24.Heirs of Lacamen vs.

Heirs of Laruan

Facts: Laruan executed a deed of sale in favor of Lacamen which was duly notarized. Immediately after
the sale, Laruan delivered the certificate of title to Lacamen. Thereupon, Lacamen entered in possession
and occupancy of the land, introduced improvements therein, without securing the corresponding
certificate of title. The document was also not approved by the Director of the Bureau of Non-Christian
Tribes whose approval is necessary in order for the Deed to be valid. This rule bounds the contracting
parties considering that they belong to the illiterate non-Christians. Later on, after the death of Laruan,
his heirs discovered that Laruans heirs were able to obtain a new owners certificate of title. Hence,
they sued Laruans heirs for reconveyance. The Trial Court rendered a decision in favor of the heirs of
Laruan whose decision was affirmed by the CA.

Issue: WON estoppel by laches applies.

Held: Laruans sale of the subject lot to Lacamen could have been valid were it not for the sole fact that
it lacked the approval of the Bureau of Non-Christian Tribes considering that there was impressed upon
its face full faith and credit after it was notarized. However, notwithstanding the invalidity of the sale,
the fact that when the Lacamens succeeded to the estate of their father, the Laruans kept silent, never
claiming that the lot is their own. Even granting that no prescription lies against their fathers record
title, their inaction for almost 30 years commands the imposition of laches. Hence, the Lacamens were
declared as the owners of the land.

25. Binalay vs. Manalo

FACTS
Manalo acquired 2 lots which were originally owned by Judge Taccad from 2 different people (the
latters daughter and from an earlier purchaser). These lots were later consolidated into Lot 307, a
total of 10.45 hectares. The lot was beside the Cagayan River, which, due to flooding, would place a
portion of the land underwater during the rainy season (September to December). On sunny days,
however, the land would be dried up for the entire dry season (January to August). When a survey of
the land was conducted on a rainy month, a portion of the land that Manalo bought was then
underwater and was thus left unsurveyed and excluded from Lot 307.

The big picture is this: Cagayan River running from south to north, forks at a certain point to form two
braches (western and eastern) and then unites at the other end, further north, to form a narrower
strip of land. The eastern branch of the river cuts through Lot 307, and is flooded during the rainy
season. The unsurveyed portion, on the other hand, is the bed of the eastern branch. Note that the
fork exists only during the rainy season while the island/elongated strip of land formed in the middle
of the forks becomes dry and perfect for cultivation when the Cagayan river is at its ordinary depth.
The strip of land in the middle of the fork totaled 22.7 hectares and was labeled Lot 821-822. Lot 821
is directly opposite Lot 307 and is separated by the eastern branch of the rivers fork.
Manalo claims that Lot 821 belongs to him by way of accretion to the submerged portion of the land
to which it is adjacent. Petitioners (Binalay, et al) who possess the Lot 821, on the other hand, insist
that they own it. They occupy the other edges of the lot along the river bank (i.e. the fertile portions
on which they plant tobacco and other agricultural products) and also cultivate the western strip
during the summer.

Manalo filed 2 cases for forcible entry which were both dismissed. Later on, he filed a complaint for
quieting of title, possession, and damages against petitioner. The trial court and the CA ruled in favor
of Manalo, saying that Lot 821 and Lot 307 cannot be considered separate and distinct from each
other. They reasoned that when the land dries up for the most part of the year, the two are
connected. [Note: The CA applied the ruling in Govt of the Phil Islands vs. Colegio de San Jose,
which was actually inappropriate because the subject matter in this case was a lake so that the
definition of a bed was different.]

ISSUE:
Whether or not Manalo owns Lot 821 by way of accretion

RULING: No.
The disputed property is not an accretion. It is the action of the heavy rains that cause the highest
ordinary level of waters of the Cagayan River during the rainy season. The depressed portion is a
river bed and is thus considered property of public domain.
The SC observed the following:
a) The pictures identified by Manalo during his direct examination depict the depressed portion as
a river bed. The dried up portion had dike-like slopes (around 8m) on both sides connecting it to Lot
307 and Lot 821 that are vertical and very prominent.
b) The eastern bed already existed even before Manalo bought the land. It was called Rio Muerte
de Cagayan.
c) Manalo could not have acquire ownership of the land because article 420 of the civil code states
that rivers are property of public dominion. The word river includes the running waters, the bed,
and the banks. [The seller never actually owned that part of the land since it was public property]
d) The submerged area (22.72 ha) is twice the area of the land he actually bought. It is difficult to
suppose that such a sizable area could have been brought about by accretion.
More importantly, the requisites of accretion in article 457 were not satisfied. These are: 1) that the
deposition of the soil or sediment be gradual and imperceptible; 2) that it be the result of the action
of the waters of the river (or sea); and 3) the land where the accretion takes place is adjacent to the
banks of the rivers (or the sea coast). The accretion shouldve been attached to Lot 307 for Manalo
to acquire its ownership. BUT, the claimed accretion lies on the bank of the river; not adjacent to Lot
307 but directly opposite it across the river. Aside from that, the dike-like slopes which were very
steep may only be formed by a sudden and forceful action like flooding. The steep slopes could not
have been formed by the river in a slow and gradual manner.
26. Republic vs. Ca

FACTS:
Respondent Morato filed a free patent application on a parcel of land, which was approved and
issued an original certificate of title. Both the free patent and title specifically mandate that the land
shall not be alienated nor encumbered within 5 years from the date of the issuance of the patent.
The District Land Officer, acting upon reports that Morato had encumbered the land and upon finding
that the subject land is submerged in water during high tide and low tide, filed a complaint for
cancellation of the title and reversion of the parcel of land to the public domain. RTC dismissed the
complaint. CA affirmed.

ISSUE:
1. Whether or not respondent violated the free patent condition prohibiting encumbering the land
within the 5-year period?
2. Whether or not the land is of public domain?

HELD
1. Yes. Public Land Act Sec. 18 provides thatlands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation from the date of approval of the
application and for a term of 5 years from and after the date of issuance of the patent or grantThe
contracts of lease and mortgage executed by Morato constitute an encumbrance as contemplated
by section 18 of the Public Land Act because such contracts impair the use of the property.

2. Yes. Based from the facts, the land is clearly foreshore as it is subject to the ebb and flow of the
tide. When the sea moved towards the estate and the tide invaded it, the invaded property became
foreshore land and passed to the realm of the public domain. In Government v. Cabangis, the Court
annulled the registration of land subject of cadastral proceedings when the parcel subsequently
became foreshore land. In another case, the Court voided the registration decree of a trial court and
held that said court had no jurisdiction to award foreshore land to any private person or entity. The
subject land in this case, being foreshore land should therefor be returned to the public domain.

27. Chavez vs. PEA

Chavez v. Pea and Amari

Fact:
In 1973, the Comissioner on Public Highways entered into a contract to reclaim areas of Manila Bay
with the Construction and Development Corportion of the Philippines (CDCP).

PEA (Public Estates Authority) was created by President Marcos under P.D. 1084, tasked with
developing and leasing reclaimed lands. These lands were transferred to the care of PEA under P.D.
1085 as part of the Manila Cavite Road and Reclamation Project (MCRRP). CDCP and PEA entered
into an agreement that all future projects under the MCRRP would be funded and owned by PEA.

By 1988, President Aquino issued Special Patent No. 3517 transferring lands to PEA. It was followed
by the transfer of three Titles (7309, 7311 and 7312) by the Register of Deeds of Paranaque to PEA
covering the three reclaimed islands known as the FREEDOM ISLANDS.

Subsquently, PEA entered into a joint venture agreement (JVA) with AMARI, a Thai-Philippine
corporation to develop the Freedom Islands. Along with another 250 hectares, PEA and AMARI
entered the JVA which would later transfer said lands to AMARI. This caused a stir especially when
Sen. Maceda assailed the agreement, claiming that such lands were part of public domain (famously
known as the mother of all scams).

Peitioner Frank J. Chavez filed case as a taxpayer praying for mandamus, a writ of preliminary
injunction and a TRO against the sale of reclaimed lands by PEA to AMARI and from implementing
the JVA. Following these events, under President Estradas admin, PEA and AMARI entered into an
Amended JVA and Mr. Chaves claim that the contract is null and void.

Issue:
w/n: the transfer to AMARI lands reclaimed or to be reclaimed as part of the stipulations in the
(Amended) JVA between AMARI and PEA violate Sec. 3 Art. XII of the 1987 Constitution
w/n: the court is the proper forum for raising the issue of whether the amended joint venture
agreement is grossly disadvantageous to the government.

Held:
On the issue of Amended JVA as violating the constitution:
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
hectares110 of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII
of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable
land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still
submerged areas of Manila Bay, such transfer is void for being contrary to 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 1987Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.

28. Director of Lands v. IAC

G.R. No. 73002 December 29, 1986

Lessons Applicable: Sec. 3 Art. XII, 1987 Constitution (Land Titles and Deeds)

FACTS:
Acme Plywood & Veneer Co., Inc., a corp. represented by Mr. Rodolfo Nazario, acquired from Mariano
and Acer Infiel, members of the Dumagat tribe 5 parcels of land
possession of the Infiels over the landdates back before the Philippines was discovered by Magellan
land sought to be registered is a private land pursuant to RA 3872 granting absolute ownership to
members of the non-Christian Tribes on land occupied by them or their ancestral lands, whether with the
alienable or disposable public land or within the public domain
Acme Plywood & Veneer Co. Inc., has introduced more than P45M worth of improvements
ownership and possession of the land sought to be registered was duly recognized by the government
when the Municipal Officials of Maconacon, Isabela
donated part of the land as the townsite of Maconacon Isabela
IAC affirmed CFI: in favor of
ISSUES:
1. W/N the land is already a private land - YES
2. W/N the constitutional prohibition against their acquisition by private corporations or associations
applies- NO
HELD: IAC affirmed Acme Plywood & Veneer Co., Inc
1. YES
already acquired, by operation of law not only a right to a grant, but a grant of the Government, for it is
not necessary that a certificate of title should be issued in order that said grant may be sanctioned by the
courts, an application therefore is sufficient
it had already ceased to be of the public domain and had become private property, at least by presumption
The application for confirmation is mere formality, the lack of which does not affect the legal sufficiency
of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said
patent.
The effect of the proof, wherever made, was not to confer title, but simply to establish it, as already
conferred by the decree, if not by earlier law
2. NO
If it is accepted-as it must be-that the land was already private land to which the Infiels had a legally
sufficient and transferable title on October 29, 1962 when Acme acquired it from said owners, it must also
be conceded that Acme had a perfect right to make such acquisition
The only limitation then extant was that corporations could not acquire, hold or lease public agricultural
lands in excess of 1,024 hectares

29. Director of Lands vs. Abairo

G.R. No. L-34602 May 31, 1979

THE DIRECTOR OF LANDS and DIRECTOR OF FORESTRY, petitioners,

vs.
LILIA A. ABAIRO, CELSO ABAIRO and THE COURT OF FIRST INSTANCE OF
ISABELA, respondents.

Office of the Solicitor General for petitioner.

Eligio A. Labog for private respondents.

MAKASIAR, J.:

This is a petition for review on certiorari of the decision dated September 27, 1971 (pp. 17-18, rec.),
of respondent Court of First Instance of Isabela confirming the ownership by Lilia A. Abairo and
Celso Abairo, of a parcel of land.

The facts of this case are undisputed. On March 1, 1971, respondent Lilia Abairo filed an application
for registration under the Land Registration Act of a parcel of land containing an area of about 573
square meters situated in Centro, Cauayan, Isabela, alleging open, public, peaceful and
uninterrupted possession thereof in the concept of owner by herself and through her predecessors-
in- interest since time immemorial up to the present (p. 12, rec.).

Respondent Lilia Abairo and her counsel appeared at the initial hearing but nobody appeared to
oppose the petition for registration of her title, except the assistant provincial fiscal who entered his
opposition in behalf of the Bureau of Lands and the Bureau of Forestry, but who subsequently
withdrew his opposition on the ground that there was a new law extending the period for filing
registration petitions up to 1976. The fiscal submitted a report of the Director of Lands to the effect
that he is withdrawing his opposition. The fiscal likewise submitted a letter from the Bureau of
Forestry showing that it has no opposition to the application for registration of title. These facts are
embodied in the Order of Judge Andres Plan, to wit:

When this case was called for initial hearing, the applicant, assisted by counsel,
appeared. The Fiscal manifested in open Court that due to the amended bill which
extends the period of filing registration petitions up to 1976, the serious opposition
filed has become moot and academic. The Fiscal also submitted a report of the
Director of Lands to the effect that the Bureau of Lands is withdrawing its opposition.
The Fiscal also submitted a letter from the Bureau of Forestry showing that they have
no opposition to the application for registration of title,

With these manifestations of the fiscal, the Bureau of Lands and the Bureau of
Forestry, the lot has become non-contested.

Upon motion of counsel for the applicant, let an order of general default issue against
the whole world. Upon his petition, the Clerk of Court, Atty. Raymundo B. Neris Jr., is
hereby appointed Commissioner to receive the evidence in support of the petition for
registration. (p. 16, rec.).

After the case was heard, respondent Court rendered a decision dated September 27, 1971,
confirming the ownership of respondent Abairo over the land in question after finding that the original
owner of the land in dispute was a certain Pablo Rivera, who possessed the land which formed part
of his estate since 1912 or even much prior thereto; that he sold said land to Inocencia Accad
sometime in 1939 and the latter had been in possession of said land up to the time when she sold it
to her daughter, Lilia A. Abairo, on December 31, 1969; that respondent has a residential house on
the land and that she has declared the lot for taxation purposes in her name and has been
religiously paying taxes thereon; that respondent Abairo and her predecessors-in-interest have been
in open, public, peaceful and uninterrupted possession of the land in the concept of owners since
1912 up to the present; that the land is free from all liens and encumbrances; and that the land is the
conjugal property of spouses Lilia and Celso Abairo (pp. 17-18, rec.).

A motion for reconsideration dated November 18, 1971 (p. 19, rec.) was filed by the Solicitor
General on the ground that respondent Court did not have jurisdiction to entertain the application for
registration of title as it was filed on March 1, 1971, after December 31, 1968, the date set by R.A.
No. 2061 as the time limit for the judicial confirmation of imperfect and incomplete titles like that of
applicant, and before the effectivity on June 19, 1971, of R.A. No. 6236 extending the time limit for
such purpose.

Respondent Court denied the aforesaid motion for reconsideration in an order dated December 15,
1971 (p. 28, rec.). Hence, this petition.

It is the contention of petitioners that respondent Court should have dismissed the application of
respondent Lilia Abairo because it has no jurisdiction over it inasmuch as it was filed on March 1,
197 1, that is, after December 31, 1968, the expiry date for filing such kind of applications based on
imperfect or incomplete titles under RA No. 2061.

Petitioner's contention is without merit.

R.A. No. 6236, enacted on June 19, 1971, further amended Section 47 of C.A. No. 141 (which was
previously amended by R.A. No. 2061) by extending to December 31, 1976 the time limit for the
filing of applications for the judical confirmation of imperfect or incomplete titles.

As amended by R.A. No. 2061, Section 47 of C.A. No. 141 reads:

Sec. 47. The persons specified in the next following section are hereby granted
time, not to extend beyond December thirty-one, nineteen hundred and sixty-
eight within which to take advantage of the benefit of this chapter: Provided, That the
several periods of time designated by the President in accordance with section forty-
five of this Act shall apply also to the lands comprised in the provisions of this
chapter, but this section shall not be construed as prohibiting any of said persons
from acting under this chapter at any time prior to the period fixed by the
President (emphasis supplied).

As amended by R.A. No. 6236, the aforesaid Section 47 states:

Sec. 47. The persons specified in the next following section are hereby granted
time, not to extend beyond December thirty-one, nineteen hundred and seventy-six,
within which to take advantage of the benefit of this chapter: Provided, That this
extension shall apply only where the area applied for does not exceed 144 hectares:
Provided further, That the several periods of time designated by the President in
accordance with section forty-five of this Act shall apply also to the lands comprised
in the provisions of this chapter, but this section shall not be construed as prohibiting
any of said persons from acting under this chapter at any time prior to the period
fixed by the President (emphasis supplied).
As amended by Presidential Decree No. 1073, promulgated on January 25, 1977, the filing of such
application has been extended to December 31, 1987.

It is clear from the law itself that those who applied for judicial confirmation of their titles at any time
prior to the cutoff date of December 31, 1976 (as provided for in R.A. No. 6236) did so on time, even
if such application were filed during the intervening period from January 1, 1969 to June 18, 1971,
like the application of respondent Abairo, who instituted the same on March 1, 197 1.

All the amendments to Section 47 of C.A. 141 expressly includes the proviso that "this section shall
not be construed as prohibiting any of said persons from acting under this chapter at any time prior
to the period fixed by the President." No period has been fixed by the President despite the authority
granted him by the aforesaid proviso.

But even in the absence of the aforesaid proviso of Section 47, as amended, the basis of the petition
is too technical to merit serious consideration. The extension until December 31, 1976 by R.A. No.
6236 for the filing of such application, retroacted to, and covered the applications filed after January
1, 1969 and before June 19, 1971. Moreover, the application which private respondent filed on
March 1, 1971, could be considered as re-filed after the effectivity of R.A. No. 6236 on June 19,
1971, less than four months thereafter.

Respect should be given to the obvious intention of the lawmaker in extending the period for filing
such applications time and time again, to give full opportunity to those who are qualified under the
law to own disposable lands of the public domain and thus reduce the number of landless among the
citizenry.

Considering the area of the lot applied for only about 573 square meters it was quite unfair, if
not oppressive, to put the private respondent to such expense and anxiety, after the Director of
Lands withdrew his opposition, while the Director of Forestry interposed no opposition to private
respondent's application.

WHEREFORE, THE DECISION OF THE LOWER COURT IS HEREBY AFFIRMED AND THE
PETITION IS HEREBY DISMISSED. NO COSTS.

30. Oh Cho vs. Director of Lands

FACTS:

Oh Cho, a Chinese citizen, purchased from the Lagdameos a parcel of land in Tayabas, which they
openly, continuously and adversely possessed since 1880. On January 17, 1940, Oh Cho applied for
registration of this land. The Solicitor General opposed on the ground that Oh Cho lacked title to said
land and also because he was an alien.

ISSUEs:
Whether or not Oh Cho had title

Whether or not Oh Cho is entitled to a decree of registration

HELD:

Oh Cho failed to show that he has title to the lot, which may be confirmed under the Land Registration
Act.

All lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain. An exception to the rule would be any land that should have been in the possession of an
occupant and of his predecessors in interest since time immemorial, for such possession would justify
the presumption that the land had never been part of the public domain or that it had been a private
property even before the Spanish conquest.

The applicant does not come under the exception, for the earliest possession of the lot by his first
predecessor in interest began in 1880.

Under the Public Land Act, Oh Cho is not entitled to a decree of registration of the lot, because he is an
alien disqualified from acquiring lands of the public domain.

Oh Cho's predecessors in interest would have been entitled toa decree of registration had they applied
for the same. The application for the registration of the land was a condition precedent, which was not
complied with by the Lagmeos. Hence, the most they had was mere possessory right, not title. This
possessory right was what was transferred to Oh Cho, but since the latter is an alien, the possessory
right could never ripen to ownership by prescription. As an alien, Oh Cho is disqualified from acquiring
title over public land by prescription.

