1. IAC vs.

Cusi

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-46729 November 19, 1982

LAUSAN AYOG, BENITO AYOG, DAMASO AYOG, JULIO AYOG, SEGUNDA
AYOG, VICENTE ABAQUETA, BERNARDINO ADORMEO, VIDAL ALBANO,
FELICIANO ARIAS, ANTONIO BALDOS, MAXIMO BALDOS, ROMERO
BINGZON, EMILIO CADAYDAY, FRUCTUOSO CHUA, SR., HERACLEO
CHUA, GUILLERMO DAGOY, ABDON DEIMOS, NICASIO DE LEON,
JULIANA VDA. DE DIANNA, DEMOCRITO DEVERO, ALFREDO
DIVINAGRACIA, ESTEBAN DIVINAGRACIA, LEODEGARDIO
DIVINAGRACIA, NELLO DIVINAGRACIA, MERQUIADES EMBERADOR,
JESUS EMPERADO, PORFERIO ENOC, SOFRONIO ENOC, RAFAEL
GAETOS, NICOLAS GARLET, TRINIDAD GARLET, FORTUNATA GEONZON,
NICOLADA NAQUILA, TORIBIO NAQUILA, EFREN OKAY, ELPIDIO OKAY,
SR., DIEGO ONGRIA, ERNESTO PANARES, VICENTE PATULOT, IGNACIA
RIBAO, JUANO RICO, JESUS ROSALITA, ARMANDO TANTE and
ANSELMO VALMORES, petitioners,
vs.
JUDGE VICENTE N. CUSI, JR., Court of First Instance of Davao, Branch I,
PROVINCIAL SHERIFF OF DAVAO, and BINAN DEVELOPMENT CO., INC.,
respondents. MINISTER OF NATURAL RESOURCES and DIRECTOR OF
LANDS, intervenors.

AQUINO, J.:

This case is about the application of section 11, Article XIV of the 1973
Constitution (disqualifying a private corporation from purchasing public lands) to
a 1953 sales award made by the Bureau of Lands, for which a sales patent and
Torrens title were issued in 1975, and to the 1964 decision of the trial court,
ejecting some of the petitioners from the land purchased, which decision was
affirmed in 1975 by the Court of Appeals. That legal question arises under the
following facts:

On January 21, 1953, the Director of Lands, after a bidding, awarded to Biñan
Development Co., Inc. on the basis of its 1951 Sales Application No. V-6834
Cadastral Lot No. 281 located at Barrio Tamugan, Guianga (Baguio District),
Davao City with an area of about two hundred fifty hectares. Some occupants of
the lot protested against the sale. The Director of Lands in his decision of August
30, 1957 dismissed the protests and ordered the occupants to vacate the lot and
remove their improvements. No appeal was made from that decision.

The Director found that the protestants (defendants in the 1961 ejectment suit,
some of whom are now petitioners herein) entered the land only after it was
awarded to the corporation and, therefore, they could not be regarded as bona
fide occupants thereof. The Director characterized them as squatters. He found
that some claimants were fictitious persons (p. 30, Rollo of L-43505, Okay vs.
CA). He issued a writ of execution but the protestants defied the writ and refused
to vacate the land (p. 28, Rollo of L-43505, Okay vs. CA). **
Because the alleged occupants refused to vacate the land, the corporation filed against them on February 27, 1961 in the Court of First
Instance of Davao, Civil Case No. 3711, an ejectment suit (accion publiciana). The forty defendants were Identified as follows:

1. Vicente Abaqueta 21. Eniego Garlic

2. Candido Abella 22. Nicolas Garlic

3. Julio Ayog 23. Rufo Garlic

4. Arcadio Ayong 24. Alfonso Ibales

5. Generoso Bangonan 25. Julian Locacia

6. Lomayong Cabao 26. Filomeno Labantaban

7. Jose Catibring 27. Arcadio Lumantas

8. Teodolfo Chua 28. Santos Militante

9. Guillermo Dagoy 29. Toribio Naquila

10. Anastacia Vda. de Didal 30. Elpidio Okay

11. Alfredo Divinagracia 31. Guillermo Omac

12. Silverio Divinagracia 32. Emilio Padayday

13. Galina Edsa 33. Marcosa Vda. de Rejoy

14. Jesus Emperado 34. Lorenzo Rutsa

15. Porfirio Enoc 35. Ramon Samsa

16. Benito Ente 36. Rebecca Samsa

17. German Flores 37. Alfeao Sante

18. Ciriaco Fuentes 38. Meliton Sante

19. Pulong Gabao 39. Amil Sidaani

20. Constancio Garlic 40. Cosme Villegas

That ejectment suit delayed the issuance of the patent. The trial court found that
the protests of twenty of the abovenamed defendants were among those that
were dismissed by the Director of Lands in his 1957 decision already mentioned.

On July 18, 1961 the purchase price of ten thousand pesos was fully paid by
Binan Development Co., Inc. On November 10, 1961, an official of the Bureau of
Lands submitted a final investigation report wherein it was stated that the
corporation had complied with the cultivation and other requirements under the
Public Land Law and had paid the purchase price of the land (p. 248, Rollo).

It was only more than thirteen years later or on August 14, 1975 when Sales
Patent No. 5681 was issued to the corporation for that lot with a reduced area of
175.3 hectares. The patent was registered. Original Certificate of Title No. P-
5176 was issued to the patentee.

The Director of Lands in his memorandum dated June 29, 1974 for the Secretary
of Natural Resources, recommending approval of the sales patent, pointed out
that the purchaser corporation had complied with the said requirements long
before the effectivity of the Constitution, that the land in question was free from
claims and conflicts and that the issuance of the patent was in conformity with
the guidelines prescribed in Opinion No. 64, series of 1973, of Secretary of
Justice Vicente Abad Santos and was an exception to the prohibition in section
11, Article XIV of the Constitution (p. 258, Rollo).

Secretary of Natural Resources Jose J. Leido, Jr., in approving the patent on

August 14, 1975, noted that the applicant had acquired a nested right to its
issuance (p. 259, Rollo).

Before that patent was issued, there was a trial in the ejectment suit. Fifteen
defendants (out of forty), namely, Julio Ayog, Guillermo Bagoy, Generoso
Bangonan, Jose Catibring, Porfirio Enoc, Jose Emperado, Arcadio Lomanto,
Toribio Naquila, Elpidio Okay, Alfeo Sante, Meliton Sante, Ramon Samsa,
Rebecca Samsa, Arcadio Sarumines and Felix Tahantahan, testified that they
entered the disputed land long before 1951 and that they planted it to coconuts,
coffee, jackfruit and other fruit trees. (p. 28, Record on Appeal).

The trial court did not give credence to their testimonies. It believed the report of
an official of the Bureau of Lands that in 1953 the land was free from private
claims and conflicts and it gave much weight to the decision of the Director of
Lands dismissing the protests of the defendants against the sales award (p. 30,
Record on Appeal).

Furthermore, the trial court during its ocular inspection of the land on November
8, 1964 found that the plantings on the land could not be more than ten years
old, meaning that they were not existing in 1953 when the sales award was
made. Hence, the trial court ordered the defendants to vacate the land and to
restore the possession thereof to tile company. The Court of Appeals affirmed
that judgment on December 5, 1975 in its decision in Binan Development Co.,
Inc. vs, Sante, CA-G.R. No. 37142- R. The review of the decision was denied by
this Court on May 17, 1976 in Elpidio Okay vs. Court of Appeals, L-43505.

After the record was remanded to the trial court, the corporation filed a motion for
execution. The defendants, some of whom are now petitioners herein, opposed
the motion. They contended that the adoption of the Constitution, which took
effect on January 17, 1973, was a supervening fact which rendered it legally
impossible to execute the lower court's judgment. They invoked the constitutional
prohibition, already mentioned, that "no private corporation or association may
hold alienable lands of the public domain except by lease not to exceed one
thousand hectares in area."

The lower court suspended action on the motion for execution because of the
manifestation of the defendants that they would file a petition for prohibition in
this Court. On August 24, 1977, the instant prohibition action was filed. Some of
the petitioners were not defendants in the ejectment case.

We hold that the said constitutional prohibition has no retroactive application to

the sales application of Biñan Development Co., Inc. because it had already
acquired a vested right to the land applied for at the time the 1973 Constitution
took effect.

That vested right has to be respected. lt could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand
and twenty-four hectares. Petitioners' prohibition action is barred by the doctrine
of vested rights in constitutional law.
"A right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest" (16 C.J.S. 1173). It is "the
privilege to enjoy property legally vested, to enforce contracts, and enjoy the
rights of property conferred by the existing law" (12 C.J. 955, Note 46, No. 6) or
"some right or interest in property which has become fixed and established and is
no longer open to doubt or controversy" (Downs vs. Blount 170 Fed. 15, 20, cited
in Balboa vs. Farrales, 51 Phil. 498, 502).

The due process clause prohibits the annihilation of vested rights. "A state may
not impair vested rights by legislative enactment, by the enactment or by the
subsequent repeal of a municipal ordinance, or by a change in the constitution of
the State, except in a legitimate exercise of the police power" (16 C.J.S. 1177-
78).

It has been observed that, generally, the term "vested right" expresses the
concept of present fixed interest, which in right reason and natural justice should
be protected against arbitrary State action, or an innately just and imperative
right which an enlightened free society, sensitive to inherent and irrefragable
individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing
Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd 587).

Secretary of Justice Abad Santos in his 1973 opinion ruled that where the
applicant, before the Constitution took effect, had fully complied with all his
obligations under the Public Land Act in order to entitle him to a sales patent,
there would seem to be no legal or equitable justification for refusing to issue or
release the sales patent (p. 254, Rollo).

In Opinion No. 140, series of 1974, he held that as soon as the applicant had
fulfilled the construction or cultivation requirements and has fully paid the
purchase price, he should be deemed to have acquired by purchase the
particular tract of land and to him the area limitation in the new Constitution
would not apply.

In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the
cultivation requirements were fulfilled before the new Constitution took effect but
the full payment of the price was completed after January 17, 1973, the applicant
was, nevertheless, entitled to a sales patent (p. 256, Rollo).

Such a contemporaneous construction of the constitutional prohibition by a high

executive official carries great weight and should be accorded much respect. It is
a correct interpretation of section 11 of Article XIV.
In the instant case, it is incontestable that prior to the effectivity of the 1973
Constitution the right of the corporation to purchase the land in question had
become fixed and established and was no longer open to doubt or controversy.

Its compliance with the requirements of the Public Land Law for the issuance of a
patent had the effect of segregating the said land from the public domain. The
corporation's right to obtain a patent for that land is protected by law. It cannot be
deprived of that right without due process (Director of Lands vs. CA, 123 Phil.
919).

As we cannot review the factual findings of the trial court and the Court of
Appeals, we cannot entertain petitioners' contention that many of them by
themselves and through their predecessors-in-interest have possessed portions
of land even before the war. They should have filed homestead or free patent
applications.

Our jurisdiction is limited to the resolution of the legal issue as to whether the
1973 Constitution is an obstacle to the implementation of the trial court's 1964
final and executory judgment ejecting the petitioners. On that issue, we have no
choice but to sustain its enforceability.

Nevertheless, in the interest of social justice, to avoid agrarian unrest and to

dispel the notion that the law grinds the faces of the poor, the administrative
authorities should find ways and means of accommodating some of the
petitioners if they are landless and are really tillers of the soil who in the words of
President Magsaysay deserve a little more food in their stomachs, a little more
shelter over their heads and a little more clothing on their backs. The State
should endeavor to help the poor who find it difficult to make both ends meet and
who suffer privations in the universal struggle for existence.

A tiller of the soil is entitled to enjoy basic human rights, particularly freedom from
want. The common man should be assisted in possessing and cultivating a piece
of land for his sustenance, to give him social security and to enable him to
achieve a dignified existence and become an independent, self-reliant and
responsible citizen in our democratic society.

To guarantee him that right is to discourage him from becoming a subversive or

from rebelling against a social order where, as the architect of the French
Revolution observed, the rich are choking with the superfluities of life but the
famished multitude lack the barest necessities.

Indeed, one purpose of the constitutional prohibition against purchases of public

agricultural lands by private corporations is to equitably diffuse land ownership or
to encourage "owner-cultivatorship and the economic family- size farm" and to
prevent a recurrence of cases like the instant case. Huge landholdings by
corporations or private persons had owned social unrest.

Petitioners' counsel claims that Biñan Development Co., Inc. seeks to execute
the judgment in Civil Case No. 3711, the ejectment suit from which this
prohibition case arose, against some of the petitioners who were not defendants
in that suit (p. 126, Rollo).

Those petitioners are not successors-in-interest of the defendants in the

ejectment suit. Nor do they derive their right of possession from the said
defendants. Those petitioners occupy portions of the disputed land distinct and
separate from the portions occupied by the said defendants.

