Case Digest: Property Case Digests (Property in Relation to Whom it Belongs, Arts. 420-426)

C.A. 141 or Public Land Act:

Section 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title thereafter, under the Land Registration Act, to wit:

x x x x

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of alienable and disposable lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the filing of the applications for confirmation of title, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

PD 1529 or Property Registration Decree

SEC. 14. Who May Apply. — The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
Those who have acquired ownership of private lands by prescription under the provisions of existing laws.
Those who have acquired ownership of private lands or abandoned river beds by right of accession or accretion under the existing laws.
Those who have acquired ownership of land in any other manner provided for by law.

Amendments introduced by RA 11573 September 1, 2021

SECTION 14. Who may apply. — The following persons may file at any time, in the proper Regional Trial Court in the province where the land is located, an application for registration of title to land, not exceeding twelve (12) hectares, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain not covered by existing certificates of title or patents under a bona fide claim of ownership for at least twenty (20) years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. They shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under this section.
Those who have acquired ownership of private lands or abandoned riverbeds by right of accession or accretion under the provisions of existing laws.
Those who have acquired ownership of land in any other manner provided for by law.

SEC. 7. Proof that the Land is Alienable and Disposable. — For purposes of judicial confirmation of imperfect titles filed under [PD 1529, a duly signed certification by a duly designated DENR geodetic engineer that the land is part of alienable and disposable agricultural lands of the public domain is sufficient proof that the land is alienable. Said certification shall be imprinted in the approved survey plan submitted by the applicant in the land registration court. The imprinted certification in the plan shall contain a sworn statement by the geodetic engineer that the land is within the alienable and disposable lands of the public domain and shall state the applicable Forestry Administrative Order, DENR Administrative Order, Executive Order, Proclamations and the Land Classification Project Map Number covering the subject land.

Hrs. of Malabanan v. Republic, G.R. No. 179987, September 3, 2013

In 1998, Mario Malabanan filed an application for land registration for a parcel of land in Silang, Cavite.
Malabanan purchased the property from Eduardo Velazco.
Malabanan presented a certification from the DENR-CENRO verifiying the parcel of land to be within the Alienable or Disposable land per Land Classification Map approved on March 15, 1982.
RTC-Tagaytay Cavite: Granted.
CA: Reversed.

The heirs of Malabanan appealed to the Supreme Court, citing:

Republic v. Court of Appeals and Corazon Naguit:

Any possession of agricultural land prior to its declaration as alienable and disposable could be counted in the reckoning of the period of possession to perfect title under the Public Land Act (Commonwealth Act No. 141) and the Property Registration Decree.

Republic v. T.A.N. Properties, Inc.:

The property had been ipso jure converted into private property by reason of the open, continuous, exclusive and notorious possession by their predecessors-in-interest of an alienable land of the public domain for more than 30 years.

SC (2009): Upheld the ruling of the CA on the ground that they had not established by sufficient evidence their right to the registration in accordance with either Section 14(1) or Section 14(2) of Presidential Decree No. 1529.
Whether or not petitioners were able to prove that the property was an alienable and disposable land of the public domain. NO
We now observe the following rules relative to the disposition of public land or lands of the public domain, namely:

(1) As a general rule and pursuant to the Regalian Doctrine, all lands of the public domain belong to the State and are inalienable. Lands that are not clearly under private ownership are also presumed to belong to the State and, therefore, may not be alienated or disposed;

(2) The following are excepted from the general rule, to wit:

Agricultural lands of the public domain are rendered alienable and disposable through any of the exclusive modes enumerated under Section 11 of the Public Land Act.
If the mode is judicial confirmation of imperfect title under Section 48(b) of the Public Land Act, the agricultural land subject of the application needs only to be classified as alienable and disposable as of the time of the application, provided the applicant’s possession and occupation of the land dated back to June 12, 1945, or earlier.
Thereby, a conclusive presumption that the applicant has performed all the conditions essential to a government grant arises, and the applicant becomes the owner of the land by virtue of an imperfect or incomplete title.
By legal fiction, the land has already ceased to be part of the public domain and has become private property.
Lands of the public domain subsequently classified or declared as no longer intended for public use or for the development of national wealth are removed from the sphere of public dominion and are considered converted into patrimonial lands or lands of private ownership that may be alienated or disposed through any of the modes of acquiring ownership under the Civil Code.
If the mode of acquisition is prescription, whether ordinary or extraordinary, proof that the land has been already converted to private ownership prior to the requisite acquisitive prescriptive period is a condition sine qua non in observance of the law (Article 1113, Civil Code) that property of the State not patrimonial in character shall not be the object of prescription.
The petitioners failed to present sufficient evidence to establish that they and their predecessors-in-interest had been in possession of the land since June 12, 1945. Without satisfying the requisite character and period of possession — possession and occupation that is open, continuous, exclusive, and notorious since June 12, 1945, or earlier — the land cannot be considered ipso jure converted to private property even upon the subsequent declaration of it as alienable and disposable. Prescription never began to run against the State, such that the land has remained ineligible for registration under Section 14(1) of the Property Registration Decree. Likewise, the land continues to be ineligible for land registration under Section 14(2) of the Property Registration Decree unless Congress enacts a law or the President issues a proclamation declaring the land as no longer intended for public service or for the development of the national wealth.
BRION, J.:
The hierarchy of applicable laws must be given full application in considering lands of the public domain. Foremost in the hierarchy is the:
1. Philippine Constitution (particularly its Article XII), followed by the applicable special laws —
2. Commonwealth Act No. 141 or the Public Land Act (PLA) and
3. Presidential Decree (PD) No. 1529 or the Property Registration Decree (PRD)
4. The Civil Code and other general laws apply suppletorily and to the extent called for by the primary laws;
The ponencia’s ruling that the classification of public lands as alienable and disposable does not need to date back to June 12, 1945 or earlier is incorrect because:
- under the Constitution's Regalian Doctrine, classification is a required step whose full import should be given full effect and recognition. The legal recognition of possession prior to classification runs counter to, and effectively weakens, the Regalian Doctrine;
- the terms of the PLA only find full application from the time a land of the public domain is classified as agricultural and declared alienable and disposable. Thus, the possession required under Section 48(b) of this law cannot be recognized prior to the required classification and declaration;
- under the Civil Code, "only things and rights which are susceptible of being appropriated may be the object of possession." Prior to the classification of a public land as alienable and disposable, a land of the public domain cannot be appropriated, hence, any claimed possession prior to classification cannot have legal effects
- there are other modes of acquiring alienable and disposable lands of the public domain under the PLA. This legal reality renders the ponencia's absurdity argument misplaced; and
- the alleged absurdity of the law addresses the wisdom of the law and is a matter for the Legislature, not for this Court, to address.
In a side by side comparison, the PLA is the substantive law that classifies and provides for the disposition of alienable lands of the public domain. On the other hand, the PRD refers to the manner of bringing registerable title to lands, among them, alienable public lands, within the coverage of the Torrens system; in terms of substantive content, the PLA must prevail. On this consideration, only land of the public domain that has passed into private ownership under the terms of the PLA can be registered under the PRD.
No extraordinary prescription can be recognized in their favor as their effective possession could have started only after March 15, 1982. Based on the reasons and conclusions in the above discussion, they have not complied with the legal requirements, either from the point of view of the PLA or the Civil Code. Hence, the denial of their petition must hold.

Republic v. Andrea Tan, G.R. No. 199537. Feb 2016

In 2002, Andrea Tan applied for the original registration of title of lot in Casili, Consolacion, Cebu.

Tan claimed ownership from Julian Gonzaga since September 17, 1992.

During the trial, Tan proved that the subject lot was declared alienable and disposable on September 1, 1965, pursuant to Forestry Administrative Order No. 4-1063;
Land Registration Court: Granted Tan’s application.
CA: Denied the appeal.

Under the Public Land Act, there are two kinds of applicants for original registration:

those who had possessed the land since June 12, 1945; and
those who already acquired the property through prescription.

The respondent’s application fell under the second category.
The certification issued by the Community Environment and Natural Resources Office (CENRO) as evidence that the subject was classified as alienable and disposable on September 1, 1965, pursuant to Land Classification Project No. 28 proves that Tan had already acquired the subject lot by prescription.

Whether the CENRO certification and tax declarations presented were insufficient to prove that the subject lot was no longer intended for public use. NO
Judicial confirmation of title requires:
1. That the applicant is a Filipino citizen;
2. That the applicant, by himself or through his predecessors-in-interest, has been in open, continuous, exclusive and notorious possession and occupation of the property since June 12, 1945;
3. That the property had been declared alienable and disposable as of the filing of the application.
Only private property can be acquired by prescription. Property of public dominion is outside the commerce of man. It cannot be the object of prescription because prescription does not run against the State in its sovereign capacity.

In the present case, respondent Tan’s application is not anchored on judicial confirmation of an imperfect title because she does not claim to have possessed the subject lot since June 12, 1945. Her application is based on acquisitive prescription on the claim that: (1) the property was declared alienable and disposable on September 1, 1965; and (2) she had been in open continuous, public, and notorious possession of the subject lot in the concept of an owner for over thirty (30) years.

In our 2009 decision and 2013 resolution in Malabanan, we already held en banc that a declaration that property of the public dominion is alienable and disposable does not ipso facto convert it into patrimonial property. We said:

Accordingly, there must be an express declaration by the State that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial. Without such express declaration, the property, even if classified as alienable or disposable, remains property of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by prescription. It is only when such alienable and disposable lands are expressly declared by the State to be no longer intended for public service or for the development of the national wealth that the period of acquisitive prescription can begin to run. Such declaration shall be in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is duly authorized by law.

While a prior declaration that the property has become alienable and disposable is sufficient in an application for judicial confirmation of title under Section 14(1) of the PRD, it does not suffice for the purpose of prescription under the Civil Code. Before prescription can even begin to run against the State, the following conditions must concur to convert the subject into patrimonial property:
1. The subject lot must have been classified as agricultural land in compliance with Sections 2 and 3 of Article XII of the Constitution;
2. The land must have been classified as alienable and disposable;
3. There must be a declaration from a competent authority that the subject lot is no longer intended for public use, thereby converting it to patrimonial property.
4. Only when these conditions are met can applicants begin their public and peaceful possession of the subject lot in the concept of an owner.
In the present case, the third condition is absent. Even though it has been declared alienable and disposable, the property has not been withdrawn from public use or public service. Without this, prescription cannot begin to run because the property has not yet been converted into patrimonial property of the State. It remains outside the commerce of man and the respondent’s physical possession and occupation thereof do not produce any legal effect. In the eyes of the law, the respondent has never acquired legal possession of the property and her physical possession thereof, no matter how long, can never ripen into ownership.

Republic of the Philippines v. San Lorenzo Development Corporation, G.R. No. 220902, February 17, 2020

In 1998, San Lorenzo Development Corporation (SLDC) filed an application for registration of two parcels of land in Barangay Buluang, Compostela, Cebu.
SLDC claimed ownership by purchase in 1994 and 1995, with open, continuous, exclusive, and notorious possession and occupation of the said parcels of land in the concept of an owner for over 30 years;
The subject lots were part of an alienable and disposable block per Land Classification Project No. 21-A, certified under Forestry Administrative Order No. 4-1063 approved on September 1, 1965.
RTC: Granted the application, confirming SLDC's possession and ownership within the time prescribed under Section 14(1), Chapter III of P.D. No. 1529.
CA: Affirmed the grant but under Section 14(2) of P.D. No. 1529, considering that it was able to prove possession for more than 30 years through its predecessors-in-interest, and that it was undisputed that the subject lots are alienable and disposable lands.
Whether the CA erred in granting SLDC's application under Section 14(2) of P.O. No. 1529. YES
In Republic of the Philippines v. T.A.N Properties, Inc., the Court ruled that it is not enough for the CENRO or the Provincial Environment and Natural Resources (PENRO) to certify that the land applied for is alienable and disposable. The Court has consistently ruled that the applicant must present a copy of the (1) original classification approved by the DENR Secretary and (2) certified as a true copy of the original land classification approved by the legal custodian of such official records to establish that the land for registration is alienable and disposable. In ruling in this wise, the Court explained that the CENRO or the PENRO are not the official repository or legal custodian of the issuances of the DENR Secretary declaring public lands as alienable and disposable. As such, the certifications they issue relating to the character of the land cannot be considered prima facie evidence of the facts stated therein.

In this case, the required copy of original land classification of the subject lands was not presented. Both the RTC and the CA merely relied on the Certifications issued by the CENRO and the Regional Technical Director of the Lands Management Services of the DENR in ruling that the alienable and disposable nature of the subject lands was established. Clearly, this is not sufficient to prove the alienability and disposability of the subject lands.

It bears stressing, thus, that the alienable and disposable character of the land must be proven by clear and incontrovertible evidence to overcome the presumption of State ownership of the lands of public domain under the Regalian doctrine. Again, the burden of proof in overcoming such presumption is upon the person applying for registration.

Republic v. Zurbaran Realty, G.R. No. 164408, March 24, 2014

In 1993, Zurbaran Realty and Development Corporation filed an application for original registration of a land in Cabuyao, Laguna.
They alleged that they purchased the land in 1992 from Jane de Castro Abalos for ₱300,000.00;
RTC-Laguna: Directed the Land Management Bureau, Manila; the Community Environment and Natural Resources Office (CENRO) of Los Baños, Laguna; and the Land Management Sector and Forest Management Bureau, Manila, to submit a status report on the land, particularly, on:

whether the land was covered by a land patent,
whether it was subject of a previously approved isolated survey, and
whether it was within a forest zone.

CENRO: Reported that the land was alienable and disposable, not covered by land patents, and not earmarked for public use. Inspection confirmed residential nature of the land, actual occupation by respondent, and absence of encroachment on protected areas.
LMB: Certified no record of public land applications or patents.
Respondent presented witnesses attesting to purchase, possession, and continuous use of the land since 1960.
RTC: Granted the application for registration.
CA: Affirmed the RTC.
Whether the respondent and its predecessors-in-interest have established the time when the land covered by the application for registration became alienable and disposable. NO
An application for registration under Section14(1) of P.D. No. 1529 must establish the following requisites, namely:
1. the land is alienable and disposable property of the public domain;
2. the applicant and its predecessors in interest have been in open, continuous, exclusive and notorious possession and occupation of the land under a bona fide claim of ownership; and
3. the applicant and its predecessors-in-interest have possessed and occupied the land since June 12, 1945, or earlier.
The Court has clarified in Malabanan that under Section14(1), it is not necessary that the land must have been declared alienable and disposable as of June 12, 1945, or earlier, because the law simply requires the property sought to be registered to be alienable and disposable at the time the application for registration of title is filed. The Court has explained that a contrary interpretation would absurdly limit the application of the provision "to the point of virtual inutility."
The foregoing interpretation highlights the distinction between a registration proceeding filed under Section 14(1) of P.D. No. 1529 and one filed under Section 14(2) of P.D. No. 1529. According to Malabanan:

Section 14(1) mandates registration on the basis of possession, while Section 14(2) entitles registration on the basis of prescription.

Registration under Section 14(1) is extended under the aegis of the Property Registration Decree and the Public Land Act while registration under Section 14(2) is made available both by the Property Registration Decree and the Civil Code.

In other words, registration under Section 14(1) of P.D. No. 1529 is based on possession and occupation of the alienable and disposable land of the public domain since June 12, 1945 or earlier, without regard to whether the land was susceptible to private ownership at that time. The applicant needs only to show that the land had already been declared alienable and disposable at any time prior to the filing of the application for registration.

On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on acquisitive prescription and must comply with the law on prescription as provided by the Civil Code. In that regard, only the patrimonial property of the State may be acquired by prescription pursuant to the Civil Code.

For acquisitive prescription to set in, therefore, the land being possessed and occupied must already be classified or declared as patrimonial property of the State. Otherwise, no length of possession would vest any right in the possessor if the property has remained land of the public dominion. Malabanan stresses that even if the land is later converted to patrimonial property of the State, possession of it prior to such conversion will not be counted to meet the requisites of acquisitive prescription. Thus, registration under Section 14(2) of P.D. No. 1529 requires that the land had already been converted to patrimonial property of the State at the onset of the period of possession required by the law on prescription.

An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore, establish the following requisites, to wit:
1. the land is an alienable and disposable, and patrimonial property of the public domain;
2. the applicant and its predecessors-in-interest have been in possession of the land for at least 10 years, in good faith and with just title, or for at least 30 years, regardless of good faith or just title; and
3. the land had already been converted to or declared as patrimonial property of the State at the beginning of the said 10-year or 30-year period of possession.
Accordingly, there must be an express declaration by the State that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial. Without such express declaration, the property, even if classified as alienable or disposable, remains property of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by prescription. It is only when such alienable and disposable lands are expressly declared by the State to be no longer intended for public service or for the development of the national wealth that the period of acquisitive prescription can begin to run. Such declaration shall be in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is duly authorized by law.

The respondent’s application does not enlighten as to whether it was filed under Section 14(1) or Section 14(2) of P.D. No. 1529. The application alleged that the respondent and its predecessors-in-interest had been in open, continuous and exclusive possession and occupation of the property in the concept of an owner, but did not state when possession and occupation commenced and the duration of such possession. At any rate, the evidence presented by the respondent and its averments in the other pleadings reveal that the application for registration was filed based on Section 14(2), not Section 14(1) of P.D. No. 1529. The respondent did not make any allegation in its application that it had been in possession of the property since June 12, 1945, or earlier, nor did it present any evidence to establish such fact.

Here, there is no evidence showing that the land in question was within an area expressly declared by law either to be the patrimonial property of the State, or to be no longer intended for public service or the development of the national wealth. The Court is left with no alternative but to deny the respondent's application for registration.

Republic v. Pasig Rizal Co., Inc, G.R. No. 213207 February 15, 2022 ⭐

In 1958, Manuel Dee Ham surveyed a parcel of land situated in Barangay Caniogan, Pasig City.

The Decree of Registration was subsequently approved by the Director of Lands.
The property was declared in Manuel's name for tax purposes.

In 1961, Manuel died.

The property was inherited by his surviving wife Esperanza Gerona, and their children who collectively transferred ownership to the Dee Ham family corporation, Pasig Rizal Co., Inc. (PRCI).

In 2009, Esperanza formalized the transfer through an Affidavit.
In 2010, Esperanza filed an application for original registration of title over the property on behalf of PRCI.

PRCI asserted ownership since 1956.

RTC-Pasig: Confirmed PRCI's title over the property.
CA: Affirmed the RTC Decision.
SC (2014): Identified two key points needing resolution:

the requirements for original registration of land acquired through prescription; and
evidence to prove the alienable and disposable status of land for PD 1529 registration.

SC (2021): Issued a Resolution, mandating the submission of memoranda within 30 days and designated the LRA as amicus curiae.

In consideration of the recent enactment of Republic Act No. (RA) 11573 which took effect on September 1, 2021, the Petition is now deemed submitted for resolution.
Whether PRCI sufficiently proved that it is entitled to a decree of registration over the Subject Property. NOT YET
As explained in the recent case of Federation of Coron, Busuanga, Palawan Farmer's Association, Inc. v. The Secretary of the Department of Environment and Natural Resources and as cogently pointed out by Associate Justice Marvic M.V.F. Leonen, this general rule admits of a single exception: native title to land. Claims of private ownership pursuant to native title are presumed to have been held even before the Spanish conquest. Thus, lands subject of native titles are deemed excluded from the mass of lands forming part of the public domain. The only exception in the Regalian doctrine is native title to land, or ownership of land by Filipinos by virtue of a claim of ownership since time immemorial and independent of any grant from the Spanish Crown. Ancestral lands are covered by the concept of native title that "refers to pre-conquest rights to lands and domains which, as far back as memory reaches, have been held under a claim of private ownership by ICCs/IPs, have never been public lands and are thus indisputably presumed to have been held that way since before the Spanish Conquest."

Being private in nature, patrimonial property is subject to alienation and disposition in the same way as properties owned by private individuals, and may thus be subject to prescription and be the object of ordinary contracts or agreements.

Examples of patrimonial property of the State include:
1. those acquired by the government in execution sales and tax sales
2. friar lands
3. mangrove lands and mangrove swamps.
Article 420 suggests that at any given point in time, all property of the State may either be classified as property of public dominion or patrimonial property. The Republic recognizes this dichotomy inasmuch as it asserts that "the classifications of land pertaining to the State under the Civil Code are mutually exclusive."

In turn, patrimonial property of the State may be further classified into two sub-categories:
1. those which are not property of public dominion or imbued with public purpose based on the State's current or intended use, and may thus be classified as patrimonial property "by nature" pursuant to Article 421; and
2. those which previously assumed the nature of property of public dominion by virtue of the State's use, but which are no longer being used or intended for said purpose, and may thus be classified as "converted" patrimonial property pursuant to Article 422.
Thus, the proper interpretation of Article 422 in relation to Articles 420 and 421 is that "converted" patrimonial property can only come from property of public dominion under Article 420. Hence, "converted" patrimonial property should not be understood as a subset of patrimonial property "by nature" under Article 421.