31. Republic vs. CA

REPUBLIC V. CA

FACTS:
Respondent Morato filed a free patent application on a parcel of land, which was approved and
issued an original certificate of title. Both the free patent and title specifically mandate that the land
shall not be alienated nor encumbered within 5 years from the date of the issuance of the patent.
The District Land Officer, acting upon reports that Morato had encumbered the land and upon finding
that the subject land is submerged in water during high tide and low tide, filed a complaint for
cancellation of the title and reversion of the parcel of land to the public domain. RTC dismissed the
complaint. CA affirmed.

ISSUE:
1. Whether or not respondent violated the free patent condition prohibiting encumbering the land
within the 5-year period?
2. Whether or not the land is of public domain?

HELD
1. Yes. Public Land Act Sec. 18 provides thatlands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation from the date of approval of the
application and for a term of 5 years from and after the date of issuance of the patent or grantThe
contracts of lease and mortgage executed by Morato constitute an encumbrance as contemplated
by section 18 of the Public Land Act because such contracts impair the use of the property.

2. Yes. Based from the facts, the land is clearly foreshore as it is subject to the ebb and flow of the
tide. When the sea moved towards the estate and the tide invaded it, the invaded property became
foreshore land and passed to the realm of the public domain. In Government v. Cabangis, the Court
annulled the registration of land subject of cadastral proceedings when the parcel subsequently
became foreshore land. In another case, the Court voided the registration decree of a trial court and
held that said court had no jurisdiction to award foreshore land to any private person or entity. The
subject land in this case, being foreshore land should therefor be returned to the public domain.

32. Balboa vs. Farrales

Balboa v Farrales (Taxation)

Balboa v Farrales

G.R. No. L-27059 February 14, 1928

FACTS:
Sometime in the year 1913, the plaintiff Buenaventura Balboa filled with the Bureau of Lands an application for
homestead, No. 10619, under the provisions of Act No. 926, covering a tract of land in Culis, Hermosa, Bataan. On
July 1, 1919, said Act No. 926 was repealed by Act No. 2874.

On August 11, 1924, said Buenaventura Balboa, for and in consideration of the sum of P950, sold said land to the
defendant Cecilio L. Farrales.

On March 6, 1926, the plaintiff commenced the present action for the purpose of having said sale declared null and
void on the ground of lack of consent on his part and fraud on the part of the defendant, and on the further ground
that said sale was contrary to, and in violation of the provisions of section 116 of Act No. 2874.

trial judge rendered a judgment in favor of the plaintiff and against the defendant, ordering the latter to return to the
plaintiff the land

ISSUE:

which of the two Acts 926 and 2874 shall be applied in determining whether the sale in question is valid or not?

RULING:
Act 926 applies and the sale is valid.

The moment the plaintiff had received a certificate from the Government and had done all that was necessary under
the law to secure his patent, his right had become vested before the patent was issued. His right had already vested
prior to the issuance of the patent, and his rights to the land cannot be affected by a subsequent law or by a
subsequent grant by the Government to any other person.

It follows, therefore that the sale of the land in question by the plaintiff Buenventura Balboa to the defendant Cecilio L.
Farrales does not infringe said prohibition, and consequently said sale is valid and binding, and should be given full
force and effect.

. Facts

(1)in the year 1913, the plaintiff Buenaventura Balboa filled with the Bureau of Lands an
application for homestead, No. 10619, under the provisions of Act No. 926, covering a tract of
land situated in the barrio of Culis, municipality of Hermosa, Province of Bataan, containing 14
hectares, 49 ares and 77 centares. (2) Five years thereafter, or in 1918, Balboa submitted proof,
showing his residence upon, and cultivation of said land, as well as his compliance with all of the
other requirements of section 3 of said Act No. 926, which final proof was approved by the
Director of Lands on February 15, 1918. On July 1, 1919, said Act No. 926 was repealed by Act
No. 2874. (3) On September 10, 1920, or over a year after Act No. 2874 had gone into effect, the
homestead patent for said land, otherwise known as certificate of title No. 91 was issued n favor
of Buenventura Balboa by the Governor-General of the Philippine Islands. (4) On August 11,
1924, said Buenaventura Balboa, for and in consideration of the sum of P950, sold said land to
the defendant Cecilio L. Farrales; and on October 16, 1924, the latter secured in his name
transfer certificate of title No. 650 of said land. On March 6, 1926, the plaintiff commenced the
present action for the purpose of having said sale declared null and void on the ground of lack of
consent on his part and fraud on the part of the defendant, and on the further ground that said sale
was contrary to, and in violation of the provisions of section 116 of Act No. 2874.The lower
court Judge rendered a decision on the basis that the said sale was null and void since, The sale
was done before the lapse of five years upon the issuance of the certificate, which in accordance
with act no. 2874.

ISSUE Whether or not Act 2874 and not act 926 shall be applicable to Balboa.

Ruling: No, Since the acquisition of the land and final completion of the requirements was done
by Balboa prior to the repeal of Act 926 by act no. 2874, also upon the submission of the final
requirement by Balboa, he acquire vested right over the patent granted unto him. The fact the
homestead patent or certificate of title No. 91 was issued on September 10, 1920, after the repeal
of Act No. 926, and under the provisions of section 116 of the repealing Act No. 2874, cannot
prejudice the vested right acquired by Balboa under the provisions of the former Act. The
issuance of the certificate of title was a mere ministerial act. The only prohibition contained in
Act No. 926 against alienation of homestead acquired under said law, appears in section 4
thereof, which reads as follows: "No lands acquired under the provisions of this chapter shall in
any event become liable to the satisfaction of any debt contracted prior to the issuance of a patent
therefor." It follows, therefore that the sale of the land in question by the plaintiff Balboa to the
defendant Farrales does not infringe said prohibition and consequently said sale is valid and
binding, and should be given full force and effect of law. Section 116 of Act No. 2874, which
prohibits the sale of homestead land during the period of five years subsequent to the issuance of
the patent or certificate of title upon which rests the decision of the court a quo, cannot be
invoked to annul the sale in question. Said prohibition, if applied in the present case, would
impair and diminish the vested rights, hence the court reversed the decision of the lower court

33. Ybanez vs. IAC

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-68291 March 6, 1991

ARCADIO, MELQUIADES, ABDULA, EUGENIO, APOLONIO, all surnamed YBAEZ, petitioners,

vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT and VALENTIN O.
OUANO, respondents,

Dominador F. Carillo for petitioners.

Pableo B. Baldoza for private respondent.
FERNAN, C.J.:

This petition for certiorari, prohibition and mandamus which this court treated as a petition for review
on certiorari in its resolution of August 22, 1984 seeks to nullify the decision of the Intermediate
Appellate Court (now Court of Appeals) dated June 29, 1984, modifying the decision of the Court of
First Instance (now Regional Trial Court) of Davao Oriental, dated June 8, 1981, ordering the herein
petitioners to vacate the property in controversy; to return its possession to private respondent and
to pay P10,000.00 representing proceeds of the land from January 4, 1975, and attorney's fees.

Records show that private respondent Valentin Ouano, a claimant-occupant of Lot No. 986, Pls-599-
D situated at sitio Bagsac, barrio of Manikling, Governor Generoso (now San Isidro), Davao del
Norte, containing an area of three (3) hectares, 48 ares and 78 centares which was surveyed on
March 13, 1958, as evidenced by the "Survey Notification Card" issued in his name, filed on
February 27, 1959, a homestead application1 with the Bureau of Lands. The said application,
recorded as Homestead Application No. 20-107001, was approved in an order dated March 3, 1959
issued by the District Land Officer, Land District No. 20, for and by authority of the Director of Lands.

Three (3) years thereafter, or on September 5, 1962, a "Notice of Intention to Make Final Proof was
made by Valentin Ouano to establish his claim to the lot applied for and to prove his residence and
cultivation before Land Inspector Lorenzo Sazon at the Bureau of Lands, Davao City at 10:00 o'clock
A.M. appending thereto an affidavit attesting that a copy of his intention to make final proof relative
to his Homestead Application No. 20-10701 was posted at the Municipal building of the Municipality
of Gov. Generoso (now San Isidro), Davao, on the bulletin board of the barrio where the land applied
for is located, and in a conspicuous place on the land itself on the 5th day of August, 1962 and
remained so posted for a period of thirty days, until September 5, 1962.2

On the said date, or on September 5, 1962, Valentin Ouano made his "Final Proof" before Land
Inspector Lorenzo Sazon pursuant to Section 14, Commonwealth Act No. 141, as amended.

The following year, or on March 4, 1963, an order for the issuance of patent was issued by the
Bureau of Lands.

On April 15, 1963, an "Original Certificate of Title No. P-15353" was issued to private respondent
Valentin Ouano over Homestead Patent No. 181261 which was transcribed in the "Registration
Book" for the province of Davao on October 28, 1963.3

On January 4, 1975, after 19 years of possession, cultivation and income derived from coconuts
planted on Lot No. 986, private respondent Valentin Ouano was interrupted in his peaceful
occupation thereof when a certain Arcadio Ybanez and his sons, Melquiades, Abdula, Eugenia
Numeriano, Apolonio and Victoriano, forcibly and unlawfully entered the land armed with spears,
canes and bolos.

Because of the unwarranted refusal of Arcadio Ybanez, et al. to vacate the premises since the time
he was dispossessed in 1975, private respondent Valentin Ouano filed on September 24, 1978 a
complaint for recovery of possession, damages and attorney's fees before the then Court of First
Instance (now RTC) of Davao Oriental against Arcadio Melquiades, Abdula, Eugenia Numeriano,
Apolonio, Victoriano and Servando, all surnamed Ybanez,4 docketed as Civil Case No. 671, seeking
to enjoin the Ybanezes from further the coconuts therefrom and restore to him the peaceful
possession and occupation of the premises. In his complaint, Valentin Ouano, then plaintiff therein,
alleged that he has been in lawful and peaceful possession since 1956 of a parcel of land
designated as Lot No. 986, Pls-599-D situated in Bagsac, Manikling, Governor Generoso (now San
Isidro), Davao Oriental, to which an Original Certificate of Title No. P-(l5353)-P-3932 was issued in
his name; that petitioners, then defendants therein, unlawfully entered his land on January 4, 1975
and started cultivating and gathering the coconuts, bananas and other fruits therein, thereby illegally
depriving him of the possession and enjoyment of the fruits of the premises.

Petitioners, on the other hand, alleged that plaintiff Valentin Ouano, now private respondent, has
never been in possession of any portion of Lot No. 986 as the same has been continously occupied
and possessed by petitioners since 1930 in the concept of owner and have introduced valuable
improvements thereon such as coconuts and houses; that Lot No. 986 was the subject matter of
administrative proceedings before the Bureau of Lands in Mati, Davao Oriental which was
consequently decided in their favor by the Director of Lands on the finding that Valentin Ouano has
never resided in the land; that it was declared by the Director of Lands that the homestead patent
issued to private respondent Valentin Ouano was improperly and erroneously issued, since on the
basis of their investigation and relocation survey, the actual occupation and cultivation was made by
petitioner Arcadio Ybaez and his children, consisting of 9.6 hectares which cover the whole of Lot
No. 986 and portions of Lot Nos. 987, 988 and 989; that based on the ocular inspection conducted, it
was established that Valentin Ouano did not have a house on the land and cannot locate the
boundaries of his titled land for he never resided therein.5

The trial court, after hearing, rendered on June 8, 1991 its decision6 in favor of private respondent,
the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:

1 The defendants are ordered to vacate the premises of Lot 986, PLS-599-D, situated at
Sitio Bagsac, Manikling, San Isidro, Governor Generoso and to return the possession thereof
to the plaintiff Valentin Ouano together with all the improvements therein;

2 To pay unto the plaintiff the sum of P12,000.00, the proceeds of the sale of copra from
January 4, 1975 to the present;

3 To pay attorney's fees of P7,500.00;

4 To desist from entering the property again after they have turned it over to plaintiff; and

5 To pay the costs of this suit.7

Petitioners appealed to the Intermediate Appellate Court.

On June 29, 1984, the Intermediate Appellate Court, First Civil Cases Division promulgated a
decision,8 affirming the decision of the trial court, with the modification that the award of Pl2,000.00
representing the proceeds of the land from January 24, 1975 was reduced to P10,000.00 and the
amount of P7,500.00 as attorney's fees was fixed at P5,000.00.9

Hence the instant recourse by petitioners.

At the outset, it must be noted that in assailing the appellate court's decision which affirmed that of
the trial court, petitioners relied on the Order dated July 19, 1978 issued by the Director of the
Bureau of Lands resolving the protest filed by them on January 3, 1975, later amended on February
6, 1975, against the Homestead Application No. 20-107001 of Valentin Ouano over Lot No. 986, Pls-
599-D, docketed as B.L. Claim No. 2809, D.L.O. Confect No. (XI-7)102.
Petitioners claimed that the complaint for recovery of possession, damages and attorneys fees
against them should have been dismissed by the trial court for failure of private respondents, as
patentee-respondent in the protest case before the Bureau of Lands, to exhaust administrative
remedies which is tantamount to a lack of cause of action under Section 1, Rule 16 of the Rules of
Court; that the decision or order on a question of fact by the Bureau of Lands that Patent No. 101201
issued to private respondent was improperly and erroneously issued should have been respected by
the trial court and the appellate court; that the indefeasibility of a certificate of title must not be a
sword for an offense nor should it be allowed to perpetrate fraud.

We find the contentions unmeritorious.

It was erroneous for petitioners to question the Torrens Original Certificate of Title issued to private
respondent over Lot No. 986 in Civil Case No. 671, an ordinary civil action for recovery of
possession filed by the registered owner of the said lot, by invoking as affirmative defense in their
answer the Order of the Bureau of Lands, dated July 19, 1978,10 issued pursuant to the investigatory
power of the Director of Lands under Section 91 of Public Land Law (C.A. 141 as amended). Such a
defense partakes of the nature of a collateral attack against a certificate of title brought under the
operation of the Torrens system of registration pursuant to Section 122 of the Land Registration Act,
now Section 103 of P.D. 1259. The case law on the matter does not allow a collateral attack on the
Torrens certificate of title on the ground of actual fraud.11 The rule now finds expression in Section 48
of P.D. 1529 otherwise known as the Property Registration Decree.

The certificate of title serves as evidence of an indefeasible title to the property in favor of the person
whose name appears therein. After the expiration of the one (1) year period from the issuance of the
decree of registration upon which it is based, it becomes incontrovertible.12 The settled rule is that a
decree of registration and the certificate of title issued pursuant thereto may be attacked on the
ground of actual fraud within one (1) year from the date of its entry and such an attack must be direct
and not by a collateral proceeding.13 The validity of the certificate of title in this regard can be
threshed out only in an action expressly filed for the purpose.14

It must be emphasized that a certificate of title issued under an administrative proceeding pursuant
to a homestead patent, as in the instant case, is as indefeasible as a certificate of title issued under
a judicial registration proceeding, provided the land covered by said certificate is a disposable public
land within the contemplation of the Public Land Law.15

There is no specific provision in the Public Land Law (C.A. No. 141, as amended) or the Land
Registration Act (Act 496), now P.D. 1529, fixing the one (1) year period within which the public land
patent is open to review on the ground of actual fraud as in Section 38 of the Land Registration Act,
now Section 32 of P.D. 1529, and clothing a public land patent certificate of title with indefeasibility.
Nevertheless, the pertinent pronouncements in the aforecited cases clearly reveal that Section 38 of
the Land Registration Act, now Section 32 of P.D. 1529 was applied by implication by this Court to
the patent issued by the Director of Lands duly approved by the Secretary of Natural Resources,
under the signature of the President of the Philippines in accordance with law. The date of issuance
of the patent, therefore, corresponds to the date of the issuance of the decree in ordinary registration
cases because the decree finally awards the land applied for registration to the party entitled to it,
and the patent issued by the Director of Lands equally and finally grants, awards, and conveys the
land applied for to the applicant.16 This, to our mind, is in consonance with the intent and spirit of the
homestead laws, i.e. conservation of a family home, and to encourage the settlement, residence and
cultivation and improvement of the lands of the public domain. If the title to the land grant in favor of
the homesteader would be subjected to inquiry, contest and decision after it has been given by the
Government thru the process of proceedings in accordance with the Public Land Law, there would
arise uncertainty, confusion and suspicion on the government's system of distributing public
agricultural lands pursuant to the "Land for the Landless" policy of the State.

In the instant case, the public land certificate of title issued to private respondent attained the status
of indefeasibility one (1) year after the issuance of patent on April 15, 1963, hence, it is no longer
open to review on the ground of actual fraud. Consequently, the filing of the protest before the
Bureau of Lands against the Homestead Application of private respondent on January 3, 1975, or 12
years after, can no longer re-open or revise the public land certificate of title on the ground of actual
fraud. No reasonable and plausible excuse has been shown for such an unusual delay. The law
serves those who are vigilant and diligent and not those who sleep when the law requires them to
act.17

In rendering judgment restoring possession of Lot No. 986 to private respondent Ouano, the duly
registered owner thereof, the trial court merely applied the rule and jurisprudence that a person
whose property has been wrongly or erroneously registered in another's name is not to set aside the
decree, but, respecting the decree as incontrovertible and no longer open to review, to bring an
ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into
the hands of an innocent purchaser for value, for damages.18

Although petitioners may still have the remedy of reconveyance, assuming that they are the
"owners" and actual occupants of Lot No. 986, as claimed by them before the trial court, this remedy,
however, can no longer be availed of by petitioners due to prescription. The prescriptive period for
the reconveyance of fraudulently registered real property is ten (10) years reckoned from the date of
the issuance of the certificate of title.19

While there is no dispute that the Director of Lands has the authority to conduct an investigation of
any alleged fraud in securing a homestead patent and the corresponding title to a public land
notwithstanding the status of indefeasibility attached to the certificate of title of private respondent,
and such investigation cannot be enjoined by a writ of prohibition, it must be observed however, that
whatever may be the result of the factual finding in this administrative proceedings under Section 91
of the Public Land Law is not decisive of the issue as to who has a better right of possession
(possession de jure) over Lot No. 986 in Civil Case No. 671. The action instituted by private
respondent before the trial court partakes of the nature of an accion publiciana which is basically
intended for the recovery of possession, and is a plenary action in an ordinary civil proceeding
before a Court of First Instance (now RTC).20

On the other hand, in the case of the administrative investigation under Section 91 of the Public
Land Law, the sole and only purpose of the Director of Lands is to determine whether or not fraud
had been committed in securing such title in order that the appropriate action for reversion may be
filed by the Government.21 It is not intended to invalidate the Torrens certificate of title of the
registered owner of the land. Unless and until the land is reverted to the State by virtue of a
judgment of a court of law in a direct proceedings for reversion, the Torrens certificate of title thereto
remains valid and binding against the whole world.

In resolving the basic issue of an accion publiciana, the trial court acted within its sphere of
competence and has correctly found that private respondent Ouano has a better right of possession
over Lot No. 986 than petitioners who claimed to own and possess a total of 12 hectares of land
including that of Lot No. 986. Records indicate that petitioners have not taken any positive step to
legitimize before the Bureau of Lands their self-serving claim of possession and cultivation of a total
of 12 hectares of public agricultural land by either applying for homestead settlement, sale patent,
lease, or confirmation of imperfect or incomplete title by judicial legalization under Section 48(b) of
the Public Land Law, as amended by R.A. No. 1942 and P.D. 1073, or by administrative legalization
(free patent) under Section 11 of Public Land Law, as amended. What was clearly shown during the
1wphi1

trial of the case was that petitioners wrested control and possession of Lot No. 986 on January 4,
1975, or one (1) day after they filed their belated protest on January 3, 1975 before the Bureau of
Lands against the homestead application of private respondent, thus casting serious doubt on their
claim of prior possession and productive cultivation.