We hold that judgment cannot be enforced against the said petitioners who were
not defendants in that litigation or who were not summoned and heard in that
case. Generally, "it is an axiom of the law that no man shall be affected by
proceedings to which he is a stranger" (Ed. A. Keller & Co. vs Ellerman &
Bucknall Steamship Co., 38 Phil. 514, 520).

To enforce the judgment against those who were not parties to the case and who
occupy portions of the disputed land distinct and separate from the portions
occupied by the defendants in the ejectment suit, would be violative of due
process of law, the law which, according to Daniel Webster in his argument in the
Dartmouth College case, is the law of the land, a law which hears before it
condemns, which proceeds upon inquiry and renders judgment only after trial.
"The meaning is, that every citizen shall hold his life, liberty, property, and
immunities, under the protection of the general rules which govern society."
(Cited in Lopez vs. Director of Lands, 47 Phil. 23, 32. See Gatchalian vs. Arlegui,
L-35615 and Tang Tee vs. Arlegui, L-41360, February 17, 1977, 75 SCRA 234
and Berses vs. Villanueva, 25 Phil. 473.)

Contempt incident.-During the pendency of this case, or at about four o'clock in

the morning of December 12, 1978, Ciriaco Tebayan, Domingo Nevasca, Rogelio
Duterte and Sofronio Etac, employees of the Crown Fruits and Cannery
Corporation, plowed or bulldozed with their tractors a portion of the disputed land
which was occupied by Melquiades Emberador, one of the petitioners herein.
The disputed land was leased by Biñan Development Co., Inc. to the canning
corporation.

The four tractor drivers destroyed the improvements thereon worth about five
thousand pesos consisting of coffee, coconut and banana plants. Emberador
was in the hospital at the time the alleged destruction of the improvements
occurred. However, it should be noted that Emberador was not expressly named
as a defendant in the ejectment suit. Apparently, he is not included in the trial
court's decision although he was joined as a co-petitioner in this prohibition case.

The petitioners in their motion of January 11, 1979 asked that the four tractor
drivers and Honesto Garcia, the manager of Biñan Development Co., Inc., be
declared in contempt of court for having disregarded the restraining order issued
by this Court on August 29, 1977, enjoining specifically Judge Vicente N. Cusi
and the provincial sheriff from enforcing the decision in the ejectment suit, Civil
Case No. 3711 (pp. 46-47, 138- 141, Rollo).

Garcia and the four drivers answered the motion. The incident was assigned for
hearing to Judge Antonio M. Martinez of the Court of First Instance of Davao.
Judge Martinez found that the plowing was made at the instance of Garcia who
told the barrio captain, petitioner Lausan Ayog, a Bagobo, that he (Garcia) could
not wait anymore for the termination of this case.

The record shows that on April 30, 1979 or four months after the said incident,
Emberador, in consideration of P3,500, as the value of the improvements on his
land, executed a quitclaim in favor of the Crown Fruits and Cannery Corporation
(Exh. 1, 2 and 3).

We hold that no contempt was committed. The temporary restraining order was
not directed to Biñan Development Co., Inc. its officers, agents or privies.
Emberador was not named specifically in the trial court's judgment as one of the
occupants to be ejected.

For the redress of whatever wrong or delict was committed against Emberador
by reason of the destruction of his improvements, his remedy is not in a contempt
proceeding but in some appropriate civil and criminal actions against the
destroyer of the improvements.

In resume, we find that there is no merit in the instant prohibition action. The
constitutional prohibition relied upon by the petitioners as a ground to stop the
execution of the judgment in the ejectment suit has no retroactive application to
that case and does not divest the trial court of jurisdiction to enforce that
judgment.

WHEREFORE, the petition is dismissed for lack of merit but with the clarification
that the said judgment cannot be enforced against those petitioners herein who
were not defendants in the ejectment case, Civil Case No. 3711, and over whom
the lower court did not acquire jurisdiction. The contempt proceeding is also
dismissed. No costs.
SO ORDERED.

2. Sta. Maria vs. CA

SYNOPSIS
On January 9, 1985 Manuel Behis mortgaged a parcel of land in favor of the Rural Bank of
Sta. Maria, Pangasinan. After being delinquent in paying his debts, Manuel sold the land to
plaintiffs Rosario Rayandayan and Carmen Arceo in a Deed of Absolute Sale with Assumption
of Mortgage. On the same date, they executed another agreement whereby the plaintiffs were
indebted to Manuel in the amount of P2,400,000.00, which was the real consideration of the
sale. The title to the land, remained in the name of Manuel Behis. After Manuel Behis died,
plaintiffs Rayandayan and Arceo negotiated with the rural bank for the assumption of the
indebtedness of Manuel Behis and the subsequent release of the mortgage on the property by the
bank. The bank was not informed of the real consideration of the sale.Subsequently, the bank
consented to the substitution of Rayandayan and Arceo as mortgage debtors in place of Behis in
a Memorandum of Agreement with restructured and liberalized terms for the payment of the
mortgage debt. When the bank came to know the real consideration of the agreement, the bank
changed heart and transacted the Behis mortgage with Halsema, Inc.. The bank considered its
contract with Rayandayan and Arceo as cancelled. Hence, Rayandayan and Arceo instituted a
civil case against the Rural Bank and Halsema, Inc. for specific performance, declaration of
nullity and/or annulment of mortgage and damages. The lower court declared that the Deed of
Sale with Assumption of Mortgage and the Agreement between the bank and plaintiffs was valid
until annulled or cancelled. However, the plaintiffs were ordered to pay the bank damages as
litigation expenses because of plaintiffs bad faith in deceiving the bank to enter into the
Memorandum of Agreement by concealing the real purchase price of the land sold to them by
Manuel Behis. The plaintiffs and defendant Halsema, Inc. appealed. The Court of Appeals
affirmed the validity of the Memorandum of Agreement between the parties, but reversed the
finding that there was bad faith on the part of the plaintiffs when the bank entered into the
Memorandum of Agreement.
The Supreme Court affirmed the decision of the Court of Appeals. Rayandayan and Arceo
had no duty to disclose the real consideration of the sale between them and Manuel Behis. The
bank security remained unimpaired regardless of the consideration of the sale. Under the terms
of the Agreement, the property remains as security for the payment of the indebtedness, in case
of default of payment.
SYLLABUS
1. CIVIL LAW; CONTRACTS; FRAUD VITIATING CONSENT; ELEMENTS; NOT ESTABLISHED IN
CASE AT BAR.- All the elements of fraud vitiating consent for purposes of annulling a contracting must
concur, to wit: (a) It was employed by a contracting party upon the other; (b) It induced the other party to enter
into the contract; (c) It was serious; and; (d) It resulted in damages and injury to the party seeking
annulment. Petitioner bank has not sufficiently shown that it was induced to enter into the agreement by the
non-disclosure of the purchase price, and that the same resulted in damages to the bank. Indeed, the general
rule is that whosoever alleges fraud or mistake in any transaction must substantiate his allegation, since it is
 presumed that a person takes ordinary care for his concerns and that private transactions have been fair and
regular. Petitioner banks allegation of fraud and deceit have not been established sufficiently and competently
to rebut the presumption of regularity and due execution of the agreement
2. ID.; ID.; ID.; MUST BE THE DETERMINING CAUSE OF THE CONTRACT, OR MUST HAVE
CAUSED THE CONSENT TO BE GIVEN; NOT PRESENT IN CASE AT BAR.- The kind of fraud that
will vitiate a contract refers to those insidious words or machinations resorted to by one of the contracting
parties to induce the other to enter into a contract which without them he would not have agreed to. Simply
stated, the fraud must be the determining cause of the contract, or must have caused the consent to be given. It
is believed that the non-disclosure to the bank of the purchase price of the sale of the land between private
respondents and Manuel Behis cannot be the fraud contemplated by Article 1338 of the Civil Code. From the
sole reason submitted by the petitioner bank that it was kept in the dark as to the financial capacity of private
respondents, the Court cannot see how the omission or concealment of the real purchase price could have
induced the bank into giving its consent to the agreement; or that the bank would not have otherwise given its
consent had it known of the real purchase price. The bank had other means and opportunity of verifying the
financial capacity of private respondents and cannot avoid the contract on the ground that they were kept in the
dark as to the financial capacity by the non-disclosure of the purchase price. As correctly pointed out by
respondent court, the bank security remained unimpaired regardless of the consideration of the sale. Under the
terms of the Memorandum of Agreement, the property remains as security for the payment of the indebtedness,
in case of default of payment. Thus, petitioner bank does not and can not even allege that the agreement was
operating to its disadvantage. In fact, the bank admits that no damages has been suffered by it.
3. ID.; ID.; ID.; SILENCE OR CONCEALMENT; WHEN TO CONSTITUTE FRAUD.- Pursuant to Article
1339 of the Civil Code, silence or concealment, by itself, does not constitute fraud, unless there is a special
duty to disclose certain facts, or unless according to good faith and the usages of commerce the communication
should be made.
4. REMEDIAL LAW; CIVIL PROCEDURE; APPEAL; A PARTY WHO DOES NOT APPEAL FROM
THE DECISION MAY NOT OBTAIN ANY AFFIRMATIVE RELIEF FROM THE APPELLATE
COURT.- It is well-settled that a party who does not appeal from the decision may not obtain any affirmative
relief from the appellate court other than what he has obtained from the lower court, if any, whose decision is
brought up on appeal.

THIRD DIVISION

[G.R. No. 110672. September 14, 1999]

RURAL BANK OF STA. MARIA, PANGASINAN, petitioner vs. THE HONO

RABLE COURT OF APPEALS, ROSARIO R. RAYANDAYAN, CAR
MEN R. ARCEO,respondents.

[G.R. No. 111201. September 14, 1999]

ROSARIO R. RAYANDAYAN and CARMEN R. ARCEO, petitioners vs. CO
URT OF APPEALS, HALSEMA INC. and RURAL BANK OF STA. M
ARIA,PANGASINAN, INC., respondents.

DECISION
GONZAGA_REYES, J.:

Before us are two consolidated[1] petitions for review on certiorari under Rule 45 of the
Revised Rules of Court. In G.R. No. 110672, petitioner Rural Bank of Sta. Maria, Pangasinan,
assails portions of the Decision dated March 17, 1993, and the Resolution dated January 25,
1993, of the Court of Appeals[2] in CA-G.R. CV No. 21918, which affirmed with modification
the Decision of the Regional Trial Court (Branch 6, Baguio City)[3] in Civil Case No. 890-R
entitled Rosario R. Rayandayan and Carmen R. Arceo versus Rural Bank of Sta. Maria,
Pangasinan and Halsema, Inc. In G.R. No. 111201, petitioners Rosario R. Rayandayan and
Carmen R. Arceo likewise assail portions of said Decision adverse to it.
The facts as found by the trial court and adopted by the Court of Appeals insofar as pertinent
to the instant petitions are as follows:

xxx, the Court Finds that a parcel of land of about 49,969 square meters, located in
Residence Section J, Camp 7, Baguio City, covered by TCT T-29817 (land for short)
is registered in the name of Manuel Behis, married to Cristina Behis (Exhibit B). Said
land originally was part of a bigger tract of land owned by Behis (one name), father of
Manuel Behis, covered by OCT-0-33 (Exhibit 26, Halsema, for history of the
land). And upon the latters death on September 24, 1971, his children, namely: Saro
Behis, Marcelo Behis, Manuel Behis, Lucia Behis, Clara Behis and Arana Behis, in an
extrajudicial settlement with Simultaneous Sale of Inheritance dated September 28,
1978, agreed to sell the land to Manuel Behis, married to Cristina Behis (Exhibit `2,
Halsema) but which subsequently was explained as only an arrangement adopted by
them to facilitate transactions over the land in a Confirmation of Rights of Co-
Ownership over real Property dated September 26, 1983, showing that the Behis
brothers and sisters, including Manuel Behis, are still co-owners thereof (Exhibit `30,
Halsema, Exhibit `AA).

Manuel Behis mortgaged said land in favor of the Bank in a Real Estate Mortgage
dated October 23, 1978 (Exhibit `Q-1) as security for loans obtained, covered by six
promissory notes and trust receipts under the Supervised Credit Program in the total
sum of P156,750.00 (Exhibit `Q-2 to `Q-7, Exhibits `4-A to `4-F, Halsema) and
annotated at the back of the title on February 13, 1979 as Entry No. 85538-10-231
(Exhibit 1-A-1, Halsema). The mortgage, the promissory notes and trust receipts bear
the signatures of both Manuel Behis and Cristina Behis.

Unfortunately thereafter, Manuel Behis was delinquent in paying his debts.