There is no doubt that forest lands, timber lands, mineral lands, and national parks which are lands of the public domain under the Constitution fall under property of public dominion under Article 420(2) of the Civil Code, as do agricultural lands. It is also clear that land classified as agricultural and subject to the State's current or intended use remains property of public dominion. However, these agricultural lands, once declared as alienable and disposable, become "converted" patrimonial property of the State.
Notably, PRCI did not specify the statutory provision invoked as basis for its application for registration. Nevertheless, PRCI hinged its application on the allegation that it and its predecessors in interest have been in open, continuous, exclusive, and notorious possession of the Subject Property for more than fifty (50) years, particularly since the year 1956, and not 1945 as prescribed by what was then Section 14(1). Thus, the inevitable conclusion which may be drawn from this is that PRCI's application for registration could only fall within the rubric of what was then Section 14(2) of PD 1529 which covered the registration of land acquired through prescription under existing laws.

The reference made by then Section 14(2) to "existing laws" necessarily includes the Civil Code — the statute which governs the acquisition of lands through prescription. By prescription, ownership over real property may be acquired through the lapse of time in the manner and under the conditions laid down by law, that is:
1. through uninterrupted possession in good faith and with just title for a period of ten (10) years for ordinary acquisitive prescription;
2. through uninterrupted possession for thirty (30) years without need of just title or good faith for extraordinary acquisitive prescription.
As to the requirements of possession, just title, and good faith, the Civil Code further provides:

ART. 1118. Possession has to be in the concept of an owner, public, peaceful and uninterrupted.

x x x x

Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership.

x x x x

ART. 1129. For the purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.

The provisions governing prescription only permit the acquisition of private unregistered lands. As previously noted, lands of private ownership may either be lands owned by private persons, or, pursuant to Article 425 of the Civil Code, patrimonial property of the State, provinces, cities, or municipalities, owned by them in their private capacity.
Accordingly, there must be an express declaration by the State that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable or disposable, remains property of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by prescription. It is only when such alienable and disposable lands are expressly declared by the State to be no longer intended for public service or for the development of the national wealth that the period of acquisitive prescription can begin to run. Such declaration shall be in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is duly authorized by law.

It is comprehensible with ease that this reading of Section 14(2) of the Property Registration Decree limits its scope and reach and thus affects the registrability even of lands already declared alienable and disposable to the detriment of the bona fide possessors or occupants claiming title to the lands. Yet this interpretation is in accord with the Regalian doctrine and its concomitant assumption that all lands owned by the State, although declared alienable or disposable, remain as such and ought to be used only by the Government

Based on the foregoing discussion in Malabanan, the requirements for original registration under then Section 14(2) were:
1. a declaration that the land subject of the application is alienable and disposable;
2. an express government manifestation that said land constitutes patrimonial property, or is "no longer retained" by the State for public use, public service, or the development of national wealth; and
3. proof of possession for the period and in the manner prescribed by the Civil Code for acquisitive prescription, reckoned from the moment the property subject of the application becomes patrimonial property of the State.
In cases where land held by the State has not been previously utilized for some public purpose, the State has no prior use to abandon or withdraw the land from. It would therefore be unreasonable to require the applicant to present a law or executive proclamation expressing such abandonment for there never will be one. The imposition of this additional requirement in cases where the land so possessed had never been utilized by the State has dire consequences for those who have occupied and cultivated the land in the concept of owners for periods beyond what is required by law.

However, and to be clear, where the property subject of the application had been previously utilized by the State for some public purpose, proof of conversion requires the establishment of a positive fact — the abandonment by the State of its use and the consequent withdrawal of the property from the public dominion. To establish this positive fact, it becomes incumbent upon the applicant to present an express government manifestation that the land subject of his application already constitutes patrimonial property, or is no longer retained for some public purpose. It is within this context that the second requirement espoused in Malabanan was crafted. This second requirement covered "converted" patrimonial property of the State, or those falling within the scope of Article 422 of the Civil Code.
Amendments introduced by RA 11573
Notably, Section 6 of RA 11573 shortens the period of possession required under the old Section 14(1). Instead of requiring applicants to establish their possession from "June 12, 1945, or earlier", the new Section 14(1) only requires proof of possession "at least twenty (20) years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure."

Equally notable is the final proviso of the new Section 14(1) which expressly states that upon proof of possession of alienable and disposable lands of the public domain for the period and in the manner required under said provision, the applicant/s "shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under this section." This final proviso unequivocally confirms that the classification of land as alienable and disposable immediately places it within the commerce of man, and renders it susceptible to private acquisition through adverse possession.

The final proviso thus clarifies that for purposes of confirmation of title under PD 1529, no further "express government manifestation that said land constitutes patrimonial property, or is 'no longer retained' by the State for public use, public service, or the development of national wealth" shall henceforth be required. This harmonizes the language of PD 1529 with the body of principles governing property of public dominion and patrimonial property in the Civil Code. Through the final proviso, any confusion which may have resulted from the wholesale adoption of the second Malabanan requirement has been addressed.

In line with the shortened period of possession under the new Section 14(1), the old Section 14(2) referring to confirmation of title of land acquired through prescription has been deleted. The rationale behind this deletion is not difficult to discern. The shortened twenty (20)-year period under the new Section 14(1) grants possessors the right to seek registration without having to comply with the longer period of thirty (30) years possession required for acquisitive prescription under the Civil Code. It is but logical for those who have been in adverse possession of alienable and disposable land for at least twenty (20) years to resort to the immediate filing of an application for registration on the basis of the new Section 14(1) without waiting for prescription to set in years later.
Thus, to aid the bench and the bar, the Court lays down the following guidelines on the application of RA 11573:

1. RA 11573 shall apply retroactively to all applications for judicial confirmation of title which remain pending as of September 1, 2021, or the date when RA 11573 took effect. These include all applications pending resolution at the first instance before all Regional Trial Courts, and applications pending appeal before the Court of Appeals.

2. Applications for judicial confirmation of title filed on the basis of the old Section 14(1) and 14(2) of PD 1529 and which remain pending before the Regional Trial Court or Court of Appeals as of September 1, 2021 shall be resolved following the period and manner of possession required under the new Section 14(1). Thus, beginning September 1, 2021, proof of "open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain not covered by existing certificates of title or patents under a bona fide claim of ownership for at least twenty (20) years immediately preceding the filing of the application for confirmation" shall be sufficient for purposes of judicial confirmation of title, and shall entitle the applicant to a decree of registration.

3. In the interest of substantial justice, the Regional Trial Courts and Court of Appeals are hereby directed, upon proper motion or motu proprio, to permit the presentation of additional evidence on land classification status based on the parameters set forth in Section 7 of RA 11573.

a. Such additional evidence shall consist of a certification issued by the DENR geodetic engineer which
1. states that the land subject of the application for registration has been classified as alienable and disposable land of the public domain;
2. bears reference to the applicable Forestry Administrative Order, DENR Administrative Order, Executive Order, or proclamation classifying the land as such; and
3. indicates the number of the LC Map covering the land.
b. In the absence of a copy of the relevant issuance classifying the land as alienable and disposable, the certification must additionally state
1. the release date of the LC Map; and
2. the Project Number.
3. Further, the certification must confirm that the LC Map forms part of the records of NAMRIA and is precisely being used by the DENR as a land classification map.
c. The DENR geodetic engineer must be presented as witness for proper authentication of the certification in accordance with the Rules of Court.
In line with this, PD 1529 provides for the judicial confirmation of imperfect title to land so as to bring the latter within the coverage of the Torrens system. The protection afforded by the Torrens system provides the necessary security to encourage land owners to make the investments needed to make productive use of their landholdings. Through this process, the law functions to aid land owners in becoming productive members of society in a manner that is consistent with the principles enshrined in the Constitution.

With the passage of RA 11573, any doubt which may have plagued the requirements for confirmation of title under Section 14 of PD 1529 have been clarified, with the expressed view of removing any ambiguity in its interpretation, and further streamlining the registration process.
In the interest of substantial justice, bearing in mind the curative nature of RA 11573, and recognizing the long period of possession by PRCI, the Court deems it proper to remand the case to the CA for reception of evidence on the Subject Property's land classification status in accordance with Section 7 of RA 11573. Thereafter, the CA is directed to resolve PRCI's application for land registration with utmost dispatch following the guidelines set forth in this Decision.

Laurel v. Garcia, G.R. No. 92013 July 25, 1990

Two petitions for prohibition sought to stop the bidding for the sale of land in Roppongi, Japan.
The Roppongi property was one of four properties acquired by the Philippine government under the Reparations Agreement with Japan in 1956.
The properties and the capital goods and services procured were indemnification for losses during World War II.

The Reparations Law prescribes the policy for their procurement and utilization.
The procurements are divided into those for use by the government sector and those for private parties in projects as the then National Economic Council shall determine.
Those intended for the private sector shall be made available by sale to Filipino citizens or to one hundred (100%) percent Filipino-owned entities in national development projects.

In 1958, the Roppongi property was acquired under the heading "Government Sector," for the Philippine Embassy until it needed repairs, after which it remained undeveloped due to lack of funds.
A proposal was made to lease the property to a Japanese firm Kajima Corporation for construction projects, but government approval was pending.
In 1987, Executive Order No. 296 allowed non-Filipino entities to avail of reparations properties, including the Roppongi property.
Whether the intention of the government regarding the use of the property been changed because the lot has been idle for some years. NO
There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become patrimonial. This, the respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the citizens; it is intended for the common and public welfare and cannot be the object of appropriation.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State and intended for some public service.

Has the intention of the government regarding the use of the property been changed because the lot has been Idle for some years? Has it become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use. A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such.

The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention. We emphasize, however, that an abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment cannot be inferred from the non-use alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property. Abandonment must be a certain and positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's original purpose. Even the failure by the government to repair the building in Roppongi is not abandonment since as earlier stated, there simply was a shortage of government funds. The recent Administrative Orders authorizing a study of the status and conditions of government properties in Japan were merely directives for investigation but did not in any way signify a clear intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text expressly authorizing the sale of the four properties procured from Japan for the government sector. The executive order does not declare that the properties lost their public character. It merely intends to make the properties available to foreigners and not to Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is another obstacle to its sale by the respondents.

There is no law authorizing its conveyance. It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence.
It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real property in Tokyo but more so because of its symbolic value to all Filipinos — veterans and civilians alike. Whether or not the Roppongi and related properties will eventually be sold is a policy determination where both the President and Congress must concur. Considering the properties' importance and value, the laws on conversion and disposition of property of public dominion must be faithfully followed.

Republic v. Cortez, G.R. No. 186639 February 5, 2014

In 2003, Emmanuel C. Cortez filed an application for judicial confirmation of title over a parcel of land in Pateros, Metro Manila.
In support of his application, Cortez submitted the following documents:

tax declarations for various years from 1966 until 2005;
survey plan (1968) of the property, with the annotation that the property is classified as alienable and disposable;
extrajudicial settlement of estate dated March 21, 1998, conveying the subject property to Cortez; and
escritura de particion extrajudicial dated July 19, 1946, allocating the subject property to Felicisima Cotas – Cortez’ mother.

RTC-Pasig: Granted the application.
CA: Affirmed the RTC decision.

Cortez's possession of the property was deemed to have commenced in 1968 when it was declared alienable and disposable, rather than in 1946 when he inherited it from his mother.

Whether the CA erred in affirming the RTC Decision which granted the application for registration filed by Cortez. YES
After a careful scrutiny of the records of this case, the Court finds that Cortez failed to comply with the legal requirements for the registration of the subject property under Section 14(1) and (2) of P.D. No. 1529.

Section 14(1) of P.D. No. 1529 refers to the judicial confirmation of imperfect or incomplete titles to public land acquired under Section 48(b) of C.A. No. 141, as amended by P.D. No. 1073.

Under Section 14(1) [of P.D. No. 1529], applicants for registration of title must sufficiently establish:
1. that the subject land forms part of the disposable and alienable lands of the public domain;
2. that the applicant and his predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of the same; and
3. that it is under a bona fide claim of ownership since June 12, 1945, or earlier.
The first requirement was not satisfied in this case. To prove that the subject property forms part of the alienable and disposable lands of the public domain, Cortez adduced in evidence a survey plan Csd-00-00063314 (conversion-subdivision plan of Lot 2697, MCadm 594-D, Pateros Cadastral Mapping) prepared by Geodetic Engineer Oscar B. Fernandez and certified by the Lands Management Bureau of the DENR. The said survey plan contained the following annotation:

This survey is inside L.C. Map No. 2623, Project No. 29, classified as alienable & disposable by the Bureau of Forest Development on Jan. 3, 1968.

However, Cortez’ reliance on the foregoing annotation in the survey plan is amiss; it does not constitute incontrovertible evidence to overcome the presumption that the subject property remains part of the inalienable public domain. In Republic of the Philippines v. Tri-Plus Corporation, the Court clarified that, the applicant must at the very least submit a certification from the proper government agency stating that the parcel of land subject of the application for registration is indeed alienable and disposable, viz:

It must be stressed that incontrovertible evidence must be presented to establish that the land subject of the application is alienable or disposable.

In the present case, the only evidence to prove the character of the subject lands as required by law is the notation appearing in the Advance Plan stating in effect that the said properties are alienable and disposable. However, this is hardly the kind of proof required by law. 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:
1. a presidential proclamation
2. an executive order
3. an administrative action,
4. investigation reports of Bureau of Lands investigators, and
5. a legislative act or statute.
The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable. In the case at bar, while the Advance Plan bearing the notation was certified by the Lands Management Services of the DENR, the certification refers only to the technical correctness of the survey plotted in the said plan and has nothing to do whatsoever with the nature and character of the property surveyed. Respondents failed to submit a certification from the proper government agency to prove that the lands subject for registration are indeed alienable and disposable.
The annotation in the survey plan presented by Cortez is not the kind of evidence required by law as proof that the subject property forms part of the alienable and disposable land of the public domain. Cortez failed to present a certification from the proper government agency as to the classification of the subject property. Cortez likewise failed to present any evidence showing that the DENR Secretary had indeed classified the subject property as alienable and disposable. Having failed to present any incontrovertible evidence, Cortez’ claim that the subject property forms part of the alienable and disposable lands of the public domain must fail.

Anent the second and third requirements, the Court finds that Cortez likewise failed to establish the same. Cortez failed to present any evidence to prove that he and his predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of the subject property since June 12, 1945, or earlier. Cortez was only able to present oral and documentary evidence of his and his mother’s ownership and possession of the subject property since 1946, the year in which his mother supposedly inherited the same.

Other than his bare claim that his family possessed the subject property since time immemorial, Cortez failed to present any evidence to show that he and his predecessors-in-interest indeed possessed the subject property prior to 1946; it is a mere claim and not factual proof of possession. "It is a rule that general statements that are mere conclusions of law and not factual proof of possession are unavailing and cannot suffice. An applicant in a land registration case cannot just harp on mere conclusions of law to embellish the application but must impress thereto the facts and circumstances evidencing the alleged ownership and possession of the land."

Further, the earliest tax declaration presented by Cortez was only in 1966. Cortez failed to explain why, despite his claim that he and his predecessors-in-interest have been in possession of the subject property since time immemorial, it was only in 1966 that his predecessors-in-interest started to declare the same for purposes of taxation.

That Cortez and his predecessors-in-interest have been in possession of the subject property for fifty-seven (57) years at the time he filed his application for registration in 2003 would likewise not entitle him to registration thereof under Section 14(2) of P.D. No. 1529.
The Court nevertheless emphasized that there must be an official declaration by the State that the public dominion property is no longer intended for public use, public service, or for the development of national wealth before it can be acquired by prescription; that a mere declaration by government officials that a land of the public domain is already alienable and disposable would not suffice for purposes of registration under Section 14(2) of P.D. No. 1529. The Court further stressed that the period of acquisitive prescription would only begin to run from the time that the State officially declares that the public dominion property is no longer intended for public use, public service, or for the development of national wealth. Thus:
Accordingly, although lands of the public domain that are considered patrimonial may be acquired by prescription under Section 14(2) of P.D. No. 1529, before acquisitive prescription could commence, the property sought to be registered must not only be classified as alienable and disposable; it must also be declared by the State that it is no longer intended for public use, public service or the development of the national wealth. Thus, absent an express declaration by the State, the land remains to be property of public dominion.

The Court finds no evidence of any official declaration from the state attesting to the patrimonial character of the subject property. Cortez failed to prove that acquisitive prescription has begun to run against the State, much less that he has acquired title to the subject property by virtue thereof. It is of no moment that Cortez and his predecessors-in-interest have been in possession of the subject property for 57 years at the time he applied for the registration of title thereto. "[I]t is not the notorious, exclusive and uninterrupted possession and occupation of an alienable and disposable public land for the mandated periods that converts it to patrimonial. The indispensability of an official declaration that the property is now held by the State in its private capacity or placed within the commerce of man for prescription to have any effect against the State cannot be overemphasized. "

Republic v. Aboitiz, G.R. No. 174626 October 23, 2013

In 1998, Luis Miguel O. Aboitiz filed an Application for Registration of Land Title for a parcel of land in Talamban, Cebu City.
Aboitiz presented various documents and witnesses to support his application

Sarah Benemerito, his secretary, testified about his possession and purchase of the subject property from Irenea Kapuno on September 5, 1994.

The Department of Environment and Natural Resources (DENR), Region VII, classified the subject property as alienable and disposable since 1957.
Sarah provided certification from the Community Environment and Natural Resources Office (CENRO), Cebu City, stating that the subject property was not covered by any subsisting public land application.
Tax declarations from 1963 to 1994 were in Irenea's name, and from 1994 onwards, they were in Aboitiz's name.

Luz Kapuno, daughter of Irenea, testified confirming her mother's ownership and possession of the subject property.

Luz affirmed that she witnessed her mother's signing of the deed of sale for the subject property and described her mother's possession as open, continuous, peaceful, and exclusive.

RTC-Cebu: Granted the application,
CA: Reversed the decision, stating that the possession must be since June 12, 1945, or earlier.

Reversed itself in its Amended Decision, granting Aboitiz's application for registration of land title, citing Section 14(2) of P.D. No. 1529.

Whether the CA erred in affirming the RTC Decision which granted the application for registration filed by Cortez. YES
Applicants for registration of land title must establish and prove:
1. that the subject land forms part of the disposable and alienable lands of the public domain
2. that the applicant and his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the same; and
3. that it is under a bona fide claim of ownership since June 12, 1945, or earlier.
The foregoing requisites are indispensable for an application for registration of land title, under Section 14(1) of P.D. No. 1529, to validly prosper. The absence of any one requisite renders the application for registration substantially defective.

Anent the first requisite, to authoritatively establish the subject land’s alienable and disposable character, it is incumbent upon the applicant to present:
1. a CENRO or Provincial Environment and Natural Resources Office (PENRO) Certification; and
2. 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.
Strangely, the Court cannot find any evidence to show the subject land’s alienable and disposable character, except for a CENRO certification submitted by Aboitiz. Clearly, his attempt to comply with the first requisite of Section 14(1) of P.D. No. 1529 fell short due to his own omission. In Republic v. Hanover Worldwide Trading Corporation, the Court declared that the CENRO is not the official repository or legal custodian of the issuances of the DENR Secretary declaring the alienability and disposability of public lands. Thus, the CENRO Certification should be accompanied by an official publication of the DENR Secretary’s issuance declaring the land alienable and disposable. For this reason, the application for registration of Aboitiz should be denied.

With regard to the third requisite, it must be shown that the possession and occupation of a parcel of land by the applicant, by himself or through his predecessors-in-interest, started on June 12, 1945 or earlier. A mere showing of possession and occupation for 30 years or more, by itself, is not sufficient.

Unfortunately, Aboitiz likewise failed to satisfy this third requisite. As the records and pleadings of this case will reveal, the earliest that he and his predecessor-in-interest can trace back possession and occupation of the subject land was only in the year 1963. Evidently, his possession of the subject property commenced roughly eighteen (18) years beyond June 12, 1945, the reckoning date expressly provided under Section 14(1) of P.D. No. 1529. Here, he neglected to present any convincing and persuasive evidence to manifest compliance with the requisite period of possession and occupation since June 12, 1945 or earlier. Accordingly, his application for registration of land title was legally infirm.
(1) In connection with Section 14(1) of the PRD, Section 48(b) of the Public Land Act recognizes and confirms that "those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of alienable and disposable lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945" have acquired ownership of, and registrable title to, such lands based on the length and quality of their possession.

(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that the lands should have been alienable and disposable during the entire period of possession, the possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable and disposable, subject to the timeframe imposed by Section 47 of the Public Land Act.

(b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed by Section 14(1) of the Property Registration Decree.

(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil Code, prescription is recognized as a mode of acquiring ownership of patrimonial property.

However, public domain lands become only patrimonial property not only with a declaration that these are alienable or disposable. There must also be an express government manifestation that the property is already patrimonial or no longer retained for public service or the development of national wealth, under Article 422 of the Civil Code. And only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run.

(a) Patrimonial property is private property of the government. The person acquires ownership of patrimonial property by prescription under the Civil Code is entitled to secure registration thereof under Section 14(2) of the Property Registration Decree.

(b) There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and other extraordinary. Under ordinary acquisitive prescription, a person acquires ownership of a patrimonial property through possession for at least ten (10) years, in good faith and with just title. Under extraordinary acquisitive prescription, a person's uninterrupted adverse possession of patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens into ownership.

