Module 4 Cases Part 2

G.R. No.
166577 February 3, 2010
SPOUSES MORRIS CARPO and SOCORRO CARPO, Petitioners,

vs.
AYALA LAND, INCORPORATED, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioners seek to
set aside and annul the Decision1 dated December 22, 2003 of the Court of Appeals (CA) in CA-G.R.
CV No. 61784, which reversed and set aside the Summary Judgment2 dated December 22, 1998 of
the Regional Trial Court (RTC) of Las Piñas City, Branch 255. Also subject of the present petition is
the CA Resolution3 dated December 16, 2004 which denied the motion for reconsideration of the
earlier decision.
A summary of the facts, as culled from the records of the case, follows:
On February 16, 1995, petitioner spouses Morris and Socorro Carpo (Carpos) filed a Complaint for
Quieting of Title4 with the RTC of Makati City against Ayala Corporation, Ayala Property Ventures
Corporation (APVC), and the Register of Deeds of Las Piñas, docketed as Civil Case No. 95-292.
In their Complaint, the Carpos claimed to be the owners of a 171,209-square meter parcel of land
covered by Transfer Certificate of Title (TCT) No. 296463 issued in their names.5 They further
alleged that Ayala Corporation was claiming to have titles (specifically, TCT Nos. 125945, T-4366, T-
4367 and T-4368) over the property covered by the Carpos’ TCT No. 296463 and that Ayala
Corporation had made such property its equity contribution in APVC to be developed into a
residential subdivision. Attached as annexes to the complaint were photocopies of:
(a) TCT No. 296463 issued on August 13, 1970 in the name of the Carpos, covering a parcel
of land (Lot 3, plan Psu-56007) located in the Barrio of Almanza, Las Piñas with an area of
171,309 square meters;
(b) TCT No. 125945 issued on April 6, 1988 in the name of Ayala Corporation, covering a
parcel of land (Lot 3, Plan Psu-80886) located in Bo. Tindig na Manga, Las Piñas with an
area of 171,309 square meters;
(c) TCT No. T-4367 issued on May 18, 1988 in the name of Ayala Corporation, covering a
parcel of land (Lot 2, plan Psu-47035) located in the Sitio of May Kokak, Bo. of Almanza, Las
Piñas with an area of 218,523 square meters; and
(d) TCT No. T-4368 issued on May 18, 1988 in the name of Ayala Corporation, covering a
parcel of land (Lot 3, plan Psu-47035) located in the Sitio of May Kokak, Bo. of Almanza, Las
Piñas with an area of 155,345 square meters.
No copy of TCT No. T-4366 was attached to the complaint.
According to the complaint, TCT Nos. 125945, T-4366, T-4367 and T-4368 and their derivatives
"appear to have been issued in the name of Ayala and purport to cover and embrace the Carpo’s
property or portion thereof duly covered registered under the already indefeasible and
incontrovertible TCT [No.] 296463 are inherently invalid and enforceable (sic) for not being the duly
issued derivatives of the Carpos’ title."6 The Carpos additionally applied for a restraining order and
writ of preliminary injunction to enjoin Ayala Corporation and APVC from doing construction and
development works on the properties in purported violation of the Carpos’ rights.
The complaint prayed that the trial court render judgment:
(1) canceling and declaring void TCT Nos. 125945, T-4366, T-4367, T-4368 and all alleged
derivatives thereof, issued in the name of Ayala Corporation and/or APVC over the properties or
portion thereof embraced in the Carpos’ TCT No. 296463 and issuing a writ of possession in favor of
the Carpos and/or ordering Ayala Corporation and APVC to surrender to the Carpos the properties
or portion thereof being occupied by the said corporations under inherently invalid or void titles; (2)
declaring TCT No. 296463 issued in their names as valid and the Carpos as the owners of the
property described therein "including the parcels of land being claimed and occupied by Ayala
[Corporation] and APVC withou[t] valid and enforceable titles"; and (3) ordering Ayala Corporation
and APVC to pay jointly and severally the amount of ₱100,000 as attorney’s fees plus costs of suit
and litigation expenses.7
On March 10, 1995, before defendants could file an answer, petitioners filed an Amended
Complaint, impleading respondent Ayala Land, Incorporated (ALI) in lieu of Ayala Corporation after
purportedly verifying with the Register of Deeds of Las Piñas that the title to the subject property was
registered in the name of ALI and not Ayala Corporation.8
On October 12, 1995 and January 12, 1996, ALI filed its Answer with Counterclaims and Opposition
to Application for Restraining Order and Writ of Preliminary Injunction9 and Pre-trial Brief with Motion
to Admit Amended Answer,10 respectively.
In its Amended Answer, ALI alleged that APVC no longer exists having been merged with ALI in
1991. ALI pointed out that the areas covered by TCT Nos. T-4366, T-4367, and T-4368 do not
overlap with the Carpos’ claimed property and the dispute pertained only to the land covered by the
Carpos’ TCT No. 296463 and TCT No. T-5333 in the name of Las Piñas Ventures, Inc. (LPVI) which
was derived from TCT No. 125945 in the name of Ayala Corporation. It appeared that Ayala
Corporation contributed the property to LPVI and LPVI had, in turn, also merged with ALI. Further,
ALI alleged that it is the true owner of the property covered by TCT No. T-5333 as it traces back its
title to Original Certificate of Title (OCT) No. 242 issued in 1950 while the Carpos’ title was derived
from OCT No. 8575 issued only in 1970. ALI also claimed the Carpos’ complaint was barred by res
judicata in view of the 1941 decision of this Court in Guico v. San Pedro11 which upheld the
ownership of a certain Eduardo Guico over the subject property as Lot 3, of Psu-80886 over the
claim of a certain Florentino Baltazar who was asserting ownership of the same under his plan, Psu-
56007.
During the pendency of the case, ALI secured a title in its own name, TCT No. T-41262, over the
property previously covered by TCT No. T-5333.12
In the Order13 dated March 6, 1996, the Makati RTC ruled that the present case was an action in rem
and directed the transfer of the case to the RTC of Las Piñas where the disputed property is located.
The case was thereafter assigned to Branch 255 of the Las Piñas RTC and docketed as Civil Case
No. 96-0082.
On December 17, 1996, ALI filed a Motion for Summary Judgment on the ground that there was
allegedly no genuine issue as to any material fact and the only issue for the court to resolve was a
purely legal one ― which of the two (2) titles should be accorded priority. According to ALI, the
parties were relying on their respective TCTs, and since ALI admittedly traces its title to OCT No.
242 which was issued more than twenty (20) years earlier than the Carpos’ predecessor’s title (OCT
No. 8575), its title is, thus, superior. Expectedly, the Carpos filed an opposition to the motion for
summary judgment, arguing that there were "genuine issues and controversies to be litigated."
In an Order dated April 7, 1997, the RTC denied ALI’s motion for summary judgment. This denial
was challenged in a petition for certiorari with the CA in CA-G.R. SP No. 44243.
In a decision14 dated September 25, 1997, the CA granted ALI’s petition and ordered the RTC to
render a summary judgment. Both parties moved for reconsideration of the CA Decision. ALI filed a
motion for partial reconsideration, entreating the CA itself to render the summary judgment in the
interest of judicial economy and on a claim that the sole issue was legal. The Carpos, in their motion,
insisted that there were genuine issues in this case that must be threshed out in a trial. Both motions
were denied in the CA Resolution dated January 12, 1998.15 1avvphi1
Both parties elevated the matter to this Court in separate petitions for review on certiorari. In G.R.
No. 132259, ALI assailed the CA’s refusal to render a summary judgment, while in G.R. No. 132440,
the Carpos assailed the CA’s ruling that trial was unnecessary.
In separate minute Resolutions,16 the Court denied both petitions. Both parties’ motions for
reconsideration were likewise denied.
Accordingly, the RTC rendered a Summary Judgment dated December 22, 1998, finding the Carpos’
title superior to that of ALI and ruling, thus:
Upon the other hand, this Court is not inclined to concur with Ayala’s claim of the validity of its TCT
No. T-5333 and alleged OCT No. 242 absent of any admission to that effect by the plaintiffs in their
complaint. A reading of the defendant’s answer reveals that OCT No. 242 covers the property
surveyed under SWO, but the pleadings on file fail to allege that the same was approved by the
Director of the Bureau of Lands, thereby justifying this court to be skeptical of the validity of the
issuance of OCT No. 242. In original land registration cases, it is mandatory that the application
should be accompanied by a survey plan of the property applied for registration, duly approved by
the Director of the Bureau of Lands. A survey plan without the approval of the Director of the Bureau
of Lands has the character of being of dubious origin and it is not therefore worthy of being accepted
as evidence. The property being claimed by the defendant ALI, allegedly registered under OCT No.
242, is shown to have been surveyed under SWO and not bearing the approval of the Director of the
Bureau of Lands. Any title issued emanating from a survey plan without the approval of the Director
of the Bureau of Lands is tainted with irregularity and therefore void, as ruled in Republic Cement
Corporation vs. Court of Appeals, et al., 198 SCRA 734. In the said case, the Supreme Court held:
"That unless a survey plan is duly approved by the Director of Lands the same is of dubious value
and is not acceptable as evidence. Indubitably, therefore, the reported survey and its alleged results
are not entitled to credit and should be rejected."
The submission of the plan is a statutory requirement of mandatory character and unless the plan
and its technical description are duly approved by the Director of Lands, the same are not of much
value (Republic vs. Vera, 120 SCRA 210). In another case, it was ruled that the Land Registration
Commission has no authority to approve original survey plans (Director of Lands, et al. vs.
Honorable Salvador Reyes, et al., 68 SCRA 177).
Evidently, the SWO survey of the property which defendant ALI claimed to have been originated
from OCT No. 242 had not been approved by the Director of the Bureau of Lands, but was
apparently prepared and approved by the then Land Registration Commissioner and under the law,
the same is void.
It will also be noted that aside from the admissions made by defendant ALI in its answer, it clearly
appears in its title TCT No. T-5333 that the date of survey was on July 28, 1930. Plaintiffs’ property
covered by TCT No. 296463 was surveyed on January 4-6, 1927. This means that plaintiffs’
predecessor-in-interest had claimed ownership of the property ahead of that of defendant ALI’s
predecessor-in-interest. The principle of prior registration cannot be applied in this case because the
land previously surveyed cannot anymore be the subject of another survey, and there is already a
record of a prior survey in the Bureau of Lands. This is precisely the reason why the survey plan has
to be approved by the Director of the Bureau of Lands. This must be the reason why the later survey
in favor of Ayala’s predecessor-in-interest did not anymore bear the approval of the Director of
Lands because had it been submitted for approval, the records of the Bureau of Lands will show that
an earlier survey of the same land had already been made and approved by the Director of the
Bureau of Lands.
Evidently, Ayala’s claim of superiority of its title over that of the plaintiffs’ cannot therefore be
sustained. Be that as it may, the fact that cannot be disputed on the basis of Ayala’s answer is its
admission that SWO survey without the approval of the Director of the Bureau of Lands was
submitted in the alleged registration proceedings, rendering the decree and the title issued
thereunder to be tainted with irregularity and therefore void.
WHEREFORE, in the light of the foregoing and the prevailing jurisprudence on the matter, judgment
is hereby rendered:
(a) Declaring TCT No. 296463 in the name of the plaintiffs Spouses Morris G. Carpo and
Socorro R. Carpo as valid and legal, and superior to that of defendant Ayala’s TCT No. T-
5333;
(b) Declaring TCT No. T-5333, TCT No. 125945, TCT No. T-6055, TCT No. 4366, TCT No.
4367 and TCT No. 4368 and their derivatives as null and void;
(c) Ordering the defendant Ayala Land, Inc. to pay the sum of ₱100,000.00 as attorney’s
fees; and
(d) To pay the costs.17
On January 5, 1999, ALI filed a notice of appeal but the same was dismissed by the CA in a
Resolution18 dated May 14, 1999 for failure to pay the full amount of docket fees. In its motion for
reconsideration, ALI pointed out that it paid the full amount assessed by the cash clerk on duty at the
RTC Las Piñas. The motion was also denied, prompting ALI to file with this Court a petition for
review docketed as G.R. No. 140162. Finding ALI’s petition meritorious, the Court, in a
Decision19 dated November 22, 2000, reversed the CA’s dismissal of ALI’s appeal and remanded the
same to the CA for further proceedings.
On December 22, 2003, the CA rendered the herein challenged decision in favor of ALI, the
dispositive portion of which reads as follows:
FOR THE FOREGOING DISQUISITIONS, the instant appeal is GRANTED, the assailed Summary
Judgment of the Regional Trial Court of Las Piñas, Branch 255, dated December 22, 1998, is hereby
REVERSED and SET ASIDE, and a new one is rendered as follows:
(1) TCT No. 41262, formerly TCT No. T-5333, in the name of defendant-appellant Ayala
Land, Incorporated is hereby declared to be the VALID title to the subject property;
(2) TCT No. 296463 issued in the name of plaintiffs-appellees is declared to be NULL and
VOID;
(3) The concerned Register of Deeds is hereby ORDERED to cancel plaintiffs-appellees’

TCT No. 296463, and any and all titles issued covering the subject property, for being
spurious and void, and of no force and effect.20
The Carpos filed their motion for reconsideration but the same was denied by the CA in its
Resolution dated December 16, 2004. Hence, the instant petition for review filed by Socorro Carpo
and the heirs of Morris Carpo.21 The Petition contained the following assignment of errors:
A THE COURT OF APPEALS ERRED IN DECLARING THAT THE TITLE OF RESPONDENT IS

VALID EVEN WITHOUT THE REQUISITE SURVEY PLAN APPROVED BY THE DIRECTOR OF
LANDS.
B. THE COURT OF APPEALS ERRED IN DECLARING PETITIONERS GUILTY OF LACHES AND

PRESCRIPTION.
C. THE COURT OF APPEALS ERRED IN DECLARING THAT THE RTC "RELIED HEAVILY" ON
AN ALLEGED "ADMISSION" BY RESPONDENT OF THE VALIDITY OF THE TITLE OF
PETITIONERS OVER THE DISPUTED PARCEL OF LAND.
D. THE COURT OF APPEALS ERRED IN DECLARING THAT THERE IS RES JUDICATA

AGAINST PETITIONERS BASED ON THE CASE OF GUICO V. SAN PEDRO, ET AL., 72 PHIL
415, WITHOUT PROPER DETERMINATION OF WHETHER THE FACTS IN SAID CASE ARE
DIRECTLY APPLICABLE TO THIS CASE AND WHETHER THE ELEMENTS OF RES JUDICATA
ARE PRESENT.22
Petitioners prayed that this Court render a decision: (a) reversing and setting aside the CA Decision
dated December 22, 2003 and Resolution dated December 16, 2004; (b) reinstating and affirming in
toto the RTC’s Summary Judgment dated December 22, 1998; or in the alternative (c) remanding
the case to the RTC for further proceedings.
After a thorough review of the records, we deny the petition and concur with the CA that the
Summary Judgment rendered by the trial court should be reversed and set aside.
Preliminary discussion regarding subject matter of the controversy
At the outset, it should be noted that the trial court in its Summary Judgment declared null and void
(a) TCT No. T-5333 (and its antecedent, TCT No. [125945] T-6055A) covering a parcel of land with
an area of 171,309 square meters; (b) TCT No. T-4366 with a land area of 254,085 square meters;
(c) TCT No. T-4367 with a land area of 218,523 square meters; and (d) TCT No. T-4368 with a land
area of 155,345 square meters, despite the lack of evidence of identity of the properties described in
TCT Nos. T-4366, T-4367 and T-4368 with the property covered by the Carpos’ TCT No. 296463 or
any portion of said property claimed by petitioners. This was grievous and palpable error on the part
of the trial court considering that the property being claimed by the Carpos under their TCT No.
296463 had an area of only 171,309 square meters and the total area of the properties in the titles
invalidated by the trial court was 799,262 square meters.
It must be emphasized that in CA-G.R. SP No. 44243, involving the same parties, the CA ruled that:
On the other hand, defendant ALI, in its responsive pleading did not deny the existence of a title in
the name of the plaintiffs/private respondents. Instead, it alleged:
"14. The parcel of land described in TCT No. 296463, issued in the name of the plaintiffs, completely
overlaps the property covered by ALI’s TCT No. T-5333. But TCT No. T-296463 traces itself to OCT
No. 8575 which was issued on August 12, 1970, long after OCT No. 242 (the title from which ALI’s
TCT No. T-5333 was derived) was issued on May 9, 1950 (on the basis of Decree of Registration
No. 2917, Record No. 43516). Hence, ALI’s TCT No. T-5333 is superior to TCT No. 296463. xxx."
This is an admission that the private respondents have a title to the property in question, and that the
property described in private respondents’ TCT No. 296463 completely overlaps the title of petitioner
ALI. This fact is further substantiated by an affidavit of Jose Rizal Mercado, a Geodetic Engineer
who, after attesting to his qualifications, competence and experience, declared under oath:
"9. In connection with the subject case, Affiant was requested to find out, based on the technical
descriptions in their respective titles, if the lots described in the title of plaintiffs, TCT No. 296463,
overlaps the lots of ALI covered by TCT No. 41262 (formerly, TCT No. T-5333 of LPVI, and, more
previously, TCT No. T (125945) 6055-A, in the name of Ayala Corporation), TCT No. 4366, TCT No.
4367 and TCT No. 4368, x x x.
‘9.1. To accomplish this task, Affiant resorted to the plotting of the technical descriptions found in the
plaintiffs’ and ALI’s respective titles. The standard operating procedure, adopted by Affiant in this
particular instance, in plotting properties is to study the technical description in the titles and at the
same time, to get all the available survey plans described in the titles for reference.
‘9.2. To evidence this plotting that Affiant conducted, Affiant prepared a Sketch Plan reflecting
Plaintiffs’ title vis-a-vis ALI’s title. Attached hereto as Annex "G" is an original copy of the Sketch
Plan prepared by the Affiant.
‘9.3. The orange-shaded portion on the Sketch Plan indicates the area covered by the title of the
plaintiffs and it is clearly shown in this plan that plaintiffs’ claimed property entirely overlaps ALI’s
property delineated in TCT No. T-41262. Plaintiffs’ claimed property (Lot 3, PSU-56007) is in fact
identical to ALI’s lot (Lot 3, PSU-80886).
‘9.4. The blue, pink and green lines on the Sketch Plan indicate the boundaries of ALI’s TCT Nos.
4366, 4367 and 4368, respectively, and it is clearly shown that these do not overlap with plaintiffs’
claimed property.’"
The Sketch Plan attached thereto clearly indicates the overlapping and identical boundaries between
the private respondents’ TCT No. 296463 and petitioner’s TCT No. 125945, (formerly TCT No. T-
5333).23 In addition to the affidavit of the Geodetic Engineer, the petitioner likewise attached to its
Motion for Summary Judgment copies of the following titles:
xxxx
In contrast, the private respondents never controverted the petitioner’s allegation that their (private
respondents’) title, TCT No. 296463 traces its origin to OCT No. 8575, issued on August 12, 1970,
while that of the petitioner has its origin in OCT No. 242, issued on May 9, 1950. Moreover, the
private respondents attached no supporting document to its Opposition to the Motion for Summary
Judgment.
Thus, as matters stand, the requisites for the grant of summary judgment appear to have been
satisfied xxx.
xxxx
Since the existence of two titles over the same property, as well as the fact of overlapping of the
technical descriptions of the two titles are admitted in the pleadings, and substantiated by the
supporting documents attached by the defendant-movant (petitioner herein) to its Motion for
Summary Judgment, there is no genuine issue as to any material fact. If at all, the sole issue is a
legal one, to wit: whose title (as to the conflicting ones) is superior and must be upheld. This issue
may be decided on the basis of the affidavits and supporting documents submitted by the parties, as
well as the applicable law and jurisprudence on the matter. In other words, there need not be a
protracted trial thereon, since all that the trial court should do is to apply the law to the issue, taking
into consideration the documents attached by the parties in their respective pleadings and/or
submitted together with the motion or the opposition thereto. The same is true with the other
defenses raised by the petitioner in its responsive pleading, to wit: res judicata, prescription and
laches – which may likewise be resolved without going to trial.24 (Emphasis and underscoring
supplied.)
The foregoing CA decision became final and executory after the separate petitions for review filed
with this Court by the parties were denied with finality. The parties, and even the trial court, were
bound by the CA’s factual finding therein that the only lots whose technical descriptions overlap are
those covered by the Carpos’ TCT No. 296463 and ALI’s TCT No. T-5333 which later became TCT
No. T-41262. There was simply no basis for the trial court to invalidate all the ALI titles mentioned in
the complaint.
The incorrectness of this sweeping invalidation of ALI titles in the Summary Judgment is even more
evident in the case of TCT No. T-4367 (Lot 2, plan Psu-47035) and TCT No. T-4368 (Lot 3, plan
Psu-47035). Petitioners’ claims with respect to these properties are already barred by res judicata. In
Realty Sales Enterprise, Inc. v. Intermediate Appellate Court,25petitioner Morris Carpo already
asserted his purported ownership of these two properties based on a transfer certificate of title with
the same survey plan number (Psu-56007) as TCT No. 296463. However, in Realty, his claim was
discredited by the Court when it held that Realty Sales Enterprise, Inc. (Realty), ALI’s predecessor in
interest,26 is the one with valid title to these properties. The relevant portions of the Realty Decision
are quoted here:
Two (2) adjacent parcels of land located in Almanza, Las Piñas, Metro Manila, having an aggregate
area of 373,868 sq. m., situated in the vicinity of the Ayala Alabang Project and BF Homes
Parañaque are covered by three (3) distinct sets of Torrens titles to wit:
1) TCT No. 20408 issued on May 29, 1975 in the name of Realty Sales Enterprise, Inc.,
which was derived from OCT No. 1609, issued on May 21, 1958, pursuant to Decree No. N-
63394 in LRC Cases Nos. 657, 758 and 976, GLRO Record Nos. N-29882, N-33721 and N-
43516, respectively.
2) TCT No. 303961 issued on October 13, 1970 in the name of Morris G. Carpo, which was
derived from OCT No. 8629, issued on October 13, 1970 pursuant to decree No. N-131349
in LRC Case No. N-11-M (N-6217), GLRO Record No. N-32166.
3) TCTs Nos. 333982 and 333985, issued on July 27, 1971 in the name of Quezon City
Development and Financing Corporation, derived from OCT No. 8931 which was issued on
July 27, 1971 pursuant to LRC Case No. P-206 GLRO Record No. N-31777.
On December 29, 1977, Morris Carpo filed a complaint with the Court of First Instance of Rizal,
Branch XXIII, presided over by Judge Rizalina Bonifacio Vera (hereafter referred to as Vera Court),
for "declaration of nullity of Decree No. N-63394 and TCT No. 20408." Named defendants were
Realty Sales Enterprise, Inc., Macondray Farms, Inc. and the Commissioner of Land Registration. x
x x.
xxxx
In the case at bar, it appears that it was Estanislao Mayuga, father of Dominador Mayuga,
predecessor-in-interest of Realty, who originally filed on June 24, 1927 a registration proceeding
docketed as LRC Case No. 657, GLRO Record No. N-29882 in the Court of First Instance of Rizal to
confirm his title over parcels of land described as Lots 1, 2 and 3, Plan Psu-47035. (Lots 2 and 3 are
the subject of the instant litigation among Carpo, Realty and QCDFC.) Case No. 657 was jointly tried
with two other cases, LRC Case No. 976, GLRO Record No. 43516 filed by Eduardo Guico and LRC
Case No. 758, GLRO Record No. 33721 filed by Florentino Baltazar, as the three cases involved
identical parcels of land, and identical applicants/oppositors.
xxxx
Carpo bought the disputed property from the Baltazars, the original registered owners, by virtue of a
deed executed before Iluminada Figueroa, Notary Public of Manila dated October 9, 1970. x x x.
xxxx
The Baltazars, predecessors-in-interest of Carpo are heirs of Florentino Baltazar, an oppositor in the
original application filed by Estanislao Mayuga in 1927. As stated earlier, the CFI-Rizal confirmed the
title of Estanislao to Lots 1, 2 and 3 of Plan Psu-47035 "desestimando oposicion de Florentino
Baltazar . . . con respeto a dichos lotes . . ." As such successors of Florentino, they could not
pretend ignorance of the land registration proceedings over the disputed parcels of land earlier
initiated by Eduardo Guico, Florentino Baltazar and Estanislao Mayuga, as when as the decisions
rendered therein.
Moreover, it is not disputed that the title in the name of Dominador Mayuga, from whom Realty
derived its title, was issued in 1958, or twelve years before the issuance of the title in the name of
the Baltazars in 1970.
In this jurisdiction, it is settled that "(t)he general rule is that in the case of two certificates of title,
purporting to include the same land, the earlier in date prevails x x x. In successive registrations,
where more than one certificate is issued in respect of a particular estate or interest in land, the
person claiming under the prior certificate is entitled to the estate or interest; and that person is
deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or
indirectly from the person who was the holder of the earliest certificate issued in respect thereof x x
x."27 (Emphasis and underscoring ours; citations omitted.)
We now discuss each assignment of error raised in the petition.
First Assignment of Error

Petitioners alleged that the CA erred in declaring that the title of respondent is valid even without the
requisite survey plan approved by the Director of the Bureau of Lands.
Petitioners clearly misunderstood or deliberately misread the CA’s ruling on this point. It is the CA’s
view that the trial court’s pronouncement that OCT No. 242 was issued without an approved survey
plan was unwarranted in view of the presumption of regularity that said title enjoys.
We cannot but agree with the CA on this point upon perusing the following portion of the Summary
Judgment:
complaint. A reading of the defendant’s answer reveals that OCT No. 242 covers the property
surveyed under SWO, but the pleadings on file fail to allege that the same was approved by the
Director of the Bureau of Lands, thereby justifying this court to be skeptical of the validity of the
issuance of OCT No. 242. In original land registration cases, it is mandatory that the application
should be accompanied by a survey plan of the property applied for registration, duly approved by
the Director of the Bureau of Lands. A survey plan without the approval of the Director of the Bureau
of Lands has the character of being of dubious origin and it is not therefore worthy of being accepted
as evidence. The property being claimed by the defendant ALI, allegedly registered under OCT No.
242, is shown to have been surveyed under SWO and not bearing the approval of the Director of the
Bureau of Lands. Any title issued emanating from a survey plan without the approval of the Director
of the Bureau of Lands is tainted with irregularity and therefore void, as ruled in Republic Cement
Corporation vs. Court of Appeals, et al., 198 SCRA 734. In the said case, the Supreme Court held:
"That unless a survey plan is duly approved by the Director of Lands the same is of dubious value
and is not acceptable as evidence. Indubitably, therefore, the reported survey and its alleged results
are not entitled to credit and should be rejected."
The submission of the plan is a statutory requirement of mandatory character and unless the plan
and its technical description are duly approved by the Director of Lands, the same are not of much
value (Republic vs. Vera, 120 SCRA 210). In another case, it was ruled that the Land Registration
Commission has no authority to approve original survey plans (Director of Lands, et al. vs.
Honorable Salvador Reyes, et al., 68 SCRA 177).
Evidently, the SWO survey of the property which defendant ALI claimed to have been originated
from OCT No. 242 had not been approved by the Director of the Bureau of Lands, but was
apparently prepared and approved by the then Land Registration Commissioner and under the law,
the same is void.28
To begin with, a perusal of the defendant’s answer or amended answer would show that, contrary to
the trial court’s allusions thereto, there is no admission on the part of ALI that OCT No. 242 was
issued without a survey plan that was duly approved by the Director of the Bureau of Lands. There is
likewise no evidence on record to support the trial court’s finding that the survey plan submitted to
support the issuance of OCT No. 242 in the 1950 land registration proceedings was approved only
by the Land Registration Commissioner and not by the Director of the Bureau of Lands.
It would appear the trial court came to the conclusion that OCT No. 242 was issued without a duly
approved survey plan simply because the notation "SWO" appeared in the technical description of
the said title which was attached to the answer and due to ALI’s failure to allege in its pleadings that
the survey plan submitted in support of the issuance of OCT No. 242 was approved by the Director
of the Bureau of Lands.29
It is incomprehensible how the trial court could conclude that the survey plan mentioned in OCT No.
242 was unapproved by the appropriate authority all from the notation "SWO" which appeared
beside the survey plan number on the face of the title or from a failure to allege on the part of ALI
that a duly approved survey plan exists. We quote with approval the discussion of the CA on this
point:
Pursuant to the foregoing, the court a quo erred when, in ruling that the validity of OCT No. 242 is
dubious, it gave emphasis to defendant-appellant’s failure to allege that the survey plan of OCT No.
242 was duly approved by the Director of the Bureau of Lands. It is admitted that a survey plan is
one of the requirements for the issuance of decrees of registration, but upon the issuance of such
decree, it can most certainly be assumed that said requirement was complied with by ALI’s original
predecessor-in-interest at the time the latter sought original registration of the subject property.
Moreover, the land registration court must be assumed to have carefully ascertained the propriety of
issuing a decree in favor of ALI’s predecessor-in-interest, under the presumption of regularity in the
performance of official functions by public officers. The court upon which the law has conferred
jurisdiction, is deemed to have all the necessary powers to exercise such jurisdiction, and to have
exercised it effectively. This is as it should be, because once a decree of registration is made under
the Torrens system, and the time has passed within which that decree may be questioned the title is
perfect and cannot later on be questioned. There would be no end to litigation if every litigant could,
by repeated actions, compel a court to review a decree previously issued by another court forty-five
(45) years ago. The very purpose of the Torrens system would be destroyed if the same land may
be subsequently brought under a second action for registration, as what the court a quo did when it
faulted ALI’s failure to allege that its predecessor-in-interest submitted a survey plan approved by
the Director of the Bureau of Lands in the original land registration case.
The Court need not emphasize that it is not for ALI to allege in its pleadings, much less prove, that
its predecessor-in-interest complied with the requirements for the original registration of the subject
property. A party dealing with a registered land need not go beyond the Certificate of Title to
determine the true owner thereof so as to guard or protect his or her interest. Hence, ALI was not
required to go beyond what appeared in the transfer certificate of title in the name of its immediate
transferor. It may rely solely, as it did, on the correctness of the certificate of title issued for the
subject property and the law will in no way oblige it to go behind the certificate of title to determine
the condition of the property. This is the fundamental nature of the Torrens System of land
registration, to give the public the right to rely upon the face of a Torrens certificate of title and to
dispense with the need of inquiring further.30 (Underscoring ours; citations omitted.)
It cannot be gainsaid that the issuance of OCT No. 242 was a result of the registration decree of the
Court of First Instance of Rizal, pursuant to land registration proceedings in Case No. 976. In the
absence of proof to the contrary, OCT No. 242 and its derivatives, including ALI’s TCT No. T-41262,
enjoy the presumption of regularity and ALI need not allege or prove that its title was regularly
issued. That is precisely the nature of such a presumption, it dispenses with proof. Rule 131, Section
3 of the Rules of Court provides:
Section 3. Disputable presumptions. — The following presumptions are satisfactory if

uncontradicted, but may be contradicted and overcome by other evidence:
xxxx
(m) That official duty has been regularly performed;
(n) That a court, or judge acting as such, whether in the Philippines or elsewhere, was acting in the
lawful exercise of jurisdiction;
(o) That all the matters within an issue raised in a case were laid before the court and passed upon
by it; and in like manner that all matters within an issue raised in a dispute submitted for arbitration
were laid before the arbitrators and passed upon by them; x x x.
Thus, we held in Herce, Jr. v. Municipality of Cabuyao, Laguna31:
In the absence of evidence to the contrary, the Ordinary Decree Book, LRC (CLR) Rec. No. 6763,
showing that Decree No. 4244 was issued on March 3, 1911, is presumed to have been regularly
issued by the accountable public officers who enjoy the legal presumption of regularity in the
performance of their functions. Thus, the proceedings that led to the issuance of Decree No. 4244 in
favor of the Municipality of Cabuyao cannot be overturned without any countervailing proof to the
contrary. In the words of Tichangco v. Enriquez:32
To overturn this legal presumption carelessly — more than 90 years since the termination of the
case — will not only endanger judicial stability, but also violate the underlying principle of the
Torrens system. Indeed, to do so would reduce the vaunted legal indefeasibility of Torrens titles to
meaningless verbiage. (Emphasis supplied.)
The presumption of regularity enjoyed by the registration decree issued in Case No. 976 and OCT
No. 242 includes the presumption that all the requisites for the issuance of a valid title had been
complied with. ALI need not allege or prove that a duly approved survey plan accompanied the
issuance of OCT No. 242 in 1950 because it is presumed. It is the party who seeks to overcome the
presumption who would have the burden to present adequate and convincing evidence to the
contrary. This, petitioners did not even attempt to do.
We cannot accept petitioners’ proposition that they did not have the burden of proof of showing the
irregularity of ALI’s title since the burden of proof purportedly did not shift to them since no full-blown
trial was conducted by the RTC.
This specious argument deserves scant credit. Rule 131, Section 1 of the Rules of Court provides:
Section 1. Burden of proof. — Burden of proof is the duty of a party to present evidence on the facts
in issue necessary to establish his claim or defense by the amount of evidence required by law.
With the filing of the complaint, petitioners should already have alleged all the bases of their cause of
action, particularly their allegation that ALI’s title is null and void and that such title should be
cancelled. However, a scrutiny of the complaint would show that petitioners never alleged the
purported lack of an approved survey plan as a defect of ALI’s title. All that the complaint alleged is
that ALI’s titles should be declared void for not being derivatives of the Carpos’ title. Implicit in that
allegation is that petitioners were relying solely on the supposed priority of their own title over ALI’s.
It stands to reason then that ALI did not have to allege in its Answer that its mother title, OCT No.
242, was supported by a duly approved survey plan when petitioners did not raise the same as an
issue in their complaint or in any other pleading filed with the trial court.
Indubitably, in view of the CA’s Decision in CA-G.R. SP No. 44243, this controversy has been
reduced to the sole substantive issue of which between the two titles, purporting to cover the same
property, deserves priority. This is hardly a novel issue. As petitioners themselves are aware, in
Realty, it was held that:
In this jurisdiction, it is settled that "(t)he general rule is that in the case of two certificates of title,
purporting to include the same land, the earlier in date prevails x x x. In successive registrations,
where more than one certificate is issued in respect of a particular estate or interest in land, the
person claiming under the prior certificate is entitled to the estate or interest; and that person is
deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or
indirectly from the person who was the holder of the earliest certificate issued in respect thereof x x
x."33 (Emphasis supplied.)
In Degollacion v. Register of Deeds of Cavite,34 we held that "[w]here two certificates of title purport
to include the same land, whether wholly or partly, the better approach is to trace the original
certificates from which the certificates of title were derived."
In all, we find that the CA committed no reversible error when it applied the principle "Primus
Tempore, Portior Jure" (First in Time, Stronger in Right) in this case and found that ALI’s title was
the valid title having been derived from the earlier OCT.
Second Assignment of Error
Petitioners contend that it is error on the part of the CA to rule that their cause of action has been
barred by prescription and laches. According to them, since the OCT from which ALI derived its title
is void for want of a duly approved survey plan, their cause of action did not prescribe. However, as
discussed above, the conclusion of the trial court that OCT No. 242 is void was not sufficiently borne
out by the evidence on record. Verily, the premise upon which petitioners build their theory of
imprescriptibility of their action did not exist.
In sum, we find no reason to disturb the CA’s finding that:
As previously emphasized, OCT No. 242 of ALI’s predecessor-in-interest was issued on May 7,
1950, or forty-five (45) years before plaintiffs-appellees filed their complaint on March 10, 1995. As
such, it is the Court’s firmly held view that plaintiffs-appellees’ claim is barred not only by
prescription, but also by laches.
Aside from the fact that OCT No. 242 had become incontrovertible after the lapse of one (1) year
from the time a decree of registration was issued, any action for reconveyance that plaintiffs-
appellees could have availed of is also barred. Although plaintiffs-appellees’ complaint was for
quieting of title, it is in essence an action for reconveyance based on an implied or constructive trust,
considering that plaintiffs-appellees were alleging in said complaint that there was a serious mistake,
if not fraud, in the issuance of OCT No. 242 in favor of ALI’s predecessor-in-interest. It is now well-
settled that an action for reconveyance, which is a legal remedy granted to a landowner whose
property has been wrongfully or erroneously registered in another’s name, must be filed within ten
years from the issuance of the title, since such issuance operates as a constructive notice. Since
ALI’s title is traced to an OCT issued in 1950, the ten-year prescriptive period expired in 1960.
By laches is meant the negligence or omission to assert a right within a reasonable time, warranting
a presumption that the party entitled to assert it either has abandoned it or declined to assert it. It
does not involve mere lapse or passage of time, but is principally an impediment to the assertion or
enforcement of a right, which has become under the circumstances inequitable or unfair to permit. In
the instant case, plaintiffs-appellees, as well as their predecessor-in-interest, have not shown that
they have taken judicial steps to nullify OCT No. 242, from which ALI’s title was derived, for forty-five
(45) years. To allow them to do so now, and if successful, would be clearly unjust and inequitable to
those who relied on the validity of said OCT, the innocent purchasers for value, who are protected by
the precise provisions of P.D. 1529, thus:
"SECTION 32. Review of decree of registration; Innocent purchaser for value – The decree of
registration shall not be reopened or revised xxx subject, however, to the right of any person xxx to
file in the proper Court of First Instance a petition for reopening and review of the decree of
registration not later than one year from and after the date of entry of such decree of registration, but
in no case shall such petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase
innocent purchaser for value or an equivalent phrase occurs in this Decree, it shall be deemed to
include and innocent lessee, mortgagee or other encumbrances for value."35
Third Assignment of Error
The next assigned error involves the question of whether the trial court, in rendering the Summary
Judgment, indeed relied heavily on the alleged admission made by ALI on the validity of Carpos’
title, as declared by the CA. Specifically, the CA stated as follows:
In its assailed decision, the court a quo relied heavily on the alleged admission by ALI in it[s] Answer
of the existence and validity of plaintiffs-appellees’ title. We have read the pertinent pleading and We
find ALI’s statement to be of no moment.
Nowhere in ALI’s statement was there an admission of the validity of plaintiffs-appellees’ title. x x x.
The Court cannot comprehend where and how the court a quo could have gotten the impression that
ALI was admitting not only the existence, but also the validity of plaintiffs-appellees’ certificate of
title. x x x.36
An examination of the Summary Judgment of the trial court would readily show that indeed the trial
court relied on ALI’s supposed admission of the existence of Carpos’ title in ruling which of the
conflicting titles was valid. Pertinently, the trial court merely declared:
The existence of plaintiffs’ TCT No. 296463 has been admitted by defendant Ayala in its answer to
have been originated from OCT No. 8575 which was issued on August 12, 1970. It is very significant
that defendant ALI admitted it in its answer that OCT No. 8575 and plaintiffs’ TCT No. 296463 both
originated from Decree No. 131141 issued on October 15, 1969 in the name of Apolonio Sabater as
Annex "G" to defendant ALI’s answer. This admission made by the defendant in its answer is
conclusive upon it. It cannot therefore take position contrary to or inconsistent with its answer, and
the facts are to be taken as true (Westminister High School vs. Sto. Domingo, et al., G.R. No. 12666
R-July 5, 1955; McDaniel vs. Apacible, 44 Phil. 248-255).
complaint. x x x.37
Although the Summary Judgment did not expressly state that ALI admitted the validity of Carpos’
title with its admission of the said title’s existence, that is the unmistakable import of the trial court’s
statements that ALI’s admission of the existence of Carpo’s title "are conclusive upon it" and bars
ALI from taking a "position contrary to or inconsistent with its answer" followed by the statement that
the trial court is "not inclined to concur with Ayala’s claim of validity of its TCT No. T-5333 and
alleged OCT No. 242, absent of (sic) any admission to that effect by the plaintiffs." This is yet
another non sequitur argument on the part of the trial court which the CA correctly pointed out in its
own Decision.
Fourth Assignment of Error
As to the issue of res judicata, the Court of Appeals ruled that the decision in the case of Guico v.
San Pedro38 was binding on the Carpos as it proceeded to discuss, thus:
In Guico vs. San Pedro, the Supreme Court resolved the conflicting claims over a tract of land
situated in barrio Tindig na Manga, Parañaque, Rizal, which was subdivided into eleven (11) lots.
The subject land was sought to be registered by a certain Eduardo C. Guico on the basis of an
accompanying plan Psu-80886, which interestingly is also the basis of ALI’s TCT No. T-5333, now
TCT No. 41262. Guico’s application was opposed by, among others, Florentino Baltazar, on the
basis of plan Psu 56007, under which plaintiffs-appellees’ title was derived.
It appears that Lots 2 and 3 were adjudicated to Guico on the basis of Psu-80886 (Lot 3 is the
subject matter of the instant case), Lot 10 in favor of Baltazar on the basis of Psu 56007, under
which plaintiffs-appellees’ title was based, and the rest to the heirs of Narciso Mayuga. While
Baltazar claimed Lot 3 on the basis of his Psu-56007, his claim was rejected and the Lot was
adjudicated to Guico on the basis of his Psu-80886.
It is clear, therefore, that whatever claim plaintiffs-appellees have on the subject property on the
basis of Lot 3 Psu-56007, through their predecessor-in-interest, Florentino Baltazar, the same had
been clearly and finally denied by the Supreme Court in Guico vs. San Pedro.
For res judicata to apply, four requisites must be met: (1) the former judgment or order must be final;
(2) it must be a judgment or an order on the merits; (3) it must have been rendered by a court having
jurisdiction over the subject matter and the parties; and (4) there must be, between the first and the
second actions, identity of parties, of subject matter and of cause of action. Plaintiffs-appellees only
have objections with respect to the fourth requisite, offering the lame excuse that it is not bound by
such decision, there being no identity of parties in Guico vs. San Pedro and the instant case.39
We agree with petitioners that it is not apparent from an examination of Guico and the evidence on
record that indeed the predecessors-in-interest of ALI and the Carpos with respect to the subject
property are Eduardo Guico and Florentino Baltazar, especially since the parties’ respective OCTs
were not issued in these persons’ names but rather a certain Alberto Yaptinchay and Apolonio
Sabater. It cannot be categorically said that there was identity of parties between the Guico case
and the instant case. Clearly, one of the elements of res judicata, i.e., that there must be, between
the first and the second actions, identity of parties, is lacking. In any event, the CA’s questioned
Decision had sufficient basis in fact and law even without relying on the Guico case. 1avvphi1
In conclusion, we find that the Court of Appeals committed no reversible error in setting aside the
patently erroneous Summary Judgment of the trial court.
WHEREFORE, the petition is DENIED. The Court of Appeals’ Decision dated December 22, 2003
and the Resolution dated December 16, 2004 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 102858 July 28, 1997
THE DIRECTOR OF LANDS, petitioner,

vs.
COURT OF APPEALS and TEODORO ABISTADO, substituted by MARGARITA, MARISSA,
MARIBEL, ARNOLD and MARY ANN, all surnamed ABISTO, respondents.
PANGANIBAN, J.:
Is newspaper publication of the notice of initial hearing in an original land registration case
mandatory or directory?
Statement of the Case
The Court of Appeals ruled that it was merely procedural and that the failure to cause such
publication did not deprive the trial court of its authority to grant the application. But the Solicitor
General disagreed and thus filed this petition to set aside the Decision promulgated on July 3, 1991
1
and the subsequent Resolution promulgated on November 19, 1991 by Respondent Court of
2
Appeals in CA-G.R. CV No. 23719. The dispositive portion of the challenged Decision reads:
3 4
WHEREFORE, premises considered, the judgment of dismissal appealed from is hereby set
aside, and a new one entered confirming the registration and title of applicant, Teodoro
Abistado, Filipino, a resident of Barangay 7, Poblacion Mamburao, Occidental Mindoro, now
deceased and substituted by Margarita, Marissa, Maribel, Arnold and Mary Ann, all
surnamed Abistado, represented by their aunt, Miss Josefa Abistado, Filipinos, residents of
Poblacion Mamburao, Occidental Mindoro, to the parcel of land covered under MSI (IV-A-8)
315-D located in Poblacion Mamburao, Occidental Mindoro.
The oppositions filed by the Republic of the Philippines and private oppositor are hereby
dismissed for want of evidence.
Upon the finality of this decision and payment of the corresponding taxes due on this land,
let an order for the issuance of a decree be issued.
The Facts
On December 8, 1986, Private Respondent Teodoro Abistado filed a petition for original registration
of his title over 648 square meters of land under Presidential Decree (PD) No. 1529. The application
5
was docketed as Land Registration Case (LRC) No. 86 and assigned to Branch 44 of the Regional
Trial Court of Mamburao, Occidental Mindoro. However, during the pendency of his petition,
6
applicant died. Hence, his heirs — Margarita, Marissa, Maribel, Arnold and Mary Ann, all surnamed
Abistado — represented by their aunt Josefa Abistado, who was appointed their guardian ad litem,
were substituted as applicants.
The land registration court in its decision dated June 13, 1989 dismissed the petition "for want of
jurisdiction." However, it found that the applicants through their predecessors-in-interest had been in
open, continuous, exclusive and peaceful possession of the subject land since 1938.
In dismissing the petition, the trial court reasoned: 7
. . . However, the Court noted that applicants failed to comply with the provisions of Section
23 (1) of PD 1529, requiring the Applicants to publish the notice of Initial Hearing (Exh. "E")
in a newspaper of general circulation in the Philippines. Exhibit "E" was only published in the
Official Gazette (Exhibits "F" and "G"). Consequently, the Court is of the well considered
view that it has not legally acquired jurisdiction over the instant application for want of
compliance with the mandatory provision requiring publication of the notice of initial hearing
in a newspaper of general circulation.
The trial court also cited Ministry of Justice Opinion No. 48, Series of 1982, which in its pertinent
portion provides: 8
It bears emphasis that the publication requirement under Section 23 [of PD 1529] has a two-
fold purpose; the first, which is mentioned in the provision of the aforequoted provision refers
to publication in the Official Gazette, and is jurisdictional; while the second, which is
mentioned in the opening clause of the same paragraph, refers to publication not only in the
Official Gazette but also in a newspaper of general circulation, and is procedural. Neither
one nor the other is dispensable. As to the first, publication in the Official Gazette is
indispensably necessary because without it, the court would be powerless to assume
jurisdiction over a particular land registration case. As to the second, publication of the notice
of initial hearing also in a newspaper of general circulation is indispensably necessary as a
requirement of procedural due process; otherwise, any decision that the court may
promulgate in the case would be legally infirm.
Unsatisfied, private respondents appealed to Respondent Court of Appeals which, as earlier

explained, set aside the decision of the trial court and ordered the registration of the title in the name
of Teodoro Abistado.
The subsequent motion for reconsideration was denied in the challenged CA Resolution dared
November 19, 1991.
The Director of Lands represented by the Solicitor General thus elevated this recourse to us. This
Court notes that the petitioner's counsel anchored his petition on Rule 65. This is an error. His
remedy should be based on Rule 45 because he is appealing a final disposition of the Court of
Appeals. Hence, we shall treat his petition as one for review under Rule 45, and not
for certiorari under Rule 65.9
The Issue
Petitioner alleges that Respondent Court of Appeals committed "grave abuse of discretion" in 10
holding —
. . . that publication of the petition for registration of title in LRC Case No. 86 need not be
published in a newspaper of general circulation, and in not dismissing LRC Case No. 86 for
want of such publication.
Petitioner points out that under Section 23 of PD 1529, the notice of initial hearing shall be
"published both in the Official Gazette and in a newspaper of general circulation." According to
petitioner, publication in the Official Gazette is "necessary to confer jurisdiction upon the trial court,
and . . . in . . . a newspaper of general circulation to comply with the notice requirement of due
process." 11
Private respondents, on the other hand, contend that failure to comply with the requirement of
publication in a newspaper of general circulation is a mere "procedural defect." They add that
publication in the Official Gazette is sufficient to confer jurisdiction. 12
In reversing the decision of the trial court, Respondent Court of Appeals ruled: 13
. . . although the requirement of publication in the Official Gazette and in a newspaper of

general circulation is couched in mandatory terms, it cannot be gainsaid that the law also
mandates with equal force that publication in the Official Gazette shall be sufficient to confer
jurisdiction upon the court.
Further, Respondent Court found that the oppositors were afforded the opportunity "to explain
matters fully and present their side." Thus, it justified its disposition in this wise:
14
. . . We do not see how the lack of compliance with the required procedure prejudiced them
in any way. Moreover, the other requirements of: publication in the Official Gazette, personal
notice by mailing, and posting at the site and other conspicuous places, were complied with
and these are sufficient to notify any party who is minded to make any objection of the
application for registration.
The Court's Ruling
We find for petitioner.
Newspaper Publication Mandatory
The pertinent part of Section 23 of Presidential Decree No. 1529 requiring publication of the notice of
initial hearing reads as follows:
Sec. 23. Notice of initial hearing, publication, etc. — The court shall, within five days from
filing of the application, issue an order setting the date and hour of the initial hearing which
shall not be earlier than forty-five days nor later than ninety days from the date of the order.
The public shall be given notice of initial hearing of the application for land registration by
means of (1) publication; (2) mailing; and (3) posting.
1. By publication. —
Upon receipt of the order of the court setting the time for initial hearing, the Commissioner of
Land Registration shall cause a notice of initial hearing to be published once in the Official
Gazette and once in a newspaper of general circulation in the Philippines: Provided,
however, that the publication in the Official Gazette shall be sufficient to confer jurisdiction
upon the court. Said notice shall be addressed to all persons appearing to have an interest in
the land involved including the adjoining owners so far as known, and "to all whom it may
concern." Said notice shall also require all persons concerned to appear in court at a certain
date and time to show cause why the prayer of said application shall not be granted.
x x x x x x x x x
Admittedly, the above provision provides in clear and categorical terms that publication in the Official
Gazette suffices to confer jurisdiction upon the land registration court. However, the question boils
down to whether, absent any publication in a newspaper of general circulation, the land registration
court can validly confirm and register the title of private respondents.
We answer this query in the negative. This answer is impelled by the demands of statutory
construction and the due process rationale behind the publication requirement.
The law used the term "shall" in prescribing the work to be done by the Commissioner of Land
Registration upon the latter's receipt of the court order setting the time for initial hearing. The said
word denotes an imperative and thus indicates the mandatory character of a statute. While
15
concededly such literal mandate is not an absolute rule in statutory construction, as its import
ultimately depends upon its context in the entire provision, we hold that in the present case the term
must be understood in its normal mandatory meaning. In Republic vs. Marasigan, the Court through
16
Mr. Justice Hilario G. Davide, Jr. held that Section 23 of PD 1529 requires notice of the initial hearing
by means of (1) publication, (2) mailing and (3) posting, all of which must be complied with. "If the
intention of the law were otherwise, said section would not have stressed in detail the requirements
of mailing of notices to all persons named in the petition who, per Section 15 of the Decree, include
owners of adjoining properties, and occupants of the land." Indeed, if mailing of notices is essential,
then by parity of reasoning, publication in a newspaper of general circulation is likewise imperative
since the law included such requirement in its detailed provision.
It should be noted further that land registration is a proceeding in rem. Being in rem, such
17
proceeding requires constructive seizure of the land as against all persons, including the state, who
have rights to or interests in the property. An in rem proceeding is validated essentially through
publication. This being so, the process must strictly be complied with. Otherwise, persons who may
be interested or whose rights may be adversely affected would be barred from contesting an
application which they had no knowledge of. As has been ruled, a party as an owner seeking the
inscription of realty in the land registration court must prove by satisfactory and conclusive evidence
not only his ownership thereof but the identity of the same, for he is in the same situation as one who
institutes an action for recovery of realty. He must prove his title against the whole world. This task,
18
which rests upon the applicant, can best be achieved when all persons concerned — nay, "the whole
world" — who have rights to or interests in the subject property are notified and effectively invited to
come to court and show cause why the application should not be granted. The elementary norms of
due process require that before the claimed property is taken from concerned parties and registered
in the name of the applicant, said parties must be given notice and opportunity to oppose.
It may be asked why publication in a newspaper of general circulation should be deemed mandatory
when the law already requires notice by publication in the Official Gazette as well as by mailing and
posting, all of which have already been complied with in the case at hand. The reason is due
process and the reality that the Official Gazette is not as widely read and circulated as newspapers
and is oftentimes delayed in its circulation, such that the notices published therein may not reach the
interested parties on time, if at all. Additionally, such parties may not be owners of neighboring
properties, and may in fact not own any other real estate. In sum, the all-encompassing in
rem nature of land registration cases, the consequences of default orders issued against the whole
world and the objective of disseminating the notice in as wide a manner as possible demand a
mandatory construction of the requirements for publication, mailing and posting.
Admittedly, there was failure to comply with the explicit publication requirement of the law. Private
respondents did not proffer any excuse; even if they had, it would not have mattered because the
statute itself allows no excuses. Ineludibly, this Court has no authority to dispense with such
mandatory requirement. The law is unambiguous and its rationale clear. Time and again, this Court
has declared that where the law speaks in clear and categorical language, there is no room for
interpretation, vacillation or equivocation; there is room only for application. There is no alternative.
19
Thus, the application for land registration filed by private respondents must be dismissed without
prejudice to reapplication in the future, after all the legal requisites shall have been duly complied
with.
WHEREFORE, the petition is GRANTED and the assailed Decision and Resolution are REVERSED
and SET ASIDE. The application of private respondent for land registration is DISMISSED without
prejudice. No costs.
SO ORDERED.
G.R. No. 171631 November 15, 2010
REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
AVELINO R. DELA PAZ, ARSENIO R. DELA PAZ, JOSE R. DELA PAZ, and GLICERIO R. DELA
PAZ, represented by JOSE R. DELA PAZ, Respondents.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
set aside the Decision1 of the Court of Appeals (CA), dated February 15, 2006, in CA-G.R. CV No.
84206, which affirmed the Decision2 of the Regional Trial Court (RTC) of Pasig City, Branch 167, in
LRC Case No. N-11514, granting respondents’ application for registration and confirmation of title
over a parcel of land located in Barangay Ibayo, Napindan, Taguig, Metro Manila.
The factual milieu of this case is as follows:
On November 13, 2003, respondents Avelino R. dela Paz, Arsenio R. dela Paz, Jose R. dela Paz,
and Glicerio R. dela Paz, represented by Jose R. dela Paz (Jose), filed with the RTC of Pasig City
an application for registration of land3 under Presidential Decree No. 1529 (PD 1529) otherwise
known as the Property Registration Decree. The application covered a parcel of land with an area of
25,825 square meters, situated at Ibayo, Napindan, Taguig, Metro Manila, described under survey
Plan Ccn-00-000084, (Conversion Consolidated plan of Lot Nos. 3212 and 3234, MCADM 590-D,
Taguig Cadastral Mapping). Together with their application for registration, respondents submitted
the following documents: (1) Special power of attorney showing that the respondents authorized
Jose dela Paz to file the application; (2) Conversion Consolidated plan of Lot Nos. 3212 and 3234,
MCADM 590-D, Taguig Cadastral Mapping (Ccn-00-000084) with the annotation that the survey is
inside L.C. Map No. 2623 Proj. No. 27-B classified as alienable/disposable by the Bureau of Forest
Development, Quezon City on January 03, 1968; (3) Technical Descriptions of Ccn-00-000084; (4)
Geodetic Engineer's Certificate; (5) Tax Declaration No. FL-018-01466; (6) Salaysay ng
Pagkakaloob dated June 18, 1987; (7) Sinumpaang Pahayag sa Paglilipat sa Sarili ng mga Pagaari
ng Namatay dated March 10, 1979; (8) Certification that the subject lots are not covered by any land
patent or any public land appilcation; and (9) Certification by the Office of the Treasurer, Municipality
of Taguig, Metro Manila, that the tax on the real property for the year 2003 has been paid.
Respondents alleged that they acquired the subject property, which is an agricultural land, by virtue
of Salaysay ng Pagkakaloob4 dated June 18, 1987, executed by their parents Zosimo dela Paz and
Ester dela Paz (Zosimo and Ester), who earlier acquired the said property from their deceased
parent Alejandro dela Paz (Alejandro) by virtue of a "Sinumpaang Pahayag sa Paglilipat sa Sarili ng
mga Pag-aari ng Namatay5 dated March 10, 1979. In their application, respondents claimed that they
are co-owners of the subject parcel of land and they have been in continuous, uninterrupted, open,
public, adverse possession of the same, in the concept of owner since they acquired it in 1987.
Respondents further averred that by way of tacking of possession, they, through their predecessors-
in-interest have been in open, public, adverse, continuous, and uninterrupted possession of the
same, in the concept of an owner even before June 12, 1945, or for a period of more than fifty (50)
years since the filing of the application of registration with the trial court. They maintained that the
subject property is classified as alienable and disposable land of the public domain.
The case was set for initial hearing on April 30, 2004. On said date, respondents presented
documentary evidence to prove compliance with the jurisdictional requirements of the law.
Petitioner Republic of the Philippines (Republic), through the Office of the Solicitor General (OSG),
opposed the application for registration on the following grounds, among others: (1) that neither the
applicants nor their predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of the land in question for a period of not less than thirty (30) years; (2)
that the muniments of title, and/or the tax declarations and tax payments receipts of applicants, if
any, attached to or alleged in the application, do not constitute competent and sufficient evidence of
bona fide acquisition of the land applied for; and (3) that the parcel of land applied for is a portion of
public domain belonging to the Republic not subject to private appropriation. Except for the Republic,
there was no other oppositor to the application.
On May 5, 2004, the trial court issued an Order of General Default6 against the whole world except
as against the Republic. Thereafter, respondents presented their evidence in support of their
application.
In its Decision dated November 17, 2004, the RTC granted respondents' application for registration
of the subject property. The dispositive portion of the decision states:
WHEREFORE, affirming the order of general default hereto entered, judgment is hereby rendered
AFFIRMING and CONFIRMING the title of AVELINO R. DELA PAZ, Arsenio R. dela Paz, Jose R.
dela Paz and Glicerio R. dela Paz, all married and residents of and with postal address at No. 65
Ibayo, Napindan, Taguig, Metro Manila, over a parcel of land described and bounded under Plan
Ccn-00-000084 (consolidation of Lots No. 3212 and 3234, Mcadm-590-D, Taguig, Cadastral
Mapping, containing Twenty-Five Thousand Eight Hundred Twenty-Five (25,825) Square Meters,
more or less, situated at Barangay Ibayo, Napindan, Taguig, Metro Manila, under the operation of
P.D. 1529, otherwise known as the Property Registration Decree.
After the decision shall have been become final and executory and, upon payment of all taxes and
other charges due on the land, the order for the issuance of a decree of registration shall be
accordingly undertaken.
SO ORDERED.7
Aggrieved by the Decision, petitioner filed a Notice of Appeal.8 The CA, in its Decision dated
February 15, 2006, dismissed the appeal and affirmed the decision of the RTC. The CA ruled that
respondents were able to show that they have been in continuous, open, exclusive and notorious
possession of the subject property through themselves and their predecessors-in-interest. The CA
found that respondents acquired the subject land from their predecessors-in-interest, who have been
in actual, continuous, uninterrupted, public and adverse possession in the concept of an owner since
time immemorial. The CA, likewise, held that respondents were able to present sufficient evidence to
establish that the subject property is part of the alienable and disposable lands of the public domain.
Hence, the instant petition raising the following grounds:
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT'S ORDER GRANTING
RESPONDENTS' APPLICATION FOR REGISTRATION OF THE SUBJECT LOT CONSIDERING
THAT THE EVIDENCE ON RECORD FAILED TO ESTABLISH THAT RESPONDENTS HAVE
BEEN IN OPEN, CONTINUOUS, EXCLUSIVE AND NOTORIOUS POSSESSION OF THE
SUBJECT LOT IN THE CONCEPT OF AN OWNER.
II
THE COURT OF APPEALS ERRED IN ORDERING THE REGISTRATION OF THE SUBJECT LOT
IN RESPONDENTS' NAME CONSIDERING THAT NO EVIDENCE WAS FORMALLY OFFERED
TO PROVE THAT THE SAME IS WITHIN THE ALIENABLE AND DISPOSABLE AREA OF THE
PUBLIC DOMAIN.9
In its Memorandum, petitioner claims that the CA's findings that respondents and their predecessors-
in-interest have been in open, uninterrupted, public, and adverse possession in the concept of
owners, for more than fifty years or even before June 12, 1945, was unsubstantiated. Respondents
failed to show actual or constructive possession and occupation over the subject land in the concept
of an owner. Respondents also failed to establish that the subject property is within the alienable and
disposable portion of the public domain. The subject property remained to be owned by the State
under the Regalian Doctrine.
In their Memorandum, respondents alleged that they were able to present evidence of specific acts
of ownership showing open, notorious, continuous and adverse possession and occupation in the
concept of an owner of the subject land. To prove their continuous and uninterrupted possession of
the subject land, they presented several tax declarations, dated 1949, 1966, 1974, 1979, 1980,
1985, 1991, 1994 and 2000, issued in the name of their predecessors-in-interest. In addition,
respondents presented a tax clearance issued by the Treasurer's Office of the City of Taguig to
show that they are up to date in their payment of real property taxes. Respondents maintain that the
annotations appearing on the survey plan of the subject land serves as sufficient proof that the land
is within the alienable and disposable portion of the public domain. Finally, respondents assert that
the issues raised by the petitioner are questions of fact which the Court should not consider in a
petition for review under Rule 45.
The petition is meritorious.
In petitions for review on certiorari under Rule 45 of the Revised Rules of Court, this Court is limited
to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of
support by the evidence on record, or the assailed judgment is based on a misapprehension of
facts.10 It is not the function of this Court to analyze or weigh evidence all over again, unless there is
a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous
as to constitute palpable error or grave abuse of discretion.11
In the present case, the records do not support the findings made by the CA that the subject land is
part of the alienable and disposable portion of the public domain.
Section 14 (1) of PD 1529, otherwise known as the Property Registration Decree provides:
SEC. 14. Who may apply. - The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized
representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands of
the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
From the foregoing, respondents need to prove that (1) the land forms part of the alienable and
disposable land of the public domain; and (2) they, by themselves or through their predecessors-in-
interest, have been in open, continuous, exclusive, and notorious possession and occupation of the
subject land under a bona fide claim of ownership from June 12, 1945 or earlier.12 These the
respondents must prove by no less than clear, positive and convincing evidence.13
Under the Regalian doctrine, which is embodied in our Constitution, all lands of the public domain
belong to the State, which is the source of any asserted right to any ownership of land. All lands not
appearing to be clearly within private ownership are presumed to belong to the State. Accordingly,
public lands not shown to have been reclassified or released as alienable agricultural land, or
alienated to a private person by the State, remain part of the inalienable public domain.14 The burden
of proof in overcoming the presumption of State ownership of the lands of the public domain is on
the person applying for registration (or claiming ownership), who must prove that the land subject of
the application is alienable or disposable. To overcome this presumption, incontrovertible evidence
must be established that the land subject of the application (or claim) is alienable or disposable.15
To support its contention that the land subject of the application for registration is alienable,
respondents presented survey Plan Ccn-00-00008416 (Conversion Consolidated plan of Lot Nos.
3212 & 3234, MCADM 590-D, Taguig Cadastral Mapping) prepared by Geodetic Engineer Arnaldo
C. Torres with the following annotation:
This survey is inside L.C. Map No. 2623 Proj. No. 27-B clasified as alienable/disposable by the
Bureau of Forest Development, Quezon City on Jan. 03, 1968.
Respondents' reliance on the afore-mentioned annotation is misplaced.
In Republic v. Sarmiento,17 the Court ruled that the notation of the surveyor-geodetic engineer on the
blue print copy of the conversion and subdivision plan approved by the Department of Environment
and Natural Resources (DENR) Center, that "this survey is inside the alienable and disposable area,
Project No. 27-B. L.C. Map No. 2623, certified on January 3, 1968 by the Bureau of Forestry," is
insufficient and does not constitute incontrovertible evidence to overcome the presumption that the
land remains part of the inalienable public domain.
Further, in Republic v. Tri-plus Corporation,18 the Court held that:
In the present case, the only evidence to prove the character of the subject lands as required by law
is the notation appearing in the Advance Plan stating in effect that the said properties are alienable
and disposable. However, this is hardly the kind of proof required by law. To prove that the land
subject of an application for registration is alienable, an applicant must establish the existence of a
positive act of the government, such as a presidential proclamation or an executive order, an
administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or
statute. The applicant may also secure a certification from the Government that the lands applied for
are alienable and disposable. In the case at bar, while the Advance Plan bearing the notation was
certified by the Lands Management Services of the DENR, the certification refers only to the
technical correctness of the survey plotted in the said plan and has nothing to do whatsoever with
the nature and character of the property surveyed. Respondents failed to submit a certification from
the proper government agency to prove that the lands subject for registration are indeed alienable
and disposable.
Furthermore, in Republic of the Philippines v. Rosila Roche,19 the Court held that the applicant bears
the burden of proving the status of the land. In this connection, the Court has held that he must
present a certificate of land classification status issued by the Community Environment and Natural
Resources Office (CENRO), or the Provincial Environment and Natural Resources Office (PENRO)
of the DENR. He must also prove that the DENR Secretary had approved the land classification and
released the land as alienable and disposable, and that it is within the approved area per verification
through survey by the CENRO or PENRO. Further, the applicant must present a copy of the original
classification approved by the DENR Secretary and certified as true copy by the legal custodian of
the official records. These facts must be established by the applicant to prove that the land is
alienable and disposable.
Clearly, the surveyor's annotation presented by respondents is not the kind of proof required by law
to prove that the subject land falls within the alienable and disposable zone. Respondents failed to
submit a certification from the proper government agency to establish that the subject land are part
of the alienable and disposable portion of the public domain. In the absence of incontrovertible
evidence to prove that the subject property is already classified as alienable and disposable, we
must consider the same as still inalienable public domain.20
Anent respondents’ possession and occupation of the subject property, a reading of the records
failed to show that the respondents by themselves or through their predecessors-in-interest
possessed and occupied the subject land since June 12, 1945 or earlier. 1avvphil
The evidence submitted by respondents to prove their possession and occupation over the subject
property consists of the testimonies of Jose and Amado Geronimo (Amado), the tenant of the
adjacent lot. However, their testimonies failed to establish respondents’ predecessors-in-interest'
possession and occupation of subject property since June 12, 1945 or earlier. Jose, who was born
on March 19, 1939,21 testified that since he attained the age of reason he already knew that the land
subject of this case belonged to them.22 Amado testified that he was a tenant of the land adjacent to
the subject property since 1950,23 and on about the same year, he knew that the respondents were
occupying the subject land.24
Jose and Amado's testimonies consist merely of general statements with no specific details as to
when respondents' predecessors-in-interest began actual occupancy of the land subject of this case.
While Jose testified that the subject land was previously owned by their parents Zosimo and Ester,
who earlier inherited the property from their parent Alejandro, no clear evidence was presented to
show Alejandro's mode of acquisition of ownership and that he had been in possession of the same
on or before June 12, 1945, the period of possession required by law. It is a rule that general
statements that are mere conclusions of law and not factual proof of possession are unavailing and
cannot suffice.25 An applicant in a land registration case cannot just harp on mere conclusions of law
to embellish the application but must impress thereto the facts and circumstances evidencing the
alleged ownership and possession of the land.26
Respondents’ earliest evidence can be traced back to a tax declaration issued in the name of their
predecessors-in-interest only in the year 1949. At best, respondents can only prove possession
since said date. What is required is open, exclusive, continuous and notorious possession by
respondents and their predecessors-in-interest, under a bona fide claim of ownership, since June
12, 1945 or earlier.27 Respondents failed to explain why, despite their claim that their predecessors-
in interest have possessed the subject properties in the concept of an owner even before June 12,
1945, it was only in 1949 that their predecessors-in-interest started to declare the same for purposes
of taxation. Well settled is the rule that tax declarations and receipts are not conclusive evidence of
ownership or of the right to possess land when not supported by any other evidence. The fact that
the disputed property may have been declared for taxation purposes in the names of the applicants
for registration or of their predecessors-in-interest does not necessarily prove ownership. They are
merely indicia of a claim of ownership.28
The foregoing pieces of evidence, taken together, failed to paint a clear picture that respondents by
themselves or through their predecessors-in-interest have been in open, exclusive, continuous and
notorious possession and occupation of the subject land, under a bona fide claim of ownership since
June 12, 1945 or earlier.
Evidently, since respondents failed to prove that (1) the subject property was classified as part of the
disposable and alienable land of the public domain; and (2) they and their predecessors-in-interest
have been in open, continuous, exclusive, and notorious possession and occupation thereof under a
bonafide claim of ownership since June 12, 1945 or earlier, their application for confirmation and
registration of the subject property under PD 1529 should be denied.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated February 15,
2006, in CA-G.R. CV No. 84206, affirming the Decision of the Regional Trial Court of Pasig City,
Branch 167, in LRC Case No. N-11514, is REVERSED and SET ASIDE. The application for
registration and confirmation of title filed by respondents Avelino R. dela Paz, Arsenio R. dela Paz,
Jose R. dela Paz, and Glicerio R. dela Paz, as represented by Jose R. dela Paz, over a parcel of
land, with a total area of twenty-five thousand eight hundred twenty-five (25,825) square meters
situated at Barangay Ibayo, Napindan, Taguig, Metro Manila, is DENIED.
SO ORDERED.
G.R. No. 167215 October 8, 2008
REPUBLIC OF THE PHILIPPINES, petitioners,

vs.
HEIRS OF EVARISTO TIOTIOEN, respondents.
DECISION
Before us is a Petition for Review on Certiorari filed by the Republic of the Philippines, represented
by the Department of Environment and Natural Resources and the Office of the Solicitor General
(OSG), seeking to set aside a part of the Decision1 dated February 15, 2005 of the Court of Appeals
(CA) in CA–G.R. SP No. 71358 insofar as it sustained the denial of the Notice of Appeal2 filed on
January 11, 2002 by the petitioner from the Decision3 dated August 30, 2001 of Branch 63 of the
Regional Trial Court (RTC) of La Trinidad, Benguet, in Land Registration Case (LRC) No. 93-LRC-
0008.
*Additional Member as per Special Order No. 520.
LRC No. 93-LRC-0008 involves the second application filed by Evaristo Tiotioen on September 6,
1993 for judicial confirmation and registration under the Torrens System of two parcels of land
denominated as Lot Nos. 1 and 2 of Plan PSU-230646, situated in Pico, La Trinidad, Benguet, with
an aggregate area of 180,488 square meters. Evaristo Tiotioen was substituted by his heirs in the
case when he died on June 21, 1997. Santiago A. Santiago, the Municipality of La Trinidad,
Benguet, and the petitioner opposed the aforesaid application.
In a Notice of Appearance4 dated October 20, 1994, the OSG formally requested that its appearance
be entered as counsel for the petitioner and that all notices of hearings, orders, resolutions and
decision be served to the OSG at its given address. The said notice of appearance informed the
court that the OSG authorized the Provincial Prosecutor of Benguet to appear in the case, subject to
the conditions quoted hereunder:
The Provincial Prosecutor, La Trinidad, Benguet, is authorized to appear in this case, and therefore,
should also be furnished notices of hearing, orders, resolutions, decisions and other processes.
However, as the Solicitor General retains supervision and control of the representation in this case
and has to approve withdrawal of the case, non-appeal, or other actions which appear to
compromise the interest of the Government, only notices of orders, resolutions, and decisions
served on him will bind the party represented.
The petitioner filed its Opposition5 dated October 20, 1994 and Supplemental Opposition6 dated June
20, 1995 on the ground that the parcels of land, applied for registration by the respondents, belong
to the communal forest of La Trinidad, Benguet, and are therefore inalienable land of the public
domain, which have not been classified and considered as disposable and alienable.
After trial, the land registration court rendered its Decision dated August 30, 2001 which granted the
application. The dispositive portion of the decision reads:
WHEREFORE, the Court, finding that the Applicants have shown their adverse, continuous and
notorious possession and in the concept of owners of the land applied for since time immemorial,
and thus their title thereto is proper to be confirmed, and is hereby confirmed.
The applicants, namely: NICOLAS TIOTIOEN, single; ILDEFONSO TIOTIOEN, married to Adelaida
Tiotioen; CONCEPCION TIOTIOEN-DIAZ, married; NANCY TIOTIOEN-OGOY, married and
FILOMENA TIOTIOEN-DULNUAN, married; all of legal age, Filipinos and residents of Pico, La
Trinidad, Benguet are hereby declared owners pro indiviso of a parcel of land situated at Pico, La
Trinidad, Benguet containing an area of ONE HUNDRED TWENTY THREE THOUSAND NINE
HUNDRED THIRTY FIVE (123,935) SQUARE METERS for Lot 1 and FIFTY SIX THOUSAND FIVE
HUNDRED FIFTY THREE (56,553) SQUARE METERS for Lot 2. The subject land is particularly
described in the Original Tracing Cloth Plan (Exh. "AA-1"), Survey Plan (Exh. "A"), and in the
Technical Description (Exhs. "B" & "B-2), subject to the claim of oppositor Santiago A. Santiago as
per agreement with the applicants and when the decision becomes final and executory, let a final
decree be issued for the issuance of title accordingly.
SO ORDERED.
The petitioner and the municipality received their respective notices of the above-mentioned decision
on September 6 and 7, 2001. The municipality filed its Motion for Reconsideration thereto on
September 20, 2001. The petitioner, on the other hand, filed a Motion and Manifestation7 on October
5, 2001 adopting the said motion of the municipality.
In the Resolution8 dated December 6, 2001, the land registration court denied for lack of merit the
motion for reconsideration of the municipality and declared the same as pro forma because the
issues cited were already passed upon in the decision sought for reconsideration. The municipality
filed its notice of appeal on the following day it received its notice of the said resolution. The OSG
was not furnished by the land registration court with a copy of this resolution but it was informed of
the said resolution only by the provincial prosecutor on January 4, 20029, through a Letter10 dated
December 19, 2001. Consequently, the OSG filed its subject notice of appeal for the petitioner on
January 11, 2002.
The land registration court denied the notice of appeal of the municipality on the ground that the
latter’s pro forma motion for reconsideration did not interrupt the reglementary period to appeal. The
petitioner’s notice of appeal was also denied supposedly for having been filed out of time11.
The petitioner sought the reconsideration of the denial of its notice of appeal which was again denied
by the land registration court in an Order12 dated April 23, 2002, quoted hereunder:
ORDER
For resolution is the Motion for Reconsideration filed by the Office of the Solicitor General (OSG) of
the Order of the Court dated January 29, 2002 denying their Notice of Appeal having been filed
beyond the reglementary period.
Be it noted that the OSG received the Decision dated August 30, 2001 on September 06, 2001
and filed its Notice of Appeal on January 11, 2002. Conformably with Section 3, Rule 41 of the
Rules of Civil Procedure, prescribing a 15-day appeal period, the last day for the perfection of
an appeal by OSG should have been on the 21st day of September 2001. Per se, it was filed
beyond the reglementary period for which to perfect an appeal.
It is well-settled in our jurisdiction that the right to appeal is a statutory right and a party who seeks to
avail of the right must comply with the rules. These rules, particularly the statutory requirement for
perfecting an appeal within the reglementary period laid down by law, must be strictly followed as
they are considered indispensable interdictions against needless delays and for orderly discharge of
judicial business (Ben Sta. Rita v. C.A., et al., G.R. No. 119891, August 21, 1995).
In view of the foregoing, the Court finds no convincing and logical reasons to reconsider its Order
dated January 29, 2002 and hereby denies the Motion for Reconsideration. [Emphasis supplied]
The municipality and petitioner separately assailed before the CA the orders of the land registration
court denying their respective notices of appeal. The CA granted the petition filed by the municipality
and gave due course to its appeal but denied the one filed by the petitioner. The CA pointed out that
the petitioner filed its motion and manifestation adopting the adverted motion for reconsideration of
the municipality beyond the reglementary period to file an appeal and, thus, the decision of the land
registration court already attained finality insofar as the petitioner was concerned. The "strong
grounds" alleged by the petitioner were likewise rejected by the CA which explained and ruled as
follows:
The merit impressed in petitioner Republic of the Philippines’ position is, however, more
apparent than real. Notwithstanding the studied avoidance of direct references thereto, the
fact remains that the Solicitor General received its copy of the 30 August 2001 decision
rendered in the case on 6 September 2001 and thus only had until the 21st of the same month
to either move for a reconsideration of said decision or perfect an appeal therefrom. There is,
therefore, no gainsaying the ineluctable fact that the selfsame decision had already attained
finality as against petitioner Republic of the Philippines by the time the Office of the
Provincial Prosecutor of Benguet filed the 4 October 2001 manifestation adopting petitioner
municipality’s motion for reconsideration.
It thus matters little that the Office of the Provincial Prosecutor of Benguet appears to have been
duly furnished with a copy of the aforesaid 6 December 2001 resolution on December 10, 2001 or
that it only informed the Office of the Solicitor General of said adverse ruling through the 19
December 2001 missive the latter received on January 4, 2002. The rule that copies or orders and
decisions served on the deputized counsel, acting as agent or representative of the Office of
the Solicitor General, are not binding until they are actually received by the latter has little
application where, as in the case at bench, said office had been duly furnished a copy of the
decision in the main case which, for reasons it alone can explain, it allowed to attain
finality. Under the factual and legal milieu of the case, public respondent cannot be faulted with
grave abuse of discretion tantamount to lack of or excess of jurisdiction for denying the 10 January
2002 Notice of Appeal filed by the Office of the Solicitor General way beyond the reglementary
period for petitioner Republic of the Philippines’ appeal.
Neither are we, finally, swayed by the strong grounds petitioner Republic of the Philippines
purportedly has to pursue an appeal from public respondent’s 30 August 2001 decision.
Except on jurisdictional grounds, correction of a lower court’s decision could, for one, only
be done by regular appeal within the period allowed by law. Our perusal of the grounds cited
by petitioner Republic of the Philippines, for another, yielded nothing which had not yet been
raised and will once again be raised by petitioner municipality.
WHEREFORE, the petition filed by petitioner Municipality of La Trinidad, Benguet is GRANTED and
the assailed 23 January 2002 order and 30 April 2002 resolution are, acoordingly, NULLIFIED and
SET ASIDE. In lieu thereof, another is entered GIVING DUE COURSE to said petitioner’s appeal.
The petition filed by the Office of the Solicitor General for and in behalf of petitioner Republic
of the Philippines is, however, DENIED for lack of merit. [Emphasis supplied]
Hence, the present petition for review on certiorari.
The petitioner claims that the OSG, as its principal counsel in the subject land registration case, is
entitled to be furnished with copies of orders, notices, and decision of the trial court, and that the
date of service of such copies to the OSG is the reckoning period in counting the timeliness of its
appeal13. The petitioner contends that the OSG was not furnished with a notice of
the Order [Resolution] dated December 6, 2001 of the land registration court which denied the
adverted motion for reconsideration of the municipality. The prescribed period within which to file
petitioner’s appeal did not commence to run and, therefore, its notice of appeal should not be treated
as filed out of time.
The petitioner prays in the alternative that issues of procedure should be set aside and its appeal
should be given due course alleging again the "strong grounds" that it has adduced against the
decision of the land registration court.
In their Comment14 and Memorandum15, the respondents contend that the appellate court correctly

denied the notice of appeal of the petitioner for having been filed out of time. They stress the fact
that the petitioner received the adverted decision of the trial court on September 6, 2001 and that the
petitioner filed its notice of appeal thereto only on January 11, 2002 which is way beyond the
prescribed period under the Rules of Court.
We find merit in the petition.
The relevant facts involving the procedural issues in this case are undisputed. The petitioner and the
municipality received a notice of the adverted decision of the land registration court on September 6
and 7, 2001, respectively. The municipality timely filed its motion for reconsideration of the said
judgment on September 20, 2001. The provincial prosecutor adopted this motion for reconsideration
of the municipality on October 5, 2001 which was beyond the fifteen-day period counted from receipt
of the petitioner of a copy of the decision. The land registration court denied the said motion for
reconsideration of the municipality in its Resolution dated December 6, 2001. The OSG was not
furnished with a notice of such resolution. The OSG was informed by the provincial prosecutor of
such denial on January 4, 2002 when it received the Letter dated December 19, 2001 of the
Provincial Prosecutor. The OSG filed the subject notice of appeal for the petitioner only on January
11, 2002 which the land registration court denied for having been filed way beyond the fifteen-day
reglementary period to appeal which the said court reckoned from September 6, 2001. The CA
affirmed the land registration court’s denial of the subject notice of appeal of the petitioner but gave
due course to the appeal of the municipality.
In deciding this case, this Court is guided by the settled doctrine that the belated filing of an appeal
by the State, or even its failure to file an opposition, in a land registration case because of the
mistake or error on the part of its officials or agents does not deprive the government of its right to
appeal from a judgment of the court. In Director of Lands v. Medina16, we said:
Considering the foregoing, the lower court gravely abused its discretion in dismissing the appeal of
the government on the basis of what it perceived as a procedural lapse. The lower court should be
reminded that the ends of substantial justice should be the paramount consideration in any litigation
or proceeding. As this Court ruled in Republic v. Associacion Benevola de Cebu, "to dismiss the
Republic's appeal merely on the alleged ground of late filing is not proper considering the
merits of the case" and to ignore the evidence presented by the provincial fiscal in behalf of the
Director of Forestry which constituted the crux of the government's case "would defeat the time-
honored Constitutional precepts and the Regalian doctrine that all lands of the public domain
belong to the State, and that the State is the source of any asserted right to ownership in land
and charged with the conservation of such patrimony."
In Heirs of Marina C. Regalado v. Republic17, we ruled:
The failure of the Republic to file any opposition or answer to the application for registration,
despite receipt of notice thereof, did not deprive its right to appeal the RTC decision.
Relative to the allegation that the Director of Lands or that the government did not oppose the
application of herein respondent, as in fact on December 26, 1969 an order of general default was
issued by the court against the whole world, suffice it to say that as stated by this court in Luciano
vs. Estrella, 34 SCRA 769, 'it is a well known and settled rule in our jurisdiction that the
Republic, or its government, is usually not estopped by mistake or error on the part of its
officials or agents.' And, in an earlier case, Republic vs. Philippine Rabbit Bus Lines, Inc., 32
SCRA 211, 'there was an enunciation of such a principle in this wise: 'Thus did the lower court, as
pointed out by the then Solicitor General, conclude that the government was bound by the mistaken
interpretation arrived at by the national treasurer and the auditor general.' It would consider estoppel
as applicable. That is not the law. Estoppel does not lie. [Emphasis supplied]
Moreover, we have advised the lower courts, under exceptional circumstances, to be "cautious
about not depriving of a party of the right to appeal and that every party litigant should be afforded
the amplest opportunity for the proper and just determination of his cause free from the constraints
of technicalities."18 In Tanenglian v. Lorenzo, et al.,19 we recognized the importance of the facts and
issues involved and gave due course to an appeal despite that it was the wrong mode of appeal and
that it was even filed beyond the reglementary period to do so, thus:
We have not been oblivious to or unmindful of the extraordinary situations that merit liberal
application of the Rules, allowing us, depending on the circumstances, to set aside technical
infirmities and give due course to the appeal. In cases where we dispense with the technicalities, we
do not mean to undermine the force and effectivity of the periods set by law. In those rare cases
where we did not stringently apply the procedural rules, there always existed a clear need to prevent
the commission of a grave injustice. Our judicial system and the courts have always tried to
maintain a healthy balance between the strict enforcement of procedural laws and the
guarantee that every litigant be given the full opportunity for the just and proper disposition
of his cause.
xxx xxx xxx
In Sebastian v. Morales, we ruled that rules of procedure must be faithfully followed except only
when, for persuasive reasons, they may be relaxed to relieve a litigant of an injustice not
commensurate with his failure to comply with the prescribed procedure, thus:
[C]onsidering that the petitioner has presented a good cause for the proper and just determination of
his case, the appellate court should have relaxed the stringent application of technical rules of
procedure and yielded to consideration of substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent procedural
defects and lapses. This is in keeping with the principle that rules of procedure are mere
tools designed to facilitate the attainment of justice and that strict and rigid application of
rules which would result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided. It is a far better and more prudent cause of action
for the court to excuse a technical lapse and afford the parties a review of the case to attain
the ends of justice, rather than dispose of the case on technicality and cause grave injustice
to the parties, giving a false impression of speedy disposal of cases while actually resulting
in more delay, if not a miscarriage of justice.
The vast tracts of land involved in this case are claimed by the petitioner to be a protected
watershed area, which allegedly preserves the main source of water of the Municipality of La
Trinidad. Relative thereto, the petitioner raises substantial factual and legal issues which should be
decided on their merit instead of being summarily disposed of based on a technicality.
WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED. The assailed

decision of the appellate court is hereby PARTIALLY MODIFIED so as to give due course to
the Notice of Appeal filed on January 11, 2002 by the petitioner from the Decision dated August 30,
2001 of Branch 63 of the RTC of La Trinidad, Benguet, in Land Registration Case (LRC) No. 93-
LRC-0008.
SO ORDERED.
G.R. No. 77770 December 15, 1988
ATTY. JOSE S. GOMEZ, DELFINA GOMEZ ESTRADA, ENRIQUITA GOMEZ OXCIANO, BENITA
GOMEZ GARLITOS, REYNALDO GOMEZ ESPEJO, ARMANDO GOMEZ, ERLINDA GOMEZ
GUICO, EUGENIA GOMEZ CALICDAN, AZUCENA GOMEZ ORENCIA, TEODORO S. GOMEZ,
JR., and ALEJO S. GOMEZ (now deceased) represented by his wife, LETICIA Y. GOMEZ, and
children, namely, MARGIE GOMEZ GOB, JACINTO Y. GOMEZ, ALEJO Y. GOMEZ, JR., and
MARY ANN Y. GOMEZ, petitioners,
vs.
HON. COURT OF APPEALS, HON. PEDRO G. ADUCAYEN Judge Regional Trial Court, San
Carlos City (Pangasinan) Branch LVI, HON. CHIEF, LAND REGISTRATION COMMISSION,
Quezon City, Metro Manila, and SILVERIO G. PEREZ, Chief, Division of Original Registration,
Land Registration Commission, Quezon City, Metro Manila, respondents.
PADILLA, J.:
The present case originated with the filing by petitioners on 30 August 1968 in the Court of First Instance (now Regional Trial Court) of San
Carlos City, Pangasinan, of an application for registration of several lots situated in Bayambang, Pangasinan.
The lots applied for were Lots Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 1 0, 11 and 12 of Plan Psu-54792 Amd.-2.
The lots were among those involved in the case of Government of the Philippine Islands vs.
Abran, wherein this Court declared Consolacion M. Gomez owner of certain lots in Sitio Poponto
1
Bayambang, Pangasinan. Petitioners are the heirs of Teodoro Y. Gomez (father of Consolacion)
who, together with Consolacion's son, Luis Lopez, inherited from her parcels of land when
Consolacion Gomez died intestate. Petitioners alleged that after the death of Teodoro Y. Gomez,
they became the absolute owners of the subject lots by virtue of a Quitclaim executed in their favor
by Luis Lopez. The lots (formerly portions of Lots 15,16, 34 and 41 covered by Plan Ipd-92) were
subdivided into twelve lots—Lots Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12. The subdivision plan
was duly approved by the Bureau of Lands on 30 November 1963. Petitioners agreed to allocate the
lots among themselves.
After notice and publication, and there being no opposition to the application, the trial court issued an
order of general default. On 5 August 1981, the court rendered its decision adjudicating the subject
lots in petitioners' favor. 2
On 6 October 1981, the trial court issued an order expressly stating that the decision of 5 August
3
1981 had become final and directed the Chief of the General Land Registration Office to issue the
corresponding decrees of registration over the lots adjudicated in the decision of 5 August 1981.
On 11 July 1984, respondent Silverio G. Perez, Chief of the Division of Original Registration, Land
Registration Commission (now known as the National Land Titles and Deeds Registration
Administration), submitted a report to the court a quo stating that Lots 15, 16, 34 and 41 of Ipd-92
were already covered by homestead patents issued in 1928 and 1929 and registered under the Land
Registration Act. He recommended that the decision of 5 August 1981, and the order of 6 October
1981 be set aside. Petitioners opposed the report, pointing out that no opposition was raised by the
Bureau of Lands during the registration proceedings and that the decision of 5 August 1981 should
be implemented because it had long become final and executory.
After hearing, the lower court rendered a second decision on 25 March 1985 setting aside the
decision dated 5 August 1981 and the order dated 6 October 1981 for the issuance of
decrees. Petitioners moved for reconsideration but the motion was denied by respondent judge on 6
4
August 1985 for lack of merit. 5
Petitioners filed a petition for certiorari and mandamus with this Court which in turn referred the
petition to the Court of Appeals. 6
On 17 September 1986, the appellate court rendered judgment, dismissing the petition and stating,
7
among others, thus—
In resumé, prior to the issuance of the decree of registration, the respondent Judge
has still the power and control over the decision he rendered. The finality of an
adjudication of land in a registration or cadastral case takes place only after the
expiration of the one-year period after entry of the final decree of registration (Afalla
vs. Rosauro, 60 Phil. 622; Valmonte vs. Nable, 85 Phil. 256; Capio vs. Capio, 94
Phil. 113). When the respondent Judge amended his decision after the report of the
respondent officials of the Land Registration office had shown that homestead
patents had already been issued on some of the lots, respondents cannot be faulted
because land already granted by homestead patent can no longer be the subject of
another registration (Manalo vs. Lukban, et al., 48 Phil. 973).
WHEREFORE, in view of the foregoing, We resolve to DISMISS the petition for lack
of merit.
SO ORDERED.
Petitioners' motion for reconsideration was denied by the appellate court in its Resolution dated 10
March 1987. Hence, this recourse.
8
Several issues are raised by petitioners in this petition. The more important issues before the Court
are: (a) whether or not respondent Judge had jurisdiction to issue the decision of 25 March 1985
which set aside the lower court's earlier decision of 5 August 1981 and the order of 6 October 1981;
(b) whether or not the respondents Acting Land Registration Commissioner and Engr. Silverio Perez,
Chief, Division of Original Registration, Land Registration Commission, have no alternative but to
issue the decrees of registration pursuant to the decision of 5 August 1981 and the order for
issuance of decrees, dated 6 October 1981, their duty to do so being purely ministerial; (c) whether
or not "the law of the case" is the decision in Government of the Philippine Islands v. Abran, supra,
which held that the lands adjudicated to Consolacion Gomez were not public lands, and therefore
they could not have been acquired by holders of homestead titles as against petitioners herein.
It is not disputed that the decision dated 5 August 1981 had become final and executory. Petitioners
vigorously maintain that said decision having become final, it may no longer be reopened, reviewed,
much less, set aside. They anchor this claim on section 30 of P.D. No. 1529 (Property Registration
Decree) which provides that, after judgment has become final and executory, the court shall
forthwith issue an order to the Commissioner of Land Registration for the issuance of the decree of
registration and certificate of title. Petitioners contend that section 30 should be read in relation to
section 32 of P.D. 1529 in that, once the judgment becomes final and executory under section 30,
the decree of registration must issue as a matter of course. This being the law, petitioners assert,
when respondent Judge set aside in his decision, dated 25 March 1985, the decision of 5 August
1981 and the order of 6 October 1981, he clearly acted without jurisdiction.
Petitioners' contention is not correct. Unlike ordinary civil actions, the adjudication of land in a
cadastral or land registration proceeding does not become final, in the sense of incontrovertibility
until after the expiration of one (1) year after the entry of the final decree of registration. This Court,
9
in several decisions, has held that as long as a final decree has not been entered by the Land
Registration Commission (now NLTDRA) and the period of one (1) year has not elapsed from date
of entry of such decree, the title is not finally adjudicated and the decision in the registration
proceeding continues to be under the control and sound discretion of the court rendering it. 10
Petitioners contend that the report of respondent Silverio Perez should have been submitted to the
court a quo before its decision became final. But were we to sustain this argument, we would be
pressuring respondent land registration officials to submit a report or study even if haphazardly
prepared just to beat the reglementary deadline for the finality of the court decision. As said by this
Court in De los Reyes vs. de Villa: 11
Examining section 40, we find that the decrees of registration must be stated in
convenient form for transcription upon the certificate of title and must contain an
accurate technical description of the land. This requires technical men. Moreover, it
frequently occurs that only portions of a parcel of land included in an application are
ordered registered and that the limits of such portions can only be roughly indicated
in the decision of the court. In such cases amendments of the plans and sometimes
additional surveys become necessary before the final decree can be entered. That
can hardly be done by the court itself; the law very wisely charges the Chief Surveyor
of the General Land Registration Office with such duties (Administrative Code,
section 177).
Thus, the duty of respondent land registration officials to render reports is not limited to the period
before the court's decision becomes final, but may extend even after its finality but not beyond the
lapse of one (1) year from the entry of the decree.
Petitioners insist that the duty of the respondent land registration officials to issue the decree is
purely ministerial. It is ministerial in the sense that they act under the orders of the court and the
decree must be in conformity with the decision of the court and with the data found in the record, and
they have no discretion in the matter. However, if they are in doubt upon any point in relation to the
preparation and issuance of the decree, it is their duty to refer the matter to the court. They act, in
this respect, as officials of the court and not as administrative officials, and their act is the act of the
court. They are specifically called upon to "extend assistance to courts in ordinary and cadastral
12
land registration proceedings ." 13
The foregoing observations resolve the first two (2) issues raised by petitioners.
Petitioners next contend that "the law of the case" is found in Government of the Philippine Islands
vs. Abran, et al., supra, where it was decided by this Court that the lands of Consolacion M. Gomez,
from whom petitioners derive their ownership over the lots in question, were not public lands. A
reading of the pertinent and dispositive portions of the aforesaid decision will show, however, that
the lots earlier covered by homestead patents were not included among the lands adjudicated to
Consolacion M. Gomez. The decision states:
With respect to the portions of land covered by homestead certificates of title, we are
of opinion that such certificates are sufficient to prevent the title to such portion from
going to appellants aforesaid, for they carry with them preponderating evidence that
the respective homesteaders held adverse possession of such portions, dating back
to 1919 or 1920, accordingly to the evidence, and the said appellants failed to object
to that possession in time. (Emphasis supplied)
Wherefore modifying the judgment appealed from, it is hereby ordered that the lots
respectively claimed by Agustin V. Gomez, Consolacion M. Gomez, and Julian
Macaraeg, be registered in their name, with the exclusion of the portions covered by
the homestead certificates ... . (Emphasis supplied.) 14
The report of respondent land registration officials states that the holders of the homestead patents
registered the lots in question in the years 1928 and 1929. The decision in Government of the
Philippine Islands vs. Abran was promulgated on 31 December 1931. Hence, the subject lots are
specifically excluded from those adjudicated by the aforesaid decision to Consolacion M. Gomez.
It is a settled rule that a homestead patent, once registered under the Land Registration Act,
becomes indefeasible and incontrovertible as a Torrens title, and may no longer be the subject of an
investigation for determination or judgment in cadastral proceeding. 15
The aforecited case of Government vs. Abran, therefore, is not "the law of the case", for the lots in
question were not private lands of Consolacion M. Gomez when homestead patents were issued
over them in 1928-1929. There is sufficient proof to show that Lots 15, 16, 34 and 41 of Ipd-92 were
already titled lands way back in 1928 and 1929 as shown by Annexes "A", "B", "C", and "D" of
respondents' Memorandum. 16
Lastly, petitioners claim that if the decision of 5 August 1981 of the lower court is sustained, the
homestead title holders may still vindicate their rights by filing a separate civil action for cancellation
of titles and for reconveyance in a court of ordinary civil jurisdiction. Conversely, the same recourse
may be resorted to by petitioners. "(T)he true owner may bring an action to have the ownership or
title to land judicially settled, and if the allegations of the plaintiff that he is the true owner of the
parcel of land granted as free patent and described in the Torrens title and that the defendant and
his predecessor-in-interest were never in possession of the parcel of land and knew that the plaintiff
and his predecessor-in-interest have been in possession thereof be established, then the court in the
exercise of its equity jurisdiction, without ordering the cancellation of the Torrens title issued upon
the patent, may direct the defendant, the registered owner, to reconvey the parcel of land to the
plaintiff who has been found to be the true owner thereof." 17
WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals is
AFFIRMED. Costs against the petitioners-appellants.
SO ORDERED.
G.R. No. 159595 January 23, 2007

vs.
LOURDES ABIERA NILLAS, Respondent.
DECISION
TINGA, J.:
The central question raised in this Petition for Review is whether prescription or laches may bar a
petition to revive a judgment in a land registration case. It is a hardly novel issue, yet petitioner
Republic of the Philippines (Republic) pleads that the Court rule in a manner that would unsettle
precedent. We deny certiorari and instead affirm the assailed rulings of the courts below.
The facts bear little elaboration. On 10 April 1997, respondent Lourdes Abiera Nillas (Nillas) filed a
Petition for Revival of Judgment with the Regional Trial Court (RTC) of Dumaguete City. It was
alleged therein that on 17 July 1941, the then Court of First Instance (CFI) of Negros Oriental
rendered a Decision Adicional in Expediente Cadastral No. 14, captioned as El Director De Terrenos
contra Esteban Abingayan y Otros.1 In the decision, the CFI, acting as a cadastral court, adjudicated
several lots, together with the improvements thereon, in favor of named oppositors who had
established their title to their respective lots and their continuous possession thereof since time
immemorial and ordered the Chief of the General Land Registration Office, upon the finality of the
decision, to issue the corresponding decree of registration.2 Among these lots was Lot No. 771 of the
Sibulan Cadastre, which was adjudicated to Eugenia Calingacion (married to Fausto Estoras) and
Engracia Calingacion, both residents of Sibulan, Negros Oriental.3
Nillas further alleged that her parents, Serapion and Josefina A. Abierra, eventually acquired Lot No.
771 in its entirety. By way of a Deed of Absolute Sale dated 7 November 1977, Engracia Calingacion
sold her undivided one-half (1/2) share over Lot No. 771 to the Spouses Abierra, the parents of
Nillas. On the other hand, the one-half (1/2) share adjudicated to Eugenia Calingacion was also
acquired by the Spouses Abierra through various purchases they effected from the heirs of Eugenia
between the years 1975 to 1982. These purchases were evidenced by three separate Deeds of
Absolute Sale all in favor of the Spouses Abierra.4
In turn, Nillas acquired Lot No. 771 from her parents through a Deed of Quitclaim dated 30 June
1994. Despite these multiple transfers, and the fact that the Abierra spouses have been in open and
continuous possession of the subject property since the 1977 sale, no decree of registration has
ever been issued over Lot No. 771 despite the rendition of the 1941 CFI Decision. Thus, Nillas
sought the revival of the 1941 Decision and the issuance of the corresponding decree of registration
for Lot No. 771. The records do not precisely reveal why the decree was not issued by the Director
of Lands, though it does not escape attention that the 1941 Decision was rendered a few months
before the commencement of the Japanese invasion of the Philippines in December of 1941.
No responsive pleading was filed by the Office of the Solicitor General (OSG), although it entered its
appearance on 13 May 1997 and simultaneously deputized the City Prosecutor of Dumaguete City
to appear whenever the case was set for hearing and in all subsequent proceedings.5
Trial on the merits ensued. The RTC heard the testimony of Nillas and received her documentary
evidence. No evidence was apparently presented by the OSG. On 26 April 2000, the RTC rendered
a Decision6 finding merit in the petition for revival of judgment, and ordering the revival of the 1941
Decision, as well as directing the Commissioner of the Land Registration Authority (LRA) to issue
the corresponding decree of confirmation and registration based on the 1941 Decision. 1avvphi1 .net
The OSG appealed the RTC Decision to the Court of Appeals, arguing in main that the right of action
to revive judgment had already prescribed. The OSG further argued that at the very least, Nillas
should have established that a request for issuance of a decree of registration before the
Administrator of the LRA had been duly made. The appeal was denied by the appellate court in its
Decision7 dated 24 July 2003. In its Decision, the Court of Appeals reiterated that the provisions of
Section 6, Rule 39 of the Rules of Court, which impose a prescriptive period for enforcement of
judgments by motion, refer to ordinary civil actions and not to "special" proceedings such as land
registration cases. The Court of Appeals also noted that it would have been especially onerous to
require Nillas to first request the LRA to comply with the 1941 decision considering that it had been
established that the original records in the 1941 case had already been destroyed and could no
longer be reconstructed.
In the present petition, the OSG strongly argues that contrary to the opinion of the Court of Appeals,
the principles of prescription and laches do apply to land registration cases. The OSG notes that
Article 1144 of the Civil Code establishes that an action upon judgment must be brought within ten
years from the time the right of action accrues.8 Further, Section 6 of Rule 39 of the 1997 Rules of
Civil Procedure establishes that a final and executory judgment or order may be executed on motion
within five (5) years from the date of its entry, after which time it may be enforced by action before it
is barred by statute of limitations.9 It bears noting that the Republic does not challenge the
authenticity of the 1941 Decision, or Nillas's acquisition of the rights of the original awardees. Neither
does it seek to establish that the property is inalienable or otherwise still belonged to the State.
The OSG also extensively relies on two cases, Shipside Inc. v. Court of Appeals10 and Heirs of
Lopez v. De Castro.11 Shipside was cited since in that case, the Court dismissed the action instituted
by the Government seeking the revival of judgment that declared a title null and void because the
judgment sought to be revived had become final more than 25 years before the action for revival
was filed. In Shipside, the Court relied on Article 1144 of the Civil Code and Section 6, Rule 39 of the
1997 Rules of Civil Procedure in declaring that extinctive prescription did lie. On the other
hand, Heirs of Lopez involved the double registration of the same parcel of land, and the subsequent
action by one set of applicants for the issuance of the decree of registration in their favor seven (7)
years after the judgment had become final. The Court dismissed the subsequent action, holding that
laches had set in, it in view of the petitioners' omission to assert a right for nearly seven (7) years.
Despite the invocation by the OSG of these two cases, there exists a more general but definite
jurisprudential rule that favors Nillas and bolsters the rulings of the lower courts. The rule is that
"neither laches nor the statute of limitations applies to a decision in a land registration case."12
The most extensive explanation of this rule may be found in Sta. Ana v. Menla,13 decided in 1961,
wherein the Court refuted an argument that a decision rendered in a land registration case wherein
the decree of registration remained unissued after 26 years was already "final and enforceable." The
Court, through Justice Labrador, explained:
We fail to understand the arguments of the appellant in support of the assignment [of error], except
insofar as it supports his theory that after a decision in a land registration case has become final, it
may not be enforced after the lapse of a period of 10 years, except by another proceeding to enforce
the judgment or decision. Authority for this theory is the provision in the Rules of Court to the effect
that judgment may be enforced within 5 years by motion, and after five years but within 10 years, by
an action (Sec. 6, Rule 39). This provision of the Rules refers to civil actions and is not
applicable to special proceedings, such as a land registration case. This is so because a
party in a civil action must immediately enforce a judgment that is secured as against the
adverse party, and his failure to act to enforce the same within a reasonable time as provided
in the Rules makes the decision unenforceable against the losing party. In special
proceedings[,] the purpose is to establish a status, condition or fact; in land registration
proceedings, the ownership by a person of a parcel of land is sought to be established. After
the ownership has been proved and confirmed by judicial declaration, no further proceeding
to enforce said ownership is necessary, except when the adverse or losing party had been in
possession of the land and the winning party desires to oust him therefrom.
Furthermore, there is no provision in the Land Registration Act similar to Sec. 6, Rule 39, regarding
the execution of a judgment in a civil action, except the proceedings to place the winner in
possession by virtue of a writ of possession. The decision in a land registration case, unless the
adverse or losing party is in possession, becomes final without any further action, upon the
expiration of the period for perfecting an appeal. x x x
x x x x There is nothing in the law that limits the period within which the court may order or
issue a decree. The reason is xxx that the judgment is merely declaratory in character and
does not need to be asserted or enforced against the adverse party. Furthermore, the
issuance of a decree is a ministerial duty both of the judge and of the Land Registration
Commission; failure of the court or of the clerk to issue the decree for the reason that no
motion therefor has been filed can not prejudice the owner, or the person in whom the land is
ordered to be registered.14
The doctrine that neither prescription nor laches may render inefficacious a decision in a land
registration case was reiterated five (5) years after Sta. Ana, in Heirs of Cristobal Marcos, etc., et al.
v. De Banuvar, et al.15 In that case, it was similarly argued that a prayer for the issuance of a decree
of registration filed in 1962 pursuant to a 1938 decision was, among others, barred by prescription
and laches. In rejecting the argument, the Court was content in restating with approval the above-
cited excerpts from Sta. Ana. A similar tack was again adopted by the Court some years later
in Rodil v. Benedicto.16 These cases further emphasized, citing Demoran v. Ibanez, etc., and
Poras17 and Manlapas and Tolentino v. Llorente,18 respectively, that the right of the applicant or a
subsequent purchaser to ask for the issuance of a writ of possession of the land never prescribes.19
Within the last 20 years, the Sta. Ana doctrine on the inapplicability of the rules on prescription and
laches to land registration cases has been repeatedly affirmed. Apart from the three (3) cases
mentioned earlier, the Sta. Ana doctrine was reiterated in another three (3) more cases later,
namely: Vda. de Barroga v. Albano,20 Cacho v. Court of Appeals,21 and Paderes v. Court
of Appeals.22 The doctrine of stare decisis compels respect for settled jurisprudence, especially
absent any compelling argument to do otherwise. Indeed, the apparent strategy employed by the
Republic in its present petition is to feign that the doctrine and the cases that spawned and educed it
never existed at all. Instead, it is insisted that the Rules of Court, which provides for the five (5)-year
prescriptive period for execution of judgments, is applicable to land registration cases either by
analogy or in a suppletory character and whenever practicable and convenient.23 The Republic
further observes that Presidential Decree (PD) No. 1529 has no provision on execution of final
judgments; hence, the provisions of Rule 39 of the 1997 Rules of Civil Procedure should apply to
land registration proceedings.
We affirm Sta. Ana not out of simple reflex, but because we recognize that the principle enunciated
therein offers a convincing refutation of the current arguments of the Republic.
Rule 39, as invoked by the Republic, applies only to ordinary civil actions, not to other or
extraordinary proceedings not expressly governed by the Rules of Civil Procedure but by some other
specific law or legal modality such as land registration cases. Unlike in ordinary civil actions
governed by the Rules of Civil Procedure, the intent of land registration proceedings is to establish
ownership by a person of a parcel of land, consistent with the purpose of such extraordinary
proceedings to declare by judicial fiat a status, condition or fact. Hence, upon the finality of a
decision adjudicating such ownership, no further step is required to effectuate the decision and a
ministerial duty exists alike on the part of the land registration court to order the issuance of, and the
LRA to issue, the decree of registration.
The Republic observes that the Property Registration Decree (PD No. 1529) does not contain any
provision on execution of final judgments; hence, the application of Rule 39 of the 1997 Rules of
Civil Procedure in suppletory fashion. Quite the contrary, it is precisely because PD No. 1529 does
not specifically provide for execution of judgments in the sense ordinarily understood and applied in
civil cases, the reason being there is no need for the prevailing party to apply for a writ of execution
in order to obtain the title, that Rule 39 of the 1997 Rules of Civil Procedure is not applicable to land
registration cases in the first place. Section 39 of PD No. 1529 reads:
SEC. 39. Preparation of Decree and Certificate of Title. - After the judgment directing the registration
of title to land has become final, the court shall, within fifteen days from entry of judgment, issue an
order directing the Commissioner to issue the corresponding decree of registration and certificate of
title. The clerk of court shall send, within fifteen days from entry of judgment, certified copies of the
judgment and of the order of the court directing the Commissioner to issue the corresponding decree
of registration and certificate of title, and a certificate stating that the decision has not been
amended, reconsidered, nor appealed, and has become final. Thereupon, the Commissioner shall
cause to be prepared the decree of registration as well as the original and duplicate of the
corresponding original certificate of title. The original certificate of title shall be a true copy of the
decree of registration. The decree of registration shall be signed by the Commissioner, entered and
filed in the Land Registration Commission. The original of the original certificate of title shall also be
signed by the Commissioner and shall be sent, together with the owner’s duplicate certificate, to the
Register of Deeds of the city or province where the property is situated for entry in his registration
book.
The provision lays down the procedure that interposes between the rendition of the judgment and
the issuance of the certificate of title. No obligation whatsoever is imposed by Section 39 on the
prevailing applicant or oppositor even as a precondition to the issuance of the title. The obligations
provided in the Section are levied on the land court (that is to issue an order directing the Land
Registration Commissioner to issue in turn the corresponding decree of registration), its clerk of
court (that is to transmit copies of the judgment and the order to the Commissioner), and the Land
Registration Commissioner (that is to cause the preparation of the decree of registration and the
transmittal thereof to the Register of Deeds). All these obligations are ministerial on the officers
charged with their performance and thus generally beyond discretion of amendment or review.
The failure on the part of the administrative authorities to do their part in the issuance of the decree
of registration cannot oust the prevailing party from ownership of the land. Neither the failure of such
applicant to follow up with said authorities can. The ultimate goal of our land registration system is
geared towards the final and definitive determination of real property ownership in the country, and
the imposition of an additional burden on the owner after the judgment in the land registration case
had attained finality would simply frustrate such goal.
Clearly, the peculiar procedure provided in the Property Registration Law from the time decisions
in land registration cases become final is complete in itself and does not need to be filled in.
From another perspective, the judgment does not have to be executed by motion or enforced by
action within the purview of Rule 39 of the 1997 Rules of Civil Procedure.
Following these premises, it can even be posited that in theory, there would have been no need for
Nillas, or others under similar circumstances, to file a petition for revival of judgment, since revival of
judgments is a procedure derived from civil procedure and proceeds from the assumption that the
judgment is susceptible to prescription. The primary recourse need not be with the courts, but with
the LRA, with whom the duty to issue the decree of registration remains. If it is sufficiently
established before that body that there is an authentic standing judgment or order from a land
registration court that remains unimplemented, then there should be no impediment to the issuance
of the decree of registration. However, the Court sees the practical value of necessitating judicial
recourse if a significant number of years has passed since the promulgation of the land court's
unimplemented decision or order, as in this case. Even though prescription should not be a cause to
bar the issuance of the decree of registration, a judicial evaluation would allow for a thorough
examination of the veracity of the judgment or order sought to be effected, or a determination of
causes other than prescription or laches that might preclude the issuance of the decree of
registration.
What about the two cases cited by the Republic, Shipside and Heirs of Lopez? Even though the
Court applied the doctrines of prescription and laches in those cases, it should be observed that
neither case was intended to overturn the Sta. Ana doctrine, nor did they make any express
declaration to such effect. Moreover, both cases were governed by their unique set of facts, quite
distinct from the general situation that marked both Sta. Ana and the present case.
The judgment sought belatedly for enforcement in Shipside did not arise from an original action for
land registration, but from a successful motion by the Republic seeking the cancellation of title
previously adjudicated to a private landowner. While one might argue that such motion still arose in
a land registration case, we note that the pronouncement therein that prescription barred the revival
of the order of cancellation was made in the course of dispensing with an argument which was
ultimately peripheral to that case. Indeed, the portion of Shipside dealing with the issue of
prescription merely restated the provisions in the Civil Code and the Rules of Civil Procedure relating
to prescription, followed by an observation that the judgment sought to be revived attained finality 25
years earlier. However, the Sta. Ana doctrine was not addressed, and perhaps with good reason, as
the significantly more extensive rationale provided by the Court in barring the revival of judgment
was the fact that the State no longer held interest in the subject property, having divested the same
to the Bases Conversion Development Authority prior to the filing of the action for
revival. Shipside expounds on this point, and not on the applicability of the rules of prescription.
Notably, Shipside has attained some measure of prominence as precedent on still another point,

relating to its pronouncements relating to the proper execution of the certification of non-forum
shopping by a corporation. In contrast, Shipside has not since been utilized by the Court to employ
the rules on prescription and laches on final decisions in land registration cases. It is worth
mentioning that since Shipside was promulgated in 2001, the Court has not hesitated in reaffirming
the rule in Sta. Ana as recently as in the middle of 2005 in the Paderes case.
We now turn to Heirs of Lopez, wherein the controlling factual milieu proved even more
unconventional than that in Shipside. The property involved therein was the subject of two separate
applications for registration, one filed by petitioners therein in 1959, the other by a different party in
1967. It was the latter who was first able to obtain a decree of registration, this accomplished as
early as 1968.24 On the other hand, the petitioners were able to obtain a final judgment in their favor
only in 1979, by which time the property had already been registered in the name of the other
claimant, thus obstructing the issuance of certificate of title to the petitioners. The issues of
prescription and laches arose because the petitioners filed their action to enforce the 1979 final
judgment and the cancellation of the competing title only in 1987, two (2) years beyond the five (5)-
year prescriptive period provided in the Rules of Civil Procedure. The Court did characterize the
petitioners as guilty of laches for the delay in filing the action for the execution of the judgment in
their favor, and thus denied the petition on that score.
Heirs of Lopez noted the settled rule that "when two certificates of title are issued to different
persons covering the same land in whole or in part, the earlier in date must prevail x x x," and indeed
even if the petitioners therein were somehow able to obtain a certificate of title pursuant to the 1979
judgment in their favor, such title could not have stood in the face of the earlier title. The Court then
correlated the laches of the petitioners with their pattern of behavior in failing to exercise due
diligence to protect their interests over the property, marked by their inability to oppose the other
application for registration or to seek enforcement of their own judgment within the five (5) -year
reglementary period.
Still, a close examination of Heirs of Lopez reveals an unusual dilemma that negates its application
as precedent to the case at bar, or to detract from Sta. Ana as a general rule for that matter. The
execution of the judgment sought for belated enforcement in Heirs of Lopez would have entailed the
disturbance of a different final judgment which had already been executed and which was shielded
by the legal protection afforded by a Torrens title. In light of those circumstances, there could not
have been a "ministerial duty" on the part of the registration authorities to effectuate the judgment in
favor of the petitioners in Heirs of Lopez. Neither could it be said that their right of ownership as
confirmed by the judgment in their favor was indubitable, considering the earlier decree of
registration over the same property accorded to a different party. The Sta. Ana doctrine rests upon
the general presumption that the final judgment, with which the corresponding decree of registration
is homologous by legal design, has not been disturbed by another ruling by a co-extensive or
superior court. That presumption obtains in this case as well. Unless that presumption is overcome,
there is no impediment to the continued application of Sta. Ana as precedent.25
We are not inclined to make any pronouncements on the doctrinal viability of Shipside or Heirs of
Lopez concerning the applicability of the rules of prescription or laches in land registration cases.
Suffice it to say, those cases do not operate to detract from the continued good standing of Sta.
Ana as a general precedent that neither prescription nor laches bars the enforcement of a final
judgment in a land registration case, especially when the said judgment has not been reversed or
modified, whether deliberately or inadvertently, by another final court ruling. This qualifier stands not
so much as a newly-carved exception to the general rule as it does as an exercise in stating the
obvious.
Finally, the Republic faults the Court of Appeals for pronouncing that the 1941 Decision
constituted res judicata that barred subsequent attacks to the adjudicates’ title over the subject
property. The Republic submits that said decision would operate as res judicata only after the
decree of registration was issued, which did not happen in this case. We doubt that a final decision’s
status as res judicata is the impelling ground for its very own execution; and indeed res judicata is
more often invoked as a defense or as a factor in relation to a different case altogether. Still, this
faulty terminology aside, the Republic’s arguments on this point do not dissuade from our central
holding that the 1941 Decision is still susceptible to effectuation by the standard decree of
registration notwithstanding the delay incurred by Nillas or her predecessors-in-interest in seeking its
effectuation and the reasons for such delay, following the prostracted failure of the then Land
Registration Commissioner to issue the decree of registration. In this case, all that Nillas needed to
prove was that she had duly acquired the rights of the original adjudicates – her predecessors-in-
interest-in order to entitle her to the decree of registration albeit still in the names of the original
prevailing parties who are her predecessors-in interest. Both the trial court and the
Court of Appeals were satisfied that such fact was proven, and the Republic does not offer any
compelling argument to dispute such proof.
WHEREFORE, the Petition is DENIED. No pronouncement as to costs.
SO ORDERED.
G.R. No. L-25660 February 23, 1990
LEOPOLDO
VENCILAO, MAURO RENOBLAS, TELESFORO BALONDIA, FELIX ABANDULA, FAUSTO GA
BAISEN, ISIDORO ELIVERA, RAYMUNDO BONGATO, MARTIN ROLLON, EUSTAQUIO
MEDANA, DOROTEO ELIVERA, FRANCISCO PAGAURA, MACARIO GEPALAGO, GREGORIO
ITAOC, ALEJANDRO RENOBLAS, SIMEON BARBARONA, GREGORIO RENOBLAS,
FRANCISCO ASOY, TEOFILA GUJELING, FABIAN VILLAME, VICENTE OMUSORA, PEDRO
BALORIA, GREGORIO ITAOC, TERESITA ITAOC, FAUSTINO ITAOC, FORTUNATO ITAOC,
FLORENTINA GEMENTIZA, RESTITUTA OMUSORA, ZOILA OMUSORA, FELISA OMUSORA,
ROBERTO HAGANAS, FELISA HAGANAS, FERMIN HAGANAS, VICTORIANO HAGANAS,
JULIA SEVILLA, ROMAN MATELA, MARCELA MATELA, DELFIN MATELA, PELAGIO MATELA,
ROBERTA MATELA, PROCOPIO CABANAS and SERAFINA CABANAS, plaintiff-appellants,
vs.
TEODORO VANO, JOSE REYES, ROSARIO REYES, SALUD OGILVE BELTRAN, AMALIA R.
OGILVE, FLORA VDA. DE COROMINAS, JESUSA REYES, LOURDES COROMINAS MUNOZ,
JUAN COROMINAS, LOURDES C. SAMSON CEBALLOS, SOLEDAD C. SAMSON RAMA,
DOLORES V. GARCES FALCON, JAIME GARCES, JOAQUIN REYES, and PEDRO RE R.
LUSPO, defendants- appellees.
G.R. No. L-32065 February 23,1990
LEOPOLDO VENCILAO, SOFRONIO ROLLON, AURELIO ELIVERA, FRANCISCO PAGAORA,

MARTIN ROLLON, GRACIANO MAHINAY, GERARDO ELIVERA, GREGORIO ITAOC, ISIDRO
ELIVERA, DEMOCRITO ELIVERA, FAUSTO GABAISIN, ALBINO RENOBLAS, EUSTAQUIO
MENDANIA, SIMEON BARBARONA, TELESFORO BALONDA, FELIX ABANDOLA, SATURNINA
GEPILAGO, TEOFILA GOHILING, TOMAS REAMBONANSA, MARCOS HAGANAS, PASTOR
ASNA and MAURO RENOBLAS, petitioners,
vs.
HONORABLE PAULINO S. MARQUEZ, Judge, Court of First Instance of Bohol, Branch 1, and
MARIANO OGILVE, et. al., respondents.
G.R. No. L-33677 February 23, 1990
LEOPOLDO VENCILAO, SOFRONIO ROLLON, AURELIO ELIVERA, FRANCISCO PAGAORA,

MARTIN ROLLON, GRACIANO MAHINAY, GERARDO ELIVERA, GREGORIO ITAOC, ISIDRO
ELIVERA, DEMOCRITO ELIVERA, FAUSTO GABAISIN, ALBINO RENOBLAS, EUSTAQUIO
MENDANIA, SIMEON BARBARONA, TELESFORO BALONDA, FELIX ABANDOLA, SATURNINA
GEPILAGO, TEOFILA GOHILING, TOMAS REAMBONANSA, MARCOS NAGANAS, PASTOR
ASNA and MAURO RENOBLAS, petitioners,
vs.
HONORABLE PAULINO S. MARQUEZ, Judge, Court of First Instance of Bohol, Branch 1, The
Provincial Sheriff, Province of Bohol, and MARIANO OGILVE, et. al., respondents.
Lord Marapao and Lorenzo A. Lopena for petitioners.
Roque R. Luspo for respondents.
MEDIALDEA, J.:
On February 7, 1974, We resolved to allow the consolidation of these three cases, considering that
they involve the same parties and parcels of land: (1) G.R. No. L-25660---this is an appeal from the
order of the Court of First Instance of Bohol (now Regional Trial Court) dated May 12,1964
1
dismissing the cases of some of the plaintiffs-appellants and its order dated August 25, 1965
denying the motion for reconsideration and the motion to declare the defendants- appellees in
default; (2) G.R. No. L32065---this is a petition for certiorari of the order of the Court of First Instance
of Bohol dated May 14, 1970 directing the execution of its prior order dated May 6, 1969 finding
petitioners guilty of contempt; (3) G.R. No. L-33677--- this is a petition for certiorari with mandamus
and prohibition of the order of the Court of First Instance of Bohol dated June 2, 1971 directing the
demolition of the houses of the petitioners.
On February 15, 1988, We resolved to require the parties to manifest whether or not they are still
interested in prosecuting these cases, or supervening events have transpired which render these
cases moot and academic or otherwise substantially affect the same. On March 25, 1988, the
petitioners filed an ex parte manifestation that they are still very much interested in the just
prosecution of these cases.
The antecedent facts are as follows:
G.R. No. 25660
On April 1, 1950, the heirs of the late Juan Reyes filed an application for registration of the parcels of
land allegedly inherited by them from Juan Reyes, in Land Registration Case No. 76, L.R.C. Record
No. N-4251. On July 26,1951, administratrix Bernardina Vda. de Luspo filed an amended application
for registration. After hearing, the land was registered under Original Certificate of Title No. 400 (pp.
84-85, Record on Appeal; p. 7, Rollo).
On October 9, 1962, a complaint for reconveyance of real properties with damages and preliminary
injunction, Civil Case No. 1533, (pp. 2-19, Record n Appeal; p. 7, Rollo) was filed by plaintiffs-
appellants before the Court of First Instance of Bohol. It was alleged that they are the lawful owners
of their respective parcels of land including the improvements thereon either by purchase or
inheritance and have been in possession publicly, continuously, peacefully and adversely under the
concept of owners for more than thirty (30) years tacked with the possession of their predecessors-
in-interest. However, those parcels of land were included in the parcels of land applied for
registration by the heirs of Juan Reyes, either by mistake or fraud and with the intention of depriving
them of their rights of ownership and possession without their knowledge, not until the last part of
1960 when the defendants-appellees, through their agents, attempted to enter those parcels of land
claiming that they now belong to the heirs of Juan Reyes. To the complaint, the defendants-
appellees moved to dismiss on two grounds (pp. 19-22, Record on Appeal; p. 7, Rollo), namely: (1)
for lack of cause of action and (2) the cause of action is barred by prior judgment.
On July 20, 1963, the court a quo issued an order denying defendants-appellees' motion to dismiss
(pp. 29-30, Record on Appeal; p. 7, Rollo). However, acting on the motion to set aside such order
(pp. 31-32, Record on Appeal; p. 7, Rollo), on May 12, 1964, the same court issued another order
reversing itself partially (p. 56, Record on Appeal; p. 7, Rollo), the dispositive portion of which reads:
WHEREFORE, the cases herein of the plaintiffs Alejandro Renoblas, Fausto