On January 9, 1985, Manuel Behis sold the land to the plaintiffs[4] in a Deed of Absolute Sale
with Assumption of Mortgage for the sum of P250,000.00 (Exhibit `A) which bears the signature of his wife
Cristina Behis. Manuel Behis took it upon himself to secure the signature of his wife and came back with it. On
the same date of January 9, 1985, plaintiffs and Manuel Behis simultaneously executed another Agreement (Exhibit
`15) whereby plaintiffs are indebted to Manuel Behis for the sum of P2,400,000.00 payable in installments with
P10,000.00 paid upon signing and in case of default in the installments, Manuel Behis shall have legal recourse to
the portions of the land equivalent to the unpaid balance of the amounts in installments. Obviously, the real
consideration of the sale of the land of Manuel Behis to the plaintiffs is contained in this Agreement (Exhibit `15).

Plaintiffs did not present to the Register of Deeds of Baguio said two contracts and
ask that the title, TCT T-29817 in the name of Manuel Behis be cancelled and a new
one issued in their name which normally a buyer does. Neither did plaintiffs annotate
at the back of the title the aforesaid two contracts. Nor did they immediately go to the
Bank and present said two contracts. Thus, the title to the land, TCT No. T-29817,
remained in the name of Manuel Behis.

Pursuant to their two contracts with Manuel Behis, plaintiffs paid him during his
lifetime the sum of P10,000.00 plus P50,000.00 plus P145,800.00 (Exhibit `U as
stipulated in the hearing), and the sum of P21,353.75 for the hospitalization, medical
and burial expenses of Manuel Behis when he died on June 21, 1985 (Exhibit `II, `JJ,
`KK, `LL, `PP, `OO, and `RR). Obviously, from the above payments, the plaintiffs
were unable to complete their full payment to Manuel Behis of the sale of the land as
it is nowhere near P2,400,000.00.

Meantime, the loan in the name of Manuel Behis with the Bank secured by the Real
Estate Mortgage on the land continued to accumulate being delinquent. By May 30,
1985, in a Statement of Account (Exhibit `D) sent to Manuel Behis by the Bank thru
the Paredes Law Office for collection, the debt of P150,750.00 has ballooned into
P316,368.13, with interest and other charges. In fact, the Bank, thru its President,
Vicente Natividad, initiated foreclosure proceedings. But after the usual publication,
the same was discontinued since many parties were interested to buy the land outside
the said procedure but none materialized.

On June 19, 1985, Atty. William Arceo, in behalf of Manuel Behis, wrote a letter
asking for a more detailed Statement of Account from the Bank broken down as to
principal, interest and other charges (Exhibit `E).

Thereafter, plaintiffs finally presented the Deed of Absolute Sale with Assumption of
Mortgage (Exhibit `A) to the Bank when negotiating with its principal stockholder,
Engr. Edilberto Natividad, in Manila, but did not show to the latter the Agreement
(Exhibit `15) with Manuel Behis providing for the real consideration of
P2,400,000.00. And thus, on August 1, 1985, a Memorandum of Agreement (Exhibit
`F) was entered into between plaintiffs, as assignees of Manuel Behis, and the Bank,
the salient features of which are:
 `x x x x x x x x x

`3. That during the lifetime of Manuel Behis he had executed a Deed of Absolute Sale
with Assumption of Mortgage in favor of Carmen Arceo and Rosario Rayandayan;

`4. That the total obligation of the late Manuel Behis to the Bank amounts to
P343,782.22;

`5. That the assignees hereby offer to redeem the aforesaid real property and the Bank
hereby agrees to release the mortgage thereon under the following terms and
conditions:

(a). That the amount of P35,000.00 shall be paid by the assignees to the Bank upon
execution of this Agreement;

(b). That the amount of P108,000.00 shall be paid by the assignees to the Bank at the
rate of P36,000.00 a month payable on September 15, 1985, October 15, 1985 and
November 15, 1985;

(c). That the balance of P200,000.00 shall be renewed for one year and shall be
secured by another mortgage over the same property which is renewable every year
upon payment of interests and at least 10 percent of the principal;

(d). That the bank shall release the mortgage of Manuel Behis and a new mortgage
shall be executed by the assignees and the bank shall give its consent for the transfer
of the title under the name of the assignees.

x x x.
Plaintiffs did not annotate the Memorandum of Agreement in the title, TCT T-29817.
Pursuant to the Memorandum of Agreement, plaintiffs paid the Bank the following:
(1) P35,000.00 on August 1, 1985 as initial deposit when the Agreement was signed (Exhibits
`G and `H);
(2) P15,000.00 on September 16, 1985 (Exhibit `I) and P21,000.00 on September 20, 1985
(Exhibit `J) to cover the obligation of P36,000.00 on September 15, 1985;
(3) P20,000.00 on October 17, 1985 (Exhibit `K) and P16,000.00 on October 25, 1985 (Exhibit
`L) to cover the obligation to pay P36,000.00 on October 15, 1985;
(4) P36,000.00 in the form of dollars remitted to Engr. Edilberto Natividad on December 18,
1985 (Exhibit `N) to cover the obligation to pay P36,000.00 on November 15, 1985.

After the last payment of P36,000.00 on December 18, 1985, received in dollars
(Exhibit `N) which completed the P143,000.00 under paragraphs 5 (a) and 5 (b) of the
Memorandum of Agreement Engr. Edilberto Natividad, wrote a letter (Exhibit M) to
Vicente Natividad, with instructions that payment be duly credited and Atty. Arceo
will communicate about the transfer of title to them and to consult the Banks counsel
on the matter, and with instructions also to Ana Acosta of the Rural Bank of Tuba to
debit said amount from the savings of Edilberto Natividad. xxx.

From the above payments made, the total amount of P143,000.00 as required by
paragraphs 5 (a) and 5 (b) of the Memorandum of Agreement was fully paid by
plaintiffs although they were not paid on time.

Meanwhile, on September 5, 1985, Cristina Behis, widow of Manuel Behis, wrote a

letter to the Bank (Exhibit `3, Halsema) claiming the Real Estate mortgage was
without her signature. And in another letter dated October 28, 1985 to the Bank
(Exhibit 4, Halsema), Cristina Behis stressed she did not authorize anybody to redeem
the property in her behalf as one of the mortgagors of the land.

On January 7, 1986, plaintiffs demanded in a letter (Exhibit `O) that the

Bank comply with its obligation under the Memorandum of Agreement to (1) release
the mortgage of Manuel Behis, (2) give its consent for the transfer of title in the name
of the plaintiffs, and (3) execute a new mortgage with plaintiffs for the balance of
P200,000.00 over the same land.

Meanwhile on January 18, 1986, Cristina Behis went to the Bank inquiring about her
protest about her signature. The Bank told her it did not receive her two letters and
instead advised her to write the Bank again as well as the plaintiffs about her
objections.

In a reply letter dated February 11, 1986, (Exhibit `B) to the demand of the plaintiffs,
the Bank said it cannot comply because of supervening circumstances, enclosing the
two letters of Cristina Behis dated September 5, 1985 and October 28, 1985 which
they said were both self explanatory, and suggested that plaintiffs take up the matter
with Mrs. Cristina Behis.

On February 15, 1986, as suggested by the Bank, Cristina Behis wrote another letter
to the Bank claiming this time that she was not a party to the Deed of Absolute Sale
with Assumption of Mortgage and her signature was forged (Exhibit 5, Halsema) and
requesting the Bank not to release the title with copy furnished to the plaintiffs
(Exhibit `5-B, Halsema).

Then, months passed, and nothing was heard from the plaintiffs by the Bank. On the
first week of July, 1986, Teodoro Verzosa, President of Halsema, Inc., heard about the
land and got interested and had preliminary talks with Vicente Natividad, President of
the Bank, and with Edilberto Natividad, the principal stockholder of the bank.

x x x.

xxx, upon suggestion of the lawyer of Halsema, an Assignment of Mortgage was

entered into on July 28, 1986 between Halsema and the Bank for the consideration of
P520,765.45 (Exhibit `1, Bank) which amount was the total indebtedness of Manuel
Behis with the Bank at the time (Exhibit `7-A, Halsema). Note however, that what
was assigned was the Mortgage made originally by Manuel Behis and not the
Mortgage as assumed by plaintiffs under a restructured and liberalized terms.

As explained by Halsema lawyer, she suggested the Assignment of Mortgage as the

cheapest and fastest way for Halsema to acquire the property of Manuel Behis as (1)
they assume the role of the Bank as Mortgagee with the assignment of mortgage
credit, (2) they acquire the property for the amount only of the mortgage debt at the
time, (3) after execution thereof, the Bank is out of the picture, and (4) in case of
foreclosure, Halsema controls the foreclosure proceedings and is assured of its
legality.

In turn, the Bank explained it entered into the Assignment of Mortgage because at the
time it considered the Memorandum of Agreement cancelled as first, plaintiffs failed
to settle the objections of Cristina Behis aforesaid on her signature being forged in the
Deed of Sale with Assumption of Mortgage despite the lapse of time from February,
1986 to July, 1986. Second, the terms of the Memorandum of Agreement have not
been fully complied with as the payments were not made on time on the dates fixed
therein; and third, their consent to the Memorandum of Agreement was secured by the
plaintiffs thru fraud as the Bank was not shown the Agreement containing the real
consideration of P2,400,000.00 of the sale of the land of Manuel Behis to plaintiffs.

On the same date of July 28, 1986, Vicente Natividad of the Bank sent notice of the
Assignment of Mortgage to the debtor mortgagor, Manuel Behis (already dead at the
time) and Cristina Behis. Notice of the Assignment of Mortgage was not sent to
plaintiffs for as aforesaid what was assigned was the Mortgage originally made by
Manuel Behis and not the Mortgage as assumed by plaintiffs under the restructured
and liberalized terms in the Memorandum of Agreement which was considered by the
Bank as cancelled.

xxx xxx xxx.

After the assignment of mortgage, the Bank returned the P143,000.00 to plaintiffs
(Exhibit `13, Bank). But the latter rejected the same maintaining the Memorandum of
Agreement is valid until annulled by Court Action. Subsequently, however, the Bank
paid plaintiffs P143,000.00 and P90,000.00 interest in settlement of the criminal case
of Estafa against Edilberto Natividad and Vicente Natividad (Exhibit `14, Bank).

In the meantime, since the account of the late Manuel Behis has been delinquent and
his widow, Cristina Behis, and his brothers and sisters could not pay as in fact they
have already assigned their rights to redeem, Halsema as Mortgage Creditor in place
of the Bank instituted foreclosure proceedings by filing an Application for
Foreclosure of Real Estate Mortgage in
the Office of the Sheriff on July 31, 1986(Exhibit `37, Halsema) setting the public
auction sale on September 2, 1986 and was published and posted as required by
law. A Notice of Foreclosure was sent directly to the mortgagor (Exhibit `38,
Halsema) and the public auction sale was held on September 2, 1986 at 10:00 a.m. at
the City Hall, Baguio City, with Halsema as the only bidder to whom accordingly the
Sheriffs Certificate of Sale was issued (Exhibit `8, Halsema).

At the auction sale, the lawyer of Halsema was approached by the plaintiff Rosario
Rayandayan who told the former that the land foreclosed was also sold to the
plaintiffs. Since plaintiffs could not do anything anymore, they registered and
annotated on the title, TCT T-29817, their adverse claim on September 3, 1986.[5]

Since the Bank could not comply with the Memorandum of Agreement, petitioners
Rayandayan and Arceo instituted Civil Case No. 890-R before the Regional Trial Court of
Baguio City (Branch 6) against the Rural Bank of Sta. Maria, Pangasinan and Halsema, Inc.
for Specific Performance, Declaration of Nullity and/or Annulment of Assignment of Mortgage
and Damages on September 5, 1986, and caused a notice of lis pendens annotated at the back of
the title, TCT T-29817, on the same date. On March 6, 1989, judgment was rendered, the
dispositive portion of the decision pertinent to this case reads:

WHEREFORE, in view of All the Foregoing, Judgment is hereby rendered, as

follows:

1. xxx xxx xxx;

2. Declaring the Deed of Sale with assumption of Mortgage (Exhibit A) and the Agreement
(Exhibit 15) taken together valid until annulled or cancelled;
3. Ordering the Bank to pay the plaintiffs the sum of P30,000.00 as Moral Damages, P10,000.00
as Exemplary Damages, P20,000.00 as Attorneys fees and P5,000.00 as litigation expenses
for their bad faith in violating the Memorandum of Agreement which took place while the
Memorandum of Agreement was still valid there being no court action first filed to nullify it
before entering into the Assignment of Mortgage;
4. Ordering the plaintiffs to pay the Bank the sum of P30,000.00 as Moral Damages, P10,000.00
as Exemplary Damages, P20,000.00 as Attorneys fees and P5,000.00 as litigation expenses
for plaintiffs bad faith in deceiving the Bank to enter into the Memorandum of Agreement;
 5. Ordering the setting off in compensation the Damages awarded to plaintiffs and the Bank.
6. xxx xxx xxx;
7. Declaring the Memorandum of Agreement as annulled due to the fraud of plaintiffs;
8. xxx xxx xxx;
9. xxx xxx xxx;
10. xxx xxx xxx,

Without pronouncement as to costs.