On September 3, 2013, the Court En Banc came out with its Resolution, in the same case of Malabanan, denying the motion for reconsideration questioning the decision. In the said resolution, the Court authoritatively stated that x x x the land continues to be ineligible for land registration under Section 14(2) of the Property Registration Decree unless Congress enacts a law or the President issues a proclamation declaring the land as no longer intended for public service or for the development of the national wealth.

Thus, under Section 14(2) of P.D. No. 1529, for acquisitive prescription to commence and operate against the State, the classification of ' land as alienable and disposable alone is not sufficient. The applicant must be able to show that the State, in addition to the said classification, expressly declared through either a law enacted by Congress or a proclamation issued, by the President that the subject land is no longer retained for public service or the development of the national wealth or that the property has been converted into patrimonial. Consequently, without an express declaration by the State, the land remains to be a property of public dominion and, hence, not susceptible to acquisition by virtue of prescription.

Gallent v. Velasquez, G.R. No. 203929 April 6, 2016

George A. Gallent, Sr. owned a residential property in Alabang Hills Village, Muntinlupa City.
In 1996, the property was mortgaged to Allied Banking Corporation (Allied Bank) by the Spouses George and Mercedes Gallent for a loan of P1.5 Million.

The Sps. Gallent failed to pay their loan, which had ballooned to P4,631,974.66.
Allied Bank foreclosed and bought the property.
The Sps. Gallent failed to redeem the subject property after one year.

In 2003, Allied Bank agreed to sell the property back to the Sps. Gallent for P4 Million.

Sps. Gallent paid a down payment of P3.5 Million.
Juan Velasquez assisted the Sps. Gallent in settling their remaining payments to Allied Bank.
They agreed that Velasquez would have the subject property registered under his name until they have repaid him.
The Sps. Gallent assigned to Velasquez all their rights, interests, and obligations under their Agreement to Sell with Allied Bank.
Velasquez then bought the property from Allied Bank for P4 Million and later registered it under his name for only P1.2 Million for tax purposes.

In 2008, Velasquez demanded possession of the property from the Sps. Gallent.

The Sps. Gallent refused to vacate the property.
Velasquez filed an ex parte petition for issuance of a writ of possession.

RTC-Muntinlupa: Issued a writ of possession in favor of Velasquez.
Two separate cases were filed before the CA:

CA-G.R. SP No. 114527 — petition for certiorari filed by Sps. Gallent on July 2, 2010.

Sps. Gallent sought to annul the RTC Orders.
CA: Ruled that the Spouses Gallent can no longer be considered to hold an interest in the property adverse to Allied Bank or Velasquez after they assigned their entire interest therein to Velasquez.

CA-G.R. SP No. 116097 — petition for certiorari filed by Sps. Gallent on September 24, 2010.

Sps. Gallent argued that the deed of sale between Velasquez and Allied Bank was a forgery.
CA: Since Velasquez did not acquire his title to the property in a foreclosure sale, but bought the same directly from Allied Bank after title had been consolidated in the said bank, he must first bring an ejectment suit or an accion reivindictoria against the Spouses Gallent in order for him to obtain possession thereof.

Whether the issuance of the writ of possession is a ministerial duty of the court upon filing of the proper application and proof of title and by its nature does not require notice upon persons interested in the subject properties. NO
The general rule in extrajudicial foreclosure of mortgage is that after the consolidation of the title over the foreclosed property in the buyer, it is the ministerial duty of the court to issue a writ of possession upon an ex parte petition by the new owner as a matter of right.

It is well-settled that the purchaser in an extrajudicial foreclosure of real property becomes the absolute owner of the property if no redemption is made within one year from the registration of the certificate of sale by those entitled to redeem.
By the nature of an ex parte petition for writ of possession, no notice is needed to be served upon the mortgagors-debtors since they already lost all their interests in the properties when they failed to redeem them. By virtue of the sale, the new owner of the lots, entitled to all rights and interests that its predecessor acquired, including the right to a writ of possession. As an exception, the ministerial duty of the court to issue an ex parte writ of possession ceases once it appears that a third party, not the debtor-mortgagor, is in possession of the property under a claim of title adverse to that of the applicant.
The Court held that to be considered in adverse possession, the third party possessor must have done so in his own right and not merely as a successor or transferee of the debtor or mortgagor.
In regard to their deed of assignment in favor of Velasquez, the Spouses Gallent may be considered as adverse possessors in their own right, the said agreement being in essence an equitable mortgage.

It is the Spouses Gallent's contention that the Deed of Assignment of Rights which they executed in favor of Velasquez was in reality an equitable mortgage under Article 1602 of the New Civil Code. The Spouses Gallent maintained that their true agreement with Velasquez was an equitable mortgage and not an assignment of their interest in the subject property.

Having substantially paid the repurchase price of their property, that is, P3,790,500.00 out of the price of P4 Million, they insisted that they had virtually recovered full ownership of the house when they entered into an equitable mortgage with Velasquez. To prove their allegation, they filed an action, Civil Case No. 10-102, to reform the said deed into a mortgage. In addition, they are seeking to declare void the transfer of the title to Velasquez.

An equitable mortgage has been defined as one which although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, there being no impossibility nor anything contrary to law in this intent. A contract where the vendor/mortgagor remains in physical possession as lessee or otherwise has been held to be an equitable mortgage. In determining the nature of a contract, the Court is not bound by the title or name given to it by the parties, but by their intention, as shown not necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement.

Without in any way pre-empting the trial court's factual determination in Civil Case No. 10-102, particularly as regards what the Spouses Gallent may have additionally received from Velasquez by way of favor or consideration for the house, if any, the Court will rule on the matter, but only in order to resolve the question of whether the Spouses Gallent may be considered as adverse claimant-occupants against whom an ex parte writ of possession will not issue. The substantial payment for the repurchase from Allied Bank of the subject property, P3,790,500.00 out of the price of P4 Million, as against Velasquez's assumption of the remaining balance of P216,635.97, entitles the Spouses Gallent to the legal presumption that their assignment to Velasquez of all their interest under their Contract to Sell with Allied Bank was an equitable mortgage. In a contract of mortgage, the mortgagor retains possession of the property given as security for the payment of the sum borrowed from the mortgagee. By the clear dictate of equity, and as held in Rockville Excel International Exim Corporation v. Spouses Culla and Miranda, when the vendor remains in possession of the property sold as lessee or otherwise, or the price of the sale is unusually inadequate, as in this case, the law deems the contract as an equitable mortgage.

It is evident that on account of the Spouses Gallent's substantial down payment under their contract to sell, Allied Bank allowed them to remain in the property, albeit as "lessees". The Spouses Gallent eventually paid a total of P3,790,500.00, all within five months. After the additional payment by Velasquez of P216,635.97, the next logical step would have been for Allied Bank to execute the sale in favor of the Spouses Gallent, by virtue of their Contract to Sell, but the Spouses Gallent had assured Velasquez that he could keep the title to the property until they have repaid him. To achieve this, they executed a deed of assignment to enable Allied Bank to transfer the title directly to Velasquez, since a transfer, first to the Spouses Gallent, and then a sale or assignment to Velasquez, would have entailed paying capital gains and documentary stamp taxes twice, along with the transfer fees. It was also apparently agreed with Velasquez that the Spouses Gallent could remain in the property, but it seems that they could do so not just as lessees but as owners-mortgagors.

If there was a forgery in the sale to Velasquez by Allied Bank, it was obviously a mere ploy to reduce the taxes and fees due on the said transaction, and not the cause of the transfer of the title of Allied Bank to Velasquez. The consent of the Spouses Gallent to the said transfer, for the probable reasons already expounded, is clear from the fact that George himself signed in the first deed of sale to Velasquez as an instrumental witness. But even if it is eventually shown that there was in fact forgery for the purpose of committing fraud against the Spouses Gallent, as held in Capital Credit Dimension, Inc. v. Chua, they, as third party occupants, should not be adversely affected by the ex parte writ of possession sought by Velasquez, for not being parties to the forgery. Thus, they cannot be summarily ejected without due process.

To recapitulate, it is important to note that this controversy can no longer be considered as an offshoot of the extrajudicial foreclosure proceedings involving Allied Bank, but rather is the result of a subsequent personal transaction between the Spouses Gallent and Velasquez, which they called an assignment; but which the law otherwise recognizes as an equitable mortgage. In the face then of the ex parte motion of Velasquez for a writ of possession, it must be kept in mind that, under the facts laid down, the contending parties are now Velasquez and the Spouses Gallent. The Spouses Gallent's defense of equitable mortgage is upheld in law and, they have a superior right to retain the possession of the subject property in their own right.

Alvarez v. PICOP, 508 SCRA 498 (2009)

In 1952, Bislig Bay Lumber Co., Inc. (BBLCI), was granted Timber License Agreement (TLA) No. 43, covering an area of 75,545 hectares in Surigao del Sur, Agusan del Sur, Compostela Valley, and Davao Oriental.
In 1969, President Ferdinand E. Marcos allegedly issued a presidential warranty to BBLCI.
In 1977, TLA No. 43 expired.

It was renewed for another 25 years to "terminate on April 25, 2002."

In 2000, Paper Industries Corporation of the Philippine (PICOP) filed an application with DENR to convert its TLA No. 43 into an Integrated Forest Management Agreement (IFMA).

The DENR Secretary constituted a negotiating team.
In the middle of the processing of the application, PICOP refused to attend further meetings with the DENR.

PICOP filed a Petition for Mandamus against DENR Secretary Heherson T. Alvarez to compel the DENR Secretary to sign, execute, and deliver an IFMA to PICOP, among other requests related to permits and honoring contractual obligations.

Cause of action: The government is bound by contract, a 1969 Document signed by then President Ferdinand Marcos, to enter into an Integrated Forest Management Agreement (IFMA) with PICOP.

RTC-Quezon City: Granted PICOP’s Petition for Mandamus.
CA: Affirmed the RTC decision.
SC (2006): Reversed and set aside the Court of Appeals decision.

The DENR Secretary has adequately proven that PICOP has, at this time, failed to comply with the administrative and statutory requirements for the conversion of TLA No. 43 into an IFMA.
PICOP is not yet entitled to such conversion, then Secretary Alvarez had been correct in withholding the same and thus cannot be held liable for damages therefor.
PICOP’s noncompliance with the requirements for the conversion of their TLA is so glaring, that we almost see a reluctance to uphold the law in light of PICOP’s sizeable investments in its business, a fact repeatedly stressed by PICOP in its pleadings.

Whether the 1969 Document a contract enforceable under the Non-Impairment Clause of the Constitution, so as to make the signing of the IFMA a ministerial duty. NO
Whether PICOP comply with all the legal and constitutional requirements for the issuance of an IFMA. NO
FROM 2006 DECISION
Whether or not outright dismissal was proper

The DENR Secretary alleges that the jurisdiction over the subject matter of the MANDAMUS CASE pertains to the exclusive administrative domain of the DENR, and therefore, the RTC had been in error in taking cognizance thereof. The DENR Secretary adds that, assuming arguendo that the RTC properly took cognizance of the MANDAMUS CASE, it committed a reversible error in not dismissing the same (1) for lack of cause of action; and (2) because the subject matter thereof is not controllable by mandamus.

The Petition filed before the trial court was one for mandamus with prayer for the issuance of a writ of preliminary prohibitory and mandatory injunction with damages.

Specifically, it sought to compel the DENR Secretary to:
1. sign, execute and deliver the IFMA documents to PICOP;
2. issue the corresponding IFMA number assignment; and
3. approve the harvesting of timber by PICOP from the area of TLA No. 43.
The Court of Appeals ruled:

The contention does not hold water. In its petition for mandamus, [PICOP] asserted that "DENR Secretary Alvarez acted with grave abuse of discretion or in excess of his jurisdiction in refusing to perform his ministerial duty to sign, execute and deliver the IFMA contract and to issue the corresponding IFMA number to it." The cited jurisdiction of the DENR on licencing regulation and management of our environment and natural resources is not disputed. In fact, the petition seeks to compel it to properly perform its said functions in relation to [PICOP]. What is at stake is not the scope of the DENR jurisdiction but the manner by which it exercises or refuses to exercise that jurisdiction.

The courts have the duty and power to strike down any official act or omission tainted with grave abuse of discretion. The 1987 Constitution is explicit in providing that judicial power includes not only the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, but also to determine whether or not there has been grave abuse of discretion amounting to lack or in excess of jurisdiction on the part of any branch or instrumentality of the government.

The Court of Appeals is correct. Since PICOP alleges grave abuse of discretion on the part of the DENR Secretary, it behooves the court to determine the same. An outright dismissal of the case would have prevented such determination.

For the same reason, the MANDAMUS CASE could not have been dismissed outright for lack of cause of action. A motion to dismiss based on lack of cause of action hypothetically admits the truth of the allegations in the complaint. In ruling upon the DENR Secretary’s Motion to Dismiss, PICOP’s allegation that it has a contract with the government should, thus, be hypothetically admitted. Necessarily, the DENR Secretary’s argument that there was no such contract should be considered in the trial of the case and should be disregarded at this stage of the proceedings.

The DENR Secretary, however, counters that he/she has not yet exercised his/her exclusive jurisdiction over the subject matter of the case, i.e., either to approve or disapprove PICOP’s application for IFMA conversion. Hence, it is argued that PICOP’s immediate resort to the trial court was precipitate based on the doctrine of exhaustion of administrative remedies.

The Court of Appeals ruled that the doctrine of exhaustion of administrative remedies is disregarded when there are circumstances indicating the urgency of judicial intervention, which are averred to be extant in this case, citing PICOP’s employment of a sizable number of workers and its payment of millions in taxes to the government.

We agree with the DENR Secretary. Republic Act No. 8975 was not intended to set out in full all laws concerning the prohibition against temporary restraining orders, preliminary injunctions and preliminary mandatory injunctions.
- Republic Act No. 8975 prohibits lower courts from issuing such orders in connection with the implementation of government infrastructure projects, while
- Presidential Decree No. 605 prohibits the issuance of the same, in any case involving licenses, concessions and the like, in connection with the natural resources of the Philippines.
- This can be further seen from the respective titles of these two laws, which, of course, should express the subjects thereof:
REPUBLIC ACT NO. 8975

AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION OF GOVERNMENT INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER COURTS FROM ISSUING TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS OR PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES.

PRESIDENTIAL DECREE NO. 605

BANNING THE ISSUANCE BY COURTS OF PRELIMINARY INJUNCTIONS IN CASES INVOLVING CONCESSIONS, LICENSES, AND OTHER PERMITS ISSUED BY PUBLIC ADMINISTRATIVE OFFICIALS OR BODIES FOR THE EXPLOITATION OF NATURAL RESOURCES.

However, when the licenses, concessions and the like also entail government infrastructure projects, the provisions of Republic Act No. 8975 should be deemed to apply, and, thus, Presidential Decree No. 605 had been modified in this sense.

Nevertheless, despite the fact that Presidential Decree No. 605 subsists, the DENR Secretary must have missed our ruling in Datiles and Co. v. Sucaldito, wherein we held that the prohibition in Presidential Decree No. 605 "pertains to the issuance of injunctions or restraining orders by courts against administrative acts in controversies involving facts or the exercise of discretion in technical cases, because to allow courts to judge these matters could disturb the smooth functioning of the administrative machinery. But on issues definitely outside of this dimension and involving questions of law, courts are not prevented by Presidential Decree No. 605 from exercising their power to restrain or prohibit administrative acts."

While there are indeed questions of facts in the present Petitions, the overriding controversy involved herein is one of law: whether the Presidential Warranty issued by former President Marcos are contracts within the purview of the Constitution’s Non-Impairment Clause. Accordingly, the prohibition in Presidential Decree No. 605 against the issuance of preliminary injunction in cases involving permits for the exploitation of natural resources does not apply in this case.

Moreover, as we held in Republic v. Nolasco, statutes such as Presidential Decree No. 605, Presidential Decree No. 1818 and Republic Act No. 8975 merely proscribe the issuance of temporary restraining orders and writs of preliminary injunction and preliminary mandatory injunction. They cannot, under pain of violating the Constitution, deprive the courts of authority to take cognizance of the issues raised in the principal action, as long as such action and the relief sought are within their jurisdiction.
A contract, being the law between the parties, can indeed, with respect to the State when it is a party to such contract, qualify as a law specifically enjoining the performance of an act. Hence, it is possible that a writ of mandamus may be issued to PICOP, but only if it proves both of the following:

1) That the 1969 Document is a contract recognized under the non-impairment clause; and

2) That the 1969 Document specifically enjoins the government to issue the IFMA.

If PICOP fails to prove any of these two matters, the grant of a privileged writ of mandamus is not warranted. This was why we pronounced in the assailed Decision that the overriding controversy involved in the Petition was one of law. If PICOP fails to prove any of these two matters, more significantly its assertion that the 1969 Document is a contract, PICOP fails to prove its cause of action. Not even the satisfactory compliance with all legal and administrative requirements for an IFMA would save PICOP’s Petition for Mandamus.

The reverse, however, is not true. The 1969 Document expressly states that the warranty as to the tenure of PICOP is "subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned matters, it still has to prove compliance with statutory and administrative requirements for the conversion of its TLA into an IFMA.
We do not subscribe to PICOP’s argument that the Presidential Warranty dated September 25, 1968 is a contract protected by the non-impairment clause of the 1987 Constitution.

An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the government’s commitment to uphold the terms and conditions of its timber license and guarantees PICOP’s peaceful and adequate possession and enjoyment of the areas which are the basic sources of raw materials for its wood processing complex. The warranty covers only the right to cut, collect, and remove timber in its concession area, and does not extend to the utilization of other resources, such as mineral resources, occurring within the concession.

The Presidential Warranty cannot be considered a contract distinct from PTLA No. 47 and FMA No. 35. We agree with the OSG’s position that it is merely a collateral undertaking which cannot amplify PICOP’s rights under its timber license. Our definitive ruling in Oposa v. Factoran that a timber license is not a contract within the purview of the non-impairment clause is edifying. We declared:

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract, property or a property right protected by the due process clause of the Constitution. In Tan vs. Director of Forestry, this Court held:

"x x x A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. A timber license is not a contract within the purview of the due process clause; it is only a license or a privilege, which can be validly withdrawn whenever dictated by public interest or public welfare as in this case.

‘A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state, or municipal, granting it and the person to whom it is granted; neither is it a property or a property right, nor does it create a vested right; nor is it taxation' (C.J. 168). Thus, this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576). x x x"

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary:

"x x x Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular concession area and the forest products therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require. Thus, they are not deemed contracts within the purview of the due process of law clause [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302]."

Since timber licenses are not contracts, the non-impairment clause, which reads:

"SEC. 10. No law impairing the obligation of contracts shall be passed."

cannot be invoked.

PICOP’s interpretation of the 1969 Document cannot be sustained. PICOP’s claim that the term of the warranty is not limited to fifty years, but that it extends to other fifty years, perpetually, violates Section 2, Article XII of the Constitution which provides:

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.

Mr. Justice Dante O. Tinga’s interpretation of the 1969 Document is much more in accord with the laws and the Constitution. What one cannot do directly, he cannot do indirectly. Forest lands cannot be alienated in favor of private entities. Granting to private entities, via a contract, a permanent, irrevocable, and exclusive possession of and right over forest lands is tantamount to granting ownership thereof. PICOP, it should be noted, claims nothing less than having exclusive, continuous and uninterrupted possession of its concession areas,31 where all other entrants are illegal,32 and where so-called "illegal settlers and squatters" are apprehended.

IFMAs are production-sharing agreements concerning the development and utilization of natural resources. As such, these 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." Any superior "contract" requiring the State to issue TLAs and IFMAs whenever they expire clearly circumvents Section 2, Article XII of the Constitution, which provides for the only permissible schemes wherein the full control and supervision of the State are not derogated: co-production, joint venture, or production-sharing agreements within the time limit of twenty-five years, renewable for another twenty-five years.

PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide a way to circumvent the provisions of the Constitution limiting agreements for the utilization of natural resources to a maximum period of fifty years. Official duties are, however, disputably considered to be regularly performed, and good faith is always presumed.

DAO No. 99-53 was issued to change the means by which the government enters into an agreement with private entities for the utilization of forest products. DAO No. 99-53 is a late response to the change in the constitutional provisions on natural resources from the 1973 Constitution, which allowed the granting of licenses to private entities, to the present Constitution, which provides for co-production, joint venture, or production-sharing agreements as the permissible schemes wherein private entities may participate in the utilization of forest products. Since the granting of timber licenses ceased to be a permissible scheme for the participation of private entities under the present Constitution, their operations should have ceased upon the issuance of DAO No. 99-53, the rule regulating the schemes under the present Constitution. This would be iniquitous to those with existing TLAs that would not have expired yet as of the issuance of DAO No. 99-53, especially those with new TLAs that were originally set to expire after 10 or even 20 or more years. The DENR thus inserted a provision in DAO No. 99-53 allowing these TLA holders to finish the period of their TLAs, but this time as IFMAs, without the rigors of going through a new application, which they have probably just gone through a few years ago.
Conclusion

In sum, PICOP was not able to prove either of the two things it needed to prove to be entitled to a Writ of Mandamus against the DENR Secretary. The 1969 Document is not a contract recognized under the non-impairment clause and, even if we assume for the sake of argument that it is, it did not enjoin the government to issue an IFMA in 2002 either. These are the essential elements in PICOP’s cause of action, and the failure to prove the same warrants a dismissal of PICOP’s Petition for Mandamus, as not even PICOP’s compliance with all the administrative and statutory requirements can save its Petition now.
PICOP’c cause of action consists in the allegation that the DENR Secretary, in not issuing an IFMA, violated its constitutional right against non-impairment of contracts. We have ruled, however, that the 1969 Document is not a contract recognized under the non-impairment clause, much less a contract specifically enjoining the DENR Secretary to issue the IFMA. The conclusion that the 1969 Document is not a contract recognized under the non-impairment clause has even been disposed of in another case decided by another division of this Court, PICOP Resources, Inc. v. Base Metals Mineral Resources Corporation, the Decision in which case has become final and executory. PICOP’s Petition for Mandamus should, therefore, fail.