Cabaisan, Fabian Villame, Gregorio Ita-oc, Faustino Ita-oc, Fortunato Ita-oc, Roberto
Haganas, Felisa Haganas, Fermin Haganas, Victorians Haganas, Julia Sevilla,
Ramon Matela, Roberto Matela, Procopio Cabañas and Vicente Amosora are hereby
dismissed on the ground of res adjudicata with these plaintiffs paying proportionately
eighteenth forty one (18/41) of the costs, but the petition to dismiss the case of the
rest of the plaintiffs is hereby denied.
SO ORDERED.
On May 28,1964, the plaintiffs-appellants whose cases were dismissed filed a motion for
reconsideration (pp. 57- 58, Record on Appeal; p. 7, Rollo). On July 24, 1964, the plaintiffs-
appellants whose cases were not dismissed filed a motion to declare the defendants-appellees in
default for failure to file their answer with the time prescribed by law (pp. 68-75, Record on Appeal;
p. 7, Rollo). On the other hand, defendants-appellees filed their opposition to the motion for
reconsideration praying that the complaint as regards the rest of the plaintiffs-appellants be likewise
dismissed (pp. 75-80, Record on Appeal; p. 7 Rollo).
On August 25, 1965, the court a quo issued an order in connection therewith (pp. 82-98, Record on
Appeal; p. 7, Rollo) denying all motions.
The case is now before Us with the following as assignments of errors (p. 3, Brief for the Plaintiffs-
Appellants; p. 9, Rollo), to wit:
THE TRIAL COURT ERRED IN DISMISSING THE CASES OF THE PLAINTIFFS-

APPELLANTS WHOSE NAMES ARE ALREADY MENTIONED ABOVE ON THE
ALLEGED GROUND THAT THEIR CASES ARE BARRED BY A PRIOR
JUDGMENT OF RES ADJUDICATA.
II
THE TRIAL COURT ERRED IN DENYING THE MOTION OF THE PLAINTIFFS-

APPELLANTS WHOSE CASES ARE NOT DISMISSED TO DECLARE THE
DEFENDANTS-APPELLEES IN DEFAULT FOR HAVING FAILED TO FILE THEIR
ANSWER WITHIN THE TIME PRESCRIBED BY LAW.
On August 12, 1966, a resolution was issued by this Court dismissing the appeal as regards the
second issue because the order appealed from was merely interlocutory, hence, not appealable (pp.
35-38, Rollo).
On August 17, 1988, petitioners Alex Abandula, Mauro Renoblas, Simeon Barbarona, Fabian
Villame, Macario Gepalago, Eustaquio Medana, Julia Sevilla, Gregorio Itaoc, Francisco Asoy and
Martin Rollon filed a motion to withdraw their appeal on the ground that they are now the absolute
owners and possessors of their respective parcels of land subject of Civil Case No. 1533.
The appeal is not impressed with merit.
The plaintiffs-appellants claim that no evidence was presented by the defendants-appellees that they
(plaintiffs-appellants) were notified of the date of the trial on the merits of the application for
registration nor were they given copies of the decision of the trial court. Likewise, they contend
that res judicata is not applicable in an action for reconveyance.
The allegations that no evidence was presented by the defendants-appellees that plaintiffs-
appellants were notified of the date of the trial on the merits of the application for registration nor
were they given copies of the decision of the trial court are new issues. It is a well-settled rule that,
except questions on jurisdiction, no question will be entertained on appeal unless it has been raised
in the court below and it is within the issues made by the parties in their pleadings (Cordero vs.
Cabral, G.R. No. 36789, July 25, 1983, 123 SCRA 532). The other contention that res judicata is not
applicable in an action for reconveyance is not plausible. The principle of res judicata applies to all
cases and proceedings, including land registration and cadastral proceedings (Republic vs. Estenzo,
G.R. No. L-35376, September 11, 1980, 99 SCRA 65; Paz vs. Inandan 75 Phil. 608; Penaloza vs.
Tuazon, 22 Phil. 303).
It is a settled rule that a final judgment or order on the merits, rendered by a court having jurisdiction
of the subject matter and of the parties, is conclusive in a subsequent case between the same
parties and their successors in interest litigating upon the same thing and issue, regardless of how
erroneous it may be. In order, therefore, that there may be res judicata, the following requisites must
be present: (a) The former judgment must be final; (b) it must have been rendered by a court having
jurisdiction of the subject matter and of the parties; (c) it must be a judgment on the merits; and (d)
there must be, between the first and the second actions, identity of parties, of subject matter, and of
cause of action (San Diego vs. Cardona, 70 Phil. 281; Ramos vs. Pablo, G.R. No. 53692, Nov.
26,1986, 146 SCRA 24).
The underlying philosophy of the doctrine of res judicata is that parties should not be permitted to
litigate the same issue more than once and when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, so long as it remains unreversed, it should be
conclusive upon the parties and those in privity with them in law or estate (Sy Kao vs. Court of
Appeals, G.R. No. 61752, Sept. 28,1984,132 SCRA 302). The doctrine of res judicata is an old
axiom of law, dictated by wisdom and sanctified by age, and is founded on the broad principle that it
is to the interest of the public that there should be an end to litigation by the same parties and their
privies over a subject once fully and fairly adjudicated. Interest republicae ut sit finis
litium (Carandang vs. Venturanza, G.R. No. L41940, Nov. 21,1984,133 SCRA 344). To ignore the
principle of res judicata would be to open the door to endless litigations by continuous determination
of issues without end (Catholic Vicar Apostolic of the Mountain Province vs. Court of Appeals, et al.,
G.R. Nos. 80294- 95, Sept. 21, 1988, 165 SCRA 515).
Thus, when a person is a party to a registration proceeding or when notified he does not want to
participate and only after the property has been adjudicated to another and the corresponding title
has been issued files an action for reconveyance, to give due course to the action is to nullify
registration proceedings and defeat the purpose of the law.
In dismissing the cases of some of the petitioners, the court a quo meticulously discussed the
presence of all the elements of res judicata (pp. 36-38; pp. 42-54, Record on Appeal; p. 7; Rollo):
There is no question that in that Registration Proceedings, LRC Record No. N-4251,
Land Registration Case No. N-76, the Court of First Instance of the province of Bohol
had jurisdiction of the subject matter, that said court had rendered a judgment on the
merit that was terminated in the Court of Appeals since December, 1958, and that
decision is now final with a decree of registration over the parcels of land described
in the application issued to the applicants.
The subject matter (the parcels of land) now claimed by the plaintiffs in this case at
bar are the same, or at least part of the parcels already adjudicated registration in
that registration case to the persons, some of them are made defendants in this case
before us. The cause of action between the two cases are the same, ownership of
these parcels of land, though the forms of action are different, one is an ordinary
Land Registration and the other is reconveyance.
'It is settled that notwithstanding the difference in the form of two

actions, the doctrine of res adjudicata will apply where it appears that
the parties in effect were litigating for the same thing. A party can not,
by varying the form of action, escape the effects of res
adjudicata (Aguirre vs. Atienza, L-10665, Aug. 30, 1958; Geronimo
vs. Nava No. L-1 21 1 1, Jan. 31, 1959; Labarro vs. Labateria et al.,
28 O.G. 4479).
'Well settled is the rule that a party can not by varying the form of
action, or adopting a different method of presenting his case, escape
the operation of the principle that one and the same cause of action
shall not be twice litigated between the same parties or their privies.
(Francisco vs. Blas, et al., No. L-5078; Cayco, et al., vs. Cruz, et al.,
No. L-1 2663, Aug. 21, 1959).
'Accordingly, a final judgment in an ordinary civil action, determining

the ownership of certain lands is res adjudicata in a registration
proceeding where the parties and property are the same as in the
former case (Paz vs. Inandan 75 Phil. 608; Penaloza vs. Tuason, 22
Phil. 303).'
xxx xxx xxx
But are there identities of parties in this case before us and the former registration
proceedings? Identity of parties means that the parties in the second case must be
the same parties in the first case, or at least, must be successors in interest by title
subsequent to the commencement of the former action or proceeding, or when the
parties in the subsequent case are heirs (Chua Tan vs. Del Rosario, 57 Phil. 411;
Martinez vs. Franco, 51 Phil. 487-1 Romero vs. Franco, 54 Phil. 744; Valdez, et a].
vs. Penida No. L- 3467, July 30, 1951).
xxx xxx xxx
Returning our attention to the case at bar, and with in mind the principles of res
adjudicata above-quoted, we noticed that many of the plaintiffs were not oppositors
in the former registration case, but many are children of the former oppositors. In
such a case we have to determine the case of every plaintiff, if the former decision in
the land registration case is conclusive and binding upon him.
xxx xxx xxx

The defendants had proven that the adjoining owners and claimants of the parcels of
land object of registration proceeding had been notified when the land was surveyed.
These persons notified according to the surveyor's certificate, Exhibit "B" were as
follows: Cipriano Samoya, Fausto Baguisin, Silveria Pahado, Enojario Laroda,
Alejandro Renoblas, Heirs of Gregorio Lofranco, Julian Villame, Pedro Itaoc, Adriano
Toloy, Bartolome Omosura, Marcelina Asilon, Gregorio Baguinang, et al., Nicolas
Omosura, Simon Lagrimas, et al., Martin Quinalayo, Gorgonio Baquinang, Demetrio
Asolan, Catalino Orellena, Heirs of Catalina Palves, Manuel Mondano, Angel
Mondano, Victoriano Balolo, Eugenio del Rosario, Verinici Bayson, Felomino Ruiz,
Apolonio Horbeda, and Mun. of Calape.
The following persons were notified by the Chief of the Land Registration Office of
the initial hearing (Exhibit "J") of the registration proceedings enjoining them to
appear on June 16,1952, at 8:30 a.m., before the Court of First Instance of Bohol to
show cause why the prayer of said application should not be granted: the Solicitor
General, the Director of Lands, the Director of Public Works and the Director of
Forestry, Manila; the Provincial Governor, the Provincial Fiscal and the District
Engineer, Tagbilaran, Bohol; the Municipal Mayor, Gorgonio Baguinang, Demetrio
Azocan, Catalino Orellena, Manuel Mondano, Angel Mondano, Victoriano Bolalo,
Eugenio del Rosario, Verinici Bayson, Filomeno Ruiz, Apolonio Horboda, the Heirs of
Gregorio Lofranco, Julian Villame, Pedro Itaoc, Adriano Toloy, Bartolome Omosura,
Marcelina Asilom, Gregorio Baguinang, Nicolas Omosura, Simon Lagrimas and
Martin Quinalayo, Calape, Bohol; the heirs of Catalino Polvos, Fausto Baguisin,
Cipriano Samoya, Silveria Pohado, Enojario, Laroda, Alejandro Renoblas and
Leoncio Barbarona, Antequera Bohol.
And after the application had been filed and published in accordance with law the
following persons represented by Atty. Conrado D. Marapao filed opposition to that
registration proceeding: Felipe Cubido, Simon Lagrimas, Simeon Villame, Felix
Lacorte, Victor Omosura, Germana Gahil, Anastacio Orillosa, Enerio Omosura,
Valeriano Tuloy, Cipriano Sanoya, Pablo Dumadag, Andres Reimbuncia, Roman
Reimbuncia, Celedonio Cabanas, Moises Cabanas, Calixto Gohiting, Gervasio
Sevilla, Pedro Omosura, Daniel Itaoc, Luis Omosura, Bartolome Omusura, Nicasio
Omosura, Calixto Sevilla, Teodora Omosura, Jose Sabari, Silverio Lacorte, Silverio
Tuloy, Gertrudes Sevilla, Teodora Sevilla, Magno Orillosa, Gervacia Sevilla, Marcos
Hagonas, Eleuterio Pandas, Pablo Omosura, Fabian Villame, Teodoro Omosura,
Magdalina Asilom, Mauricio Matela, Marciano Ordada, Eusebio Omosura, and
Gregorio Repelle, (Exhibit "E"), Atty. Juna V. Balmaseda in representation of the
Bureau of Lands, and Asst. Fiscal Norberto M. Gallardo in representation of the
Municipality of Calape.
Plaintiffs Mauro Renoblas and Gregorio Renoblas are children of plaintiff Alejandro
Renoblas. Plaintiff Telesforo Balanda is son-in-law of Alejandro, being the husband
of Juliana Renoblas, daughter of Alejandro. Plaintiff Alejandro Renoblas was not one
of the oppositors in the registration proceedings, but he was notified of the initial
healing of that registration case and by the surveyor that surveyed the land object of
registration (Exhibit J-Movant). Therefore, the decision of the land registration
proceeding is binding upon him and his case is dismissed on the ground of res
adjudicata with costs.
xxx xxx xxx

Plaintiff Fausto Cabaisan was notifed by the surveyor and that notice of the initial
hearing. And though he was not an oppositor, the former land registration proceeding
is binding on him. Therefore, this case is dismissed in so far as Fausto Cabaisan is
concerned with costs.
xxx xxx xxx
Plaintiffs Gregorio Ita-oc, Teresita Ita-oc, Faustino Ita-oc and Fortunate Ita-oc are
children of Daniel Ita-oc, one of the oppositors in the registration proceedings. They
claim parcel No. 10 described in paragraph 2 of the complaint. Gregorio Ita-oc
testified that his land was inherited by said plaintiffs' mother from her father, Pio
Sevilla. The evidence on record (Exhibits J-3, J- 4, J-5). However (sic), shows that
the land is declared in the name of Daniel Ita-oc, a former oppositor in the
registration case. Hence, these plaintiffs are successors-in-interest of Daniel Ita-oc,
and, therefore, are bound by the decision in that registration case. Their case,
therefore, is dismissed, with costs.
"Plaintiffs Roberto Haganas, Felisa Haganas, Fermin Haganas and Victoriano

Haganas are children of Marcos Haganas, a former oppositor in the registration
case. Marcos testified that his claim before was only two hectares, while the claim of
his children is seven hectares, which come from his wife, not from him. These
plaintiffs claim two parcels, one under Tax Declaration No. R-4452, and Tax
Declaration No. R-8456. It appears that Tax Declaration No. R-4452 (Exhibit M) is in
the name of Marcos Haganas and the land described under Tax Declaration No. R-
8456 was bought by the spouses Marcos Haganas and Tomasa Sevilla from
Gertrudis Sevilla in 1956 (Exhibit M-3), who was an oppositor in the registration
proceeding. Therefore, plaintiffs Roberto Haganas, Felisa Haganas, Fermin
Haganas, and Victoriano Haganas are successors-in-interest to properties in which
the decision in the registration case is conclusive and binding to their predecessors-
in-interest. Hence, their case here is dismissed with costs.
Plaintiff Julia Sevilla is the wife of Marcelo Matela, who was the oppositor in the
registration proceedings. Plaintiffs Roman Matela, Marcela Matela, Delfin Matela,
and Roberta Matela are their children. She has no son by the name of Pelagic. Julia
testified that the land now claimed by her children came from her father Pio Sevilla.
The land that was claimed by Mauricio Matela as oppositor was in his name under
Tax Declaration No. 5099. This is the same land now claimed by plaintiffs Julia
Sevilla, Ramon Matela, Marcela Matela, Delfin Matela, and Roberta Matela (Exhibit
0-4). These plaintiffs are successors-in-interest of Mauricio Matela, who is bound by
the decision in that land proceeding wherein he was the oppositor. Therefore, the
case of these plaintiffs are dismissed with costs.
Plaintiff Procopia Cabanas was the wife of Andres Reambonancia, oppositor in the
land registration proceedings. She claims parcel No. 20 described in paragraph 2 of
the complaint bearing Tax Declaration No. R-8121. It appears that this land is
declared in the name of Andres Reambonancia (Exhibit N-3) who, as oppositor in the
land registration case, is bound by the decision of that case. Therefore, the case of
plaintiff Procopia Cabanas as successor-in-interest to Andres Reambonancia, is
hereby dismissed, with costs.
Plaintiff Vicente Amosora is the son of Enerio Amosora and Florencia Gahil both
oppositors in the former registration case. The land claimed by plaintiff Vicente
Amosora is described as parcel No. 24 of paragraph 2 of the complaint under Tax
Declaration No. R-6107, under the name of his father Enerio Amosora. Since Enerio
Amosora was an oppositor in the former land registration of which this land was a
part, the decision of that land registration case is conclusive and binding not only to
Enerio Amosora, but also to his successor-in-interest, plaintiff Vicente Amosora,
whose case therefore, is dismissed with costs.
G.R. No. L-32065
Upon the death of administratrix Bernardina Vda. de Luspo, Transfer Certificate of Title No. 3561
was issued in the name of Pedro R. Luspo and Transfer Certificate of Title No. 3562 was issued in
the name of several persons (p. 36, Rollo).
A writ of possession dated November 6, 1959, a first alias writ of possession dated January 6, 1961,
and a second alias writ of possession dated July 2, 1966 were issued by the trial court against the
petitioners. A sample of the guerilla-like, hide and seek tactics employed by the petitioners was
proved by the official report of the deputy sheriff dated January 21 1960. Another evidence of
petitioners' refusal to sign and to vacate was a certification dated July 22, 1966 and the Sheriffs
return dated October 25, 1966.
On March 29, 1967, a petition for contempt was filed by Mariano Ogilve, who is one of the registered
owners of the parcel of land covered by Transfer Certificate of Title No. 3562, against the petitioners
for refusing to vacate the land occupied by them and for refusing to sign the Sheriffs return.
On May 6, 1969, the court a quo issued a resolution, the dispositive portion of which reads (p.
47, Rollo):
FOR ALL THE FOREGOING CONSIDERATION, make it of record that Procopia

Reambonansa voluntarily left the land and dropped out from the case; the charge of
contempt against Alejandro Renoblas (who died) is dismissed and each of the
remaining 22 respondents are hereby found guilty of contempt under Sec. 3-b of
Rule 71 and are hereby sentenced each to pay a fine of One Hundred Pesos,
authorizing the Constabulary Detachment at or near Candungao Calape Bohol to
collect the same and to transmit the money to the Clerk of this Court, with subsidiary
imprisonment in case of insolvency at the rate of one day for every P2.50 or fraction
of a day, the said Constabulary Detachment to effect the commitment if any of them
is unable to pay the fine. The fingerprints of each of these 22 respondents shall also
be taken by the constabulary and filed with the record of this case.
It is so ordered.
On June 4, 1969, the petitioners filed a motion for reconsideration of the aforestated resolution
whereas Ogilve filed an opposition thereto.
On February 14, 1970, the motion for reconsideration was denied. On March 18, 1970, another
motion for reconsideration was filed by petitioners on the ground of pendency of the action for
reconveyance in Civil Case No. 1533 and their appeal in G.R. No. L-25660. On May 14, 1970, the
court a quo ordered the proper officers to actually execute the resolution dated May 6, 1969.
Hence, the present petition.

Petitioners raise the following issues:
THAT THE SAID RESPONDENT JUDGE ERRED IN ISSUING A WRIT OF POSSESSION

WITHOUT ANY COMPLAINT FILED IN COURT FOR FORCIBLE ENTRY AND DETAINER, NOR
FOR RECOVERY OF OWNERSHIP AND POSSESSION OF THE PARCELS OF LAND IN
QUESTION AGAINST THE HEREIN PETITIONERS.
II
THAT THE HONORABLE RESPONDENT JUDGE ERRED IN ISSUING A WRIT OF POSSESSION

AGAINST THE PETITIONERS HEREIN, WHO WERE NOT PARTIES TO THE REGISTRATION
PROCEEDING AND WHO WERE NOT DEFEATED OPPOSITORS OF THE SAID APPLICATION
FOR REGISTRATION.
The petition is impressed with merit.
Petitioners contend that they were not claimants-oppositors nor defeated oppositors in the said land
registration case, as their names do not appear in the amended application for registration; that they
have occupied the subject parcels of land for more than thirty (30) years which began long before
the filing of the application for registration; and that after the hearing of the registration case, they
continued in possession of the said land.
In a registration case, the judgment confirming the title of the applicant and ordering its registration in
his name necessarily carried with it the delivery of possession which is an inherent element of the
right of ownership. The issuance of the writ of possession is, therefore, sanctioned by existing laws
in this jurisdiction and by the generally accepted principle upon which the administration of justice
rests (Romasanta et. al. vs. Platon, 34 O.G. No. 76; Abulocion et. al. vs. CFI of Iloilo, et. al., 100
Phil. 554 [1956]). A writ of possession may be issued not only against the person who has been
defeated in a registration case but also against anyone unlawfully and adversely occupying the land
or any portion thereof during the land registration proceedings up to the issuance of the final decree
(Demorar vs. Ibañez, et al., 97 Phil 72 [1955]).
The petitioners' contention that they have been in possession of the said land for more than thirty
(30) years which began long before the filing of the application for registration and continued in
possession after the hearing of the registration case, worked against them. It was a virtual admission
of their lack of defense. Thus, the writs of possession were properly issued against them.
However, We do not subscribe to the ruling of the court a quo that petitioners are guilty of contempt.
Under Section 8 (d) of Rule 19, Rules of Court, if the judgment be for the delivery of the possession
of real property, the writ of execution must require the sheriff or other officer to whom it must be
directed to deliver the possession of the property, describing it, to the party entitled thereto. This
means that the sheriff must dispossess or eject the losing party from the premises and deliver the
possession thereof to the winning party. If subsequent to such dispossession or ejectment the losing
party enters or attempts to enter into or upon the real property, for the purpose of executing acts of
ownership or possession, or in any manner disturbs the possession of the person adjudged to be
entitled thereto, then and only then may the loser be charged with and punished for contempt
(Quizon vs. Philippine National Bank, et. al., 85 Phil. 459). According to this section, it is exclusively
incumbent upon the sheriff to execute, to carry out the mandates of the judgment in question, and in
fact, it was he himself, and he alone, who was ordered by the trial judge who rendered that
judgment, to place the respondents in possession of the land. The petitioners in this case had
nothing to do with that delivery of possession, and consequently, their refusal to effectuate the writ of
possession, is entirely officious and impertinent and therefore could not hinder, and much less
prevent, the delivery being made, had the sheriff known how to comply with his duty. It was solely
due to the latter's fault, and not to the disobedience of the petitioners' that the judgment was not duly
executed. For that purpose, the sheriff could even have availed himself of the public force, had it
been necessary to resort thereto (see United States v. Ramayrat 22 Phil. 183).
G.R. No. L-33677
On March 22,1971, Mariano Ogilve filed a Motion for a Writ of Demolition which was granted by the
trial court on April 5, 1971 (pp. 42-43, Rollo) against those who were adjudged guilty of contempt.
On April 29, 1971, the petitioners filed an urgent motion for reconsideration of said order. On June 2,
1971, the trial court issued another order, the dispositive portion of which reads (p. 48, Rollo):
WHEREFORE, in the absence of writ of preliminary injunction Deputy Provincial

Sheriff Pedro Aparece must not only take P.C. soldiers with him but also carpenters
to effect the demolition, the carpenters being at the expense of the Luspo.
IT IS SO ORDERED.
The issue here is whether or not the respondent judge acted without or in excess of his jurisdiction,
or with grave abuse of discretion and thus excluded the herein petitioners from the use and
enjoyment of their right to which they are entitled when he (respondent judge) issued the order of
demolition on April 5, 1971 and again on June 2, 1971 (p. 107, Rollo).
On July 14, 1971, this Court issued a temporary restraining order (p. 51, Rollo).
The petition is not impressed with merit.
The petitioners allege that the respondent-judge cannot issue a writ of demolition pending the
resolution of G.R. No. L-32065.
We rule that the petition in G.R. No. L-32065 was not a bar to the issuance of the writ of demolition.
It is significant to note that the subject matter of the petition in G.R. No. L-32065 is the order dated
May 14, 1970 directing the execution of the prior order dated May 6, 1969 finding petitioners guilty of
contempt and not the writs of possession themselves. Thus, the respondent Judge correctly issued
the writs of demolition. In Meralco vs. Mencias, 107 Phil 1071, We held:
[I]f the writ of possession issued in a land registration proceeding implies the delivery
of possession of the land to the successful litigant therein (Demorar vs. Ibanez, 97
Phil. 72; Pasay Estate Company vs. Del Rosario, et al., 11 Phil. 391; Manlapas vs.
Llorente 48 Phil. 298), a writ of demolition must, likewise, issue, especially
considering that the latter writ is but a complement of the former which, without said
writ of demolition, would be ineffective.
xxx xxx xxx
[The issuance of the writ of demolition] is reasonably necessary to do justice to

petitioner who is being deprived of the possession of the lots in question, by reason
of the continued refusal of respondent ...... to remove his house thereon and restore
possession of the promises to petitioner.
ACCORDINGLY, judgment is hereby rendered as follows:
1) In G.R. No. L-25660, the appeal is DENIED and the orders of the Court of First Instance dated
May 12, 1964 and August 25, 1965 are AFFIRMED; the motion to withdraw the appeal of some of
the plaintiffs-appellants is GRANTED;
2) In G.R. No. L-32065, the petition is GRANTED and the resolution of the Court of First Instance
dated May 14, 1970 is SET ASIDE; and
3) In G.R. No. L-33677, the petition is DISMISSED and the order of the Court of First Instance dated
June 2, 1971 is AFFIRMED. The temporary restraining order is LIFTED.
SO ORDERED.
G.R. No. 123346 March 31, 2009
MANOTOK REALTY, INC. and MANOTOK ESTATE CORPORATION, Petitioners,

vs.
CLT REALTY DEVELOPMENT, CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 134385 March 31, 2009
ARANETA INSTITUTE OF AGRI-CULTURE, INC., Petitioner,

vs.
HEIRS OF JOSE B. DIMSON, REPRESENTED BY HIS COMPULSORY HEIRS: HIS SURVIVING
SPOUSE, ROQUETA R. DIMSON AND THEIR CHILDREN, NORMA AND CELSA TIRADO,
ALSON AND VIRGINIA DIMSON, LINDA AND CARLOS LAGMAN, LERMA AND RENE
POLICAR, AND ESPERANZA R. DIMSON; AND THE REGISTER OF DEEDS OF
MALABON, Respondents.
RESOLUTION
TINGA, J.:
In the Court’s Resolution dated 14 December 2007,1 the Court constituted a Special Division of the
Court of Appeals to hear the instant case on remand. The Special Division was composed of three
Associate Justices of the Court of Appeals, with Justice Josefina Guevara-Salonga as Chairperson;
Justice Lucas Bersamin as Senior Member; and Associate Justice Japar B. Dimaampao as Junior
Member. We instructed the Special Division to proceed as follows:
The Special Division is tasked to hear and receive evidence, conclude the proceedings and submit
to this Court a report on its findings and recommended conclusions within three (3) months from
finality of this Resolution.
In ascertaining which of the conflicting claims of title should prevail, the Special Division is directed
to make the following determinations based on the evidence already on record and such other
evidence as may be presented at the proceedings before it, to wit:
i. Which of the contending parties are able to trace back their claims of title to OCT No. 994
dated 3 May 1917?
ii. Whether the imputed flaws in the titles of the Manotoks and Araneta, as recounted in the
2005 Decision, are borne by the evidence? Assuming they are, are such flaws sufficient to
defeat the claims of title of the Manotoks and Araneta?
iii. Whether the factual and legal bases of 1966 Order of Judge Muñoz-Palma and the 1970
Order of Judge Sayo are true and valid. Assuming they are, do these orders establish a
superior right to the subject properties in favor of the Dimsons and CLT as opposed to the
claims of Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of expropriation proceedings
at any point since the issuance of OCT No. 994 on 3 May 1917, and if so what are those
proceedings, what are the titles acquired by the Government and whether any of the parties
is able to trace its title to the title acquired by the Government through expropriation.
v. Such other matters necessary and proper in ascertaining which of the conflicting claims of
title should prevail.
WHEREFORE, the instant cases are hereby REMANDED to the Special Division of the Court of
Appeals for further proceedings in accordance with Parts VI, VII and VIII of this Resolution.
SO ORDERED.2
The Special Division proceeded to conduct hearings in accordance with the Resolution. The parties
to these cases, namely CLT Realty Development Corporation (CLT), Manotok Realty Inc. and
Manotok Estate Corporation (the Manotoks), the Heirs of Jose B. Dimson (Heirs of Dimson), and
Araneta Institute of Agriculture, Inc. (Araneta), were directed by the Special Division to present their
respective evidence to the Court of Appeals. Thereafter, the Special Division rendered a 70-page
Report3 (Report) on 26 November 2008. The Special Division submitted the sealed Report to this
Court.
Before taking action on the Report itself, we dispose of a preliminary matter. On February 17, 2009,
the Manotoks filed a motion beseeching that copies of the report be furnished the parties "so that
they may submit their comments and objections thereon in accord with the principle contained in
Sec. 10, Rule 32 of the Rules of Court." We deny the motion.
It is incorrect to presume that the earlier referral of these cases to the Court of Appeals for reception
of evidence was strictly in accordance with Rule 32. Notably, Section 1 of said Rule authorizes the
referral of the case to a commissioner "by written consent of both parties," whereas in the cases at
bar, the Court did not endeavor to secure the consent of the parties before effectuating the remand
to the Court of Appeals. Nonetheless, our earlier advertence to Rule 32 remains proper even if the
adopted procedure does not hew strictly to that Rule, owing to our power under Section 6, Rule 135
to adopt any suitable process or mode of proceeding which appears conformable to the spirit of the
Rules to carry into effect all auxiliary processes and other means necessary to carry our jurisdiction
into effect.
Moreover, furnishing the parties with copies of the Sealed Report would not serve any useful
purpose. It would only delay the promulgation of the Court’s action on the Sealed Report and the
adjudication of these cases. In any event, the present Resolution quotes extensively from the sealed
Report and discusses its other substantive segments which are not quoted.
The Report is a commendably exhaustive and pellucid analysis of the issues referred to the Special
Division. It is a more than adequate basis for this Court to make the following final dispositions in
these cases.
I.
We adopt the succeeding recital of operative antecedents made by the Special Division in its Report.
THE PROCEDURAL ANTECEDENTS
DIMSON v. ARANETA
CA-G.R. CV. NO. 41883 & CA-G.R. SP No. 34819
[SC-G.R. No. 134385]
On 18 December 1979, DIMSON filed with the then Court of First Instance ["CFI"] of Rizal a
complaint for Recovery of Possession and Damages against ARANETA. On 7 May 1980, DIMSON
amended his complaint and included Virgilio L. Enriquez ["ENRIQUEZ"] as his co-plaintiff.
In said Amended Complaint, DIMSON claimed that he is the absolute owner of a 50-hectare land
located in Bo. Potrero, Malabon, Metro Manila covered by TCT No. R-15169, [Lot 25-A-2] of the
Caloocan Registry of Deeds. Allegedly, DIMSON had transferred the subject property to ENRIQUEZ
by way of an absolute and irrevocable sale on 14 November 1979. Unfortunately though, DIMSON
and ENRIQUEZ discovered that the subject property was being occupied by ARANETA wherein an
"agricultural school house" is erected and that despite repeated demands, the latter refused to
vacate the parcel of land and remove the improvements thereon.
ARANETA, for its part, refuted said allegations and countered that it is the absolute owner of the
land being claimed by DIMSON and that the real properties in the Araneta Compound are "properly
documented and validly titled." It maintained that it had been in possession of the subject parcel of
land since 1974. For this reason, the claims of DIMSON and ENRIQUEZ were allegedly barred by
prescription.
During the trial, counsel for ARANETA marked in evidence, among others, certifications from the
Land Registration Commission attesting that TCTs Nos. 13574 and 26538, covering the disputed
property, are in the names of ARANETA and Jose Rato, respectively. ARANETA also offered TCT
No. 7784 in evidence to prove that it is the registered owner of the land described therein.
On 28 May 1993, the trial court rendered a Decision upholding the title of DIMSON over the disputed
property xxx
Undaunted, ARANETA interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No.
41883, which was later consolidated with CA-GR. SP No. 34819 in view of the inter-related issues of
the two cases.
In its 30 May 1997 Decision, the Court of Appeals, in CA-G.R. CV No. 41883, sustained the RTC
Decision in favor of DIMSON finding that the title of ARANETA to the disputed land in a nullity. In
CA-GR. SP No. 34819, the Court of Appeals likewise invalidated the titles of ARANETA, relying on
the Supreme Court ruling in Metropolitan Waterworks and Sewerage System v. Court of
Appeals, which declared null and void the certificates of title derived from OCT No. 994 registered
on 3 may 1917. It was also held that ARANETA failed to sufficiently show that the Order sought to
be nullified was obtained through extrinsic fraud that would warrant the annulment thereof.
Dissatisfied still, ARANETA filed a Motion for Reconsideration And/Or New Trial espousing therein
as basis for its entreaty the various letters from different government agencies and Department order
No. 137 of the Department of Justice, among others.
On 16 July 1998, the various Motions of ARANETA were denied by the Court of Appeals.
Nonetheless, the Court ordered DIMSON to maintain status quo until the finality of the aforesaid
judgment.
Consequently, ARANETA filed a petition before the Supreme Court. Refuting the factual finding of
the trial court and the Court of Appeals, ARANETA contended that there in only one OCT 994
covering the Maysilo Estate issued on 3 May 1917 pursuant to the Decree No. 36455 issued by the
Court of Land Registration on 19 April 1917 and added that there were subsequent certifications
issued by the government officials, notably from the LRS, the DOJ Committee Report and the
Senate Committees’ Joint Report which attested that there is only one OCT 994, that which had
been issued on 3 May 1917. 1avvphi1
CLT v. MANOTOK
CA-G.R. CV. No. 45255

[SC-G.R. No. 123346]
On 10 August 1992, CLT filed with the Regional Trial Court ["RTC"] A COMPLAINT FOR Annulment
of Transfer Certificates of Title, Recovery of Possession and Damages against the MANOTOKS and
the Registry of Deeds of Metro Manila District II (Calookan City, Metro Manila) ["CALOOCAN RD"].
In its Complaint, CLT alleged that it is the registered owner of Lot 26 of the Maysilo Estate located in
Caloocan City and covered by Transfer Certificate of Title No. T- 177013, a derivative title of OCT
No. 994. As a basis of its proprietary claim, CLT averred that on 10 December 1988, it had acquired
Lot 26 from its former registered owner, Estelita I. Hipolito ["HIPOLITO"], by virtue of a Deed of Sale
with Real Estate Mortgage. HIPOLITO’s title was , in turn, a direct transfer from DIMSON, the
registered owner of TCT No. 15166, the latter having acquired the same by virtue of a Court Order
dated 13 June 1966 issued by the Court of First Instance of Rizal in Civil Case No. 4557.
On the other hand, the MANOTOKS maintained the validity of their titles, which were all derivatives
of OCT No. 994 covering over twenty (20) parcels of land located over a portion of Lot 26 in the
Maysilo Estate. In substance, it was contented that the title of CLT was an offspring of an ineffective
grant of an alleged undisputed portion of Lot 26 by way of attorney’s fees to its predecessor-in-
interest, Jose B. Dimson. The MANOTOKS, in this connection, further contended that the portion of
Lot 26, subject of the present controversy, had long been disposed of in favor of Alejandro Ruiz and
Mariano Leuterio and hence, there was nothing more in said portion of Lot 26 that could have been
validly conveyed to Dimson.
Tracing the legitimacy of their certificates of titles, the MANOTOKS alleged that TCT No. 4210,
which cancelled OCT No. 994, had been issued in the names of Alejandro Ruiz and Mariano
Leuterio on Sept ember 1918 by virtue of an Escritura De Venta executed by Don Tomas Arguelles
and Don Enrique Lopes on 21 August 1918. TCT No. 4210 allegedly covered an approximate area
of 19,565.43 square meters of Lot 26. On even date, TCT No. 4211 was transferred to Francisco
Gonzales on the strength of an Escritura de Venta dated 3 March 1920 for which TCT No. T-5261,
covering an area of 871,982 square meters was issued in the name of one Francisco Gonzales,
married to Rufina Narciso.
Thereafter, TCT No. T-35485, canceling TCT No. T-5261, was issued to Rufina Narcisa Vda. de
Gonzales which was later replaced with the names of Gonzales six (6) children. The property was
then subdivided and as a result of which, seven (7) certificates of titles were issued, six (6),under the
names of each of the children while the remaining title was held by all of them as co-owners.
Eventually, the properties covered by said seven certificates of title were expropriated by the
Republic of the Philippines. These properties were then later subdivided by the National Housing
Authority ["NHA"], into seventy-seven (77) lots and thereafter sold to qualified vendees. As it turned
out, a number of said vendees sold nineteen (19) of these lots to Manotok Realty, Inc. while one (1)
lot was purchased by the Manotok Estate Corporation.
During the pre-trial conference, the trial court, upon agreement of the parties, approved the creation
of a commission composed of three commissioners tasked to resolve the conflict in their respective
titles. Accordingly, the created Commission convened on the matter in dispute.
On 8 October 1993, Ernesto Erive and Avelino San Buenaventura submitted an exhaustive Joint
Final Report ["THE MAJORITY REPORT"] finding that there were inherent technical infirmities or
defects on the face of TCT No. 4211, from which the MANOTOKS derived their titles (also on TCT
No. 4210), TCT No. 5261 and TCT No. 35486. Teodoro Victoriano submitted his Individual Final
Report ["THE MINORITY REPORT"] dated 23 October 1993.
After the conduct of a hearing on these reports, the parties filed their respective
comments/objections thereto. Upon order of the trial court, the parties filed their respective
memoranda.
Adopting the findings contained in the Majority Report, the RTC, on 10 May 1994, rendered a
Decision, in favor of CLT and ordered, among others, the cancellation of the certificates of title
issued in the name of the MANOTOKS.
The MANOTOKS elevated the adverse RTC Decision on appeal before the Court of Appeals. In its
Decision dated 28 September 1995, the Court of Appeals affirmed the RTC Decision, except as to
the award of damages which was deleted. The MANOTOKS then moved for reconsideration, but
said motion was denied by said appellate court in its Resolution dated 8 January 1996. After the
denial of their Motion for Reconsideration, the MANOTOKS filed a Petition for Review before the
Supreme Court.
PROCEEDINGS BEFORE THE SUPREME COURT
Before the Supreme Court, the Petitioners for Review, separately filed by the MANOTOKS,
ARANETA and Sto. Niño Kapitbahayan Association, Inc., ["STO. NIÑO"], were consolidated.
Also submitted for consideration of the Supreme Court were the report of the Fact Finding
Committee dated 28 August 1997 and the Senate Committee Report No. 1031 dated 25 May 1998
which concluded that there was only one OCT No. 994 issued, transcribed and registered on 3 May
1917.
THE SUPREME COURT DECISION
In its Decision dated 29 November 2005 ["THE SUPREME COURT 2005 DECISION"], the Supreme
Court, through its Third Division, affirmed the RTC Decision and Resolutions of the Court of Appeals,
which declared the titles of CLT and DIMSON as valid.
In invalidating the respective titles of the MANOTOKS and ARANETA, the Supreme Court, in turn,
relied on the factual and legal findings of the trial courts, which had heavily hinged on the imputed
flaws in said titles. Considering that these trial court findings had been affirmed by the Court of
Appeals, the Supreme Court highlighted the fact that the same were accorded the highest degree of
respect and, generally, should not be disturbed on appeal.
Emphasis was also made on the settled rule that because the Supreme Court was not a trier of
facts, it was not within its function to review factual issues and examine, evaluate or weigh the
probative value of the evidence presented by the parties.
THE SUPEME COURT RESOLUTION
Expectedly, the MANOTOKS and ARANETA filed their respective Motions for Reconsideration of the
Supreme Court 2005 Decision.
Resolving said motions for reconsideration, with the Office of the Solicitor General ["OSG"]
intervening on behalf of the Republic, the Supreme Court, in its Resolution of 14 December 2007
["THE SUPREME CCOURT 2007 RESOLUTION"] reversed and nullified its 2005 Decision and
categorically invalidated OCT No. 994 dated 19 April 1917, which was the basis of the propriety
claims of CLT and DIMSON. However, the Supreme Court resolved to remand the cases to this
Special Division of the Court of Appeals for reception of evidence.
To guide the proceedings before this Special Division of the Court of Appeals, the Supreme Court
made the following binding conclusions:
"First, there is only one OCT 994. As it appears on the record, that mother title was
received for transcription by the Register of Deeds on 3 May 1917, and that should
be the date which should be reckoned as the ate of registration of the title. It may
also be acknowledged, as appears on the title, that OCT No. 994 resulted from the
issuance of the decree of registration on (19)* April 1917, although such dated cannot
be considered as the date of the title or the date when the title took effect.
Second. Any title that traces its source to OCT No. 994 dated (19) April 1917 is void,
for such mother title is inexistent. The fact that the Dimson and CLT titles made
specific reference to an OCT No. 994 dated (19) April 1917 casts doubt on the
validity of such titles since they refer to an inexistent OCT. This error alone is, in fact,
sufficient to invalidate the Dimson and CLT claims over the subject property if
singular reliance is placed by them on the dates appearing on their respective titles.
Third. The decision of this Court in MWSS v. Court of Appeals and Gonzaga v. Court
of Appeals cannot apply to the cases at bar, especially in regard to their recognition
of an OCT No. 994 dated 19 April 1917, a title which we now acknowledge as
inexistent. Neither could the conclusions in MWSS or Gonzaga with respect to an
OCT No. 994 dated 19 April 1917 bind any other case operating under the factual
setting the same as or similar to that at bar.4
II.
The parties were afforded the opportunity to present their evidence before the Special Division. The
Report names the evidence submitted to the Special Division for its evaluation:
CLT EVIDENCE
In its Offer of Evidence,5 CLT adopted the documentary exhibits and testimonial evidence of
witnesses submitted in the case filed by CLT against STO. NIÑO in Civil Case No. C-15491, ["CLT-
STO NIÑO CASE"]. These pieces of evidence include, among others, the Majority and Minority
Reports, the Formal Offer of Evidence in the presentation of the evidence-in-chief and rebuttal
evidence in the CLT-STO NIÑO CASE consisting of various certificates of titles, plans by geodetic
engineer, tax declarations, chemistry report, specimen signatures and letters of correspondence.
MANOTOKS EVIDENCE
The MANOTOKS sought admission of the following evidence: Senate and DOJ Committee Reports;
certificates of title issued to them and their vendees/assignees, i.e., Republic of the Philippines, the
Gonzalezes, Alejandro Ruiz and Mariano Leuterio, Isabel Gil del Sola and Estelita Hipolito; deeds of
absolute sale; contracts to sell; tax declarations and real property tax receipts; the Formal Officer of
Evidence of Philville Development & Housing Corporation; ["PHILVILLE"], in Civil Case No. 15045;
this Court of Appeals’ Decision in CA-G.R. CV. No. 52606 between CLT and PHILVILLE; the Orders
of Judge Palma dated 13 June 1966 and 16 August 1966 in Case No. 4557 and the billing
statements of SSHG Law Office. They also submitted in evidence the Affidavits and Supplemental
Affidavits of Rosa R. Manotok and Luisa T. Padora; Affidavits of Atty. Felix B. Lerio, Atty. Ma. P.G.
Ongkiko and Engineer Jose Marie P. Bernabe; a copy of a photograph of BM No. 9; certified true
copy of coordinates and reference point of L.M. No. 1 and BM No. 1 to 10 of Piedad Estate and TCT
No. 177013 of CLT.6
DIMSON EVIDENCE
In their Consolidated Formal Offer of Evidence,7 DIMSON submitted the previous decisions and
resolutions passed relative to these cases, various certifications of different government agencies,
OCT 994, subdivision plan of Lot 25-A-2, observations of Geodetic Engineer Reggie P. Garcia
showing the relative positions of properties within Lot 25-A; the Novation of Contract/Deed of Sale
and Mortgage dated 15 January 1948 between Rato, Don Salvador Araneta and Araneta Institute of
Agriculture; copies of various certificates of titles to dispute some of the titles held by ARANETA;
several letter-requests and official receipts.
ARANETA EVIDENCE
ARANETA, in turn, offered in evidence various certificates of title, specifically, OCT No. 994, TCT
No. 8692; TCT No. 21857; TCT No. 26538; TCT No. 26539; TCT No. (7784)-738 and TCT no.
13574. It also marked in evidence the certified true copies of Decree No. 36577; the DOJ and
Senate Reports; letters of correspondence to the Land Registration Commission and the Register of
Deeds of Malabon City; survey plans of Lot 25-A and TCT r-15169 of Dimson and; the affidavit of
Engineer Felino M. Cortez and his curriculum vitae. ARANETA also offered the certified true copy of
TCT No. 6196 in the name of Victoneta, Inc.; TCT No. 13574 in the name of ARANETA;
certifications issued by Atty. Josephine H. Ponciano, Acting Register of Deeds of Malabon city-
Navotas; certified true copy of Judge Palma’s Order dated 16 August 1966 in Case No. 4557;
Circular No. 17 (which pertains to the rules on reconstitution of titles as of 19 February 1947) and its
official receipt and; the owner’s duplicate copy of OCT No. 994.89
III.
We now turn to the evaluation of the evidence engaged in by the Special Division. To repeat, the
Special Division was tasked to determine the following issues based on the evidence:
i. Which of the contending parties are able to trace back their claims to Original Certificate of
Title (OCT) No. 994 dated 3 May 1917:
ii. Whether the respective imputed flaws in the titles of the Manotoks and Araneta, as
recounted in the Supreme Court 2005 Decision, are borne by the evidence. Assuming they
are, are such flaws sufficient to defeat said claims?
iii. Whether the factual and legal bases of the 1966 Order of Judge Muñoz-Palma and the
1970 Order of Judge Sayo are true and valid. Assuming they are, do these orders establish
a superior right to the subject properties in favor of the Dimsons and CLT as opposed to the
claims of the Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of expropriation proceedings
at any point since the issuance of OCT No. 994 on 3 May 1917, and if so, what are those
proceedings, what are the titles acquired by the Government, and is any of the parties able
to trace its title acquired by the government through expropriation?
v. Such other matters necessary and proper in ascertaining which of the conflicting claims of
title should prevail.
The ultimate purpose of the inquiry undertaken by the Court of Appeals was to ascertain which of the
four groups of claimants were entitled to claim ownership over the subject properties to which they
claimed title thereto. One set of properties was disputed between CLT and the Manotoks, while the
other set was disputed between Araneta and the Heirs of Dimson.
As can be gleaned from the Report, Jose Dimson was able to obtain an order in 1977 issued by
Judge Marcelino Sayo of the Court of First Instance (CFI) of Caloocan City on the basis of which he
was able to register in his name properties belonging to the Maysilo Estate. Judge Sayo’s order in
turn was sourced from a 1966 Order issued by Judge (later Supreme Court Associate Justice)
Cecilia Muñoz-Palma of the CFI of Rizal. Dimson’s titles reflected, as their mother title, OCT No. 994
dated 19 April 1917.10 Among these properties was a fifty (50)-hectare property covered by Transfer
Certificate of Title (TCT) No. 151169, which apparently overlapped with the property of Araneta
covered by TCT No. 13574 and 26538.11 Araneta was then and still is in possession of the property.
The Araneta titles state, as their mother title, OCT No. 994 dated 3 May 1917. Consequently,
Dimson filed an action for recovery of possession against Araneta.
Another property in Dimson’s name, apparently taken from Lot 26 of the Maysilo Estate, was later
sold to Estelita Hipolito, who in turn sold the same to CLT. Said property was registered by CLT
under TCT No. T-177013, which also reflected, as its mother title, OCT No. 994 dated 19 April
1917.12 Said property claimed by CLT encroached on property covered by titles in the name of the
Manotoks. The Manotoks traced their titles to TCT Nos. 4210 and 4211, both issued in 1918 and
both reflecting, as their mother title, OCT No. 994 dated 3 May 1917. 1avvphi1
It is evident that both the Heirs of Dimson and CLT had primarily relied on the validity of OCT No.
994 dated 19 April 1917 as the basis of their claim of ownership. However, the Court in its 2007
Resolution held that OCT No. 994 dated 19 April 1917 was inexistent. The proceedings before the
Special Division afforded the Heirs of Dimson and CLT alike the opportunity to prove the validity of
their respective claims to title based on evidence other than claims to title the inexistent 19 April
1917 OCT No. 994. Just as much was observed by the Special Division:
Nonetheless, while the respective certificates of title of DIMSON and CLT refer to OCT 994 issued
on 19 April 1917 and that their previous postulations in the present controversies had been anchored
on the supposed validity of their titles, that which emanated from OCT 994 of 19 April 1917, and
conversely the invalidity of the 3 May 1917 OCT 994, the Supreme Court has yet again allowed
them to substantiate their claims on the basis of other evidentiary proofs:
Otherwise stated, both DIMSON and CLT bear the onus of proving in this special proceedings, by
way of the evidence already presented before and such other forms of evidence that are not yet of
record, that either there had only been an error in the course of the transcription or registration of
their derivative titles, or that other factual and legal bases existed to validate or substantiate their
titles aside from the OCT No. 994 issued on 19 April 1917.13
Were they able to discharge such burden?
A.
We begin with the Heirs of Dimson. The Special Division made it clear that the Heirs of Dimson were
heavily reliant on the OCT No. 994 dated 19 April 1917.
[DIMSON], on the strength of Judge Sayo’s Order dated 18 October dated 18 October 1977, was
issued separate certificates of title, i.e., TCT Nos. 15166, 15167, 15168 and 15169, covering
portions of the Maysilo Estate. Pertinently, with respect to TCT No. 15169 of DIMSON, which covers
Lot 25-A-2 of the said estate, the following were inscribed on the face of the instrument.
"IT IS FURTHER CERTIFIED that said land was originally registered on the 19th day of April in the
year nineteen hundred and seventeen in the Registration Book of the Office of the Register of
Deeds of Rizal, Volume NA page NA , as Original Certificate of Title No. 994 pursuant to Decree
No. 36455 issued in L.R.C. Case No. 4429 Record No. ______
This Certificate is a transfer from Original Certificate of Title No. 994/NA, which is cancelled by virtue
hereof in so far as the above-described land is concerned.14
From the above accounts, it is clear that the mother title of TCT no. 15169, the certificate of title of
DIMSON covering the now disputed Lot 25-A-2, is OCT No. 994 registered on 19 April 1917.
Manifestly, the certificate of title issued to DIMSON, and as a matter of course, the derivative title
later issued to CLT, should both be voided inasmuch as the OCT which they emanated had already
been declared inexistent.15
The Special Division noted that the Heirs of Dimson did not offer any explanation why their titles
reflect the erroneous date of 19 April 1917. At the same time, it rejected CLT’s explanation that the
transcription of the erroneous date was a "typographical error."
As can be gleaned from the records, both DIMSON and their successor-in-interest CLT, had failed to
present evidence before this Court to prove that there had been a mere typographical error in the
transcription of their respective titles with regard to the date of registration of OCT No. 994. CLT
specifically harps on this assertion that there had only been a typographical error in the transcription
of its title.16 On the other hand, while DIMSON had refused to categorically assert that there had
been such a typographical error causing the invalidity of their title, their failure to proffer any reason
or argument which would otherwise justify why their title reflects 19 April 1917 and not 3 May 1917
leads this Court to conclude that they simply had no basis to support their proprietary claim.
Thus, without proffering any plausible explanation as to what led to the erroneous entry of the
registration dated of OCT 994, DIMSON are left without any recourse but to substantiate their claim
on the basis of other evidence not presented during the proceedings below, which would effectively
prove that they had a valid proprietary claim over the disputed properties. This is specifically true
because DIMSON had previously placed reliance on the MWSS doctrine to prove the validity of their
title.17
Absent such explanation, the Heirs of Dimson were particularly constrained to rely on the 1977
Order of Judge Sayo, which was allegedly sourced from the 1966 Order of Judge Muñoz Palma. On
that issue, the Special Division made the following determinations:
It should be recalled that in their appellee’s brief in CA-G.R.CV No. 41883, therein appellee Jose
Dimson specifically denied the falsity of TCT No. R-15169 alleging that the contention "is already
moot and can be determined by a controlling decision."18 Jose Dimson expounded on his reliance as
follows:
"In Metropolitan Waterworks & Sewerage System (for brevity MWSS) case, Jose B. Dimson’s (as
private respondent) title TCT No. 15167 issued for Lot 28 on June 8, 1978 derived from OCT No.
994 registered on April 19, 1917, is overlapping with MWSS title TCT No. 41028 issued on July 29,
1940 derived from the same OCT 994, registered on May 3, 1917.
(Same facts in the case at bar; Jose B. Dimson’ (plaintiff-appellee) title TCT No. R-15169 issued for
Lot 25-A-2, on June 8, 1978, is overlapping with defendant-appellant’s title TCT Nos. 13574 and
21343, not derived from OCT No. 994."19
So viewed, sans any proof of a mechanical error in the transcription or annotation on their respective

certificates of title, the present inquiry then hinges on whether the Order dated 13 June 1966 issued
by then Judge Cecilia Muñoz-Palma of the Court of First Instance of Rizal in Civil Case No. 4557
["PALMA ORDER"] and Judge Sayo’s Order dated 18 October 1977 ["SAYOS 18 OCTOBER 1977
ORDER"], can be validated and authenticated. It is so since the brunt of the proprietary claims of
both DIMSON and CLT has its roots on said Orders.
Perforce, in consideration of the foregoing, this leads Us to the THIRD ISSUE as presented by the
Supreme Court, to wit:
"Whether the factual and legal bases of Palma’s 13 June 1966 Order and Sayo’s 18 October
1977 Order are true and valid. Assuming they are, do these orders establish a superior right
to the subject properties in favor of the Dimsons and CLT as opposed to the claims of
Araneta and the Manotoks?"
As it is, in contending that their certificates of title could be validly traced from the 3 May 1917 OCT
No. 994, DIMSON point out that their title was issued pursuant to a court order issued by Judge
Palma in Case No. 4557 and entered in the memorandum of Encumbrance of OCT No. 994.
DIMSON also insist that TCT Nos. 8692, 21857 and 26538 were mere microfilmed or certified copies
and, therefore, inadmissible. Lastly, DIMSON reiterated the flaws and irregularities which voided the
titles of the ARANETA in the previous proceedings and focused on the burden of ARANETA to
present evidence to defeat their titles.
The foregoing contentions of DIMSON find to factual and legal basis. As we see it, Sayo’s 18
October 1977 Order, which apparently confirmed Palma’s 13 June 1966 Order, raised serious
questions as to the validity of the manner by which it was arrived at.
It is worthy to note that as early as 25 August 1981, counsel for the ARANETA applied for
a subpoena duces tecum addressed to the Clerk of Court of CFI Pasig for the production of the
records of LRC Case No. 4557 for purposes of determining the genuineness and authenticity of the
signature of Judge Palma and also of her Order granting the confirmation. A certain Atty. Contreras,
Officer-in-Charge of the said court, appeared and manifested in open court that the records
pertaining to the petition for Substitution of names of Bartolome Rivera, et al. could no longer be
located inasmuch as they had passed hands from one court to another.
What is perplexing to this Court is not only the loss of the entire records of Case No. 4557 but the
admission of Judge Sayo that he had not seen the original of the Palma Order. Neither was the
signature of Judge Palma on the Order duly proven because all that was presented was an unsigned
duplicate copy with a stamped notation of "original signed." Equally perplexing is that while CFI
Pasig had a Case No. 4557 on file, said file pertained not to an LRC case but to a simple civil
case.20 Thus:
"Atty. Directo:
The purpose of this subpoena duces tecum is to present your Honor the Order Order (sic) of Judge
Palma in order to determine the genuineness and authenticity of the signature of Judge Palma in this
court order and which order was a basis of a petition in this court to be confirmed. That is the reason
why we want to see the genuineness of the signature of Judge Palma.
COURT:
No signature of Judge Palma was presented in this court. it was a duplicate copy not signed. There
is a stamp only of original signed.
Atty. Directo:
That is the reason why we want to see the original.
Court:
I did not see the original also. When the records of this case was brought here, I checked the
records, there were so many pages missing and the pages were re-numbered but then I saw the
duplicate original and there is a certification of a woman clerk of Court, Atty. Molo.
Atty. Directo:
That is the reason why we want to see this document, we are surprised why it is missing.
Court:
We are surprised also. You better ask Judge Muñoz Palma.
Atty. Contreras:
May I make of record that in verifying our records, we found in our original vault LRC application no.
N-4557 but the applications were certain Feliciano Manuel and Maria Leaño involving Navotas
property because I was wondering why they have the same number. There should be only one.
Atty. Directo:
Aside from that, are there other cases of the same number?
Atty. Contreras:
No, there should be only number for a particular case; that must be a petition after decree record.
Atty. Ignacio:
This 4557 is not an LRC Case, it is a simple civil case.
xxxxxx
Moreover, both the MANOTOKS and ARANETA insist that Palma’s 13 June 1966 Order had been
recalled by a subsequent Order dated 16 August 1966, ["RECALL ORDER"],21 wherein the trial court
dismissed the motion filed by DIMSON on the court’s findings that " x x x whatever portion of the
property covered by OCT 994 which has not been disposed of by the previous registered owners
have already been assigned and adjudicated to Bartolome Rivera and his assignees, as a result of
which there is no portion that is left to be given to the herein supposed assignee Jose Dimson."
However, We are reluctant to recognize the existence and due execution of the Recall Order
considering that its original or even a certified true copy thereof had not been submitted by either of
the two parties relying on it despite having been given numerous opportunities to do so.
Be that as it may, even if We are to consider that no Recall Order was ever issued by then Judge
Palma, the validity of the DIMSON titles over the properties in the Maysilo Estate becomes doubtful
in light of the fact that the supposed "share" went beyond what was actually due to Jose Dimson
under the Compromise Agreement with Rivera. It should be recalled that Palma’s 13 June 1966
Order approved only the conveyance to Jose Dimson of "25% of whatever share of Bartolome
Rivera has over Lots 25, 26, 27, 28-B and 29 of OCT 994 x x x subject to availability of undisposed
portion of the said lots."22
In relation to this, We find it significant to note the observations contained in the Senate Committee
Report No. 1031 that, based on the assumption that the value of the lots were equal, and
"(C)onsidering that the share of Maria de la Concepcion Vidal was only 1-189/1000 percent of the
Maysilo Estate, the Riveras who claimed to be the surviving heirs of Vidal will inherit only 197,
405.26 square meters (16,602,629.53 m2 x 1.1890%) or 19.7 hectares as their share.23 Even if we
are to base the 25% of Jose Dimson on the 19.7 hectares allotted to the Riveras, it would appear
that Jose Dimson would only be entitled to more or less five (5)hectares of the Maysilo Estate.
Obviously, basing only on TCT No. 15169 of Dimson which covered a land area of 50 hectares
(500,000 square meters),24 it is undisputable that the total properties eventually transferred to Jose
Dimson went over and beyond his supposed 25% share.
What is more, Palma’s 13 June 1966 Order specifically required that "x x x whatever title is to be
issued herein in favor of Jose Dimson, the same shall be based on a subdivision plan duly certified
by the Land Registration Commission as correct and in accordance with previous orders issued in
this proceedings, said plan to be submitted to this court for final approval.
Interestingly however, despite such requirement, DIMSON did not submit Survey Plan LRC (GLRO)
Rec. No. 4429 SWO-5268 which allegedly was the basis of the segregation of the lands, if only to
prove that the same had been duly approved and certified correct by the Land Registration
Commission. What was submitted before the RTC and this Court was only the Subdivision Plan of
Lot 25-A-2 which notably does not bear the stamp of approval of the LRC. Even an inspection of the
exhibit for CLT does not bear this Survey Plan, which could have, at the very least, proven the
authenticity of the DIMSON title.
Indeed, We find the absence of this piece of evidence as crucial in proving the validity of the titles of
DIMSON in view of the allegation of contending parties that since the survey plan upon which the
land titles were based contained the notation "SWO," meaning that the subdivision plan was only a
product of a "special work order," the same could not have passed the LRC. Neither was it duly
certified by the said office.25
In addition, the Special Division took note of other irregularities attending Dimson’s TCT No. R-
15169.
[Firstly], OCT No. 994 showed that Lot 25-A of the Maysilo Estate was originally surveyed on
"September 8-27, 1911, October 4-21 and November 17-18, 1911." Yet, in said TCT No. R-15169,
the date of the original survey is reflected as "Sept. 8-27, 1911" and nothing more.26 The variation in
date is revealing considering that DIMSON’s titles are all direct transfers from OCT No. 994 and, as
such, would have faithfully adopted the mother lot’s data. Unfortunately, no explanation for the
variance was ever offered.
Equally worthy of consideration is the fact that TCT No. 15169 indicates that not only was the date of
original registration inexistent, but the remarks thereon tend to prove that OCT No. 994 had not been
presented prior to the issuance of the said transfer certificate. This manifest from the notations "NA"
on the face of DIMSON’s title meaning, "not available." It bears emphasizing that the issuance of a
transfer certificate of title to the purchaser without the production of the owner’s duplicate is illegal
(Rodriguez v. Llorente, 49 Phil. 826) and does not confer any right to the purchaser (Philippine
National Bank vs. Fernandez, 61 Phil. 448 [1935]). The Registrar of Deeds must, therefore, deny
registration of any deed or voluntary instrument if the owner’s duplicate is not presented in
connection therewith. (Director of Lands vs. Addison, 40 Phil. 19 [1926]; Hodges vs. Treasurer of the
Phil. 50 Phil. 16 [1927].27
In has also been held that, in cases where transfer certificates of title emanating from one common
original certificate of title were issued on different dates to different persons or entities covering the
same land, it would be safe to conclude that the transfer certificate issued at an earlier date along
the line should prevail, barring anomaly in the process of registration.28 Thus, "(w)here two
certificates purport to include the same land, the earlier in date prevails. X x x. In successive
registration, where more than one certificate is issued in respect of a particular estate or interest in
land, the person is deemed to hold under the prior certificate who is the holder or whose claim is
derived directly from the person who was the holder of the earliest certificate issued in respect
thereof. x x x"29
xxx
Still another indication of irregularity of the DIMSON title over Lot No. 25-A is that the issuance of the
Sayo Order allegedly confirming the Palma Order was in itself suspect. Gleaning from the records,
DIMSON filed the Motion only on 10 October 1977, or eleven (11) years after obtaining the
supposed sanction for the issuance of titles in this name. Besides, what was lodged by Jose Dimson
before the sala of then Judge Palma was not a simple land registration case wherein the only
purpose of Jose Dimson was to establish his ownership over the subject parcels of land, but, as
reflected in the Palma Order, the subject of the case was the confirmation of Jose Dimson’s claim
over the purported rights of Rivera in the disputed properties. The case did not partake of the nature
of a registration proceeding and thus, evidently did not observe the requirements in land registration
cases. Unlike in a land registration case, therefore, Jose Dimson needed to file an action before
Judge Sayo to seek "confirmation" of Palma’s Order dated 13 June 1966.
So viewed the general rule proscribing the application of laches or the statute of limitations in land
registration cases,30 as well as Section 6, Rule 39 of the Rules of Court, in relation to its provisions
on revival of judgment applies only to ordinary civil actions and not to other or extraordinary
proceedings such as land registration cases, is clearly not applicable in the present case. The legal
consequences of laches as committed by DIMSON and their failure to observe the provisions of
Rule 39 should, therefore, find application in this case and thus, the confirmation of DIMSON’s title, if
any, should fail.
Parenthetically, the allegations of DIMSON would further show that they derive the validity of their
certificates of title from the decreased Jose Dimson’s 25% share in the alleged hereditary rights of
Bartolome Rivera ["RIVERA"] as an alleged grandson of Maria Concepcion Vidal ["VIDAL"].
However, the records of these cases would somehow negate the rights of Rivera to claim from Vidal.
The Verification Report of the Land Registration
Commission dated 3 August 1981 showed that Rivera was 65 years old on 17 May 1963 (as
gathered from the records of Civil Case Nos. 4429 and 4496).31 It can thus be deduced that, if Rivera
was already 65 years old in 1963, then he must have been born around 1898. On the other hand,
Vidal was only nine (9) years in 1912; hence, she could have been born only on 1905. This alone
creates an unexplained anomalous, if not ridiculous, situation wherein Vidal, Rivera’s alleged
grandmother, was seven (7) years younger than her alleged grandson. Serious doubts existed as to
whether Rivera was in fact an heir of Vidal, for him to claim a share in the disputed portions of the
Maysilo Estate.32
These findings are consonant with the observations raised by Justice Renato Corona in his
Concurring and Dissenting Opinion on our 2007 Resolution. To wit:
TCT No. T-177013 covers Lot 26 of the Maysilo Estate with an area of 891,547.43 sq. m. It was a
transfer from TCT No. R-17994 issued in the name of Estelita I. Hipolito. On the other hand, TCT
No. R-17994 was a transfer from TCT No. R-15166 in the name of Jose B. Dimson which, in turn,
was supposedly a direct transfer from OCT No. 994 registered on April 19, 1917.
Annotations at the back of Hipolito's title revealed that Hipolito acquired ownership by virtue of a
court order dated October 18, 1977 approving the compromise agreement which admitted the sale
made by Dimson in her favor on September 2, 1976. Dimson supposedly acquired ownership by
virtue of the order dated June 13, 1966 of the CFI of Rizal, Branch 1 in Civil Case No. 4557
awarding him, as his attorney's fees, 25% of whatever remained of Lots 25-A, 26, 27, 28 and 29 that
were undisposed of in the intestate estate of the decedent Maria de la Concepcion Vidal, one of the
registered owners of the properties covered by OCT No. 994. This order was confirmed by the CFI
of Caloocan in a decision dated October 13, 1977 and order dated October 18, 1977 in SP Case No.
C-732.
However, an examination of the annotation on OCT No. 994, particularly the following entries,
showed:
AP-6665/0-994 — Venta: Queda cancelado el presente Certificado en cuanto a una extencion

superficial de 3,052.93 metros cuadrados y 16,512.50 metros cuadrados, y descrita en el lote no.
26, vendida a favor de Alejandro Ruiz y Mariano P Leuterio, el primer casado con Deogracias
Quinones el Segundo con Josefa Garcia y se ha expedido el certificado de Titulo No; 4210, pagina
163 Libro T-22.
Fecha del instrumento — Agosto 29, 1918
Fecha de la inscripcion — September 9, 1918
10.50 AM
AP-6665/0-994 — Venta: — Queda cancelado el presente Certficado el cuanto a una extencion
superficial de 871,982.00 metros cuadrados, descrita en el lote no. 26, vendida a favor de Alejandro
Ruiz y Mariano P. Leuterio, el primer casado con Deogracias Quinones el segundo con Josefa
Garcia y se ha expedido el certificado de Titulo No 4211, pagina 164, Libro T-22.
Fecha del instrumento — Agosto 25, 1918
Fecha de la inscripcion – September 9, 1918
10:50- AM
Based on the description of Lot No. 26 in OCT No. 994, it has an area of 891,547.43 sq. m. which
corresponds to the total area sold in 1918 pursuant to the above-cited entries. Inasmuch as, at the
time the order of the CFI of Rizal was made on June 13, 1966, no portion of Lot No. 26 remained
undisposed of, there was nothing for the heirs of Maria de la Concepcion Vidal to convey to Dimson.
Consequently, Dimson had nothing to convey to Hipolito who, by logic, could not transmit anything to
CLT.
Moreover, subdivision plan Psd-288152 covering Lot No. 26 of the Maysilo Estate described in
Hipolito's certificate of title was not approved by the chief of the Registered Land Division as it
appeared to be entirely within Pcs-1828, Psd-5079, Psd-5080 and Psd-15345 of TCT Nos. 4210 and
4211. How Hipolito was able to secure TCT No. R-17994 was therefore perplexing, to say the least.
All these significant facts were conveniently brushed aside by the trial and appellate courts. The
circumstances called for the need to preserve and protect the integrity of the Torrens system.
However, the trial and appellate courts simply disregarded them.33
The Court thus adopts these findings of the Special Division on the validity of Jose Dimson’s titles,
which he obtained consequent to the 1977 Order of Judge Sayo. Consequently, we cannot give due
legal recognition to any and all titles supposedly covering the Maysilo Estate obtained by Dimson
upon the authority of either the purported 1966 Order of Judge Muñoz-Palma or the 1977 Order of
Judge Sayo.
B.
Indubitably, as between the titles of ARANETA and the MANOTOKS and their predecessors-in-
interest, on one hand, and those of DIMSON, on the other, the titles held by ARANETA and the
MANOTOKS must prevail considering that their titles were issued much earlier than the titles of the
latter.
Our findings regarding the titles of Jose Dimson necessarily affect and even invalidate the claims of
all persons who seek to derive ownership from the Dimson titles. These include CLT, which acquired
the properties they laid claim on from Estelita Hipolito who in turn acquired the same from Jose
Dimson. Just as much was concluded by the Special Division as it evaluated CLT’s claims.
For its part, CLT contended that even at the trial court level, it maintained that there was only one
OCT No. 994 from where its claim emanates. It argued that its case against the MANOTOKS,
including that of STO. NIÑO, was never decided based on the doctrines laid down in Metropolitan
Waterworks and Sewerage System v. Court of Appeals34 and Heirs of Gonzaga v. Court of
Appeals.35
Before this Special Division, CLT insists that the MANOTOKS failed to submit "new" competent
evidence and, therefore, dwelling on the alleged flaws of the MANOTOK’s titles, "the findings and
conclusions of the court-appointed commissioners as adopted by the trial court, then upheld by the
Honorable Court in its Decision dated 28 September 1995 and finally affirmed in the Supreme
Court’s Decision dated 29 November 2005, therefore stand, as there is no reason to disturb them."
Furthermore, CLT contends that the Orders of Judge Palma and Judge Sayo are no longer open to
attack in view of their finality. Lastly, CLT asserts that the properties covered by the MANOTOKS’
titles and those covered by the expropriation proceedings did not property pertain to and were
different from Lot 26 owned by CLT. Thus, it maintains that the MANOTOKS cannot use as basis for
the validity of their titles the expropriation undertaken by the Government as a means of staking their
claims.
To restate, CLT claims the 891,547.43 square meters of land covered by TCT No. T-
17701336 located in Malabon, Caloocan City and designated as "Lot 26, Maysilo Estate, LRC Swo-
5268." TCT No. T-177013 shows that its mother titles is OCT No. 994 registered on 19 April 1917.
Tracing said claim, Estelita Hipoloto executed a Deed of Sale with Real Estate Mortgage in favor of
CLT on 10 December 1988. By virtue of this transfer, Hipolito’s TCT No. R-1799437 was cancelled
and in lieu thereof, CLT’s TCT No. 223677/R-17994 of TCT No. R-17994. Hipolito, on the other
hand, was a transferee of the deceased Dimson who was allegedly the registered owner of the
subject land on the basis of TCT No. 15166.
In view of the foregoing disquisitions, invalidating the titles of DIMSON, the title of CLT should also
be declared a nullity inasmuch as the nullity of the titles of DIMSON necessarily upended CLT’s
propriety claims. As earlier highlighted, CLT had anchored its claim on the strength of Hipolito’s title
and that of DIMSON’s TCT No. 15166. Remarkably and curiously though, TCT No. 15166 was never
presented in evidence for purposes of tracing the validity of titles of CLT. On this basis alone, the
present remand proceedings remain damning to CLT’s claim of ownership.
Moreover, considering that the land title of CLT carried annotations identical to those of DIMSON
and consequently included the defects in DIMSON’s title, the fact that whatever typographical errors
were not at anytime cured by subsequent compliance with the administrative requirements or
subjected to administrative correction bolsters the invalidity of the CLT title due to its complete and
sole dependence on the void DIMSON title.38
IV.
The task of the Special Division was not limited to assessing the claims of the Heirs of Dimson and
CLT. We likewise tasked the Special Division to ascertain as well the validity of the titles held by the
Manotoks and Araneta, titles which had been annulled by the courts below. Facially, these titles of
the Manotoks and Araneta reflect, as their valid mother title, OCT No. 994 dated 3 May 1917.
Nonetheless, particular issues were raised as to the validity of the Manotok and Araneta titles
independent of their reliance on the 3 May 1917 OCT No. 994 vis-à-vis the inexistent 19 April 1917
OCT No. 994.
A.
We begin by evaluating the Araneta titles. The Special Division quoted the observations of the trial
court, which upheld Dimson’s claim over that of Araneta, citing the following perceived flaws of TCT
Nos. 26538 and 26539, from which Araneta derived its titles, thus:
Let us now examine TCT 26538 and TCT 26539 both in the name of Jose Ma. Rato from where
defendant was said to have acquired TCT 13574 and TCT 7784 now TCT 21343 in the name of
Araneta and the other documents related thereto:
1) Perusal of TCT 26538 shows that its Decree No. and Record No. are both 4429. In the
same vein, TCT 26539 also shows that it has Decree No. 4429 and Record No. 4429.
However, Decree No. 4429 was issued by the Court of First Instance, Province of Isabela
(Exhibit I) and Record No. 4429, issued for Ordinary Land Registration Case, was issued on
March 31, 1911 in CLR No. 5898, Laguna (Exhibit 8, 8-A Bartolome Rivera et al.)
How then could TCT No. 26538 and TCT No. 26539 both have Decree No. 4429 and Record
No. 4429, which were issued in Court of First Instance, Province of Isabela and issued in
Laguna, respectively.
2) TCT no. 26538 and TCT No. 26539 in the name of Jose Ma. Rato are not annotated in the
Original Certificate of Title 994, where they were said to have originated.
3) The Escritura de Incorporacion de Philippine Land Improvement Company (Exhibit I)

executed on April 8, 1925 was only registered and was stamped received by the Office of the
Securities and Exchange Commission only April 29, 1953 when the Deed of Sale &
Mortgage was executed on August 23, 1947 (Exh. 5 defendant) and the Novation of
Contract, Deed of Sale and Mortgage executed on November 13, 1947 (Exh. M0. So, that
when Philippine Land Improvement was allegedly given a special power of attorney by Jose
Ma. Rato to represent him in the execution of the said two (2) documents, the said Philippine
Land Improvement Company has not yet been duly registered.
4) TCT 26538 and 26538 and TCT 26539 both in the name of Jose Ma. Rato, both cancel
21857 which was never presented in Court if only to have a clear tracing back of the titles of
defendant Araneta.
5) If the subject matter of the Deed of Sale & Mortgage (Exhibit 5 defendant) is TCT 26539,
why is it that TCT 13574 of defendant Araneta cancels TCT 6196 instead of TCT 26539.
That was never explained. TCT 6196 was not even presented in Court.
6) How come TCT 26538 of Jose Ma. Rato with an area of 593,606.90 was cancelled by
TCT 7784 with an area of only 390,282 sq.m.
7) How was defendant Araneta able to have TCT 7784 issued in its name, when the
registration of the document entitled Novation of Contract, Deed of Sale & Mortgage (Exhibit
M) was suspended/denied (Exhibit N) and no title was received by the Register of Deeds of
Pasig at the time the said document was filed in the said Office on March 4, 1948 (Exhibit N
and N-1).
Under Sec. 55 of Land Registration Act (Act No. 496) now Sec. 53 of Presidential Decree
No. 1529, no new certificate of title shall be entered, no memorandum shall be made upon
any certificate of title by the register of deeds, in pursuance of any deed or other voluntary
instrument, unless the owner’s duplicate certificate is presented for such endorsement.
8) The sale by Jose Ma. Rato in favor of defendant Araneta is not reflected on the
Memorandum of Encumbrances of TCT 26538 (Exhibit 7-defendant) meaning that TCT
26538 still exists and intact except for the encumbrances annotated in the Memorandum of
Encumbrances affecting the said title (Exhibits 16, 16-A and 16-N David & Santos)
9) In the encumbrances annotated at the back of TCT 26539 (Exhibit 4-defendant) there
appears under entry No. 450 T 6196 Victoneta, Incorporated covering parcel of land
canceling said title (TCT 26539) and TCT 6196 was issued ( x x x) which could have referred
to the Deed (sic) of Sale and Mortgage of 8-23-47 (Exhibit 5-defendant) entered before Entry
5170 T-8692 Convenio Philippine Land Improvement Company, with Date of Instrument: 1-
10-29, and Date of Inscription: 9-21-29.
In TCT 26838 this Entry 5170 T-8692 Convenio Philippine Land Improvement Company (Exhibit 16-
J-1) appears, but the document, Novation of Contract, Deed of Sale & Mortgage dated November
13, 1947 (Exhibit M) does not appear.
Entry marked Exhibit 16-J-1 on TCT 26538 shows only the extent of the value of P42,000.00
invested by Jose Ma. Rato in the Philippine Land Improvement Company. Said entry was also
entered on TCT 26539.
The Court also wonders why it would seem that all the documents presented by defendant Araneta
are not in possession of said defendant, for according to witness Zacarias Quintan, the real estate
officer of the said defendant Araneta since 1970, his knowledge of the land now in possession of
defendant Araneta was acquired by him from all its documents marked in evidence which were
obtained only lately when they needed for presentation before this Court.3940
The Special Division then proceeded to analyze these factual contentions, and ultimately concluded
that the Araneta claim to title was wholly valid. We adopt in full the following factual findings of the
Special Division, thus:
As for the proprietary claim of ARANETA, it maintains that it has established by direct evidence that
its titles were validly derived from OCT No. 994 dated 3 May 1917. With regard to the imputed flaws,
it asseverates that these were unfounded and thus, labored to refute all of them. ARANETA further
expounded on the nullity of the Palma and Sayo Orders which was the basis of DIMSON’s titles.
The documentary exhibits it proffered traced its certificates of title to OCT No. 994 registered on 3
May 1917. From the titles submitted, its predecessor-in-interest was Jose Ma. Rato y Tuazon
["RATO"], one of the co-heirs named in OCT No. 994, who was allotted the share of nine and five
hundred twelve one thousandths (9-512/1000) percent share of the Maysilo Estate.41 For this reason,
to ascertain the legitimacy of the derivative title of ARANETA, the origin and authenticity of the title of
RATO need to be reassessed.
Verily, attesting to RATO’s share on the property, Entry No. 12343/O-994 of the Owner’s Duplicate
Copy of OCT no. 994, records the following:
"12343/O-994 – Auto: Jose Rato y Tuason - - - Queda cancelado el presente seartificado en cuanto
a una estension superficial de 1,405,725.90 metro Cuadrados mas o menos descrita en el Lote No.
25-A-3, an virtud del auto dictado por el Juzgado de Primera Instancia de Riza, de fecha 28 de Julio
de 1924, y que en au lugar se had expedido el Certificados de Titulo No. 8692, folio 492 del Tomo
T-35 del Libro de Certicadads de Transferencia.
Date of Instrument – Julio 28, 1924.

Date of Inscription – Agosto 1, 1024 – 10:19 a.m.
SGD. GLICERIO OPINION, Register of deeds
Agosto 19, 192442
In accordance with the decree, RATO was issued on 1 August 1924, TCT No. 869243 which covers
"Lote No. 25 A-3 del plano del subdivision, parte del Lote No. 25-A, plano Psu-(not legible),
"Hacienda de Maysilo," situado en el Munisipio de Caloocan, Provincia del Rizal x x x."44 The parcel
of land covers an approximate area of "UN MILLION CUATROCIENTOS CINCO MIL
SETECIENTOS VEINTICINCO metros cuadrados con NOVENTA decimetros cuadrados
(1,405,725.90) mas o menos." As reflected under Entry No. 14517….T-8692,45 the parcel of land
covered under this certificate of title was subdivided into five (5) lots under subdivision plan Psd-
6599 as per Order of the court of First Instance of Rizal. Consequently, TCT Nos. 21855, 21856,
21857, 21858 and 21859 were issued.
Focusing on TCT No. 21857 issued on 23 May 1932, this certificate of title issued in RATO’s
name,46 cancelled TCT No. 869247 with respect to the property it covers. On its face, TCT No.
21857,48 was a derivative of OCT No. 994 registered on 3 May 1917. It covers Lot No. 25 A-3-C of
subdivision plan Psd-6589, being a portion of Lot No. 25-A-3, G.L.R.O Record No. 4429. Thereafter,
TCT No. 21857 was cancelled by TCT No. 2653849 and TCT No. 2653950 which were both issued in
the name of Jose Ma. Rato y Tuazon on 17 September 1934.
With respect to TCT No. 26539, the certificate of title showed that it covered a parcel of land
designated as Section No. 2 of the subdivision plan Psd-10114, being a portion of Lot 25-A-3-C
having an approximate area of 581,872 square meters.51 Thereafter, TCT No. 26539 was cancelled
by TCT No. 619652 whose registered owner appears to be a certain Victoneta, Inc. This parcel of
land has an area of 581,872 square meters designated as section No. 2 of subdivision plan Psd-
10114, being a portion of Lot 25-A-3-C.
As shown on its face, TCT No. 6196 issued on 18 October 1947 in the name of Victoneta, Inc. and
its mother title were traced from OCT No. 994 registered on 3 May 1917. Later, TCT No. 6196 was
cancelled, and in lieu thereof, TCT No. 13574 was issued in favor of Araneta Institute of Agriculture
on 20 May 1949.53 It covers a parcel of land designated as section No. 2 of subdivision plan Psd-
10114, being a portion of Lot 25-A-3-C. It has an aggregate area of 581,872 square meters.
On the other hand, appearing under Entry No. 16086/T-No. 13574 of TCT No. 6196 is the following:
"Entry No. 16086/T-No. 13574 – SALE in favor of the ARANETA INSTITUTE OF AGRICULTURE,
vendee: Conveying the property described in this certificate of title which is hereby cancelled and
issuing in lieu thereof Transfer Certificate of Title No. 13574, page 74, Book T-345 in the name of the
vendee. (Doc. No. 149, page 98, Book II, S. of 1949 of Notary Public for Manila, Hospicio B. Biñas).
Date of Instrument – May 18, 1949
Date of the Inscription – May 30, 1949 at 11:00 a.m.54
TCT No. 2653855 in turn showed on its face that it covers a parcel of land designated as Section 1 of
subdivision plan Psd-10114 being a portion of Lot 25-A-3-C having an area of 592,606.90 square
meters.56
On 4 March 1948, TCT No. 26538 was cancelled by TCT No. 7784, which was issued in favor of
Araneta Institute of Agriculture. TCT No. 7784 covers four (4) parcels of land with an aggregate area
of 390,282 square meters.57 It would appear from the records of CA-G.R. SP No. 34819 consolidated
with CA-G.R. CV No. 41883 that TCT No. 7784 was eventually cancelled by TCT No. 21343.58 As
per attachment of ARANETA in its Answer dated 6 march 1980 filed in Civil Case No. 8050, a mere
copy of TCT No. 21343 showed that it covers a parcel of land designated as Lot 6-B of the
subdivision plan Psd-24962 being a portion of Lot 6, described as plan Psd-21943, G.L.R.O. Record
No. 4429 with an approximate area of 333,377 square meters.59 However, for reasons unknown, a
copy of TCT No. 21343, whether original or certified true copy thereof, was not submitted before this
Court.
In summation, ARANETA had shown that RATO, as one of the co-owners of the property covered by
OCT NO. 994, was assigned Lot No. 25-A-3. His evidence of ownership is reflected on TCT No.
8692 issued in his name. RATO held title to these parcels of land even after its subdivision in the
1930’s. Further subdividing the property, RATO was again issued TCT No. 21857, and later TCT
Nos. 26538 and 26539, still covering Lot No. 25 A-3-C. In all his certificates of title, including those
that ultimately passed ownership to ARANETA, the designation of the lot as either belonging to or
portions of Lot 25-A-3 was retained, thereby proving identity of the land.
More importantly, the documentary trail of land titles showed that all of them were derived from OCT
No. 994 registered on 3 May 1917. For purposes of tracing ARANETA’s titles to Oct No. 994, it
would appear that the evidence presented ultimately shows a direct link of TCT Nos. 7784 and
13574 to said mother title. Suffice it to state, the origin and legitimacy of the proprietary claim of
ARANETA had been well substantiated by the evidence on record and on this note, said titles
deserve validation.
Under the guidelines set, we shall now proceed to evaluate the imputed flaws which had been the
previous bases of the trial court in invalidating ARANETA’s titles.
One of the flaws observed on the titles of ARANETA’s predecessor-in-interest was that TCT No.
26538 and TCT No. 26539 in Rato’s name refer to Decree No. 4429 and Record No. 4429, as basis
of their issuance. This is being questioned inasmuch as Decree No. 4429 refers to a decree issued
by the CFI of Isabela while Record No. 4429 was issued for ordinary Land Registration Case No. 31
March 1911 in CLR No. 5898 of Laguna.
Explaining this discrepancy, ARANETA insisted that the same was a mere typographical error and
did not have any effect on the validity of their title. It further contended that the number "4429" was
the case number of Decree No. 36455 and was used interchangeably as the record number.
This Court finds that the incorrect entry with respect to the Decree and Record Number appearing on
the title of ARANETA’s predecessor-in-interest cannot, by itself, invalidate the titles of ARANETA’s
predecessors-in-interest and ultimately, that of ARANETA. To the mind of this Court, the incorrect
entries alluded to would not have the effect of rendering the previous titles void sans any strong
showing of fraudulent or intentional wrongdoing on the part of the person making such entries. Fraud
is never presumed but must be established by clear and convincing evidence.60 The strongest
suspicion cannot sway judgment or overcome the presumption of regularity. The sea of suspicion
has no shore, and the court that embarks upon it is without rudder or compass.61
The Supreme Court, in Encinas v. National Bookstore, Inc.62 acknowledged that certain defects on a
certificate of title, specifically, the interchanging of numbers, may occur and "it is certainly believable
that such variance in the copying of entries could be merely a typographical or clerical error." In such
cases, citing with approval the decision of the appellate court, the technical description in the title
should prevail over the record number.63
Thus, what is of utmost importance is that the designation and the technical description of the land,
as stated on the face of the title, had not been shown to be erroneous or otherwise inconsistent with
the source of titles. In ARANETA’s case, all the titles pertaining to Lot No. 25 had been verified to be
an offshoot of Decree No. 36455 and are all located in Tinajeros, Malabon. At any rate, despite the
incorrect entries on the title, the properties, covered by the subject certificates of title can still be
determined with sufficient certainty.
It was also opined that TCT No. 26538 and TCT No. 26539 in the name of RATO had not been
annotated on OCT No. 994 from which said titles had supposedly originated. It should be stressed
that what partially cancelled OCT No. 994 with respect to this subject lot were not TCT Nos. 26538
and 26539 but TCT No. 8692 issued on 1 August 1924. In fact, TCT Nos. 26538 and 26539 are not
even the immediate predecessors of OCT No. 994 but were mere derivatives of TCT No. 21857.
Logically therefore, these two certificates of title could not have been annotated on OCT No. 994,
they not being the preceding titles.
In any case, a perusal of OCT No. 994 shows an entry, which pertains to Jose Ma. Rato but, on
account of the physical condition of the copy submitted to this Court, the entry remains illegible for
us to make a definite conclusion.64 On the other hand, Entry No. 12343/O-994 found on the Owner’s
Duplicate Copy of OCT No. 994 specifically recorded the issuance of TCT No. 8692 over Lot No. 25-
A-3.65
The other flaws noted on ARANETA’s certificates of title pertained to its failure to present TCT Nos.
21857, 6196 and 21343. As we have discussed, ARANETA offered in evidence a certified microfilm
copy of TCT No. 21857 and a certified true copy of TCT No. 6196 marked as Exhibits 5-A1A and 19-
A1A, respectively. However, it failed to submit a copy of said TCT No. 21343. Be that as it may, we
will not hasten to declare void TCT No. 7784 as a consequence of such omission, especially so
since TCT No. 21343 appears to be a mere derivative of TCT No. 7784. Given that the validity of
TCT No. 7784 had been preponderantly proven in these proceedings, the authenticity of said title
must be sustained. Besides, ARANETA’s failure to submit TCT No. 21343 had never been put into
issue in these proceedings.
With respect to the difference in the area of more than 200,0000 square meters between TCT No.
7784 and TCT No. 26538, we find that the trial court failed to consider the several conveyances of
portions of TCT No. 26538 before they finally passed on to ARANETA. Thus, on the Memorandum
of Encumbrance of TCT No. 26538, it is apparent that portions of this piece of land had been sold to
various individuals before the same were transferred to ARANETA on 4 march 1948. Naturally, since
the subject land had been partially cancelled with respect to the portion disposed of, it could not be
expected that the area of TCT No. 26538 will remain the same at the time of its transfer to
ARANETA. Even assuming that the entire area covered by TCT No. 26538 had been disposed of,
this fact alone, cannot lend us to conclude that the conveyance was irregular. An anomaly exists if
the area covered under the derivative title will be much more than its predecessor-in-interest.
Evidently, this is not so in the case before us.
The trial court, relying on Exhibit "N", further asserted that ARANETA should not have been issued
TCT No. 7784 considering that the registration of the Novation of Contract, deed of Sale & Mortgage
was suspended/denied and no title was received by the Register of Deeds of Pasig at the time the
said document was filed in the said Office on march 4, 1948. A perusal of Exhibit "N" submitted
before the trial court, shows that the suspension or denial was merely conditional considering that
the person seeking registration had give days within which to correct the defects before final denial
thereof. As we see it, the Notice merely contained a warning regarding the denial of the registration
of the voluntary deed but, in no way, did it affect the vested rights of ARANETA to be land. The fact
that the title to the land was subsequently issued free from any notation of the alluded defect creates
a reasonable presumption that ARANETA was in fact able to comply with the condition imposed.
This is especially true since the notice itself contained a note, "Just Completed," written across the
face of the letter.
Records also reveal the RTC’s observation with regard to Araneta’s failure to disprove the result of
the plotting made on the subject land (Exhibit K) to the effect that TCT 26538 overlaps ½ portion of
TCT 15159 and TCT 26539 also overlaps the other ½ portion of said TCT R-15169. The trial court
further noted that "TCT R-15169 (Jose Dimson) and TCT 26539 (Jose Rato) and TCT 21343
(Araneta) are overlapping each other within Lot 25-A. That portion of TCT R-15169 (Jose Dimson)
along bearing distance points to 17 to 18 to 19 to 20 to 21 to 1 and 2 shaded in yellow color in the
Plan is not covered by TCT 21343 (Araneta)."66
Scrutinizing Exhibit "K," it becomes apparent that the said evidence relied upon was only a private
survey conducted by Geodetic Engineer Reggie P. Garcia which had not been duly approved by the
Bureau of Lands and was based only on photocopies of relevant land titles.67 What is more, said
geodetic engineer also failed to adequately explain his observations, approach and manner of
plotting the relative positions of the lots.68 From all indications, the conclusions reached by said
geodetic engineer were anchored on unfounded generalizations.
Another defect cited on ARANETA’s title was the absence of any entry on the Memorandum of
Encumbrances of TCT No. 26538 of the alleged sale between RATO and ARANETA. As pointed out
by ARANETA, the copy of TCT No. 26538 submitted to the trial court contained entries only up to
the year 1947, thus, explaining the (1) lack of entry with regard to the issuance of TCT No. 7784 in
favor of ARANETA considering that the same was issued a year later and; (2) entry pertaining to
Convenio Philippine Land Improvement Company which was entered way back on 21 August 1929.
Nonetheless, it still cannot be denied that Rato and ARANETA together with Don Salvador Araneta,
entered into a voluntary agreement with the intention of transferring the ownership of the subject
property. Moreover, no conclusion should have been reached regarding the total cancellation of TCT
No. 26538 inasmuch as TCT No. 7784 cancelled the former certificate of title to the extent only of
Three Hundred Ninety Thousand Two Hundred Eighty Two (390,282) square meters.
Notably also, with the evident intent to discredit and refute the title of ARANETA, DIMSON submitted
TCT Nos. 2653869 and 21857,70 which are both derivatives of OCT No. 994 registered on 3 May 1917
and cover parcels of land located in Malabon, Rizal. However, these certificates of title reflect
different registered owners and designation of the land covered.
Pertinently, Exhibit "M-Dimson" relating to TCT No. 26538, registered on 12 June 1952, points to
one Angela Bautista de Alvarez as the registered owner of a 240 square meter of land designated as
Lot No. 19, Block 14 of the subdivision plan Psd-5254 being a portion of Lot No. 7-A-1-A. This
certificate of title cancels TCT No. 14112/T-348 and refers to a certain TCT No. 30473 on the
inscriptions.
Exhibit "N-Dimson," on the other hand, pertaining to TCT No. 21857 was issued on 30 March 1951
to one Angela I. Tuason de Perez married to Antonio Perez. This certificate of Title covers a parcel
of land described as Lot No. 21, Block 16 of the consolidation and subdivision plan Pcs-140,
G.L.R.O. Record No. 4429. It ahs an area of 436 square meters and cancels TCT No. 21856.
Exhibit "Q-Dimson"71 consisting of TCT No. 8692 covers two parcels of land designated as Lot Nos.
1 and 2 of Block No. 44 of the consolidation Subdivision Plan Pcs-188 with a total area of 3,372
square meters. It was issued to Gregorio Araneta, Incorporated on 7 May 1948. This certificate of
title cancelled TCT No. 46118.
Comparing these titles to those of the ARANETA, it is apparent that no identity of the land could be
found. The Supreme Court, in the case of Alonso v. Cebu City Country Club, Inc.72 agreeing with the
Court of Appeals’ dissertation in said case, ruled that there is nothing fraudulent for a certificate of
title to bear the same number as another title to another land. On this score, the Supreme Court
elucidated as follows:
"On the question that TCT No. RT-1310 (T-1151) bears the same number as another title to another
land, we agree with the Court of Appeals that there is nothing fraudulent with the fact that Cebu
Country Club, Inc.’s reconstituted title bears the same number as the title of another parcel of land.
This came about because under General Land Registration Office (GLRO) Circular No. 17, dated
February 19, 1947, and Republic Act No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which
were in force at the time the title was reconstituted on July 26, 1946, the titles issued before the
inauguration of the Philippine Republic were numbered consecutively and the titles issued after the
inauguration were numbered also consecutively starting with No. 1, so that eventually, the titles
issued before the inauguration were duplicated by titles issued after the inauguration of the
Philippine Republic x x x."
Parenthetically, in their Motion for Partial Reconsideration of this Court’s Resolution dated 30
October 2008, DIMSON objected to the admissibility of Exhibits 4-A1A to 7-A1A on the ground that
ARANETA failed to submit the original copies of these certificates of title and contended that the
"originals" contain different "contents" from their own Exhibits M, N and Q.73 The fact that the entries
contained in ARANETA’s pieces of evidence are different from that of DIMSON’s do not
automatically make ARANETA’s exhibits inferior replications or a confirmation of their falsity.
Interestingly, the objection regarding the non-submission of the "original copy" had not been raised
by DIMSON in their Comments/Objections to Consolidated Formal Offer of Evidence (Of Araneta
Institute of Agriculture, Inc.).74 In any case, we find the objections unwarranted considering that
certified true copies or certified microfilm copies of Exhibits 4-A1A to 7-A1A had been submitted by
ARANETA in these proceedings.
Lastly, on the alleged non-registration of Philippine Land Improvement Company at the time the
special power of attorney was executed by Jose Ma. Rato to represent him in the execution of the
deed of conveyances, the same only proves that Philippine Land Improvement Company was not
yet registered and this does not go as far as proving the existence or non-existence of the company
at which time it was executed. In effect, the company was not precluded to enter into contracts and
be bound by them but it will do so at the risk of the adverse effects of non-registration under the law.
Ultimately, the question of whether the aforesaid certificates of title constitute as clouds on
ARANETA’s titles are not for this Court to rule upon for purposes of the present remand. Needless to
state, it is not for the Heirs of Dimson to rely on the weakness of ARANETA’s titles and profit from it.
Rather, they should have focused on the strength of their own titles since it is not within our office to
decide in whose hands the contested lands should go, our task being merely to trace back the
parties’ claims to OCT No. 994 dated 3 May 1917.75
There is no question that the Araneta titles were derived from OCT No. 994 dated 3 May 1917,
particularly from the share of Jose Ma. Rato y Tuazon, one of the co-heirs named in OCT No. 994.
The Special Division correctly assessed, among others, the reference to Decree No. 4429 and
Record No. 4429 in some of the antecedent titles of Araneta76 as mere clerical errors that could not
have invalidated said titles, "4429" being the case number of Decree No. 36455, and the designation
and the technical description of the land on those titles not having been shown to be erroneous or
variant with the source title. The Special Division also correctly considered that the trial court had
failed to take into account the several conveyances of TCT No. 26538 before it was ultimately
transferred to Araneta in 1948, which explain the difference in area between TCT No. 7784 and TCT
No. 26538. The imputed overlap of TCT No. 26538 and TCT No. 26539 with the titles held by
Dimson was based on a private survey which had not been duly approved by the Bureau of Lands.
The alleged absence of any entry on the Memorandum of Encumbrances of TCT No. 26538 of the
sale of the property between Rato and Araneta did not, according to the Special Division, discount
the fact that Rato and Araneta entered into a voluntary agreement with the intention of transferring
the ownership of the subject property. Finally, the Special Division noted that the titles derived from
OCT No. 994, which Dimson had submitted as evidence to discredit the Araneta claim, pertain to
properties wholly different from those covered by the Araneta titles.
There is no cause to dispute the factual findings and conclusions of the Special Division on the
validity of the Araneta titles, and we affirm the same.
B.
It appears that the claim to title of the Manotoks is somewhat more controversial. The Special
Division did not discount the fact that there could have been flaws in some of the intervening titles
between the 3 May 1917 OCT No. 994 and the present titles of the Manotoks. However, the
significant event was the expropriation proceedings undertaken by the Republic of the Philippines
sometime in 1947. At least some of the titles in the name of the Manotoks were sourced from the
titles issued to and subsequently distributed by the Republic. The Special Division explained the
milieu in full:
VALIDITY OF THE MANOTOK TITLES
The notation under Entry No. 6655/O-994, found on page 17 of OCT 994 of the Owner’s Duplicate
Copy, shows that Lot No. 26 had been a subject of sale in favor of Alejandro Ruiz and Mariano P.
Leuterio.77 The notations reads:
"Ap. 6655/O-994 – Venta: Queda Cancelado el presente Certificado en cuanto a una extension
superficial de 3,052.93 Metros cuadrados y 16,512.50 metros Cuadrados y descrita en elLote No. 26
vendida a favor de Alejandro Ruis y Mariano P. Leuterio, el primar casado con Diogracias Quinones
y el Segundo con Josefa Garcia y se be expedido el Certificado de Titulo No. 4210, Pagina 163,
Libro T-22.
Date of the Instrument – Aug. 29, 1918
Date of Inscription – Sept. 9, 1918 – 10:50 a.m.
(GD) L. GARDUNIO, Register of Deeds"
"Ap. 6665/O-994-Venta: Queda Cancelado el presente Cerficiado en cuanto a una extension

superficial de 871,982.00 metros cuadrados, descrita en el Lote No. 26, vendida a favor de
Alejandro Ruiz y Mariano P. Leuterio, el primar casado con Deogracias Quinones y el Segundo con
Josefa Garcia y se be expedido el Certificado de Titulo No. 4211, Pagina 164, Libro T-No. 22.
Date of Instrument – Aug. 21, 1918

Date of Inscription – Sept. 9, 1918 – 10:50 a.m.
(SGD.) L. GARDUNIO, Register of Deeds"
As a result, TCT No. 4211 was cancelled by TCT No. 5261 which was issued in the name of
Francisco Gonzales. Inscribed on the "Memorandum of the Incumbrances Affecting the Property
Described in this Certificate" was the sale executed in favor of
Francisco Gonzales dated 3 March 1920. Thus, on 6 April 1920, TCT No. 5261 was issued in the
name of Francisco Gonzales.78
On 22 August 1938, TCT No. 5261 was cancelled by TCT No. 35486 in the names of Jose Gonzales
y Narciso married to Maria P. Gutierrez, Consuelo Susana Gonzales y Narciso married to Alfonso D.
Prescilla; Juana Francisco Gonzales y Narciso married to Fortunato de Leon; Maria Clara Gonzales
y Narciso married to Delfin Hilario; Francisco Felipe Gonzales y Narciso married to Pilar Narciso,
and Concepcion Andrea Gonzales y Narciso married to Melquiades M. Virata, Jr.
Appearing on the "Memorandum" of TCT No. 5261 is NOTA: Ap 2111 which reads as follows:79
"A/2111 – Adjudicado el torreno descrito en este certificado de titulo, a Rufina Narciso Vda. de
Gonzales, a cuenta de la participacion de osia esta en (not legible) los tienes de la eseledad de
genanciales. Habida entre la misma y el finado Francisco J. Gonzales, per una orden del Hon.
Fernando Jugo, Juez del Juzgado de Primera Instancia de Manila Sala II, dienada el 20 de
Septiembre de 19 (not legible), en el Expidiente de intestado del nombrado Francisco J. Gonzales,
No. 49034, se cancela el presente certificado de tituto y se expide otre a hombre decha Rufina
Narciso, con (not legible) No. 35486, folio 86, Tomo T-168 del libro de transferencias, archivando se
la copia de dicha orden da que se ha heche referencia en al Legajo T-No. 35486.
(SGD) TEODORO GONZALES,

Registrado de Titulos."
The property was later subdivided into seven lots in accordance with subdivision plan Psd-
21154.80 Partitioning the lots among the co-owners, TCT No. 35486 was eventually cancelled and in
lieu thereof six (6) certificates of titles were individually issued81 to Francisco Gonzales’s six (6)
children, specifically, TCT Nos. 1368-1373 while TCT No. 1374 was issued in favor of all the
children.82
As previously mentioned, the properties covered by TCT Nos. 1368-1374 were expropriated by the
Republic of the Philippines and were eventually subdivided and sold to various vendees. Eighteen
(18) lots were obtained by MRI from the years 1965 to 1974, while it acquired the lot covered by TCT
No. 165119 in 1988. On the other hand, MEC acquired from PhilVille Development Housing
Corporation Lot No. 19-B by virtue of Deed of Exchange executed in its favor for which, TCT No.
232568 was issue don 9 May 1991.
The 20 certificates of titles were traced by the MANOTOKS, as follows:
1) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidation-subdivision
plan (LRC) Pcs-1828 which has an area of 4,988 square meters. MRI purchased this lot from
one Basilio Caina who was issued TCT No. 7526 which cancelled TCT Nos. 36657-62
registered in the name of the Republic of the Philippines.83
2) TCT No. 7762, covering Lot 1-C, was obtained by MRI from one Narcisa Buenaventura.
The Parcel of land has an approximate area of 2,876 square meters. Buenaventura’s
ownership was evidenced by TCT No. 7525,84 deriving the same from TCT No. 36657-63.85
3) TCT No. 8012 in the name of MRI covers Lot No. 12-1 having an area of 20,000 square
meters.86 This certificate of title was traced from one Filemon Custodio who held TCT No.
7792. Custodio was in turn a transferee of Guillermo Rivera, the latter having been issued
TCT No. 7760 by virtue of sale between him and then People’s Homesite and Housing
Corporation ["PHHC"]. The latter title eventually cancelled TCT No. 36557-63 of the
Republic.87
4) TCT No. 9866 issued to MRI covers Lot No. 21 and has an approximate area of 23,979
square meters. MRI’s certificate of title was derived from TCT No. 9854 registered in the
name of Filemon Custodio, a transferee of Jose Dionisio, who was issued TCT No. 9853.
Dionisio’s title in turn cancelled the Republic’s TCT No. 36657-63.88
5) TCT No. 21107 issued to MRI covers Lot 22 with an approximate area of 2,557 square
meters. MRI acquired the same by virtue of sale between him and Francisco Custodio,
holder of TCT No. 21040. Francisco Custodio was a transferee of Lorenzo Caina, registered
owner of TCT No. 21039 as evidenced by a Deed of Sale between Caina and the PHHC, the
latter’s certificate of title canceling TCT No. 36557-63 of the Republic.89
6) TCT No. 21485 was issued to MRI by virtue of sale between it and Francisco Custodio,
registered owner of TCT No. 21484. The certificate of title covers Lot 20 with an approximate
area of 25,276 square meters Custodio was in turn a transferee of Lorenzo Caina, the latter
being the registered owner of TCT No. 21013 by reason of sale between him and
PHHC.90 Under Entry No. 6277/T-21485, it would appear that portions of the property
covered under TCT No. 21485 and TCT No. 232568 had been subject of an expropriation
proceedings to which the Manotok Estate Corporation, et al. interposed no objections subject
to the payment of just compensation.91
7) TCT Nos. 2640592 and 26406,93 both registered in the name of MRI, cancelled TCT Nos.
9773 and 9774, respectively. TCT Nos. 9773 and 9774 were registered in the names of
Romulo, Rosalina, Lucila, Felix and Emilia all surnamed Jacinto, [JACINTOS"], before the
same were transferred to MRI by reason of sale in favor of the latter. The JACINTOS’
certificates of title were in turn derived from TCT Nos. 8014 and 8015 issued in the name of
Filemon Custodio94 Both TCT Nos. 8014 and 8015 cancelled TCT 7792/T-39. However, for
purposes of tracing TCT No. 7792/T-39 to the Republic’s certificate of titles, this certificate of
title was not submitted in evidence.
8) TCT No. 2640795 issued to MRI was traced back to the title of Lourdes Mercado Cloribel
who was the registered owner of TCT No. 8404 by virtue of sale between the two, thereby
transferring ownership to MRI. On the fact of TCT No. 8404, it would show that it cancelled
TCT No. 8013/T41 but there is no showing in whose name TCT No. 8013 was registered and
what certificate of title it cancelled.
9) TCT No. 3390496 of MRI cancelled TCT No. 8017 of Filemon Custodio by virtue of sale
between the latter and MRI.97 We note that TCT No. 8017 cancelled TCT No. 7792/T-39 but
there is no showing whether the same could be traced back to the Republic’s certificates of
title.
10) TCT No. 34255, covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square
meters, reflects MRI as the registered owner. This certificate of title cancels TCT No. 36557-
63 of the Republic.98
11) TCT No. 25487599 bears MRI as the registered owner of Lot 55-A with an area of
approximately 1,910 square meters. This certificate of title cancelled TCT No. 41956 which
covers Lot 55, also registered in the name of MRI. It would appear that MRI acquired the lot
covered under TCT No. 41956 from one Joaquin Caina who was the registered owner of
TCT No. 25715 being a vendee of PHHC.100
12) TCT No. 53268 of MRI covered Lot No. 15,101 which was purchased by MRI from one
Maria V. Villacorta who held TCT No. 53155. Villacorta in turn acquired the same land from
one Eufrocina Mackay whose TCT No. 7827 was eventually cancelled by Villacorta’s land
title.102 It would appear that TCT No. 7827 cancelled TCT No. 7826/T-40 but there is no trace
to whom the latter title was registered and what certificate of title it cancelled.
13) TCT No. 55897 shows MRI as the registered owner of Lot 3 of the consolidation-
subdivision plan (LRC) Pcs-1828 of the Maysilo Estate covering an area of more or less
20,531 square meters. This certificate of title cancelled TCT No. 53122 in the names of MRI
(19,531 square meters) and one Silvestre Domingo (1,000 square meters). TCT No. 53122
in turn cancelled TCT No. 21347 registered in the names of Jesus Hipona (19,531 square
meters) and Silvestre Domingo (1,000 square meters). Notably, TCT No. 21347 cancelled
TCT No. 21315/T-107 but there is no indication to whom TCT No. 21315 was registered and
what certificate of title it cancelled.103
14) TCT No. C-17272 reflects MRI as the registered owner of Lot 6-C which has an
approximate area of 27,850 square meters. MRI’s certificate of title cancelled TCT No. C-
17234 registered in the names of MRI (27,750 square meters), Roberto S. David (3,0000
square meters) and Jose Madulid (500 square meters). It would appear that TCT No. C-
17234 cancelled TCT No. 53124 registered in the names of MRI, Spouses Priscila and
Antonio Sebastian and Jose Madulid.104 MRI also submitted in evidence a Deed of Partition
between itself, Roberto David and Madulid thereby subdividing the property into Lots 6-A, 6-
B and 6-C as per subdivision plan (LRC) Psd-277091.105 Again, we note that TCT No. 53124
cancelled TCT No. 21350/T-107 but the records are bereft of any indication what certificate
of title it cancelled and to whom the same was registered.
15) TCT No. C-35267, covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an
approximate area of 9,707 square meters, was a by-product of TCT No. 25146, also
registered in the name of MRI, after the same was subdivided into two lots, namely, Lot Nos.
56-A and 56-B. TCT No. 25146 cancelled TCT No. 25145 registered in the name of Quirino
Labing-isa by virtue of sale in favor of MRI. In turn, TCT No. 21545 cancelled TCT Nos.
(36557) 12836 to (36563) 12842.106
16) TCT No. T-121428, registered in the name of MRI covers Lot No. 5-C of subdivision plan
(LRC) psd-315272 which has an approximate area of 4,650 square meters. It was previously
registered in the names of MRI (4,650 square meters), Ricardo Cruz (941 square meters)
and Conchita Umali (1,000 square meters) under TCT No. 53123 by order of the Court of
First Instance of Rizal, Caloocan City, Branch XII and as per agreement of the parties in Civil
Case No. C-424. TCT No. 53123 in turn cancelled TCT No. 21346 whose registered owners
were Conchita Umali (1,000 square meters), Ricardo Cruz (941 square meters) and Jesus
Hipona (4,650 square meters).107 Like some of the other titles, TCT No. 21346 cancelled TCT
No. 21316 but there is no trace of this latter certificate of title.
17) TCT No. 163902, registered in the name of MRI, covers Lot No. 4-B-2 and has an area
of more or less 6,354 square meters and a by-product of TCT No. 9022, also in the name of
MRI, after the same was subdivided under subdivision plan (LRC) Psd-334454. TCT No.
9022, in turn, cancelled TCT No. 8994/T-45 registered in the name of Filemon S. Custodio
whose ownership thereon was transferred to MRI by virtue of a voluntary sale.108 TCT No.
8894 cancelled TCT No. 8846/T-45 but this latter certificate of title was not submitted in
evidence for purposes of tracing back to the Republic’s title.
18) TCT No. 165119109 was issued to MRI by virtue of a Deed of Sale between Spouses
Francisca Labing-isa and Juan Ignacio [SPOUSES IGNACIO] and MRI, as a result of which,
TCT No. C-36960 of the SPOUSES IGNACIO was cancelled.110 It would appear that TCT No.
C-39690 cancelled TCT No. 35266/T-173 but TCT No. 35266/T-173 was not submitted in
evidence.
19) TCT No. T-232568 of the Manotok Estate Corporation, covering Lot No. 19-B of
subdivision plan Psd-13011152 with an area of 23,206 square meters, was derived from the
certificate of title held by PhiVille Development and Housing Corporation under TCT No.
197357. MEC acquired the subject parcel of land by virtue of Deed of Exchange between it
and PHILVILLE DATED 9 May 1991.111 TCT No. 197357 cancelled TCT No. 195730/T-974
but there is no trace what certificate of title the latter title cancelled.
By and large, all the certificates of title submitted by the MANOTOKS, including their derivative titles,
were all traced to OCT No. 994 registered on 3 May 1917. Likewise, they declared all the lots
covered by such titles for taxation purposes. Without doubt, MRI had successfully traced back some
of their certificates of title to the valid OCT No. 994, they having acquired the lots from some of the
vendees of the PHHC after the same were expropriated by the Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings sometime in 1947 under
Commonwealth Act No. 539 for resale to tenants is beyond question, as also enunciated by the
Supreme Court in Republic of the Philippines v. Jose Leon Gonzales, et al. To bolster this fact,
paragraph "r" of the Majority Report noted that the seven properties covered by TCT Nos. 1368 to
1374 were expropriated by the Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings sometime in 1947 under
Commonwealth Act No. 539 for resale to tenants is beyond question, as also enunciated by the
Supreme Court in Republic of the Philippines vs. Jose Leon Gonzaels, et al. To bolster this fact,
paragraph "r" of the Majority Report noted that the seven properties covered by TCT Nos. 1368 to
1374 were expropriated by the People’s Homesite and Housing Corporation which were later
consolidated and subdivided into 77 lots for resale to tenants. No sign of protest was ever raised by
CLT on this point.112
The fact of expropriation is extremely significant, for titles acquired by the State by way of
expropriation are deemed cleansed of whatever previous flaws may have attended these titles. As
Justice Vitug explained in Republic v. Court of Appeals,113 and then Associate Justice (now Chief
Justice) Puno reiterated in Reyes v. NHA:114 "In an rem proceeding, condemnation acts upon the
property. After condemnation, the paramount title is in the public under a new and independent title;
thus, by giving notice to all claimants to a disputed title, condemnation proceedings provide a judicial
process for securing better title against all the world than may be obtained by voluntary
conveyance."115 This doctrine was derived from the opinion of then Chief Judge (now U.S. Supreme
Court Justice) Stephen Breyer in Cadorette v. U.S.,116 which in turn cited the pronouncement of the
U.S. Supreme Court in U.S. v. Carmack117 that "[b]y giving notice to all claimants to a disputed title,
condemnation proceedings provide a judicial process for securing better title against all the world
than may be obtained by voluntary conveyance."118
In annulling the Manotok titles, focus was laid on the alleged defects of TCT No. 4211 issued in
September of 1918. However, TCT No. 4211 was issued decades before the property was
expropriated. Thus, any and all defects that may have attended that particular title would have been
purged when the property covered by it was subsequently acquired by the State through eminent
domain. The Special Division noted as much:
As it is, the validity of most of MRI’s certificates of title should be upheld because they were derived
from the Republic’s valid certificates of title. In fact, some of the MANOTOKS’ titles can be traced
back to the Government’s titles as a result of the expropriation in 1947.
Relevantly, the titles of the Republic, as the predecessor-in-interest of the MANOTOKS, are
presumed valid by virtue of their acquisition resulting from the exercise of its inherent power of
eminent domain that need not be granted even by the fundamental law. Thus, the alleged flaws
concerning the certificates of title issued previous to the exercise of the State of its inherent power
did not affect or render invalid the subsequent transfers after the forced sale. Indeed, when land has
been acquired for public use in fee simple unconditionally, either by the exercise of eminent domain
or by purchase, the former owner retains no rights in the land, and the public use may be
abandoned, or the land may be devoted to a different use, without any impairment of the estate or
title acquired or any reversion to the former owner.119
The Special Division also took exception to the majority report of the Commissioners (Majority
Report) who had been tasked by the trial court to examine the validity of the Manotok titles. The
Majority Report
had arrived at several conclusions with respect to the TCTs from which the Manotok titles were
derived.120 The Special Division, however, concluded that such report was in fact tainted by the fact
that it was determined "outside the scope of the issues framed and agreed upon by the parties." To
wit:
In meeting the issue, the MANOTOKS disproved the "opinion" with regard to the alleged defects of
their titles inasmuch as the majority report submitted before the trial court was made outside the
scope of the tasks which the trial court confined them to perform. The MANOTOKS also argued that
before this proceeding on remand, CLT failed to introduce evidence of such flaws neither were the
concerned geodetic engineers presented as witnesses. Moreover, the MANOTOKS further
maintained that CLT failed to submit any factual or legal bases to prove the authenticity and validity
of the Palma and Sayo Orders. They insisted that the Palma Order was a void one for being
conditional and having resulted to the issuance of "duplicate certificates of land title."
With respect to the imputed flaws on the MANOTOKS’ titles which were based on the Majority
Report, we find that the bases of the alleged defects proceeded from unreliable sources thus,
tainting the veracity of the said report.
The records of the case between CLT and the MANOTOKS reveal that the parties approved the
creation of a commission to resolve only these two issues, to wit:
"x x x
These issues to be resolved by the 3 Commissioners are as follows:

