorari, prohibition, or mandamus, though cognizable
by other courts, may directly be filed with us if the redress desired cannot
be obtained in the appropriate courts or where exceptional compelling
circumstances justify availment of a remedy within and calling for the
exercise of [this Courts] primary jurisdiction. [52]
The instant petition challenges the constitutionality and legality of the
SMDRP involving several hectares of government land and hundreds of
millions of funds of several government agencies. Moreover, serious
constitutional challenges are made on the different aspects of the Project
which allegedly affect the right of Filipinos to the distribution of natural
resources in the country and the right to information of a citizenmatters
which have been considered to be of extraordinary significance and grave
consequence to the public in general. These concerns in the instant action
compel us to turn a blind eye to the judicial structure meant to provide an
orderly dispensation of justice and consider the instant petition as a
justified deviation from an established precept.
Core factual matters undisputed
Respondents next challenge the projected review by this Court of the
alleged factual issues intertwined in the issues propounded by
petitioner. They listed a copious number of questions seemingly factual in
nature which would make this Court a trier of facts. [53]
We find the position of respondents bereft of merit.
For one, we already gave due course to the instant petition in our January
18, 2005 Resolution.[54] In said issuance, the parties were required to make
clear and concise statements of established facts upon which our decision
will be based.
Secondly, we agree with petitioner that there is no necessity for us to make
any factual findings since the facts needed to decide the instant petition
are well established from the admissions of the parties in their
pleadings[55] and those derived from the documents appended to said
submissions. Indeed, the core facts which are the subject matter of the
numerous issues raised in this petition are undisputed.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his
postulations in a number of issues, we first resolve the
queryis PEA applicable to the case at bar?
A juxtaposition of the facts in the two cases constrains the Court to rule
in the negative.
The Court finds that PEA is not a binding precedent to the instant petition
because the facts in said case are substantially different from the facts and
circumstances in the case at bar, thus:
(1) The reclamation project in PEA was undertaken through a JVA
entered into between PEA and AMARI. The reclamation project in the
instant NHA case was undertaken by the NHA, a national government
agency in consultation with PEA and with the approval of two Philippine
Presidents;
(2) In PEA, AMARI and PEA executed a JVA to develop
the Freedom Islands and reclaim submerged areas without public bidding
on April 25, 1995. In the instant NHA case, the NHA and RBI executed a
JVA after RBI was declared the winning bidder on August 31, 1992 as the
JVA partner of the NHA in the SMDRP after compliance with the
requisite public bidding.
(3) In PEA, there was no law or presidential proclamation classifying the
lands to be reclaimed as alienable and disposal lands of public domain. In
this RBI case, MO 415 of former President Aquino and Proclamation No.
39 of then President Ramos, coupled with Special Patents Nos. 3591,
3592, and 3598, classified the reclaimed lands as alienable and disposable;
(4) In PEA, the Chavez petition was filed before the amended JVA was
executed by PEA and AMARI. In this NHA case, the JVA and subsequent
amendments were already substantially implemented. Subsequently, the
Project was terminated through a MOA signed on August 27,
2003. Almost one year later on August 5, 2004, the Chavez petition was
filed;
(5) In PEA, AMARI was considered to be in bad faith as it signed the
amended JVA after the Chavez petition was filed with the Court and after
Senate Committee Report No. 560 was issued finding that the subject
lands are inalienable lands of public domain. In the instant petition, RBI
and other respondents are considered to have signed the agreements in
good faith as the Project was terminated even before the Chavez petition
was filed;
(6) The PEA-AMARI JVA was executed as a result of direct negotiation
between the parties and not in accordance with the BOT Law. The NHA-
RBI JVA and subsequent amendments constitute a BOT contract
governed by the BOT Law; and
(7) In PEA, the lands to be reclaimed or already reclaimed were
transferred to PEA, a government entity tasked to dispose of public lands
under Executive Order No. (EO) 525.[56] In the NHA case, the reclaimed
lands were transferred to NHA, a government entity NOT tasked to
dispose of public land and therefore said alienable lands were converted
to patrimonial lands upon their transfer to NHA.[57]
Thus the PEA Decision[58] cannot be considered an authority
or precedent to the instant case. The principle of stare decisis[59] has no
application to the different factual setting of the instant case.
We will now dwell on the substantive issues raised by
petitioner. After a perusal of the grounds raised in this petition, we find
that most of these issues are moored on our PEA Decision which, as
earlier discussed, has no application to the instant petition. For this reason
alone, the petition can already be rejected. Nevertheless, on the premise
of the applicability of said decision to the case at bar, we will proceed to
resolve said issues.
First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner
Petitioner contends that neither respondent NHA nor respondent RBI may
validly reclaim foreshore and submerged land because they were not
given any power and authority to reclaim lands of the public domain as
this power was delegated by law to PEA.
Asserting that existing laws did not empower the NHA and RBI to reclaim
lands of public domain, the Public Estates Authority (PEA), petitioner
claims, is the primary authority for the reclamation of all foreshore and
submerged lands of public domain, and relies on PEA where this Court
held:
Moreover, Section 1 of Executive Order No. 525
provides that PEA shall be primarily responsible
for integrating, directing, and coordinating all
reclamation projects for and on behalf of the
National Government. The same section also states
that [A]ll reclamation projects shall be approved by
the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a
proper contract executed by it with any person or
entity; x x x. Thus, under EO No. 525, in relation
to PD No. 3-A and PD No. 1084, PEA became the
primary implementing agency of the National
Government to reclaim foreshore and submerged
lands of the public domain. EO No. 525 recognized
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 50
PEA as the government entity to undertake the
reclamation of lands and ensure their maximum
utilization in promoting public welfare and
interests. Since large portions of these reclaimed
lands would obviously be needed for public
service, there must be a formal declaration
segregating reclaimed lands no longer needed for
public service from those still needed for public
service.[60]
In the Smokey Mountain Project, petitioner clarifies that the
reclamation was not done by PEA or through a contract executed by PEA
with another person or entity but by the NHA through an agreement with
respondent RBI. Therefore, he concludes that the reclamation is null and
void.
Petitioners contention has no merit.
EO 525 reads:
Section 1. The Public Estates Authority (PEA)
shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects
for and on behalf of the National Government. All
reclamation projects shall be approved by the
President upon recommendation of the PEA, and
shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity;
Provided, that, reclamation projects of any
national government agency or entity
authorized under its charter shall be
undertaken in consultation with the PEA upon
approval of the President. (Emphasis supplied.)
The aforequoted provision points to three (3) requisites for a legal and
valid reclamation project, viz:
(1) approval by the President;
(2) favorable recommendation of PEA; and
(3) undertaken by any of the following:
a. by PEA
b. by any person or entity pursuant to a contract it executed with PEA
c. by the National Government agency or entity authorized under its
charter to reclaim lands subject to consultation with PEA
Without doubt, PEA under EO 525 was designated as the agency
primarily responsible for integrating, directing, and coordinating all
reclamation projects. Primarily means mainly, principally, mostly,
generally. Thus, not all reclamation projects fall under PEAs authority of
supervision, integration, and coordination. The very charter of PEA, PD
1084,[61] does not mention that PEA has the exclusive and sole power and
authority to reclaim lands of public domain. EO 525 even reveals the
exceptionreclamation projects by a national government agency or entity
authorized by its charter to reclaim land. One example is EO 405 which
authorized the Philippine Ports Authority (PPA) to reclaim and develop
submerged areas for port related purposes. Under its charter, PD 857, PPA
has the power to reclaim, excavate, enclose or raise any of the lands vested
in it.
Thus, while PEA under PD 1084 has the power to reclaim land and under
EO 525 is primarily responsible for integrating, directing and coordinating
reclamation projects, such authority is NOT exclusive and such power to
reclaim may be granted or delegated to another government agency or
entity or may even be undertaken by the National Government itself, PEA
being only an agency and a part of the National Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation
phase of SMDRP. After a scrutiny of the facts culled from the records, we
find that the project met all the three (3) requirements, thus:
1. There was ample approval by the President of the Philippines; as a
matter of fact, two Philippine Presidents approved the same,
namely: Presidents Aquino and Ramos.President Aquino sanctioned the
reclamation of both the SMDRP housing and commercial-industrial sites
through MO 415 (s. 1992) which approved the SMDRP under Sec. 1 and
directed NHA x x x to implement the Smokey Mountain Development
Plan and Reclamation of the Area across R-10 through a private sector
joint venture scheme at the least cost to government under Section 3.
For his part, then President Ramos issued Proclamation No. 39 (s. 1992)
which expressly reserved the Smokey Mountain Area and the
Reclamation Area for a housing project and related
commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s.
1994) which authorized the increase of the Reclamation Area from 40
hectares of foreshore and submerged land of the Manila Bay to 79
hectares. It speaks of the reclamation of 400,000 square meters, more or
less, of the foreshore and submerged lands of Manila Bayadjoining R-
10 as an enabling component of the SMDRP.
As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591
covering 211,975 square meters of Smokey Mountain, Special Patent No.
3592 covering 401,485 square meters of reclaimed land, and Special
Patent No. 3598 covering another 390,000 square meters of reclaimed
land were issued by the DENR.
Thus, the first requirement of presidential imprimatur on the SMDRP has
been satisfied.