SO ORDERED.[6]

From the decision, plaintiffs Rayandayan and Arceo and defendant Halsema, Inc.
appealed. Defendant Rural Bank of Sta. Maria, Pangasinan did not appeal.[7] The Court of
Appeals rendered herein assailed decision, the dispositive portion insofar as pertinent to this case
reads:

WHEREFORE, premises considered, decision is hereby rendered:

1. xxx xxx xxx;

2. xxx xxx xxx;
3. xxx xxx xxx;
4. Declaring the Deed of Absolute Sale with Assumption of Mortgage, Exhibit A and the
Memorandum of Agreement, Exhibit F, valid as between the parties thereto;
5. Ordering and sentencing defendant Rural Bank of Sta. Maria, Pangasinan to pay plaintiffs-
appellant the sum of P229,135.00 as actual damages, the sum of P30,000.00 as moral
damages, P10,000.00 as exemplary damages, P20,000.00 as attorneys fees and P5,000.00 as
litigation expenses;
6. Affirming the dismissal of all other counterclaims for damages;
7. Reversing and setting aside all other dispositions made by the trial court inconsistent with this
decision;
8. There is no pronouncement as to costs.

SO ORDERED.[8]

In sum, the Court of Appeals in its assailed decision: (1) affirmed the validity of the
Memorandum of Agreement between the parties thereto; (2) reversed and set aside the finding of
the trial court on the bad faith of Rayandayan and Arceo in concealing the real purchase price of
the land sold to them by Manuel Behis during negotiations with the bank on the assumption of
the mortgage debt; (3) modified the trial courts finding as to the damages due Rayandayan and
Arceo from the bank by adding P229,135.00 as actual damages; (4) dismissed the counterclaim
for damages by the bank and deleted the portion on the set-off of damages due between the bank
on the one hand, and Rayandayan and Arceo on the other.
Motions for reconsideration were filed by plaintiffs-appellants Rayandanan and Arceo and
defendant Rural Bank of Sta. Maria, Pangasinan which were denied for lack of merit.[9]
Hence, the instant consolidated petitions.
In a Resolution dated August 25, 1993, this Court denied the petition for review on certiorari
(G.R. No. 111201) filed by Rayandayan and Arceo for having been filed out of time and for late
payment of docket fees.[10] Petitioners Rayandayan and Arceo moved to reconsider; this Court in
a Resolution dated November 22, 1993, resolved to deny the same with finality considering
petitioners failed to show any compelling reason and to raise any substantial argument which
would warrant a modification of the said resolution.[11]
What remains for resolution then is G.R. No. 110672, wherein petitioner Rural Bank of Sta.
Maria, Pangasinan, contends that:
I

THE MEMORANDUM OF AGREEMENT (EXH. F) ENTERED INTO BETWEEN

PRIVATE RESPONDENTS, AS ALLEGED ASSIGNEES OF MANUEL BEHIS,
AND PETITIONER BANK IS VOIDABLE AND MUST BE ANNULLED.
II

PRIVATE RESPONDENTS ARE IN BAD FAITH, HENCE, THEY ARE NOT

ENTITLED TO THE SUMS OF P30,000.00 AS MORAL DAMAGES; P10,000.00
AS EXEMPLARY DAMAGES; P20,000.00 AS ATTORNEYS FEES; AND
P5,000.00 AS LITIGATION EXPENSES.[12]

The petition is devoid of merit.

Briefly, the antecedents material to this appeal are as follows: A Deed of Absolute Sale with
Assumption of Mortgage was executed between Manuel Behis as vendor/assignor and
Rayandayan and Arceo as vendees/assignees for the sum of P250,000.00. On the same day,
Rayandayan and Arceo together with Manuel Behis executed another Agreement embodying the
real consideration of the sale of the land in the sum of P2,400,000.00. Thereafter, Rayandayan
and Arceo negotiated with the principal stockholder of the bank, Engr. Edilberto Natividad in
Manila, for the assumption of the indebtedness of Manuel Behis and the subsequent release of
the mortgage on the property by the bank. Rayandayan and Arceo did not show to the bank the
Agreement with Manuel Behis providing for the real consideration of P2,400,000.00 for the sale
of the property to the former. Subsequently, the bank consented to the substitution of plaintiffs as
mortgage debtors in place of Manuel Behis in a Memorandum of Agreement between private
respondents and the bank with restructured and liberalized terms for the payment of the mortgage
debt. Instead of the bank foreclosing immediately for non-payment of the delinquent account,
petitioner bank agreed to receive only a partial payment of P143,000.00 by installment on
specified dates. After payment thereof, the bank agreed to release the mortgage of Manuel Behis;
to give its consent to the transfer of title to the private respondents; and to the payment of the
balance of P200,000.00 under new terms with a new mortgage to be executed by the private
respondents over the same land.
This brings us to the first issue raised by petitioner bank that the Memorandum of
Agreement is voidable on the ground that its consent to enter said agreement was vitiated by
fraud because private respondents withheld from petitioner bank the material information that the
real consideration for the sale with assumption of mortgage of the property by Manuel Behis to
Rayandayan and Arceo is P2,400,000.00, and not P250,000.00 as represented to petitioner
bank. According to petitioner bank, had it known of the real consideration for the sale, i.e. P2.4
million, it would not have consented into entering the Memorandum of Agreement with
Rayandayan and Arceo as it was put in the dark as to the real capacity and financial standing of
private respondents to assume the mortgage from Manuel Behis.Petitioner bank pointed out that
it would not have assented to the agreement, as it could not expect the private respondents to pay
the bank the approximately P343,000.00 mortgage debt when private respondents have to pay at
the same time P2,400,000.00 to Manuel Behis on the sale of the land.
The kind of fraud that will vitiate a contract refers to those insidious words or machinations
resorted to by one of the contracting parties to induce the other to enter into a contract which
without them he would not have agreed to.[13] Simply stated, the fraud must be the determining
cause of the contract, or must have caused the consent to be given. It is believed that the non-
disclosure to the bank of the purchase price of the sale of the land between private respondents
and Manuel Behis cannot be the fraud contemplated by Article 1338 of the Civil Code. [14] From
the sole reason submitted by the petitioner bank that it was kept in the dark as to the financial
capacity of private respondent, we cannot see how the omission or concealment of the real
purchase price could have induced the bank into giving its consent to the agreement; or that the
bank would not have otherwise given its consent had it known of the real purchase price.
First of all, the consideration for the purchase of the land between Manuel Behis and herein
private respondents Rayandayan and Arceo could not have been the determining cause for the
petitioner bank to enter into the memorandum of agreement. To all intents and purposes, the
bank entered into said agreement in order to effect payment on the indebtedness of Manuel
Behis. As correctly ruled by the Court of Appeals:

xxx. The real consideration for the sale with assumption of mortgage, or the non-
disclosure thereof, was not the determining influence on the consent of the bank.

The bank received payments due under the Memorandum of Agreement, even if
delayed. It initially claimed that the sale with assumption of mortgage was invalid not
because of the concealment of the real consideration of P2,400,000.00 but because of
the information given by Cristina Behis, the widow of the mortgagor Manuel Behis
that her signature on the deed of absolute sale with assumption of mortgage was
forged. Thus, the alleged nullity of the Memorandum of Agreement, Exhibit F, is a
clear aftertought. It was raised by defendant bank, by way of counterclaim only after it
was sued.
The deceit which avoids the contract exists where the party who obtains the consent
does so by means of concealing or omitting to state material facts, with intent to
deceive, by reason of which omission or concealment the other party was induced to
give a consent which he would not otherwise have given (Tolentino, Commentaries
and Jurisprudence on the Civil Code, Vol. IV, p. 480). In this case, the consideration
for the sale with assumption of mortgage was not the inducement to defendant bank to
give a consent which it would not otherwise have given.

Indeed, whether the consideration of the sale with assumption of mortgage was
P250,000.00 as stated in Exhibit A, or P2,400,000.00 as stated in the Agreement,
Exhibit 15, should not be of importance to the bank. Whether it was P250,000.00 or
P2,400.000.00 the banks security remained unimpaired.

The stipulation in Exhibit 15, reading in case of default in all of the above, Manuel
Behis shall have legal recourse to the portion of the parcel of land under TCT No. T-
29817 equivalent to the unpaid balance of the amount subject of this Agreement,
obviously even if revealed would not have induced defendant bank to withhold its
consent. The legal recourse to TCT No. T-29817 given to Manuel Behis, under the
Agreement, is subordinate and inferior to the mortgage to the bank.

We are, therefore, constrained to uphold the validity of the Memorandum of

Agreement, Exhibit F, and reverse and set aside the ruling declaring the same
annulled allegedly due to fraud of plaintiffs-appellants (paragraph 7, dispositive
portion).

With the above conclusion reached, the award of moral and exemplary damages,
attorneys fees and expenses of litigation in favor of defendant bank and against
plaintiffs-appellants in paragraph 4 of the dispositive portion of the decision of the
trial court must likewise be reversed and set aside; and similarly, paragraph 5. The
basis for the award, which we quote for plaintiffs bad faith in deceiving the Bank to
enter into the Memorandum of Agreement is not correct as we have discussed.[15]

Secondly, pursuant to Article 1339 0f the Civil Code,[16] silence or concealment, by itself,
does not constitute fraud, unless there is a special duty to disclose certain facts, or unless
according to good faith and the usages of commerce the communication should be made. Verily,
private respondents Rayandayan and Arceo had no duty, and therefore did not act in bad faith, in
failing to disclose the real consideration of the sale between them and Manuel Behis.
Thirdly, the bank had other means and opportunity of verifying the financial capacity of
private respondents and cannot avoid the contract on the ground that they were kept in the dark
as to the financial capacity by the non-disclosure of the purchase price. As correctly pointed out
by respondent court, the bank security remained unimpaired regardless of the consideration of
the sale. Under the terms of the Memorandum of Agreement, the property remains as security for
the payment of the indebtedness, in case of default of payment. Thus, petitioner bank does not
and can not even allege that the agreement was operating to its disadvantage. If fact, the bank
admits that no damages has been suffered by it. [17]
Consequently, not all elements of fraud vitiating consent for purposes of annulling a contract
concur, to wit: (a) It was employed by a contracting party upon the other; (b) It induced the other
party to enter into the contract; (c) It was serious; and; (d) It resulted in damages and injury to
the party seeking annulment.[18] Petitioner bank has not sufficiently shown that it was induced to
enter into the agreement by the non-disclosure of the purchase price, and that the same resulted
in damages to the bank. Indeed, the general rule is that whosoever alleges fraud or mistake in any
transaction must substantiate his allegation, since it is presumed that a person takes ordinary care
for his concerns and that private transactions have been fair and regular. Petitioner bank's
allegation of fraud and deceit have not been established sufficiently and competently to rebut the
presumption of regularity and due execution of the agreement.
Based on the foregoing, the second issue raised by petitioner bank must likewise
fail. Petitioner bank's imputation of bad faith to private respondents premised on the same non-
disclosure of the real purchase price of the sale so as to preclude their entitlement to damages
must necessarily be resolved in the negative. Petitioner bank does not question the actual
damages awarded to private respondents in the amount of P229,135.00, but only the moral
damages of P30,000.00, exemplary damages of P10,000.00, attorney's fees of P20,000.00 and
litigation expenses of P5,000.00. We may no longer examine the amounts awarded by the trial
court and affirmed by the appellate court as petitioner bank did not appeal from the decision of
the trial court. It is well-settled that a party who does not appeal from the decision may not
obtain any affirmative relief from the appellate court other than what he has obtained from the
lower court, if any, whose decision is brought up on appeal.[19]
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals,
dated March 17, 1993 is AFFIRMED. No cost.
SO ORDERED.

3. Suzi vs. Go

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24066 December 9, 1925

VALENTIN SUSI, plaintiff-appellee,
vs.
ANGELA RAZON and THE DIRECTOR OF LANDS, defendants. THE
DIRECTOR OF LANDS, appellant.

Acting Attorney-General Reyes for appellant.

Monico R. Mercado for appellee.

VILLA-REAL, J.:

This action was commenced in the Court of First Instance of Pampanga by a

complaint filed by Valentin Susi against Angela Razon and the Director of Lands,
praying for judgment: (a) Declaring plaintiff the sole and absolute owner of the
parcel of land described in the second paragraph of the complaint; (b) annulling
the sale made by the Director of Lands in favor of Angela Razon, on the ground
that the land is a private property; (c) ordering the cancellation of the certificate of
title issued to said Angela Razon; and (d) sentencing the latter to pay plaintiff the
sum of P500 as damages, with the costs.

For his answer to the complaint, the Director of Lands denied each and every
allegation contained therein and, as special defense, alleged that the land in
question was a property of the Government of the United States under the
administration and control of the Philippine Islands before its sale to Angela
Razon, which was made in accordance with law.