What is more, it was only in 1975 that petitioners came to know and realize that they do not have
actual possession of the so-called 12 hectares because, as testified by Ernesto Domanais, son-in-
law of Arcadio Ybanez, three (3) hectares of their land were found to be in possession of a certain
Rodolfo Beneguian; and that petitioners did not object when said portion of land was removed from
their occupation thereby reducing their purported claim of 12 hectares to only nine (9) hectares.22 It is
relatively easy to declare and claim that one owns and possesses a 12-hectare public agricultural
land, but it is entirely a different matter to affirmatively declare and to prove before a court of law that
one actually possessed and cultivated the entire area to the exclusion of other claimants who stand
on equal footing under the Public Land Law (CA 141, as amended) as any other pioneering
claimants.

WHEREFORE, the petition is DENIED for lack of merit. The decision of the Intermediate Appellate
Court, now Court of Appeals, dated June 29, 1984, is hereby affirmed. No costs.

SO ORDERED.

34. Ramoso Vs. Obligado

SUPREME COURT
Manila

EN BANC

G.R. No. 46548 June 21, 1940

ARMESTO RAMOSO, petitioner,

vs.
JOSE OBLIGADO, ET AL., respondents.

Armesto Ramoso in his own behalf.

Macario M. Peralta for the respondents.

MORAN, J.:

An appeal by certiorari from the judgment of the Court of Appeals.

One Feliciano Capinpin was owner of a homestead granted him on September 21, 1921, and
registered in the office of the registrar of deeds of Nueva Ecija under title No. 1080. He died, and his
widow, Luisa Jarduela, and son by the first marriage, Geronimo Capinpin, sold the property to
respondent Juan Obligado on May 17, 1930. When the cadastral proceedings were opened in
Nueva Ecija, the widow, without the son, claimed the property, and the court awarded it to her on
December 10, 1929, the final decree of registration and the original title having been issued on
December 8, 1930, and January 7, 1931, respectively. On October 26. 1934, the widow transferred
the property to her lawyer, Armesto Ramoso, the herein petitioner, in whose favor transfer certificate
of title No. 8550 was issued. The question now is whether Armesto Ramoso, under his transfer
certificate of title, is entitled to the property as against the first transferee, Juan Obligado.

A homestead patent, once registered under the Registration Act, becomes as indefeasible as a
Torrens title and cannot thereafter be the subject of an investigation for determination or judgment in
a cadastral case. Any new title which the cadastral, court may order to be issued is null and void and
should be cancelled. All that the cadastral court may do is to make corrections of technical errors in
the description of the property contained in its title, or to proceed to the partition thereof if it is owned
by two or more coowners. (Pamintuan vs. San Agustin et al., 43 Phil., 558; El Hogar Filipino vs.
Olviga et al., 60 Phil., 17, 18.) Accordingly, the order of registration issued by the cadastral court in
favor of the widow is null and void, and, consequently, no valid transfer could have been made by
her in favor of the petitioner, Armesto Ramos. In other words, the latter has no right to the property.

It is argued, however, that, if in a cadastral proceeding, the court may order the partition of the
property already registered, then it may also validly award the property in favor of the supposed sole
heir of the person in whose favor the title was issued. This conclusion is wrong. Awarding the
property to a supposed sole heir is not ordering its partition. If, according to the registered title, the
property belongs to several owners, the cadastral court may order partition among them. But when
the registered title belongs to only one person, the cadastral court cannot, if that person is dead,
order the registration of the property in favor of the heirs or its partition among them, for that would
presuppose a declaration of heirs, a function which devolves upon probate courts. We do not mean
to say that the cadastral court cannot do so in connection with undersigned lands, the actual
ownership of which it must determine. But when the ownership has already been determined and a
registered title has already been issued, the cadastral court cannot adjudicate anew the ownership
of the property and order the issuance of an original title to successors in interest. Such successors
in interest, either by inheritance or by contract, are entitled only to a transfer certificate of title which
can be issued in proceedings that are not proper in a cadastral court. The issuance of an original title
to the successors in interest is in fact equivalent to setting aside the original title issued in favor of
their predecessor in interest. And this cannot be done by the cadastral court.

It is true that this is a question of jurisdiction of the cadastral court, which the Court of Appeals may
not entertain. But there is no showing that the petitioner has challenged the jurisdiction of the Court
of Appeals on this matter and has taken, the proper steps to have the case certified to this Court.
Under this circumstance, this court will confine itself to reviewing the pronouncement of the Court of
Appeals on the question of jurisdiction and such other questions of law as have been properly raised
by the petitioner.

In the judgment rendered by the Court of Appeals, it is held that the herein petitioner acted in bad
faith in acquiring the property from Luisa Jarduela, for, prior to the acquisition, he knew that the
property had already been sold to Juan Obligado. This is a question of fact which we will not review.
And the finding of the Court of Appeals on this matter is another ground for holding that the petitioner
has no right to the property.

Judgment is affirmed, with costs against petitioner.

35. Pamintuan Vs. San Agustin

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-17943 June 22, 1922

FLORENTINO PAMINTUAN, petitioner,

vs.
Honorable PRIMITIVO SAN AGUSTIN, Auxiliary Judge of the Second Judicial District, the
SHERIFF OF PAMPANGA,
NICOMEDES ESPINOSA, ROSA ESPINOSA, EUSEBIA ESPINOSA, and FRANCISCA
DAVID, respondents.

Cavanna, Aboitiz and Agan for petitioner.

Felix Bautista for respondents.

OSTRAND, J.:

This is a petition for a writ of certiorari, requiring the respondent judge of the Court of First Instance
to certify to this court the record in land registration case No. 11732, and as much of the record of
cadastral case No. 132, as pertains to lot No. 625, of the cadaster of Mabalacat, Province of
Pampanga. The petitioner further prays that upon said records being so certified, all proceedings
had in said cadastral case in relation to said lot No. 625, be declared null and void. By order of this
court dated November 30, 1920, a preliminary injunction was issued, directing the respondents to
return the possession of the land in question to the petitioner and under another order dated August
29, 1921, the records mentioned were certified to this court.

An examination of the records before us shows that in land registration case No. 11732, and under
the date of April 19, 1917, the aforesaid lot No. 625, was decreed in favor of Florentino Pamintuan,
the petitioner herein, by the Court of First Instance of Pampanga, and that certificate of title No. 540
covering the said lot was thereupon issued to him in June, 1918.

In the meantime cadastral case No. 132, was instituted. This case embraced the district in which the
lot in question was situated and the lot was given its cadastral number in the proceedings and was
marked on the plans as land in regard to which registration proceedings were pending under Act.
No. 496. Florentino Pamintuan inadvertently failed to claim the lot of trial of the cadastral case, and
the Court of First Instance in a decision dated April 29, 1919, awarded it to the respondents
Nicomedes, Maria, Mercedes, Rose and Eusebia Espinosa, and ordered the cancellation of
certificate of title No. 540. The person to whom the land had been adjudged subsequently conveyed
their interest to the respondent Francisca David, in favor of whom the Court of First Instance issued
a writ of possession, placing her in possession of the land. The possession was restored to the
petitioner by virtue of the preliminary injunction issued by this court on November 30, 1920. It may
be noted that no final decree has as yet been issued in the cadastral case in regard to the lot.

Florentino Pamintuan knew nothing about the adjudication of the land in favor of the Espinosa until
the clerk of the Court of First Instance of Pampanga required him to surrender his certificate of title
for cancellation. He then presented a motion to the Court of First Instance, asking that the decision
of the court in regard to the lot in the cadastral case be set aside and that the writ of possession
issued by virtue of said decision be recalled. This motion was denied by the court on November 16,
1920.
We are of the opinion that the court below exceeded its jurisdiction in undertaking to decree in a
cadastral case land already decreed in another land registration case. Cadastral proceedings are
authorized and regulated by Act No. 2259. The scope and purpose of this Act is expressed in its title:
"An Act providing of land titles." What is understood by "settlement and adjudication" is very clearly
indicated in section 11 of the Act, which reads as follows:

SEC. 11. The trial of the case may occur at any convinient place within the province in which
the lands are situated or at such other place as the court, for reasons stated in writing and
filed with the record of the case, may designate, and shall be conducted in the same manner
as ordinary trials and proceedings in the Court of Land Registration, and shall be governed
by the same rules. Orders of default and confession shall also be entered in the same
manner as in ordinary cases in the same court and shall have the same effect. All conflicting
interest shall be adjudicated by the court and decrees awarded in favor of the person entitle
to the lands or the various parts thereof, and such decrees, when final, shall be the basis for
original certificates of title in favor of said persons, which shall have the same effect as
certificates of title granted on application for registration of land under the Land Registration
Act, and except as herein otherwise provided all of the provisions of said Land Registration
Act, as now amended, and as it hereafter may be amended, shall be applicable to
proceedings under this Act, and to the titles and certificate of title granted or issued
hereunder.

As will be seen the "settlement and adjudication" of a land title under the Cadastral Act is exactly that
provided for in the land Registration Act No. 496, i.e., a proceeding culminating in the issuance of a
final decree and a Torrens certificate of title in favor of the owner of the land.

The title to the land is therefore fully as well settled and adjudicated, within the meaning of the
Cadastral Act, by a final decree in an ordinary land registration case as it would be by a similar
decree in cadastral case and, obviously, it cannot have been the intention of the Legislature to
provide a special proceeding for the settlement and adjudication of titles already settled and
adjudicated. It is, indeed, more than doubtful if the Legislature. would have the power to enact such
a provision had it so desired; the landholder who possesses a settled and adjudicated title to his land
cannot be deprived of that title through another settlement and adjudication of a similar character.

The intention of the Legislature to exclude land already registered form the operation of the
Cadastral Act is further indicated by the provision of section 18 of the Act to the effect that, no
apportionment of any part of the costs and expenses of cadastral proceedings can be made against
such lands.

We hold that in cadastral case the jurisdiction of the court over lands already registered is limited to
the necessary correction of technical errors in the description of the lands, provided, such
corrections, do not impair the substantial rights of the registered owner, and that such jurisdiction
cannot operate to deprive a registered owner of his title.

The petition is granted, and the proceedings in the court below in regard to lot No. 625 of the
cadaster of Mabalacat are declared null and void, with costs against the respondents Nicomedes
Espinosa, Maria Mercedes Espinosa, Eusebia Espinosa, and Francisca David, jointly and severally.
So ordered.
36. Heirs of Tengco vs. Aliwalas

. HEIRS OF GREGORIO TENGCO vs. HEIRS OF JOSE ALIWALAS

168 SCRA 198, 1988

FACTS:

The instant case stemmed from an action to quiet title instituted by the late
Victorio Vda. De Aliwalas against the Heirs of Gregorio Tengco, the Director of Lands &
the Register of Deeds of Pampanga.

Lot No. 3563 of the Arayat Cadastre was originally a part of the public domain
& it was so declared on October 12, 1933. Thereafter, Dr. Jose Aliwalas applied with
the Bureau of Lands for the issuance of a homestead patent covering this lot. On
December 11, 1936, the Director of Lands granted the application and issued in favor
of Jose Aliwalas Homestead Patent No. 38588. This patent was duly registered in the
Register of Deeds of Pampanga on April 8, 1937. On the same day, OCT No. 159 was
issued in the name of Jose Aliwalas. From then on, Dr. Aliwalas paid the
corresponding realty taxes thereon having declared the land for taxation purposes in
his name.

In 1962, Jose Aliwalas died and the administration and management of the
land was assumed by Jose Aliwalas Jr., son of Dr. Aliwalas. When the property was
partitioned among Dr. Aliwalas surviving heirs, the lot was allotted in favor of the
plaintiff Victoria Vda. De Aliwalas. Thereafter, an OCT was issued in her name on
November 14, 1966.

On the other hand, defendant Ponciano Tengco in representation of the

defendants Heirs of Gregorio Tengco filed an application with the Bureau of Lands,
thru its District Land Office in Pampanga. He alleged that this parcel of land had been
occupied and cultivated originally & continuously thereafter by Gregorio Tengco. After
being given due course, this application was approved by the Director of Lands who
issued a Free Patent covering the lot.
 The defendant-Heirs of Gregorio Tengco also adduced evidence showing that
their late grandfather Gregorio Tengco had occupied the land exclusively years before
he died in 1934, his children succeeded him in its possession & enjoying the fruits
from different trees planted thereon.

On rebuttal, Plaintiff Aliwalas adduced evidence showing that the pre-war

records of the Bureau of Lands pertaining to public land applications were burned
during the war as certified by the Bureau of Lands. This was the reason why no more
record pertaining the Homestead Patent issued in favor of Jose Aliwalas in 1936 which
gave rise to the issuance of an OCT.

On the basis of the evidence, the Trial Court rendered judgment declaring the
plaintiff Aliwalas as the true owner of the property, ordering the Register of Deeds of
Pampanga to cancel the TCTS in the name of Cipriano Tengco, et. al.; ordering the
defendants-Heirs of Gregorio Tengco to vacate the land in question xxxxxxx.

Dissatisfied with the trial courts judgment, the Heirs of Tengco interposed an
appeal to the Court of Appeals which affirmed the trial courts findings. Petitioners
moved for reconsideration but same was denied. Hence, this petition.

ISSUE:

1. WON an original certificate of title issued on the strength of a homestead

patent becomes indefeasible and incontrovertible upon the expiration of one (1)
year from the date of promulgation of the order.

2.WON private respondents are guilty of laches or prescription.

HELD:
 1. Yes. An original certificate of title issued on the strength of a homestead patent
becomes indefeasible and incontrovertible upon the expiration of one (1) year from the
date of promulgation of the order. It is a well-settled rule that an original certificate of
title issued on the strength of a homestead patent partakes of the nature of a
certificate of title issued in a judicial proceeding, as long as the land disposed of is
really part of the disposable land of the public domain, and becomes indefeasible &
incontrovertible upon the expiration of one (1) year from the date of the promulgation
of the order of the Director of Lands for the issuance of the patent. A homestead
patent, once registered under the Land Registration Act becomes as indefeasible as a
Torrens Title.

2. No. They are not guilty of laches or prescription. Title acquired through a
homestead patent registered under the Land Registration Act is imprescriptible.
Thus, prescription cannot operate against the registered owner.

Petition DENIED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-17943 June 22, 1922

FLORENTINO PAMINTUAN, petitioner,

vs.
Honorable PRIMITIVO SAN AGUSTIN, Auxiliary Judge of the Second Judicial District, the
SHERIFF OF PAMPANGA,
NICOMEDES ESPINOSA, ROSA ESPINOSA, EUSEBIA ESPINOSA, and FRANCISCA
DAVID, respondents.

Cavanna, Aboitiz and Agan for petitioner.

Felix Bautista for respondents.

OSTRAND, J.:

This is a petition for a writ of certiorari, requiring the respondent judge of the Court of First Instance
to certify to this court the record in land registration case No. 11732, and as much of the record of
cadastral case No. 132, as pertains to lot No. 625, of the cadaster of Mabalacat, Province of
Pampanga. The petitioner further prays that upon said records being so certified, all proceedings
had in said cadastral case in relation to said lot No. 625, be declared null and void. By order of this
court dated November 30, 1920, a preliminary injunction was issued, directing the respondents to
return the possession of the land in question to the petitioner and under another order dated August
29, 1921, the records mentioned were certified to this court.

An examination of the records before us shows that in land registration case No. 11732, and under
the date of April 19, 1917, the aforesaid lot No. 625, was decreed in favor of Florentino Pamintuan,
the petitioner herein, by the Court of First Instance of Pampanga, and that certificate of title No. 540
covering the said lot was thereupon issued to him in June, 1918.

In the meantime cadastral case No. 132, was instituted. This case embraced the district in which the
lot in question was situated and the lot was given its cadastral number in the proceedings and was
marked on the plans as land in regard to which registration proceedings were pending under Act.
No. 496. Florentino Pamintuan inadvertently failed to claim the lot of trial of the cadastral case, and
the Court of First Instance in a decision dated April 29, 1919, awarded it to the respondents
Nicomedes, Maria, Mercedes, Rose and Eusebia Espinosa, and ordered the cancellation of
certificate of title No. 540. The person to whom the land had been adjudged subsequently conveyed
their interest to the respondent Francisca David, in favor of whom the Court of First Instance issued
a writ of possession, placing her in possession of the land. The possession was restored to the
petitioner by virtue of the preliminary injunction issued by this court on November 30, 1920. It may
be noted that no final decree has as yet been issued in the cadastral case in regard to the lot.

Florentino Pamintuan knew nothing about the adjudication of the land in favor of the Espinosa until
the clerk of the Court of First Instance of Pampanga required him to surrender his certificate of title
for cancellation. He then presented a motion to the Court of First Instance, asking that the decision
of the court in regard to the lot in the cadastral case be set aside and that the writ of possession
issued by virtue of said decision be recalled. This motion was denied by the court on November 16,
1920.

We are of the opinion that the court below exceeded its jurisdiction in undertaking to decree in a
cadastral case land already decreed in another land registration case. Cadastral proceedings are
authorized and regulated by Act No. 2259. The scope and purpose of this Act is expressed in its title:
"An Act providing of land titles." What is understood by "settlement and adjudication" is very clearly
indicated in section 11 of the Act, which reads as follows:

SEC. 11. The trial of the case may occur at any convinient place within the province in which
the lands are situated or at such other place as the court, for reasons stated in writing and
filed with the record of the case, may designate, and shall be conducted in the same manner
as ordinary trials and proceedings in the Court of Land Registration, and shall be governed
by the same rules. Orders of default and confession shall also be entered in the same
manner as in ordinary cases in the same court and shall have the same effect. All conflicting
interest shall be adjudicated by the court and decrees awarded in favor of the person entitle
to the lands or the various parts thereof, and such decrees, when final, shall be the basis for
original certificates of title in favor of said persons, which shall have the same effect as
certificates of title granted on application for registration of land under the Land Registration
Act, and except as herein otherwise provided all of the provisions of said Land Registration
Act, as now amended, and as it hereafter may be amended, shall be applicable to
proceedings under this Act, and to the titles and certificate of title granted or issued
hereunder.
As will be seen the "settlement and adjudication" of a land title under the Cadastral Act is exactly that
provided for in the land Registration Act No. 496, i.e., a proceeding culminating in the issuance of a
final decree and a Torrens certificate of title in favor of the owner of the land.

The title to the land is therefore fully as well settled and adjudicated, within the meaning of the
Cadastral Act, by a final decree in an ordinary land registration case as it would be by a similar
decree in cadastral case and, obviously, it cannot have been the intention of the Legislature to
provide a special proceeding for the settlement and adjudication of titles already settled and
adjudicated. It is, indeed, more than doubtful if the Legislature. would have the power to enact such
a provision had it so desired; the landholder who possesses a settled and adjudicated title to his land
cannot be deprived of that title through another settlement and adjudication of a similar character.