2. The requisite favorable endorsement of the reclamation phase was
impliedly granted by PEA. President Aquino saw to it that there was
coordination of the project with PEA by designating its general manager
as member of the EXECOM tasked to supervise the project
implementation. The assignment was made in Sec. 2 of MO 415 which
provides:
Section 2. An Executive Committee is hereby
created to oversee the implementation of the Plan,
chaired by the NCR-CORD, with the heads of the
following agencies as members: The National
Housing Authority, the City of Manila, the
Department of Public Works and Highways, the
Public Estates Authority, the Philippine Ports
Authority, the Department of Environment and
Natural Resources and the Development Bank of
the Philippines. (Emphasis supplied.)
The favorable recommendation by PEA of the JVA and subsequent
amendments were incorporated as part of the recommendations of the
EXECOM created under MO 415. While there was no specific
recommendation on the SMDRP emanating solely from PEA, we find that
the approbation of the Project and the land reclamation as an essential
component by the EXECOM of which PEA is a member, and its
submission of the SMDRP and the agreements on the Project to the
President for approval amply met the second requirement of EO 525.
3. The third element was also presentthe reclamation was undertaken
either by PEA or any person or entity under contract with PEA or by the
National Government agency or entity authorized under its charter to
reclaim lands subject to consultation with PEA. It cannot be disputed that
the reclamation phase was not done by PEA or any person or entity under
contract with PEA. However, the reclamation was implemented by the
NHA, a national government agency whose authority to reclaim lands
under consultation with PEA is derived from its charterPD 727 and other
pertinent lawsRA 7279[62] and RA 6957 as amended by RA 7718.
While the authority of NHA to reclaim lands is challenged by petitioner,
we find that the NHA had more than enough authority to do so under
existing laws. While PD 757, the charter of NHA, does not explicitly
mention reclamation in any of the listed powers of the agency, we rule
that the NHA has an implied power to reclaim land as this is vital or
incidental to effectively, logically, and successfully implement an urban
land reform and housing program enunciated in Sec. 9 of Article XIII of
the 1987 Constitution.
Basic in administrative law is the doctrine that a government agency or
office has express and implied powers based on its charter and other
pertinent statutes. Express powers are those powers granted, allocated,
and delegated to a government agency or office by express provisions of
law. On the other hand, implied powers are those that can be inferred or
are implicit in the wordings of the law[63] or conferred by necessary or fair
implication in the enabling act.[64] In Angara v. Electoral Commission, the
Court clarified and stressed that when a general grant of power is
conferred or duty enjoined, every particular power necessary for the
exercise of the one or the performance of the other is also conferred by
necessary implication.[65] It was also explicated that when the statute does
not specify the particular method to be followed or used by a government
agency in the exercise of the power vested in it by law, said agency has
the authority to adopt any reasonable method to carry out its functions. [66]
The power to reclaim on the part of the NHA is implicit from PD 757, RA
7279, MO 415, RA 6957, and PD 3-A,[67] viz:
1. NHAs power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order
to attain the goals of NHA:
Section 3. Progress and Objectives. The Authority
shall have the following purposes and objectives:
xxxx
b) To undertake housing, development,
resettlement or other activities as would
enhance the provision of housing to
every Filipino;
c) To harness and promote private
participation in housing ventures in
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 51
terms of capital expenditures, land,
expertise, financing and other facilities
for the sustained growth of the housing
industry. (Emphasis supplied.)
Land reclamation is an integral part of the development of resources for
some of the housing requirements of the NHA. Private participation in
housing projects may also take the form of land reclamation.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the
Tondo Foreshore Development Authority (TFDA), has the power to
reclaim, thus:
Section 5. Dissolution of Existing
Housing Agencies. The People's Homesite and
Housing Corporation (PHHC), the Presidential
Assistant on Housing Resettlement Agency
(PAHRA), the Tondo Foreshore Development
Authority (TFDA), the Central Institute for the
Training and Relocation of Urban Squatters
(CITRUS), the Presidential Committee for
Housing and Urban Resettlement (PRECHUR),
Sapang Palay Development Committee, Inter-
Agency Task Force to Undertake the Relocation of
Families in Barrio Nabacaan, Villanueva, Misamis
Oriental and all other existing government housing
and resettlement agencies, task forces and ad-hoc
committees, are hereby dissolved. Their powers
and functions, balance of appropriations,
records, assets, rights, and choses in action, are
transferred to, vested in, and assumed by the
Authority. x x x (Emphasis supplied.)
PD 570 dated October 30, 1974 created the TFDA, which
defined its objectives, powers, and functions. Sec. 2 provides:
Section 2. Objectives and Purposes. The Authority
shall have the following purposes and objectives:
a) To undertake all manner of activity, business or
development projects for the establishment of
harmonious, comprehensive, integrated and
healthy living community in the Tondo
Foreshoreland and its resettlement site;
b) To undertake and promote the physical and
socio-economic amelioration of the Tondo
Foreshore residents in particular and the nation in
general (Emphasis supplied.)
The powers and functions are contained in Sec. 3, to wit:
a) To develop and implement comprehensive and
integrated urban renewal programs for the Tondo
Foreshore and Dagat-dagatan lagoon and/or any
other additional/alternative resettlement
site and to formulate and enforce general and
specific policies for its development which shall
ensure reasonable degree of compliance with
environmental standards.
b) To prescribe guidelines and standards for the
reservation, conservation and utilization of public
lands covering the Tondo Foreshore land and its
resettlement sites;
c) To construct, acquire, own, lease, operate and
maintain infrastructure facilities, housing complex,
sites and services;
d) To determine, regulate and supervise the
establishment and operation of housing, sites,
services and commercial and industrial complexes
and any other enterprises to be constructed or
established within the Tondo Foreshore and its
resettlement sites;
e) To undertake and develop, by itself or through
joint ventures with other public or private entities,
all or any of the different phases of development of
the Tondo Foreshore land and its resettlement
sites;
f) To acquire and own property, property-rights and
interests, and encumber or otherwise dispose of the
same as it may deem appropriate (Emphasis
supplied.)
From the foregoing provisions, it is readily apparent that the TFDA has
the explicit power to develop public lands covering the Tondo foreshore
land and any other additional and alternative resettlement sites under letter
b, Sec. 3 of PD 570. Since the additional and/or alternative sites adjacent
to Tondo foreshore land cover foreshore and submerged areas, the
reclamation of said areas is necessary in order to convert them into a
comprehensive and integrated resettlement housing project for the slum
dwellers and squatters of Tondo.Since the powers of TFDA were assumed
by the NHA, then the NHA has the power to reclaim lands in the Tondo
foreshore area which covers the 79-hectare land subject of Proclamations
Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.
c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which
embrace the authority to reclaim land, thus:
Sec. 6. Powers and functions of the Authority.The
Authority shall have the following powers and
functions to be exercised by the Board in
accordance with its established national human
settlements plan prepared by the Human
Settlements Commission:
(a) Develop and implement the comprehensive
and integrated housing program provided for in
Section hereof;
xxxx
(c) Prescribe guidelines and standards for the
reservation, conservation and utilization of public
lands identified for housing and resettlement;
xxxx
(e) Develop and undertake housing development
and/or resettlement projects through joint
ventures or other arrangements with public and
private entities;
xxxx
(k) Enter into contracts whenever necessary under
such terms and conditions as it may deem proper
and reasonable;
(l) Acquire property rights and interests and
encumber or otherwise dispose the same as it may
deem appropriate;
xxxx
(s) Perform such other acts not inconsistent with
this Decree, as may be necessary to effect the
policies and objectives herein
declared. (Emphasis supplied.)
The NHAs authority to reclaim land can be inferred from the
aforequoted provisions. It can make use of public lands under letter (c) of
Sec. 6 which includes reclaimed land as site for its comprehensive and
integrated housing projects under letter (a) which can be undertaken
through joint ventures with private entities under letter (e). Taken together
with letter (s) which authorizes NHA to perform such other activities
necessary to effect the policies and objectives of PD 757, it is safe to
conclude that the NHAs power to reclaim lands is a power that is implied
from the exercise of its explicit powers under Sec. 6 in order to effectively
accomplish its policies and objectives under Sec. 3 of its charter. Thus,
the reclamation of land is an indispensable component for the
development and construction of the SMDRP housing facilities.
2. NHAs implied power to reclaim land is enhanced by RA 7279.
PD 757 identifies NHAs mandate to [d]evelop and undertake housing
development and/or resettlement projects through joint ventures or other
arrangements with public and private entities.
The power of the NHA to undertake reclamation of land can be inferred
from Secs. 12 and 29 of RA 7279, which provide:
Section 12. Disposition of Lands for Socialized
Housing.The National Housing Authority, with
respect to lands belonging to the National
Government, and the local government units with
respect to other lands within their respective
localities, shall coordinate with each other to
formulate and make available various alternative
schemes for the disposition of lands to the
beneficiaries of the Program. These schemes
shall not be limited to those involving transfer of
ownership in fee simple but shall include lease,
with option to purchase, usufruct or such other
variations as the local government units or the
National Housing Authority may deem most
expedient in carrying out the purposes of this Act.
xxxx
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 52
Section 29. Resettlement.With two (2) years from
the effectivity of this Act, the local government
units, in coordination with the National Housing
Authority, shall implement the relocation and
resettlement of persons living in danger areas such
as esteros, railroad tracks, garbage dumps,
riverbanks, shorelines, waterways, and in other
public places as sidewalks, roads, parks, and
playgrounds. The local government unit, in
coordination with the National Housing Authority,
shall provide relocation or resettlement sites with
basic services and facilities and access to
employment and livelihood opportunities
sufficient to meet the basic needs of the affected
families. (Emphasis supplied.)