1) Whether or not the property covered by the Transfer Certificates of Title of defendants
pertain to or involve Lot No. 26 of the Maysilo Estate presently titled in the name of the
plaintiff; and
2) Whether or not the property covered by the title of the plaintiff and the property covered by
the titles of the defendants overlap.121
Scrutinizing the Majority Report upon which the trial court’s conclusions were based, it would appear
that the findings therein were outside the scope of the issues framed and agreed upon by the
parties. Specifically, the deductions with regard to the technical infirmities and defects of TCT Nos.
4211, 4210, 5261 and 35486 do not involve the question of whether or not the subject properties
were identified as Lot No. 26 of the Maysilo estate or whether there was overlapping of titles.
Records bear out that the MANOTOKS took exception to the procedure taken citing therein the "ultra
vires" acts of the two Commissioners.
In addition, the majority report focused on the alleged flaws and inherent technical defects of TCT
Nos. 4211, 5261 and 35486, ranging from the language of the technical descriptions, absence of
subdivision plan, lot number and survey plan. Evidently, these defects go only as far as the
certificates of title issued prior to those of the Republic. Remarkably, no specific flaw was found on
the MANOTOKS’ titles indicating any irregularity on their issuance. In fact, the Commissioners who
signed the majority report even concluded that only TCT Nos. 4211, 4210, 5261, 35486, 1368 thru
1324 (sic)122 were irregularly and questionably issued without any reference to the MANOTOKS’
certificates of title.123 Otherwise stated, the imputed flaws affect only those certificates of title issued
prior to those registered in the name of the Republic. No flaw had been specifically identified or
established in the proceedings below, which would taint the titles held by the MANOTOKS in so far
as the regularity of their issuance is concerned.124
At the same time, the Special Division was not prepared to uphold the validity of all of the Manotok
titles. It took issue with the particular titles which could not be retraced to the titles acquired by the
Republic of the Philippines by way of expropriation.
Although the MANOTOKS had traced their title from the vendees of PHHC, there are, however,
some certificates of title which could not be traced back to the titles previously held by the Republic
specifically, MRI’s TCT Nos. 26405 and 26406, 26407, 33904, 53268, 55897, C-17272, T-121428,
163903, 165119 and MEC’s TCT No. T-232568. As to these certificates of title, the MANOTOKS
failed to make any specific reference to the preceding certificates of title which they cancelled and to
whose names they were subsequently transferred and registered. Thus, we find no sufficient basis
to make a conclusion as to their origins.125
V.
The Special Division supplied the following precise and concise summary of its conclusions:
In précis, the factual milieu of the present controversy and the evidence on record clearly establish
the failure of DIMSON and CLT to substantiate their titles and overcome the onus of proving that
said titles are derivatives of OCT 994 registered on 3 May 1917, and not 19 April 1917, as what is
reflected in their titles. In contrast, the MANOTOKS and ARANETA, both of which had consistently
anchored their proprietary claims on OCT No. 994 registered on 3 May 1917, have, in this remand
proceeding, been able to support their claims of ownership over the respective portions of the
Maysilo Estate. Except in the case of the MANOTOKS which had failed to substantiate the validity of
some of their certificates of title, the MANOTOKS and ARANETA presented evidence proving the
identity, the extent and the origin of their titles.
Answering the issues assigned by the Supreme Court relative to the tenability of the respective
imputed flaws in the titles of the MANOTOKS and ARANETA and whether such flaws are sufficient
to defeat said claims, this Court finds that, as discussed above, such flaws are inconsequential and
ineffectual in invalidating the MANOTOKS and ARANETA titles.
Significantly, since the respective certificates of title of herein contending parties are contradictory to
each other and stand to refute the validity of their opposing titles, it cannot be gainsaid that said
certificates of title have correspondingly been subjected to dispute on the basis of separate and
distinct imputed flaws. Still, the crucial difference between the imputed flaws allegedly tainting said
contending titles, DIMSON and CLT on one hand, and the MANOTOKS and ARANETA, on the
other, is that the imputed flaws purportedly beleaguering the respective certificates of title of the
MANOTOKS and ARANETA relate to the mechanical and technical aspect of the transcription of
their titles and are therefore inconsequential to the import and validity thereof. Said imputed flaws do
not depart from the fact that the predecessors-in-interest of the MANOTOKS and ARANETA had
been clothed with the right of ownership over the disputed portions of the Maysilo Estate.
On the other hand, the flaws attending the titles of DIMSON and CLT primarily stem from infirmities
attending or otherwise affecting the very crux of their claim of ownership. Having derived their titles
from RIVERA, whose title is questionable and dubious to the core, DIMSON and CLT cannot rightly
insist on the validity of their titles. Such flaws are hard to overcome as they delve into the substance
of their proprietary claims. As stated, DIMSON and CLT miserably failed to overcome their onus and
instead opted to hap on the supposed flaws of the adverse parties. For these reasons, the titles of
DIMSON and CLT should be declared a nullity.
xxx
From the foregoing evaluation and in conformity with the Supreme Court 2007 Resolution, this Court
arrived at the following conclusions as to the status of the original title and its subsequent
conveyances:
1. As categorically declared by the Supreme Court, there is only one OCT 994, the
registration date of which had already been decisively settled as 3 May 1917 and not 19 April
1917. OCT 994 which reflects the date of 19 April 1917 as its registration date is null and
void.
2. In view thereof and in addition to other grounds we have already discussed, the
certificates of title of the deceased Jose Dimson and his successor-in-interest, CLT, having
been traced back to OCT 994 dated 19 April 1917, are NULL and VOID and thus vest no
legal right or claim in favor of DIMSON and CLT.
3. The 13 June 1966 Palma Order and the 18 October 1977 Sayo Order, on which DIMSON
and CLT anchor the validity of their respective titles, do not substantiate their proprietary
claims. While the existence of said Orders are admitted, the legal import thereof nonetheless
fails to confer a semblance of legality on the titles of DIMSON and consequently, of CLT,
more so, a superior right to defeat the titles of the MANOTOKS and ARANETA, respectively.
4. Portions of Lot No. 26 pertinent to this controversy, particularly that being disputed by the
MANOTOKs and CLT, were expropriated by the Republic of the Philippines sometime in
1947 under Commonwealth Act No. 539 for resale to tenants. The MANOTOKS, thus as
successor-in-interest of the Republic, were able to establish that some of their certificates of
title had indeed originated or were derived from said expropriated parcels of land.
5. The evidence on record confirm that the certificates of title covering the land being claimed
by ARANETA were derived from OCT NO. 994 registered on 3 May 1917 thereby ultimately
showing a direct link of TCT Nos. 7784 and 13574 to said mother title. By reason of which,
that is either belonging to or portions of Lot 25-A-3 as previously owned by RATO, had been
well substantiated and proven to be superior to that of DIMSON.
6. For reasons above-stated and in view of the established rights of ownership of both the
MANOTOKS and ARANETA over the contested properties, we find that the imputed flaws on
their titles cannot defeat the valid claims of the MANOTOKS and ARANETA over the
disputed portions of the Maysilo Estate.126
Inasmuch as we agree with the factual findings and evaluation of the Special Division, we likewise
adopt the above conclusions. As we earlier stated, it was incumbent on the Heirs of Dimson and/or
CLT to establish their claim to title for reasons other than the fact that OCT No. 994 dated 19 April
1917 is extant. They failed to do so. It should be noted that the instant cases arose from separate
actions filed by Jose Dimson and CLT seeking the recovery of possession and/or annulment of title
against Araneta and the Manotok Group. Thus, the burden of evidence was on Dimson and CLT to
establish the strength of their respective claims of ownership, and not merely to rely upon whatever
weaknesses in the claims of the Manotoks and Araneta for their causes of action to prosper. The
well-settled legal principle in actions for annulment or reconveyance of title is that a party seeking it
should establish not merely by a preponderance of evidence but by clear and convincing evidence
that the land sought to be reconveyed is his.127 In an action to recover, the property must be
identified, and the plaintiff must rely on the strength of his title and not on the weakness of the
defendant's claim.128
We now proceed to tackle the recommendations submitted by the Special Division. They are as
follows:
RECOMMENDATIONS
Apropos to said conclusions, this Court hereby respectfully makes the following recommendations
regarding the validity of the conflicting proprietary claims as interposed by the herein contending
parties:
1. To declare with finality that the certificates of title of DIMSON and CLT including
other derivative titles issued to their successors-in-interest, if any, are NULL and
VOID, thus invalidating their legal claims over the subject parcels of land.
2. To declare LEGAL and VALID the proprietary claims the MANOTOKS over the
parcels of land covered by the following certificates of title:
a) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of
consolidation-subdivision plan (LRC) Pcs-1828 which has an area of 4,988
square meters.
b) TCT No. 7762 covering Lot 1-C, with an approximate area of 2,287 square
meters.
c) TCT No. 8012 covering Lot No. 12-1 having an area of 20,000 square
meters.
d) TCT No. 9866 covering Lot No. 21 and has an approximate area of 23,979
square meters.
e) TCT No. 21107 covering Lot 22 with an approximate area of 2,557 square
meters.
f) TCT No. 21485 covering Lot 20 with an approximate area of 25,276 square
meters.
g) TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with an area of
11,000 square meters.
h) TCT No. 254875 covering Lot 55-A with an area of approximately 1,910
square meters.
i) TCT No. C-35267 covering Lot 56-B of subdivision plan (LRC) Psd-292683
with an approximate area of 9,707 square meters.
With regard to the following certificates of title, namely:
3.A. MANOTOK REALTY INC.
a) TCT No. 26405 covering Lot No. 12-E with an area of 1,0000 square
meters.
b) TCT No. 26406 covering Lot No. 12-F with an area of 1,000 square
meters.
c) TCT No. 26407 covering Lot No. 12-B with an area of 1,000 square
meters.
d) TCT No. 33904 covering Lot No. 12-H with an area of 1,802 square
meters.
e) TCT No. 53268 covering Lot No. 15 purchased by MRI from one Maria V.
Villacorta with an approximate area of 3,163 square meters.
f) TCT No. 55897 covering Lot 3 of consolidation-subdivision plan (LRC) Pcs-

1828 of the Maysilo Estate covering an area of more or less 20,531 square
meters.
g) TCT No. C-17272 covering Lot 6-C which has an approximate area of
27,850 square meters.
h) TCT No. T-121428 covering Lot No. 5-C of subdivision plan (LRC) psd-
315278, which has an approximate area of 4,650 square meters.
i) TCT No. 163902 covering Lot No. 4-B-2 with an area of more or less 6,354
square meters allegedly a by-product of TCT No. 9022, which in turn,
cancelled TCT No. 8994/T-45 registered in the name of Filemon S Custodio.
j) TCT No. 165119 which allegedly cancelled TCT No. C-36960 of the
SPOUSES IGNACIO by virtue of a Deed of Sale between said Spouses and
MRI.
3.B. MANOTOK ESTATE CORPORATION
a) TCT No. T-232568 covering Lot No. 19-B of subdivision plan Psd-
13011152 with an area of 23,206 square meters.
The foregoing certificates of title (3.A and 3.B), failing to make specific
references to the particular certificates of title which they cancelled and in
whose name they were registered, may be declared NULL and VOID, or in
the alternative, subject the same to further technical verification.
4. To declare LEGAL and VALID the title of ARANETA respecting parcels of land
covered by the following certificates of title:
a) TCT No. 13574 covering a parcel of land designated as Section No. 2 of

subdivision plan Psd-10114, being a portion of Lot 25-A-3-C with an
aggregate area of 581,872 square meters;
b) TCT No. 7784 covering four (4) parcels of land with an aggregate area of
390,383 square meters.129
The first, second and fourth recommendations are well taken as they logically arise from the facts
and conclusions, as determined by the Special Division, which this Court adopts.
The third recommendation – that eleven (11) of the titles held by the Manotoks be declared null and
void or subjected to further technical verification – warrants some analysis.
The Court has verified that the titles mentioned in the third recommendation do not, as stated by the
Special Division, sufficiently indicate that they could be traced back to the titles acquired by the
Republic when it expropriated portions of the Maysilo Estate in the 1940s. On the other hand, the
Manotok titles that were affirmed by the Special Division are traceable to the titles of the Republic
and thus have benefited, as they should, from the cleansing effect the expropriation had on whatever
flaws that attached to the previous titles. However, although the Special Division did not concede the
same benefit to the other Manotok titles named in the third recommendation, at the same time it did
not conclude that such titles were false or fraudulently acquired. Absent such a finding, we are
disinclined to take the ultimate step of annulling those titles.
Said titles have as their origin what we have acknowledged to be a valid mother title – OCT No. 994
dated 3 May 1917. This is in stark contrast with the titles of CLT, the oppositors to the Manotoks,
which all advert to an inexistent mother title. On their face, the Manotok titles do not reflect any error
or fraud, and certainly the Special Division do not point to any such flaw in these titles. Nothing on
the face of the titles gives cause for the Court to annul the same.
It is worth mentioning that the Special Division refused to adopt the Majority Report earlier rendered
in the case between the Manotoks and CLT, said report having exhaustively listed the perceived
flaws in the antecedent TCTs from which the Manotoks derived their claim. The Special Division
concluded that such findings had been reached by the Commissioners in excess of their original
mandate and, thus, ultra vires. Assuming that such flaws were extant, they existed on the titles and
anteceded the expropriation of the properties by the Government. As stated earlier, such
expropriation would have cleansed the titles of the prior flaws. But even if the Manotok titles
enumerated in the third recommendation could not be sourced from the titles acquired by the
Republic through expropriation, still the rejection of the Majority Report signifies that the flaws
adverted to therein could not form the basis for the annulment of the titles involved. Indeed, the
Special Division’s rejection of the Majority Report further diminishes any ground to annul the
Manotok titles referred to in the third recommendation.
Yet, the Court is cognizant that the inability to trace the Manotok titles specified in the third
recommendation to those titles acquired by the Government through expropriation puts such titles in
doubt somehow. In addition, the Court is aware that the ground utilized by the Special Division in
rejecting the Majority Report – that the determinations were made outside the scope of the issues
framed and agreed upon by the parties -- does not categorically refute the technical findings made
therein. Those circumstances, while insufficient for now to annul the Manotoks’ titles listed in the
third recommendation, should be sufficiently made public.
Hence, in lieu of annulling the Manotok titles per the Special Division’s third recommendation, the
Court deems it sufficient to require the Registers of Deeds concerned to annotate this Resolution on
said titles so as to sufficiently notify the public of their unclear status, more particularly the inability of
the Manotoks to trace the titles without any gap back to OCT No. 994 issued on 3 May 1917. If there
should be any cause for the annulment of those titles from a proper party’s end, then let the proper
case be instituted before the appropriate court.
WHEREFORE, the Court hereby adopts the Report of the Special Division and issues the following
reliefs:
1) The certificates of title of the DIMSONs and CLT including other derivative titles issued to
their successors-in-interest, if any, are declared NULL and VOID, thus invalidating their legal
claims over the subject parcels of land;
2. The proprietary claims of the MANOTOKS over the parcels of land covered by the
following certificates of title are declared LEGAL and VALID, to wit:
a) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidation-
subdivision plan (LRC) Pcs-1828 which has an area of 4,988 square meters.
b) TCT No. 7762 covering Lot 1-C, with an approximate area of 2,287 square meters.
c) TCT No. 8012 covering Lot No. 12-1 having an area of 20,000 square meters.
d) TCT No. 9866 covering Lot No. 21 and having an approximate area of 23,979
square meters.
e) TCT No. 21107 covering Lot 22 with an approximate area of 2,557 square meters.
f) TCT No. 21485 covering Lot 20 with an approximate area of 25,276 square
meters.
g) TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square
meters.
h) TCT No. 254875 covering Lot 55-A with an area of approximately 1,910 square
meters.
i) TCT No. C-35267 covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an
approximate area of 9,707 square meters.
3) The following certificates of titles in the name of ARANETA are hereby declared LEGAL
and VALID, to wit:
a) TCT No. 13574 covering a parcel of land designated as Section No. 2 of

subdivision plan Psd-10114, being a portion of Lot 25-A-3-C with an aggregate area
of 581,872 square meters;
b) TCT No. 7784 covering four (4) parcels of land with an aggregate area of 390,383
square meters.
4) On the following titles in the name of Manotok Realty, Inc. or Manotok Estate Corporation,
to wit:
a) TCT No. 26405 covering Lot No. 12-E with an area of 1,0000 square meters;
b) TCT No. 26406 covering Lot No. 12-F with an area of 1,000 square meters;
c) TCT No. 26407 covering Lot No. 12-B with an area of 1,000 square meters;
d) TCT No. 33904 covering Lot No. 12-H with an area of 1,802 square meters;
e) TCT No. 53268 covering Lot No. 15 purchased by MRI from one Maria V.
Villacorta with an approximate area of 3,163 square meters;
f) TCT No. 55897 covering Lot 3 of consolidation-subdivision plan (LRC) Pcs-1828 of

the Maysilo Estate covering an area of more or less 20,531 square meters;
g) TCT No. C-17272 covering Lot 6-C which has an approximate area of 27,850
square meters;
h) TCT No. T-121428 covering Lot No. 5-C of subdivision plan (LRC) psd-315278,
which has an approximate area of 4,650 square meters;
i) TCT No. 163902 covering Lot No. 4-B-2 with an area of more or less 6,354 square
meters allegedly a by-product of TCT No. 9022, which in turn, cancelled TCT No.
8994/T-45 registered in the name of Filemon S. Custodio;
j) TCT No. 165119 which allegedly cancelled TCT No. C-36960 of the SPOUSES
IGNACIO by virtue of a Deed of Sale between said spouses and MRI;
k) TCT No. T-232568 covering Lot No. 19-B of subdivision plan Psd-13011152 with
an area of 23,206 square meters.
the Registers of Deeds concerned are ordered to annotate that as determined in the foregoing
Resolution, the registered owners of the said titles "failed to make any specific reference to the
preceding certificates of title which they cancelled and to whose names they were subsequently
transferred and registered," thereby leading the Supreme Court "to find no sufficient basis to make a
conclusion as to their origins."130
Costs against private respondents.
SO ORDERED.
G.R. No. 83609 October 26, 1989
DIRECTOR OF LANDS, petitioner,
vs.
COURT OF APPEALS, IBARRA BISNAR and AMELIA BISNAR, respondents.
Ibarra L. Bisnar for himself and for and in behalf of co-private respondent Amelia Bisnar.
GRIÑO-AQUINO, J.:
Petitioner Director of Lands, through the Solicitor General, seeks a review of the decision dated May
27, 1988, of the Court of Appeals in CA-G.R. CV No. 66426, entitled "Ibarra Bisnar, et al. vs.
Director of Lands," affirming in toto the decision of the Court of First Instance of Capiz, granting the
private respondents' application for confirmation and registration of their title to two (2) parcels of
land in LRC Cad. Rec. 1256.
In their joint application for registration of title to two (2) parcels of land filed on July 20,1976, the
applicants Ibarra and Amelia Bisnar claimed to be the owners in fee simple of Lots 866 and 870 of
the Pilar Cadastre Plan AP-06-000869, respectively containing an area of 28 hectares (284,424 sq.
m.) and 34 hectares (345,385 sq. m.) situated in barrio Gen. Hizon, Municipality of President Roxas,
Province of Capiz (p. 14, Rollo). The applicants alleged that they inherited those parcels of land (p.
41, Rollo) and they had been paying the taxes thereon (p. 40, Rollo).
On December 16,1976, the Director of Lands and the Director of the Bureau of Forest Development,
opposed the application on the grounds that:
1. Neither the applicants nor their predecessors-in-interest possess sufficient title to

acquire ownership in fee simple of the land or lots applied for, the same not having
been acquired by any of the various types of title issued by the Spanish Government,
such as, (1) 'titulo real' or royal grant, (2) the 'concession especial' or special grant,
(3) the 'composicion con el estado titulo' or adjustment title, (4) the 'titulo de
compra 'or title by purchase, and (5) the 'informacion possessoria' or possessory
information under the Royal Decree of 13 February 1894, or any other recognized
mode of acquisition of title over realty under pertinent applicable laws.
2. Neither the applicants nor their predecessors-in-interest have been in open,

continuous, exclusive and notorious possession and occupation of the land in
question for at least thirty (30) years immediately preceding the filing of the
application.
3. The properties in question are a portion of the public domain belonging to the
Republic of the Philippines, not subject to private appropriation, (pp. 17-19, Record
on Appeal). (pp. 14-15, Rollo.)
On February 24,1977, the applicants filed an amended application, which was approved on March
14, 1977, and included the following allegation:
Should the Land Registration Act invoked be not applicable to the case, they hereby
apply for the benefits of Chapter 8, Commonwealth Act 141, as amended, as they
and their predecessors-in-interest have been in possession of the land as owners for
more than fifty (50) years. (p. 16, Rollo.)
After hearing, the trial court ordered the registration of the title of the lots in the names of the
applicants, herein private respondents. It found that applicants and their predecessors- in-interest
have been in open, public, continuous, peaceful and adverse possession of the subject parcels of
land under bona fide claims of ownership for more than eighty (80) years (not only 30) prior to the
filing of the application for registration, introduced improvements on the lands by planting coconuts,
bamboos and other plants, and converted a part of the land into productive fishponds (p. 68, Rollo).
On appeal, the Appellate Court affirmed the trial court's decision. It held that the classification of the
lots as timberland by the Director of Forestry cannot prevail in the absence of proof that the said lots
are indeed more valuable as forest land than as agricultural land, citing as authority the case
of Ankron vs. Government of the Philippine Islands (40 Phil. 10). In this petition, the government
alleges that:
1. the classification or reclassification of public lands into alienable or disposable

agricultural land, mineral land or forest land is a prerogative of the Executive
Department of the government and not of the courts;
2. that possession of forest lands, no matter how long, cannot ripen into private
ownership; and
3. that an applicant for registration of title has the burden of proving that he meets the
requirements of Section 48 of Com. Act No. 141, as amended. (p. 19, Rollo.)
The principal issue in this appeal is whether the lots in question may be registered under Section 48
(b) of CA 141, as amended.
In the case of Bureau of Forestry vs. Court of Appeals, 153 SCRA 351, we ruled:
As provided for under Section 6 of Commonwealth Act 141, which was lifted from Act
2874, the classification or reclassification of public lands into alienable or disposable,
mineral or forest lands is now a prerogative of the Executive Department of the
government and not the courts. With these rules, there should be no more room for
doubt that it is not the court which determines the classification of lands of the public
domain into agricultural, forest or mineral but the Executive Branch of the
government, through the Office of the President. Hence, it was grave error and/or
abuse of discretion for respondent court to ignore the uncontroverted facts that (1)
the disputed area is within a timberland block, and (2) as certified to by the then
Director of Forestry, the area is needed for forest purposes. (pp. 21-22, Rollo.)
It bears emphasizing that a positive act of the government is needed to declassify land which is
classified as forest and to convert it into alienable or disposable land for agricultural or other
purposes (Republic vs. Animas, 56 SCRA 499). Unless and until the land classified as forest is
released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply
(Amunategui vs. Director of Forestry, 126 SCRA 69; Director of Lands vs. Court of Appeals, 129
SCRA 689; Director of Lands vs. Court of Appeals, 133 SCRA 701; Republic vs. Court of Appeals,
148 SCRA 480; Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).
Thus, possession of forest lands, however long, cannot ripen into private ownership (Vano vs.
Government, 41 Phil. 161 [1920]; Adorable vs. Director of Forestry, 107 Phil. 401 [1960]). A parcel of
forest land is within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and
jurisdiction of the cadastral court to register under the Torrens System (Republic vs. Court of
Appeals, 89 SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983]; Director of Lands vs. Court of
Appeals, 129 SCRA 689 [1984]).
Section 48 (b) of Commonwealth Act No. 141, as amended, applies exclusively to public agricultural
land. Forest lands or areas covered with forests are excluded (p. 26, Rollo). We reiterate our ruling
in Amunategui that:
In confirmation of imperfect title cases, the applicant shoulders the burden of proving
that he meets the requirements of Section 48, Commonwealth Act No. 141, as
amended by Republic Act 1942. He must overcome the presumption that the land he
is applying for is part of the public domain but that he has an interest therein
sufficient to warrant registration in his name because of an imperfect title such as
those derived from old Spanish grants or that he has had continuous, open 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 (30) years preceding
the filing of his application. (Heirs of Amunategui vs. Director of Forestry, 126 SCRA
69.)
WHEREFORE, the appealed decision is reversed and set aside. The application for registration in
LRC Cad. Rec. 1256 of the former Court of First Instance, is hereby dismissed without costs.
SO ORDERED.
G.R. No. 155450 August 6, 2008
REPUBLIC OF THE PHILIPPINES represented by the Regional Executive Director, Department of

Environment and Natural Resources, Regional Office No. 2, petitioners,
vs.
COURT OF APPEALS, HEIRS OF ANTONIO CARAG AND VICTORIA TURINGAN, THE REGISTER
OF DEEDS OF CAGAYAN, and the COURT OF FIRST INSTANCE OF CAGAYAN, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 21 May 20012 and 25 September 20023 Resolutions of the Court of
Appeals in CA-G.R. SP No. 47965. The
21 May 2001 Resolution dismissed petitioner Republic of the Philippines’ (petitioner) amended complaint
for reversion, annulment of decree, cancellation and declaration of nullity of titles. The 25 September
2002 Resolution denied petitioner’s motion for reconsideration.
The Facts
On 2 June 1930, the then Court of First Instance of Cagayan (trial court) issued Decree No. 3819284 in
favor of spouses Antonio Carag and Victoria Turingan (spouses Carag), predecessors-in-interest of
private respondents Heirs of Antonio Carag and Victoria Turingan (private respondents), covering a
parcel of land identified as Lot No. 2472, Cad. 151, containing an area of 7,047,673 square meters
(subject property), situated in Tuguegarao, Cagayan. On 19 July 1938, pursuant to said Decree, the
Register of Deeds of Cagayan issued Original Certificate of Title No. 115855 (OCT No. 11585) in the
name of spouses Carag.
On 2 July 1952, OCT No. 11585 was cancelled to discharge the encumbrance expressly stated in Decree
No. 381928. Two transfer certificates of title were issued: Transfer Certificate of Title No. T-1277,6 issued
in the name of the Province of Cagayan, covering Lot 2472-B consisting of 100,000 square meters and
Transfer Certificate of Title No. T-1278,7 issued in the name of the private respondents, covering Lot
2472-A consisting of 6,997,921 square meters.
On 19 May 1994, Bienvenida Taguiam Vda. De Dayag and others filed with the Regional Office No. 2 of
the Department of Environment and Natural Resources (DENR), Tuguegarao, Cagayan, a letter-petition
requesting the DENR to initiate the filing of an action for the annulment of Decree No. 381928 on the
ground that the trial court did not have jurisdiction to adjudicate a portion of the subject property which
was allegedly still classified as timber land at the time of the issuance of Decree No. 381928.
The Regional Executive Director of the DENR created an investigating team to conduct ground
verification and ocular inspection of the subject property.
The investigating team reported that:
A) The portion of Lot 2472 Cad-151 as shown in the Plan prepared for spouses Carag, and
covered under LC Project 3-L of Tuguegarao, Cagayan, was found to be still within the timberland
area at the time of the issuance of the Decree and O.C.T. of the spouses Antonio Carag and
Victoria Turingan, and the same was only released as alienable and disposable on February 22,
1982, as certified by USEC Jose G. Solis of the NAMRIA on 27 May 1994.
B) Petitioner Bienvenida Taguiam Vda. De Dayag and others have possessed and occupied by
themselves and thru their predecessors-in-interest the portion of Lot 2472 Cad-151, covered by
LC Project 3-L of LC Map 2999, since time immemorial.8
Thus, the investigating team claimed that "a portion of Lot 2472 Cad-151" was "only released as alienable
and disposable on 22 February 1982."
In a Memorandum dated 9 September 1996, the Legal Division of the Land Management Bureau
recommended to the Director of Lands that an action for the cancellation of OCT No. 11585, as well as its
derivative titles, be filed with the proper court. The Director of Lands approved the recommendation.
On 10 June 1998, or 68 years after the issuance of Decree No. 381928, petitioner filed with the Court
of Appeals a complaint for annulment of judgment, cancellation and declaration of nullity of titles9 on the
ground that in 1930 the trial court had no jurisdiction to adjudicate a portion of the subject property, which
portion consists of 2,640,000 square meters (disputed portion). The disputed portion was allegedly still
classified as timber land at the time of issuance of Decree No. 381928 and, therefore, was not alienable
and disposable until 22 February 1982 when the disputed portion was classified as alienable and
disposable.
On 19 October 1998, private respondents filed a motion to dismiss.10 Private respondents alleged that
petitioner failed to comply with Rule 47 of the Rules of Court because the real ground for the complaint
was mistake, not lack of jurisdiction, and that petitioner, as a party in the original proceedings, could have
availed of the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies but
failed to do so. Private respondents added that petitioner did not attach to the complaint a certified true
copy of the decision sought to be annulled. Private respondents also maintained that the complaint was
barred by the doctrines of res judicata and law of the case and by Section 38 of Act No. 496.11 Private
respondents also stated that not all the heirs of spouses Carag were brought before the Court of Appeals
for an effective resolution of the case. Finally, private respondents claimed that the real party in interest
was not petitioner but a certain Alfonso Bassig, who had an ax to grind against private respondents.12
On 3 March 1999, petitioner filed an amended complaint for reversion, annulment of decree, cancellation
and declaration of nullity of titles.13
The Ruling of the Court of Appeals
On 21 May 2001, the Court of Appeals dismissed the complaint because of lack of jurisdiction over the
subject matter of the case. The Court of Appeals declared:
The rule is clear that such judgments, final orders and resolutions in civil actions which this court
may annul are those which the "ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available." The Amended Complaint contains no such
allegations which are jurisdictional neither can such circumstances be divined from its allegations.
Furthermore, such actions for Annulment may be based only on two (2) grounds: extrinsic fraud
and lack of jurisdiction. Neither ground is alleged in the Amended Complaint which is for
Reversion/Annulment of Decree, Cancellation and Declaration of Nullity of Titles. It merely
alleges that around 2,640,000 square meters of timberland area within Lot 2472 Cad. 151, had
been erroneously included in the title of the Spouses Antonio Carag and Victoria Turingan under
Decree No. 381928 and O.C.T. No. 11585 issued on June 2, 1930 and July 19, 1938,
respectively; that hence, such adjudication and/or Decree and Title covering a timberland area is
null and void ab initio under the provisions of the 1935, 1973 and 1987 Constitutions.
Finally, it is clear that the issues raised in the Amended Complaint as well as those in the Motion to
dismiss are factual in nature and should be threshed out in the proper trial court in accordance with
Section 101 of the Public Land Act.14 (Citations omitted)
Petitioner filed a motion for reconsideration. In its 25 September 2002 Resolution, the Court of Appeals
denied the motion for reconsideration.
Hence, this petition.
The Issues
Petitioner raises the following issues:
1. Whether the allegations of the complaint clearly stated that the ordinary remedies of new trial,
appeal, petition for relief and other appropriate remedies are no longer available;
2. Whether the amended complaint clearly alleged the ground of lack of jurisdiction;
3. Whether the Court of Appeals may try the factual issues raised in the amended complaint and
in the motion to dismiss;
4. Whether the then Court of First Instance of Cagayan had jurisdiction to adjudicate a tract of
timberland in favor of respondent spouses Antonio Carag and Victoria Turingan;
5. Whether the fact that the Director of Lands was a party to the original proceedings changed the
nature of the land and granted jurisdiction to the then Court of First Instance over the land;
6. Whether the doctrine of res judicata applies in this case; and
7. Whether Section 38 of Act No. 496 is applicable in this case.
The Ruling of the Court
While the Court of Appeals erred in dismissing the complaint on procedural grounds, we will still deny the
petition because the complaint for annulment of decree has no merit.
Petitioner Complied with Rule 47 of the Rules of Court

First, the Court of Appeals ruled that petitioner failed to allege either of the grounds of extrinsic fraud or
lack of jurisdiction in the complaint for annulment of decree.15
We find otherwise. In its complaint and amended complaint, petitioner stated:
11. In view of the fact that in 1930 or in 1938, only the Executive Branch of the Government had
the authority and power to declassify or reclassify land of the public domain, the Court did not,
therefore, have the power and authority to adjudicate in favor of the spouses Antonio
Carag and Victoria Turingan the said tract of timberland, portion of the Lot 2472 Cad-151,
at the time of the issuance of the Decree and the Original Certificate of Title of the said
spouses; and such adjudication and/or Decree and Title issued covering the timberland area is
null and void ab initio considering the provisions of the 1935, 1973 and 1987 Philippine
constitution.
xxxx
15. The issuance of Decree No. 381928 and O.C.T. No. 11585 in the name of spouses Antonio
Carag and Victoria Turingan, and all the derivative titles thereto in the name of the Heirs and said
spouses, specifically with respect to the inclusion thereto of timberland area, by the then Court of
First Instance (now the Regional Trial Court), and the Register of Deeds of Cagayan is patently
illegal and erroneous for the reason that said Court and/or the Register of Deeds of Cagayan
did not have any authority or jurisdiction to decree or adjudicate the said timberland area
of Lot 2472 Cad-151, consequently, the same are null and void ab initio, and of no force and
effect whatsoever.16 (Emphasis supplied; citations omitted)
Petitioner clearly alleged in the complaint and amended complaint that it was seeking to annul Decree No.
381928 on the ground of the trial court’s lack of jurisdiction over the subject land, specifically over the
disputed portion, which petitioner maintained was classified as timber land and was not alienable and
disposable.
Second, the Court of Appeals also dismissed the complaint on the ground of petitioner’s failure to allege
that the "ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no
longer available."
In Ancheta v. Ancheta,17 we ruled:
In a case where a petition for annulment of judgment or final order of the RTC filed under Rule 47
of the Rules of Court is grounded on lack of jurisdiction over the person of the
defendant/respondent or over the nature or subject of the action, the petitioner need not allege in
the petition that the ordinary remedy of new trial or reconsideration of the final order or judgment
or appeal therefrom are no longer available through no fault of her own. This is so because a
judgment rendered or final order issued by the RTC without jurisdiction is null and void and may
be assailed any time either collaterally or in a direct action or by resisting such judgment or final
order in any action or proceeding whenever it is invoked, unless barred by laches.18
Since petitioner’s complaint is grounded on lack of jurisdiction over the subject of the action, petitioner
need not allege that the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of petitioner.
Third, the Court of Appeals ruled that the issues raised in petitioner’s complaint were factual in nature and
should be threshed out in the proper trial court in accordance with Section 101 of the Public Land Act.19
Section 6, Rule 47 of the Rules of Court provides:

SEC. 6. Procedure. - The procedure in ordinary civil cases shall be observed. Should a trial be
necessary, the reception of evidence may be referred to a member of the court or a judge of a
Regional Trial Court.
Therefore, the Court of Appeals may try the factual issues raised in the complaint for the complete and
proper determination of the case.
However, instead of remanding the complaint to the Court of Appeals for further proceedings, we shall
decide the case on the merits.
Complaint for Annulment of Decree Has No Merit
Petitioner contends that the trial court had no jurisdiction to adjudicate to spouses Carag the disputed
portion of the subject property. Petitioner claims that the disputed portion was still classified as timber
land, and thus not alienable and disposable, when Decree No. 381928 was issued in 1930. In effect,
petitioner admits that the adjacent 4,407,673 square meters of the subject property, outside of the
disputed portion, were alienable and disposable in 1930. Petitioner argues that in 1930 or in 1938, only
the Executive Branch of the Government, not the trial courts, had the power to declassify or reclassify
lands of the public domain.
Lack of jurisdiction, as a ground for annulment of judgment, refers to either lack of jurisdiction over the
person of the defending party or over the subject matter of the claim.20 Jurisdiction over the subject matter
is conferred by law and is determined by the statute in force at the time of the filing of the action.21
Under the Spanish regime, all Crown lands were per se alienable. In Aldecoa v. Insular Government,22 we
ruled:
From the language of the foregoing provisions of law, it is deduced that, with the exception of
those comprised within the mineral and timber zone, all lands owned by the State or by the
sovereign nation are public in character, and per se alienable and, provided they are not
destined to the use of the public in general or reserved by the Government in accordance with
law, they may be acquired by any private or juridical person x x x23 (Emphasis supplied)
Thus, unless specifically declared as mineral or forest zone, or reserved by the State for some public
purpose in accordance with law, all Crown lands were deemed alienable.
In this case, petitioner has not alleged that the disputed portion had been declared as mineral or forest
zone, or reserved for some public purpose in accordance with law, during the Spanish regime or
thereafter. The land classification maps24 petitioner attached to the complaint also do not show that in
1930 the disputed portion was part of the forest zone or reserved for some public purpose. The
certification of the National Mapping and Resources Information Authority, dated 27 May 1994, contained
no statement that the disputed portion was declared and classified as timber land.25
The law prevailing when Decree No. 381928 was issued in 1930 was Act No. 2874,26 which provides:
SECTION 6. The Governor-General, upon the recommendation of the Secretary of Agriculture

and Natural Resources, shall from time to time classify the lands of the public domain into -
(a) Alienable or disposable
(b) Timber and
(c) Mineral lands

and may at any time and in a like manner transfer such lands from one class to another, for the
purposes of their government and disposition.
Petitioner has not alleged that the Governor-General had declared the disputed portion of the subject
property timber or mineral land pursuant to Section 6 of Act No. 2874.
It is true that Section 8 of Act No. 2874 opens to disposition only those lands which have been declared
alienable or disposable. Section 8 provides:
SECTION 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited and classified and, when practicable, surveyed, and which have not been
reserved for public or quasi-public uses, not appropriated by the Government, nor in any
manner become private property, nor those on which a private right authorized and
recognized by this Act or any other valid law may be claimed, or which, having been
reserved or appropriated, have ceased to be so. However, the Governor-General may, for
reasons of public interest, declare lands of the public domain open to disposition before the same
have had their boundaries established or been surveyed, or may, for the same reasons, suspend
their concession or disposition by proclamation duly published or by Act of the Legislature.
(Emphasis supplied)
However, Section 8 provides that lands which are already private lands, as well as lands on which a
private claim may be made under any law, are not covered by the classification requirement in Section 8
for purposes of disposition. This exclusion in Section 8 recognizes that during the Spanish regime, Crown
lands were per se alienable unless falling under timber or mineral zones, or otherwise reserved for some
public purpose in accordance with law.
Clearly, with respect to lands excluded from the classification requirement in Section 8, trial courts had
jurisdiction to adjudicate these lands to private parties. Petitioner has not alleged that the disputed portion
had not become private property prior to the enactment of Act No. 2874. Neither has petitioner alleged
that the disputed portion was not land on which a private right may be claimed under any existing law at
that time.
In Republic of the Philippines v. Court of Appeals,27 the Republic sought to annul the judgment of the
Court of First Instance (CFI) of Rizal, sitting as a land registration court, because when the application for
land registration was filed in 1927 the land was alleged to be unclassified forest land. The Republic also
alleged that the CFI of Rizal had no jurisdiction to determine whether the land applied for was forest or
agricultural land since the authority to classify lands was then vested in the Director of Lands as provided
in Act Nos. 92628 and 2874. The Court ruled:
We are inclined to agree with the respondent that it is legally doubtful if the authority of the
Governor General to declare lands as alienable and disposable would apply to lands that have
become private property or lands that have been impressed with a private right authorized and
recognized by Act 2874 or any valid law. By express declaration of Section 45 (b) of Act 2874
which is quoted above, those who 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 since July 26, 1894 may file an application with the Court of First
Instance of the province where the land is located for confirmation of their claims and these
applicants shall be conclusively presumed to have performed all the conditions essential to a
government grant and shall be entitled to a certificate of title. When the land registration court
issued a decision for the issuance of a decree which was the basis of an original
certificate of title to the land, the court had already made a determination that the land was
agricultural and that the applicant had proven that he was in open and exclusive
possession of the subject land for the prescribed number of years. It was the land
registration court which had the jurisdiction to determine whether the land applied for was
agricultural, forest or timber taking into account the proof or evidence in each particular
case. (Emphasis supplied)
As with this case, when the trial court issued the decision for the issuance of Decree No. 381928 in 1930,
the trial court had jurisdiction to determine whether the subject property, including the disputed portion,
applied for was agricultural, timber or mineral land. The trial court determined that the land was
agricultural and that spouses Carag proved that they were entitled to the decree and a certificate of title.
The government, which was a party in the original proceedings in the trial court as required by law, did not
appeal the decision of the trial court declaring the subject land as agricultural. Since the trial court had
jurisdiction over the subject matter of the action, its decision rendered in 1930, or 78 years ago, is now
final and beyond review.
The finality of the trial court’s decision is further recognized in Section 1, Article XII of the 1935
Constitution which provides:
SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, and other natural resources
of the Philippines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines, or to corporations or associations at least
sixty per centum of the capital of which is owned by such citizens, subject to any existing right,
grant, lease, or concession at the time of the inauguration of the Government established
under this Constitution. (Emphasis supplied)
Thus, even as the 1935 Constitution declared that all agricultural, timber and mineral lands of the public
domain belong to the State, it recognized that these lands were "subject to any existing right, grant,
lease or concession at the time of the inauguration of the Government established under this
Constitution."29 When the Commonwealth Government was established under the 1935 Constitution,
spouses Carag had already an existing right to the subject land, including the disputed portion, pursuant
to Decree No. 381928 issued in 1930 by the trial court.
WHEREFORE, we DENY the petition. We DISMISS petitioner Republic of the Philippines’ complaint for

reversion, annulment of decree, cancellation and declaration of nullity of titles for lack of merit.
SO ORDERED.
G.R. No. 167707 October 8, 2008
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,

THE REGIONAL EXECUTIVE DIRECTOR, DENR-REGION VI, REGIONAL TECHNICAL
DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI PROVINCIAL
ENVIRONMENT AND NATURAL RESOURCES OFFICER OF KALIBO, AKLAN, REGISTER OF
DEEDS, DIRECTOR OF LAND REGISTRATION AUTHORITY, DEPARTMENT OF TOURISM
SECRETARY, DIRECTOR OF PHILIPPINE TOURISM AUTHORITY, petitioners,
vs.
MAYOR JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, and ANICETO YAP, in their
behalf and in behalf of all those similarly situated, respondents.
x--------------------------------------------------x
G.R. No. G.R. No. 173775 October 8, 2008
DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE LANDOWNERS OF BORACAY
SIMILARLY SITUATED NAMED IN A LIST, ANNEX "A" OF THIS PETITION, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,
THE REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU,
REGION VI, PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER, KALIBO,
AKLAN, respondents.
DECISION
REYES, R.T., J.:
AT stake in these consolidated cases is the right of the present occupants of Boracay Island to
secure titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for review
on certiorari of the Decision1 of the Court of Appeals (CA) affirming that2 of the Regional Trial Court
(RTC) in Kalibo, Aklan, which granted the petition for declaratory relief filed by respondents-
claimants Mayor Jose Yap, et al. and ordered the survey of Boracay for titling purposes. The second
is G.R. No. 173775, a petition for prohibition, mandamus, and nullification of Proclamation No.
10645">[3] issued by President Gloria Macapagal-Arroyo classifying Boracay into reserved forest
and agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm
crystalline waters, is reputedly a premier Philippine tourist destination. The island is also home to
12,003 inhabitants4 who live in the bone-shaped island’s three barangays.5
On April 14, 1976, the Department of Environment and Natural Resources (DENR) approved the
National Reservation Survey of Boracay
Island,6 which identified several lots as being occupied or claimed by named persons.7
On November 10, 1978, then President Ferdinand Marcos issued Proclamation No. 18018 declaring

Boracay Island, among other islands, caves and peninsulas in the Philippines, as tourist zones and
marine reserves under the administration of the Philippine Tourism Authority (PTA). President
Marcos later approved the issuance of PTA Circular 3-829 dated September 3, 1982, to implement
Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an
application for judicial confirmation of imperfect title or survey of land for titling purposes,
respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for
declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-
82 raised doubts on their right to secure titles over their occupied lands. They declared that they
themselves, or through their predecessors-in-interest, had been in open, continuous, exclusive, and
notorious possession and occupation in Boracay since June 12, 1945, or earlier since time
immemorial. They declared their lands for tax purposes and paid realty taxes on them.10
Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not
place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it
was susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141,
otherwise known as the Public Land Act, they had the right to have the lots registered in their names
through judicial confirmation of imperfect titles.
The Republic, through the Office of the Solicitor General (OSG), opposed the petition for declaratory
relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It
formed part of the mass of lands classified as "public forest," which was not available for disposition
pursuant to Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry Code,11 as
amended.
The OSG maintained that respondents-claimants’ reliance on PD No. 1801 and PTA Circular No. 3-
82 was misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD
No. 705. Since Boracay Island had not been classified as alienable and disposable, whatever
possession they had cannot ripen into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1)
respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these
parcels of land were planted with coconut trees and other natural growing trees; (3) the coconut
trees had heights of more or less twenty (20) meters and were planted more or less fifty (50) years
ago; and (4) respondents-claimants declared the land they were occupying for tax purposes.12
The parties also agreed that the principal issue for resolution was purely legal: whether Proclamation
No. 1801 posed any legal hindrance or impediment to the titling of the lands in Boracay. They
decided to forego with the trial and to submit the case for resolution upon submission of their
respective memoranda.13
The RTC took judicial notice14 that certain parcels of land in Boracay Island, more particularly Lots 1
and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the
name of the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262
filed before the RTC of Kalibo, Aklan.15 The titles were issued on
August 7, 1933.16
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with
a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that Proclamation No. 1801 and PTA
Circular No. 3-82 pose no legal obstacle to the petitioners and those similarly situated to acquire title
to their lands in Boracay, in accordance with the applicable laws and in the manner prescribed
therein; and to have their lands surveyed and approved by respondent Regional Technical Director
of Lands as the approved survey does not in itself constitute a title to the land.
SO ORDERED.17
The RTC upheld respondents-claimants’ right to have their occupied lands titled in their name. It
ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay
were inalienable or could not be the subject of disposition.18 The Circular itself recognized private
ownership of lands.19 The trial court cited Sections 8720 and 5321 of the Public Land Act as basis for
acknowledging private ownership of lands in Boracay and that only those forested areas in public
lands were declared as part of the forest reserve.22
The OSG moved for reconsideration but its motion was denied.23 The Republic then appealed to the
CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING the
appeal filed in this case and AFFIRMING the decision of the lower court.24
The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they
occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.25 Hence, the present petition
under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo
issued Proclamation No. 106426 classifying Boracay Island into four hundred (400) hectares of
reserved forest land (protection purposes) and six hundred twenty-eight and 96/100 (628.96)
hectares of agricultural land (alienable and disposable). The Proclamation likewise provided for a
fifteen-meter buffer zone on each side of the centerline of roads and trails, reserved for right-of-way
and which shall form part of the area reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,27 Wilfredo Gelito,28 and other

landowners29 in Boracay filed with this Court an original petition for prohibition, mandamus, and
nullification of Proclamation No. 1064.30 They allege that the Proclamation infringed on their "prior
vested rights" over portions of Boracay. They have been in continued possession of their respective
lots in Boracay since time immemorial. They have also invested billions of pesos in developing their
lands and building internationally renowned first class resorts on their lots.31
Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into
agricultural land. Being classified as neither mineral nor timber land, the island
is deemed agricultural pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first
Public Land Act.32 Thus, their possession in the concept of owner for the required period entitled
them to judicial confirmation of imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over
their occupied portions in the island. Boracay is an unclassified public forest land pursuant to Section
3(a) of PD No. 705. Being public forest, the claimed portions of the island are inalienable and cannot
be the subject of judicial confirmation of imperfect title. It is only the executive department, not the
courts, which has authority to reclassify lands of the public domain into alienable and disposable
lands. There is a need for a positive government act in order to release the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally
involve the same issues on the land classification of Boracay Island.33
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose
any legal obstacle for respondents, and all those similarly situated, to acquire title to their occupied
lands in Boracay Island.34
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF

OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT
THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY
RELIEF ON NOV. 19, 1997, WERE THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL
LANDS AS DEFINED BY LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT
TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a, PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE

OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT
THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND

DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR
PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR
VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN
BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS
PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657.
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO

APPROVE THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE
LANDS OF PETITIONERS IN BORACAY?35 (Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707
and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied
portions in Boracay. The twin petitions pertain to their right, if any, to judicial confirmation of
imperfect title under CA No. 141, as amended. They do not involve their right to secure title under
other pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of
imperfect title, namely: (a) Philippine Bill of 190236 in relation to Act No. 926, later amended and/or
superseded by Act No. 2874 and CA No. 141;37 (b) Proclamation No. 180138 issued by then
President Marcos; and (c) Proclamation No. 106439 issued by President Gloria Macapagal-Arroyo.
We shall proceed to determine their rights to apply for judicial confirmation of imperfect title under
these laws and executive acts.
But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the
public domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest or
timber.40 Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other
classes as may be provided by law,41 giving the government great leeway for classification.42 Then
the 1987 Constitution reverted to the 1935 Constitution classification with one addition: national
parks.43 Of these, only agricultural lands may be alienated.44 Prior to Proclamation No. 1064 of May
22, 2006, Boracay Island had never been expressly and administratively classified under any of
these grand divisions. Boracay was an unclassified land of the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State
is the source of any asserted right to ownership of land and charged with the conservation of such
patrimony.45 The doctrine has been consistently adopted under the 1935, 1973, and 1987
Constitutions.46
All lands not otherwise appearing to be clearly within private ownership are presumed to belong to
the State.47 Thus, all lands that have not been acquired from the government, either by purchase or
by grant, belong to the State as part of the inalienable public domain.48 Necessarily, it is up to the
State to determine if lands of the public domain will be disposed of for private ownership. The
government, as the agent of the state, is possessed of the plenary power as the persona in law to
determine who shall be the favored recipients of public lands, as well as under what terms they may
be granted such privilege, not excluding the placing of obstacles in the way of their exercise of what
otherwise would be ordinary acts of ownership.49
Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of the
Philippines, ownership of all lands, territories and possessions in the Philippines passed to the
Spanish Crown.50 The Regalian doctrine was first introduced in the Philippines through the Laws of
the Indies and the Royal Cedulas, which laid the foundation that "all lands that were not acquired
from the Government, either by purchase or by grant, belong to the public domain."51
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The
Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as
possessory claims.52
The Royal Decree of 1894 or the Maura Law53 partly amended the Spanish Mortgage Law and
the Laws of the Indies. It established possessory information as the method of legalizing possession
of vacant Crown land, under certain conditions which were set forth in said decree.54 Under Section
393 of the Maura Law, an informacion posesoria or possessory information title,55 when duly
inscribed in the Registry of Property, is converted into a title of ownership only after the lapse of
twenty (20) years of uninterrupted possession which must be actual, public, and adverse,56 from the
date of its inscription.57 However, possessory information title had to be perfected one year after the
promulgation of the Maura Law, or until April 17, 1895. Otherwise, the lands would revert to the
State.58
In sum, private ownership of land under the Spanish regime could only be founded on royal
concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or
special grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or title by
purchase; and (5) informacion posesoria or possessory information title.59>
The first law governing the disposition of public lands in the Philippines under American rule was
embodied in the Philippine Bill of 1902.60 By this law, lands of the public domain in the Philippine
Islands were classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest
lands.61 The act provided for, among others, the disposal of mineral lands by means of absolute
grant (freehold system) and by lease (leasehold system).62 It also provided the definition by exclusion
of "agricultural public lands."63 Interpreting the meaning of "agricultural lands" under the Philippine
Bill of 1902, the Court declared in Mapa v. Insular Government:64
x x x In other words, that the phrase "agricultural land" as used in Act No. 926 means those
public lands acquired from Spain which are not timber or mineral lands. x x x65 (Emphasis
Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land
Registration Act. The act established a system of registration by which recorded title becomes
absolute, indefeasible, and imprescriptible. This is known as the Torrens system.66
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the
first Public Land Act. The Act introduced the homestead system and made provisions for judicial and
administrative confirmation of imperfect titles and for the sale or lease of public lands. It permitted
corporations regardless of the nationality of persons owning the controlling stock to lease or
purchase lands of the public domain.67 Under the Act, open, continuous, exclusive, and notorious
possession and occupation of agricultural lands for the next ten (10) years preceding July 26, 1904
was sufficient for judicial confirmation of imperfect title.68
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the

second Public Land Act. This new, more comprehensive law limited the exploitation of agricultural
lands to Filipinos and Americans and citizens of other countries which gave Filipinos the same
privileges. For judicial confirmation of title, possession and occupation en concepto dueño since time
immemorial, or since July 26, 1894, was required.69
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1,
1936. To this day, CA No. 141, as amended, remains as the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands,70 and
privately owned lands which reverted to the State.71
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and
occupation of lands of the public domain since time immemorial or since July 26, 1894. However,
this provision was superseded by Republic Act (RA) No. 1942,72 which provided for a simple thirty-
year prescriptive period for judicial confirmation of imperfect title. The provision was last amended
by PD No. 1073,73 which now provides for possession and occupation of the land applied for since
June 12, 1945, or earlier.74
The issuance of PD No. 89275 on February 16, 1976 discontinued the use of Spanish titles as
evidence in land registration proceedings.76 Under the decree, all holders of Spanish titles or grants
should apply for registration of their lands under Act No. 496 within six (6) months from the effectivity
of the decree on February 16, 1976. Thereafter, the recording of all unregistered lands77 shall be
governed by Section 194 of the Revised Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property
Registration Decree. It was enacted to codify the various laws relative to registration of property.78 It
governs registration of lands under the Torrens system as well as unregistered lands, including
chattel mortgages.79
A positive act declaring land as alienable and disposable is required. In keeping with the
presumption of State ownership, the Court has time and again emphasized that there must be a
positive act of the government, such as an official proclamation,80 declassifying inalienable public
land into disposable land for agricultural or other purposes.81 In fact, Section 8 of CA No. 141 limits
alienable or disposable lands only to those lands which have been "officially delimited and
classified."82
The burden of proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration (or claiming ownership), who must prove that the
land subject of the application is alienable or disposable.83 To overcome this presumption,
incontrovertible evidence must be established that the land subject of the application (or claim) is
alienable or disposable.84 There must still be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for registration is alienable,
the applicant must establish the existence of a positive act of the government such as a presidential
proclamation or an executive order; an administrative action; investigation reports of Bureau of
Lands investigators; and a legislative act or a statute.85 The applicant may also secure a certification
from the government that the land claimed to have been possessed for the required number of years
is alienable and disposable.86
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to
2006, the portions of Boracay occupied by private claimants were subject of a government
proclamation that the land is alienable and disposable. Absent such well-nigh incontrovertible
evidence, the Court cannot accept the submission that lands occupied by private claimants were
already open to disposition before 2006. Matters of land classification or reclassification cannot be
assumed. They call for proof.87
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it,
agricultural lands. Private claimants posit that Boracay was already an agricultural land pursuant to
the old cases Ankron v. Government of the Philippine Islands (1919)88 and De Aldecoa v. The Insular
Government (1909).89 These cases were decided under the provisions of the Philippine Bill of 1902
and Act No. 926. There is a statement in these old cases that "in the absence of evidence to the
contrary, that in each case the lands are agricultural lands until the contrary is shown."90
Private claimants’ reliance on Ankron and De Aldecoa is misplaced. These cases did not have the
effect of converting the whole of Boracay Island or portions of it into agricultural lands. It should be
stressed that the Philippine Bill of 1902 and Act No. 926 merely provided the manner through which
land registration courts would classify lands of the public domain. Whether the land would be
classified as timber, mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power
to classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts
were free to make corresponding classifications in justiciable cases, or were vested with implicit
power to do so, depending upon the preponderance of the evidence.91 This was the Court’s ruling
in Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v.
Republic,92 in which it stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be formally released by an act of
the Executive before it can be deemed open to private ownership, citing the cases of Ramos v.
Director of Lands and Ankron v. Government of the Philippine Islands.
xxxx
Petitioner’s reliance upon Ramos v. Director of Lands and Ankron v. Government is misplaced.

These cases were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926
enacted by the Philippine Commission on October 7, 1926, under which there was no legal provision
vesting in the Chief Executive or President of the Philippines the power to classify lands of the public
domain into mineral, timber and agricultural so that the courts then were free to make corresponding
classifications in justiciable cases, or were vested with implicit power to do so, depending upon the
preponderance of the evidence.93
To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to
devise a presumption on land classification. Thus evolved the dictum in Ankron that "the courts have
a right to presume, in the absence of evidence to the contrary, that in each case the lands are
agricultural lands until the contrary is shown."94
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all
lands of the public domain had been automatically reclassified as disposable and alienable
agricultural lands. By no stretch of imagination did the presumption convert all lands of the public
domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would have
automatically made all lands in the Philippines, except those already classified as timber or mineral
land, alienable and disposable lands. That would take these lands out of State ownership and worse,
would be utterly inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under
the provisions of Act No. 926, or more specifically those cases dealing with judicial and
administrative confirmation of imperfect titles. The presumption applies to an applicant for judicial or
administrative conformation of imperfect title under Act No. 926. It certainly cannot apply to
landowners, such as private claimants or their predecessors-in-interest, who failed to avail
themselves of the benefits of Act No. 926. As to them, their land remained unclassified and, by virtue
of the Regalian doctrine, continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in
the end, dependent on proof. If there was proof that the land was better suited for non-agricultural
uses, the courts could adjudge it as a mineral or timber land despite the presumption. In Ankron, this
Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in effect that
whether the particular land in question belongs to one class or another is a question of fact. The
mere fact that a tract of land has trees upon it or has mineral within it is not of itself sufficient to
declare that one is forestry land and the other, mineral land. There must be some proof of the extent
and present or future value of the forestry and of the minerals. While, as we have just said, many
definitions have been given for "agriculture," "forestry," and "mineral" lands, and that in each case it
is a question of fact, we think it is safe to say that in order to be forestry or mineral land the proof
must show that it is more valuable for the forestry or the mineral which it contains than it is for
agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that there exists some trees
upon the land or that it bears some mineral. Land may be classified as forestry or mineral today,
and, by reason of the exhaustion of the timber or mineral, be classified as agricultural land tomorrow.
And vice-versa, by reason of the rapid growth of timber or the discovery of valuable minerals, lands
classified as agricultural today may be differently classified tomorrow. Each case must be decided
upon the proof in that particular case, having regard for its present or future value for one or
the other purposes. We believe, however, considering the fact that it is a matter of public
knowledge that a majority of the lands in the Philippine Islands are agricultural lands that the courts
have a right to presume, in the absence of evidence to the contrary, that in each case the lands are
agricultural lands until the contrary is shown. Whatever the land involved in a particular land
registration case is forestry or mineral land must, therefore, be a matter of proof. Its superior
value for one purpose or the other is a question of fact to be settled by the proof in each
particular case. The fact that the land is a manglar [mangrove swamp] is not sufficient for the courts
to decide whether it is agricultural, forestry, or mineral land. It may perchance belong to one or the
other of said classes of land. The Government, in the first instance, under the provisions of Act No.
1148, may, by reservation, decide for itself what portions of public land shall be considered forestry
land, unless private interests have intervened before such reservation is made. In the latter case,
whether the land is agricultural, forestry, or mineral, is a question of proof. Until private interests
have intervened, the Government, by virtue of the terms of said Act (No. 1148), may decide for itself
what portions of the "public domain" shall be set aside and reserved as forestry or mineral land.
(Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs. Director of Forestry, supra)95 (Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from the facts of each
case, except those that have already became private lands.96 Act No. 2874, promulgated in 1919
and reproduced in Section 6 of CA No. 141, gave the Executive Department, through the President,
the exclusive prerogative to classify or reclassify public lands into alienable or disposable, mineral
or forest.96-a Since then, courts no longer had the authority, whether express or implied, to determine
the classification of lands of the public domain.97
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933,98 did not
present a justiciable case for determination by the land registration court of the property’s land
classification. Simply put, there was no opportunity for the courts then to resolve if the land the
Boracay occupants are now claiming were agricultural lands. When Act No. 926 was supplanted by
Act No. 2874 in 1919, without an application for judicial confirmation having been filed by private
claimants or their predecessors-in-interest, the courts were no longer authorized to determine the
property’s land classification. Hence, private claimants cannot bank on Act No. 926.
We note that the RTC decision99 in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of
Manila,100 which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to
classify lands of the public domain was already in effect. Krivenko cited the old cases Mapa v.
Insular Government,101 De Aldecoa v. The Insular Government,102 and Ankron v. Government of the
Philippine Islands.103
Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent
issue in Krivenko was whether residential lots were included in the general classification of
agricultural lands; and if so, whether an alien could acquire a residential lot. This Court ruled that as
an alien, Krivenko was prohibited by the 1935 Constitution104 from acquiring agricultural land, which
included residential lots. Here, the issue is whether unclassified lands of the public domain are
automatically deemed agricultural.
Notably, the definition of "agricultural public lands" mentioned in Krivenko relied on the old cases
decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.105 As We have
already stated, those cases cannot apply here, since they were decided when the Executive did not
have the authority to classify lands as agricultural, timber, or mineral.
Private claimants’ continued possession under Act No. 926 does not create a presumption
that the land is alienable. Private claimants also contend that their continued possession of
portions of Boracay Island for the requisite period of ten (10) years under Act No. 926106 ipso
facto converted the island into private ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.107 Collado, citing the separate opinion of now Chief Justice Reynato S. Puno in Cruz v.
Secretary of Environment and Natural Resources,107-a ruled:
"Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the Philippine
Bill of 1902. The law governed the disposition of lands of the public domain. It prescribed rules and
regulations for the homesteading, selling and leasing of portions of the public domain of the
Philippine Islands, and prescribed the terms and conditions to enable persons to perfect their titles to
public lands in the Islands. It also provided for the "issuance of patents to certain native settlers upon
public lands," for the establishment of town sites and sale of lots therein, for the completion of
imperfect titles, and for the cancellation or confirmation of Spanish concessions and grants in the
Islands." In short, the Public Land Act operated on the assumption that title to public lands in the
Philippine Islands remained in the government; and that the government’s title to public land sprung
from the Treaty of Paris and other subsequent treaties between Spain and the United States. The
term "public land" referred to all lands of the public domain whose title still remained in the
government and are thrown open to private appropriation and settlement, and excluded the
patrimonial property of the government and the friar lands."
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902 and Public
Land Act No. 926, mere possession by private individuals of lands creates the legal
presumption that the lands are alienable and disposable.108 (Emphasis Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land of the
public domain prior to Proclamation No. 1064. Such unclassified lands are considered public
forest under PD No. 705. The DENR109 and the National Mapping and Resource Information
Authority110 certify that Boracay Island is an unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as
public forest. Section 3(a) of PD No. 705 defines a public forest as "a mass of lands of the public
domain which has not been the subject of the present system of classification for the determination
of which lands are needed for forest purpose and which are not." Applying PD No. 705, all
unclassified lands, including those in Boracay Island, are ipso facto considered public forests. PD
No. 705, however, respects titles already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to
be out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of
its forest cover to pave the way for commercial developments. As a premier tourist destination for
local and foreign tourists, Boracay appears more of a commercial island resort, rather than a forest
land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the
island;111 that the island has already been stripped of its forest cover; or that the implementation of
Proclamation No. 1064 will destroy the island’s tourism industry, do not negate its character as
public forest.
Forests, in the context of both the Public Land Act and the Constitution112 classifying lands of the
public domain into "agricultural, forest or timber, mineral lands, and national parks," do not
necessarily refer to large tracts of wooded land or expanses covered by dense growths of trees and
underbrushes.113 The discussion in Heirs of Amunategui v. Director of Forestry114 is particularly
instructive:
A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as
forest land may actually be covered with grass or planted to crops by kaingin cultivators or other
farmers. "Forest lands" do not have to be on mountains or in out of the way places. Swampy areas
covered by mangrove trees, nipa palms, and other trees growing in brackish or sea water may also
be classified as forest land. The classification is descriptive of its legal nature or status and
does not have to be descriptive of what the land actually looks like. Unless and until the land
classified as "forest" is released in an official proclamation to that effect so that it may form part of
the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do
not apply.115 (Emphasis supplied)
There is a big difference between "forest" as defined in a dictionary and "forest or timber land" as a
classification of lands of the public domain as appearing in our statutes. One is descriptive of what
appears on the land while the other is a legal status, a classification for legal purposes.116 At any
rate, the Court is tasked to determine the legal status of Boracay Island, and not look into its
physical layout. Hence, even if its forest cover has been replaced by beach resorts, restaurants and
other commercial establishments, it has not been automatically converted from public forest to
alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of
imperfect title. The proclamation did not convert Boracay into an agricultural land. However,
private claimants argue that Proclamation No. 1801 issued by then President Marcos in 1978 entitles
them to judicial confirmation of imperfect title. The Proclamation classified Boracay, among other
islands, as a tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible of
private ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an
agricultural land. There is nothing in the law or the Circular which made Boracay Island an
agricultural land. The reference in Circular No. 3-82 to "private lands"117 and "areas declared as
alienable and disposable"118 does not by itself classify the entire island as agricultural. Notably,
Circular No. 3-82 makes reference not only to private lands and areas but also to public forested
lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without prior authority from the PTA. All forested areas
in public lands are declared forest reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely recognizes that the
island can be classified by the Executive department pursuant to its powers under CA No. 141. In
fact, Section 5 of the Circular recognizes the then Bureau of Forest Development’s authority to
declare areas in the island as alienable and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest
Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to classify Boracay
Island as alienable and disposable land. If President Marcos intended to classify the island as
alienable and disposable or forest, or both, he would have identified the specific limits of each, as
President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of
Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a tourist
zone and marine reserve to be administered by the PTA – to ensure the concentrated efforts of the
public and private sectors in the development of the areas’ tourism potential with due regard for
ecological balance in the marine environment. Simply put, the proclamation is aimed at
administering the islands for tourism and ecological purposes. It does not address the areas’
alienability.119
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other
islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas,
Port Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto
Princesa and surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis
Oriental, to name a few. If the designation of Boracay Island as tourist zone makes it alienable and
disposable by virtue of Proclamation No. 1801, all the other areas mentioned would likewise be
declared wide open for private disposition. That could not have been, and is clearly beyond, the
intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable
and opened the same to private ownership. Sections 6 and 7 of CA No. 141120 provide that it is
only the President, upon the recommendation of the proper department head, who has the authority
to classify the lands of the public domain into alienable or disposable, timber and mineral lands.121
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority
granted to her to classify lands of the public domain, presumably subject to existing vested rights.
Classification of public lands is the exclusive prerogative of the Executive Department, through the
Office of the President. Courts have no authority to do so.122 Absent such classification, the land
remains unclassified until released and rendered open to disposition.123
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96
hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each
side of the center line of roads and trails, which are reserved for right of way and which shall form
part of the area reserved for forest land protection purposes.
Contrary to private claimants’ argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through
Proclamation No. 1064. It was within her authority to make such classification, subject to existing
vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private
claimants further assert that Proclamation No. 1064 violates the provision of the Comprehensive
Agrarian Reform Law (CARL) or RA No. 6657 barring conversion of public forests into agricultural
lands. They claim that since Boracay is a public forest under PD No. 705, President Arroyo can no
longer convert it into an agricultural land without running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4. Scope. – The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of
tenurial arrangement and commodity produced, all public and private agricultural lands as provided
in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain
suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture.
No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive
from later converting it into agricultural land. Boracay Island still remained an unclassified land of the
public domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,124 the Court
stated that unclassified lands are public forests.
While it is true that the land classification map does not categorically state that the islands
are public forests, the fact that they were unclassified lands leads to the same result. In the
absence of the classification as mineral or timber land, the land remains unclassified land until
released and rendered open to disposition.125 (Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a "reclassification" of land. If the land had
never been previously classified, as in the case of Boracay, there can be no prohibited
reclassification under the agrarian law. We agree with the opinion of the Department of Justice126 on
this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is the word
"reclassification." Where there has been no previous classification of public forest [referring, we
repeat, to the mass of the public domain which has not been the subject of the present system of
classification for purposes of determining which are needed for forest purposes and which are not]
into permanent forest or forest reserves or some other forest uses under the Revised Forestry Code,
there can be no "reclassification of forest lands" to speak of within the meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of forest
lands to agricultural lands without a prior law delimiting the limits of the public domain, does not, and
cannot, apply to those lands of the public domain, denominated as "public forest" under the Revised
Forestry Code, which have not been previously determined, or classified, as needed for forest
purposes in accordance with the provisions of the Revised Forestry Code.127
Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA
No. 141. Neither do they have vested rights over the occupied lands under the said law. There
are two requisites for judicial confirmation of imperfect or incomplete title under CA No. 141, namely:
(1) open, continuous, exclusive, and notorious possession and occupation of the subject land by
himself or through his predecessors-in-interest under a bona fide claim of ownership since time
immemorial or from June 12, 1945; and (2) the classification of the land as alienable and disposable
land of the public domain.128
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert
portions of Boracay Island into an agricultural land. The island remained an unclassified land of the
public domain and, applying the Regalian doctrine, is considered State property.
Private claimants’ bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902,
Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second element of
alienable and disposable land. Their entitlement to a government grant under our present Public
Land Act presupposes that the land possessed and applied for is already alienable and disposable.
This is clear from the wording of the law itself.129 Where the land is not alienable and disposable,
possession of the land, no matter how long, cannot confer ownership or possessory rights.130
Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation No.
1064, with respect to those lands which were classified as agricultural lands. Private claimants failed
to prove the first element of open, continuous, exclusive, and notorious possession of their lands in
Boracay since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private
claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the first element of
possession. We note that the earliest of the tax declarations in the name of private claimants were
issued in 1993. Being of recent dates, the tax declarations are not sufficient to convince this Court
that the period of possession and occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having been in possession of the
island for a long time. They have invested millions of pesos in developing the island into a tourist
spot. They say their continued possession and investments give them a vested right which cannot
be unilaterally rescinded by Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not automatically
give them a vested right in Boracay. Nor do these give them a right to apply for a title to the land
they are presently occupying. This Court is constitutionally bound to decide cases based on the
evidence presented and the laws applicable. As the law and jurisprudence stand, private claimants
are ineligible to apply for a judicial confirmation of title over their occupied portions in Boracay even
with their continued possession and considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development of Boracay Island,
making it a by-word in the local and international tourism industry. The Court also notes that for a
number of years, thousands of people have called the island their home. While the Court
commiserates with private claimants’ plight, We are bound to apply the law strictly and judiciously.
This is the law and it should prevail. Ito ang batas at ito ang dapat umiral.
All is not lost, however, for private claimants. While they may not be eligible to apply for judicial
confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote
their automatic ouster from the residential, commercial, and other areas they possess now classified
as agricultural. Neither will this mean the loss of their substantial investments on their occupied
alienable lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of improvements. They
can take steps to preserve or protect their possession. For another, they may look into other modes
of applying for original registration of title, such as by homestead131 or sales patent,132 subject to the
conditions imposed by law.
More realistically, Congress may enact a law to entitle private claimants to acquire title to their
occupied lots or to exempt them from certain requirements under the present land laws. There is one
such bill133 now pending in the House of Representatives. Whether that bill or a similar bill will
become a law is for Congress to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to open up the
island to private ownership. This gesture may not be sufficient to appease some sectors which view
the classification of the island partially into a forest reserve as absurd. That the island is no longer
overrun by trees, however, does not becloud the vision to protect its remaining forest cover and to
strike a healthy balance between progress and ecology. Ecological conservation is as important as
economic progress.
To be sure, forest lands are fundamental to our nation’s survival. Their promotion and protection are
not just fancy rhetoric for politicians and activists. These are needs that become more urgent as
destruction of our environment gets prevalent and difficult to control. As aptly observed by Justice
Conrado Sanchez in 1968 in Director of Forestry v. Munoz:134
The view this Court takes of the cases at bar is but in adherence to public policy that should be
followed with respect to forest lands. Many have written much, and many more have spoken, and
quite often, about the pressing need for forest preservation, conservation, protection, development
and reforestation. Not without justification. For, forests constitute a vital segment of any country's
natural resources. It is of common knowledge by now that absence of the necessary green cover on
our lands produces a number of adverse or ill effects of serious proportions. Without the trees,
watersheds dry up; rivers and lakes which they supply are emptied of their contents. The fish
disappear. Denuded areas become dust bowls. As waterfalls cease to function, so will hydroelectric
plants. With the rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property – crops, livestock, houses,
and highways – not to mention precious human lives. Indeed, the foregoing observations should be
written down in a lumberman’s decalogue.135
WHEREFORE, judgment is rendered as follows:
1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision in
CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
SO ORDERED.
[G.R. No. L-27873. November 29, 1983.]
HEIRS OF JOSE AMUNATEGUI, Petitioners, v. DIRECTOR OF

FORESTRY, Respondent.
[G.R. No. L-30035. November 29, 1983.]
ROQUE BORRE and ENCARNACION DELFIN, Petitioners, v. ANGEL ALPASAN,

HEIRS OF MELQUIADES BORRE, EMETERIO BEREBER and HEIRS OF JOSE
AMUNATEGUI and THE CAPIZ COURT OF FIRST INSTANCE, Respondents.
SYLLABUS
1. CIVIL LAW; PUBLIC LAND ACT; FOREST LAND; CLASSIFICATION NOT LOST EVEN IF
IT HAS BEEN STRIPPED OF FOREST COVER; UNLESS RELEASED IN AN OFFICIAL
PROCLAMATION AS DISPOSABLE LANDS, RULES ON CONFIRMATION OF IMPERFECT
TITLE DO NOT APPLY. — A forested area classified as forest land of the public domain
does not lose such classification simply because loggers or settlers may have stripped it
of its forest cover. Parcels of land classified as forest land may actually be covered with
grass or planted to crops by kaingin cultivators or other farmers. "Forest lands" do not
have to be on mountains or in out of the way places. Swampy areas covered by
mangrove trees, nipa palms, and other tress growing in brackish or sea water may also
be classified as forest land. The classification is descriptive of its legal nature or status
and does not have to be descriptive of what the land actually looks like. Unless and
until the land classified as "forest" is released in an official proclamation to that effect
so that it may form part of the disposable agricultural lands of the public domain, the
rules on confirmation of imperfect title do not apply.
2. ID.; ID.; FOREST LANDS; ACQUISITIVE OWNERSHIP NOT ACQUIRED. — This Court
ruled in the leading case of Director of Forestry v. Muñoz (23 SCRA 1184) that
possession of forest lands, no matter how long, cannot ripen into private ownership.
And in Republic v. Animas (56 SCRA 499), we granted the petition on the ground that
the ares covered by the patent and title was not disposable public land, it being a part
of the forest zone and any patent and title to said area is void ab initio. It bears
emphasizing that a positive act of Government is needed to declassify land which is
classified as forest and to convert it into alienable or disposable land for agricultural or
other purposes.
3. ID.; ID.; CONFIRMATION, OF IMPERFECT TITLE CASES; BURDEN OF PROVING THAT

THE REQUIREMENTS OF THE LAW HAVE BEEN MET, RESTS ON THE APPLICANT. — In
confirmation of imperfect title cases, the applicant shoulders the burden of proving that
he meets the requirements of Section 48, Commonwealth Act No. 141, as amended by
Republic Act No. 1942. He must overcome the presumption that the land he is applying
for is part of the public domain but that he has an interest therein sufficient to warrant
registration in his name because of an imperfect title such as those derived from old
Spanish grants or that he has had continuous, open, 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 (30) years preceding the filing of his
application.
DECISION
GUTIERREZ, JR., J.:
The two petitions for review on certiorari before us question the decision of the Court of
Appeals which declared the disputed property as forest land, not subject to titling in
favor of private persons.
These two petitions have their genesis in an application for confirmation of imperfect
title and its registration filed with the Court of First Instance of Capiz. The parcel of land
sought to be registered is known as Lot No. 885 of the Cadastral Survey of Pilar, Capiz,
and has an area of 645,703 square meters. cralawnad
Roque Borre, petitioner in G.R. No, L-30035, and Melquiades Borre, filed the application
for registration. In due time, the heirs of Jose Amunategui, petitioners in G.R. No. L-
27873 filed an opposition to the application of Roque and Melquiades Borre. At the
same time, they prayed that the title to a portion of Lot No. 885 of Pilar Cadastre
containing 527,747 square meters be confirmed and registered in the names of said
Heirs of Jose Amunategui.
The Director of Forestry, through the Provincial Fiscal of Capiz, also filed an opposition
to the application for registration of title claiming that the land was mangrove swamp
which was still classified as forest land and part of the public domain.
Another oppositor, Emeterio Bereber filed his opposition insofar as a portion of Lot No.
885 containing 117,956 square meters was concerned and prayed that title to said
portion be confirmed and registered in his name.
During the progress of the trial, applicant-petitioner Roque Borre sold whatever rights
and interests he may have on Lot No. 885 to Angel Alpasan. The latter also filed an
opposition, claiming that he is entitled to have said lot registered in his name.
After trial, the Court of First Instance of Capiz adjudicated 117,956 square meters to
Emeterio Bereber and the rest of the land containing 527,747 square meters was
adjudicated in the proportion of 5/6 share to Angel Alpasan and 1/6 share to
Melquiades Borre.
Only the Heirs of Jose Amunategui and the Director of Forestry filed their respective
appeals with the Court of Appeals, The case was docketed as CA-G.R. No. 34190-R.
In its decision, the Court of Appeals held: jgc:chanrobles.com.ph
". . . the conclusion so far must have to be that as to the private litigants that have
been shown to have a better right over Lot 885 are, as to the northeastern portion of a
little less than 117,956 square meters, it was Emeterio Bereber and as to the rest of
527,747 square meters, it was the heirs of Jose Amunategui; but the last question that
must have to be considered is whether after all, the title that these two (2) private
litigants have shown did not amount to a registerable one in view of the opposition and
evidence of the Director of Forestry; . . .
". . . turning back the clock thirty (30) years from 1955 when the application was filed
which would place it at 1925, the fact must have to be accepted that during that period,
the land was a classified forest land so much so that timber licenses had to be issued to
certain licensee before 1926 and after that; that even Jose Amunategui himself took
the trouble to ask for a license to cut timber within the area; and this can only mean
that the Bureau of Forestry had stood and maintained its ground that it was a forest
land as indeed the testimonial evidence referred to above persuasively indicates, and
the only time when the property was converted into a fishpond was sometime after
1950; or a bare five (5) years before the filing of the application; but only after there
had been a previous warning by the District Forester that that could not be done
because it was classified as a public forest; so that having these in mind and
remembering that even under Republic Act 1942 which came into effect in 1957, two
(2) years after this case had already been filed in the lower Court, in order for applicant
to be able to demonstrate a registerable title he must have shown.
"‘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 (30) years, preceding the filing of the application;’
the foregoing details cannot but justify the conclusion that not one of the applicants or
oppositors had shown that during the required period of thirty (30) years prescribed by
Republic Act 1942 in order for him to have shown a registerable title for the entire
period of thirty (30) years before filing of the application, he had been in
"‘open, continuous, exclusive and notorious possession and occupation of agricultural

lands of the public domain’,
it is evident that the Bureau of Forestry had insisted on its claim all throughout that
period of thirty (30) years and even before and applicants and their predecessors had
made implicit recognition of that; the result must be to deny all these applications; this
Court stating that it had felt impelled notwithstanding, just the same to resolve the
conflicting positions of the private litigants among themselves as to who of them had
demonstrated a better right to possess because this Court foresees that this litigation
will go all the way to the Supreme Court and it is always better that the findings be as
complete as possible to enable the Highest Court to pass final judgment;
"IN VIEW WHEREOF, the decision must have to be as it is hereby reversed; the
application as well as all the oppositions with the exception of that of the Director of
Forestry which is hereby sustained are dismissed; no more pronouncement as to
costs."cralaw virtua1aw library
A petition for review on certiorari was filed by the Heirs of Jose Amunategui contending
that the disputed lot had been in the possession of private persons for over thirty years
and therefore in accordance with Republic Act No. 1942, said lot could still be the
subject of registration and confirmation of title in the name of a private person in
accordance with Act No. 496 known as the Land Registration Act. On the other hand,
another petition for review on certiorari was filed by Roque Borre and Encarnacion
Delfin, contending that the trial court committed grave abuse of discretion in dismissing
their complaint against the Heirs of Jose Amunategui. The Borre complaint was for the
annulment of the deed of absolute sale of Lot No. 885 executed by them in favor of the
Heirs of Amunategui. The complaint was dismissed on the basis of the Court of Appeals’
decision that the disputed lot is part of the public domain. The petitioners also question
the jurisdiction of the Court of Appeals in passing upon the relative rights of the parties
over the disputed lot when its final decision after all is to declare said lot a part of the
public domain classified as forest land.chanrobles law library : red
The need for resolving the questions raised by Roque Borre and Encarnacion Delfin in
their petition depends on the issue raised by the Heirs of Jose Amunategui, that is,
whether or not Lot No. 885 is public forest land, not capable of registration in the
names of the private applicants.
The Heirs of Jose Amunategui maintain that Lot No. 885 cannot be classified as forest
land because it is not thickly forested but is a "mangrove swamp." Although conceding
that a "mangrove swamp" is included in the classification of forest land in accordance
with Section 1820 of the Revised Administrative Code, the petitioners argue that no big
trees classified in Section 1821 of said Code as first, second and third groups are found
on the land in question. Furthermore, they contend that Lot 885, even if it is a
mangrove swamp, is still subject to land registration proceedings because the property
had been in actual possession of private persons for many years, and therefore, said
land was already "private land" better adapted and more valuable for agricultural than
for forest purposes and not required by the public interests to be kept under forest
classification.
The petition is without merit.
A forested area classified as forest land of the public domain does not lose such
classification simply because loggers or settlers may have stripped it of its forest cover.
Parcels of land classified as forest land may actually be covered with grass or planted to
crops by kaingin cultivators or other farmers. "Forest lands" do not have to be on
mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa
palms, and other trees growing in brackish or sea water may also be classified as forest
land. The classification is descriptive of its legal nature or status and does not have to
be descriptive of what the land actually looks like. Unless and until the land classified as
"forest" is released in an official proclamation to that effect so that it may form part of
the disposable agricultural lands of the public domain, the rules on confirmation of
imperfect title do not apply.
This Court ruled in the leading case of Director of Forestry v. Muñoz (23 SCRA 1184)
that possession of forest lands, no matter how long, cannot ripen into private
ownership. And in Republic v. Animas (56 SCRA 499), we granted the petition on the
ground that the area covered by the patent and title was not disposable public land, it
being a part of the forest zone and any patent and title to said area is void ab initio. It
bears emphasizing that a positive act of Government is needed to declassify land which
is classified as forest and to convert it into alienable or disposable land for agricultural
or other purposes.
The findings of the Court of Appeals are particularly well-grounded in the instant
petition.
The fact that no trees enumerated in Section 1821 of the Revised Administrative Code
are found in Lot No. 885 does not divest such land of its being classified as forest land,
much less as land of the public domain. The appellate court found that in 1912, the
land must have been a virgin forest as stated by Emeterio Bereber’s witness Deogracias
Gavacao, and that as late as 1926, it must have been a thickly forested area as
testified by Jaime Bertolde. The opposition of the Director of Forestry was strengthened
by the appellate court’s finding that timber licenses had to be issued to certain
licensees and even Jose Amunategui himself took the trouble to ask for a license to cut
timber within the area. It was only sometime in 1950 that the property was converted
into fishpond but only after a previous warning from the District Forester that the same
could not be done because it was classified as "public forest." chanrobles.com:cralaw:red
In confirmation of imperfect title cases, the applicant shoulders the burden of proving
that he meets the requirements of Section 48, Commonwealth Act No. 141, as
amended by Republic Act No. 1942. He must overcome the presumption that the land
he is applying for is part of the public domain but that he has an interest therein
sufficient to warrant registration in his name because of an imperfect title such as those
derived from old Spanish grants or that he has had continuous, open, 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 (30) years preceding the filing of his
application.
The decision of the appellate court is not based merely on the presumptions implicit in
Commonwealth Act No. 141 as amended. The records show that Lot No. 88S never
ceased to be classified as forest land of the public domain.
In Republic v. Gonong (118 SCRA 729) we ruled: jgc:chanrobles.com.ph
"As held in Oh Cho v. 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-interests 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."cralaw virtua1aw library
In the instant petitions, the exception in the Oh Cho case does not apply. The evidence
is clear that Lot No. 885 had always been public land classified as forest.
Similarly, in Republic v. Vera (120 SCRA 210), we ruled: jgc:chanrobles.com.ph
". . . The possession of public land however long the period thereof may have extended,
never confers title thereto upon the possessor because the statute of limitations with
regard to public land does not operate against the State, unless the occupant can prove
possession and occupation of the same under claim of ownership for the required
number of years to constitute a grant from the State. (Director of Lands v. Reyes, 68
SCRA 177, 195)." cralaw virtua1aw library
We, therefore, affirm the finding that the disputed property Lot No. 885 is part of the
public domain, classified as public forest land. There is no need for us to pass upon the
other issues raised by petitioners Roque Borre and Encarnacion Delfin, as such issues
are rendered moot by this finding. chanrobles virtual lawlibrary
WHEREFORE, the petitions in G. R. No. L-30035 and G. R. No. L-27873 are DISMISSED
for lack of merit. Costs against the petitioners.
SO ORDERED.
G.R. No. L-39473 April 30, 1979
REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
HON. COURT OF APPEALS and ISABEL LASTIMADO, respondents.
Eduardo G. Makalintal for private respondent.
MELENCIO-HERRERA, J.:
This is a Petition for Review (Appeal) by certiorari filed by the Republic of the Philippines from the
Decision of the Court of Appeals promulgated on September 30, 1974 in CA-G.R. No. Sp-01504
denying the State's Petition for certiorari and Mandamus.
Briefly, the facts of the case are as follows:
Private respondent, Isabel Lastimado, filed on September 11, 1967, in the Court of First Instance of
Bataan, Branch I, a Petition for the reopening of cadastral proceedings over a portion of Lot No. 626
of the Mariveles Cadastre, consisting of 971.0569 hectares, pursuant to Republic Act No. 931, as
amended by Republic Act No. 2061, docketed as Cad. Case No. 19, LRC Cad. Rec. No. 1097. In
the absence of any opposition, whether from the Government or from private individuals, private
respondent was allowed to present her evidence ex-parte. On October 14, 1967, the trial Court
rendered a Decision granting the Petition and adjudicating the land in favor of private respondent.
The trial Court issued an order for the issuance of a decree of registration on November 20, 1967,
and on November 21, 1967, the Land Registration Commission issued Decree No. N-117573 in
favor of private respondent. Eventually, Original Certificate of Title No. N-144 was also issued in her
favor. Private respondent thereafter subdivided the land into ten lots, and the corresponding titles.
Transfer Certificates of Title Nos. 18905 to 18914 inclusive, were issued by the Register of Deeds.
On June 3, 1968, or within one year from the entry of the decree of registration, petitioner filed a
Petition for Review pursuant to Sec. 38, Act No. 496, on the ground of fraud alleging that during the
period of alleged adverse possession by private respondent, said parcel of land was part of the U.S.
Military Reservation in Bataan. which was formally turned over to the Republic of the Philippines only
on December 22, 1965, and that the same is inside the public forest of Mariveles, Bataan and,
therefore, not subject to disposition or acquisition under the Public Land Law. Respondent field an
Opposition thereto, which was considered by the trial Court, as a Motion to Dismiss, and on
December 20,1968, said Court (Judge Tito V. Tizon, presiding) issued an Order dismissing the
Petition for Review mainly on the ground that the Solicitor General had failed to file opposition to the
original Petition for reopening of the cadastral proceedings and was, therefore, estopped from
questioning the decree of registration ordered issued therein. On January 28, 1969, petitioner moved
for reconsideration, which was denied by the trial Court in its Order dated May 20, 1969, for lack of
merit.
Petitioner seasonably filed a Notice of Appeal and a Record on Appeal, which was objected to by
private respondent. On July 15, 1972, or three years later, * the trial Court (Judge Abraham P. Vera, presiding)
refused to give due course to the appeal. Petitioner filed a Motion for Reconsideration but the trial Court denied it in its Order of October 14,
1972 on the ground that the proper remedy of petitioner was a certiorari petition, not an ordinary appeal, and that the Order sought to be
appealed from had long become final and executory as petitioner's Motion for Reconsideration was pro-forma and did not suspend the
running of the reglementary period of appeal.
On November 9, 1972, petitioner filed a Petition for certiorari and mandamus with the Court of
Appeals claiming that the trial Court gravely abused its discretion, amounting to lack of jurisdiction
when, without the benefit of hearing, it summarily dismissed the Petition for Review; and since said
Petition raised certain issues of fact which cannot be decided except in a trial on the merits, the
dismissal of the Petition on the basis of private respondent's Opposition, considered as a Motion to
Dismiss, constituted a denial of due process of law. Petitioner then prayed that the Order of the trial
Court, dated December 20, 1968 dismissing the Petition for Review, be declared null and void, and
that said trial Court be directed to give due course to the Petition for Review; or, in the alternative, to
give due course to petitioner's appeal.
On September 30, 1974, the Court of Appeals upheld the trial Court's dismissal of the Petition for
Review stating:
... We cannot find any allegation in the petition for review which shows that private
respondent had committed fraud against petitioner. Its representations and officials
were duly notified of private respondent's petition for reopening and registration of
title in her name. In said petition, the technical descriptions of the portion of Lot No.
626 of the Mariveles (Bataan) Cadastre, subject-matter of the petition were expressly
stated, the boundaries, specifically delineated. The alleged ground that the land
forms part of a forest land exists at the time petitioner was duly notified of said
petition. Failure to file opposition is in effect, an admission that the petition is actually
not part of a forest land. Indubitably, therefore, no justifiable reason exists for the
annulment of the Order, dated December 20, 1968 (Annex D-Petition) of the lower
court dismissing herein petitioner's petition for review of the decree issued in favor of
private respondent Lastimado. 1
The Court of Appeals then disposed as follows:
WHEREFORE, finding that the respondent Judge has not committed any grave
abuse of discretion amounting to lack of jurisdiction in the issuance of an Order,
dated December 20, 1968 (Annex D-Petition) dismissing herein petitioner's petition
for review, the present petition for review is hereby denied.
The issuance of the writ of mandamus as prayed for in the petition is no longer
necessary as this Court, in the exercise of its appellate jurisdiction and authority to
supervise orderly administration of justice, has already resolved on the merits the
question whether or not the dismissal of the petition for review had been done with
grave abuse of discretion amounting to lack of jurisdiction. 2
From this Decision, petitioner filed the present Petition for Review (Appeal) by certiorari assigning
the following errors to the Court of Appeals and to the trial Court:
1. The Lower Court as well as the Court of Appeals erred in finding that there can be
possession, even for the purpose of claiming title, of land which at the time of
possession is subject to a military reservation.
2. The Lower Court as well as the Court of Appeals erred in finding that such land
which is subject to a government reservation, may appropriately be the subject of
cadastral proceedings, and hence. also of a petition to reopen cadastral proceedings.
3. The Lower Court as well as the Court of Appeals erred in finding that a parcel of
land which is part of the public forest is susceptible of occupation and registration in
favor of private individual.
4. The Lower Court as well as the Court of Appeals erred in not finding that the
Republic of the Philippines is not estopped from questioning the decree of
registration and the title issued pursuant thereto in favor of respondent Lastimado
over the parcel of land in question.
5. The Lower Court erred in dismissing the petition for review of the Republic of the
Philippines.
6. The Court of Appeals erred in denying Petitioner's petition for certiorari and
mandamus.
Section 38 of the Land Registration Act (Act 496) provides:
Section 38. Decree of registration, and remedies after entry of decree.
If the court after hearing finds that the applicant or adverse claimant has title as
stated in his application or adverse claim and proper for registration, a decree of
confirmation and registration shall be entered. Every decree of registration shall bind
the land, and quiet title thereto. subject only to the exceptions stated in the following
section. It shall be conclusive upon and against all persons, including the Insular
Government and all the branches thereof, whether mentioned by name in the
application, notice of citation, or included in the general description "To all whom it
may concern". Such decree shall not be opened by reason of the absence, infancy,
or other disability of any person affect thereby, nor by any proceeding in any court for
reversing judgments or decrees; subject, however, to the right of any person
deprived of land or of any estate or interest therein by decree of registration obtained
by fraud to file in the competent Court of First Instance a petition for review within
one year after entry of the decree provided no innocent purchaser for value has
acquired an interest. ...
3
The essential elements for the allowance of the reopening or review of a decree are: a) that the
petitioner has a real and dominical right; b) that he has been deprived thereof; c) through fraud; d)
that the petition is filed within one year from the issuance of the decree; and e) that the property has
not as yet been transferred to an innocent purchaser. 4
However, for fraud to justify the review of a decree, it must be extrinsic or collateral and the facts
upon which it is based have not been controverted or resolved in the case where the judgment
sought to be annulled was rendered. The following ruling spells out the difference between extrinsic
5
and intrinsic fraud:
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any

fraudulent scheme executed by a prevailing litigant "outside the trial of a case
against the defeated party, or his agents, attorneys or witnesses, whereby said
defeated party is prevented from presenting fully and fairly his side of the case." But
intrinsic fraud takes the form of "acts of a party in a litigation during the trial such as
the use of forged instruments or perjured testimony, which did not affect the present
action of the case, but did prevent a fair and just determination of the case. 6
The fraud is one that affects and goes into the jurisdiction of the Court. 7
In its Petition for Review filed before the trial Court, petitioner alleged that fraud was committed by
private respondent when she misrepresented that she and her predecessors-in-interest had been in
possession of the land publicly, peacefully, exclusively and adversely against the whole world as
owner for more than forty years when, in fact, the subject land was in. side the former U.S. Military
Reservation, which was formally turned over to the Republic of the Philippines only on December 22,
1965, and that she likewise contended that her rights, as derived from the original and primitive
occupants of the land in question, are capable of judicial confirmation under existing laws, when the
truth is, said parcel of land is within the public forest of Mariveles, Bataan, and is not subject to
disposition or acquisition by private persons under the Public Land Law.
The trial Court ruled, and was upheld by the Court of Appeals, that no fraud was committed by
private respondent, which deprived petitioner of its day in Court as there was no showing that she
was aware of the facts alleged by the Government, so that she could not have suppressed them with
intent to deceive. The trial Court also noted that petitioner had failed to file an opposition to the
reopening of the cadastral proceedings despite notices sent not only to the Solicitor General as
required by Republic Act No. 931. but to the Bureau of Lands and the Bureau of Forestry as well. It
then concluded that "the remedy granted by section 38 of the Land Registration Act is designed to
give relief to victims of fraud, not to those who are victims of their own neglect, inaction or
carelessness, especially when no attempt is ever made to excuse or justify the neglect." With the
foregoing as the essential basis, the trial Court dismissed the Petition for Review.
We find reversible error. Although there was an agreement by the parties to submit for resolution the
Opposition to the Petition for Review, which was treated as a motion to dismiss, the trial Court, in the
exercise of sound judicial discretion, should not have dismissed the Petition outright but should have
afforded petitioner an opportunity to present evidence in support of the facts alleged to constitute
actual and extrinsic fraud committed by private respondent. Thus, in the case of Republic vs. Sioson,
et al., it was held that "the action of the lower Court in denying the petition for review of a decree of
8
registration filed within one year from entry of the d without hearing the evidence in support of the
allegation and claim that actual and extrinsic fraud upon which the petition is predicated, is held to
be in error, because the lower Court should have afforded the petitioner an opportunity to prove it."
If the allegation of petitioner that the land in question was inside the military reservation at the time it
was claimed is true, then, it cannot be the object of any cadastral p nor can it be the object of
reopening under Republic Act No. 931. Similarly, if the land in question, indeed forms part of the
9
public forest, then, possession thereof, however long, cannot convert it into private property as it is
within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and jurisdiction of
the Cadastral Court to register under the Torrens System. 10
Even assuming that the government agencies can be faulted for inaction and neglect (although the
Solicitor General claims that it received no notice), yet, the same cannot operate to bar action by the
State as it cannot be estopped by the mistake or error of its officials or agents. Further, we cannot
11
lose sight of the cardinal consideration that "the State as persona in law is the juridical entity, which
is the source of any asserted right to ownership in land" under basic Constitutional Precepts, and
that it is moreover charged with the conservation of such patrimony. 12
WHEREFORE, the Decision of the Court of Appeals dated September 30, 1974, dismissing the
Petition for certiorari and mandamus filed before it, as well as the Order of the Court of First Instance
of Bataan (Branch I) dated December 20, 1968, dismissing the Petition for Review, are hereby set
aside and the records of this case hereby ed to the latter Court for further proceedings to enable
petitioner to present evidence in support of its Petition for Review.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary
of Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN
RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the
PRINCIPAL AND BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF
PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the
bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February
21, 1990. We granted the prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in G.R. No.
92047) likewise prayes for a writ of mandamus to compel the respondents to fully disclose to the public the basis of their decision
to push through with the sale of the Roppongi property inspire of strong public opposition and to explain the proceedings which
effectively prevent the participation of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on
March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the
respondents were required to file a comment by the Court's resolution dated February 22,
1990. The two petitions were consolidated on March 27, 1990 when the memoranda of the
parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a motion
for an extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second
motion for an extension of another thirty (30) days which we granted on May 8, 1990, a third
motion for extension of time granted on May 24, 1990 and a fourth motion for extension of
time which we granted on June 5, 1990 but calling the attention of the respondents to the
length of time the petitions have been pending. After the comment was filed, the petitioner in
G.R. No. 92047 asked for thirty (30) days to file a reply. We noted his motion and resolved to
decide the two (2) cases.
The subject property in this case is one of the four (4) properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on May 9,
1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area
of approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy
Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72
square meters and categorized as a commercial lot now being used as a warehouse and
parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese government
for national development projects are part of the indemnification to the Filipino people for
their losses in life and property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be
payable in twenty (20) years in accordance with annual schedules of procurements to be
fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement). Rep.
Act No. 1789, the Reparations Law, prescribes the national policy on procurement and
utilization of reparations and development loans. The procurements are divided into those for
use by the government sector and those for private parties in projects as the then National
Economic Council shall determine. Those intended for the private sector shall be made
available by sale to Filipino citizens or to one hundred (100%) percent Filipino-owned entities
in national development projects.
The Roppongi property was acquired from the Japanese government under the Second Year
Schedule and listed under the heading "Government Sector", through Reparations Contract
No. 300 dated June 27, 1958. The Roppongi property consists of the land and building "for
the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503).
As intended, it became the site of the Philippine Embassy until the latter was transferred to
Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the
failure of our government to provide necessary funds, the Roppongi property has remained
undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador

to Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a
Japanese firm - Kajima Corporation — which shall construct two (2) buildings in Roppongi
and one (1) building in Nampeidai and renovate the present Philippine Chancery in
Nampeidai. The consideration of the construction would be the lease to the foreign
corporation of one (1) of the buildings to be constructed in Roppongi and the two (2)
buildings in Nampeidai. The other building in Roppongi shall then be used as the Philippine
Embassy Chancery. At the end of the lease period, all the three leased buildings shall be
occupied and used by the Philippine government. No change of ownership or title shall
occur. (See Annex "B" to Reply to Comment) The Philippine government retains the title all
throughout the lease period and thereafter. However, the government has not acted favorably
on this proposal which is pending approval and ratification between the parties. Instead, on
August 11, 1986, President Aquino created a committee to study the disposition/utilization of
Philippine government properties in Tokyo and Kobe, Japan through Administrative Order
No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens
or entities to avail of separations' capital goods and services in the event of sale, lease or
disposition. The four properties in Japan including the Roppongi were specifically mentioned
in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225
million. The first bidding was a failure since only one bidder qualified. The second one, after
postponements, has not yet materialized. The last scheduled bidding on February 21, 1990
was restrained by his Court. Later, the rules on bidding were changed such that the $225
million floor price became merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R.
No. 92013 objects to the alienation of the Roppongi property to anyone while the petitioner in
G.R. No. 92047 adds as a principal objection the alleged unjustified bias of the Philippine
government in favor of selling the property to non-Filipino citizens and entities. These
petitions have been consolidated and are resolved at the same time for the objective is the
same - to stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine
Government?; and
(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to
sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the
government to alienate the Roppongi property assails the constitutionality of Executive
Order No. 296 in making the property available for sale to non-Filipino citizens and entities.
He also questions the bidding procedures of the Committee on the Utilization or Disposition
of Philippine Government Properties in Japan for being discriminatory against Filipino
citizens and Filipino-owned entities by denying them the right to be informed about the
bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots
were acquired as part of the reparations from the Japanese government for diplomatic and
consular use by the Philippine government. Vice-President Laurel states that the Roppongi
property is classified as one of public dominion, and not of private ownership under Article
420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended for public
service" in paragraph 2 of the above provision. He states that being one of public dominion,
no ownership by any one can attach to it, not even by the State. The Roppongi and related
properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings
and other improvements" (Second Year Reparations Schedule). The petitioner states that
they continue to be intended for a necessary service. They are held by the State in
anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated,
is outside the commerce of man, or to put it in more simple terms, it cannot be alienated nor
be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]).
Noting the non-use of the Roppongi property at the moment, the petitioner avers that the
same remains property of public dominion so long as the government has not used it for
other purposes nor adopted any measure constituting a removal of its original purpose or
use.
The respondents, for their part, refute the petitioner's contention by saying that the subject
property is not governed by our Civil Code but by the laws of Japan where the property is
located. They rely upon the rule of lex situs which is used in determining the applicable law
regarding the acquisition, transfer and devolution of the title to a property. They also invoke
Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used
the lex situs in explaining the inapplicability of Philippine law regarding a property situated in
Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is
applicable, the Roppongi property has ceased to become property of public dominion. It has
become patrimonial property because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and
because the intention by the Executive Department and the Congress to convert it to private
use has been manifested by overt acts, such as, among others: (1) the transfer of the
Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the possibility
of alienating the four government properties in Japan; (3) the issuance of Executive Order
No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive
Agrarian Reform Law] on June 10, 1988 which contains a provision stating that funds may be
taken from the sale of Philippine properties in foreign countries; (5) the holding of the public
bidding of the Roppongi property but which failed; (6) the deferment by the Senate in
Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate of
the government's intention to remove the Roppongi property from the public service
purpose; and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding
Committee, et al., G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi
property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality
of Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court
dismissed on August 1, 1989. He now avers that the executive order contravenes the
constitutional mandate to conserve and develop the national patrimony stated in the
Preamble of the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public domain
to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of
Commonwealth Act 141). i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions
covering the national economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade
practices;
(4) The guarantee of the right of the people to information on all matters of public concern
(Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by
Filipino citizens of capital goods received by the Philippines under the Reparations Act
(Sections 2 and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all transactions involving
public interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional
executive order is a misapplication of public funds He states that since the details of the
bidding for the Roppongi property were never publicly disclosed until February 15, 1990 (or a
few days before the scheduled bidding), the bidding guidelines are available only in Tokyo,
and the accomplishment of requirements and the selection of qualified bidders should be
done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance
to comply with Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be
sold for a minimum price of $225 million from which price capital gains tax under Japanese
law of about 50 to 70% of the floor price would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi site
and the three related properties were through reparations agreements, that these were
assigned to the government sector and that the Roppongi property itself was specifically
designated under the Reparations Agreement to house the Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is
dictated by the terms of the Reparations Agreement and the corresponding contract of
procurement which bind both the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the
property has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot
be alienated. Its ownership is a special collective ownership for general use and enjoyment,
an application to the satisfaction of collective needs, and resides in the social group. The
purpose is not to serve the State as a juridical person, but the citizens; it is intended for the
common and public welfare and cannot be the object of appropration. (Taken from 3
Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963
Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks shores roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth.
ART. 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil
Code as property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed because
the lot has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy service
does not automatically convert it to patrimonial property. Any such conversion happens only
if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]). A property continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335
[1960]).
The respondents enumerate various pronouncements by concerned public officials

insinuating a change of intention. We emphasize, however, that an abandonment of the
intention to use the Roppongi property for public service and to make it patrimonial property
under Article 422 of the Civil Code must be definite Abandonment cannot be inferred from the
non-use alone specially if the non-use was attributable not to the government's own
deliberate and indubitable will but to a lack of financial support to repair and improve the
property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must
be a certain and positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the failure by the government to repair the
building in Roppongi is not abandonment since as earlier stated, there simply was a shortage
of government funds. The recent Administrative Orders authorizing a study of the status and
conditions of government properties in Japan were merely directives for investigation but did
not in any way signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a
provision in its text expressly authorizing the sale of the four properties procured from Japan
for the government sector. The executive order does not declare that the properties lost their
public character. It merely intends to make the properties available to foreigners and not to
Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction
under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one
hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296
provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of other
laws to the contrary notwithstanding, the above-mentioned properties can be
made available for sale, lease or any other manner of disposition to non-
Filipino citizens or to entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and
the three other properties were earlier converted into alienable real properties. As earlier
stated, Rep. Act No. 1789 differentiates the procurements for the government sector and the
private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can
be sold to end-users who must be Filipinos or entities owned by Filipinos. It is this nationality
provision which was amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of
funds for its implementation, the proceeds of the disposition of the properties of the
Government in foreign countries, did not withdraw the Roppongi property from being
classified as one of public dominion when it mentions Philippine properties abroad. Section
63 (c) refers to properties which are alienable and not to those reserved for public use or
service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the
Roppongi property. It merely enumerates possible sources of future funding to augment (as
and when needed) the Agrarian Reform Fund created under Executive Order No. 299.
Obviously any property outside of the commerce of man cannot be tapped as a source of
funds.
The respondents try to get around the public dominion character of the Roppongi property by
insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the ones
to insist that in the sale of extremely valuable government property, Japanese law and not
Philippine law should prevail. The Japanese law - its coverage and effects, when enacted,
and exceptions to its provision — is not presented to the Court It is simply asserted that
the lex loci rei sitae or Japanese law should apply without stating what that law provides. It is
a ed on faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation
exists. A conflict of law situation arises only when: (1) There is a dispute over the title or
ownership of an immovable, such that the capacity to take and transfer immovables, the
formalities of conveyance, the essential validity and effect of the transfer, or the
interpretation and effect of a conveyance, are to be determined (See Salonga, Private
International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land ownership and its
conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need
to determine which law should apply.
In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the
property belongs to the Philippines. The issue is the authority of the respondent officials to
validly dispose of property belonging to the State. And the validity of the procedures adopted
to effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of
the lex situs rule is misplaced. The opinion does not tackle the alienability of the real
properties procured through reparations nor the existence in what body of the authority to
sell them. In discussing who are capable of acquiring the lots, the Secretary merely explains
that it is the foreign law which should determine who can acquire the properties so that the
constitutional limitation on acquisition of lands of the public domain to Filipino citizens and
entities wholly owned by Filipinos is inapplicable. We see no point in belaboring whether or
not this opinion is correct. Why should we discuss who can acquire the Roppongi lot when
there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by

the investigating committee to sell the Roppongi property was premature or, at the very least,
conditioned on a valid change in the public character of the Roppongi property. Moreover,
the approval does not have the force and effect of law since the President already lost her
legislative powers. The Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of
public dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government is a party.

— In cases in which the Government of the Republic of the Philippines is a
party to any deed or other instrument conveying the title to real estate or to
any other property the value of which is in excess of one hundred thousand
pesos, the respective Department Secretary shall prepare the necessary
papers which, together with the proper recommendations, shall be submitted
to the Congress of the Philippines for approval by the same. Such deed,
instrument, or contract shall be executed and signed by the President of the
Philippines on behalf of the Government of the Philippines unless the
Government of the Philippines unless the authority therefor be expressly
vested by law in another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of 1987
(Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. — Whenever real

property of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested
by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her
own sole will. Any such conveyance must be authorized and approved by a law enacted by
the Congress. It requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of
the Roppongi property does not withdraw the property from public domain much less
authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the public
character of the Roppongi property. In fact, the Senate Committee on Foreign Relations is
conducting hearings on Senate Resolution No. 734 which raises serious policy
considerations and calls for a fact-finding investigation of the circumstances behind the
decision to sell the Philippine government properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon
the constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did
not uphold the authority of the President to sell the Roppongi property. The Court stated that
the constitutionality of the executive order was not the real issue and that resolving the
constitutional question was "neither necessary nor finally determinative of the case." The
Court noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the
disposition of the Roppongi property." In emphasizing that "the decision of the Executive to
dispose of the Roppongi property to finance the CARP ... cannot be questioned" in view of
Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that the property
became alienable nor did it indicate that the President was authorized to dispose of the
Roppongi property. The resolution should be read to mean that in case the Roppongi
property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a
sale may be used for national economic development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed
1990 sale of the Roppongi property. We are resolving the issues raised in these petitions, not
the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property
from public domain to make it alienable and a need for legislative authority to allow the sale
of the property, we see no compelling reason to tackle the constitutional issues raised by
petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these questions are
properly raised in appropriate cases and their resolution is necessary for the determination
of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional
question although properly presented by the record if the case can be disposed of on some
other ground such as the application of a statute or general law (Siler v. Louisville and
Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496
[1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:
The Roppongi property is not just like any piece of property. It was given to the
Filipino people in reparation for the lives and blood of Filipinos who died and
suffered during the Japanese military occupation, for the suffering of widows
and orphans who lost their loved ones and kindred, for the homes and other
properties lost by countless Filipinos during the war. The Tokyo properties are
a monument to the bravery and sacrifice of the Filipino people in the face of an
invader; like the monuments of Rizal, Quezon, and other Filipino heroes, we do
not expect economic or financial benefits from them. But who would think of
selling these monuments? Filipino honor and national dignity dictate that we
keep our properties in Japan as memorials to the countless Filipinos who died
and suffered. Even if we should become paupers we should not think of selling
them. For it would be as if we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese government

in atonement for its past belligerence for the valiant sacrifice of life and limb
and for deaths, physical dislocation and economic devastation the whole
Filipino people endured in World War II.
It is for what it stands for, and for what it could never bring back to life, that its
significance today remains undimmed, inspire of the lapse of 45 years since
the war ended, inspire of the passage of 32 years since the property passed on
to the Philippine government.
Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-

92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much because of the inflated
prices fetched by real property in Tokyo but more so because of its symbolic value to all
Filipinos — veterans and civilians alike. Whether or not the Roppongi and related properties
will eventually be sold is a policy determination where both the President and Congress must
concur. Considering the properties' importance and value, the laws on conversion and
disposition of property of public dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of

prohibition is issued enjoining the respondents from proceeding with the sale of the
Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is
made PERMANENT.
SO ORDERED.
G.R. No. 127882 December 1, 2004
LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman F'LONG

MIGUEL M. LUMAYONG; WIGBERTO E. TAÑADA; PONCIANO BENNAGEN; JAIME TADEO;
RENATO R. CONSTANTINO JR.; F'LONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM
L. DABIE; SIMEON H. DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L.
GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA P. TACUAYAN;
Minors JOLY L. BUGOY, Represented by His Father UNDERO D. BUGOY and ROGER M.
DADING; Represented by His Father ANTONIO L. DADING; ROMY M. LAGARO, Represented
by His Father TOTING A. LAGARO; MIKENY JONG B. LUMAYONG, Represented by His Father
MIGUEL M. LUMAYONG; RENE T. MIGUEL, Represented by His Mother EDITHA T. MIGUEL;
ALDEMAR L. SAL, Represented by His Father DANNY M. SAL; DAISY RECARSE,
Represented by Her Mother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR;
MARIO L. MANGCAL; ALDEN S. TUSAN; AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F.
LEONEN; JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR JR., Represented
by Their Father VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His Parents
JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR; ANA GININA R. TALJA, Represented by
Her Father MARIO JOSE B. TALJA; SHARMAINE R. CUNANAN, Represented by Her Father
ALFREDO M. CUNANAN; ANTONIO JOSE A. VITUG III, Represented by His Mother ANNALIZA
A. VITUG, LEAN D. NARVADEZ, Represented by His Father MANUEL E. NARVADEZ JR.;
ROSERIO MARALAG LINGATING, Represented by Her Father RIO OLIMPIO A. LINGATING;
MARIO JOSE B. TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SAN JOSE; Sr. SUSAN O.
BOLANIO, OND; LOLITA G. DEMONTEVERDE; BENJIE L. NEQUINTO; ROSE LILIA S.
1
ROMANO; ROBERTO S. VERZOLA; EDUARDO AURELIO C. REYES; LEAN LOUEL A. PERIA,

Represented by His Father ELPIDIO V. PERIA; GREEN FORUM PHILIPPINES; GREEN FORUM
2
WESTERN VISAYAS (GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC);

KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN
(KAISAHAN); PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT
3
SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP FOR THE DEVELOPMENT OF

HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA); WOMEN'S LEGAL BUREAU
(WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI); UPLAND
DEVELOPMENT INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG
ALTERNATIBONG LINGAP PANLIGAL (SALIGAN); and LEGAL RIGHTS AND NATURAL
RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources (DENR);
HORACIO RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); RUBEN TORRES,
Executive Secretary; and WMC (PHILIPPINES), INC., respondents.
4
RESOLUTION
PANGANIBAN, J.:
All mineral resources are owned by the State. Their exploration, development and utilization (EDU)
must always be subject to the full control and supervision of the State. More specifically, given the
inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the
help of foreign companies in all relevant matters -- especially financial and technical assistance --
provided that, at all times, the State maintains its right of full control. The foreign assistor or
contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it
may be given reasonable management, operational, marketing, audit and other prerogatives to
protect its investments and to enable the business to succeed.
Full control is not anathematic to day-to-day management by the contractor, provided that the State
retains the power to direct overall strategy; and to set aside, reverse or modify plans and actions of
the contractor. The idea of full control is similar to that which is exercised by the board of directors of
a private corporation: the performance of managerial, operational, financial, marketing and other
functions may be delegated to subordinate officers or given to contractual entities, but the board
retains full residual control of the business.
Who or what organ of government actually exercises this power of control on behalf of the State?
The Constitution is crystal clear: the President. Indeed, the Chief Executive is the official
constitutionally mandated to "enter into agreements with foreign owned corporations." On the other
hand, Congress may review the action of the President once it is notified of "every contract entered
into in accordance with this [constitutional] provision within thirty days from its execution." In contrast
to this express mandate of the President and Congress in the EDU of natural resources, Article XII
of the Constitution is silent on the role of the judiciary. However, should the President and/or
Congress gravely abuse their discretion in this regard, the courts may -- in a proper case -- exercise
their residual duty under Article VIII. Clearly then, the judiciary should not inordinately interfere in the
exercise of this presidential power of control over the EDU of our natural resources.
The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate
economic growth or to serve narrow, parochial interests. Rather, it should be construed to grant the
President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign
investments and expertise, as well as to secure for our people and our posterity the blessings of
prosperity and peace.
On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining
Law, its Implementing Rules and Regulations -- insofar as they relate to financial and technical
agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA). 5
Background
The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1)
Republic Act No. [RA] 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and
Regulations (DENR Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30,
1995, executed by the government with Western Mining Corporation (Philippines), Inc. (WMCP).
6 7
On January 27, 2004, the Court en banc promulgated its Decision granting the Petition and
8
declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire
FTAA executed between the government and WMCP, mainly on the finding that FTAAs are service
contracts prohibited by the 1987 Constitution.
The Decision struck down the subject FTAA for being similar to service contracts, which, though
9
permitted under the 1973 Constitution, were subsequently denounced for being antithetical to the
10
principle of sovereignty over our natural resources, because they allowed foreign control over the
exploitation of our natural resources, to the prejudice of the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service contracts
for, inter alia, vesting in the foreign contractor exclusive management and control of the enterprise,
including operation of the field in the event petroleum was discovered; control of production,
expansion and development; nearly unfettered control over the disposition and sale of the products
discovered/extracted; effective ownership of the natural resource at the point of extraction; and
beneficial ownership of our economic resources. According to the Decision, the 1987 Constitution
(Section 2 of Article XII) effectively banned such service contracts.
Subsequently, respondents filed separate Motions for Reconsideration. In a Resolution dated March
9, 2004, the Court required petitioners to comment thereon. In the Resolution of June 8, 2004, it set
the case for Oral Argument on June 29, 2004.
After hearing the opposing sides, the Court required the parties to submit their respective
Memoranda in amplification of their arguments. In a Resolution issued later the same day, June 29,
2004, the Court noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the Office
of the Solicitor General (OSG) on behalf of public respondents. The OSG said that it was not
interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the
Philippines, Inc. (CMP) and was in fact joining and adopting the latter's Motion for Reconsideration.
Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents,
and private respondent, dwelling at length on the three issues discussed below. Later, WMCP
submitted its Reply Memorandum, while the OSG -- in obedience to an Order of this Court -- filed a
Compliance submitting copies of more FTAAs entered into by the government.
Three Issues Identified by the Court
During the Oral Argument, the Court identified the three issues to be resolved in the present
controversy, as follows:
1. Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent
of Sagittarius' equity is owned by Filipinos and/or Filipino-owned corporations while 40 percent is
owned by Indophil Resources NL, an Australian company) and by the subsequent transfer and
registration of the FTAA from WMCP to Sagittarius?
2. Assuming that the case has been rendered moot, would it still be proper to resolve the
constitutionality of the assailed provisions of the Mining Law, DAO 96-40 and the WMCP FTAA?
3. What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial
Assistance contained in paragraph 4 of Section 2 of Article XII of the Constitution?
Should the Motion for Reconsideration Be Granted?
Respondents' and intervenor's Motions for Reconsideration should be granted, for the reasons
discussed below. The foregoing three issues identified by the Court shall now be taken up seriatim.
First Issue:
Mootness
In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the
majority Decision agreed with petitioners' contention that the subject FTAA had been executed in
violation of Section 2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs
entered into by the government with foreign-owned corporations are limited by the fourth paragraph
of the said provision to agreements involving only technical or financial assistance for large-scale
exploration, development and utilization of minerals, petroleum and other mineral oils. Furthermore,
the foreign contractor is allegedly permitted by the FTAA in question to fully manage and control the
mining operations and, therefore, to acquire "beneficial ownership" of our mineral resources.
The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on
January 23, 2001, WMC had sold all its shares in WMCP to Sagittarius Mines, Inc., 60 percent of
whose equity was held by Filipinos; and (2) that the assailed FTAA had likewise been transferred
from WMCP to Sagittarius. The ponencia declared that the instant case had not been rendered
11
moot by the transfer and registration of the FTAA to a Filipino-owned corporation, and that the
validity of the said transfer remained in dispute and awaited final judicial determination. Patently
12
therefore, the Decision is anchored on the assumption that WMCP had remained
a foreign corporation.
The crux of this issue of mootness is the fact that WMCP, at the time it entered into the
FTAA, happened to be wholly owned by WMC Resources International Pty., Ltd. (WMC), which in
turn was a wholly owned subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed
major Australian mining and exploration company.
The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation.
Had the FTAA been originally issued to a Filipino-owned corporation, there would have been no
constitutionality issue to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a
Filipino corporation can be likened to the sale of land to a foreigner who subsequently acquires
Filipino citizenship, or who later resells the same land to a Filipino citizen. The conveyance would be
validated, as the property in question would no longer be owned by a disqualified vendee.
And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer
possible for the Court to declare it unconstitutional. The case pending in the Court of Appeals is a
dispute between two Filipino companies (Sagittarius and Lepanto), both claiming the right to
purchase the foreign shares in WMCP. So, regardless of which side eventually wins, the FTAA
would still be in the hands of a qualified Filipino company. Considering that there is no longer any
justiciable controversy, the plea to nullify the Mining Law has become a virtual petition for
declaratory relief, over which this Court has no original jurisdiction.
In their Final Memorandum, however, petitioners argue that the case has not become moot,
considering the invalidity of the alleged sale of the shares in WMCP from WMC to Sagittarius, and of
the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA
in question. And even assuming that the said transfers were valid, there still exists an actual case
predicated on the invalidity of RA 7942 and its Implementing Rules and Regulations (DAO 96-40).
Presently, we shall discuss petitioners' objections to the transfer of both the shares and the
FTAA. We shall take up the alleged invalidity of RA 7942 and DAO 96-40 later on in the discussion
of the third issue.
No Transgression of the Constitution

by the Transfer of the WMCP Shares
Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares to Sagittarius
violates the fourth paragraph of Section 2 of Article XII of the Constitution; second, that it is contrary
to the provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and
should therefore be the subject of a case in which its validity may properly be litigated.
On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the
government to enter into FTAAs only with foreign-owned corporations. Petitioners insist that the first
paragraph of this constitutional provision limits the participation of Filipino corporations in the
exploration, development and utilization of natural resources to only three species of contracts --
production sharing, co-production and joint venture -- to the exclusion of all other arrangements or
variations thereof, and the WMCP FTAA may therefore not be validly assumed and implemented by
Sagittarius. In short, petitioners claim that a Filipino corporation is not allowed by the Constitution to
enter into an FTAA with the government.
However, a textual analysis of the first paragraph of Section 2 of Article XII does not support
petitioners' argument. The pertinent part of the said provision states: "Sec. 2. x x x The exploration,
development and utilization of natural resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations at
least sixty per centum of whose capital is owned by such citizens. x x x." Nowhere in the provision is
there any express limitation or restriction insofar as arrangements other than the three
aforementioned contractual schemes are concerned.
Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to
believe that the framers of the Constitution, a majority of whom were obviously concerned with
furthering the development and utilization of the country's natural resources, could have wanted to
restrict Filipino participation in that area. This point is clear, especially in the light of the overarching
constitutional principle of giving preference and priority to Filipinos and Filipino corporations in the
development of our natural resources.
Besides, even assuming (purely for argument's sake) that a constitutional limitation barring Filipino
corporations from holding and implementing an FTAA actually exists, nevertheless, such provision
would apply only to the transfer of the FTAA to Sagittarius, but definitely not to the sale of WMC's
equity stake in WMCP to Sagittarius. Otherwise, an unreasonable curtailment of property rights
without due process of law would ensue. Petitioners' argument must therefore fail.
FTAA Not Intended

Solely for Foreign Corporation
Equally barren of merit is the second ground cited by petitioners -- that the FTAA was intended to
apply solely to a foreign corporation, as can allegedly be seen from the provisions therein. They
manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply
only to a foreign contractor: Section 12, which provides for international commercial arbitration under
the auspices of the International Chamber of Commerce, after local remedies are exhausted. This
provision, however, does not necessarily imply that the WMCP FTAA cannot be transferred to and
assumed by a Filipino corporation like Sagittarius, in which event the said provision should simply be
disregarded as a superfluity.
No Need for a Separate

Litigation of the Sale of Shares
Petitioners claim as third ground the "suspicious" sale of shares from WMC to Sagittarius; hence, the
need to litigate it in a separate case. Section 40 of RA 7942 (the Mining Law) allegedly requires the
President's prior approval of a transfer.
A re-reading of the said provision, however, leads to a different conclusion. "Sec.