The intention of the Legislature to exclude land already registered form the operation of the
Cadastral Act is further indicated by the provision of section 18 of the Act to the effect that, no
apportionment of any part of the costs and expenses of cadastral proceedings can be made against
such lands.

We hold that in cadastral case the jurisdiction of the court over lands already registered is limited to
the necessary correction of technical errors in the description of the lands, provided, such
corrections, do not impair the substantial rights of the registered owner, and that such jurisdiction
cannot operate to deprive a registered owner of his title.

The petition is granted, and the proceedings in the court below in regard to lot No. 625 of the
cadaster of Mabalacat are declared null and void, with costs against the respondents Nicomedes
Espinosa, Maria Mercedes Espinosa, Eusebia Espinosa, and Francisca David, jointly and severally.
So ordered.

37. Cruz vs. Secretary of ENR

Cruz vs DENR, G.R. No. 135385, December 6, 2000

Isagani Cruz v. Dept. of Energy and Natural Resources,
G.R. No. 135385, December 6, 2000

FACTS: Cruz, a noted constitutionalist, assailed the validity of the RA 8371 or the Indigenous Peoples
Rights Act on the ground that the law amount to an unlawful deprivation of the States ownership over
lands of the public domain as well as minerals and other natural resources therein, in violation of the
regalian doctrine embodied in Section 2, Article XII of the Constitution. The IPRA law basically
enumerates the rights of the indigenous peoples over ancestral domains which may include natural
resources. Cruz et al content that, by providing for an all-encompassing definition of ancestral domains
and ancestral lands which might even include private lands found within said areas, Sections 3(a) and
3(b) of said law violate the rights of private landowners.

ISSUE: Whether or not the IPRA law is unconstitutional.

HELD: The SC deliberated upon the matter. After deliberation they voted and reached a 7-7 vote. They
deliberated again and the same result transpired. Since there was no majority vote, Cruzs petition was
dismissed and the IPRA law was sustained. Hence, ancestral domains may include natural resources
somehow against the regalian doctrine

38. Cheesman vs. IAC

G.R. No. 74833 January 21, 1991

THOMAS C. CHEESMAN, petitioner,

vs.
INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA, respondents.

NARVASA, J.:p

FACTS:
Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been
separated since February 15, 1981.
On June 4, 1974, a Deed of Sale and Transfer of Possessory Rights was executed by Armando
Altares conveying a parcel of unregistered land and the house in favor of Criselda P. Cheesman, of
legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8, Filtration
Road, Sta. Rita, Olongapo City .
Thomas Cheesman, although aware of the deed, did not object to the transfer being made only to his
wife.
Thereafter, tax declarations for the property purchased were issued in the name only of Criselda
Cheesman and Criselda assumed exclusive management and administration of said property, leasing it
to tenants. This happened without any protest from Thomas.
Criselda sold the property to Estelita M. Padilla, without the knowledge or consent of Cheesman. The
deed described Criselda as being of legal age, married to an American citizen...
Subsequently, Thomas filed a suit in the CFI against Criselda and Estelita Padilla, praying for the
annulment of the sale on the ground that the transaction had been executed without his knowledge and
consent.
During the Pre-trial, the sale was declared void ab initio and the the delivery of the property to Thomas
as administrator of the conjugal partnership property was ordered.
However, the judgment was set aside on a petition for relief filed by the Estrellita, grounded on "fraud,
mistake and/or excusable negligence" which had seriously impaired her right to present her case
adequately. Estelita Padilla filed a supplemental pleading as her own answer to the complaint and a
motion for summary judgment.
The Trial Court found that
o The evidence on record satisfactorily overcame the disputable presumption that all property of the
marriage belongs to the conjugal partnership and that the immovable in question was in truth
Criseldas paraphernal property;
o The legal presumption in Article 160 could not apply because the husband-plaintiff is an American
citizen and therefore disqualified under the Constitution to acquire and own real properties; and
o The exercise by Criselda of exclusive acts of dominion with the knowledge of her husband had led
Estelita to believe that the properties were the exclusive properties of Criselda and on the faith of
such a belief she bought the properties from her and for value and therefore, Thomas was estopped
to impugn the transfer.
Thomas appealed the judgment, as well as the act of the Trial Court of granting Estelitas
petition for relief and its resolution of matters not subject of said petition. IAC affirmed the
Summary Judgment and found no reversible error. Thomas Cheesman appealed to the Supreme Court.
ISSUE: Whether or not Thomas correctly availed of the remedy of appeal to SC? NO

[COMMENTO: Were familiar with the Persons related issue The foreigner husband has no capacity
or personality to question the sale of the property because it would be an indirect controversion of the
constitutional prohibition. Aliens are prohibited from acquiring lands of the public domain.]

RULING: An order of the CFI granting a petition for relief under Rule 38 is interlocutory and is not
appealable.

QUESTION OF FACT vs. QUESTION OF LAW: The conclusions made by the trial court were derived
from evidence adduced by the parties, the facts set out in the pleadings or otherwise appearing on
recordare conclusions or findings of fact. As distinguished from a QUESTION OF LAWwhich
exists "when the doubt or difference arises as to what the law is on a certain state of facts" "there is
a QUESTION OF FACT when the doubt or difference arises as to the truth or the falsehood of alleged
facts;" or when the "query necessarily invites calibration of the whole evidence considering mainly the
credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation; to
each other and to the whole and the probabilities of the situation."
The RULE is that only questions of law, distinctly set forth, may be raised in a petition for the review on
certiorari of a decision of the Court of Appeals presented to the Supreme Court.
The appellate jurisdiction of the SC is limited to reviewing errors of law, accepting as conclusive the
factual findings of the lower court upon its own assessment of the evidence.
CA was created precisely to take away from the SC the work of examining the evidence, and confine its
task to the determination of questions which do not call for the reading and study of transcripts
containing the testimony of witnesses.
The rule of conclusiveness of the factual findings or conclusions of the CA is subject to certain
exceptions. However, none of which is present in the case at bar.
Both the Trial Court and the IAC reached the same conclusions on the 3 factual matters, after
assessment of the evidence and determination of the probative value thereof and these determinations
will not be disturbed.
o The facts on record adequately proved fraud, mistake or excusable negligence by which Estelita
Padilla's rights had been substantially impaired; that the funds used by Criselda Cheesman was
money she had earned and saved prior to her marriage to Thomas Cheesman, and that Estelita
Padilla did believe in good faith that Criselda Cheesman was the sole owner of the property in
question.
An order of a CFI granting a petition for relief under Rule 38 is interlocutory and is NOT
appealable. The failure of the party who opposed the petition to appeal from said order, or his
participation in the proceedings subsequently had, cannot be construed as a waiver of his
objection to the petition for relief so as to preclude his raising the same question on appeal
from the judgment on the merits of the main case.
Such a party need not repeat his objections to the petition for relief, or perform any act thereafter in
order to preserve his right to question the same eventually, on appeal, it being sufficient for this
purpose that he has made of record "the action which he desires the court to take or his objection to
the action of the court and his grounds therefor."
The prayer in a petition for relief from judgment under Rule 38 is not necessarily the same prayer in
the petitioner's complaint, answer or other basic pleading. Once a petition for relief is granted and the
judgment subject thereof set aside, and further proceedings are thereafter had, the Court in its
judgment on the merits may properly grant the relief sought in the petitioner's basic pleadings,
although different from that stated in his petition for relief.

WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner.

39. Muller vs. Muller

40. Phil. Banking Corp vs. Lui She

OCTRINE:

Even if the contract appears to be valid, if the provisions is against a constitutional prohibition,
the same should be considered null and void.

FACTS:

Justina Santos executed on a contract of lease in favor of Wong, covering the portion then already
leased to him and another portion fronting Florentino Torres street. The lease was for 50 years,
although the lessee was given the right to withdraw at any time from the agreement.

On December 21 she executed another contract giving Wong the option to buy the leased premises for
P120,000, payable within ten years at a monthly installment of P1,000. The option, written in Tagalog,
imposed on him the obligation to pay for the food of the dogs and the salaries of the maids in her
household, the charge not to exceed P1,800 a month. The option was conditioned on his obtaining
Philippine citizenship, a petition for which was then pending in the Court of First Instance of Rizal.

It appears, however, that this application for naturalization was withdrawn when it was discovered that
he was not a resident of Rizal. On October 28, 1958 she filed a petition to adopt him and his children on
the erroneous belief that adoption would confer on them Philippine citizenship. The error was
discovered and the proceedings were abandoned.

In two wills executed on August 24 and 29, 1959, she bade her legatees to respect the contracts she had
entered into with Wong, but in a codicil of a later date (November 4, 1959) she appears to have a
change of heart. Claiming that the various contracts were made by her because of machinations and
inducements practiced by him, she now directed her executor to secure the annulment of the contracts.

ISSUE:

Whether the contracts involving Wong were valid

HELD:

No, the contracts show nothing that is necessarily illegal, but considered collectively, they reveal
an insidious pattern to subvert by indirection what the Constitution directly prohibits. To be sure, a lease
to an alien for a reasonable period is valid. So is an option giving an alien the right to buy real property
on condition that he is granted Philippine citizenship.

But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of
which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it
becomes clear that the arrangement is a virtual transfer of ownership whereby the owner divests
himself in stages not only of the right to enjoy the land but also of the right to dispose of it rights the
sum total of which make up ownership. If this can be done, then the Constitutional ban against alien
landholding in the Philippines, is indeed in grave peril.

41. Ramirez vs. Vda De Ramirez

42. Ting Ho Jr. Teng Gui

Republic of the Philippines

Supreme Court
Manila

FIRST DIVISION

FELIX TING HO, JR., G.R. No. 130115

MERLA TING HO BRADEN,
JUANA TING HO & LYDIA
TING HO BELENZO, Present:

Petitioners, PUNO, C.J., Chairperson,

CARPIO,
CORONA,
- versus - AZCUNA, and
LEONARDO-DE CASTRO, JJ.
Promulgated:
VICENTE TENG GUI,
Respondent. July 16, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
PUNO, C.J.:
 This is a Petition for Review on Certiorari[1] assailing the Decision[2] of the
Court of Appeals (CA) in CA-G.R. CV No. 42993 which reversed and set aside the
Decision of the Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil
Case No. 558-0-88.

The instant case traces its origin to an action for partition filed by petitioners
Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia Ting Ho
Belenzo against their brother, respondent Vicente Teng Gui, before the RTC,
Branch 74 of Olongapo City. The controversy revolves around a parcel of land,
and the improvements established thereon, which, according to petitioners, should
form part of the estate of their deceased father, Felix Ting Ho, and should be
partitioned equally among each of the siblings.

In their complaint before the RTC, petitioners alleged that their father Felix
Ting Ho died intestate on June 26, 1970, and left upon his death an estate
consisting of the following:
a) A commercial land consisting of 774 square meters, more or less, located
at Nos. 16 and 18 Afable St., East Bajac-Bajac, Olongapo City, covered by
Original Certificate of Title No. P-1064 and Tax Declaration No. 002-2451;
b) A two-storey residential house on the aforesaid lot;
c) A two-storey commercial building, the first floor rented to different
persons and the second floor, Bonanza Hotel, operated by the defendant also
located on the above described lot; and
d) A sari-sari store (formerly a bakery) also located on the above described
[3]
lot.

According to petitioners, the said lot and properties were titled and tax declared
under trust in the name of respondent Vicente Teng Gui for the benefit of the
deceased Felix Ting Ho who, being a Chinese citizen, was then disqualified to own
public lands in the Philippines; and that upon the death of Felix Ting Ho, the
respondent took possession of the same for his own exclusive use and benefit to
their exclusion and prejudice.[4]
In his answer, the respondent countered that on October 11, 1958, Felix Ting
Ho sold the commercial and residential buildings to his sister-in-law, Victoria
Cabasal, and the bakery to his brother-in-law, Gregorio Fontela.[5] He alleged that
he acquired said properties from the respective buyers on October 28, 1961 and has
since then been in possession of subject properties in the concept of an owner; and
that on January 24, 1978, Original Certificate of Title No. P-1064 covering the
subject lot was issued to him pursuant to a miscellaneous sales patent granted to
him on January 3, 1978.[6]

The undisputed facts as found by the trial court (RTC), and affirmed by the
appellate court (CA), are as follows:

[T]he plaintiffs and the defendant are all brothers and sisters, the
defendant being the oldest. They are the only legitimate children of the
deceased Spouses Felix Ting Ho and Leonila Cabasal. Felix Ting Ho
died on June 26, 1970 while the wife Leonila Cabasal died on December
7, 1978. The defendant Vicente Teng Gui is the oldest among the
children as he was born on April 5, 1943. The father of the plaintiffs and
the defendant was a Chinese citizen although their mother was
Filipino. That sometime in 1947, the father of the plaintiffs and
defendant, Felix Ting Ho, who was already then married to their mother
Leonila Cabasal, occupied a parcel of land identified to (sic) as Lot No.
18 Brill which was thereafter identified as Lot No. 16 situated at Afable
Street, East Bajac-Bajac, Olongapo City, by virtue of the permission
granted him by the then U.S. Naval Reservation Office, Olongapo,
Zambales. The couple thereafter introduced improvements on the
land. They built a house of strong material at 16 Afable Street which is a
commercial and residential house and another building of strong material
at 18 Afable Streetwhich was a residential house and a bakery. The
couple, as well as their children, lived and resided in the said properties
until their death. The father, Felix Ting Ho had managed the bakery
while the mother managed the sari-sari store. Long before the death of
Felix Ting Ho, who died on June 26, 1970, he executed on October
11, 1958 a Deed of Absolute Sale of a house of strong material
located at 16 Afable Street, Olongapo, Zambales, specifically
described in Tax Dec. No. 5432, in favor of Victoria Cabasal his
sister-in-law (Exh. C). This Deed of Sale cancelled the Tax Dec. of
Felix Ting Ho over the said building (Exh. C-1) and the building was
registered in the name of the buyer Victoria Cabasal, as per Tax Dec.
No. 7579 (Exh. C-2). On the same date, October 11, 1958 the said
Felix Ting Ho also sold a building of strong material located at 18
Afable Street, described in Tax Dec. No. 5982, in favor of Gregorio
 Fontela, of legal age, an American citizen, married (Exh. D). This
Deed of Sale, in effect, cancelled Tax Dec. No. 5982 and the same was
registered in the name of the buyer Gregorio Fontela, as per Tax Dec.
No. 7580 (Exh. D-2). In turn Victoria Cabasal and her husband
Gregorio Fontela sold to Vicente Teng Gui on October 28, 1961 the
buildings which were bought by them from Felix Ting Ho and their
tax declarations for the building they bought (Exhs. C-2 and D-2)
were accordingly cancelled and the said buildings were registered in
the name of the defendant Vicente Teng Gui (Exhs. C-3 and D-3). On
October 25, 1966 the father of the parties Felix Ting Ho executed an
Affidavit of Transfer, Relinquishment and Renouncement of Rights and
Interest including Improvements on Land in favor of his eldest son the
defendant Vicente Teng Gui. On the basis of the said document the
defendant who then chose Filipino citizenship filed a miscellaneous sales
application with the Bureau of Lands. Miscellaneous Sales Patent No.
7457 of the land which was then identified to be Lot No. 418, Ts-308
consisting of 774 square meters was issued to the applicant Vicente
Teng Gui and accordingly on the 24th of January, 1978 Original
Certificate of Title No. P-1064 covering the lot in question was issued
to the defendant Vicente Teng Gui. Although the buildings and
improvements on the land in question were sold by Felix Ting Ho to
Victoria Cabasal and Gregorio Fontela in 1958 and who in turn sold the
buildings to the defendant in 1961 the said Felix Ting Ho and his wife
remained in possession of the properties as Felix Ting Ho continued to
manage the bakery while the wife Leonila Cabasal continued to manage
the sari-sari store. During all the time that the alleged buildings were
sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and
the subsequent sale of the same to the defendant Vicente Teng Gui in
October of 1961 the plaintiffs and the defendant continued to live and
were under the custody of their parents until their father Felix Ting Ho
died in 1970 and their mother Leonila Cabasal died in
1978.[7] (Emphasis supplied)
In light of these factual findings, the RTC found that Felix Ting Ho, being a
Chinese citizen and the father of the petitioners and respondent, resorted to a series
of simulated transactions in order to preserve the right to the lot and the properties
thereon in the hands of the family. As stated by the trial court:
After a serious consideration of the testimonies given by both one
of the plaintiffs and the defendant as well as the documentary exhibits
presented in the case, the Court is inclined to believe that Felix Ting Ho,
the father of the plaintiffs and the defendant, and the husband of Leonila
Cabasal thought of preserving the properties in question by transferring
 the said properties to his eldest son as he thought that he cannot acquire
the properties as he was a Chinese citizen. To transfer the improvements
on the land to his eldest son the defendant Vicente Teng Gui, he first
executed simulated Deeds of Sales in favor of the sister and brother-in-
law of his wife in 1958 and after three (3) years it was made to appear
that these vendees had sold the improvements to the defendant Vicente
Teng Gui who was then 18 years old. The Court finds that these
transaction (sic) were simulated and that no consideration was ever paid
by the vendees.

xxxxxxxxx

With regards (sic) to the transfer and relinquishment of Felix Ting

Hos right to the land in question in favor of the defendant, the Court
believes, that although from the face of the document it is stated in
absolute terms that without any consideration Felix Ting Ho was
transferring and renouncing his right in favor of his son, the defendant
Vicente Teng Gui, still the Court believes that the transaction was one of
implied trust executed by Felix Ting Ho for the benefit of his family [8]
Notwithstanding such findings, the RTC considered the Affidavit of
Transfer, Relinquishment and Renouncement of Rights and Interests over the land
as a donation which was accepted by the donee, the herein respondent. With
respect to the properties in the lot, the trial court held that although the sales were
simulated, pursuant to Article 1471 of the New Civil Code[9] it can be assumed that
the intention of Felix Ting Ho in such transaction was to give and donate such
properties to the respondent. As a result, it awarded the entire conjugal share of
Felix Ting Ho in the subject lot and properties to the respondent and divided only
the conjugal share of his wife among the siblings. The dispositive portion of
the RTC decision decreed:

WHEREFORE, judgment is hereby rendered in favor of the

plaintiffs and against the defendant as the Court orders the partition and
the adjudication of the subject properties, Lot 418, Ts-308, specifically
described in original Certificate of Title No. P-1064 and the residential
and commercial houses standing on the lot specifically described in Tax
Decs. Nos. 9179 and 9180 in the name of Vicente Teng Gui in the
following manner, to wit: To the defendant Vicente Teng Gui is
adjudicated an undivided six-tenth (6/10) of the aforementioned
properties and to each of the plaintiffs Felix Ting Ho, Jr., Merla Ting-Ho
 Braden, Juana Ting and Lydia Ting Ho-Belenzo each an undivided one-
tenth (1/10) of the properties[10]
From this decision, both parties interposed their respective appeals. The petitioners
claimed that the RTC erred in awarding respondent the entire conjugal share of
their deceased father in the lot and properties in question contrary to its own
finding that an implied trust existed between the parties. The respondent, on the
other hand, asserted that the RTCerred in not ruling that the lot and properties do
not form part of the estate of Felix Ting Ho and are owned entirely by him.