Lands belonging to the National Government include foreshore and
submerged lands which can be reclaimed to undertake housing
development and resettlement projects.
3. MO 415 explains the undertaking of the NHA in SMDRP:
WHEREAS, Memorandum Order No. 161-A
mandated the National Housing Authority to
conduct feasibility studies and develop low-cost
housing projects at the dumpsites of Metro
Manila;
WHEREAS, the National Housing Authority has
presented a viable Conceptual Plan to convert the
Smokey Mountain dumpsite into a habitable
housing project inclusive of the reclamation area
across R-10 as enabling component of the
Project;
WHEREAS, the said Plan requires the coordinated
and synchronized efforts of the City of Manila and
other government agencies and instrumentalities to
ensure effective and efficient implementation;
WHEREAS, the government encourages private
sector initiative in the implementation of its
projects. (Emphasis supplied.)
Proceeding from these whereas clauses, it is unequivocal that
reclamation of land in the Smokey Mountain area is an essential and vital
power of the NHA to effectively implement its avowed goal of developing
low-cost housing units at the Smokey Mountain dumpsites. The
interpretation made by no less than the President of the Philippines as
Chief of the Executive Branch, of which the NHA is a part, must
necessarily command respect and much weight and credit.
4. RA 6957 as amended by RA 7718the BOT Lawserves as an exception
to PD 1084 and EO 525.
Based on the provisions of the BOT Law and Implementing
Rules and Regulations, it is unequivocal that all government infrastructure
agencies like the NHA can undertake infrastructure or development
projects using the contractual arrangements prescribed by the law, and
land reclamation is one of the projects that can be resorted to in the BOT
project implementation under the February 10, 1992 Joint Resolution No.
3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has ample
implied authority to undertake reclamation projects.
Even without an implied power to reclaim lands under NHAs charter, we
rule that the authority granted to NHA, a national government agency, by
the President under PD 3-A reinforced by EO 525 is more than sufficient
statutory basis for the reclamation of lands under the SMDRP.
PD 3-A is a law issued by then President Ferdinand E. Marcos under his
martial law powers on September 23, 1972. It provided that [t]he
provisions of any law to the contrary notwithstanding, the reclamation of
areas, underwater, whether foreshore or inland, shall be limited to the
National Government or any person authorized by it under the proper
contract. It repealed, in effect, RA 1899 which previously delegated the
right to reclaim lands to municipalities and chartered cities and revested it
to the National Government.[68] Under PD 3-A, national government can
only mean the Executive Branch headed by the President. It cannot refer
to Congress as it was dissolved and abolished at the time of the issuance
of PD 3-A on September 23, 1972. Moreover, the Executive Branch is the
only implementing arm in the government with the equipment,
manpower, expertise, and capability by the very nature of its assigned
powers and functions to undertake reclamation projects. Thus, under PD
3-A, the Executive Branch through the President can implement
reclamation of lands through any of its departments, agencies, or offices.
Subsequently, on February 4, 1977, President Marcos issued PD 1084
creating the PEA, which was granted, among others, the power to reclaim
land, including foreshore and submerged areas by dredging, filling or
other means or to acquire reclaimed lands. The PEAs power to reclaim is
not however exclusive as can be gleaned from its charter, as the President
retained his power under PD 3-A to designate another agency to reclaim
lands.
On February 14, 1979, EO 525 was issued. It granted PEA primary
responsibility for integrating, directing, and coordinating reclamation
projects for and on behalf of the National Government although other
national government agencies can be designated by the President to
reclaim lands in coordination with the PEA. Despite the issuance of EO
525, PD 3-A remained valid and subsisting. Thus, the National
Government through the President still retained the power and control
over all reclamation projects in the country.
The power of the National Government through the President over
reclamation of areas, that is, underwater whether foreshore or inland, was
made clear in EO 543[69] which took effect on June 24, 2006. Under EO
543, PEA was renamed the Philippine Reclamation Authority (PRA) and
was granted the authority to approve reclamation projects, a power
previously reposed in the President under EO 525. EO 543 reads:
Section 1. The power of the President to approve
reclamation projects is hereby delegated to the
Philippine Reclamation Authority [formerly
PEA], through its governing board, subject to
compliance with existing laws and rules and
subject to the condition that reclamation contracts
to be executed with any person or entity go through
public bidding.
Section 2. Nothing in the Order shall be
construed as diminishing the Presidents
authority to modify, amend or nullify PRAs
action.
Section 3. All executive issuances inconsistent
with this Executive Order are hereby repealed or
amended accordingly. (Emphasis supplied.)
Sec. 2 of EO 543 strengthened the power of control and
supervision of the President over reclamation of lands as s/he can modify,
amend, or nullify the action of PEA (now PRA).
From the foregoing issuances, we conclude that the Presidents
delegation to NHA, a national government agency, to reclaim lands under
the SMDRP, is legal and valid, firmly anchored on PD 3-A buttressed by
EO 525 notwithstanding the absence of any specific grant of power under
its charter, PD 757.
Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and submerged
lands
Petitioner Chavez puts forth the view that even if the NHA and RBI were
granted the authority to reclaim, they were not authorized to do so by the
DENR.
Again, reliance is made on our ruling in PEA where it was held
that the DENRs authority is necessary in order for the government to
validly reclaim foreshore and submerged lands. In PEA, we expounded in
this manner:
As manager, conservator and overseer of the
natural resources of the State, DENR exercises
supervision and control over alienable and
disposable public lands. DENR also exercises
exclusive jurisdiction on the management and
disposition of all lands of the public domain. Thus,
DENR decides whether areas under water, like
foreshore or submerged areas of Manila Bay,
should be reclaimed or not. This means that PEA
needs authorization from DENR before PEA can
undertake reclamation projects in Manila Bay, or
in any part of the country.
DENR also exercises exclusive jurisdiction over
the disposition of all lands of the public
domain. Hence, DENR decides whether reclaimed
lands of PEA should be classified as alienable
under Sections 6 and 7 of CA No. 141. Once
DENR decides that the reclaimed lands should be
so classified, it then recommends to the President
the issuance of a proclamation classifying the lands
as alienable or disposable lands of the public
domain open to disposition. We note that then
DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 53
compliance with the Revised Administrative Code
and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to
authorize the reclamation of areas under water,
while PEA is vested with the power to undertake
the physical reclamation of areas under water,
whether directly or through private
contractors. DENR is also empowered to classify
lands of the public domain into alienable or
disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to
develop, sell or lease the reclaimed alienable lands
of the public domain.[70]
Despite our finding that PEA is not a precedent to the case at
bar, we find after all that under existing laws, the NHA is still required to
procure DENRs authorization before a reclamation project in Manila Bay
or in any part of the Philippines can be undertaken. The requirement
applies to PEA, NHA, or any other government agency or office granted
with such power under the law.
Notwithstanding the need for DENR permission, we
nevertheless find petitioners position bereft of merit.
The DENR is deemed to have granted the authority to reclaim in the
Smokey Mountain Project for the following reasons:
1. Sec. 17, Art. VII of the Constitution provides that the President shall
have control of all executive departments, bureaus and offices. The
President is assigned the task of seeing to it that all laws are faithfully
executed. Control, in administrative law, means the power of an officer to
alter, modify, nullify or set aside what a subordinate officer has done in
the performance of his duties and to substitute the judgment of the former
for that of the latter.[71]
As such, the President can exercise executive power motu proprio and can
supplant the act or decision of a subordinate with the Presidents own. The
DENR is a department in the executive branch under the President, and it
is only an alter ego of the latter. Ordinarily the proposed action and the
staff work are initially done by a department like the DENR and then
submitted to the President for approval. However, there is nothing infirm
or unconstitutional if the President decides on the implementation of a
certain project or activity and requires said department to implement
it. Such is a presidential prerogative as long as it involves the department
or office authorized by law to supervise or execute the Project. Thus, as
in this case, when the President approved and ordered the development of
a housing project with the corresponding reclamation work, making
DENR a member of the committee tasked to implement the project, the
required authorization from the DENR to reclaim land can be deemed
satisfied. It cannot be disputed that the ultimate power over alienable and
disposable public lands is reposed in the President of the Philippines and
not the DENR Secretary. To still require a DENR authorization on
the Smokey Mountain when the President has already authorized and
ordered the implementation of the Project would be a derogation of the
powers of the President as the head of the executive branch. Otherwise,
any department head can defy or oppose the implementation of a project
approved by the head of the executive branch, which is patently illegal
and unconstitutional.