Furthermore, even if we assume for the sake of argument that the 1969 Document is a contract recognized under the non-impairment clause, and even if we assume for the sake of argument that the same is a contract specifically enjoining the DENR Secretary to issue an IFMA, PICOP’s Petition for Mandamus must still fail. The 1969 Document expressly states that the warranty as to the tenure of PICOP is "subject to compliance with constitutional and statutory requirements as well as with existing policy on timber concessions." Thus, if PICOP proves the two above-mentioned matters, it still has to prove compliance with statutory and administrative requirements for the conversion of its TLA into an IFMA.

While we have withdrawn our pronouncements in the assailed Decision that (1) PICOP had not submitted the required forest protection and reforestation plans, and that (2) PICOP had unpaid forestry charges, thus effectively ruling in favor of PICOP on all factual issues in this case, PICOP still insists that the requirements of an NCIP certification and Sanggunian consultation and approval do not apply to it. To affirm PICOP’s position on these matters would entail nothing less than rewriting the Indigenous Peoples’ Rights Act and the Local Government Code, an act simply beyond our jurisdiction.

Bracewell v. CA, G.R. No. 107427 Jan 25, 2000

In 1908, Maria Cailles acquired 9,657 square meters of land in Las Piñas, Metro Manila. from the Dalandan and Jimenez families of Las Piñas.

Tax Declarations were issued in the name of Maria Cailles.

In 1961, Maria Cailles sold the land to her son, James Bracewell, Jr., by virtue of a Deed of Sale which was duly annotated and registered with the Registry of Deeds of Pasig, Rizal.

Tax Declarations were then issued in the name of James Bracewell, Jr before CFI-Pasig.

In 1963, James Bracewell, Jr. filed an action for confirmation of imperfect title.

The Director of Lands opposed, represented by the Solicitor General, claiming the land was part of the public domain.

In 1985, the case was forwarded to the RTC-Makati.

The Solicitor General opposed again citing failure to prosecute the action for an unreasonable length of time and inadequacy of tax declarations.

RTC-Makati: Granted the application.
CA: Reversed and set aside the lower court's Order.
Whether the Honorable Court of Appeal erred and failed to consider vested rights of the applicant-appellant and his predecessors-in-interest land occupied from 1908. NO
The applicant must prove that the land is alienable public land. On this score, we agree with respondents that petitioner failed to show that the parcels of land subject of his application are alienable or disposable. On the contrary, it was conclusively shown by the government that the same were only classified as alienable or disposable on March 27, 1972.

Thus, even granting that petitioner and his predecessors-in-interest had occupied the same since 1908, he still cannot claim title thereto by virtue of such possession since the subject parcels of land were not yet alienable land at that time nor capable of private appropriation. The adverse possession which may be the basis of a grant of title or confirmation of an imperfect title refers only to alienable or disposable portions of the public domain.

Prior to March 27, 1972, when the subject parcels of land were classified as inalienable or indisposable, therefore, the same could not be the subject of confirmation of imperfect title. There can be no imperfect title to be confirmed over lands not yet classified as disposable or alienable. In the absence of such classification, the land remains unclassified public land until released therefrom and open to disposition. Indeed, it has been held that the rules on the confirmation of imperfect title do not apply unless and until the land classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain.

Neither has petitioner shown proof that the subject Forestry Administrative Order recognizes private or vested rights under which his case may fall. We only find on record the Indorsement of the Bureau of Forest Development from which no indication of such exemption may be gleaned.

Having found petitioner to have no cause of action for his application for confirmation of imperfect title, we see no need to discuss the other errors raised in this petition.

Chavez vs. NHA, G.R. No. 164527 Aug 15, 2008

In 1988, President Corazon C. Aquino issues Memorandum Order No. 1612 approving the Comprehensive and Integrated Metropolitan Manila Waste Management Plan.

National Housing Authority (NHA) prepared the feasibility studies of the Smokey Mountain low-cost housing project which resulted in the formulation of the Smokey Mountain Development and Reclamation Project (SMDRP).

The Project aimed to convert the Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of the area across Road Radial 10 (R-10), adjacent to the Smokey Mountain as the enabling component of the project.

In 1992, President Aquino approved the Smokey Mountain Development and Reclamation Project (SMDRP).

The land area covered by the Smokey Mountain dumpsite was conveyed to the NHA as well as the area to be reclaimed across R-10.
The Public Estates Authority (PEA) was directed to assist in the evaluation of proposals regarding the technical feasibility of reclamation.
The DENR was directed to:

facilitate titling of Smokey Mountain and of the area to be reclaimed and
assist in the technical evaluation of proposals regarding environmental impact statements

In 1992, Fidel V. Ramos authorized NHA to enter into a Joint Venture Agreement with R-II Builders, Inc. (RBI) for the development of the Smokey Mountain dumpsite and the reclamation of the area across R-10.

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

For the developer (RBI):

To own the forty (40) hectares of reclaimed land.
To own the commercial area at the Smokey Mountain area composed of 1.3 hectares, and
To own all the constructed units of medium rise low cost permanent housing units beyond the 3,500 units share of the [NHA].

For the NHA:

To own the temporary housing consisting of 3,500 units.
To own the cleared and fenced incinerator site consisting of 5 hectares situated at the Smokey Mountain area.
To own the 3,500 units of permanent housing to be constructed by [RBI] at the Smokey Mountain area to be awarded to qualified on site residents.
To own the Industrial Area site consisting of 3.2 hectares, and
To own the open spaces, roads and facilities within the Smokey Mountain area.

In 1996, the land reclamation was completed.
In 1998, The EXECOM directed NHA to enter into a supplemental agreement for necessary works.

However, the approval of the Supplemental Agreement was delayed, leading to construction covering only the original 79-hectare area and financial difficulties.
Work on the SMDRP was suspended due to delays in approval and inability to cover costs.

President Joseph Estrada reconstituted the SMDRP EXECOM, which recommended modifying the Supplemental Agreement to make it more feasible.

The modified Supplemental Agreement included additional reclamation, property conveyance, and cost revisions.

In 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) to terminate the JVA and other subsequent agreements.
Former Solicitor General Francisco I. Chavez filed a petition raising constitutional issues regarding the project.
Whether the respondent NHA nor respondent R-II builders may validly reclaim foreshore and submerged land. YES

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

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

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

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

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

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

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

(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a government entity tasked to dispose of public lands under Executive Order No. (EO) 525. In the NHA case, the reclaimed lands were transferred to NHA, a government entity NOT tasked to dispose of public land and therefore said alienable lands were converted to patrimonial lands upon their transfer to NHA.

Thus the PEA Decision cannot be considered an authority or precedent to the i

Three (3) requisites for a legal and valid reclamation project, viz:
1. approval by the President;
2. favorable recommendation of PEA; and
3. undertaken by any of the following:
Without doubt, PEA under EO 525 was designated as the agency primarily responsible for integrating, directing, and coordinating all reclamation projects. Primarily means "mainly, principally, mostly, generally." Thus, not all reclamation projects fall under PEA’s authority of supervision, integration, and coordination. The very charter of PEA, PD 1084, does not mention that PEA has the exclusive and sole power and authority to reclaim lands of public domain.

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

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

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

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

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

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

2. The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA. President Aquino saw to it that there was coordination of the project with PEA by designating its general manager as member of the EXECOM tasked to supervise the project implementation.

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

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

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

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

The power of the National Government through the President over reclamation of areas, that is, underwater whether foreshore or inland, was made clear in EO 5439 which took effect on June 24, 2006. Under EO 543, PEA was renamed the Philippine Reclamation Authority (PRA) and was granted the authority to approve reclamation projects, a power previously reposed in the President under EO 525. EO 543 reads:

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

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

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

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

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

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

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

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

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

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

2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the NCR-CORD to oversee the implementation of the Project. The EXECOM was the one which recommended approval of the project plan and the joint venture agreements. Clearly, the DENR retained its power of supervision and control over the laws affected by the Project since it was tasked to "facilitate the titling of the Smokey Mountain and of the area to be reclaimed," which shows that it had tacitly given its authority to the NHA to undertake the reclamation.

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

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

Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified and confirmed the reclamation of the subject lands for the purposes laid down in Proclamations Nos. 39 and 465.
Third Issue: Whether respondent RBI can acquire reclaimed
foreshore and submerged lands considered as inalienable and
outside the commerce of man

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

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

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

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

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

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

Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on Proclamations Nos. 39 and 465 issued by President Ramos, without doubt, classified the reclaimed areas as alienable and disposable.

Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that the lands to be reclaimed are classified as alienable and disposable. We find however that such conclusion is derived and implicit from the authority given to the NHA to transfer the reclaimed lands to qualified beneficiaries.

The query is, when did the declaration take effect? It did so only after the special patents covering the reclaimed areas were issued. It is only on such date that the reclaimed lands became alienable and disposable lands of the public domain.
While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that shall serve as payment to the project proponent have become alienable and disposable lands and opened for disposition; nonetheless, this conclusion is necessarily implied, for how else can the land be used as the enabling component for the Project if such classification is not deemed made?

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

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

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

Petitioner’s contention is not well-taken.

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

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

The conduct of the survey, the preparation of the survey plan, the computation of the technical description, and the processing and preparation of the special patent are matters within the technical area of expertise of administrative agencies like the DENR and the Land Management Bureau and are generally accorded not only respect but at times even finality. Preparation of special patents calls for technical examination and a specialized review of calculations and specific details which the courts are ill-equipped to undertake; hence, the latter defer to the administrative agency which is trained and knowledgeable on such matters.

Subsequently, the special patents in the name of the NHA were submitted to the Register of Deeds of the City of Manila for registration, and corresponding certificates of titles over the reclaimed lots were issued based on said special patents. The issuance of certificates of titles in NHA’s name automatically converts the reclaimed lands to patrimonial properties of the NHA. Otherwise, the lots would not be of use to the NHA’s housing projects or as payment to the BOT contractor as the enabling component of the BOT contract. The laws of the land have to be applied and interpreted depending on the changing conditions and times. Tempora mutantur et legis mutantur in illis (time changes and laws change with it). One such law that should be treated differently is the BOT Law (RA 6957) which brought about a novel way of implementing government contracts by allowing reclaimed land as part or full payment to the contractor of a government project to satisfy the huge financial requirements of the undertaking. The NHA holds the lands covered by Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP undertaken by authority of the BOT Law and for disposition in accordance with said special law. The lands become alienable and disposable lands of public domain upon issuance of the special patents and become patrimonial properties of the Government from the time the titles are issued to the NHA.
Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use

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

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

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

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

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

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

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

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

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

The NHA is not a government unit but a government corporation performing governmental and proprietary functions.

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

NHA can acquire property rights and interests and encumber or otherwise dispose of them as it may deem appropriate. The transfer of the reclaimed lands by the National Government to the NHA for housing, commercial, and industrial purposes transformed them into patrimonial lands which are of course owned by the State in its private or proprietary capacity. Perforce, the NHA can sell the reclaimed lands to any Filipino citizen or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding

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

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

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

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

Dream Village v. BCDA, 702 SCRA 222, G.R. No. 192896, July 24, 2013

Dream Village Neighborhood Association, Inc. represents over 2,000 families occupying a 78,466-square meter lot in Western Bicutan, Taguig City since 1985.

The lot was previously part of Hacienda de Maricaban, owned by Dolores Casal y Ochoa, covered by Torrens title Original Certificate of Title (OCT) No. 291 issued in 1906.
The US government purchased Maricaban and converted it into Fort William McKinley during the American colonial period, subsequent title was issued in the name of the USA.
The US government transferred 30 hectares of Maricaban to the Manila Railroad Company.
In 1956, the USA formally ceded Fort William McKinley to the Republic of the Philippines and title was issued the name of the Republic of the Philippines.
In 1957, President Carlos P. Garcia issued Proclamation No. 423, reserving the land within Fort William McKinley (now Fort Bonifacio) for military purposes.

In 1986, President Ferdinand Marcos issued Proclamation No. 2476 allowing the sale of certain portions of Fort Bonifacio, including the area occupied by Dream Village, for residential use.
In 1992, RA No. 7227 created the Bases Conversion and Development Authority (BCDA) to oversee the conversion of military reservations to civilian use, including Fort Bonifacio.

BCDA acquired titles to the land for this purpose.

Dream Village filed a complaint with the Commission on the Settlement of Land Problems (COSLAP) against BCDA, alleging unlawful summary demolition and asserting their right to the land.
COSLAP: Conducted a verification survey, and concluded that Dream Village lies outside BCDA's jurisdiction.

Directed LMB to process their applications for sales patent.

BCDA argued that the land has been under private title since 1906 and is currently held by the government.
CA: Ruled that the dispute is outside the jurisdiction of the COSLAP because of the land’s history of private ownership.
Whether the Honorable Court of Appeal erred in ruling that the dispute is outside the jurisdiction of the COSLAP because of the land’s history of private ownership. NO
The BCDA holds title to Fort Bonifacio.

That the BCDA has title to Fort Bonifacio has long been decided with finality. In Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA, it was categorically ruled as follows:

First, it is unequivocal that the Philippine Government, and now the BCDA, has title and ownership over Fort Bonifacio. The case of Acting Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati is final and conclusive on the ownership of the then Hacienda de Maricaban estate by the Republic of the Philippines. Clearly, the issue on the ownership of the subject lands in Fort Bonifacio is laid to rest. Other than their view that the USA is still the owner of the subject lots, petitioner has not put forward any claim of ownership or interest in them.

The facts in Samahan ng Masang Pilipino sa Makati are essentially not much different from the controversy below. There, 20,000 families were long-time residents occupying 98 has. of Fort Bonifacio in Makati City, who vainly sought to avert their eviction and the demolition of their houses by the BCDA upon a claim that the land was owned by the USA under TCT No. 2288. The Supreme Court found that TCT No. 2288 had in fact been cancelled by TCT No. 61524 in the name of the Republic, which title was in turn cancelled on January 3, 1995 by TCT Nos. 23888, 23887, 23886, 22460, 23889, 23890, and 23891, all in the name of the BCDA. The Court ruled that the BCDA’s aforesaid titles over Fort Bonifacio are valid, indefeasible and beyond question, since TCT No. 61524 was cancelled in favor of BCDA pursuant to an explicit authority under R.A. No. 7227, the legal basis for BCDA’s takeover and management of the subject lots.
Dream Village sits on the
abandoned C-5 Road, which lies
outside the area declared in
Proclamation Nos. 2476 and 172 as
alienable and disposable.

Pursuant to Proclamation No. 2476, the following surveys were conducted by the Bureau of Lands to delimit the boundaries of the areas excluded from the coverage of Proclamation No. 423:

Barangay Survey Plan Date Approved

1. Lower Bicutan SWO-13-000253 October 21, 1986

2. Signal Village SWO-13-000258 May 13, 1986

3. Upper Bicutan SWO-13-000258 May 13, 1986

4. Western Bicutan SWO-13-000298 January 15, 1987

However, the survey plan for Western Bicutan, Swo-13-000298, shows that Lots 3, 4, 5 and 6 thereof are inside the area segregated for the Libingan ng mga Bayani under Proclamation No. 208, which then leaves only Lots 1 and 2 of Swo-13-000298 as available for disposition. For this reason, it was necessary to amend Proclamation No. 2476. Thus, in Proclamation No. 172 only Lots 1 and 2 of Swo-13-000298 are declared alienable and disposable.

The DENR verification survey report states that Dream Village is not situated in Lot 1 of Swo-13-000298 but actually occupies Lots 10, 11 and part of 13 of Swo-00-0001302: "x x x Dream Village is outside Lot1, SWO-13-000298 and inside Lot 10, 11 & portion of Lot 13, SWO-00-0001302 with an actual area of 78466 square meters. The area is actually is [sic] outside SWO-00-0001302 of BCDA." Inexplicably and gratuitously, the DENR also states that the area is outside of BCDA, completely oblivious that the BCDA holds title over the entire Fort Bonifacio, even as the BCDA asserts that Lots 10, 11 and 13 of SWO-00-0001302 are part of the abandoned right-of-way of C-5 Road. This area is described as lying north of Lot 1 of Swo-13-000298 and of Lots 3, 4, 5 and 6 of Swo-13-000298 (Western Bicutan) inside the Libingan ng mga Bayani, and the boundary line of Lot 1 mentioned as C-5 Road is really the proposed alignment of C-5 Road, which was abandoned when, as constructed, it was made to traverse northward into the Libingan ng mga Bayani. Dream Village has not disputed this assertion.

The mere fact that the original plan for C-5 Road to cross Swo-00-0001302 was abandoned by deviating it northward to traverse the southern part of Libingan ng mga Bayani does not signify abandonment by the government of the bypassed lots, nor that these lots would then become alienable and disposable. They remain under the title of the BCDA, even as it is significant that under Section 8(d) of R.A. No. 7227, a relocation site of 30.5 has. was to be reserved for families affected by the construction of C-5 Road. It is nowhere claimed that Lots 10, 11 and 13 of Swo-00-0001302 are part of the said relocation site. These lots border C-5 Road in the south, making them commercially valuable to BCDA, a farther argument against a claim that the government has abandoned them to Dream Village.
While property of the State or any
of its subdivisions patrimonial in
character may be the object of
prescription, those "intended for
some public service or for the
development of the national
wealth" are considered property of
public dominion and therefore not
susceptible to acquisition by
prescription.

In Heirs of Mario Malabanan v. Republic, it was pointed out that from the moment R.A. No. 7227 was enacted, the subject military lands in Metro Manila became alienable and disposable.

However, it was also clarified that the said lands did not thereby become patrimonial, since the BCDA law makes the express reservation that they are to be sold in order to raise funds for the conversion of the former American bases in Clark and Subic. The Court noted that the purpose of the law can be tied to either "public service" or "the development of national wealth" under Article 420(2) of the Civil Code, such that the lands remain property of the public dominion, albeit their status is now alienable and disposable. The Court then explained that it is only upon their sale to a private person or entity as authorized by the BCDA law that they become private property and cease to be property of the public dominion:

For as long as the property belongs to the State, although already classified as alienable or disposable, it remains property of the public dominion if when it is "intended for some public service or for the development of the national wealth."

Thus, under Article 422 of the Civil Code, public domain lands become patrimonial property only if there is a declaration that these are alienable or disposable, together with an express government manifestation that the property is already patrimonial or no longer retained for public service or the development of national wealth. Only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run. Also under Section 14(2) of Presidential Decree (P.D.) No. 1529, it is provided that before acquisitive prescription can commence, the property sought to be registered must not only be classified as alienable and disposable, it must also be expressly declared by the State that it is no longer intended for public service or the development of the national wealth, or that the property has been converted into patrimonial. Absent such an express declaration by the State, the land remains to be property of public dominion.

Since the issuance of Proclamation No. 423 in 1957, vast portions of the former Maricaban have been legally disposed to settlers, besides those segregated for public or government use.
- Proclamation No. 1217 (1973) established the Maharlika Village in Bicutan, Taguig to serve the needs of resident Muslims of Metro Manila;
- Proclamation No. 2476 (1986), as amended by Proclamation No. 172 (1987), declared more than 400 has. of Maricaban in Upper and Lower Bicutan, Signal Village, and Western Bicutan as alienable and disposable;
- Proclamation No. 518 (1990) formally exempted from Proclamation No. 423 the Barangays of Cembo, South Cembo, West Rembo, East Rembo, Comembo, Pembo and Pitogo, comprising 314 has., and declared them open for disposition.
The above proclamations notwithstanding, Fort Bonifacio remains property of public dominion of the State, because although declared alienable and disposable, it is reserved for some public service or for the development of the national wealth, in this case, for the conversion of military reservations in the country to productive civilian uses. Needless to say, the acquisitive prescription asserted by Dream Village has not even begun to run.
Ownership of a land registered
under a Torrens title cannot be lost
by prescription or adverse
possession.

Dream Village has been unable to dispute BCDA’s claim that Lots 10, 11 and part of 13 of Swo-00-0001302 are the abandoned right-of-way of C-5 Road, which is within the vast titled territory of Fort Bonifacio. We have already established that these lots have not been declared alienable and disposable under Proclamation Nos. 2476 or 172.

