AYOG VS.

CUSI
G.R. No. L-46729, 118 SCRA 492, November 19, 1982

(This case is about the application of Article XIV, Section 11 of the 1973
Constitution, disqualifying a private corporation from purchasing public lands, to
a 1953 sales award issued by the Bureau of Lands, for which a sales patent and a
Torrens title were issued in 1975, and to the 1964 decision of the trial court,
ejecting some of the petitioners from the land purchased. More specifically, this
case discusses on the concept of vested right in lands which were previously part
of lands of the public domain and the effects of full compliance with the Public
Land Act, prior to the effectivity of the 1973 Constitution.)

Facts:

After an auction in 1953, a 250-hectare lot in Davao City was awarded by

the Director of Lands to Biñan Devt Co, Inc. (BDCI). Some occupants (herein
petitioners) of the lot protested the sale, but were later ordered to vacate the lot, as
they occupied it only after it had been awarded to BDCI, thereby classifying them
as “squatters.”

In 1961, BDCI filed an ejectment suit against 40 of them. In the same year,
BDCI paid the purchase price of ₱10,000.00. The patent was issued more than 13
years later or in 1975, after the 1973 Constitution took effect, which disqualified
private corporations from purchasing public lands (in Article XIV, Section 11
thereof).

In 1964, the trial court ordered the ejectment of the petitioners (or
“squatters”). The petitioners opposed the execution of the ejectment. They
contended that the adoption of the 1973 Constitution was a supervening fact that
effectively and legally barred the execution of the lower court’s judgment. They
invoked the constitutional prohibition that “no private corporation or association
may hold alienable land of the public domain except by lease not to exceed one
thousand hectares in area.” (supra)

Issue:
 Whether or not the constitutional prohibition against private corporations to
hold alienable land of the public domain, under Article XIV, Section 11 of the
1973 Constitution, should bar BDCI from asserting ownership over the land in
question

Ruling:

No, the constitutional prohibition against private corporations to hold

alienable lands of the public domain should not bar BDCI from asserting
ownership over the land in question.

The reasons being were that BDCI’s right to the land had already been
vested. The constitutional prohibition could not be applied retroactively to
BDCI as its rights to the land in question had already been vested. Article XIII,
Section 2 of the 1935 Constitution, which was the Constitution in force when
the land in question was awarded to BDCI in 1953, allowed private
corporations to purchase public agricultural lands not exceeding 1024 hectares.

By “vested right” it is meant that “it is some right or interest in property

which has become fixed and established, and no longer open to doubt or
controversy.”

As BDCI paid in full the purchase price of the land in question prior to
January 17, 1973 or the effectivity of the 1973 Constitution, BDCI was entitled
to a sales patent. Its compliance with the requirements of the “Public Land
Act” had the effect of segregating the land in question from the public domain.
BDCI’s right to obtain a patent therefor is protected by law.

(The policy/ruling in a gist: Compliance with the requirements of the

Public Land Act segregated the lands from the public domain. A corporation
which had purchased the land prior to the effectivity of the 1973 Constitution
had vested rights over the land provided that payment was completed prior
thereto..)