In Chavez v. Romulo, we stated that when a statute imposes a
specific duty on the executive department, the President may act directly
or order the said department to undertake an activity, thus:
[A]t the apex of the entire executive officialdom is
the President. Section 17, Article VII of the
Constitution specifies [her] power as Chief
executive departments, bureaus and offices. [She]
shall ensure that the laws be faithfully executed. As
Chief Executive, President Arroyo holds the
steering wheel that controls the course of her
government. She lays down policies in the
execution of her plans and programs. Whatever
policy she chooses, she has her subordinates to
implement them. In short, she has the power of
control. Whenever a specific function is
entrusted by law or regulation to her
subordinate, she may act directly or merely
direct the performance of a duty x x x. Such act
is well within the prerogative of her
office (emphasis supplied).[72]
Moreover, the power to order the reclamation of lands of public domain
is reposed first in the Philippine President. The Revised Administrative
Code of 1987 grants authority to the President to reserve lands of public
domain for settlement for any specific purpose, thus:
Section 14. Power to Reserve Lands of the Public
and Private Domain of the Government.(1) The
President shall have the power to reserve for
settlement or public use, and for specific public
purposes, any of the lands of the public domain,
the use of which is not otherwise directed by
law. The reserved land shall thereafter remain
subject to the specific public purpose indicated
until otherwise provided by law or
proclamation. (Emphasis supplied.)
President Aquino reserved the area of
the Smokey Mountain dumpsite for settlement and issued MO 415
authorizing the implementation of the Smokey Mountain Development
Project plus the reclamation of the area across R-10. Then President
Ramos issued Proclamation No. 39 covering the 21-hectare dumpsite and
the 40-hectare commercial/industrial area, and Proclamation No. 465 and
MO 415 increasing the area of foreshore and submerged lands
of Manila Bay to be reclaimed from 40 to 79 hectares.Having supervision
and control over the DENR, both Presidents directly assumed and
exercised the power granted by the Revised Administrative Code to the
DENR Secretary to authorize the NHA to reclaim said lands. What can be
done indirectly by the DENR can be done directly by the President. It
would be absurd if the power of the President cannot be exercised simply
because the head of a department in the executive branch has not acted
favorably on a project already approved by the President. If such
arrangement is allowed then the department head will become more
powerful than the President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the
EXECOM chaired by the NCR-CORD to oversee the implementation of
the Project. The EXECOM was the one which recommended approval of
the project plan and the joint venture agreements. Clearly, the DENR
retained its power of supervision and control over the laws affected by the
Project since it was tasked to facilitate the titling of
the Smokey Mountain and of the area to be reclaimed, which shows that
it had tacitly given its authority to the NHA to undertake the reclamation.
3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos.
3591 and 3592 while then Secretary Victor O. Ramos issued Special
Patent No. 3598 that embraced the areas covered by the
reclamation. These patents conveyed the lands to be reclaimed to the
NHA and granted to said agency the administration and disposition of said
lands for subdivision and disposition to qualified beneficiaries and for
development for mix land use (commercial/industrial) to provide
employment opportunities to on-site families and additional areas for port
related activities. Such grant of authority to administer and dispose of
lands of public domain under the SMDRP is of course subject to the
powers of the EXECOM of SMDRP, of which the DENR is a member.
4. The issuance of ECCs by the DENR for SMDRP is but an exercise of
its power of supervision and control over the lands of public domain
covered by the Project.
Based on these reasons, it is clear that the DENR, through its acts and
issuances, has ratified and confirmed the reclamation of the subject lands
for the purposes laid down in Proclamations Nos. 39 and 465.
Third Issue: Whether respondent RBI can acquire reclaimed
foreshore and submerged lands considered as inalienable and
outside the commerce of man
Petitioner postulates that respondent RBI cannot acquire the reclaimed
foreshore and submerged areas as these are inalienable public lands
beyond the commerce of man based on Art. 1409 of the Civil Code which
provides:
Article 1409. The following contracts are
inexistent and void from the beginning:
(1) Those whose cause, object or purpose is
contrary to law, morals, good customs, public order
or public policy;
xxxx
(7) Those expressly prohibited or declared void by
law.
These contracts cannot be ratified. Neither can the
right to set up the defense of illegality be waived.
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources
are owned by the State and they cannot be alienated except for alienable
agricultural lands of the public domain. One of the States natural
resources are lands of public domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be
alienable, there must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable and disposable and open to
disposition or concession. Absent such law or proclamation, the reclaimed
lands cannot be the enabling component or consideration to be paid to RBI
as these are beyond the commerce of man.
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 54
We are not convinced of petitioners postulation.
The reclaimed lands across R-10 were classified alienable and disposable
lands of public domain of the State for the following reasons, viz:
First, there were three (3) presidential proclamations classifying the
reclaimed lands across R-10 as alienable or disposable hence open to
disposition or concession, to wit:
(1) MO 415 issued by President Aquino, of which Sec. 4 states that [t]he
land covered by the Smokey Mountain Dumpsite is hereby conveyed to
the National Housing Authority as well as the area to be reclaimed across
R-10.
The directive to transfer the lands once reclaimed to the NHA implicitly
carries with it the declaration that said lands are alienable and
disposable. Otherwise, the NHA cannot effectively use them in its
housing and resettlement project.
(2) Proclamation No. 39 issued by then President Ramos by which the
reclaimed lands were conveyed to NHA for subdivision and disposition
to qualified beneficiaries and for development into a mixed land use
(commercial/industrial) to provide employment opportunities to on-site
families and additional areas for port-related activities. Said directive
carries with it the pronouncement that said lands have been transformed
to alienable and disposable lands. Otherwise, there is no legal way to
convey it to the beneficiaries.
(3) Proclamation No. 465 likewise issued by President Ramos enlarged
the reclaimed area to 79 hectares to be developed and disposed of in the
implementation of the SMDRP.The authority put into the hands of the
NHA to dispose of the reclaimed lands tacitly sustains the conversion to
alienable and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR
anchored on Proclamations Nos. 39 and 465 issued by President Ramos,
without doubt, classified the reclaimed areas as alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and
465 are explicit declarations that the lands to be reclaimed are classified
as alienable and disposable. We find however that such conclusion is
derived and implicit from the authority given to the NHA to transfer the
reclaimed lands to qualified beneficiaries.
The query is, when did the declaration take effect? It did so only after the
special patents covering the reclaimed areas were issued. It is only on such
date that the reclaimed lands became alienable and disposable lands of the
public domain. This is in line with the ruling in PEA where said issue was
clarified and stressed:
PD No. 1085, coupled with President
Aquinos actual issuance of a special patent
covering the Freedom Islands, is equivalent to
an official proclamation classifying
the FreedomIslands as alienable or disposable
lands of the public domain. PD No. 1085 and
President Aquinos issuance of a land patent also
constitute a declaration that
the Freedom Islands are no longer needed for
public service. The Freedom Islands are thus
alienable or disposable lands of the public domain,
open to disposition or concession to qualified
parties.[73] (Emphasis supplied.)
Thus, MO 415 and Proclamations Nos. 39 and 465
cumulatively and jointly taken together with Special Patent Nos. 3591,
3592, and 3598 more than satisfy the requirement in PEA that [t]here must
be a law or presidential proclamation officially classifying these
reclaimed lands as alienable or disposable and open to disposition or
concession (emphasis supplied).[74]
Apropos the requisite law categorizing reclaimed land as alienable or
disposable, we find that RA 6957 as amended by RA 7718 provides ample
authority for the classification of reclaimed land in the SMDRP for the
repayment scheme of the BOT project as alienable and disposable lands
of public domain. Sec. 6 of RA 6957 as amended by RA 7718 provides:
For the financing, construction, operation and
maintenance of any infrastructure projects
undertaken through the build-operate-and transfer
arrangement or any of its variations pursuant to the
provisions of this Act, the project proponent x x x
may likewise be repaid in the form of a share in the
revenue of the project or other non-monetary
payments, such as, but not limited to, the grant of
a portion or percentage of the reclaimed land,
subject to the constitutional requirements with
respect to the ownership of the land. (Emphasis
supplied.)
While RA 6957 as modified by RA 7718 does not expressly declare that
the reclaimed lands that shall serve as payment to the project proponent
have become alienable and disposable lands and opened for disposition;
nonetheless, this conclusion is necessarily implied, for how else can the
land be used as the enabling component for the Project if such
classification is not deemed made?
It may be argued that the grant of authority to sell public lands, pursuant
to PEA, does not convert alienable lands of public domain into private or
patrimonial lands. We ruled in PEA that alienable lands of public
domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these
lands can become private or patrimonial lands (emphasis
supplied).[75] To lands reclaimed by PEA or through a contract with a
private person or entity, such reclaimed lands still remain alienable lands
of public domain which can be transferred only to Filipino citizens but not
to a private corporation. This is because PEA under PD 1084 and EO 525
is tasked to hold and dispose of alienable lands of public domain and it is
only when it is transferred to Filipino citizens that it becomes patrimonial
property. On the other hand, the NHA is a government agency not tasked
to dispose of public lands under its charterThe Revised Administrative
Code of 1987. The NHA is an end-user agency authorized by law to
administer and dispose of reclaimed lands. The moment titles over
reclaimed lands based on the special patents are transferred to the NHA
by the Register of Deeds, they are automatically converted to patrimonial
properties of the State which can be sold to Filipino citizens and private
corporations, 60% of which are owned by Filipinos. The reason is
obvious: if the reclaimed land is not converted to patrimonial land once
transferred to NHA, then it would be useless to transfer it to the NHA
since it cannot legally transfer or alienate lands of public domain. More
importantly, it cannot attain its avowed purposes and goals since it can
only transfer patrimonial lands to qualified beneficiaries and prospective
buyers to raise funds for the SMDRP.