On appeal, the CA reversed and set aside the decision of the RTC. The appellate
court held that the deceased Felix Ting Ho was never the owner and never claimed
ownership of the subject lot since he is disqualified under Philippine laws from
owning public lands, and that respondent Vicente Teng Gui was the rightful owner
over said lot by virtue of Miscellaneous Sales Patent No. 7457 issued in his
favor, viz:

The deceased Felix Ting Ho, plaintiffs and defendants late father, was
never the owner of the subject lot, now identified as Lot No. 418, Ts-
308 covered by OCT No. P-1064 (Exh. A; Record, p. 104). As stated
by Felix Ting Ho no less in the Affidavit of Transfer,
Relinquishment and Renouncement of Rights and Interest etc. (Exh.
B: Record, p. 107), executed on October 25, 1966 he, the late Felix
Ting Ho, was merely a possessor or occupant of the subject lot by
virtue of a permission granted by the then U.S. Naval Reservation
Office, Olongapo, Zambales. The late Felix Ting Ho was never the
owner and never claimed ownership of the land. (Emphasis supplied)
The affidavit, Exhibit B, was subscribed and sworn to before a Land
Investigator of the Bureau of Lands and in the said affidavit, the late
Felix Ting Ho expressly acknowledged that because he is a Chinese
citizen he is not qualified to purchase public lands under Philippine laws
for which reason he thereby transfers, relinquishes and renounces all his
rights and interests in the subject land, including all the improvements
thereon to his son, the defendant Vicente Teng Gui, who is of legal age,
single, Filipino citizen and qualified under the public land law to acquire
lands.

xxxxxxxxx
 Defendant Vicente Teng Gui acquired the subject land by
sales patent or purchase from the government and not from his
father, the late Felix Ting Ho. It cannot be said that he acquired or
bought the land in trust for his father because on December 5, 1977
when the subject land was sold to him by the government and on January
3, 1978 when Miscellaneous Sales Patent No. 7457 was issued, the late
Felix Ting Ho was already dead, having died on June 6, 1970 (TSN,
January 10, 1990, p. 4).[11]
Regarding the properties erected over the said lot, the CA held that the finding that
the sales of the two-storey commercial and residential buildings and sari-sari store
to Victoria Cabasal and Gregorio Fontela and subsequently to respondent were
without consideration and simulated is supported by evidence, which clearly
establishes that these properties should form part of the estate of the late spouses
Felix Ting Ho and Leonila Cabasal.

Thus, while the appellate court dismissed the complaint for partition with
respect to the lot in question, it awarded the petitioners a four-fifths (4/5) share of
the subject properties erected on the said lot. The dispositive portion of the CA
ruling reads as follows:

WHEREFORE, premises considered, the decision appealed from is

REVERSED and SET ASIDE and NEW JUDGMENT rendered:

1. DISMISSING plaintiff-appellants complaint with respect to the

subject parcel of land, identified as Lot No. 418, Ts-308, covered by
OCT No. P-1064, in the name of plaintiff-appellants [should be
defendant-appellant];

2. DECLARING that the two-storey commercial building, the two-storey

residential building and sari-sari store (formerly a bakery), all erected on
the subject lot No. 418, Ts-308, form part of the estate of the deceased
spouses Felix Ting Ho and Leonila Cabasal, and that plaintiff-appellants
are entitled to four-fifths (4/5) thereof, the remaining one-fifth (1/5)
being the share of the defendant-appellant;

3. DIRECTING the court a quo to partition the said two-storey

commercial building, two-storey residential building and sari-sari store
(formerly a bakery) in accordance with Rule 69 of the Revised Rules of
Court and pertinent provisions of the Civil Code;
 4. Let the records of this case be remanded to the court of origin for
further proceedings;

5. Let a copy of this decision be furnished the Office of the Solicitor

General; and

6. There is no pronouncement as to costs.

SO ORDERED.[12]
Both petitioners and respondent filed their respective motions for
reconsideration from this ruling, which were summarily denied by the CA in its
Resolution[13] dated August 5, 1997. Hence, this petition.

According to the petitioners, the CA erred in declaring that Lot No. 418, Ts-
308 does not form part of the estate of the deceased Felix Ting Ho and is owned
alone by respondent. Respondent, on the other hand, contends that he should be
declared the sole owner not only of Lot No. 418, Ts-308 but also of the properties
erected thereon and that the CA erred in not dismissing the complaint for partition
with respect to the said properties.

The primary issue for consideration is whether both Lot No. 418, Ts-308 and
the properties erected thereon should be included in the estate of the deceased Felix
Ting Ho.

We affirm the CA ruling.

With regard to Lot No. 418, Ts-308, Article XIII, Section 1 of the 1935
Constitution states:

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
(Emphasis supplied)

Our fundamental law cannot be any clearer. The right to acquire lands of the
public domain is reserved for Filipino citizens or corporations at least sixty percent
of the capital of which is owned by Filipinos. Thus, in Krivenko v. Register of
Deeds,[14] the Court enunciated that:

Perhaps the effect of our construction is to preclude aliens, admitted

freely into the Philippines from owning sites where they may build
their homes. But if this is the solemn mandate of the Constitution,
we will not attempt to compromise it even in the name of amity or
equity. We are satisfied, however, that aliens are not completely
excluded by the Constitution from the use of lands for residential
purposes. Since their residence in the Philippines is temporary, they may
be granted temporary rights such as a lease contract which is not
forbidden by the Constitution. Should they desire to remain here forever
and share our fortunes and misfortunes, Filipino citizenship is not
impossible to acquire.[15]
In the present case, the father of petitioners and respondent was a Chinese
citizen; therefore, he was disqualified from acquiring and owning real property in
the Philippines. In fact, he was only occupying the subject lot by virtue of the
permission granted him by the then U.S. Naval Reservation Office of Olongapo,
Zambales. As correctly found by the CA, the deceased Felix Ting Ho was never
the owner of the subject lot in light of the constitutional proscription and the
respondent did not at any instance act as the dummy of his father.

On the other hand, the respondent became the owner of Lot No. 418, Ts-308
when he was granted Miscellaneous Sales Patent No. 7457 on January 3, 1978, by
the Secretary of Natural Resources By Authority of the President of the
Philippines, and when Original Certificate of Title No. P-1064 was
correspondingly issued in his name. The grant of the miscellaneous sales patent by
the Secretary of Natural Resources, and the corresponding issuance of the original
certificate of title in his name, show that the respondent possesses all the
qualifications and none of the disqualifications to acquire alienable and disposable
lands of the public domain. These issuances bear the presumption of regularity in
their performance in the absence of evidence to the contrary.
Registration of grants and patents involving public lands is governed by Section
122 of Act No. 496, which was subsequently amended by Section 103 of
Presidential Decree No. 1529, viz:

Sec. 103. Certificate of title pursuant 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. It
shall be the duty of the official issuing the instrument of alienation,
grant, patent or conveyance in behalf of the Government to cause such
instrument to be filed with the Register of Deeds of the province or city
where the land lies, and to be there registered like other deeds and
conveyance, whereupon a certificate of title shall be entered as in other
cases of registered land, and an owners duplicate issued to the
grantee. The deeds, grant, patent or instrument of conveyance from the
Government to the grantee shall not take effect as a conveyance or bind
the land, but shall operate only as a contract between the Government
and the grantee and as evidence of authority to the Register of Deeds to
make registration. It is the act of registration that shall be the operative
act to affect and convey the land, and in all cases under this Decree
registration shall be made in the office of the Register of Deeds of the
province or city where the land lies. The fees for registration shall be
paid by the grantee. After due registration and issuance of the
certificate of title, such land shall be deemed to be registered land to
all intents and purposes under this Decree.[16] (Emphasis supplied)

Under the law, a certificate of title issued pursuant to any grant or patent involving
public land is as conclusive and indefeasible as any other certificate of title issued
to private lands in the ordinary or cadastral registration proceeding. The effect of
the registration of a patent and the issuance of a certificate of title to the patentee is
to vest in him an incontestable title to the land, in the same manner as if ownership
had been determined by final decree of the court, and the title so issued is
absolutely conclusive and indisputable, and is not subject to collateral attack.[17]
Nonetheless, petitioners invoke equity considerations and claim that the ruling of
the RTC that an implied trust was created between respondent and their father with
respect to the subject lot should be upheld.
This contention must fail because the prohibition against an alien from owning
lands of the public domain is absolute and not even an implied trust can be
permitted to arise on equity considerations.

In the case of Muller v. Muller,[18] wherein the respondent, a German

national, was seeking reimbursement of funds claimed by him to be given in trust
to his petitioner wife, a Philippine citizen, for the purchase of a property in
Antipolo, the Court, in rejecting the claim, ruled that:

Respondent was aware of the constitutional prohibition and

expressly admitted his knowledge thereof to this Court. He declared that
he had the Antipolo property titled in the name of the petitioner because
of the said prohibition. His attempt at subsequently asserting or claiming
a right on the said property cannot be sustained.

The Court of Appeals erred in holding that an implied trust

was created and resulted by operation of law in view of petitioner's
marriage to respondent. Save for the exception provided in cases of
hereditary succession, respondent's disqualification from owning
lands in the Philippines is absolute. Not even an ownership in trust is
allowed. Besides, where the purchase is made in violation of an existing
statute and in evasion of its express provision, no trust can result in favor
of the party who is guilty of the fraud. To hold otherwise would allow
circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but
also a court of equity, is likewise misplaced. It has been held that equity
as a rule will follow the law and will not permit that to be done indirectly
which, because of public policy, cannot be done directly...[19]

Coming now to the issue of ownership of the properties erected on the

subject lot, the Court agrees with the finding of the trial court, as affirmed by the
appellate court, that the series of transactions resorted to by the deceased were
simulated in order to preserve the properties in the hands of the family. The records
show that during all the time that the properties were allegedly sold to the spouses
Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same
to respondent in 1961, the petitioners and respondent, along with their parents,
remained in possession and continued to live in said properties.
 However, the trial court concluded that:

In fairness to the defendant, although the Deeds of Sale executed by

Felix Ting Ho regarding the improvements in favor of Victoria Cabasal
and Gregorio Fontela and the subsequent transfer of the same by
Gregorio Fontela and Victoria Cabasal to the defendant are all simulated,
yet, pursuant to Article 1471 of the New Civil Code it can be
assumed that the intention of Felix Ting Ho in such transaction was
to give and donate the improvements to his eldest son the defendant
Vicente Teng Gui [20]

Its finding was based on Article 1471 of the Civil Code, which provides that:

Art. 1471. If the price is simulated, the sale is void, but the act
may be shown to have been in reality a donation, or some other act or
contract.[21]

The Court holds that the reliance of the trial court on the provisions of
Article 1471 of the Civil Code to conclude that the simulated sales were a valid
donation to the respondent is misplaced because its finding was based on a mere
assumption when the law requires positive proof.

The respondent was unable to show, and the records are bereft of any
evidence, that the simulated sales of the properties were intended by the deceased
to be a donation to him. Thus, the Court holds that the two-storey residential house,
two-storey residential building and sari-sari store form part of the estate of the late
spouses Felix Ting Ho and Leonila Cabasal, entitling the petitioners to a four-fifths
(4/5) share thereof.

IN VIEW WHEREOF, the petition is DENIED. The assailed Decision

dated December 27, 1996 of the Court of Appeals in CA-G.R. CV No. 42993 is
hereby AFFIRMED.

SO ORDERED.
43. JG Summit Holdings Inc vs. CA

FACTS:

National Investment and Development Corporation (NIDC) and Kawasaki Heavy Industries entered into a
Joint Venture Agreement in a shipyard business named PHILSECO, with a shareholding of 60-40
respectively. NIDCs interest was later transferred to the National Government.

Pursuant to President Aquinos Proclamation No.5, which established the Committee on Privatization
(COP) and Asset Privatization Trust (APT), and allowed for the disposition of the governments non-
performing assets, the latter allowed Kawasaki Heavy Industries to choose a company to which it has
stockholdings, to top the winning bid of JG Summit Holdings over PHILSECO. JG Summit protested
alleging that such act would effectively increase Kawasakis interest in PHILSECOa shipyard is a public
utilityand thus violative of the Constitution.

ISSUE:

Whether or not respondents act is valid.

HELD:

No.

A shipyard such as PHILSECO being a public utility as provided by law, the following provision of the
Article XII of the Constitution applies:

Sec. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility
shall be granted except to citizens of the Philippines or to corporations or associations organized under
the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall
such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the common good so requires. The
State shall encourage equity participation in public utilities by the general public. The participation of
foreign investors in the governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers of such corporation or
association shall be citizens of the Philippines.

Notably, paragraph 1.4 of the JVA accorded the parties the right of first refusal under the same terms.
This phrase implies that when either party exercises the right of first refusal under paragraph 1.4, they
can only do so to the extent allowed them by paragraphs 1.2 and 1.3 of the JVA or under the proportion
of 60%-40% of the shares of stock. Thus, should the NIDC opt to sell its shares of stock to a third party,
Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock would not
exceed 40% of the entire shares of stock of SNS or PHILSECO. The NIDC, on the other hand, may
purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100%
Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign capitalization.

SPECIAL FIRST DIVISION

G.R. No. 124293 January 31, 2005

J.G. SUMMIT HOLDINGS, INC., petitioner,

vs.
COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET
PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents.

RESOLUTION

PUNO, J.:

For resolution before this Court are two motions filed by the petitioner, J.G. Summit Holdings, Inc. for
reconsideration of our Resolution dated September 24, 2003 and to elevate this case to the
Court En Banc. The petitioner questions the Resolution which reversed our Decision of November
20, 2000, which in turn reversed and set aside a Decision of the Court of Appeals promulgated on
July 18, 1995.

I. Facts

The undisputed facts of the case, as set forth in our Resolution of September 24, 2003, are as
follows:

On January 27, 1997, the National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of
Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National
Shipyard, Inc. (SNS) which subsequently became the Philippine Shipyard and Engineering
Corporation (PHILSECO). Under the JVA, the NIDC and KAWASAKI will contribute 330 million for
the capitalization of PHILSECO in the proportion of 60%-40% respectively. One of its salient
features is the grant to the parties of the right of first refusal should either of them decide to sell,
assign or transfer its interest in the joint venture, viz:

1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any
third party without giving the other under the same terms the right of first refusal. This provision shall
not apply if the transferee is a corporation owned or controlled by the GOVERNMENT or by a
KAWASAKI affiliate.

On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the
Philippine National Bank (PNB). Such interests were subsequently transferred to the National
Government pursuant to Administrative Order No. 14. On December 8, 1986, President Corazon C.
Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the
Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of
non-performing assets of the National Government. Thereafter, on February 27, 1987, a trust
agreement was entered into between the National Government and the APT wherein the latter was
named the trustee of the National Government's share in PHILSECO. In 1989, as a result of a quasi-
reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's
shareholdings in PHILSECO increased to 97.41% thereby reducing KAWASAKI's shareholdings to
2.59%.

In the interest of the national economy and the government, the COP and the APT deemed it best to
sell the National Government's share in PHILSECO to private entities. After a series of negotiations
between the APT and KAWASAKI, they agreed that the latter's right of first refusal under the JVA be
"exchanged" for the right to top by five percent (5%) the highest bid for the said shares. They further
agreed that KAWASAKI would be entitled to name a company in which it was a stockholder, which
could exercise the right to top. On September 7, 1990, KAWASAKI informed APT that Philyards
Holdings, Inc. (PHI)1 would exercise its right to top.

At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of
the JVA between NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for
the National Government's 87.6% equity share in PHILSECO. The provisions of the ASBR were
explained to the interested bidders who were notified that the bidding would be held on December 2,
1993. A portion of the ASBR reads:

1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National
Government's equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67%
of PHILSECO's outstanding capital stock), which will be sold as a whole block in accordance with
the rules herein enumerated.

xxx xxx xxx

2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board
of Trustees and the Committee on Privatization (COP).

2.1 APT reserves the right in its sole discretion, to reject any or all bids.
3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the
National Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED
MILLION (1,300,000,000.00).

xxx xxx xxx

6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting
following the bidding, for the purpose of determining whether or not it should be endorsed by the
APT Board of Trustees to the COP, and the latter approves the same. The APT shall advise
Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc., that the highest
bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS]
Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such
advice from APT within which to exercise their "Option to Top the Highest Bid" by offering a bid
equivalent to the highest bid plus five (5%) percent thereof.

6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. exercise their
"Option to Top the Highest Bid," they shall so notify the APT about such exercise of their option and
deposit with APT the amount equivalent to ten percent (10%) of the highest bid plus five percent
(5%) thereof within the thirty (30)-day period mentioned in paragraph 6.0 above. APT will then serve
notice upon Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. declaring them as
the preferred bidder and they shall have a period of ninety (90) days from the receipt of the APT's
notice within which to pay the balance of their bid price.

6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. fail to exercise their
"Option to Top the Highest Bid" within the thirty (30)-day period, APT will declare the highest bidder
as the winning bidder.

xxx xxx xxx

12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the
official bid forms, including any addenda or amendments thereto issued during the bidding period.
The bidder shall likewise be responsible for informing itself with respect to any and all conditions
concerning the PHILSECO Shares which may, in any manner, affect the bidder's proposal. Failure
on the part of the bidder to so examine and inform itself shall be its sole risk and no relief for error or
omission will be given by APT or COP. . . .

At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc.2 submitted a bid of Two
Billion and Thirty Million Pesos (2,030,000,000.00) with an acknowledgment of
KAWASAKI/[PHILYARDS'] right to top, viz:

4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on
APT's recommendation based on the result of this bidding. Should the COP approve the highest bid,
APT shall advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc.
that the highest bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc.
and/or [PHILYARDS] Holdings, Inc. shall then have a period of thirty (30) calendar days from the
date of receipt of such advice from APT within which to exercise their "Option to Top the Highest
Bid" by offering a bid equivalent to the highest bid plus five (5%) percent thereof.

As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993
"subject to the right of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's
bid by 5% as specified in the bidding rules."
On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid
on the grounds that: (a) the KAWASAKI/PHI consortium composed of KAWASAKI, [PHILYARDS],
Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4)
companies were the losing bidders thereby circumventing the law and prejudicing the weak winning
bidder; (b) only KAWASAKI could exercise the right to top; (c) giving the same option to top to PHI
constituted unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a
public bidding or auction sale; and (e) the JG Summit consortium was not estopped from questioning
the proceedings.

On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase
price of the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised
its option to top the highest bid and that the COP had approved the same on January 6, 1994. On
February 24, 1994, the APT and PHI executed a Stock Purchase Agreement. Consequently,
petitioner filed with this Court a Petition for Mandamus under G.R. No. 114057. On May 11, 1994,
said petition was referred to the Court of Appeals. On July 18, 1995, the Court of Appeals denied the
same for lack of merit. It ruled that the petition for mandamus was not the proper remedy to question
the constitutionality or legality of the right of first refusal and the right to top that was exercised by
KAWASAKI/PHI, and that the matter must be brought "by the proper party in the proper forum at the
proper time and threshed out in a full blown trial." The Court of Appeals further ruled that the right of
first refusal and the right to top are prima facie legal and that the petitioner, "by participating in the
public bidding, with full knowledge of the right to top granted to KAWASAKI/[PHILYARDS]
isestopped from questioning the validity of the award given to [PHILYARDS] after the latter
exercised the right to top and had paid in full the purchase price of the subject shares, pursuant to
the ASBR." Petitioner filed a Motion for Reconsideration of said Decision which was denied on
March 15, 1996. Petitioner thus filed a Petition for Certiorari with this Court alleging grave abuse of
discretion on the part of the appellate court.