Moreover, it is a settled rule that lands under a Torrens title cannot be acquired by prescription or adverse possession. Section 47 of P.D. No. 1529, the Property Registration Decree, expressly provides that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. And, although the registered landowner may still lose his right to recover the possession of his registered property by reason of laches, nowhere has Dream Village alleged or proved laches, which has been defined as such neglect or omission to assert a right, taken in conjunction with lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a bar in equity. Put any way, it is a delay in the assertion of a right which works disadvantage to another because of the inequity founded on some change in the condition or relations of the property or parties. It is based on public policy which, for the peace of society, ordains that relief will be denied to a stale demand which otherwise could be a valid claim.
The subject property having been
expressly reserved for a specific
public purpose, the COSLAP
cannot exercise jurisdiction over the
complaint of the Dream Village
settlers.

Fort Bonifacio has been reserved for a declared specific public purpose under R.A. No. 7227, which unfortunately for Dream Village does not encompass the present demands of its members. Indeed, this purpose was the very reason why title to Fort Bonifacio has been transferred to the BCDA, and it is this very purpose which takes the dispute out of the direct jurisdiction of the COSLAP. A review of the history of the COSLAP will readily clarify that its jurisdiction is limited to disputes over public lands not reserved or declared for a public use or purpose.

On July 31, 1970, President Marcos issued E.O. No. 251 creating the Presidential Action Committee on Land Problems (PACLAP) to expedite and coordinate the investigation and resolution of all kinds of land disputes between settlers, streamline and shorten administrative procedures, adopt bold and decisive measures to solve land problems, or recommend other solutions E.O. No. 305, issued on March 19, 1971, reconstituted the PACLAP and gave it exclusive jurisdiction over all cases involving public lands and other lands of the public domain, as well as adjudicatory powers phrased in broad terms: "To investigate, coordinate, and resolve expeditiously land disputes, streamline administrative proceedings, and, in general, to adopt bold and decisive measures to solve problems involving public lands and lands of the public domain."

On November 27, 1975, P.D. No. 832 reorganized the PACLAP and enlarged its functions and duties.

On September 21, 1979, E.O. No. 561 abolished the PACLAP and created the COSLAP to be a more effective administrative body to provide a mechanism for the expeditious settlement of land problems among small settlers, landowners and members of the cultural minorities to avoid social unrest.

Citing the constant threat of summary eviction and demolition by the BCDA and the seriousness and urgency of the reliefs sought in its Amended Petition, Dream Village insists that the COSLAP was justified in assuming jurisdiction of COSLAP Case No. 99-500. But in Longino v. Atty. General, it was held that as an administrative agency, COSLAP’s jurisdiction is limited to cases specifically mentioned in its enabling statute.

COSLAP’s jurisdiction is limited to disputes involving lands in which the government has a proprietary or regulatory interest, or public lands covered with a specific license from the government such as a pasture lease agreements, a timber concessions, or a reservation grants, and where moreover, the dispute is between occupants/squatters and pasture lease agreement holders or timber concessionaires; between occupants/squatters and government reservation grantees; and between occupants/squatters and public land claimants or applicants.

The COSLAP has two different rules in acting on a land dispute or problem lodged before it, e.g., COSLAP can assume jurisdiction only if the matter is one of those enumerated in paragraph 2(a) to (e) of the law. Otherwise, it should refer the case to the agency having appropriate jurisdiction for settlement or resolution.

In resolving whether to assume jurisdiction over a case or to refer it to the particular agency concerned, the COSLAP considers:
1. the nature or classification of the land involved;
2. the parties to the case;
3. the nature of the questions raised; and
4. the need for immediate and urgent action thereon to prevent injury to persons and damage or destruction to property.
The terms of the law clearly do not vest on the COSLAP the general power to assume jurisdiction over any land dispute or problem. Thus, under EO 561, the instances when the COSLAP may resolve land disputes are limited only to those involving public lands or those covered by a specific license from the government, such as pasture lease agreements, timber concessions, or reservation grants.
In contrast, the present petition involves land titled to and managed by a government agency which has been expressly reserved by law for a specific public purpose other than for settlement. Thus, as we have advised in Longino, the law does not vest jurisdiction on the COSLAP over any land dispute or problem, but it has to consider the nature or classification of the land involved, the parties to the case, the nature of the questions raised, and the need for immediate and urgent action thereon to prevent injuries to persons and damage or destruction to property.

Leong v. See, G.R. No. 194077, December 3, 2014

Spouses Florentino and Carmelita Leong owned the property at No. 539–41 Z.P. De Guzman Street, Quiapo, Manila.

Elena Leong is Florentino's sister-in-law, who lived on the property rental-free for two decades until the building they lived in was razed by fire.
They then constructed makeshift houses, and the rental-free arrangement continued.

Florentino and Carmelita immigrated to the United States and eventually had their marriage dissolved in Illinois.

Florentino conveyed his right to the property to Carmelita as per their marital settlement agreement.
In the lower margin of page 12 of the instrument was a long-hand scribbling of a proviso, purporting to be a footnote remark:

Neither party shall evict or charge rent to relatives of the parties, or convey title, until it has been established that Florentino has clear title to the Malabon property.

Carmelita sold the property to Edna See.

In lieu of Florentino's signature of conformity in the deed of absolute sale, Carmelita presented her father, witness Ernesto See, a waiver of interest notarized in Illinois where Florentino reiterated his quitclaim over his right, title, and interest to the land.

Edna was aware of the Leong relatives staying in the makeshift houses on the land.

Carmelita assured her that her nieces and nephews would move out, but demands to vacate were unheeded.

Edna filed a complaint for recovery of possession against Elena and the other relatives of the Leong ex-spouses
Florentino filed a separate complaint to declare the sale null and void.
RTC: Ruled in favor of Edna, granting her possession and ownership of the property.
CA: Affirmed the trial court's decision.
Whether respondent Edna C. See is a buyer in good faith and for value. YES
In any event, the lower courts correctly found that respondent is a purchaser in good faith for value who exercised the necessary diligence in purchasing the property.

First, good faith is presumed, and petitioners did not substantiate their bold allegation of fraud.

Second, respondent did not rely on the clean title alone precisely because of the possession by third parties, thus, she also relied on Florentino’s waiver of interest. Respondent even verified the authenticity of the title at the Manila Register of Deeds with her father and Carmelita. These further inquiries prove respondent’s good faith.

Respondent submits that petitioners’ invocation of the Civil Code provisions misleads this court. Philippine laws cannot govern Florentino who was already an American citizen when he executed the waiver of interest, obtained a divorce, and signed a marital settlement agreement with Carmelita on July 8, 1994. The waiver was also a consequence of the separation of properties and not in the nature of a donation between spouses.

Lastly, respondent argues that "between possessors who are not owners and a buyer in good faith and for value, it is clear in this case that the Respondent Edna See, the buyer in good faith, has the greater right to possession over the subject property."
The sole issue for resolution is whether respondent Edna C. See is a buyer in good faith and for value.

We affirm the Court of Appeals.

The Torrens system was adopted to "obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and to dispense, as a rule, with the necessity of inquiring further."

One need not inquire beyond the four corners of the certificate of title when dealing with registered property. Section 44 of Presidential Decree No. 1529 known as the Property Registration Decree recognizes innocent purchasers in good faith for value and their right to rely on a clean title:

Section 44. Statutory liens affecting title. - Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted in said certificate and any of the following encumbrances which may be subsisting, namely:

First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrances of record.

Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of the government to collect taxes payable before that period from the delinquent taxpayer alone.

Third. Any public highway or private way established or recognized by law, or any government irrigation canal or lateral thereof, if the certificate of title does not state that the boundaries of such highway or irrigation canalor lateral thereof have been determined.

Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian reform.

An innocent purchaser for value refers to someone who "buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim." One claiming to be an innocent purchaser for value has the burden of proving such status.

The protection of innocent purchasers in good faith for value grounds on the social interest embedded in the legal concept granting indefeasibility of titles. Between the third party and the owner, the latter would be more familiar with the history and status of the titled property. Consequently, an owner would incur less costs to discover alleged invalidities relating to the property compared to a third party. Such costs are, thus, better borne by the owner to mitigate costs for the economy, lessen delays in transactions, and achieve a less optimal welfare level for the entire society.

Both lower courts found respondent to be an innocent purchaser in good faith for value. The trial court discussed:

By her overt acts, Edna See with her father verified the authenticity of Carmelita’s land title at the Registry of Deeds of Manila. There was no annotation on the same thus deemed a clean title (page 19, TSN, 12 January 2005). Also, she relied on the duly executed and notarized Certificate of Authority issued by the State of Illinois and Certificate of Authentication issued by the Consul of the Republic of the Philippines for Illinois in support to the Waiver of Interest incorporated in the Deed of Absolute Sale presented to her by Carmelita (Exhibit 2). Examination of the assailed Certificate of Authority shows that it is valid and regular on its face. It contains a notarial seal. . . .

. . . . The assailed Certificate of Authority is a notarized document and therefore, presumed to be validand duly executed. Thus, Edna See’s reliance on the notarial acknowledgment found in the duly notarized Certificate of Authority presented by Carmelita is sufficient evidence of good faith. . . .

A determination of whether a party is an innocent purchaser in good faith and for value involves a factual issue beyond the ambit of a petition for review on certiorari.

Generally, factual findings of lower courts are deemed conclusive and binding upon this court.66 No cogent reason exists to overturn the findings of both lower courts.

Petitioners raise that "actual possession of the property by a person other than the vendor should put the purchaser in inquiry and absen[t] such inquiry[,] he cannot be regarded as a bona fide purchaser against such possessors."

As discussed by the Court of Appeals, respondent did conduct further inquiry by relying not only on the certificate of title, but also on Florentino’s waiver.

Petitioners submit that respondent bought the property knowing that Florentino and Carmelita were married. They then invoke Civil Code and Family Code provisions on the nature of conjugal properties and the prohibition against donations between spouses.

Respondent counters that Florentino and Carmelita were already American citizens when they executed the marital settlement agreement. She even presented before the trial court Florentino’s special power of attorney executed on March 25, 1997 to prove Florentino’s citizenship.

The trial court disregarded petitioners’ argument on the applicability of our civil laws on the validity of the sale since it already deemed respondent to be an innocent purchaser in good faith and for value. The trial court added that since "[respondent] parted with a substantial amount of ₱4 Million, equity dictates that she shall have possession of the property[,] [n]onetheless, Florentino Leong shall get his one-half share of the purchase price."

On the other hand, the Court of Appeals discussed that Florentino was estopped from questioning the transfer of the property since he already waived all his rights, title, and interests over the same. The court also found that the intercalated proviso in the marital settlement agreement violated the mutuality of contracts principle.

The question of whether Florentino and Carmelita were already American citizens at the time of the property’s sale to Edna — thus no longer covered by our laws relating to family rights and duties — involves a factual question outside the ambit of a petition for review on certiorari. In any event, respondent exerted due diligence when she ascertained the authenticity of the documents attached to the deed of sale such as the marital settlement agreement with Florentino’s waiver of interest over the property. She did not rely solely on the title. She even went to the Registry of Deeds to verify the authenticity of the title. These further inquiries were considered by the lower courts in finding respondent to be an innocent purchaser in good faith and for value.

Lastly, an allegation of fraud must be substantiated. Rule 8, Section 5 of the Rules of Court provides:

SEC. 5. Fraud, mistake, condition of the mind. – In all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity. Malice intent, knowledge or other condition of the mind of a person may be averred generally.

In petitioners’ memorandum before this court, they mentioned the rule of fraud as an exception to the indefeasibility of title principle, but failed to substantiate their allegation by immediately concluding as follows:

Petitioners beg to disagree with the ruling of the Honorable Trial Court and the Honorable Court of Appeals. Respondent Edna See is not a buyer in good faith. The ruling that every person can rely on the correctness of the certificate of title and that the buyer need not go beyond the four corners of the title to determine the condition of the property is not absolute and admits of exception. As held in the case of Remegia Feliciano vs. Sps. Zaldivar, G.R. No. 162593, 2006 Sep 26 the principle of indefeasibilty of a Torrens title does not apply where fraud attended the issuance of the title. The Torrens title does not furnish a shield for fraud. As such, a title issued based on void documents may be annulled.

Even assuming the procurement of title was tainted with fraud and misrepresentation, "such defective title may still be the source of a completely legal and valid title in the hands of an innocent purchaser for value."

Respondent, an innocent purchaser in good faith and for value with title in her name, has a better right to the property than Elena. Elena’s possession was neither adverse to nor in the concept of owner.

Article 428 of the Civil Code provides:

Art. 428. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. The owner has also a right of action against the holder and possessor of the thing in order to recover it.

Thus, respondent had every right to pursue her claims as she did.

Chavez v. PEA, 415 SCRA 403 (2003)

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).

CDCP to carry out all the works in consideration of 50% reclaimed land.

In 1977, 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 reclaimed lands to PEA.

It was followed by the transfer of three Titles by the Register of Deeds of Paranaque to PEA covering the three reclaimed islands known as the Freedom Islands.

In 1995, PEA entered into a joint venture agreement (JVA) with Amari Coastal Bay and Development Corporation (AMARI), a Thai-Philippine corporation to develop the Freedom Islands.

The JVA also required the reclamation of an additional 250 hectares of submerged areas surrounding these islands to complete the configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP.

In 1996, Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as the "grandmother of all scams."
In 1998, 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.
In 1999, PEA and AMARI signed the Amended Joint Venture Agreement under the administration of then President Joseph E. Estrada.
Petitioner now prays that on "constitutional and statutory grounds the renegotiated contract be declared null and void."
SC (2002):

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.
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.
Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.
Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as alienable or disposable, and further declare them no longer needed for public service. Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.

Consolidated Motions:

Motion to Inhibit and for Re-Deliberation by Amari (Sept 13, 2002).
Motion to Set Case for Hearing on Oral Argument by Amari (Aug 20, 2002).
Motion for Reconsideration and Supplement by Amari (July 26, 2002 & Aug 20, 2002).
Motion for Reconsideration and Supplement by PEA (July 26, 2002 & Aug 8, 2002).
Motion for Reconsideration and/or Clarification by Office of the Solicitor General (July 25, 2002).
Petitioner Francisco I. Chavez filed Consolidated Opposition on Nov 13, 2002, against main and supplemental motions for reconsideration.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of men," are "inexistent and void from the beginning." The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab initio.

Motion to Inhibit and for Re-Deliberation by Amari
Amari seeks the inhibition of Justice Antonio T. Carpio, ponente of the Decision, on the ground that Justice Carpio, before his appointment to the Court, wrote in his Manila Times column of July 1, 1997, "I have always maintained that the law requires the public bidding of reclamation projects." Justice Carpio, then a private law practitioner, also stated in the same column, "The Amari-PEA reclamation contract is legally flawed because it was not bid out by the PEA." Amari claims that because of these statements Justice Carpio should inhibit himself "on the grounds of bias and prejudgment" and that the instant case should be "re-deliberated" after being assigned to a new ponente.

The motion to inhibit Justice Carpio must be denied for three reasons. First, the motion to inhibit came after Justice Carpio had already rendered his opinion on the merits of the case. The rule is that a motion to inhibit must be denied if filed after a member of the Court had already given an opinion on the merits of the case,1 the rationale being that "a litigant cannot be permitted to speculate upon the action of the Court xxx (only to) raise an objection of this sort after a decision has been rendered." Second, as can be readily gleaned from the summary of the Decision quoted above, the absence of public bidding is not one of the ratio decidendi of the Decision which is anchored on violation of specific provisions of the Constitution. The absence of public bidding was not raised as an issue by the parties. The absence of public bidding was mentioned in the Decision only to complete the discussion on the law affecting reclamation contracts for the guidance of public officials. At any rate, the Office of the Solicitor General in its Motion for Reconsideration concedes that the absence of public bidding in the disposition of the Freedom Islands rendered the Amended JVA null and void. Third, judges and justices are not disqualified from participating in a case just because they have written legal articles on the law involved in the case. As stated by the Court in Republic v. Cocofed,-

The mere fact that, as a former columnist, Justice Carpio has written on the coconut levy will not disqualify him, in the same manner that jurists will not be disqualified just because they may have given their opinions as textbook writers on the question involved in a case.

Besides, the subject and title of the column in question was "The CCP reclamation project" and the column referred to the Amari-PEA contract only in passing in one sentence.

Motion to Set Case for Hearing on Oral Argument by Amari.

Amari’s motion to set the case for oral argument must also be denied since the pleadings of the parties have discussed exhaustively the issues involved in the case.

Motion for Reconsideration and Supplement by Amari.
The motions for reconsideration reiterate mainly the arguments already discussed in the Decision. We shall consider in this Resolution only the new arguments raised by respondents.

In its Supplement to Motion for Reconsideration, Amari argues that the Decision should be made to apply prospectively, not retroactively to cover the Amended JVA. Amari argues that the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached, citing De Agbayani v. PNB, thus:

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

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

x x x

x x x That before the decision they were not constitutionally infirm was admitted expressly. There is all the more reason then to yield assent to the now prevailing principle that the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached.

Amari now claims that "assuming arguendo that Presidential Decree Nos. 1084 and 1085, and Executive Order Nos. 525 and 654 are inconsistent with the 1987 Constitution, the limitation imposed by the Decision on these decrees and executive orders should only be applied prospectively from the finality of the Decision."

Amari likewise asserts that a new doctrine of the Court cannot operate retroactively if it impairs vested rights. Amari maintains that the new doctrine embodied in the Decision cannot apply retroactively on those who relied on the old doctrine in good faith, citing Spouses Benzonan v. Court of Appeals, thus:

At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP are bound by these decisions for pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines." But while our decisions form part of the law of the land, they are also subject to Article 4 of the Civil Code which provides that "laws shall have no retroactive effect unless the contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against retroactivity is easy to perceive. The retroactive application of a law usually divests rights that have already become vested or impairs the obligations of contract and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]).

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

There may be special cases where weighty considerations of equity and social justice will warrant a retroactive application of doctrine to temper the harshness of statutory law as it applies to poor farmers or their widows and orphans. In the present petitions, however, we find no such equitable considerations. Not only did the private respondent apply for free agricultural land when he did not need it and he had no intentions of applying it to the noble purposes behind the law, he would now repurchase for only P327,995.00, the property purchased by the petitioners in good faith for P1,650,000.00 in 1979 and which, because of improvements and the appreciating value of land must be worth more than that amount now.

The buyers in good faith from DBP had a right to rely on our rulings in Monge and Tupas when they purchased the property from DBP in 1979 or thirteen (13) years ago. Under the rulings in these two cases, the period to repurchase the disputed lot given to respondent Pe expired on June 18, 1982. He failed to exercise his right. His lost right cannot be revived by relying on the 1988 case of Belisario. The right of petitioners over the subject lot had already become vested as of that time and cannot be impaired by the retroactive application of the Belisario ruling.

Amari’s reliance on De Agbayani and Spouses Benzonan is misplaced. These cases would apply if the prevailing law or doctrine at the time of the signing of the Amended JVA was that a private corporation could acquire alienable lands of the public domain, and the Decision annulled the law or reversed this doctrine. Obviously, this is not the case here.

Under the 1935 Constitution, private corporations were allowed to acquire alienable lands of the public domain. But since the effectivity of the 1973 Constitution, private corporations were banned from holding, except by lease, alienable lands of the public domain. The 1987 Constitution continued this constitutional prohibition. The prevailing law before, during and after the signing of the Amended JVA is that private corporations cannot hold, except by lease, alienable lands of the public domain. The Decision has not annulled or in any way changed the law on this matter. The Decision, whether made retroactive or not, does not change the law since the Decision merely reiterates the law that prevailed since the effectivity of the 1973 Constitution. Thus, De Agbayani, which refers to a law that is invalidated by a decision of the Court, has no application to the instant case.

Likewise, Spouses Benzonan is inapplicable because it refers to a doctrine of the Court that is overruled by a subsequent decision which adopts a new doctrine. In the instant case, there is no previous doctrine that is overruled by the Decision. Since the case of Manila Electric Company v. Judge Castro-Bartolome, decided on June 29, 1982, the Court has applied consistently the constitutional provision that private corporations cannot hold, except by lease, alienable lands of the public domain. The Court reiterated this in numerous cases, and the only dispute in the application of this constitutional provision is whether the land in question had already become private property before the effectivity of the 1973 Constitution. If the land was already private land before the 1973 Constitution because the corporation had possessed it openly, continuously, exclusively and adversely for at least thirty years since June 12, 1945 or earlier, then the corporation could apply for judicial confirmation of its imperfect title. But if the land remained public land upon the effectivity of the 1973 Constitution, then the corporation could never hold, except by lease, such public land. Indisputably, the Decision does not overrule any previous doctrine of the Court.

The prevailing doctrine before, during and after the signing of the Amended JVA is that private corporations cannot hold, except by lease, alienable lands of the public domain. This is one of the two main reasons why the Decision annulled the Amended JVA. The other main reason is that submerged areas of Manila Bay, being part of the sea, are inalienable and beyond the commerce of man, a doctrine that has remained immutable since the Spanish Law on Waters of 1886. Clearly, the Decision merely reiterates, and does not overrule, any existing judicial doctrine.

Even on the characterization of foreshore lands reclaimed by the government, the Decision does not overrule existing law or doctrine. Since the adoption of the Regalian doctrine in this jurisdiction, the sea and its foreshore areas have always been part of the public domain. And since the enactment of Act No. 1654 on May 18, 1907 until the effectivity of the 1973 Constitution, statutory law never allowed foreshore lands reclaimed by the government to be sold to private corporations. The 1973 and 1987 Constitution enshrined and expanded the ban to include any alienable land of the public domain.