40. Assignment/Transfer -- A financial or technical assistance agreement may be assigned or
transferred, in whole or in part, to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every financial or technical assistance
agreement assigned or converted in accordance with this provision within thirty (30) days from the
date of the approval thereof."
Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer
of shares of stock in WMCP. Moreover, when the transferee of an FTAA is
another foreign corporation, there is a logical application of the requirement of prior approval by the
President of the Republic and notification to Congress in the event of assignment or transfer of an
FTAA. In this situation, such approval and notification are appropriate safeguards, considering that
the new contractor is the subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need
for such safeguard is not critical; hence, the lack of prior approval and notification may not be
deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is
entirely absent in this instance. As pointed out by private respondent in its Memorandum, the issue
13
of approval is the subject of one of the cases brought by Lepanto against Sagittarius in GR No.
162331. That case involved the review of the Decision of the Court of Appeals dated November 21,
2003 in CA-GR SP No. 74161, which affirmed the DENR Order dated December 31, 2001 and the
Decision of the Office of the President dated July 23, 2002, both approving the assignment of the
WMCP FTAA to Sagittarius.
Petitioners also question the sale price and the financial capacity of the transferee. According to the
Deed of Absolute Sale dated January 23, 2001, executed between WMC and Sagittarius, the price
of the WMCP shares was fixed at US$9,875,000, equivalent to P553 million at an exchange rate of
56:1. Sagittarius had an authorized capital stock of P250 million and a paid up capital of P60 million.
Therefore, at the time of approval of the sale by the DENR, the debt-to-equity ratio of the transferee
was over 9:1 -- hardly ideal for an FTAA contractor, according to petitioners.
However, private respondents counter that the Deed of Sale specifically provides that the payment
of the purchase price would take place only after Sagittarius' commencement of commercial
production from mining operations, if at all. Consequently, under the circumstances, we believe it
would not be reasonable to conclude, as petitioners did, that the transferee's high debt-to-equity ratio
per se necessarily carried negative implications for the enterprise; and it would certainly be improper
to invalidate the sale on that basis, as petitioners propose.
FTAA Not Void,

Thus Transferrable
To bolster further their claim that the case is not moot, petitioners insist that the FTAA is void and,
hence cannot be transferred; and that its transfer does not operate to cure the constitutional infirmity
that is inherent in it; neither will a change in the circumstances of one of the parties serve to ratify the
void contract.
While the discussion in their Final Memorandum was skimpy, petitioners in their Comment (on the
MR) did ratiocinate that this Court had declared the FTAA to be void because, at the time it was
executed with WMCP, the latter was a fully foreign-owned corporation, in which the former vested
full control and management with respect to the exploration, development and utilization of mineral
resources, contrary to the provisions of paragraph 4 of Section 2 of Article XII of the Constitution.
And since the FTAA was per se void, no valid right could be transferred; neither could it be ratified,
so petitioners conclude.
Petitioners have assumed as fact that which has yet to be established. First and foremost, the
Decision of this Court declaring the FTAA void has not yet become final. That was precisely the
reason the Court still heard Oral Argument in this case. Second, the FTAA does not vest in the
foreign corporation full control and supervision over the exploration, development and utilization of
mineral resources, to the exclusion of the government. This point will be dealt with in greater detail
below; but for now, suffice it to say that a perusal of the FTAA provisions will prove that the
government has effective overall direction and control of the mining operations, including marketing
and product pricing, and that the contractor's work programs and budgets are subject to its review
and approval or disapproval.
As will be detailed later on, the government does not have to micro-manage the mining operations
and dip its hands into the day-to-day management of the enterprise in order to be considered as
having overall control and direction. Besides, for practical and pragmatic reasons, there is a need for
government agencies to delegate certain aspects of the management work to the contractor. Thus
the basis for declaring the FTAA void still has to be revisited, reexamined and reconsidered.
Petitioners sniff at the citation of Chavez v. Public Estates Authority, and Halili v. CA, claiming that
14 15
the doctrines in these cases are wholly inapplicable to the instant case.
Chavez clearly teaches: "Thus, the Court has ruled consistently that where a Filipino citizen sells
land to an alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by
the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires
Philippine citizenship, the sale is validated since the purpose of the constitutional ban to limit land
ownership to Filipinos has been achieved. In short, the law disregards the constitutional
disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or
the buyer himself becomes a qualified party." 16
In their Comment, petitioners contend that in Chavez and Halili, the object of the transfer (the land)
was not what was assailed for alleged unconstitutionality. Rather, it was the transaction that was
assailed; hence subsequent compliance with constitutional provisions would cure its infirmity. In
contrast, in the instant case it is the FTAA itself, the object of the transfer, that is being assailed as
invalid and unconstitutional. So, petitioners claim that the subsequent transfer of a void FTAA to a
Filipino corporation would not cure the defect.
Petitioners are confusing themselves. The present Petition has been filed, precisely because the
grantee of the FTAA was a wholly owned subsidiary of a foreign corporation. It cannot be gainsaid
that anyone would have asserted that the same FTAA was void if it had at the outset been issued to
a Filipino corporation. The FTAA, therefore, is not per se defective or unconstitutional. It was
questioned only because it had been issued to an allegedly non-qualified, foreign-owned
corporation.
We believe that this case is clearly analogous to Halili, in which the land acquired by a non-Filipino
was re-conveyed to a qualified vendee and the original transaction was thereby cured.
Paraphrasing Halili, the same rationale applies to the instant case: assuming arguendo the invalidity
of its prior grant to a foreign corporation, the disputed FTAA -- being now held by a Filipino
corporation -- can no longer be assailed; the objective of the constitutional provision -- to keep the
exploration, development and utilization of our natural resources in Filipino hands -- has been
served.
More accurately speaking, the present situation is one degree better than that obtaining in Halili, in
which the original sale to a non-Filipino was clearly and indisputably violative of the constitutional
prohibition and thus void ab initio. In the present case, the issuance/grant of the subject FTAA to the
then foreign-owned WMCP was not illegal, void or unconstitutional at the time. The matter had to be
brought to court, precisely for adjudication as to whether the FTAA and the Mining Law had indeed
violated the Constitution. Since, up to this point, the decision of this Court declaring the FTAA void
has yet to become final, to all intents and purposes, the FTAA must be deemed valid and
constitutional.
17
At bottom, we find completely outlandish petitioners' contention that an FTAA could be entered into
by the government only with a foreign corporation, never with a Filipino enterprise. Indeed, the
nationalistic provisions of the Constitution are all anchored on the protection of Filipino interests.
How petitioners can now argue that foreigners have the exclusive right to FTAAs totally overturns
the entire basis of the Petition -- preference for the Filipino in the exploration, development and
utilization of our natural resources. It does not take deep knowledge of law and logic to understand
that what the Constitution grants to foreigners should be equally available to Filipinos.
Second Issue:
Whether the Court Can Still Decide the Case,

Even Assuming It Is Moot
All the protagonists are in agreement that the Court has jurisdiction to decide this controversy, even
assuming it to be moot.
Petitioners stress the following points. First, while a case becomes moot and academic when "there
is no more actual controversy between the parties or no useful purpose can be served in passing
upon the merits," what is at issue in the instant case is not only the validity of the WMCP FTAA, but
18
also the constitutionality of RA 7942 and its Implementing Rules and Regulations. Second, the acts
of private respondent cannot operate to cure the law of its alleged unconstitutionality or to divest this
Court of its jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty
to declare invalid any law that offends the Constitution.
Petitioners also argue that no amendatory laws have been passed to make the Mining Act of 1995
conform to constitutional strictures (assuming that, at present, it does not); that public respondents
will continue to implement and enforce the statute until this Court rules otherwise; and that the said
law continues to be the source of legal authority in accepting, processing and approving numerous
applications for mining rights.
Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been filed with the
Mines and Geosciences Bureau (MGB), with an aggregate area of 2,064,908.65 hectares -- spread
over Luzon, the Visayas and Mindanao -- applied for. It may be a bit far-fetched to assert, as
19
petitioners do, that each and every FTAA that was entered into under the provisions of the Mining
Act "invites potential litigation" for as long as the constitutional issues are not resolved with finality.
Nevertheless, we must concede that there exists the distinct possibility that one or more of the future
FTAAs will be the subject of yet another suit grounded on constitutional issues.
But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry,
which is even now scaring away foreign investments. Attesting to this climate of anxiety is the fact
that the Chamber of Mines of the Philippines saw the urgent need to intervene in the case and to
present its position during the Oral Argument; and that Secretary General Romulo Neri of the
National Economic Development Authority (NEDA) requested this Court to allow him to speak,
during that Oral Argument, on the economic consequences of the Decision of January 27, 2004.20
We are convinced. We now agree that the Court must recognize the exceptional character of the
situation and the paramount public interest involved, as well as the necessity for a ruling to put an
end to the uncertainties plaguing the mining industry and the affected communities as a result of
doubts cast upon the constitutionality and validity of the Mining Act, the subject FTAA and future
FTAAs, and the need to avert a multiplicity of suits. Paraphrasing Gonzales v. Commission on
Elections, it is evident that strong reasons of public policy demand that the constitutionality issue be
21
resolved now. 22
In further support of the immediate resolution of the constitutionality issue, public respondents
cite Acop v. Guingona, to the effect that the courts will decide a question -- otherwise moot and
23
academic -- if it is "capable of repetition, yet evading review." Public respondents ask the Court to
24
avoid a situation in which the constitutionality issue may again arise with respect to another FTAA,
the resolution of which may not be achieved until after it has become too late for our mining industry
to grow out of its infancy. They also recall Salonga v. Cruz Paño, in which this Court declared
25
that "(t)he Court also has the duty to formulate guiding and controlling constitutional principles,
precepts, doctrines or rules. It has the symbolic function of educating the bench and bar on the
extent of protection given by constitutional guarantees. x x x."
The mootness of the case in relation to the WMCP FTAA led the undersigned ponente to state in his
dissent to the Decision that there was no more justiciable controversy and the plea to nullify the
Mining Law has become a virtual petition for declaratory relief. The entry of the Chamber of Mines
26
of the Philippines, Inc., however, has put into focus the seriousness of the allegations of
unconstitutionality of RA 7942 and DAO 96-40 which converts the case to one for prohibition in the27
enforcement of the said law and regulations.
Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of
Section 2 of Article XII of the Constitution is contravened by RA 7942 and DAO 96-40, not whether it
was violated by specific acts implementing RA 7942 and DAO 96-40. "[W]hen an act of the
legislative department is seriously alleged to have infringed the Constitution, settling the controversy
becomes the duty of this Court. By the mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a judicial controversy even without any
other overt act." This ruling can be traced from Tañada v. Angara, in which the Court said:
28 29
"In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not only
the right but in fact the duty of the judiciary to settle the dispute.
xxxxxxxxx
"As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress
from or abandon its sacred duty and authority to uphold the Constitution in matters that
involve grave abuse of discretion brought before it in appropriate cases, committed by any
officer, agency, instrumentality or department of the government." 30
Additionally, the entry of CMP into this case has also effectively forestalled any possible objections
arising from the standing or legal interest of the original parties.
For all the foregoing reasons, we believe that the Court should proceed to a resolution of the
constitutional issues in this case.
Third Issue:
The Proper Interpretation of the Constitutional Phrase

"Agreements Involving Either Technical or Financial Assistance"
The constitutional provision at the nucleus of the controversy is paragraph 4 of Section 2 of Article
XII of the 1987 Constitution. In order to appreciate its context, Section 2 is reproduced in full:
"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development and utilization
of natural resources shall be under the full control and supervision of the State. The State
may directly undertake such activities, or it may enter into co-production, joint venture or
production-sharing agreements with Filipino citizens or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water
power, beneficial use may be the measure and limit of the grant.
"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens.
"The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-
workers in rivers, lakes, bays and lagoons.
"The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general terms
and conditions provided by law, based on real contributions to the economic growth and
general welfare of the country. In such agreements, the State shall promote the development
and use of local scientific and technical resources.
"The President shall notify the Congress of every contract entered into in accordance with
this provision, within thirty days from its execution."
31
No Restriction of Meaning by
a Verba Legis Interpretation
To interpret the foregoing provision, petitioners adamantly assert that the language of the
Constitution should prevail; that the primary method of interpreting it is to seek the ordinary meaning
of the words used in its provisions. They rely on rulings of this Court, such as the following:
"The fundamental principle in constitutional construction however is that the primary source
from which to ascertain constitutional intent or purpose is the language of the provision itself.
The presumption is that the words in which the constitutional provisions are couched
express the objective sought to be attained. In other words, verba legis prevails. Only when
the meaning of the words used is unclear and equivocal should resort be made to
extraneous aids of construction and interpretation, such as the proceedings of the
Constitutional Commission or Convention to shed light on and ascertain the true intent or
purpose of the provision being construed." 32
Very recently, in Francisco v. The House of Representatives, this Court indeed had the occasion to
33
reiterate the well-settled principles of constitutional construction:
"First, verba legis, that is, wherever possible, the words used in the Constitution must be
given their ordinary meaning except where technical terms are employed. x x x.
xxxxxxxxx
"Second, where there is ambiguity, ratio legis est anima. The words of the Constitution
should be interpreted in accordance with the intent of its framers. x x x.
xxxxxxxxx
"Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole." 34
For ease of reference and in consonance with verba legis, we reconstruct and stratify the
aforequoted Section 2 as follows:
1. All natural resources are owned by the State. Except for agricultural lands, natural
resources cannot be alienated by the State.
2. The exploration, development and utilization (EDU) of natural resources shall be under the
full control and supervision of the State.
3. The State may undertake these EDU activities through either of the following:
(a) By itself directly and solely
(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with
Filipino citizens or corporations, at least 60 percent of the capital of which is owned
by such citizens
4. Small-scale utilization of natural resources may be allowed by law in favor of Filipino

citizens.
5. For large-scale EDU of minerals, petroleum and other mineral oils, the President may
enter into "agreements with foreign-owned corporations involving either technical or financial
assistance according to the general terms and conditions provided by law x x x."
Note that in all the three foregoing mining activities -- exploration, development and utilization -- the
State may undertake such EDU activities by itself or in tandem with Filipinos or Filipino corporations,
except in two instances: first, in small-scale utilization of natural resources, which Filipinos may be
allowed by law to undertake; and second, in large-scale EDU of minerals, petroleum and mineral
oils, which may be undertaken by the State via "agreements with foreign-owned corporations
involving either technical or financial assistance" as provided by law.
Petitioners claim that the phrase "agreements x x x involving either technical or financial

assistance" simply means technical assistance or financial assistance agreements, nothing more
and nothing else. They insist that there is no ambiguity in the phrase, and that a plain reading of
paragraph 4 quoted above leads to the inescapable conclusion that what a foreign-owned
corporation may enter into with the government is merely an agreement
for either financial or technical assistance only, for the large-scale exploration, development and
utilization of minerals, petroleum and other mineral oils; such a limitation, they argue, excludes
foreign management and operation of a mining enterprise. 35
This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the
Constitution reserving to Filipino citizens and corporations the use and enjoyment of the country's
natural resources. They maintain that this Court's Decision of January 27, 2004 correctly declared
36
the WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor
to have direct and exclusive management of a mining enterprise. Allowing such a privilege not only
runs counter to the "full control and supervision" that the State is constitutionally mandated to
exercise over the exploration, development and utilization of the country's natural resources; doing
so also vests in the foreign company "beneficial ownership" of our mineral resources. It will be
recalled that the Decision of January 27, 2004 zeroed in on "management or other forms of
assistance" or other activities associated with the "service contracts" of the martial law regime,
since "the management or operation of mining activities by foreign contractors, which is the primary
feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought
to eradicate."
On the other hand, the intervenor and public respondents argue that the FTAA allowed by
37
paragraph 4 is not merely an agreement for supplying limited and specific financial or technical
services to the State. Rather, such FTAA is a comprehensive agreement for the foreign-owned
corporation's integrated exploration, development and utilization of mineral, petroleum or other
mineral oils on a large-scale basis. The agreement, therefore, authorizes the foreign contractor's
rendition of a whole range of integrated and comprehensive services, ranging from the discovery to
the development, utilization and production of minerals or petroleum products.
We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could
inexorably lead to the conclusions arrived at in the ponencia. First, the drafters' choice of words --
their use of the phrase agreements x x x involving either technical or financial assistance -- does
not indicate the intent to exclude other modes of assistance. The drafters opted to
use involving when they could have simply said agreements for financial or technical
assistance, if that was their intention to begin with. In this case, the limitation would be very clear
and no further debate would ensue.
In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms
of assistance or activities having to do with, otherwise related to or compatible with financial or
technical assistance. The word "involving" as used in this context has three connotations that can be
differentiated thus: one, the sense of "concerning," "having to do with," or "affecting"; two, "entailing,"
"requiring," "implying" or "necessitating"; and three, "including," "containing" or "comprising."38
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving,"
when understood in the sense of "including," as in including technical or financial
assistance, necessarily implies that there are activities other than those that are being included. In
other words, if an agreement includes technical or financial assistance, there is apart from such
assistance -- something else already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly mentioned, could be
made part of the agreement. Thus, we are now led to the conclusion that the use of the word
"involving" implies that these agreements with foreign corporations are not limited to mere financial
or technical assistance. The difference in sense becomes very apparent when we juxtapose
"agreements for technical or financial assistance" against "agreements including technical or
financial assistance." This much is unalterably clear in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to financial or
technical assistance and nothing more, their language would have certainly been so unmistakably
restrictive and stringent as to leave no doubt in anyone's mind about their true intent. For example,
they would have used the sentence foreign corporations are absolutely prohibited from
involvement in the management or operation of mining or similar ventures or words of similar import.
A search for such stringent wording yields negative results. Thus, we come to the inevitable
conclusion that there was a conscious and deliberate decision to avoid the use of restrictive
wording that bespeaks an intent not to use the expression "agreements x x x involving either
technical or financial assistance" in an exclusionary and limiting manner.
Deletion of "Service Contracts" to

Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se
Third, we do not see how a verba legis approach leads to the conclusion that "the management or
operation of mining activities by foreign contractors, which is the primary feature of service contracts,
was precisely the evil that the drafters of the 1987 Constitution sought to eradicate." Nowhere in the
above-quoted Section can be discerned the objective to keep out of foreign hands the management
or operation of mining activities or the plan to eradicate service contracts as these were understood
in the 1973 Constitution. Still, petitioners maintain that the deletion or omission from the 1987
Constitution of the term "service contracts" found in the 1973 Constitution sufficiently proves the
drafters' intent to exclude foreigners from the management of the affected enterprises.
To our mind, however, such intent cannot be definitively and conclusively established from the mere
failure to carry the same expression or term over to the new Constitution, absent a more specific,
explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign
participation in the management of mining operations, as previously allowed by the earlier
Constitutions) is nothing short of bringing about a momentous sea change in the economic and
developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our
government. We cannot imagine such a radical shift being undertaken by our government, to the
great prejudice of the mining sector in particular and our economy in general, merely on the basis of
the omission of the terms service contract from or the failure to carry them over to the new
Constitution. There has to be a much more definite and even unarguable basis for such a drastic
reversal of policies.
Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed by petitioners,
suffers from certain internal logical inconsistencies that generate ambiguities in the understanding of
the provision. As the intervenor pointed out, there has never been any constitutional or statutory
provision that reserved to Filipino citizens or corporations, at least 60 percent of which is Filipino-
owned, the rendition of financial or technical assistance to companies engaged in mining or the
development of any other natural resource. The taking out of foreign-currency or peso-denominated
loans or any other kind of financial assistance, as well as the rendition of technical assistance --
whether to the State or to any other entity in the Philippines -- has never been restricted in favor of
Filipino citizens or corporations having a certain minimum percentage of Filipino equity. Such a
restriction would certainly be preposterous and unnecessary. As a matter of fact, financial, and even
technical assistance, regardless of the nationality of its source, would be welcomed in the mining
industry anytime with open arms, on account of the dearth of local capital and the need to continually
update technological know-how and improve technical skills.
There was therefore no need for a constitutional provision specifically allowing foreign-owned
corporations to render financial or technical assistance, whether in respect of mining or some other
resource development or commercial activity in the Philippines. The last point needs to be
emphasized: if merely financial or technical assistance agreements are allowed, there would
be no need to limit them to large-scale mining operations, as there would be far greater need
for them in the smaller-scale mining activities (and even in non-mining areas). Obviously, the
provision in question was intended to refer to agreements other than those for mere financial
or technical assistance.
In like manner, there would be no need to require the President of the Republic to report to
Congress, if only financial or technical assistance agreements are involved. Such agreements are in
the nature of foreign loans that -- pursuant to Section 20 of Article VII of the 1987 Constitution -- the
39
President may contract or guarantee, merely with the prior concurrence of the Monetary Board. In
turn, the Board is required to report to Congress within thirty days from the end of every quarter of
the calendar year, not thirty days after the agreement is entered into.
And if paragraph 4 permits only agreements for loans and other forms of financial, or technical
assistance, what is the point of requiring that they be based on real contributions to the economic
growth and general welfare of the country? For instance, how is one to measure and assess the
"real contributions" to the "economic growth" and "general welfare" of the country that may ensue
from a foreign-currency loan agreement or a technical-assistance agreement for, say, the
refurbishing of an existing power generating plant for a mining operation somewhere in Mindanao?
Such a criterion would make more sense when applied to a major business investment in a principal
sector of the industry.
The conclusion is clear and inescapable -- a verba legis construction shows that paragraph 4 is not
to be understood as one limited only to foreign loans (or other forms of financial support) and to
technical assistance. There is definitely more to it than that. These are provisions permitting
participation by foreign companies; requiring the President's report to Congress; and using,
as yardstick, contributions based on economic growth and general welfare. These were
neither accidentally inserted into the Constitution nor carelessly cobbled together by the
drafters in lip service to shallow nationalism. The provisions patently have significance and
usefulness in a context that allows agreements with foreign companies to include more than mere
financial or technical assistance.
Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a rendition of specific and
limited financial service or technical assistance by a foreign company. This argument begs the
question "To whom or for whom would it be rendered"? or Who is being assisted? If the answer is
"The State," then it necessarily implies that the State itself is the one directly and solely undertaking
the large-scale exploration, development and utilization of a mineral resource, so it follows that the
State must itself bear the liability and cost of repaying the financing sourced from the foreign lender
and/or of paying compensation to the foreign entity rendering technical assistance.
However, it is of common knowledge, and of judicial notice as well, that the government is and has
for many many years been financially strapped, to the point that even the most essential services
have suffered serious curtailments -- education and health care, for instance, not to mention judicial
services -- have had to make do with inadequate budgetary allocations. Thus, government has had
to resort to build-operate-transfer and similar arrangements with the private sector, in order to get
vital infrastructure projects built without any governmental outlay.
The very recent brouhaha over the gargantuan "fiscal crisis" or "budget deficit" merely confirms what
the ordinary citizen has suspected all along. After the reality check, one will have to admit the
implausibility of a direct undertaking -- by the State itself -- of large-scale exploration, development
and utilization of minerals, petroleum and other mineral oils. Such an undertaking entails not only
humongous capital requirements, but also the attendant risk of never finding and developing
economically viable quantities of minerals, petroleum and other mineral oils. 40
It is equally difficult to imagine that such a provision restricting foreign companies to the rendition of
only financial or technical assistance to the government was deliberately crafted by the drafters of
the Constitution, who were all well aware of the capital-intensive and technology-oriented nature of
large-scale mineral or petroleum extraction and the country's deficiency in precisely those areas. To41
say so would be tantamount to asserting that the provision was purposely designed to ladle the
large-scale development and utilization of mineral, petroleum and related resources with impossible
conditions; and to remain forever and permanently "reserved" for future generations of Filipinos.
A More Reasonable Look

at the Charter's Plain Language
Sixth, we shall now look closer at the plain language of the Charter and examining the logical
inferences. The drafters chose to emphasize and highlight agreements x x x involving either
technical or financial assistance in relation to foreign corporations' participation in large-scale EDU.
The inclusion of this clause on "technical or financial assistance" recognizes the fact that foreign
business entities and multinational corporations are the ones with the resources and know-how to
provide technical and/or financial assistance of the magnitude and type required for large-scale
exploration, development and utilization of these resources.
The drafters -- whose ranks included many academicians, economists, businessmen, lawyers,
politicians and government officials -- were not unfamiliar with the practices of foreign corporations
and multinationals.
Neither were they so naïve as to believe that these entities would provide "assistance" without
conditionalities or some quid pro quo. Definitely, as business persons well know and as a matter of
judicial notice, this matter is not just a question of signing a promissory note or executing a
technology transfer agreement. Foreign corporations usually require that they be given a say in the
management, for instance, of day-to-day operations of the joint venture. They would demand the
appointment of their own men as, for example, operations managers, technical experts, quality
control heads, internal auditors or comptrollers. Furthermore, they would probably require seats on
the Board of Directors -- all these to ensure the success of the enterprise and the repayment of the
loans and other financial assistance and to make certain that the funding and the technology they
supply would not go to waste. Ultimately, they would also want to protect their business reputation
and bottom lines.42
In short, the drafters will have to be credited with enough pragmatism and savvy to know that these
foreign entities will not enter into such "agreements involving assistance" without requiring
arrangements for the protection of their investments, gains and benefits.
Thus, by specifying such "agreements involving assistance," the drafters necessarily gave implied
assent to everything that these agreements necessarily entailed; or that could reasonably be
deemed necessary to make them tenable and effective, including management authority with
respect to the day-to-day operations of the enterprise and measures for the protection of the
interests of the foreign corporation, PROVIDED THAT Philippine sovereignty over natural resources
and full control over the enterprise undertaking the EDU activities remain firmly in the State.
Petitioners' Theory Deflated by the

Absence of Closing-Out Rules or Guidelines
Seventh and final point regarding the plain-language approach, one of the practical difficulties that
results from it is the fact that there is nothing by way of transitory provisions that would serve to
confirm the theory that the omission of the term "service contract" from the 1987 Constitution
signaled the demise of service contracts.
The framers knew at the time they were deliberating that there were various service contracts extant
and in force and effect, including those in the petroleum industry. Many of these service contracts
were long-term (25 years) and had several more years to run. If they had meant to ban service
contracts altogether, they would have had to provide for the termination or pretermination of the
existing contracts. Accordingly, they would have supplied the specifics and the when and how of
effecting the extinguishment of these existing contracts (or at least the mechanics for determining
them); and of putting in place the means to address the just claims of the contractors for
compensation for their investments, lost opportunities, and so on, if not for the recovery thereof.
If the framers had intended to put an end to service contracts, they would have at least left specific
instructions to Congress to deal with these closing-out issues, perhaps by way of general guidelines
and a timeline within which to carry them out. The following are some extant examples of such
transitory guidelines set forth in Article XVIII of our Constitution:
"Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI of this
Constitution shall have five years from its ratification to comply on a graduated and
proportionate basis with the minimum Filipino ownership requirement therein.
xxxxxxxxx
"Section 25. After the expiration in 1991 of the Agreement between the Republic of the
Philippines and the United States of America concerning military bases, foreign military
bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly
concurred in by the Senate and, when the Congress so requires, ratified by a majority of the
votes cast by the people in a national referendum held for that purpose, and recognized as a
treaty by the other contracting State.
"Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3
dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative
for not more than eighteen months after the ratification of this Constitution. However, in the
national interest, as certified by the President, the Congress may extend such period.
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The
order and the list of the sequestered or frozen properties shall forthwith be registered with
the proper court. For orders issued before the ratification of this Constitution, the
corresponding judicial action or proceeding shall be filed within six months from its
ratification. For those issued after such ratification, the judicial action or proceeding shall be
commenced within six months from the issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or

proceeding is commenced as herein provided." 43]
It is inconceivable that the drafters of the Constitution would leave such an important matter -- an
expression of sovereignty as it were -- indefinitely hanging in the air in a formless and ineffective
state. Indeed, the complete absence of even a general framework only serves to further deflate
petitioners' theory, like a child's balloon losing its air.
Under the circumstances, the logical inconsistencies resulting from petitioners' literal and
purely verba legis approach to paragraph 4 of Section 2 of Article XII compel a resort to other aids to
interpretation.
Petitioners' Posture Also Negated

by Ratio Legis Et Anima
Thus, in order to resolve the inconsistencies, incongruities and ambiguities encountered and to
supply the deficiencies of the plain-language approach, there is a need for recourse to the
proceedings of the 1986 Constitutional Commission. There is a need for ratio legis et anima.
Service Contracts Not

"Deconstitutionalized"
Pertinent portions of the deliberations of the members of the Constitutional Commission (ConCom)
conclusively show that they discussed agreements involving either technical or financial
assistance in the same breadth as service contracts and used the terms interchangeably. The
following exchange between Commissioner Jamir (sponsor of the provision) and Commissioner
Suarez irrefutably proves that the "agreements involving technical or financial assistance" were none
other than service contracts.
THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.

MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section 3, my
amendment by substitution reads: THE PRESIDENT MAY ENTER INTO AGREEMENTS
WITH FOREIGN-OWNED CORPORATIONS INVOLVING EITHER TECHNICAL OR
FINANCIAL ASSISTANCE FOR LARGE-SCALE EXPLORATION, DEVELOPMENT AND
UTILIZATION OF NATURAL RESOURCES ACCORDING TO THE TERMS AND
CONDITIONS PROVIDED BY LAW.
MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will give the
background.
MR. JAMIR. Thank you.
THE PRESIDENT. Commissioner Suarez is recognized.
MR. SUAREZ. Thank you, Madam President.
Will Commissioner Jamir answer a few clarificatory questions?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. This particular portion of the section has reference to what was popularly
known before as service contracts, among other things, is that correct?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. As it is formulated, the President may enter into service contracts but

subject to the guidelines that may be promulgated by Congress?
MR. JAMIR. That is correct.
MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on the
President, not upon Congress?
MR. JAMIR. That is also correct, Madam President.
MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made
strictly in accordance with guidelines prescribed by Congress?
MR. JAMIR. That is also correct.
MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers
situations of the same nature?
MR. JAMIR. That is 100 percent correct.
MR. SUAREZ. I thank the Commissioner.
MR. JAMIR. Thank you very much. 44

The following exchange leaves no doubt that the commissioners knew exactly what they were
dealing with: service contracts.
THE PRESIDENT. Commissioner Gascon is recognized.
MR. GASCON. Commissioner Jamir had proposed an amendment with regard to

special service contracts which was accepted by the Committee. Since the Committee has
accepted it, I would like to ask some questions.
THE PRESIDENT. Commissioner Gascon may proceed.
MR. GASCON. As it is proposed now, such service contracts will be entered into by the

President with the guidelines of a general law on service contract to be enacted by
Congress. Is that correct?
MR. VILLEGAS. The Commissioner is right, Madam President.
MR. GASCON. According to the original proposal, if the President were to enter into a
particular agreement, he would need the concurrence of Congress. Now that it has been
changed by the proposal of Commissioner Jamir in that Congress will set the general law to
which the President shall comply, the President will, therefore, not need the concurrence of
Congress every time he enters into service contracts. Is that correct?
MR. VILLEGAS. That is right.
MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect contrast to

my proposed amendment, so I would like to object and present my proposed amendment to
the body.
xxxxxxxxx
MR. GASCON. Yes, it will be up to the body.
I feel that the general law to be set by Congress as regard service contract

agreements which the President will enter into might be too general or since we do not know
the content yet of such a law, it might be that certain agreements will be detrimental to the
interest of the Filipinos. This is in direct contrast to my proposal which provides that there be
effective constraints in the implementation of service contracts.
So instead of a general law to be passed by Congress to serve as a guideline to the

President when entering into service contract agreements, I propose that every service
contract entered into by the President would need the concurrence of Congress, so as to
assure the Filipinos of their interests with regard to the issue in Section 3 on all lands of the
public domain. My alternative amendment, which we will discuss later, reads: THAT THE
PRESIDENT SHALL ENTER INTO SUCH AGREEMENTS ONLY WITH THE
CONCURRENCE OF TWO-THIRDS VOTE OF ALL THE MEMBERS OF CONGRESS
SITTING SEPARATELY.
xxxxxxxxx
MR. BENGZON. The reason we made that shift is that we realized the original proposal
could breed corruption. By the way, this is not just confined to service contracts but also
to financial assistance. If we are going to make every single contract subject to the
concurrence of Congress – which, according to the Commissioner's amendment is the
concurrence of two-thirds of Congress voting separately – then (1) there is a very great
chance that each contract will be different from another; and (2) there is a great temptation
that it would breed corruption because of the great lobbying that is going to happen. And we
do not want to subject our legislature to that.
Now, to answer the Commissioner's apprehension, by "general law," we do not mean

statements of motherhood. Congress can build all the restrictions that it wishes into that
general law so that every contract entered into by the President under that specific area will
have to be uniform. The President has no choice but to follow all the guidelines that will be
provided by law.
MR. GASCON. But my basic problem is that we do not know as of yet the contents of such a
general law as to how much constraints there will be in it. And to my mind, although the
Committee's contention that the regular concurrence from Congress would subject Congress
to extensive lobbying, I think that is a risk we will have to take since Congress is a body of
representatives of the people whose membership will be changing regularly as there will be
changing circumstances every time certain agreements are made. It would be best then to
keep in tab and attuned to the interest of the Filipino people, whenever the President enters
into any agreement with regard to such an important matter as technical or financial
assistance for large-scale exploration, development and utilization of natural
resources or service contracts, the people's elected representatives should be on top of it.
xxxxxxxxx
MR. OPLE. Madam President, we do not need to suspend the session. If Commissioner
Gascon needs a few minutes, I can fill up the remaining time while he completes his
proposed amendment. I just wanted to ask Commissioner Jamir whether he would entertain
a minor amendment to his amendment, and it reads as follows: THE PRESIDENT SHALL
SUBSEQUENTLY NOTIFY CONGRESS OF EVERY SERVICE CONTRACT ENTERED
INTO IN ACCORDANCE WITH THE GENERAL LAW. I think the reason is, if I may state it
briefly, as Commissioner Bengzon said, Congress can always change the general law later
on to conform to new perceptions of standards that should be built into service contracts.
But the only way Congress can do this is if there were a notification requirement from the
Office of the President that such service contracts had been entered into, subject then to
the scrutiny of the Members of Congress. This pertains to a situation where the service
contracts are already entered into, and all that this amendment seeks is the reporting
requirement from the Office of the President. Will Commissioner Jamir entertain that?
MR. JAMIR. I will gladly do so, if it is still within my power.
MR. VILLEGAS. Yes, the Committee accepts the amendment.
xxxxxxxxx
SR. TAN. Madam President, may I ask a question?
THE PRESIDENT. Commissioner Tan is recognized.

SR. TAN. Am I correct in thinking that the only difference between these future service
contracts and the past service contracts under Mr. Marcos is the general law to be
enacted by the legislature and the notification of Congress by the President? That is the only
difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards.
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President. 45
More Than Mere Financial

and Technical Assistance
Entailed by the Agreements
The clear words of Commissioner Jose N. Nolledo quoted below explicitly and eloquently
demonstrate that the drafters knew that the agreements with foreign corporations were going to
entail not mere technical or financial assistance but, rather, foreign investment in and management
of an enterprise involved in large-scale exploration, development and utilization of minerals,
petroleum, and other mineral oils.
THE PRESIDENT. Commissioner Nolledo is recognized.
MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader to
speak for only two minutes in favor of the amendment of Commissioner Gascon.
THE PRESIDENT. Commissioner Nolledo may proceed.
MR. NOLLEDO. With due respect to the members of the Committee and Commissioner
Jamir, I am in favor of the objection of Commissioner Gascon.
Madam President, I was one of those who refused to sign the 1973 Constitution, and
one of the reasons is that there were many provisions in the Transitory Provisions
therein that favored aliens. I was shocked when I read a provision
authorizing service contracts while we, in this Constitutional Commission, provided
for Filipino control of the economy. We are, therefore, providing for exceptional
instances where aliens may circumvent Filipino control of our economy. And one way
of circumventing the rule in favor of Filipino control of the economy is to
recognize service contracts.
As far as I am concerned, if I should have my own way, I am for the complete

deletion of this provision. However, we are presenting a compromise in the sense
that we are requiring a two-thirds vote of all the Members of Congress as a
safeguard. I think we should not mistrust the future Members of Congress by saying
that the purpose of this provision is to avoid corruption. We cannot claim that they
are less patriotic than we are. I think the Members of this Commission should know
that entering into service contracts is an exception to the rule on protection of
natural resources for the interest of the nation, and therefore, being an exception it
should be subject, whenever possible, to stringent rules. It seems to me that we are
liberalizing the rules in favor of aliens.
I say these things with a heavy heart, Madam President. I do not claim to be a
nationalist, but I love my country. Although we need investments, we must adopt
safeguards that are truly reflective of the sentiments of the people and not mere
cosmetic safeguards as they now appear in the Jamir amendment. (Applause)
Thank you, Madam President. 46
Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates
the limitations of the scope of such service contracts -- they are valid only in regard to minerals,
petroleum and other mineral oils, not to all natural resources.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir amendment
and also to the Ople amendment. I propose to delete "NATURAL RESOURCES" and
substitute it with the following: MINERALS, PETROLEUM AND OTHER MINERAL OILS. On
the Ople amendment, I propose to add: THE NOTIFICATION TO CONGRESS SHALL BE
WITHIN THIRTY DAYS FROM THE EXECUTION OF THE SERVICE CONTRACT.
THE PRESIDENT. What does the Committee say with respect to the first amendment in lieu
of "NATURAL RESOURCES"?
MR. VILLEGAS. Could Commissioner Davide explain that?
MR. DAVIDE. Madam President, with the use of "NATURAL RESOURCES" here, it would
necessarily include all lands of the public domain, our marine resources, forests, parks and
so on. So we would like to limit the scope of these service contracts to those areas really
where these may be needed, the exploitation, development and exploration of minerals,
petroleum and other mineral oils. And so, we believe that we should really, if we want to
grant service contracts at all, limit the same to only those particular areas where Filipino
capital may not be sufficient, and not to all natural resources.
MR. SUAREZ. Just a point of clarification again, Madam President. When the Commissioner
made those enumerations and specifications, I suppose he deliberately did not include
"agricultural land"?
MR. DAVIDE. That is precisely the reason we have to enumerate what these resources are
into which service contracts may enter. So, beyond the reach of any service contract will
be lands of the public domain, timberlands, forests, marine resources, fauna and flora,
wildlife and national parks.47
After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with 2 abstentions,
Commissioner Davide made the following statement, which is very relevant to our quest:
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals, petroleum
and mineral oils. The Commission has just approved the possible foreign entry into the
development, exploration and utilization of these minerals, petroleum and other mineral oils
by virtue of the Jamir amendment. I voted in favor of the Jamir amendment because it will
eventually give way to vesting in exclusively Filipino citizens and corporations wholly owned
by Filipino citizens the right to utilize the other natural resources. This means that as a matter
of policy, natural resources should be utilized and exploited only by Filipino citizens or
corporations wholly owned by such citizens. But by virtue of the Jamir amendment, since we
feel that Filipino capital may not be enough for the development and utilization of minerals,
petroleum and other mineral oils, the President can enter into service contracts with foreign
corporations precisely for the development and utilization of such resources. And so, there is
nothing to fear that we will stagnate in the development of minerals, petroleum and mineral
oils because we now allow service contracts. x x x." 48
The foregoing are mere fragments of the framers' lengthy discussions of the provision dealing
with agreements x x x involving either technical or financial assistance, which ultimately became
paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the
ConCom were actually debating about the martial-law-era service contracts for which they were
crafting appropriate safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations given by
Commissioners Gascon, Garcia and Tadeo indicated that they had voted to reject this provision on
account of their objections to the "constitutionalization" of the "service contract" concept.
Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this
should always be with the concurrence of Congress and not guided only by a general law to be
promulgated by Congress." Mr. Garcia explained, "Service contracts are given constitutional
49
legitimization in Sec. 3, even when they have been proven to be inimical to the interests of the
nation, providing, as they do, the legal loophole for the exploitation of our natural resources for the
benefit of foreign interests." Likewise, Mr. Tadeo cited inter alia the fact that service contracts
50
continued to subsist, enabling foreign interests to benefit from our natural resources. It was hardly
51
likely that these gentlemen would have objected so strenuously, had the provision called for
mere technical or financial assistance and nothing more.
The deliberations of the ConCom and some commissioners' explanation of their votes leave no room
for doubt that the service contract concept precisely underpinned the commissioners' understanding
of the "agreements involving either technical or financial assistance."
Summation of the
Concom Deliberations
At this point, we sum up the matters established, based on a careful reading of the ConCom
deliberations, as follows:
· In their deliberations on what was to become paragraph 4, the framers used the
term service contracts in referring to agreements x x x involving either technical or financial
assistance.
· They spoke of service contracts as the concept was understood in the 1973 Constitution.
· It was obvious from their discussions that they were not about to ban or eradicate service
contracts.
· Instead, they were plainly crafting provisions to put in place safeguards that would
eliminate or minimize the abuses prevalent during the marital law regime. In brief, they were
going to permit service contracts with foreign corporations as contractors, but with safety
measures to prevent abuses, as an exception to the general norm established in the first
paragraph of Section 2 of Article XII. This provision reserves or limits to Filipino citizens --
and corporations at least 60 percent of which is owned by such citizens -- the exploration,
development and utilization of natural resources.
· This provision was prompted by the perceived insufficiency of Filipino capital and the felt
need for foreign investments in the EDU of minerals and petroleum resources.
· The framers for the most part debated about the sort of safeguards that would be
considered adequate and reasonable. But some of them, having more "radical" leanings,
wanted to ban service contracts altogether; for them, the provision would permit aliens to
exploit and benefit from the nation's natural resources, which they felt should be reserved
only for Filipinos.
· In the explanation of their votes, the individual commissioners were heard by the entire
body. They sounded off their individual opinions, openly enunciated their philosophies, and
supported or attacked the provisions with fervor. Everyone's viewpoint was heard.
· In the final voting, the Article on the National Economy and Patrimony -- including
paragraph 4 allowing service contracts with foreign corporations as an exception to the
general norm in paragraph 1 of Section 2 of the same article -- was resoundingly approved
by a vote of 32 to 7, with 2 abstentions.
Agreements Involving Technical
or Financial Assistance Are
Service Contracts With Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements involving either
technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike
those of the 1973 variety, the new ones are between foreign corporations acting as contractors on
the one hand; and on the other, the government as principal or "owner" of the works. In the new
service contracts, the foreign contractors provide capital, technology and technical know-how, and
managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and
the government, through its agencies (DENR, MGB), actively exercises control and supervision over
the entire operation.
Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant thereof is subject to several safeguards, among which are these
requirements:
(1) The service contract shall be crafted in accordance with a general law that will set
standard or uniform terms, conditions and requirements, presumably to attain a certain
uniformity in provisions and avoid the possible insertion of terms disadvantageous to the
country.
(2) The President shall be the signatory for the government because, supposedly before an
agreement is presented to the President for signature, it will have been vetted several times
over at different levels to ensure that it conforms to law and can withstand public scrutiny.
(3) Within thirty days of the executed agreement, the President shall report it to Congress to
give that branch of government an opportunity to look over the agreement and interpose
timely objections, if any.
Use of the Record of the
ConCom to Ascertain Intent
At this juncture, we shall address, rather than gloss over, the use of the "framers' intent" approach,
and the criticism hurled by petitioners who quote a ruling of this Court:
"While it is permissible in this jurisdiction to consult the debates and proceedings of the
constitutional convention in order to arrive at the reason and purpose of the resulting
Constitution, resort thereto may be had only when other guides fail as said proceedings are
powerless to vary the terms of the Constitution when the meaning is clear. Debates in the
constitutional convention 'are of value as showing the views of the individual members, and
as indicating the reason for their votes, but they give us no light as to the views of the large
majority who did not talk, much less the mass of our fellow citizens whose votes at the polls
gave that instrument the force of fundamental law. We think it safer to construe the
constitution from what appears upon its face.' The proper interpretation therefore depends
more on how it was understood by the people adopting it than in the framers' understanding
thereof."52
The notion that the deliberations reflect only the views of those members who spoke out and not the
views of the majority who remained silent should be clarified. We must never forget that those who
spoke out were heard by those who remained silent and did not react. If the latter were silent
because they happened not to be present at the time, they are presumed to have read the minutes
and kept abreast of the deliberations. By remaining silent, they are deemed to have signified their
assent to and/or conformity with at least some of the views propounded or their lack of objections
thereto. It was incumbent upon them, as representatives of the entire Filipino people, to follow the
deliberations closely and to speak their minds on the matter if they did not see eye to eye with the
proponents of the draft provisions.
In any event, each and every one of the commissioners had the opportunity to speak out and to vote
on the matter. Moreover, the individual explanations of votes are on record, and they show where
each delegate stood on the issues. In sum, we cannot completely denigrate the value or
usefulness of the record of the ConCom, simply because certain members chose not to
speak out.
It is contended that the deliberations therein did not necessarily reflect the thinking of the voting
population that participated in the referendum and ratified the Constitution. Verily, whether we like it
or not, it is a bit too much to assume that every one of those who voted to ratify the proposed
Charter did so only after carefully reading and mulling over it, provision by provision.
Likewise, it appears rather extravagant to assume that every one of those who did in fact bother to
read the draft Charter actually understood the import of its provisions, much less analyzed it vis-à-vis
the previous Constitutions. We believe that in reality, a good percentage of those who voted in favor
of it did so more out of faith and trust. For them, it was the product of the hard work and careful
deliberation of a group of intelligent, dedicated and trustworthy men and women of integrity and
conviction, whose love of country and fidelity to duty could not be questioned.
In short, a large proportion of the voters voted "yes" because the drafters, or a majority of them,
endorsed the proposed Constitution. What this fact translates to is the inescapable conclusion that
many of the voters in the referendum did not form their own isolated judgment about the draft
Charter, much less about particular provisions therein. They only relied or fell back and acted upon
the favorable endorsement or recommendation of the framers as a group. In other words, by
voting yes, they may be deemed to have signified their voluntary adoption of the understanding and
interpretation of the delegates with respect to the proposed Charter and its particular provisions. "If
it's good enough for them, it's good enough for me;" or, in many instances, "If it's good enough for
President Cory Aquino, it's good enough for me."
And even for those who voted based on their own individual assessment of the proposed Charter,
there is no evidence available to indicate that their assessment or understanding of its provisions
was in fact different from that of the drafters. This unwritten assumption seems to be petitioners' as
well. For all we know, this segment of voters must have read and understood the provisions of the
Constitution in the same way the framers had, an assumption that would account for the favorable
votes.
Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a
group were supposed to represent the entire Filipino people. Thus, we cannot but regard their views
as being very much indicative of the thinking of the people with respect to the matters deliberated
upon and to the Charter as a whole.
It is therefore reasonable and unavoidable to make the following conclusion, based on the
above arguments. As written by the framers and ratified and adopted by the people, the
Constitution allows the continued use of service contracts with foreign corporations -- as
contractors who would invest in and operate and manage extractive enterprises, subject to
the full control and supervision of the State -- sans the abuses of the past regime. The
purpose is clear: to develop and utilize our mineral, petroleum and other resources on a large
scale for the immediate and tangible benefit of the Filipino people.
In view of the foregoing discussion, we should reverse the Decision of January 27, 2004, and in fact
now hold a view different from that of the Decision, which had these findings: (a) paragraph 4 of
Section 2 of Article XII limits foreign involvement in the local mining industry to agreements strictly
for either financial or technical assistance only; (b) the same paragraph precludes agreements that
grant to foreign corporations the management of local mining operations, as such agreements are
purportedly in the nature of service contracts as these were understood under the 1973 Constitution;
(c) these service contracts were supposedly "de-constitutionalized" and proscribed by the omission
of the term service contracts from the 1987 Constitution; (d) since the WMCP FTAA contains
provisions permitting the foreign contractor to manage the concern, the said FTAA is invalid for
being a prohibited service contract; and (e) provisions of RA 7942 and DAO 96-40, which likewise
grant managerial authority to the foreign contractor, are also invalid and unconstitutional.
Ultimate Test: State's "Control"

Determinative of Constitutionality
But we are not yet at the end of our quest. Far from it. It seems that we are confronted with a
possible collision of constitutional provisions. On the one hand, paragraph 1 of Section 2 of Article
XII explicitly mandates the State to exercise "full control and supervision" over the exploration,
development and utilization of natural resources. On the other hand, paragraph 4 permits
safeguarded service contracts with foreign contractors. Normally, pursuant thereto, the contractors
exercise management prerogatives over the mining operations and the enterprise as a whole. There
is thus a legitimate ground to be concerned that either the State's full control and supervision may
rule out any exercise of management authority by the foreign contractor; or, the other way around,
allowing the foreign contractor full management prerogatives may ultimately negate the State's full
control and supervision.
Ut Magis Valeat
Quam Pereat
Under the third principle of constitutional construction laid down in Francisco -- ut magis valeat quam
pereat -- every part of the Constitution is to be given effect, and the Constitution is to be read and
understood as a harmonious whole. Thus, "full control and supervision" by the State must be
understood as one that does not preclude the legitimate exercise of management prerogatives by
the foreign contractor. Before any further discussion, we must stress the primacy and supremacy of
the principle of sovereignty and State control and supervision over all aspects of exploration,
development and utilization of the country's natural resources, as mandated in the first paragraph of
Section 2 of Article XII.
But in the next breadth we have to point out that "full control and supervision" cannot be taken
literally to mean that the State controls and supervises everything involved, down to the minutest
details, and makes all decisions required in the mining operations. This strained concept of control
and supervision over the mining enterprise would render impossible the legitimate exercise by the
contractors of a reasonable degree of management prerogative and authority necessary and
indispensable to their proper functioning.
For one thing, such an interpretation would discourage foreign entry into large-scale exploration,
development and utilization activities; and result in the unmitigated stagnation of this sector, to the
detriment of our nation's development. This scenario renders paragraph 4 inoperative and useless.
And as respondents have correctly pointed out, the government does not have to micro-manage the
mining operations and dip its hands into the day-to-day affairs of the enterprise in order for it to be
considered as having full control and supervision.
The concept of control adopted in Section 2 of Article XII must be taken to mean less than
53
dictatorial, all-encompassing control; but nevertheless sufficient to give the State the power to direct,
restrain, regulate and govern the affairs of the extractive enterprises. Control by the State may be on
a macro level, through the establishment of policies, guidelines, regulations, industry standards and
similar measures that would enable the government to control the conduct of affairs in various
enterprises and restrain activities deemed not desirable or beneficial.
The end in view is ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of the affected
local communities. Such a concept of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it invested in, in order
to ensure that it is operating efficiently and profitably, to protect its investments and to enable it to
succeed.
The question to be answered, then, is whether RA 7942 and its Implementing Rules enable
the government to exercise that degree of control sufficient to direct and regulate the
conduct of affairs of individual enterprises and restrain undesirable activities.
On the resolution of these questions will depend the validity and constitutionality of certain provisions
of the Philippine Mining Act of 1995 (RA 7942) and its Implementing Rules and Regulations (DAO
96-40), as well as the WMCP FTAA.
Indeed, petitioners charge that RA 7942, as well as its Implementing Rules and Regulations, makes
54
it possible for FTAA contracts to cede full control and management of mining enterprises over to fully
foreign-owned corporations, with the result that the State is allegedly reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers. The State does not
supposedly act as the owner of the natural resources for and on behalf of the Filipino people; it
practically has little effective say in the decisions made by the enterprise. Petitioners then conclude
that the law, the implementing regulations, and the WMCP FTAA cede "beneficial ownership" of the
mineral resources to the foreign contractor.
A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners' claims.
Paraphrasing the Constitution, Section 4 of the statute clearly affirms the State's control thus:
"Sec. 4. Ownership of Mineral Resources. – Mineral resources are owned by the State and
the exploration, development, utilization and processing thereof shall be under its full control
and supervision. The State may directly undertake such activities or it may enter into mineral
agreements with contractors.
"The State shall recognize and protect the rights of the indigenous cultural communities to
their ancestral lands as provided for by the Constitution."
The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as follows:
"Sec. 2. Declaration of Policy. All mineral resources in public and private lands within the
territory and exclusive economic zone of the Republic of the Philippines are owned by the
State. It shall be the responsibility of the State to promote their rational exploration,
development, utilization and conservation through the combined efforts of the Government
and private sector in order to enhance national growth in a way that effectively safeguards
the environment and protects the rights of affected communities."
Sufficient Control Over Mining

Operations Vested in the State
by RA 7942 and DAO 96-40
RA 7942 provides for the State's control and supervision over mining operations. The following
provisions thereof establish the mechanism of inspection and visitorial rights over mining operations
and institute reportorial requirements in this manner:
1. Sec. 8 which provides for the DENR's power of over-all supervision and periodic review for
"the conservation, management, development and proper use of the State's mineral
resources";
2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to
exercise "direct charge in the administration and disposition of mineral resources", and
empowers the MGB to "monitor the compliance by the contractor of the terms and conditions
of the mineral agreements", "confiscate surety and performance bonds", and deputize
whenever necessary any member or unit of the Phil. National Police, barangay, duly
registered non-governmental organization (NGO) or any qualified person to police mining
activities;
3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections
of all installations, whether surface or underground", utilized in mining operations.
4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:
"(g) Mining operations shall be conducted in accordance with the provisions of the
Act and its IRR.
"(h) Work programs and minimum expenditures commitments.
xxxxxxxxx
"(k) Requiring proponent to effectively use appropriate anti-pollution technology and

facilities to protect the environment and restore or rehabilitate mined-out areas.
"(l) The contractors shall furnish the Government records of geologic, accounting and
other relevant data for its mining operation, and that books of accounts and records
shall be open for inspection by the government. x x x.
"(m) Requiring the proponent to dispose of the minerals at the highest price and
more advantageous terms and conditions.
"(n) x x x x x x x x x
"(o) Such other terms and conditions consistent with the Constitution and with this
Act as the Secretary may deem to be for the best interest of the State and the
welfare of the Filipino people."
The foregoing provisions of Section 35 of RA 7942 are also reflected and

implemented in Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules, DAO
96-40.
Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government's
control over mining enterprises:
· The contractor is to relinquish to the government those portions of the contract area not
needed for mining operations and not covered by any declaration of mining feasibility
(Section 35-e, RA 7942; Section 60, DAO 96-40).
· The contractor must comply with the provisions pertaining to mine safety, health and
environmental protection (Chapter XI, RA 7942; Chapters XV and XVI, DAO 96-40).
· For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter
XVII, RA 7942; Chapter XXIV, DAO 96-40).
· An FTAA contractor is obliged to open its books of accounts and records for inspection by
the government (Section 56-m, DAO 96-40).
· An FTAA contractor has to dispose of the minerals and by-products at the highest market
price and register with the MGB a copy of the sales agreement (Section 56-n, DAO 96-40).
· MGB is mandated to monitor the contractor's compliance with the terms and conditions of
the FTAA; and to deputize, when necessary, any member or unit of the Philippine National
Police, the barangay or a DENR-accredited nongovernmental organization to police mining
activities (Section 7-d and -f, DAO 96-40).
· An FTAA cannot be transferred or assigned without prior approval by the President

(Section 40, RA 7942; Section 66, DAO 96-40).
· A mining project under an FTAA cannot proceed to the construction/development/utilization

stage, unless its Declaration of Mining Project Feasibility has been approved by government
(Section 24, RA 7942).
· The Declaration of Mining Project Feasibility filed by the contractor cannot be approved
without submission of the following documents:
1. Approved mining project feasibility study (Section 53-d, DAO 96-40)
2. Approved three-year work program (Section 53-a-4, DAO 96-40)
3. Environmental compliance certificate (Section 70, RA 7942)
4. Approved environmental protection and enhancement program (Section 69, RA

7942)
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA

7942; Section 27, RA 7160)
6. Free and prior informed consent by the indigenous peoples concerned, including
payment of royalties through a Memorandum of Agreement (Section 16, RA 7942;
Section 59, RA 8371)
· The FTAA contractor is obliged to assist in the development of its mining community,
promotion of the general welfare of its inhabitants, and development of science and mining
technology (Section 57, RA 7942).
· The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis
as the case may be; per Section 270, DAO 96-40), pertaining to the following:
1. Exploration
2. Drilling
3. Mineral resources and reserves
4. Energy consumption
5. Production
6. Sales and marketing
7. Employment
8. Payment of taxes, royalties, fees and other Government Shares
9. Mine safety, health and environment
10. Land use
11. Social development
12. Explosives consumption
· An FTAA pertaining to areas within government reservations cannot be granted without a

written clearance from the government agencies concerned (Section 19, RA 7942; Section
54, DAO 96-40).
· An FTAA contractor is required to post a financial guarantee bond in favor of the

government in an amount equivalent to its expenditures obligations for any particular year.
This requirement is apart from the representations and warranties of the contractor that it has
access to all the financing, managerial and technical expertise and technology necessary to
carry out the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).
· Other reports to be submitted by the contractor, as required under DAO 96-40, are as
follows: an environmental report on the rehabilitation of the mined-out area and/or mine
waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a-2); annual
reports of the mining operations and records of geologic accounting (Section 56-m); annual
progress reports and final report of exploration activities (Section 56-2).
· Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the
following: a safety and health program (Section 144); an environmental work program
(Section 168); an annual environmental protection and enhancement program (Section 171).
The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the
FTAA contractor by the statute and regulations easily overturns petitioners' contention. The setup
under RA 7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator"
dependent on submitted plans and reports. On the contrary, the government agencies concerned
are empowered to approve or disapprove -- hence, to influence, direct and change -- the various
work programs and the corresponding minimum expenditure commitments for each of the
exploration, development and utilization phases of the mining enterprise.
Once these plans and reports are approved, the contractor is bound to comply with its commitments
therein. Figures for mineral production and sales are regularly monitored and subjected to
government review, in order to ensure that the products and by-products are disposed of at the best
prices possible; even copies of sales agreements have to be submitted to and registered with MGB.
And the contractor is mandated to open its books of accounts and records for scrutiny, so as to
enable the State to determine if the government share has been fully paid.
The State may likewise compel the contractor's compliance with mandatory requirements on mine
safety, health and environmental protection, and the use of anti-pollution technology and facilities.
Moreover, the contractor is also obligated to assist in the development of the mining community and
to pay royalties to the indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or
noncompliance with statutes or regulations. This general, all-around, multipurpose sanction is no
trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of
millions of dollars sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just discussed, we believe that
the State definitely possesses the means by which it can have the ultimate word in the operation of
the enterprise, set directions and objectives, and detect deviations and noncompliance by the
contractor; likewise, it has the capability to enforce compliance and to impose sanctions, should the
occasion therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get away with it;
on the contrary, it will have to follow the government line if it wants to stay in the enterprise.
Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient
degree of control and supervision over the conduct of mining operations.
Section 3(aq) of RA 7942

Not Unconstitutional
An objection has been expressed that Section 3(aq) of RA 7942 -- which allows a foreign contractor
55
to apply for and hold an exploration permit -- is unconstitutional. The reasoning is that Section 2 of
Article XII of the Constitution does not allow foreign-owned corporations to undertake mining
operations directly. They may act only as contractors of the State under an FTAA; and the State, as
the party directly undertaking exploitation of its natural resources, must hold through the government
all exploration permits and similar authorizations. Hence, Section 3(aq), in permitting foreign-owned
corporations to hold exploration permits, is unconstitutional.
The objection, however, is not well-founded. While the Constitution mandates the State to exercise
full control and supervision over the exploitation of mineral resources, nowhere does it require the
government to hold all exploration permits and similar authorizations. In fact, there is no prohibition
at all against foreign or local corporations or contractors holding exploration permits. The reason is
not hard to see.
Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the
right to conduct exploration for all minerals in specified areas. Such a permit does not amount to an
authorization to extract and carry off the mineral resources that may be discovered. This phase
involves nothing but expenditures for exploring the contract area and locating the mineral bodies. As
no extraction is involved, there are no revenues or incomes to speak of. In short, the exploration
permit is an authorization for the grantee to spend its own funds on exploration programs that are
pre-approved by the government, without any right to recover anything should no minerals in
commercial quantities be discovered. The State risks nothing and loses nothing by granting these
permits to local or foreign firms; in fact, it stands to gain in the form of data generated by the
exploration activities.
Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial
viability of a mining area may, within the term of the permit, file with the MGB a declaration of mining
project feasibility accompanied by a work program for development. The approval of the mining
project feasibility and compliance with other requirements of RA 7942 vests in the grantee the
exclusive right to an MPSA or any other mineral agreement, or to an FTAA.
Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a co-production
agreement, or an FTAA over the permit area, and the application shall be approved if the permit
grantee meets the necessary qualifications and the terms and conditions of any such agreement.
Therefore, the contractor will be in a position to extract minerals and earn revenues only when the
MPSA or another mineral agreement, or an FTAA, is granted. At that point, the contractor's rights
and obligations will be covered by an FTAA or a mineral agreement.
But prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or
prospective contractor) cannot yet be deemed to have entered into any contract or agreement with
the State, and the grantee would definitely need to have some document or instrument as evidence
of its right to conduct exploration works within the specified area. This need is met by the exploration
permit issued pursuant to Sections 3(aq), 20 and 23 of RA 7942.
In brief, the exploration permit serves a practical and legitimate purpose in that it protects the
interests and preserves the rights of the exploration permit grantee (the would-be contractor)
-- foreign or local -- during the period of time that it is spending heavily on exploration works,
without yet being able to earn revenues to recoup any of its investments and
expenditures. Minus this permit and the protection it affords, the exploration works and
expenditures may end up benefiting only claim-jumpers. Such a possibility tends to discourage
investors and contractors. Thus, Section 3(aq) of RA 7942 may not be deemed unconstitutional.
The Terms of the WMCP FTAA
A Deference to State Control
A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State control and
supervision:
1. The contractor is obligated to account for the value of production and sale of minerals
(Clause 1.4).
2. The contractor's work program, activities and budgets must be approved by/on behalf of
the State (Clause 2.1).
3. The DENR secretary has the power to extend the exploration period (Clause 3.2-a).
4. Approval by the State is necessary for incorporating lands into the FTAA contract area
(Clause 4.3-c).
5. The Bureau of Forest Development is vested with discretion in regard to approving the
inclusion of forest reserves as part of the FTAA contract area (Clause 4.5).
6. The contractor is obliged to relinquish periodically parts of the contract area not needed
for exploration and development (Clause 4.6).
7. A Declaration of Mining Feasibility must be submitted for approval by the State (Clause
4.6-b).
8. The contractor is obligated to report to the State its exploration activities (Clause 4.9).
9. The contractor is required to obtain State approval of its work programs for the succeeding
two-year periods, containing the proposed work activities and expenditures budget related to
exploration (Clause 5.1).
10. The contractor is required to obtain State approval for its proposed expenditures for
exploration activities (Clause 5.2).
11. The contractor is required to submit an annual report on geological, geophysical,

geochemical and other information relating to its explorations within the FTAA area (Clause
5.3-a).
12. The contractor is to submit within six months after expiration of exploration period a final
report on all its findings in the contract area (Clause 5.3-b).
13. The contractor, after conducting feasibility studies, shall submit a declaration of mining
feasibility, along with a description of the area to be developed and mined, a description of
the proposed mining operations and the technology to be employed, and a proposed work
program for the development phase, for approval by the DENR secretary (Clause 5.4).
14. The contractor is obliged to complete the development of the mine, including
construction of the production facilities, within the period stated in the approved work
program (Clause 6.1).
15. The contractor is obligated to submit for approval of the DENR secretary a work program
covering each period of three fiscal years (Clause 6.2).
16. The contractor is to submit reports to the DENR secretary on the production, ore
reserves, work accomplished and work in progress, profile of its work force and management
staff, and other technical information (Clause 6.3).
17. Any expansions, modifications, improvements and replacements of mining facilities shall
be subject to the approval of the secretary (Clause 6.4).
18. The State has control with respect to the amount of funds that the contractor may borrow
within the Philippines (Clause 7.2).
19. The State has supervisory power with respect to technical, financial and marketing
issues (Clause 10.1-a).
20. The contractor is required to ensure 60 percent Filipino equity in the contractor, within
ten years of recovering specified expenditures, unless not so required by subsequent
legislation (Clause 10.1).
21. The State has the right to terminate the FTAA for the contractor's unremedied substantial
breach thereof (Clause 13.2);
22. The State's approval is needed for any assignment of the FTAA by the contractor to an
entity other than an affiliate (Clause 14.1).
We should elaborate a little on the work programs and budgets, and what they mean with respect to
the State's ability to exercise full control and effective supervision over the enterprise. For instance,
throughout the initial five-year exploration and feasibility phase of the project, the contractor is
mandated by Clause 5.1 of the WMCP FTAA to submit a series of work programs (copy furnished
the director of MGB) to the DENR secretary for approval. The programs will detail the contractor's
proposed exploration activities and budget covering each subsequent period of two fiscal years.
In other words, the concerned government officials will be informed beforehand of the proposed
exploration activities and expenditures of the contractor for each succeeding two-year period, with
the right to approve/disapprove them or require changes or adjustments therein if deemed
necessary.
Likewise, under Clause 5.2(a), the amount that the contractor was supposed to spend for exploration
activities during the first contract year of the exploration period was fixed at not less than P24 million;
and then for the succeeding years, the amount shall be as agreed between the DENR secretary and
the contractor prior to the commencement of each subsequent fiscal year. If no such agreement is
arrived upon, the previous year's expenditure commitment shall apply.
This provision alone grants the government through the DENR secretary a very big say in the
exploration phase of the project. This fact is not something to be taken lightly, considering that
the government has absolutely no contribution to the exploration expenditures or work activities and
yet is given veto power over such a critical aspect of the project. We cannot but construe as very
significant such a degree of control over the project and, resultantly, over the mining enterprise itself.
Following its exploration activities or feasibility studies, if the contractor believes that any part of the
contract area is likely to contain an economic mineral resource, it shall submit to the DENR secretary
a declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description
of the area delineated for development and production, a description of the proposed mining
operations including the technology to be used, a work program for development, an environmental
impact statement, and a description of the contributions to the economic and general welfare of the
country to be generated by the mining operations (pursuant to Clause 5.5).
The work program for development is subject to the approval of the DENR secretary. Upon its
approval, the contractor must comply with it and complete the development of the mine, including
the construction of production facilities and installation of machinery and equipment, within the
period provided in the approved work program for development (per Clause 6.1).
Thus, notably, the development phase of the project is likewise subject to the control and
supervision of the government. It cannot be emphasized enough that the proper and timely
construction and deployment of the production facilities and the development of the mine are of
pivotal significance to the success of the mining venture. Any missteps here will potentially be very
costly to remedy. Hence, the submission of the work program for development to the DENR
secretary for approval is particularly noteworthy, considering that so many millions of dollars worth of
investments -- courtesy of the contractor -- are made to depend on the State's consideration and
action.
Throughout the operating period, the contractor is required to submit to the DENR secretary for
approval, copy furnished the director of MGB, work programs covering each period of three fiscal
years (per Clause 6.2). During the same period (per Clause 6.3), the contractor is mandated to
submit various quarterly and annual reports to the DENR secretary, copy furnished the director of
MGB, on the tonnages of production in terms of ores and concentrates, with corresponding grades,
values and destinations; reports of sales; total ore reserves, total tonnage of ores, work
accomplished and work in progress (installations and facilities related to mining operations),
investments made or committed, and so on and so forth.
Under Section VIII, during the period of mining operations, the contractor is also required to submit
to the DENR secretary (copy furnished the director of MGB) the work program and corresponding
budget for the contract area, describing the mining operations that are proposed to be carried out
during the period covered. The secretary is, of course, entitled to grant or deny approval of any work
program or budget and/or propose revisions thereto. Once the program/budget has been approved,
the contractor shall comply therewith.
In sum, the above provisions of the WMCP FTAA taken together, far from constituting a surrender of
control and a grant of beneficial ownership of mineral resources to the contractor in
question, bestow upon the State more than adequate control and supervision over the
activities of the contractor and the enterprise.
No Surrender of Control
Under the WMCP FTAA
Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which, they say,
amount to a relinquishment of control by the State, since it "cannot truly impose its own discretion" in
respect of the submitted work programs.
"8.2. The Secretary shall be deemed to have approved any Work Programme or Budget or
variation thereof submitted by the Contractor unless within sixty (60) days after submission
by the Contractor the Secretary gives notice declining such approval or proposing a revision
of certain features and specifying its reasons therefor ('the Rejection Notice').
8.3. If the Secretary gives a Rejection Notice, the Parties shall promptly meet and endeavor
to agree on amendments to the Work Programme or Budget. If the Secretary and the
Contractor fail to agree on the proposed revision within 30 days from delivery of the
Rejection Notice then the Work Programme or Budget or variation thereof proposed by the
Contractor shall be deemed approved, so as not to unnecessarily delay the performance of
the Agreement.
8.4. x x x x x x x x x
8.5. So far as is practicable, the Contractor shall comply with any approved Work
Programme and Budget. It is recognized by the Secretary and the Contractor that the details
of any Work Programmes or Budgets may require changes in the light of changing
circumstances. The Contractor may make such changes without approval of the Secretary
provided they do not change the general objective of any Work Programme, nor entail a
downward variance of more than twenty per centum (20percent) of the relevant Budget. All
other variations to an approved Work Programme or Budget shall be submitted for approval
of the Secretary."
From the provisions quoted above, petitioners generalize by asserting that the government does not
participate in making critical decisions regarding the operations of the mining firm. Furthermore,
while the State can require the submission of work programs and budgets, the decision of the
contractor will still prevail, if the parties have a difference of opinion with regard to matters affecting
operations and management.
We hold, however, that the foregoing provisions do not manifest a relinquishment of control. For
instance, Clause 8.2 merely provides a mechanism for preventing the business or mining operations
from grinding to a complete halt as a result of possibly over-long and unjustified delays in the
government's handling, processing and approval of submitted work programs and budgets. Anyway,
the provision does give the DENR secretary more than sufficient time (60 days) to react to submitted
work programs and budgets. It cannot be supposed that proper grounds for objecting thereto, if any
exist, cannot be discovered within a period of two months.
On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in the event a
disagreement over the submitted work program or budget arises between the State and the
contractor and results in a stalemate or impasse, in order that there will be no unreasonably long
delays in the performance of the works.
These temporary or stop-gap solutions are not necessarily evil or wrong. Neither does it follow that
the government will inexorably be aggrieved if and when these temporary remedies come into
play. First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the
State as well as the contractor. Second, who is to say that the work program or budget proposed by
the contractor and deemed approved under Clause 8.3 would not be the better or more reasonable
or more effective alternative? The contractor, being the "insider," as it were, may be said to be in a
better position than the State -- an outsider looking in -- to determine what work program or budget
would be appropriate, more effective, or more suitable under the circumstances.
All things considered, we take exception to the characterization of the DENR secretary as a
subservient nonentity whom the contractor can overrule at will, on account of Clause 8.3. And
neither is it true that under the same clause, the DENR secretary has no authority whatsoever to
disapprove the work program. As Respondent WMCP reasoned in its Reply-Memorandum, the State
-- despite Clause 8.3 -- still has control over the contract area and it may, as sovereign authority,
prohibit work thereon until the dispute is resolved. And ultimately, the State may terminate the
agreement, pursuant to Clause 13.2 of the same FTAA, citing substantial breach thereof. Hence, it
clearly retains full and effective control of the exploitation of the mineral resources.
On the other hand, Clause 8.5 is merely an acknowledgment of the parties' need for flexibility, given
that no one can accurately forecast under all circumstances, or predict how situations may change.
Hence, while approved work programs and budgets are to be followed and complied with as far as
practicable, there may be instances in which changes will have to be effected, and effected rapidly,
since events may take shape and unfold with suddenness and urgency. Thus, Clause 8.5 allows the
contractor to move ahead and make changes without the express or implicit approval of the DENR
secretary. Such changes are, however, subject to certain conditions that will serve to limit or restrict
the variance and prevent the contractor from straying very far from what has been approved.
Clause 8.5 provides the contractor a certain amount of flexibility to meet unexpected situations, while
still guaranteeing that the approved work programs and budgets are not abandoned altogether.
Clause 8.5 does not constitute proof that the State has relinquished control. And ultimately, should
there be disagreement with the actions taken by the contractor in this instance as well as under
Clause 8.3 discussed above, the DENR secretary may resort to cancellation/termination of the FTAA
as the ultimate sanction.
Discretion to Select Contract

Area Not an Abdication of Control
Next, petitioners complain that the contractor has full discretion to select -- and the government has
no say whatsoever as to -- the parts of the contract area to be relinquished pursuant to Clause 4.6 of
the WMCP FTAA. This clause, however, does not constitute abdication of control. Rather, it is a
56
mere acknowledgment of the fact that the contractor will have determined, after appropriate
exploration works, which portions of the contract area do not contain minerals in commercial
quantities sufficient to justify developing the same and ought therefore to be relinquished. The State
cannot just substitute its judgment for that of the contractor and dictate upon the latter which areas to
give up.
Moreover, we can be certain that the contractor's self-interest will propel proper and efficient
relinquishment. According to private respondent, a mining company tries to relinquish as much non-
57
mineral areas as soon as possible, because the annual occupation fees paid to the government are
based on the total hectarage of the contract area, net of the areas relinquished. Thus, the larger the
remaining area, the heftier the amount of occupation fees to be paid by the contractor. Accordingly,
relinquishment is not an issue, given that the contractor will not want to pay the annual occupation
fees on the non-mineral parts of its contract area. Neither will it want to relinquish promising sites,
which other contractors may subsequently pick up.
Government Not a Subcontractor
Petitioners further maintain that the contractor can compel the government to exercise its power of
eminent domain to acquire surface areas within the contract area for the contractor's use. Clause
10.2 (e) of the WMCP FTAA provides that the government agrees that the contractor shall "(e) have
the right to require the Government at the Contractor's own cost, to purchase or acquire surface
areas for and on behalf of the Contractor at such price and terms as may be acceptable to the
contractor. At the termination of this Agreement such areas shall be sold by public auction or tender
and the Contractor shall be entitled to reimbursement of the costs of acquisition and maintenance,
adjusted for inflation, from the proceeds of sale."
According to petitioners, "government becomes a subcontractor to the contractor" and may, on

account of this provision, be compelled "to make use of its power of eminent domain, not for public
purposes but on behalf of a private party, i.e., the contractor." Moreover, the power of the courts to
determine the amount corresponding to the constitutional requirement of just compensation has
allegedly also been contracted away by the government, on account of the latter's commitment that
the acquisition shall be at such terms as may be acceptable to the contractor.
However, private respondent has proffered a logical explanation for the provision. Section 10.2(e)
58
contemplates a situation applicable to foreign-owned corporations. WMCP, at the time of the

execution of the FTAA, was a foreign-owned corporation and therefore not qualified to own land. As
contractor, it has at some future date to construct the infrastructure -- the mine processing plant, the
camp site, the tailings dam, and other infrastructure -- needed for the large-scale mining operations.
It will then have to identify and pinpoint, within the FTAA contract area, the particular surface areas
with favorable topography deemed ideal for such infrastructure and will need to acquire the surface
rights. The State owns the mineral deposits in the earth, and is also qualified to own land.
Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own
land, identifies to the government the specific surface areas within the FTAA contract area to be
acquired for the mine infrastructure. The government then acquires ownership of the surface land
areas on behalf of the contractor, in order to enable the latter to proceed to fully implement the
FTAA.
The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it,
after termination of the FTAA, to be reimbursed from proceeds of the sale of the surface areas,
which the government will dispose of through public bidding. It should be noted that this provision
will not be applicable to Sagittarius as the present FTAA contractor, since it is a Filipino corporation
qualified to own and hold land. As such, it may therefore freely negotiate with the surface rights
owners and acquire the surface property in its own right.
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the
rationale for the said provision. That provision does not call for the exercise of the power of eminent
domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified
party to acquire the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having the State do the
purchasing is a better alternative. This will at least cause the government to be aware of such
transaction/s and foster transparency in the contractor's dealings with the local property owners. The
government, then, will not act as a subcontractor of the contractor; rather, it will facilitate the
transaction and enable the parties to avoid a technical violation of the Anti-Dummy Law.
Absence of Provision
Requiring Sale at Posted
Prices Not Problematic
The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the
contractor to sell the mineral products at posted or market prices is not a problem. Apart from Clause
1.4 of the FTAA obligating the contractor to account for the total value of mineral production and the
sale of minerals, we can also look to Section 35 of RA 7942, which incorporates into all FTAAs
certain terms, conditions and warranties, including the following:
"(l) The contractors shall furnish the Government records of geologic, accounting and other
relevant data for its mining operation, and that books of accounts and records shall be open
for inspection by the government. x x x
(m) Requiring the proponent to dispose of the minerals at the highest price and more
advantageous terms and conditions."
For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA contractor to dispose of
the minerals and by-products at the highest market price and to register with the MGB a copy of the
sales agreement. After all, the provisions of prevailing statutes as well as rules and regulations are
deemed written into contracts.
Contractor's Right to Mortgage

Not Objectionable Per Se
Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to mortgage and
encumber not only its rights and interests in the FTAA and the infrastructure and improvements
introduced, but also the mineral products extracted. Private respondents do not touch on this matter,
but we believe that this provision may have to do with the conditions imposed by the creditor-banks
of the then foreign contractor WMCP to secure the lendings made or to be made to the latter.
Ordinarily, banks lend not only on the security of mortgages on fixed assets, but also on
encumbrances of goods produced that can easily be sold and converted into cash that can be
applied to the repayment of loans. Banks even lend on the security of accounts receivable that are
collectible within 90 days.59
It is not uncommon to find that a debtor corporation has executed deeds of assignment "by way of
security" over the production for the next twelve months and/or the proceeds of the sale thereof -- or
the corresponding accounts receivable, if sold on terms -- in favor of its creditor-banks. Such deeds
may include authorizing the creditors to sell the products themselves and to collect the sales
proceeds and/or the accounts receivable.
Seen in this context, Clause 10.2(l) is not something out of the ordinary or objectionable. In any
case, as will be explained below, even if it is allowed to mortgage or encumber the mineral end-
products themselves, the contractor is not freed of its obligation to pay the government its basic and
additional shares in the net mining revenue, which is the essential thing to consider.
In brief, the alarum raised over the contractor's right to mortgage the minerals is simply unwarranted.
Just the same, the contractor must account for the value of mineral production and the sales
proceeds therefrom. Likewise, under the WMCP FTAA, the government remains entitled to its sixty
percent share in the net mining revenues of the contractor. The latter's right to mortgage the
minerals does not negate the State's right to receive its share of net mining revenues.
Shareholders Free to Sell Their Stocks
Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority "to change its equity
structure at any time." This provision may seem somewhat unusual, but considering that WMCP
then was 100 percent foreign-owned, any change would mean that such percentage would either
stay unaltered or be decreased in favor of Filipino ownership. Moreover, the foreign-held shares may
change hands freely. Such eventuality is as it should be.
We believe it is not necessary for government to attempt to limit or restrict the freedom of the
shareholders in the contractor to freely transfer, dispose of or encumber their shareholdings,
consonant with the unfettered exercise of their business judgment and discretion. Rather, what is
critical is that, regardless of the identity, nationality and percentage ownership of the various
shareholders of the contractor -- and regardless of whether these shareholders decide to take the
company public, float bonds and other fixed-income instruments, or allow the creditor-banks to take
an equity position in the company -- the foreign-owned contractor is always in a position to render
the services required under the FTAA, under the direction and control of the government.
Contractor's Right to Ask

For Amendment Not Absolute
With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions bind government
to allow amendments to the FTAA if required by banks and other financial institutions as part of the
conditions for new lendings. However, we do not find anything wrong with Clause 10.4(e), which only
states that "if the Contractor seeks to obtain financing contemplated herein from banks or other
financial institutions, (the Government shall) cooperate with the Contractor in such efforts provided
that such financing arrangements will in no event reduce the Contractor's obligations or the
Government's rights hereunder." The colatilla obviously safeguards the State's interests; if breached,
it will give the government cause to object to the proposed amendments.
On the other hand, Clause 10.4(i) provides that "the Government shall favourably consider any
request from [the] Contractor for amendments of this Agreement which are necessary in order for
the Contractor to successfully obtain the financing." Petitioners see in this provision a complete
renunciation of control. We disagree.
The proviso does not say that the government shall grant any request for amendment. Clause
10.4(i) only obliges the State to favorably consider any such request, which is not at all
unreasonable, as it is not equivalent to saying that the government must automatically consent to it.
This provision should be read together with the rest of the FTAA provisions instituting government
control and supervision over the mining enterprise. The clause should not be given an interpretation
that enables the contractor to wiggle out of the restrictions imposed upon it by merely suggesting
that certain amendments are requested by the lenders.
Rather, it is up to the contractor to prove to the government that the requested changes to the FTAA
are indispensable, as they enable the contractor to obtain the needed financing; that without such
contract changes, the funders would absolutely refuse to extend the loan; that there are no other
sources of financing available to the contractor (a very unlikely scenario); and that without the
needed financing, the execution of the work programs will not proceed. But the bottom line is, in the
exercise of its power of control, the government has the final say on whether to approve or
disapprove such requested amendments to the FTAA. In short, approval thereof is not mandatory on
the part of the government.
In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions
sufficiently overturns petitioners' litany of objections to and criticisms of the State's alleged
lack of control.
Financial Benefits Not

Surrendered to the Contractor
One of the main reasons certain provisions of RA 7942 were struck down was the finding mentioned
in the Decision that beneficial ownership of the mineral resources had been conveyed to the
contractor. This finding was based on the underlying assumption, common to the said provisions,
that the foreign contractor manages the mineral resources in the same way that foreign contractors
in service contracts used to. "By allowing foreign contractors to manage or operate all the aspects of
the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed
beneficial ownership over the nation's mineral resources to these contractors, leaving the State
with nothing but bare title thereto." As the WMCP FTAA contained similar provisions deemed by
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the ponente to be abhorrent to the Constitution, the Decision struck down the Contract as well.
Beneficial ownership has been defined as ownership recognized by law and capable of being
enforced in the courts at the suit of the beneficial owner. Black's Law Dictionary indicates that the
61
term is used in two senses: first, to indicate the interest of a beneficiary in trust property (also called
"equitable ownership"); and second, to refer to the power of a corporate shareholder to buy or sell
the shares, though the shareholder is not registered in the corporation's books as the
owner. Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment
62
of all the benefits and privileges of ownership, as against possession of the bare title to property.
An assiduous examination of the WMCP FTAA uncovers no indication that it confers upon WMCP
ownership, beneficial or otherwise, of the mining property it is to develop, the minerals to be
produced, or the proceeds of their sale, which can be legally asserted and enforced as against the
State.
As public respondents correctly point out, any interest the contractor may have in the proceeds of
the mining operation is merely the equivalent of the consideration the government has undertaken to
pay for its services. All lawful contracts require such mutual prestations, and the WMCP FTAA is no
different. The contractor commits to perform certain services for the government in respect of the
mining operation, and in turn it is to be compensated out of the net mining revenues generated from
the sale of mineral products. What would be objectionable is a contractual provision that unduly
benefits the contractor far in excess of the service rendered or value delivered, if any, in exchange
therefor.
A careful perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor
DAO 99-56 can be said to convey beneficial ownership of any mineral resource or product to any
foreign FTAA contractor.
Equitable Sharing
of Financial Benefits
On the contrary, DAO 99-56, entitled "Guidelines Establishing the Fiscal Regime of Financial or
Technical Assistance Agreements" aims to ensure an equitable sharing of the benefits derived from
mineral resources. These benefits are to be equitably shared among the government (national and
local), the FTAA contractor, and the affected communities. The purpose is to ensure sustainable
mineral resources development; and a fair, equitable, competitive and stable investment regime for
the large-scale exploration, development and commercial utilization of minerals. The general
framework or concept followed in crafting the fiscal regime of the FTAA is based on the principle that
the government expects real contributions to the economic growth and general welfare of the
country, while the contractor expects a reasonable return on its investments in the project.63
Specifically, under the fiscal regime, the government's expectation is, inter alia, the receipt of its
share from the taxes and fees normally paid by a mining enterprise. On the other hand, the FTAA
contractor is granted by the government certain fiscal and non-fiscal incentives to help support the
64
former's cash flow during the most critical phase (cost recovery) and to make the Philippines
competitive with other mineral-producing countries. After the contractor has recovered its initial
investment, it will pay all the normal taxes and fees comprising the basic share of the government,
plus an additional share for the government based on the options and formulae set forth in DAO 99-
56.
The said DAO spells out the financial benefits the government will receive from an FTAA, referred to
as "the Government Share," composed of a basic government share and an additional
government share.
The basic government share is comprised of all direct taxes, fees and royalties, as well as other
payments made by the contractor during the term of the FTAA. These are amounts paid directly to (i)
the national government (through the Bureau of Internal Revenue, Bureau of Customs, Mines &
Geosciences Bureau and other national government agencies imposing taxes or fees), (ii) the local
government units where the mining activity is conducted, and (iii) persons and communities directly
affected by the mining project. The major taxes and other payments constituting the basic
government share are enumerated below: 65
Payments to the National Government:
· Excise tax on minerals - 2 percent of the gross output of mining operations
· Contractor' income tax - maximum of 32 percent of taxable income for corporations
· Customs duties and fees on imported capital equipment -the rate is set by the Tariff
and Customs Code (3-7 percent for chemicals; 3-10 percent for explosives; 3-15
percent for mechanical and electrical equipment; and 3-10 percent for vehicles,
aircraft and vessels
· VAT on imported equipment, goods and services – 10 percent of value
· Royalties due the government on minerals extracted from mineral reservations, if

applicable – 5 percent of the actual market value of the minerals produced
· Documentary stamp tax - the rate depends on the type of transaction

· Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares
· Withholding tax on interest payments on foreign loans -15 percent of the amount of
interest
· Withholding tax on dividend payments to foreign stockholders – 15 percent of the

dividend
· Wharfage and port fees
· Licensing fees (for example, radio permit, firearms permit, professional fees)
· Other national taxes and fees.
Payments to Local Governments:
· Local business tax - a maximum of 2 percent of gross sales or receipts (the rate
varies among local government units)
· Real property tax - 2 percent of the fair market value of the property, based on an
assessment level set by the local government
· Special education levy - 1 percent of the basis used for the real property tax
· Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if
located in a mineral reservation
· Community tax - maximum of PhP10,500 per year
· All other local government taxes, fees and imposts as of the effective date of the
FTAA - the rate and the type depend on the local government
Other Payments:
· Royalty to indigenous cultural communities, if any – 1 percent of gross output from

mining operations
· Special allowance - payment to claim owners and surface rights holders
Apart from the basic share, an additional government share is also collected from the FTAA
contractor in accordance with the second paragraph of Section 81 of RA 7942, which provides that
the government share shall be comprised of, among other things, certain taxes, duties and fees. The
subject proviso reads:
"The Government share in a financial or technical assistance agreement shall consist of, among
other things, the contractor's corporate income tax, excise tax, special allowance, withholding tax
due from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of a foreign national, and all such other taxes, duties and fees as
provided for under existing laws." (Bold types supplied.)
The government, through the DENR and the MGB, has interpreted the insertion of the
phrase among other things as signifying that the government is entitled to an "additional government
share" to be paid by the contractor apart from the "basic share," in order to attain a fifty-fifty sharing
of net benefits from mining.
The additional government share is computed by using one of three options or schemes

presented in DAO 99-56: (1) a fifty-fifty sharing in the cumulative present value of cash flows; (2) the
share based on excess profits; and (3) the sharing based on the cumulative net mining revenue. The
particular formula to be applied will be selected by the contractor, with a written notice to the
government prior to the commencement of the development and construction phase of the mining
project.
66
Proceeds from the government shares arising from an FTAA contract are distributed to and received
by the different levels of government in the following proportions:
National Government 50 percent
Provincial 10 percent
Government
Municipal 20 percent
Government
Affected Barangays 20 percent
The portion of revenues remaining after the deduction of the basic and additional government shares
is what goes to the contractor.
Government's Share in an
FTAA Not Consisting Solely
of Taxes, Duties and Fees
In connection with the foregoing discussion on the basic and additional government shares, it is

pertinent at this juncture to mention the criticism leveled at the second paragraph of Section 81 of
RA 7942, quoted earlier. The said proviso has been denounced, because, allegedly, the State's
share in FTAAs with foreign contractors has been limited to taxes, fees and duties only; in effect, the
State has been deprived of a share in the after-tax income of the enterprise. In the face of this
allegation, one has to consider that the law does not define the term among other things; and the
Office of the Solicitor General, in its Motion for Reconsideration, appears to have erroneously
claimed that the phrase refers to indirect taxes.
The law provides no definition of the term among other things, for the reason that Congress
deliberately avoided setting unnecessary limitations as to what may constitute compensation to the
State for the exploitation and use of mineral resources. But the inclusion of that phrase clearly and
unmistakably reveals the legislative intent to have the State collect more than just the usual taxes,
duties and fees. Certainly, there is nothing in that phrase -- or in the second paragraph of Section 81
-- that would suggest that such phrase should be interpreted as referring only to taxes, duties, fees
and the like.
Precisely for that reason, to fulfill the legislative intent behind the inclusion of the phrase among
other things in the second paragraph of Section 81, the DENR structured and formulated in DAO
67
99-56 the said additional government share. Such a share was to consist not of taxes, but of a
share in the earnings or cash flows of the mining enterprise. The additional government share
was to be paid by the contractor on top of the basic share, so as to achieve a fifty-fifty sharing
-- between the government and the contractor -- of net benefits from mining. In the Ramos-DeVera
paper, the explanation of the three options or formulas -- presented in DAO 99-56 for the
68
computation of the additional government share -- serves to debunk the claim that the government's
take from an FTAA consists solely of taxes, fees and duties.
Unfortunately, the Office of the Solicitor General -- although in possession of the relevant data --
failed to fully replicate or echo the pertinent elucidation in the Ramos-DeVera paper regarding the
three schemes or options for computing the additional government share presented in DAO 99-56.
Had due care been taken by the OSG, the Court would have been duly apprised of the real nature
and particulars of the additional share.
But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and the even more
abstruse mathematical jargon employed in DAO 99-56, the OSG omitted any mention of the three
options. Instead, the OSG skipped to a side discussion of the effect of indirect taxes, which
had nothing at all to do with the additional government share, to begin with. Unfortunately, this move
created the wrong impression, pointed out in Justice Antonio T. Carpio's Opinion, that the OSG had
taken the position that the additional government share consisted of indirect taxes.
In any event, what is quite evident is the fact that the additional government share, as formulated,
has nothing to do with taxes -- direct or indirect -- or with duties, fees or charges. To repeat, it is over
and above the basic government share composed of taxes and duties. Simply put, the additional
share may be (a) an amount that will result in a 50-50 sharing of the cumulative present value of
the cash flows of the enterprise; (b) an amount equivalent to 25 percent of the additional or excess
69
profits of the enterprise, reckoned against a benchmark return on investments; or (c) an amount that
will result in a fifty-fifty sharing of the cumulative net mining revenue from the end of the recovery
period up to the taxable year in question. The contractor is required to select one of the three options
or formulae for computing the additional share, an option it will apply to all of its mining operations.
As used above, "net mining revenue" is defined as the gross output from mining operations for a
calendar year, less deductible expenses (inclusive of taxes, duties and fees). Such revenue would
roughly be equivalent to "taxable income" or income before income tax. Definitely, as compared
with, say, calculating the additional government share on the basis of net income (after income
tax), the net mining revenue is a better and much more reasonable basis for such computation, as it
gives a truer picture of the profitability of the company.
To demonstrate that the three options or formulations will operate as intended, Messrs. Ramos and
de Vera also performed some quantifications of the government share via a financial modeling of
each of the three options discussed above. They found that the government would get the highest
share from the option that is based on the net mining revenue, as compared with the other two
options, considering only the basic and the additional shares; and that, even though production rate
decreases, the government share will actually increase when the net mining revenue and the
additional profit-based options are used.
Furthermore, it should be noted that the three options or formulae do not yet take into account the
indirect taxes and other financial contributions of mining projects. These indirect taxes and other
70 71
contributions are real and actual benefits enjoyed by the Filipino people and/or government. Now, if
some of the quantifiable items are taken into account in the computations, the financial modeling
would show that the total government share increases to 60 percent or higher -- in one instance, as
much as 77 percent and even 89 percent -- of the net present value of total benefits from the project.
As noted in the Ramos-DeVera paper, these results are not at all shabby, considering that the
contractor puts in all the capital requirements and assumes all the risks, without the government
having to contribute or risk anything.
Despite the foregoing explanation, Justice Carpio still insisted during the Court's deliberations that
the phrase among other things refers only to taxes, duties and fees. We are bewildered by his
position. On the one hand, he condemns the Mining Law for allegedly limiting the government's
benefits only to taxes, duties and fees; and on the other, he refuses to allow the State to benefit from
the correct and proper interpretation of the DENR/MGB. To remove all doubts then, we hold that the
State's share is not limited to taxes, duties and fees only and that the DENR/MGB interpretation of
the phrase among other things is correct. Definitely, this DENR/MGB interpretation is not only legally
sound, but also greatly advantageous to the government.
One last point on the subject. The legislature acted judiciously in not defining the terms among other
things and, instead, leaving it to the agencies concerned to devise and develop the various modes of
arriving at a reasonable and fair amount for the additional government share. As can be seen from
DAO 99-56, the agencies concerned did an admirable job of conceiving and developing not just one
formula, but three different formulae for arriving at the additional government share. Each of these
options is quite fair and reasonable; and, as Messrs. Ramos and De Vera stated, other alternatives
or schemes for a possible improvement of the fiscal regime for FTAAs are also being studied by the
government.
Besides, not locking into a fixed definition of the term among other things will ultimately be more
beneficial to the government, as it will have that innate flexibility to adjust to and cope with rapidly
changing circumstances, particularly those in the international markets. Such flexibility is especially
significant for the government in terms of helping our mining enterprises remain competitive in world
markets despite challenging and shifting economic scenarios.
In conclusion, we stress that we do not share the view that in FTAAs with foreign contractors
under RA 7942, the government's share is limited to taxes, fees and duties. Consequently, we
find the attacks on the second paragraph of Section 81 of RA 7942 totally unwarranted.
Collections Not Made Uncertain

by the Third Paragraph of Section 81
The third or last paragraph of Section 81 provides that the government share in FTAAs shall be
72
collected when the contractor shall have recovered its pre-operating expenses and exploration and
development expenditures. The objection has been advanced that, on account of the proviso, the
collection of the State's share is not even certain, as there is no time limit in RA 7942 for this grace
period or recovery period.
We believe that Congress did not set any time limit for the grace period, preferring to leave it to the
concerned agencies, which are, on account of their technical expertise and training, in a better
position to determine the appropriate durations for such recovery periods. After all, these recovery
periods are determined, to a great extent, by technical and technological factors peculiar to the
mining industry. Besides, with developments and advances in technology and in the geosciences,
we cannot discount the possibility of shorter recovery periods. At any rate, the concerned agencies
have not been remiss in this area. The 1995 and 1996 Implementing Rules and Regulations of RA
7942 specify that the period of recovery, reckoned from the date of commercial operation, shall be
for a period not exceeding five years, or until the date of actual recovery, whichever comes earlier.
Approval of Pre-Operating
Expenses Required by RA 7942
Still, RA 7942 is criticized for allegedly not requiring government approval of pre-operating,
exploration and development expenses of the foreign contractors, who are in effect given unfettered
discretion to determine the amounts of such expenses. Supposedly, nothing prevents the
contractors from recording such expenses in amounts equal to the mining revenues anticipated for
the first 10 or 15 years of commercial production, with the result that the share of the State will be
zero for the first 10 or 15 years. Moreover, under the circumstances, the government would be
unable to say when it would start to receive its share under the FTAA.
We believe that the argument is based on incorrect information as well as speculation. Obviously,
certain crucial provisions in the Mining Law were overlooked. Section 23, dealing with the rights and
obligations of the exploration permit grantee, states: "The permittee shall undertake exploration work
on the area as specified by its permit based on an approved work program." The next proviso
reads: "Any expenditure in excess of the yearly budget of the approved work program may be
carried forward and credited to the succeeding years covering the duration of the permit. x x
x." (underscoring supplied)
Clearly, even at the stage of application for an exploration permit, the applicant is required to submit
-- for approval by the government -- a proposed work program for exploration, containing a yearly
budget of proposed expenditures. The State has the opportunity to pass upon (and approve or
reject) such proposed expenditures, with the foreknowledge that -- if approved -- these will
subsequently be recorded as pre-operating expenses that the contractor will have to recoup over the
grace period. That is not all.
Under Section 24, an exploration permit holder who determines the commercial viability of a project
covering a mining area may, within the term of the permit, file with the Mines and Geosciences
Bureau a declaration of mining project feasibility. This declaration is to be accompanied by a work
program for development for the Bureau's approval, the necessary prelude for entering into an
FTAA, a mineral production sharing agreement (MPSA), or some other mineral agreement. At this
stage, too, the government obviously has the opportunity to approve or reject the proposed work
program and budgeted expenditures for development works on the project. Such expenditures will
ultimately become the pre-operating and development costs that will have to be recovered by the
contractor.
Naturally, with the submission of approved work programs and budgets for the exploration and the
development/construction phases, the government will be able to scrutinize and approve or
reject such expenditures. It will be well-informed as to the amounts of pre-operating and other
expenses that the contractor may legitimately recover and the approximate period of time needed to
effect such a recovery. There is therefore no way the contractor can just randomly post any amount
of pre-operating expenses and expect to recover the same.
The aforecited provisions on approved work programs and budgets have counterparts in Section 35,
which deals with the terms and conditions exclusively applicable to FTAAs. The said provision
requires certain terms and conditions to be incorporated into FTAAs; among them, "a firm
commitment x x x of an amount corresponding to the expenditure obligation that will be invested in
the contract area" and "representations and warranties x x x to timely deploy these [financing,
managerial and technical expertise and technological] resources under its supervision pursuant to
the periodic work programs and related budgets x x x," as well as "work programs and minimum
expenditures commitments." (underscoring supplied)
Unarguably, given the provisions of Section 35, the State has every opportunity to pass upon the
proposed expenditures under an FTAA and approve or reject them. It has access to all the
information it may need in order to determine in advance the amounts of pre-operating and
developmental expenses that will have to be recovered by the contractor and the amount of time
needed for such recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA 7942 is in
any manner unconstitutional.
No Deprivation of Beneficial Rights
It is also claimed that aside from the second and the third paragraphs of Section 81 (discussed
above), Sections 80, 84 and 112 of RA 7942 also operate to deprive the State of beneficial rights of
ownership over mineral resources; and give them away for free to private business enterprises
(including foreign owned corporations). Likewise, the said provisions have been construed as
constituting, together with Section 81, an ingenious attempt to resurrect the old and discredited
system of "license, concession or lease."
Specifically, Section 80 is condemned for limiting the State's share in a mineral production-sharing
agreement (MPSA) to just the excise tax on the mineral product. Under Section 151(A) of the Tax
Code, such tax is only 2 percent of the market value of the gross output of the minerals.
The colatilla in Section 84, the portion considered offensive to the Constitution, reiterates the same
limitation made in Section 80. 73
It should be pointed out that Section 80 and the colatilla in Section 84 pertain only to MPSAs and
have no application to FTAAs. These particular statutory provisions do not come within the issues
that were defined and delineated by this Court during the Oral Argument -- particularly the third
issue, which pertained exclusively to FTAAs. Neither did the parties argue upon them in their
pleadings. Hence, this Court cannot make any pronouncement in this case regarding the
constitutionality of Sections 80 and 84 without violating the fundamental rules of due process.
Indeed, the two provisos will have to await another case specifically placing them in issue.
On the other hand, Section 112 is disparaged for allegedly reverting FTAAs and all mineral
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agreements to the old and discredited "license, concession or lease" system. This Section states in
relevant part that "the provisions of Chapter XIV [which includes Sections 80 to 82] on government
share in mineral production-sharing agreement x x x shall immediately govern and apply to a mining
lessee or contractor." (underscoring supplied) This provision is construed as signifying that the 2
percent excise tax which, pursuant to Section 80, comprises the government share in MPSAs shall
now also constitute the government share in FTAAs -- as well as in co-production agreements and
joint venture agreements -- to the exclusion of revenues of any other nature or from any other
source.
Apart from the fact that Section 112 likewise does not come within the issues delineated by this
Court during the Oral Argument, and was never touched upon by the parties in their pleadings, it
must also be noted that the criticism hurled against this Section is rooted in unwarranted conclusions
made without considering other relevant provisions in the statute. Whether Section 112 may properly
apply to co-production or joint venture agreements, the fact of the matter is that it cannot be made to
apply to FTAAs.
First, Section 112 does not specifically mention or refer to FTAAs; the only reason it is being applied
to them at all is the fact that it happens to use the word "contractor." Hence, it is a bit of a stretch to
insist that it covers FTAAs as well. Second, mineral agreements, of which there are three types --
MPSAs, co-production agreements, and joint venture agreements -- are covered by Chapter V of RA
7942. On the other hand, FTAAs are covered by and in fact are the subject of Chapter VI, an entirely
different chapter altogether. The law obviously intends to treat them as a breed apart from mineral
agreements, since Section 35 (found in Chapter VI) creates a long list of specific terms, conditions,
commitments, representations and warranties -- which have not been made applicable to mineral
agreements -- to be incorporated into FTAAs.
Third, under Section 39, the FTAA contractor is given the option to "downgrade" -- to convert the
FTAA into a mineral agreement at any time during the term if the economic viability of the contract
area is inadequate to sustain large-scale mining operations. Thus, there is no reason to think that
the law through Section 112 intends to exact from FTAA contractors merely the same government
share (a 2 percent excise tax) that it apparently demands from contractors under the three forms of
mineral agreements. In brief, Section 112 does not apply to FTAAs.
Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain that the Court
must rule now on the constitutionality of Sections 80, 84 and 112, allegedly because the WMCP
FTAA contains a provision which grants the contractor unbridled and "automatic" authority to convert
the FTAA into an MPSA; and should such conversion happen, the State would be prejudiced since
its share would be limited to the 2 percent excise tax. Justice Carpio adds that there are five MPSAs
already signed just awaiting the judgment of this Court on respondents' and intervenor's Motions for
Reconsideration. We hold however that, at this point, this argument is based on pure speculation.
The Court cannot rule on mere surmises and hypothetical assumptions, without firm factual anchor.
We repeat: basic due process requires that we hear the parties who have a real legal interest in the
MPSAs (i.e. the parties who executed them) before these MPSAs can be reviewed, or worse, struck
down by the Court. Anything less than that requirement would be arbitrary and capricious.
In any event, the conversion of the present FTAA into an MPSA is problematic. First, the contractor
must comply with the law, particularly Section 39 of RA 7942; inter alia, it must convincingly show
that the "economic viability of the contract is found to be inadequate to justify large-scale mining
operations;" second, it must contend with the President's exercise of the power of State control over
the EDU of natural resources; and third, it will have to risk a possible declaration of the
unconstitutionality (in a proper case) of Sections 80, 84 and 112.
The first requirement is not as simple as it looks. Section 39 contemplates a situation in which an
FTAA has already been executed and entered into, and is presumably being implemented, when the
contractor "discovers" that the mineral ore reserves in the contract area are not sufficient to justify
large-scale mining, and thus the contractor requests the conversion of the FTAA into an MPSA. The
contractor in effect needs to explain why, despite its exploration activities, including the conduct of
various geologic and other scientific tests and procedures in the contract area, it was unable to
determine correctly the mineral ore reserves and the economic viability of the area. The contractor
must explain why, after conducting such exploration activities, it decided to file a declaration of
mining feasibility, and to apply for an FTAA, thereby leading the State to believe that the area could
sustain large-scale mining. The contractor must justify fully why its earlier findings, based on
scientific procedures, tests and data, turned out to be wrong, or were way off. It must likewise prove
that its new findings, also based on scientific tests and procedures, are correct. Right away, this puts
the contractor's technical capabilities and expertise into serious doubt. We wonder if anyone would
relish being in this situation. The State could even question and challenge the contractor's
qualification and competence to continue the activity under an MPSA.
All in all, while there may be cogent grounds to assail the aforecited Sections, this Court -- on
considerations of due process -- cannot rule upon them here. Anyway, if later on these
Sections are declared unconstitutional, such declaration will not affect the other portions
since they are clearly separable from the rest.
Our Mineral Resources Not

Given Away for Free by RA 7942
Nevertheless, if only to disabuse our minds, we should address the contention that our mineral
resources are effectively given away for free by the law (RA 7942) in general and by Sections 80,
81, 84 and 112 in particular.
Foreign contractors do not just waltz into town one day and leave the next, taking away mineral
resources without paying anything. In order to get at the minerals, they have to invest huge sums of
money (tens or hundreds of millions of dollars) in exploration works first. If the exploration proves
unsuccessful, all the cash spent thereon will not be returned to the foreign investors; rather, those
funds will have been infused into the local economy, to remain there permanently. The benefits
therefrom cannot be simply ignored. And assuming that the foreign contractors are successful in
finding ore bodies that are viable for commercial exploitation, they do not just pluck out the minerals
and cart them off. They have first to build camp sites and roadways; dig mine shafts and connecting
tunnels; prepare tailing ponds, storage areas and vehicle depots; install their machinery and
equipment, generator sets, pumps, water tanks and sewer systems, and so on.
In short, they need to expend a great deal more of their funds for facilities, equipment and supplies,
fuel, salaries of local labor and technical staff, and other operating expenses. In the meantime, they
also have to pay taxes, duties, fees, and royalties. All told, the exploration, pre-feasibility, feasibility,
75
development and construction phases together add up to as many as eleven years. The contractors
76
have to continually shell out funds for the duration of over a decade, before they can commence
commercial production from which they would eventually derive revenues. All that money translates
into a lot of "pump-priming" for the local economy.
Granted that the contractors are allowed subsequently to recover their pre-operating expenses, still,
that eventuality will happen only after they shall have first put out the cash and fueled the economy.
Moreover, in the process of recouping their investments and costs, the foreign contractors do not
actually pull out the money from the economy. Rather, they recover or recoup their investments out
of actual commercial production by not paying a portion of the basic government share
corresponding to national taxes, along with the additional government share, for a period of not more
than five years counted from the commencement of commercial production.
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It must be noted that there can be no recovery without commencing actual commercial production. In
the meantime that the contractors are recouping costs, they need to continue operating; in order to
do so, they have to disburse money to meet their various needs. In short, money is continually
infused into the economy.
The foregoing discussion should serve to rid us of the mistaken belief that, since the foreign
contractors are allowed to recover their investments and costs, the end result is that they practically
get the minerals for free, which leaves the Filipino people none the better for it.
All Businesses Entitled

to Cost Recovery
Let it be put on record that not only foreign contractors, but all businessmen and all business entities
in general, have to recoup their investments and costs. That is one of the first things a student learns
in business school. Regardless of its nationality, and whether or not a business entity has a five-year
cost recovery period, it will -- must -- have to recoup its investments, one way or another. This is just
common business sense. Recovery of investments is absolutely indispensable for business survival;
and business survival ensures soundness of the economy, which is critical and contributory to the
general welfare of the people. Even government corporations must recoup their investments in order
to survive and continue in operation. And, as the preceding discussion has shown, there is no
business that gets ahead or earns profits without any cost to it.
It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily
accessible or transformable into usable and negotiable currency without the intervention of the
credible mining companies. Those untapped mineral resources, hidden beneath tons of earth and
rock, may as well not be there for all the good they do us right now. They have first to be extracted
and converted into marketable form, and the country needs the foreign contractor's funds,
technology and know-how for that.
After about eleven years of pre-operation and another five years for cost recovery, the foreign
contractors will have just broken even. Is it likely that they would at that point stop their operations
and leave? Certainly not. They have yet to make profits. Thus, for the remainder of the contract
term, they must strive to maintain profitability. During this period, they pay the whole of the basic
government share and the additional government share which, taken together with indirect taxes
and other contributions, amount to approximately 60 percent or more of the entire financial benefits
generated by the mining venture.
In sum, we can hardly talk about foreign contractors taking our mineral resources for free. It takes a
lot of hard cash to even begin to do what they do. And what they do in this country ultimately
benefits the local economy, grows businesses, generates employment, and creates infrastructure,
as discussed above. Hence, we definitely disagree with the sweeping claim that no FTAA under
Section 81 will ever make any real contribution to the growth of the economy or to the general
welfare of the country. This is not a plea for foreign contractors. Rather, this is a question of focusing
the judicial spotlight squarely on all the pertinent facts as they bear upon the issue at hand, in order
to avoid leaping precipitately to ill-conceived conclusions not solidly grounded upon fact.
Repatriation of After-Tax Income
Another objection points to the alleged failure of the Mining Law to ensure real contributions to the
economic growth and general welfare of the country, as mandated by Section 2 of Article XII of the
Constitution. Pursuant to Section 81 of the law, the entire after-tax income arising from the
exploitation of mineral resources owned by the State supposedly belongs to the foreign contractors,
which will naturally repatriate the said after-tax income to their home countries, thereby resulting in
no real contribution to the economic growth of this country. Clearly, this contention is premised on
erroneous assumptions.
First, as already discussed in detail hereinabove, the concerned agencies have correctly interpreted
the second paragraph of Section 81 of RA 7942 to mean that the government is entitled to an
additional share, to be computed based on any one of the following factors: net mining revenues, the
present value of the cash flows, or excess profits reckoned against a benchmark rate of return on
investments. So it is not correct to say that all of the after-tax income will accrue to the foreign FTAA
contractor, as the government effectively receives a significant portion thereof.
Second, the foreign contractors can hardly "repatriate the entire after-tax income to their home
countries." Even a bit of knowledge of corporate finance will show that it will be impossible to
maintain a business as a "going concern" if the entire "net profit" earned in any particular year will be
taken out and repatriated. The "net income" figure reflected in the bottom line is a mere accounting
figure not necessarily corresponding to cash in the bank, or other quick assets. In order to produce
and set aside cash in an amount equivalent to the bottom line figure, one may need to sell off assets
or immediately collect receivables or liquidate short-term investments; but doing so may very likely
disrupt normal business operations.
In terms of cash flows, the funds corresponding to the net income as of a particular point in time
are actually in use in the normal course of business operations. Pulling out such net income disrupts
the cash flows and cash position of the enterprise and, depending on the amount being taken out,
could seriously cripple or endanger the normal operations and financial health of the business
enterprise. In short, no sane business person, concerned with maintaining the mining
enterprise as a going concern and keeping a foothold in its market, can afford to repatriate
the entire after-tax income to the home country.
The State's Receipt of Sixty

Percent of an FTAA Contractor's
After-Tax Income Not Mandatory
We now come to the next objection which runs this way: In FTAAs with a foreign contractor, the
State must receive at least 60 percent of the after-tax income from the exploitation of its mineral
resources. This share is the equivalent of the constitutional requirement that at least 60 percent of
the capital, and hence 60 percent of the income, of mining companies should remain in Filipino
hands.
First, we fail to see how we can properly conclude that the Constitution mandates the State to
extract at least 60 percent of the after-tax income from a mining company run by a foreign
contractor. The argument is that the Charter requires the State's partner in a co-production
agreement, joint venture agreement or MPSA to be a Filipino corporation (at least 60 percent owned
by Filipino citizens).
We question the logic of this reasoning, premised on a supposedly parallel or analogous situation.
We are, after all, dealing with an essentially different equation, one that involves different
elements. The Charter did not intend to fix an iron-clad rule on the 60 percent share,
applicable to all situations at all times and in all circumstances. If ever such was the intention of
the framers, they would have spelt it out in black and white. Verba legis will serve to dispel
unwarranted and untenable conclusions.
Second, if we would bother to do the math, we might better appreciate the impact (and
reasonableness) of what we are demanding of the foreign contractor. Let us use
a simplified illustration. Let us base it on gross revenues of, say, P500. After deducting operating
expenses, but prior to income tax, suppose a mining firm makes a taxable income of P100. A
corporate income tax of 32 percent results in P32 of taxable income going to the government,
leaving the mining firm with P68. Government then takes 60 percent thereof, equivalent to P40.80,
leaving only P27.20 for the mining firm.
At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100
of taxable income, leaving the mining firm with only P27.20. But that is not all. The government has
also taken 2 percent excise tax "off the top," equivalent to another P10. Under the minimum 60
percent proposal, the government nets around P82.80 (not counting other taxes, duties, fees and
charges) from a taxable income of P100 (assuming gross revenues of P500, for purposes of
illustration). On the other hand, the foreign contractor, which provided all the capital, equipment and
labor, and took all the entrepreneurial risks -- receives P27.20. One cannot but wonder whether such
a distribution is even remotely equitable and reasonable, considering the nature of the mining
business. The amount of P82.80 out of P100.00 is really a lot – it does not matter that we call part of
it excise tax or income tax, and another portion thereof income from exploitation of mineral
resources. Some might think it wonderful to be able to take the lion's share of the benefits. But we
have to ask ourselves if we are really serious in attracting the investments that are the indispensable
and key element in generating the monetary benefits of which we wish to take the lion's
share. Fairness is a credo not only in law, but also in business.
Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all times in the mining
business. The reason happens to be the fact that in petroleum operations, the bulk of expenditures
is in exploration, but once the contractor has found and tapped into the deposit, subsequent
investments and expenditures are relatively minimal. The crude (or gas) keeps gushing out, and the
work entailed is just a matter of piping, transporting and storing. Not so in mineral mining. The ore
body does not pop out on its own. Even after it has been located, the contractor must continually
invest in machineries and expend funds to dig and build tunnels in order to access and extract the
minerals from underneath hundreds of tons of earth and rock.
As already stated, the numerous intrinsic differences involved in their respective operations and
requirements, cost structures and investment needs render it highly inappropriate to use petroleum
operations FTAAs as benchmarks for mining FTAAs. Verily, we cannot just ignore the realities of
the distinctly different situations and stubbornly insist on the "minimum 60 percent."
The Mining and the Oil Industries

Different From Each Other
To stress, there is no independent showing that the taking of at least a 60 percent share in the after-
tax income of a mining company operated by a foreign contractor is fair and reasonable under most
if not all circumstances. The fact that some petroleum companies like Shell acceded to such
percentage of sharing does not ipso facto mean that it is per se reasonable and applicable to non-
petroleum situations (that is, mining companies) as well. We can take judicial notice of the fact that
there are, after all, numerous intrinsic differences involved in their respective operations and
equipment or technological requirements, costs structures and capital investment needs, and
product pricing and markets.
There is no showing, for instance, that mining companies can readily cope with a 60 percent
government share in the same way petroleum companies apparently can. What we have is a
suggestion to enforce the 60 percent quota on the basis of a disjointed analogy. The only factor
common to the two disparate situations is the extraction of natural resources.
Indeed, we should take note of the fact that Congress made a distinction between mining firms and
petroleum companies. In Republic Act No. 7729 -- "An Act Reducing the Excise Tax Rates on
Metallic and Non-Metallic Minerals and Quarry Resources, Amending for the Purpose Section
151(a) of the National Internal Revenue Code, as amended" -- the lawmakers fixed the excise tax
rate on metallic and non-metallic minerals at two percent of the actual market value of the annual
gross output at the time of removal. However, in the case of petroleum, the lawmakers set the excise
tax rate for the first taxable sale at fifteen percent of the fair international market price thereof.
There must have been a very sound reason that impelled Congress to impose two very dissimilar
excise tax rate. We cannot assume, without proof, that our honorable legislators acted arbitrarily,
capriciously and whimsically in this instance. We cannot just ignore the reality of two distinctly
different situations and stubbornly insist on going "minimum 60 percent."
To repeat, the mere fact that gas and oil exploration contracts grant the State 60 percent of the net
revenues does not necessarily imply that mining contracts should likewise yield a minimum of 60
percent for the State. Jumping to that erroneous conclusion is like comparing apples with oranges.
The exploration, development and utilization of gas and oil are simply different from those of mineral
resources.
To stress again, the main risk in gas and oil is in the exploration. But once oil in commercial
quantities is struck and the wells are put in place, the risk is relatively over and black gold simply
flows out continuously with comparatively less need for fresh investments and technology.
On the other hand, even if minerals are found in viable quantities, there is still need for continuous
fresh capital and expertise to dig the mineral ores from the mines. Just because deposits of mineral
ores are found in one area is no guarantee that an equal amount can be found in the adjacent areas.
There are simply continuing risks and need for more capital, expertise and industry all the time.
Note, however, that the indirect benefits -- apart from the cash revenues -- are much more in the
mineral industry. As mines are explored and extracted, vast employment is created, roads and other
infrastructure are built, and other multiplier effects arise. On the other hand, once oil wells start
producing, there is less need for employment. Roads and other public works need not be
constructed continuously. In fine, there is no basis for saying that government revenues from the oil
industry and from the mineral industries are to be identical all the time.
Fourth, to our mind, the proffered "minimum 60 percent" suggestion tends to limit the flexibility and
tie the hands of government, ultimately hampering the country's competitiveness in the international
market, to the detriment of the Filipino people. This "you-have-to-give-us-60-percent-of-after-tax-
income-or-we-don't-do- business-with-you" approach is quite perilous. True, this situation may not
seem too unpalatable to the foreign contractor during good years, when international market prices
are up and the mining firm manages to keep its costs in check. However, under unfavorable
economic and business conditions, with costs spiraling skywards and minerals prices plummeting, a
mining firm may consider itself lucky to make just minimal profits.
The inflexible, carved-in-granite demand for a 60 percent government share may spell the end of the
mining venture, scare away potential investors, and thereby further worsen the already dismal
economic scenario. Moreover, such an unbending or unyielding policy prevents the government from
responding appropriately to changing economic conditions and shifting market forces. This
inflexibility further renders our country less attractive as an investment option compared with other
countries.
And fifth, for this Court to decree imperiously that the government's share should be not less than 60
percent of the after-tax income of FTAA contractors at all times is nothing short of dictating upon the
government. The result, ironically, is that the State ends up losing control. To avoid compromising
the State's full control and supervision over the exploitation of mineral resources, this Court must
back off from insisting upon a "minimum 60 percent" rule. It is sufficient that the State has the power
and means, should it so decide, to get a 60 percent share (or more) in the contractor's net mining
revenues or after-tax income, or whatever other basis the government may decide to use in
reckoning its share. It is not necessary for it to do so in every case, regardless of circumstances.
In fact, the government must be trusted, must be accorded the liberty and the utmost flexibility to
deal, negotiate and transact with contractors and third parties as it sees fit; and upon terms that it
ascertains to be most favorable or most acceptable under the circumstances, even if it means
agreeing to less than 60 percent. Nothing must prevent the State from agreeing to a share less than
that, should it be deemed fit; otherwise the State will be deprived of full control over mineral
exploitation that the Charter has vested in it.
To stress again, there is simply no constitutional or legal provision fixing the minimum share of the
government in an FTAA at 60 percent of the net profit. For this Court to decree such minimum is to
wade into judicial legislation, and thereby inordinately impinge on the control power of the State. Let
it be clear: the Court is not against the grant of more benefits to the State; in fact, the more the
better. If during the FTAA negotiations, the President can secure 60 percent, or even 90 percent,
78
then all the better for our people. But, if under the peculiar circumstances of a specific contract, the
President could secure only 50 percent or 55 percent, so be it. Needless to say, the President will
have to report (and be responsible for) the specific FTAA to Congress, and eventually to the people.
Finally, if it should later be found that the share agreed to is grossly disadvantageous to the
government, the officials responsible for entering into such a contract on its behalf will have to
answer to the courts for their malfeasance. And the contract provision voided. But this Court would
abuse its own authority should it force the government's hand to adopt the 60 percent demand of
some of our esteemed colleagues.
Capital and Expertise Provided,

Yet All Risks Assumed by Contractor
Here, we will repeat what has not been emphasized and appreciated enough: the fact that the
contractor in an FTAA provides all the needed capital, technical and managerial expertise, and
technology required to undertake the project.
In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor committed, at the very
outset, to make capital investments of up to US$50 million in that single mining project. WMCP
claims to have already poured in well over P800 million into the country as of February 1998, with
more in the pipeline. These resources, valued in the tens or hundreds of millions of dollars, are
invested in a mining project that provides no assurance whatsoever that any part of the investment
will be ultimately recouped.
At the same time, the contractor must comply with legally imposed environmental standards and the
social obligations, for which it also commits to make significant expenditures of funds. Throughout,
the contractor assumes all the risks of the business, as mentioned earlier. These risks are indeed
79
very high, considering that the rate of success in exploration is extremely low. The probability of
finding any mineral or petroleum in commercially viable quantities is estimated to be about 1:1,000
only. On that slim chance rides the contractor's hope of recouping investments and generating
profits. And when the contractor has recouped its initial investments in the project, the government
share increases to sixty percent of net benefits -- without the State ever being in peril of incurring
costs, expenses and losses.
And even in the worst possible scenario -- an absence of commercial quantities of minerals to justify
development -- the contractor would already have spent several million pesos for exploration works,
before arriving at the point in which it can make that determination and decide to cut its losses. In
fact, during the first year alone of the exploration period, the contractor was already committed to
spend not less than P24 million. The FTAA therefore clearly ensures benefits for the local economy,
courtesy of the contractor.
All in all, this setup cannot be regarded as disadvantageous to the State or the Filipino
people; it certainly cannot be said to convey beneficial ownership of our mineral resources to
foreign contractors.
Deductions Allowed by the
WMCP FTAA Reasonable
Petitioners question whether the State's weak control might render the sharing arrangements
ineffective. They cite the so-called "suspicious" deductions allowed by the WMCP FTAA in arriving
at the net mining revenue, which is the basis for computing the government share. The WMCP
FTAA, for instance, allows expenditures for "development within and outside the Contract
Area relating to the Mining Operations," "consulting fees incurred both inside and outside the
80
Philippines for work related directly to the Mining Operations," and "the establishment and
81
administration of field offices including administrative overheads incurred within and outside the
Philippines which are properly allocatable to the Mining Operations and reasonably related to the
performance of the Contractor's obligations and exercise of its rights under this Agreement." 82
It is quite well known, however, that mining companies do perform some marketing activities abroad
in respect of selling their mineral products and by-products. Hence, it would not be improper to allow
the deduction of reasonable consulting fees incurred abroad, as well as administrative expenses
and overheads related to marketing offices also located abroad -- provided that these deductions are
directly related or properly allocatable to the mining operations and reasonably related to the
performance of the contractor's obligations and exercise of its rights. In any event, more facts are
needed. Until we see how these provisions actually operate, mere "suspicions" will not suffice to
propel this Court into taking action.
Section 7.9 of the WMCP FTAA