On November 20, 2000, this Court rendered x x x [a] Decision ruling among others that the Court of
Appeals erred when it dismissed the petition on the sole ground of the impropriety of the special civil
action of mandamus because the petition was also one of certiorari. It further ruled that a shipyard
like PHILSECO is a public utility whose capitalization must be sixty percent (60%) Filipino-owned.
Consequently, the right to top granted to KAWASAKI under the Asset Specific Bidding Rules (ASBR)
drafted for the sale of the 87.67% equity of the National Government in PHILSECO is illegal not
only because it violates the rules on competitive bidding but more so, because it allows foreign
corporations to own more than 40% equity in the shipyard. It also held that "although the petitioner
had the opportunity to examine the ASBR before it participated in the bidding, it cannot be estopped
from questioning the unconstitutional, illegal and inequitable provisions thereof." Thus, this Court
voided the transfer of the national government's 87.67% share in PHILSECO to Philyard[s] Holdings,
Inc., and upheld the right of JG Summit, as the highest bidder, to take title to the said shares, viz:

WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and
Resolution of the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to
APT its bid price of Two Billion Thirty Million Pesos (2,030,000,000.00), less its bid deposit plus
interests upon the finality of this Decision. In turn, APT is ordered to:

(a) accept the said amount of 2,030,000,000.00 less bid deposit and interests from
petitioner;

(b) execute a Stock Purchase Agreement with petitioner;

(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6%
of PHILSECO's total capitalization;
 (d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One
Million Five Hundred Thousand Pesos (2,131,500,000.00); and

(e) cause the cancellation of the stock certificates issued to PHI.

SO ORDERED.

In separate Motions for Reconsideration, respondents submit[ted] three basic issues for x x x
resolution: (1) Whether PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI
can exercise its right of first refusal only up to 40% of the total capitalization of PHILSECO; and (3)
Whether the right to top granted to KAWASAKI violates the principles of competitive
bidding.3 (citations omitted)

In a Resolution dated September 24, 2003, this Court ruled in favor of the respondents. On the first
issue, we held that Philippine Shipyard and Engineering Corporation (PHILSECO) is not a public
utility, as by nature, a shipyard is not a public utility4 and that no law declares a shipyard to be a
public utility.5 On the second issue, we found nothing in the 1977 Joint Venture Agreement (JVA)
which prevents Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) from acquiring more
than 40% of PHILSECOs total capitalization.6 On the final issue, we held that the right to top granted
to KAWASAKI in exchange for its right of first refusal did not violate the principles of competitive
bidding.7

On October 20, 2003, the petitioner filed a Motion for Reconsideration8 and a Motion to Elevate This
Case to the Court En Banc.9 Public respondents Committee on Privatization (COP) and Asset
Privatization Trust (APT), and private respondent Philyards Holdings, Inc. (PHILYARDS) filed their
Comments on J.G. Summit Holdings, Inc.s (JG Summits) Motion for Reconsideration and Motion to
Elevate This Case to the Court En Banc on January 29, 2004 and February 3, 2004, respectively.

II. Issues

Based on the foregoing, the relevant issues to resolve to end this litigation are the following:

1. Whether there are sufficient bases to elevate the case at bar to the Court en banc.

2. Whether the motion for reconsideration raises any new matter or cogent reason to warrant
a reconsideration of this Courts Resolution of September 24, 2003.

Motion to Elevate this Case to the

Court En Banc

The petitioner prays for the elevation of the case to the Court en banc on the following grounds:

1. The main issue of the propriety of the bidding process involved in the present case has
been confused with the policy issue of the supposed fate of the shipping industry which has
never been an issue that is determinative of this case.10

2. The present case may be considered under the Supreme Court Resolution dated
February 23, 1984 which included among en banc cases those involving a novel question of
law and those where a doctrine or principle laid down by the Court en banc or in division may
be modified or reversed.11
 3. There was clear executive interference in the judicial functions of the Court when the
Honorable Jose Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a
memorandum dated November 5, 2001, attaching a copy of the Foreign Chambers Report
dated October 17, 2001, which matter was placed in the agenda of the Court and noted by it
in a formal resolution dated November 28, 2001.12

Opposing J.G. Summits motion to elevate the case en banc, PHILYARDS points out the petitioners
inconsistency in previously opposing PHILYARDS Motion to Refer the Case to the Court En
Banc. PHILYARDS contends that J.G. Summit should now be estopped from asking that the case be
referred to the Court en banc. PHILYARDS further contends that the Supreme Court en banc is not
an appellate court to which decisions or resolutions of its divisions may be appealed citing Supreme
Court Circular No. 2-89 dated February 7, 1989.13 PHILYARDS also alleges that there is no novel
question of law involved in the present case as the assailed Resolution was based on well-settled
jurisprudence. Likewise, PHILYARDS stresses that the Resolution was merely an outcome of the
motions for reconsideration filed by it and the COP and APT and is "consistent with the inherent
power of courts to amend and control its process and orders so as to make them conformable to law
and justice. (Rule 135, sec. 5)"14 Private respondent belittles the petitioners allegations regarding
the change in ponente and the alleged executive interference as shown by former Secretary of
Finance Jose Isidro Camachos memorandum dated November 5, 2001 arguing that these do not
justify a referral of the present case to the Court en banc.

In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G.
Summit further argued that: its Opposition to the Office of the Solicitor Generals Motion to Refer is
different from its own Motion to Elevate; different grounds are invoked by the two motions; there was
unwarranted "executive interference"; and the change in ponente is merely noted in asserting that
this case should be decided by the Court en banc.15

We find no merit in petitioners contention that the propriety of the bidding process involved in the
present case has been confused with the policy issue of the fate of the shipping industry which,
petitioner maintains, has never been an issue that is determinative of this case. The Courts
Resolution of September 24, 2003 reveals a clear and definitive ruling on the propriety of the bidding
process. In discussing whether the right to top granted to KAWASAKI in exchange for its right of first
refusal violates the principles of competitive bidding, we made an exhaustive discourse on the rules
and principles of public bidding and whether they were complied with in the case at bar.16This Court
categorically ruled on the petitioners argument that PHILSECO, as a shipyard, is a public utility
which should maintain a 60%-40% Filipino-foreign equity ratio, as it was a pivotal issue. In doing so,
we recognized the impact of our ruling on the shipbuilding industry which was beyond avoidance.17

We reject petitioners argument that the present case may be considered under the Supreme Court
Resolution dated February 23, 1984 which included among en banc cases those involving a novel
question of law and those where a doctrine or principle laid down by the court en banc or in division
may be modified or reversed. The case was resolved based on basic principles of the right of first
refusal in commercial law and estoppel in civil law. Contractual obligations arising from rights of first
refusal are not new in this jurisdiction and have been recognized in numerous cases.18 Estoppel is
too known a civil law concept to require an elongated discussion. Fundamental principles on public
bidding were likewise used to resolve the issues raised by the petitioner. To be sure, petitioner leans
on the right to top in a public bidding in arguing that the case at bar involves a novel issue. We are
not swayed. The right to top was merely a condition or a reservation made in the bidding rules which
was fully disclosed to all bidding parties. In Bureau Veritas, represented by Theodor H.
Hunermann v. Office of the President, et al., 19 we dealt with this conditionality, viz:
x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28
April 1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the
bidders to the effect that the bidding shall be subject to the right of the government to reject
any and all bids subject to its discretion. In the case at bar, the government has made its
choice and unless an unfairness or injustice is shown, the losing bidders have no cause to
complain nor right to dispute that choice. This is a well-settled doctrine in this jurisdiction
and elsewhere."

The discretion to accept or reject a bid and award contracts is vested in the Government agencies
entrusted with that function. The discretion given to the authorities on this matter is of such wide
latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a
fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is
a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and
deliberation. This task can best be discharged by the Government agencies concerned, not by the
Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government
has transgressed its constitutional boundaries. But the Courts will not interfere with executive or
legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy
decision-making.

It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of
a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary
and whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935,
30 September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to
act at all in contemplation of law, where the power is exercised in an arbitrary and despotic manner
by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July
1988, 163 SCRA 489).

The facts in this case do not indicate any such grave abuse of discretion on the part of public
respondents when they awarded the CISS contract to Respondent SGS. In the "Invitation to
Prequalify and Bid" (Annex "C," supra), the CISS Committee made an express reservation of the
right of the Government to "reject any or all bids or any part thereof or waive any defects
contained thereon and accept an offer most advantageous to the Government." It is a well-
settled rule that where such reservation is made in an Invitation to Bid, the highest or lowest
bidder, as the case may be, is not entitled to an award as a matter of right (C & C Commercial
Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the lowest Bid or any Bid may be
rejected or, in the exercise of sound discretion, the award may be made to another than the lowest
bidder (A.C. Esguerra & Sons v. Aytona, supra, citing 43 Am. Jur., 788). (emphases supplied) 1awphi 1.nt

Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the
government in the bidding rules which was made known to all parties. It was a condition imposed
on all bidders equally, based on the APTs exercise of its discretion in deciding on how best
to privatize the governments shares in PHILSECO. It was not a whimsical or arbitrary condition
plucked from the ether and inserted in the bidding rules but a condition which the APT approved as
the best way the government could comply with its contractual obligations to KAWASAKI under the
JVA and its mandate of getting the most advantageous deal for the government. The right to top had
its history in the mutual right of first refusal in the JVA and was reached by agreement of the
government and KAWASAKI.

Further, there is no "executive interference" in the functions of this Court by the mere filing of a
memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely "noted"
to acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution
dated September 24, 2003 was decided unanimously by the Special First Division in favor of
the respondents.

Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court20 and
the Court en banc is not an appellate court to which decisions or resolutions of a Division may be
appealed.21

For all the foregoing reasons, we find no basis to elevate this case to the Court en banc.

Motion for Reconsideration

Three principal arguments were raised in the petitioners Motion for Reconsideration. First, that a fair
resolution of the case should be based on contract law, not on policy considerations; the contracts
do not authorize the right to top to be derived from the right of first refusal.22 Second, that neither the
right of first refusal nor the right to top can be legally exercised by the consortium which is not the
proper party granted such right under either the JVA or the Asset Specific Bidding Rules
(ASBR).23 Third, that the maintenance of the 60%-40% relationship between the National Investment
and Development Corporation (NIDC) and KAWASAKI arises from contract and from the
Constitution because PHILSECO is a landholding corporation and need not be a public utility to be
bound by the 60%-40% constitutional limitation.24

On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to
show compelling reasons to warrant a reconsideration of the Decision of the Court.25 PHILYARDS
denies that the Decision is based mainly on policy considerations and points out that it is premised
on principles governing obligations and contracts and corporate law such as the rule requiring
respect for contractual stipulations, upholding rights of first refusal, and recognizing the assignable
nature of contracts rights.26 Also, the ruling that shipyards are not public utilities relies on established
case law and fundamental rules of statutory construction. PHILYARDS stresses that KAWASAKIs
right of first refusal or even the right to top is not limited to the 40% equity of the latter.27 On the
landholding issue raised by J.G. Summit, PHILYARDS emphasizes that this is a non-issue and even
involves a question of fact. Even assuming that this Court can take cognizance of such question of
fact even without the benefit of a trial, PHILYARDS opines that landholding by PHILSECO at the
time of the bidding is irrelevant because what is essential is that ultimately a qualified entity would
eventually hold PHILSECOs real estate properties.28 Further, given the assignable nature of the
right of first refusal, any applicable nationality restrictions, including landholding limitations, would not
affect the right of first refusal itself, but only the manner of its exercise.29 Also, PHILYARDS argues
that if this Court takes cognizance of J.G. Summits allegations of fact regarding PHILSECOs
landholding, it must also recognize PHILYARDS assertions that PHILSECOs landholdings were
sold to another corporation.30 As regards the right of first refusal, private respondent explains that
KAWASAKIs reduced shareholdings (from 40% to 2.59%) did not translate to a deprivation or loss
of its contractually granted right of first refusal.31 Also, the bidding was valid because PHILYARDS
exercised the right to top and it was of no moment that losing bidders later joined PHILYARDS in
raising the purchase price.32

In cadence with the private respondent PHILYARDS, public respondents COP and APT contend:

1. The conversion of the right of first refusal into a right to top by 5% does not violate any
provision in the JVA between NIDC and KAWASAKI.

2. PHILSECO is not a public utility and therefore not governed by the constitutional
restriction on foreign ownership.
 3. The petitioner is legally estopped from assailing the validity of the proceedings of the
public bidding as it voluntarily submitted itself to the terms of the ASBR which included the
provision on the right to top.

4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact
that PHILYARDS formed a consortium to raise the required amount to exercise the right to
top the highest bid by 5% does not violate the JVA or the ASBR.

5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does
not apply to PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns
real property.

6. Petitioners motion to elevate the case to the Court en banc is baseless and would only
delay the termination of this case.33

In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the
public and private respondents in this wise:

1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders
through the exercise of a right to top, which is contrary to law and the constitution is null and
void for being violative of substantive due process and the abuse of right provision in the
Civil Code.

a. The bidders[] right to top was actually exercised by losing bidders.

b. The right to top or the right of first refusal cannot co-exist with a genuine
competitive bidding.

c. The benefits derived from the right to top were unwarranted.

2. The landholding issue has been a legitimate issue since the start of this case but is
shamelessly ignored by the respondents.

a. The landholding issue is not a non-issue.

b. The landholding issue does not pose questions of fact.

c. That PHILSECO owned land at the time that the right of first refusal was agreed
upon and at the time of the bidding are most relevant.

d. Whether a shipyard is a public utility is not the core issue in this case.

3. Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to
the right to top.

a. The history behind the birth of the right to top shows fraud and bad faith.

b. The right of first refusal was, indeed, "effectively useless."

4. Petitioner is not legally estopped to challenge the right to top in this case.
 a. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law
or against public policy.

b. Deception was patent; the right to top was an attractive nuisance.

c. The 10% bid deposit was placed in escrow.

J.G. Summits insistence that the right to top cannot be sourced from the right of first refusal is not
new and we have already ruled on the issue in our Resolution of September 24, 2003. We upheld
the mutual right of first refusal in the JVA.34 We also ruled that nothing in the JVA prevents
KAWASAKI from acquiring more than 40% of PHILSECOs total capitalization.35 Likewise, nothing in
the JVA or ASBR bars the conversion of the right of first refusal to the right to top. In sum, nothing
new and of significance in the petitioners pleading warrants a reconsideration of our ruling.

Likewise, we already disposed of the argument that neither the right of first refusal nor the right to
top can legally be exercised by the consortium which is not the proper party granted such right under
either the JVA or the ASBR. Thus, we held:

The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life
Assurance, Mitsui and ICTSI), has joined PHILYARDS in the latter's effort to raise 2.131 billion
necessary in exercising the right to top is not contrary to law, public policy or public morals. There is
nothing in the ASBR that bars the losing bidders from joining either the winning bidder (should the
right to top is not exercised) or KAWASAKI/PHI (should it exercise its right to top as it did), to raise
the purchase price. The petitioner did not allege, nor was it shown by competent evidence, that the
participation of the losing bidders in the public bidding was done with fraudulent intent. Absent any
proof of fraud, the formation by [PHILYARDS] of a consortium is legitimate in a free enterprise
system. The appellate court is thus correct in holding the petitioner estopped from questioning the
validity of the transfer of the National Government's shares in PHILSECO to respondent.36

Further, we see no inherent illegality on PHILYARDS act in seeking funding from parties who were
losing bidders. This is a purely commercial decision over which the State should not interfere absent
any legal infirmity. It is emphasized that the case at bar involves the disposition of shares in a
corporation which the government sought to privatize. As such, the persons with whom PHILYARDS
desired to enter into business with in order to raise funds to purchase the shares are basically its
business. This is in contrast to a case involving a contract for the operation of or construction of a
government infrastructure where the identity of the buyer/bidder or financier constitutes an important
consideration. In such cases, the government would have to take utmost precaution to protect public
interest by ensuring that the parties with which it is contracting have the ability to satisfactorily
construct or operate the infrastructure.

On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company,
KAWASAKI could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to
the constitutional prohibition on landholding by corporations with more than 40% foreign-owned
equity. It further argues that since KAWASAKI already held at least 40% equity in PHILSECO, the
right of first refusal was inutile and as such, could not subsequently be converted into the right to
top. 37 Petitioner also asserts that, at present, PHILSECO continues to violate the constitutional
provision on landholdings as its shares are more than 40% foreign-owned.38 PHILYARDS admits
that it may have previously held land but had already divested such landholdings.39 It contends,
however, that even if PHILSECO owned land, this would not affect the right of first refusal but only
the exercise thereof. If the land is retained, the right of first refusal, being a property right, could be
assigned to a qualified party. In the alternative, the land could be divested before the exercise of the
right of first refusal. In the case at bar, respondents assert that since the right of first refusal was
validly converted into a right to top, which was exercised not by KAWASAKI, but by PHILYARDS
which is a Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then there is no
violation of the Constitution.40 At first, it would seem that questions of fact beyond cognizance by this
Court were involved in the issue. However, the records show that PHILYARDS admits it had
owned land up until the time of the bidding.41 Hence, the only issue is whether KAWASAKI
had a valid right of first refusal over PHILSECO shares under the JVA considering that
PHILSECO owned land until the time of the bidding and KAWASAKI already held 40% of
PHILSECOs equity.

We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and
NIDC. First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI
and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-
shareholder before they are offered to a third party. The agreement of co-shareholders to
mutually grant this right to each other, by itself, does not constitute a violation of the
provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations.
As PHILYARDS correctly puts it, if PHILSECO still owns land, the right of first refusal can be validly
assigned to a qualified Filipino entity in order to maintain the 60%-40% ratio. This transfer, by itself,
does not amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The
transfer could be made either to a nominee or such other party which the holder of the right of first
refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of its
landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of
PHILSECOs equity. In fact, it can even be said that if the foreign shareholdings of a
landholding corporation exceeds 40%, it is not the foreign stockholders ownership of the
shares which is adversely affected but the capacity of the corporation to own land that is,
the corporation becomes disqualified to own land. This finds support under the basic corporate law
principle that the corporation and its stockholders are separate juridical entities. In this vein, the right
of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to
the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right
of first refusal. No law disqualifies a person from purchasing shares in a landholding
corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies
is the corporation from owning land. This is the clear import of the following provisions in the
Constitution:

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. The State may directly undertake such
activities, or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose capital is
owned by such citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other
than the development of water power, beneficial use may be the measure and limit of the grant.

xxx xxx xxx

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or

conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain.42(emphases supplied)
The petitioner further argues that "an option to buy land is void in itself (Philippine Banking
Corporation v. Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a
Japanese corporation, is similarly void. Hence, the right to top, sourced from the right of first refusal,
is also void."43 Contrary to the contention of petitioner, the case of Lui She did not that say "an
option to buy land is void in itself," for we ruled as follows:

x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an

alien the right to buy real property on condition that he is granted Philippine citizenship. As
this Court said in Krivenko vs. Register of Deeds:

[A]liens are not completely excluded by the Constitution from the use of lands for residential
purposes. Since their residence in the Philippines is temporary, they may be granted temporary
rights such as a lease contract which is not forbidden by the Constitution. Should they desire to
remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to
acquire.