After trial, whereat evidence was introduced by both parties, the Court of First
Instance of Pampanga rendered judgment declaring the plaintiff entitled to the
possession of the land, annulling the sale made by the Director of Lands in favor
of Angela Razon, and ordering the cancellation of the certificate of title issued to
her, with the costs against Angela Razon. From this judgment the Director of
Lands took this appeal, assigning thereto the following errors, to wit: (1) The
holding that the judgment rendered in a prior case between the plaintiff and
defendant Angela Razon on the parcel of land in question is controlling in this
action; (2) the holding that plaintiff is entitled to recover the possession of said
parcel of land; the annulment of the sale made by the Director of Lands to Angela
Razon; and the ordering that the certificate of title issued by the register of deeds
of the Province of Pampanga to Angela Razon by virtue of said sale be
cancelled; and (3) the denial of the motion for new trial filed by the Director of
Lands.
The evidence shows that on December 18, 1880, Nemesio Pinlac sold the land
in question, then a fish pond, tho Apolonio Garcia and Basilio Mendoza for the
sum of P12, reserving the right to repurchase the same (Exhibit B). After having
been in possession thereof for about eight years, and the fish pond having been
destroyed, Apolonio Garcia and Basilio Mendoza, on September 5, 1899, sold it
to Valentin Susi for the sum of P12, reserving the right to repurchase it (Exhibit
A). Before the execution of the deed of sale, Valentin Susi had already paid its
price and sown "bacawan" on said land, availing himself of the firewood gathered
thereon, with the proceeds of the sale of which he had paid the price of the
property. The possession and occupation of the land in question, first, by
Apolonio Garcia and Basilio Mendoza, and then by Valentin Susi has been open,
continuous, adverse and public, without any interruption, except during the
revolution, or disturbance, except when Angela Razon, on September 13, 1913,
commenced an action in the Court of First Instance of Pampanga to recover the
possession of said land (Exhibit C), wherein after considering the evidence
introduced at the trial, the court rendered judgment in favor of Valentin Susi and
against Angela Razon, dismissing the complaint (Exhibit E). Having failed in her
attempt to obtain possession of the land in question through the court, Angela
Razon applied to the Director of Lands for the purchase thereof on August 15,
1914 (Exhibit C). Having learned of said application, Valentin Susi filed and
opposition thereto on December 6, 1915, asserting his possession of the land for
twenty-five years (Exhibit P). After making the proper administrative investigation,
the Director of Lands overruled the opposition of Valentin Susi and sold the land
to Angela Razon. By virtue of said grant the register of deeds of Pampanga, on
August 31, 1921, issued the proper certificate of title to Angela Razon. Armed
with said document, Angela Razon required Valentin Susi to vacate the land in
question, and as he refused to do so, she brought and action for forcible entry
and detainer in the justice of the peace court of Guagua, Pampanga, which was
dismissed for lack of jurisdiction, the case being one of title to real property
(Exhibit F and M). Valentin Susi then brought this action.

With these facts in view, we shall proceed to consider the questions raised by the
appellant in his assignments of error.law phi 1.net

It clearly appears from the evidence that Valentin Susi has been in possession of
the land in question openly, continuously, adversely, and publicly, personally and
through his predecessors, since the year 1880, that is, for about forty-five years.
While the judgment of the Court of First Instance of Pampanga against Angela
Razon in the forcible entry case does not affect the Director of Lands, yet it is
controlling as to Angela Razon and rebuts her claim that she had been in
possession thereof. When on August 15, 1914, Angela Razon applied for the
purchase of said land, Valentin Susi had already been in possession thereof
personally and through his predecessors for thirty-four years. And if it is taken
into account that Nemesio Pinlac had already made said land a fish pond when
he sold it on December 18, 1880, it can hardly be estimated when he began to
possess and occupy it, the period of time being so long that it is beyond the
reach of memory. These being the facts, the doctrine laid down by the Supreme
Court of the United States in the case of Cariño vs. Government of the Philippine
Islands (212 U. S., 449 1), is applicable here. In favor of Valentin Susi, there is,
moreover, the presumption juris et de jure established in paragraph (b) of section
45 of Act No. 2874, amending Act No. 926, that all the necessary requirements
for a grant by the Government were complied with, for he has been in actual and
physical possession, personally and through his predecessors, of an agricultural
land of the public domain openly, continuously, exclusively and publicly since
July 26, 1894, with a right to a certificate of title to said land under the provisions
of Chapter VIII of said Act. So that when Angela Razon applied for the grant in
her favor, Valentin Susi had already acquired, by operation of law, not only a
right to a grant, but a grant of the Government, for it is not necessary that
certificate of title should be issued in order that said grant may be sanctioned by
the courts, an application therefore is sufficient, under the provisions of section
47 of Act No. 2874. If by a legal fiction, Valentin Susi had acquired the land in
question by a grant of the State, it had already ceased to be the public domain
and had become private property, at least by presumption, of Valentin Susi,
beyond the control of the Director of Lands. Consequently, in selling the land in
question to Angela Razon, the Director of Lands disposed of a land over which
he had no longer any title or control, and the sale thus made was void and of no
effect, and Angela Razon did not thereby acquire any right.

The Director of Lands contends that the land in question being of the public
domain, the plaintiff-appellee cannot maintain an action to recover possession
thereof.l aw phi 1.net

If, as above stated, the land, the possession of which is in dispute, had already
become, by operation of law, private property of the plaintiff, there lacking only
the judicial sanction of his title, Valentin Susi has the right to bring an action to
recover possession thereof and hold it.

For the foregoing, and no error having been found in the judgment appealed
from, the same is hereby affirmed in all its parts, without special pronouncement
as to costs. So ordered.

Avanceña, C.J., Malcolm, Street, Villamor, Ostrand, Johns, and Romualdez, JJ.,
concur.
Johnson, J., took no part.
Footnotes

1 41 Phil., 935.

4. Mesina vs. Sonza

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-14722 May 25, 1960

IGNACIO MESINA, plaintiff-appellant,

vs.
EULALIA PINEDA VDA. DE SONZA, ET AL., defendants.
EULALIA PINEDA VDA. DE SONZA, defendant-appellee.

Agustin C. Bagasao for appellant.

Luis Manalang and Associates for appellee.

BAUTISTA ANGELO, J.:

Plaintiff brought this action before the Court of First Instance of Nueva Ecija
praying that Original Certificate of Title No. P-1137 of the Register of Deeds of
Nueva Ecija be ordered cancelled and that the registration case pending before
the same court covering the property described therein be given due course and
that defendants be ordered to pay plaintiff P1,000.00 as attorney's fees and
costs.

Defendants filed a motion to dismiss on the ground that plaintiff's action is

already barred by the statute of limitations. The reasons advanced are: the
complaint was filed on March 25, 1958. The decree of registration or issuance of
patent over the property was issued "sometime on September 12, 1953 or
thereabout", while the transfer certificate of title covering the same was issued on
September 16, 1953. The present action which calls for the cancellation of said
decree and title has, therefore, been filed after the elapse of more than four
years, which cannot be done, because the title has already become indefeasible
and incontrovertible. The court sustained this motion and dismissed the
complaint. Hence the present appeal.

Plaintiff claims that he is the owner in fee simple of Lot No. 3259, with
improvements thereon, situated in San Antonio, Nueva Ecija; that he has been in
actual possession thereof since 1914, publicly, openly, peacefully and against
the whole world and up to the present time he is the only one who benefits from
the produce thereof; that said lot is at present the subject of registration
proceedings pending in the same court known as Registration Case No. N-372,
L.R.C. Cad. Record No. N-12238; that sometime in September 12, 1953, the
Director of Lands, without exercising due care, and in spite of his knowledge that
defendants had not complied with the knowledge that defendants had not
complied with the requirements of Commonwealth Act No. 141, issued a
homestead patent in their favor as a consequence of which a certificate of title
was issued in their name by the register of deeds; that said title was procured by
defendants through frauds, deception and misrepresentation since they knew
that the lot belonged to the plaintiff; and that the Director of Lands has no
authority nor jurisdiction to issue a patent covering said land because it is a
private property of plaintiff. For these reasons, plaintiff prays that said decree and
title be cancelled.

Republic Act No. 1942, which took effect on June 22, 1957 (amending Section
48-b of Commonwealth Act 141), provides:

(b) Those who by themselves or through their predecessors in interest

have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition of ownership, for at least thirty years immediately
preceeding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed
to have performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title under the provisions of this chapter.

In the case of Susi vs. Razon, et al., 48 Phil., 424, it was observed that where all
the necessary requirements for a grant by the Government are complied with
through actual physical possession openly, continuously, and publicly, with a
right to a certificate of title to said land under the provisions of Chapter VIII of Act
No. 2874, amending Act No. 926 (carried over as Chapter VIII of Commonwealth
Act No. 141), the possessor is deemed to have already acquired by operation of
law not only a right to a grant, but a grant of the Government, for it is not
necessary that a certificate of title be issued in order that said grant may be
sanctioned by the court — an application therefor being sufficient under the
provisions of Section 47 of Act No. 2874 (reproduced as Section 50,
Commonwealth Act No. 141). Thus, the following is what this Court said on the
matter:

It clearly appears from the evidence that Valentin Susi has been in
possession of the land in question openly, continuously, adversely and
publicly, personally and through his predecessors, since the year 1880,
that is, for about forty-five years. ... When on August 15, 1914, Angela
Razon applied for the purchase of said land, Valentin Susi had already
been in possession thereof personally and through his predecessors for
thirty-forty years. And if it is taken into account that Nemesio Pinlac had
already made said land a fish pond when he sold it on December 13, 1880,
it can hardly be estimated when he began to possess and occupy it, the
period of time being so long that it is beyond the reach of memory. ... In
favor of Valentin Susi, there is, moreover the presumption juris et de
jure established paragraph (b) of section 45 of Act No. 2874, amending Act
No. 926, that all the necessary requirements for a grant by the
Government were complied with, for he has been in actual and physical
possession, personally and through his predecessors, of an agricultural
land of the public domain openly, continuously, exclusively and publicly
since July 26, 1894, with a right to a certificate of title to said land under
the provisions of Chapter VIII of said Act. So that when Angela Razon
applied for the grant in her favor, Valentin Susi had already acquired, by
operation of law, not only a right to grant, but a grant of the Government,
for it is not necessary that certificate of title should be issued in order that
said grant may be sanctioned by the courts, an application therefor is
sufficient, under the provisions of section 47 of Act No. 2874. If by a legal
fiction, Valentin Susi had acquired the land in question by a grant of the
State, it had already ceased to be of the public domain and had become
private property, at least by presumption, of Valentin Susi, beyond the
control, of the Director of Lands. Consequently, in selling the land in
question to Angela Razon, the Director of Lands disposed of a land over
which he had no longer any title or control, and the sale thus made was
void and of no effect, and Angela Razon did not thereby acquire any right.
(Emphasis supplied)

Such is the situation in which the plaintiff claims to be in his complaint. He

alleges that he is the owner in fee simple of the lot in question, with the
improvements thereon, situated in San Antonio, Nueva Ecija, and that he has
been in actual possession thereof since 1914, publicly, openly, peacefully and
against the whole world, and that up to the present time he is the only one who
benefits from the produce thereof. He further claims that said lot is present the
subject of a registration proceeding pending in the same court, known as
Registration Case No. N-372, L.R.C. Cad. Record No. N-12238. If by legal
fiction, as stated in the Susi case, plaintiff is deemed to have acquired the lot by
a grant of the State, it follows that the same had ceased to be part of the public
domain and had become private property and, therefore, is beyond the control of
the Director of Lands. Consequently, the homestead patent and the original
certificate of title covering said lot issued by the Director of Lands in favor of the
defendants can be said to be null and void, for having been issued through fraud,
deceit and misrepresentation.

Considering that this case was dismissed by the trial court merely on a motion to
dismiss on the ground that plaintiff's action is already barred by the statute of
limitations, which apparently is predicated on the theory that a decree of
registration can no longer be impugned on the ground of fraud one year after the
issuance and entry of the decree,1 which theory does not apply here because the
property involved is allegedly private in nature and has ceased to be part of the
public domain, we are of the opinion that the trial court erred in dismissing the
case outright without giving plaintiff a chance to prove his claim. It would have
been more proper for the court to deny the motion on the ground that its object
does not appear to be indubitable, rather than to have dismissed it, as was done
by the trial court.

Wherefore, the order appealed from is set aside. The case is remanded to the
trial court for further proceedings. No costs.

Paras, Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, and Gutierrez

David, JJ., concur.

Footnotes
1
Sorsogon vs. Makalintal, 80 Phil., 259; 45 Off. Gaz., 3819; See also G. M.
Tuason & Co., Inc. vs. Quirino Bolaños, 95 Phil., 106; Aguilar, et al. vs.
Caoagdan, et al., 105 Phil., 661; 56 Off. Gaz. (28) 4546; Henderson vs.
Garrido, et al., G.R. No. L-4913, December 28, 1951.