Invalid and Disadvantageous
Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let us start with
Section 7.9 of the WMCP FTAA. While Section 7.7 gives the government a 60 percent share in the
net mining revenues of WMCP from the commencement of commercial production, Section 7.9
deprives the government of part or all of the said 60 percent. Under the latter provision, should
WMCP's foreign shareholders -- who originally owned 100 percent of the equity -- sell 60 percent or
more of its outstanding capital stock to a Filipino citizen or corporation, the State loses its right to
receive its 60 percent share in net mining revenues under Section 7.7.
Section 7.9 provides:
The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7
shall be reduced by 1percent of Net Mining Revenues for every 1percent ownership interest
in the Contractor (i.e., WMCP) held by a Qualified Entity. 83
Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section
7.9 without any offsetting compensation to the State. Thus, in reality, the State has no vested right to
receive any income from the FTAA for the exploitation of its mineral resources. Worse, it would
seem that what is given to the State in Section 7.7 is by mere tolerance of WMCP's foreign
stockholders, who can at any time cut off the government's entire 60 percent share. They can do so
by simply selling 60 percent of WMCP's outstanding capital stock to a Philippine citizen or
corporation. Moreover, the proceeds of such sale will of course accrue to the foreign stockholders of
WMCP, not to the State.
The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-
owned and 40 percent foreign-owned will still trigger the operation of Section 7.9. Effectively, the
State will lose its right to receive all 60 percent of the net mining revenues of WMCP; and foreign
stockholders will own beneficially up to 64 percent of WMCP, consisting of the remaining 40 percent
foreign equity therein, plus the 24 percent pro-rata share in the buyer-corporation. 84
In fact, the January 23, 2001 sale by WMCP's foreign stockholder of the entire outstanding equity in
WMCP to Sagittarius Mines, Inc. -- a domestic corporation at least 60 percent Filipino owned -- may
be deemed to have automatically triggered the operation of Section 7.9, without need of further
action by any party, and removed the State's right to receive the 60 percent share in net mining
revenues.
At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining
revenues of WMCP without any offset or compensation whatsoever. It is possible that the inclusion
of the offending provision was initially prompted by the desire to provide some form of incentive for
the principal foreign stockholder in WMCP to eventually reduce its equity position and ultimately
divest in favor of Filipino citizens and corporations. However, as finally structured, Section 7.9 has
the deleterious effect of depriving government of the entire 60 percent share in WMCP's net mining
revenues, without any form of compensation whatsoever. Such an outcome is completely
unacceptable.
The whole point of developing the nation's natural resources is to benefit the Filipino people, future
generations included. And the State as sovereign and custodian of the nation's natural wealth is
mandated to protect, conserve, preserve and develop that part of the national patrimony for their
benefit. Hence, the Charter lays great emphasis on "real contributions to the economic growth and
general welfare of the country" as essential guiding principles to be kept in mind when negotiating
85
the terms and conditions of FTAAs.
Earlier, we held (1) that the State must be accorded the liberty and the utmost flexibility to deal,
negotiate and transact with contractors and third parties as it sees fit, and upon terms that it
ascertains to be most favorable or most acceptable under the circumstances, even if that should
mean agreeing to less than 60 percent; (2) that it is not necessary for the State to extract a 60
percent share in every case and regardless of circumstances; and (3) that should the State be
prevented from agreeing to a share less than 60 percent as it deems fit, it will be deprived of the full
control over mineral exploitation that the Charter has vested in it.
That full control is obviously not an end in itself; it exists and subsists precisely because of the need
to serve and protect the national interest. In this instance, national interest finds particular application
in the protection of the national patrimony and the development and exploitation of the country's
mineral resources for the benefit of the Filipino people and the enhancement of economic growth
and the general welfare of the country. Undoubtedly, such full control can be misused and
abused, as we now witness.
Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining revenues
(provided for in Section 7.7) without anything in exchange. Moreover, this outcome
constitutes unjust enrichment on the part of the local and foreign stockholders of WMCP. By their
mere divestment of up to 60 percent equity in WMCP in favor of Filipino citizens and/or corporations,
the local and foreign stockholders get a windfall. Their share in the net mining revenues of WMCP is
automatically increased, without their having to pay the government anything for it. In short, the
provision in question is without a doubt grossly disadvantageous to the government, detrimental to
the interests of the Filipino people, and violative of public policy.
Moreover, it has been reiterated in numerous decisions that the parties to a contract may establish
86
any agreements, terms and conditions that they deem convenient; but these should not be contrary
to law, morals, good customs, public order or public policy. Being precisely violative of anti-graft
87
provisions and contrary to public policy, Section 7.9 must therefore be stricken off as invalid.
Whether the government officials concerned acceded to that provision by sheer mistake or with full
awareness of the ill consequences, is of no moment. It is hornbook doctrine that the principle of
estoppel does not operate against the government for the act of its agents, and that it is never
88
estopped by any mistake or error on their part. It is therefore possible and proper to rectify the
89
situation at this time. Moreover, we may also say that the FTAA in question does not involve mere
contractual rights; being impressed as it is with public interest, the contractual provisions and
stipulations must yield to the common good and the national interest.
Since the offending provision is very much separable from Section 7.7 and the rest of the FTAA, the
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deletion of Section 7.9 can be done without affecting or requiring the invalidation of the WMCP FTAA
itself. Such a deletion will preserve for the government its due share of the benefits. This way, the
mandates of the Constitution are complied with and the interests of the government fully protected,
while the business operations of the contractor are not needlessly disrupted.
Section 7.8(e) of the WMCP FTAA

Also Invalid and Disadvantageous
Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:
"7.8 The Government Share shall be deemed to include all of the following sums:
"(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including
excise tax, corporate income tax, customs duty, sales tax, value added tax,
occupation and regulatory fees, Government controlled price stabilization schemes,
any other form of Government backed schemes, any tax on dividend payments by
the Contractor or its Affiliates in respect of revenues from the Mining Operations and
any tax on interest on domestic and foreign loans or other financial arrangements or
accommodations, including loans extended to the Contractor by its stockholders;
"(b) any payments to local and regional government, including taxes, fees, levies,
costs, imposts, duties, royalties, occupation and regulatory fees and infrastructure
contributions;
"(c) any payments to landowners, surface rights holders, occupiers, indigenous

people or Claimowners;
"(d) costs and expenses of fulfilling the Contractor's obligations to contribute to

national development in accordance with Clause 10.1(i) (1) and 10.1(i) (2);
"(e) an amount equivalent to whatever benefits that may be extended in the future by
the Government to the Contractor or to financial or technical assistance agreement
contractors in general;
"(f) all of the foregoing items which have not previously been offset against the
Government Share in an earlier Fiscal Year, adjusted for inflation." (underscoring
supplied)
Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance, money spent by the
government for the benefit of the contractor in building roads leading to the mine site should still be
deductible from the State's share in net mining revenues. Allowing this deduction results in benefiting
the contractor twice over. It constitutes unjust enrichment on the part of the contractor at the
expense of the government, since the latter is effectively being made to pay twice for the same
item. For being grossly disadvantageous and prejudicial to the government and contrary to public
91
policy, Section 7.8(e) is undoubtedly invalid and must be declared to be without effect. Fortunately,
this provision can also easily be stricken off without affecting the rest of the FTAA.
Nothing Left Over

After Deductions?
In connection with Section 7.8, an objection has been raised: Specified in Section 7.8 are numerous
items of deduction from the State's 60 percent share. After taking these into account, will the State
ever receive anything for its ownership of the mineral resources?
We are confident that under normal circumstances, the answer will be yes. If we examine the
various items of "deduction" listed in Section 7.8 of the WMCP FTAA, we will find that they
correspond closely to the components or elements of the basic government share established in
DAO 99-56, as discussed in the earlier part of this Opinion.
Likewise, the balance of the government's 60 percent share -- after netting out the items of
deduction listed in Section 7.8 --corresponds closely to the additional government share provided
for in DAO 99-56 which, we once again stress, has nothing at all to do with indirect taxes. The
Ramos-DeVera paper concisely presents the fiscal contribution of an FTAA under DAO 99-56 in this
92
equation:
Receipts from an FTAA = basic gov't share + add'l gov't share
Transposed into a similar equation, the fiscal payments system from the WMCP FTAA assumes the
following formulation:
Government's 60 percent share in net mining revenues of WMCP = items listed in Sec. 7.8 of
the FTAA + balance of Gov't share, payable 4 months from the end of the fiscal year
It should become apparent that the fiscal arrangement under the WMCP FTAA is very similar to that
under DAO 99-56, with the "balance of government share payable 4 months from end of fiscal year"
being the equivalent of the additional government share computed in accordance with the "net-
mining-revenue-based option" under DAO 99-56, as discussed above. As we have emphasized
earlier, we find each of the three options for computing the additional government share -- as
presented in DAO 99-56 -- to be sound and reasonable.
We therefore conclude that there is nothing inherently wrong in the fiscal regime of the
WMCP FTAA, and certainly nothing to warrant the invalidation of the FTAA in its entirety.
Section 3.3 of the WMCP

FTAA Constitutional
Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional restrictions on the
term of FTAAs. The provision in question reads:
"3.3 This Agreement shall be renewed by the Government for a further period of twenty-five
(25) years under the same terms and conditions provided that the Contractor lodges a
request for renewal with the Government not less than sixty (60) days prior to the expiry of
the initial term of this Agreement and provided that the Contractor is not in breach of any of
the requirements of this Agreement."
Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987 Constitution, which
states:
"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development and utilization
of natural resources shall be under the full control and supervision of the State. The State
may directly undertake such activities, or it may enter into co-production, joint venture or
production-sharing agreements with Filipino citizens or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. Such agreements may be for
a period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens.
"The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-
workers in rivers, lakes, bays and lagoons.
"The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of
the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
"The President shall notify the Congress of every contract entered into in accordance with
this provision, within thirty days from its execution."
93
We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the
above provision is found within paragraph 1 of Section 2 of Article XII, which refers to mineral
agreements -- co-production agreements, joint venture agreements and mineral production-sharing
agreements -- which the government may enter into with Filipino citizens and corporations, at least
60 percent owned by Filipino citizens. The word "such" clearly refers to these three mineral
agreements -- CPAs, JVAs and MPSAs -- not to FTAAs.
Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of the Constitution.
It will be noted that there are no term limitations provided for in the said paragraphs dealing with
FTAAs. This shows that FTAAs are sui generis, in a class of their own. This omission was obviously
a deliberate move on the part of the framers. They probably realized that FTAAs would be different
in many ways from MPSAs, JVAs and CPAs. The reason the framers did not fix term limitations
applicable to FTAAs is that they preferred to leave the matter to the discretion of the legislature
and/or the agencies involved in implementing the laws pertaining to FTAAs, in order to give the latter
enough flexibility and elbow room to meet changing circumstances.
Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to eleven years.
Thereafter, a few more years would be gobbled up in start-up operations. It may take fifteen years
before an FTAA contractor can start earning profits. And thus, the period of 25 years may really be
short for an FTAA. Consider too that in this kind of agreement, the contractor assumes all
entrepreneurial risks. If no commercial quantities of minerals are found, the contractor bears all
financial losses. To compensate for this long gestation period and extra business risks, it would not
be totally unreasonable to allow it to continue EDU activities for another twenty five years.
In any event, the complaint is that, in essence, Section 3.3 gives the contractor the power to compel
the government to renew the WMCP FTAA for another 25 years and deprives the State of any say
on whether to renew the contract.
While we agree that Section 3.3 could have been worded so as to prevent it from favoring the
contractor, this provision does not violate any constitutional limits, since the said term limitation does
not apply at all to FTAAs. Neither can the provision be deemed in any manner to be illegal, as no law
is being violated thereby. It is certainly not illegal for the government to waive its option to refuse the
renewal of a commercial contract.
Verily, the government did not have to agree to Section 3.3. It could have said "No" to the stipulation,
but it did not. It appears that, in the process of negotiations, the other contracting party was able to
convince the government to agree to the renewal terms. Under the circumstances, it does not seem
proper for this Court to intervene and step in to undo what might have perhaps been a possible
miscalculation on the part of the State. If government believes that it is or will be aggrieved by the
effects of Section 3.3, the remedy is the renegotiation of the provision in order to provide the State
the option to not renew the FTAA.
Financial Benefits for Foreigners

Not Forbidden by the Constitution
Before leaving this subject matter, we find it necessary for us to rid ourselves of the false belief that
the Constitution somehow forbids foreign-owned corporations from deriving financial benefits from
the development of our natural or mineral resources.
The Constitution has never prohibited foreign corporations from acquiring and enjoying "beneficial
interest" in the development of Philippine natural resources. The State itself need not directly
undertake exploration, development, and utilization activities. Alternatively, the Constitution
authorizes the government to enter into joint venture agreements (JVAs), co-production agreements
(CPAs) and mineral production sharing agreements (MPSAs) with contractors who are Filipino
citizens or corporations that are at least 60 percent Filipino-owned. They may do the actual "dirty
work" -- the mining operations.
In the case of a 60 percent Filipino-owned corporation, the 40 percent individual and/or

corporate non-Filipino stakeholders obviously participate in the beneficial interest derived from the
development and utilization of our natural resources. They may receive by way of dividends, up to
40 percent of the contractor's earnings from the mining project. Likewise, they may have a say in the
decisions of the board of directors, since they are entitled to representation therein to the extent of
their equity participation, which the Constitution permits to be up to 40 percent of the contractor's
equity. Hence, the non-Filipino stakeholders may in that manner also participate in the management
of the contractor's natural resource development work. All of this is permitted by our Constitution, for
any natural resource, and without limitation even in regard to the magnitude of the mining project or
operations (see paragraph 1 of Section 2 of Article XII).
It is clear, then, that there is nothing inherently wrong with or constitutionally objectionable about the
idea of foreign individuals and entities having or enjoying "beneficial interest" in -- and participating
in the management of operations relative to -- the exploration, development and utilization of our
natural resources.
FTAA More Advantageous

Than Other Schemes
Like CPA, JVA and MPSA
A final point on the subject of beneficial interest. We believe the FTAA is a more advantageous
proposition for the government as compared with other agreements permitted by the Constitution. In
a CPA that the government enters into with one or more contractors, the government shall provide
inputs to the mining operations other than the mineral resource itself. 94
In a JVA, a JV company is organized by the government and the contractor, with both parties having
equity shares (investments); and the contractor is granted the exclusive right to conduct mining
operations and to extract minerals found in the area. On the other hand, in an MPSA, the
95
government grants the contractor the exclusive right to conduct mining operations within the contract
area and shares in the gross output; and the contractor provides the necessary financing,
technology, management and manpower.
The point being made here is that, in two of the three types of agreements under consideration,
the government has to ante up some risk capital for the enterprise. In other words, government
funds (public moneys) are withdrawn from other possible uses, put to work in the venture and placed
at risk in case the venture fails. This notwithstanding, management and control of the operations of
the enterprise are -- in all three arrangements -- in the hands of the contractor, with the government
being mainly a silent partner. The three types of agreement mentioned above apply to any natural
resource, without limitation and regardless of the size or magnitude of the project or operations.
In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2 of Article XII,
the FTAA is limited to large-scale projects and only for minerals, petroleum and other mineral oils.
Here, the Constitution removes the 40 percent cap on foreign ownership and allows the foreign
corporation to own up to 100 percent of the equity. Filipino capital may not be sufficient on account
of the size of the project, so the foreign entity may have to ante up all the risk capital.
Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if the project fails. In
respect of the particular FTAA granted to it, WMCP (then 100 percent foreign owned) was
responsible, as contractor, for providing the entire equity, including all the inputs for the project. It
was to bear 100 percent of the risk of loss if the project failed, but its maximum potential "beneficial
interest" consisted only of 40 percent of the net beneficial interest, because the other 60 percent is
the share of the government, which will never be exposed to any risk of loss whatsoever.
In consonance with the degree of risk assumed, the FTAA vested in WMCP the day-to-day
management of the mining operations. Still such management is subject to the overall control and
supervision of the State in terms of regular reporting, approvals of work programs and budgets, and
so on.
So, one needs to consider in relative terms, the costs of inputs for, degree of risk attendant to, and
benefits derived or to be derived from a CPA, a JVA or an MPSA vis-à-vis those pertaining to an
FTAA. It may not be realistically asserted that the foreign grantee of an FTAA is being unduly
favored or benefited as compared with a foreign stakeholder in a corporation holding a CPA, a JVA
or an MPSA. Seen the other way around, the government is definitely better off with an FTAA than a
CPA, a JVA or an MPSA.
Developmental Policy on the Mining Industry
During the Oral Argument and in their Final Memorandum, petitioners repeatedly urged the Court to
consider whether mining as an industry and economic activity deserved to be accorded priority,
preference and government support as against, say, agriculture and other activities in which Filipinos
and the Philippines may have an "economic advantage." For instance, a recent US study reportedly
96
examined the economic performance of all local US counties that were dependent on mining and 20
percent of whose labor earnings between 1970 and 2000 came from mining enterprises.
The study -- covering 100 US counties in 25 states dependent on mining -- showed that per capita
income grew about 30 percent less in mining-dependent communities in the 1980s and 25 percent
less for the entire period 1980 to 2000; the level of per capita income was also lower. Therefore,
given the slower rate of growth, the gap between these and other local counties increased.
Petitioners invite attention to the OXFAM America Report's warning to developing nations that

mining brings with it serious economic problems, including increased regional inequality,
unemployment and poverty. They also cite the final report of the Extractive Industries Review
97
project commissioned by the World Bank (the WB-EIR Report), which warns of environmental
degradation, social disruption, conflict, and uneven sharing of benefits with local communities that
bear the negative social and environmental impact. The Report suggests that countries need to
decide on the best way to exploit their natural resources, in order to maximize the value added from
the development of their resources and ensure that they are on the path to sustainable development
once the resources run out.
Whatever priority or preference may be given to mining vis-à-vis other economic or non-economic
activities is a question of policy that the President and Congress will have to address; it is not for this
Court to decide. This Court declares what the Constitution and the laws say, interprets only when
necessary, and refrains from delving into matters of policy.
Suffice it to say that the State control accorded by the Constitution over mining activities assures a
proper balancing of interests. More pointedly, such control will enable the President to demand the
best mining practices and the use of the best available technologies to protect the environment and
to rehabilitate mined-out areas. Indeed, under the Mining Law, the government can ensure the
protection of the environment during and after mining. It can likewise provide for the mechanisms to
protect the rights of indigenous communities, and thereby mold a more socially-responsive,
culturally-sensitive and sustainable mining industry.
Early on during the launching of the Presidential Mineral Industry Environmental Awards on
February 6, 1997, then President Fidel V. Ramos captured the essence of balanced and sustainable
mining in these words:
"Long term, high profit mining translates into higher revenues for government, more decent
jobs for the population, more raw materials to feed the engines of downstream and allied
industries, and improved chances of human resource and countryside development by
creating self-reliant communities away from urban centers.
xxxxxxxxx
"Against a fragile and finite environment, it is sustainability that holds the key. In sustainable
mining, we take a middle ground where both production and protection goals are balanced,
and where parties-in-interest come to terms."
Neither has the present leadership been remiss in addressing the concerns of sustainable mining
operations. Recently, on January 16, 2004 and April 20, 2004, President Gloria Macapagal Arroyo
issued Executive Orders Nos. 270 and 270-A, respectively, "to promote responsible mineral
resources exploration, development and utilization, in order to enhance economic growth, in a
manner that adheres to the principles of sustainable development and with due regard for justice
and equity, sensitivity to the culture of the Filipino people and respect for Philippine sovereignty."98
REFUTATION OF DISSENTS
The Court will now take up a number of other specific points raised in the dissents of Justices Carpio
and Morales.
1. Justice Morales introduced us to Hugh Morgan, former president and chief executive officer of
Western Mining Corporation (WMC) and former president of the Australian Mining Industry Council,
who spearheaded the vociferous opposition to the filing by aboriginal peoples of native title claims
against mining companies in Australia in the aftermath of the landmark Mabo decision by the
Australian High Court. According to sources quoted by our esteemed colleague, Morgan was also
a racist and a bigot. In the course of protesting Mabo, Morgan allegedly uttered derogatory remarks
belittling the aboriginal culture and race.
An unwritten caveat of this introduction is that this Court should be careful not to permit the entry
of the likes of Hugh Morgan and his hordes of alleged racist-bigots at WMC. With all due respect,
such scare tactics should have no place in the discussion of this case. We are deliberating on the
constitutionality of RA 7942, DAO 96-40 and the FTAA originally granted to WMCP, which had been
transferred to Sagittarius Mining, a Filipino corporation. We are not discussing the apparition of white
Anglo-Saxon racists/bigots massing at our gates.
2. On the proper interpretation of the phrase agreements involving either technical or financial

assistance, Justice Morales points out that at times we "conveniently omitted" the use of the
disjunctive either…or, which according to her denotes restriction; hence the phrase must be deemed
to connote restriction and limitation.
But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive phrase either
technical or financial assistance would, strictly speaking, literally mean that a foreign contractor
may provide only one or the other, but not both. And if both technical and financial assistance were
required for a project, the State would have to deal with at least two different foreign contractors --
one for financial and the other for technical assistance. And following on that, a foreign contractor,
though very much qualified to provide both kinds of assistance, would nevertheless be prohibited
from providing one kind as soon as it shall have agreed to provide the other.
But if the Court should follow this restrictive and literal construction, can we really find two (or more)
contractors who are willing to participate in one single project -- one to provide the "financial
assistance" only and the other the "technical assistance" exclusively; it would be excellent if these
two or more contractors happen to be willing and are able to cooperate and work closely together on
the same project (even if they are otherwise competitors). And it would be superb if no conflicts
would arise between or among them in the entire course of the contract. But what are the chances
things will turn out this way in the real world? To think that the framers deliberately imposed this kind
of restriction is to say that they were either exceedingly optimistic, or incredibly naïve. This begs the
question -- What laudable objective or purpose could possibly be served by such strict and restrictive
literal interpretation?
3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a contract or
property right which merits protection by the due process clause of the Constitution, but merely a
license or privilege which may be validly revoked, rescinded or withdrawn by executive action
whenever dictated by public interest or public welfare.
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as authority. The

latter cases dealt specifically with timber licenses only. Oposa allegedly reiterated that a license is
merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between
the authority, federal, state or municipal, granting it and the person to whom it is granted; neither is it
property or a property right, nor does it create a vested right; nor is it taxation. Thus this Court held
that the granting of license does not create irrevocable rights, neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are
also involved in this situation? We do not think so. A grantee of a timber license, permit or license
agreement gets to cut the timber already growing on the surface; it need not dig up tons of earth to
get at the logs. In a logging concession, the investment of the licensee is not as substantial as the
investment of a large-scale mining contractor. If a timber license were revoked, the licensee packs
up its gear and moves to a new area applied for, and starts over; what it leaves behind are mainly
the trails leading to the logging site.
In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars)
into the ground, so to speak, for exploration activities, for development of the mine site and
infrastructure, and for the actual excavation and extraction of minerals, including the extensive
tunneling work to reach the ore body. The cancellation of the mining contract will utterly deprive the
contractor of its investments (i.e., prevent recovery of investments), most of which cannot be pulled
out.
To say that an FTAA is just like a mere timber license or permit and does not involve contract or
property rights which merit protection by the due process clause of the Constitution, and may
therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance;
at the very least, it is downright dismissive of the property rights of businesspersons and corporate
entities that have investments in the mining industry, whose investments, operations and
expenditures do contribute to the general welfare of the people, the coffers of government, and the
strength of the economy. Such a pronouncement will surely discourage investments (local and
foreign) which are critically needed to fuel the engine of economic growth and move this country out
of the rut of poverty. In sum, Oposa is not applicable.
4. Justice Morales adverts to the supposedly "clear intention" of the framers of the Constitution to
reserve our natural resources exclusively for the Filipino people. She then quoted from the records
of the ConCom deliberations a passage in which then Commissioner Davide explained his vote,
arguing in the process that aliens ought not be allowed to participate in the enjoyment of our natural
resources. One passage does not suffice to capture the tenor or substance of the entire extensive
deliberations of the commissioners, or to reveal the clear intention of the framers as a group. A re-
reading of the entire deliberations (quoted here earlier) is necessary if we are to understand the true
intent of the framers.
5. Since 1935, the Filipino people, through their Constitution, have decided that the retardation or
delay in the exploration, development or utilization of the nation's natural resources is merely
secondary to the protection and preservation of their ownership of the natural resources, so says
Justice Morales, citing Aruego. If it is true that the framers of the 1987 Constitution did not care
much about alleviating the retardation or delay in the development and utilization of our natural
resources, why did they bother to write paragraph 4 at all? Were they merely paying lip service to
large-scale exploration, development and utilization? They could have just completely ignored the
subject matter and left it to be dealt with through a future constitutional amendment. But we have to
harmonize every part of the Constitution and to interpret each provision in a manner that would give
life and meaning to it and to the rest of the provisions. It is obvious that a literal interpretation of
paragraph 4 will render it utterly inutile and inoperative.
6. According to Justice Morales, the deliberations of the Constitutional Commission do not support
our contention that the framers, by specifying such agreements involving financial or technical
assistance, necessarily gave implied assent to everything that these agreements implicitly entailed,
or that could reasonably be deemed necessary to make them tenable and effective, including
management authority in the day-to-day operations. As proof thereof, she quotes one single
passage from the ConCom deliberations, consisting of an exchange among Commissioners
Tingson, Garcia and Monsod.
However, the quoted exchange does not serve to contradict our argument; it even bolsters it. Comm.
Christian Monsod was quoted as saying: "xxx I think we have to make a distinction that it is not
really realistic to say that we will borrow on our own terms. Maybe we can say that we inherited
unjust loans, and we would like to repay these on terms that are not prejudicial to our own growth.
But the general statement that we should only borrow on our own terms is a bit unrealistic." Comm.
Monsod is one who knew whereof he spoke.
7. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is
after completion of the exploration phase and just before undertaking the development and
construction phase, on account of the fact that the requirement for a minimum investment of $50
million is applicable only during the development, construction and utilization phase, but not during
the exploration phase, when the foreign contractor need merely comply with minimum ground
expenditures. Thus by converting, the foreign contractor maximizes its profits by avoiding its
obligation to make the minimum investment of $50 million.
This argument forgets that the foreign contractor is in the game precisely to make money. In order to
come anywhere near profitability, the contractor must first extract and sell the mineral ore. In order to
do that, it must also develop and construct the mining facilities, set up its machineries and
equipment and dig the tunnels to get to the deposit. The contractor is thus compelled to expend
funds in order to make profits. If it decides to cut back on investments and expenditures, it will
necessarily sacrifice the pace of development and utilization; it will necessarily sacrifice the amount
of profits it can make from the mining operations. In fact, at certain less-than-optimal levels of
operation, the stream of revenues generated may not even be enough to cover variable expenses,
let alone overhead expenses; this is a dismal situation anyone would want to avoid. In order to make
money, one has to spend money. This truism applies to the mining industry as well.
8. Mortgaging the minerals to secure a foreign FTAA contractor's obligations is anomalous,

according to Justice Morales since the contractor was from the beginning obliged to provide all
financing needed for the mining operations. However, the mortgaging of minerals by the contractor
does not necessarily signify that the contractor is unable to provide all financing required for the
project, or that it does not have the financial capability to undertake large-scale operations.
Mortgaging of mineral products, just like the assignment (by way of security) of manufactured goods
and goods in inventory, and the assignment of receivables, is an ordinary requirement of banks,
even in the case of clients with more than sufficient financial resources. And nowadays, even the
richest and best managed corporations make use of bank credit facilities -- it does not necessarily
signify that they do not have the financial resources or are unable to provide the financing on their
own; it is just a manner of maximizing the use of their funds.
9. Does the contractor in reality acquire the surface rights "for free," by virtue of the fact that it is
entitled to reimbursement for the costs of acquisition and maintenance, adjusted for inflation? We
think not. The "reimbursement" is possible only at the end of the term of the contract, when the
surface rights will no longer be needed, and the land previously acquired will have to be disposed of,
in which case the contractor gets reimbursement from the sales proceeds. The contractor has to pay
out the acquisition price for the land. That money will belong to the seller of the land. Only if and
when the land is finally sold off will the contractor get any reimbursement. In other words, the
contractor will have been cash-out for the entire duration of the term of the contract -- 25 or 50 years,
depending. If we calculate the cost of money at say 12 percent per annum, that is the cost or
opportunity loss to the contractor, in addition to the amount of the acquisition price. 12 percent per
annum for 50 years is 600 percent; this, without any compounding yet. The cost of money is
therefore at least 600 percent of the original acquisition cost; it is in addition to the acquisition
cost. "For free"? Not by a long shot.
10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The acquisition by the
State of land for the contractor is just to enable the contractor to establish its mine site, build its
facilities, establish a tailings pond, set up its machinery and equipment, and dig mine shafts and
tunnels, etc. It is impossible that the surface requirement will aggregate 5,000 hectares. Much of the
operations will consist of the tunneling and digging underground, which will not require possessing or
using any land surface. 5,000 hectares is way too much for the needs of a mining operator. It simply
will not spend its cash to acquire property that it will not need; the cash may be better employed for
the actual mining operations, to yield a profit.
11. Justice Carpio claims that the phrase among other things (found in the second paragraph of
Section 81 of the Mining Act) is being incorrectly treated as a delegation of legislative power to the
DENR secretary to issue DAO 99-56 and prescribe the formulae therein on the State's share from
mining operations. He adds that the phrase among other things was not intended as a delegation of
legislative power to the DENR secretary, much less could it be deemed a valid delegation of
legislative power, since there is nothing in the second paragraph of Section 81 which can be said to
grant any delegated legislative power to the DENR secretary. And even if there were, such
delegation would be void, for lack of any standards by which the delegated power shall be exercised.
While there is nothing in the second paragraph of Section 81 which can directly be construed as a
delegation of legislative power to the DENR secretary, it does not mean that DAO 99-56 is invalid
per se, or that the secretary acted without any authority or jurisdiction in issuing DAO 99-56. As we
stated earlier in our Prologue, "Who or what organ of government actually exercises this power of
control on behalf of the State? The Constitution is crystal clear: the President. Indeed, the Chief
Executive is the official constitutionally mandated to 'enter into agreements with foreign owned
corporations.' On the other hand, Congress may review the action of the President once it is notified
of 'every contract entered into in accordance with this [constitutional] provision within thirty days from
its execution.'" It is the President who is constitutionally mandated to enter into FTAAs with foreign
corporations, and in doing so, it is within the President's prerogative to specify certain terms and
conditions of the FTAAs, for example, the fiscal regime of FTAAs -- i.e., the sharing of the net
mining revenues between the contractor and the State.
Being the President's alter ego with respect to the control and supervision of the mining industry, the
DENR secretary, acting for the President, is necessarily clothed with the requisite authority and
power to draw up guidelines delineating certain terms and conditions, and specifying therein the
terms of sharing of benefits from mining, to be applicable to FTAAs in general. It is important to
remember that DAO 99-56 has been in existence for almost six years, and has not been amended or
revoked by the President.
The issuance of DAO 99-56 did not involve the exercise of delegated legislative power. The
legislature did not delegate the power to determine the nature, extent and composition of the items
that would come under the phrase among other things. The legislature's power pertains to the
imposition of taxes, duties and fees. This power was not delegated to the DENR secretary. But the
power to negotiate and enter into FTAAs was withheld from Congress, and reserved for the
President. In determining the sharing of mining benefits, i.e., in specifying what the phrase among
other things include, the President (through the secretary acting in his/her behalf) was not
determining the amount or rate of taxes, duties and fees, but rather the amount of INCOME to be
derived from minerals to be extracted and sold, income which belongs to the State as owner of the
mineral resources. We may say that, in the second paragraph of Section 81, the legislature in a
sense intruded partially into the President's sphere of authority when the former provided that
"The Government share in financial or technical assistance agreement shall consist of,
among other things, the contractor's corporate income tax, excise tax, special allowance,
withholding tax due from the contractor's foreign stockholders arising from dividend or
interest payments to the said foreign stockholder in case of a foreign national and all such
other taxes, duties and fees as provided for under existing laws." (Italics supplied)
But it did not usurp the President's authority since the provision merely included the enumerated
items as part of the government share, without foreclosing or in any way preventing (as in fact
Congress could not validly prevent) the President from determining what constitutes the State's
compensation derived from FTAAs. In this case, the President in effect directed the inclusion or
addition of "other things," viz., INCOME for the owner of the resources, in the government's share,
while adopting the items enumerated by Congress as part of the government share also.
12. Justice Carpio's insistence on applying the ejusdem generis rule of statutory construction to the
phrase among other things is therefore useless, and must fall by the wayside. There is no point
trying to construe that phrase in relation to the enumeration of taxes, duties and fees found in
paragraph 2 of Section 81, precisely because "the constitutional power to prescribe the sharing
of mining income between the State and mining companies," to quote Justice Carpio pursuant
to an FTAA is constitutionally lodged with the President, not with Congress. It thus makes no
sense to persist in giving the phrase among other things a restricted meaning referring only to taxes,
duties and fees.
13. Strangely, Justice Carpio claims that the DENR secretary can change the formulae in DAO 99-
56 any time even without the approval of the President, and the secretary is the sole authority to
determine the amount of consideration that the State shall receive in an FTAA, because Section 5 of
the DAO states that "xxx any amendment of an FTAA other than the provision on fiscal regime shall
require the negotiation with the Negotiation Panel and the recommendation of the Secretary for
approval of the President xxx". Allegedly, because of that provision, if an amendment in the FTAA
involves non-fiscal matters, the amendment requires approval of the President, but if the amendment
involves a change in the fiscal regime, the DENR secretary has the final authority, and approval of
the President may be dispensed with; hence the secretary is more powerful than the President.
We believe there is some distortion resulting from the quoted provision being taken out of context.
Section 5 of DAO 99-56 reads as follows:
"Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of this
Administrative Order shall remain valid and be recognized by the Government: Provided,
That should a Contractor desire to amend its FTAA, it shall do so by filing a Letter of Intent
(LOI) to the Secretary thru the Director. Provided, further, That if the Contractor desires to
amend the fiscal regime of its FTAA, it may do so by seeking for the amendment of its
FTAA's whole fiscal regime by adopting the fiscal regime provided hereof: Provided, finally,
That any amendment of an FTAA other than the provision on fiscal regime shall require the
negotiation with the Negotiating Panel and the recommendation of the Secretary for approval
of the President of the Republic of the Philippines." (underscoring supplied)
It looks like another case of misapprehension. The proviso being objected to by Justice Carpio is
actually preceded by a phrase that requires a contractor desiring to amend the fiscal regime of its
FTAA, to amend the same by adopting the fiscal regime prescribed in DAO 99-56 -- i.e., solely in
that manner, and in no other. Obviously, since DAO 99-56 was issued by the secretary under
the authority and with the presumed approval of the President, the amendment of an FTAA by
merely adopting the fiscal regime prescribed in said DAO 99-56 (and nothing more) need not
have the express clearance of the President anymore. It is as if the same had been pre-
approved. We cannot fathom the complaint that that makes the secretary more powerful than the
President, or that the former is trying to hide things from the President or Congress.
14. Based on the first sentence of Section 5 of DAO 99-56, which states "[A]ll FTAAs approved prior
to the effectivity of this Administrative Order shall remain valid and be recognized by the
Government", Justice Carpio concludes that said Administrative Order allegedly exempts FTAAs
approved prior to its effectivity -- like the WMCP FTAA -- from having to pay the State any share
from their mining income, apart from taxes, duties and fees.
We disagree. What we see in black and white is the statement that the FTAAs approved before the
DAO came into effect are to continue to be valid and will be recognized by the State. Nothing is said
about their fiscal regimes. Certainly, there is no basis to claim that the contractors under said FTAAs
were being exempted from paying the government a share in their mining incomes.
For the record, the WMCP FTAA is NOT and has never been exempt from paying the government
share. The WMCP FTAA has its own fiscal regime -- Section 7.7 -- which gives the government
a 60 percent share in the net mining revenues of WMCP from the commencement of
commercial production.
For that very reason, we have never said that DAO 99-56 is the basis for claiming that the WMCP
FTAA has a consideration. Hence, we find quite out of place Justice Carpio's statement
that ironically, DAO 99-56, the very authority cited to support the claim that the WMCP FTAA has a
consideration, does not apply to the WMCP FTAA. By its own express terms, DAO 99-56 does not
apply to FTAAs executed before the issuance of DAO 99-56, like the WMCP FTAA. The majority's
position has allegedly no leg to stand on since even DAO 99-56, assuming it is valid, cannot save
the WMCP FTAA from want of consideration. Even assuming arguendo that DAO 99-56 does not
apply to the WMCP FTAA, nevertheless, the WMCP FTAA has its own fiscal regime, found in
Section 7.7 thereof. Hence, there is no such thing as "want of consideration" here.
Still more startling is this claim: The majority supposedly agrees that the provisions of the WMCP
FTAA, which grant a sham consideration to the State, are void. Since the majority agrees that the
WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks the third element of a valid
contract. The Decision should declare the WMCP FTAA void for want of consideration unless it
treats the contract as an MPSA under Section 80. Indeed the only recourse of WMCP to save the
validity of its contract is to convert it into an MPSA.
To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions grossly
disadvantageous to government and detrimental to the interests of the Filipino people, as well as
violative of public policy, and must therefore be stricken off as invalid. Since the offending provisions
are very much separable from Section 7.7 and the rest of the FTAA, the deletion of Sections 7.9 and
7.8(e) can be done without affecting or requiring the invalidation of the WMCP FTAA itself, and such
deletion will preserve for government its due share of the 60 percent benefits. Therefore, the WMCP
FTAA is NOT bereft of a valid consideration (assuming for the nonce that indeed this is the
"consideration" of the FTAA).
SUMMATION
To conclude, a summary of the key points discussed above is now in order.
The Meaning of "Agreements Involving

Either Technical or Financial Assistance"
Applying familiar principles of constitutional construction to the phrase agreements involving either

technical or financial assistance, the framers' choice of words does not indicate the intent to exclude
other modes of assistance, but rather implies that there are other things being included or possibly
being made part of the agreement, apart from financial or technical assistance. The drafters avoided
the use of restrictive and stringent phraseology; a verba legis scrutiny of Section 2 of Article XII of
the Constitution discloses not even a hint of a desire to prohibit foreign involvement in the
management or operation of mining activities, or to eradicate service contracts. Such moves would
necessarily imply an underlying drastic shift in fundamental economic and developmental policies of
the State. That change requires a much more definite and irrefutable basis than mere omission of
the words "service contract" from the new Constitution.
Furthermore, a literal and restrictive interpretation of this paragraph leads to logical

inconsistencies. A constitutional provision specifically allowing foreign-owned corporations to render
financial or technical assistance in respect of mining or any other commercial activity was clearly
unnecessary; the provision was meant to refer to more than mere financial or technical assistance.
Also, if paragraph 4 permits only agreements for financial or technical assistance, there would be no
point in requiring that they be "based on real contributions to the economic growth and general
welfare of the country." And considering that there were various long-term service contracts still in
force and effect at the time the new Charter was being drafted, the absence of any transitory
provisions to govern the termination and closing-out of the then existing service contracts strongly
militates against the theory that the mere omission of "service contracts" signaled their prohibition by
the new Constitution.
Resort to the deliberations of the Constitutional Commission is therefore unavoidable, and a careful
scrutiny thereof conclusively shows that the ConCom members discussed agreements involving
either technical or financial assistance in the same sense as service contracts and used the terms
interchangeably. The drafters in fact knew that the agreements with foreign corporations were going
to entail not mere technical or financial assistance but, rather, foreign investment in and
management of an enterprise for large-scale exploration, development and utilization of minerals.
The framers spoke about service contracts as the concept was understood in the 1973 Constitution.
It is obvious from their discussions that they did not intend to ban or eradicate service contracts.
Instead, they were intent on crafting provisions to put in place safeguards that would eliminate or
minimize the abuses prevalent during the martial law regime. In brief, they were going to permit
service contracts with foreign corporations as contractors, but with safety measures to
prevent abuses, as an exception to the general norm established in the first paragraph of
Section 2 of Article XII, which reserves or limits to Filipino citizens and corporations at least
60 percent owned by such citizens the exploration, development and utilization of mineral or
petroleum resources. This was prompted by the perceived insufficiency of Filipino capital and the
felt need for foreign expertise in the EDU of mineral resources.
Despite strong opposition from some ConCom members during the final voting, the Article on the
National Economy and Patrimony -- including paragraph 4 allowing service contracts with foreign
corporations as an exception to the general norm in paragraph 1 of Section 2 of the same Article --
was resoundingly and overwhelmingly approved.
The drafters, many of whom were economists, academicians, lawyers, businesspersons and
politicians knew that foreign entities will not enter into agreements involving assistance without
requiring measures of protection to ensure the success of the venture and repayment of their
investments, loans and other financial assistance, and ultimately to protect the business reputation
of the foreign corporations. The drafters, by specifying such agreements involving assistance,
necessarily gave implied assent to everything that these agreements entailed or that could
reasonably be deemed necessary to make them tenable and effective -- including management
authority with respect to the day-to-day operations of the enterprise, and measures for the protection
of the interests of the foreign corporation, at least to the extent that they are consistent with
Philippine sovereignty over natural resources, the constitutional requirement of State control, and
beneficial ownership of natural resources remaining vested in the State.
From the foregoing, it is clear that agreements involving either technical or financial

assistance referred to in paragraph 4 are in fact service contracts, but such new service contracts
are between foreign corporations acting as contractors on the one hand, and on the other hand
government as principal or "owner" (of the works), whereby the foreign contractor provides the
capital, technology and technical know-how, and managerial expertise in the creation and operation
of the large-scale mining/extractive enterprise, and government through its agencies (DENR, MGB)
actively exercises full control and supervision over the entire enterprise.
Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant of such service contracts is subject to several safeguards, among them: (1)
that the service contract be crafted in accordance with a general law setting standard or uniform
terms, conditions and requirements; (2) the President be the signatory for the government; and (3)
the President report the executed agreement to Congress within thirty days.
Ultimate Test: Full State Control
To repeat, the primacy of the principle of the State's sovereign ownership of all mineral resources,
and its full control and supervision over all aspects of exploration, development and utilization of
natural resources must be upheld. But "full control and supervision" cannot be taken literally to mean
that the State controls and supervises everything down to the minutest details and makes all
required actions, as this would render impossible the legitimate exercise by the contractor of a
reasonable degree of management prerogative and authority, indispensable to the proper
functioning of the mining enterprise. Also, government need not micro-manage mining operations
and day-to-day affairs of the enterprise in order to be considered as exercising full control and
supervision.
Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of control sufficient to
enable the State to direct, restrain, regulate and govern the affairs of the extractive enterprises.
Control by the State may be on a macro level, through the establishment of policies, guidelines,
regulations, industry standards and similar measures that would enable government to regulate the
conduct of affairs in various enterprises, and restrain activities deemed not desirable or beneficial,
with the end in view of ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of the local
affected communities. Such a degree of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it has invested in, to
ensure efficient and profitable operation.
Government Granted Full Control

by RA 7942 and DAO 96-40
Baseless are petitioners' sweeping claims that RA 7942 and its Implementing Rules and Regulations
make it possible for FTAA contracts to cede full control and management of mining enterprises over
to fully foreign owned corporations. Equally wobbly is the assertion that the State is reduced to a
passive regulator dependent on submitted plans and reports, with weak review and audit powers
and little say in the decision-making of the enterprise, for which reasons "beneficial ownership" of the
mineral resources is allegedly ceded to the foreign contractor.
As discussed hereinabove, the State's full control and supervision over mining operations are
ensured through the following provisions in RA 7942: Sections 8, 9, 16, 19, 24, 35[(b), (e), (f), (g),
(h), (k), (l), (m) and (o)], 40, 57, 66, 69, 70, and Chapters XI and XVII; as well as the following
provisions of DAO 96-40: Sections7[(d) and (f)], 35(a-2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and
(n)], 56(2), 60, 66, 144, 168, 171 and 270, and also Chapters XV, XVI and XXIV.
Through the foregoing provisions, the government agencies concerned are empowered to approve
or disapprove -- hence, in a position to influence, direct, and change -- the various work programs
and the corresponding minimum expenditure commitments for each of the exploration, development
and utilization phases of the enterprise. Once they have been approved, the contractor's compliance
with its commitments therein will be monitored. Figures for mineral production and sales are
regularly monitored and subjected to government review, to ensure that the products and by-
products are disposed of at the best prices; copies of sales agreements have to be submitted to and
registered with MGB.
The contractor is mandated to open its books of accounts and records for scrutiny, to enable the
State to determine that the government share has been fully paid. The State may likewise compel
compliance by the contractor with mandatory requirements on mine safety, health and environmental
protection, and the use of anti-pollution technology and facilities. The contractor is also obligated to
assist the development of the mining community, and pay royalties to the indigenous peoples
concerned. And violation of any of the FTAA's terms and conditions, and/or non-compliance with
statutes or regulations, may be penalized by cancellation of the FTAA. Such sanction is significant to
a contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a
mining project.
Overall, the State definitely has a pivotal say in the operation of the individual enterprises, and can
set directions and objectives, detect deviations and non-compliances by the contractor, and enforce
compliance and impose sanctions should the occasion arise. Hence, RA 7942 and DAO 96-40 vest
in government more than a sufficient degree of control and supervision over the conduct of mining
operations.
Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a foreign contractor
to apply for and hold an exploration permit. During the exploration phase, the permit grantee (and
prospective contractor) is spending and investing heavily in exploration activities without yet being
able to extract minerals and generate revenues. The exploration permit issued under Sections 3(aq),
20 and 23 of RA 7942, which allows exploration but not extraction, serves to protect the interests
and rights of the exploration permit grantee (and would-be contractor), foreign or local. Otherwise,
the exploration works already conducted, and expenditures already made, may end up only
benefiting claim-jumpers. Thus, Section 3(aq) of RA 7942 is not unconstitutional.
WMCP FTAA Likewise Gives the

State Full Control and Supervision
The WMCP FTAA obligates the contractor to account for the value of production and sale of
minerals (Clause 1.4); requires that the contractor's work program, activities and budgets be
approved by the State (Clause 2.1); gives the DENR secretary power to extend the exploration
period (Clause 3.2-a); requires approval by the State for incorporation of lands into the contract area
(Clause 4.3-c); requires Bureau of Forest Development approval for inclusion of forest reserves as
part of the FTAA contract area (Clause 4.5); obligates the contractor to periodically relinquish parts
of the contract area not needed for exploration and development (Clause 4.6); requires submission
of a declaration of mining feasibility for approval by the State (Clause 4.6-b); obligates the contractor
to report to the State the results of its exploration activities (Clause 4.9); requires the contractor to
obtain State approval for its work programs for the succeeding two year periods, containing the
proposed work activities and expenditures budget related to exploration (Clause 5.1); requires the
contractor to obtain State approval for its proposed expenditures for exploration activities (Clause
5.2); requires the contractor to submit an annual report on geological, geophysical, geochemical and
other information relating to its explorations within the FTAA area (Clause 5.3-a); requires the
contractor to submit within six months after expiration of exploration period a final report on all its
findings in the contract area (Clause 5.3-b); requires the contractor after conducting feasibility
studies to submit a declaration of mining feasibility, along with a description of the area to be
developed and mined, a description of the proposed mining operations and the technology to be
employed, and the proposed work program for the development phase, for approval by the DENR
secretary (Clause 5.4); obligates the contractor to complete the development of the mine, including
construction of the production facilities, within the period stated in the approved work program
(Clause 6.1); requires the contractor to submit for approval a work program covering each period of
three fiscal years (Clause 6.2); requires the contractor to submit reports to the secretary on the
production, ore reserves, work accomplished and work in progress, profile of its work force and
management staff, and other technical information (Clause 6.3); subjects any expansions,
modifications, improvements and replacements of mining facilities to the approval of the secretary
(Clause 6.4); subjects to State control the amount of funds that the contractor may borrow within the
Philippines (Clause 7.2); subjects to State supervisory power any technical, financial and marketing
issues (Clause 10.1-a); obligates the contractor to ensure 60 percent Filipino equity in the contractor
within ten years of recovering specified expenditures unless not so required by subsequent
legislation (Clause 10.1); gives the State the right to terminate the FTAA for unremedied substantial
breach thereof by the contractor (Clause 13.2); requires State approval for any assignment of the
FTAA by the contractor to an entity other than an affiliate (Clause 14.1).
In short, the aforementioned provisions of the WMCP FTAA, far from constituting a surrender of
control and a grant of beneficial ownership of mineral resources to the contractor in question, vest
the State with control and supervision over practically all aspects of the operations of the FTAA
contractor, including the charging of pre-operating and operating expenses, and the disposition of
mineral products.
There is likewise no relinquishment of control on account of specific provisions of the WMCP FTAA.
Clause 8.2 provides a mechanism to prevent the mining operations from grinding to a complete halt
as a result of possible delays of more than 60 days in the government's processing and approval of
submitted work programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution
in case a disagreement between the State and the contractor (over the proposed work program or
budget submitted by the contractor) should result in a deadlock or impasse, to avoid unreasonably
long delays in the performance of the works.
The State, despite Clause 8.3, still has control over the contract area, and it may, as sovereign
authority, prohibit work thereon until the dispute is resolved, or it may terminate the FTAA, citing
substantial breach thereof. Hence, the State clearly retains full and effective control.
Clause 8.5, which allows the contractor to make changes to approved work programs and budgets
without the prior approval of the DENR secretary, subject to certain limitations with respect to the
variance/s, merely provides the contractor a certain amount of flexibility to meet unexpected
situations, while still guaranteeing that the approved work programs and budgets are not abandoned
altogether. And if the secretary disagrees with the actions taken by the contractor in this instance, he
may also resort to cancellation/termination of the FTAA as the ultimate sanction.
Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the contract area to
be relinquished. The State is not in a position to substitute its judgment for that of the contractor,
who knows exactly which portions of the contract area do not contain minerals in commercial
quantities and should be relinquished. Also, since the annual occupation fees paid to government
are based on the total hectarage of the contract area, net of the areas relinquished, the contractor's
self-interest will assure proper and efficient relinquishment.
Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel government to
use its power of eminent domain. It contemplates a situation in which the contractor is a foreign-
owned corporation, hence, not qualified to own land. The contractor identifies the surface areas
needed for it to construct the infrastructure for mining operations, and the State then acquires the
surface rights on behalf of the former. The provision does not call for the exercise of the power of
eminent domain (or determination of just compensation); it seeks to avoid a violation of the anti-
dummy law.
Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and encumber the
mineral products extracted may have been a result of conditions imposed by creditor-banks to
secure the loan obligations of WMCP. Banks lend also upon the security of encumbrances on goods
produced, which can be easily sold and converted into cash and applied to the repayment of loans.
Thus, Clause 10.2(l) is not something out of the ordinary. Neither is it objectionable, because even
though the contractor is allowed to mortgage or encumber the mineral end-products themselves, the
contractor is not thereby relieved of its obligation to pay the government its basic and additional
shares in the net mining revenue. The contractor's ability to mortgage the minerals does not negate
the State's right to receive its share of net mining revenues.
Clause 10.2(k) which gives the contractor authority "to change its equity structure at any time,"
means that WMCP, which was then 100 percent foreign owned, could permit Filipino equity
ownership. Moreover, what is important is that the contractor, regardless of its ownership, is always
in a position to render the services required under the FTAA, under the direction and control of the
government.
Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if required by banks and
other financial institutions as part of the conditions of new lendings. There is nothing objectionable
here, since Clause 10.4(e) also provides that such financing arrangements should in no event
reduce the contractor's obligations or the government's rights under the FTAA. Clause 10.4(i)
provides that government shall "favourably consider" any request for amendments of this agreement
necessary for the contractor to successfully obtain financing. There is no renunciation of control, as
the proviso does not say that government shall automatically grant any such request. Also, it is up to
the contractor to prove the need for the requested changes. The government always has the final
say on whether to approve or disapprove such requests.
In fine, the FTAA provisions do not reduce or abdicate State control.
No Surrender of Financial Benefits
The second paragraph of Section 81 of RA 7942 has been denounced for allegedly limiting the
State's share in FTAAs with foreign contractors to just taxes, fees and duties, and depriving the
State of a share in the after-tax income of the enterprise. However, the inclusion of the
phrase "among other things" in the second paragraph of Section 81 clearly and unmistakably reveals
the legislative intent to have the State collect more than just the usual taxes, duties and fees.
Thus, DAO 99-56, the "Guidelines Establishing the Fiscal Regime of Financial or Technical
Assistance Agreements," spells out the financial benefits government will receive from an FTAA, as
consisting of not only a basic government share, comprised of all direct taxes, fees and royalties,
as well as other payments made by the contractor during the term of the FTAA, but also
an additional government share, being a share in the earnings or cash flows of the mining
enterprise, so as to achieve a fifty-fifty sharing of net benefits from mining between the government
and the contractor.
The additional government share is computed using one of three (3) options or schemes detailed
in DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative present value of cash flows; (2) the excess
profit-related additional government share; and (3) the additional sharing based on the cumulative
net mining revenue. Whichever option or computation is used, the additional government share has
nothing to do with taxes, duties, fees or charges. The portion of revenues remaining after the
deduction of the basic and additional government shares is what goes to the contractor.
The basic government share and the additional government share do not yet take into account the
indirect taxes and other financial contributions of mining projects, which are real and actual benefits
enjoyed by the Filipino people; if these are taken into account, total government share increases to
60 percent or higher (as much as 77 percent, and 89 percent in one instance) of the net present
value of total benefits from the project.
The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the payment of the
government share in FTAAs until after the contractor shall have recovered its pre-operating
expenses, exploration and development expenditures. Allegedly, the collection of the State's share is
rendered uncertain, as there is no time limit in RA 7942 for this grace period or recovery period. But
although RA 7942 did not limit the grace period, the concerned agencies (DENR and MGB) in
formulating the 1995 and 1996 Implementing Rules and Regulations provided that the period of
recovery, reckoned from the date of commercial operation, shall be for a period not exceeding five
years, or until the date of actual recovery, whichever comes earlier.
And since RA 7942 allegedly does not require government approval for the pre-operating,
exploration and development expenses of the foreign contractors, it is feared that such expenses
could be bloated to wipe out mining revenues anticipated for 10 years, with the result that the State's
share is zero for the first 10 years. However, the argument is based on incorrect information.
Under Section 23 of RA 7942, the applicant for exploration permit is required to submit a proposed
work program for exploration, containing a yearly budget of proposed expenditures, which the State
passes upon and either approves or rejects; if approved, the same will subsequently be recorded as
pre-operating expenses that the contractor will have to recoup over the grace period.
Under Section 24, when an exploration permittee files with the MGB a declaration of mining project
feasibility, it must submit a work program for development, with corresponding budget, for approval
by the Bureau, before government may grant an FTAA or MPSA or other mineral agreements; again,
government has the opportunity to approve or reject the proposed work program and budgeted
expenditures for development works, which will become the pre-operating and development costs
that will have to be recovered. Government is able to know ahead of time the amounts of pre-
operating and other expenses to be recovered, and the approximate period of time needed therefor.
The aforecited provisions have counterparts in Section 35, which deals with the terms and conditions
exclusively applicable to FTAAs. In sum, the third or last paragraph of Section 81 of RA 7942 cannot
be deemed defective.
Section 80 of RA 7942 allegedly limits the State's share in a mineral production-sharing agreement
(MPSA) to just the excise tax on the mineral product, i.e., only 2 percent of market value of the
minerals. The colatilla in Section 84 reiterates the same limitation in Section 80. However, these
two provisions pertain only to MPSAs, and have no application to FTAAs. These particular
provisions do not come within the issues defined by this Court. Hence, on due process
grounds, no pronouncement can be made in this case in respect of the constitutionality of
Sections 80 and 84.
Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old "license,
concession or lease" system, because it allegedly effectively reduces the government share in
FTAAs to just the 2 percent excise tax which pursuant to Section 80 comprises the government
share in MPSAs. However, Section 112 likewise does not come within the issues delineated by this
Court, and was never touched upon by the parties in their pleadings. Moreover, Section 112 may not
properly apply to FTAAs. The mining law obviously meant to treat FTAAs as a breed apart from
mineral agreements. There is absolutely no basis to believe that the law intends to exact from FTAA
contractors merely the same government share (i.e., the 2 percent excise tax) that it apparently
demands from contractors under the three forms of mineral agreements.
While there is ground to believe that Sections 80, 84 and 112 are indeed unconstitutional, they
cannot be ruled upon here. In any event, they are separable; thus, a later finding of nullity will not
affect the rest of RA 7942.
In fine, the challenged provisions of RA 7942 cannot be said to surrender financial benefits
from an FTAA to the foreign contractors.
Moreover, there is no concrete basis for the view that, in FTAAs with a foreign contractor, the State
must receive at least 60 percent of the after-tax income from the exploitation of its mineral
resources, and that such share is the equivalent of the constitutional requirement that at least 60
percent of the capital, and hence 60 percent of the income, of mining companies should remain in
Filipino hands. Even if the State is entitled to a 60 percent share from other mineral agreements
(CPA, JVA and MPSA), that would not create a parallel or analogous situation for FTAAs. We are
dealing with an essentially different equation. Here we have the old apples and oranges syndrome.
The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to all situations,
regardless of circumstances. There is no indication of such an intention on the part of the framers.
Moreover, the terms and conditions of petroleum FTAAs cannot serve as standards for mineral
mining FTAAs, because the technical and operational requirements, cost structures and
investment needs of off-shore petroleum exploration and drilling companies do not have the
remotest resemblance to those of on-shore mining companies.
To take the position that government's share must be not less than 60 percent of after-tax income of
FTAA contractors is nothing short of this Court dictating upon the government. The State resultantly
ends up losing control. To avoid compromising the State's full control and supervision over the
exploitation of mineral resources, there must be no attempt to impose a "minimum 60 percent" rule.
It is sufficient that the State has the power and means, should it so decide, to get a 60 percent share
(or greater); and it is not necessary that the State does so in every case.
Invalid Provisions of the WMCP FTAA
Section 7.9 of the WMCP FTAA clearly renders illusory the State's 60 percent share of WMCP's
revenues. Under Section 7.9, should WMCP's foreign stockholders (who originally owned 100
percent of the equity) sell 60 percent or more of their equity to a Filipino citizen or corporation, the
State loses its right to receive its share in net mining revenues under Section 7.7, without any
offsetting compensation to the State. And what is given to the State in Section 7.7 is by mere
tolerance of WMCP's foreign stockholders, who can at any time cut off the government's entire share
by simply selling 60 percent of WMCP's equity to a Philippine citizen or corporation.
In fact, the sale by WMCP's foreign stockholder on January 23, 2001 of the entire outstanding equity
in WMCP to Sagittarius Mines, Inc., a domestic corporation at least 60 percent Filipino owned, can
be deemed to have automatically triggered the operation of Section 7.9 and removed the State's
right to receive its 60 percent share. Section 7.9 of the WMCP FTAA has effectively given away the
State's share without anything in exchange.
Moreover, it constitutes unjust enrichment on the part of the local and foreign stockholders in
WMCP, because by the mere act of divestment, the local and foreign stockholders get a windfall, as
their share in the net mining revenues of WMCP is automatically increased, without having to pay
anything for it.
Being grossly disadvantageous to government and detrimental to the Filipino people, as well as
violative of public policy, Section 7.9 must therefore be stricken off as invalid. The FTAA in question
does not involve mere contractual rights but, being impressed as it is with public interest, the
contractual provisions and stipulations must yield to the common good and the national interest.
Since the offending provision is very much separable from the rest of the FTAA, the deletion of
Section 7.9 can be done without affecting or requiring the invalidation of the entire WMCP FTAA
itself.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums spent by
government for the benefit of the contractor to be deductible from the State's share in net mining
revenues, it results in benefiting the contractor twice over. This constitutes unjust enrichment on the
part of the contractor, at the expense of government. For being grossly disadvantageous and
prejudicial to government and contrary to public policy, Section 7.8(e) must also be declared without
effect. It may likewise be stricken off without affecting the rest of the FTAA.
EPILOGUE
AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the Court upon
the key principle that the State must exercise full control and supervision over the exploration,
development and utilization of mineral resources.
The crux of the controversy is the amount of discretion to be accorded the Executive Department,
particularly the President of the Republic, in respect of negotiations over the terms of FTAAs,
particularly when it comes to the government share of financial benefits from FTAAs. The Court
believes that it is not unconstitutional to allow a wide degree of discretion to the Chief Executive,
given the nature and complexity of such agreements, the humongous amounts of capital and
financing required for large-scale mining operations, the complicated technology needed, and the
intricacies of international trade, coupled with the State's need to maintain flexibility in its dealings, in
order to preserve and enhance our country's competitiveness in world markets.
We are all, in one way or another, sorely affected by the recently reported scandals involving
corruption in high places, duplicity in the negotiation of multi-billion peso government contracts, huge
payoffs to government officials, and other malfeasances; and perhaps, there is the desire to see
some measures put in place to prevent further abuse. However, dictating upon the President
what minimum share to get from an FTAA is not the solution. It sets a bad precedent since such
a move institutionalizes the very reduction if not deprivation of the State's control. The remedy may
be worse than the problem it was meant to address. In any event, provisions in such future
agreements which may be suspected to be grossly disadvantageous or detrimental to government
may be challenged in court, and the culprits haled before the bar of justice.
Verily, under the doctrine of separation of powers and due respect for co-equal and coordinate
branches of government, this Court must restrain itself from intruding into policy matters and must
allow the President and Congress maximum discretion in using the resources of our country and in
securing the assistance of foreign groups to eradicate the grinding poverty of our people and answer
their cry for viable employment opportunities in the country.
"The judiciary is loath to interfere with the due exercise by coequal branches of government of their
official functions." As aptly spelled out seven decades ago by Justice George Malcolm, "Just as the
99
Supreme Court, as the guardian of constitutional rights, should not sanction usurpations by any
other department of government, so should it as strictly confine its own sphere of influence to the
powers expressly or by implication conferred on it by the Organic Act." Let the development of the
100
mining industry be the responsibility of the political branches of government. And let not this Court
interfere inordinately and unnecessarily.
The Constitution of the Philippines is the supreme law of the land. It is the repository of all the
aspirations and hopes of all the people. We fully sympathize with the plight of Petitioner La Bugal
B'laan and other tribal groups, and commend their efforts to uplift their communities. However, we
cannot justify the invalidation of an otherwise constitutional statute along with its implementing rules,
or the nullification of an otherwise legal and binding FTAA contract.
We must never forget that it is not only our less privileged brethren in tribal and cultural communities
who deserve the attention of this Court; rather, all parties concerned -- including the State itself, the
contractor (whether Filipino or foreign), and the vast majority of our citizens -- equally deserve the
protection of the law and of this Court. To stress, the benefits to be derived by the State from mining
activities must ultimately serve the great majority of our fellow citizens. They have as much right and
interest in the proper and well-ordered development and utilization of the country's mineral resources
as the petitioners.
Whether we consider the near term or take the longer view, we cannot overemphasize the need for
an appropriate balancing of interests and needs -- the need to develop our stagnating mining
industry and extract what NEDA Secretary Romulo Neri estimates is some US$840 billion (approx.
PhP47.04 trillion) worth of mineral wealth lying hidden in the ground, in order to jumpstart our
floundering economy on the one hand, and on the other, the need to enhance our nationalistic
aspirations, protect our indigenous communities, and prevent irreversible ecological damage.
This Court cannot but be mindful that any decision rendered in this case will ultimately impact not
only the cultural communities which lodged the instant Petition, and not only the larger community of
the Filipino people now struggling to survive amidst a fiscal/budgetary deficit, ever increasing prices
of fuel, food, and essential commodities and services, the shrinking value of the local currency, and
a government hamstrung in its delivery of basic services by a severe lack of resources, but also
countless future generations of Filipinos.
For this latter group of Filipinos yet to be born, their eventual access to education, health care and
basic services, their overall level of well-being, the very shape of their lives are even now being
determined and affected partly by the policies and directions being adopted and implemented by
government today. And in part by the this Resolution rendered by this Court today.
Verily, the mineral wealth and natural resources of this country are meant to benefit not merely a
select group of people living in the areas locally affected by mining activities, but the entire Filipino
nation, present and future, to whom the mineral wealth really belong. This Court has therefore
weighed carefully the rights and interests of all concerned, and decided for the greater good of the
greatest number. JUSTICE FOR ALL, not just for some; JUSTICE FOR THE PRESENT AND THE
FUTURE, not just for the here and now.
WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions for

Reconsideration; to REVERSE and SET ASIDE this Court's January 27, 2004 Decision;
to DISMISS the Petition; and to issue this new judgment declaring CONSTITUTIONAL (1) Republic
Act No. 7942 (the Philippine Mining Law), (2) its Implementing Rules and Regulations contained in
DENR Administrative Order (DAO) No. 9640 -- insofar as they relate to financial and technical
assistance agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and
(3) the Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995 executed by
the government and Western Mining Corporation Philippines Inc. (WMCP), except Sections 7.8 and
7.9 of the subject FTAA which are hereby INVALIDATED for being contrary to public policy and for
being grossly disadvantageous to the government.
SO ORDERED.
G.R. No. L-43938 April 15, 1988
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST DEVELOPMENT), petitioner,

vs.
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA ROSA, respondents.
G.R. No. L-44081 April 15, 1988
BENGUET CONSOLIDATED, INC., petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and EDUARDO, all
surnamed DE LA ROSA, represented by their father JOSE Y. DE LA ROSA, respondents.
G.R. No. L-44092 April 15, 1988
ATOK-BIG WEDGE MINING COMPANY, petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and EDUARDO, all
surnamed DE LA ROSA, represented by their father, JOSE Y. DE LA ROSA, respondents.
CRUZ, J.:
The Regalian doctrine reserves to the State all natural wealth that may be found in the bowels of the earth even if the land where the
discovery is made be private. 1 In the cases at bar, which have been consolidated because they pose a common issue, this doctrine was not
correctly applied.
These cases arose from the application for registration of a parcel of land filed on February 11,
1965, by Jose de la Rosa on his own behalf and on behalf of his three children, Victoria, Benjamin
and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was divided into 9 lots and
covered by plan Psu-225009. According to the application, Lots 1-5 were sold to Jose de la Rosa
and Lots 6-9 to his children by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2
The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big
Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the
Philippines, through the Bureau of Forestry Development, as to lots 1-9. 3
In support of the application, both Balbalio and Alberto testified that they had acquired the subject
land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father shortly after
the Liberation. She testified she was born in the land, which was possessed by her parents under
claim of ownership. Alberto said he received Lots 6-9 in 1961 from his mother, Bella Alberto, who
4
declared that the land was planted by Jaime and his predecessors-in-interest to bananas, avocado,
nangka and camote, and was enclosed with a barbed-wire fence. She was corroborated by Felix
Marcos, 67 years old at the time, who recalled the earlier possession of the land by Alberto's
father. Balbalio presented her tax declaration in 1956 and the realty tax receipts from that year to
5
1964, Alberto his tax declaration in 1961 and the realty tax receipts from that year to 1964.
6 7
Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it on
September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in
September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet had
been in actual, continuous and exclusive possession of the land in concept of owner, as evidenced
by its construction of adits, its affidavits of annual assessment, its geological mappings, geological
samplings and trench side cuts, and its payment of taxes on the land. 8
For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma
and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930, and recorded
on January 2, 1931, in the office of the mining recorder of Baguio. These claims were purchased
from these locators on November 2, 1931, by Atok, which has since then been in open, continuous
and exclusive possession of the said lots as evidenced by its annual assessment work on the
claims, such as the boring of tunnels, and its payment of annual taxes thereon. 9
The location of the mineral claims was made in accordance with Section 21 of the Philippine Bill of
1902 which provided that:
SEC. 21. All valuable mineral deposits in public lands in the philippine Islands both
surveyed and unsurveyed are hereby declared to be free and open to exploration,
occupation and purchase and the land in which they are found to occupation and
purchase by the citizens of the United States, or of said islands.
The Bureau of Forestry Development also interposed its objection, arguing that the land sought to be
registered was covered by the Central Cordillera Forest Reserve under Proclamation No. 217 dated
February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation under the
Constitutions of 1935 and 1973. 10
The trial court * denied the application, holding that the applicants had failed to prove their claim of possession and ownership of the
land sought to be registered. 11 The applicants appealed to the respondent court, * which reversed the trial court and recognized the claims of
the applicant, but subject to the rights of Benguet and Atok respecting their mining claims. 12 In other words, the Court of Appeals affirmed the
surface rights of the de la Rosas over the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of their
mining claims.
Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership. The
Republic has filed its own petition for review and reiterates its argument that neither the private
respondents nor the two mining companies have any valid claim to the land because it is not
alienable and registerable.
It is true that the subject property was considered forest land and included in the Central Cordillera
Forest Reserve, but this did not impair the rights already vested in Benguet and Atok at that time.
The Court of Appeals correctly declared that:
There is no question that the 9 lots applied for are within the June Bug mineral claims
of Benguet and the "Fredia and Emma" mineral claims of Atok. The June Bug
mineral claim of plaintiff Benguet was one of the 16 mining claims of James E. Kelly,
American and mining locator. He filed his declaration of the location of the June Bug
mineral and the same was recorded in the Mining Recorder's Office on October 14,
1909. All of the Kelly claims ha subsequently been acquired by Benguet
Consolidated, Inc. Benguet's evidence is that it had made improvements on the June
Bug mineral claim consisting of mine tunnels prior to 1935. It had submitted the
required affidavit of annual assessment. After World War II, Benguet introduced
improvements on mineral claim June Bug, and also conducted geological mappings,
geological sampling and trench side cuts. In 1948, Benguet redeclared the "June
Bug" for taxation and had religiously paid the taxes.
The Emma and Fredia claims were two of the several claims of Harrison registered in
1931, and which Atok representatives acquired. Portions of Lots 1 to 5 and all of Lots
6 to 9 are within the Emma and Fredia mineral claims of Atok Big Wedge Mining
Company.
The June Bug mineral claim of Benguet and the Fredia and Emma mineral claims of
Atok having been perfected prior to the approval of the Constitution of the Philippines
of 1935, they were removed from the public domain and had become private
properties of Benguet and Atok.
It is not disputed that the location of the mining claim under

consideration was perfected prior to November 15, 1935, when the
Government of the Commonwealth was inaugurated; and according
to the laws existing at that time, as construed and applied by this
court in McDaniel v. Apacible and Cuisia (42 Phil. 749), a valid
location of a mining claim segregated the area from the public
domain. Said the court in that case: The moment the locator
discovered a valuable mineral deposit on the lands located, and
perfected his location in accordance with law, the power of the United
States Government to deprive him of the exclusive right to the
possession and enjoyment of the located claim was gone, the lands
had become mineral lands and they were exempted from lands that
could be granted to any other person. The reservations of public
lands cannot be made so as to include prior mineral perfected
locations; and, of course, if a valid mining location is made upon
public lands afterwards included in a reservation, such inclusion or
reservation does not affect the validity of the former location. By such
location and perfection, the land located is segregated from the public
domain even as against the Government. (Union Oil Co. v. Smith,
249 U.S. 337; Van Mess v. Roonet, 160 Cal. 131; 27 Cyc. 546).
"The legal effect of a valid location of a mining claim is not only to

segregate the area from the public domain, but to grant to the locator
the beneficial ownership of the claim and the right to a patent therefor
upon compliance with the terms and conditions prescribed by law.
Where there is a valid location of a mining claim, the area becomes
segregated from the public domain and the property of the locator."
(St. Louis Mining & Milling Co. v. Montana Mining Co., 171 U.S. 650;
655; 43 Law ed., 320, 322.) "When a location of a mining claim is
perfected it has the effect of a grant by the United States of the right
of present and exclusive possession, with the right to the exclusive
enjoyment of all the surface ground as well as of all the minerals
within the lines of the claim, except as limited by the extralateral right
of adjoining locators; and this is the locator's right before as well as
after the issuance of the patent. While a lode locator acquires a
vested property right by virtue of his location made in compliance with
the mining laws, the fee remains in the government until patent
issues."(18 R.C.L. 1152) (Gold Creek Mining Corporation v. Hon.
Eulogio Rodriguez, Sec. of Agriculture and Commerce, and Quirico
Abadilla, Director of the Bureau of Mines, 66 Phil. 259, 265-266)
It is of no importance whether Benguet and Atok had secured a patent for as held in
the Gold Creek Mining Corp. Case, for all physical purposes of ownership, the owner
is not required to secure a patent as long as he complies with the provisions of the
mining laws; his possessory right, for all practical purposes of ownership, is as good
as though secured by patent.
We agree likewise with the oppositors that having complied with all the requirements
of the mining laws, the claims were removed from the public domain, and not even
the government of the Philippines can take away this right from them. The reason is
obvious. Having become the private properties of the oppositors, they cannot be
deprived thereof without due process of law. 13
Such rights were not affected either by the stricture in the Commonwealth Constitution against the
alienation of all lands of the public domain except those agricultural in nature for this was made
subject to existing rights. Thus, in its Article XIII, Section 1, it was categorically provided that:
SEC. 1. All agricultural, timber and mineral lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy and
other natural resources of the Philipppines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines
or to corporations or associations at least 60% of the capital of which is owned by
such citizens, subject to any existing right, grant, lease or concession at the time of
the inauguration of the government established under this Constitution. Natural
resources with the exception of public agricultural lands, shall not be alienated, and
no license, concession, or lease for the exploitation, development or utilization of any
of the natural resources shall be granted for a period exceeding 25 years, except as
to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which case beneficial use may be the measure and
the limit of the grant.
Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:
Any provision of existing laws, executive order, proclamation to the contrary

notwithstanding, all locations of mining claim made prior to February 8, 1935 within
lands set apart as forest reserve under Sec. 1826 of the Revised Administrative
Code which would be valid and subsisting location except to the existence of said
reserve are hereby declared to be valid and subsisting locations as of the date of
their respective locations.
The perfection of the mining claim converted the property to mineral land and under the laws then in
force removed it from the public domain. By such act, the locators acquired exclusive rights over
14
the land, against even the government, without need of any further act such as the purchase of the
land or the obtention of a patent over it. As the land had become the private property of the
15
locators, they had the right to transfer the same, as they did, to Benguet and Atok.
It is true, as the Court of Appeals observed, that such private property was subject to the
"vicissitudes of ownership," or even to forfeiture by non-user or abandonment or, as the private
respondents aver, by acquisitive prescription. However, the method invoked by the de la Rosas is
not available in the case at bar, for two reasons.
First, the trial court found that the evidence of open, continuous, adverse and exclusive possession
submitted by the applicants was insufficient to support their claim of ownership. They themselves
had acquired the land only in 1964 and applied for its registration in 1965, relying on the earlier
alleged possession of their predecessors-in-interest. The trial judge, who had the opportunity to
16
consider the evidence first-hand and observe the demeanor of the witnesses and test their credibility
was not convinced. We defer to his judgment in the absence of a showing that it was reached with
grave abuse of discretion or without sufficient basis. 17
Second, even if it be assumed that the predecessors-in-interest of the de la Rosas had really been in
possession of the subject property, their possession was not in the concept of owner of the mining
claim but of the property as agricultural land, which it was not. The property was mineral land, and
they were claiming it as agricultural land. They were not disputing the lights of the mining locators
nor were they seeking to oust them as such and to replace them in the mining of the land. In fact,
Balbalio testified that she was aware of the diggings being undertaken "down below" but she did
18
not mind, much less protest, the same although she claimed to be the owner of the said land.
The Court of Appeals justified this by saying there is "no conflict of interest" between the owners of
the surface rights and the owners of the sub-surface rights. This is rather doctrine, for it is a well-
known principle that the owner of piece of land has rights not only to its surface but also to
everything underneath and the airspace above it up to a reasonable height. Under the aforesaid
19
ruling, the land is classified as mineral underneath and agricultural on the surface, subject to
separate claims of title. This is also difficult to understand, especially in its practical application.
Under the theory of the respondent court, the surface owner will be planting on the land while the
mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may
interfere with the operations below and the miner cannot blast a tunnel lest he destroy the crops
above. How deep can the farmer, and how high can the miner, go without encroaching on each
other's rights? Where is the dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural. In the instant case, as already observed, the land
which was originally classified as forest land ceased to be so and became mineral — and completely
mineral — once the mining claims were perfected. As long as mining operations were being
20
undertaken thereon, or underneath, it did not cease to be so and become agricultural, even if only
partly so, because it was enclosed with a fence and was cultivated by those who were unlawfully
occupying the surface.
What must have misled the respondent court is Commonwealth Act No. 137, providing as follows:
Sec. 3. All mineral lands of the public domain and minerals belong to the State, and
their disposition, exploitation, development or utilization, shall be limited to citizens of
the Philippines, or to corporations, or associations, at least 60% of the capital of
which is owned by such citizens, subject to any existing right, grant, lease or
concession at the time of the inauguration of government established under the
Constitution.
SEC. 4. The ownership of, and the right to the use of land for agricultural, industrial,
commercial, residential, or for any purpose other than mining does not include the
ownership of, nor the right to extract or utilize, the minerals which may be found on or
under the surface.
SEC. 5. The ownership of, and the right to extract and utilize, the minerals included
within all areas for which public agricultural land patents are granted are excluded
and excepted from all such patents.
SEC. 6. The ownership of, and the right to extract and utilize, the minerals included
within all areas for which Torrens titles are granted are excluded and excepted from
all such titles.
This is an application of the Regalian doctrine which, as its name implies, is intended for the benefit
of the State, not of private persons. The rule simply reserves to the State all minerals that may be
found in public and even private land devoted to "agricultural, industrial, commercial, residential or
(for) any purpose other than mining." Thus, if a person is the owner of agricultural land in which
minerals are discovered, his ownership of such land does not give him the right to extract or utilize
the said minerals without the permission of the State to which such minerals belong.
The flaw in the reasoning of the respondent court is in supposing that the rights over the land could
be used for both mining and non-mining purposes simultaneously. The correct interpretation is that
once minerals are discovered in the land, whatever the use to which it is being devoted at the time,
such use may be discontinued by the State to enable it to extract the minerals therein in the exercise
of its sovereign prerogative. The land is thus converted to mineral land and may not be used by any
private party, including the registered owner thereof, for any other purpose that will impede the
mining operations to be undertaken therein, For the loss sustained by such owner, he is of course
entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings. 21
Our holding is that Benguet and Atok have exclusive rights to the property in question by virtue of
their respective mining claims which they validly acquired before the Constitution of 1935 prohibited
the alienation of all lands of the public domain except agricultural lands, subject to vested rights
existing at the time of its adoption. The land was not and could not have been transferred to the
private respondents by virtue of acquisitive prescription, nor could its use be shared simultaneously
by them and the mining companies for agricultural and mineral purposes.
WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET ASIDE and that of
the trial court dated March 11, 1969, is REINSTATED, without any pronouncement as to costs.
SO ORDERED.
G.R. No. 173289 February 17, 2010
ELAND PHILIPPINES, INC., Petitioner,

vs.
AZUCENA GARCIA, ELINO FAJARDO, AND HEIR OF TIBURCIO MALABANAN NAMED
TERESA MALABANAN, Respondents.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse
and set aside the decision1 dated February 28, 2006 of the Court of Appeals (CA) in CA-G.R. CV No.
67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the Resolutions
dated November 3, 1999 and June 28, 2006 of Branch 18, Regional Trial Court (RTC) of Tagaytay
City.
The facts of the case, as shown in the records, are the following:
Respondents Azucena Garcia, Elino Fajardo, and Teresa Malabanan, the heir of Tiburcio
Malabanan, filed a Complaint2 dated March 2, 1998 for Quieting of Title with Writ of Preliminary
Injunction with the RTC, Branch XVIII, Tagaytay City against petitioner Eland Philippines, Inc.
Respondents claimed that they are the owners, in fee simple title, of a parcel of land identified as Lot
9250 Cad-355, Tagaytay Cadastre, Plan Ap-04-008367, situated in Barangay Iruhin, Tagaytay City,
containing an area of Two Hundred Forty-Four Thousand One Hundred Twelve (244,112) square
meters, by occupation and possession under the provisions of Sec. 48 (b)3 of the Public Land Law or
Commonwealth Act No. 141, as amended.
For having been in continuous, public, and adverse possession as owners of the said lot for at least
thirty years, respondents stated that they were not aware of any person or entity who had a legal or
equitable interest or claim on the same lot until the time they were requesting that the lot be declared
for tax purposes. They found out that the lot was the subject of a land registration proceeding that
had already been decided by the same court4 where their complaint was filed. They also found out
that Decree No. N-217313, LRC Record No. N-62686, was already issued on August 20, 1997 to the
petitioner pursuant to the Decision dated June 7, 1994 of the same court. They averred that they
were not notified of the said land registration case; thus, they claimed the presence of
misrepresentation amounting to actual or extrinsic fraud. Thus, they argued that they were also
entitled to a writ of preliminary injunction in order to restrain or enjoin petitioner, its privies, agents,
representatives, and all other persons acting on its behalf, to refrain from committing acts of
dispossession on the subject lot.
Summons, together with a copy of the complaint, were served on the petitioner on April 7, 1998. On
April 29, 1998, petitioner filed an Entry of Appearance with Motion for Extension of Time,5 which the
trial court granted6 for a period of ten (10) days within which to file a responsive pleading. Petitioner
filed a Second Motion for Extension of Time to File Answer7 dated April 29, 1998, which the trial
court likewise granted.8
Thereafter, petitioner filed a Motion to Dismiss9 dated May 9, 1998, stating that the pleading
asserting the claim of respondents stated no cause of action, and that the latter were not entitled to
the issuance of a writ of preliminary injunction, setting the same for hearing on May 21, 1998. On the
date of the hearing, the trial court issued an Order,10 which granted the respondents ten (10) days
from that day to file a comment, and set the date of the hearing on July 23, 1998. Respondents filed
a Motion to Admit Comment/Opposition to Defendant Eland,11 together with the corresponding
Comment/Opposition12 dated June 8, 1998.
On the scheduled hearing of September 23, 1998, the trial court issued an Order,13 considering the
Motion to Dismiss submitted for resolution due to the non-appearance of the parties and their
respective counsels. The said motion was eventually denied by the trial court in an Order14 dated
September 25, 1998, ruling that the allegations in the complaint established a cause of action and
enjoined petitioner Eland to file its answer to the complaint within ten (10) days from receipt of the
same. Petitioner then filed two Motions for Extension to File an Answer.15
Petitioner, on November 9, 1998, filed a Motion for Reconsideration16 of the trial court's Order dated
September 25, 1998, denying the former's Motion to Dismiss. Again, petitioner filed a Motion for
Final Extension of Time to File Answer17 dated November 6, 1998. Respondents filed their
Comment/Opposition to Motion for Reconsideration dated November 24, 1998. Subsequently, the
trial court denied petitioner's motion for reconsideration in an Order18 dated January 11, 1999.
Meanwhile, respondents filed a Motion to Declare Defendant Eland in Default19 dated November 17,
1998. On December 4, 1998 Petitioner Eland filed its Comment (on Plaintiff's Motion to Declare
Defendant Eland in Default)20 dated December 2, 1998, while respondents filed a Reply to Comment
(on Plaintiff's Motion to Declare Defendant Eland in Default)21 dated December 29, 1998. Thereafter,
the trial court issued an Order22 dated January 11, 1999 declaring the petitioner in default and
allowed the respondents to present evidence ex parte. Petitioner filed a Motion for Reconsideration
(of the Order dated 11 January 1999)23 dated February 5, 1999 on the trial court's denial of its motion
to dismiss and in declaring it in default. The trial court in an Order24 dated March 18, 1999, denied
the former and granted the latter. In the same Order, the trial court admitted petitioner's Answer Ad
Cautelam.
Earlier, petitioner filed its Answer Ad Cautelam (With Compulsory Counterclaim)25 dated November

12, 1998. Respondents countered by filing a Motion to Expunge Eland's Answer from the
Records26 dated December 2, 1998. Petitioner filed its Opposition (to Plaintiff's Motion to Expunge
Eland's Answer from the Records)27 dated December 21, 1998, as well as a Comment (on Plaintiff's
Motion to Expunge Eland's Answer from the Records)28 dated January 26, 1999.
Consequently, respondents filed a Motion to Set Presentation of Evidence Ex Parte29 dated January

18, 1999, which was granted in an Order30 dated January 22, 1999.
On January 28, 1999, respondents presented their evidence before the Clerk of Court of the trial
court which ended on February 3, 1999; and, on February 10, 1999, respondents filed their Formal
Offer of Evidence.31 However, petitioner filed an Urgent Motion to Suspend Plaintiff's Ex
Parte Presentation of Evidence32 dated February 8, 1999. In that regard, the trial court issued an
Order33 dated February 11, 1999 directing the Clerk of Court to suspend the proceedings.
On May 14, 1999, respondents filed a Motion for Clarification34 as to whether or not the evidence
presented ex parte was nullified by the admission of petitioner's Answer Ad Cautelam. Petitioner
filed its Comment35 dated May 13, 1999 on the said motion for clarification.
A pre-trial conference was scheduled on May 27, 1999, wherein the parties submitted their pre-trial
briefs.36 However, petitioner filed a Motion to Suspend Proceedings37 dated May 24, 1999 on the
ground that the same petitioner had filed a petition for certiorari with the CA, asking for the
nullification of the Order dated March 18, 1999 of the trial court and for the affirmation of its earlier
Order denying petitioner's Motion to Dismiss. The petition for certiorari was subsequently denied;
and a copy of the Resolution38 dated June 14, 1999 was received by the trial court. Hence, in an
Order39 dated July 7, 1999, the trial court ruled that the reception of evidence already presented by
the respondents before the Clerk of Court remained as part of the records of the case, and that the
petitioner had the right to cross-examine the witness and to comment on the documentary exhibits
already presented. Consequently, petitioner filed a Motion for Reconsideration40 dated July 19, 1999,
but it was denied by the trial court in an Omnibus Order41 dated September 14, 1999.
Eventually, respondents filed a Motion for Summary Judgment42 dated August 5, 1999, while
petitioner filed its Opposition43 to the Motion dated August 31, 1999. In its Resolution44 dated
November 3, 1999, the trial court found favor on the respondents. The dispositive portion of the
Resolution reads:
WHEREFORE, premises considered, the motion for summary judgment is hereby GRANTED and it
is hereby adjudged that:
1. Plaintiffs are the absolute owners and rightful possessors of Lot 9250, CAD-355, Tagaytay
Cadastre, subject to the rights of occupancy of the farm workers on the one-third area
thereof;
2. The Judgment dated June 7, 1994 in Land Registration Case No. TG-423 is set aside and
the Decree No. N-217313, LRC Record No. N-62686 dated August 20, 1997 is null and void;
3. The Original Transfer Certificate of Title is ordered to be canceled, as well as tax
declaration covering Lot 9250, Cad-355.
SO ORDERED.
Petitioner appealed the Resolution of the trial court with the CA, which dismissed it in a Decision
dated February 28, 2006, which reads:
WHEREFORE, for lack of merit, the appeal is DISMISSED. The assailed Resolution dated
November 3, 1999, of the RTC, Branch 18, Tagaytay City, in Civil Case No. TG-1784, is AFFIRMED.
No pronouncement as to cost.
SO ORDERED.
The grounds relied upon by the petitioner are the following:
5.1 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT RULED
THAT RESPONDENTS' MOTION FOR SUMMARY JUDGMENT DATED AUGUST 05, 1999
DID NOT VIOLATE THE TEN (10)-DAY NOTICE RULE UNDER SECTION 3, RULE 35 OF
THE 1997 RULES OF CIVIL PROCEDURE.
THAT A MOTION FOR SUMMARY JUDGMENT IS PROPER IN AN ACTION FOR
QUIETING OF TITLE.
THAT THERE ARE NO GENUINE FACTUAL AND TRIABLE ISSUES IN CIVIL CASE NO.
TG-1784.
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT UPHELD
THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO, BASED ON
TESTIMONIES OF RESPONDENTS' WITNESSES TAKEN WITHOUT GRANTING HEREIN
PETITIONER THE RIGHT TO CROSS-EXAMINE AND UPON DOCUMENTARY EXHIBITS
PRESENTED BUT NOT ADMITTED AS EVIDENCE.
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT UPHELD
THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO BASED ON
FALSIFIED "EVIDENCE."
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT FAILED
TO RULE THAT THE COURT A QUO PATENTLY DEPRIVED PETITIONER OF ITS RIGHT
TO DUE PROCESS IN RENDERING ITS SUMMARY JUDGMENT.
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT HELD
THAT THE COURT A QUO HAS JURISDICTION TO CANCEL PETITIONER'S ORIGINAL
CERTIFICATE OF TITLE (OCT) NO. 0-660 IN AN ACTION TO QUIET TITLE.
According to the petitioner, a motion for summary judgment must be served at least ten (10) days
before the date set for hearing thereof, and that a hearing must be held to hear the parties on the
propriety of a summary judgment, per Sec. 3 of Rule 35 of the Revised Rules of Court, which was
not observed because the petitioner received a copy of the respondents' motion for summary
judgment only on August 20, 1999, or the very same day that the motion was set for hearing.
Petitioner further claims that the trial court never conducted any hearing on the motion for summary
judgment.
Petitioner also argued that a summary judgment is only available to a claimant seeking to recover
upon a claim, counterclaim or cross-claim or to obtain a declaratory relief, and does not include
cases for quieting of title. Furthermore, petitioner also averred that a summary judgment has no
place in a case where genuine factual and triable issues exist, like in the present case. It added that
the genuine and triable issues were all raised in its Answer Ad Cautelam.
Another ground relied upon by petitioner is its failure to cross-examine the witnesses for the
respondents without fault on its part. It also stated that the trial court did not issue any order
admitting in evidence the documentary exhibits presented by the respondents. Hence, according to
the petitioner, the trial court gravely erred in relying upon the testimonies of the witnesses for the
respondents, without having the latter cross-examined; and upon the documentary exhibits
presented but not admitted as evidence.
Petitioner further claimed that the trial court based its Resolution dated November 3, 1999 on
falsified evidence.
Lastly, petitioner raised the issue that by rendering summary judgment, the trial court deprived the
former of its right to due process.
Respondents, in their Comment45 dated October 16, 2006, countered the first issue raised by the
petitioner, stating that their filing of the motion for summary judgment fourteen (14) days before the
requested hearing of the same motion was in compliance with Sec. 3, Rule 35 of the Rules of Court.
As to the second and third issues, respondents argued that petitioner had a constricted perception of
the coverage of the Rules of Summary Judgment, and that the latter's citation of cases decided by
this Court showed the diverse causes of action that could be the subject matters of summary
judgment. Respondents also posited that petitioner's statements in its Answer Ad Cautelam,
although denominated as Specific Denial, were really general denials that did not comply with the
provisions of Section 10, Rule 8 of the Rules of Court.
Anent the fourth and fifth issues, respondents claimed that despite the opportunity, or the right
allowed in the Order dated July 17, 1999 of the trial court, for the petitioner to cross-examine
respondents' witnesses and to comment on the documentary evidence presented ex parte after the
default order against the same petitioner, the latter evasively moved to set aside respondents'
evidence in order to suspend further proceedings that were intended to abort the pre-trial
conference. They added that petitioner neglected to avail itself of, or to comply with, the prescription
of the rules found in Rule 35 of the Rules of Court by opting not to avail itself of the hearing of its
opposition to the summary judgment after receiving the Order dated August 20, 1999; by failing to
serve opposing affidavit, deposition or admission in the records; and by not objecting to the decretal
portion of the said Order dated August 20, 1999, which stated that the motion for summary judgment
has been submitted for resolution without further argument. With regard to the contention of the
petitioner that the trial court wrongly appreciated falsified evidence, respondents asserted that
petitioner's counsel failed to study carefully the records of the proceedings for the presentation of the
evidence ex parte to be able to know that it was not only a single-day proceeding, and that more
than one witness had been presented. They further averred that the trial court did not only rely on
the photographs of the houses of the occupants of the property in question.
Finally, as to the sixth and seventh issues, respondents asseverated that their complaint alleged
joint causes of action for quieting of title under Art. 476 of the New Civil Code and for the review of
the decree of registration pursuant to Sec. 32 of the Property Registration Decree or P.D. No. 1529,
because they are complimentary with each other.
The basic contention that must be resolved by this Court is the propriety of the summary judgment in
this particular case of quieting of title.
Rule 35 of the 1997 Rules of Civil Procedure provides:
SEC. 1. Summary judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or
cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has
been served, move with supporting affidavits for a summary judgment in his favor upon all or any
part thereof
SEC. 3. Motion and proceedings thereon. - The motion shall be served at least ten (10) days before
the time specified for the hearing. The adverse party prior to the day of hearing may serve opposing
affidavits. After the hearing, the judgment sought shall be rendered forthwith if the pleading,
depositions, and admissions on file together with the affidavits, show that, except as to the amount
of damages, there is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.46
In the present case, it was the respondents who moved for a summary judgment.
Petitioner contended that the ten-day notice rule was violated, because the copy of the motion for
summary judgment was served only on August 20, 1999 or on the same day it was set for hearing. It
also added that even if the petitioner received a copy of the motion only on August 20, 1999, there
was no hearing conducted on that date because the trial court issued an order giving petitioner 10
days within which to file its comment or opposition.
The above specific contention, however, is misguided. The CA was correct in its observation that
there was substantial compliance with due process. The CA ruled, as the records show, that the ten-
day notice rule was substantially complied with because when the respondents filed the motion for
summary judgment on August 9, 1999, they furnished petitioner with a copy thereof on the same day
as shown in the registry receipt and that the motion was set for hearing on August 20, 1999, or 10
days from the date of the filing thereof.
Due process, a constitutional precept, does not, therefore, always and in all situations a trial-type
proceeding. The essence of due process is found in the reasonable opportunity to be heard and
submit one's evidence in support of his defense. What the law prohibits is not merely the absence of
previous notice, but the absence thereof and the lack of opportunity to be heard.47
Petitioner further argues that summary judgment is not proper in an action for quieting of title. This
particular argument, however, is misplaced. This Court has already ruled that any action can be the
subject of a summary judgment with the sole exception of actions for annulment of marriage or
declaration of its nullity or for legal separation.48
Proceeding to the main issue, this Court finds that the grant of summary judgment was not proper. A
summary judgment is permitted only if there is no genuine issue as to any material fact and a
moving party is entitled to a judgment as a matter of law. A summary judgment is proper if, while the
pleadings on their face appear to raise issues, the affidavits, depositions, and admissions presented
by the moving party show that such issues are not genuine.49
It must be remembered that the non-existence of a genuine issue is the determining factor in

granting a motion for summary judgment, and the movant has the burden of proving such
nonexistence. The trial court found no genuine issue as to any material fact that would necessitate
conducting a full-blown trial. However, a careful study of the case shows otherwise.
In their motion for summary judgment, the respondents failed to clearly demonstrate the absence of
any genuine issue of fact. They merely reiterated their averments in the complaint for quieting of title
and opposed some issues raised by the petitioner in its Answer Ad Cautelam, to wit:
Nonetheless, going by the records of the admitted and uncontroverted facts and facts established
there is no more litigious or genuine issue of basic fact to be the subject of further trial on the merits.
The first defense as to the identity of the subject property, the issue has already become nil because
of not only the lack of seriousness in the allegations but also because the identity of the subject
parcel of land Lot 9250 was proven by the approved plan Ap-04-008367 that was already presented
and offered in evidence as Exhibit "B" for the plaintiffs.
The second defense that plaintiffs' claim of the property is barred by prior judgment rule is unavailing
considering that the vital documentary evidence they presented in Land Registration Case No. TG-
423 before this Honorable Court the markings and descriptions of such documents are stated in the
Judgment quoted as follows:
(1) Tax Declaration No. 015224-A (Exhibit "Q"; x x x.
(2) Tax Declaration No. 05019-B (Exhibit "R"; x x x.
(3) Tax Declaration No. 01926-B (Exhibit "S"; x x x.
(4) Tax Declaration No. GR-007-0007 (Exhibit "T" x x x.
are the very documentary evidence adopted and relied upon by the plaintiffs in seeking the review
and nullity of the Decree No. 217313 issued on August 20, 1997 under LRC Record No. N-62686
pursuant to the Judgment dated June 7, 1994 rendered by this Honorable Court penned by the
acting presiding Judge Eleuterio F. Guerrero in said Land Registration Case No. TG-423.
On the other hand, as to the gravamen of the claims in the complaint, the plaintiffs have presented
clear and convincing evidence as the well-nigh or almost incontrovertible evidence of a registerable
title to the subject land in the proceedings conducted on the reception of evidence ex-parte for the
plaintiffs establishing in detail the specifications of continuous, open, exclusive possession as
aspects of acquisitive prescription as confirmed in the affidavit herein attached as Annex "A";
In ruling that there was indeed no genuine issue involved, the trial court merely stated that:
This Court, going by the records, observed keenly that plaintiffs’ cause of action for quieting of title
on the disputed parcel of land is based on the alleged fraud in the substitution of their
landholdings of Lot 9250, Cad 355, Tagaytay Cadastre containing only an area of 244,112 square
meters with Lot 9121, Cad 335, Tagaytay Cadastre, containing only an area of 19,356 square
meters. While defendant Eland in its answer practically and mainly interposed the defenses of: (a)
the parcel of land being claimed by the plaintiffs is not the parcel of land subject matter of Land
Registration Case No. TG-423; (b) the claim of the plaintiffs is barred by prior judgment of this Court
in said Land Registration Case; and (c) plaintiffs' complaint is barred by the Statute of Limitation
since Original Certificate of Title No. 0-660 has become incontrovertible.
Cross-reference of the above-cited Land Registration Case No. TG-423 that was decided previously
by this Court with the case at bench was imperatively made by this Court. Being minded that the
Court has and can take judicial notice of the said land registration case, this Court observed that
there is no genuine issue of fact to be tried on the merits. Firstly, because the supposed identity
crisis of the controverted parcel of land covered by the Land Registration Case No. TG-423 with the
subject parcel of land is established by Plan Ap-04-006275 (Exhibit "N") LRC Case No. 423 and by
Plan A04 008367 (Exhibit "B" of the plaintiffs) and the Technical Description of Lot 9250, Cad 355
(Exhibit "B-1" of the plaintiffs). Secondly, the prior judgment rule cannot be availed of by defendant
Eland since not only intrinsic fraud but extrinsic fraud were alleged in and established by the records.
(Heirs of Manuel Roxas v. Court of Appeals, G. R. No. 1184436, pro. March 21, 1997). Thirdly, it is
incontrovertible that the complaint in this case seeking to review the judgment and annul the decree
was filed on March 5, 1998 or within one (1) year from August 20, 1997 or the date of issuance of
Decree No. 217313, LRC Record No. N-62686, hence, the Original Certificate of Title No. 0-660
issued to defendant Eland has not attained incontrovertibility. (Heirs of Manuel Roxas v. Court of
Appeals, G.R. No. 118436, prom. March 21, 1997).
Notwithstanding, the issue of possession is a question of fact by the interaction of the basic

pleadings, the observation of this Court is that the plaintiffs were able to prove by the well-nigh
incontrovertible evidence, the aspects of possession in accordance with Section 48 (b) of
Commonwealth Act 141, as amended, as hereinafter illustrated.
The CA, in affirming the above Resolution of the trial court, propounded thus:
The contention of defendant-appellant is untenable. Summary judgment is not only limited to solving
actions involving money claims. Under Rule 35 of the 1997 Rules of Court, except as to the amount
of damages, when there is no genuine issue as to any material fact and the moving party is entitled
to a judgment as a matter of law, summary judgment may be allowed. The term "genuine issue" has
been defined as an issue of fact which calls for the presentation of evidence as distinguished from
an issue which is sham, fictitious, contrived, set up in bad faith and patently unsubstantial so as not
to constitute a genuine issue for trial.
Thus, under the aforecited rule, summary judgment is appropriate when there are no genuine issues
of fact, which call for the presentation of evidence in a full-blown trial. Thus, even if on their face the
pleadings appear to raise issues, but when the affidavits, depositions and admissions show that
such issues are not genuine, then summary judgment as prescribed by the rules must ensue as a
matter of law.
It should be stressed that the court a quo which rendered the assailed resolution in Civil Case No.
TG-1784 was the very court that decided the LRC Case No. TG-423. Such being the case, the court
a quo was privy to all relevant facts and rulings pertaining to LRC Case No. TG-423 which it
considered and applied to this case. Thus, where all the facts are within the judicial knowledge of the
court, summary judgment may be granted as a matter of right.
On the contrary, in petitioner's Answer Ad Cautelam, genuine, factual and triable issues were raised,
aside from specifically denying all the allegations in the complaint, thus:
2. SPECIFIC DENIALS
2.1 Answering defendant specifically denies the allegations contained in paragraphs 1 and 3
of the Complaint insofar as it alleges the personal circumstances of the plaintiff and one A. F.
Development Corporation for lack of knowledge or information sufficient to form a belief as to
the truth thereof.
2.2 Answering defendant specifically denies the allegations contained in paragraphs 4, 5, 6

and 7 of the Complaint for lack of knowledge or information sufficient to form a belief as to
the truth of said allegations. And if the property referred to in said paragraphs is that parcel
of land which was the subject matter of Land Registration Case No. TG-423 which was
previously decided by this Honorable Court with finality, said allegations are likewise
specifically denied for the obvious reason that the said property had already been adjudged
with finality by no less than this Honorable Court as absolutely owned by herein answering
defendant as will be further discussed hereunder.
2.3 Answering defendant specifically denies the allegations contained in paragraph 8 of the
Complaint insofar as it alleged that "(u)pon exercise of further circumspection, counsel for
the plaintiffs once followed-up in writing the 1994 request of the plaintiffs to have the subject
parcel of land be declared for taxation purposes" and insofar as it is made to appear that
parcel of land being claimed by the plaintiffs is the same parcel of land subject matter of
Land Registration Case No. TG-423 for lack of knowledge or information sufficient to form a
belief as to the truth thereof and for the reason that the names of the herein plaintiffs were
never mentioned during the entire proceedings in said land registration case and by reason
of the Affirmative Allegations contained hereunder.
2.4 Answering defendant specifically denies the allegations contained in paragraphs 9, 10,
10 (a), 10 (b), 10 (c), 10 (d), 10 (e), 10 (f), 10 (g), 10 (h), and 11 for the reason that there is
no showing that the parcel of land being claimed by the plaintiff is the same parcel of land
which was the subject matter of Land Registration Case No. TG- 423, and in the remote
possibility that the parcel of land being claimed by the plaintiffs is the same as that parcel of
land subject of Land Registration Case No. TG-423, the allegations contained in said
paragraphs are still specifically denied for the reason that no less than the Honorable Court
had decided with finality that the parcel of land is absolutely owned by herein defendant to
the exclusion of all other persons as attested to by the subsequent issuance of an Original
Certificate of Title in favor of answering defendant and for reasons stated in the Affirmative
Allegations.
Complaint for the obvious reason that it was the plaintiffs who appear to have been sleeping
on their rights considering that up to the present they still do not have any certificate of title
covering the parcel of land they are claiming in the instant case, while on the part of herein
defendant, no less than the Honorable Court had adjudged with finality that the parcel of land
subject matter of Land Registration Case No. TG-423 is absolutely owned by herein
defendant.
complaint for the reason that defendant has never ladgrabbed any parcel of land belonging
to others, much less from the plaintiffs, and further, answering defendant specifically denies
the allegations therein that plaintiffs engaged the services of a lawyer for a fee for lack of
knowledge r information sufficient to form a belief as to the truth thereof.
2.7 Answering defendant specifically denies the allegations contained in paragraphs 14, 15,
16, 17 and 18 of the Complaint for lack of knowledge or information sufficient to form a belief
as the truth thereof.
2.8 Answering defendant specifically denies the allegations contained in paragraphs IV (a) to
IV (c) for the reason that, as above-stated, if the parcel of land being claimed by the plaintiffs
is the same as that parcel of land subject matter of Land Registration Case No. TG-423, this
Honorable Court had already decided with finality that said parcel of land is absolutely
owned by herein answering defendant and additionally, for those reasons stated in
defendant's Motion to Dismiss.
2.9 Answering defendant specifically denies the allegations contained in paragraph IV (d) of
the Complaint for lack of knowledge or information sufficient to form a belief as to the truth
thereof.
Special and affirmative defenses were also raised in the same Answer Ad Cautelam, to wit:
xxxx
4.1 The pleading asserting the claim of the plaintiff states no cause of action as asserted in
the Motion To Dismiss filed by herein answering defendant and for the reason that there is
no evidence whatsoever showing or attesting to the fact that the parcel of land being claimed
by the plaintiffs in the Complaint is the same parcel of land which was the subject matter of
Land Registration Case No. TG-423.
4.2 The complaint was barred by the prior judgment rendered by this Honorable in Land
Registration Case No. TG-423.
4.3 The complaint is barred by the Statute of Limitation in that OCT No. 0-660 had become
incontrovertible by virtue of the Torrens System of Registration; and to allow plaintiffs to
question the validity of answering defendant's title through the instant complaint would be a
collateral of OCT No. 0-660 which is not permissible under the law.
4.4 Plaintiffs are barred by their own acts and/or omission from filing the present complaint
under the principles of estoppel and laches.
4.5 Plaintiffs does not to the Court with clean hands as they appear to be well aware of the
proceedings in said Land Registration Case No. TG- 423 and inspite of such knowledge,
plaintiffs never bothered to present their alleged claims in the proceedings.
4.6 Answering defendant has always acted with justice, given everyone his due, and
observed honesty and good faith in his dealings.
Clearly, the facts pleaded by the respondents in their motion for summary judgment have been duly
disputed and contested by petitioner, raising genuine issues that must be resolved only after a full-
blown trial. When the facts as pleaded by the parties are disputed or contested, proceedings for
summary judgment cannot take the place of trial.50 In the present case, the petitioner was able to
point out the genuine issues. A "genuine issue" is an issue of fact that requires the presentation of
evidence as distinguished from a sham, fictitious, contrived or false claim.51
It is of utmost importance to remember that petitioner is already the registered owner (Original
Certificate of Title [OCT] No. 0-660 issued by the Register of Deeds) of the parcel of land in
question, pursuant to a decree of registration (Decree No. N-217313, LRC Record No. 62686) based
on the ruling of the same court that granted the summary judgment for the quieting of title.
Incidentally, the findings of the trial court contained in the disputed summary judgment were
obtained through judicial notice of the facts and rulings pertaining to that earlier case (LRC Case No.
TG-423) wherein the same trial court ruled in favor of the petitioner. It is, therefore, disorienting that
the same trial court reversed its earlier ruling, which categorically stated that:
x x x There is overwhelming evidence or proof on record that the vendors listed in Exhibit "HH," with
submarkings, are the previous owners of the parcel of land mentioned in the same deed of sale and
aside form the tax declarations covering the same property (Exhibits "Q" to "T," inclusive), the
uncontroverted testimony of Atty. Ruben Roxas establishes beyond any shadow of doubt that
applicant's (referring to herein defendant-appellant) sellers/predecessors-in-interest are the
grandchildren, great grandchildren and great great grandchildren of the spouses Lucio Petate and
Maria Pobleta Petate, the former owners of the same property, whose ownership is further bolstered
by tax receipts showing payments of realty taxes (Exhibits "U" to "GG," inclusive, with submarkings).
xxx
On the basis of the foregoing facts and circumstances, and considering that applicant is a domestic
corporation not otherwise disqualified from owning real properties in the Philippines, this Court finds
that applicant has satisfied all the conditions/requirements essential to the grant of its application
pursuant to the provisions of the Land Registration Law, as amended, inspite of the opposition filed
by the Heirs of the late Doroteo Miranda. Hence, the grant of applicant's petition appears to be
inevitable.
WHEREFORE, this Court hereby approves the instant petition for land registration and, thus, places
under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as the Property
Registration Law, the land described in Plan Ap-04-006275 and containing an area of Two Hundred
Forty-Two Thousand Seven Hundred Ninety-Four (242,794) square meters, as supported by its
technical description now forming part of the record of this case, in addition to other proofs adduced
in the name of the applicant, ELAND PHILIPPINES, INC., with principal office at No. 43 E.
Rodriguez Ave. (España Extension), Quezon City, Metro Manila.
Once this decision becomes final and executory, the corresponding decree of registration shall
forthwith issue.
SO ORDERED.
By granting the summary judgment, the trial court has in effect annulled its former ruling based on a
claim of possession and ownership of the same land for more than thirty years without the benefit of
a full-blown trial. The fact that the respondents seek to nullify the original certificate of title issued to
the petitioner on the claim that the former were in possession of the same land for a number of
years, is already a clear indicium that a genuine issue of a material fact exists. This, together with
the failure of the respondents to show that there were no genuine issues involved, should have been
enough for the trial court to give the motion for summary judgment, filed by respondents, scant
consideration. Trial courts have limited authority to render summary judgments and may do so only
when there is clearly no genuine issue as to any material fact.52
Based on the foregoing, this Court deems it necessary to delve briefly on the nature of the action of
quieting of title as applied in this case. This Court's ruling in Calacala, et al. v. Republic, et al.53 is
instructive on this matter, thus:
To begin with, it bears emphasis that an action for quieting of title is essentially a common law
remedy grounded on equity. As we held in Baricuatro, Jr. vs. CA:54
Regarding the nature of the action filed before the trial court, quieting of title is a common law
remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real
property. Originating in equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a
claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever afterward free from any danger of hostile
claim.’ In an action for quieting of title, the competent court is tasked to determine the respective
rights of the complainant and other claimants, ‘x x x not only to place things in their proper place, to
make the one who has no rights to said immovable respect and not disturb the other, but also for the
benefit of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he may desire, to use,
and even to abuse the property as he deems best xxx.
Under Article 476 of the New Civil Code, the remedy may be availed of only when, by reason of any
instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid,
ineffective, voidable, or unenforceable, a cloud is thereby cast on the complainant’s title to real
property or any interest therein. The codal provision reads:
Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of
any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said
title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.
In turn, Article 477 of the same Code identifies the party who may bring an action to quiet title, thus:
Article 477. The plaintiff must have legal or equitable title to, or interest in the real property which is
the subject-matter of the action. He need not be in possession of said property.
It can thus be seen that for an action for quieting of title to prosper, the plaintiff must first have a
legal, or, at least, an equitable title on the real property subject of the action and that the alleged
cloud on his title must be shown to be in fact invalid. So it is that in Robles, et al. vs. CA,55 we ruled:
It is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest in
the real property which is the subject matter of the action. Also, the deed, claim, encumbrance or
proceeding that is being alleged as a cloud on plaintiff’s title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy.
Verily, for an action to quiet title to prosper, two (2) indispensable requisites must concur, namely:
(1) the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed
to be casting cloud on his title must be shown to be in fact invalid or inoperative despite
its prima facie appearance of validity or legal efficacy.
Respondents, in their Complaint, claim that they have become the owners in fee-simple title of the
subject land by occupation and possession under the provisions of Sec. 48 (b) of the Public Land
Law or Commonwealth Act No. 141, as amended. Thus, it appears that the first requisite has been
satisfied. Anent the second requisite, respondents enumerated several facts that would tend to
prove the invalidity of the claim of the petitioner. All of these claims, which would correspond to the
two requisites for the quieting of title, are factual; and, as discussed earlier, the petitioner interposed
its objections and duly disputed the said claims, thus, presenting genuine issues that can only be
resolved through a full-blown trial.
Anent the propriety of the filing of an action for the quieting of title, the indefeasibility and
incontrovertibility of the decree of registration come into question. Under Sec. 32 of P.D. No. 1529 or
the Property Registration Decree:
Section 32. Review of decree of registration; Innocent purchaser for value. The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject,
however, to the right of any person, including the government and the branches thereof, deprived of
land or of any estate or interest therein by such adjudication or confirmation of title obtained by
actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the entry of such decree of
registration, but in no case shall such petition be entertained by the court where an innocent
purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced.
Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree,
it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of
title issued shall become incontrovertible. Any person aggrieved by such decree of registration in
any case may pursue his remedy by action for damages against the applicant or any other persons
responsible for the fraud.
As borne out by the records and undisputed by the parties, OCT No. 0-660 of petitioner was issued
on August 29, 1997 pursuant to a Decree issued on August 20, 1997, while the complaint for the
quieting of title in Civil Case No. TG-1784 was filed and docketed on March 5, 1998; hence, applying
the above provisions, it would seem that the period of one (1) year from the issuance of the decree
of registration has not elapsed for the review thereof. However, a closer examination of the above
provisions would clearly indicate that the action filed, which was for quieting of title, was not the
proper remedy.
Courts may reopen proceedings already closed by final decision or decree when an application for
review is filed by the party aggrieved within one year from the issuance of the decree of
registration.56 However, the basis of the aggrieved party must be anchored solely on actual fraud.
Shedding light on the matter is a discussion presented in one of the recognized textbooks on
property registration,57 citing decisions of this Court, thus:
The right of a person deprived of land or of any estate or interest therein by adjudication or
confirmation of title obtained by actual fraud is recognized by law as a valid and legal basis for
reopening and revising a decree of registration.58 One of the remedies available to him is a
petition for review. To avail of a petition for review, the following requisites must be satisfied:
(a) The petitioner must have an estate or interest in the land;
(b) He must show actual fraud in the procurement of the decree of registration;
(c) The petition must be filed within one year from the issuance of the decree by the Land
Registration Authority; and
(d) The property has not yet passed to an innocent purchaser for value.59
A mere claim of ownership is not sufficient to avoid a certificate of title obtained under the Torrens
system. An important feature of a certificate of title is its finality. The proceedings whereby such
a title is obtained are directed against all persons, known or unknown, whether actually served with
notice or not, and includes all who have an interest in the land. If they do not appear and oppose the
registration of their own estate or interest in the property in the name of another, judgment is
rendered against them by default, and, in the absence of fraud, such judgment is conclusive. If an
interest in the land will not by itself operate to vacate a decree of registration, a fortiori, fraud is not
alone sufficient to do so.60
As further pointed out in the same book,61 the petition for review must be filed within one year from
entry of the decree of registration. As written:
As long as a final decree has not been entered by the Land Registration Authority and period of one
year has not elapsed from the date of entry of such decree, the title is not finally adjudicated and the
decision in the registration case continues to be under the control and sound discretion of the
registration court.62 After the lapse of said period, the decree becomes incontrovertible and no longer
subject to reopening or review.
Section 32 provides that a petition for review of the decree of registration may be filed "not
later than one year from and after the date of entry of such decree of registration." Giving this
provision a literal interpretation, it may at first blush seem that the petition for review cannot be
presented until the final decree has been entered. However, it has been ruled that the petition may
be filed at any time after the rendition of the court's decision and before the expiration of one
year from the entry of the final decree of registration for, as noted in Rivera v. Moran,63 there can
be no possible reason requiring the complaining party to wait until the final decree is entered before
urging his claim for fraud.
The one-year period stated in Sec. 32 within which a petition to re-open and review the decree of
registration refers to the decree of registration described in Section 31, which decree is prepared
and issued by the Land Registration Administrator.64
The provision of Section 31 that every decree of registration shall bind the land, quiet title thereto,
and be conclusive upon and against all persons, including the national government, and Sec. 32 that
the decree shall not be reopened or revised by reason of absence, minority or other disability or by
any proceeding in court, save only in cases of actual fraud and then only for one year from the entry
of the decree, must be understood as referring to final and unappealable decrees of registration. A
decision or, as it is sometimes called after entry, a decree of a registration court, does not become
final and unappealable until fifteen days after the interested parties have been notified of its entry,
and during that period may be set aside by the trial judge on motion for new trial, upon any of the
grounds stated in the Rules of Court.65 An appeal from the decision of the trial court prevents the
judgment from becoming final until that decree is affirmed by the judgment of the appellate court.66
A petition for review under Section 32 is a remedy separate and distinct from a motion for
new trial and the right to the remedy is not affected by the denial of such a motion
irrespective of the grounds upon which it may have been presented. Thus, where petitioners
acquired their interest in the land before any final decree had been entered, the litigation was
therefore in effect still pending and, in these circumstances, they can hardly be considered innocent
purchasers in good faith.671avvphi1
Where the petition for review of a decree of registration is filed within the one-year period from entry
of the decree, it is error for the court to deny the petition without hearing the evidence in support of
the allegation of actual and extrinsic fraud upon which the petition is predicated. The petitioner
should be afforded an opportunity to prove such allegation.68
In the present case, the one-year period before the Torrens title becomes indefeasible and
incontrovertible has not yet expired; thus, a review of the decree of registration would have been the
appropriate remedy.
Based on the above disquisitions, the other issues raised by the petitioner are necessarily rendered
inconsequential.
WHEREFORE, the petition for review on certiorari of petitioner Eland Philippines, Inc. is

hereby GRANTED, and the decision dated February 28, 2006 of the Court of Appeals (CA) in CA-
G.R. CV No. 67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the
resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, RTC of Tagaytay City, is
hereby REVERSED and SET ASIDE. Consequently, the resolutions dated November 3, 1999 and
June 28, 2006 of Branch 18, RTC of Tagaytay City in Civil Case No. TG-1784 are hereby
declared NULL and VOID.
SO ORDERED.
G.R. No. L-27559 May 18, 1972
BERNABE LOPEZ (M.S.A. VI-1-135), MRS. GLORIA D. RAMA, assisted by her husband
FORTUNATO RAMA (M.S.A. VINEW), MELECIO CABIDO (M.S.A. NO. VI-1-167), SOTERO UBAL
(M.S.A. NO. VI-1-2-10), MRS. FELISA VDA. DE BORJA (M.S.A. VI-1-NEW), JOSE ARQUIZAL
(R.P.A. NEW), LEOPOLDO UBAL (M.S.A. VI-1-NEW), BIENVENIDO GENSIS (M.S.A. VI-1-NEW ),
ANGEL ALEONAR (R.P.A. NEW), MACARIO DE LOS REYES (R.P.A. NEW), DALMACIO DE
LOS REYES (R.P.A. NEW), JULIAN ABING (R.P.A. NEW), FELIPE BANDE (R.P.A. NEW),
ANTONIO SABLE (R.P.A. NEW), ENRIQUE BASCON (R.P.A. NEW), J. PABALAYA (R.P.A.
NEW), ROSARIO EDAÑO (R.P.A. NEW), PEDRO PICON (R.P.A. NEW), APOLONIO VILLAMALA
(R.P.A. NEW), JUANITA GASIONG (R.P.A. NEW), GREGORIA DICHOSO (R.P.A. NEW),
RODULFO BACANTI (R.P.A. NEW), TEODORO TABOGON (R.P.A. NEW), CARLOS BACULI
(R.P.A. NEW), CRISANTO BACULI (R.P.A. NEW), BIBIANO CALMA (R.P.A. NEW), NICASIO
PANSACALA, JR., (R.P.A. NEW), PONCIANO YNTONG (R.P.A. NEW), RESTITUTA CABUCAL
(R.P.A. NEW), ANITA MARIQUIT (R.P.A. NEW), LUCIANO CABARRON (R.P.A. NEW),
GREGORIO CANCANO (R.P.A. NEW), BENEDICTO ALPHABITE (R.P.A. NEW), ESTRELLA
PETALCORIN (R.P.A. NEW), plaintiffs-appellants,
vs.
EMILIO & ALBERTO both surnamed PADILLA as heirs of the late JUAN PADILLA; the
DIRECTOR OF LANDS, Bureau of Lands, Manila; and EDGAR WOOLBRIGHT, defendants-
appellees.
Eleno Andales for plaintiffs-appellants.
Gaudioso C. Villagonzalo, Filemon B. Barria and I. V. Binamira for defendants-appellees.
TEEHANKEE, J.:p
Direct appeal on questions of law from the orders of the Court of First Instance of Cebu dismissing plaintiffs' complaint.
Plaintiffs' complaint for cancellation of title and injunction with prayer for writ of preliminary
mandatory injunction as filed on June 10, 1966, made the following allegations, as restated by them
in their brief:
That the late Juan Padilla, the predecessor in interest of defendants Emilio Padilla
and Alberto Padilla, was the applicant of a public land under Homestead Application
No. V-6992 filed with the Bureau of Lands on February 28, 1939 (par. 2, complaint;
p. 2, record on appeal); that on December 27, 1965, the heirs of the said Juan
Padilla were issued Original Certificate of Title No. 183 which was transcribed in the
Registration Book of the Province of Cebu pursuant to the provisions of Section 41 of
Act 496 on January 7, 1966, covering Lot Nos. 3986-A, 3986-C, and 3986-F
described therein (par. 3, complaint; pp. 3-4, record on appeal);
That sometime in the year 1958, the plaintiffs began reclaiming the area covered by
the waters across the shores of Mambaling, Cebu City, and as soon as the same
became tenantable, they constructed their dwellings thereon and consequently, they
filed with the Bureau of Lands applications to lease the areas reclaimed and
occupied by them for which they religiously paid the yearly rentals due thereon (par.
4, complaint; p. 4, record on appeal); that some of them also filed with the Bureau of
Lands, miscellaneous sales applications under Republic Act No. 730 considering the
long period of time within which plaintiffs were occupying the land in question in good
faith, openly, continuously, publicly, notoriously and uninterruptedly, which individual
applications are indicated therein (par. 4, supra);
That the said Juan Padilla and later on his heirs, defendants Padillas, succeeded in
obtaining the approval of the Director of Lands of their homestead application without
excluding therefrom the foreshore and marshy lands as well as the areas reclaimed
and occupied by the plaintiffs and covered by plaintiffs' applications to the great and
irreparable damage of said plaintiffs (par. 5, complaint; p. 6, record on appeal); that
the approval by the Director of Lands of the homestead application aforesaid and the
subsequent proceedings leading to the issuance of the homestead patent in
defendants' favor were done without the knowledge of herein plaintiffs and without
consulting the records of the District Land Office in the province and city of Cebu,
thru fraud and misrepresentation of the defendants Padillas (par. 6, complaint; p. 6,
record on appeal); that the late Juan Padilla and later his heirs, the defendants
Padillas, pretended to the Bureau of Lands, Manila, that their Homestead Application
No. V-6992 entirely covered an area of land which they alone occupied and
cultivated, the truth of the matter being that more than half of the area applied by
them for homestead was foreshore, marshy, and covered by the sea, and a portion
of which was reclaimed and occupied by herein plaintiffs long before the issuance of
the patent and title in defendants' favor (par. 7, complaint; p. 6, record on appeal);
That subsequent to the issuance of the patent and title aforesaid through fraud,
deceit and misrepresentation, defendants Padillas sold the land to defendant Edgar
Woolbright in open violation of Section 118 of Commonwealth Act No. 141, as
amended by Commonwealth Act No. 456, as admitted by Edgar Woolbright himself
in his letter dated May 20, 1966 to the District Land Officer, Land District No. VI-I
Bureau of Lands, Cebu City (par. 8, complaint; pp. 6-8, record on appeal);
That the defendants Padillas wrote the plaintiffs demanding that the latter vacate the
premises reclaimed and occupied by the said plaintiffs because said defendants
would bulldoze, level or fill up the same in order to construct improvements thereon;
that defendant Edgar Woolbright has purchased some of the houses within the
portion reclaimed and occupied by said plaintiffs with the evident intent of destroying
them and bulldozing the houses and/or the lot for the purpose of constructing
improvements thereon (par. 9, complaint; p. 8, record on appeal);
That notwithstanding the clear and lawful rights of plaintiffs over their respective lots
as assigned and allocated to them by the Bureau of Lands through its regional office
in Cebu City, Philippines, defendants conspiring and working together threatened
and are still threatening to occupy the premises in question and forcibly oust plaintiffs
from their humble homes, thereby compelling plaintiffs to retain the professional
service of undersigned counsel in the sum of P20,000.00 as attorney fees (par. 10,
complaint; p. 8, record on appeal); that due to the refusal of defendants to see the
side of the plaintiffs, they suffered damages to the tune of P50,000.00 by way of
actual and moral damages (par. 11, complaint; p. 9, record on appeal); and that
plaintiffs will suffer great and irreparable loss and injury in the event defendants
Padillas and Woolbright will proceed to destroy the houses of plaintiffs and/or
bulldoze level or fill up the areas reclaimed and occupied by them, and in order to
obviate the same, plaintiffs pray for the issuance of a Writ of Preliminary Mandatory
Injunction enjoining defendants Padillas and Woolbright or their representatives an
all persons acting under their orders from entering into the lands reclaimed and
occupied by plaintiffs, from destroying and/or bulldozing plaintiffs' houses, and
bulldozing, leveling or filling up the areas aforesaid, while this case is still pending
(par. 12, complaint; p. 9, record on appeal).1
Plaintiffs accordingly prayed of the lower court to render judgment —
1. Declaring Homestead Patent No. 112448 issued in favor of defendants Emilio