From the foregoing considerations, we find that the 79-hectare reclaimed
land has been declared alienable and disposable land of the public domain;
and in the hands of NHA, it has been reclassified as patrimonial property.
Petitioner, however, contends that the reclaimed lands were inexistent
prior to the three (3) Presidential Acts (MO 415 and Proclamations Nos.
39 and 465) and hence, the declaration that such areas are alienable and
disposable land of the public domain, citing PEA, has no legal basis.
Petitioners contention is not well-taken.
Petitioners sole reliance on Proclamations Nos. 39 and 465 without taking
into consideration the special patents issued by the DENR demonstrates
the inherent weakness of his proposition. As was ruled in PEA cited by
petitioner himself, PD No. 1085, coupled with President Aquinos actual
issuance of a special patent covering the Freedom Islands is equivalent to
an official proclamation classifying the Freedom islands as alienable or
disposable lands of public domain. In a similar vein, the combined and
collective effect of Proclamations Nos. 39 and 465 with Special Patents
Nos. 3592 and 3598 is tantamount to and can be considered to be an
official declaration that the reclaimed lots are alienable or disposable
lands of the public domain.
The reclaimed lands covered by Special Patents Nos. 3591,
3592, and 3598, which evidence transfer of ownership of reclaimed lands
to the NHA, are official acts of the DENR Secretary in the exercise of his
power of supervision and control over alienable and disposable public
lands and his exclusive jurisdiction over the management and disposition
of all lands of public domain under the Revised Administrative Code of
1987. Special Patent No. 3592 speaks of the transfer of Lots 1 and 2, and
RI-003901-000012-D with an area of 401,485 square meters based on the
survey and technical description approved by the Bureau of Lands. Lastly,
Special Patent No. 3598 was issued in favor of the NHA transferring to
said agency a tract of land described in Plan RL-00-000013 with an area
of 390,000 square meters based on the survey and technical descriptions
approved by the Bureau of Lands.
The conduct of the survey, the preparation of the survey plan, the
computation of the technical description, and the processing and
preparation of the special patent are matters within the technical area of
expertise of administrative agencies like the DENR and the Land
Management Bureau and are generally accorded not only respect but at
times even finality.[76] Preparation of special patents calls for technical
examination and a specialized review of calculations and specific details
which the courts are ill-equipped to undertake; hence, the latter defer to
the administrative agency which is trained and knowledgeable on such
matters.[77]
Subsequently, the special patents in the name of the NHA were submitted
to the Register of Deeds of the City of Manila for registration, and
corresponding certificates of titles over the reclaimed lots were issued
based on said special patents. The issuance of certificates of titles in
NHAs name automatically converts the reclaimed lands to patrimonial
properties of the NHA. Otherwise, the lots would not be of use to the
NHAs housing projects or as payment to the BOT contractor as the
enabling component of the BOT contract. The laws of the land have to be
applied and interpreted depending on the changing conditions and
times. Tempora mutantur et legis mutantur in illis (time changes and laws
change with it). One such law that should be treated differently is the BOT
Law (RA 6957) which brought about a novel way of implementing
government contracts by allowing reclaimed land as part or full payment
to the contractor of a government project to satisfy the huge financial
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 55
requirements of the undertaking. The NHA holds the lands covered by
Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP
undertaken by authority of the BOT Law and for disposition in accordance
with said special law. The lands become alienable and disposable lands of
public domain upon issuance of the special patents and become
patrimonial properties of the Government from the time the titles are
issued to the NHA.
As early as 1999, this Court in Baguio v. Republic laid down the
jurisprudence that:
It is true that, once a patent is registered and the
corresponding certificate of title is issued, the land
covered by them ceases to be part of the public
domain and becomes private property, and the
Torrens Title issued pursuant to the patent becomes
indefeasible upon the expiration of one year from
the date of issuance of such patent.[78]
The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga,
Sr.,[79] Heirs of Carlos Alcaraz v. Republic,[80] and the more recent case
of Doris Chiongbian-Oliva v. Republic of the Philippines.[81] Thus, the
79-hectare reclaimed land became patrimonial property after the issuance
of certificates of titles to the NHA based on Special Patents Nos. 3592 and
3598.
One last point. The ruling in PEA cannot even be applied retroactively to
the lots covered by Special Patents Nos. 3592 (40 hectare reclaimed land)
and 3598 (39-hectare reclaimed land). The reclamation of the land under
SMDRP was completed in August 1996 while the PEA decision was
rendered on July 9, 2002. In the meantime, subdivided lots forming parts
of the reclaimed land were already sold to private corporations for value
and separate titles issued to the buyers. The Project was terminated
through a Memorandum of Agreement signed on August 27,
2003. The PEA decision became final through the November 11,
2003 Resolution. It is a settled precept that decisions of the Supreme
Court can only be applied prospectively as they may prejudice vested
rights if applied retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly elucidated the
prospective application of its decisions based on considerations of equity
and fair play, thus:
At that time, the prevailing
jurisprudence interpreting section 119 of R.A. 141
as amended was that enunciated in Monge and
Tupas cited above. The petitioners Benzonan and
respondent Pe and the DBP are bound by these
decisions for pursuant to Article 8 of the Civil Code
judicial decisions applying or interpreting the laws
of the Constitution shall form a part of the legal
system of the Philippines. But while our decisions
form part of the law of the land, they are also
subject to Article 4 of the Civil Code which
provides that laws shall have no retroactive effect
unless the contrary is provided. This is expressed
in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The
rationale against retroactivity is easy to
perceive. The retroactive application of a law
usually divests rights that have already become
vested or impairs the obligations of contract and
hence, is unconstitutional.
The same consideration underlies our rulings
giving only prospective effect to decisions
enunciating new doctrines. Thus, we emphasized
in People v. Jabinal, 55 SCRA 607 [1974] x x x
when a doctrine of this Court is overruled and a
different view is adopted, the new doctrine should
be applied prospectively and should not apply to
parties who had relied on the old doctrine and acted
on the faith thereof.[82]
Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use
Petitioner Chavez avers that despite the declaration that the reclaimed
areas are alienable lands of the public domain, still, the reclamation is
flawed for there was never any declaration that said lands are no longer
needed for public use.
We are not moved by petitioners submission.
Even if it is conceded that there was no explicit declaration that the lands
are no longer needed for public use or public service, there was however
an implicit executive declaration that the reclaimed areas R-10 are not
necessary anymore for public use or public service when President
Aquino through MO 415 conveyed the same to the NHA partly for
housing project and related commercial/industrial development intended
for disposition to and enjoyment of certain beneficiaries and not the public
in general and partly as enabling component to finance the project.
President Ramos, in issuing Proclamation No. 39, declared,
though indirectly, that the reclaimed lands of the Smokey Mountain
project are no longer required for public use or service, thus:
These parcels of land of public domain are hereby
placed under the administration and disposition of
the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries,
as well as its development for mix land use
(commercial/industrial) to provide employment
opportunities to on-site families and additional
areas for port related activities.(Emphasis
supplied.)
While numerical count of the persons to be benefited is not the
determinant whether the property is to be devoted to public use, the
declaration in Proclamation No. 39 undeniably identifies only particular
individuals as beneficiaries to whom the reclaimed lands can be sold,
namelythe Smokey Mountain dwellers. The rest of the Filipinos are not
qualified; hence, said lands are no longer essential for the use of the public
in general.
In addition, President Ramos issued on August 31, 1994
Proclamation No. 465 increasing the area to be reclaimed from forty (40)
hectares to seventy-nine (79) hectares, elucidating that said lands are
undoubtedly set aside for the beneficiaries of SMDRP and not the
publicdeclaring the power of NHA to dispose of land to be reclaimed,
thus: The authority to administer, develop, or dispose lands identified and
reserved by this Proclamation and Proclamation No. 39 (s.1992), in
accordance with the SMDRP, as enhance, is vested with the NHA, subject
to the provisions of existing laws. (Emphasis supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations that
proclaimed the non-use of the reclaimed areas for public use or service as
the Project cannot be successfully implemented without the withdrawal of
said lands from public use or service. Certainly, the devotion of the
reclaimed land to public use or service conflicts with the intended use of
the Smokey Mountain areas for housing and employment of the Smokey
Mountain scavengers and for financing the Project because the latter
cannot be accomplished without abandoning the public use of the subject
land. Without doubt, the presidential proclamations on SMDRP together
with the issuance of the special patents had effectively removed the
reclaimed lands from public use.