5. Rep vs. IAC

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 73085 June 4, 1990

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
THE INTERMEDIATE APPELLATE COURT, PABLO, JUAN, JR., JULIAN,
RUFINA, LEONOR, GLORIA TERESITA, ANTONIO, DOLORES, BERNARDO,
JR., and MARIA VIOLETA, all surnamed MERCHAN, respondents.

Alfredo L. Raya for respondents.

PARAS, J.:
This is a petition for review on certiorari of the decision of the then Intermediate Appellate Court*, dated December 2, 1985, in AC-G.R. CV
No. 67964 affirming the appealed decision of the then Court of First Instance (now Regional Trial Court) of Quezon, Branch II, Lucena City.

The antecedent facts of this case are as follows:

Claiming that they acquired the property by virtue of a document which they
alleged to be a Spanish title originally issued in the name of Bernardo Merchan,
the private respondents filed a complaint dated August 7, 1974 against petitioner
Republic of the Philippines for quieting of title over said property located in Sitio
de Malapianbato alias Arras, Bo. de Ayuti, Lucban, Quezon, containing an area
of one million six hundred and sixty thousand (1,660,000) square meters, more
or less, or 166 hectares. The petitioner moved to dismiss the complaint on the
ground that the trial court had no jurisdiction over the subject matter of the case
because the land is part of a forest reserve established by Proclamation No. 42
dated October 14,1921, and by Proclamation No. 716 dated May 26,1941 which
declared the area as part of the "Mts. Banahaw-San Cristobal National Park."

The motion to dismiss was denied by the trial court.

The private respondents filed a motion to declare the petitioner in default for
failure to file its answer within the reglementary period and for the appointment of
a Commissioner to receive their evidence, which was granted.
The petitioner filed a motion to lift the order of default which was denied by the
trial court. The petitioner filed a motion for reconsideration of the aforesaid denial.

Meanwhile, Judge Manolo L. Maddela rendered a decision on December 18,

1975, declaring the private respondents as owners of the land subject of the
litigation.

On April 21, 1976, the trial court, presided over by Judge Delia P. Medina, issued
an order declaring as moot and academic petitioner's motion for reconsideration
of the order denying the motion to lift the order of default in view of this Court's
resolution declaring null and void all judicial acts, decisions, orders and
resolutions performed, promulgated and issued after January 2, 1976, by then
Judge Manolo L. Maddela. In the same order, Judge Medina required the
petitioner to file a reply to the private respondents' opposition to its motion to set
aside the decision of December 18, 1975. The petitioner filed its reply on May 10,
1976.

Petitioner's motion to set aside the decision dated December 18, 1975 of the trial
court which rendered judgment in private respondents' favor was granted by the
court on July 23, 1976, thereby vacating and setting aside the questioned
decision and the order of default. In the same order, the petitioner was required
to file its answer to the complaint which it did.

The private respondents filed a motion for reconsideration of the order granting
the motion to set aside the decision dated December 18, 1975, which was
denied.

On September 16, 1976, the private respondents filed a manifestation assailing

the jurisdiction of the court to hear the case contending that it properly belonged
to another branch of the court but this was denied.

On September 27, 1976, the private respondents filed with the Court of Appeals
a petition for certiorari and prohibition with preliminary injunction against Judge
Medina. The appellate court issued a temporary restraining order enjoining
respondent judge from further proceeding with Civil Case No. 7840. The
appellate court further required the petitioner to file its answer, which was duly
submitted.

Meanwhile, on December 29, 1976, the private respondents, six months after the
effectivity of P.D. No. 892, filed an application for the registration of the parcel of
land involved in Civil Case No. 7840. This was docketed as Land Registration
Case No. N-1055.
On November 29, 1977, the appellate court denied the aforesaid petition for
certiorari and lifted the restraining order.

The trial court, this time presided by Judge Benigno M. Puno, issued an order
setting the case for pre-trial. For failure of petitioner's counsel to attend the
scheduled hearing, the trial court issued an order declaring the said failure as a
waiver to present evidence and to cross-examine the private respondents'
witnesses and declared the case submitted for decision.

On March 3, 1980, the trial court rendered its decision in favor of the private
respondents, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs

and against the defendant:

(1) Declaring the plaintiff the rightful co-owners and possessors of

the land in question as well as the improvements thereon since time
immemorial by themselves and/or their predecessors-in-interests;

(2) Ordering the defendant Bureau of Forestry, as represented by

the Director of Forestry, to desist from disturbing the peaceful
possession and ownership of the plaintiffs over the land in question;

(3) Ordering the defendant to recognize the right of possession and

ownership of the plaintiffs over the land described in paragraph 7 of
the complaint which is particularly known as Cad. Lot No. 4292
(portion) of Cadastral Survey No. 340-D, Case No. 4, situated at the
barrio Ayuti, Municipality of Lucena, Province of Quezon, Island of
Luzon;

(4) Ordering the defendant to agree in, and cause the segregation of
the land in question within the perimeter of the Mt. Banahaw San
Cristobal National Park, it being private property of the plaintiffs; and

(5) The applicants in Land Registration Case No. 1055 are hereby
directed to take immediate measures for the early and prompt
hearing and/or disposition of said case, otherwise, the Court will be
constrained to dismiss the same for lack of interest. (Rollo, pp. 113-
114).

The petitioner appealed to the then Intermediate Appellate Court which affirmed
the judgment of the trial court.
Hence, this petition.

On August 10, 1987, the Court gave due course to the petition and granted the
parties a period of thirty (30) days from notice within which to file memoranda
(Rollo, p. 112). The petitioner filed its memorandum on September 18, 1987
(Rollo, p. 113), while the private respondents submitted for consideration their
comment to the petition dated August 25, 1986, and their rejoinder to the reply of
the petitioner dated June 29, 1987 (Rollo, p. 135).

The main issue in this case is whether or not the subject parcel of land which
was declared a part of the forest reserve in 1921 and later a national park in
1941 may be subject of private appropriation and registration.

The petitioner contends that being part of a forest reserve, and later as a national
park, the subject parcel of land cannot be the subject of appropriation as private
property. As reservation for a national park, the land cannot be registered
because public reservations are outside the commerce of man and cannot be
disposed of or registered as private property.

The petitioner further argues that the document itself dated July 29, 1870 which
private respondents allege to be a Spanish title negates their claim. The
supposed Spanish title plainly reveals that it is a mere instrument executed by
Bernardo Merchan, private respondents' predecessor-in-interest, claiming
possession over the land described therein which he sought to be recognized by
the government during the Spanish regime. The document does not say it is a
title, nor does it state that Bernardo Merchan has acquired ownership over the
land. The document does not contain the specific area of the land which is
claimed to be owned by private respondents.

The petition is impressed with merit.

The land in question was proclaimed part of a forest reserve by virtue of

Proclamation No. 42 dated October 14, 1921. This proclamation was superseded
by Proclamation No. 716 dated May 26, 1941 establishing the Mts. Banahaw-
San Cristobal National Park. It is already a settled rule that forest lands or forest
reserves are not capable of private appropriation, and possession thereof,
however long, can not convert them into private property (Vano v. Government of
the Philippine Islands, 41 Phil. 161 [1920]; Adorable v. Director of Forestry, 107
Phil. 401 [1960]; Director of Forestry v. Munoz, 132 Phil. 637 [1968]; Republic v.
De la Cruz, 67 SCRA 221 [1975]; Director of Lands v. Reyes and Alinsunurin v.
Director of Lands, 68 SCRA 177 [1975]; Republic v. Court of Appeals, 89 SCRA
648 [1979]; Republic v. Animas, 56 SCRA 499 [1974]; Director of Lands v. Court
of Appeals, 133 SCRA 701 [1984]; Republic v. Court of Appeals, 135 SCRA 156
[1985]; Director of Lands v. Rivas, 141 SCRA 329 [1986]) unless such lands are
reclassified and considered disposable and alienable by the Director of Forestry
(Republic v. Court of Appeals, 154 SCRA 476 [1987]).

In this case, there is no proof of reclassification by the Director of Forestry that

the land in question is disposable or alienable.

Furthermore, with the passage of Presidential Decree No. 892, effective

February 16, 1976, Spanish Titles can no longer be used as evidence of land
ownership. Under the same decree, lands not under the Torrens System shall be
considered as unregistered.

PREMISES CONSIDERED, the decision of the appellate court is hereby

REVERSED, and Civil Case No. 7840 and Registration Case No. N-1055 are
hereby DISMISSED.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes

* IAC, Second Civil Cases Division, Justice Jose C. Campos, Jr.,

penned the decision and concurred in by Justices Crisolito Pascual,
Serafin E. Camilon and Desiderio P. Jurado.

6. Chavit vs. Public,

7. Republic vs. Acne

8. Republic vs. Villanueva

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-55289 June 29, 1982

REPUBLIC OF THE PHILIPPINES, represented by the Director of

Lands, petitioner-appellant,
vs.
JUDGE CANDIDO P. VILLANUEVA, of the Court of First Instance of
Bulacan, Malolos Branch VII, and IGLESIA NI CRISTO, as a corporation
sole, represented by ERAÑO G. MANALO, as Executive
Minister, respondents-appellees.

AQUINO, J.:

Like L-49623, Manila Electric Company vs. Judge Castro-Bartolome, this case
involves the prohibition in section 11, Article XIV of the Constitution that "no
private corporation or association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in area".

Lots Nos. 568 and 569, located at Barrio Dampol, Plaridel, Bulacan, with an area
of 313 square meters and an assessed value of P1,350 were acquired by the
Iglesia Ni Cristo on January 9, 1953 from Andres Perez in exchange for a lot with
an area of 247 square meters owned by the said church (Exh. D).

The said lots were already possessed by Perez in 1933. They are not included in
any military reservation. They are inside an area which was certified as alienable
or disposable by the Bureau of Forestry in 1927. The lots are planted to santol
and mango trees and banana plants. A chapel exists on the said land. The land
had been declared for realty tax purposes. Realty taxes had been paid therefor
(Exh. N).

On September 13, 1977, the Iglesia Ni Cristo, a corporation sole, duly existing
under Philippine laws, filed with the Court of First Instance of Bulacan an
application for the registration of the two lots. It alleged that it and its
predecessors-in-interest had possessed the land for more than thirty years. It
invoked section 48(b) of the Public Land Law, which provides:

Chapter VIII.—Judicial confirmation of imperfect or incomplete titles.

xxx xxx xxx

SEC. 48. The following-described citizens of the Philippines,

occupying lands of the public domain or claiming to own any such
 lands or an interest therein, but whose titles have not been perfected
or completed, may apply to the Court of First Instance of the
province where the land is located for confirmation of their claims
and the issuance of a certificate of title therefore, under the Land
Register Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors-in-

interest have been in open, continuous, exclusive, and notorious
possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, for at
least thirty years immediately preceding the filing of the application
for confirmation of title except when prevented by war 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."
(As amended by Republic Act No. 1942, approved on June 22,
1957.)

The Republic of the Philippines, through the Direct/r of Lands, opposed the
application on the grounds that applicant, as a private corporation, is disqualified
to hold alienable lands of the public domain, that the land applied for is public
land not susceptible of private appropriation and that the applicant and its
predecessors-in-interest have not been in the open, continuous, exclusive and
notorious possession of the land since June 12, 1945.

After hearing, the trial court ordered the registration of the two lots, as described
in Plan Ap-04-001344 (Exh. E), in the name of the Iglesia Ni Cristo, a corporation
sole, represented by Executive Minister Eraño G. Manalo, with office at the
corner of Central and Don Mariano Marcos Avenues, Quezon City, From that
decision, the Republic of the Philippines appealed to this Court under Republic
Act No. 5440. The appeal should be sustained.

As correctly contended by the Solicitor General, the Iglesia Ni Cristo, as a

corporation sole or a juridical person, is disqualified to acquire or hold alienable
lands of the public domain, like the two lots in question, because of the
constitutional prohibition already mentioned and because the said church is not
entitled to avail itself of the benefits of section 48(b) which applies only to Filipino
citizens or natural persons. A corporation sole (an "unhappy freak of English
law") has no nationality (Roman Catholic Apostolic Adm. of Davao, Inc. vs. Land
Registration Commission, 102 Phil. 596. See Register of Deeds vs. Ung Siu Si
Temple, 97 Phil. 58 and sec. 49 of the Public Land Law).
The contention in the comments of the Iglesia Ni Cristo (its lawyer did not file any
brief) that the two lots are private lands, following the rule laid down in Susi vs.
Razon and Director of Lands, 48 Phil. 424, is not correct. What was considered
private land in the Susi case was a parcel of land possessed by a Filipino
citizen since time immemorial, as in Cariño vs. Insular Government, 212 U.S.
449, 53 L. ed. 594, 41 Phil. 935 and 7 Phil. 132. The lots sought to be registered
in this case do not fall within that category. They are still public lands. A land
registration proceeding under section 48(b) "presupposes that the land is public"
(Mindanao vs. Director of Lands, L-19535, July 10, 1967, 20 SCRA 641, 644).