There are, of course, decisions of the Court which, while recognizing a violation of the law or Constitution, hold that the sale or transfer of the land may no longer be invalidated because of "weighty considerations of equity and social justice." The invalidation of the sale or transfer may also be superfluous if the purpose of the statutory or constitutional ban has been achieved. But none of these cases apply to Amari.

Thus, the Court has ruled consistently that where a Filipino citizen sells land to an alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires Philippine citizenship, the sale is validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been achieved. In short, the law disregards the constitutional disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or the buyer himself becomes a qualified party. In the instant case, however, Amari has not transferred the Freedom Islands, or any portion of it, to any qualified party. In fact, Amari admits that title to the Freedom Islands still remains with PEA.

The Court has also ruled consistently that a sale or transfer of the land may no longer be questioned under the principle of res judicata, provided the requisites for res judicata are present. Under this principle, the courts and the parties are bound by a prior final decision, otherwise there will be no end to litigation. As the Court declared in Toledo-Banaga v. Court of Appeals, "once a judgement has become final and executory, it can no longer be disturbed no matter how erroneous it may be." In the instant case, there is no prior final decision adjudicating the Freedom Islands to Amari.

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

Amari has also not paid to PEA the full reimbursement cost incurred by PEA in reclaiming the Freedom Islands. Amari states that it has paid PEA only P300,000,000.0015 out of the P1,894,129,200.00 total reimbursement cost agreed upon in the Amended JVA. Moreover, Amari does not claim to have even initiated the reclamation of the 592.15 hectares of submerged areas covered in the Amended JVA, or to have started to construct any permanent infrastructure on the Freedom Islands. In short, Amari does not claim to have introduced any physical improvement or development on the reclamation project that is the subject of the Amended JVA. And yet Amari claims that it had already spent a "whopping P9,876,108,638.00" as its total development cost as of June 30, 2002. Amari does not explain how it spent the rest of the P9,876,108,638.00 total project cost after paying PEA P300,000,000.00. Certainly, Amari cannot claim to be an innocent purchaser in good faith and for value.

In its Supplement to Motion for Reconsideration, PEA claims that it is "similarly situated" as the Bases Conversion Development Authority (BCDA) which under R.A. No. 7227 is tasked to sell portions of the Metro Manila military camps and other military reservations. PEA’s comparison is incorrect. The Decision states as follows:

As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes of other alienable lands, does not dispose of private lands but alienable lands of the public domain. Only when qualified private parties acquire these lands will the lands become private lands. In the hands of the government agency tasked and authorized to dispose of alienable or disposable lands of the public domain, these lands are still public, not private lands.

PEA is the central implementing agency tasked to undertake reclamation projects nationwide. PEA took the place of Department of Environment and Natural Resources ("DENR" for brevity) as the government agency charged with leasing or selling all reclaimed lands of the public domain. In the hands of PEA, which took over the leasing and selling functions of DENR, reclaimed foreshore lands are public lands in the same manner that these same lands would have been public lands in the hands of DENR. BCDA is an entirely different government entity. BCDA is authorized by law to sell specific government lands that have long been declared by presidential proclamations as military reservations for use by the different services of the armed forces under the Department of National Defense. BCDA’s mandate is specific and limited in area, while PEA’s mandate is general and national. BCDA holds government lands that have been granted to end-user government entities – the military services of the armed forces. In contrast, under Executive Order No. 525, PEA holds the reclaimed public lands, not as an end-user entity, but as the government agency "primarily responsible for integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government."

In Laurel v. Garcia, cited in the Decision, the Court ruled that land devoted to public use by the Department of Foreign Affairs, when no longer needed for public use, may be declared patrimonial property for sale to private parties provided there is a law authorizing such act. Well-settled is the doctrine that public land granted to an end-user government agency for a specific public use may subsequently be withdrawn by Congress from public use and declared patrimonial property to be sold to private parties. R.A. No. 7227 creating the BCDA is a law that declares specific military reservations no longer needed for defense or military purposes and reclassifies such lands as patrimonial property for sale to private parties.

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

We reiterate what we stated in the Decision is the rationale for treating PEA in the same manner as DENR with respect to reclaimed foreshore lands, thus:

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

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

Finally, the Office of the Solicitor General and PEA argue that the cost of reclaiming deeply submerged areas is "enormous" and "it would be difficult for PEA to accomplish such project without the participation of private corporations." The Decision does not bar private corporations from participating in reclamation projects and being paid for their services in reclaiming lands. What the Decision prohibits, following the explicit constitutional mandate, is for private corporations to acquire reclaimed lands of the public domain. There is no prohibition on the directors, officers and stockholders of private corporations, if they are Filipino citizens, from acquiring at public auction reclaimed alienable lands of the public domain. They can acquire not more than 12 hectares per individual, and the land thus acquired becomes private land.

Despite the nullity of the Amended JVA, Amari is not precluded from recovering from PEA in the proper proceedings, on a quantum meruit basis, whatever Amari may have incurred in implementing the Amended JVA prior to its declaration of nullity.

Manila Prince Hotel v. GSIS, G.R. No. 122156 February 3, 1997

Pursuant to the privatization program of the Philippine Government, respondent Government Service Insurance System (GSIS) decided to sell 30% to 51% of its Manila Hotel Corporation (MHC) shares through public bidding.
Only two bidders participated:

Petitioner Manila Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% or 15,300,000 shares at P41.58 per share, and
Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share.

The bidding rules required the highest bidder to negotiate and execute necessary contracts with GSIS/MHC by a specified date.

Pending declaration of the of Renong Berhad as the winning bidder, petitioner matched the bid price of Renong Berhad.
Petitioner sent a manager's check issued by Philtrust Bank for Thirty-three Million Pesos (P33.000.000.00) as Bid Security to match the bid.
GSIS refused to accept petitioner's bid security.

Petitioner sought prohibition and mandamus from the Court to halt the sale to Renong Berhad.
SC: Issued a temporary restraining order.

Petitioner Manila Prince Hotel Corporation invoked the Filipino First Policy in its bid to acquire 51% of the shares of the Manila Hotel Corporation (MHC), emphasizing the preference for qualified Filipinos in the grant of rights, privileges, and concessions covering the national economy and patrimony as enshrined in the 1987 Constitution.
Respondents argued that the provision is not self-executing and requires implementing legislation for enforcement.

They also claim that the Manila Hotel cannot be considered a part of the national patrimony because it only refers to lands of public domain, waters, minerals, etc.
Further, granting that Manila Hotel is part of the national patrimony, GSIS is not selling its land or the building, but its shares of ownership

Whether Manila Hotel can be considered part of the national patrimony in order for the aforementioned provision to be applicable. YES
Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is non-self-executing but simply for purposes of style. But, certainly, the legislature is not precluded from enacting other further laws to enforce the constitutional provision so long as the contemplated statute squares with the Constitution. Minor details may be left to the legislature without impairing the self-executing nature of constitutional provisions.

In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers directly granted by the constitution, further the operation of such a provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for the protection of the rights secured or the determination thereof, or place reasonable safeguards around the exercise of the right. The mere fact that legislation may supplement and add to or prescribe a penalty for the violation of a self-executing constitutional provision does not render such a provision ineffective in the absence of such legislation. The omission from a constitution of any express provision for a remedy for enforcing a right or liability is not necessarily an indication that it was not intended to be self-executing. The rule is that a self-executing provision of the constitution does not necessarily exhaust legislative power on the subject, but any legislation must be in harmony with the constitution, further the exercise of constitutional right and make it more available. Subsequent legislation however does not necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.

Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the tenor of the first and third paragraphs of the same section which undoubtedly are not self-executing. The argument is flawed. If the first and third paragraphs are not self-executing because Congress is still to enact measures to encourage the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the State still needs legislation to regulate and exercise authority over foreign investments within its national jurisdiction, as in the third paragraph, then a fortiori, by the same logic, the second paragraph can only be self-executing as it does not by its language require any legislation in order to give preference to qualified Filipinos in the grant of rights, privileges and concessions covering the national economy and patrimony. A constitutional provision may be self-executing in one part and non-self-executing in another.

Sec. 10, second par., Art. XII of the of the 1987 Constitution is a mandatory, positive command which is complete in itself and which needs no further guidelines or implementing laws or rules for its enforcement. From its very words the provision does not require any legislation to put it in operation. It is per se judicially enforceable.

When our Constitution mandates that [i]n the grant of rights, privileges, and concessions covering national economy and patrimony, the State shall give preference to qualified Filipinos, it means just that — qualified Filipinos shall be preferred. And when our Constitution declares that a right exists in certain specified circumstances an action may be maintained to enforce such right notwithstanding the absence of any legislation on the subject; consequently, if there is no statute especially enacted to enforce such constitutional right, such right enforces itself by its own inherent potency and puissance, and from which all legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi remedium.

As regards our national patrimony, a member of the 1986 Constitutional Commission 34 explains —

The patrimony of the Nation that should be conserved and developed refers not only to out rich natural resources but also to the cultural heritage of out race. It also refers to our intelligence in arts, sciences and letters. Therefore, we should develop not only our lands, forests, mines and other natural resources but also the mental ability or faculty of our people.

We agree. In its plain and ordinary meaning, the term patrimony pertains to heritage. When the Constitution speaks of national patrimony, it refers not only to the natural resources of the Philippines, as the Constitution could have very well used the term natural resources, but also to the cultural heritage of the Filipinos.

Manila Hotel has become a landmark — a living testimonial of Philippine heritage. While it was restrictively an American hotel when it first opened in 1912, it immediately evolved to be truly Filipino, Formerly a concourse for the elite, it has since then become the venue of various significant events which have shaped Philippine history. It was called the Cultural Center of the 1930's. It was the site of the festivities during the inauguration of the Philippine Commonwealth. Dubbed as the Official Guest House of the Philippine Government. it plays host to dignitaries and official visitors who are accorded the traditional Philippine hospitality.

The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and Memory of a City. During World War II the hotel was converted by the Japanese Military Administration into a military headquarters. When the American forces returned to recapture Manila the hotel was selected by the Japanese together with Intramuros as the two (2) places fro their final stand. Thereafter, in the 1950's and 1960's, the hotel became the center of political activities, playing host to almost every political convention. In 1970 the hotel reopened after a renovation and reaped numerous international recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the site of a failed coup d' etat where an aspirant for vice-president was "proclaimed" President of the Philippine Republic.

For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and failures, loves and frustrations of the Filipinos; its existence is impressed with public interest; its own historicity associated with our struggle for sovereignty, independence and nationhood. Verily, Manila Hotel has become part of our national economy and patrimony. For sure, 51% of the equity of the MHC comes within the purview of the constitutional shelter for it comprises the majority and controlling stock, so that anyone who acquires or owns the 51% will have actual control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hotel and the land on which the hotel edifice stands. Consequently, we cannot sustain respondents' claim that the Filipino First Policy provision is not applicable since what is being sold is only 51% of the outstanding shares of the corporation, not the Hotel building nor the land upon which the building stands.

The argument is pure sophistry. The term qualified Filipinos as used in Our Constitution also includes corporations at least 60% of which is owned by Filipinos. This is very clear from the proceedings of the 1986 Constitutional Commission

The term "qualified Filipinos" simply means that preference shall be given to those citizens who can make a viable contribution to the common good, because of credible competence and efficiency. It certainly does NOT mandate the pampering and preferential treatment to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be counter productive and inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to be made between a "qualified foreigner" end a "qualified Filipino," the latter shall be chosen over the former."

In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights, privileges and concessions covering the national economy and patrimony, thereby exceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to match the bid of the foreign entity. And if the Filipino matches the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and meaning to the Filipino First Policy provision of the 1987 Constitution. For, while this may neither be expressly stated nor contemplated in the bidding rules, the constitutional fiat is, omnipresent to be simply disregarded. To ignore it would be to sanction a perilous skirting of the basic law.

Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules, respondent GSIS is left with no alternative but to award to petitioner the block of shares of MHC and to execute the necessary agreements and documents to effect the sale in accordance not only with the bidding guidelines and procedures but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents with petitioner as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly constitutes grave abuse of discretion.

The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be used as a guideline for future legislation but primarily to be enforced; so must it be enforced. This Court as the ultimate guardian of the Constitution will never shun, under any reasonable circumstance, the duty of upholding the majesty of the Constitution which it is tasked to defend. It is worth emphasizing that it is not the intention of this Court to impede and diminish, much less undermine, the influx of foreign investments.

The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely for the sake of privatization. We are not talking about an ordinary piece of property in a commercial district. We are talking about a historic relic that has hosted many of the most important events in the short history of the Philippines as a nation. We are talking about a hotel where heads of states would prefer to be housed as a strong manifestation of their desire to cloak the dignity of the highest state function to their official visits to the Philippines. Thus the Manila Hotel has played and continues to play a significant role as an authentic repository of twentieth century Philippine history and culture. In this sense, it has become truly a reflection of the Filipino soul — a place with a history of grandeur; a most historical setting that has played a part in the shaping of a country.

Republic v. Tri-plus, 505 SCRA 41 (2006)

In 1997, Tri-Plus Corporation, represented by its president Euclid C. Po, filed an Application for Registration of Title over Lots 1061 and 1062 in Consolacion, Cebu.

Tri-Plus claimed ownership of the parcels, including improvements, through purchase for more than 30 years, including that of its predecessors-in-interest.

The Republic of the Philippines, through the Office of the Solicitor General (OSG), opposed the application.
MTC-Cebu: Declared Tri-Plus as the exclusive owner of Lots 1061 and 106.
Land Registration Authority (LRA): Noted discrepancies in land descriptions and requested verification from the Department of Environment and Natural Resources (DENR).
CA: Affirmed the trial court's decision;L
Whether the CA erred in affirming the trial court's Decision which granted the application for registration. YES
Insofar as the identity of the land subject of an application for original registration is concerned, this Court has laid down the rule, as follows:

The submission in evidence of the original tracing cloth plan, duly approved by the Bureau of Lands, in cases for application of original registration of land is a mandatory requirement. The reason for this rule is to establish the true identity of the land to ensure that it does not overlap a parcel of land or a portion thereof already covered by a previous land registration, and to forestall the possibility that it will be overlapped by a subsequent registration of any adjoining land. The failure to comply with this requirement is fatal to petitioner's application for registration.

However, in Republic of the Philippines v. Court of Appeals and in the more recent cases of Spouses Recto v. Republic of the Philippines and Republic of the Philippines v. Hubilla, the Court ruled that while the best evidence to identify a piece of land for registration purposes is the original tracing cloth plan from the Bureau of Lands (now the Lands Management Services of the DENR), blueprint copies and other evidence could also provide sufficient identification.

In the present case, respondent submitted in evidence a blueprint copy of the Advance Plan of Lot 1061 and a Technical Description thereof, both of which had been duly certified and approved by the Lands Management Services of the DENR. The Court finds these pieces of evidence as substantial compliance with the legal requirements for the proper identification of Lot 1061. The discrepancy in the common boundary that separates Lot 1061 from Lot 1058, as contained in the LRA Report does not cast doubt on the identity of the subject lot. As the CA correctly held, the discrepancy is not substantial because it does not unduly increase or affect the total area of the subject lot and at the same time prejudice the adjoining lot owner. It is only when the discrepancy results to an unexplained increase in the total area of the land sought to be registered that its identity is made doubtful. Besides, only a portion of the many boundaries of Lot 1061 has been found to bear a discrepancy in relation to the boundary of one adjoining lot and the LRA Report simply recommends that the Lands Management Services of the DENR verify the reported discrepancy and make the necessary corrections, if needed, in order to avoid duplication in the issuance of titles covering the same parcels of land.

Petitioner's argument that, on the basis of the LRA Report, the MTC should have dismissed respondent's application for registration for lack of jurisdiction over the subject matter, is without merit. The MTC could not have possibly done this because said Report was submitted to the trial court more than five months after the latter rendered its Decision. A copy of the LRA Report attached to the present petition shows that it is dated August 6, 1998 while the MTC decision was rendered much earlier on February 26, 1998. In fact, the Office of the Solicitor General (OSG) perfected its appeal by filing a notice of appeal of the MTC Decision on April 2, 1998, which is also prior to the submission of the LRA report. Hence, by the time the LRA report was submitted to the MTC, the latter has already lost jurisdiction over the case, not on the ground cited by petitioner but because the appeal to the CA was already perfected, vesting jurisdiction upon the appellate court.

In any case, while the subject lands were properly identified, the Court finds that respondent failed to comply with the other legal requirements for its application for registration to be granted.

Applicants for confirmation of imperfect title must prove the following:
1. that the land forms part of the alienable and disposable agricultural lands of the public domain; and
2. that they have been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.
In the present case, the Court finds merit in petitioner's contention that respondent failed to prove the first requirement that the properties sought to be titled forms part of the alienable and disposable agricultural lands of the public domain.

Section 6 of Commonwealth Act No. 141, as amended, provides that the classification and reclassification of public lands into alienable or disposable, mineral or forest land is the prerogative of the Executive Department. Under the Regalian doctrine, which is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to any ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land or alienated to a private person by the State remain part of the inalienable public domain.

It must be stressed that incontrovertible evidence must be presented to establish that the land subject of the application is alienable or disposable.

In the present case, the only evidence to prove the character of the subject lands as required by law is the notation appearing in the Advance Plan stating in effect that the said properties are alienable and disposable. However, this is hardly the kind of proof required by law. 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 statute.

The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable. In the case at bar, while the Advance Plan bearing the notation was certified by the Lands Management Services of the DENR, the certification refers only to the technical correctness of the survey plotted in the said plan and has nothing to do whatsoever with the nature and character of the property surveyed. Respondents failed to submit a certification from the proper government agency to prove that the lands subject for registration are indeed alienable and disposable.

As to the second requirement, testimonial evidence were presented to prove that respondent's predecessors-in-interest had been in possession of the subject lots in the concept of an owner for the period required by law.
- The first witness was Thelma Pilapil who claims to be the daughter of Constancia Frias from whom respondent bought Lot 1061.
- The second witness who was presented was Tomas Frias from whom respondent bought Lot 1062.
Moreover, other pieces of evidence presented by respondent to prove the period of its possession and that of its predecessors-in-interest show that the subject properties were declared for taxation purposes beginning only in 1961. This date may be considered as relatively recent considering that respondent's predecessors-in-interest claim to have been in possession of the subject properties as early as 1947.

While belated declaration of a property for taxation purposes does not necessarily negate the fact of possession, tax declarations or realty tax payments of property are, nevertheless, good indicia of possession in the concept of an owner, for no one in his right mind would be paying taxes for a property that is not in his actual, or at least, constructive possession. In the present case, respondent failed to explain why, despite the claim of its predecessors-in interest that they possessed the subject properties in the concept of an owner as early as 1947, it was only in 1961 that they started to declare the same for purposes of taxation.

From the foregoing, it is clear that respondent and its predecessors-in-interest failed to prove that they had been in open, continuous, exclusive and notorious possession of the subject properties under a bona fide claim of ownership since June 12, 1945 or earlier, as required by law.

Well-entrenched is the rule that the burden of proof in land registration cases rests on the applicant who must show clear, positive and convincing evidence that his alleged possession and occupation were of the nature and duration required by law. In the present case, the Court finds that respondent failed to prove, by clear and convincing evidence, the legal requirements that the lands sought to be titled are alienable and disposable and that its predecessors-in-interest were already in possession of the subject lots since 1945 or earlier.

As to the last assigned error, respondent having failed to prove that the subject properties are alienable and disposable public lands, the Court agrees with petitioner that there would be no basis in concluding that these lands have already become private. The presumption remains that said properties remain part of the inalienable public domain and, therefore, could not become the subject of confirmation of imperfect title.

Finally, while it is an acknowledged policy of the State to promote the distribution of alienable public lands as a spur to economic growth and in line with the ideal of social justice, the law imposes stringent safeguards upon the grant of such resources lest they fall into the wrong hands to the prejudice of the national patrimony. The Court must not, therefore, relax the stringent safeguards relative to the registration of imperfect titles.

Republic v. Aquafresh Seafood, Inc., 634 SCRA 82 (2010)

In 1999, Aquafresh Seafoods Inc. sold two parcels of land in Roxas City to Philips Seafoods, Inc. for Php 3,100,000.
Aquafresh filed Capital Gains Tax Return, paying:

Php 186,000 for Capital Gains Tax and
Php 46,500 for Documentary Stamp Tax.

Bureau of Internal Revenue (BIR) received a report that the lots sold were undervalued for taxation purposes.
BIR Special Investigation Division (SID): Concluded that the subject properties were commercial with a zonal value of Php 2,000 per square meter.
BIR Regional Director Leonardo Q. Sacamos issued Assessment Notices for CGT and DST deficiencies.

Aquafresh protested assessments.
Director Sacamos denied it.

Aquafresh filed petition for review before Court of Tax Appeals (CTA), arguing properties were residential, not commercial.
CTA: Ruled in favor of respondent.

The existing Revised Zonal Values of Real Properties in the City of Roxas shall prevail for the purpose of determining the proper tax liabilities of petitioner.

CTA En Banc: Dismissed the appeal.

Affirming that the 1995 Revised Zonal Values of Real Properties should prevail, as no amendment was proven at time of sale.