But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue
of which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50
years, then it becomes clear that the arrangement is a virtual transfer of ownership whereby
the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus
utendi, jus fruendi and jus abutendi) but also of the right to dispose of it (jus disponendi)
rights the sum total of which make up ownership. It is just as if today the possession is
transferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all
the rights of which ownership is made up are consolidated in an alien. And yet this is just exactly
what the parties in this case did within this pace of one year, with the result that Justina Santos'[s]
ownership of her property was reduced to a hollow concept. If this can be done, then the
Constitutional ban against alien landholding in the Philippines, as announced in Krivenko vs.
Register of Deeds, is indeed in grave peril.44 (emphases supplied; Citations omitted)

In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership
as the owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner
of the land from selling, donating, mortgaging, or encumbering the property during the 50-year
period of the option to buy. This is not so in the case at bar where the mutual right of first refusal in
favor of NIDC and KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact,
the case at bar involves a right of first refusal over shares of stock while the Lui She case
involves an option to buy the land itself. As discussed earlier, there is a distinction between the
shareholders ownership of shares and the corporations ownership of land arising from the separate
juridical personalities of the corporation and its shareholders.

We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to
violate the Constitution as its foreign equity is above 40% and yet owns long-term leasehold
rights which are real rights.45It cites Article 415 of the Civil Code which includes in the definition of
immovable property, "contracts for public works, and servitudes and other real rights over immovable
property."46 Any existing landholding, however, is denied by PHILYARDS citing its recent financial
statements.47 First, these are questions of fact, the veracity of which would require introduction of
evidence. The Court needs to validate these factual allegations based on competent and reliable
evidence. As such, the Court cannot resolve the questions they pose. Second, J.G. Summit
misreads the provisions of the Constitution cited in its own pleadings, to wit:

29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40%
corporation, and this violates the Constitution x x x The violation continues to this day because under
the law, it continues to own real property
 xxx xxx xxx

32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution
(the JVA was signed in 1977), provided:

"Save in cases of hereditary succession, no private lands shall be transferred or conveyed except
to individuals, corporations, or associations qualified to acquire or hold lands of the public domain."

32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution.

32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public
domain are corporations at least 60% of which is owned by Filipino citizens (Sec. 22,
Commonwealth Act 141, as amended). (emphases supplied)

As correctly observed by the public respondents, the prohibition in the Constitution applies only to
ownership of land.48 It does not extend to immovable or real property as defined under Article
415 of the Civil Code.Otherwise, we would have a strange situation where the ownership of
immovable property such as trees, plants and growing fruit attached to the land49 would be limited to
Filipinos and Filipino corporations only.

III.

WHEREFORE, in view of the foregoing, the petitioners Motion for Reconsideration is DENIED WITH
FINALITY and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the
Court En Banc is likewise DENIED for lack of merit.

SO ORDERED.

44. RD of Rizal vs. Ung Siu Temple

REGISTER OF DEEDS vs UNG SIU SI TEMPLEGR. No. L-6776 May 21,1955FACTS:

A Filipino citizen executed a deed of donation in favor of the Ung Siu Si Temple, an unregistered
religiousorganization that operated through three trustees all of Chinese nationality. The Register of
Deeds refused torecord the deed of donation executed in due form arguing that the Consitution
provides that acquisition of landis limited to Filipino citizens, or to corporations or associations at least
60% of which is owned by suchcitizens.

ISSUE:

Whether a deed of donation of a parcel of land executed in favor of a religious organization whose
founder,trustees and administrator are Chinese citizens should be registered or not.

RULING:Sec. 5, Art. 13 of the Constitution provides that save in cases of hereditary succession, no
privateagricultural land shall be transferred or assigned except to individuals, corporations, or
associationsqualified to hold lands of the public domain in the Philippines. The Constitution does not
make anyexception in favor of religious associations

.The fact that appellant has no capital stock does not exempt it from the Constitutional inhibition, since
itsmember are of foreign nationality. The purpose of the 60% requirement is to ensure that corporations
or associations allowed to acquire agricultural lands or to exploit natural resources shall be controlled
byFilipinos; and

the spirit of the Constitution demands that in the absence of capital stock, controllingmembership
should be composed of Filipino citizens.

As to the complaint that the disqualification under Art. 13 of the Constitution violated the freedom of
religion,the Court was not convinced that land tenure is indispensable to the free exercise and
enjoyment of religious profession or worship

45. Republic vs. T.A.N Properties Inc.

REPUBLIC OF THE PHILIPPINES, G.R. No. 154953

Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

T.A.N. PROPERTIES, INC., Promulgated:

Respondent. June 26, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case
Before the Court is a petition for review[1] assailing the 21 August
2002 Decision[2] of the Court of Appeals in CA-G.R. CV No. 66658. The Court of
Appeals affirmed in totothe 16 December 1999 Decision[3] of the Regional Trial
Court of Tanauan, Batangas, Branch 6 (trial court) in Land Registration Case No.
T-635.

The Antecedent Facts

This case originated from an Application for Original Registration of Title filed by
T.A.N. Properties, Inc. covering Lot 10705-B of the subdivision plan Csd-04-
019741 which is a portion of the consolidated Lot 10705, Cad-424, Sto. Tomas
Cadastre. The land, with an area of 564,007 square meters, or 56.4007 hectares, is
located at San Bartolome, Sto. Tomas, Batangas.

On 31 August 1999, the trial court set the case for initial hearing at 9:30 a.m. on 11
November 1999. The Notice of Initial Hearing was published in the Official
Gazette, 20 September 1999 issue, Volume 95, No. 38, pages 6793 to 6794,[4] and
in the 18 October 1999 issue of Peoples Journal Taliba,[5] a newspaper of general
circulation in the Philippines. The Notice of Initial Hearing was also posted in a
conspicuous place on the bulletin board of the Municipal Building of Sto. Tomas,
Batangas, as well as in a conspicuous place on the land.[6] All adjoining owners and
all government agencies and offices concerned were notified of the initial
hearing.[7]

On 11 November 1999, when the trial court called the case for initial hearing, there
was no oppositor other than the Opposition dated 7 October 1999 of the Republic
of the Philippines represented by the Director of Lands (petitioner). On 15
November 1999, the trial court issued an Order[8] of General Default against the
whole world except as against petitioner.

During the hearing on 19 November 1999, Ceferino Carandang (Carandang)

appeared as oppositor. The trial court gave Carandang until 29 November
1999 within which to file his written opposition.[9] Carandang failed to file his
written opposition and to appear in the succeeding hearings. In an
Order[10] dated 13 December 1999, the trial court reinstated the Order of General
Default.

During the hearings conducted on 13 and 14 December 1999, respondent presented

three witnesses: Anthony Dimayuga Torres (Torres), respondents Operations
Manager and its authorized representative in the case; Primitivo Evangelista
(Evangelista), a 72-year old resident of San Bartolome, Sto. Tomas, Batangas since
birth; and Regalado Marquez, Records Officer II of the Land Registration
Authority (LRA), Quezon City.

The testimonies of respondents witnesses showed that Prospero Dimayuga

(Kabesang Puroy) had peaceful, adverse, open, and continuous possession of the
land in the concept of an owner since 1942. Upon his death, Kabesang Puroy was
succeeded by his son Antonio Dimayuga (Antonio). On 27 September 1960,
Antonio executed a Deed of Donation covering the land in favor of one of his
children, Fortunato Dimayuga (Fortunato). Later, however, Antonio gave
Fortunato another piece of land. Hence, on 26 April 1961, Antonio executed a
Partial Revocation of Donation, and the land was adjudicated to one of Antonios
children, Prospero Dimayuga (Porting).[11] On 8 August 1997, Porting sold the land
to respondent.

The Ruling of the Trial Court

In its 16 December 1999 Decision, the trial court adjudicated the land in favor of
respondent.

The trial court ruled that a juridical person or a corporation could apply for
registration of land provided such entity and its predecessors-in-interest have
possessed the land for 30 years or more. The trial court ruled that the facts showed
that respondents predecessors-in-interest possessed the land in the concept of an
owner prior to 12 June 1945, which possession converted the land to private
property.

The dispositive portion of the trial courts Decision reads:

 WHEREFORE, and upon previous confirmation of the Order of General
Default, the Court hereby adjudicates and decrees Lot 10705-B, identical
to Lot 13637, Cad-424, Sto. Tomas Cadastre, on plan Csd-04-019741,
situated in Barangay of San Bartolome, Municipality of Sto. Tomas,
Province of Batangas, with an area of 564,007 square meters, in favor of
and in the name of T.A.N. Properties, Inc., a domestic corporation duly
organized and existing under Philippine laws with principal office at
19th Floor, PDCP Bank Building, 8737 Paseo de Roxas, Makati City.

Once this Decision shall have become final, let the corresponding decree
of registration be issued.

SO ORDERED.[12]

Petitioner appealed from the trial courts Decision. Petitioner alleged that the trial
court erred in granting the application for registration absent clear evidence that the
applicant and its predecessors-in-interest have complied with the period of
possession and occupation as required by law. Petitioner alleged that the
testimonies of Evangelista and Torres are general in nature. Considering the area
involved, petitioner argued that additional witnesses should have been presented to
corroborate Evangelistas testimony.

The Ruling of the Court of Appeals

In its 21 August 2002 Decision, the Court of Appeals affirmed in toto the trial
courts Decision.

The Court of Appeals ruled that Evangelistas knowledge of the possession and
occupation of the land stemmed not only from the fact that he worked there for
three years but also because he and Kabesang Puroy were practically neighbors.
On Evangelistas failure to mention the name of his uncle who continuously worked
on the land, the Court of Appeals ruled that Evangelista should not be faulted as he
was not asked to name his uncle when he testified. The Court of Appeals also ruled
that at the outset, Evangelista disclaimed knowledge of Fortunatos relation to
Kabesang Puroy, but this did not affect Evangelistas statement that Fortunato took
over the possession and cultivation of the land after Kabesang Puroys death. The
Court of Appeals further ruled that the events regarding the acquisition and
disposition of the land became public knowledge because San Bartolome was a
small community. On the matter of additional witnesses, the Court of Appeals
ruled that petitioner failed to cite any law requiring the corroboration of the sole
witness testimony.

The Court of Appeals further ruled that Torres was a competent witness since he
was only testifying on the fact that he had caused the filing of the application for
registration and that respondent acquired the land from Porting.

Petitioner comes to this Court assailing the Court of Appeals Decision. Petitioner
raises the following grounds in its Memorandum:
The Court of Appeals erred on a question of law in allowing the grant
of title to applicant corporation despite the following:

1. Absence of showing that it or its predecessors-in-interest had

open, continuous, exclusive, and notorious possession and
occupation in the concept of an owner since 12 June 1945 or
earlier; and

2. Disqualification of applicant corporation to acquire the

subject tract of land.[13]

The Issues

The issues may be summarized as follows:

1. Whether the land is alienable and disposable;

2. Whether respondent or its predecessors-in-interest had open, continuous,
exclusive, and notorious possession and occupation of the land in the
concept of an owner since June 1945 or earlier; and

3. Whether respondent is qualified to apply for registration of the land under

the Public Land Act.
 The Ruling of this Court

The petition has merit.

Respondent Failed to Prove

that the Land is Alienable and Disposable

Petitioner argues that anyone who applies for registration has the burden of
overcoming the presumption that the land forms part of the public
domain. Petitioner insists that respondent failed to prove that the land is no longer
part of the public domain.

The well-entrenched rule is that all lands not appearing to be clearly of private
dominion presumably belong to the State.[14] The onus to overturn, by
incontrovertible evidence, the presumption that the land subject of an application
for registration is alienable and disposable rests with the applicant.[15]

In this case, respondent submitted two certifications issued by the Department of

Environment and Natural Resources (DENR). The 3 June 1997 Certification by the
Community Environment and Natural Resources Offices
[16]
(CENRO), Batangas City, certified that lot 10705, Cad-424, Sto. Tomas
Cadastre situated at Barangay San Bartolome, Sto. Tomas, Batangas with an area
of 596,116 square meters falls within the ALIENABLE AND DISPOSABLE
ZONE under Project No. 30, Land Classification Map No. 582 certified [on] 31
December 1925. The second certification[17] in the form of a memorandum to the
trial court, which was issued by the Regional Technical Director, Forest
Management Services of the DENR (FMS-DENR), stated that the subject area falls
within an alienable and disposable land, Project No. 30 of Sto. Tomas, Batangas
certified on Dec. 31, 1925 per LC No. 582.

The certifications are not sufficient. DENR Administrative Order (DAO) No.
20,[18] dated 30 May 1988, delineated the functions and authorities of the offices
within the DENR. Under DAO No. 20, series of 1988, the CENRO issues
certificates of land classification status for areas below 50 hectares. The Provincial
Environment and Natural Resources Offices (PENRO) issues certificate of land
classification status for lands covering over 50 hectares. DAO No. 38,[19] dated 19
April 1990, amended DAO No. 20, series of 1988.DAO No. 38, series of 1990
retained the authority of the CENRO to issue certificates of land classification
status for areas below 50 hectares, as well as the authority of the PENRO to issue
certificates of land classification status for lands covering over 50 hectares.[20] In
this case, respondent applied for registration of Lot 10705-B. The area covered
by Lot 10705-B is over 50 hectares (564,007 square meters). The CENRO
certificate covered the entire Lot 10705 with an area of 596,116 square meters
which, as per DAO No. 38, series of 1990, is beyond the authority of the CENRO
to certify as alienable and disposable.

The Regional Technical Director, FMS-DENR, has no authority under DAO Nos.
20 and 38 to issue certificates of land classification. Under DAO No. 20, the
Regional Technical Director, FMS-DENR:

1. Issues original and renewal of ordinary minor products (OM) permits

except rattan;
2. Approves renewal of resaw/mini-sawmill permits;
3. Approves renewal of special use permits covering over five hectares for
public infrastructure projects; and
4. Issues renewal of certificates of registration for logs, poles, piles, and
lumber dealers.

Under DAO No. 38, the Regional Technical Director, FMS-DENR:

1. Issues original and renewal of ordinary minor [products] (OM) permits

except rattan;
2. Issues renewal of certificate of registration for logs, poles, and piles and
lumber dealers;
3. Approves renewal of resaw/mini-sawmill permits;
4. Issues public gratuitous permits for 20 to 50 cubic meters within calamity
declared areas for public infrastructure projects; and
5. Approves original and renewal of special use permits covering over five
hectares for public infrastructure projects.

Hence, the certification issued by the Regional Technical Director, FMS-DENR, in

the form of a memorandum to the trial court, has no probative value.
Further, it is not enough for the PENRO or CENRO to certify that a land is
alienable and disposable. The applicant for land registration must prove that the
DENR Secretary had approved the land classification and released the land of the
public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification through
survey by the PENRO or CENRO. In addition, the applicant for land registration
must present a copy of the original classification approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official records. These
facts must be established to prove that the land is alienable and
disposable. Respondent failed to do so because the certifications presented by
respondent do not, by themselves, prove that the land is alienable and disposable.

Only Torres, respondents Operations Manager, identified the certifications

submitted by respondent. The government officials who issued the
certifications were not presented before the trial court to testify on their
contents. The trial court should not have accepted the contents of the certifications
as proof of the facts stated therein. Even if the certifications are presumed duly
issued and admissible in evidence, they have no probative value in establishing that
the land is alienable and disposable.

Public documents are defined under Section 19, Rule 132 of the Revised Rules on
Evidence as follows:

(a) The written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and public officers,
whether of the Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public except last wills
and testaments; and

(c) Public records, kept in the Philippines, of private documents

required by law to be entered therein.
Applying Section 24 of Rule 132, the record of public documents referred to in
Section 19(a), when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having legal custody of
the record, or by his deputy x x x. The CENRO is not the official repository or
legal custodian of the issuances of the DENR Secretary declaring public lands as
alienable and disposable. The CENRO should have attached an official
publication[21] of the DENR Secretarys issuance declaring the land alienable and
disposable.

Section 23, Rule 132 of the Revised Rules on Evidence provides:

Sec. 23. Public documents as evidence. 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 stated therein. All other public
documents are evidence, even against a third person, of the fact which
gave rise to their execution and of the date of the latter.

The CENRO and Regional Technical Director, FMS-DENR, certifications do not

fall within the class of public documents contemplated in the first sentence of
Section 23 of Rule 132. The certifications do not reflect entries in public records
made in the performance of a duty by a public officer, such as entries made by the
Civil Registrar[22] in the books of registries, or by a ship captain in the ships
logbook.[23] The certifications are not the certified copies or authenticated
reproductions of original official records in the legal custody of a government
office. The certifications are not even records of public documents.[24] The
certifications are conclusions unsupported by adequate proof, and thus have no
probative value.[25] Certainly, the certifications cannot be considered prima facie
evidence of the facts stated therein.

The CENRO and Regional Technical Director, FMS-DENR, certifications do not

prove that Lot 10705-B falls within the alienable and disposable land as
proclaimed by the DENR Secretary. Such government certifications do not, by
their mere issuance, prove the facts stated therein.[26] Such government
certifications may fall under the class of documents contemplated in the second
sentence of Section 23 of Rule 132. As such, the certifications are prima facie
evidence of their due execution and date of issuance but they do not constitute
prima facie evidence of the facts stated therein.

The Court has also ruled that a document or writing admitted as part of the
testimony of a witness does not constitute proof of the facts stated therein. [27] Here,
Torres, a private individual and respondents representative, identified the
certifications but the government officials who issued the certifications did not
testify on the contents of the certifications. As such, the certifications cannot be
given probative value.[28] The contents of the certifications are hearsay because
Torres was incompetent to testify on the veracity of the contents of the
certifications.[29] Torres did not prepare the certifications, he was not an officer of
CENRO or FMS-DENR, and he did not conduct any verification survey whether
the land falls within the area classified by the DENR Secretary as alienable and
disposable.

Petitioner also points out the discrepancy as to when the land allegedly became
alienable and disposable. The DENR Secretary certified that based on Land
Classification Map No. 582, the land became alienable and disposable on 31
December 1925. However, the certificate on the blue print plan states that it
became alienable and disposable on 31 December 1985.
We agree with petitioner that while the certifications submitted by respondent
show that under the Land Classification Map No. 582, the land became alienable
and disposable on 31 December 1925, the blue print plan states that it became
alienable and disposable on 31 December 1985. Respondent alleged that the blue
print plan merely serves to prove the precise location and the metes and bounds of
the land described therein x x x and does not in any way certify the nature and
classification of the land involved.[30] It is true that the notation by a surveyor-
geodetic engineer on the survey plan that the land formed part of the alienable and
disposable land of the public domain is not sufficient proof of the lands
classification.[31] However, respondent should have at least presented proof that
would explain the discrepancy in the dates of classification. Marquez, LRA
Records Officer II, testified that the documents submitted to the court consisting of
the tracing cloth plan, the technical description of Lot 10705-B, the approved
subdivision plan, and the Geodetic Engineers certification were faithful
reproductions of the original documents in the LRA office. He did not explain the
discrepancy in the dates. Neither was the Geodetic Engineer presented to explain
why the date of classification on the blue print plan was different from the other
certifications submitted by respondent.

There was No Open, Continuous, Exclusive, and Notorious

Possession and Occupation in the Concept of an Owner

Petitioner alleges that the trial courts reliance on the testimonies of Evangelista and
Torres was misplaced. Petitioner alleges that Evangelistas statement that the
possession of respondents predecessors-in-interest was open, public, continuous,
peaceful, and adverse to the whole world was a general conclusion of law rather
than factual evidence of possession of title. Petitioner alleges that respondent failed
to establish that its predecessors-in-interest had held the land openly, continuously,
and exclusively for at least 30 years after it was declared alienable and disposable.