More decisive and not in so many words is the ruling in PEA which we
earlier cited, that PD No. 1085 and President Aquinos issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer
needed for public service. Consequently, we ruled in that case that the
reclaimed lands are open to disposition or concession to qualified
parties.[83]
In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with
the special patents have classified the reclaimed lands as alienable and
disposable and open to disposition or concession as they would be devoted
to units for Smokey Mountain beneficiaries. Hence, said lands are no
longer intended for public use or service and shall form part of the
patrimonial properties of the State under Art. 422 of the Civil Code.[84] As
discussed a priori, the lands were classified as patrimonial properties of
the NHA ready for disposition when the titles were registered in its name
by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling components of a
BOT infrastructure project are necessarily reclassified as alienable and
disposable lands under the BOT Law; otherwise, absurd and illogical
consequences would naturally result. Undoubtedly, the BOT contract will
not be accepted by the BOT contractor since there will be no consideration
for its contractual obligations. Since reclaimed land will be conveyed to
the contractor pursuant to the BOT Law, then there is an implied
declaration that such land is no longer intended for public use or public
service and, hence, considered patrimonial property of the State.
Fifth Issue: Whether there is a law authorizing sale of
reclaimed lands
Petitioner next claims that RBI cannot acquire the reclaimed lands
because there was no law authorizing their sale. He argues that unlike
PEA, no legislative authority was granted to the NHA to sell reclaimed
land.
This position is misplaced.
Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support
his view that the NHA is not empowered by any law to sell reclaimed
land, thus:
Section 60. Any tract of land comprised under this
title may be leased or sold, as the case may be, to
any person, corporation or association authorized
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 56
to purchase or lease public lands for agricultural
purposes. The area of the land so leased or sold
shall be such as shall, in the judgment of the
Secretary of Agriculture and Natural Resources, be
reasonably necessary for the purposes for which
such sale or lease if requested and shall in no case
exceed one hundred and forty-four
hectares: Provided, however, That this limitation
shall not apply to grants, donations, transfers, made
to a province, municipality or branch or
subdivision of the Government for the purposes
deemed by said entities conducive to the public
interest; but the land so granted donated or
transferred to a province, municipality, or
branch or subdivision of the Government shall
not be alienated, encumbered, or otherwise
disposed of in a manner affecting its title, except
when authorized by Congress; Provided, further,
That any person, corporation, association or
partnership disqualified from purchasing public
land for agricultural purposes under the provisions
of this Act, may lease land included under this title
suitable for industrial or residential purposes, but
the lease granted shall only be valid while such
land is used for the purposes referred to. (Emphasis
supplied.)
Reliance on said provision is incorrect as the same applies only to a
province, municipality or branch or subdivision of the Government. The
NHA is not a government unit but a government corporation performing
governmental and proprietary functions.
In addition, PD 757 is clear that the NHA is empowered by law to transfer
properties acquired by it under the law to other parties, thus:
Section 6. Powers and functions of the
Authority. The Authority shall have the following
powers and functions to be exercised by the Boards
in accordance with the established national human
settlements plan prepared by the Human
Settlements Commission:
xxxx
(k) Enter into contracts whenever necessary under
such terms and conditions as it may deem proper
and reasonable;
(l) Acquire property rights and interests, and
encumber or otherwise dispose the same as it may
deem appropriate (Emphasis supplied.)
Letter (l) is emphatic that the NHA can acquire property rights and
interests and encumber or otherwise dispose of them as it may deem
appropriate. The transfer of the reclaimed lands by the National
Government to the NHA for housing, commercial, and industrial purposes
transformed them into patrimonial lands which are of course owned by
the State in its private or proprietary capacity. Perforce, the NHA can sell
the reclaimed lands to any Filipino citizen or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding
Petitioner also contends that there was no public bidding but an awarding
of ownership of said reclaimed lands to RBI. Public bidding, he says, is
required under Secs. 63 and 67 of CA 141 which read:
Section 63. Whenever it is decided that
lands covered by this chapter are not needed for
public purposes, the Director of Lands shall ask the
Secretary of Agriculture and Commerce for
authority to dispose of the same. Upon receipt of
such authority, the Director of Lands shall give
notice by public advertisement in the same manner
as in the case of leases or sales of agricultural
public land, that the Government will lease or sell,
as the case may be, the lots or blocks specified in
the advertisement, for the purpose stated in the
notice and subject to the conditions specified in this
chapter.
xxxx
Section 67. The lease or sale shall be made through
oral bidding; and adjudication shall be made to the
highest bidder. However, where an applicant has
made improvements on the land by virtue of a
permit issued to him by competent authority, the
sale or lease shall be made by sealed bidding as
prescribed in section twenty-six of this Act, the
provisions of which shall be applied whenever
applicable. If all or part of the lots remain unleased
or unsold, the Director of Lands shall from time to
time announce in the Official Gazette or in any
other newspapers of general circulation, the lease
of sale of those lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as
the reclaimed lands were conveyed to RBI by negotiated contract and not
by public bidding as required by law.
This stand is devoid of merit.
There is no doubt that respondent NHA conducted a public bidding of the
right to become its joint venture partner in the Smokey Mountain
Project. Notices or Invitations to Bid were published in the national dailies
on January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992. The
bidding proper was done by the Bids and Awards Committee (BAC)
on May 18, 1992. On August 31, 1992, the Inter-Agency Techcom made
up of the NHA, PEA, DPWH, PPA, DBP, and DENR opened the bids and
evaluated them, resulting in the award of the contract to respondent RBI
on October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the
JVA. On February 23, 1994, said JVA was amended and restated into the
ARJVA. On August 11, 1994, the ARJVA was again
amended. On September 7, 1994, the OP approved the ARJVA and the
amendments to the ARJVA. From these factual settings, it cannot be
gainsaid that there was full compliance with the laws and regulations
governing public biddings involving a right, concession, or property of
the government.
Petitioner concedes that he does not question the public bidding on the
right to be a joint venture partner of the NHA, but the absence of bidding
in the sale of alienable and disposable lands of public domain pursuant to
CA 141 as amended.
Petitioners theory is incorrect.
Secs. 63 and 67 of CA 141, as amended, are in point as they refer to
government sale by the Director of Lands of alienable and disposable
lands of public domain. This is not present in the case at bar. The lands
reclaimed by and conveyed to the NHA are no longer lands of public
domain. These lands became proprietary lands or patrimonial properties
of the State upon transfer of the titles over the reclaimed lands to the NHA
and hence outside the ambit of CA 141. The NHA can therefore legally
transfer patrimonial land to RBI or to any other interested qualified buyer
without any bidding conducted by the Director of Lands because the
NHA, unlike PEA, is a government agency not tasked to sell lands of
public domain. Hence, it can only hold patrimonial lands and can dispose
of such lands by sale without need of public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires
public bidding when government property has become unserviceable for
any cause or is no longer needed.It appears from the Handbook on
Property and Supply Management System, Chapter 6, that reclaimed
lands which have become patrimonial properties of the State, whose titles
are conveyed to government agencies like the NHA, which it will use for
its projects or programs, are not within the ambit of Sec. 79. We quote the
determining factors in the Disposal of Unserviceable Property, thus:
Determining Factors in the Disposal of
Unserviceable Property
Property, which can no longer be repaired or
reconditioned;
Property whose maintenance costs of repair
more than outweigh the benefits and services
that will be derived from its continued use;
Property that has become obsolete or
outmoded because of changes in technology;
Serviceable property that has been rendered
unnecessary due to change in the agencys
function or mandate;
Unused supplies, materials and spare parts
that were procured in excess of requirements;
and
Unused supplies and materials that [have]
become dangerous to use because of long
storage or use of which is determined to be
hazardous.[85]
Reclaimed lands cannot be considered unserviceable
properties. The reclaimed lands in question are very much needed by the
NHA for the Smokey Mountain Project because without it, then the
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 57
projects will not be successfully implemented. Since the reclaimed lands
are not unserviceable properties and are very much needed by NHA, then
Sec. 79 of PD 1445 does not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial
properties like reclaimed lands transferred to a government agency like
the NHA which has entered into a BOT contract with a private firm. The
reason is obvious. If the patrimonial property will be subject to public
bidding as the only way of disposing of said property, then Sec. 6 of RA
6957 on the repayment scheme is almost impossible or extremely difficult
to implement considering the uncertainty of a winning bid during public
auction. Moreover, the repayment scheme of a BOT contract may be in
the form of non-monetary payment like the grant of a portion or
percentage of reclaimed land. Even if the BOT partner participates in the
public bidding, there is no assurance that he will win the bid and therefore
the payment in kind as agreed to by the parties cannot be performed or the
winning bid prize might be below the estimated valuation of the land. The
only way to harmonize Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to
consider Sec. 79 of PD 1445 as inapplicable to BOT contracts involving
patrimonial lands. The law does not intend anything impossible (lex non
intendit aliquid impossibile).
Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Petitioner maintains that RBI, being a private corporation, is
expressly prohibited by the 1987 Constitution from acquiring lands of
public domain.
Petitioners proposition has no legal mooring for the following reasons:
1. RA 6957 as amended by RA 7718 explicitly states that a contractor can
be paid a portion as percentage of the reclaimed land subject to the
constitutional requirement that only Filipino citizens or corporations with
at least 60% Filipino equity can acquire the same. It cannot be denied that
RBI is a private corporation, where Filipino citizens own at least 60% of
the stocks. Thus, the transfer to RBI is valid and constitutional.