Padilla and Alberto Padilla and its corresponding Original Certificate of Title No. 183
as procured thru actual fraud, deceit and misrepresentation, hence null and void, and
in flagrant violation of Section 118 of Commonwealth Act No. 141, as amended by
Commonwealth Act No. 456;
2. Ordering the Director of Lands to exclude from the coverage of Homestead

Application No. V-6992 the areas which are strictly foreshore and marshy lands as
well as those portion which are still under the sea;
3. Ordering the Director of Lands to exclude from the coverage as Homestead

Application No. V-6992 of defendant Padillas that area reclaimed and presently
occupied by plaintiffs as well as ordering said officer to approve the lease and
miscellaneous sales applications of plaintiffs excluding only those portions which
may be needed by the City of Cebu, which sale and lease applications had been
given due course by the Burea of Lands and are still pending action by the same to
date;
4. While this case is pending, a Writ of Preliminary Mandatory Injunction be issued

enjoining defendants Padillas and Woolbright from —
(a) Entering into the areas reclaimed and presently occupied by plaintiffs;
(b) Destroying and/or bulldozing plaintiffs' houses;
(c) Bulldozing, leveling or filling up the areas reclaimed and occupied by plaintiffs;
(d) Such act or acts prejudicial to plaintiffs in their occupation and use of the areas
reclaimed and occupied by them;
5. Making permanent the preliminary mandatory injunction that may be issued by this
Honorable Court;
6. Sentencing defendants to pay jointly and severally to plaintiffs the sum of

P20,000.00 as attorney's fees and the further sum of P50,000.00 as actual and moral
damages;
7. Granting such other reliefs and remedies as may be deemed just, proper and
equitable in the premises. 2
Private defendants, in due course filed their answer of June 16, 1966, disclaiming any intention to
bulldoze or destroy plaintiffs' houses and averring that they have spent money to help those who
realized that they were squatting on the land and accordingly removed their houses. They further set
up special defenses in their answer based on the records of the subject property in the Bureau of
Lands, as follows:
13. That Juan Padilla in life, applied for a homestead patent, over Lot 3986, Cebu
Cadastre, sometime in 1939. He then took possession of the land, and made
improvements thereon, planted coconut trees, filled up low places, constructed a
small salt bed on the fringes bordering the sea.
14. The landing American liberation forces made use of the homestead beach; U.S.
tanks, heavy equipment, and trucks passed thru the homestead, and destroyed the
coconut trees, salt beds, and dikes bordering the sea. After liberation, Juan Padilla
and his sons Emilio and Alberto renewed building the dikes, and introduced
improvements to comply with the requirements of the homestead law.
15. In 1947 Juan Padilla died; the Heirs Emilio and Alberto Padilla were substituted
applicants. They carried on the work, and pushed thru the Homestead application. In
1948, long before any of the plaintiffs-squatters complainant herein even ever knew
of the homestead, the same was, after due investigation by the Bureau of Lands,
duly approved; and in December 1952, all the requirements of law having been
satisfactorily met, the Director of Lands issued the decree for the issuance of Patent.
16. There being delay in the issuance of patent, the Heirs of Juan Padilla filed Civil
Case No. 4041 entitled Heirs of Juan Padilla vs. Director of Lands, for Mandamus,
and the Court of First Instance, thru then Presiding Judge Hon. Edmundo
Piccio decided on November 11, 1955 in favor of the Padillas, and the Director of
Lands was ordered to issue the patent.
17. The intervention by the City of Cebu, in the Mandamus Civil Case No. 4041
having been dismissed as without merit, said Cebu City filed a separate civil suit for
alleged recovery of title and damages, in Civil Case No. 4877 in 1955. This held up
the issuance of the patent until December 27, 1965, when said case was decided by
the Supreme Court on appeal, affirming the issuance of patent, and pursuant
3
thereto Original Certificate of Title No. 183 was issued by the Director of Lands in
favor of the Heirs of Juan Padilla.
18. Answering defendants hereby allege that the decree for the issuance of patent
issued in December 1952 has long since become final, that Original Certificate of
Title No. 183, issued by virtue thereof, and pursuant to the final judgment by the Hon.
Supreme Court is valid, legal, final and indefeasible.
19. Answering defendants aver that prior to the approval of the Homestead
application in 1948, the Homestead site, Lot 3986 had already been segregated from
the lands of the public domain and especially upon the decree of the issuance of
patent in 1952, the same was being held and possessed as a private property by the
Heirs of Juan Padilla who had vested equitable title thereto, and as such not any
portion thereof is subject to any Application for Revocable Permit (RPA) or
Miscellaneous sale, as all the plaintiffs now pretend to claim to have made such
applications in 1958 and thereafter.
20. That assuming but not admitting that any such RPA or Miscellaneous Sale
Applications were ever filed in 1958 or thereafter, for any portion of the Homestead,
Lot 3986 O.C.T. No. 183, the same must have been either rejected, unacted or if
accepted such acceptance must necessarily be illegal, null and void, for the Bureau
of Lands or any of its Officers and employees has no right to sell or lease privately
owned estates. 4
Private defendants further filed under date of June 28, 1966 a motion to dismiss the complaint,
asserting that since plaintiffs admit in their complaint that "(a) they are, as they have been, since
1958, occupying the lots described in the complaint; (b) that the areas occupied are within the
homestead grant of which the defendant Heirs of Juan Padilla were issued Original Certificate of
Title pursuant to a valid decree, affirmed by the Hon. Supreme Court, now final and indefeasible;
(c) that plaintiffs have never filed any opposition against the issuance of the patent, and that in open
court, they manifested thru counsel they have not instituted any proceedings against the Land
authorities, so therefore have not exhausted the administrative remedies, a requisite sine qua
non prior to instituting a civil action as required by law," the complaint should be dismissed since
plaintiffs not only are improper parties but have no cause of action against defendants, and the lower
court is without jurisdiction over the subject matter.
After hearing plaintiffs' opposition, the lower court presided by Judge (now appellate justice) Mateo
Canonoy, issued his order of July 13, 1966 dismissing the complaint with costs against petitioners.
The lower court after citing the applicable legal principles, ruled that "The fact that the plaintiffs
herein allege that they have pending MSA applications over portions of the land in question with the
Bureau of Lands, negates any claim on their part that they own the said portions as their private
property. So, even if they succeed in annulling the title of the respondents to the property in
question, they do not thereby become the owners of the same. Hence, they have no interest in the
land in question which would entitle them to invoke the protection of the Court. Again, even if this
action were to be considered as one for the reversion of the homestead to the government, it is the
Solicitor General or his representative and not the plaintiffs herein who have the personality to file
the action."
Plaintiffs filed their motion for reconsideration insisting that they had the right under section 38 of Act
496 within the one-year period therein provided to declare null and void the homestead patent and
Original Certificate of Title issued in pursuance thereof on December 7, 1965 — on the ground that
the same were obtained through fraud and deceit. The lower court denied reconsideration per its
order of August 3, 1966, wherein it ruled that defendants' torrens title was no longer susceptible to
collateral attack through plaintiffs' action and again stressed plaintiffs' lack of personality or legal
interest to assail defendants' title, thus:
It is a rule in this jurisdiction that once a public land has been brought under the Land
Registration Act, the Torrens title issued thereto is indefeasible. It is entitled to the
same regard as one issued in a judicial proceeding. The Torrens title is not
susceptible to collateral attack. The decree (or order of the Director of Lands for the
issuance of the patent in the case of a homestead) may be reviewed under Sec. 38
of the Land Registration Act by filing the appropriate petition within one year from the
issuance of the order for the issuance of the patent. Or an appeal may be taken to
the appellate court within the reglementary period from the decision of the Court; and
in the case of the homestead, the administrative remedies may be pursued. These
are the methods of direct attack.
In the case at bar, this Court sitting as a court of general jurisdiction has no power to
annul the Torrens title issued to the defendant, Woolbright, and others, because this
is an ordinary civil action and it is a collateral attack.
During the discussion of the main motion to dismiss the complaint and the motion for
reconsideration, what is manifest is that the various plaintiffs have filed
Miscellaneous Applications covering various portions of the lots in question. It is not
shown that the applications have already been approved. It is more consistent with
the fact and law to state that the Director of Lands would abstain from acting on the
applications in view of the existence of Torrens title to the land in question, for he is
presumed to know that the property is no longer public land, but private property;
hence the Bureau of Lands would have no jurisdiction over the same.
Hence, this appeal from the lower court's dismissal order. Plaintiffs-appellants themselves formulate
the "fundamental issues" raised by them, as follows:
(1) Whether or not the case at bar falls within the scope of the provisions of Section
38 of Act 496, otherwise known as the Land Registration Act.
(2) Whether or not the plaintiffs are the proper parties to bring the action.
(3) Whether or not the Court of First Instance of Cebu has jurisdiction over the
subject-matter of the action as well as the power to cancel the patent and title issued
to the defendants on the ground of fraud.
1. On appellants' first issue, the lower court correctly held that "in ordinary registration proceedings
involving private lands, courts may re-open proceedings already closed by final decision or decree,
only when application for review is filed by the party aggrieved within one year from the issuance of
the decree of registration. Applied to homesteads the decree of registration corresponds to the
promulgation of the order of the Director of Lands for the issuance of the patent and not the actual
issue of the patent. (Tinio vs. Frances, 21 O.G. 6205; Balboa vs. Ferales, 51 Phil. 498; Recido, et
al., vs. Refaso et al., G.R. No. L-16641, prom. June 24, 1965)." 5
The facts of record, including this Court's own decision of January 30, 1965 in City of Cebu vs.
Padilla, show that the order for the issuance of the patent for the 53,000 square meter homestead
6
lot in question in favor of the Padillas was issued by the Director of Lands on December 16, 1952,
which was upheld by this Court even as against the adverse claim and opposition of the City of Cebu
in said case; the sale to defendant Woolbright was made on June 2, 1966, and the present action
was filed on June 10, 1966. The lower court accordingly held correctly that "the period within which
to file the action for review of the title and to annul the sale to Woolbright has already expired," on
the strength of the ruling of Recido "that the patent is deemed issued upon promulgation of the
7
order of the Director of Lands for the issuance thereof."
2. On appellants' second issue, the lower court likewise correctly ruled that plaintiffs could not
properly institute the action for cancellation of defendants' homestead patent No. 112148 and
original certificate of title No. 183 issued in pursuance thereof, since the land clearly had ceased to
be public land and private ownership thereof had vested in favor of defendants Padillas and their
transferee Woolbright. Granting arguendo plaintiffs' allegations of fraud and deceit against
defendants and their alleged preferential right under Republic Act 730 to purchase the portions of
the homestead lot occupied by them in 1958 — which they insist should be deemed conceded for
purposes of the motion to dismiss filed by defendants-appellees — section 101 of the Public Land
Act vests only in the Solicitor General or the officer acting in his stead the authority to institute the
action on behalf of the Republic for cancellation of defendants' title and for reversion of the
homestead to the Government. This Court has recognized as exceptions cases where plaintiff-
8
claimant has sought direct reconveyance from defendant of public land unlawfully and in breach of
trust titled by defendant, on the principle of enforcement of a constructive trust, but such principle is
in no way applicable or invoked in the case at bar. 9
3. Appellants' third issue insisting that the lower court has jurisdiction over the subject matter of the
action and authority to cancel defendants' homestead patent and torrens title, must necessarily fail.
As succinctly held by the lower court, the torrens title issued to defendants in pursuance of the
homestead patent is no longer susceptible to collateral attack through the present action filed by
plaintiffs, who as mere applicants of revocable lease permits or miscellaneous applications of what is
now concededly titled property of private ownership, have no personality or legal interest in the first
place to institute the action, nor to question the sale of the homestead allegedly within the five-year
prohibitory period of section 118 of the Public Land Act. Since there is no showing that their
applications have been approved by the Director of Lands, who could not be expected to do so
knowing that he has since 1952 decreed the issuance of a patent therefor and the property has long
ceased to be of the public domain, the lower court correctly ruled itself to be bereft of authority to
grant the relief sought by plaintiffs-appellants on the basis of their lack of a valid cause of action.
ACCORDINGLY, finding no error in the lower court's appealed orders dismissing the complaint, the
same are hereby affirmed. Without pronouncement as to costs.
G.R. No. 94033 May 29, 1995
FELICIANO RAMOS, Substituted by his heirs through VALERIANA VDA. DE

RAMOS, petitioners,
vs.
HONORABLE FRANCISCO C. RODRIGUEZ, Presiding Judge, RTC, Branch 77, San Mateo,
Rizal and LAND REGISTRATION AUTHORITY, respondents.
ROMERO, J.:
Feliciano Ramos applied for the registration of a parcel of land in San Jose, Rodriguez, Montalban,
Rizal, identified as Lot 125-B of subdivision plan Psd-760 with a total area of 156,485 square meters.
Upon his death on April 6, 1982 and during the pendency of said application, Feliciano was
substituted by his heirs, petitioners herein.
After issuing an order of general default, respondent judge rendered a decision on July 28, 1988,
adjudicating the said lot to the petitioners.
On September 12, 1988, the court a quo issued an Order for Issuance of Decree stating that the July
28, 1988 decision had become final and directing the Administrator of National Land Titles and
Deeds Registration Administration (NLTDRA) to comply with Section 39 of Presidential Decree No.
1
1529, that is, to prepare the decree and certificate of registration.
Instead of issuing the said decree, NLTDRA Administrator Teodoro G. Bonifacio submitted a report
dated September 26, 1988, which was earlier required by the court, recommending that the July 28,
1988 decision be set aside after due hearing because the subject lot was part of Lot 125, Psu-32606
which is already covered by Transfer Certificate of Title (TCT) No. 8816 issued on October 29, 1924,
in case No. 1037 in the name of the Payatas Estate Improvement Company, and which was
assigned Decree No. 1131 on January 31, 1905. Petitioners later claimed that TCT No. 8816 was
fraudulent but they failed to present any evidence in support of such allegation.
Several settings for the hearing were made before the court in an order dated February 2, 1990,
merely noted the said report. The court opined "that it cannot set aside its (July 28, 1988) decision
on the basis of the report dated September 26, 1988, which was received by this Court on October
10, 1988, after the finality of its decision." It added that the proper remedy of the government was an
action for annulment of judgment.
Bonifacio filed on March 9, 1990, through the Chief Legal Officer of the Land Registration Authority
(LRA), a motion for reconsideration of the February 2, 1990, order.
On May 29, 1990, the court a quo issued an order granting the motion for reconsideration, denying
petitioner's application for registration, setting aside its decision dated July 28, 1988, as well as its
order for the issuance of decree dated September 12, 1988 and denying the petition to re-direct the
LRA to issue the decree of registration. The court noted that the subject lot was already covered by
an existing certificate of title and that no final decree has yet been issued by the LRA.
Petitioners are now asking the Court to set aside the trial court's May 29, 1990, order on the strength
of the principle of finality of judgments.
This issue has already been settled in a similar case, where the Court declared that:
2
. . . Unlike ordinary civil actions, the adjudication of land in a cadastral or land

registration proceeding does not become final, in the sense of incontrovertibility(,)
until after the expiration of one (1) year after (sic) the entry of the final decree of
registration. This Court, in several decisions, has held that as long as a final decree
has not been entered by the Land Registration Commission (now NLTDRA) and the
period of one (1) year has not elapsed from the date of entry of such decree, the title
is not finally adjudicated and the decision in the registration proceeding continues to
be under the control and sound discretion of the court rendering it.
It is also argued by petitioners that the issuance of the decree of registration and the certificate of
title by the LRA is a ministerial duty which follows as a matter of course the order of the court
directing it to issue said decree. This, too, has been squarely met in Gomez, thus:
Petitioners insist that the duty of the respondent land registration officials to issue the
decree is purely ministerial. It is ministerial in the sense that they act under the
orders of the court and the decree must be in conformity with the decision of the
court and with the data found in the record, and they have no discretion in the matter.
However, if they are in doubt upon any point in relation to the preparation and
issuance of the decree, it is their duty to refer the matter to the court. They act, in this
respect as officials of the court and not as administrative officials, and their act is the
act of the court. They are specifically called upon to "extend assistance to courts in
ordinary and cadastral land registration proceedings."
In the case at bench, Administrator Bonifacio filed his report as an officer of the court precisely to
inform the latter that the NLTDRA cannot comply with the order to issue a decree because the
subject lot sought to be registered was discovered to have been already decreed and titled in the
name of the Payatas Estate. Under these circumstances, the LRA is not legally obligated to follow
the court's order.
This is also one of the reasons why we have to reject the claim of petitioners that the court's Order
for Issuance of Decree is the reckoning point in determining the timeliness of a petition to re-open or
review the decree of registration in view of the ministerial nature of the LRA's duty. The other reason
is that the one-year period stated in section 32 of P.D. 1529 within which a petition to re-open and
review the decree of registration clearly refers to the decree of registration described in Section 31 of
the said P.D., which decree is prepared and issued by the Commissioner of Land Registration.
Finally, petitioners aver that respondent judge committed grave abuse of discretion in setting aside
the July 28, 1988, decision and the order for issuance of decree dated September 12, 1988, upon
the mere motion for reconsideration filed by the LRA, not by the Solicitor General, of the February 2,
1990 order.
Under the Administrative Code of 1987, the Solicitor General is bound to "[r]epresent the
Government in all land registration and related proceedings." Add to this the fact that P.D. 1529
3
itself, specifically Section 6 thereof which enumerates the functions of the Commissioner of Land
Registration, is bereft of any grant of power to the LRA or to the Commissioner to make the same
representation as the Office of the Solicitor General in behalf of the government in land registration
proceedings.
The court a quo could not have committed grave abuse of discretion because it was merely following
the earlier recommendation of the LRA which was then acting as an agent of the court.
Nevertheless, even granting that procedural lapses have been committed in the proceedings below,
these may be ignored by the Court in the interest of substantive justice. This is especially true
4
when, as in this case, a strict adherence to the rules would result in a situation where the LRA would
be compelled to issue a decree of registration over land which has already been decreed to and
titled in the name of another.
It must be noted that petitioners failed to rebut the LRA report and only alleged that the title of the
Payatas Estate was spurious, without offering any proof to substantiate this claim. TCT No. 8816,
however, having been issued under the Torrens system, enjoys the conclusive presumption of
validity. As we declared in an early case, "[t]he very purpose of the Torrens system would be
5
destroyed if the same land may be subsequently brought under a second action for registration." The
application for registration of the petitioners in this case would, under the circumstances, appear to
be a collateral attack of TCT No. 8816 which is not allowed under Section 48 of P.D. 1529.
At this point, it may be stated that this controversy could have been avoided had the proper
procedure in land registration cases been observed by both the trial court, acting as a land
registration court and by the LRA, acting as an agent of the court. The court should have rendered
its decision only "after considering the evidence and the reports of the commissioner of Land
Registration and the Director of Lands," as mandated by Section 29 of P.D. 1529, instead of
precipitately adjudicating the land in question to the applicant and directing the Commissioner to
issue a decree of registration and certificate of title when the report of the LRA was still forthcoming.
On the other hand, if a faster disposition of the proceedings were really desired, the court could
facilely wield the powers of its office in order to compel the LRA to speed up its investigation, report,
and recommendation.
Finally, the Solicitor General is reminded to be more vigilant in handling cases which his office
should, under the law, properly represent.
ACCORDINGLY, the instant petition for review is hereby DENIED, and the order of respondent court
dated May 29, 1990, is AFFIRMED.
SO ORDERED.
G.R. No. L-38387 January 29, 1990
HILDA WALSTROM, petitioner-appellant,
vs.
FERNANDO MAPA, JR., VICTORINO A. MAPA, MARIA C.M. DE GOCO, FERNANDO MAPA, III,
MARIO L. MAPA, and THE REGISTER OF DEEDS OF THE PROVINCE OF
BENGUET, respondents-appellees.
Pelaez, Adriano & Gregrio for petitioner-appellant.

Tomas G. Mapa & Associates for private respondents.
SARMIENTO, J.:
This is a review of the Order dated December 1, 1973 of the then Court of First Instance of Baguio-
Benguet, Branch IV, which dismissed, before trial on the merits, the petitioner's complaint in Civil
Case No. 2434. The concluding portion of the assailed order states:
This Court is unprepared to consider this case as falling under any of the exceptions to the
rule on exhaustion of administrative remedies because under plaintiffs allegations, her
"Petition for Relief " is still pending resolution by the Secretary of Agriculture and Natural
Resources who may reconsider his action on the matter in dispute; and, furthermore, an
action for annulment of title issued pursuant to a patent must be initiated by the Director of
Lands or at least by his prior authority and consent (Kabayan (sic) vs. Republic, L-33307,
1
August 30, 1973) who may be directed by the Secretary for that purpose if plaintiff's "Petition
for Relief" is granted and the previous action reconsidered. The records fail to show that
such authority or consent has been secured by the plaintiff before instituting the present
action.
A motion to dismiss of this nature does not affect the jurisdiction of the court but shows that
plaintiff lacks a cause of action. (Commissioner of Immigration vs. Vamenta, Jr., 45 SCRA
342.) In other words, non-compliance with this requirement justifies the dismissal for lack of
cause of action. (Cruz vs. Del Rosario, 9 SCRA 755.)
WHEREFORE, the Court, finding the motion to dismiss to be in order, hereby orders the
dismissal of the case without pronouncement as to costs.
SO ORDERED. 2
This drawn-out controversy between the parties, which is one of the many cases we inherited from
the pre-EDSA Court, arose from the following facts and proceedings:
I.
(1) The petitioner alleges that long before World War II, Cacao Dianson, predecessor-in-
interest of Gabriela Walstrom, filed a Free Patent Application (FPA) for a parcel of land
located between what are known as Lots Nos. 1 and 2 of Psu-153657. Under the said Free
Patent Application, Cacao Dianson was able to secure on April 10, 1933 the issuance of
Free Patent No. 14885 and Original Certificate of Title No. 1217 in his name.
(2) On June 9, 1933, Josefa Abaya Mapa, predecessor- in-interest of the private
respondents, filed Miscellaneous Sales Application No. 6439 for a parcel of land located in
barrio Pico, municipality of La Trinidad, Mountain Province.
(3) According to the petitioner, a public auction of the land subject of Josefa Abaya Mapa's
miscellaneous sales application was held on April 18, 1934. Josefa Abaya Mapa was the
only bidder.
(4) On May 12, 1934, the Director of Lands awarded Josefa Abaya Mapa a tract of land with
an area of 2,800 square meters which was appraised at P0.05 per square meter, located in
Pico, La Trinidad, Mountain Province, with the following boundaries: N.- Public Land; S.E. -
Public Land; S. - Road; W. - Public Land (not surveyed) No improvements had been made
on the land.
(5) On June l, 1956, Cacao Dianson filed Free Patent Application No. 3-74 covering Lots
Nos. 1, 2, and 3 of Psu-153657, situated in Barrio Beckel, La Trinidad, Mountain Province,
and on the same date he filed with the District Land Office in Baguio City a letter protesting
the construction in April, 1956 by Josefa Abaya Mapa of a camarin on the parcel of land
(described as "portion A") of one of the parcels of land more specifically, Lot No. 1 of Psu-
153657 — covered by Dianson's FPA No. 3-74. 3
(6) The private respondents counter that this portion being claimed by Dianson, which is
designated as Portion "A" of Lot 1, Psu-153657, was already awarded to Josefa Abaya Mapa
in the public bidding held in 1934.
(7) On June 17, 1958, the controversy between Cacao Dianson and Josefa Abaya Mapa
with respect to the disputed property was referred to Bureau of Lands Investigator Antonio
Mejia for investigation. After conducting several hearings and making an ocular inspection of
the controverted premises, Mejia submitted his "Report of Investigation," wherein he stated
the following:
FINDINGS OF FACTS
Josefa Abaya Mapa has filed a Miscellaneous Sales Application for a parcel of land located
in Pico, La Trinidad, Mt. Province, on June 9, 1933 and the same was awarded to her on
May 12, 1934. The land has an area of 2800 square meters with the following boundaries.
North — Public Land, South-East — Public Land, South-Road and West — Public Land.
The purchase price has been paid in full in 1943 as per Official Receipt No. B-1982778
dated November 8, 1943.
The land was first applied for by her husband, Fernando Mapa, but it was later transferred to
Josefa Abaya Mapa.
Cacao Dianson filed a Free Patent Application for the same parcel of land on June 1, 1956,
alleging that the said land was first occupied by his father, Dianson, in 1884. The land has
been survey under Psu-153657 on September 10, 1956.
Cacao Dianson is occupying the land and has fenced it. Josefa Abaya Mapa has constructed
a sort of a shack near the land. Terraces were made by Cacao Dianson in the premises.
Cacao Dianson has also constructed a shack inside the land.
No survey appears to have been conducted on the land covered by the Miscellaneous Sales
Application of Josefa Abaya Mapa.
Rodrigo H. Romea conducted a survey on the land. However, Mr. Romea made two surveys
separately. One on the land pointed to her by Josefa Abaya Mapa and the other, on the land
which according to his findings and opinion would be the correct place of the land covered by
the application of Josefa Abaya Mapa.
Lands Investigator Mejia also found that:
During the ocular inspection of the land, it was found out that Mrs. Josefa Abaya Mapa has
constructed a shack near the road. On the other hand, Cacao Dianson has also constructed
a hut in the premises of the said land. In fact, Cacao Dianson was in a threatening mood
against the Mapas during the ocular inspection. Of the alleged improvements introduced by
Mrs. Josefa Abaya Mapa, they were not seen by the herein Investigator, except the shack
constructed by her. However, rice terraces were found in the premises and other plants, but
from the appearance of the said improvements, it seems to be recently introduced.
This Investigator has searched all the records in the Office of the Bureau of Lands, Baguio
City, but no available records could be found regarding the location of the land applied for by
Josefa Abaya Mapa. A verification of the records, however. show that Cacao Dianson has
sold the land applied for by him to a certain Agripino Farol, a resident of Davao.
4
(8) The regional land officer of Dagupan City, in a decision dated August 12, 1964, resolved
the controversy between Cacao Dianson and Josefa Abaya Mapa in this wise:
In view of the foregoing, the undersigned holds and so decides that Free Patent Application
No. 3-74 of Cacao Dianson be, as hereby it is, amended so as to exclude therefrom Portion
"A" of Lot No. 1, Psu-153657, as shown on the sketch drawn at the back hereof and shall
cover only portion "B" of Lot No. 1, Lots 2 and 3 of Psu-153657, and the Miscellaneous Sales
Application No. 6439 (E -1341) of Josefa Abaya Mapa shall cover the said portion "A" of Lot
No. 1, Psu-153657 and thereafter both applications shall continue to be given due course. 5
(9) In the meantime, Cacao Dianson died on August 7, 1964. Nearly two years later, on July
8,1966, Gabriela Walstrom filed a motion for reconsideration with the Director of Lands of the
decision dated August 12, 1964 of the regional land officer, claiming that she had acquired
the rights and interests of Cacao Dianson to the subject parcel of land by virtue of a transfer
of said rights and interests. by Dianson to one Agripino Farol who, in turn, transferred the
same rights and interests to Gabriela Walstrom.
(10) On September 9, 1966, the Director of Lands, acting on the motion for reconsideration
filed by Gabriela Walstrom, issued an order setting aside the decision of August 12, 1964 of
the district land officer of Dagupan City.
(11) On November 9, 1966, Josefa Abaya Mapa appealed the order dated September 9,
1966 of the Director of Lands to the Department of Agriculture and Natural Resources
(DANR).
This became DANR Case No. 3118.
II.
(1) On July 28, 1967, the DANR Secretary rendered a decision, dismissing Josefa Abaya
Mapa's appeal from the order dated September 9, 1966 of the Director of Lands.
(2) On September 21, 1967, the heirs of Josefa Abaya Mapa, through their judicial
administrator, Victorino Mapa, filed a motion for reconsideration of the decision of the DANR
promulgated on July 28, 1967.
(3) On June 13, 1968, the DANR Secretary Set aside the order of the Director of Lands
dated September 9, 1966 and ordered that the decision of the regional land officer in
Dagupan City dated August 12, 1964 be reinstated and given full force and effect.
(4) On July 30, 1968, counsel of Gabriela Walstrom manifested his intention to file a motion
for reconsideration against the DANR order, dated June 13, 1968, but it was only on
September 20, 1968 that a memorandum in support of his motion for reconsideration was
filed.
(5) On March 4, 1969, DANR Secretary Fernando Lopez promulgated an order denying the
motion for reconsideration of Gabriela Walstrom on two (2) grounds, as follows:
1. From the foregoing, it is clear that more than thirty days had elapsed from the time
plaintiff received the order she is seeking to be reconsidered to the time she
manifested any intention to have the same reconsidered. Such being the case, her
motion does not merit any consideration whatsoever for having been filed out of tune.
2. Nevertheless, this office reviewed the records of this case in view of the errors
mentioned by movant in her memorandum and the answer thereto filed by
defendant. This office, however does not find any reversible error in its Order of June
13, 1968.6
(6) Gabriela Walstrom filed a second motion for reconsideration of the Order of the DANR
dated June 13, 1968. In the meantime Mapa filed a motion for execution of the said order of
DANR.
(7) The DANR, in its order dated March 24, 1970, denied the second motion for
reconsideration of Walstrom and granted the motion for execution filed by the heirs of Josefa
Abaya Mapa.
(8) On June 8, 1970, Gabriela Walstrom filed a petition for relief with the DANR. Before her
petition was heard, she died on October 4, 1970. The heirs of Josefa Abaya Mapa, pursuing
the case, filed an answer dated March 29, 1972, to the petition of Walstrom, stating that:
Preliminary Statement
The land being controverted by Appellee Walstrom was the subject of the Miscellaneous
Sales Application and not a Homestead Patent Application. The property now being
contested by Appellee Walstrom is already titled in the name of the HEIRS OF JOSEFA
ABAYA MAPA, under original Certificate of Title No. P-456 of the Registry of deeds for the
Province of Benguet, pursuant to a Miscellaneous Sales Patent No. 4487. This property,
therefore, is now under the Torrens System.
It is also worthwhile to note that the land in question is only a small portion of the claim of
Cacao Dianson and Walstrom. This is the land in question particularly designated as Portion
"A" of Lot 1, Psu-153657. 7
(Emphasis supplied by petitioner Walstrom)
It was only upon receipt on April 11, 1972 of the above-stated answer of the heirs of Josefa Abaya
Mapa to the petition for relief of the late Gabriela Walstrom, that the herein petitioner Hilda
Walstrom, daughter and successor-in-interest of the late Gabriela, learned for the first time that the
property being contested by Walstrom was already titled in the name of the heirs of Josefa Abaya
Mapa, under Original Certificate of Title No. P-456 of the Registry of Deeds for the Province of
Benguet, pursuant to Miscellaneous Sales Patent No. 4487. 8
III.
Upon subsequent inquiry with respect to the claim of the heirs of Josefa Abaya Mapa that the
property in dispute in DANR Case No. 3118 had already been titled pursuant to Miscellaneous Sales
Patent No. 4487, the petitioner further became aware, also for the first time, that Miscellaneous
Sales Patent No. 4487 was issued by the DANR Secretary on July 19,1971 and released for
transmittal to the office of the Register of Deeds for Benguet Province on July 22, 1971; that on
September 30, 1971, respondent register of deeds issued Original Certificate of Title No. P-456,
pursuant to Miscellaneous Sales Patent No. 4487; and that on or about November 13, 1971,
respondent Fernando Mapa, Jr. transferred the property covered by Original Certificate of Title No.
P-456 to the other heirs of Josefa Abaya Mapa, namely, defendants Victorino A. Mapa, Jose A.
Mapa, Maria C.M. de Goco, Fernando Mapa III, and Mario L. Mapa, in connection with which
transfer, Transfer Certificate of Title No. T-6644 was issued by the Register of Deeds of Benguet. 9
During all this time, the petition for relief filed by Gabriela Walstrom on June 8, 1970 remained
unresolved. In fact, the DANR Secretary issued an order, dated January 9,1972, giving due course
to the said petition. According to petitioner Hilda Walstrom, she was compelled to file an action in the
then Court of First Instance of Baguio-Benguet on July 19, 1972 because the one-year prescriptive
period for seeking judicial relief provided for in Sec. 38 of the Land Registration Act was about to
lapse.
The court a quo dismissed petitioner Hilda Walstrom's petition on the ground of "failure to exhaust
administrative remedy dies."
The petitioner submits two questions:
I.
DID PETITIONER-APPELLEE (sic) REALLY FAIL TO EXHAUST ADMINISTRATIVE

REMEDIES?
II.
IN THE LIGHT OF THE FACT THAT THE DISPUTED MISCELLANEOUS SALES PATENT
WAS ISSUED ON JUNE 19, 1971, DOES THE FACT THAT THE PETITION FOR REVIEW
IN DANR CASE NO. 3118 HAD NOT YET BEEN RESOLVED AS OF JULY 19, 1972,
PRECLUDE PETITIONER-APPELLANT FROM FILING ON SAID DATE (JULY 19,1972)
HER SUIT TO ANNUL SAID SALES PATENT AND THE TORRENS CERTIFICATES OF
TITLE ISSUED BY THE REGISTER OF DEEDS BY VIRTUE THEREOF? 10
Petitioner Hilda Walstrom filed a civil complaint against the respondents praying for the nullification
of the Mapas' sales patent and certificates of title issued by the register of deeds of Benguet
Province under Section 38 of Act 496 or the Land Registration Act.
11
The pertinent portions of Section 38 of said Act are quoted as follows:
SEC. 38. Decree of registration and remedies after entry of decree.

If the court after hearing finds that the applicant or adverse claimant has title as stated in his
application or adverse claim and proper for registration, a decree of confirmation and
registration shall be entered. Every decree of registration shall bind the land, and quiet title
thereto, subject only to the exceptions stated in the following section. It shall be conclusive
upon and against all persons, including the Insular Government and all the branches thereof,
whether mentioned by name in the application, notice of citation, or included in the general
description "To all whom it may concern," Such decree shall not be opened by reason of the
absence, infancy, or other disability of any person affected thereby, nor by any proceeding in
any court for reversing judgments or decrees; subject, however, to the right of any person
deprived of land or of any estate or interest therein by decree of registration obtained by
fraud to file in the competent Court of First Instance a petition for review within one year after
entry of the decree provided no innocent purchaser for value has acquired an interest....
It is the teaching of the foregoing provisions that a decree of registration may be reopened or
reviewed by the proper Regional Trial Court upon the concurrence of five essential requisites, to wit:
(a) that the petitioner has a real and a dominical right; (b) that he has been deprived thereof;(c)
through fraud; (d) that the petition is filed within one year from the issuance of the decree; and (e)
that the property has not as yet been transferred to an innocent purchaser for value. 12
An examination of the records of the case shows non-concurrence of the essential elements
enumerated above.
The first element is patently not present because the petitioner can not allege that she has already a
real and dominical right to the piece of property in controversy. The latest order of the DANR
Secretary, dated June 13,1968, was to give full force and effect to the regional land officer's
decision, dated August 12, 1964. The regional land officer held that the petitioner's Free Patent
13
Application No. 3-74 shall exclude the disputed portion "A" of Lot No. 1, which, instead, shall be
included in the Mapas' Miscellaneous Sales Application.
The second element is also absent since corollary to the aforecited ruling of the DANR Secretary,
the petitioner can not aver that she was deprived of property because she did not have a real right
over portion "A".
Apropos the third element, the records are bereft of any indication that there was fraud in the
issuance of the certificates of title. As matters stand, the prerequisites have not been complied with.
The petitioner's recourse to Section 38 would not have prospered; accordingly, the respondent
court's dismissal of petitioner's complaint was proper.
We also find that the lower court was correct in holding that the case does not fall under any of the
exceptions to the rule on exhaustion of administrative remedies. The petitioner herself admits that
her petition for relief is still pending resolution by the Secretary of Agriculture and Natural Resources
who may reconsider his action on the matter in dispute. The petitioner's failure to exhaust
administrative remedies is a flaw which to our mind is fatal to a court review at this time. 14
Instead of invoking Section 38, the petitioner should have pressed for the speedy resolution of her
petition with the DANR. The petitioner avers that since the one-year prescriptive period for seeking
judicial relief provided for in Sec. 38 of the Land Registration Act was about to lapse, she was
compelled to file the action to nullify said patent. The petitioner's submission is not correct. Her fear
15
of the futility, or even only inefficacy, of exhausting the administrative remedies granted her by law is
clearly unfounded.
We have ruled before in Amerol vs. Bagumbaran that notwithstanding the irrevocability of the
16
Torrens title already issued in the name of another person, he can still be compelled under the law to
reconvey the subject property to the rightful owner. The property registered is deemed to be held in
trust for the real owner by the person in whose name it is registered. After all, the Torrens system
was not designed to shield and protect one who had committed fraud or misrepresentation and thus
holds title in bad faith.
17
In an action for reconveyance, the decree of registration is respected as incontrovertible. What is

1âwphi1
sought instead is the transfer of the property, in this case the title thereof, which has been wrongfully
or erroneously registered in another person's name, to its rightful and legal owner, or to one with a
better right. This is what reconveyance is all about. 18
Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute nor is it
imprescriptible. An action for reconveyance based on an implied or constructive trust must perforce
prescribe in ten years from the issuance of the Torrens title over the property. 19
We find no reversible error in the challenged order of the trial court.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
G.R. No. L-22822 August 30, 1968
GREGORIA PALANCA, petitioner-appellant,
vs.
THE AMERICAN FOOD MANUFACTURING COMPANY and TIBURCIO EVALLE, in his capacity
as Director of Patents, respondents-appellees.
On May 14, 1958, petitioner-appellant Gregoria Palanca filed with the Philippine Patent Office,
Department of Commerce and Industry, an application to register the trademark, "LION and the
representation of a lion's head," alleging that she had been using the trademark since January 5,
1958 on bechin (food seasoning). The application was opposed by herein respondent-appelee. The
American Food Manufacturing Company, on the ground that petitioner's trademark was similar to its
(respondent's) trademark "LION and representation of a lion" previously adopted and used by it on
the same type of product since August 3, 1953.
After hearing, the Director of Patents, on June 14, 1961, rendered a decision, the pertinent portion of
which reads as follows:
The record of the case consisting of respondent-appellant's1 application, the testimonies on

behalf of the parties with accompanying exhibits and the opposer's2 memorandum have been
given careful consideration. There is no memorandum for respondent-applicant. "There can
be no question but that the trademarks and the goods of the parties are similar. Accordingly
the only issue presented is that of priority of use.
Opposer's record establishes that it has at least since 1957, prior to January 5, 1968, the
earliest date of use asserted by respondent-applicant, continuously used LION and
representation thereof, as a trademark for bechin (food seasoning). The opposer is therefore
the prior user while the respondent-applicant is the later user of substantially the same
trademark.
IN VIEW OF THE ABOVE CONSIDERATIONS, the opposition is hereby sustained and

application Serial No. 6321 of Gregoria Palanca is rejected.
The record shows the petitioner's counsel was furnished with copy of the decision on June 16,
1961.3 No appeal was taken from the decision of the Director of Patents within the reglementary
period from June 16, 1961.
On December 14, 1961, however, herein petitioner-appellant filed with the Patent Office a petition to
set aside the aforementioned judgment of June 14, 1961, invoking section 2 of Rule 38 of the Rules
of Court, alleging fraud and/or negligence committed by her former counsel, Atty. Bienvenido Medel,
in that the latter failed to file a memorandum before the case was submitted for decision; that she
had been fraudulently kept in total ignorance of the proceedings in the case; that her counsel had
not informed her of the decision thus preventing her from resorting to all the legal remedies available
to her; that she came to known of the decision only about the latter part of October, 1961, through
her friend, Mr. Domingo Adevoso; that she had evidence to disprove the claim of opposer The
American Food Manufacturing Company that it had been using the same trademark even before
1958; and that she had evidence to show that the bechin that the opposer sold prior to 1958 were
not of the "Lion" brand but of the "Lion-Tiger" brand, another trademark of opposer.
In its answer to the petition to set aside the judgment, the opposer, herein respondent-appellee be
American Food Manufacturing Company, denied the allegations of the petition and put up special
and affirmative defenses, to wit: that the petition was filed out of time; that the evidence proposed to
be presented was not new but was already existing and available at the time of the hearing of the
case; and that the decision was not rendered through fraud, accident, mistake, or excusable
negligence, as is contemplated in Section 2 of Rule 38 of the Rules of Court.
The petition to set aside the judgment was set for hearing, wherein petitioner-appellant and a
witness, Ricardo Monfero, testified. Witness Monfero testified that he was the owner of a grocery
store in San Pablo City, that the receipts issued to him by the American Food Manufacturing
Company on October 16, 1957 showing that Lion blue bechin had been sold to his store really
referred to Lion-Tiger brand bechin After this hearing, herein respondent-appellee Director of
Patents issued resolution No. 20, dated October 14, 1963, denying the petition to set aside
judgment, pertinent portions of which resolution reads:
Therefore, from the facts established, no extrinsic or collateral fraud would warrant the
setting aside of the judgment herein already rendered.
This office has also carefully considered the possible value of the evidence purportedly
showing that the Opposer falsified its receipt to be proven through the testimony of Ricardo
Monfero. His testimony is of course, immaterial to the issue because what should have been
proven was the alleged fraud but, inasmuch as the purpose for his presentation as witness
and the nature of his testimony has been revealed, this Office might as well rule now that
such character of evidence can not be considered as a new evidence which would alter the
result of the proceedings.
Her motion for reconsideration of the resolution denying the petition to set aside judgment having
been denied, petitioner-appellant filed a notice of appeal "from the decision of the Director of Patents
to the Supreme Court on the ground that said decision is not supported by the evidence presented
and is contrary to law."
In her brief, petitioner-appellant contends that respondent Director of Patents committed the
following errors:
1äwphï1.ñët
1. In denying the petition to set aside judgment and resolving that there was no fraud
perpetrated against petitioner-appellant, as contemplated under section 2 of Rule 38 of the
Rules of Court; .
2. In holding that a client is bound even by fraudulent and deliberate lapses of his counsel;.
3. In holding that the testimony of the petitioner-appellant's witness, Ricardo Monfero, is

immaterial and that it cannot be considered as a newly discovered evidence which would
alter the result of the proceedings;
4. In holding that the prior user of the trademark in question is the respondent-appellee, The
American Food Manufacturing Company;
5. In giving more credence to the invoices of the respondent company than on the testimony
of the respondent company's customers denying the genuineness and the truth of the facts
contained in said invoices;
6. In not considering the failure of the respondent company to register the trademark in
question earlier than 1958 as negating its claim of its prior use as early as 1953; and.
7. In rejecting the application for registration of trademark Lion and Representation in the
vetsin food products of petitioner-appellant and in sustaining the opposition of the
respondent company.
We have noted, upon a reading of herein appellant's notice of appeal and appeal brief, that she does
not only question the correctness of the resolution of appellee Director of Patents denying the
petition to set aside the decision of June 14, 1961 but at the same time prays for the reversal of the
said decision. We believe that in this appeal the most that appellant can ask this Court is to pass
upon the correctness of the resolution denying the petition to set aside the decision.
The record shows that the decision proper, which was rendered on June 14, 1961, had already
become final, because counsel for the appellant had been furnished with copy of said decision on
June 16, 1961 and no appeal had been taken from said decision within the reglementary period.
Appellant admits that she had lost completely her right to appeal from the decision.4 It is a settled
rule that notice of any decision or order of a court to counsel is also notice to the client.5 Appellant
claims that she became aware of the decision only during the last week of October, 1961.6 Indeed
she took the proper step when on December 14, 1961 she filed a petition to set aside the decision
upon the alleged ground of fraud pursuant to Section 2 of Rule 38 of the Rules of Court. That petition
to set aside the decision, however, was denied by the respondent-appellee Director of Patents on
October 14, 1963. It is only from this order denying the petition to set aside the decision that herein
appellant can now appeal to this Court, and not from the decision proper which was rendered on
June 14, 1961. We are, therefore, concerned only in determining whether the respondent-appellee
Director of Patents had correctly denied the petition to set aside the decision of June 14, 1961. In
this connection, we shall dwell only on the first three errors that have been assigned by the
petitioner-appellant.
Petitioner-appellant, in support of the first three assigned errors which she discussed jointly, argues
that the acts committed by her former counsel, Atty. Bienvenido Medel, constitute fraud that would
warrant the setting aside of the decision denying her application to register the controverted
trademark. These acts, allegedly, are: his having kept her ignorant of the proceedings of the case;
his having failed to file a memorandum after the hearing of the evidence before the Patent Office; his
having failed to notify her of the adverse decision after receiving notice of it, of which decision she
came to know only after five months from the time it was rendered; his having intentionally kept
himself entirely out of her reach, thereby causing her to lose the right to appeal in due time and
preventing her from informing counsel of the newly discovered evidence which might have changed
the decision had it been timely presented. Petitioner-appellant also claims that the acts of her
counsel also prevented her from presenting all her case before the Patent Office and deprived her of
other available legal remedies. She claims, furthermore, that the acts and/or behavior of her counsel
cannot be considered honest mistakes, but are fraudulent and deliberate lapses or omissions on his
part, which cannot bind her as a client. She also claims that the Director of Patents erred in finding
that the testimony of Ricardo Monfero during the hearing on the petition to set aside the decision
was immaterial, because this witness precisely testified that the invoices relied upon by the Director
of Patents in finding that respondent The American Food Manufacturing Company had been using
the trademark at least since 1957 referred to the trademark "Lion-Tiger" of said respondent and not
to the trademark in question, and so this testimony had directly refuted the basis of the findings of
facts of the respondent Director.
Respondent-appellee Director of Patents, on the other hand, contends that the basic issue in the
petition to set aside the decision of June 14, 1961 is whether there was fraud, as contemplated in
section 2 of Rule 38 of the Rules of Court, to justify the setting aside of the decision. This
respondent-appellee maintains that the acts or omissions of her counsel, cited by petitioner-
appellant as constituting fraud, had not prevented her from presenting fully her case, such that it
could not be said that there had never been a real contest before the Patent Office regarding the
subject matter of the suit. He further maintains that the acts of petitioner-appellant's counsel
complained of, including the failure to file the memorandum, refer to procedural matters, and were
binding on her. Regarding the merit, of the testimony of Monfero, respondent-appellee Director of
Patents contends that there is no use in discussing the same because fraud as would warrant the
setting aside of the judgment had not been shown.
We uphold the stand of respondent-appellee Director of Patents.
Section 2 of Rule 38 of the Rules of Court provides that a judgment or order entered against a party
through fraud, accident, mistake or excusable negligence may be set aside upon proper petition to
that effect. Not every kind of fraud, however, is sufficient ground to set aside a judgment. This Court
has held that only extrinsic or collateral, as distinguished from intrinsic, fraud is a ground for
annulling a judgment.7 Extrinsic fraud refers to any fraudulent act of the successful party in a
litigation which is committed outside the trial of a case against the defeated party, or his agents,
attorneys or witnesses, whereby said defeated party is prevented from presenting fully and fairly his
side of the case. On the other hand, intrinsic fraud refers to acts of a party in a litigation during the
trial, such as the use of forged instruments on perjured testimony, which did not affect the
presentation of the case, but did prevent a fair and just determination of the case.8 The distinctions
are pointed out in the case of United States v. Throckmorton, 98 U.S. 61, 25 L. Ed. 93, — the very
case cited by petitioner-appellant — where the court said:
Where the unsuccessful party had been prevented from exhibiting fully his case, by fraud or
deception practiced on him by his opponent, as by keeping him away from court, a false
promise of a compromise; or where the defendant never had knowledge of the suit, being
kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without
authority assumes to represent a party and connives at his defeat; or where the attorney
regularly employed corruptly sells out his client's interest to the other side - these, and similar
cases which show that there has never been a real contest in the trial or hearing of the case,
are reasons for which a new suit may be sustained to set aside and annul the former
judgment or decree, and open the case for a new and fair hearing.
xxx xxx xxx
On the other hand, the doctrine is equally well settled that the court will not set aside a
judgment because it was founded on a fraudulent instrument, or perjured evidence, or for
any matter which was actually presented and considered in the judgment assailed.
In this connection, this Court, in the case of Varela vs. Villanueva, etc., et al., 95 Phil. 248, 258,
said:.
The rule is that an action to annul a judgment, upon the ground of fraud, will not lie unless
the fraud be extrinsic or collateral and the facts upon which it is based have not been
controverted or resolved in the case where the judgment sought to be annulled was
rendered, and that false testimony or perjury is not a ground for assailing said judgment,
unless the fraud refers to jurisdiction (Labayen vs. Talisay-Silay Milling Co., 68 Phil. 376);
that fraud has been regarded as extrinsic or collateral, where it has prevented a party from
having a trial or from presenting all of his case to the court (33 Am. Jur. pp. 230-232). The
reason for this rule has been aptly stated in Almeda, et al. vs. Cruz, 47 Off. Gaz., 1179:
'Fraud to be ground for nullity of a judgment must be extrinsic to the litigation. Were
not this the rule there would be no end to litigations, perjury being of such common
occurrence in trials. In fact, under the opposite rule, the losing party could attack the
judgment at any time by attributing imaginary falsehood to his adversary's proofs. But
the settled law is that judicial determination however erroneous of matters brought
within the court's jurisdiction cannot be invalidated in another proceeding. It is the
business of a party to meet and repel his opponent's perjured evidence.'
The acts complained of by petitioner-appellant, even if assumed to be true and fraudulent, were all
committed by her own counsel, and not by the successful party or opponent in the case. Hence,
petitioner-appellant had not shown extrinsic fraud that would warrant the setting aside of the
decision.
Negligence, mistake or fraud of one's own attorney is not ground for granting a new trial.
(O'Quinn v. Tate, [Tex.] Civ. App. 187 S.W. 2d 241).
xxx xxx xxx
Fraud, such as would authorize the setting aside of the verdict at the instance of the movant,
is fraud of respondent or his counsel. She is not at liberty to avail herself of the misconduct of
her own counsel, for the purpose of annulling the verdict obtained by respondent. (Ketchem
v. Ketchem, 11 S.E. 2d 788).
xxx xxx xxx
In order to obtain relief on this ground it must appear that the fraud was practiced or
participated in by the judgment creditor, or his agent or attorney. The fraud must have been
practiced upon the opposite party." (Amuran vs. Aquino, 38 Phil. 29; Velayo vs. Shell
Company of the Philippines, Ltd., G.R. No. L-8883, July 14, 1959.).
The record shows that petitioner-appellant had all the opportunity to present fully her side of the
case before the decision was rendered, because she and her witnesses. Estrellita Concepcion and
Adela Palmario, testified in the case. The decision in question itself states that "The record of the
case consisting of respondent-applicant's application, the testimonies on behalf of the parties with
accompanying exhibits and the opposer's memorandum have been given careful
consideration."9 The failure to submit a memorandum was also the negligence of her counsel and
could not in any manner be attributed to any fraud or deception practiced by her opponent.
This Court has held that mistakes of counsel as to the competency of witnesses, the sufficiency and
relevancy of evidence, the proper defense, or the burden of proof, his failure to introduce certain
evidence, or to summon witnesses and to argue the case, are not proper grounds for a new trial,
unless the incompetence of counsel be so great that his client is prejudiced and prevented from fairly
presenting his case. 10
Anent appellant's not having been informed of the adverse decision, this Court has held that:
The failure of counsel to notify her on time of the adverse judgment to enable her to appeal
therefrom does not constitute excusable negligence. Notice sent to counsel of record is
binding upon the client and the neglect or failure of counsel to inform him of an adverse
judgment resulting in the loss of his right to appeal is not a ground for setting aside a
judgment valid and regular on its face. (Duran v. Pagarigan, L-12573, Jan. 29, 1960).
xxx xxx xxx
Relief under Rule 38 will not be granted to a party who seeks relief from the effects of a
judgment on the ground of fraud, where the loss of the remedy is due to his own fault or
negligence or that of his counsel." (Echevarri v. Velasco, 55 Phil. 570.)
The claim of petitioner-appellant that she had evidence, to disprove the claim of opposer (herein
appellee The American Food Manufacturing Company) that it was the prior user of the trademark in
question, and to show that the receipts issued by opposer purporting to be in connection with the
sale of Lion brand bechin were falsified, is tantamount to saying that her adversary in this case had
presented false evidence consisting of perjured testimonies and falsified documents. But even
assuming that the evidence presented by respondent-appellee The American Food Manufacturing
Company was false, this circumstance would not constitute extrinsic fraud, but only intrinsic fraud.
This Court, in a number of cases, held:
Assuming that there were falsities on the aspect of the case, they make out merely intrinsic
fraud which, as already noted, is not sufficient to annul a judgment. (Varela vs. Villanueva,
etc., et al., supra).
xxx xxx xxx
And we have recently ruled that presentation of false testimony or the concealment of
evidentiary facts does not per se constitute extrinsic fraud, the only kind of fraud sufficient to
annul a court decision. (Cortes vs. Brownell, Jr., etc., et al., 97 Phil. 542, 548).
xxx xxx xxx
That the testimony upon which a judgment has been based was false or perjured is no
ground to assail said judgment, unless the fraud refers to jurisdiction" (Labayen, et al. vs.
Talisay-Silay Milling Co., 68 Phil. 376, 383, quoting Scotten vs. Rosenblum, 231 Fed., 357;
U.S. vs. Chung Shee, 71 Fed. 277; Giffen vs. Christ's Church, 48 Cal. A. 151; 191 P. 718;
Pratt vs. Griffin, 223 Ill., 349; 79 N.E., 102).
xxx xxx xxx
As a general rule, extrinsic or collateral fraud would warrant a court of justice to set aside or
annul a judgment, based on fraud (Labayen, et al. v. Talisay-Silay Milling Co., G.R. No.
45843, June 30, 1939, L.J. Aug. 15, 1939). In seeking the annulment of the decision of Civil
Case No. 833 (CA-G.R. No. 8085-R), the alleged fraud does not refer to jurisdiction, but to
the admission by the trial court in said case, of supposedly false or forged documents, which
is intrinsic in character. (Velasco, et al. vs. Velasco, G.R. No. L-15129, June 30, 1961).
We find that respondent-appellee Director of Patents correctly ruled that the testimony of Ricardo
Monfero, — a witness presented by the petitioner-appellant during the hearing on the petition to set
aside the decision — is immaterial to the issue of whether or not the decision should be set aside.
This witness did not testify on any matter which would establish extrinsic fraud that would warrant
the setting aside of the decision.
As we have adverted to at the early part of this opinion, this appeal must be treated only as an
appeal from the resolution of respondent-appellee Director of Patents, dated October 14, 1963,
denying the petition to set aside the decision rendered on June 14, 1961. Having found that
respondent Director of Patents committed no error in denying the petition to set aside the decision,
we do not consider it necessary to discuss the other errors assigned by petitioner-appellant because
those other errors are not pertinent to the appeal now before this Court.
WHEREFORE, the instant appeal is dismissed. The resolution of the Director of Patents, dated
October 14, 1963, denying petitioner-appellant's petition to set aside the decision, dated June 14,
1961, in Inter Partes Case No. 130 before the Philippine Patent Office, is affirmed. Costs against
petitioner-appellant. It is so ordered.
G.R. No. L-17366 July 31, 1962
ALFREDO FRIAS, ET AL., applicants-appellees,

vs.
SANTIAGO ESQUIVEL, ET AL., oppositors-appellants.
On March 26, 1952, appellee spouses Alfredo N. Frias and Belen Lustre filed in the Court of First
Instance of Nueva Ecija an application to register a residential lot situated in Jaen, Nueva Ecija,
containing an area of about 2,974 square meters, more particularly bounded and described in Plan
Psu-131405 Exhibit A.
On September 22, 1952, Santiago Esquivel and his sisters, Felisa, Rosalia, Rosa, Ceferina, and his
sister-in-law, Perpetua Pada-Esquivel, widow of their brother, Alvaro, as legal guardian of her minor
children, Ricardo, Vicente, Aurelio, Raymundo and Prudencio (Reynaldo), all surnamed Esquivel,
opposed the application claiming ownership of a portion of 1,357 square meters of the land sought to
be registered, having inherited the same from their parents, Victoriano Esquivel and Catalina
Villamanca. They also sought the postponement of the proceedings pending final determination of
Civil Case No. 998 of the same court between themselves as plaintiffs and the applicants as
defendants, involving the ownership and possession of the land subject of their opposition.
In the civil case mentioned above, the plaintiffs alleged that they, together with their youngest sister,
Anastacia Esquivel de Yambao (who refused to be joined as a party in the action), inherited pro-
indiviso from their parents, Victoriano Esquivel and, Catalina Villamanca, a parcel of land with
improvements thereon situated at Jaen, Nueva Ecija, containing an area of about 1,357 square
meters; that while said property was still owned in common, on or about July 16, 1951, without their
knowledge and consent, Anastasia Esquivel de Yambao sold the whole of it to the defendants, the
Frias spouses, who knew, at the time of the sale, that their vendor owned only a part thereof; that
the defendants had taken possession of the land and had refused to reconvey it to them despite
repeated demands therefor.
On September 30, 1952, the Court issued an order postponing the hearing on the application until
after final adjudication of Civil Case No. 998, but on March 24, 1953 issued an order of general
default except as against the oppositors and the Director of Lands.
On April 20, 1956 we rendered judgment in Civil Case No. 998 (G.R. No. 8825) declaring the deed
of sale executed by Anastacia Esquivel valid insofar as Santiago, Felisa, Ceferina and Anastasia, all
surnamed Esquivel, were concerned, but invalid with respect to the minor heirs of the late Alvaro
Esquivel. In our decision we found the following facts as having been established: The parcel of land
in question originally belonged to the spouses Victoriano Esquivel and Catalina Villamanca who
seven children, namely, Santiago, Felisa, Rosalia, Rosa, Ceferina, Anastacia and Alvaro. Alvaro
died on December 19, 1940 leaving his widow, Perpetua Pada, and children, Ricardo, Vicente,
Aurelio, Raymundo and Prudencio (Reynaldo). Victoriano Esquivel died on January 7, 1943 leaving
considerable real estate in Jaen, Nueva Ecija consisting of rice and residential lands, which were
extrajudicially partitioned by and amongst his heirs sometime in 1946, the land in question having
been adjudicated to Anastacia, who sold it to the Frias spouse on July 16, 1951. The minor heirs of
the late Alvaro Esquivel were represented in the partition by their mother Perpetua Pada, who was
neither their legal guardian in the administratrix of their property. As the partition made in 1946, the
applicable law was found to be Section 553 of the Code of Civil Procedure which provided that the
father or mother is only deemed to be the nature guardian of his or her minor children and not of his
estate unless appointed by the court. As a result, the land in question was declared to be common
property of Anastacia Esquivel and the minor heirs of Alvaro Esquivel the time of its sale by the
former to the Frias spouses.
It appears that, subsequent to our decision, that is, on February 15, 1957, the children of the
deceased Alvaro Esquivel — who had attained the age of majority, with the exception of Alvaro and
Reynaldo — and their mother, Perpetua Pada de Zaragosa (remarried to Eduardo Zaragaza), as
natural guardian of the two minors, executed a deed of sale conveying their one-seventh
participation on the land to the Frias spouses. (Exhibit I)
On October 2, 1957, in the aforesaid registration proceedings, after due notice and hearing, the
Court rendered judgment adjudicating the lands described in the plan, Exhibit A, in favor of the
applicants and ordering its registration in their name. After the same had become final and
executory, the Court ordered the issuance of the Decree of Registration, and on December 11, 1957
the Chief of the General Land Registration Office issued Decree of Registration No. 60798 in favor
of the Frias spouses.
On December 8, 1958, Rosario Esquivel-Gonzales, as the duly appointed guardian of the minors
Reynaldo and Ricardo Esquivel, filed a verified petition to reopen the decree of registration on the
ground of fraud committed — according to the petition — as follows:
5. That the herein applicants committed fraud in obtaining said decree of registration, and
such fraud consists of the following: the herein applicants had falsely represented to this
Honorable Court during the hearing of their application that they were the owners of the
entire residential lot included in their plan marked as Exhibit "A" and now covered by the
decree of registration, when at that time they knew fully well they were not the owners
thereof in its entirety; that they were aware of such fraudulent representation when they
made it because they were parties in Civil Case No. 998 of this Court involving precisely the
validity of their title to the aforementioned lot; they also knew that on appeal the case
became G.R. No. L-8825 of the Supreme Court which, in a decision promulgated on April 20,
1956, held that the title (a deed of sale) to that residential lot claimed by the herein
applicants "is invalid with regard to the minor heirs of the late Alvaro Esquivel", one of them
being Reynaldo Esquivel, your petitioner's ward, in whose behalf this petition is being
presented;
6. That your petitioner has been informed, believes the information, and therefore alleges
that in order to perpetrate the aforesaid fraud upon this Court and upon your petitioner's
ward, Reynaldo Esquivel, the herein applicants had maneuvered sometime in February of
1957 the execution in their favor of a deed of sale of the share in the oft-repeated residential
lot pertaining to the minor heirs of the late Alvaro Esquivel, and that deed of sale signed by
Perpetua P. Zaragoza, widow and mother of the Esquivel minors, but who has remarried
many years before she was made to sign it and who has taken up residence in Asingan,
Pangasinan, since her remarriage, away from her minor children aforesaid, particularly from
the minor Reynaldo Esquivel who had to be taken care of alternately by his uncle and his
aunts;
On February 22, 1960, the Court denied the above mentioned petition. Hence the present appeal.
To justify the setting aside or review of a decree of registration under Section 38 of Act No. 496, the
party seeking relief must allege and prove, inter alia, that the registration was procured through fraud
— actual and extrinsic. It has been held in this connection that if the fraud alleged in the petition to
set aside the decree is involved in the same proceedings in which the party seeking relief had ample
opportunity to assert his right, to attack the document presented by the applicant for registration and
to cross-examine the witnesses who testified relative thereto, then the fraud relied upon is intrinsic.
The fraud is extrinsic if it was employed to deprive a party of his day in court, thus preventing him
from asserting his right to the property registered in the name of the applicant (Bagoyboy vs. Director
of Lands, 77 O.G. 1956).
Upon consideration of the facts relied upon by appellants to justify a review of the decree in
question, we find that the same do not constitute the extrinsic fraud require as justification for the
granting of the relief sought by them.
WHEREFORE, the decision appealed from is affirmed, with costs.
G.R. No. L-31681 July 31, 1987

THE DIRECTOR OF LANDS, petitioner,
vs.
COURT OF FIRST INSTANCE OF RIZAL, BR. XII, HON. FERNANDO A. CRUZ, PRESIDING
JUDGE; and PABLO, ANGELITA, JUAN, BARCELISA, ISRAEL, REBECCA and PEDRO, Jr., all
surnamed CASAJE, respondents.
PARAS, J.:
This is a Petition for Review (Appeal by Certiorari) filed by the Director of Lands from the Orders
dated January 4, 1969 and July 14, 1969 of respondent Court of First Instance of Rizal, Branch XII
Caloocan City, in Land Registration Case No. C-72, L.R.C. Record No. N-30167. Said order of
January 4, 1969 denied the Petition for Review filed by the Director of Lands and the order of
February 3, 1969 denied the motion for reconsideration.
Briefly, the facts of the case are as follows:
On February 22, 1966, respondents Pablo, Angelita, Juan, Barcelisa, Israel, Rebecca and Pedro,
Jr., all surnamed Casaje, filed with the Court of First Instance of Rizal, Land Registration Case No.
C-72, L.R.C. Record No. N-30167, for the confirmation and registration of their title to a parcel of
land situated in Barrio San Roque, Municipality of Navotas, Province of Rizal, more particularly
described on plan PSU-214300 with an area of 986 square meters. They alleged that they are the
owners in fee simple and in possession of the aforementioned land and that their possession
together with their predecessors-in-interest has been from time immemorial and for a period of more
than thirty (30) years, public continuous, adverse to the whole world, and in the concept of absolute
owners thereof.
The Director of Lands, thru the Solicitor General, filed an Opposition dated July 18, 1966 stating that
neither the applicants nor their predecessors-in-interest possess sufficient title to the parcel of e land
sought to be registered, the same not having been acquired by them by composition title from the
Spanish government or by possessory information title under the Royal Decree of February 13,
1894; that neither the applicants nor their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of the land in question for at least 30 years
immediately preceding the filing of the application and that the same is a portion of the public domain
belonging to the Republic of the Philippines.
Notice of the initial hearing scheduled on September 8, 1966 was furnished the Director of lands.
The corresponding publication was made in the official Gazette and the required posting of Sheriff's
notice was duly complied with.
At the said scheduled initial hearing, however, the Director of Lands did not appear. Instead, counsel
for the applicants presented to the court, the second and third indorsements of the District Land
Officer dated August 7, 1966, manifesting that the Bureau of Lands is no longer interested in
opposing the application for registration, because after due investigation the land was found to be of
private ownership as certified to by the land investigator Mr. Jose Sison, C/O District Land Officer III-
1. The third indorsement, dated August 7, 1966 and signed by Mr. Arturo Pascual, recommend that
in view of the above findings as per investigation conducted by a representative of the Bureau of
Lands, no opposition be filed. A copy of the said 2nd Indorsement is hereinbelow reproduced as
follows —
SUBJECT:
Land. Reg. Case No. C-72

L.R.C. Rec. No. N-30167
Pablo Casaje, et al.
San Roque, Navotas,
Rizal
2nd Indorsement
August 1, 1966
Respectfully returned to the Director of Lands thru the District Land Officer, DLO III-1, Bureau of
Lands, Manila, submitting hereunder the findings and report of the undersigned on the above-noted
Registration Case, to wit:
That the parcel of land sought to be registered is a residential lot located in San Roque, Navotas,
Rizal which was originally owned and possessed by Leonardo Casaje, deceased and father of the
herein registration applicants;
That the land subject of this registration was declared for taxation purposes under Tax Dec.. No,
8800 in the names of the applicants and the taxes were paid for and the latest is covered by O.R.
No. D-1865945 dated May 31, 1966 with an assessed value of P990.00;
That during the ocular investigation of the premises of the land subject of this registration, it has
been ascertained that a camarin and a residential house are found thereon. The 3-meter legal
easement has been set aside and unoccupied for embankment of the Navotas, River:
That it has been ascertained further that the subject of this registration case is abutting Lot 12 of
Psu-64860 of Leonardo Casaje which is a titled or private property;
That the land has been found that the same is not covered by any public land applications or patent
neither it is within any public or quasi public improvements;
That the undersigned has finally ascertained that the applicants are Filipino citizens and no person,
corporation, or association is either directly or indirectly interested in the land sought to be
registered; and
That the applicants thru their predecessors-in-interest and in concept of owners have been in actual,
open, adverse, public and continuous occupation and possession for more than thirty (30) years
which is believed to be not later than July 4, 1926.
In view of the foregoing, and in as much as the applicants have satisfactorily met all the conditions
essential to entitle them to a Judicial legalization of their imperfect claims over the land applied for
under the provisions of Section 48(b) of Com. Act No. 141, as amended by R.A. No. 1942, it is
recommended that no opposition be interposed on the instant Registration Case as far as our Office
is concern.
(SGD.) JOSE SISON
Land Investigator
Also on September 8, 1966, respondent Court, for failure of the Oppositors to appear despite due
notice, entered an order of general default against the whole world, with the exception of the
provincial government of Rizal and the municipal government of Navotas, thereby authorizing the
applicants to present their evidence before the Deputy Clerk of Court, who was commissioned to
receive the same.
On September 13, 1966, respondent court rendered a decision declaring the applicants, the true and
absolute owners of the land in question, and ordering the registration thereof in their names but
reserving for public easement a 3.00 meter strip of the land along the Navotas River.
On August 26, 1967, the private oppositors Roberto Lusterio, et al., filed a Petition for Review from
the order of general default and from the judgment alleging fraud and evident bad faith. The petition
was denied by respondent court for failure on the part of private oppositors to prove their allegations
of fraud and evident bad faith allegedly employed by the applicants. No appeal was interposed by
the private oppositors from the said order. 1avvphi1
On his part, the Director of Lands filed on October 11, 1967, a Petition for review, pursuant to Sec.
38 of Act No. 496, alleging fraud in obtaining the decree of registration and that the one (1) year
period has not elapsed from the issuance of the decree (the decrees was issued on June 5, 1967).
The applicants (the Casajes) filed an opposition contending among other things, that the said
petition for review "represents the interest of Eusebia Cruz, Roberto Lusterio and Evangelina
Laquindanum who were the original oppositors represented by private counsel Atty. Artemio L.
Agcaoili;" that since the decree of registration was issued on June 5, 1967 and since the
corresponding certificate of title has already been issued by the Register of Deeds, said petition for
review is a mere harassment, and that the land in dispute, as may be seen from the investigation
report and indorsement of the District Land Officer, is the private property of Leonardo Casaje: and
that the aforementioned Eusebia Cruz, Roberto Lusterio and Evangelina Laquindanum were merely
their tenants.
The petition for review was set for hearing on December 19, 1968. On January 4, 1969, respondent
court issued its Order denying the petition for lack of evidence to support the same. From this order,
after its motion for reconsideration had been denied, herein petitioner interposed this petition.
The primordial question to be resolved in the case at bar is whether or not respondent court erred in
denying petitioner's petition for review filed pursuant to Sec. 38 of Act 496, (Land Registration Act)
which provides:
Section 38. Decree of registration, and remedies after entry of decree.
If the court after hearing finds that the applicant or adverse claimant has title as stated in his
application or adverse claim and proper for registration, a decree of confirmation and
registration shall be entered. Every decree of registration shall bind the land, and quiet title
thereto, subject only to the exceptions stated in the following section. It shall be conclusive
upon and against an persons, including the Insular Government and an the branches
thereof, whether mentioned by name in the application, notice of citation, or included in the
general description "To all whom it may concern." Such decree shall not be opened by
reason of the absence, infancy, or other disability of any person affected thereby, nor by any
proceeding in any court for reversing judgments or decrees; subject, however, to the right of
any person deprived of land or of any estate or interest therein by decree of registration
obtained by fraud to file in the competent Court of First Instance a petition for review within
one year after entry of the decree provided no innocent purchaser for value has acquired an
interest. ...
The essential elements for the allowance of the reopening or review of a decree are: (a) that the
petitioner has a real and dominical right; (b) that he has been deprived thereof; (c) through fraud; (d)
that the petition is filed within one year from the issuance of the decree; and (e) that the property has
not as yet been transferred to an innocent purchaser.
However, for fraud to justify the review of a decree, it must be extrinsic or collateral and the facts
upon which it is based have not been controverted or resolved in the case where the judgment
sought to be annulled was rendered. The following ruling spells out the difference between extrinsic
and intrinsic fraud:
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any fraudulent
scheme executed by a prevailing litigant "outside the trial of a case against the defeated
party, or his agents, attorneys or witnesses, whereby said defeated party, is prevented from
presenting fully and fairly his side of the case." But intrinsic fraud takes the form of "acts of a
party in a litigation during the trial, such as the use of forged instruments or perjured
testimony, which did not affect the present action of the case, but did present a fair and just
determination of the case." (Libudan vs. Gil, 45 SCRA 17)
In other words, extrinsic fraud is one that affects and goes into the jurisdiction of the Court.
In its Petition for Review filed before the respondent court, petitioner alleged that the Casajes
committed fraud in obtaining said decree of registration in the following manner:
(a) By falsely alleging and misrepresenting that they have been in peaceful, open, adverse
and continuous possession of the land described in paragraph 1 hereof for more than 30
years, the truth being that said land had been in the actual and exclusive possession of
Eusebia Cruz, Roberto Lusterio and Evangelina Laquindanum who are not and have never
been in such possession as tenants or representatives of the registration applicants;
(b) By falsely representing that the land was formed by alluvia and is thus an accretion to
their private property, the truth being that the entire land has always been part of the public
domain, formed as it was by the intervention of human hands; and
(c) By misrepresenting that no other person, including the state, has any interest whatsoever
in the land in question. (pp. 47-48, Rollo)
Clearly, the foregoing allegations, even if proved, do not constitute extrinsic fraud as would warrant a
reopening of the decree.
The person(s) contemplated under Section 38 of Act 496, to be entitled to a review of a decree of
registration, are those who were fraudulently deprived of their opportunity to be heard in the original
registration case. Such is not the situation of the petitioner here. It was not denied a day in court by
fraud, which the law provides as the sole ground for reopening of the decree of registration. In fact, it
opposed the application but failed to substantiate its opposition because it did not appear at the
hearing of the registration case despite proper notice. In Solomon et al., vs. Bocauto et al., 71 Phil.
363, 365, cited in Crisolo vs. Court of Appeals, 68 SCRA 435, 441, a petition for review of a decree
of registration was properly denied for "both petitioners had notice of the original registration
proceedings; but failed to put up any claim and to show title in themselves. " Significantly, petitioner
failed to explain why it failed to appear at the hearing. Mere allegation of fraud is not enough.
Specific, intentional acts to deceive and deprive another of his right, or in some manner injure him
must be alleged and proved. There must be actual or positive fraud as distinguished from
constructive fraud to entitle one to the reopening of a decree of registration. And it must be extrinsic
and not intrinsic fraud (Greg Alba vs. de la Cruz, 17 Phil. 49, 57). This is necessary to maintain the
stability of judicial decisions and save the precious time of the courts from being wasted by
unnecessary proceedings. Moreover, the fact that the District Land Officer of the Bureau of Land
conducted the corresponding inspection and investigation of the land in question with its findings and
report submitted in court, renders the present appeal interposed by the Director of Lands without
valid basis. It cannot just simply deny the report of its own investigator. Besides, there is always that
presumption of regularity in the performance of official function.
WHEREFORE, this petition is DENIED for lack of merit. The order of respondent judge denying the
petition for review and/or to reopen the decree of registration in Land Registration Case No. C-72,
L.R.C. Record No. N-30167 is hereby AFFIRMED.
SO ORDERED.
G.R. No. 143573 January 30, 2009
ADORACION ROSALES RUFLOE, ALFREDO RUFLOE and RODRIGO RUFLOE, Petitioners,

vs.
LEONARDA BURGOS, ANITA BURGOS, ANGELITO BURGOS, AMY BURGOS, ELVIRA DELOS
REYES and JULIAN C. TUBIG, Respondents.
DECISION
Under consideration is this petition for review under Rule 45 of the Rules of Court seeking the
reversal and setting aside of the Decision1 dated January 17, 2000 of the Court of Appeals (CA) in
CA-G.R. CV. No. 49939, and its Resolution2 dated June 9, 2000, denying petitioners’ motion for
reconsideration.
The assailed decision reversed and set aside the February 10, 1995 decision3 of the Regional Trial
Court (RTC) at Muntinlupa, Metro Manila, Branch 276,4 in its Civil Case No. 90-359, an action for
Declaration of Nullity of Contract and Cancellation of Transfer Certificate of Titles and Damages,
commenced by the petitioners against herein respondents.
The factual antecedents are as follows:
Petitioner Adoracion Rufloe is the wife of Angel Rufloe, now deceased, while co-petitioners Alfredo
and Rodrigo are their children. During the marriage of Adoracion and Angel, they acquired a 371-
square meter parcel of land located at Barangay Bagbagan, Muntinlupa, and covered by Transfer
Certificate of Title (TCT) No. 406851 which is the subject of the present controversy.
Sometime in 1978, respondent Elvira Delos Reyes forged the signatures of Adoracion and Angel in
a Deed of Sale dated September 8, 1978 to make it appear that the disputed property was sold to
her by the spouses Rufloe. On the basis of the said deed of sale, Delos Reyes succeeded in
obtaining a title in her name, TCT No. S-74933.
Thus, in November 1979, the Rufloes filed a complaint for damages against Delos Reyes with the
RTC of Pasay City alleging that the Deed of Sale was falsified as the signatures appearing thereon
were forged because Angel Rufloe died in 1974, which was four (4) years before the alleged sale in
favor of Delos Reyes. The complaint was docketed as Civil Case No. M-7690.5 They also filed a
notice of adverse claim on November 5, 1979.
On December 4, 1984, during the pendency of Civil Case No. M-7690, Delos Reyes sold the subject
property to respondent siblings Anita, Angelina, Angelito and Amy (Burgos siblings). A new title, TCT
No. 135860, was then issued in their names.
On December 12, 1985, the Burgos siblings, in turn, sold the same property to their aunt, Leonarda
Burgos. However, the sale in favor of Leonarda was not registered. Thus, no title was issued in her
name. The subject property remained in the name of the Burgos siblings who also continued paying
the real estate taxes thereon.
On February 6, 1989, the RTC of Pasay City, Branch 108,6 rendered its decision in Civil Case No. M-
7690 declaring that the Deed of Sale in favor of Delos Reyes was falsified as the signatures of the
spouses Rufloe had been forged. The trial court ruled that Delos Reyes did not acquire ownership
over the subject property. Said decision had become final and executory.
Such was the state of things when, on February 8, 1990, in the RTC of Muntinlupa, the Rufloes filed
their complaint for Declaration of Nullity of Contract and Cancellation of Transfer Certificate of Titles
against respondents Leonarda and the Burgos siblings, and Delos Reyes. In their complaint,
docketed as Civil Case No. 90-359, the Rufloes basically alleged that inasmuch as the Deed of Sale
in favor of Delos Reyes was falsified, no valid title was ever conveyed to the Burgos siblings.7 The
Burgos siblings executed a simulated deed of sale in favor of Leonarda knowing fully well that their
title was a nullity.
In their common "Answer," respondents maintained that they bought the property in good faith after
they were shown a genuine copy of the title of the disputed property by Delos Reyes. They also
insisted that they were innocent purchasers in good faith and for value.8
On February 10, 1995, the trial court rendered a decision declaring that Leonarda and the Burgos
siblings were not innocent purchasers for value and did not have a better right to the property in
question than the true and legal owners, the Rufloes. The trial court also held that the subsequent
conveyance of the disputed property to Leonarda by the Burgos siblings was simulated to make it
appear that Leonarda was a buyer in good faith. The trial court then directed the Register of Deeds
of Makati, Rizal to reinstate the title of the spouses Rufloe, and to cancel all other titles subsequent
to the said title particularly TCT No. S-74933 issued to Delos Reyes and TCT No. 135860 issued to
the Burgos siblings.9
Respondents interposed an appeal to the CA, whereat the appellate recourse was docketed as CA-
G.R. CV. No. 49939.
As stated at the threshold hereof, the CA, in its decision dated January 17, 2000, reversed and set
aside that of the trial court, declaring in the process that respondents were purchasers in good faith
and for value. In so ruling, the CA explained:
Measured by this yardstick, defendants-appellants [herein respondents] are purchasers in good faith
and for value. Amado Burgos bought the subject property (for his children Anita, Angelina, Angelito
and Amy) free from any lien or encumbrance or any notice of adverse claim annotated thereto. He
was presented with a clean title already in the name of the seller. If a person purchases a piece of
land on the assurance that the seller’s title thereto is valid, he should not run the risk of being told
later that his acquisition was ineffectual after all. If we were to void a sale of property covered by a
clean and unencumbered torrens title, public confidence in the Torrens System would be eroded and
transactions would have to be attended by complicated and inconclusive investigations and
uncertain proof of ownership. The consequences would be that land conflicts could proliferate and
become more abrasive, if not violent. (Words in bracket ours).10
Their motion for reconsideration having been denied by the CA in its equally challenged resolution of
June 9, 2000, petitioners are now with us via the present recourse, faulting the CA as follows:
A. THE HONORABLE COURT OF APPEALS DECIDED THIS CASE IN A WAY NOT IN ACCORD
WITH THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT.
B. THERE ARE SPECIAL AND IMPORTANT REASONS THAT REQUIRE A REVIEW OF THE CA
DECISION.
C. THE HONORABLE CA ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK

OF JURISDICTION WHEN IT COUNTERMANDED THE FINDINGS OF THE REGIONAL TRIAL
COURT EVEN ON POINTS AND QUESTIONS OF CREDIBILITY.
D. THE CA JUDGMENT THAT REVERSED THE RTC DECISION IS NOT SUPPORTED BY THE
EVIDENCE ON RECORD AND IS CONTRARY TO ESTABLISHED PRECEDENTS LAID DOWN BY
THE HONORABLE SUPREME COURT.
E. THE CA ERRED IN LAW IN PRACTICALLY HOLDING THAT A DEAD MAN ANGEL RUFLOE
(ANGEL NEVER SIGNED) VALIDLY DISPOSED OF HIS PROPERTY (A HOUSE AND LOT
COVERED BY A TCT THROUGH A FALSIFIED DEED OF SALE) AFTER HIS DEATH FOUR (4)
YEARS BEFORE THE EXECUTION OF THE DEED.
F. THE CA ERRED IN LAW IN HOLDING ANITA, ANGELINA, AMY AND ANGELITO BURGOS
AND THEIR SUCCESOR-IN-INTEREST (THEIR AUNT) LEONARDA BURGOS ARE BUYERS IN
GOOD FAITH.
G. THE CA IGNORED THE PLAIN PROVISIONS OF THE CIVIL CODE THAT "IN ALL
CONTRACTUAL, PROPERTY OR OTHER RELATIONS, WHEN ONE OF THE PARTIES IS AT A
DISADVANTAGE ON ACCOUNT OF HIS MORAL DEPENDENCE, IGNORANCE, INDIGENCE,
MENTAL WEAKNESS, TENDER AGE OR OTHER HANDICAP, THE COURT MUST BE VIGILANT
FOR HIS PROTECTION."11
In a gist, the issues to be resolved are (1) whether the sale of the subject property by Delos Reyes to
the Burgos siblings and the subsequent sale by the siblings to Leonarda were valid and binding; and
(2) whether respondents were innocent purchasers in good faith and for value despite the forged
deed of sale of their transferor Delos Reyes.
The issues necessitate an inquiry into the facts. While, as a rule, factual issues are not within the
province of this Court, nonetheless, in light of the conflicting factual findings of the two (2) courts
below, an examination of the facts obtaining in this case is in order.
The Rufloes aver that inasmuch as the Deed of Sale purportedly executed by them in favor of Delos
Reyes was a forgery, she could not pass any valid right or title to the Burgos siblings and Leonarda.
The Rufloes also contend that since the Burgos siblings and Leonarda acquired the subject property
with notice that another person has a right to or interest in such property, they cannot be considered
innocent purchasers in good faith and for value.
For their part, the Burgos siblings and Leonarda insist that their title is valid and binding. They
maintain that under the Torrens System, a person dealing with registered land may safely rely on the
correctness on the certificate of title without the need of further inquiry. For this reason, the Court
cannot disregard the right of an innocent third person who relies on the correctness of the certificate
of title even if the sale is void.
We find merit in the petition.
The issue concerning the validity of the deed of sale between the Rufloes and Delos Reyes had
already been resolved with finality in Civil Case No. M-7690 by the RTC of Pasay City which
declared that the signatures of the alleged vendors, Angel and Adoracion Rufloe, had been
forged.12 It is undisputed that the forged deed of sale was null and void and conveyed no title. It is a
well-settled principle that no one can give what one does not have, nemo dat quod non habet. One
can sell only what one owns or is authorized to sell, and the buyer can acquire no more right than
what the seller can transfer legally.13 Due to the forged deed of sale, Delos Reyes acquired no right
over the subject property which she could convey to the Burgos siblings. All the transactions
subsequent to the falsified sale between the spouses Rufloe and Delos Reyes are likewise void,
including the sale made by the Burgos siblings to their aunt, Leonarda.
We now determine whether respondents Burgos siblings and Leonarda Burgos were purchasers in
good faith. It has been consistently ruled that a forged deed can legally be the root of a valid title
when an innocent purchaser for value intervenes.14
An innocent purchaser for value is one who buys the property of another without notice that some
other person has a right to or interest in it, and who pays a full and fair price at the time of the
purchase or before receiving any notice of another person’s claim.15 The burden of proving the status
of a purchaser in good faith and for value lies upon one who asserts that status. This onus
probandi cannot be discharged by mere invocation of the ordinary presumption of good faith.16
As a general rule, every person dealing with registered land, as in this case, may safely rely on the
correctness of the certificate of title issued therefor and will in no way oblige him to go beyond the
certificate to determine the condition of the property. However, this rule admits of an unchallenged
exception:
… a person dealing with registered land has a right to rely on the Torrens certificate of title and to
dispense with the need of inquiring further except when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title of the property in litigation. The
presence of anything which excites or arouses suspicion should then prompt the vendee to look
beyond the certificate and investigate the title of the vendor appearing on the face of said certificate.
One who falls within the exception can neither be denominated an innocent purchaser for value nor
a purchaser in good faith and, hence, does not merit the protection of the law.17
The circumstances surrounding this case point to the absolute lack of good faith on the part of
respondents. The evidence shows that the Rufloes caused a notice of adverse claim to be annotated
on the title of Delos Reyes as early as November 5, 1979.18 The annotation of an adverse claim is a
measure designed to protect the interest of a person over a piece of real property, and serves as a
notice and warning to third parties dealing with said property that someone is claiming an interest on
the same or may have a better right than the registered owner thereof. Despite the notice of adverse
claim, the Burgos siblings still purchased the property in question.
Too, at the time the Burgos siblings bought the subject property on December 4, 1984, Civil Case
No. M-7690,19 an action for damages, and Criminal Case No. 10914-P,20 for estafa, filed by the
Rufloes against Delos Reyes, were both pending before the RTC of Pasay City. This circumstance
should have alerted the Burgos siblings as to the validity of Delos Reyes’ title and her authority and
legal right to sell the property.
Equally significant is the fact that Delos Reyes was not in possession of the subject property when
she sold the same to the Burgos siblings. It was Amado Burgos who bought the property for his
children, the Burgos siblings. Amado was not personally acquainted with Delos Reyes prior to the
sale because he bought the property through a real estate broker, a certain Jose Anias, and not from
Delos Reyes herself. There was no showing that Amado or any of the Burgos siblings exerted any
effort to personally verify with the Register of Deeds if Delos Reyes’ certificate of title was clean and
authentic. They merely relied on the title as shown to them by the real estate broker. An ordinarily
prudent man would have inquired into the authenticity of the certificate of title, the property’s location
and its owners. Although it is a recognized principle that a person dealing with registered land need
not go beyond its certificate of title, it is also a firmly established rule that where circumstances exist
which would put a purchaser on guard and prompt him to investigate further, such as the presence
of occupants/tenants on the property offered for sale, it is expected that the purchaser would inquire
first into the nature of possession of the occupants, i.e., whether or not the occupants possess the
land in the concept of an owner. Settled is the rule that a buyer of real property that is in the
possession of a person other than the seller must be wary and should investigate the rights of those
in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as a buyer in good
faith.21
In the same vein, Leonarda cannot be categorized as a purchaser in good faith. Since it was the
Rufloes who continued to have actual possession of the property, Leonarda should have
investigated the nature of their possession.
We cannot ascribe good faith to those who have not shown any diligence in protecting their rights.
Respondents had knowledge of facts that should have led them to inquire and investigate in order to
acquaint themselves with possible defects in the title of the seller of the property. However, they
1avvphi1 .zw+
failed to do so. Thus, Leonarda, as well as the Burgos siblings, cannot take cover under the
protection the law accords to purchasers in good faith and for value. They cannot claim valid title to
the property.
Moreover, the defense of indefeasibility of a Torrens title does not extend to a transferee who takes
it with notice of a flaw in the title of his transferor. To be effective, the inscription in the registry must
have been made in good faith. A holder in bad faith of a certificate of title is not entitled to the
protection of the law, for the law cannot be used as a shield for fraud.22
We quote with approval the following findings of the trial court showing that the sale between the
Burgos siblings and Leonarda is simulated:
1. The sale was not registered, a circumstance which is inconceivable in a legitimate

transfer. A true vendee would not brook any delay in registering the sale in his favor. Not
only because registration is the operative act that effects property covered by the Torrens
System, but also because registration and issuance of new title to the transferee, enable this
transferee to assume domiciliary and possessory rights over the property. These benefits of
ownership shall be denied him if the titles of the property shall remain in the name of vendor.
Therefore, it is inconceivable as contrary to behavioral pattern of a true buyer and the
empirical knowledge of man to assume that a buyer who invested on the property he bought
would be uninvolved and not endeavor to register the property he bought. The nonchalance
of Leonarda amply demonstrates the pretended sale to her, and the evident scheme of her
brother Amado who invested on the property he bought.
2. Despite the sale of property to Leonarda, the sellers continued paying taxes on the
property from the time they acquired it from Elvira in 1984 up to the present or a period of ten
years. The tax payment receipts remained in the name of Anita and her siblings, (Exhibits
"16" to "16-H"). On the other hand, Leonarda does not even pretend to have paid any tax on
the land she allegedly bought in 1985. Even the Tax Declaration issued in 1988, three years
after the sale to her (Leonarda) is still in the name of her nieces and nephew. These
circumstances can only account for the fact that her nieces and nephew remained the
owners of the land and continued paying taxes thereon.
3. Leonarda never exercised the attributes of ownership. Far from it, she vested the exercise
of domiciliary and possessory rights in her brother Amado the father of Anita, Angelina,
Angelito and Amy, by constituting him with full power including the ejectment of plaintiffs, to
defend and to enter a compromise of any case he may file. She allowed the children of
Amado to remain as the registered owners of the property without pressing for its transfer to
her.
4. And, this simulated sale is the handiwork of Amado who apparently acted advisedly to
make it appear that his sister Leonarda as the second transferee of the property is an
innocent purchaser for value. Since he or his children could not plausibly assume the stance
of a buyer in good faith from the forger Elvira Delos Reyes, knowing of Elvira’s defective title,
Amado hoped that the entry of his sister Leonarda, might conjure the image and who might
pass off as an innocent purchaser, specially considering that the notice of adverse claim of
the Plaintiffs which was annotated in Elvira’s title was not, strangely enough, NOT carried
over in the title of his children, who were made to appear as the sellers to their Aunt
Leonarda. It was a neat chicanery of Amado to bring the property out of the reach of
Plaintiffs thru a series of transfers involving a third party, to make her appear as an innocent
purchaser for value. His sister could be manipulated to evict or oust the real owners from
their own property thru a documentary manipulation. Unfortunately, his scheme has not
passed unnoticed by a discerning and impartial evaluator, like this court. The Municipal Court
of Muntinlupa in Civil Case No. 17446 has even established that Amado’s children Anita and
others are buyers in bad faith who knew of the defective title of their transferor Elvira Delos
Reyes, the forger, as aforestated.
These circumstances taken altogether would show that the sale, which occurred between Leonarda
and the Burgos siblings, was simply a scheme designed to cleanse the title passed on to them by
the forger Delos Reyes. Respondents had to resort to this strategy because they were fully aware
that their title, having originated from the forged deed of sale of Delos Reyes, was not a clean and
valid title. The trial court explained, thus:
And, this simulated sale is the handiwork of Amado who apparently acted advisedly to make it
appear that his sister Leonarda as the second transferee of the property is an innocent purchaser for
value. Since he or his children could not plausibly assume the stamp of a buyer in good faith from
the forger Elvira Delos Reyes, knowing Elvira’s defective title, Amado had hoped that the entry of his
sister Leonarda, might conjure the image and might pass off as an innocent purchaser. xxx. It was a
neat chicanery of Amado to bring the property out of the reach of plaintiffs [herein petitioners] thru a
series of transfers involving a third party, to make her appear as an innocent purchaser for value.
Unfortunately, his scheme has not passed unnoticed by a discerning and impartial evaluator, like this
Court.23 (Words in bracket ours)
Patently, the Burgos siblings were not innocent purchasers for value and the simulated sale to
Leonarda did not remove the defect in their title.
Accordingly, we sustain the trial court’s award of ₱20,000.00 as moral damages, ₱50,000.00 as
exemplary damages, and P50,000.00 as attorney’s fees.24
However, the actual damages in the amount of ₱134,200.00 should be deleted. In view of this
Court’s ruling that the property rightfully belongs to petitioners and must be restored to them, there is
no more basis for the award of said actual damages to the Rufloes.
WHEREFORE, the petition for review is hereby GRANTED. The assailed decision and resolution of
the Court of Appeals in CA-G.R. CV. No. 49939 are REVERSED and SET ASIDE. Accordingly, the
decision of the trial court is hereby REVIVED, except the award of actual damages which must be
deleted.
SO ORDERED.
G.R. No. L-17951 February 28, 1963
CONRADO C. FULE and LOURDES F. ARAGON, petitioners,

vs.
EMILIA E. DE LEGARE and COURT OF APPEALS, respondents.
Teehankee, Tanada & Carreon for petitioners.

Ignacio M. Orendain for respondents.
REGALA, J.:
This is a petition for certiorari to review the decision of the Court of Appeals, promulgated on
November 16, 1960, in Civil Case No. 15728-R, entitled" Emilia E. Legare, plaintiff-appellant, versus
Conrado C. Fule and Lourdes F. Aragon, defendants-appellants..
The facts of this case as found by the Court of Appeals in its decision are as follows:
This is an action for annulment of certain deeds of sale and conveyance covering a parcel of
land, together with the improvements existing thereon, situated in the municipality of San
Juan, province of Rizal, and for damages.
It appears in evidence that the plaintiff, Emilia E. de Legare, was the owner of a parcel of
land, together with a residential house erected thereon, situated at No. 146 Sta. Mesa
Boulevard Extension, San Juan, Rizal, her ownership being evidenced by Transfer
Certificate of Title No. 21253, issued by the Office of the Register of Deeds of the province of
Rizal. She was living in that house together with defendant John W. Legare, her adopted
son, and a maid named Purita Tarrosa. On September 26, 1951, the plaintiff, thru a public
deed, constituted on the above mentioned house and lot a first class mortgage in favor of
defendant Tomas Q. Soriano to guarantee the payment of a loan in the amount of
P8,000.00. This deed of mortgage was on the same date recorded in the Office of the
Register of Deeds of the province of Rizal and annotated in the memorandum of
encumbrances of transfer certificate of title No. 21253. On account of certain partial
payments made by the plaintiff and the contracting by the latter of additional loans in small
amounts from Tomas Q. Soriano the debt guaranteed by the above mentioned mortgage
was reduced to the sum of P7,000.00 as of February 23, 1953. These transactions, however,
were not annotated on the memorandum of encumbrances of the above mentioned
certificate of title.
At about 9:00 o'clock in the evening of March 29, 1953, while the plaintiff, John W. Legare,
and Purita Tarrosa were seated in the drawing room of the house above referred to, an
unknown man intruded into the room, approached the plaintiff, covered her mouth, and,
pressing a knife on her side, demanded that she give him P10,000.00 if she did not like to be
killed. The plaintiff replied that she did not have that amount. Thereupon, the intruder told the
plaintiff to raise the necessary amount as he would come back the following morning and
once more threatened to kill her if she would fail to do so. After having made that threat, the
intruder left the house. John W. Legare did not call for help nor made any attempt to defend
his mother, and when Purita Tarrosa stood up to go down the house to call for a policeman,
he held the latter by the hand and slapped her on the face when she persisted in going
down, telling her that the man had companions waiting downstairs.
After the intruder was gone John W. Legare approached the plaintiff, and exhibiting to her a
paper told her to sign it as with the same he could secure from the U.S. Veterans
Administration the amount which they needed to deliver to that intruder. The plaintiff, who did
not know how to read nor write, although she could sign her name, asked John W. Legare
what that paper was. The latter answered that it was an application for payment of
compensation. As plaintiff had confidence in John W. Legare and prior to that occasion she
had received from the U.S. Veterans Administration a letter concerning some compensation
she was to receive, she signed that paper. After the paper was signed by the plaintiff, John
W. Legare had Purita Tarrosa sign it as a witness, without however, allowing the latter to
read it.
After that paper was thus signed, John W. Legare told the plaintiff and Purita Tarrosa to pack
up their things as they were leaving the house to hide in a hotel, adding that the men who
came earlier that evening were Huks. Early the next morning John W. Legare took the
plaintiff and Purita Tarrosa to the Windsor Hotel in the City of Manila, and after conducting
them to a room in the hotel, told them not to leave the room or peep out of the window as
they might be seen by the men who came to their house in the previous evening. This advise
given, John W. Legare left the hotel. The plaintiff and Purita Tarrosa stayed in that hotel for
about a month and a half. John W. Legare occasionally visited them there. In one of said
occasional visits the plaintiff told John that she wanted to go home. The latter told her that it
was not yet safe for her to go home. On May 7, 1953, however, John W. Legare came to the
hotel, gave the plaintiff a five-peso bill, and told her that she could use the amount for
transportation expenses if she wanted to leave the hotel. On the following morning the
plaintiff and Purita Tarrosa left the hotel and went direct to her house at Sta. Mesa Boulevard
Extension. When they arrived at the house, however, they found that it was occupied by
strangers, and that all her furniture and personal belongings had disappeared. Inquiring from
those strangers how they happened to occupy the house, the latter told her that John W.
Legare had sold the house to them and that it was no longer hers. The plaintiff thereupon
sought the help of her attorney. It was then discovered that the paper which John W. Legare
had the plaintiff and Purita Tarrosa sign in the evening of March 29, 1953 was a deed of sale
of the lot and house in question in favor of John W. Legare for the sum of P12,000.00, and
that it was supposed to have been executed on the 7th day of April, 1953, and
acknowledged before a notary public on that date. Exhibit X.
It further appears that sometime prior to May 9, 1953, John W. Legare approached Elias B.
Fermin, the real estate broker who intervened in the securing of the loan contracted by the
plaintiff from Tomas Q. Soriano, and sought said broker's help to sell the lot and house in
question. Elias B. Fermin accepted the commission and offered the property in sale to
defendants spouses Conrado C. Fule and Lourdes F. Aragon. Conrado C. Fule read the title
papers in the hand of John W. Legare and inspected the premises, and satisfied with the
result of his inspection, he agreed to purchase the property for P12,000.00 on condition that
the sum of P7,000, the unpaid balance of plaintiff's indebtedness to Tomas Q. Soriano
secured by a mortgage thereon, would be deducted from the price, and that he would
assume said mortgage. The terms offered by Conrado C. Fule being acceptable to John W.
Legare and Tomas Soriano, the parties proceeded to formalize the contract. Accordingly, on
May 9, 1953, defendant Tomas Q. Soriano executed a deed of absolute sale thereof, free of
all liens and encumbrances, in favor of defendant spouses Conrado C. Fule and Lourdes F.
Aragon, Exhibit X-2, and said spouses in turn executed in favor of Tomas Q. Soriano a deed
of mortgage covering the property for the sum of P7,000.00. Exhibit X-3. These three deeds,
together with transfer certificate of Title No. 21253, issued in the name of the plaintiff, were
on that same date presented for registration in the Office of the Register of Deeds of the
province of Rizal. The latter, following the usual procedure, recorded, first, the deed of sale
executed by the plaintiff in favor of defendant John W. Legare (Exhibit 1) and issued in the
name of the latter transfer certificate of title No. 30126 which cancelled transfer certificate of
title No. 21253 (Exhibit Y), then the deed of sale executed by John W. Legare in favor of the
spouses Conrado C. Fule and Lourdes F. Aragon (Exhibit X-2) and issued in favor of the
latter transfer certificate of title No. 30127 (Exhibit Y-1), which cancelled transfer certificate of
title No. 30126, and then annotated on the memorandum of encumbrances of transfer
certificate of title No. 30127 the deed of mortgage (Exhibit X-1) executed in favor of Tomas
Q. Soriano by said spouses. Once these were accomplished, Elias B. Fermin and John W.
Legare went back to the house of the spouses Conrado C. Fule and Lourdes P. Aragon and
gave the transfer certificate of title No. 30127. Thereupon said spouses delivered to John W.
Legare the balance of the purchase price of the property after deducting therefrom the
amount of the mortgage constituted thereon in favor of Tomas Q. Soriano, the brokerage
fees and the expenses incident to the execution and registration of said deeds and issuance
of new certificates of title, which amounted to a little P4,000.00.
Upon the evidence, the trial court rendered judgment, the dispositive part of which reads as
follows:
IN VIEW OF ALL THE FOREGOING, this Court hereby orders:
1) the cancellation of Certificates of Title Nos. 30127 and 10126, thereby leaving valid TCT
No. 21253 in the name of Emilia E. de Legare together with the encumbrance thereon in
favor of Tomas Q. Soriano;
2) the delivery of the possession of the premises to the plaintiff and the monthly rental of
P150.00 a month from May 9, 1953, up to and including the date on which the delivery is to
be made, this obligation being understood to be joint and several insofar as the defendants
Fule and Aragon are concerned;
3) the award of P5,000.00 as moral damages in favor of the plaintiff and enforceable against
John W. Legare for the fraud perpetrated by the latter on the former;
4) the award of P1,000.00 as attorney's is fees enforceable against the defendants Fule and
Aragon;
And on the cross-claim, the court orders —
1) John W. Legare to refund to the spouses Fule and Aragon the amount paid by the latter
on account of the sale contained in Exhibit X-2 plus interest thereon at the legal rate from the
date of the cross-claim;
2) the award of P5,000.00 as moral damages in favor of the spouses Fule and Aragon and
enforceable against John W. Legare for the misrepresentation made by him;.
3) the reimbursement to the spouses Fule and Aragon by John W. Legare of all amounts
which may be paid by the former to the plaintiff by way of rentals for the premises involved
herein, as well as attorney's fees in the amount of P1,000.00.
SO ORDERED.
The Court of Appeals, in deciding the appeal, entered a judgment the dispositive portion of which
follows:.
WHEREFORE, modified as indicated above, i.e., the transfer certificate of title No. 21253
issued in the name of Emilia E. de Legare is revived with the mortgage in favor of appellee
Tomas Q. Soriano annotated on its memorandum of encumbrances but reduced to the
amount of P7,000.00, and that the award of attorney's fees in the amount of P1,000.00 to be
paid by the spouses Conrado C. Fule and Lourdes F. Aragon, in favor of the plaintiff, is
eliminated therefrom, the judgment appealed from is hereby affirmed in all other respects,
without special pronouncement as to costs in this instance.
IT IS SO ORDERED.
In elevating the judgment of the Court of Appeals to this Tribunal for review, herein petitioners
discussed 6 assignments of error. However, this Court is of the view that, in effect and substance,
only one issue was raised.We have always refrained from reviewing factual findings of the Court of
Appeals and the first two errors assigned were but attempts at disputing the same. The other four
were simply detailed aspects of the one, sole issue, to wit:
Were the herein petitioners purchasers in good faith and for value of the properties here
contested?
Guided by the facts found by the Court of Appeals, We hold the herein petitioners innocent
purchasers for value of the house and lot here disputed. In consequence, they are here adjudged
the lawful owners thereof.
A purchaser in good faith is one who buys property of another, without notice that some other
persons has a right to, or interest in, such property and pays a full and fair price for the same, at the
time of such purchase, or before he has notice of the claim or interest of some other persons in the
property. Good faith consists in an honest intention to abstain from taking any unconscientious
advantage of another (Cui and Joven v. Henson, 51 Phil. 606). We have measured the conduct of
the petitioner spouses by this yardstick.
These facts were uncontroverted. The negotiation and transaction which eventually caused the
certificate of title to be transferred from the herein respondent to the petitioner spouses were
conducted by a real estate broker licensed since 1938. Nothing in John W. Legare's person or
behaviour suggested anything suspicious. He was the adopted son of the herein respondent, and, to
the time that he was contracting with the petitioner spouses, he had not been known to commit crime
or dishonesty. On the contrary, John has had previous dealings with the real estate broker during
which he exhibited the expected degree of trustworthiness.
It should be noted that the deed of sale was regular upon its face, and no one would have
questioned its authenticity since it was duly acknowledged before a notary public. Moreover, even if
the petitioners had the opportunity to compare the signature of the respondent on the deed of
conveyance with a specimen of her genuine signature, the effort, nonetheless, would have been in
vain since the respondent's signature on the document was admittedly hers. Lastly, it should not be
overlooked that the respondent, during the whole period of the negotiation, was nowhere available to
confirm or deny the execution of the deed. She was then in hiding, or, hidden, at the Windsor Hotel
in Manila.
The diligence and precaution observed by the petitioners themselves could hardly have been
wanting. The records show that they did not rely solely and fully upon the deed of sale in favor of
John W. Legare and the fact that John had then in his possession the corresponding certificate of
title of the registered owner. They demanded more. They insisted that the sale in favor of John W.
Legare be first registered and that the transfer in their favor be thereafter likewise registered. It was
only after all these were complied with that they paid the purchase price. In other words, the
petitioner spouses relied not really on the documents exhibited to them by John W. Legare, but, on
the registerability of those documents. This in Our view, satisfies the measure of good faith
contemplated by law.
It is true that at the time the herein petitioners purchased the properties from John W. Legare, he
was not yet the registered owner of the same. This fact alone, however, could not have caused the
herein petitioners to lose their status as innocent purchasers for value. It should be recalled that
although the title was in the name of the respondent Emilia E. de Legare, the certificate of title was in
the possession of her adopted son, John. Under Section 55 of Act 496, as amended, John's
possession of the certificate and his subsequent production of it to the herein petitioners operated as
a "conclusive authority from the registered owner to the register of deeds to enter a new certificate."
SEC. 55. xxx xxx xxx
The production of the owner's duplicate certificate whenever any voluntary instrument is
presented for registration shall be conclusive authority from the registered owner to the
register of deeds to enter a new certificate or to make a memorandum or registration in
accordance with such instrument, and the new certificate or memorandum shall be binding
upon the registered owner and upon all persons claiming under him, in favor of every
purchaser for value and in good faith. ....
While it was true that the transfer in favor of John was still unregistered when he sought to sell the
property to the herein petitioners, it was not true that the latter observed no precaution whatsoever
from the complication of such non-registration. As already discussed above, the petitioners required
that the registration of the previous sale (from the respondent to John W. Legare) be first attended to
and completed. After that was done and the certificate of title thereof was issued to John by the
Register of Deeds, they still withheld payment till the second sale (from John to the petitioners) has
in turn registered and the corresponding certificate of title therefor was issued in their names. It was
only after all these were followed that the entire negotiation was terminated with the payment of the
balance of the purchase price. All these, We hold, were adequate safeguards against the objection
interposed. A contrary conclusion would operate to weaken the reliance of the general public on the
indefeasibility of titles registered under the Torrens System.
We have so far demonstrated the good faith of the petitioner spouses. By the very facts established
by the Court of Appeals, however, there is still another reason why the property herein in question
should be adjudged to the petitioners.
Although the deed of sale in favor of John W. Legare was fraudulent, the fact remains that he was
able to secure a registered title to the house and lot. It was this title which he subsequently conveyed
to the herein petitioners. We have indeed ruled that a forged or fraudulent deed is a nullity and
conveys no title (Director of Lands v. Addison, 49 Phil. 19). However, We have also laid down the
doctrine that there are instances when such a fraudulent document may become the root of valid
title. One such instance is where the certificate of title was already transferred from the name of the
true owner to the forger, and while it remained that way, the land was subsequently sold to an
innocent purchaser. For then, the vendee had the right to rely upon what appeared in the certificate
(Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960).
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove
their case not covered by this stipulation of facts. 1äwphï1.ñët
We have been constrained to adopt the conclusion here set forth because under the Torrens
system, "registration is the operative act that gives validity to the transfer or creates a lien upon the
land (Secs. 50 and 51, Land Registration Act). Consequently, where there was nothing in the
certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance
thereon, the purchaser is not required to explore farther than what the Torrens title upon its face
indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right
thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which the
Torrens system seeks to insure would entirely be futile and nugatory. (Reynes vs. Barrera, 68 Phil.
656; De Lara and De Guzman vs. Ayroso, 50 O.G. No. 10, 4838). The public shall then be denied of
its foremost motivation for respecting and observing the Land Registration Act. In the end, the
business community stands to be inconvenienced and prejudiced immeasurably.
Furthermore, when the Register of Deeds issued a certificate of title in the name of John W. Legare,
and thereafter registered the same, John W. Legare, insofar as third parties were concerned,
acquired a valid title to the house and lot here disputed. When, therefore, he transferred this title to
the herein petitioners, third persons, the entire transaction fell within the purview of Article 1434 of
the Civil Code. The registration in John W. Legare's name effectively operated to convey the
properties to him.
ART. 1434. When a person who is not the owner of a thing sells or alienates and delivers it,
and later the seller or grantor acquires title thereto, such title passes by operation of law to
the buyer or grantee.
This Court sympathizes with the respondent. It is aware of the treacherous, painful fraud committed
on her by her adopted son. But positive provisions of law and settled jurisprudence cannot be
subordinated to that feeling.
Besides, the records of this case reveal that the herein respondent is herself not entirely free from
blame. We note that when John presented to her the document which turned out to be a bed of
conveyance in his favor, she readily affixed her signature thereto upon the simple representation of
John that it was a document pertaining to her claim with the U.S. Veterans Administration. She could
have asked her maid to read the contents of the same for her and yet she did not. These, We
believe, amount to a lack of prudence and precaution on the part of Mrs. Emilia de Legare.
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby reversed and set
aside. A new one is here entered dismissing the respondent's complaint and declaring the
petitioners herein the lawful owners of the properties here involved. Without pronouncement as to
costs.
G.R. No. 172172 February 24, 2009
SPS. ERNESTO V. YU and ELSIE ONG YU, Petitioners,

vs.
BALTAZAR N. PACLEB, (Substituted by ANTONIETA S PACLEB, LORNA PACLEB-
GUERRERO, FLORENCIO C. PACLEB, and MYRLA C. PACLEB), Respondents.
DECISION
PUNO, C.J.:
Before the Court is a Petition filed under Rule 45 of the Rules of Court assailing: (i) the
Decision1 dated August 31, 2005 of the Court of Appeals in CA-G.R. CV No. 78629 setting aside the
Decision2 dated December 27, 2002 of the Regional Trial Court in Civil Case No. 1325-96; and (ii)
the Resolution3 dated April 3, 2006 of the Court of Appeals denying reconsideration of the said
decision.
The facts are well established.
Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the registered owners of an
18,000-square meter parcel of land in Barrio Langcaan, Dasmariñas, Cavite, covered by Transfer
Certificate of Title (TCT) No. T-1183754 (Langcaan Property).
In 1992, the Langcaan Property became the subject of three (3) documents purporting to transfer its
ownership. On February 27, 1992, a Deed of Absolute Sale5 was entered into between Spouses
Baltazar N. Pacleb and Angelita Chan and Rebecca Del Rosario. On May 7, 1992, a Deed of
Absolute Sale6 was entered into between Rebecca Del Rosario and Ruperto L. Javier (Javier). On
November 10, 1992, a Contract to Sell7 was entered into between Javier and petitioner spouses
Ernesto V. Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu agreed to pay Javier a total
consideration of ₱900,000. Six hundred thousand pesos (₱600,000) (consisting of ₱200,000 as
previous payment and ₱400,000 to be paid upon execution of the contract) was acknowledged as
received by Javier and ₱300,000 remained as balance. Javier undertook to deliver possession of the
Langcaan Property and to sign a deed of absolute sale within thirty (30) days from execution of the
contract.
All the aforementioned sales were not registered.
On April 23, 1993, petitioner spouses Yu filed with the Regional Trial Court of Imus, Cavite, a
Complaint8 for specific performance and damages against Javier, docketed as Civil Case No. 741-
93, to compel the latter to deliver to them ownership and possession, as well as title to the Langcaan
Property. In their Complaint, they alleged that Javier represented to them that the Langcaan
Property was not tenanted. However, after they already paid ₱200,000 as initial payment and
entered into an Agreement dated September 11, 1992 for the sale of the Langcaan Property, they
discovered it was tenanted by Ramon C. Pacleb (Ramon).9 Petitioner spouses demanded the
cancellation of their agreement and the return of their initial payment. Thereafter, petitioner spouses
and Javier verified from Ramon if he was willing to vacate the property and the latter was agreeable.
Javier then promised to make arrangements with Ramon to vacate the property and to pay the latter
his disturbance compensation. Hence, they proceeded to enter into a Contract to Sell canceling the
Agreement mentioned. However, Javier failed to comply with his obligations.
Javier did not appear in the proceedings and was declared in default. On September 8, 1994, the
trial court rendered a Decision,10 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant based on the
sale of subject parcel of land to the former who is entitled thereby to the ownership and possession
thereof from the said defendant who is further directed to pay damages of Thirty Thousand Pesos
(₱30,000.00) including attorney’s fees and expenses incurred by the plaintiff in this case as a
consequence.
The defendant is further directed to deliver the certificate of title of the land to the plaintiff who is
entitled to it as transferee and new owner thereof upon payment by the plaintiff of his balance of the
purchase price in the sum of Three Hundred Thousand Pesos (₱300,000.00) with legal interest from
date.
SO ORDERED.
The said Decision and its Certificate of Finality11 were annotated on TCT No. T-118375 as Entry No.
2676-7512 and Entry No. 2677-75,13 respectively.
On March 10, 1995, petitioner spouses and Ramon and the latter’s wife, Corazon Bodino, executed
a "Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa
Karapatan."14 Under the said agreement, petitioner spouses paid Ramon the amount of ₱500,000 in
exchange for the waiver of his tenancy rights over the Langcaan Property.
On October 12, 1995, respondent filed a Complaint15 for annulment of deed of sale and other
documents arising from it, docketed as Civil Case No. 1199-95. He alleged that the deed of sale
purportedly executed between him and his late first wife and Rebecca Del Rosario was spurious as
their signatures thereon were forgeries. Respondent moved to have summons served upon Rebecca
Del Rosario by publication since the latter’s address could not be found. The trial court, however,
denied his motion.16 Respondent then moved to dismiss the case, and the trial court granted the
motion in its Order17 dated April 11, 1996, dismissing the case without prejudice.
Meanwhile, on November 23, 1995, petitioner spouses filed an action for forcible entry against
respondent with the Municipal Trial Court (MTC). They alleged that they had prior physical
possession of the Langcaan Property through their trustee, Ramon, until the latter was ousted by
respondent in September 1995. The MTC ruled in favor of petitioner spouses, which decision was
affirmed by the Regional Trial Court.18 However, the Court of Appeals set aside the decisions of the
lower courts and found that it was respondent who had prior physical possession of the property as
shown by his payment of real estate taxes thereon.19
On May 29, 1996, respondent filed the instant case for removal of cloud from title with damages to
cancel Entry No. 2676-75 and Entry No. 2677-75, the annotated Decision in Civil Case No. 741-93
and its Certificate of Finality, from the title of the Langcaan Property.20 Respondent alleged that the
deed of sale between him and his late first wife and Rebecca Del Rosario, who is not known to them,
could not have been possibly executed on February 27, 1992, the date appearing thereon. He
alleged that on said date, he was residing in the United States21 and his late first wife, Angelita Chan,
died twenty (20) years ago.221avvphi1
On May 28, 1997, during the pendency of the instant case before the trial court, respondent died
without having testified on the merits of his case. Hence, he was substituted by his surviving spouse,
Antonieta S. Pacleb, and Lorna Pacleb-Guerrero, Florencio C. Pacleb and Myrla C. Pacleb
representing the children with the first wife.23
On December 27, 2002, the trial court dismissed respondent’s case and held that petitioner spouses
are purchasers in good faith.24 The trial court ratiocinated that the dismissal of respondent’s
complaint for annulment of the successive sales at his instance "sealed the regularity of the
purchase"25 by petitioner spouses and that he "in effect admits that the said sale…was valid and in
order."26 Further, the trial court held that the Decision in Civil Case No. 741-93 on petitioner spouses’
action for specific performance against Javier is already final and can no longer be altered.
Accordingly, the trial court ordered the cancellation of TCT No. T-118375 in the name of respondent
and the issuance of a new title in the name of petitioner spouses. The trial court also ordered the
heirs of respondent and all persons claiming under them to surrender possession of the Langcaan
Property to petitioner spouses.
On appeal by respondent, the Court of Appeals reversed and set aside the decision of the trial
court.27 The Court of Appeals ruled that petitioner spouses are not purchasers in good faith and that
the Decision in Civil Case No. 741-93 did not transfer ownership of the Langcaan Property to them.
Accordingly, the appellate court ordered the cancellation of the annotation of the Decision in Civil
Case No. 741-93 on the title of the Langcaan Property. The Court of Appeals denied reconsideration
of said decision.28
Hence, this Petition.
Two issues are involved in the instant petition. The first is whether petitioner spouses are innocent
purchasers for value and in good faith. The second is whether ownership over the Langcaan
Property was properly vested in petitioner spouses by virtue of the Decision in Civil Case No. 741-
93.
Petitioner spouses argue that they are purchasers in good faith. Further, they contend that the Court
of Appeals erred in finding that: "Ramon told him [Ernesto V. Yu] that the property is owned by his
father, Baltazar, and that he is the mere caretaker thereof"29 since Ramon clarified that his father was
the former owner of the Langcaan Property. In support of their stance, they cite the following
testimony of petitioner Ernesto V. Yu:
Atty. Abalos: Mr. Witness, you testified during the direct that you acquired the subject property from
one Ruperto Javier, when for the first time have you come to know Mr. Ruperto Javier?
A: I first came to know him in the year 1992 when he was accompanied by Mr. Kalagayan.
He showed me some papers to the office.
Q: Do you know the exact date Mr. Witness?
A: I forgot the exact date, ma’am.
Q: More or less can you estimate what month?
A: Sometime in February or March 1992.
Q: When you said that the subject property was offered to you for sale, what did you do Mr.
Witness, in preparation for a transaction?
A: I asked my lawyer Atty. Florencio Paredes to check and verify the Deed of Sale.
Q: And after Atty. Florencio Paredes verified the document you decided to buy the property?
A: No, ma’am. We visited the place.
Q: When was that?
A: I could not remember the exact date but I visited the place and I met the son, Ramon
Pacleb. I went there in order to verify if the property is existing. When I verified that the
property is existing Mr. Javier visited me again to follow-up what decision I have but I told
him that I will wait for my lawyer’s advi[c]e.
Q: Mr. Witness, what particular instruction did you give to your lawyer?
A: To verify the title and the documents.
Court: Documents for the title?
A: Yes, Your Honor.
Atty. Abalos: When you were able to get the title in whose name the title was registered?
A: It was registered in the name of the older Pacleb.
Court: By the way Mr. Witness, when you said you met Ramon Pacleb the son of the owner
of the property, was he residing there or he was (sic) just went there? When you visited the
property did you find him to be residing in that property?
A: No, Your Honor.
Atty. Abalos: You mean to say Mr. Witness, you just met Mr. Ramon Pacleb in the place at
the time you went there?
A: No, ma’am. He went to my office with Mr. Kalagayan. He was introduced to me at the
Kelly Hardware. I do not know Mr. Ruperto Javier. He told me that there is a property that [is]
tenanted and occupied by the son Ramon Pacleb after that I went with them to visit the
place. On (sic) there he introduced me [to] Mr. Ramon Pacleb the caretaker of the property
and I told them that I will still look at the property and he gave me some documents and that
(sic) documents I gave it to my lawyer for verification.
Q: You said that Mr. Ruperto Javier went to your office with Mr. Kalagayan, so the first time
you visited the property you did not see Mr. Ramon Pacleb there?
A: No, ma’am. When I went there I met Ramon Pacleb the caretaker and he was the one
who showed the place to us.
Q: Mr. Witness, since you visited the place you were able to see the allege[d] caretaker Mr.
Ramon Pacleb, did you ask him regarding the property or the whereabouts of the registered
owner, did you ask him?
A: When Ruperto introduced me to Mr. Ramon Pacleb he told me that he is the son of the
owner and he is the caretaker and his father is in the States. He showed me the place, I
verified and I saw the monuments and I told him I will come back to check the papers and if it
is okay I will bring with me the surveyor.
Q: Could you estimate Mr. Witness, more or less what was the month when you were able to
talk to Mr. Ramon Pacleb?
A: I am not sure but it was morning of February.
Q: So it was in February, Mr. Witness?
A: I am not sure if February or March.
Q: But definitely…
A: Before I purchased the property I checked the property.
Q: But that was definitely after Mr. Ruperto offered to you for sale the subject property?
xxx
Atty. Abalos: Okay, Mr. Witness, you said that you talked to Mr. Ramon Pacleb and he told
you that his father is the owner of the property?
A: He told me that property is their former property and it was owned by them. Now, he is the
tenant of the property.30 (Emphasis ours)
Petitioner spouses conclude that based on their personal inspection of the property and the
representations of the registered tenant thereon, they had no reason to doubt the validity of the
deeds of absolute sale since these were duly notarized. Consequently, the alleged forgery of
Angelita Chan’s signature is of no moment since they had no notice of any claim or interest of some
other person in the property despite their diligent inquiry.
We find petitioner spouses’ contentions without merit.
At the outset, we note that in petitioner Ernesto V. Yu’s testimony, he stated that he inspected the
Langcaan Property and talked with the tenant, Ramon, before he purchased the same. However, in
his Complaint for specific performance and damages which he filed against Javier, he alleged that it
was only after he had entered into an Agreement for the sale of the property and his initial payment
of ₱200,000 that he discovered that the property was indeed being tenanted by Ramon who lives in
the said farm, viz.:
8. Sometime on September 11, 1992, defendant came again to the Office of plaintiff reiterating his
offer to sell said Lot No. 6853-D, containing an area of 18,000 square meters, at ₱75.00 per square
meters (sic). Defendant manifested to the plaintiff that if his offer is acceptable to the plaintiff, he
binds and obligates himself to pay the capital gains of previous transactions with the BIR and
register subject Lot No. 6853-D in his name (defendant). On these conditions, plaintiff accepted the
offer and made [the] initial payment of Two Hundred Thousand Pesos (₱200,000.00) to defendant
by issuance and delivery of plaintiff’s personal check.
9. Sometime on September 11, 1992, plaintiff and defendant signed an AGREEMENT on the sale of
Lot No. 6853-D of the subdivision plan (LRC) Psd-282604, containing an area of 18,000 square
meters, more or less, located at Bo. Langcaan, Municipality of Dasmarinas, Province of Cavite, at a
selling price of ₱75.00 per square meter. A xerox copy of this AGREEMENT signed by the parties
thereto is hereto attached and marked as ANNEX "D" of this complaint.
10. Thereafter, however, plaintiff and defendant, with their surveyor discovered that subject Lot No.
6853-D offered for sale to the plaintiff is indeed being tenanted by one RAMON PACLEB who lives
in the said farm.
11. In view of the foregoing developments, plaintiff informed defendant that he wanted the
Agreement be cancelled and for the defendant to return the sum of TWO HUNDRED THOUSAND
PESOS (₱200,000.00).31 (Emphasis supplied)
This inconsistency casts grave doubt as to whether petitioner spouses personally inspected the
property before purchasing it.
More importantly, however, several facts should have put petitioner spouses on inquiry as to the
alleged rights of their vendor, Javier, over the Langcaan Property.
First, it should be noted that the property remains to be registered in the name of respondent despite
the two (2) Deeds of Absolute Sale32 purporting to transfer the Langcaan Property from respondent
and his late first wife, Angelita Chan, to Rebecca Del Rosario then from the latter to Javier. Both
deeds were not even annotated in the title of the Langcaan Property.
Second, a perusal of the two deeds of absolute sale reveals that they were executed only about two
(2) months apart and that they contain identical provisions.
Third, it is undisputed that the Langcaan Property is in the possession of Ramon, the son of the
registered owner. Regardless of the representations given by the latter, this bare fact alone should
have made petitioner spouses suspicious as to the veracity of the alleged title of their vendor.
Moreover, as noted by the Court of Appeals, petitioner spouses could have easily verified the true
status of the Langcaan Property from Ramon’s wife, since the latter is their relative, as averred in
paragraph 13 of their Answer in Civil Case No. 1199-95.33 The case law is well settled, viz.:
The law protects to a greater degree a purchaser who buys from the registered owner himself.
Corollarily, it requires a higher degree of prudence from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered. While one who buys from
the registered owner does not need to look behind the certificate of title, one who buys from one who
is not the registered owner is expected to examine not only the certificate of title but all factual
circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in
his capacity to transfer the land.
This Court has consistently applied the stricter rule when it comes to deciding the issue of good faith
of one who buys from one who is not the registered owner, but who exhibits a certificate of
title.34 (Emphasis supplied)
Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil Case No. 1199-95 (the
action to annul the successive sales of the property) cannot serve to validate the sale to petitioner
spouses since the dismissal was ordered because Rebecca Del Rosario and Javier could no longer
be found. Indeed, the dismissal was without prejudice.
Based on the foregoing, therefore, petitioner spouses cannot be considered as innocent purchasers
in good faith.
We now go to the second issue.