We agree with petitioner.

Evangelista testified that Kabesang Puroy had been in possession of the land
before 1945. Yet, Evangelista only worked on the land for three years. Evangelista
testified that his family owned a lot near Kabesang Puroys land. The Court of
Appeals took note of this and ruled that Evangelistas knowledge of Kabesang
Puroys possession of the land stemmed not only from the fact that he had worked
thereat but more so that they were practically neighbors.[32] The Court of Appeals
observed:
In a small community such as that of San Bartolome, Sto. Tomas,
Batangas, it is not difficult to understand that people in the said
community knows each and everyone. And, because of such familiarity
with each other, news or events regarding the acquisition or disposition
for that matter, of a vast tract of land spreads like wildfire, thus, the
reason why such an event became of public knowledge to them.[33]

Evangelista testified that Kabesang Puroy was succeeded by Fortunato. However,

he admitted that he did not know the exact relationship between Kabesang Puroy
and Fortunato, which is rather unusual for neighbors in a small community. He did
not also know the relationship between Fortunato and Porting. In fact, Evangelistas
testimony is contrary to the factual finding of the trial court that Kabesang Puroy
was succeeded by his son Antonio, not by Fortunato who was one of Antonios
children. Antonio was not even mentioned in Evangelistas testimony.

The Court of Appeals ruled that there is no law that requires that the testimony of a
single witness needs corroboration. However, in this case, we find Evangelistas
uncorroborated testimony insufficient to prove that respondents predecessors-in-
interest had been in possession of the land in the concept of an owner for more
than 30 years. We cannot consider the testimony of Torres as sufficient
corroboration. Torres testified primarily on the fact of respondents acquisition of
the land. While he claimed to be related to the Dimayugas, his knowledge of their
possession of the land was hearsay. He did not even tell the trial court where he
obtained his information.

The tax declarations presented were only for the years starting 1955. While tax
declarations are not conclusive evidence of ownership, they constitute proof of
claim of ownership.[34] Respondent did not present any credible explanation why
the realty taxes were only paid starting 1955 considering the claim that the
Dimayugas were allegedly in possession of the land before 1945. The payment of
the realty taxes starting 1955 gives rise to the presumption that the Dimayugas
claimed ownership or possession of the land only in that year.
Land Application by a Corporation
Petitioner asserts that respondent, a private corporation, cannot apply for
registration of the land of the public domain in this case.

We agree with petitioner.

Section 3, Article XII of the 1987 Constitution provides:

Sec. 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 to
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.

The 1987 Constitution absolutely prohibits private corporations from acquiring

any kind of alienable land of the public domain. In Chavez v. Public Estates
Authority,[35] the Court traced the law on disposition of lands of the public
domain. Under the 1935 Constitution, there was no prohibition against private
corporations from acquiring agricultural land. The 1973 Constitution limited the
alienation of lands of the public domain to individuals who were citizens of the
Philippines. Under the 1973 Constitution, private corporations, even if wholly
owned by Filipino citizens, were no longer allowed to acquire alienable lands of
the public domain. The present 1987 Constitution continues the prohibition against
private corporations from acquiring any kind of alienable land of the public
domain.[36] The Court explained in Chavez:

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. x x x x

[I]f 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.[37]

In Director of Lands v. IAC,[38] the Court allowed the land registration proceeding
filed by Acme Plywood & Veneer Co., Inc. (Acme) for five parcels of land with an
area of 481,390 square meters, or 48.139 hectares, which Acme acquired from
members of the Dumagat tribe. The issue in that case was whether the title could
be confirmed in favor of Acme when the proceeding was instituted after the
effectivity of the 1973 Constitution which prohibited private corporations or
associations from holding alienable lands of the public domain except by lease not
to exceed 1,000 hectares. The Court ruled that the land was already private land
when Acme acquired it from its owners in 1962, and thus Acme acquired a
registrable title. Under the 1935 Constitution, private corporations could acquire
public agricultural lands not exceeding 1,024 hectares while individuals could
acquire not more than 144 hectares.[39]
In Director of Lands, the Court further ruled that open, exclusive, and undisputed
possession of alienable land for the period prescribed by law created the legal
fiction whereby the land, upon completion of the requisite period, ipso jure and
without the need of judicial or other sanction ceases to be public land and becomes
private property. The Court ruled:

Nothing can more clearly demonstrate the logical inevitability of

considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant from
the State than the dictum of the statute itself that the possessor(s) x x x
shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of
title x x x. No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would, in truth be little more
than a formality, at the most limited to ascertaining whether the
possession claimed is of the required character and length of time; and
registration thereunder would not confer title, but simply recognize a
title already vested. The proceedings would not originally convert the
land from public to private land, but only confirm such a conversion
already effected by operation of law from the moment the required
period of possession became complete.

x x x [A]lienable public land held by a possessor, personally or through

his predecessors-in-interest, openly, continuously and exclusively for the
prescribed statutory period of (30 years under The Public Land Act, as
amended) is converted to private property by the mere lapse or
completion of said period, ipso jure. Following that rule and on the basis
of the undisputed facts, the land subject of this appeal was already
private property at the time it was acquired from the Infiels by
Acme. Acme thereby acquired a registrable title, there being at the
time no prohibition against said corporations holding or owning private
land. x x x.[40] (Emphasis supplied)

Director of Lands is not applicable to the present case. In Director of

Lands, the land x x x was already private property at the time it was acquired
x x x by Acme. In this case, respondent acquired the land on 8 August 1997 from
Porting, who, along with his predecessors-in-interest, has not shown to have been,
as of that date, in open, continuous, and adverse possession of the land for 30 years
since 12 June 1945. In short, when respondent acquired the land from Porting, the
land was not yet private property.

For Director of Lands to apply and enable a corporation to file for registration of
alienable and disposable land, the corporation must have acquired the land when
its transferor had already a vested right to a judicial confirmation of title to the
land by virtue of his open, continuous and adverse possession of the land in the
concept of an owner for at least 30 years since 12 June 1945. Thus, in Natividad v.
Court of Appeals,[41] the Court declared:

Under the facts of this case and pursuant to the above rulings, the parcels
of land in question had already been converted to private ownership
through acquisitive prescription by the predecessors-in-interest of TCMC
when the latter purchased them in 1979. All that was needed was the
confirmation of the titles of the previous owners or predecessors-in-
interest of TCMC.

Being already private land when TCMC bought them in 1979, the
prohibition in the 1973 Constitution against corporations acquiring
alienable lands of the public domain except through lease (Article XIV,
Section 11, 1973 Constitution) did not apply to them for they were no
longer alienable lands of the public domain but private property.

What is determinative for the doctrine in Director of Lands to apply is for the
corporate applicant for land registration to establish that when it acquired the land,
the same was already private land by operation of law because the statutory
acquisitive prescriptive period of 30 years had already lapsed. The length of
possession of the land by the corporation cannot be tacked on to complete the
statutory 30 years acquisitive prescriptive period. Only an individual can avail of
such acquisitive prescription since both the 1973 and 1987 Constitutions prohibit
corporations from acquiring lands of the public domain.

Admittedly, a corporation can at present still apply for original registration of land
under the doctrine in Director of Lands. Republic Act No. 9176[42] (RA 9176)
further amended the Public Land Act[43] and extended the period for the filing of
applications for judicial confirmation of imperfect and incomplete titles to
alienable and disposable lands of the public domain until 31 December
2020. Thus:

Sec. 2. Section 47, Chapter VIII of the same Act, as amended, is hereby
further amended to read as follows:

Sec. 47. The persons specified in the next following section are
hereby granted time, not to extend beyond December 31, 2020 within
which to avail of the benefits of this Chapter: Provided, That this
period shall apply only where the area applied for does not exceed
twelve (12) hectares: Provided, further, That the several periods of
time designated by the President in accordance with Section Forty-
five of this Act shall apply also to the lands comprised in the
provisions of this Chapter, but this Section shall not be construed as
prohibiting any of said persons from acting under this Chapter at any
time prior to the period fixed by the President.

Sec. 3. All pending applications filed before the effectivity of this

amendatory Act shall be treated as having been filed in accordance with
the provisions of this Act.

Under RA 9176, the application for judicial confirmation is limited only to 12

hectares, consistent with Section 3, Article XII of the 1987 Constitution that a
private individual may only acquire not more than 12 hectares of alienable and
disposable land. Hence, respondent, as successor-in-interest of an individual owner
of the land, cannot apply for registration of land in excess of 12 hectares. Since
respondent applied for 56.4007 hectares, the application for the excess area of
44.4007 hectares is contrary to law, and thus void ab initio. In applying for land
registration, a private corporation cannot have any right higher than its
predecessor-in-interest from whom it derived its right. This assumes, of course,
that the corporation acquired the land, not exceeding 12 hectares, when the
land had already become private land by operation of law. In the present case,
respondent has failed to prove that any portion of the land was already private land
when respondent acquired it from Porting in 1997.
WHEREFORE, we SET ASIDE the 21 August 2002 Decision of the Court of
Appeals in CA-G.R. CV No. 66658 and the 16 December 1999 Decision of the
Regional Trial Court of Tanauan, Batangas, Branch 6 in Land Registration Case
No. T-635. We DENY the application for registration filed by T.A.N. Properties,
Inc.

SO ORDERED.

46. Roman Catholic Apostolic Administrator of Davao vs. Land registration Commission

FACTS:
October 4, 1954: Mateo L. Rodis, a Filipino citizen and resident of the City of Davao,
executed a deed of sale of a parcel of land in favor of the Roman Catholic Apostolic
Administrator of Davao Inc.(Roman), a corporation sole organized and existing in
accordance with Philippine Laws, with Msgr. Clovis Thibault, a Canadian citizen, as actual
incumbent.
The Register of Deeds of Davao for registration, having in mind a previous resolution of the
CFI in Carmelite Nuns of Davao were made to prepare an affidavit to the effect that 60% of
the members of their corp. were Filipino citizens when they sought to register in favor of
their congregation of deed of donation of a parcel of land, required it to submit a similar
affidavit declaring the same.
June 28, 1954: Roman in the letter expressed willingness to submit an affidavit but not in the
same tenor as the Carmelite Nuns because it had five incorporators while as a corporation
sole it has only one and it was ownership through donation and this was purchased
As the Register of the Land Registration Commissioner (LRC) : Deeds has some doubts as to
the registerability, the matter was referred to the Land Registration Commissioner en
consulta for resolution (section 4 of Republic Act No. 1151)
LRC:
In view of the provisions of Section 1 and 5 of Article XIII of the Philippine Constitution,
the vendee was not qualified to acquire private lands in the Philippines in the absence of
proof that at least 60 per centum of the capital, property, or assets of the Roman Catholic
Apostolic Administrator of Davao, Inc., was actually owned or controlled by Filipino
citizens, there being no question that the present incumbent of the corporation sole was a
Canadian citizen
ordered the Registered Deeds of Davao to deny registration of the deed of sale in the absence
of proof of compliance with such condition
action for mandamus was instituted by Roman alleging the land is held in true for the benefit
of the Catholic population of a place
ISSUE: W/N Roman is qualified to acquire private agricultural lands in the Philippines pursuant to
the provisions of Article XIII of the Constitution

HELD: YES. Register of Deeds of the City of Davao is ordered to register the deed of sale
 A corporation sole consists of one person only, and his successors (who will always be one at
a time), in some particular station, who are incorporated by law in order to give them some
legal capacities and advantages, particularly that of perpetuity, which in their natural persons
they could not have had.
In this sense, the king is a sole corporation; so is a bishop, or dens, distinct from their several
chapters
corporation sole
1. composed of only one persons, usually the head or bishop of the diocese, a unit which is
not subject to expansion for the purpose of determining any percentage whatsoever
2. only the administrator and not the owner of the temporalities located in the territory
comprised by said corporation sole and such temporalities are administered for and on
behalf of the faithful residing in the diocese or territory of the corporation sole
3. has no nationality and the citizenship of the incumbent and ordinary has nothing to do with
the operation, management or administration of the corporation sole, nor effects the
citizenship of the faithful connected with their respective dioceses or corporation sole.
Constitution demands that in the absence of capital stock, the controlling membership should
be composed of Filipino citizens. (Register of Deeds of Rizal vs. Ung Sui Si Temple)
undeniable proof that the members of the Roman Catholic Apostolic faith within the territory
of Davao are predominantly Filipino citizens
presented evidence to establish that the clergy and lay members of this religion fully covers
the percentage of Filipino citizens required by the Constitution
fact that the law thus expressly authorizes the corporations sole to receive bequests or gifts of
real properties (which were the main source that the friars had to acquire their big haciendas
during the Spanish regime), is a clear indication that the requisite that bequests or gifts of
real estate be for charitable, benevolent, or educational purposes, was, in the opinion of the
legislators, considered sufficient and adequate protection against the revitalization of
religious landholdings.
as in respect to the property which they hold for the corporation, they stand in position of
TRUSTEES and the courts may exercise the same supervision as in other cases of trust

47. Aranda vs. Republic

Petitioner:

RAMON ARANDA

Respondent:

REPUBLIC OF THE PHILIPPINES

Promulgated: August 24, 2011

G.R. No. 172331

FACTS:

Subject of a petition for original registration before the RTC is a parcel of land situated in San Andres,
Malvar, Batangas with an area of 9,103 square meters and designated as Lot 3730, Psc 47, Malvar
Cadastre.

ICTSI Warehousing, Inc. originally filed The petition represented by its Chairman, Enrique K. Razon, Jr.

OSG filed its opposition on grounds that the land applied for is part of the public domain and the
applicant has not acquired a registrable title.

ICTSI-WI sought leave of court to amend the application citing the reasons: 1.

petition was not accompanied by a certification of non-forum shopping; 2.

the statement of technical description was based merely on the boundaries set forth in the tax
declaration; and 3.

due to a technicality, the sale between the vendor and applicant corporation cannot push through and
consequently the tax declaration is still in the name of vendor Ramon Aranda and the land cannot be
transferred and declared in the name of ICTSI-WI.
RTC admitted the Amended Application for Registration of Title

this time filed in the name of Ramon Aranda.

Petitioner prayed that should the Land Registration Act be not applicable to this case, he invokes the
liberal provisions of Section 48 of Commonwealth Act No. 141, as amended, having been in continuous
possession of the subject land in the concept of owner, publicly, openly and adversely for more than
thirty (30) years prior to the filing of the application.

petitioners sister Merlita A. Enriquez testified that in 1965 her father Anatalio Aranda donated the
subject land to his brother, as evidenced by documents

Pagpapatunay ng Pagkakaloob ng Lupa

executed on June 7, 2000. As to the donation made by his father to his brother Ramon, she recalled
there was such a document but it was eaten by rats.

Luis Olan, testified that his father Lucio Olan originally owned the land. They had open, peaceful,
continuous and adverse possession of the land in the concept of owner until his father sold the land in
1946 to Anatalio Aranda. The children of Anatalio then took over in tilling the land, planting it with rice
and corn and adding a few coconut trees. He does not have any copy of the document of sale because
his mother gave it to Anatalio.

RTC granted the application and ordering the issuance of a decree of registration in favor of petitioner.
CA held that petitioners evidence does not satisfactorily establish the character and duration of
possession required by law, as petitioner failed to prove specific acts showing the nature of the
possession by his predecessors-in-interest. The CA also did not give evidentiary weight to the documents

Pagpapatunay ng Pagkakaloob ng Lupa

and

Pagpapatunay ng Bilihang Lampasan ng Lupa,

both prepared only in the year 2000 when the application for registration was filed, as factual proof of
ownership by the parties to the compromise agreement.

ISSUE:

WON the deeds of confirmation of the 1946 sale in favor of Anatalio Aranda and the 1965 donation to
petitioner are competent proof of transfer of ownership

HELD:

The Property Registration Decree (P.D. No. 1529) provides for original registration of land in an
ordinary registration proceeding. Under Section 14(1)

[14]

thereof, a petition may be granted upon compliance with the following requisites: (a) that the property
in question is alienable and disposable land of the public domain; (b) that the applicants by themselves
or through their predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation; and (c) that such possession is under a

bona fide

claim of ownership since June 12, 1945 or earlier. Under the

Regalian doctrine

which is embodied in Section 2, Article XII of the 1987 Constitution,

all lands of the public domain belong to the State, which is the source of any asserted right to
ownership of land. All lands not appearing to be clearly within private ownership are presumed to
belong to the State.
Unless public land is shown to have been reclassified or alienated to a private person by the State, it
remains part of the inalienable public domain. To overcome this presumption, incontrovertible evidence
must be established that the land subject of the application is alienable or disposable.

[15]

To prove that the land subject of an application for registration is alienable, an applicant must establish
the existence of a positive act of the government such as a presidential proclamation or an executive
order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative
act or a statute.

[16]

The applicant may also secure a certification from the Government that the lands applied for are
alienable and disposable.

[17]

In this case, the Assistant Regional Executive Director For Operations-Mainland Provinces of the
Department of Environment and Natural Resources (DENR), in compliance with the directive of the trial
court, issued a certification stating that the subject property falls within the Alienable and Disposable
Land, Project No. 22-A of Lipa, Batangas per LC Map 718 certified on March 26, 1928.

[18]

However, in the Certification

[19]

dated January 14, 2000 issued by the DENR CENR Officer of Batangas City, Pancrasio M. Alcantara,
which was submitted in evidence by the petitioner, it states that: This is to certify that based on
projection from the technical reference map of this Office, Lot No. 3730, Ap-04-009883, situated at
Barangay San Andres, Malvar

48. Heirs of Malabanan vs. Republic

49. Martinez vs. CA

50. Republic vs. Hanover

51. Bureau of Forestry vs. CA

52. Republic vs. Heirs of Alejaga

53. Republic vs. Southside Hometown Association

54. Republic vs. Vera

55. De Vera Cruz vs. Miguel

17.Lepanto

Facts:
The Republic of the Philippines... represented by the Director of Lands... commenced
City Civil Cases... on the ground of misrepresentation and false data and informations
furnished by the defendants
The lands embraced... situated in the... o
Benguet, Mountain Province.
Lepanto Consolidated Mining Company, petitioner... filed motions for intervention... which
were granted
The complaints in intervention alleged that a portion of the titled lands in question is within
the intervenor's ordinary timber license... and another portion of said lands is... embraced in
its mineral claims.
The plaintiff, Republic... and the intervenor,... filed separate motions for reconsideration of
the order dismissing Civil Cases
Both motions for reconsideration were denied
Issues:
the lands covered by the patents and certificates of title are timber lands and mineral...
lands and, therefore, not alienable.
Ruling:
There is no evidence that the private respondents are members of the National Cultural
Minorities; that they have continuously occupied and cultivated either by themselves or
through their predecessors-in-interest the lands... in question... and that they are not the
owner of any land secured or disposable under the Public Land Act at the time they filed the
free patent applications. These qualifications must be... established by
evidence. Precisely, the intervenor, petitioner herein, claims that it was in possession of the
lands in question when the private respondents applied for free patents thereon.
It is well settled that a certificate of title is void when it covers... property of public domain
classified as forest or timber and mineral lands. Any title issued on non-disposable lots
even in the hands of alleged innocent purchaser for value, shall be cancelled.