2. When Proclamations Nos. 39 and 465 were issued,
inalienable lands covered by said proclamations were converted to
alienable and disposable lands of public domain.When the titles to the
reclaimed lands were transferred to the NHA, said alienable and
disposable lands of public domain were automatically classified as lands
of the private domain or patrimonial properties of the State because the
NHA is an agency NOT tasked to dispose of alienable or disposable lands
of public domain. The only way it can transfer the reclaimed land in
conjunction with its projects and to attain its goals is when it is
automatically converted to patrimonial properties of the State. Being
patrimonial or private properties of the State, then it has the power to sell
the same to any qualified personunder the Constitution, Filipino citizens
as private corporations, 60% of which is owned by Filipino citizens like
RBI.
3. The NHA is an end-user entity such that when alienable lands of public
domain are transferred to said agency, they are automatically classified as
patrimonial properties. The NHA is similarly situated as BCDA which
was granted the authority to dispose of patrimonial lands of the
government under RA 7227. The nature of the property holdings
conveyed to BCDA is elucidated and stressed in the May 6,
2003 Resolution in Chavez v. PEA, thus:
BCDA is an entirely different government
entity. BCDA is authorized by law to
sell specific government lands that have long
been declared by presidential proclamations as
military reservations for use by the different
services of the armed forces under the
Department of National Defense. BCDAs
mandate is specific and limited in area, while
PEAs mandate is general and national. BCDA
holds government lands that have been granted
to end-user government entitiesthe military
services of the armed forces. In contrast, under
Executive Order No. 525, PEA holds the
reclaimed public lands, not as an end-user
entity, but as the government agency primarily
responsible for integrating, directing, and
coordinating all reclamation projects for and on
behalf of the National Government.
x x x Well-settled is the doctrine that public land
granted to an end-user government agency for a
specific public use may subsequently be withdrawn
by Congress from public use and declared
patrimonial property to be sold to private
parties. R.A. No. 7227 creating the BCDA is a
law that declares specific military reservations
no longer needed for defense or military
purposes and reclassifies such lands as
patrimonial property for sale to private parties.
Government owned lands, as long as they are
patrimonial property, can be sold to private
parties, whether Filipino citizens or qualified
private corporations. Thus, the so-called Friar
Lands acquired by the government under Act No.
1120 are patrimonial property which even private
corporations can acquire by purchase. Likewise,
reclaimed alienable lands of the public domain if
sold or transferred to a public or municipal
corporation for a monetary consideration become
patrimonial property in the hands of the public or
municipal corporation. Once converted to
patrimonial property, the land may be sold by the
public or municipal corporation to private parties,
whether Filipino citizens or qualified private
corporations.[86] (Emphasis supplied.)
The foregoing Resolution makes it clear that the SMDRP was a program
adopted by the Government under Republic Act No. 6957 (An Act
Authorizing the Financing, Construction, Operation and Maintenance of
Infrastructure Projects by the Private Sector, and For Other Purposes), as
amended by RA 7718, which is a special law similar to RA
7227. Moreover, since the implementation was assigned to the NHA, an
end-user agency under PD 757 and RA 7279, the reclaimed lands
registered under the NHA are automatically classified as patrimonial
lands ready for disposition to qualified beneficiaries.
The foregoing reasons likewise apply to the contention of petitioner that
HCPTI, being a private corporation, is disqualified from being a transferee
of public land. What was transferred to HCPTI is a 10-hectare lot which
is already classified as patrimonial property in the hands of the
NHA. HCPTI, being a qualified corporation under the 1987 Constitution,
the transfer of the subject lot to it is valid and constitutional.
Eighth Issue: Whether respondents can be compelled to disclose
all information related to the SMDRP
Petitioner asserts his right to information on all documents such as
contracts, reports, memoranda, and the like relative to SMDRP.
Petitioner asserts that matters relative to the SMDRP have not been
disclosed to the public like the current stage of the Project, the present
financial capacity of RBI, the complete list of investors in the asset pool,
the exact amount of investments in the asset pool and other similar
important information regarding the Project.
He prays that respondents be compelled to disclose all
information regarding the SMDRP and furnish him with originals or at
least certified true copies of all relevant documents relating to the said
project including, but not limited to, the original JVA, ARJVA, AARJVA,
and the Asset Pool Agreement.
This relief must be granted.
The right of the Filipino people to information on matters of
public concern is enshrined in the 1987 Constitution, thus:
ARTICLE II
xxxx
SEC. 28. Subject to reasonable conditions
prescribed by law, the State adopts and implements
a policy of full public disclosure of all its
transactions involving public interest.
ARTICLE III
SEC. 7. The right of the people to information on
matters of public concern shall be
recognized. Access to official records, and to
documents, and papers pertaining to official acts,
transactions, or decisions, as well as to government
research data used as basis for policy development,
shall be afforded the citizen, subject to such
limitations as may be provided by law.
In Valmonte v. Belmonte, Jr., this Court explicated this way:
[A]n essential element of these freedoms is to keep
open a continuing dialogue or process of
communication between the government and the
people. It is in the interest of the State that the
channels for free political discussion be maintained
to the end that the government may perceive and be
responsive to the peoples will. Yet, this open
dialogue can be effective only to the extent that the
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 58
citizenry is informed and thus able to formulate its
will intelligently. Only when the participants in the
discussion are aware of the issues and have access
to information relating thereto can such bear
fruit.[87]
In PEA, this Court elucidated the rationale behind the right to information:
These twin provisions of the Constitution seek to
promote transparency in policy-making and in the
operations of the government, as well as provide
the people sufficient information to exercise
effectively other constitutional rights. These twin
provisions are essential to the exercise of freedom
of expression. If the government does not disclose
its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed
without any restraint, will be speculative and
amount to nothing. These twin provisions are also
essential to hold public officials at all times x x x
accountable to the people, for unless citizens have
the proper information, they cannot hold public
officials accountable for anything. Armed with the
right information, citizens can participate in public
discussions leading to the formulation of
government policies and their effective
implementation. An informed citizenry is essential
to the existence and proper functioning of any
democracy.[88]
Sec. 28, Art. II compels the State and its agencies to fully
disclose all of its transactions involving public interest. Thus, the
government agencies, without need of demand from anyone, must bring
into public view all the steps and negotiations leading to the
consummation of the transaction and the contents of the perfected
contract.[89] Such information must pertain to definite propositions of the
government, meaning official recommendations or final positions reached
on the different matters subject of negotiation.The government agency,
however, need not disclose intra-agency or inter-agency
recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the
exploratory stage. The limitation also covers privileged communication
like information on military and diplomatic secrets; information affecting
national security; information on investigations of crimes by law
enforcement agencies before the prosecution of the accused; information
on foreign relations, intelligence, and other classified information.
It is unfortunate, however, that after almost twenty (20) years
from birth of the 1987 Constitution, there is still no enabling law that
provides the mechanics for the compulsory duty of government agencies
to disclose information on government transactions. Hopefully, the
desired enabling law will finally see the light of day if and when Congress
decides to approve the proposed Freedom of Access to Information
Act. In the meantime, it would suffice that government agencies post on
their bulletin boards the documents incorporating the information on the
steps and negotiations that produced the agreements and the agreements
themselves, and if finances permit, to upload said information on their
respective websites for easy access by interested parties. Without any law
or regulation governing the right to disclose information, the NHA or any
of the respondents cannot be faulted if they were not able to disclose
information relative to the SMDRP to the public in general.
The other aspect of the peoples right to know apart from the
duty to disclose is the duty to allow access to information on matters of
public concern under Sec. 7, Art. III of the Constitution. The gateway to
information opens to the public the following: (1) official records; (2)
documents and papers pertaining to official acts, transactions, or
decisions; and (3) government research data used as a basis for policy
development.
Thus, the duty to disclose information should be differentiated from the
duty to permit access to information. There is no need to demand from the
government agency disclosure of information as this is mandatory under
the Constitution; failing that, legal remedies are available. On the other
hand, the interested party must first request or even demand that he be
allowed access to documents and papers in the particular agency. A
request or demand is required; otherwise, the government office or agency
will not know of the desire of the interested party to gain access to such
papers and what papers are needed. The duty to disclose covers only
transactions involving public interest, while the duty to allow access has
a broader scope of information which embraces not only transactions
involving public interest, but any matter contained in official
communications and public documents of the government agency.
We find that although petitioner did not make any demand on the NHA to
allow access to information, we treat the petition as a written request or
demand. We order the NHA to allow petitioner access to its official
records, documents, and papers relating to official acts, transactions, and
decisions that are relevant to the said JVA and subsequent agreements
relative to the SMDRP.
Ninth Issue: Whether the operative fact doctrine applies to the
instant petition
Petitioner postulates that the operative fact doctrine is inapplicable to the
present case because it is an equitable doctrine which could not be used to
countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the
existence of the various agreements implementing the SMDRP is an
operative fact that can no longer be disturbed or simply ignored,
citing Rieta v. People of the Philippines.[90]
The argument of the Solicitor General is meritorious.
The operative fact doctrine is embodied in De Agbayani v. Court of
Appeals, wherein it is stated that a legislative or executive act, prior to its
being declared as unconstitutional by the courts, is valid and must be
complied with, thus:
As the new Civil Code puts it: When the courts
declare a law to be inconsistent with the
Constitution, the former shall be void and the latter
shall govern. Administrative or executive acts,
orders and regulations shall be valid only when
they are not contrary to the laws of the
Constitution. It is understandable why it should be
so, the Constitution being supreme and paramount.
Any legislative or executive act contrary to its
terms cannot survive.