As held in Oh Cho vs. Director of Lands, 75 Phil. 890, "all lands that were not
acquired from the Government, either by purchase or by grant, belong to the
public domain. An exception to the rule would be any land that should have been
in the possession of an occupant and of his predecessors-in-interest since time
immemorial, for such possession would justify the presumption that the land had
never been part of the public domain or that it had been a private property even
before the Spanish conquest. "

In Uy Un vs. Perez, 71 Phil. 508, it was noted that the right of an occupant of
public agricultural land to obtain a confirmation of his title under section 48(b) of
the Public Land Law is a "derecho dominical incoativo"and that before the
issuance of the certificate of title the occupant is not in the juridical sense the true
owner of the land since it still pertains to the State.

The lower court's judgment is reversed and set aside. The application for
registration of the Iglesia Ni Cristo is dismissed with costs against said applicant.

SO ORDERED.

Barredo, Makasiar, Guerrero, Melencio-Herrera, Escolin, Vasquez, Relova and

Gutierrez, Jr., JJ., concur.

Concepcion, Jr., J., is on leave.

Plana, J., took no part.

9. Republic vs. Baloy,

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-46145 November 26, 1986

REPUBLIC OF THE PHILIPPINES (BUREAU OF LANDS), petitioner,

vs.
THE HON. COURT OF APPEALS, HEIRS OF DOMINGO P. BALOY,
represented by RICARDO BALOY, ET AL., respondents.

Pelaez, Jalondoni, Adriano and Associates for respondents.

PARAS, J.:p

This case originally emanated from a decision of the then Court of First Instance
of Zambales in LRC Case No. 11-0, LRC Record No. N-29355, denying
respondents' application for registration. From said order of denial the applicants,
heirs of Domingo Baloy, represented by Ricardo P. Baloy, (herein private
respondents) interposed on appeal to the Court of Appeals which was docketed
as CA-G.R. No. 52039-R. The appellate court, thru its Fifth Division with the Hon.
Justice Magno Gatmaitan as ponente, rendered a decision dated February 3,
1977 reversing the decision appealed from and thus approving the application for
registration. Oppositors (petitioners herein) filed their Motion for Reconsideration
alleging among other things that applicants' possessory information title can no
longer be invoked and that they were not able to prove a registerable title over
the land. Said Motion for Reconsideration was denied, hence this petition for
review on certiorari.

Applicants' claim is anchored on their possessory information title (Exhibit F

which had been translated in Exhibit F-1) coupled with their continuous, adverse
and public possession over the land in question. An examination of the
possessory information title shows that the description and the area of the land
stated therein substantially coincides with the land applied for and that said
possessory information title had been regularly issued having been acquired by
applicants' predecessor, Domingo Baloy, under the provisions of the Spanish
Mortgage Law. Applicants presented their tax declaration on said lands on April
8, 1965.
The Director of Lands opposed the registration alleging that this land had
become public land thru the operation of Act 627 of the Philippine Commission.
On November 26, 1902 pursuant to the executive order of the President of the
U.S., the area was declared within the U.S. Naval Reservation. Under Act 627 as
amended by Act 1138, a period was fixed within which persons affected thereby
could file their application, (that is within 6 months from July 8, 1905) otherwise
"the said lands or interest therein will be conclusively adjudged to be public lands
and all claims on the part of private individuals for such lands or interests therein
not to presented will be forever barred." Petitioner argues that since Domingo
Baloy failed to file his claim within the prescribed period, the land had become
irrevocably public and could not be the subject of a valid registration for private
ownership.

Considering the foregoing facts respondents Court of Appeals ruled as follows:

... perhaps, the consequence was that upon failure of Domingo

Baloy to have filed his application within that period the land had
become irrevocably public; but perhaps also, for the reason that
warning was from the Clerk of the Court of Land Registration, named
J.R. Wilson and there has not been presented a formal order or
decision of the said Court of Land Registration so declaring the land
public because of that failure, it can with plausibility be said that after
all, there was no judicial declaration to that effect, it is true that the
U.S. Navy did occupy it apparently for some time, as a recreation
area, as this Court understands from the communication of the
Department of Foreign Affairs to the U.S. Embassy exhibited in the
record, but the very tenor of the communication apparently seeks to
justify the title of herein applicants, in other words, what this Court
has taken from the occupation by the U.S. Navy is that during the
interim, the title of applicants was in a state of suspended animation
so to speak but it had not died either; and the fact being that this
land was really originally private from and after the issuance and
inscription of the possessory information Exh. F during the Spanish
times, it would be most difficult to sustain position of Director of
Lands that it was land of no private owner; open to public
disposition, and over which he has control; and since immediately
after U.S. Navy had abandoned the area, applicant came in and
asserted title once again, only to be troubled by first Crispiniano
Blanco who however in due time, quitclaimed in favor of applicants,
and then by private oppositors now, apparently originally tenants of
Blanco, but that entry of private oppositors sought to be given color
of ownership when they sought to and did file tax declaration in
1965, should not prejudice the original rights of applicants thru their
 possessory information secured regularly so long ago, the
conclusion must have to be that after all, applicants had succeeded
in bringing themselves within the provisions of Sec. 19 of Act 496,
the land should be registered in their favor;

IN VIEW WHEREOF, this Court is constrained to reverse, as it now

reverses, judgment appealed from the application is approved, and
once this decision shall have become final, if ever it would be, let
decree issue in favor of applicants with the personal circumstances
outlined in the application, costs against private oppositors.

Petitioner now comes to Us with the following:

ASSIGNMENT OF ERRORS:

1. Respondent court erred in holding that to bar private respondents

from asserting any right under their possessory information title there
is need for a court order to that effect.

2. Respondent court erred in not holding that private respondents'

rights by virtue of their possessory information title was lost by
prescription.

3. Respondent court erred in concluding that applicants have

registerable title.

A cursory reading of Sec. 3, Act 627 reveals that several steps are to be followed
before any affected land can "be conclusively adjudged to be public land." Sec.
3, Act 627 reads as follows:

SEC. 3. Immediately upon receipt of the notice from the civil

Governor in the preceeding section mentioned it shall be the duty of
the judge of the Court of Land Registration to issue a notice, stating
that the lands within the limits aforesaid have been reserved for
military purposes, and announced and declared to be military
reservations, and that claims for all private lands, buildings, and
interests therein, within the limits aforesaid, must be presented for
registration under the Land Registration Act within six calendar
months from the date of issuing the notice, and that all lands,
buildings, and interests therein within the limits aforesaid not so
presented within the time therein limited will be conclusively
adjudged to be public lands and all claims on the part of private
individuals for such lands, buildings, or an interest therein not so
 presented will be forever barred. The clerk of the Court of Land
Registration shall immediately upon the issuing of such notice by the
judge cause the same to be published once a week for three
successive weeks in two newspapers, one of which newspapers
shall be in the English Language, and one in the Spanish language
in the city or province where the land lies, if there be no such
Spanish or English newspapers having a general circulation in the
city or province wherein the land lies, then it shall be a sufficient
compliance with this section if the notice be published as herein
provided, in a daily newspaper in the Spanish language and one in
the English language, in the City of Manila, having a general
circulation. The clerk shall also cause a duly attested copy of the
notice in the Spanish language to be posted in conspicuous place at
each angle formed by the lines of the limits of the land reserved. The
clerk shall also issue and cause to be personally served the notice in
the Spanish language upon every person living upon or in visible
possession of any part of the military reservation. If the person in
possession is the head of the family living upon the hand, it shall be
sufficient to serve the notice upon him, and if he is absent it shall be
sufficient to leave a copy at his usual place of residence. The clerk
shall certify the manner in which the notices have been published,
posted, and served, and his certificate shall be conclusive proof of
such publication, posting, and service, but the court shall have the
power to cause such further notice to be given as in its opinion may
be necessary.

Clearly under said provisions, private land could be deemed to have become
public land only by virtue of a judicial declaration after due notice and hearing. It
runs contrary therefore to the contention of petitioners that failure to present
claims set forth under Sec. 2 of Act 627 made the land ipso facto public without
any deed of judicial pronouncement. Petitioner in making such declaration relied
on Sec. 4 of Act 627 alone. But in construing a statute the entire provisions of the
law must be considered in order to establish the correct interpretation as
intended by the law-making body. Act 627 by its terms is not self-executory and
requires implementation by the Court of Land Registration. Act 627, to the extent
that it creates a forfeiture, is a penal statute in derogation of private rights, so it
must be strictly construed so as to safeguard private respondents' rights.
Significantly, petitioner does not even allege the existence of any judgment of the
Land Registration court with respect to the land in question. Without a judgment
or order declaring the land to be public, its private character and the possessory
information title over it must be respected. Since no such order has been
rendered by the Land Registration Court it necessarily follows that it never
became public land thru the operation of Act 627. To assume otherwise is to
deprive private respondents of their property without due process of law. In fact it
can be presumed that the notice required by law to be given by publication and
by personal service did not include the name of Domingo Baloy and the subject
land, and hence he and his lane were never brought within the operation of Act
627 as amended. The procedure laid down in Sec. 3 is a requirement of due
process. "Due process requires that the statutes which under it is attempted to
deprive a citizen of private property without or against his consent must, as in
expropriation cases, be strictly complied with, because such statutes are in
derogation of general rights." (Arriete vs. Director of Public Works, 58 Phil. 507,
508, 511).

We also find with favor private respondents' views that court judgments are not to
be presumed. It would be absurd to speak of a judgment by presumption. If it
could be contended that such a judgment may be presumed, it could equally be
contended that applicants' predecessor Domingo Baloy presumably seasonably
filed a claim, in accordance with the legal presumption that a person takes
ordinary care of his concerns, and that a judgment in his favor was rendered.

The finding of respondent court that during the interim of 57 years from
November 26, 1902 to December 17, 1959 (when the U.S. Navy possessed the
area) the possessory rights of Baloy or heirs were merely suspended and not lost
by prescription, is supported by Exhibit "U," a communication or letter No. 1108-
63, dated June 24, 1963, which contains an official statement of the position of
the Republic of the Philippines with regard to the status of the land in question.
Said letter recognizes the fact that Domingo Baloy and/or his heirs have been in
continuous possession of said land since 1894 as attested by an "Informacion
Possessoria" Title, which was granted by the Spanish Government. Hence, the
disputed property is private land and this possession was interrupted only by the
occupation of the land by the U.S. Navy in 1945 for recreational purposes. The
U.S. Navy eventually abandoned the premises. The heirs of the late Domingo P.
Baloy, are now in actual possession, and this has been so since the
abandonment by the U.S. Navy. A new recreation area is now being used by the
U.S. Navy personnel and this place is remote from the land in question.

Clearly, the occupancy of the U.S. Navy was not in the concept of owner. It
partakes of the character of a commodatum. It cannot therefore militate against
the title of Domingo Baloy and his successors-in-interest. One's ownership of a
thing may be lost by prescription by reason of another's possession if such
possession be under claim of ownership, not where the possession is only
intended to be transient, as in the case of the U.S. Navy's occupation of the land
concerned, in which case the owner is not divested of his title, although it cannot
be exercised in the meantime.
WHEREFORE, premises considered, finding no merit in the petition the appealed
decision is hereby AFFIRMED.

SO ORDERED.

Feria (Chairman), Alampay and Feliciano, * JJ., concur.

Gutierrez, Jr., J., concurs in the results.

Fernan J., took no part.

Footnotes

* Feliciano was designated in lieu of J. Fernan.

10. Natiividad vs. CA and Republic

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 88233 October 4, 1991

OSCAR NATIVIDAD, BARTOLOME RAMOS and EUGENIO

PASCUAL, petitioners,

vs.

THE COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES.

Aladdin F. Trinidad for petitioners.

GRIÑO-AQUINO, J.:
This is a petition for review of the decision dated August 25, 1988 of the Court of
Appeals (Annex G, Petition) reversing the judgment of the Regional Trial Court,
Branch 31, Makati, Metro Manila, that allowed the registration in the names of
petitioners Oscar Natividad, Eugenio Pascual and Bartolome Ramos of six (6)
parcels of land which had originally been applied for by Tomas Claudio Memorial
College, Inc. (TCMC for short) in LRC Case No. 10585.

The facts set forth in the decision of the Court of Appeals are as follows:

On January 18, 1982, Tomas Claudio Memorial College, Inc. (TCMC) filed in the
Court of First Instance of Rizal, Branch 19 (now Regional Trial Court, Branch
137) an application for registration of title to six (6) parcels of land designated as
lots 3010, 3011, 2855, 2853, 2851 and 5650 each respectively containing an
area of 2,269, 11,672, 2,273, 3,422, 11, 183 and 1,178 square meters, more or
less. These lots are situated in Barrio San Juan, Morong, Rizal (Appellees' Brief,
p. 208, Rollo).