Petitioner spouses argue that the decision of the Regional Trial Court in Civil Case No. 741-93 as to
the rightful owner of the Langcaan Property is conclusive and binding upon respondent even if the
latter was not a party thereto since it involved the question of possession and ownership of real
property, and is thus not merely an action in personam but an action quasi in rem.
In Domagas v. Jensen,35 we distinguished between actions in personam and actions quasi in rem.
The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and
purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights
and obligations brought against the person and is based on the jurisdiction of the person, although it
may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to
control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in
personam is to impose, through the judgment of a court, some responsibility or liability directly upon
the person of the defendant. Of this character are suits to compel a defendant to specifically perform
some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one
which has for its object a judgment against the person, as distinguished from a judgment against the
propriety (sic) to determine its state. It has been held that an action in personam is a proceeding to
enforce personal rights or obligations; such action is brought against the person.
xxx
On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the
property of such persons to the discharge of the claims assailed. In an action quasi in rem, an
individual is named as defendant and the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to operate on these questions
only as between the particular parties to the proceedings and not to ascertain or cut off the rights or
interests of all possible claimants. The judgments therein are binding only upon the parties who
joined in the action.
Civil Case No. 741-93 is an action for specific performance and damages filed by petitioner spouses
against Javier to compel performance of the latter’s undertakings under their Contract to Sell. As
correctly held by the Court of Appeals, its object is to compel Javier to accept the full payment of the
purchase price, and to execute a deed of absolute sale over the Langcaan Property in their favor.
The obligations of Javier under the contract to sell attach to him alone, and do not burden the
Langcaan Property.36
We have held in an unbroken string of cases that an action for specific performance is an action in
personam.37 In Cabutihan v. Landcenter Construction and Development Corporation,38 we ruled that
an action for specific performance praying for the execution of a deed of sale in connection with an
undertaking in a contract, such as the contract to sell, in this instance, is an action in personam.
Being a judgment in personam, Civil Case No. 741-93 is binding only upon the parties properly
impleaded therein and duly heard or given an opportunity to be heard.39 Therefore, it cannot bind
respondent since he was not a party therein. Neither can respondent be considered as privy thereto
since his signature and that of his late first wife, Angelita Chan, were forged in the deed of sale.
All told, we affirm the ruling of the Court of Appeals finding that, as between respondent and
petitioner spouses, respondent has a better right over the Langcaan Property as the true owner
thereof.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is affirmed. Costs
against petitioners.
SO ORDERED.
G.R. No. 157701 December 9, 2005
Spouses DANILO and ALBERTA DOMINGO, and EDUARDO QUITEVES, Petitioners,

vs.
GUILLERMO REED, Respondent.
DECISION
PANGANIBAN, J.:
When dealing with registered land, prospective buyers are normally not required by law to inquire
further than what appears on the face of the Torrens certificate of title on file with the Register of
Deeds. Equally settled is the principle, however, that purchasers cannot close their eyes to known
facts that should put a reasonable person on guard; they cannot subsequently claim to have acted in
good faith, in the belief that there was no defect in the vendor’s certificate of title. Their mere refusal
to face up to that possibility will not make them innocent purchasers for value, if it later becomes
apparent that the title was indeed defective, and that they would have discovered the fact, had they
acted with the measure of precaution required of a prudent person in a like situation.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to
1
reverse the August 27, 2002 Decision and the March 20, 2003 Resolution of the Court of Appeals
2 3
(CA) in CA-GR CV No. 59544. The dispositive part of the Decision reads as follows:
"WHEREFORE, the decision appealed from is REVERSED and SET ASIDE.
"The deeds of sale executed by Lolita Reed in favor of [herein Petitioner-]spouses Danilo Domingo
and Alberta Domingo and Eduardo Quiteves over portions of the subject property covered by TCT
No. 58195 registered in the name of Lolita R. Reed, married to Guillermo Reed, are
declared NULL and VOID.
"The Register of Deeds of Pasig City is ordered to cancel TCT Nos. 84565 and 84567 issued in the
names of [Petitioners] Eduardo Quiteves and spouses Danilo Domingo and Alberta Domingo,
respectively, covering the portions of the subject property sold to them by Lolita Reed, and to
reinstate TCT No. 58195 in the name of Lolita Reed, married to Guillermo Reed, insofar as the same
covers the portions of the subject property sold to said [petitioners]."4
The assailed Resolution denied petitioners’ Motion for Reconsideration.
The Facts
The facts were summarized by the CA as follows:
"[Respondent] Guillermo Reed was an overseas contract worker from 1978 to 1986 and came home
only for short vacations. He purchased from the Government Service Insurance System [GSIS] on
installment basis a 166 square meter property located at MRR Road, Mangahan, Pasig. Because he
was working abroad, it was his wife, Lolita Reed, who paid the consideration to the GSIS. On July 9,
1986, TCT No. 58195 covering said property was issued by the Registry of Deeds for the Province
of Rizal, Metro Manila – District II in the name of Lolita Reed, married to Guillermo Reed. Guillermo
Reed had allowed his brother, Dominador, and the latter’s wife, Luz, to stay in the house constructed
on his property.
"In December, 1991, Dominador and Luz Reed were summoned to the barangay in connection with
the complaint for ejectment filed against them by Eduardo Quiteves, who claimed to be the owner of
the lot where their house stands. Dominador and Luz informed Guillermo of the complaint filed
against them. Guillermo accompanied Dominador and Luz to the barangay, where they met Eduardo
Quiteves and Alberta Domingo, who both claimed ownership of the subject property. Guillermo
denied having sold his property.
"In view of the claims of Eduardo Quiteves and Alberta Domingo that they bought the subject
property, Guillermo Reed made a verification with the Register of Deeds of Pasig. Guillermo
discovered that his title over the subject property had been cancelled and he was able to secure
copies of the following documents, to wit:
"1. Special Power of Attorney, dated July 8, 1986, allegedly executed by him authorizing his wife,
Lolita Reed, to sell the subject property or a portion thereof;
"2. Deed of Sale of a Portion of Residential Land, dated July 14, 1986, executed by Lolita Reed in
favor of Danilo Domingo, married to Alberta Q. Domingo covering 41.50 square meter portion of
subject property;
"3. Absolute Deed of Sale of a Portion of Residential Land, dated July 22, 1987, executed by Lolita
Reed, as vendor and attorney-in-fact of Guillermo Reed, in favor of Natividad R. Villanera, married to
Ardaniel Villanera, covering 41.50 square meter portion of subject property;
"4. Deed of Sale of a Portion of a Residential Land, dated January 10, 1989, executed by Lolita
Reed, for herself and as attorney-in-fact, in favor of Eduardo Quiteves covering 86 square meter
portion of subject property;
"5. TCT No. 84565 in the name of Eduardo Quiteves;
"6. TCT No. 84566 in the name of spouses Ardaniel and Natividad Villanera; and
"7. TCT No. 84567 in the name of spouses Danilo and Alberta Domingo.
"On March 8, 1994, Guillermo Reed filed a complaint for reconveyance of property against Lolita
Reed, spouses Ardaniel and Natividad Villanera, spouses Danilo and Alberta Domingo, Eduardo
Quiteves and the Register of Deeds of Pasig, Metro Manila alleging that his wife, Lolita Reed, from
whom he had been estranged, conspiring with the other [petitioners], except the Register of Deeds
of Pasig, caused the preparation of a special power of attorney, dated July 8, 1986, wherein it was
made to appear that he authorized his wife to sell the subject property; that he did not sign the
special power of attorney nor appear before the notary public because he was working abroad; that
the special power of attorney was not submitted to the Regional Trial Court [(RTC)] in Pasig City by
Notary Public Macario C. Cruz, as stated in the letter dated April 1, 1993 of Clerk of Court Grace S.
Belvis; and that spouses Villanera and Domingo and Eduardo Quiteves are purchasers in bad faith
because they knew, at the time they transacted with Lolita Reed, that he was working abroad and
estranged from the latter.
"An [A]nswer to the complaint was filed by [Petitioners] Eduardo Quiteves and spouses Danilo and
Alberta Domingo alleging that the sale of the subject property to them by Lolita Reed was valid
inasmuch as Guillermo Reed gave his written consent thereto, as shown in a letter dated July 26,
1986; that in a proceeding before the [b]arangay [c]hairman, Guillermo Reed admitted that he
personally signed the special power of attorney; that they have the right to rely on the presumption of
regularity of the notarized special power of attorney; and that they are buyers in good faith and for
value.
"Per Sheriff’s Return, Lolita Reed was not served with summons as she is no longer residing at the
given address while spouses Ardaniel and Natividad Villanera were served with summons through
Mrs. Alberta Domingo.
"After trial on the merits, the court a quo rendered judgment, the dispositive portion of which reads:
‘WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of x x x Sps.
Ardaniel & Natividad Villanera, Sps. Alberto (sic) & Dominga (sic) Domingo, Eduardo Quiteves and
the Register of Deeds of Pasig, Metro Manila, and against [respondent] Guillermo Reed and orders
the DISMISSAL of the present case for lack of merit.
‘No pronouncement as to cost.’" 5
Ruling of the Court of Appeals
The Court of Appeals reversed the trial court. First, it should be clear that the CA ruling concerned
two transactions entered into by Petitioner-Intervenor Lolita Reed. The first transaction involved
the sale she executed in favor of Spouses Danilo and Alberta Domingo. To them she sold a portion
of the subject property covered by TCT No. 58195; it measured 41.5 square meters and was located
at the southwest section. The second sale was effected by the same vendor, this time in favor of
Eduardo Quiteves; it covered 86 square meters at the northern portion of the same property.
Because of these transactions, the vendees were able to have certificates of titles issued in their
respective names.
A third sale was made in favor of Spouses Ardaniel and Natividad Villanera. The CA ruled, however,
that they had not been validly served any summons. Consequently, the trial court did not acquire
jurisdiction over their persons; hence, its Decision would not affect their rights.
Second, the CA held that the vendees were not purchasers for value in good faith. It found that
Spouses Danilo and Alberta Domingo had entered into the Contract of Sale involving conjugal
property without actually seeing any Special Power of Attorney (SPA) authorizing Lolita Reed to
convey the property for and on behalf of the conjugal partnership. Also, the fact that the Deed of
Sale executed by them did not even mention any SPA showing that Respondent Guillermo Reed
had consented to the sale of the conjugal property rendered the transaction questionable.
As for Eduardo Quiteves, he was faulted by the CA for not having inquired into and investigated the
authenticity and validity of the SPA shown to him by Lolita, evidencing her husband’s alleged
consent to the sale of their conjugal property. The appellate court opined that Quiteves should have
been put on guard, since the acknowledgment portion of the document stated that only Lolita had
appeared before the lawyer who had notarized it. Also, considering that it had been issued two years
before the property was offered to Quiteves, he should have taken steps to verify the validity of the
document and to find out the whereabouts of Guillermo, who had allegedly executed it.
Finally, the CA found that the SPA, from which Lolita had derived her authority to sell the property,
was a forgery. The appellate court gave credence to the consistent denial of Guillermo that he had
signed the document. It did not accept the Minutes of the barangay meeting, containing his alleged
6
admission that he had signed the SPA. Furthermore, the CA gave weight to the Certification issued
7
by the Office of the Clerk of Court of the Regional Trial Court (RTC) of Pasig that the alleged SPA
notarized by Atty. Macario Cruz was not the same document submitted to that office.
Consequently, the CA declared the Deeds of Sale executed by Lolita in favor of Spouses Danilo and
Alberta Domingo and Eduardo Quiteves null and void. It also ordered the cancellation of the Transfer
Certificates of Titles (TCTs) issued in their favor; and the reinstatement of TCT No. 58195 in the
name of Lolita Reed, married to Guillermo Reed, insofar as it covered the portions of the property
sold to petitioners.
Hence, this Petition. 8
The Issues
Petitioners submit the following issues for this Court’s resolution:
"I. Whether the case for reconveyance filed by respondent against petitioners sans the trial court’s
acquisition of jurisdiction over the person of Lolita Reed, an indispensable party, can prosper.
"II. Whether entrenched jurisprudence assigns the onus probandi, or burden of proof, showing
forgery to the respondent after having asserted the same in his complaint.
"III. Whether the case of Voluntad vs. Dizon, 313 SCRA 210-211 (26 August 1999), utilized as basis
to find petitioners not purchasers in good faith can apply to the case at bench.
"IV. Whether the case of Veloso vs. Court of Appeals, 260 SCRA 594-595 (21 August 1996) is apt to
the case at bench.
"V. Whether the established doctrine, i.e., trial courts are in a better position to determine questions
involving credibility having heard the witnesses and having observed their deportment and manner
of testifying during the trial, was applied by the Court of Appeals to the case.
"VI. Whether the finding, assuming without admitting, that respondent’s signature was falsified the
right of petitioners, without any evidence as co-conspirators of Lolita Reed in the forgery and as
purchasers in good faith over the subject properties, can be adversely affected." 9
For her part, petitioner-intervenor submits the following:
"I. Whether the conveyance of subject property in favor of Petitioners Danilo and Alberta Domingo
and Eduardo Quiteves is valid considering that the same was executed by Petitioner-intervenor
Lolita Reed and the proceeds arising therefrom were utilized to purchase things necessary for the
support of family including education of petitioner-intervenor’s and Guillermo Reed’s common
children pursuant to Article 161 of the Civil Code in relation to Article 115 of the same Code.
"II. Whether Guillermo Reed can recover the one-half (1/2) share of the conjugal partnership despite
that he had already donated the same to his and Lolita Reed’s common children pursuant to Article
162 of the Civil Code." 10
The long-winded issues presented by petitioners and petitioner-intervenor can be reduced to one
procedural and three main questions. The three main issues to be resolved are as follows: 1)
whether the Special Power of Attorney is authentic; 2) whether Lolita Reed’s justification for selling
the subject property is tenable; and 3) whether petitioners are buyers in good faith. As to the
procedural matter, this Court will resolve whether jurisdiction over the person of Lolita has been
acquired.
This Court’s Ruling
The Petition and the Petition-in-Intervention have no merit.
Procedural Issue:
Jurisdiction over the Person
On the procedural question, petitioners contend that, for this case to stand, the RTC should have
first acquired jurisdiction over the person of Lolita Reed -- an allegedly indispensable party.
Petitioners argue that, since she had not been served any summons, the trial court never acquired
jurisdiction over her; consequently, there can be no final determination of this controversy. Thus,
they contend, the case should have never proceeded in the first place.
This Court need not engage itself in a discussion of whether Lolita is an indispensable party.
Although the RTC may not have acquired jurisdiction over her because she had not been served any
summons, she has already voluntarily appeared before this Court when she filed a Petition-in-
Intervention. Thus, jurisdiction over her has been acquired, and she is bound by any decision
11
emanating from this Court.
The Rules of Court provide that "the defendant’s voluntary appearance in the action shall be
equivalent to service of summons." In fact, Lolita never questioned the Supreme Court’s alleged
12
lack of jurisdiction over her. That she recognizes and accepts it is shown by her voluntary
appearance before this Court and her decision to participate in this appeal. Her actions render the
alleged lack of jurisdiction moot and binds her to the outcome of this case. There should be no more
obstacle to the progress of this case.
We do not see any need to remand this case to the trial court to allow it to receive evidence on the
factual allegations of Lolita. As it stands now, this Court is in a position to rule on the merits of this
case. Primarily, Lolita vouches for the authenticity of the Special Power of Attorney that she showed
to petitioners when the Deeds of Sale were executed. Significantly, she relies on the same
documents already presented by the other parties during the trial. Based on the arguments proffered
and the evidence on record, this Court can now render a determination of the SPA’s authenticity,
which is one of the main issues to be resolved here, as earlier adverted to.
First Main Issue:
Authenticity of the
Special Power of Attorney
Prior to determining whether petitioners are buyers in good faith, the essential question to be
answered is whether the Special Power of Attorney relied upon by the parties was indeed authentic.
Petitioners maintained before the courts below that it had not been proven to be a forgery, so it was
presumably authentic. The CA, however, held otherwise. We agree.
Most telling is the admission of Lolita that she merely sent an already typewritten SPA to her
husband, who was then working in the Middle East. She further admits that when it was brought
13
back by her brother-in-law, it had already been signed by Guillermo. Thus, it is clear that she never
14
saw him sign it. Furthermore, she does not have any actual knowledge of whether he even saw the
typewritten document, much less signed it.
It then becomes dubious whether the witnesses affixed their signatures to the SPA to attest that it
had been signed in their presence by the principal and the attorney-in-fact. How could they have
attested to the signing, when the principal denied it, while the attorney-in-fact admitted having merely
sent it to the Middle East for the principal’s signature?
This fact further explains why Notary Public Macario Cruz, in the acknowledgment portion of the
document, stated that only Lolita Reed had appeared before him. But Atty. Cruz should have known
better. Obviously, since an SPA was being notarized, there should have been two parties to that
document -- the principal and the agent who was being constituted as attorney-in-fact.
A document should not be notarized unless the persons who are executing it are the very same
ones who are personally appearing before the notary public. The affiants should be present to attest
to the truth of the contents of the document and to enable the notary to verify the genuineness of
15
their signature. Notaries public are enjoined from notarizing a fictitious or spurious document. In
16
fact, it is their duty to demand that the document presented to them for notarization be signed in their
presence. Their function is, among others, to guard against illegal deeds.
17
Notarization is not an empty, meaningless and routinary act. It converts a private document into a
18
public instrument, making it admissible in evidence without the necessity of preliminary proof of its
authenticity and due execution. 19
In not giving credence to the SPA, the Court agrees with the CA, which held thus:
"[T]he same [special power of attorney] was not reported by Atty. Macario Cruz as having been
notarized by him. Thus, in a letter dated April 1, 1993 addressed to Luz Reed, Grace S. Belvis, Clerk
of Court, Regional Trial Court, Pasig stated that it was not the special power of attorney dated July 8,
1986 and recorded as Doc. 326, Page No. 66, Book No. XV, Series of 1986 in the notarial report of
Atty. Macario Cruz which was submitted by the latter to the court. x x x." 20
Guillermo Reed has consistently denied having signed the document. Moreover, together with his
witness, he has denied other documents allegedly showing that he admitted having signed it. Thus,
21
we do not find any cogent reason to disturb the CA’s findings, as follows:
"The alleged admission of Guillermo Reed before the Barangay Chairman that he signed the special
power of attorney, as shown in the minutes of the meeting prepared by Barangay Secretary, does
not appear to be credible. Guillermo Reed has consistently denied having signed the special power
of attorney. In fact, he was not confronted during his cross-examination, of said minutes of the
meeting in the barangay, where he met Eduardo Quiteves and Alberta Domingo for the first time,
despite his insistence that the subject property still belongs to him. Moreover, on rebuttal, Dominador
Reed, whose signature appears in the minutes of the meeting, testified that he affixed his signature
on a small piece of paper to show that he attended the meeting and there were no entries therein
regarding the alleged admission of Guillermo Reed that he signed the special power of attorney; and
that Guillermo Reed stated in said meeting that his property is not for sale. x x x."
22
Petitioners insist that an expert witness, such as one from the National Bureau of Investigation (NBI),
should have been presented to show that respondent’s signature was forged. But even without
expert testimony, the questionable circumstances surrounding the execution of the SPA already
casts serious doubt on its genuineness. As shown earlier, there is a plethora of factual details that
point to its falsity.
Additionally, the CA noted the date "July 8, 1986," on the SPA authorizing Lolita to sell the property
covered by TCT No. 58195, issued by the Registry of Deeds of Rizal, District II, Metro Manila. As of
that date, however, TCT No. 58195 was not yet in existence, because it was issued only on the
following day, July 9, 1986.23
All the foregoing circumstances successfully challenge the integrity, genuineness, and veracity of the
questioned document. Petitioners, therefore, cannot take refuge in the presumption of regularity of
public documents, a presumption that has been clearly rebutted in this case.
Second Main Issue:
Justification for the Sale
of the Conjugal Property
Lolita Reed argues that, even on the assumption that the SPA was indeed a forgery, she was still
justified in effecting a sale without her husband’s consent. We are not persuaded. In addition to the
fact that her rights over the property were merely inchoate prior to the liquidation of the conjugal
partnership, there was absolutely no proof to her allegations that she used the proceeds of the sale
24
to purchase necessities for the maintenance and support of the family. Having failed to establish
25
any of these circumstances, she may not unilaterally bind the conjugal assets.
Additionally, the Civil Code provisions she cited pertain to what the conjugal partnership is liable for.
They do not specifically refer to whether the actual transactions entered into by either spouse can
validly bind the conjugal partnership. The issues addressed by this Court in this case involve the
essential formalities determining the validity of contracts entered into by either the husband or the
wife for and on behalf of the partnership.
As to the assertions of Lolita regarding an alleged donation by respondent in favor of their children,
this matter is irrelevant to the disputed sales. We need not belabor the point. Besides, it would mean
that she should have sold the subject property not only in her name, but for and on behalf of her
children as co-owners of the property. To accept her contention is to open a whole gamut of issues
that are not the subject of this appeal.
Third Main Issue:
Buyers in Good Faith
The final question to be resolved is whether petitioners were buyers in good faith. An innocent
purchaser for value is one who buys the property of another without notice that some other person
has a right to or interest in that same property, and who pays a full and fair price at the time of the
purchase or before receiving any notice of another person’s claim. 26
The honesty of intention that constitutes good faith implies freedom from knowledge of
circumstances that ought to put a prudent person on inquiry. Good faith consists in the belief of the
possessors that the persons from whom they received the thing are its rightful owners who could
convey their title. Good faith, while always presumed in the absence of proof to the contrary,
27
requires this well-founded belief.
When dealing with land that is registered and titled, as in this case, buyers are not required by the
law to inquire further than what the Torrens certificate of title indicates on its face. It is also settled,
28
however, that purchasers cannot close their eyes to known facts that should put a reasonable
person on guard. They cannot subsequently claim to have acted in good faith in the belief that there
was no defect in the vendor’s certificate of title. Their mere refusal to face up to that possibility will
29
not make them innocent purchasers for value, if it later becomes clear that the title was indeed
defective, and that they would have discovered the fact, had they acted with the measure of
precaution required of a prudent person in a like situation. 30
Thus, the presence of anything that excites or arouses suspicion should then prompt the vendee to
look beyond the vendor’s certificate and investigate the title appearing on the face of that
certificate. A vendee who does not do so cannot be denominated either as an innocent purchaser
31
for value or as a purchaser in good faith and, hence, does not merit the protection of the law.
The circumstances surrounding this case debunk the presumption of good faith on the part of
petitioners. To begin with, it was clear to them that, at the time of the sales, Lolita was married to
Respondent Guillermo Reed; and that the property in question was part of their conjugal partnership.
As to Spouses Domingo, the CA found thus:
"Alberta Domingo admitted that the subject property belongs to the conjugal partnership of spouses
Guillermo and Lolita Reed; that the Reed spouses were no longer living together as husband and
wife when the property was sold to her and her husband by Lolita Reed; and that Guillermo Reed
was in Saudi Arabia. x x x." 32
The Deed of Sale executed between the Domingo spouses and Lolita Reed clearly stated that what
33
was being sold was her share in the conjugal property. Despite their knowledge of this fact, the
couple did not inquire about her authority to sell any portion of the property. According to Alberta
Domingo, Lolita told her that the latter had been authorized by Guillermo to sell the property. When
they executed the Deed of Sale, however, Lolita allegedly showed no special power of attorney.
Alberta merely relied on the former’s
verbal claim of having been authorized to sell the property, and that the sale would bind the conjugal
partnership.
Neither was there any mention in the Deed of Sale that Lolita had the authority to sell the property,
and that respondent had consented to the sale. In short, there was no mention of the SPA that she
allegedly possessed. Interestingly, the statement in the Deed that the subject of the sale
corresponded to her share in the conjugal assets is not equivalent to her claim that she was
authorized by her husband to sell them.
Lolita’s authority to sell the subject property and to bind respondent was not questioned by Petitioner
Quiteves, although he claimed to be close to respondent, who was a classmate’s father. The
findings of the CA clearly demonstrate that factual circumstances present in this case should have
made Quiteves inquire about Lolita’s authority to sell the property. The CA negated the claim of good
faith, as follows:
"x x x. [H]e [Quiteves] should have noticed in the acknowledgement portion of the special power of
attorney the statement that only Lolita Reed appeared before Atty. Cruz, who notarized the special
power of attorney. Considering that the special power of attorney is dated July 8, 1986 and it was
only two years later that the subject property was offered to him by Lolita Reed, Eduardo should
have taken steps to verify the whereabouts of Guillermo Reed and inquire as to whether the special
power of attorney was still valid. Had Eduardo made the necessary verification from the daughter of
Guillermo Reed, he could have been informed that Guillermo Reed was estranged from Lolita Reed,
that Guillermo Reed returned home in 1986 and where the latter was staying. Eduardo could [have
then] contacted Guillermo Reed and inquired from the latter about the authenticity of the special
power of attorney. Likewise, the admission of Atty. Cruz in the acknowledgement portion of the
special power of attorney that only Lolita Reed appeared before him should have put Eduardo on
guard and he should have consulted a lawyer other than the one who notarized the special power of
attorney as to the validity thereof. x x x."
34
Indeed, Quiteves should not have closed his eyes to these facts that should have made him even
more vigilant, as any other reasonable person would have been.
Petitioners complain that the CA imposed on them a task too tedious, such as "to pry on whether
respondent was estranged from Lolita Reed." They miss the whole point. What was required of
35
them by the appellate court, which we affirm, was merely to investigate -- as any prudent vendee
should -- the authority of Lolita to sell the property and to bind the partnership. They had knowledge
of facts that should have led them to inquire and to investigate, in order to acquaint themselves with
possible defects in her title. The law requires them to act with the diligence of a prudent person; in
this case, their only prudent course of action was to investigate whether respondent had indeed
given his consent to the sale and authorized his wife to sell the property.
Petitioners finally argue that, on the assumption that the Special Power of Attorney was forged, there
was still no proof that the forgery had resulted from a conspiracy between them and Lolita. Thus,
they conclude that the titles issued in their favor cannot be revoked. We disagree. Petitioner’s
argument would stand if only they have been found to be innocent purchasers for value.
WHEREFORE, the Petition and the Petition-in-Intervention are hereby DENIED. Costs against

petitioners.
SO ORDERED.
G.R. No. 70623
ST. DOMINIC CORPORATION, petitioner,

vs.
THE INTERMEDIATE APPELLATE COURT, HON. RICARDO P. TENSUAN, RTC BRANCH
LXXXIII, QUEZON CITY FRANCISCA B. BUSTAMANTE, FLAVIANO BUSTAMANTE, CARLOS
ROBES, ADALIA FRANCISCO and AURORA FRANCISCO, respondents.
June 30, 1987
No. L-48630
FLAVIANO BUSTAMANTE and FRANCISCA B. BUSTAMANTE, petitioners,

vs.
HON ULPIANO SARMIENTO, as Presiding Judge of the Court of First Instance of Rizal,
Branch IX, sitting in Quezon City, RODOLFO ESPINELI, personally and as "Special Sheriff"
appointed by respondent Judge Sarmiento, AURORA B. FRANCISCO, and ST. DOMINIC
CORPORATION, respondents.
GUTIERREZ, JR., J.:
Arising from a common set of facts, these petitions are before us for concurrent disposition.
G.R. No. 70623 entitled "St. Dominic Corporation v. The Intermediate Appellate Court. et al."
is a petition to review on certiorari the decision of the respondent appellate court, dated
January 31, 1985 in AC-G. R. SP No. 00513 entitled "Francisca B. Bustamante, et al., v. Hon.
Ricardo P. Tensuan, et al.," which set aside the orders of the then Court of First Instance of
Rizal at Quezon City, in Civil Case No. Q-11895, as well as the resolution dated April 16, 1985
denying the petitioner's motion for reconsideration.
On the other hand, G.R. No. L-48630, is a petition for certiorari assailing the order of
respondent Judge Ulpiano Sarmiento, dated April 27, 1976, directing the issuance of a writ of
possession against the petitioners covering the same property involved in G.R. No. 70623.
The facts are not disputed.
On February 27, 1968, Civil Case No. Q-11895 entitled Ricardo Castulo and Juan V. Ebreo v.
Carlos Robes and wife Adalia Francisco and People's Homesite and Housing Corporation"
was filed seeking the cancellation of Transfer Certificate of Title No. 83783 in the name of the
spouses Carlos Robes and Adaha Francisco, covering Lot No. 8, Block 101 of the Malaya
Subdivision, People's Homesite and Housing Corporation (PHHC). The original complaint
was superseded by an amended complaint filed on February 24, 1969.
It appears that sometime in 1961, the PHHC awarded the property in question to one
Cristobal Santiago, Jr., in whose favor a final deed of sale was executed and Transfer
Certificate of Title (TCT) No. 83783 was issued.
Subsequently, the Robes spouses mortgaged the realty to the Manufacturer's Bank and Trust
Company. The mortgage lien was duly annotated on TCT 84387 on February 9, 1965.
Thereafter, on February 2, 1968, Civil Case No. Q- 1 1895 was filed.
Claiming legal interest in the property, the Bustamante spouses were allowed to intervene in
the case.
On March 25, 1968, a notice of lis pendens was annotated on TCT 84387 at the instance of the
Bustamante spouses.
For failure of the Robes' spouses to pay the mortgage obligation, the Manufacturer's Bank
and Trust Company foreclosed the lot and caused the same to be sold at public auction on
December 14, 1974.
The property was purchased by Aurora Francisco in whose favor a certificate of sale was
issued. The levy on execution was annotated on TCT 84387 on March 16, 1974.
No redemption of said property was effected. Thus, on March 5, 1976, TCT 84387 in the name
of the Robes spouseswas cancelled and in heu thereof, TCT 217192 was issued to Aurora
Francisco on the same date. The notice of lis pendens on the title of the Robes spouses,
however, was not carried over to TCT 217192.
On April 20, 1976, before the sale of the land to St. Dominic, Aurora Francisco applied for a
writ of possession in LRC Case No. 851 (76) before Branch IX of the then Court of First
Instance of Rizal in Quezon City.
On April 27, 1976, said court issued the writ of possession.
The lower court (Branch IX, Court of First Instance of Rizal) having stood firm in the grant of
the writ of possession and having denied the motion to quash the same, the Bustamante
spouses filed with this Court a petition for certiorari, docketed as G.R. No. L-48630 entitled
"Flaviano Bustamante, et al., v. Hon. Sarmiento, etc., et al.", now before us for resolution.
On September 15, 1976, Aurora Francisco sold the property to petitioner, St. Dominic
Corporation. Consequently, TCT 222337 was issued to petitioner corporation. As earlier
stated, no notice of any lien or encumbrance appears on the title.
Meanwhile, Civil Case No. Q-11895 proceeded to judgment. The dispositive portion of the
decision reads:
WHEREFORE, all the foregoing premises considered, judgment is hereby rendered as

follows:
(a) declaring null and void the allocation and sale of PHHC (now NHA) to
defendant Cristobal Santiago, Jr., of Lot 8, Block 101 of subdivision plan Psd-
88807, and cancelling Transfer Certifirate of Title No. 83783 issued therefor in
his name;
(b) declaring null and void and without force and effect the sale of said lot by
Cristobal Santiago, Jr., to spouses Adalia Francisco and Carlos Robes, and
cancelling Transfer Certificate of Title No. 84387 issued therefor in their
names;
(c) directing defendant PHHC (now NHA), to prgcess the application to
purchase said subject lot filed by intervenor Francisco Banzon Bustamante
and to execute or cause to be executed the requisite documents for the award
of said lot to her.
The complaint praying that an award of the subject lot be ordered made in Lavor of
plaintiffs Ricardo S. Castulo and Juan V. Ebreo, is hereby dismissed for lack of
showing that they or either of them ever filed the requisite application to purchase the
same. All other counterclaims are hereby dismissed for lack of merit. (Annex "A". p.
26, Rollo — G.R. No. 70623).
When the judgment became final, the Bustamante spouses applied for a writ of execution.
On June 29, 1982, Presiding Judge Tensuan issued an order granting the application for a
writ of execution with the qualification, however, that "said writ may not be enforced and/or
implemented as against the St. Dominic Corporation."
The Bustamante spouses moved for a reconsideration, arguing that the order of the court
dated June 29, 1982 in effect amended a final and executory judgment in violation of law. In
an order dated November 26, 1982, Judge Tensuan denied the motion. Whereupon, the
Bustamante spouses filed a petition for certiorari and mandamus docketed as AC-G.R. SP
No. 00513, before the Intermediate Appellate Court. Herein petitioner, St. Dominic
Corporation and Aurora Francisco who were not parties to Civil Case No. Q-11895, were
made respondents in the petition questioning the orders of Judge Tensuan exempting the
petitioner corporation from the enforcement of the trial court's judgment and denying
reconsideration thereof.
On January 31, 1985, the Intermediate Appellate Court rendered judgment. The dispositive
portion of the decision reads:
WHEREFORE, the writs of certiorari and mandamus prayed for are granted; the orders
of September 24, 1982 and November 26, 1982 complained of are hereby set aside;
and the respondent Judge is hereby ordered to cause the issuance of a writ of
execution in strict conformity with the dispositive portion of the final and executory
decision in subject Civil Case No. Q-11895. Costs against the private respondents. (p.
55, Rollo-G.R. No. 70623)
On February 18, 1985, the petitioner filed its motion for reconsideration and on February 18,
1985, Aurora Francisco followed suit. In a minute resolution dated April 16, 1985, both
motions were denied by the respondent appellate court. Thus, the petition filed by St.
Dominic Corporation in G.R. No. 70623.
The appellate court's ruling in AC-G.R. SP No. 00513 is tainted with error.
The trial court's statement exempting from execution one not a party to the case nor privy to
the interests of the parties therein, from the effects of its pronouncements, cannot be
considered an amendment of its final and executory judgment in Civil Case No. Q- 1 1895.
Justice Lino M. Patajo's dissent in AC-G.R. SP No. 00513 is clear and to the point elucidating
the correct doctrine thus:
I believe that respondent Court cannot be held as having abused its discretion or
exceeded its jurisdiction in issuing the questioned orders. I find no merit in the
contention of petitioners that in so providing in said orders that its decision should
not be enforced or executed against St. Dominic, respondent Court had actually
amended its decision which had already become final. Respondent Court was merely
applying the provision of Rule 39, Section 49(b) which provides that the decision of
the Court in cases other than those provided for in sub-paragraph (a) of said section
(judgment against specific thing, probate of a will, administration of the estate of a
deceased person, or in respect to the personal, political, or legal condition or status of
a particular person or his relationship to another) is conclusive only between the
parties and their successors-ininterest by title subsequent to the commencement of
the action. .... (Annex "H". p. 58, Rollo-70323)
Indeed, a judgment cannot bind persons who are not parties to the action (Vda. de
Sengbengco v. Arellano, 1 SCRA 711; Hanopol v. Pilapil, 7 SCRA 452; and Hollero v. Court of
Appeals, 1 1 SCRA 3 1 0). It is elementary that strangers to a case are not bound by the
judgment rendered by the court (Bien v. Sunga, 117 SCRA 249) and such judgment is not
available as an adjurtication either against or in favor of such other person. A decision of a
court will not operate to divest the rights of a person who has not and has never been a party
to a litigation, either as plaintiff or defendant (Granados v. Monton, 86 Phil., 42). Verily,
execution of a judgment can only be issued against one who is a party to the action, and not
against one who, not being a party in the case, has not yet had his day in court (City of
Bacolod, et al., v. Hon. Enriquez, et al., 101 Phil., 644; Tayson v. Angeles v. Icasiano, et al., 83
Phil., 921; Manza v. Hon. Vicente Santiago, etc., 96 Phil., 938; and Angara v. Gorospe, et al.,
101 Phil., 79).
It is clear from the records that petitioner St. Dominic Corporation had never been impleaded
as a party to Civil Case No. Q-11895 filed by Ricardo Castulo and Juan V. Ebreo. The
complaint had for its purpose the nullification of the award to Cristobal Santiago, Jr., and the
subsequent sale between Santiago and the spouses Adalia Francisco and Carlos Robes.
Such proceedings neither involved nor affected St. Dominic Corporation. Judgment therein
was directed only against the titles of Cristobal Santiago, Jr., and the Robes spouses. The
trial court could not execute the same against the petitioner as to deprive it of its property
without due process of law. This is what the trial court made explicit in its order of execution.
Its decision could not reach the petitioner's rights. Yet, the respondent appellate court
declined to pass upon this principal issue in a rather ambiguous ruling.
In its decision the Court of Appeals held:
Decidedly, the present certiorari and mandamus proceedings is not the appropriate
forum for the determination of the legal effect, if any there be, of the aforesaid final
and executory judgment nullifying or declaring the nullity of the sale of subject
property in question by Cristobal Santiago, Jr., to spouses Adalia Francisco and
Carlos Robes and cancelling TCT No. T-83783 in their names, on the alleged
subsequent auction sale to respondent Aurora Francisco and from the latter to St.
Dominic Corporation over the same property involved in said judgment. ...Whether or
not the foreclosure proceedings, auction sale and subsequent transactions had on
subject property during the pendency of the litigation thereover in the court below are
subject to the outcome of said case, need not be passed upon in this disposition.
What We are concerned with here are the assailed orders of the respondent court. ...
(Annex "H", p. 55, Rollo — 70623).
The determination of whether or not the foreclosure proceedings, auction sale, and
subsequent transactions had on the subject property, during the pendency of the litigation
are subject to the outcome of said case bears heavily on the issues at hand. The answer is
determinative of whether or not the trial court's order of execution should affect or be issued
against the petitioner.
Anent the effect of the trial court's judgment on the mortgagee bank's rights and on the
foreclosure of the property in question, this Court has held that where a Torrens title was
issued as a result of regular land registration proceedings and was in the name of the
mortgagor when given as a security for a bank loan, the subsequent declaration of said title
as null and void is not a ground for nullifying the mortgage rights of the bank which had
acted in good faith (Philippine National Cooperative Bank v. Carandang-Villalon, 139 SCRA
570). As a matter of fact, there are instances when even a fraudulent and forged document of
sale may become the root of a valid title if the certificate had already been transferred from
the name of the true owner to the name indicated by the forger (Duran v. Intermediate
Appellate Court, 138 SCRA 489). Here, there is no forgery or fraud involved.
A mortgagee has the right to rely on what appears on the face of the certificate of title. In the
absence of anything to excite suspicion, it is under no obligation to look beyond the
certificate and investigate the title of the mortgagor appearing on the face of said certificate.
There is no showing in the records that the mortgagee bank was aware of any shadow
affecting the title of the mortgaged property when it was mortgaged. As will be explained
later, the intervenors are only prospective awardees of the disputed lot. They are not the
owners. They have no title to the land.
The main purpose of the Torrens System is to avoid possible conflicts of title to real estate,
and to facilitate transactions relative thereto by giving the public the right to rely upon the
face of a Torrens certificate of title and to dispense with the need of inquiring further, except
when the party concerned had actual knowledge of facts and circumstances that should
impel a reasonably cautious man to make such further inquiry (Pascua v. Capuyoc, 77 SCRA
78). Thus, where innocent third persons relying on the correctness of the certificate of title
thus issued, acquire rights over the property, the court cannot disregard such rights
(Director of Land v. Abache, et al., 73 Phil. 606). The lien of the petitioner, an innocent
mortgagee for value must be respected and protected (Blanco v. Esquierdo, 110 Phil., 494).
The title to the property given as security to the Manufacturer's Bank and Trust Co., by the
spouses Robes was valid, regular, and free from any lien or encumbrance. The mortgage was
executed prior to the institution of Civil Case No. Q-11895, thus establishing it as a lien
superior to whatever claims the plaintiffs therein may have as a result of the subsequent
litigation. An inquiry beyond the face of the mortgagor's title would certainly have yielded no
flaw at that time. This being so, the adverse claim in Civil Case No. Q-11895 could not affect
the rights of the mortgagee. The fact that the foreclosure of the mortgage and the subsequent
auction sale were effected after the annotation of the adverse claim is of no moment. The
foreclosure sale retroacts to the date of registration of the mortgage (Bank of the Philippine
Islands v. Noblejas, 105 Phil., 418).
A person who takes a mortgage in good faith and for a valuable consideration, the record
showing a clear title in the mortgagor, will be protected against any equitable titles to the
premises or equitable claims on the title, in favor of third persons, of which he had no notice,
actual or constructive. The protection extends to a purchaser at a Sheriff's sale under
proceedings on the mortgage although such purchaser had notice of the alleged equity (59
CJS, Sec. 233, pp. 303-304).
Any subsequent lien or encumbrance annotated at the back of the certificate of title cannot in
any way prejudice the mortgage previously registered and the lots subject thereto pass to the
purchaser at public auction free from any lien or encumbrance (Gonzalo Puyat & Sons, Inc.,
v. Philippine National Bank, 4 SCRA 1257). Otherwise, the value of the mortgage could be
easily destroyed by a subsequent record of an adverse claim, for no one would purchase at a
foreclosure sale if found by the posterior claim (Bank of the Philippine Island v.
Noblejas, supra). Aurora Francisco's title, as a purchaser at the auction sale of the property
in question, cannot be bound by the adverse claims of the plaintiffs in Civil Case No. Q-
11895. This is even more true with petitioner St. Dominic Corporation which had acquired title
from Aurora Francisco without any notice or flaw.
Upon proper foreclosure of a first mortgage, all liens subordinate to the mortgage are
likewise foreclosed. The foreclosure as well as the sale of the property were annotated on the
title to the property, then still in the name of Adalia Francisco and Carlos Robes. Such
annotation serves as constructive notice to the parties having any claim or nterest in the
property to exercise their right of redemption or to participate in the foreclosure sale.
Certainly, there was an opportunity for the claimants in Civil Case No. Q-1 1895 to acquire the
property at issue. St. Dominic's rights can no longer be disturbed.
It should also be noted that the intervenors in Civil Case Q-11895 possess no enforceable
lien over the property in question. They are merely prospective awardees of the realty. The
right they assert is purely speculative. No vested rights exist in their favor. The award of the
disputed lot to Cristobal Santiago, Jr. may have been declared improper. As to who should
get the lot, according to law, still lies in the discretion of the PHHC. No assurance is given
that the lot would be awarded to the claimants-intervenors. The decision in Civil Case Q-
11895 may be deemed correct insofar as it called for a processing of the Bustamante claim
but erroneous when it assumed that after processing, the award would be in the spouses'
favor.
However, the PHHC is now estopped by circumstances from making any further award. As
earlier stated, the lower court cannot order the execution of the decision as against the
petitioner and, thereby, cancel St. Dominic's title in favor of a future unknown person. It
cannot disregard the rights already vested in petitioner St. Dominic. To do so would impair
confidence in certificates of titles and orderly processes of law. Among the guarantees of the
Torrens system is that it renders title indefeasible. Section 31, Presidential Decree 1529, The
Land Registration Act, provides: "The decree of registration shall bind the land and quiet title
thereto, subject only to the exceptions or liens as may be provided by law. It shall be
conclusive upon and against all persons, including the National Government and all
branches thereof whether mentioned by name in the application or notice, the same being
included in the general description "to all of whom it may concern". " This provision is
applicable under the facts of this case.
In its petition in G.R. No. 70623, petitioner St. Dominic "prays most earnestly for such and
any other relief as this Honorable Court, in its far greater wisdom, may deem just, equitable
and proper in the premises, such as the dismissal of the petition in G.R. No. L-48630."
Petitioners Bustamante in G.R. No. L-48630, assail the grant ex parte by the trial court of the
writ of possession over the property, likewise the subject of G.R. No. 70623, in favor of
Aurora Francisco. It is alleged that a court has no jurisdiction, power, and authority to eject a
third person who is not a party to the foreclosure proceedings or mortgage by a mere writ of
possession summarily issued in a foreclosure suit.
Respondent St. Dominic Corporation moved and was allowed to intervene as successor-in-
interest by purchase to all the rights, title, and interest of respondent Francisco over the lot
in question.
Section 6 of Act No. 3135, as amended by Act 4118, the law that regulates the methods of
affecting extrajudicial foreclosure of mortgage makes applicable Sections 464 to 466 of the
Code of Civil Procedure, now sections 29 to 31 and 35 of Rule 39 of the Revised Rules which
provide: "If no redemption be made within twelve (12) months after the sale, the purchaser, or
his assignee, is entitled to a conveyance and possession of the property ..., " and "The
possession of the property shall be given to the purchaser or last redemptioner by the officer
unless a third person is actually holding the property adversely to the judgment debtor."
Petitioners capitalize on this last proviso of the law.
On this point, the trial court held, and We quote with approval that:
The Court is aware of the limitation that writ of possession may not issue when the
property is in the possession of a third party who holds the property adverse to the
buyer in the foreclosure sale. But, by their express admission in their motion,
movants are merely 'occupants-applicants' for the purchase of the land from the
defunct PHHC. Under such claim which is, at best inchoate, we cannot refuse to grant
the writ of possession prayed for; to do so, would be to becloud the integrity of the
torrens title, and it would be in derogation of its indefeasibility.
x x x x x x x x x
In the instant case, the property involved is covered by a certificate of title. It has
passed through different owners until it was bought by petitioner, Aurora Francisco,
at a public auction sale by reason of the foreclosure of the mortgage in the property
and subsequently sold by said Aurora Francisco to intervenor St. Dominic. And
movants here, would like us to quash the writ of possession we issued, on the ground
that the same was issued upon an ex parte petition is permitted and allowed by virtue
of Act 3135, and on the allegation that movants "have been in possession of the
subject property since 1962 as occupants-applicants for the purchase thereof from
the defendant PHHC ... " (p. 3, Motion to Quash) which, as we said above is a matter of
expectancy (inchoate) and should not be allowed to prevail over the clean title of the
petitioner and/or intervenor herein. (pp. 73-74, Rollo-G.R. No. 48630).
Indeed, the rules contemplate a situation where a third party holds the property by adverse
title or right such as a coowner, tenant or usufructuary. In such cases, a grant of a writ of
possession, would be denial of such third person's rights without giving them their day in
court. Especially, where question of title is involved, the matter would well be threshed out in
a separate action and not in a motion for a writ of possession. But such is not the state of
affairs in the case at bar.
The right of the respondent to the possession of the property is clearly unassailable. It is
founded on the right of ownership. As the purchaser of the properties in the foreclosure sale,
and to which the respective titles thereto have already been issued, the petitioner's rights
over the property has become absolute, vesting upon it the right of possession of the
property which the court must aid in affecting its delivery. After such delivery, the purchaser
becomes the absolute owner of the property. As we said in Tan Soo Huat u. Ongwico (63
Phil., 746), the deed of conveyance entitled the purchaser to have and to hold the purchased
property. This means, that the purchaser is entitled to go immediately upon the real property,
and that it is the sheriff's inescapable duty to place him in such possession. (Philippine
National Bank v. Adil, 118 SCRA 110). With more reason that the said writ of possession
should be granted Aurora Francisco or, in her stead, St. Dominic Corporation in the light of
our pronouncements in G.R. No. 70623. Ownership has been consolidated in St. Dominic's
favor. There being no clear title or right enforceable by the Bustamante spouses, a writ of
execution or a writ of possession, may issue in favor of Aurora Francisco and/or St. Dominic
Corporation.
Be it noted that as the trial court had said "the writ of possession issued by us has been
complied with and satisfied," meaning to say that the movants vacated the property. But in
the hearing held in this case, it has been admitted by the parties that the movants retumed to
the land in question and constructed again thereon their respective uses. This being so, the
movants must vacate and remove from the disputed premises whatever they have built or
constructed thereon. The writ of possession issued and enforced may no longer be quashed.
WHEREFORE, judgment is hereby rendered in G.R. No. 70623, GRANTING the petition of ST.
DOMINIC CORPORATION. The decision of the Intermediate Appellate Court, now Court of
Appeals, dated January 31, 1985 in ACG.R. SP No. 00513 and its resolution dated April 16,
1985, are REVERSED and SET ASIDE. The writ of execution issued by the trial court in Civil
Case No. Q-11895, with the qualification excluding the petitioner, is in accord with the facts
and the applicable law and is accordingly sustained as correct. However, the decision of the
trial court directing the PHHC (now NHA) to process the application of Francisco Banzon
Bustamante to purchase the property in question and to execute the requisite documents for
the award of said lot to her having been rendered ineffective by circumstances supervening
in Civil Case No. Q-11895, the writ of execution issued by the court a quo therefore is hereby
declared without force and effect.
G.R. No. L-48630 is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 160711 August 14, 2004
HEIRS OF MAXIMO LABANON, represented by ALICIA LABANON CAÑEDO and the

PROVINCIAL ASSESSOR OF COTABATO, Petitioners,
vs.
HEIRS OF CONSTANCIO LABANON, represented by ALBERTO MAKILANG, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the recall and nullification of the May 8,
2003 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 65617 entitled Heirs of Constancio
Labanon represented by Alberto Makilang v. Heirs of Maximo Labanon represented by Alicia
Labanon Cañedo and the Provincial Assessor of Cotabato, which reversed the August 18, 1999
Decision2 of the Kidapawan City, Cotabato Regional Trial Court (RTC), Branch 17, in Civil Case No.
865. Likewise assailed is the October 13, 2003 Resolution3 which disregarded petitioners’ Motion for
Reconsideration.
The Facts
The CA culled the facts this way:
During the lifetime of Constancio Labanon, prior to the outbreak of WWII, he settled upon a piece of
alienable and disposable public agricultural land situated at Brgy. Lanao, Kidapawan, Cotabato x x x.
Constancio cultivated the said lot and introduced permanent improvements that still exist up to the
present. Being of very limited educational attainment, he found it difficult to file his public land
application over said lot. Constancio then asked his brother, Maximo Labanon who was better
educated to file the corresponding public land application under the express agreement that they will
divide the said lot as soon as it would be feasible for them to do so. The offer was accepted by
Maximo. During the time of the application it was Constancio who continued to cultivate the said lot
in order to comply with the cultivation requirement set forth under Commonwealth Act 141, as
amended, on Homestead applications. After which, on June 6, 1941, due to industry of Constancio,
Homestead Application No. 244742 (E-128802) of his brother Maximo was approved with
Homestead Patent No. 67512. Eventually, Original Certificate of Title No. P-14320 was issued by the
Register of Deeds of Cotabato over said lot in favor of Maximo Labanon.
On February 11, 1955, Maximo Labanon executed a document denominated as "Assignment of

Rights and Ownership" and docketed as Doc. No. 20; Page No. 49; Book No. V; Series of 1955 of
the Notarial Register of Atty. Florentino Kintanar. The document was executed to safeguard the
ownership and interest of his brother Constancio Labanon. Pertinent portion of which is reproduced
as follows:
"That I, MAXIMO LABANON, of legal age, married to Anastacia Sagarino, and a resident of
Kidapawan, Cotabato, for and in consideration of the expenses incurred by my elder brother
CONSTANCIO LABANON also of legal age, Filipino, widower and a resident of Kidapawan,
Cotabato, for the clearing, cultivation and improvements on the eastern portion xxx Lot No. 1, Blk.
22, Pls-59 xxx which expenses have been incurred by my said brother xxx before the outbreak of the
last world war xxx I do hereby assign transfer and convey my rights to, interests in and ownership on
the said eastern portion of said Lot No. 1, Block 22, Pls-59 ONE HUNDRED (100 M) ALONG THE
NATIONAL HIGHWAY, (DAVAO-COTABATO ROAD) by TWO HUNDRED FIFTY METERS (250 M)
going inside the land to cover an area of TWO AND ONE HALF HECTARES (25,000 SQ. M.), more
or less, adjoining the school site of barrio Lanao, Kidapawan, Cotabato, to the said CONSTANCIO
LABANON, his heirs and assigns, can freely occupy for his own use and benefit xxx.
IN WITNESS WHEREFOF, I have hereunto set my hand this 11th day of February 1995 at
Kidapawan, Cotabato.
(SGD) MAXIMO LABANON
With my marital consent.
(SGD) ANASTACIA SAGARINO

(Wife)" (p.16, rollo)
On April 25, 1962, Maximo Labanon executed a sworn statement reiterating his desire that his elder
brother Constancio, his heirs and assigns shall own the eastern portion of the Lot, pertinent portion
of which reads:
"That I am the same and identical person who is a homestead applicant (HA-224742, E-128802) of a
tract of land which is covered by Homestead Patent No. 67512 dated June 6, 1941, known as Lot
No. 1, Block 22, Pls-59, situated in [B]arrio Lanao, Municipality of Kidapawan, Province of Cotabato,
Philippines, and containing an area of 5.0000 hectares, more or less;
That I am the same and identical person who executed a deed of ASSIGNMENT OF RIGHTS AND
OWNERSHIP in favor of my brother Constancio Labanon, now deceased, now for his heirs, for the
eastern half portion of the land above described, and which deed was duly notarized by notary public
Florentino P. Kintanar on February 11, 1955 at Kidapawan, Cotabato and entered in his Notarial
Register as Doc. No. 20, Page No. 49, Book No. V, Series of 1955; and
That in order that I and the Heirs of Constancio Labanon will exercise our respective rights and
ownership over the aforementioned lot, and to give force and effect to said deed of assignment, I
hereby, by these presents, request the Honorable Director of Lands and the Land Title Commission
to issue a separate title in my favor covering the western half portion of the aforementioned lot and
to the Heirs of Constancio Labanon a title for the eastern half portion thereof.
IN WITNESS THEREOF, I have hereunto set my hand this 25th day of April, 1962, at Pikit,
Cotabato, Philippines." (p. 9, records)
After the death of Constancio Labanon, his heirs executed an [e]xtra-judicial settlement of estate
with simultaneous sale over the aforesaid eastern portion of the lot in favor of Alberto Makilang, the
husband of Visitacion Labanon, one of the children of Constancio. Subsequently, the parcel of land
was declared for taxation purposes in the name of Alberto under TD No. 11593. However, in March
1991, the defendants heirs of Maximo Labanon namely, Alicia L. Caniedo, Leopoldo Labanon,
Roberto Nieto and Pancho Labanon, caused to be cancelled from the records of the defendant
Provincial Assessor of Cotabato the aforesaid TD No. 11593 and the latter, without first verifying the
legality of the basis for said cancellation, did cancel the same. x x x Further, after discovering that
the defendant-heirs of Maximo Labanon were taking steps to deprive the heirs of Constancio
Labanon of their ownership over the eastern portion of said lot, the latter, thru Alberto Makilang,
demanded the owner’s copy of the certificate of title covering the aforesaid Lot to be surrendered to
the Register of Deeds of Cotabato so that the ownership of the heirs of Constancio may be fully
effected but the defendants refused and still continue to refuse to honor the trust agreement entered
into by the deceased brothers. x x x4
Thus, on November 12, 1991, petitioners filed a complaint5 for Specific Performance, Recovery of
Ownership, Attorney’s Fees and Damages with Writ of Preliminary Injunction and Prayer for
Temporary Restraining Order against respondents docketed as Civil Case No. 865 before the
Kidapawan City RTC. After hearing, the trial court rendered its August 18, 1999 Decision, the
decretal portion of which reads:
Wherefore, prescinding from the foregoing facts and considerations the Court finds and so holds that
the [defendant-heirs] of Maximo Labanon represented by Alicia Labanon Caniedo have proved by
preponderance of evidence that they are entitled to the reliefs set forth in their answer and
consequently judgment is hereby rendered as follows:
1. Ordering the dismissal of the complaint against the Heirs of Maximo Labanon represented
by Alicia Labanon Caniedo for lack of merit;
2. Ordering the dismissal of the case against the Provincial Assessor. The claim of the
plaintiff is untenable, because the duties of the Provincial Assessor are ministerial. Moreover,
the presumption of regularity in the performance of his duty is in his favor;
3. Ordering the plaintiff to pay the defendants the amount of P20,000.00 as exemplary
damages, P10,000.00 for Attorney’s Fees, P500.00 per appearance in Court; and
4. To pay the costs of this suit.
IT IS SO ORDERED.6
Aggrieved, respondents elevated the adverse judgment to the CA which issued the assailed May 8,
2003 Decision in CA-G.R. CV No. 65617, the fallo of which states:
WHEREFORE, the appeal is hereby GRANTED for being meritorious. The assailed decision of the
Regional Trial Court is hereby REVERSED and SET ASIDE and a new one is hereby entered as
follows:
1) Recognizing the lawful possession of the plaintiffs-appellants over the eastern portion of
the property in dispute;
2) Declaring the plaintiffs-appellants as owners of the eastern portion of the property by

reason of lawful possession;
3) Ordering the Provincial Assessor to reinstate TD No. 11593 and declaring TD No. 243-A
null and void;
4) Ordering the defendants-appellees to pay the plaintiffs-appellants the amount of P20,000

as moral damages, P10,000 for attorney’s fees, P500.00 per appearance in Court and
5) To pay the costs of the suit.
SO ORDERED.
The Issues
Surprised by the turn of events, petitioners brought this petition before us raising the following
issues, to wit:
1. Whether or not Original Certificate of Title No. 41320 issued on April 10, 1975 in the name
of MAXIMO LABANON be now considered indefeasible and conclusive; and
2. Whether or not the Trust Agreement allegedly made by Constancio Labanon and Maximo
Labanon prescribed.7
The Court’s Ruling
The petition must fail.
First Issue
Respondents are not precluded from challenging the validity of Original Certificate of Title No. P-
41320
Petitioners argue that respondents can no longer question Maximo Labanon’s ownership of the land
after its registration under the principle of indefeasibility of a Transfer Certificate of Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in Section 32 of Presidential Decree No. (PD)
1529, amending the Land Registration Act, which provides:
Section 32. Review of decree of registration; Innocent purchaser for value. The decree of

registration shall not be reopened or revised by reason of absence, minority, or other disability of any
person adversely affected thereby, nor by any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the government and the branches thereof,
deprived of land or of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and
review of the decree of registration not later than one year from and after the date of the entry of
such decree of registration, but in no case shall such petition be entertained by the court where an
innocent purchaser for value has acquired the land or an interest therein, whose rights may be
prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in
this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for
value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title
issued shall become incontrovertible. Any person aggrieved by such decree of registration in any
case may pursue his remedy by action for damages against the applicant or any other persons
Contrary to petitioners’ interpretation, the aforequoted legal provision does not totally deprive a party
of any remedy to recover the property fraudulently registered in the name of another. Section 32 of
PD 1529 merely precludes the reopening of the registration proceedings for titles covered by the
Torrens System, but does not foreclose other remedies for the reconveyance of the property to its
rightful owner. As elaborated in Heirs of Clemente Ermac v. Heirs of Vicente Ermac:
While it is true that Section 32 of PD 1529 provides that the decree of registration becomes
incontrovertible after a year, it does not altogether deprive an aggrieved party of a remedy in law.
The acceptability of the Torrens System would be impaired, if it is utilized to perpetuate fraud against
the real owners.8
A more succinct explanation is found in Vda. De Recinto v. Inciong, thus:
The mere possession of a certificate of title under the Torrens system does not necessarily make the
possessor a true owner of all the property described therein for he does not by virtue of said
certificate alone become the owner of the land illegally included. It is evident from the records that
the petitioner owns the portion in question and therefore the area should be conveyed to her. The
remedy of the land owner whose property has been wrongfully or erroneously registered in another's
name is, after one year from the date of the decree, not to set aside the decree, but, respecting the
decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary
court of justice for reconveyance or, if the property has passed into the hands of an innocent
purchaser for value, for damages.9 (Emphasis supplied.)
Undeniably, respondents are not precluded from recovering the eastern portion of Original
Certificate of Title (OCT) No. P-14320, with an area subject of the "Assignment of Rights and
Ownership" previously owned by their father, Constancio Labanon. The action for Recovery of
Ownership before the RTC is indeed the appropriate remedy.
Second Issue
The trust agreement between Maximo Labanon and Constancio Labanon may still be enforced
Former Vice-President and Senator Arturo Tolentino, a noted civilist, explained the nature and
import of a trust:
Trust is the legal relationship between one person having an equitable ownership in property and
another person owning the legal title to such property, the equitable ownership of the former entitling
him to the performance of certain duties and the exercise of certain powers by the latter.10
This legal relationship can be distinguished from other relationships of a fiduciary character, such as
deposit, guardianship, and agency, in that the trustee has legal title to the property.11 In the case at
bench, this is exactly the relationship established between the parties.
Trusts are classified under the Civil Code as either express or implied. Such classification
determines the prescriptive period for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that "[n]o particular words are required
for the creation of an express trust, it being sufficient that a trust is clearly intended."
Civil law expert Tolentino further elucidated on the express trust, thus:
No particular form of words or conduct is necessary for the manifestation of intention to create a
trust. It is possible to create a trust without using the word "trust" or "trustee". Conversely, the mere
fact that these words are used does not necessarily indicate an intention to create a trust. The
question in each case is whether the trustor manifested an intention to create the kind of relationship
which to lawyers is known as trust. It is immaterial whether or not he knows that the relationship
which he intends to create is called a trust, and whether or not he knows the precise characteristics
of the relationship which is called a trust.12
Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of Charles Parsons and Patrick C.
Parsons, that:
An express trust is created by the direct and positive acts of the parties, by some writing or deed or
by words evidencing an intention to create a trust; the use of the word trust is not required or
essential to its constitution, it being sufficient that a trust is clearly intended.13
1avvphi1
In the instant case, such intention to institute an express trust between Maximo Labanon as trustee
and Constancio Labanon as trustor was contained in not just one but two written documents, the
Assignment of Rights and Ownership as well as Maximo Labanon’s April 25, 1962 Sworn Statement.
In both documents, Maximo Labanon recognized Constancio Labanon’s ownership and possession
over the eastern portion of the property covered by OCT No. P-14320, even as he recognized
himself as the applicant for the Homestead Patent over the land. Thus, Maximo Labanon maintained
the title over the property while acknowledging the true ownership of Constancio Labanon over the
eastern portion of the land. The existence of an express trust cannot be doubted nor disputed.
On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that unrepudiated
written express trusts are imprescriptible:
While there are some decisions which hold that an action upon a trust is imprescriptible, without
distinguishing between express and implied trusts, the better rule, as laid down by this Court in other
decisions, is that prescription does supervene where the trust is merely an implied one. The reason
has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA
84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real property
prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229, March
29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the Code of Civil
Procedure referred only to express unrepudiated trusts, and did not include constructive trusts (that
are imposed by law) where no fiduciary relation exists and the trustee does not recognize the trust at
all.14
This principle was amplified in Escay v. Court of Appeals this way: "Express trusts prescribe 10
years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 0.G. p.
8429, Sec. 40, Code of Civil Procedure)."15
In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive period for the
enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by the
trustee.16
In the case at bar, Maximo Labanon never repudiated the express trust instituted between him and
Constancio Labanon. And after Maximo Labanon’s death, the trust could no longer be renounced;
thus, respondents’ right to enforce the trust agreement can no longer be restricted nor prejudiced by
prescription.
It must be noted that the Assignment of Rights and Ownership and Maximo Labanon’s Sworn
Statement were executed after the Homestead Patent was applied for and eventually granted with
the issuance of Homestead Patent No. 67512 on June 6, 1942. Evidently, it was the intent of
Maximo Labanon to hold the title over the land in his name while recognizing Constancio Labanon’s
equitable ownership and actual possession of the eastern portion of the land covered by OCT No. P-
14320.
In addition, petitioners can no longer question the validity of the positive declaration of Maximo
Labanon in the Assignment of Rights and Ownership in favor of the late Constancio Labanon, as the
agreement was not impugned during the former’s lifetime and the recognition of his brother’s rights
over the eastern portion of the lot was further affirmed and confirmed in the subsequent April 25,
1962 Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the repository of the settled precept that "[w]here one
derives title to property from another, the act, declaration, or omission of the latter, while holding the
title, in relation to the property, is evidence against the former." Thus, petitioners have accepted the
declaration made by their predecessor-in-interest, Maximo Labanon, that the eastern portion of the
land covered by OCT No. P-14320 is owned and possessed by and rightfully belongs to Constancio
Labanon and the latter’s heirs. Petitioners cannot now feign ignorance of such acknowledgment by
their father, Maximo.
Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied in the Assignment of
Rights and Ownership pursuant to Article 1371 of the Civil Code that contracts take effect between
the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the commitment made by their father with respect to
the subject property since they were merely subrogated to the rights and obligations of their
predecessor-in-interest. They simply stepped into the shoes of their predecessor and must therefore
recognize the rights of the heirs of Constancio over the eastern portion of the lot. As the old adage
goes, the spring cannot rise higher than its source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA Decision and October 13, 2003
Resolution in CA-G.R. CV No. 65617 are AFFIRMED with the modifications that the Kidapawan City,
Cotabato RTC, Branch 17 is directed to have OCT No. P-14320 segregated and subdivided by the
Land Management Bureau into two (2) lots based on the terms of the February 11, 1955 Assignment
of Rights and Ownership executed by Maximo Labanon and Constancio Labanon; and after
approval of the subdivision plan, to order the Register of Deeds of Kidapawan City, Cotabato to
cancel OCT No. P-14320 and issue one title each to petitioners and respondents based on the said
subdivision plan.
Costs against petitioners.
SO ORDERED.
G.R. No. L-48335 April 15, 1988
JUAN AGUILA, petitioner,
vs.
COURT OF FIRST INSTANCE OF BATANGAS, BRANCH I, SPOUSES JUAN HERNANDEZ and
MAGDALENA MALALUAN, GAVINA HERNANDEZ and BONIFACIO LIMBO, MAGDALENA
HERNANDEZ and BENITO DIMACULANGAN, ELEUTERIO HERNANDEZ and LAURA
BRIONES, DEMETRIA HERNANDEZ and CONRADO CASTILLO, and AVELINO, NESTORIO and
CARMEN, all surnamed HERNANDEZ, respondents.
CRUZ, J.:
Juliana Matienzo had two husbands in succession, namely, Escolastico Alabastro and, after his death, Daniel Aguila. The petitioner is
claiming the disputed property as the only surviving child of the second marriage. The private respondents are resisting this claim as the
children of Maria Alabastro, the sole offspring of the first marriage. 1
In an earlier action between them, docketed as Civil Case No. 1552 in the Court of First Instance of
Batangas, the private respondents had sued for partition and damages against the herein petitioner
and his wife, alleging that some properties held by them pertained to the first marriage as Juliana
and her second husband had not acquired anything during their marriage. Judgment was rendered
on January 7, 1974, in favor of the plaintiffs after the defendants were precluded from presenting
their own evidence owing to what they later called "the gross ineptitude of their counsel," who had
failed to appear at two scheduled hearings. A motion for reconsideration and a second motion for
2
reconsideration and/or to present their evidence were both denied by the trial court. On September
5, 1974, the defendants were given an extension of twenty days to file their record on appeal and on
September 24, 1974, another extension of fifteen days was granted. On November 21, 1974, the
trial court denied the defendants' record on appeal and appeal bond on the ground that the decision
had already become final and executory. On motion of the plaintiffs, the trial court then issued a writ
of execution on December 2, 1974, amended the following day, pursuant to which the properties
held by the defendants were levied upon and sold at public auction to the plaintiffs as the highest
bidders. 3
The acts of the trial court were questioned by the defendants in a petition
for certiorari and mandamus with preliminary injunction, which was denied by the Court of Appeals.
So was their motion for reconsideration. The defendants then came to this Court in a petition for
review by certiorari which was also denied. An "amended" petition was considered a motion for
reconsideration and was likewise denied. On August 16, 1976, another motion for reconsideration
was also denied with finality, with the warning that no further motions would be entertained . 4
Nothing daunted the defendants tried again, this time by filing on June 8, 1977, a complaint for
reconveyance of the properties acquired by the defendants in the earlier action for partition. This
new complaint was docketed as Civil Case No. 1728 in the Court of First Instance of Batangas. In
their answer, the defendants alleged res judicata as one of their affirmative defenses, arguing that
the complaint was barred by the prior judgment in Civil Case No. 1552. After preliminary hearing of
this defense, the trial court considered the objection well-taken and dismissed the case. The 5
petitioner then came to this court to challenge the order.

The petitioner does not seriously dispute that requisites of res judicata are present, to wit: (1) the
presence of a final former judgment; (2) the court rendering the same must have jurisdiction over the
subject matter and the parties; (3) the former judgment must be on the merits; and (4) there must be,
between the two cases, Identity of parties, Identity of subject matter and Identity of causes of
action. He says in fact that "he does not seek to do away with the rule of res judicata but merely
6
proposes to undo a grave and serious wrong perpetuated in the name of justice." 7
What he does contend in his brief is that, as a mere technical defense, res judicata showed not
prevail over his right to substantial justice, and specifically to due process. The petitioner claims he
was denied this constitutional protection when the defendants were deprived of the opportunity to
submit their evidence in the said Civil Case No. 1552 and later to appeal the decision of the trial
court.
As a matter of fact, he was not denied that opportunity, which is precisely – and only – what due
process guarantees. The records show that he did have that opportunity to be heard and to have the
decision reviewed but forfeited the right because of his own counsel, whom he criticized as follows:
Clearly, it was through the gross ineptitude of petitioner's original counsel that he
was precluded from presenting his evidence in Civil Case No. 1552; that he lost his
right to appeal; and that the Decision in the Id case became final, executory and
executed.
xxx xxx xxx
There is also no dispute that the Decision in Civil Case No. 1552 has already
become final, executory and executed, and this, all because of the gross ineptitude
of counsel for the defendants (herein petitioner and his wife) who did not file the
record on appeal within the extended period of time granted by the Court and who
later on pursued a wrong remedy before the Honorable Court of appeals in CA. G.R.
No. SP-04698 and before the Honorable Supreme Court in G.R. No. L- 43388
thereby allowing the period for availing of the remedy of Relief judgment judgment to
lapse. 6
Counsel are supposed to represent their clients by virtue of a valid authorization from the latter and
act on their behalf with binding effect. Persons are allowed to practice law only after they shall have
passed the bar petitions, which merely determine if they have the minimum requirements to engage
in the exercise of the legal profession. This is no guaranty, of course, that they will discharge their
duties with full fidelity to their clients or with full mastery or at least appreciation of the law. The law,
to be fair, is not really all that simple; there are parts that are rather complicated and may challenge
the skills of many lawyers. By and large, however, the practice of the law should not present much
difficulty unless by some unfortunate quirk of fate the lawyer has been allowed to enter the bar
despite his lack of preparation, or, while familiar with the intricacies of his , is nevertheless neglectful
of his duties and does not pay proper attention to his work.
In the instant case, the petitioner should have noticed the succession of errors committed by his
counsel and taken appropriate steps for his replacement before it was altogether too late. He did not.
On the contrary, he continued to retain his counsel through the series of proceedings that all resulted
in the rejection of his cause, obviously through such counsel's "ineptitude" and, let it be added, the
clients" forbearance. The petitioner"s reverses should have cautioned him that his lawyer was
mishandling his case and moved him to seek the help of other counsel, which he did in the end but
rather tardily.
Now petitioner wants us to nullify all of the antecedent proceedings and recognize his earlier claims
to the disputed property on the justification that his counsel was grossly inepet. Such a reason is
hardly plausible as the petitioner's new counsel should know. Otherwise, all a defeated party would
have to do to salvage his case is claim neglect or mistake on the part of his counsel as a ground for
reversing the adverse judgment. There would be no end to litigation if this were allowed as every
shortcoming of counsel could be the subject of challenge by his client through another counsel who,
if he is also found wanting, would likewise be disowned by the same client through another counsel,
and so on ad infinitum. This would render court proceedings indefinite, tentative and subject to
reopening at any time by the mere subterfuge of replacing counsel.
On the effects of counsel's acts upon his client, this Court has categorically declared:
It has been repeatedly enunciated that "a client is bound by the action of his counsel
in the conduct of a case and cannot be heard to complain that the result might have
been different had he proceeded differently. A client is bound by the mistakes of his
lawyer. If such grounds were to be admitted and reasons for reopening cases, there
would never be an end to a suit so long as new counsel could be employed who
could allege and show that prior counsel had not been sufficiently diligent or
experienced or learned. ... Mistakes of attorneys as to the competency of a witness,
the sufficiency, relevancy or irrelevancy of certain evidence, the proper defense, or
the burden of proof, ... failure to introduce certain evidence, to summon witnesses
and to argue the case are not paper grounds for a new trial, unless the incompetency
of counsel is so great that his client is prejudiced and prevented from properly
presence his case." (Vol. 2, Moran, Comments on the Rules of Court, pp. 218, 219-
220, citing Rivero v. Santos, et al., 98 Phil. 500. 503-504; Isaac v. Mendoza, 89 Phil.
279; Montes v. Court, 48 Phil. 64; People v. Manzanilla, 43 Phil. 167; U.S. v.
Dungca, 27 Phil. 274, U.S. v. Umali, 15 Phil. 33; see also People v. Ner 28 SCRA
1151, 1164). In the 1988 case of Palanca v. American Food, etc. (24 SCRA 819,
828), this principle was reiterated. (Tesoro v. Court of Appeals, 54 SCRA 296, 304).
At that, it is not even exactly true, as the petitioner claims, that his evidence was not considered by
the trial court in Civil Case No. 1552. The record shows that when the defendants filed their second
motion for reconsideration and/or to allow them to present their evidence, which was attached, it was
examined by the court "in fairness to the defendants" but found to be "so vague and not appearing to
be indubitable as to warrant reopening of the case." This conclusion was reached by the late Judge
9
Jaime R. Agloro after he had made a careful and lengthy analysis of such evidence, dwelling on
each of the disputed properties, their antecedent, description, and the basis of the defendants'
claims therefor. A mere reading of such discussion, which covered two single spaced typewritten
pages, will show that, although the judge could have simply denied the second motion for
reconsideration, he nonetheless took the time and exerted painstaking efforts to study the proffered
evidence. The meticulous consideration of such evidence commends the trial judge's thoroughness
and sense of justice and clearly belies the petitioner's complaint that he had been denied due
process.
Perhaps it is for this reason that the petitioner does not strongly attack the decision, preferring to
train his sights on his own former counsel. As he says in his petition, he "does not seek the nullity of
the judgment rendered in Civil Case No. 1552 which has already become final due to legal
technicality." What he does ask for is a reconveyance of the subject properties which he says were
10
udjustly taken from him as a result of his lawyer's mistakes. Such blunders, he contends, are
correctable in an action for reconveyance which the Court should allow in the exercise of its equity
jurisdiction.
The law on reconveyance is clear, and jurisprudence thereon is well-settled. This remedy is
available in cases where, as a result of mistake or fraud, property is registered in the name of a
person not its owner. Clerical error in designating the real owner is a valid ground for reconveyance
11
after the decree shall have become final following the lapse of one year therefrom. Reconveyance
may also be sought where it is established that a person not entitled to the property succeeded in
registering it in his name to the prejudice of the real owner. However, it cannot be employed to
negate the effects of a valid decision of a court of justice determining the conflicting claims of
ownership of the parties in an appropriate proceeding, as in Civil Case No. 1562. The decision in
that case was a valid resolution of the question of ownership over the disputed properties and
cannot be reversed now through the remedy of reconveyance.
For all its conceded merits, equity is available only in the absence of law and not as its replacement.
Equity is described as justice outside legality, which simply means that it cannot supplant although it
may, as often happens, supplement the law. We said in an earlier case and we repeat it now, that
12
all abstract arguments based only on equity should yield to positive rules, which pre-empt and
prevail over such persuasions. Emotional appeals for justice, while they may wring the heart of the
Court, cannot justify disregard of the mandate of the law as long as it remains in force. The
applicable maxim, which goes back to the ancient days of the Roman jurists – and is now still
reverently observed – is "aequetas nunquam contravenit legis.
We find it unnecessary to rule on the other arguments raised by the petitioner as they will not affect
the decision we reach today. This decision must again be adverse to him although he may this time
be represented by able counsel.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.
G.R. No. 148147 February 16, 2007
JESSIE GASATAYA, Petitioner,
vs.
EDITHA MABASA, Respondent.
DECISION
CORONA, J.:
Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the
decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 55055 which, in turn, affirmed the decision
of the Regional Trial Court (RTC) of Lanao del Norte, Branch 7.2
The facts follow.
Respondent Editha Mabasa’s father, Buenaventura Mabasa, was granted a homestead patent on
Lots 279, 272 and 972 located in Lala, Lanao del Norte. Buenaventura Mabasa mortgaged these
lots to secure a loan from the Development Bank of the Philippines (DBP). Because of his failure to
pay his indebtedness, DBP foreclosed on the lots and sold them at public auction where it emerged
as the highest bidder. DBP then obtained titles to the lots: Lot 279 under TCT No. T-2247 and
consolidated Lots 272 and 972 under TCT No. T-2448.
When Buenaventura Mabasa died, respondent’s siblings authorized her to negotiate with DBP for
the repurchase of the lots. DBP allowed respondent to reacquire the foreclosed properties through a
deed of conditional sale for ₱25,875.3
Subsequently, respondent entered into an agreement with petitioner’s father, Sabas Gasataya, for
the latter to assume payment of her obligation to DBP. They further agreed that Sabas Gasataya
would take possession of the lots for 20 years and develop them into a fishpond. As consideration
thereof, respondent received ₱10,000 cash, in addition to the ₱25,000 that Sabas Gasataya had to
pay DBP on her behalf.
Upon representation by Sabas Gasataya that respondent’s obligation to DBP had already been
settled, they entered into another agreement denominated as "Deed of Sale of Fishpond Lands with
Right to Repurchase."
Eight years after the execution of the above deed of sale with right to repurchase, respondent
discovered that Sabas Gasataya had stopped paying DBP. As a result, DBP revoked her right to
repurchase the subject lots.1awphi1.net
DBP later on held a public auction of the properties where petitioner participated and bid the highest
price of ₱27,200. Eventually, he acquired titles to the lots for which he was issued TCT No. T-11720
in lieu of TCT No. T-2447 (Lot 279) and TCT No. T-11721 for TCT No. T-2448 (Lots 272 and 972).
Respondent then filed a complaint in the RTC for reconveyance of titles of lands with
damages4 against petitioner and Sabas Gasataya (Gasatayas). She claimed that the latter
deliberately reneged on his commitment to pay DBP to: (1) revoke her right to repurchase the lots
under the deed of conditional sale and (2) subject the properties to another public auction where
petitioner could bid.
Petitioner and his father denied the allegations saying that the deed of conditional sale assumed by
the latter from respondent was rendered ineffective by DBP’s refusal to accept payments thereon.
The trial court ruled in favor of respondent finding that the Gasatayas failed to controvert her claim
that they defrauded her just so petitioner could acquire the lots at public auction.5 According to the
trial court, the Gasatayas failed to prove that DBP indeed rejected payments from Sabas Gasataya.
The trial court ruled:
WHEREFORE, judgment is hereby rendered in favor of the [respondent] and against [the
Gasatayas] ordering [them] to wit:
a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720] and TCT No. T-

11721, both of the Registry of Deeds for the Province of Lanao del Norte, upon tender to and
receipt by [petitioner] of the amount of ₱37,200.00 Philippine money;
b. Ordering the Registrar of Deeds for the Province of Lanao del Norte to procure and cause
the transfer and registration of the aforesaid transfer certificates of title in favor and in the
name of herein [respondent] Editha S. Mabasa;
c. Ordering [the Gasatayas] to cede, transfer and reconvey to [respondent] the physical
possession and occupancy of Lot 279, 272 and Lot 972…as covered by the aforesaid
certificates of title;
d. Ordering [the Gasatayas] to pay [respondent] the sum of ₱5,000.00 for attorney’s fees;
₱5,000.00 as litigation expenses;
e. Ordering [the Gasatayas] to pay costs of this proceeding[s].
SO ORDERED.6
Petitioner and his father appealed to the CA which affirmed the RTC’s decision and dismissed their
appeal for lack of merit. The CA declared:
The contention of [respondent] that [the Gasatayas] deliberately chose not to pay DBP as agreed, in
order for them to acquire said properties in a fraudulent and treacherous manner, was not fully
controverted by [them]. [The Gasatayas] failed to produce evidence to support their defenses.
xxx xxx xxx
Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a Deed of Sale with a Right
to Repurchase and not because the DBP granted it to them…[T]o facilitate their acquisition of the
land in question, [they] deliberately defaulted in the payment of the assumed obligation to the
damage and prejudice of [respondent]. Consequently, the lands in question were subjected to public
bidding wherein [petitioner] participated and eventually won…[the Gasatayas] committed a breach of
trust amounting to fraud which would warrant an action for reconveyance.7
Petitioner alone came to us via this appeal by certiorari seeking the reversal of the CA decision.
Before us, petitioner contests the CA decision affirming the trial court’s order to reconvey his titles on
the disputed lots to respondent who, according to him, is not the owner thereof.
We affirm the CA.
Reconveyance is available not only to the legal owner of a property but also to the person with a
better right than the person under whose name said property was erroneously registered.8 While
respondent is not the legal owner of the disputed lots, she has a better right than petitioner to the
contested lots on the following grounds: first, the deed of conditional sale executed by DBP vested
on her the right to repurchase the lots and second, her right to repurchase them would have
subsisted had they (the Gasatayas) not defrauded her.
The trial court’s findings, as affirmed by the CA, that petitioner and his father deceived respondent to
acquire the disputed lots bind us. Well-settled is the rule that factual conclusions of the trial court
deserve respect and become irrefutable especially when affirmed by the CA.9 Absent any evidence
that the CA overlooked salient matters that could justify a reversal of the outcome of this case, we
decline to disturb such factual conclusions.
Petitioner, however, insists that respondent had no right to the disputed lots since the conditional
sale agreement where such right was based had long been cancelled by DBP. According to
petitioner, a void and inexistent deed cannot override his right as registered owner of the lots.
We disagree.
Petitioner cannot discredit the deed of conditional sale just so he can to keep his titles to the lots.
Petitioner should be reminded that DBP revoked respondent’s right to repurchase the lots under said
deed because of the deceitful maneuverings that he and his father employed. If we were to sustain
petitioner’s argument, then we would, in effect, reward him for his misdeed.
Neither can this Court uphold petitioner’s contention that his titles are unsullied on the mere fact that
he purchased the properties at public auction. Fraud overthrows the presumption that the public sale
was attended with regularity. The public sale did not vest petitioner with any valid title to the
properties since it was but the consequence of his and his father’s fraudulent schemes.
The registration of the properties in petitioner’s name did not obliterate the fact that fraud preceded
and facilitated such registration. Actual or positive fraud proceeds from an intentional deception
practiced by means of misrepresentation of material facts,10 which in this case was the conscious
representation by petitioner’s father (Sabas Gasataya) that respondent’s obligation to DBP had
already been settled. It is fraud to knowingly omit or conceal a fact, upon which benefit is obtained,
to the prejudice of another.11 Consequently, fraud is a ground for reconveyance.12
Moreover, the law only protects an innocent purchaser for value and not one who has knowledge of
and participation in the employment of fraud. An innocent purchaser for value is one who buys the
property of another without notice that some other person has a right to or interest in that same
property, and who pays a full and fair price at the time of the purchase or before receiving any notice
of another person’s claim.13 Obviously, petitioner was not an innocent purchaser for value.
As a final point, the Court takes significant note of the fact that respondent’s father originally
acquired the subject lots through homestead grant. Commonwealth Act 141 (Public Land Act) aims
to confine and preserve to the homesteader and his kin the homestead lots. We, therefore, agree
with the CA’s disquisition that courts should "lend a stout shoulder to help keep a homestead in the
homesteader’s family" for the stern reality cannot be belied that "homesteaders and their families are
generally in the lower stratum of life" and most likely, when they alienate the homestead, it is "out of
dire necessity."14 According to the CA, desperation does not allow much of a choice, hence
homesteaders and their kin should be given every opportunity to repurchase their homestead.
WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No. 55055 is
hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. L-26127 June 28, 1974
(Civil Case No. 3621)
VICTOR BENIN, ET AL., plaintiffs-appellees,

vs.
MARIANO SEVERO TUASON y DE LA PAZ, ET AL., defendants. J. M. TUASON & CO.,
INC., defendant-appellant.
G.R. No. L-26128 June 28, 1974
JUAN ALCANTARA, ET AL., plaintiffs-appellees,

vs.
MARIANO SEVERO TUASON y DE LA PAZ, ET AL., defendants. J.M. TUASON & CO.,
G.R. No. L-26129 June 28, 1974
DIEGO PILI, ET AL., plaintiffs-appellees,

vs.
MARIANO SEVERO TUASON y DE LA PAZ, ET AL., defendants. J.M. TUASON & CO.,
Jose Palarca Law Offices for plaintiffs-appellees.
Manuel O. Chan & Rodolfo M. Caluag for defendant-appellant.
ZALDIVAR, J.:p
Appeal from the decision, dated January 18, 1965, of the Court of First Instance of Rizal, the Hon. Judge Eulogio Mencias, presiding in Civil
Cases Nos. 3621, 3622, and 3623.1
On May 19, 1955 three sets of plaintiffs filed three separate complaints containing substantially the
same allegations. 2
In Civil Case No. 3621, the plaintiffs alleged that they were the owners and possessors of the three
parcels of agricultural lands, described in paragraph V of the complaint, located in the barrio of La
Loma (now barrio of San Jose) in the municipality (now city) of Caloocan, province of Rizal, having
an aggregate area of approximately 278,928 square meters; that they inherited said parcels of land
from their ancestor Sixto Benin, who in turn inherited the same from his father, Eugenio Benin; that
they and their predecessors in interest had possessed these three parcels of land openly, adversely,
and peacefully, cultivated the same and exclusively enjoyed the fruits harvested therefrom; that
Eugenio Benin, plaintiff's grandfather, had said parcels of land surveyed on March 4 and 6, 1894,
that during the cadastral survey by the Bureau of Lands of the lands in Barrio San Jose in 1933 Sixto
Benin and herein plaintiffs claim the ownership over said parcels of land; that they declared said
lands for taxation purposes in 1940 under Tax Declaration No. 2429; that after the outbreak of the
last World War, or sometime in 1942 and subsequently thereafter, evacuees from Manila and other
places, after having secured the permission of the plaintiffs, constructed their houses thereon and
paid monthly rentals to plaintiffs.
In Civil Case No. 3622 the plaintiffs alleged that they were the owners and possessors of two parcels
of agricultural land, described in paragraph V of the complaint, located in the Barrio of La Loma (now
Barrio San Jose) in the municipality of Caloocan, province of Rizal, having an aggregate area of
approximately 148,118 square meters; that these parcels of land were inherited by them from their
deceased father Bonoso Alcantara, who in turn inherited the same from his father, Juan Alcantara;
that plaintiffs Juan Alcantara and Jose Alcantara were the children of Bonoso Alcantara; that these
two brothers inherited the land from their father, and they and their predecessors in interest had
been in open, adverse and continuous possession of the same, planting therein palay and other
agricultural products and exclusively enjoying said products; that on March 28, 1894 plaintiffs'
grandfather, Juan Alcantara, had said lands surveyed; that during the cadastral survey by the
Bureau of Lands of the lands in Barrio San Jose in 1933 Bonoso Alcantara and the plaintiffs filed
and registered their claims of ownership over said lands; that plaintiffs had said lands declared for
taxation purposes under Tax Declaration No. 2390, of Quezon City; that after the outbreak of the last
World War, or sometime in 1942 and subsequently thereafter, evacuees from Manila and other
places, after having secured permission from plaintiffs, settled and constructed their houses on said
lands and plaintiffs collected monthly rentals from them.
In Civil Case No. 3623, plaintiffs alleged that they are the owners and possessors of a parcel of
agricultural land located in the Barrio of La Loma (now San Jose), municipality of Caloocan, province
of Rizal, having an area of approximately 62,481 square meters; that this parcel of land was
inherited by plaintiffs from their ancestor Candido Pili who in turn inherited the same from his
parents; that Candido Pili and his predecessors in interest owned, possessed, occupied and
cultivated the said parcel of land from time immemorial; that upon the death of Candido Pili his
children Luisa Pili, Pascual Pili, Diego Pili and Manuel Pili succeeded to the ownership and
possession and cultivation of said land; that plaintiffs and their predecessors in interest, as owners
and possessors of said land, had openly, adversely and continuously cultivated the land, planting
thereon palay and other agricultural products and enjoying exclusively the products harvested
therefrom; that during his lifetime, Candido Pili ordered the survey of said land sometime on March
11, 1894, and when the cadastral survey of said land was conducted by the Bureau of Lands in 1933
Candido Pili and plaintiffs filed and registered their claim of ownership over the said parcel of land;
that plaintiffs had the land declared for taxation purposes under Tax Declaration No. 2597, Quezon
City, Philippines; that after the outbreak of the last World War, or sometime in 1942 and
subsequently thereafter, evacuees from Manila and other places, after securing permission from
plaintiffs, settled and constructed their houses in said land and plaintiffs collected monthly rentals
from their lessees or tenants.
The plaintiffs in these three civil cases uniformly alleged, in their respective complaint, that sometime
in the year 1951 while they were enjoying the peaceful possession of their lands, the defendants,
particularly the defendant J.M. Tuason and Co. Inc., through their agents and representatives, with
the aid of armed men, by force and intimidation, using bulldozers and other demolishing equipment,
illegally entered and started defacing, demolishing and destroying the dwellings and constructions of
plaintiffs' lessees, as well as the improvements consisting of rice paddies (pilapiles), bamboos and
fruit trees, and permanent improvements such as old roads, old bridges and other permanent
landmarks within and outside the lands in question, disregarding the objections of plaintiffs, and as a
result plaintiffs were deprived of the rentals received from their lessees; that plaintiffs made inquiries
regarding the probable claim of defendants, and in 1953 they discovered for the first time that their
lands, as described in their respective complaint, had either been fraudulently or erroneously
included, by direct or constructive fraud, in what appears as Parcel No. 1 (known as Santa Mesa
Estate) in Original Certificate of Title No. 735 of the Land Records of the province of Rizal in the
names of the original applicants for registration, now defendants, Mariano Severo Tuason y de la
Paz, Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion
Tuason y de la Paz, and Augusto Huberto Tuason y de la Paz.
The plaintiffs in each of the three complaints also alleged that the registered owners mentioned in
Original Certificate of Title No. 735 had applied for the registration of two parcels of land (known as
the Santa Mesa Estate and the Diliman Estate), located in the municipalities of Caloocan and San
Juan del Monte, province of Rizal, of which parcel No. 1 (Santa Mesa Estate) contained an area of
8,798,617 square meters; that the registration proceedings were docketed as LRC No. 7681 of the
Court of Land Registration; that the application for registration in LRC No. 7681, containing the
boundaries, technical descriptions and areas of parcel No. 1 (Santa Mesa Estate) and parcel No. 2
(Diliman Estate) was published in the Official Gazette; that before the decision was handed down in
LRC No. 7681, the area, boundaries and technical descriptions of parcel No. 1 were altered and
amended; that the amendments and alterations, which were made after the publication of the
original application, were never published; that on March 7, 1914 a decision was rendered in LRC
No. 7681 based on the amended plan; that pursuant to the decision of March 7, 1914 a decree of
registration was issued on July 6, 1914, known as Decree No. 17431, decreeing the registration in
the names of the applicants of the two parcels of land (Santa Mesa Estate and Diliman Estate); that
the decision dated March 7, 1914 in LRC No. 7681 is null and void because the Land Registration
Court had no jurisdiction to render the decision for lack of publication; that Decree No. 17431 issued
pursuant to the decision of March 7, 1914 in LRC No. 7681 is likewise null and void from the
beginning, because it was issued pursuant to a void decision and because the boundaries, technical
descriptions and areas appearing in the decree are different and not identical with the boundaries,
technical descriptions and areas in the application for registration as published in the Official
Gazette; that the area of parcel No. 1 as mentioned in Decree No. 17431 is bigger than the area of
parcel No. 1 appearing in the application for registration as published in the Official Gazette; that
Original Certificate of Title No. 735, referring to parcel 1 (Santa Mesa Estate), is also null and void
from the beginning because it was issued pursuant to a void decree of registration; that the area,
boundaries and technical description of Parcel No. 1 appearing in Decree of Registration No. 17431
and in the Original Certificate of Title No. 735 are different from the area, boundaries and technical
description appearing in the application for registration as published in the Official Gazette; that the
plaintiffs had not been notified of the proceedings in LRC No. 7681 although the applicants knew, or
could have known, by the exercise of necessary diligence, the names and addresses of the plaintiffs
and their predecessors in interest who were then, and up to the time the complaints were filed, in
possession and were cultivating the lands described in paragraph V of their respective complaint;
and that during, before, and even after the issuance of Original Certificate of Title No. 735 the
defendants had tacitly recognized the ownership of the plaintiffs over their respective lands because
said defendants had never disturbed the possession and cultivation of the lands by the plaintiffs until
the year 1951; and that all transfer certificates of title issued subsequently, based on Original
Certificate of Title No. 735, are also null and void.
3
The plaintiffs in each of the three cases prayed the court: (1) to declare them owners and entitled to
the possession of the parcel, or parcels, of land described in their respective complaint, as the case
may be; (2) to revoke the decision of the Court of Land Registration, dated March 7, 1914 in LRC
No. 7681, and to declare Decree No. 17431, dated July 6, 1914 null and void from the beginning
with respect to Parcel No. 1(Santa Mesa Estate) in Original Certificate of Title No. 735 which include
the lands of the plaintiffs; (3) to declare Original Certificate of Title No. 735, particularly as it refers to
Parcel No. 1 (Santa Mesa Estate) also null and void; (4) to declare null and void all transfer
certificates of titles issued by the Register of Deeds of Rizal and of Quezon City subsequent to, and
based on, Original Certificate of Title No. 735; (5) to order the defendants, in the event Original
Certificate of Title No. 735 is declared valid, to reconvey and transfer title over the land described in
their respective complaint in favor of the plaintiffs in each case, as the case may be; (6) to order the
defendants to pay the plaintiffs the market value of the lands in question in case of defendants'
inability to reconvey the same; (7) to order the defendants to pay damages to the plaintiffs; (8) to
issue a writ of preliminary injunction against the defendants, their lawyers, their agents and
representatives from disturbing the ownership and possession of the plaintiffs during the pendency
of these cases.
The plaintiffs, in the three cases, were allowed by the trial court to litigate as paupers.
Only defendant J.M. Tuason & Co., Inc. was actually served with summons. The other defendants
were ordered summoned by publication in accordance with Sections 16 and 17 of the Rules of
Court. Only defendant J.M. Tuason & Co., Inc. appeared. The other defendants were all declared in
default.
On June 23, 1955 defendant J.M. Tuason & Co., Inc. filed a motion to dismiss in each of the three
cases. This motion to dismiss was denied by the trial court on July 20, 1955.
On July 18, 1955 the trial court issued an order granting the writ of preliminary injunction prayed for
by the plaintiffs in their complaints. The preliminary injunction, however, was lifted by order of the
trial court on October 3, 1955, upon the posting by defendant J.M. Tuason & Co., Inc. of bonds in the
total amount of P14,000.00 pursuant to the order of the court of September 26, 1955.
On August 11, 1955 defendant J.M. Tuason & Co., Inc. filed in the three cases a motion for
reconsideration of the order of July 20, 1955 denying the motion to dismiss. This motion for
reconsideration was denied by order of the court of September 26, 1955.
On November 29, 1955 defendant J.M. Tuason & Co., Inc. filed an answer in each of the three
cases. In its answer, this defendant, among others, specifically denied plaintiffs' claim of ownership
of the lands involved in each case. The answer contains special and affirmative defenses, to wit: (1)
that the plaintiffs' cause of action is barred by prior judgment and res judicata in view of the judgment
of the Court of First Instance of Rizal in its Civil Case No. Q-156 which was subsequently elevated to
the Supreme Court as G.R. No. L-4998, in which latter case the Supreme Court affirmed in toto the
order of the lower court dismissing the case; (2) that the complaints failed to state facts sufficient to
constitute a cause of action against the defendants; (3) that the plaintiffs' action, assuming that their
complaints state sufficient cause of action, had prescribed either under Act No. 496 or under statutes
governing prescription of action; (4) that defendant J.M. Tuason & Co., Inc. is a buyer in good faith
and for valuable consideration of the parcels of land involved in the three cases; (5) that the
registration proceedings had in LRC No. 7681 instituted by the defendant's predecessors in interest
was in accordance with law, and the requirements for a valid registration of title were complied with.
By way of counterclaim the defendant prayed that the plaintiffs be ordered to pay damages as
therein specified.
The plaintiffs, amended their complaints in the three cases, by including additional parties as
plaintiffs, and the amended complaints were admitted by the trial court. The defendant, J.M. Tuason
& Co., Inc., filed a manifestation that it was reproducing and realleging its answers to the original
complaints as its answers to the amended complaints in view of the fact that the amendments to the
complaints consist merely in the inclusion of additional indispensable as well as necessary parties-
plaintiffs.
4
On June 7, 1962, after the plaintiffs had presented their evidence, defendant J.M. Tuason & Co., Inc.
presented a motion to dismiss the cases upon grounds that (1) the actions were barred by the
statute of limitations; (2) that the actions barred by a prior judgment; and (3) that plaintiffs had not
presented any evidence to prove their claim of ownership. The defendant later filed a motion to
withdraw the third ground of its motion to dismiss. The plaintiffs filed their opposition to the motion to
dismiss, as well as to the motion of defendant to withdraw its third ground to dismiss. The trial court,
in an order dated December 3, 1962, granted defendant's motion to withdraw the third ground of its
motion to dismiss but denied the motion to dismiss. 5
After trial, on January 18, 1965, the lower court rendered a decision for the three cases, the
dispositive portion of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in

favor of the Plaintiffs and against the Defendants as follows:
A — Declaring that the decision, the decree and the title issued in LRC No. 7681, are
null and void, ab initio, and of no effect whatsoever;
B — Declaring that Original Certificate of Title No. 735 found on page 136 Vol. A-7 of
the Registration Book of Rizal is null and void from the very beginning (and) of no
effect whatsoever;
C — Declaring that all Transfer Certificates of Title emanating or allegedly derived

from Original Certificate of Title No. 735 of the Province of Rizal are likewise null and
void;
D — Declaring that the plaintiff in Civil Cases Nos. 3621, 3622 and 3623 are the
owners and entitled to the possession of the parcels of land claimed and described in
paragraph V of their respective complaints;
E — Ordering the defendants and all persons claiming under them to vacate and
restore to the plaintiffs the possesion of the parcels of land described in paragraph V
of the complaint in Civil Case No. 3621 and indicated as Parcel A, Parcel B and
Parcel C, in SWO-40187 (Exh. "UU" and Exh. "VV");
F — Ordering the defendants and all persons claiming under them to vacate and
restore to the plaintiffs the possession of the parcels of land described in paragraph
V of the complaint in Civil Case No. 3623 and indicated as Parcel D and Parcel F, in
SWO-40187 (Exh. "UU" and Exh. 'VV");
G — Ordering the Defendants and all persons claiming under them to vacate and
restore to the plaintiffs the possession of the parcels of land described in paragraph
V of the complaint in Civil Case No. 3623 and indicated in Parcel E, in SWO-491187
(Exh. "UU and Exh. "VV");
H — Ordering the defendants to pay plaintiffs in Civil Case No. 3621 the sum of
P600.00 a month as actual damages for uncollected rentals from 1951 until such
possession is restored to them;
I — Ordering the defendants to pay the plaintiffs in Civil Case No. 3623 the sum of
P600.00 a month, as actual damages for uncollected rentals from 1951 until such
possession is restored to them;.
J — Ordering the defendants to pay the plaintiffs in Civil Case No. 3623 the sum of
P150.00 a month as actual damages for uncollected rentals from 1951 until such
possession is restored to them; .
K — Ordering the defendants to pay the costs; .
L — The defendants' counterclaim is hereby declared dismissed for lack of merit." 6
A motion for new trial was filed by defendant J.M. Tuason & Co., Inc. on January 30, 1965. However,
before the motion for new trial was resolved by the court, said defendant, on February 11, 1965, filed
a notice of appeal to this Court and an appeal bond, and on February 12, 1965 he filed the record on
appeal. The record on appeal, after it had been corrected and amended, as ordered and/or
7
authorized by the trial court, was approved on September 29, 1965. 8
Appellant J.M. Tuason & Co. Inc., in this appeal, contends that the trial court committed the following
errors:
I. The lower court erred in holding that the Land Registration Court in GLRO No.
7681 lacked or was without jurisdiction to issue decree No. 17431 for the alleged
reason that:
(1) The amendment to the original plan was not published;
(2) The description of Parcel 1 in the decree is not identical with the
description of Parcel 1 as applied for and as published in the Official
Gazette;
(3) Parcel 1 as decreed is bigger in area than Parcel 1 as applied for;
(4) A. Bonifacio Road is the only boundary on the West of Parcel 1.
II. The trial court erred in finding that the transcription of the decree No. 17431 was
not in accordance with the law and that, therefore, said OCT 735 was a complete
nullity and the land remains unregistered.
III. The trial court erred in taking cognizance of these cases despite its lack of
jurisdiction to hear and decide the same.
IV. The trial court erred in not dismissing these cases on the grounds of prescription
and laches, and in denying the motions to dismiss filed on said grounds.
V. The trial court erred in not dismissing these cases on the ground of res
judicata and in denying the motion to dismiss filed on said ground.
VI. The trial court erred in declaring null and void all certificates of title emanating
from OCT 735.
VII. The trial court erred in holding that J.M. Tuason & Co., Inc. is not a purchaser in
good faith and for value.
VIII. The trial court erred in awarding ownership of the lands claimed by, and in
awarding damages to, the appellees.
IX. The trial court erred in denying and in dismissing appellant's counterclaim and in
sentencing appellant to pay the costs of these suits.
As stated by the trial court in its decision, "These cases involve the validity of the decision and the
decree issued in LRC No. 7681 resulting in the issuance of Title No. 735, and the ownership and
possession of several parcels of land, claimed by the plaintiffs in their respective complaints...."
The lower court, summarizing its findings, among others, concluded that: (1) the decision and the
decree in LRC No. 7681 are null and void ab initio, having been rendered without jurisdiction; (2)
Original Certificate of Title No. 735 issued pursuant to the decree in LRC No. 7681 is null and void,
having been issued pursuant to a void degree; (3) Original Certificate of Title No. 735 is null and void
because the No. 17431 in LRC No. 7681, assuming the degree to be valid, had not been inscribed in
accordance with the provisions of Section 41 of Act 496; (4) all Transfer Certificates of Title allegedly
emanating and derived from the void Original Certificate of Title No. 735 are likewise null and void;
and (5) the plaintiffs in these three civil are the owners and entitled to the possession of the parcels
of land described in their respective complaints.
We have carefully examined and studied the voluminous records, and the numerous documentary
evidence, of these three cases, and We find that the conclusions of the trial court are not supported
by the evidence and the applicable decisions of this Court.
The Original Certificate of Title No. 735 that had been declared null and void ab initio by the trial
court covers two big parcels of land, mentioned in said title as Parcel 1, having an area of
8,778,644.10 square meters more or less, known as the Santa Mesa Estate; and Parcel 2, having an
area of 15,961,246 square meters more or less, known as the Diliman Estate. The three parcels of
land involved in Civil Case No. 3621, having an aggregate area of 278,853 square meters, more or
less; the two parcels of land involved in Civil Case No. 3622 having an aggregate area of 154,119.7
square meters, more or less; and the one parcel of land involved in Civil Case No. 3623, having an
area of 62,481 square meters, more or less, are all included in the area of Parcel 1. The trial court,
9
in its decision, states that the identity of the parcels of land claimed by the plaintiffs is not disputed
and that both the plaintiffs and the defendant admit that the parcels of land litigated are found within
the boundaries of the present Sta. Mesa Heights Subdivision (Parcel 1) covered by Original
Certificate of Title No. 735. It is shown in the survey plans, presented by both the plaintiffs and the
10
defendant, that the six parcels of lands involved in these three cases are located at the northwestern
portion of Parcel 1. (Exhs. UU, VV; and Exh. 29).
The records show, and it is established by the evidence, that sometime in 1911 Mariano Severo
Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio
Asuncion Tuason y de la Paz, and Augusto Huberto Tuason y de la Paz, filed with the Court of Land
Registration an application for the registration of their title over two parcels of land, designated in the
survey plans accompanying the application as Parcel 1 with an area of 8,798,617 square meters,
and Parcel 2 with an area of 16,254,037 square meters. The application was docketed as LRC No.
7681. There was another application covering three other parcels of land, docketed as LRC No.
7680. The application in LRC No. 7681 was set for hearing on November 20, 1911 (Exh. X). The
application and the notice of hearing, containing the technical descriptions of the two parcels of land
applied for, were published in the issue of the Official Gazette of October 25, 1911 (Exh. YY). On
November 20, 1911 the Court of Land Registration issued an order of general default against the
whole world except the Insular Government, the Director of Lands and the municipalities of
Caloocan and San Juan del Monte (Exh. 28). On December 23, 1911 the court issued an order
authorizing the amendment of the plan in LRC No. 7681 (Exh. 23). November 11, 1913 the
applicants and the Government entered into an agreement whereby the Government agreed to
withdraw its opposition to the application for registration of title over the portion known as Hacienda
Diliman (Parcel 2) on condition that the roads existing on said tract of land be allowed to remain, and
it was further agreed "that the issuance, of the title to applicants shall be made subject to all the
exceptions established by Section 39 of Act 496 as amended by Section 1 of Act 2011" (Exh. 21).
On December 29, 1913 the Court of Land Registration rendered a decision (Exh. 24) in both LRC
No. 7680 and LRC No. 7681 which, among others, stated that during the registration proceedings
the plans accompanying the two applications were amended in order to exclude certain areas that
were the subject of opposition, that the order of general default was confirmed, that the Chief of the
Surveyor's Division of the Court of Land Registration was ordered to submit a report as to whether or
not the new (amended) plans had included lands which were not by the original plans, and whether
or not the new plans had excluded the lands that had already been covered by the decree in LRC
No. 3563. The decision further stated that in the event that the new plans did not include new
parcels of land and that the lands that were the subject of the proceedings in LRC No. 3563 had
been excluded, an additional decision would be made decreeing the adjudication and registration of
the lands that were the subject of the registration proceedings in favor of the applicants, as follows:
To Mariano Severo Tuason y de la Paz, two sixths (2/6) undivided portion to Teresa Eriberta Tuason
y de la Paz, one sixth (1/6) undivided portion; to Juan Jose Tuason y de la Paz, one sixth (1/6)
undivided portion; to Demetrio Asuncion Tuason y de la Paz, one sixth (1/6)undivided portion; and to
Augusto Huberto Tuason y de la Paz, one sixth (1/6) undivided portion.
In compliance with the order contained in the decision of December 29, 1913, the Chief of the
Survey Division of the Court of Land Registration, on January 24, 1914, submitted a report (Exh. 22)
to the court which, among others, stated that the new plan of Parcel 1 in LRC No. 7681 did not
include any land that had not been previously included in the original plan.
On March 7, 1914 the Court of Land Registration rendered a supplemental decision declaring that,
on the basis of the decision of December 29, 1913 and of the report of the Surveyor of Court of Land
Registration, the applicants Mariano Severo Tuason y de la Paz and others were the owners of the
land applied for, as described in the amended plan, in the proportion mentioned in the decision, and
ordering that the land applied for be registered in the names of the applicants and that a decree of
registration be issued in accordance with the decision and the amended plan. On March 27, 1914
the Chief of the Survey Division addressed a communication to the registration court, in connection
with LRC No. 7681, suggesting that the decision of the court of March 7, 1914 be modified such that
the decree of registration be based upon the original plan as published and not upon the amended
plan (Exh. Z-3). The Court of Land Registration did not follow the recommendation of the Chief of the
Survey Division. On July 6, 1914 Decree of Registration No. 17431 was issued by the Chief of the
General Land Registration Office pursuant to the decision of the Court of Land Registration of March
7, 1914 in LRC No. 7681. The decree contains the technical description of the two parcels of land in
accordance with the plan as amended. It appears in the decree that Parcel 1 has an area of
8,798,644.10 square meters, more or less, or an increase of 27.10 square meters over the area of
8,798,617 square meters that was stated in the application for registration and in the notice of
hearing which were published in the Official Gazette of October 25, 1911; and that Parcel 2 has an
area of 15,961,246 square meters, more or less, or a decrease of 292,791 square meters from the
area of 16,254,037 square meters that was stated in the application and in the notice of hearing that
were published in the Official Gazette (Exhs. 25 and YY). All in all, there is a decrease of 292,763.90
square meters in the aggregate area of the two parcels of land sought to be registered.
Subsequently, on July 8, 1914, the Register of Deeds of the province of Rizal issued Original
Certificate of Title No. 735 in the names of the applicants, Mariano Severo Tuason y de la Paz,
Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion Tuason y de
la Paz, and Augusto Huberto Tuason y de la Paz (Exh. 30).
1. We shall now deal with the first error assigned by the appellant.
The lower court declared Original Certificate of Title No. 735 null and void ab initio because,
according to said court, that title was based on Decree of Registration No. 17431 in LRC No. 7681
that was null and void, said decree having been issued pursuant to a decision of the Court of Land
Registration in LRC No. 7681 which had no jurisdiction to render said decision.
As We have adverted to, Original Certificate of Title No. 735 covers two big parcels of land: Parcel 1,
known as the Santa Mesa Estate, and Parcel 2, known as the Diliman Estate. The records show that
these two parcels of land had been subdivided into numerous lots, and most of those lots had sold to
numerous parties — Parcel 1 having been converted into a subdivision known as the Santa Mesa
Heights Subdivision, and the lots had been sold to private individual and entities, such that in that
subdivision now are located the National Orthopedic Hospital, the station of Pangasinan
Transportation Co. (Pantranco), Sto. Domingo Church, Lourdes Church and others. Necessarily, as
a result of the sales of the lots into which Parcel 1 was subdivided, transfer certificates of title were
issued to the purchasers of the lots, and these transfer certificates of title were based upon transfer
certificates of title that emanated from Original Certificate of Title No. 735. The trial court declared
null and void all transfer certificates of title emanating, or derived, from Original Certificate of No.
735.
The decision of the trial court declaring null and void ab initio Original Certificate of Title No. 735
would invalidate the title over the entire area included in Parcel 1 — which admittedly includes the
six parcels of land claimed by the plaintiffs-and also the title over the entire area included in Parcel 2.
Let it be noted that Parcel 1 has an area of 8,798,644.10 square meters, more or less, and Parcel 2
has an area of 15,961,246 square meters, more or less; while the six parcels of land claimed by the
plaintiffs have an aggregate area of only 495,453.7 square meters, more or less. In other words, the
area of the six parcels of land claimed by the plaintiffs is only a little over two per cent (2%) of the
aggregate area of Parcel 1 and Parcel 2. But the decision of the trial court nullified Original
Certificate of Title No. 785, without any qualification.
The trial court held that the Court of Land Registration had no jurisdiction to render the decision in
LRC No. 7681 because during the registration proceedings, after the original application and notice
of hearing had been duly published, the plan of Parcel 1 was amended and no publication regarding
the amended plan was made. The trial court pointed out that the area and the description of Parcel 1
in Decree of Registration No. 17431 are not identical with the area and description of Parcel 1
applied for and published in the Official Gazette. The trial court stressed on the point that publication
is one of the essential bases of the jurisdiction of the court to hear and decide an application for
registration and to order the issuance of a decree of registration, as provided in Act 496 (Land
Registration Act).
We believe that the lower court erred when it held that the Land Registration Court was without
jurisdiction to render the decision in LRC No. 7681. Under Section 23 of Act 496, the registration
court may allow, or order, an amendment of the application for registration when it appears to the
court that the amendment is necessary and proper. Under Section 24 of the same act the court may
at any time order an application to be amended by striking out one or more parcels or by severance
of the application. The amendment may be made in the application or in the survey plan, or in both,
since the application and the survey plan go together. If the amendment consists in the inclusion in
the application for registration of an area or parcel of land not previously included in the original
application, as published, a new publication of the amended application must be made. The purpose
of the new publication is to give notice to all persons concerned regarding the amended application.
Without a new publication the registration court can not acquire jurisdiction over the area or parcel of
land that is added to the area covered by the original application, and the decision of the registration
court would be a nullity insofar as the decision concerns the newly included land. The reason is
11
because without a new publication, the law is infringed with respect to the publicity that is required in
registration proceedings, and third parties who have not had the opportunity to present their claim
might be prejudiced in their rights because of failure of notice. But if the amendment consists in the
12
exclusion of a portion of the area covered by the original application and the original plan as
previously published, a new publication is not necessary. In the latter case, the jurisdiction of the
13
court over the remaining area is not affected by the failure of a new publication.14
In the case at bar We find that the original plan covering Parcel 1 and Parcel 2 that accompanied the
application for registration in LRC No. 7681 was amended in order to exclude certain areas that
were the subject of opposition, or which were the subject of another registration case; and the Chief
of the Survey Division of the Court of Land Registration was ordered to determine whether the
amended plan included lands or areas not included in the original plan. In compliance with the order
of the registration court said Chief of the Survey Division informed the court that no new parcels
were included in the new (or amended) plan. Thus, in the decision of the Court of Land Registration
in LRC Nos. 7680 and 7681, dated December 29, 1913 (Exh. 24), We read the following:
Despues de las notificaciones y avisos de las dos solicitudes en ambos

expedientes, se enmendaron los planos unidos a los mismos para excluir ciertas
porciones que habian sido objeto de oposicion.
xxx xxx xxx
POR TANTO, ratificando como por la presente se ratifica la declaracion de rebeldia

general, se ordena:
"1.o Que el Jefe de la Division de Agrimensores de este Tribunal

terreno que no haya sido comprendido en los planos originales ...." 15
On January 24, 1914, the Chief of the Survey Division of the Court of Land Registration made a
report to the court (Exh. 22), from which the report We read the following:.
Cumpliendo lo mandado por el Tribunal en el No. 1 de la parte dispositiva de su

Decision de fecha 29 de Diciembre proximo pasado, el que suscribe, despues de un
detenido estudio de los planos unidos a los Expedientes arriba citados, tiene el
honor de informar:
1.o Que los nuevos planos presentados por los solicitantes corresponden a las
parcelas 1.a 2.a, y 3.a, del Expedients No. 7680 y a la 1.a parcela del No. 7681, que
son las mismas a que se refiere el plano Exhibito A del No. 7680.
xxx xxx xxx