Such a view has support in logic and possesses the
merit of simplicity. It may not however be
sufficiently realistic. It does not admit of doubt
that prior to the declaration of nullity such
challenged legislative or executive act must have
been in force and had to be complied with. This
is so as until after the judiciary, in an appropriate
case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted
under it and may have changed their
positions. What could be more fitting than that in a
subsequent litigation regard be had to what has
been done while such legislative or executive act
was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior
to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness
that precisely because the judiciary is the
governmental organ which has the final say on
whether or not a legislative or executive measure is
valid, a period of time may have elapsed before it
can exercise the power of judicial review that may
lead to a declaration of nullity. It would be to
deprive the law of its quality of fairness and justice
then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court
decision: The actual existence of a statute, prior
to such a determination [of unconstitutionality],
is an operative fact and may have consequences
which cannot justly be ignored. The past cannot
always be erased by a new judicial
declaration. The effect of the subsequent ruling as
to invalidity may have to be considered in various
aspects, with respect to particular relations,
individual and corporate, and particular conduct,
private and official. This language has been quoted
with approval in a resolution in Araneta v. Hill and
the decision in Manila Motor Co., Inc.
v. Flores. An even more recent instance is the
opinion of Justice Zaldivar speaking for the Court
in Fernandez v. Cuerva and Co.[91] (Emphasis
supplied.)
This doctrine was reiterated in the more recent case of City of Makati v.
Civil Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City
Governments order of suspension, as we have no
reason to do so, much less retroactively apply such
nullification to deprive private respondent of a
compelling and valid reason for not filing the leave
application. For as we have held, a void act
though in law a mere scrap of paper nonetheless
confers legitimacy upon past acts or omissions
done in reliance thereof. Consequently, the
existence of a statute or executive order prior to
its being adjudged void is an operative fact to
which legal consequences are attached. It would
indeed be ghastly unfair to prevent private
respondent from relying upon the order of
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 59
suspension in lieu of a formal leave
application.[92] (Emphasis supplied.)
The principle was further explicated in the case of Rieta v. People of
the Philippines, thus:
In similar situations in the past this Court had taken
the pragmatic and realistic course set forth in
Chicot County Drainage District vs. Baxter Bank
to wit:
The courts below have proceeded on the
theory that the Act of Congress, having
been found to be unconstitutional, was
not a law; that it was inoperative,
conferring no rights and imposing no
duties, and hence affording no basis for
the challenged decree. x x x It is quite
clear, however, that such broad
statements as to the effect of a
determination of unconstitutionality
must be taken with qualifications. The
actual existence of a statute, prior to
[the determination of its invalidity], is
an operative fact and may have
consequences which cannot justly be
ignored. The past cannot always be
erased by a new judicial
declaration. The effect of the
subsequent ruling as to invalidity may
have to be considered in various aspects
with respect to particular conduct,
private and official. Questions of rights
claimed to have become vested, of
status, of prior determinations deemed
to have finality and acted upon
accordingly, of public policy in the light
of the nature both of the statute and of
its previous application, demand
examination. These questions are
among the most difficult of those which
have engaged the attention of courts,
state and federal, and it is manifest from
numerous decisions that an all-
inclusive statement of a principle of
absolute retroactive invalidity cannot
be justified.
In the May 6, 2003 Resolution in Chavez v. PEA,[93] we ruled that De
Agbayani[94] is not applicable to the case considering that the prevailing
law did not authorize private corporations from owning land. The
prevailing law at the time was the 1935 Constitution as no statute dealt
with the same issue.
In the instant case, RA 6957 was the prevailing law at the time
that the joint venture agreement was signed. RA 6957, entitled An Act
Authorizing The Financing, Construction, Operation And Maintenance
Of Infrastructure Projects By The Private Sector And For Other Purposes,
which was passed by Congress on July 24, 1989, allows repayment to the
private contractor of reclaimed lands.[95] Such law was relied upon by
respondents, along with the above-mentioned executive issuances in
pushing through with the Project. The existence of such law and issuances
is an operative fact to which legal consequences have attached. This Court
is constrained to give legal effect to the acts done in consonance with such
executive and legislative acts; to do otherwise would work patent injustice
on respondents.
Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in
certain cases, the transfer of land, although illegal or unconstitutional, will
not be invalidated on considerations of equity and social justice. However,
in that case, we did not apply the same considering that PEA, respondent
in said case, was not entitled to equity principles there being bad faith on
its part, thus:
There are, moreover, special circumstances that
disqualify Amari from invoking equity
principles. Amari cannot claim good faith because
even before Amari signed the Amended JVA
on March 30, 1999, petitioner had already filed the
instant case on April 27, 1998 questioning
precisely the qualification of Amari to acquire
the Freedom Islands. Even before the filing of this
petition, two Senate Committees had already
approved on September 16, 1997 Senate
Committee Report No. 560. This Report
concluded, after a well-publicized investigation
into PEAs sale of the Freedom Islands to Amari,
that the Freedom Islands are inalienable lands of
the public domain. Thus, Amari signed the
Amended JVA knowing and assuming all the
attendant risks, including the annulment of the
Amended JVA.[96]
Such indicia of bad faith are not present in the instant case. When the
ruling in PEA was rendered by this Court on July 9, 2002, the JVAs were
all executed. Furthermore, when petitioner filed the instant case against
respondents on August 5, 2004, the JVAs were already terminated by
virtue of the MOA between the NHA and RBI. The respondents had no
reason to think that their agreements were unconstitutional or even
questionable, as in fact, the concurrent acts of the executive department
lent validity to the implementation of the Project. The SMDRP
agreements have produced vested rights in favor of the slum dwellers, the
buyers of reclaimed land who were issued titles over said land, and the
agencies and investors who made investments in the project or who
bought SMPPCs. These properties and rights cannot be disturbed or
questioned after the passage of around ten (10) years from the start of the
SMDRP implementation. Evidently, the operative fact principle has set
in. The titles to the lands in the hands of the buyers can no longer be
invalidated.
The Courts Dispositions
Based on the issues raised in this petition, we find that the March 19, 1993
JVA between NHA and RBI and the SMDRP embodied in the JVA, the
subsequent amendments to the JVA and all other agreements signed and
executed in relation to it, including, but not limited to, the September 26,
1994 Smokey Mountain Asset Pool Agreement and the agreement on
Phase I of the Project as well as all other transactions which emanated
from the Project, have been shown to be valid, legal, and
constitutional. Phase II has been struck down by the Clean Air Act.
With regard to the prayer for prohibition, enjoining respondents
particularly respondent NHA from further implementing and/or enforcing
the said Project and other agreements related to it, and from further
deriving and/or enjoying any rights, privileges and interest from the
Project, we find the same prayer meritless.
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:
Sec. 2. Petition for prohibition.When the
proceedings of any tribunal, corporation, board,
officer or person, whether exercising judicial,
quasi-judicial or ministerial functions, are without
or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any other
plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file
a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be
rendered commanding the respondent to desist
from further proceedings in the action or matter
specified therein, or otherwise granting such
incidental reliefs as law and justice may require.
It has not been shown that the NHA exercised judicial or quasi-
judicial functions in relation to the SMDRP and the agreements relative
to it. Likewise, it has not been shown what ministerial functions the NHA
has with regard to the SMDRP.
A ministerial duty is one which is so clear and specific as to leave no room
for the exercise of discretion in its performance. It is a duty which an
officer performs in a given state of facts in a prescribed manner in
obedience to the mandate of legal authority, without regard to the exercise
of his/her own judgment upon the propriety of the act done. [97]
Whatever is left to be done in relation to the August 27, 2003 MOA,
terminating the JVA and other related agreements, certainly does not
involve ministerial functions of the NHA but instead requires exercise of
judgment. In fact, Item No. 4 of the MOA terminating the JVAs provides
for validation of the developers (RBIs) claims arising from the termination
of the SMDRP through the various government agencies.[98] Such
validation requires the exercise of discretion.
In addition, prohibition does not lie against the NHA in view of petitioners
failure to avail and exhaust all administrative remedies. Clear is the rule
that prohibition is only available when there is no adequate remedy in the
ordinary course of law.
More importantly, prohibition does not lie to restrain an act which is
already a fait accompli. The operative fact doctrine protecting vested
rights bars the grant of the writ of prohibition to the case at bar. It should
be remembered that petitioner was the Solicitor General at the time
SMDRP was formulated and implemented. He had the opportunity to
question the SMDRP and the agreements on it, but he did not. The
moment to challenge the Project had passed.
On the prayer for a writ of mandamus, petitioner asks the Court
to compel respondents to disclose all documents and information relating
to the project, including, but not limited to, any subsequent agreements
with respect to the different phases of the Project, the revisions of the
original plan, the additional works incurred on the Project, the current
financial condition of respondent RBI, and the transactions made with
respect to the project. We earlier ruled that petitioner will be allowed
MODES OF ACQUIRING OWNERSHIP, CASES, PAGE 60

access to official records relative to the SMDRP. That would be adequate

relief to satisfy petitioners right to the information gateway.

WHEREFORE, the petition is PARTIALLY GRANTED.

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

merit.

The prayer for a writ of mandamus is GRANTED. Respondent NHA is

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

No costs.

SO ORDERED.