Whether the CTA erred in applying fair market value of the land based on the zonal valuation of a residential land. NO
While the CIR has the authority to prescribe real property values and divide the Philippines into zones, the law is clear that the same has to be done upon consultation with competent appraisers both from the public and private sectors.

It is undisputed that at the time of the sale of the subject properties found in Barrio Banica, Roxas City, the same were classified as "RR," or residential, based on the 1995 Revised Zonal Value of Real Properties. Petitioner, thus, cannot unilaterally change the zonal valuation of such properties to "commercial" without first conducting a re-evaluation of the zonal values as mandated under Section 6(E) of the NIRC.

Petitioner argues, however, that the requirement of consultation with competent appraisers is mandatory only when it is prescribing real property values – that is when a formulation or change is made in the schedule of zonal values. Petitioner also contends that what it did in the instant case was not to prescribe the zonal value, but merely classify the same as commercial and apply the corresponding zonal value for such classification based on the existing schedule of zonal values in Roxas City.

We disagree.

To this Court's mind, petitioner's act of re-classifying the subject properties from residential to commercial cannot be done without first complying with the procedures prescribed by law. It bears to stress that ALL the properties in Barrio Banica were classified as residential, under the 1995 Revised Zonal Values of Real Properties. Thus, petitioner's act of classifying the subject properties involves a re-classification and revision of the prescribed zonal values.

In addition, Revenue Memorandum No. 58-69 provides for the procedures on the establishment of the zonal values of real properties, viz.:

(1) The submission or review by the Revenue District Offices Sub-Technical Committee of the schedule of recommended zonal values to the TCRPV;

(2) The evaluation by TCRPV of the submitted schedule of recommended zonal values of real properties;

(3) Except in cases of correction or adjustment, the TCRPV finalizes the schedule and submits the same to the Executive Committee on Real Property Valuation (ECRPV);

(3) Upon approval of the schedule of zonal values by the ECRPV, the same is embodied in a Department Order for implementation and signed by the Secretary of Finance. Thereafter, the schedule takes effect (15) days after its publication in the Official Gazette or in any newspaper of general circulation.

Petitioner failed to prove that it had complied with Revenue Memorandum No. 58-69 and that a revision of the 1995 Revised Zonal Values of Real Properties was made prior to the sale of the subject properties. Thus, notwithstanding petitioner's disagreement to the classification of the subject properties, the same must be followed for purposes of computing the CGT and DST. It bears stressing, and as observed by the CTA En Banc, that the 1995 Revised Zonal Values of Real Properties was drafted by petitioner, BIR personnel, representatives from the Department of Finance, National Tax Research Center, Institute of Philippine Real Estate Appraisers and Philippine Association of Realtors Board, which duly satisfied the requirement of consultation with public and private appraisers.

Petitioner contends, nevertheless, that its act of classifying the subject properties based on actual use was in accordance with guidelines number 1-b and 2 as set forth in "Certain Guidelines in the Implementation of Zonal Valuation of Real Properties for RDO 72 Roxas City" (Zonal Valuation Guidelines).

Section 1 (b) of the Zonal Valuation Guidelines reads:

1. No zonal value has been prescribed for a particular classification of real property.

Where in the approved schedule of zonal values for a particular barangay -

x x x x

b) No zonal value has been prescribed for a particular classification of real property in one barangay, the zonal value prescribed for the same classification of real property located in an adjacent barangay of similar conditions shall be used.

Section 1 (b) does not apply to the case at bar for the simple reason that said proviso operates only when "no zonal valuation has been prescribed." The properties located in Barrio Banica, Roxas City were already subject to a zonal valuation, a fact which even petitioner has admitted in its petition, thus:

It must be noted that under the schedule of zonal values, Barangay Banica, where the subject lots are situated, has a single classification only – that of a residential area. Accordingly, it has a prescribed zonal value of Php650.00 per square meter.13

Petitioner, however, also relies on Section 2 (a) of the Zonal Valuation Guidelines, to justify its action. Said section states:

2. Predominant Use of Property.

a) All real properties, regardless of actual use, located in a street/barangay zone, the use of which are predominantly commercial shall be classified as "Commercial" for purposes of zonal valuation.

In BIR Ruling No. 041-2001, issued on September 18, 2001, the BIR tackled the application of a provision which is identical to Section 2 (a) of the Zonal Valuation Guidelines. BIR Ruling No. 041-2001 involved a request by the Iglesia Ni Cristo that the re-computation of CGT and DST based on the predominant use of the real properties located at Mindanao Avenue, Quezon City, be set aside. In said case, the Iglesia ni Cristo paid the CGT and DST based on the zonal value of residential lots in Quezon City. The Revenue District Officer, however, ordered a re-computation of the CGT and DST based on the ground that the real property is located in a predominantly commercial area and must be classified as commercial for purposes of zonal valuation. The BIR ruled in favor of Iglesia ni Cristo stating that "Certain Guidelines in the Implementation of Zonal Valuation of Real Properties for RDO No. 38, applying the predominant use of property as the basis for the computation of the Capital Gains and Documentary Stamp Taxes, shall apply only when the real property is located in an area or zone where the properties are not yet classified and their respective zonal valuation are not yet determined." The pertinent portion of BIR Ruling No. 041-2001 reads:

In reply, please be informed that this Office finds your request meritorious. The number 2 guideline laid down in Certain Guidelines in the implementation of Zonal valuation of Real Properties for RDO No. 38- North Quezon City xxx does not apply to this case.

Number 2 of the CERTAIN GUIDELINES IN THE IMPLEMENTATION OF ZONAL VALUATION OF REAL PROPERTIES FOR RD NO. 38 – NORTH QUEZON CITY" provides:

"2. PREDOMINANT USE OF PROPERTY:

ALL REAL PROPERTIES REGARDLESS OF ACTUAL USE, LOCATED IN A STREET/BARANGAY ZONE, THE USE OF WHICH ARE PREDOMINANTLY COMMERCIAL SHALL BE CLASSIFIED AS 'COMMERICIAL'FOR PURPOSES OF ZONAL VALUATION."

It is the considered opinion of this Office that the guideline applies when the real property is located in an area or zone where the properties are not yet classified and their respective zonal valuation are not yet determined.

In the instant case, however, the classification and valuation of the properties located in Mindanao Avenue, Bagong Bantay, have already been determined. Under Department of Finance Order No. 6-2000, the properties along Mindanao Avenue had already been classified as residential and commercial. The zonal valuation thereof had already been determined. x x x Therefore, the Revenue District Officer of RDO No. 38 has no discretion to determine the classification or valuation of the properties located in the pertinent area. The computation of the capital gains and documentary stamp taxes shall be based on the zonal of residential properties located at Mindanao Avenue, Bago Bantay, Quezon City.

Based on the foregoing, this Court need not belabour on the applicability of Section 2 (a), as the BIR itself has already ruled that the same shall apply only when the real property is located in an area or zone where the properties are not yet classified and their respective zonal valuation are not yet determined. As mentioned earlier, the subject properties were already part of the 1995 Revised Zonal Value of Real Properties which classified the same as residential with a zonal value of Php650.00 per square meter; thus, Section 2 (a) clearly has no application.

This Court agrees with the observation of the CTA that "zonal valuation was established with the objective of having an ‘efficient tax administration by minimizing the use of discretion in the determination of the tax based on the part of the administrator on one hand and the taxpayer on the other hand.’"15 Zonal value is determined for the purpose of establishing a more realistic basis for real property valuation. Since internal revenue taxes, such as CGT and DST, are assessed on the basis of valuation, the zonal valuation existing at the time of the sale should be taken into account.

If petitioner feels that the properties in Barrio Banica should also be classified as commercial, then petitioner should work for its revision in accordance with Revenue Memorandum Order No. 58-69. The burden was on petitioner to prove that the classification and zonal valuation in Barrio Banica have been revised in accordance with the prevailing memorandum. In the absence of proof to the contrary, the 1995 Revised Zonal Values of Real Properties must be followed.

Lastly, this Court takes note of the wording of Section 2 (b) of the Zonal Valuation Guidelines, to wit:

2. Predominant Use of Property.

b) The predominant use of other classification of properties located in a street/barangay zone, regardless of actual use shall be considered for purposes of zonal valuation.

Based thereon, this Court rules that even assuming arguendo that the subject properties were used for commercial purposes, the same remains to be residential for zonal value purposes. It appears that actual use is not considered for zonal valuation, but the predominant use of other classification of properties located in the zone. Again, it is undisputed that the entire Barrio Banica has been classified as residential.

Learning Child, Inc v. Ayala Alabang, 624 SCRA 258 (2010)

In 1984, Ayala Land, Inc. (ALI) sold land to the spouses Jose and Cristina Yuson.
In 1987, the Sps. Yuson sold to the same to the spouses Felipe and Mary Anne Alfonso, with Deed of Restrictions:

2.2 USE AND OCCUPANCY - The property shall be used exclusively for the establishment and maintenance thereon of a preparatory (nursery and kindergarten) school, which may include such installations as an office for school administration, playground and garage for school vehicles.

In 1989, Sps. Alfonsoopened on the same lot The Learning Child Center Pre-school (TLC), a preparatory school which initially consisted of nursery and kindergarten classes.
In 1991, TLC was expanded to include a grade school program, the School of the Holy Cross.

Ayala Alabang Village Association (AAVA) protested the TLC’s and the Sps. Alfonso’s violation of the Deed of Restrictions

In 1992, AAVA filed an action for injunction.
RTC-Makati (1994): Ruled for AAVA, ordering TLC to cease grade school operation, citing Deed of Restrictions and zoning ordinance.

TLC and Sps. Alfonso spouses moved for reconsideration, citing Muntinlupa Zoning Ordinance No. 91-39 reclassifying property as "institutional."

RTC-Makati (1995): Reversed the decision, dismissing complaint and complaint-in-intervention.

AAVA appealed.

CA: Reinstated RTC's July 22, 1994 decision.
Zoning Ordinance Case:

In 1994, the Municipality of Muntinlupa passed Resolution No. 94-179 correcting an alleged typographical error in the description of a parcel of land under the heading "Institutional Zone" in Ordinance No. 91-39.
In 1999, the Office of the President declared Resolution No. 94-179 valid, stating it corrected a typographical error and did not require compliance with notice and hearing requirements.

Office of the President rejected AAVA's alternative prayer to recognize Deed of Restrictions.
AAVA and adjacent property owners petitioned Court of Appeals challenging the Office of the President's decision.

CA: Partially granted the petition, affirming the validity of Resolution No. 94-179 but vacating the ruling on its effect on the Deed of Restrictions.

Whether the Court of Appeals is correct in upholding the validity of Muntinlupa Resolution No. 94-179. NO
Whether TLC and the Sps. Alfonso should be enjoined from continuing the operation of a grade school in the subject property. NO
The purpose of Muntinlupa Resolution No. 94-179 is clearly set forth in its whereas clauses:

SAPAGKAT, ang Sanguniang Bayan ng Muntinlupa ay pinagtibay ang Kautusang Bayan Bilang 91-39 na nagsasaad ng bagong pagreresona ng Bayan ng Muntinlupa;

SAPAGKAT, sa pagrerepaso sa nabanggit na kautusang bayan ay napag-alamang nagkaroon ng isang "typographical error sa Appendix B" nito;

SAPAGKAT, sa halip na Lot 25, Block 3, Phase V, Ayala Alabang, ang nailagay o nai-type sa hindi sinasadyang dahilan ay Lot 25, Block 1, Phase V, Ayala Alabang;

SAPAGKAT, ang pagtatamang ito sa teksto ng Appendix B na nakapaloob sa institutional zone ay hindi makakaapekto sa ibang bahagi o kabuuang nilalaman at itinatakda sa kautusang bayan bilang 91-39.

Even more telling that there was indeed a typographical error in Appendix B of Ordinance No. 91-39 is the fact that both the Official Zoning Map of Muntinlupa and that of the Ayala Alabang Village show that the subject property, described as "Lot 25, Block 3, Phase V of Ayala Alabang" is classified as "institutional." On the other hand, neither the Official Zoning Map of Muntinlupa nor that of the Ayala Alabang Village classify "Lot 25, Block 1, Phase V of Ayala Alabang" as institutional. The official zoning map is an indispensable and integral part of a zoning ordinance, without which said ordinance would be considered void. Indeed, Section 3 of Ordinance No. 91-39 expressly provides that the Official Zoning Map of Muntinlupa shall be made an integral part of said ordinance. Both the MMC and the HLURB Board of Commissioners approved the Official Zoning Map of Muntinlupa. Furthermore, the very reason for the enactment of Muntinlupa Zoning Ordinance No. 91-39 is the need to accomplish an updated zoning map, as shown by the following clause in MMC’s Resolution No. 2, series of 1992:

WHEREAS, the Sanguniang Bayan of Muntinlupa, Metro Manila, approved on 10 December 1991 Municipal Ordinance No. 91-39 rezoning the entire municipality (as shown in the accompanying zoning map and described in the attached Appendix "B") as a response to the need to have an updated zoning map. x x x.

It is furthermore noted that TLC’s and the spouses Alfonso’s claim that Lot 25, Block 1, Phase 5 of Ayala Alabang has been and remains to be a residential lot has never been rebutted by AAVA. As regards the comment that Blocks 1 and 3 are not even near the map, we agree with TLC and the spouses Alfonso that this bolsters their position even more, as the distance would make it difficult to commit an error on the map. It is much more plausible to mistype a single digit than to mistake an area for another that is far away from it.

It is therefore crystal clear that there was a typographical error in Muntinlupa Zoning Ordinance No. 91-39. AAVA, however, furthermore claims that even assuming arguendo that there was a typographical error in the said zoning ordinance, the proper remedy is to legislate a new zoning ordinance, following all the formalities therefor, citing the leading case of Resins, Incorporated v. Auditor General.

Again, we disagree.

Resins was decided on the principle of separation of powers, that the judiciary should not interfere with the workings of the executive and legislative branches of government:

If there has been any mistake in the printing of the bill before it was certified by the officers of Congress and approved by the Executive – on which we cannot speculate, without jeopardizing the principle of separation of powers and undermining one of the cornerstones of our democratic system – the remedy is by amendment or curative legislation, not by judicial decree.

In Resins, it was a taxpayer who alleged that there was an error in the printing of the statute, unlike in the case at bar where it is the Municipality (now City) of Muntinlupa itself which seeks to correct its own error in the printing of the ordinance. While it would be a violation of the principle of separation of powers for the courts to interfere with the wordings of a statute, there would be no violation of said principle for the court to merely affirm the correction made by the same entity which committed the error. In Resins, there is a presumption of regularity in favor of the enrolled bill, which the courts should not speculate on. In the case at bar, it is the curative Muntinlupa Resolution No. 94-179 which is entitled to a presumption of regularity.

Finally, AAVA claims that the power to evaluate, approve or disapprove zoning ordinances lies with the HLURB under Article IV, Section 5(b) of Executive Order No. 648. AAVA reminds us that the decisions of administrative agencies on matters pertaining to their jurisdiction will generally not be disturbed by the courts.

We should remind AAVA that the Court of Appeals, the court that was first to reexamine the case at bar, affirmed the Decision of the Office of the President, which had set aside the HLURB ruling. The authority of the HLURB is certainly subordinate to that of the Office of the President and the acts of the former may be set aside by the latter. Furthermore, while it is true that courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies, it should be noted that the HLURB and the then MMC were both tasked to regulate the rezoning of the Metropolitan Manila area. The then Municipality of Muntinlupa submitted Resolution No. 94-179 to both the HLURB and the MMC for their appropriate action. The MMC approved Muntinlupa Resolution No. 94-179, and this approval should be given more weight than the disapproval of the HLURB since it was the MMC itself which issued the Uniform Guidelines for the Rezoning of the Metropolitan Manila Area (MMC Resolution No. 12, Series of 1991), the issuance alleged by AAVA to have been violated by the Municipality of Muntinlupa.

In sum, Muntinlupa Resolution No. 94-179, being a mere corrective issuance, is not invalidated by the lack of notice and hearing as AAVA contends.

Motion to Intervene of Aquino, et al.

It is recalled that the Motion for Leave to Intervene of Aquino, et al., was filed on February 5, 1998, which was three months after the Special Third Division of the Court of Appeals had already rendered its Decision dated November 11, 1997 setting aside the RTC Resolution which had been in favor of TLC and the spouses Alfonso.

Aquino, et al., premised their intervention on their being grade school students in the School of the Holy Cross, wherein they allegedly benefit from the full-inclusion program of said school. Under said full-inclusion program, Aquino, et al., who claim to suffer from various learning disabilities and behavioral disorders, are enrolled full-time in educational settings enjoyed by regular, typically developing children. Aquino, et al., alleges that TLC is the only educational institution in the Philippines that offers a full-inclusion program, adding that other schools offer only partial integration programs wherein children with special needs join their typically developing classmates only in certain classes.

Considering the date of the Motion for Leave to Intervene, February 5, 1998, it is apparent that Aquino, et al., would not still be in grade school at this time, thus rendering their alleged interest in this case moot. Neither could Aquino, et al., claim to represent other special children since the Motion for Reconsideration filed with the Motion for Leave to Intervene bore no indication that it was intended as a class action; they merely sought to represent themselves. Since the interest of Aquino, et al., in the instant case is already moot, it is but proper for us to affirm the denial of their Motion for Leave to Intervene before the trial court.

Assuming, however, for the sake of argument, that Aquino, et al.’s, interest in the injunction suit had not yet been mooted, we nevertheless find no reversible error in the Court of Appeals’ denial of their Motion for Leave to Intervene.

The Motion to Intervene filed by Aquino, et al., was denied in the same Resolution wherein the Court of Appeals denied the Motion for Reconsideration of TLC and the spouses Alfonso. The ground for the denial of Aquino, et al.’s, Petition is Section 2, Rule 19 of the 1997 Rules on Civil Procedure, which provides:

Sec. 2. Time to intervene. – The motion to intervene may be filed at any time before rendition of judgment by the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on the original parties.

This section is derived from the former Section 2, Rule 12, which then provided that the motion to intervene may be filed "before or during a trial." Said former phraseology gave rise to ambiguous doctrines on the interpretation of the word "trial," with one decision holding that said Motion may be filed up to the day the case is submitted for decision,30 while another stating that it may be filed at any time before the rendition of the final judgment.31 This ambiguity was eliminated by the present Section 2, Rule 19 by clearly stating that the same may be filed "at any time before rendition of the judgment by the trial court," in line with the second doctrine above-stated. The clear import of the amended provision is that intervention cannot be allowed when the trial court has already rendered its Decision, and much less, as in the case at bar, when even the Court of Appeals had rendered its own Decision on appeal.

Aquino, et al., claim that they could not have intervened in the case earlier, as the full-inclusion program was allegedly commenced by defendants TLC and the spouses Alfonso only in 1997. However, said defendants cannot be benefited by their allegedly recent introduction of a full-inclusion program. While we sympathize with the plight of the minor intervenors, we cannot allow that a program commenced by the defendants way beyond the institution of the case in 1992 could be considered as a valid defense. To do so would put into the hands of the defendant in a case the power to introduce new issues to a litigation on appeal with the assistance of intervenors.

Injunction against the operation of the School of the Holy Cross

Effect of Ordinance No. 91-39, as corrected by Resolution No. 94-179 to the Deed of Restrictions

In reversing itself on Motion for Reconsideration, the RTC cited the Ortigas case and held that the earlier residential classification can no longer be enforced due to the reclassification by Muntinlupa Municipal Ordinance No. 91-39 of the subject property.

In Ortigas, the restriction of exclusive use for residential purposes was contained in the Deeds of Sale of the subject properties at the insistence of developer Ortigas & Co. and was annotated in the corresponding titles thereof. Therein defendant Feati Bank and Trust Co. eventually acquired the subject properties from the successor-in-interest of the original buyers; the deeds of sale and the TCTs issued likewise reflected the same restriction. However, the then Municipal Council of Mandaluyong, Rizal passed a Resolution declaring the area to which the subject property is situated as an industrial and commercial zone. Ortigas & Co. later on sued Feati Bank, seeking an injunction to restrain the latter from completing a commercial bank building on the premises. This Court held that the Mandaluyong Resolution was passed in the exercise of police power.33 Since the motives behind the passage of the questioned resolution is reasonable, and it being a legitimate response to a felt public need, not whimsical or oppressive, the non-impairment of contracts clause of the Constitution will not bar the municipality’s exercise of police power.

As previously stated, the Court of Appeals set aside the RTC Resolution and reinstated the original RTC Decision enjoining TLC and the spouses Alfonso from the operation of the school beyond nursery and kindergarten classes with a maximum of two classrooms. The Court of Appeals held that there is no conflict between the Deed of Restrictions, which limited the use of the property for the establishment of a preparatory school, and the provisions of the Muntinlupa Zoning Ordinance No. 91-39, which reclassified the subject property as "institutional." The Court of Appeals continued that there are valid grounds for it not to apply the Ortigas case cited by the RTC Resolution, holding that while the subject property in said case was found in an area classified as industrial and commercial, "a study of the location of defendants’ school would clearly reveal that the same is situated within a residential area – the exclusive Ayala Alabang Village."

TLC and the spouses Alfonso insist on the applicability of Ortigas in the case at bar, and likewise cited Presley v. Bel-Air Village Association, Inc. in order to drive home its point that reclassification of properties is a valid exercise of the state’s police power, with which contractual obligations should be reconciled.