On August 16, 1982, the Director of Lands opposed the application (pp. 151-152,
Records) on the grounds among others that:

1. Neither the applicant (TCMC) nor its predecessors-in-interest have been

in open, continuous, exclusive and notorious possession and occupation of
the land in question since June 12, 1945 or prior thereto (Sec. 48[b], P.D.
1073);

2. The muniments of title and/or the tax declarations and tax payments
receipts, if any, alleged in the application, do not constitute sufficient
evidence of a bona fide acquisition of the lands applied for ...;

3. The parcels applied for are portions of the public domain belonging to
the Republic of the Philippines not subject to private appropriation; and

4. The applicant is a private corporation disqualified under the New

Philippine Constitution to hold alienable land of the public domain (Sec. 11,
Art. XIV, New Constitution; Meralco vs. Judge Bartolome, G.R. No. L-
49623, June 29, 1982; Republic vs. Villanueva, G.R. No. 55289, June 29,
1982).

On November 19, 1982, TCMC filed a motion for substitution (pp. 238-241,
Records), praying that it be substituted by petitioners Oscar Natividad, Eugenio
Pascual and Bartolome Ramos because on November 9, 1982, it sold to them
the six parcels of land subject of its application. The motion was granted by the
lower court in an Order dated November 22, 1982 (p. 247, Records).
Accordingly, in lieu of TCMC, the petitioners thereafter adduced evidence in
support of the application, showing that the original owners had possessed and
cultivated the land as owners for more than 30 years before they were sold to
TCMC. Thus, did the witnesses for the applicants testify:

(a) Oscar J. Natividad, 55 years old, college professor and resident of 111
Calero St., Morong, Rizal declared that he is the present owner and
possessor of Lot 3011; that on November 9, l982, he purchased Lot 3011
from Tomas Claudio Memorial College, Inc. (Exh. E-Natividad) which in
turn purchased it from the heirs of Geronimo Manapat namely Tiburcio
Manapat and Manuel Manapat (Exhs. K-L, Natividad) who inherited the
same upon the death of their father Geronimo in l937; that the survey plan
of Lot 3011 was approved by the Director of Lands (Exh. F-Natividad); that
Lot 3011 was declared for taxation purposes (Exhs. 1, 0, Q, R, S) and the
realty taxes for the year covering l966 up to l982 were paid (Exhs. J, I T)
(pp. 1-13, tsn. Nov. 13, 1982);

(b) Crispin Manapat, 54 years old, farmer and resident of Pililla, Rizal,
declared that he is the son of Tiburcio Manapat; that Oscar J. Natividad
and his predecessors-in-interest Tomas Claudio Memorial College, Inc.,
Tiburcio Manapat, Manuel Manapat and Geronimo Manapat possessed
Lot 3011 continuously, openly, adversely and exclusively for over thirty
(30) years; that he and his father Tiburcio Manapat used to till said land
before it was sold to Tomas Claudio Memorial College, Inc. (pp. 9-13, tsn.,
Nov. 23, 1982).

(c) Eugenio Pascual, 74 years old, vice-president of Tomas Claudio

Memorial College and resident of Morong, Rizal declared that he is the
present owner and possessor of Lots 2851 and 2853; that on November 9,
1982, he purchased Lots 2851 and 2853 from Tomas Claudio Memorial
College, Inc. (Exh. E-Pascual) which in turn purchased them from the heirs
of Simeon Bonifacio on June 29, 1978 (Exh. L-Pascual); that Simeon
Bonifacio had been the owner of Lots 2851 and 2853 about fifteen years
prior to World War II; that the survey plans of Lots 2851 and 2853 were
approved by the Director of Lands (Exhs. F, 6-Pascual); that Lots 2857
and 2853 were declared for taxation purposes (Exhs. M to M-4 Pascual)
and the realty taxes for the years covering 1950 up to 1982 were paid
(Exhs. N to N-Q; O, P-Pascual) (pp. 1-9, tsn., Dec. 10, 1982).

(d) Victor Bonifacio, 45 years old, farmer and resident of Morong, Rizal,
declared that he is the grandson of Simeon Bonifacio who was the original
owner of Lots 2851 and 2853; that his grandfather worked on their
properties for forty years; that when his grandfather died before the
Second World War, his father Apolonio and his uncles Lucio, Gaudencio
and Jose inherited said properties and worked on them until they were sold
to Tomas Claudio Memorial College, Inc. on 29 June 1979; that applicant
Eugenio Pascual and his predecessors-in-interest owned and possessed
said properties continuously, openly, adversely and exclusively for over
thirty (30) years.

(e) Bartolome R. Ramos, 44 years old, employee of Tomas Claudio

Memorial College, Inc. and resident of Morong, Rizal, declared that he is
the present owner and possessor of lots 5650, 2855 and 3010; that on
November 9, 1982, he purchased lots 5650, 2855 and 3010 from Tomas
Claudio Memorial College, Inc. (Exh. E-Ramos); that Tomas Claudio
Memorial College, Inc. purchased lot 5650 from the heirs of Marcos
Trinidad on June 27, 1978 (Exh. 1-Ramos), lot 2855 from the heirs of
Domingo Gonzalvo and Modesta Manapat on January 15, l981 and lot
3010 from Mariano de Castro on December 5, 1979 (Exh. R-Ramos); that
the survey plans of lots 5650, 2855 and 3010 were approved by the
Director of Lands (Exhs. F, M, S-Ramos); that said lots were declared for
taxation purposes (Exhs. J, P, V, X, to X-1; Y to Y-2; AA-Ramos) and the
realty taxes for the year 1966 to 1982 (Exhs. J, Q, Z, to Z-2, BB-Ramos);

(f) Edilberto Trinidad, 67 years old, farmer, and resident of Morong, Rizal
declared that he is the son of Marcos Trinidad who was the original owner
and possessor of Lot 5650; that his father worked on said Lot until he died
during the Second World War; that he and the other heirs of Marcos
Trinidad inherited said property from the latter; that the heirs tilled the land
until it was sold by them to Tomas Claudio Memorial College, Inc. in 27
June 1979; that applicant Bartolome Ramos and his predecessors-in-
interest owned and possessed said land continuously, openly, adversely
and exclusively for over thirty (30) years (pp. 4-8, tsn., Dec. 6, 1982).

(g) Pedro Gonzalvo, 63 years old, carpenter, and resident of Morong,

Rizal, declared that he is the son of Domingo Gonzalvo and Modesta
Manapat, the original owner/possessor of Lot 2855; that his parents
cultivated said land even before the Second World War, planted it with
vegetables, mango trees, sampaloc and bananas; that after the death of
their parents, he and his brothers, Ireneo, Seferino and Honorio inherited
the property; that they cultivated the same until it was sold to Tomas
Claudio Memorial Inc. of (sic) 15 January 1981; that possession of
applicant Bartolome Ramos and his predecessors-in-interest over said lot
is continuous, openly, adverse and exclusive against the whole world (pp.
7-8, tsn., Dec. 6, 1982).
 (h) Mariano de Castro, 77 years old, farmer and resident of Morong, Rizal
declared that his father Juan de Castro was the original owner of lot 3010;
that his father planted said lot with peanuts, bamboo and sampaloc trees;
that when his father died in 1938 and his mother died in 1965, he, being
the only child, inherited the property; that he cultivated the same until it
was sold to Tomas Claudio Memorial College, Inc. in 1979; that the
possession of applicant Bartolome Ramos and his predecessors-in-interest
over said property is continuous, adverse, open, notorious and exclusive
against the whole world (pp. 7-11, tsn., Dec. 14, 1980). (pp. 108-112,
Rollo.)

On March 16, 1983, the lower court rendered a decision (pp. 248-253, Records),
ordering the registration of Lots 3010, 2855, 2853, 2851 and 5650 in the names
of Oscar H. Natividad, Eugenio P. Pascual and Bartolome R. Ramos. The
dispositive portion of said decision reads:

WHEREFORE, finding the application to be meritorious, and it appearing

that all the applicants have a registerable title over the lots subject of this
application, as prayed for, the Court hereby orders the registration of title
of herein applicant Oscar J. Natividad over lot 3011 ... Eugenio P. Pascual
over Lots 2851 and 2853 ... Bartolome R. Ramos over Lots 5650, 2855
and 3010 subject to the condition that a width of ten (10) meters strip of Lot
3010 along the Sakayin Creek on the N. along lines 1-2; Sakayin Creek on
the NW and SW along lines 4-5-6-7-8-9-1; Sakayin Creek on the SW along
lines 2-3-4-5-6 shall be reserved to the easement of public use for the
maintenance and improvement of the channels for flood control and other
purposes.

As soon as this decision shall have become final, let the corresponding
decrees be issued in favor of the applicants. (p. 5, Respondents-Appellees
Brief, p. 208, Rollo.)

The Director of Lands appealed the lower court's decision to the Court of Appeals
(formerly Intermediate Appellate Court) alleging that the trial court erred in not
holding that the registration of titles of the parcels of land in question in favor of
petitioners through substitution was a circumvention of the constitutional
prohibition against acquisition by private corporations of alienable lands of the
public domain and that furthermore, petitioners failed to adduce adequate and
substantital proof that they and their predecessors-in-interest had been in open,
continuous, exclusive and notorious possession in the concept of owners since
June 12, 1945 or prior thereto, as required by law.

The petitioners did not file their appellees' brief.

On August 25, 1988, the Court of Appeals reversed the lower court's decision
and denied the application for registration of title in petitioners' names.

Petitioners' motion for reconsideration was denied by the Court of Appeals,

hence, the present recourse (pp. 1-7, Appellees' Brief, p. 208, Rollo).

The issue raised in the petition for review is whether TCMC, may by itself, or
through its vendees, register the titles of the lots in question.

Determinative of this issue is the character of the parcels of land — whether they
were still public land or already private — when the registration proceedings were
commenced. If they were already private lands, the constitutional prohibition
against acquisition by a private corporation would not apply (Director of Lands vs.
Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc., 146 SCRA
509).

Section 48 of Commonwealth Act No. 141, the Public Land Act, provides:

SEC. 48. The following described citizens of the Philippines, occupying

lands of 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
the confirmation of their claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors-in-interest

have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition of ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when
prevented by war 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.

On the other hand, Article XIV, Section II, of the l973 Constitution, in part,
provides:

SEC. 11. No private corporation or association may hold alienable lands of

the public domain except by lease not to exceed one thousand hectares in
area; nor may any citizen hold such lands by lease in excess of five
hundred hectares ...
The thrust of the argument of the Director of Lands is that the sales of the parcels
of land to the petitioners were sham transactions intended to circumvent the
constitutional prohibition disqualifying a private corporation from acquiring
alienable lands of the public domain.

In Susi vs. Razon (48 Phil. 424), this Court ruled that "open, continuous, adverse
and public possession of a land of the public domain from time immemorial by a
private individual personally and through his predecessors confers an effective
title on said possessor, whereby the land ceases to be public, to become private,
property."

In the Acme case, supra, this Court upheld the doctrine that "open, exclusive and
undisputed possession of alienable public land for the period prescribed by law
creates the legal fiction whereby the land, upon completion of the requisite
period ipso jure and without the need of judicial or other sanction, ceases to be
public land and becomes private property." We said:

Nothing can more clearly demonstrate the logical inevitability of

considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant from
the State than the dictum of the statute itself that thepossessor(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 ..." No proof
being admissible to overcome a conclusive presumption, confirmation
proceedings would in truth be little more than a formality, at the most
limited to ascertaining whether the possession claimed is of the required
character and length of time; and registration thereunder would not confer
title, but simply recognize a title already vested. The proceedings would
not originally convert the land from public to private land, but only confirm
such conversion already affected (sic) from the moment the required
period of possession became complete. (Director of Lands vs. IAC and
Acme Plywood & Veneer Co., Inc., 146 SCRA 509, 520.)

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

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

The Director's contention that a corporation may not apply for confirmation of title
under Section 48 of Commonwealth Act 141, the Public Land Act, was disposed
of in the Acme case where this Court ruled that the defect in filing the
confirmation proceedings in the name of a corporation was simply an "accidental
circumstance, ... in nowise affecting the substance and merits of the right of
ownership sought to be confirmed in said proceedings." (Director of Lands vs.
IAC and Acme Plywood & Veneer Co., Inc., 146 SCRA 509, 522.) Since the
petitioners could have had their respective titles confirmed prior to the sale to
TCMC, it was not necessary for the corporation to take the circuitous route of
assigning to natural persons its rights to the lots for the purpose of complying, on
paper, with the technicality of having natural persons file the applications for
confirmation of title to the private lands.

WHEREFORE, the petition for review is granted and the assailed decision of the
Court of Appeals is set aside. The order of the Regional Trial Court dated March
16, 1983 is reinstated.

SO ORDERED.

Narvasa, (Chairman), Cruz and Medialdea, JJ., concur.