AAVA counters that even where the exercise of police power is valid, the same does not operate to automatically negate all other legal relationships in existence since the better policy is to reconcile the conflicting rights and to preserve both instead of nullifying one against the other, citing the case of Co v. Intermediate Appellate Court. AAVA thus adopt the finding of the Court of Appeals that even assuming that the subject property has been validly reclassified as an institutional zone, there is no real conflict between the Deed of Restrictions and said reclassification.

A careful study of the pertinent documents yields the conclusion that there is indeed a way to harmonize the seemingly opposing provisions in the Deed of Restrictions and the assailed zoning ordinance.

To recall, the annotation at the back of TCT No. 149166 covering the subject property provides:

PE-222/T-134042 – RESTRICTIONS – The property cannot be subdivided for a period of fifty (50) years from the date of sale. The property shall be used exclusively for the establishment and maintenance thereon of a preparatory (nursery and kindergarten) school which may include such installations as an office for school administration, playground and garage for school vehicles. x x x.

It is noted that the above restriction limits the use of the subject property for preparatory (nursery and kindergarten) school, without regard to the number of classrooms. The two-classroom limit is actually imposed, not by the Deed of Restrictions, but by MMC Ordinance No. 81-01, otherwise known as the Comprehensive Zoning Ordinance for the National Capital Region, which classified Ayala Alabang Village as a low density residential area or an "R-1 zone." The principal permitted uses of a "low-density residential area" or "R-1 zone," the classification of the subject property if not for the correction under Muntinlupa Municipal Resolution No. 94-179, is listed in Comprehensive Zoning Ordinance No. 81-01 as follows:

In R-1 districts, no building, structure or land used, and no building or structure shall be erected or altered in whole or in part except for one or more of the following:

Principal Uses

1. One-family dwellings;

2. Duplex type buildings;

3. Churches or similar places of worship and dwelling for the religious and seminaries;

4. Nursery and kindergarten schools, provided that they do not exceed two (2) classrooms;

5. Clubhouses, lodges and other social centers;

6. Parks, playgrounds, pocket parks, parkways, promenades and playlots;

7. Recreational uses such as golf courses, tennis courts, baseball diamonds, swimming pools and similar uses operated by the government or private individuals as membership organizations for the benefit of their members, families or guests not primarily for gain;

8. Townhouses.

On the other hand, the following are the principal uses of an institutional site, the classification of the subject property by virtue of Ordinance No. 91-39 as corrected by Muntinlupa Municipal Resolution No. 94-179:

Institutional

Principal Uses

1. Barangay health centers;

2. Day-care centers;

3. Puericulture centers;

4. Clinics, family planning clinics and children’s clinics;

5. Nursery and kindergarten schools;

6. Elementary schools;

7. Elementary and high school;

8. Local civic centers, local auditoriums, halls and exhibition centers;

9. Churches, temples and mosques;

10. Chapels;

11. Barangay centers;

12. Maternity hospitals;

13. National executive, judicial, legislative and related facilities and activities;

14. Government buildings;

15. Tertiary and provincial hospitals and medical center;

16. National museums and galleries;

17. Art galleries;

18. Planetarium;

19. Colleges or universities;

20. Vocational and technical schools, special training;

21. Convents and seminaries;

22. Welfare and charitable institutions;

23. Municipal buildings;

24. Fire and police station buildings;

25. Local museum and libraries;

26. University complexes; and

27. Penal institutions.40 (Emphasis supplied.)

The jurisprudence cited by TLC and the spouses Alfonso requires a meticulous review. We find that a clarification of the doctrines laid down in the aforestated cases of Co, Ortigas, and Presley is in order.

In the Ortigas case which had been interpreted differently by the RTC and the Court of Appeals, this Court, in upholding the exercise of police power attendant in the reclassification of the subject property therein over the Deed of Restrictions over the same property, took into consideration the prevailing conditions in the area:

Resolution No. 27, s-1960 declaring the western part of Highway 54, now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality. Judicial notice may be taken of the conditions prevailing in the area, especially where lots Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial complexes have flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong, through its Municipal Council, was reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution.

Near the end of the Ortigas Decision, this Court added:

Applying the principle just stated to the present controversy, We can say that since it is now unprofitable, nay a hazard to the health and comfort, to use Lots Nos. 5 and 6 for strictly residential purposes, defendants-appellees should be permitted, on the strength of the resolution promulgated under the police power of the municipality, to use the same for commercial purposes. In Burgess v. Magarian, et al., it was held that "restrictive covenants running with the land are binding on all subsequent purchasers x x x." However, Section 23 of the zoning ordinance involved therein contained a proviso expressly declaring that the ordinance was not intended "to interfere with or abrogate or annul any easements, covenants or other agreement between parties." In the case at bar, no such proviso is found in the subject resolution.

In the case at bar, as observed by the Court of Appeals, the subject property, though declared as an institutional lot, nevertheless lies within a residential subdivision and is surrounded by residential lots. Verily, the area surrounding TLC did not undergo a radical change similar to that in Ortigas but rather remained purely residential to this day. Significantly, the lot occupied by TLC is located along one of the smaller roads (less than eight meters in width) within the subdivision. It is understandable why ALI, as the developer, restricted use of the subject lot to a smaller, preparatory school that will generate less traffic than bigger schools. With its operation of both a preparatory and grade school, TLC’s student population had already swelled to around 350 students at the time of the filing of this case. Foreseeably, the greater traffic generated by TLC’s expanded operations will affect the adjacent property owners enjoyment and use of their own properties. AAVA’s and ALI’s insistence on (1) the enforcement of the Deed of Restrictions or (2) the obtainment of the approval of the affected residents for any modification of the Deed of Restrictions is reasonable. On the other hand, the then Municipality of Muntinlupa did not appear to have any special justification for declaring the subject lot as an institutional property. On the contrary, Engr. Hector S. Baltazar, the Municipal Planning and Development Officer of Muntinlupa, testified that in declaring the subject property as institutional the municipality simply adopted the classification used in a zoning map purportedly submitted by ALI itself. In other words, the municipality was not asserting any interest or zoning purpose contrary to that of the subdivision developer in declaring the subject property as institutional.

It is therefore proper to reconcile the apparently conflicting rights of the parties herein pursuant to the aforementioned Co case. In Co, agricultural tenant Roaring, facing a demolition order, filed a complaint for maintenance of possession with the Court of Agrarian Relations of Quezon City. The landowner challenged the jurisdiction of the court arguing that the classification of the subject property therein from agricultural to a light industrial zone. This Court denied the applicability of the reclassification, and clarified Ortigas:

This is not to suggest that a zoning ordinance cannot affect existing legal relationships for it is settled that it can legally do so, being an exercise of the police power. As such, it is superior to the impairment clause. In the case of Ortigas & Co. v. Feati Bank, for example, we held that a municipal ordinance establishing a commercial zone could validly revoke an earlier stipulation in a contract of sale of land located in the area that it could be used for residential purposes only. In the case at bar, fortunately for the private respondent, no similar intention is clearly manifested. Accordingly, we affirm the view that the zoning ordinance in question, while valid as a police measure, was not intended to affect existing rights protected by the impairment clause.

It is always a wise policy to reconcile apparently conflicting rights under the Constitution and to preserve both instead of nullifying one against the other. x x x.

In Presley, the Deed of Restrictions of Bel-Air subdivision likewise restricted its use for a residential purpose. However, the area (Jupiter Street) where the lot was located was later reclassified into a high density commercial (C-3) zone. Bel-Air Village Association (BAVA) sought to enjoin petitioner therein from operating its Hot Pan de Sal Store, citing the Deed of Restrictions. We allowed the operation of the Hot Pan de Sal Store despite the Deed of Restrictions, but not without examining the surrounding area like what we did in Ortigas:

Jupiter Street has been highly commercialized since the passage of Ordinance No. 81-01. The records indicate that commercial buildings, offices, restaurants, and stores have already sprouted in this area. We, therefore, see no reason why the petitioner should be singled out and prohibited from putting up her hot pan de sal store. Thus, in accordance with the ruling in the Sangalang case, the respondent court's decision has to be reversed.

Furthermore, we should also take note that in the case of Presley, there can be no reconciliation between the restriction to use of the property as a residential area and its reclassification as a high density commercial (C-3) zone wherein the use of the property for residential purposes is not one of the allowable uses.

Alleged estoppel on the part of AAVA from enforcing the Deed of Restrictions

TLC and the spouses Alfonso’s main argument against the enforcement of the Deed of Restrictions on their property is the AAVA had allegedly abrogated said restrictions by its own acts. TLC and the spouses Alfonso proceeded to enumerate acts allegedly constituting a setting aside of said restrictions:

1. AAVA Village Manager Frank Roa admitted before the trial court that AAVA had previously approved the proposed construction of a school building with 24 classrooms, which approval is further evidenced by a stamp mark of AAVA on the Site Development Plan with the signature of Frank Roa himself.44

2. While the case was submitted for resolution with the Court of Appeals, AAVA, through its president Jesus M. Tañedo, authorized through a letter the construction of a new "school building extension."45

3. ALI itself requested the reclassification of the subject property as institutional, as allegedly proven by the testimony of then Municipal Planning and Development Officer Engineer Hector S. Baltazar, who said:

Engineer Baltazar:

There was a publication, your Honor, the developer of the Ayala Alabang Village, in fact, was the one who submitted this map of theirs. In deference to the Ayala Land, Inc. which is the developer of the Ayala Alabang Village whom we know "na maayos naman ang kanilang zoning," we just adopted what they submitted to us. Whereas, the other areas are "talagang pinag-aralan pa namin."

TLC and the spouses Alfonso point out that the subject property was considered institutional in the Official Zoning Map, thereby implying that the submission of the latter constitutes an intent to have the subject property reclassified as institutional.

4. ALI assented to the reclassification of the subject property to institutional, as shown by its letter dated July 24, 1991, wherein it stated:

This refers to the 26 June 1991 letter of Mr. Manuel Luis C. Gonzales concerning the proposed expansion of the school curriculum to grade school of the Learning Child Pre-school owned by Mrs. Mary Anne Alfonso.

Insofar as an evaluation of such proposed expansion of the school is concerned, we believe that it is a worthy undertaking that will definitely benefit the community, and thus interpose no objection to such proposal as long as the conditions mentioned below are met.47

We are not convinced.

Estoppel by deed is "a bar which precludes one party from asserting as against the other party and his privies any right or title in derogation of the deed, or from denying the truth of any material facts asserted in it."48 We have previously cautioned against the perils of the misapplication of the doctrine of estoppel:

Estoppel has been characterized as harsh or odious, and not favored in law. When misapplied, estoppel becomes a most effective weapon to establish an injustice, inasmuch as it shuts a man’s mouth from speaking the truth and debars the truth in a particular case. Estoppel cannot be sustained by mere argument or doubtful inference; it must be clearly proved in all its essential elements by clear, convincing and satisfactory evidence. x x x.

TLC and the spouses Alfonso failed to prove by clear and convincing evidence the gravity of AAVA’s acts so as to bar the latter from insisting compliance with the Deed of Restrictions.

In numbers 1 and 2 above, TLC and the spouses Alfonso claim that the previous approvals by AAVA of the construction of additional classrooms allegedly constitute a revocation of the Deed of Restrictions. However, as we have previously discussed, the two-classroom restriction is not imposed in the Deed of Restrictions but rather in MMC Ordinance No. 81-01. The alleged assent of AAVA to the construction of additional classrooms is not at all inconsistent with the provisions of the Deed of Restrictions, which merely limit the use of the subject property "exclusively for the establishment and maintenance thereon of a preparatory (nursery and kindergarten) school which may include such installations as an office for school administration, playground and garage school vehicles."

The circumstances around the enumerated acts of AAVA also show that there was no intention on the part of AAVA to abrogate the Deed of Restrictions nor to waive its right to have said restrictions enforced. Frank Roa’s signature in the Site Development Plan came with the note: "APPROVED SUBJECT TO STRICT COMPLIANCE OF CAUTIONARY NOTICES APPEARING ON THE PLAN AND TO RESTRICTIONS ENCUMBERING THE PROPERTY REGARDING THE USE AND OCCUPANCY OF THE SAME." The Site Development Plan itself was captioned "The LEARNING CHILD PRE-SCHOOL,"  showing that the approval was for the construction of a pre-school, not a grade school. AAVA’s letter dated March 20, 1996 contained an even more clear cut qualification; it expressly stated that the approval is "subject to the conditions stipulated in the Deed of Restrictions covering your above-mentioned property, which states, among others, that the property shall be used exclusively for the establishment and maintenance thereon of a PREPARATORY (NURSERY AND KINDERGARTEN) SCHOOL."

We furthermore accept AAVA’s explanation as regards the March 20, 1996 letter that at it had to allow the construction of the new school building extension in light of the trial court’s Orders dated March 9, 1995 and August 3, 1995. It should be noted here that AAVA was the party appealing to the Court of Appeals as the trial court decision favorable to them had been reversed by the same court on Motion for Reconsideration.

Numbers 3 and 4 are acts allegedly performed by ALI. AAVA claims that these acts cannot be considered in the case at bar under the res inter alios acta rule, as ALI is not a party to the case. Section 28, Rule 130 of the Rules of Court embodies said rule:

Sec. 28. Admission by third party. — The rights of a party cannot be prejudiced by an act, declaration, or omission of another, except as hereinafter provided.

We have to clarify that ALI’s statements, if damaging to AAVA, would be binding on the latter. The general Ayala Alabang Village "Deed Restrictions," which was attached to the Deed of Restrictions on the title of the subject property, expressly state that: "2. Compliance with the said restrictions, reservation, easements and conditions maybe enjoined and/or enforced by Court action by Ayala Corporation and/or the Ayala Alabang Village Association, their respective successors and assigns, or by any member of the Ayala Alabang Village Association." As such, it appears that Ayala Corporation is jointly interested with AAVA in an action to enforce the Deed of Restrictions, and is therefore covered under the following exception to the res inter alios acta rule:

Sec. 29. Admission by copartner or agent. — The act or declaration of a partner or agent of the party within the scope of his authority and during the existence of the partnership or agency, may be given in evidence against such party after the partnership or agency is shown by evidence other than such act or declaration. The same rule applies to the act or declaration of a joint owner, joint debtor, or other person jointly interested with the party.

However, the acts of ALI are not at all damaging to the position of AAVA. The act in number 1 concerns the alleged assent of ALI to the reclassification of the subject property as institutional which, as we have already ruled, does not amount to a nullification of the Deed of Restrictions. As regards the act in number 2, the statement in ALI’s July 24, 1991 letter that it believes the expansion of TLC is a "worthy undertaking," it should be pointed out that ALI’s purported assent came with conditions:

Insofar as an evaluation of such proposed expansion of the school is concerned, we believe that it is a worthy undertaking that will definitely benefit the community, and thus interpose no objection to such proposal as long as the conditions mentioned below are met.

It is true that the Ayala Alabang Village Association (AAVA) Board does not have the authority on its own to alter the Deed of Restrictions for Ayala Alabang Village, and the approval of Ayala is an indispensable condition precedent to any change in the restrictions. However, we feel that any change in the restrictions for Ayala Alabang should be concurred to by the AAVA Board on the premise that any change in the restrictions affects the general welfare of the community which is the primary concern of the AAVA Board. On this same premise, we have imposed as an additional condition to our approval of the change in restrictions, that such change should be approved by the residents of the Village or by the residents of the particular district where the school is situated, at the option of the Board. We feel that the concurrence of not only the AAVA Board but also of the residents of the Village or of the affected district (as the case may be) is fair and reasonable under the circumstances.

As previously stated, a majority of AAVA’s members, on April 5, 1992, voted to ratify the Board of Governors’ resolutions that the Deed of Restrictions should be implemented. Therefore, the conditions for ALI’s approval of the alteration of the Deed of Restrictions, namely the concurrence of the AAVA Board and the approval of the affected residents of the village, were clearly not met.

Finally, a thorough examination of the records of the case furthermore shows that AAVA consistently insisted upon compliance with the Deed of Restrictions:

1. Petitioner Mary Anne Alfonso, as directress of TLC, wrote AAVA on May 20, 1991 requesting "reconsideration and approval to modify the restrictions at our property at 111 Cordillera to include the establishment and maintenance of a grade school" and avowed to make a similar representation to ALI.55 AAVA replied on June 26, 1991 with a letter stating that the matter of interpretation or relaxation of the Deed of Restrictions is not within its power, but of ALI, and thus referred the request to the latter. ALI wrote AAVA on July 24, 1991 stating that while it interposes no objection to the modification of the restrictions on the subject property, any change on such restrictions should be concurred in by AAVA’s Board of Governors and approved by the residents of the village, particularly the residents of the district where the school is situated. AAVA’s Board of Governors, during its regular meeting on August 27, 1991, voted unanimously to retain the restrictions and recommended said retention to ALI.

2. The spouses Alfonso wrote AAVA on October 25, 1991 requesting a reconsideration of the decision of AAVA’s Board of Governors. On October 31, 1991, AAVA wrote ALI to inquire about the reasons for the restrictions. ALI replied that the restrictions were imposed because the school sites located along small roads had to be limited to small nursery schools since the latter generate less traffic than bigger schools. ALI reiterated that the residents should be consulted prior to any change in the restrictions. In the meantime, TLC proceeded to operate a grade school on the subject property. On February 27, 1992, AAVA’s former counsel wrote TLC a letter demanding that they suspend the enrollment of students other than for pre-school.

3. The spouses Alfonso wrote AAVA on March 11, 1992, reiterating their request to operate a grade school in the subject property. On March 24, 1992, the Board of Governors of AAVA affirmed its earlier decision to retain the restrictions. On March 27, 1992, AAVA replied to the spouses Alfonso’s letter informing them of the denial.

4. On April 5, 1992, during AAVA’s annual membership meeting, the spouses Alfonso appealed directly to the members of AAVA. Majority of AAVA’s members voted to ratify the Board of Governor’s Resolutions,

5. On April 24, 1992, the spouses Alfonso wrote AAVA another letter requesting that it be allowed to continue holding classes for Grades I to III at their premises for at least the coming school year, since they needed time to relocate the same outside the village. AAVA replied on April 30, 1992, explaining that the Board of Governors has to follow the April 5, 1992 decision of the members and demanded that the TLC close its grade school in the coming school year.

6. On June 4, 1992, the spouses Alfonso wrote to AAVA again, appealing to be allowed to continue in their premises for three more months, June to August, after which they solemnly promised to move the grade school out of the village, possibly in TLC’s former school site in B.F. Homes Parañaque. AAVA replied on June 16, 1992 denying their request, and demanded that TLC cease its operation of a grade school on the subject property.

7. In view of the continued operation of the grade school, AAVA sent letters to TLC on August 17 1992 and September 4, 1992 demanding that the latter immediately cease and desist from continuing and maintaining a grade school in the subject property.

From the foregoing, it cannot be said that AAVA abrogated the Deed of Restrictions. Neither could it be deemed estopped from seeking the enforcement of said restrictions.

DISPOSITION

This Court hereby resolves to affirm with modification the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 51096 insofar as they reinstated the July 22, 1994 RTC Decision ordering the defendants in Civil Case No. 92-2950 to cease and desist from the operation of the Learning Child School beyond nursery and kindergarten classes. Pursuant to Muntinlupa Ordinance No. 91-39, as corrected under Muntinlupa Municipal Resolution No. 94-179, we therefore delete the two-classroom restriction from said Decision.

This Court, however, understands the attendant difficulties this Decision could cause to the current students of the School of the Holy Cross, who are innocent spectators to the litigation in the case at bar. We therefore resolve that the current students of the School of the Holy Cross be allowed to finish their elementary studies in said school up to their graduation in their Grade 7. The school, however, shall no longer be permitted to accept new students to the grade school.

WHEREFORE, the Court rules on the consolidated Petitions as follows:

1. The Petition in G.R. No. 134269 is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 51096 dated November 11, 1997 and July 2, 1998, respectively, insofar as they reinstated the July 22, 1994 RTC Decision ordering the defendants in Civil Case No. 92-2950 to cease and desist from the operation of the Learning Child School beyond nursery and kindergarten classes with a maximum of two classrooms, is hereby AFFIRMED with the MODIFICATION that (1) the two-classroom restriction is deleted, and (2) the current students of the School of the Holy Cross, the Learning Child School’s grade school department, be allowed to finish their elementary studies in said school up to their graduation in their Grade 7. The enrollment of new students to the grade school shall no longer be permitted.

2. The Petition in G.R. No. 134440 is DISMISSED on the ground of mootness. The Resolution of the Court of Appeals in CA-G.R. CV No. 51096 dated July 2, 1998, insofar as it dismissed the Motion for Leave to Intervene filed by Jose Marie V. Aquino, Lorenzo Maria E. Veloso, Christopher E. Walmsley, Joanna Marie S. Sison, and Matthew Raphael C. Arce is hereby AFFIRMED.

3. The Petition in G.R. No. 144518 is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 54438, dated August 15, 2000, which upheld the validity of a Mandaluyong Municipal Resolution correcting an alleged typographical error in a zoning ordinance is hereby AFFIRMED.

No pronouncement as to costs.

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Case Digest: Property Case Digests (Property in Relation to Whom it Belongs, Arts. 420-426)

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