4. Que los nuevos planos presentados de las parcelas 1.a, 2.a y 3.a del Expediente
7680, y de la 1.a del 7681 no incluyen terreno alguno que no haya sido comprendido
en los planos originales. 16
And so, in the supplemental decision of the Court of Land Registration in LRC No. 7681, dated
March 7, 1914 (Exh. 24-A), the report of the Chief of the Survey Division was taken into
consideration and the court ordered the registration of the lands applied for by the applicants as
described in the amended plan ("como esta descrito en el plano enmendado"). It is thus shown that
the amended plan in LRC No. 7681 did not cover parcels, or areas, that were not previously included
in the original plan which accompanied the application that had been published in the Official
Gazette. There was, therefore, no necessity for a new publication of the amended plan in order to
vest the Court of Land Registration with jurisdiction to hear and decide the application for registration
in LRC No. 7681 and to order the issuance of Decree of Registration No. 17431 upon which Original
Certificate of Title No. 735 was based.
Way back in 1933, this Court had occasion to rule on the validity of the very same Original
Certificate of Title No. 735 which the trial court had declared null and void in the three cases now
before this Court. In the case of the Bank of the Philippine Islands vs. Acuña (59 Phil. 183) the
validity of Original Certificate of Title No. 735 was assailed by the appellants (Pascual Acuña and
others) precisely upon the ground that during the registration proceedings, which brought about the
issuance of Original Certificate of Title No. 735, the original plan of the applicants was ordered
amended, and no new publication was made of the amended plan and so it was urged that the
registration court did not have jurisdiction to order the issuance of the decree of registration in favor
of the applicants. The action in this case was instituted by the Bank of the Philippine Islands as
receiver of the Tuason Entail for the purpose, among others, of recovering from Pascual Acuña and
others certain lands included in the Santa Mesa and Diliman hacienda located in the barrios of
Bagobantay and Diliman, in the municipalities of Caloocan and San Juan del Monte Province of
Rizal. Upon hearing, the Court of First Instance of Rizal declared that none of the defendants owned
any part of the land in controversy. On appeal, this Court observed that the character in which the
plaintiff sued was not open to question, and the material facts were as follows: The heirs of the
Tuason estate, referred to as the Tuason Entail, held a Torrens title to a tract of land with an area of
about 1,600 hectares located in the province of Rizal. This property was then covered by Transfer
Certificate of Title No. 3792 issued in lieu of older certificates dating from July 8, 1914. This Transfer
Certificate of Title No. 3792 emanated from Or Certificate of Title No. 735. The appellants precisely
17
sought to nullify the title of the heirs of the Tuason estate, which emanated from Original Certificate
of Title No. 735, upon the ground, as now urged by the appellees in the three cases at bar, that
during the registration proceedings the original plan of the lands known as the Sta. Mesa and
Diliman was amended, and no publication was made of the amended plan. Regarding the question
of the non-publication of the amended plan, this Court said:
Among the arguments made by the appellants of the Bagobantay group, it is alleged
that the Torrens title relied by the plaintiff is void, and in support of this contention it
stated that, during the course of the registration proceedings, an order was made by
the court for the amendment of the applicants and that this order was not followed by
new publication, wherefore, it is supposed the court was without jurisdiction to decree
the title to the applicants. In this connection reliance is placed upon the doctrine
stated in the Philippine Manufacturing Co. vs. Imperial (49 Phil. 122). But the brief for
the appellants fails to call attention to the fact that the rule stated in the case cited
has reference to an amendment of the plan by which additional land, different from
that included in the original survey is intended to be brought within the process of
registration. In the case before us, the order referred to was for the exclusion of
certain portions of the land covered by the original survey, and the doctrine of the
case cited cannot apply. Apart from this it does not appear that the portion intended
to be excluded comprehended any part of the land which had been usurped. 18
The appellees, however, asserts that the case of the Bank of the Philippine Islands vs. Acuña,
supra, is not applicable to the three cases now before this Court because what was involved in said
case was Parcel 2 of Original Certificate of Title No. 735, and not Parcel 1 which is the land involved
in these cases. This assertion of the appellees is not correct. The decision in that case states that
the action was instituted by the Bank of the Philippine Islands, as receiver of the Tuason Entail, for
the purpose, among others, of recovering from Pascual Acuña and others "certain lands contained in
the Sta. Mesa and Diliman Hacienda located in the barrios of Bagobantay and Diliman in the
municipalities of Caloocan and San Juan del Monte." But what matters is the doctrine that was laid
19
down by this Court in that case that is: that when the original survey plan is amended, after the
publication of the application in order to include land not previously included in the original survey, a
new publication of the amended plan is necessary in order to confer jurisdiction upon the registration
court to order the registration of the land that is added to what was included in the original survey
plan. The ruling of this Court in the Bank of the Philippine Islands case has a decisive application in
the three cases now before this Court.
The trial court laid stress on the point that publication of the amended plan of Parcel 1 should have
been made because it appears in the Decree of Registration No. 17431, and as reproduced in
Original Certificate of Title No. 735, that the area of said parcel is "bigger" than the area stated in the
application as published in the Official Gazette; and, also, that the boundaries of Parcel 1 stated in
the decree are not identical with the boundaries stated in the application as published in the Official
Gazette. We paid particular attention on this point of the lower court's decision, and our impression is
that the trial court had exploited certain minor discrepancies between the description of Parcel 1 in
the decree of registration and its description in the original application, in order to bolster its ruling
that "to render a decision on the amended plan, boundary descriptions, and additional lands
comprised within Parcel 1 in Decree No. 17431, a republication of such amended plan, boundary
description, technical description and additional areas is necessary to confer jurisdiction upon the
Court."20
Oddly enough, when the lower court said that the area of Parcel 1 in the decree of registration
is bigger than the area of Parcel 1 in the application as published, it did not mention the fact that the
difference in area is only 27.10 square meters. We believe that this difference of 27.10 square
meters is too minimal to be of decisive consequence in the determination of the validity of Original
Certificate of Title No. 735. It was error on the part of the lower court to lay stress on this
circumstance and made it a basis for ruling that because in the amended plan there is this increase
in area as compared to the area appearing in the application as published, the Land Registration
Court did not have jurisdiction to render the decision decreeing the registration of Parcel 1 in LRC
No. 7681. The Chief of the Survey Division of the Court of Land Registration, in his report to the
court of January 24, 1914 (Exh. 22), stated that the new plan of Parcel 1 did not include any land
that was not included in the original plan. That report was made precisely in compliance with the
order of the registration court, in the decision of December 29, 1913 in LRC No. 7681, to inform the
court "si los nuevos planos incluyen o no terreno que no haya sido comprendido en los planos
originales". That report was submitted by the Chief Surveyor "despues de un detenido estudio de los
planos unidos a los expedientes". Under the foregoing circumstances, our inference is that the area
of 27.10 square meters was already included in the original plan, and that the computation of the
area in the original survey must have been inaccurate; and the error was corrected in the
recomputation of the area when the amended plan was prepared. We made a careful study and
comparison of the technical description of Parcel 1 appearing in the application as published, and
the technical description appearing in Decree of Registration No. 17431 (Exhs. 19, 19-A and Z-6),
and We accept the explanation of counsel for the appellant that this seeming increase of 27.10
square meters had been brought about "by the fact that when the amendment of the plan was made,
the distances and bearings in a few points along the southwestern boundary (Please see Exh. 19)
were brought to the nearest millimeter and to the nearest second respectively; whereas, the
computation of the survey in the original plan was to the nearest decimeter and to the nearest
minute only". We believe that this very slight increase of 27.10 square meters would not justify the
21
conclusion of the lower court that "the amended plan ... included additional lands which were not
originally included in Parcel 1 as published in the Official Gazette." It being undisputed that Parcel 1
has an area of more than 8,798,600 square meters (or 879.86 hectares), We believe that this
difference of 27.10 square meters, between the computation of the area when the original plan was
made and the computation of the area when the amended plan was prepared, can not be
considered substantial as would affect the identity of Parcel 1.
Moreover, no evidence was presented to identify this area of 27.10 square meters, nor to show its
location, in relation to the entire area of Parcel 1. The appellees did not even attempt to show that
this excess area of 27.10 square meters is included within the parcels that they are claiming. We
cannot, therefore; consider this area of 27.10 square meters as an area that was separate and
distinct from, and was added to, the land that was covered by the original survey plan, such that the
publication of the amended plan would be necessary in order that the registration court could acquire
jurisdiction over that area. As We have pointed out, this increase of 27.10 square meters was simply
the result of the recomputation of the area when the original plan was amended. There is no
showing that the recomputation is incorrect. Neither is there a showing that this small area of 27.10
square meters belongs to any person and that person had been deprived of his property, or had
failed to claim that particular area because of the non-publication of the amended plan. On the other
hand, there is the report of the Chief of the Survey Division of the Court of Land Registration (Exh.
22) stating that the amended plan of Parcel 1 in LRC No. 7681 did not include any land which was
not included in the original plan.
It is the settled rule in this jurisdiction that only in cases where the original survey plan is amended
during the registration proceedings by the addition of lands not previously included in the original
plan should publication be made in order to confer jurisdiction on the court to order the registration of
the area that was added after the publication of the original plan. 22
The settled rule, further, is that once the registration court had acquired jurisdiction over a certain
parcel, or parcels, of land in the registration proceedings in virtue of the publication of the
application, that jurisdiction attaches to the land or lands mentioned and described in the application.
If it is later shown that the decree of registration had included land or lands not included in the
original application as published, then the registration proceedings and the decree of registration
must be declared null and void in so far — but only in so far — as the land not included in the
publication is concerned. This is so, because the court did not acquire jurisdiction over the land not
included in the publication-the publication being the basis: of the jurisdiction of the court. But the
proceedings and the decree of registration, relating to the lands that were included in the publication,
are valid. Thus, if it is shown that a certificate of title had been issued covering lands where the
registration court had no jurisdiction, the certificate of title is null and void insofar as it concerns the
land or lands over which the registration court had not acquired jurisdiction. 23
And so in the three cases now before this Court, even granting that the registration court had no
jurisdiction over the increased area of 27.10 square meters (as alleged by appellees), the most that
the lower court could have done was to nullify the decree and the certificate of title insofar as that
area of 27.10 square meters is concerned, if that area can be identified. But, certainly, the lower
court could not declare, and should not have declared, null and void the whole proceedings in LRC
No. 7681; and, certainly, the lower court erred in declaring null and void ab initio Original Certificate
of Title 735 which covers not only the supposed excess area of 27.10 square meters but also the
remaining area of 8,798,617 square meters of Parcel 1 and the entire area of 15,961,246 square
meters of Parcel 2. The trial court, in its decision, declared Original Certificate of Title No. 735 "null
and void from the very beginning and of no effect whatsoever", without any qualification. This
declaration by the lower court, if sanctioned by this Court and given effect, would nullify the title that
covers two big parcels of land (Parcels 1 and 2) that have a total area of 24,759,890.10 square
meters, or almost 2,476 hectares. And not only that. The trial court declared null and void all transfer
certificates of title that are derived, or that emanated, from Original Certificate of Title No. 735,
regardless of whether those transfer certificates of title are the results of transactions done in good
faith and for value by the holder of those transfer certificates of title.
It must be noted that the appellees in the present cases claim six parcels that have an area of some
495,453.7 square meters (about 49.5 hectares), whereas the combined area of Parcel 1 and Parcel
2 is 24,759,890.10 square meters (about 2,476 hectares). It must also be noted that both Parcel 1
and Parcel 2 have been subdivided into numerous lots (Exhs. 14 and 14-B) which have already
been acquired by numerous persons and/or entities that are now holding certificates of title which
can be traced back to Original Certificate of Title No. 735. The decision of the lower court, however,
would render useless Original Certificate of Title No. 735 and all transfer certificates of title
emanating, or derived, therefrom. The decision of the lower court would certainly prejudice the rights
of the persons, both natural and juridical, who had acquired portions of Parcel 1 and Parcel 2, relying
on the doctrine of the indefeasibility of Torrens title. The decision of the lower court would, indeed,
prejudice the rights of persons who are not parties in the present cases. And this is so, because the
trial court, in its decision, did not adhere to the applicable decisions of this Court in resolving the
pertinent issues in these cases.
Another reason mentioned by the lower court to support its ruling that Decree of Registration No.
17431 is null and void is that the description of Parcel 1 in the decree of registration is different from
the description of the same parcel in the notice of hearing of the original application for registration
as published in the Official Gazette. The different description that appears in the decree of
registration, according to the lower court, is an amendment to the Original survey plan that
accompanied the application and the amended survey plan should have been republished; and
because there was no such republication the registration court was without jurisdiction to issue the
decree of registration. The lower court also committed an error in making this ruling. We find that the
lower court incorrectly laid stress on differences in the names of the owners, and on differences in
the designations, of the lands that adjoin Parcel 1 along its southwestern boundary. We find,
however, that these differences are well explained in the record.
In the notice of hearing in LRC No. 7681 (Exhibits YY and YY-2) the boundaries of Parcel 1 are
stated as follows:
Bounded on the N. by property of Rosario Negrao and others (Maysilo Estate); E. by

the San Juan River; SW. by Parcel 3, properties of Benito Legarda, Hospital de San
Juan de Dios, by Parcel 2, Santa Clara Monastery, by Parcel 1; and W. by a road,
Cementerio del Norte and the Roman Catholic Church.
As described in Decree of Registration No. 17431 (Exh. 25), the boundaries of Parcel 1 are as
follows:
PARCEL 1. Bounded on the N. by property of Rosario Negrao y Escobar, et al.,

(Maysilo Estate): On the E. by San Juan River; on the SW. by properties of Mariano
Severo Tuason y de la Paz, et al., Benito Legarda, Hospital de San Juan de Dios
and C.W. Rosenstock & Co.; and on the W. by a road, Cementerio del Norte and
property of the Roman Catholic Church ...
It will thus be noted that the boundaries of Parcel 1 on the northern, eastern, and western sides, as
they appear in the notice of hearing that was published and in Decree of Registration No. 17431, are
the same. It is in the southwestern boundary where there appear some differences in the names of
the owners, or in the designations, of the adjoining lands. Thus, in the published notice of hearing, it
appears that the names of the owners, or the designations, of the lands that bound Parcel 1 (of LRC
No. 7681) on the Southwest are parcel 3, properties of Benito Legarda, Hospital de San Juan de
Dios, parcel 2, Monasterio de Santa Clara and parcel 1; while in the decree of registration it appears
that the lands that bound Parcel 1 (of LRC No. 7681) on the Southwest are the properties of Mariano
Severo Tuason y de la Paz, et al., Benito Legarda, Hospital de San Juan de Dios and C.W.
Rosenstock & Co. Upon a careful examination of the records, We find that the lands that adjoin
Parcel 1 at its southwestern boundary, as indicated in the notice of hearing that was published in the
Official Gazette, are the same lands that are indicated in the decree of registration as the lands that
adjoin Parcel 1 at its southwestern boundary. There is simply a change in the names of the owners
or in the designations, of the lands. We find that parcels 3, 2 and 1, appearing as the boundary lands
on the southwestern side of Parcel 1 in LRC No. 7681, as published, are in fact parcels of land that
are owned, and had been applied for registration, by Mariano Severo Tuason y de la Paz, et al. in
LRC No. 7680. This LRC No. 7680 was heard and decided jointly with LRC No. 7681 by the Land
Registration Court (Exh. 24). These parcels 3, 2 and 1 of LRC No. 7680, being lands owned by
Mariano Severo Tuason y de la Paz, et al., it may as well be stated in the decree of registration that
those lands on the southwestern side of Parcel 1 in LRC No. 7681 are the properties of Mariano
Severo Tuason y de la Paz, et al., instead of designating them as parcel 3, parcel 2, and parcel 1 (of
LRC 1680). And so, what appears in Decree of Registration No. 17431 as the properties of Mariano
Severo Tuason y de la Paz, et al., at the southwestern side of Parcel 1 are no other than those very
parcels 3, 2 and 1 that appear in the notice of hearing as the lands that bound Parcel 1 on the
southwest.
In the description of Parcel 1 as published, it appears that one of the boundaries on the
southwestern side is Santa Clara Monastery, while in the decree of registration the words "Santa
Clara Monastery" do not appear but, instead, are replaced by the words "C. W. Rosenstock & Co." It
will be remembered that during the registration proceedings the plan of Parcel 1 was ordered
amended, and the surveyor, who prepared the amended plan must have found that what used to be
the property of the Santa Clara Monastery at the time of the original Survey was already the property
of C. W. Rosenstock & Co. when the amended plan was prepared. This can simply mean that there
was a change of ownership from Santa Clara Monastery to C.W. Rosenstock & Co. It must be
considered that the original survey took place from December, 1910 to June, 1911 (Exhibits 18 and
19), while the registration case was decided on March 7, 1914.
Under Section 40 of Act 496, the decree of registration "shall contain a description of the land as
finally determined by the court." Evidently, the Court of Land Registration acted in consonance with
this provision of the law when, in its decision in LRC 7681, it took into consideration the actual
description of Parcel 1 as shown in the amended survey plan, and when it disregarded the
recommendation of the Chief of the Survey Division, dated March 27, 1914, that the decision of the
court of March 7, 1914 "be based upon the original plans, as published, and not upon the amended
plan." It may well be said that Decree of Registration N. 17431 simply contains the correct area of
Parcel 1 and the correct names of the owners of the lands that bound Parcel 1 in LRC No. 1681 as
of the time when the decision of the land registration court was rendered.
In this connection, the following pronouncement of this Court in the case of Domingo vs. Ongsiako,
55 Phil. 361, 373-4, is pertinent:
We may further observe that underlying the contention of the plaintiffs is the idea that
errors in the plans nullify the decrees of registration. This is erroneous. It is the land
and not the plan which is registered. Prior to the enactment of Act No. 1875,
practically all plans for land registration were defective especially in regard to errors
of closures and areas, but so far no such errors have been permitted to affect the
validity of the decrees. If the boundaries of the land registered can be determined,
the technical description in the certificate of title may be corrected without cancelling
the decree. Such corrections have been made in this case by approved surveys
which embrace all of the land here in question. To nullify and cancel final decrees
merely by reason of faulty technical descriptions would lead to chaos.
We have taken note of the fact that the six parcels of land that are claimed by the plaintiffs in the
three cases now before this Court are on the northwestern portion of Parcel 1 (parcels labelled A, B,
C, D, E and F, in Exh. UU; and Exhs. 17, 29 and 29-B). They are far from the southwestern
boundary. The circumstance, therefore, regarding the dissimilarity in the names of the owners, or the
designations, of the lands that adjoin the southwestern side of Parcel 1 is of no moment insofar as
the lots claimed by appellees are concerned. What matters is that the lots claimed by the appellees
are included in Parcel 1 of LRC No. 1681 and are located at the northwestern portion of said Parcel
1. Indeed, it was error on the part of the lower court to make as one of the bases in declaring Decree
of Registration No. 17431 and Original Certificate of Title No. 735 null and void and of no effect
whatsoever the aforestated dissimilarities in the names of the owners, or in the designations, of the
lands on the southwestern side of Parcel 1, because those dissimilarities are well explained in the
records of these cases.
The lower court committed still another error when it made the finding that the only boundary of
Parcel 1 on the western side is "A. Bonifacio road" and then declared that the lands situated west of
the A. Bonifacio road were never the subject of the registration proceedings in LRC No. 7681. The
lower court declared the lands west of A. Bonifacio road as unregistered lands and awarded the
ownership of those lands to the plaintiffs in Civil Cases Nos. 3621 and 3622 (appellees in G.R. Nos.
L-26127 and L-26128). This finding of the lower court is contrary to the evidence presented by the
parties in these cases. Both the appellees and the appellant submitted as their evidence the notice
of hearing of the application as published in the Official Gazette (Exhibit X, YY and YY-2; and Exhibit
26) and the decree of registration No. 17431 (Exhibit Y, and Exh. 25) wherein are clearly stated that
the boundaries of Parcel 1 on the West are: (1) a road, (2) Cementerio del Norte and (3) Roman
Catholic Church (Exhs. Z-6, UU, and Exhs. 6, 18, 19 and 20). But the lower court considered the A.
Bonifacio road as the only boundary on the West, and ignored the two other boundaries on the West
that are mentioned both in the notice of hearing as published and in the decree of registration. The
sketches and the survey plans, forming part of the evidence on record, show that the road, labelled
as "A. Bonifacio", goes alongside the western boundary of Parcel 1 (separating Parcel 1 and the
Cementerio del Norte), until it reaches a point where it traverses the northwestern portion of Parcel
1, such that from the point where it enters the area of Parcel 1 what is left as the boundaries on the
western side are the Cementerio del Norte and the Roman Catholic Church (Exhibits UU, VV, 17, 19
and 29). Ignoring the existence of the Cementerio del Norte and the Roman Catholic Church as the
other boundaries of Parcel 1 on the West, the lower court declared that the lands west of the A.
Bonifacio road, which form part of the lands that are claimed by the plaintiffs in Civil Cases Nos.
3621 and 3622, are outside the boundary of Parcel 1 on the west and that those particular areas had
remained as unregistered lands and are not covered by Original Certificate of Title No. 735. This
finding of the lower court is contrary to the very admission of the appellees in these three cases that
all the lands (six parcels in all) that they claim are included in the area of Parcel 1 mentioned in
Original Certificate of Title No. 735. In paragraph XIV of the original, as well as in the amended
complaint, in each of these three cases, the plaintiffs alleged that the lands that they claim "had
either been fraudulently or erroneously included ... in Parcel 1 (known as Santa Mesa Estate) of the
Original Certificate of Title No. 735 of the Land Records of the Province of Rizal." In their appeal
24
brief, the appellees categorically stated that "Both the appellees and the appellant admit that these
parcels of land claimed by the plaintiffs in these three (3) civil cases are located within Parcel 1
(Santa Mesa Estate) covered by Original Certificate of Title No. 735". In the pre-trial order of the
25
lower court of December 18, 1957, it was stated that the parcels of land litigated in these are
portions of the lands covered by OCT No. 735. The lower court itself, at the earlier part of its
26
decision, stated that "both the plaintiffs and the defendants admit that the parcels of land litigated in
Civil Cases Nos. 3621, 3622 and 3623 are found within the boundaries of the present Santa Mesa
Heights Subdivision covered by Original Certificate of Title No. 735" The appellees in these two
27
cases had never asserted that part of the lands that they claim are outside the boundaries of Parcel
1, nor did they assert that part of the lands that they claim have remained unregistered and not
covered by Original Certificate of Title No. 735. The lower court had made a finding not only contrary
to the evidence of the appellees but even more than what the appellees asked when it said in its
decision that the western boundary of Parcel 1 is only the A. Bonifacio road and that the lands
claimed by the appellees west of this road had never been registered. This Court certainly can not
give its approval to the findings and rulings of the lower court that are patently erroneous.
2. The lower court also erred when it declared Original Certificate of Title No. 735 null and void upon
the ground that the decree of registration was not transcribed in the Registration Book in accordance
with the provisions of Section 41 of Act 496. In its decision, the lower court said:
During the trial, the Book of Original Certificate of Title was brought to the Court. The
Court had occasion to see and examine the `ENTRY' made in the Registration Book.
The Court found that the Face of the Title which, under ordinary circumstances,
should be Page 1 is found as Page 2. The sheet containing the technical description
which should be page 2 is Page 1. The FACE of the Title, which should have been
Page 1, contained the last portion of the description of the land described in the
decree. The sheet containing the bulk of the description of the lands decreed should
have been Page 2. The so-called Original Certificate of Title No. 735 found on Page
138, Book A-7 of the Register of Deeds of Rizal is, therefore, null and void because
the provisions of Section 41 of the Land Registration Law have not been complied
with. Said Section requires that the entry in the Registration Book must be a
transcription of the Decree and the paging should consist of a leaf or leaves in
consecutive order .... 28
The pertinent provisions of Section 41 of Act 496 reads, as follows:
SEC. 41. Immediately after final decision by the court directing the registration of any
property, the clerk shall send a certified copy of such decision to the Chief of the
General Land Registration Office, who shall prepare the decree in accordance with
section forty of Act numbered four hundred and ninety-six, and he shall forward a
certified copy of said decree to the register of deeds of the province or city in which
the property is situated. The register of deeds shall transcribe the decree in a book to
be called the "Registration Book" in which a leaf, or leaves in consecutive order, shall
be devoted exclusively to each title. The entry made by the register of deeds in this
book in each case shall be the original certificate of title, and shall be signed by him
and sealed with the seal of his office....
The pertinent provisions of Section 40 of Act 496 reads, as follows:
SEC. 40. Every decree of registration shall bear the day of the year, hour, and
minute of its entry, and shall be signed by the clerk. It shall state whether the owner
is married or unmarried, and if married, the name of the husband or wife. If the owner
is under disability, it shall state the nature of the disability, and if a minor, shall state
his age. It shall contain a description of the land as finally determined by the court , . .
The decree shall be stated in a convenient form for transcription upon the certificates
of title hereinafter mentioned.
Section 29 of Act 496 provides that as soon as the decree of title has been registered in the office of
the register of deeds, as provided in Section forty-one, the property included in said decree shall
become registered land under the Act. Section 42 of Act 496 provides that the certificate shall take
effect upon the date of the transcription of the decree.
This Court has held that as defined in Section 41 of Act 496, the certificate of title is the transcript of
the decree of registration made by the register of deeds in the registry. 29
The appellant presented as evidence a photostat of Original Certificate of Title No. 735, as found in
the Registration Book in the office of the register of deeds of Rizal (Exhibit 50). We have examined
30
this document very carefully, and We find that it is a copy of the original that satisfies all the
requirements of a valid Torrens title as provided for in Sections 40 and 41 of Act 496.
On the face, or on the first page, of this title, there is the certification of the Chief of the Land
Registration Office that the decree of registration was registered in Manila on July 6, 1914 at 7:41
a.m.; and the certification of the Register of Deeds of Rizal that the decree was received for
transcription in his office on July 8, 1914 at 3:30 P.M. It is also stated on the face of this title that it
was entered pursuant to Decree No. 17431 of the Court of Land Registration, dated at Manila on the
7th day of March 1914, in Case No. 7681 of said court. The names of the declared owners, their civil
status, their spouses if married, and their respective interest or share in the lands covered by the title
are stated on the face of this title. We have noted that the technical descriptions of the lands
(Parcels 1 and 2) covered by the title are copied on the sheets constituting the title. We have
compared the technical descriptions of Parcels 1 and 2 as they appear on this photostat of Original
Certificate of Title No. 735 (Exhibit 50) with the technical descriptions of these lands as they appear
in the decree of registration (Exhibit Y for the plaintiffs, and Exhibit 25 for the defendant), and We
find that the technical descriptions appearing on the title are the complete and faithful reproduction,
or transcription, of the technical descriptions appearing in the decree of registration.
We have noted what the lower court found, that the technical descriptions of Parcels 1 and 2 do not
begin on the face, or on the first page, of this title, as a technical description is ordinarily copied on
the certificate of title. What appears on the face of this title is the last part of the technical description
of Parcel 2. The technical descriptions of Parcels 1 and 2 begin on the second page and end on the
first page. This circumstance, that is, that the technical descriptions of Parcels 1 and 2 do not begin
on the face, or on the first page, of the title, is the basis of the lower court in ruling that the decree of
registration was not transcribed in the registration book in accordance with Section 41 of Act 496,
and so Original Certificate of Title No. 735 is null and void. We have noted, however, that in its
decision the lower court made no mention that in the transcription of the decree in the registration
book any of the data that is required in Section 40 of Act 496 to be included had been omitted. We
have also noted — and this fact is undenied — that the technical descriptions of Parcels 1 and 2 as
they appear in Decree of Registration No. 17431 are fully and faithfully transcribed on the photostat
of Original Certificate of Title No. 735 (Exhibit 50). There is no showing that the manner of
transcribing the decree, as it appears on that photostat, was done for a fraudulent purpose, or was
done in order to mislead. Considering that the decree of registration is fully transcribed in the
Registration Book, and also as copied in Original Certificate of Title No. 735, the circumstance that
the beginning of the technical descriptions is not found on the face, or on the first page, of Original
Certificate of Title No. 735 is not a ground to nullify the said certificate of title. We agree with the
lower court that the transcription of the technical descriptions should begin, or should have been
started, on the face, or on the first page, of the title. We hold, however, that the fact that this was not
so done in the case of Original Certificate of Title No. 735 should not be taken as a factor in
determining the validity of Original Certificate of Title No. 735. This defect in the manner of
transcribing the technical descriptions should be considered as a formal, and not a substantial,
defect. What matters is that the original certificate of title contains the full transcription of the decree
of registration, and that the required data provided for in Section 40 of Act 496 are stated in the
original certificate of title. The lower court made a literal construction of the provisions of Section 41
of Act 496 and strictly applied its construction in the determination of the validity of Original
Certificate of Title No. 735. We believe that the provisions of Section 41 of Act 496 should be
interpreted liberally, in keeping with Section 123 of said Act which provides that "This Act shall be
construed liberally so far as may be necessary for the purpose of effecting its general intent." If We
adopt a literal construction of the provisions of Section 41 of Act 496, as was done by the lower
court, such that the defect in the manner or form of transcribing the decree in the registration book
would render null and void the original certificate of title, then it can happen that the validity or the
invalidity of a certificate of title would depend on the register of deeds, or on the personnel in the
office of the register of deeds. The register of deeds, or an employee in his office, can wittingly or
unwittingly render useless a decree of registration regularly issued pursuant to a decision of a
registration court and thus nullify by the error that he commits in the transcription of the decree in the
Registration Book an original certificate of title that has been existing for years. This strict
interpretation or construction of Section 41 of Act 496 would certainly not promote the purpose of the
Land Registration Law (Act 496), which generally are to ascertain once and for all the absolute title
over a given landed property ; to make, so far as it is possible, a certificate of title issued by the
31
court to the owner of the land absolute proof of such title ; to quiet title to land and to put a stop
32
forever to any question of legality of title ; and to decree that land title shall be final, irrevocable and
33
indisputable.34
We, therefore, hold that the formal defect in the transcription of Decree of Registration No. 17431 in
the Registration Book did not render null and void Original Certificate of Title No. 735. Consequently,
We declare that the two parcels of land (Parcel 1 which includes the lands claimed by the appellees,
and Parcel 2) covered by Original Certificate of Title No. 735 are properly registered under the
Torrens System of registration.
3. The principal issue that has to be resolved in the present appeal is whether or not the lower court
had correctly declared that "Original Certificate of Title No. 735 ... is null and void from the very
beginning and of no effect whatsoever. 35
In the preceding discussions, We have held that the lower court erred when it declared null and void
Original Certificate of Title No. 735. We have found that the registration proceedings that brought
about the decree of registration upon which was based the issuance of Original Certificate of Title
No. 735 were in accordance with the provisions of Act 496, as amended. We have held that the
Land Registration Court that ordered the issuance of the decree of registration had jurisdiction to
hear and decide the application for registration filed by Mariano Severo, Teresa Eriberta, Juan Jose,
Demetrio Asuncion, and Augusto Huberto, all surnamed Tuason y de la Paz. The records show that
the notice of hearing of the application, which embodied the technical descriptions of the two parcels
of land (Parcel 1, known as the Sta. Mesa Estate, and Parcel 2, known as the Diliman Estate), was
duly published as required by law. The records show that the hearing on the application was
regularly held, and that the registration court had seen to it that no land which was not included in
the original survey plan and not covered by the original application was made the subject of the
registration proceedings. We have found that the decree of registration was properly issued by the
Land Registration Office pursuant to the decision of the Land Registration Court, and that said
decree of registration was fully transcribed in the Registration Book in the office of the Register of
Deeds of the province of Rizal. We have found also that the six parcels of land that are claimed by
the appellees. in the three cases now before Us are all included in Parcel 1 that is covered by
Original Certificate of Title No. 735.
In view of Our findings and conclusion that Original Certificate of Title No. 735 was issued in
accordance with the provisions of Act 496, and that the six parcels of land that are claimed by the
appellees in the present cases are covered by said certificate of title, what is left for this Court to
decide is whether or not the appellees still have any legal right over the six parcels of land that they
claim.
Let it be noted that, as maintained by counsel for the appellees, the action of the appellees is
principally to recover the ownership and possession of the six parcels of land mentioned and
described in their complaints. The appellees would accomplish their objective through alternative
ways: (1) secure the nullification of the decision of the Land Registration Court in LRC No. 6781, the
nullification of the Decree of Registration No. 17431 and the nullification of Original Certificate of
Title No. 735; (2) if they fail in their efforts to secure the desired nullifications, with Original Certificate
of Title No. 735 being considered valid and effective, they seek the reconveyance to them by the
defendants named in their complaints, including herein appellant J.M. Tuason & Co., Inc., of the six
parcels of land that they claim; and (3) if they cannot secure a reconveyance, they seek to secure
payment to them by the defendants named in their complaints of the actual value of the six parcels
of land that they claim.
It appears to Us that the appellees are not sure of their stand, or have not adopted a definite stand,
in asserting the rights that they claim.
It is the settled rule that a party seeking the reconveyance to him of his land that he claims had been
wrongly registered in the name of another person must recognize the validity of the certificate of title
of the latter. It is also the rule that a reconveyance may only take place if the land that is claimed to
be wrongly registered is still registered in the name of the person who procured the wrongful
registration. No action for reconveyance can take place as against a third party who had acquired
title over the registered property in good faith and for value. And if no reconveyance can be made,
the value of the property registered may be demanded only from the person (or persons) who
procured the wrongful registration in his name. 36
The lower court accepted, and sustained, the assertion of the appellees that the proceedings in LRC
No. 7681 of the Court of Land Registration were null and void and that Original Certificate of Title
No. 735 is null and void ab initio and of no effect. The trial court even went to the extent of declaring
that some of the parcels of land claimed by the appellees in Civil Cases Nos. 3621 and 3622 (now
G.R. Nos. L-26127 and L-26128 before this Court) were not covered by Original Certificate of Title
No. 735. The lower court forthwith declared the appellees the owners of the parcels of land claimed
by them, as described in their complaints. Strangely enough, the lower court, upon declaring Original
Certificate of Title No. 735 null and void, did not make any statement, or observation, regarding the
status or situation of the remaining lands (Parcels 1 and 2) covered by Original Certificate of Title
No. 735 after adjudicating to the appellees the six parcels of land claimed by them in their
complaints.
In the present appeal counsel for the appellees had maintained, and has endeavored to show, that
the lower court was correct in annulling Original Certificate of Title No. 735 and in adjudicating in
favor of the appellees the ownership and possession of the six parcels of land claimed by them in
their complaints.
But, as hereinbefore held by Us, the lower court erred in declaring Original Certificate of Title No.
735 void and of no effect. We have held that Original Certificate of Title No. 735 was issued as a
result of the registration proceedings in LRC No, 7681 which was regular and that said certificate of
title is valid and effective. The proceedings in LRC 7681 being in rem, the decree of registration
issued pursuant to the decision rendered in said registration case bound the lands covered by the
decree and quieted title thereto, and is conclusive upon and against all persons, including the
government and all the branches thereof, whether mentioned by name in the application, notice or
citation, or included in the general inscription "To whom it may concern", and such decree will not be
opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by
any proceedings in any court for reversing judgment or decree. Such decree may only be reopened
if any person deprived of land or of any estate or interest therein by decree of registration obtained
by fraud would file in the competent court of first instance a petition for review within one year after
entry of the decree, provided no innocent purchaser for value had acquired an interest on the land,
and upon the expiration of said period of one year, the decree, or the certificate of title issued
pursuant to the decree, is incontrovertible (See. 38, Act 496). In the case now before Us, the Decree
of Registration No. 17431 in LRC 7681 was entered on July 8, 1914. It is undisputed that no person
had filed any petition for review of the decree of registration in LRC 7681 within the period of one
year from July 8, 1914. That decree of registration, and Original Certificate of Title No. 735 issued
pursuant thereto, therefore, had been incontrovertible since July 9, 1915.
Moreover, innocent purchases for value had acquired interest in the lands covered by Original
Certificate of Title No. 735.
37
The Original Certificate of Title No. 735 was issued on July 8, 1914 in the names of the original an
applicants for registration, namely, Mariano Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz,
Juan Jose Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz and Augusta Huberto
Tuason y de la Paz. Herein appellant J.M. Tuason & Co., Inc. is not one of those who were
registered as the original owners mentioned in Original Certificate of Title No. 735. When the original
complaints were filed in these three cases in the Court of First Instance of Rizal the parties named
defendants in each of the three cases were Mariano Severo Tuason y de la Paz, Teresa Eriberta
Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz,
Augusta Huberto Tuason y de la Paz, the heirs of each one of these defendants (without naming
them), and J.M. Tuason & Co., Inc. Of all the defendants named in the three complaints only
defendant J.M. Tuason & Co., Inc. appeared and filed its answer to the complaints. All the other
defendants did not appear, and so they were all declared in default. It had to happen that way
38
because as of the time when the three complaints were filed on May 19, 1955 the ownership of
Parcel 1 that was originally covered by Original Certificate of Title No. 735 had already passed to
defendant J.M. Tuason & Co., Inc. In fact this defendant had caused Parcel 1 to be subdivided and
had sold the subdivision lots.
The records show that Parcel 1 in Original Certificate of Title No. 735 was part of the properties of
the Mayorasgo Tuason (Tuason Entail) which became involved in a litigation in the Court of First
Instance of Manila. During the pendency of the case the properties of the Mayorasgo Tuason were
39
administered by the Bank of the Philippine Islands as the judicial receiver. In the order of the Court
of First Instance of Manila, dated May 5, 1938, in Civil Case No. 24803, the Bank of the Philippine
Islands, as receiver, was authorized, directed and ordered to execute, upon payment to it of the sum
of P763,925.75, a deed of transfer and assignment in favor of the Heirs of D. Tuason, Inc. of the
property covered by Transfer Certificate of Title No. 31997, which was originally Parcel 1 included in
Original Certificate of Title No. 735 (Exh. 13-B). On June 13, 1938 the receiver Bank of the
Philippine Islands executed the deed of transfer and assignment (Exh. 13-A). Transfer Certificate of
Title No. 34853 of the Register of Deeds of Rizal was forthwith issued in the name of the Heirs of D.
Tuason, Inc. (Exhs. 12-b and 36). The deed of transfer and assignment was approved by the court in
an order dated June 17, 1938. This conveyance to the Heirs of D. Tuason, Inc. took place at a time
when the Supreme Court had already decided the case of Bank of the Philippine Islands vs. Acuña
(59 Phil. 183) wherein this Court upheld the validity of Original Certificate of Title No. 735 and also
the validity of the transfer certificate of title emanating therefrom.
40
The circumstances attending the acquisition by the Heirs of D. Tuason, Inc. of the land covered by
Transfer Certificate of Title No. 31997 — which was formerly Parcel 1 covered by Original Certificate
of Title No. 735 — clearly indicate that said corporation acquired its title in a regular transaction as
purchaser in good faith and for value. On June 15, 1938 the Heirs of D. Tuason, Inc. in turn sold the
same property to J.M. Tuason & Co., Inc., and Transfer Certificate of Title No. 35073 was issued in
the name of the latter (Exhs. 12-c and 37).
The lower court declared that herein appellant J.M. Tuason & Co., Inc. was a purchaser in bad faith.
We do not find any evidence in the record that would sustain such a finding of the lower court. One
reason given by the lower court in declaring appellant J.M. Tuason & Co., Inc. a purchaser in bad
faith is the fact that the incorporators of the Heirs of D. Tuason, Inc. and the incorporators of J. M.
Tuason & Co., Inc. were practically the same persons belonging to the same Tuason family. We do
not see anything wrong if some incorporators of the Heirs of D. Tuason Inc. are also incorporators of
the J.M. Tuason & Co., Inc. During these days when businesses are promoted, operated, and
managed, through corporate entities, it is not surprising to see two or more corporations organized
by the same persons or group of persons with different purposes, for different lines of business and
with distinct or separate assets and interests. Besides, as has been shown, the Heirs of D. Tuason,
Inc. acquired the land (Parcel 1 in Original Certificate of Title No. 735) from the Bank of the
Philippine Islands, the receiver of the properties of the Mayorasgo Tuason, in a sale that was
authorized, and subsequently approved, by the court. The Heirs of D. Tuason, Inc. paid the sum of
P763,950.80 for the property. Certainly if the Heirs of D. Tuason, Inc. had acquired the land
originally covered by Original Certificate of Title No. 735 in a transaction that was authorized by the
court, for a valuable consideration, thereby acquiring a good title over the property as a purchaser in
good faith and for value, the title that it transferred to J. M. Tuason & Co., Inc. when it sold same
property to the latter was also a good title, and J.M. Tuason & Co., Inc. was also a purchaser in good
faith and for value — even if it appears that the incorporators of the two corporations belong to the
same Tuason family. The records of these cases are bereft of any evidence which would indicate
that the sale of Parcel 1 in question by the Heirs of D. Tuason, Inc. to J. M. Tuason & Co., Inc. was
fraudulent.
Another reason given by the lower court in declaring appellant J.M. Tuason & Co., Inc. a buyer in
bad faith is that when said appellant bought Parcel 1 originally covered by Original Certificate of Title
No. 735 it was aware of the fact that the appellees or their predecessors in interest were in
possession of, and were cultivating, the six parcels of land that they now claim in these cases. The
conclusion of the lower court is too strained. It should be remembered that the registered property
bought by J.M. Tuason & Co., Inc. had an area of some 879 hectares. It could happen that certain
relatives or ancestors of appellees had been squatting on some portions of the land and claimed
certain areas as their own, to the extent of having the areas claimed by them declared for taxation
purposes in their names. Thus the appellees presented in evidence tax declarations that appear to
have taken effect as of 1941. We have noted, however, that at the back of those tax declarations are
written the words "This parcel is a duplicate of the land under Tax No. 764-J. M. Tuason & Co., Inc."
(Exhs. E-Alcantara, F-Alcantara, FF-1-Benin, GG-Benin, HH-Benin, BBB-Pili, and BBB-1-
Pili). These annotations simply reveal that when the predecessors of the appellees had those tax
41
declarations made to cover the lands that they claim, those lands were already included in the tax
declaration of appellant J. M. Tuason & Co., Inc. Appellant J. M. Tuason & Co., Inc. had been
exercising, and asserting, its proprietary rights over the lands in question after it bought the same
from the Heirs of D. Tuason, Inc. This is borne by the statement in the order, dated September 26,
42
1955, issued by Judge Juan P. Enriquez who at the time was presiding the branch of the Court of
First Instance of Rizal where these three were pending, as follows:
3. It having been shown that J. M. Tuason & Co. had title covering the land in
question which they are subdividing into small lots for sale and in view of the
observation under paragraph 2 hereof the Court finds that there is no justifiable
reason to maintain the writ of preliminary injunction that has been issued. This is
particularly true in Civil Case No. 2622, defendants having secured a final judgment
against plaintiffs Juan Alcantara and Jose Alcantara for ejectment before the
Municipal court of Quezon City; and such injunction would annul the order of the
execution issued by the Quezon City courts. It should be noted that the herein
plaintiffs at the beginning pleaded to the Court that the area on which their respective
houses stand be not touched and their possession thereof be respected by
defendant J. M. & Co. In other words, each plaintiff is merely asking for about 250
square meters each which represents the land on which the house stands and their
immediate yard, and not the whole land covered by these three or 68 hectares. On
the other hand, the Court requires J. M. Tuason & Co. to put up a bond of P2,000 in
favor of each of the defendant (sic) to answer for whatever damages he may suffer
by reason of the continuance during the action of the acts complained
of.
43
Besides, the possession by the appellees, either by themselves or through their predecessors in
interest, if there was such possession at all, would be unavailing against title holder of a Torrens
certificate of title covering the parcels Of lands now in question. From July 8, 1914 when Certificate
of Title No. 735 was issued, no possession by any person of any portion of the lands covered by
said original certificate of title, or covered by a subsequent transfer certificate of title derived from
said original certificate of title, could defeat the title of the registered owner of the lands covered by
the certificate of title. In this connection, let it be noted that appellant J. M. Tuason & Co., Inc.
became the registered owner of Parcel 1, which was originally covered by Original Certificate of Title
No. 735, only on June 15, 1938, or almost 24 years after Original Certificate of Title No. 735 was
issued.
It can well be said that J. M. Tuason & Co., Inc. had relied on the title of the Heirs of D. Tuason, Inc.
when it bought the land covered by Transfer Certificate of Title No.34853, and the Heirs of D.
Tuason, Inc. likewise had relied on the title of the Mayorasgo Tuason (Mariano Severo Tuason y de
la Paz, et al.) when it bought the land covered by Transfer Certificate of Title No. 31997 from the
judicial receiver, duly authorized and approved by the court. We, therefore, can not agree with the
lower court when it declared appellant J. M. Tuason & Co., Inc. a purchaser on bad faith.
The evidence shows that appellant J. M. Tuason & Co., Inc. had converted the land originally
covered by Original Certificate of Title No. 735, including the six parcels claimed by appellees into a
subdivision, and numerous persons and entities had purchased the subdivision lots, and the
purchasers in turn were issued transfer certificates of title covering the lots that they bought, based
on the transfer certificate of title in the name of J. M Tuason & Co., Inc. The buyers of the lots relied
upon the certificate of title in the name of J. M. Tuason & Co., Inc. and because they paid for the lots
they certainly are purchasers in good faith and for value. The purchasers of these lots have built
thereon residential houses, office buildings, shops, hospital, even churches. But the lower court,
disregarding these circumstances, declared null and void all transfer certificates of title that
emanated, or that were derived, from Original Certificate of Title No. 735. This is a grave error
committed by the lower court. And the error is compounded when the lower court ordered appellant
J. M. Tuason & Co., Inc. and all those claiming under said appellant, to vacate and restore to the
appellees the possession of the parcels of lands that are claimed by them in the present cases. The
possessors of the lots comprised within the six parcels of land in question, and who hold certificates
of title covering the lots that they bought, are not parties in the present cases, and yet the decision of
the lower court would annul their titles and compel them to give up the possession of their
properties. To give effect to the decision of the lower court is to deprive persons of their property
without due process of law. The decision of the lower court would set at naught the settled doctrine
44
that the holder of a certificate of title who acquired the property covered by the title in good faith and
for value can rest assured that his title is perfect and incontrovertible.
45
In view of the foregoing discussions, it is obvious that the action of the appellees in the three cases
now before this Court must fail..
It has been shown that appellant J. M. Tuason & Co., Inc. had acquired a valid title over the land
which includes the six parcels that are claimed by the appellees. The fact, that the predecessors in
interest of the appellees — or any person, for that matter — had not filed a petition for the review of
the decree of registration in LRC No. 7681 within a period of one year from July 8, 1914 when the
decree of registration was issued, is a circumstance that had forever foreclosed any proceeding for
the review of said decree. As We have adverted to, that decree of registration had become
incontrovertible. An action, similar to one brought by the appellees in each of the present cases,
which attack collaterally the said decree of registration cannot be entertained. Neither may the
46
action of the appellees for reconveyance of the lands in question be entertained because such
action had already prescribed, barred by laches, considering that Original Certificate of Title No. 735
had been issued way back in 1914 and the complaint in the present cases were filed only on May
19, 1955, or after a lapse of some 41 years. Moreover, as of the time when these complaints were
filed the six parcels of land claimed by the appellees are no longer covered by the certificate of title
in the names of the persons who procured the original registration of those lands. The title to Parcel
1, which includes the six parcels of land claimed by the appellees, had passed to the hands parties
who were innocent purchase for value. This Parcel 1 which was one of the two parcels originally
covered by Original Certificate of Title No. 735, was subsequently covered by Transfer Certificate of
Title No. 31997. As has been shown, this Parcel 1 was part of the properties of the Mayorasgo
Tuason and it was conveyed by order of the court in Civil Case No. 24803 of the Court of First
Instance of Manila to the Heirs of D. Tuason, Inc., and the latter in turn conveyed the same to J. M.
Tuason & Co., Inc. Transfer Certificate of Title No. 34853 in the name of the Heirs of D. Tuason, Inc.
was cancelled and transfer Certificate of Title No. 35073 was issued in the name of J. M. Tuason &
Co., Inc. It has also been shown that J. M. Tuason & Co., Inc. had converted Parcel 1 to a
subdivision. Numerous persons and entities bought those subdivision lots, and to those buyers were
issued transfer certificates of title covering the lots that they acquired. It is very clear, therefore, that
an action for reconveyance cannot prosper against appellant J. M. Tuason & Co., much less against
the registered owners of the lots that form parts of the six parcels of land that are claimed by the
appellees. 47
Neither may the appellees have a cause of Action for damages against appellant J. M. Tuason &
Co., Inc., considering that said appellant is not one of the original registered owners that procured
the registration of the land. There is no evidence that J. M. Tuason & Co., Inc. had anything to do
with the registration proceedings which brought about the issuance of Original Certificate of Title No.
735 — even supposing that the registration was procured fraudulently.
4. Numerous cases have been decided by this Court, dealing on questions regarding the validity and
ineffectiveness of Original Certificate of Title No. 735. The rulings of this Court in those cases are
necessarily relevant to, and of decisive bearing in, the resolution of the issues involved in the three
cases now at bar.
(a) We have earlier cited the case of the Bank of the Philippine Islands vs. Acuña (59 Phil., 183),
where the jurisdiction of the Court of Land Registration that issued the decree which was the basis of
Original Certificate of Title No. 735 was questioned, and this Court upheld the jurisdiction of the
registration court and categorically pronounced the validity of Original Certificate of Title No. 735.
(b) There is the case of Jose Alcantara, et al., versus Mariano Tuason y de la Paz, et al. (G.R. No.
L-4998, Mar. 13, 1953, 92 Phil. 796), where this Court declared that Original Certificate of Title No.
735 is incontrovertible and is conclusive against all persons claiming, either by themselves or by
their predecessors in interest, rights over the lands covered by said certificate of title.
We find that the Alcantara case is intimately related to the three cases at bar, and the rulings of this
Court in that former case are of decisive application to these three cases.
On August 29, 1950 a complaint was filed in the Court of First Instance of Rizal (Quezon City
Branch) by Jose Alcantara, Elias Benin, Pascual Pili, Alejandro de Dios, Tomas Bagagonio, Quintina
Sandoval, and Tomasa Lazaro against Mariano Tuason y de la Paz, Heirs of Mariano Tuason, J. M.
Tuason & Co., Inc. and Gregorio Araneta, Inc. This case was docketed as Civil Case No. Q-156. It
will be noted that three of the plaintiffs in Civil Case No. Q-156, namely, Jose Alcantara, Elias Benin,
and Pascual Pili, are among the original plaintiffs in the three cases now before this Court; Elias
Benin, in Civil Case No. 3621; Jose Alcantara, in Civil Case No. 3622; and Pascual Pili, in Civil Case
No. 3623. Jose Alcantara, Elias Benin and Pascual Pili, as plaintiffs in that Civil Case No. Q-156
claimed that they were the lawful owners of six (of the ten) parcels of land described in paragraph 2
of their complaint — Jose Alcantara claiming two parcels, Elias Benin claiming three parcels, and
Pascual Pili claiming one parcel. Substantially, it is alleged in the complaint that each plaintiff, by
48
himself and by his predecessors in interest, as lawful owner, had been in the actual, open and
continuous possession of his own respective parcel, or parcels, of land from time immemorial until
January 1950 when the defendants by force and by the use of armed men started to convert their
lands into a subdivision; that on July 8, 1914 the defendants had obtained Original Certificate of Title
No. 735 over a parcel of land which included the lands possessed by them (plaintiffs) and which they
and their ancestors had been enjoying as owners, for more than thirty years before the issuance of
the title; that the silence and inaction of the defendants since the date of their original certificate of
title showed that said certificate of title did not express the status of the their claim to the said
parcels, that plaintiffs were not given formal notice by the defendants of the registration of the lands,
such that defendants' certificate of title No. 735 was not in accordance with law, and that defendants
did not have proper title for registration to the parcels of land owned by the plaintiffs, as described in
the complaint; and that because the certificate of title issued by the register of deeds was still in the
names of the defendants, successors in interest of the Tuasons y de la Paz, and has not passed to
innocent parties for valuable consideration, the conveyance of the same to the plaintiffs was in order.
The plaintiffs prayed that therein defendants be ordered to execute deeds of conveyance of the
parcels of land described in their complaint in favor of the plaintiffs, that the defendants' certificate of
title be cancelled and the corresponding certificate be ordered issued in the names of the plaintiffs.
We quote from the decision:
The material allegations of the complaint are: that plaintiffs are owners of the parcels
of land set forth in their complaint, which parcels are situated along Bonifacio street,
barrio of San Jose, Quezon City, and that they have been in actual, open, and
continuous possession and enjoyment thereof without molestation from defendants
from time immemorial to the present; that on July 8, 1914, defendants obtained a
certificate of title (No. 735) over a parcel of land, which included the lands by
plaintiffs, and which they and their ancestors had been enjoying as owners more
than 30 years before the issuance of said title; that on June 23, 1950, defendants
caused the removal of two houses of plaintiffs on the land; and that defendants did
not file any action against plaintiffs before the inclusion of the lands in their title, in
violation of the "due process of law" clause of the Constitution. There are other
allegations which really are arguments of legal discussion, thus: that defendants
could not acquire title by the registration proceedings against the lawful holder,
especially without formal notice, because registration is to confirm title, not to acquire
it; that the silence of the defendants since the issuance of their title shows that this
does not express the lawful status of their claim, etc. The defendants moved to
dismiss the complaint on the ground that it states no of action and that, if it does, the
same is barred by the statute of limitations. The court sustained this motion on the
second ground. Subsequently, plaintiffs filed an amended complaint with the same
substantial allegations, but with new ones, i.e., that it was in January, 1950, that they
learned that their lands were included in the registration proceedings which
culminated in the issuance of defendants' title; that defendants never claimed
ownership to the lands, but directly or indirectly allowed plaintiffs to continue
exercising their rights of ownership over the same. This amended complaint was
denied admission, and the motion for the reconsideration of the order of dismiss was
also denied. Hence the appeal.
In affirming the order of the lower court dismissing the complaint, this Court held:
Without considering whether the trial court's refusal to admit the amended complaint is erroneous or
not we are constrained to hold that the dismissal of the action, even with the amended complaint is a
basis thereof, is correct. From the allegations of both the original and amended complaints, it
appears that the defendants are holders of a certificate of title issued on July 8, 1914 as a
consequence of registration proceedings. There is no allegation in both original and amended
complaints that the plaintiffs were not notified, or were not aware, of the registration proceedings. It
is presumed, therefore, that as occupants proper notices thereof were served on them and that they
were aware of said proceedings. If this is so, then the plaintiffs, who were, or whose predecessors in
interest were, on the land during the registration proceedings, were bound by said proceedings. The
latter are in rem and bind the whole world, whether served with notice personally or not. (Grey Alba
vs. De la Cruz, 17 Phil., 49). And the decree of registration, in pursuance of which defendants' title
was issued, binds the land and quiets title thereto, and is conclusive against the plaintiffs. (Section
38, Land Registration Act). The supposed right of plaintiffs by reason of their alleged continued
possession for thirty years was, therefore, destroyed fully and completely by the registration
proceedings, and their supposed ignorance of the inclusion of the lands can not exclude them from
the effects of the registration proceedings, and the supposed conduct of defendants in allowing
plaintiffs to continue on the land after registration can not serve as basis of any title or right thereto,
because acts of a possessory character by tolerance of an owner does not constitute possession
(Article 1942, Spanish Civil Code), and because no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession (Section 46, Land
Registration Act).
Thus, in the Alcantara case, as in the Bank of the Philippine Island vs. Acuña case, supra, this Court
upheld the validity of the registration proceedings which culminated in the issuance of Original
Certificate of Title No. 735. This Court declared that "the decree of registration, in pursuance of
which defendants' title was issued, binds the land and quiets title thereto and is conclusive against
the plaintiffs." In other words, in virtue of that decision, the plaintiffs in Civil Case No. Q-156, among
them Jose Alcantara, Elias Benin and Pascual Pili, and their successors-in-interest, could no longer
question the validity of Original Certificate of Title No. 735, nor claim any right of ownership over any
portion of the land that is covered by said certificate of title.
But Elias Benin, Jose Alcantara, and Pascual Pili again came to court to claim ownership over
portions of the land covered by Original Certificate of Title No. 735. On May 19, 1955 Elias Benin,
joined by his brother Victor Benin and his sister Marta Benin, filed Civil Case No. 3621; Jose
Alcantara joined by his brother Juan Alcantara, filed Civil Case No. 3622; and Pascual Pili, joined by
his sister Luisa Pili, filed Civil Case No. 3623. These are the three cases which originated in the
Court of First Instance of Rizal (Quezon City Branch) which are now before this Court on appeal.
In the earlier part of this decision, We have pointed out that the complaints in these three cases had
been amended so as to include as parties plaintiffs all the heirs of the persons who were alleged to
be the owners of the parcels of land claimed by the plaintiffs in each case. Thus, the complaint in
Civil Case No. 3621 was amended to include all the heirs of Sixto Benin, the alleged owner of the
three parcels of land described in the complaint and the common predecessor in interest of all the
plaintiffs in the case. The complaint in Civil Case No. 3622 was amended to include all the heirs of
Bonoso Alcantara, the alleged owner of the two parcels of land described in the complaint and the
common predecessor in interest of all the plaintiffs in the case. The complaint in Civil Case No. 3623
was amended to include all the heirs of Candido Pili, the alleged owner of the one parcel of land
described in the complaint and the common predecessor in interest of all the plaintiffs in the case.
In those three cases, in the court below, herein appellant J.M. Tuason & Co., Inc. (defendant therein)
filed a motion to dismiss upon the principal ground "that the cause of action (assuming there is one)
is barred by prior judgment, or by the statute of limitation". In its motion to dismiss J.M. Tuason &
Co., Inc. contended that the decision of the Supreme Court in the Alcantara case is a bar to the
action of the plaintiffs in Civil Cases Nos. 3621, 3622 and 3623 of the Court of the First Instance of
Rizal. The lower court, however, denied the motion to dismiss. In its answer to the complaint in each
of these three cases, J.M. Tuason & Co., Inc. set up as affirmative defenses the very grounds of its
motion to dismiss. After the plaintiffs had closed their direct evidence, J.M. Tuason & Co., Inc. filed
another motion to dismiss upon the ground that the action was barred by the statute of limitations
and by a prior judgment, and that the plaintiffs had not presented evidence to prove their claim of
ownership. This second motion to dismiss was also denied by the lower court. 49
In its decision, which is now on appeal before this Court, the lower court held that the decision in
the Alcantara case was not a bar to the action in these three cases, ruling that there is no identity, of
the parties, of the subject matter, and of the cause of action, between Civil Case No. Q-156, on the
one hand, and Civil Cases Nos. 3621, 3622, and 3623, on the other.
It is now contended by appellant J.M. Tuason & Co. Inc., in the present appeal, that "the trial court
erred in not dismissing these cases on the ground of res judicata and in denying the motion to
dismiss filed on said ground."50
Does the judgment in the aforementioned Alcantara case operate as a bar to the action of the
appellees in the three cases at bar?
In order that the rule of res judicata may apply, the following requisites must be present: (a) the
former judgment must be final; (b) it must have been rendered by a court having jurisdiction of the
subject-matter and of the parties; (c) it must be a judgment on the merits; and (d) there must be,
between the first and the second actions, identity of parties, of subject-matter, and of cause of action
(San Diego vs. Cardona, 70 Phil. 281-283).
We find that the judgment in Civil Case No. Q-156 (G.R. No. L-4998) is a final judgment on the
merits that was rendered by a court having jurisdiction over the subject matter and over the parties.
The only requisite for res judicata which we have to determine is whether between Civil Case Q-156
(G.R. No. 4998), on the one hand, and Civil Cases Nos. 8621, 3622 and 3623 (G.R. Nos. L-26127,
26128 and 26129), on the other, there is identity of parties, of subject matter and of cause of action.
In our examination of the records and the evidence, We find that there is identity of subject matter. In
the lower court's pretrial order dated December 18, 1957, which was based on the agreement of the
parties, it is stated
That the parcels of land in litigation in Case No. Q-156 are substantially identical to
the same parcels of land litigated in them cases Nos. 3621, 8622 and
3623. 51
We also find that there is identity of cause of action. It is apparent, upon reading the original
complaint (Exhibit 1) in Civil Case Q-156 and the decision in the Alcantara case (G.R. No. L-4998),
that the cause of action in Civil Case Q-156 was based on the alleged fact that the defendants had
dispossessed and deprived the plaintiff therein of the parcels of land described in the complaint,
which were claimed by the plaintiffs as their own and of which they had been in actual, open and
continuous possession from time immemorial, and that said lands were wrongly included in
Certificate of Title No. 735 that was obtained by the defendants. In the three cases at bar, plaintiffs
(now appellees) also complain of having been dispossessed and deprived by the defendants of the
parcels of land of which they were absolute owners and possessors, by themselves and through
their predecessors in interest, since time immemorial and that their said lands wrongly included in
Parcel 1 of Original Certificate of Title No. 735 that was obtained by the defendants. In Civil Case
No. Q-156, on the one hand, and in the three cases now at bar, on the other, the plaintiffs therein
seek the nullification of Original Certificate of Title No. 735, and the reconveyance to them of the
parcels of land that they claim as theirs. It appears clear to Us that in Civil Case No. Q-156 and in
52
the three cases at bar, the object or purpose of the plaintiffs is to recover the ownership and
possession of the same parcels of land.
As far as the parties are concerned, We find that there is no exact identity of parties between Civil
Case No. Q-156, on the one hand, and Civil Cases Nos. 3621, 3622 and 3623, on the other. It
appears that of the plaintiffs in Civil Cases Nos. 3621, 3622 and 3623 only Elias Benin, Jose
Alcantara and Pascual Pili were plaintiffs in Civil Case No. Q-156. In Civil Case No. Q-156, the
defendants were Mariano Tuason y de la Paz, Heirs of Mariano Tuason, J.M. Tuason & Co., Inc.
and Gregorio Araneta, Inc., while in Civil Cases Nos. 3621, 3622 and 3623 the defendants were
Mariano Severo, Teresa Eriberta, Juan Jose, Demetrio Asuncion, Augusta Huberto, all surnamed
Tuason y de la Paz (the persons appearing as registered owners in Original Certificate of Title No.
735), their heirs, and J.M. Tuason and Co., Inc. We find that the natural persons surnamed Tuason,
and the heirs, refer to the persons who belong to the Tuason family that secured the registration of
Parcel 1 in Original Certificate of Title No. 735. The defendant Gregorio Araneta Inc. in Civil Case
No. Q-156 is the administrator of the Tuason properties. So, the parties defendants in all these
cases are practically the same. We find, however, that in Civil Case No. Q-156 as well as in Civil
Cases Nos. 3621, 3622 and 3623, it was the defendant J. M. Tuason & Co., Inc. that actually
controverted the claims of the plaintiffs.
After a careful study, We are of the considered view that the judgment in the Alcantara case is a bar
to the action of the plaintiffs who are the heirs of Elias Benin in Civil Case No. 3621 (G.R. No.
26127), of plaintiff Jose Alcantara in Civil Case No. 3622 (G.R. No. 26128), and of plaintiff Pascual
Pili in Civil Case No. 3623 (G. R. No. 26129) under the doctrine of res adjudicata. We are likewise of
the considered view that the decision in the Alcantara case would serve to rule out the action of the
other plaintiffs in Civil Cases Nos. 3621, 3622 and 3623 under the doctrine of stare decisis.
In Civil Case No. 3621 the original plaintiffs were Victor Benin, Marta Benin, and Elias Benin--two
brothers and a sister. In the amended complaint it was alleged that these three original plaintiffs had
another brother, and another sister, namely Esteban Benin and Felipa Benin. But because all the
five Benin brothers and sisters died, they were all substituted by their heirs, such that as of the time
when Civil Case No. 3621 was decided the plaintiffs were: (1) the heirs of Victor Benin; (2) the heirs
of Marta Benin; (3) the heirs of Elias Benin; (4) the heirs of Esteban Benin, and (5) the heirs of Felipa
Benin.
In Civil Case No. 3622 the original plaintiffs were Juan Alcantara and Jose Alcantara. Juan Alcantara
died, and he was substituted by his heirs, such that as of the time Civil Case No. 3622 was decided
the plaintiffs were: (1) the heirs of Juan Alcantara, and (2) Jose A. Alcantara.
In Civil Case No. 3623 the original plaintiffs were Pascual Pili and Luisa Pili. In the amended
complaint, it was alleged that Luisa Pili and Pascual Pili had two brothers who were already dead,
namely, Diego Pili and Manuel Pili, so they were substituted by their heirs. Luisa Pili died, and she
was substituted by her heirs, such that as of the time Civil Case No. 3623 was decided, the plaintiffs
were: (1) the heirs of Diego Pili; (2) the heirs of Manuel Pili; (3) the heirs of Luisa Pili, and
(4) Pascual Pili.
It would thus appear that of the plaintiffs in Civil Case No. 3621 Elias Benin is the only one who was
a plaintiff in Civil Case No. Q-156; of the plaintiffs in Civil Case No. 3622 Jose E. Alcantara, who is
still living, is the only one who was a plaintiff in Civil Case No. Q-156; of the plaintiffs in Civil Case
No. 3623 Pascual Pili, who is still living, is the only one who was a plaintiff in Civil Case No. Q-156.
It being Our finding that the judgment in Civil Case No. Q-156 (G.R. No. L-4998-the Alcantara case)
is a final judgment on the merits that was rendered by a court that had jurisdiction over the subject
matter and over the parties, and that there is identity of subject matter and cause of action between
Civil Case No. Q-156, on the one hand, and Civil Cases Nos. 3621, 3622, and 3623, on the other;
and it appearing that Elias Benin is a party-plaintiff both in Civil Case Q-156 and Civil Case No.
3621; that Jose Alcantara is a party-plaintiff in both Civil Case No. Q-156 and Civil Case No. 3622;
that Pascual Pili is a party-plaintiff in both Civil Case No. Q-156 and Civil Case No. 3623; and that
the defendants in Civil Case No. Q-156 and in Civil Cases Nos. 3621, 3622 and 3623 are practically
the same persons and/or entities, We hold that the doctrine of bar by a previous judgment or res
adjudicata squarely applies to Elias Benin, or to his heirs and successors in interest in Civil Case No.
3621; to Jose Alcantara and his heirs or successors in interest in Civil Case No. 3622; and to
Pascual Pili and his heirs or successors in interest in Civil Case No. 3623. 53
We now consider the case of the other plaintiffs in Civil Cases Nos. 3621, 3622 and 3623.
It will be noted that in Civil Case No. 3621 the plaintiffs base their claim of ownership of the three
parcels of land described in the complaint on their being heirs or successors in interest of Sixto
Benin who died in 1936. In Civil Case No. 3622 the plaintiffs base their claim of ownership over the
two parcels of land described in their complaint on their being the heirs and successors in interest
of Bonoso Alcantara who died in 1934. In Civil Case No. 3623 the plaintiffs base their claim of
ownership of the one parcel of land described in their complaint on their being the heirs and
successors in interest of Candido Pili who died in 1931.
When Jose Alcantara, Elias Benin and Pascual Pili, alleged in their complaint in Civil Case No. Q-
156 (which was filed in 1950) that they were the owners of the parcels of land specified in their
complaint, having inherited the same from their ancestors and had been in possession of the same
from time immemorial, each was claiming a right as an heir of Bonoso Alcantara, Sixto Benin, and
Candido Pili, respectively. Similarly, in Civil Cases Nos. 3621, 3622 and 3623, the source of the
rights claimed by the plaintiffs Jose Alcantara, Elias Benin and Pascual Pili and all the other plaintiffs
were their respective ancestor, or predecessor in interest, namely Bonoso Alcantara, Sixto Benin
and Candido Pili, as the case may be.
Inasmuch as Sixto Benin died in 1936, Bonoso Alcantara died in 1934, and Candido Pili died in
1931, it is obvious that during all the time when the registration proceedings in LRC No. 7681 were
taking place before the Court of Land Registration, which culminated in the issuance of Original
Certificate of Title No. 735 on July 8, 1914, Sixto Benin, Bonoso Alcantara and Candido Pili were
living. The records show that no one of these three persons, or their representative, had filed any
opposition to the application for registration in said LRC 7681, nor did any one of them, or their
representative, file any petition for review of the decree of registration No. 17431 that was issued in
said LRC No. 7681.
It is Our view, therefore, that the decision of this Court, in G.R. No. L-4998, which affirmed the order
of the Court of First Instance of Rizal dismissing the complaint of Jose Alcantara, Elias Benin and
Pascual Pili (along with four other plaintiffs) in Civil Case No. Q-156 should apply not only against
the heirs, of Elias Benin, against Jose Alcantara, and against Pascual Pili, as plaintiffs in Civil Cases
Nos. 3621, 3622 and 3623, respectively, but also against all the other plaintiffs in those cases. We
find that the plaintiffs in Civil Case No. 3621 do not claim a right which is different from that claimed
by Elias Benin in Civil Case No. Q-156. Likewise, the plaintiffs in Civil Case No. 3622 do not claim a
right different from that claimed by Jose Alcantara in Civil Case No Q-156. And, also, the plaintiffs in
Civil Case No. 3623 do not claim a right different from that claimed by Pascual Pili in Civil Case No.
Q-156. They all claim the same right, based on the alleged ownership of their respective common
predecessor in interest — in Civil Case No. 3621 the common predecessor in interest being Sixto
Benin; in Civil Case No. 3622 the common predecessor in interest being Bonoso Alcantara; and in
Civil Case No. 3623 the common predecessor in interest being Candido Pili. In Civil Case No. Q-156
Elias Benin based his claim of ownership upon the ownership of his predecessor in interest who
necessarily must be Sixto Benin; Jose Alcantara, upon the ownership of his predecessor in interest
who necessarily must be Bonoso Alcantara; and Pascual Pili, upon the ownership of his predecessor
in interest who necessarily must be Candido Pili. It follows, therefore, that the decision of this Court
in G.R. No. L-4998 (Civil Case No. Q-156), which held untenable the cause of action of the
successors in interest, of Sixto Benin, of Bonoso Alcantara and of Candido Pili, to recover the
ownership and possession of any land covered by Original Certificate of Title No. 735, would also
foreclose a similar cause of action of all other persons who claim to be successors in interest of
Sixto Benin, of Bonoso Alcantara and of Candido Pili over any land covered by said certificate of
title. As We have adverted to, Sixto Benin died in 1936, Bonoso Alcantara died in 1934, and Candido
Pili died in 1931. These three predecessors in interest of the appellees died long after the issuance
of Original Certificate of Title No. 735, which took place on July 8, 1914.
And so, even if there are plaintiffs (now appellees) in these three cases who are not privies to
plaintiffs Jose Alcantara, Elias Benin, and Pascual Pili in Civil Case No. Q-156 (G.R. No. L-4998 —
the Alcantara case) and were not parties in that case, still the ruling of this Court in that former case,
to the effect that therein plaintiffs or their predecessors in interest were bound by the proceedings in
the registration court which culminated in the issuance of Original Certificate of Title No. 735, holds
and applies to those plaintiffs in these three cases, because the claim of ownership of these plaintiffs
is based on the same predecessors in interest of plaintiffs Jose Alcantara, Elias Benin and Pascual
Pili in said Civil Case No. Q-156. It may well be said that the interests of the appellees in G.R. No.
54
L-26127 (Civil Case No. 3621) who claim rights as heirs or successors in interest of Sixto Benin
were represented by Elias Benin in Civil Case No. Q-156 (G.R. No. L-4998); the appellees in G.R.
No. 26128 (Civil Case No. 3622) who claim rights as heirs or successors in interest of Bonoso
Alcantara were represented by Jose Alcantara in Civil Case No. Q-156 (G.R. No. L-4998); the
appellees in G.R. No. 26129 (Civil Case No. 3623) who claim rights as heirs or successors in
interest of Candido Pili were represented by Pascual Pili in Civil Case No. Q-156 (G.R. No. L-4998).
(c) In the case of Albina Santiago, et al. vs. J.M. Tuason & Co., Inc. (G.R. No. L-14223, November
23, 1960) , where Original Certificate of Title No. 735, was also in question, this Court ruled on
55
issues akin to the issues involved in the three cases now at bar. Albina Santiago and her co-plaintiffs
filed a complaint in the Court of First Instance of Quezon City, docketed as Civil Case No. Q-2918,
against J. M. Tuason & Co. Inc. alleging, substantially, that their ancestor, Inocencio Santiago, was
the owner of a parcel of land, evidenced by a document (attached to their complaint as Annex A)
issued by the Spanish government on May 12, 1848 ; that Inocencio Santiago had since then been
56
in possession of the aforesaid land as owner, publicly, continuously and adversely until his death,
when his two children, Isaias and Albina, succeeded and continued to own and possess said
land pro indiviso in the same character as that of their predecessor that upon the death of Isaias
Santiago his one-half share of the land was inherited by his eleven children who, together with their
aunt Albina, continued to own and possess the land in the same character as that of their
predecessors; that Albina and her co-plaintiffs came to know that J.M. Tuason & Co., Inc. had
previously filed in the Court of First Instance of Quezon City Civil Case No. Q-27 for "quieting of title
and recovery of possession" against five of the children of Isaias Santiago involving the parcel of
land of which they were co-owners; that J.M. Tuason & Co., Inc. had claimed that parcel to be part of
the land covered by its Transfer Certificate of Title No. 119; that the judgment in Civil. Case No. Q-
27, in which they (Albina Santiago, et al.) were never impleaded as parties, had already become
final ; that J.M. Tuason & Co., Inc. had executed the judgment against them, excluding and rusting
57
them from the enjoyment and possession of the land. Albina and her co-plaintiffs also alleged that
Transfer Certificate of Title No. 119 (37679) of J.M. Tuason & Co., Inc., as well as Original
Certificate of Title No. 735 from which the former was derived, did not include the parcel claimed by
them; that even granting that Transfer Certificate of Title No. 119 included the parcel claimed by
them the inclusion of that parcel in the certificate of title of J.M. Tuason & Co., Inc. was done through
fraud because they, nor their predecessors, were not actually notified of the registration
proceedings. As ground for cancellation of the certificate of title of J.M. Tuason & Co., Inc. Albina
Santiago and her co-plaintiffs further alleged that the technical description in Original Certificate of
Title No. 735 had been falsified to include areas never brought within the jurisdiction of the Land
Registration Court, since they were areas not included in the application and publication in the
registration proceedings; that long before the predecessors of J.M. Tuason & Co., Inc. applied for,
and secured, registration of the land which included their parcel of land they had already acquired
ownership thereof not only by the document, Annex A of their complaint, but also by acquisitive
prescription. Albina Santiago and her co-plaintiffs prayed, that J.M. Tuason & Co., Inc. be ordered to
desist from enforcing Civil Case No. Q-27 against them; that a resurvey be ordered to determine
whether or not Transfer Certificate of Title No. 119 (37679) included the land described in their
complaint; that a reconveyance to them be ordered of whatever portion of the land claimed by them
may be found included in transfer Certificate of Title No. 119; that Transfer Certificate of Title No.
119 and Original Certificate of Title No. 735 be ordered cancelled and substituted with a new
certificate of title embracing only those lands included in the application, publication and/or decree in
LRC No. 7681 of the Court of Land Registration.
Upon motion of defendant J.M. Tuason & Co., Inc., the Court of First Instance of Quezon City
dismissed the complaint of Albina Santiago, et al., upon the grounds that there was no cause of
action, that the case was barred by a prior judgment in Civil Case No. Q-27 which was affirmed by
the Supreme Court in G.R. No. L-5079, and that the action of the plaintiffs, if they had any, had
prescribed.
This Court affirmed the order of the lower court dismissing the complaint of Albina Santiago and her
co-plaintiffs. Regarding the contention of Albina Santiago and her co-plaintiffs that the judgment in
58
the previous case (Civil Case No. Q-27, affirmed in G.R. No. L-5079) would not operate as res
judicata against them because they were not parties in that suit, and that they did not derive their
title from the defendants in the previous suit, this Court held:
We agree with appellants that the decision in the preceding suit to quiet title,
prosecuted by the appellee Tuason & Co. against other heirs of Ynocencio Santiago
(99 Phil., 615; 50 Off. Gaz. 11, 5727), can not constitute res judicata against these
appellants who were not parties to that suit and do not derive their title from the
defendants in the previous litigation (Rule 39, sec. 44 (b). There is authority for the
proposition that a judgment may be made binding in a subsequent litigation upon one
who, although not a formal party to a previous suit, has actually conducted or
controlled the action or defense therein (65 ALR 1134), or who was adequately
represented in such previous litigation; but no clear proof of the existence of such
exceptional circumstance is before us in the present case. On the other hand, the
rule is that co-owners are not privies inter se in relation to the property owned in
common.
xxx xxx xxx
But granting that the plaintiffs-appellants herein are not privies of the defendants
Santiago in the former litigation over this same property (S.C.G.R. No.
L-5079), still the pronouncement of this Court, made in the former case, to the effect
that the Spanish document (Annex A) issued in favor of Ynocencio Santiago
(ancestor of appellants herein) was neither a titulo de informacion posesoria nor a
title by composicion con el estado, and, therefore, vested no ownership over the land
therein described in favor of Ynocencio Santiago, holds and applies to herein
appellants, since the quality or the legal effect of the document does not depend
upon the person who invoke it.
If the late Ynocencio Santiago did not become the owner of the disputed property by
virtue of the document Annex A, then appellants herein, as heirs of Ynocencio have
not acquired such ownership either. It follows that the first and second causes of
action of their complaint, predicated as they are on the assumption that such
ownership and its consequential rights resulted from Annex A, must necessarily fail.
Not being owners, they can complain of no invasion of dominical rights.
It will thus be noted that in the aforementioned decision in the Santiago case, even if Albina Santiago
and her co-plaintiffs were not considered privies to the defendants in Civil Case No. Q-27, and even
if they were not parties in that previous case, this Court nevertheless applied to them the judgment
(G. R. No. L-5079) in that previous case where it was pronounced that the document, Annex A of the
complaint of Albina Santiago, et al., was neither a titulo de informacion posesoria nor a title
by composision con el estado, and it did not establish the right of ownership of their predecessor in
interest, Inocencio Santiago, Albina Santiago and her co-plaintiffs had based their claim of
ownership on that document (Annex A). This Court held in that previous case that the document
59
was unavailing against Transfer Certificate of Title No. 119 of J. M. Tuason & Co., Inc. and against
Original Certificate of Title No. 735.
And so, following the logic of this Court in its decision in the Santiago case, in the three cases at bar
We hold that even if the plaintiffs in Civil Case No. 3621, except the heirs of Elias Benin, are not
privies to Elias Benin and were not parties in Civil Case No. Q-156; even if the plaintiffs in Civil Case
No. 3622, except Jose Alcantara, are not privies to Jose Alcantara and were not parties in Civil Case
No. Q-156; and even if the plaintiffs in Civil Case No. 3623, except Pascual Pili, are not privies to
Pascual Pili and were not parties in Civil Case No. Q156, still the pronouncement of this Court in the
judgment in that previous case (G.R. No. L-4998), to the effect that the plaintiffs in that case and
their predecessors in interest were bound by the registration proceedings which culminated in the
issuance of Original Certificate of Title No. 735, holds and applies to all the plaintiffs (now appellees)
in these three cases. In that judgment this Court ruled out, or did not sustain, the rights claimed by
the predecessors in interest of herein appellees over the land covered by Original Certificate of Title
No. 735. These appellees, therefore, have not succeeded to any right that can derrogate the validity
and conclusiveness of Original Certificate of Title No. 735, and of the certificates of title that are
derived from said original certificate of title.
Coming back to the Santiago case, as regards the contention of Albina Santiago and her co-plaintiffs
that the registration proceedings which resulted in the issuance of Original Certificate of Title No.
735 were irregular and fraudulent, this Court held:
(T)he mere fact that appellants herein were not personally notified of the registration
proceedings that resulted in a decree of registration of title in favor of the Tuasons in
1914 does not constitute in itself a case of fraud that would invalidate the decree.
The registration proceedings, as proceedings in rem, operate as against the whole
world and the decree issued therein is conclusive adjudication of the ownership of
the lands registered, not only against those parties who appeared in such
proceedings but also against parties who were summoned by publication but did not
appear. The registration by the appellee's predecessors-in-interest freed the lands
from claims and liens of whatever character that existed against the lands prior to the
issuance of the certificates of title, except those noted in the certificate and legal
encumbrances saved by law (Yumol vs. Rivera and Dizon, 64 Phil. 13, 17 and cases
cited therein). In addition, there being no allegation that the registered owners
procured the non-appearance of appellants at the registration proceedings, and very
much more than one year having elapsed from the issuance of the decree of
registration in 1914, neither revocation of such decree nor a decree of reconveyance
are obtainable any more.
Regarding the claim of Albina Santiago and her co-plaintiffs that they had acquired title by
prescription over the parcel of land claimed by them, this Court held:
It follows also that the allegation of prescriptive title in favor of plaintiffs does not
suffice to establish a cause of action. If such prescription was completed before the
registration of the land in favor of the Tuasons, the resulting prescriptive title was cut
off and extinguished by the decree of registration. If, on the contrary, the prescription
was either begun or completed after the decree of registration, it conferred no title
because, by express provision of law, prescription cannot operate against the
registered owner (Act 496, section 46).
Thus, in this Santiago case, as in the Alcantara case, this Court declared conclusive and
indefeasible Original Certificate of Title No. 735 which was issued as a result of the registration
proceedings in L.R.C. No. 7681 of the Court of Land Registration. There are many other cases
where this Court has made a similar pronouncement regarding Original Certificate of Title No. 735. 60
In view of the findings, and the rulings, that We have hereinbefore made, it follows that, as
contended by the appellant, the lower court also erred when it declared the appellees the owners of
the lands claimed by them and in awarding damages to them, in these three cases. 61
We consider it unnecessary to rule on the counterclaim of appellant J.M. Tuason & Co., Inc., for
damages and attorneys fees against the appellees , considering, as the records show, that the
62
appellees are persons who are not in a position to pay damages in any form. We believe that the
63
appellees had filed their complaints in the honest, but mistaken, belief that they have a good cause
of action against the appellant corporation and not because they meant to embarrass or humiliate
the persons who are identified or connected with the appellant.
WHEREFORE, the joint decision of the Court of First Instance of Rizal (Quezon City Branch) in Civil
Cages Nos. 3621, 3622 and 3623, appealed from, is reversed and set aside. The bond filed by
appellant in the three cases in the court below for the lifting of the writ of preliminary injunction is
ordered cancelled. No pronouncement as to costs.
IT IS SO ORDERED.
G.R. No. 163551 July 18, 2011
DATU KIRAM SAMPACO, substituted by HADJI SORAYA S. MACABANDO, Petitioner,

vs.
HADJI SERAD MINGCA LANTUD, Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari of the Court of Appeals’ Decision dated August 15, 2003 in
CA-G.R. CV No. 63801 and its Resolution dated May 13, 2004, denying petitioner’s motion for
reconsideration.
The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud, the plaintiff in the lower court, filed
an action to quiet title with damages1 with the Regional Trial Court (RTC) of Lanao del Sur, Branch 8,
Marawi City (trial court), against petitioner Datu Kiram Sampaco (deceased), the defendant in the
lower court, who has been substituted by his heirs, represented by Hadji Soraya Sampaco-
Macabando.2
Respondent alleged in his Complaint3 that he is the owner in fee simple of a parcel of residential lot
located at Marinaut, Marawi City, with an area of 897 square meters covered by Original Certificate
of Title (OCT) No. P-658. On August 25, 1984, petitioner Datu Kiram Sampaco, through his daughter
Soraya Sampaco-Macabando with several armed men, forcibly and unlawfully entered his property
and destroyed the nursery buildings, cabbage seedlings and other improvements therein worth
₱10,000.00. On August 30, 1984, Barangay Captain Hadji Hassan Abato and his councilmen
prepared and issued a decision4 in writing stating that petitioner Datu Kiram Sampaco is the owner of
the subject parcel of land. Respondent stated that the acts of petitioner and the said decision of the
Barangay Captain may cast a cloud over or otherwise prejudice his title. Respondent stated that he
and his predecessors-in-interest have been in open, public and exclusive possession of the subject
property. He prayed that the acts of petitioner and the decision of Barangay Captain Hadji Hassan
Abato and his councilmen be declared invalid, and that petitioner be ordered to pay respondent
damages in the amount of ₱10,000.00 and attorney’s fees.
In his Answer,5 defendant Datu Kiram Sampaco, petitioner herein, denied the material allegations of
the Complaint. Petitioner asserted that he and his predecessors-in-interest are the ones who had
been in open, public, continuous, and exclusive possession of the property in dispute. Petitioner
alleged that OCT No. P-658 was secured in violation of laws and through fraud, deception and
misrepresentation, considering that the subject parcel of land is a residential lot and the title issued
is a free patent. Moreover, respondent and his predecessors-in-interest had never taken actual
possession or occupied the land under litigation. On the contrary, petitioner has all the evidence of
actual possession and ownership of permanent improvements and other plants on the land in
dispute.
Petitioner filed a counterclaim for actual and moral damages, and attorney's fees for the unfounded
complaint and prayed for its dismissal. He also sought the cancellation of respondent’s OCT No. P-
658 and the reconveyance of the subject parcel of land.
During the trial, respondent Hadji Lantud testified that he acquired the subject lot from his
grandmother, Intumo Pagsidan, a portion thereof from his grandmother’s helper, Totop Malacop,
pursuant to a court decision after litigating with him.6 Respondent had been residing on the lot for
more than 30 years, applied for a title thereto and was issued OCT No. P-658.7 He paid the
corresponding real estate taxes for the land.8 He planted assorted trees and plants on the lot like
bananas, jackfruits, coconuts and others.9 He testified that he was not aware of the alleged litigation
over the lot before Barangay Captain Hadji Hassan Abato, although he was furnished a copy of the
decision.10
On the other hand, petitioner Datu Kiram Sampaco testified that the land under litigation is only a
portion of the 1,800 square meters of land that he inherited in 1952 from his father, Datu Sampaco
Gubat.11 Since then, he had been in adverse possession and ownership of the subject lot, cultivating
and planting trees and plants through his caretaker Hadji Mustapha Macawadib.12 In 1962, he
mortgaged the land (1,800 square meters) with the Development Bank of the Philippines, Ozamis
branch.13 He declared the land (1,800 square meters) for taxation purposes14 and paid real estate
taxes, and adduced in evidence the latest Tax Receipt No. 1756386 dated September 15,
19[9]3.15 Petitioner presented four corroborating witnesses as regards his possession of the subject
property.
After trial on the merits, the trial court rendered a Decision on March 31, 1999 in favor of petitioner,
the dispositive portion of which reads:
WHEREFORE, premises considered the court is of the opinion and so holds that the preponderance
of evidence is in favor of the defendant and against the plaintiff. Judgment is hereby rendered as
follows:
1. Dismissing plaintiff’s complaint for lack of merit;
2. Declaring Original Certificate of Title No. P-658 (Exh. A) null and void and of no legal
effect;
3. Declaring the defendant the absolute or true owner and possessor of the land in dispute;
and
4. Ordering the plaintiff to pay the defendant the sum of ₱10,000.00 for attorney’s fees plus
₱500.00 per appearance.16
The trial court held that the issuance of respondent’s title, OCT No. P-658, was tainted with fraud
and irregularities and the title is, therefore, spurious; hence, it is null and void, and without any
probative value. The finding of fraud was based on: (1) the Certification issued by Datu Samra
Andam, A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi City, stating that the data
contained in respondent’s title were verified and had no record in the said office; (2) the said
Certification was not refuted or rebutted by respondent; (3) while free patents are normally issued for
agricultural lands, respondent’s title is a free patent title issued over a residential land as the lot is
described in the Complaint as a residential lot; and (4) Yusoph Lumampa, an employee of the local
Bureau of Lands, to whom respondent allegedly entrusted the paperwork of the land titling, was not
presented as a witness.
Moreover, the trial court stated that respondent failed to establish with competent and credible
evidence that he was in prior possession of the subject property. No corroborative witness was
presented to further prove his prior possession.
On the other hand, the trial court stated that petitioner offered documentary evidence, consisting of a
contract of real estate mortgage of the subject property, tax declarations, an official tax receipt, and
testimonial evidence to prove that he had been in open, public, continuous, and lawful possession of
the subject property in the concept of owner.
Respondent appealed the decision of the trial court to the Court of Appeals.
On August 15, 2003, the Court of Appeals rendered a Decision reversing the decision of the trial
court, the dispositive portion of which reads:
WHEREFORE:
1. The appeal is granted and the appealed judgment is hereby totally REVERSED.
2. To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud is confirmed the owner of
the parcel of land covered by Original Certificate of Title No. P-658;
3. The defendant-appellee is ordered to pay ₱50,000.00 as attorney’s fees to the plaintiff-

appellant; and
4. Costs against the defendant-appellee.17
Petitioner’s motion for reconsideration was denied by the Court of Appeals in its Resolution18 dated
May 13, 2004.
The Court of Appeals held that there is no controversy that respondent is a holder of a Torrens title;
hence, he is the owner of the subject property. The appellate court stressed that Section 4719 of the
Land Registration Act (Act No. 496) provides that the certificate of title covering registered land shall
be received as evidence in all courts of the Philippines and shall be conclusive as to all matters
stated therein.
The Court of Appeals stated that the Torrens title has three attributes: (1) a Torrens title is the best
evidence of ownership over registered land and, unless annulled in an appropriate proceeding, the
title is conclusive on the issue of ownership; (2) a Torrens title is incontrovertible and indefeasible
upon the expiration of one year from the date of the entry of the decree of registration;20 and (3) a
Torrens title is not subject to collateral attack.21
The Court of Appeals held that petitioner’s counterclaim filed on October 15, 1984 for cancellation of
respondent’s original certificate of title issued on May 22, 1981 was filed beyond the statutory one-
year period; hence, petitioner’s title had become indefeasible, and cannot be affected by the
decision made by Barangay Captain Hadji Hassan Abato and his councilmen. Moreover, the
appellate court held that petitioner’s prayer for the cancellation of respondent’s title, OCT No. P-658,
through a counterclaim included in his Answer is a collateral attack, which the law does not allow,
citing Cimafranca v. Court of Appeals22 and Natalia Realty Corporation v. Valdez.23
The allegation of fraud in securing OCT No. P-658 on the ground that the property in dispute is a
residential lot and not subject of a free patent was not given weight by the appellate court as it was
supported only by testimonial evidence that did not show how (by metes and bounds) and why the
property in dispute could not have been the subject of a free patent. The appellate court stated that a
mere preponderance of evidence is not adequate to prove fraud;24 it must be established by clear
and convincing evidence.
The Court of Appeals also noted that petitioner claimed that the subject property is only part of his
larger property. Although petitioner introduced proof of payment of the real estate taxes of the said
property, as well as a previous mortgage of the property, petitioner did not show that the disputed
property is part of his larger property. Hence, the appellate court stated that under such
circumstances, it cannot rule that petitioner owned the land under litigation, since petitioner failed to
show that it is part of his larger property.
The Court of Appeals did not award actual and moral damages, because respondent failed to prove
the amount of any actual damages sustained, and the instances enumerated under Article 2219 of
the Civil Code warranting the award of moral damages were not present.
However, the Court of Appeals awarded attorney's fees in the amount of ₱50,000.00, considering
that respondent was forced to incur expenses to protect his right through the action to quiet title.
Petitioner filed this petition raising the following issues:
THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER THE FACT THAT THE
TORRENS TITLE INVOLVED HEREIN WAS ISSUED PURSUANT TO A FREE PATENT
WHICH COULD NOT BE VALIDLY ISSUED OVER A PRIVATE LAND.
II
THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT THAT AS CERTIFIED

TO BY THE BUREAU OF LANDS ITSELF NO SUCH FREE PATENT OVER THE SUBJECT
LAND WAS ISSUED BY IT; HENCE, SAID FREE PATENT IS SPURIOUS.
III
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE TRIAL

COURT THAT THE SUBJECT LOT HAD LONG BEEN OWNED, POSSESSED AND
CULTIVATED BY THE DEFENDANT (PETITIONER HEREIN) OR HIS PREDECESSORS-
IN-INTEREST SINCE TIME IMMEMORIAL IN THE CONCEPT OF AN OWNER.
IV
THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONER’S

COUNTERCLAIM FOR CANCELLATION OF RESPONDENT’S TITLE IS BARRED.
THE COURT OF APPEALS ERRED IN RULING THAT THE COUNTERCLAIM IN THE

INSTANT CASE IS A COLLATERAL ATTACK ON RESPONDENT-PLAINTIFF’S TITLE.
VI
THE COURT OF APPEALS ERRED IN DENYING PETITIONER’S MOTION FOR

RECONSIDERATION.25
The main issue is whether or not the Court of Appeals erred in sustaining the validity of OCT No. P-
658 and confirming respondent as owner of the property in dispute.
Petitioner contends that the Court of Appeals erred in disregarding the fact that the Torrens title was
issued to respondent by virtue of a free patent covering a residential lot that is private land as it has
been acquired by petitioner through open, public, continuous and lawful possession of the land in the
concept of owner. Petitioner thus prayed for the cancellation of respondent’s title and the
reconveyance of the subject property. Hence, the Court of Appeals erred in declaring that the
subject lot belongs to respondent.
The contention is without merit.
The Torrens title is conclusive evidence with respect to the ownership of the land described therein,
and other matters which can be litigated and decided in land registration proceedings.26 Tax
declarations and tax receipts cannot prevail over a certificate of title which is an incontrovertible
proof of ownership.27 An original certificate of title issued by the Register of Deeds under an
administrative proceeding is as indefeasible as a certificate of title issued under judicial
proceedings.28 However, the Court has ruled that indefeasibility of title does not attach to titles
secured by fraud and misrepresentation.29
In this case, petitioner alleged in his Answer to respondent’s Complaint in the trial court that
respondent’s title, OCT No. P-658, was secured in violation of the law and through fraud, deception
and misrepresentation, because the subject parcel of land is a residential lot, which cannot be
subject of a free patent, since only agricultural lands are subject of a free patent.
The trial court found that "[t]he lot under litigation as clearly described in the complaint is a
residential lot and a free patent title thereto cannot validly be issued." This finding was one of the
bases for the trial court’s declaration that the issuance of OCT was tainted with fraud and
irregularities and is, therefore, spurious; thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint that the land is residential was made
only by respondent, but the true classification of the disputed land as residential was not shown to
have been made by the President, upon recommendation by the Secretary of Environment and
Natural Resources, pursuant to Section 9 of Commonwealth Act No. 141, otherwise known as The
Public Land Act.30 Hence, the trial court erred in concluding that there was fraud in the issuance of
respondent’s free patent title on the ground that it covered residential land based only on the
Complaint which stated that the property was residential land when it was not shown that it was the
President who classified the disputed property as residential, and OCT No. P-658 itself stated that
the free patent title covered agricultural land. It has been stated that at present, not only agricultural
lands, but also residential lands, have been made available by recent legislation for acquisition by
free patent by any natural born Filipino citizen.31 Nevertheless, the fact is that in this case, the free
patent title was granted over agricultural land as stated in OCT No. P-658.
Moreover, petitioner contends in his petition that the Certification32 dated July 24, 1987 issued by
Datu Samra I. Andam, A/Adm. Assistant II, Natural Resources District No. XII-3, Bureau of Lands,
Marawi City, certifying that the data contained in OCT No. P-658 in respondent’s name had no
records in the said office, showed that respondent’s Torrens title was spurious.
The Court holds that the certification, by itself, is insufficient to prove the alleged fraud. Fraud and
misrepresentation, as grounds for cancellation of patent and annulment of title, should never be
presumed, but must be proved by clear and convincing evidence, mere preponderance of evidence
not being adequate.33 Fraud is a question of fact which must be proved.34 The signatory of the
certification, Datu Samra Andam, A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi
City, was not presented in court to testify on the due issuance of the certification, and to testify on
the details of his certification, particularly the reason why the said office had no records of the data
contained in OCT No. P-658 or to testify on the fact of fraud, if any.
Thus, the Court holds that the evidence on record is insufficient to prove that fraud was committed in
the issuance of respondent’s Torrens title. Hence, respondent’s Torrens title is a valid evidence of
his ownership of the land in dispute.
On the other hand, petitioner claims ownership of the subject lot, which is merely a portion of a
larger property (1,800 square meters) that he allegedly inherited from his father in 1952, by virtue of
open, public and continuous possession of the land in the concept of owner making it petitioner’s
private property. Hence, petitioner prays for reconveyance of the said property.
Article 434 of the Civil Code governs an action for reconveyance, thus:
Art. 434. In an action to recover, the property must be identified, and the plaintiff must rely on the
strength of his title and not on the weakness of the defendant’s claim.
Under Article 434 of the Civil Code, to successfully maintain an action to recover the ownership of a
real property, the person who claims a better right to it must prove two (2) things: first, the identity of
the land claimed; and second, his title thereto.35
In regard to the first requisite, in an accion reinvindicatoria, the person who claims that he has a
better right to the property must first fix the identity of the land he is claiming by describing the
location, area and boundaries thereof.36
In this case, petitioner claims that the property in dispute is part of his larger property. However,
petitioner failed to identify his larger property by providing evidence of the metes and bounds
thereof, so that the same may be compared with the technical description contained in the title of
respondent, which would have shown whether the disputed property really formed part of petitioner’s
larger property. The appellate court correctly held in its Resolution dated May 13, 2004 that
petitioner’s claim is solely supported by testimonial evidence, which did not conclusively show the
metes and bounds of petitioner’s larger property in relation to the metes and bounds of the disputed
property; thus, there is no sufficient evidence on record to support petitioner’s claim that the disputed
property is part of his larger property.
In regard to the second requisite of title to property, both petitioner and respondent separately claim
that they are entitled to ownership of the property by virtue of open, public, continuous and exclusive
possession of the same in the concept of owner. Petitioner claims that he inherited the subject
property from his father in 1952, while respondent claims that he acquired the property from his
grandmother Intumo Pagsidan, a portion thereof from his grandmother’s helper Totop Malacop
pursuant to a court decision after litigating with him.37 Respondent has OCT No. P-658 to prove his
title to the subject property, while petitioner merely claims that the property is already his private land
by virtue of his open, public, continuous possession of the same in the concept of owner.
The Court holds that petitioner failed to prove the requisites of reconveyance as he failed to prove
the identity of his larger property in relation to the disputed property, and his claim of title by virtue of
open, public and continuous possession of the disputed property in the concept of owner is nebulous
in the light of a similar claim by respondent who holds a free patent title over the subject property. As
stated in Ybañez v. Intermediate Appellate Court,38 it is relatively easy to declare and claim that one
owns and possesses public agricultural land, but it is entirely a different matter to affirmatively
declare and to prove before a court of law that one actually possessed and cultivated the entire area
to the exclusion of other claimants who stand on equal footing under the Public Land Act
(Commonwealth Act No. 141, as amended) as any other pioneering claimants.
Further, petitioner contends that the Court of Appeals erred in ruling that petitioner’s counterclaim is
time-barred, since the one-year prescriptive period does not apply when the person seeking
annulment of title or reconveyance is in possession of the lot, citing Heirs of Simplicio Santiago v.
Heirs of Mariano E. Santiago.39 Petitioner also contends that the Court of Appeals erred in ruling that
the counterclaim in this case is a collateral attack on respondent’s title,
citing Cimafranca v. Intermediate Appellate Court.40 Petitioner cites the case of Heirs of Simplicio
Santiago v. Heirs of Mariano E. Santiago,41 which held that a counterclaim can be considered a
direct attack on the title.
The Court notes that the case of Cimafranca v. Intermediate Appellate Court,42 cited by the Court of
Appeals to support its ruling that the prayer for the cancellation of respondent’s title through a
counterclaim included in petitioner’s Answer is a collateral attack on the said title, is inapplicable to
this case. In Cimafranca, petitioners therein filed a complaint for Partition and Damages, and
respondents therein indirectly attacked the validity of the title involved in their counterclaim. Hence,
the Court ruled that a Torrens title cannot be attacked collaterally, and the issue on its validity can be
raised only in an action expressly instituted for that purpose.
Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago,
declared that the one-year prescriptive period does not apply when the party seeking annulment of
title or reconveyance is in possession of the lot, as well as distinguished a collateral attack under
Section 48 of PD No. 1529 from a direct attack, and held that a counterclaim may be considered as
a complaint or an independent action and can be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply when the person seeking annulment of
title or reconveyance is in possession of the lot. This is because the action partakes of a suit to quiet
title which is imprescriptible. In David v. Malay, we held that a person in actual possession of a piece
of land under claim of ownership may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right, and his undisturbed possession gives him the continuing
right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of
a third party and its effect on his title.
xxxx
Section 48 of P.D. 1529, the Property Registration Decree, provides that a certificate of title shall not
be subject to collateral attack and cannot be altered, modified, or canceled except in a direct
proceeding. An action is an attack on a title when the object of the action is to nullify the title, and
thus challenge the judgment or proceeding pursuant to which the title was decreed. The attack is
direct when the object of an action is to annul or set aside such judgment, or enjoin its enforcement.
On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an
attack on the judgment or proceeding is nevertheless made as an incident thereof.
x x x A counterclaim can be considered a direct attack on the title. In Development Bank of the
Philippines v. Court Appeals, we ruled on the validity of a certificate of title despite the fact that the
nullity thereof was raised only as a counterclaim. It was held that a counterclaim is considered a
complaint, only this time, it is the original defendant who becomes the plaintiff. It stands on the
1avvphi1
same footing and is to be tested by the same rules as if it were an independent action. x x x43
The above ruling of the court on the definition of collateral attack under Section 48 of P.D. No. 1529
was reiterated in Leyson v. Bontuyan,44 Heirs of Enrique Diaz v. Virata,45 Arangote v.
Maglunob,46 and Catores v. Afidchao.47
Based on the foregoing, the Court holds that petitioner’s counterclaim for cancellation of
respondent’s title is not a collateral attack, but a direct attack on the Torrens title of petitioner.
However, the counterclaim seeking for the cancellation of title and reconveyance of the subject
property has prescribed as petitioner has not proven actual possession and ownership of the
property due to his failure to prove the identity of his larger property that would show that the
disputed property is a part thereof, and his claim of title to the subject property by virtue of open,
public and continuous possession in the concept of owner is nebulous in the light of a similar claim
by respondent who holds a Torrens title to the subject property.
Respondent’s original certificate of title was issued on May 22, 1981, while the counterclaim was
filed by petitioner on October 15, 1984, which is clearly beyond the one-year prescriptive period.
In fine, the Court of Appeals did not err in confirming that respondent is the owner of the parcel of
land covered by OCT No. P-658.
WHEREFORE, the petition is DENIED. The Court of Appeals’ decision dated August 15, 2003, and
its Resolution dated May 13, 2004 in CA-G.R. CV No. 63801, are hereby AFFIRMED.
No costs.
SO ORDERED.
G.R. No. 170375 July 7, 2010

vs.
HON. MAMINDIARA P. MANGOTARA, in his capacity as Presiding Judge of the Regional Trial
Court, Branch 1, Iligan City, Lanao del Norte, and MARIA CRISTINA FERTILIZER
CORPORATION, and the PHILIPPINE NATIONAL BANK, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170505
LAND TRADE REALTY CORPORATION, Petitioner,

vs.
NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION CORPORATION
(TRANSCO), Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 173355-56
NATIONAL POWER CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND
TRADE REALTY CORPORATION, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 173401

vs.
DEMETRIA CACHO, represented by alleged Heirs DEMETRIA CONFESOR VIDAL and/or
TEOFILO CACHO, AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION and LAND
TRADE REALTY CORPORATION, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 173563-64
NATIONAL TRANSMISSION CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND
TRADE REALTY CORPORATION as represented by Atty. Max C. Tabimina, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178779
LAND TRADE REALTY CORPORATION, Petitioner,

vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178894
TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO, Petitioner,

vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION, Respondents.
DECISION
Before the Court are seven consolidated Petitions for Review on Certiorari and a Petition for
Certiorari under Rules 45 and 65 of the Rules of Court, respectively, arising from actions for quieting
of title, expropriation, ejectment, and reversion, which all involve the same parcels of land.
In G.R. No. 170375, the Republic of the Philippines (Republic), by way of consolidated Petitions for
Review on Certiorari and for Certiorari under Rules 45 and 65 of the Rules of Court, respectively,
seeks to set aside the issuances of Judge Mamindiara P. Mangotara (Judge Mangotara) of the
Regional Trial Court, Branch 1 (RTC-Branch 1) of Iligan City, Lanao del Norte, in Civil Case No. 106,
particularly, the: (1) Resolution1 dated July 12, 2005 which, in part, dismissed the Complaint for
Expropriation of the Republic for the latter’s failure to implead indispensable parties and forum
shopping; and (2) Resolution2 dated October 24, 2005, which denied the Partial Motion for
Reconsideration of the Republic.
G.R. Nos. 178779 and 178894 are two Petitions for Review on Certiorari under Rule 45 of the Rules
of Court, where Landtrade Realty Corporation (LANDTRADE), Teofilo Cacho, and/or Atty.
Godofredo Cabildo assail the Decision3 dated January 19, 2007 and Resolution4 dated July 4, 2007
of the Court of Appeals in CA-G.R. CV No. 00456. The Court of Appeals affirmed the
Decision5 dated July 17, 2004 of the Regional Trial Court, Branch 3 (RTC-Branch 3) of Iligan City,
Lanao del Norte, in Civil Case No. 4452, granting the Petition for Quieting of Title, Injunction and
Damages filed by Demetria Vidal and Azimuth International Development Corporation (AZIMUTH)
against Teofilo Cacho and Atty. Godofredo Cabildo.
G.R. No. 170505 is a Petition for Review on Certiorari under Rule 45 of the Rules of Court in which
LANDTRADE urges the Court to reverse and set aside the Decision6 dated November 23, 2005 of
the Court of Appeals in CA-G.R. SP Nos. 85714 and 85841. The appellate court annulled several
issuances of the Regional Trial Court, Branch 5 (RTC-Branch 5) of Iligan City, Lanao del Norte, and
its sheriff, in Civil Case No. 6613, specifically, the: (1) Order7 dated August 9, 2004 granting the
Motion for Execution Pending Appeal of LANDTRADE; (2) Writ of Execution8 dated August 10, 2004;
(3) two Notices of Garnishment9 both dated August 11, 2004, and (4) Notification10 dated August 11,
2004. These issuances of the RTC-Branch 5 allowed and/or enabled execution pending appeal of
the Decision11 dated February 17, 2004 of the Municipal Trial Court in Cities (MTCC), Branch 2 of
Iligan City, Lanao del Norte, favoring LANDTRADE in Civil Case No. 11475-AF, the ejectment case
said corporation instituted against the National Power Corporation (NAPOCOR) and the National
Transmission Corporation (TRANSCO).
G.R. Nos. 173355-56 and 173563-64 are two Petitions for Certiorari and Prohibition under Rule 65
of the Rules of Court with prayer for the immediate issuance of a Temporary Restraining Order
(TRO) and/or Writ of Preliminary Injunction filed separately by NAPOCOR and TRANSCO. Both
Petitions seek to annul the Resolution12 dated June 30, 2006 of the Court of Appeals in the
consolidated cases of CA-G.R. SP Nos. 00854 and 00889, which (1) granted the Omnibus Motion of
LANDTRADE for the issuance of a writ of execution and the designation of a special sheriff for the
enforcement of the Decision13 dated December 12, 2005 of the RTC-Branch 1 in Civil Case No.
6613, and (2) denied the applications of NAPOCOR and TRANSCO for a writ of preliminary
injunction to enjoin the execution of the same RTC Decision. The Decision dated December 12,
2005 of RTC-Branch 1 in Civil Case No. 6613 affirmed the Decision dated February 17, 2004 of the
MTCC in Civil Case No. 11475-AF, favoring LANDTRADE.
G.R. No. 173401 involves a Petition for Review on Certiorari under Rule 45 of the Rules of Court
filed by the Republic, which raises pure questions of law and seeks the reversal of the following
issuances of the Regional Trial Court, Branch 4 (RTC-Branch 4) of Iligan City, Lanao del Norte, in
Civil Case No. 6686, an action for cancellation of titles and reversion: (1) Order14 dated December
13, 2005 dismissing the Complaint in Civil Case No. 6686; and (2) Order15 dated May 16, 2006,
denying the Motion for Reconsideration of the Republic.
I
THE PRECEDING CASES
The consolidated seven cases have for their common genesis the 1914 case of Cacho v.
Government of the United States16 (1914 Cacho case).
The 1914 Cacho Case
Sometime in the early 1900s, the late Doña Demetria Cacho (Doña Demetria) applied for the
registration of two parcels of land: (1) Lot 1 of Plan II-3732, the smaller parcel with an area of 3,635
square meters or 0.36 hectares (Lot 1); and (2) Lot 2 of Plan II-3732, the larger parcel with an area
of 378,707 square meters or 37.87 hectares (Lot 2). Both parcels are situated in what was then the
Municipality of Iligan, Moro Province, which later became Sitio Nunucan, then Brgy. Suarez, in Iligan
City, Lanao del Norte. Doña Demetria’s applications for registration were docketed as GLRO Record
Nos. 6908 and 6909.
The application in GLRO Record No. 6908 covered Lot 1, the smaller parcel of land. Doña Demetria
allegedly acquired Lot 1 by purchase from Gabriel Salzos (Salzos). Salzos, in turn, bought Lot 1
from Datto Darondon and his wife Alanga, evidenced by a deed of sale in favor of Salzos signed
solely by Alanga, on behalf of Datto Darondon.
The application in GLRO Record No. 6909 involved Lot 2, the bigger parcel of land. Doña Demetria
purportedly purchased Lot 2 from Datto Bunglay. Datto Bunglay claimed to have inherited Lot 2 from
his uncle, Datto Anandog, who died without issue.
Only the Government opposed Doña Demetria’s applications for registration on the ground that the
two parcels of land were the property of the United States and formed part of a military reservation,
generally known as Camp Overton.
On December 10, 1912, the land registration court (LRC) rendered its Decision in GLRO Record
Nos. 6908 and 6909.
Based on the evidence, the LRC made the following findings in GLRO Record No. 6908:
6th. The court is convinced from the proofs that the small parcel of land sold by the Moro woman
Alanga was the home of herself and her husband, Darondon, and was their conjugal property; and
the court so finds.
xxxx
As we have seen, the deed on which applicant’s title to the small parcel rests, is executed only by
the Moro woman Alanga, wife of Datto Darondon, which is not permitted either by the Moro laws or
the Civil Code of the Philippine Islands. It appears that the husband of Alanga, Datto Darondon, is
alive yet, and before admitting this parcel to registration it is ordered that a deed from Datto
Darondon, husband of Alanga, be presented, renouncing all his rights in the small parcel of land
object of Case No. 6908, in favor of the applicant.17 (Emphases supplied.)
In GLRO Record No. 6909, the LRC observed and concluded that:
A tract of land 37 hectares in area, which is the extent of the land under discussion, is larger than is
cultivated ordinarily by the Christian Filipinos. In the Zamboanga cadastral case of thousands of
parcels now on trial before this court, the average size of the parcels is not above 3 or 4 hectares,
and the court doubts very much if a Moro with all his family could cultivate as extensive a parcel of
land as the one in question. x x x
xxxx
The court is also convinced from the proofs that the small portion in the southern part of the larger
parcel, where, according to the proofs, Datto Anandog had his house and where there still exist
some cocos and fruit trees, was the home of the said Moro Datto Anandog; and the court so finds.
As to the rest of the large parcel the court does not find the title of Datto Bunglay established.
According to his own declaration his residence on this land commenced only a few days before the
sale. He admitted that the coco trees he is supposed to have planted had not yet begun to bear fruit
at the time of the sale, and were very small. Datto Duroc positively denies that Bunglay lived on the
land, and it clearly appears that he was not on the land when it was first occupied by the military. Nor
does Datto Bunglay claim to have planted the three mango trees by the roadside near point 25 of the
plan. The court believes that all the rest of this parcel, not occupied nor cultivated by Datto Anandog,
was land claimed by Datto Duroc and also by Datto Anandog and possibly by other dattos as a part
of their general jurisdiction, and that it is the class of land that Act No. 718 prohibits the sale of, by
the dattos, without the express approval of the Government.
It is also found that Datto Bunglay is the nephew of Dato Anandog, and that the Moro woman
Alanga, grantor of the small parcel, is the sister of Datto Anandog, and that he died without issue.
xxxx
It appears also that according to the provisions of the Civil Code as also the provisions of the
‘Luwaran Code’ of the Moros, the Moro woman Alanga has an interest in the portion of land left by
her deceased brother, Datto Anandog. By article LXXXV, section 3, of the ‘Luwaran Code,’ it will be
seen that the brothers and sisters of a deceased Moro inherit his property to the exclusion of the
more distant relatives. Therefore Datto Bunglay had no legal interest whatever in the land to sell to
the applicant, Doña Demetria Cacho. But the Moro woman, Alanga, having appeared as a witness
for the applicant without having made any claim to the land, the court finds from this fact that she
has ratified the sale made by her nephew.
The court therefore finds that the applicant Doña Demetria Cacho is owner of the portion of land
occupied and planted by the deceased Datto Anandog in the southern part of the large parcel object
of expediente No. 6909 only; and her application as to all the rest of the land solicited in said case is
denied. And it is ordered that a new survey of the land be made and a corrected plan be presented,
excluding all the land not occupied and cultivated by Datto Anandog; that said survey be made and
the corrected plan presented on or before the 30th day of March, 1913, with previous notice to the
commanding general of the Division of the Philippines.
On the 8th day of December, the court was at Camp Overton and had another ocular inspection of
the land for the purpose of fixing the limits of the part cultivated by Datto Anandog, so often
mentioned herein, with previous notice to the applicant and her husband and representative, Señor
Dionisio Vidal. Having arrived late, Señor Vidal did not assist in the ocular inspection, which was
fixed for 3 o’clock, p.m. of the day mentioned. But the court, nevertheless, set stakes marking the
N.E., S.E., and S.W. corners of the land found to have been cultivated by the deceased Anandog.
The N.E. limit of said land is a brook, and the N.W. corner is the point where the brook intersects the
shore line of the sea, the other corners mentioned being marked with pine stakes. And it is ordered
that the new survey be made in accordance with the points mentioned, by tracing four straight lines
connecting these four points. Between the portion cultivated by Datto Anandog and the mouth of the
River Agus there is a high steep hill and the court does not believe it possible to cultivate said hill, it
being covered with rocks and forest.18 (Emphases supplied.)
The LRC additionally decreed at the end of its December 10, 1912 Decision:
It is further ordered that one-half of the costs of the new survey be paid by the applicant and the
other half by the Government of the United States, and that the applicant present the corresponding
deed from Datto Darondon on or before the above-mentioned 30th day of March, 1913. Final
decision in these cases is reserved until the presentation of the said deed and the new plan.19
Apparently dissatisfied with the foregoing LRC judgment, Doña Demetria appealed to this Court. In
its Decision dated December 10, 1914, the Court affirmed in toto the LRC Decision of December 10,
1912, well satisfied that the findings of fact of the court below were fully sustained by the evidence
adduced during trial.
Eighty-three years later, in 1997, the Court was again called upon to settle a matter concerning the
registration of Lots 1 and 2 in the case of Cacho v. Court of Appeals20 (1997 Cacho case).
The 1997 Cacho Case
On June 29, 1978, Teofilo Cacho (Teofilo), claiming to be the late Doña Demetria’s son and sole
heir, filed before the RTC a petition for reconstitution of two original certificates of title (OCTs),
docketed under the original GLRO Record Nos. 6908 and 6909.
Teofilo’s petition was opposed by the Republic, National Steel Corporation (NSC), and the City of
Iligan.
Acting on the motion for judgment on demurrer to evidence filed by the Republic and NSC, the RTC
initially dismissed Teofilo’s petition for reconstitution of titles because there was inadequate evidence
to show the prior existence of the titles sought to be restored. According to the RTC, the proper
remedy was a petition for the reconstitution of decrees since "it is undisputed that in Cases No. 6908
and 6909, Decrees No. 10364 and 18969, respectively, were issued." Teofilo sought leave of court
for the filing and admission of his amended petition, but the RTC refused. When elevated to this
Court in Cacho v. Mangotara, docketed as G.R. No. 85495, the Court resolved to remand the case
to the RTC, with an order to the said trial court to accept Teofilo’s amended petition and to hear it as
one for re-issuance of decrees.
In opposing Teofilo’s petition, the Republic and NSC argued that the same suffered from
jurisdictional infirmities; that Teofilo was not the real party-in-interest; that Teofilo was guilty of
laches; that Doña Demetria was not the registered owner of the subject parcels of land; that no
decrees were ever issued in Doña Demetria’s name; and that the issuance of the decrees was
dubious and irregular.
After trial, on June 9, 1993, the RTC rendered its Decision granting Teofilo’s petition and ordering
the reconstitution and re-issuance of Decree Nos. 10364 and 18969. The RTC held that the
issuance of Decree No. 10364 in GLRO No. 6908 on May 9, 1913 and Decree No. 18969 in GLRO
Record No. 6909 on July 8, 1915 was sufficiently established by the certifications and testimonies of
concerned officials. The original issuance of these decrees presupposed a prior judgment that had
become final.
On appeal, the Court of Appeals reversed the RTC Decision dated June 9, 1993 and dismissed the
petition for re-issuance of Decree Nos. 10364 and 18969 because: (1) re-issuance of Decree No.
18969 in GLRO Record No. 6909 could not be made in the absence of the new survey ordered by
this Court in the 1914 Cacho case; (2) the heir of a registered owner may lose his right to recover
possession of the property and title thereto by laches; and (3) Teofilo failed to establish his identity
and existence and that he was a real party-in-interest.
Teofilo then sought recourse from this Court in the 1997 Cacho case. The Court reversed the
judgment of the Court of Appeals and reinstated the decision of the RTC approving the re-issuance
of Decree Nos. 10364 and 18969. The Court found that such decrees had in fact been issued and
had attained finality, as certified by the Acting Commissioner, Deputy Clerk of Court III, Geodetic
Engineer, and Chief of Registration of the then Land Registration Commission, now National Land
Titles and Deeds Registration Administration (NALTDRA). The Court further reasoned that:
[T]o sustain the Court of Appeals ruling as regards requiring petitioners to fulfill the conditions set
forth in Cacho vs. U.S. would constitute a derogation of the doctrine of res judicata. Significantly, the
issuance of the subject decrees presupposes a prior final judgment because the issuance of such
decrees is a mere ministerial act on part of the Land Registration Commission (now the NALTDRA),
upon presentation of a final judgment. It is also worth noting that the judgment in Cacho vs.
U.S. could not have acquired finality without the prior fulfillment of the conditions in GLRO Record
No. 6908, the presentation of the corresponding deed of sale from Datto Dorondon on or before
March 30, 1913 (upon which Decree No. 10364 was issued on May 9, 1913); and in GLRO Record
No. 6909, the presentation of a new survey per decision of Judge Jorge on December 10, 1912 and
affirmed by this Court on December 10, 1914 (upon which Decree No. 18969 was issued on July 8,
1915).
Requiring the submission of a new plan as a condition for the re-issuance of the decree would
render the finality attained by the Cacho vs. U.S. case nugatory, thus, violating the fundamental rule
regarding res judicata. It must be stressed that the judgment and the resulting decree are res
judicata, and these are binding upon the whole world, the proceedings being in the nature of
proceedings in rem. Besides, such a requirement is an impermissible assault upon the integrity and
stability of the Torrens System of registration because it also effectively renders the decree
inconclusive.21
As to the issue of laches, the Court referred to the settled doctrine that laches cannot bar the
issuance of a decree. A final decision in land registration cases can neither be rendered inefficacious
by the statute of limitations nor by laches.
Anent the issue of the identity and existence of Teofilo and he being a real party-in-interest, the
Court found that these were sufficiently established by the records. The Court relied on Teofilo’s
Affidavit of Adjudication as Doña Demetria’s sole heir, which he executed before the Philippine
Consulate General in Chicago, United States of America (U.S.A.); as well as the publication in the
Times Journal of the fact of adjudication of Doña Demetria’s estate. Teofilo also appeared personally
before the Vice Consul of the Philippine Consulate General in Chicago to execute a Special Power
of Attorney in favor of Atty. Godofredo Cabildo (Atty. Cabildo) who represented him in this case. The
Court stressed that the execution of public documents is entitled to the presumption of regularity and
proof is required to assail and controvert the same.
In the Resolution dated July 28, 1997,22 the Court denied the Motions for Reconsideration of the
Republic and NSC.
As a result of the 1997 Cacho case, the decrees of registration were re-issued bearing new numbers
and OCTs were issued for the two parcels of land in Doña Demetria’s name. OCT No. 0-1200 (a.f.)
was based on re-issued Decree No. N-219464 in GLRO Record No. 6908, while OCT No. 0-1201
(a.f.) was based on re-issued Decree No. N-219465 in GLRO Record No. 6909.
The dispute over Lots 1 and 2 did not end with the termination of the 1997 Cacho case. Another four
cases involving the same parcels of land were instituted before the trial courts during and after the
pendency of the 1997 Cacho case. These cases are: (1) the Expropriation Case, G.R. No. 170375;
(2) the Quieting of Title Case, G.R. Nos. 178779 and 178894; (3) the Ejectment or Unlawful Detainer
Case, G.R. No. 170505 (execution pending appeal before the RTC) and G.R. Nos. 173355-56 and
173563-64 (execution pending appeal before the Court of Appeals); and (4) the Cancellation of
Titles and Reversion Case, G.R. No. 173401. These cases proceeded independently of each other
in the courts a quo until they reached this Court via the present Petitions. In the Resolution23 dated
October 3, 2007, the Court consolidated the seven Petitions considering that they either originated
from the same case or involved similar issues.
Expropriation Case
(G.R. No. 170375)
The Complaint for Expropriation was originally filed on August 15, 1983 by the Iron and Steel
Authority (ISA), now the NSC, against Maria Cristina Fertilizer Corporation (MCFC), and the latter’s
mortgagee, the Philippine National Bank (PNB). The Complaint was docketed as Civil Case No. 106
and raffled to RTC-Branch 1, presided over by Judge Mangotara.
ISA was created pursuant to Presidential Decree No. 272924 dated August 9, 1973, to strengthen,
develop, and promote the iron and steel industry in the Philippines. Its existence was extended until
October 10, 1988.
On November 16, 1982, during the existence of ISA, then President Ferdinand E. Marcos issued
Presidential Proclamation No. 2239,25 reserving in favor of ISA a parcel of land in Iligan City,
measuring 302,532 square meters or 30.25 hectares, to be devoted to the integrated steel program
of the Government. MCFC occupied certain portions of this parcel of land. When negotiations with
MCFC failed, ISA was compelled to file a Complaint for Expropriation.
When the statutory existence of ISA expired during the pendency of Civil Case No. 106, MCFC filed
a Motion to Dismiss the case alleging the lack of capacity to sue of ISA. The RTC-Branch 1 granted
the Motion to Dismiss in an Order dated November 9, 1988. ISA moved for reconsideration or, in the
alternative, for the substitution of the Republic as plaintiff in Civil Case No. 106, but the motion was
denied by RTC-Branch 1. The dismissal of Civil Case No. 106 was affirmed by the Court of Appeals,
thus, ISA appealed to this Court. In Iron and Steel Authority v. Court of Appeals26 (ISA case), the
Court remanded the case to RTC-Branch 1, which was ordered to allow the substitution of the
Republic for ISA as plaintiff. Entry of Judgment was made in the ISA case on August 31, 1998. In an
Order27 dated November 16, 2001, the RTC-Branch 1 allowed the substitution of the Republic for ISA
as plaintiff in Civil Case No. 106.
Alleging that Lots 1 and 2 involved in the 1997 Cacho case encroached and overlapped the parcel of
land subject of Civil Case No. 106, the Republic filed with the RTC-Branch 1 a Motion for Leave to
File Supplemental Complaint dated October 7, 2004 and to Admit the Attached Supplemental
Complaint dated September 28, 200428 seeking to implead in Civil Case No. 106 Teofilo Cacho and
Demetria Vidal and their respective successors-in-interest, LANDTRADE and AZIMUTH.
MCFC opposed the Motion for leave to file and to admit the Supplemental Complaint on the ground
that the Republic was without legal personality to file the same because ISA was the plaintiff in Civil
Case No. 106. MCFC argued that the Republic failed to move for the execution of the decision in the
ISA case within the prescriptive period of five years, hence, the only remedy left was for the Republic
to file an independent action to revive the judgment. MCFC further pointed out that the unreasonable
delay of more than six years of the Republic in seeking the substitution and continuation of the
action for expropriation effectively barred any further proceedings therein on the ground of estoppel
by laches.
In its Reply, the Republic referred to the Order dated November 16, 2001 of the RTC-Branch 1
allowing the substitution of the Republic for ISA.
In an Order dated April 4, 2005, the RTC-Branch 1 denied the Motion of the Republic for leave to file
and to admit its Supplemental Complaint. The RTC-Branch 1 agreed with MCFC that the Republic
did not file any motion for execution of the judgment of this Court in the ISA case. Since no such
motion for execution had been filed, the RTC-Branch 1 ruled that its Order dated November 16,
2001, which effected the substitution of the Republic for ISA as plaintiff in Civil Case No. 106, was
an honest mistake. The Republic filed a Motion for Reconsideration of the April 4, 2005 Order of the
RTC-Branch 1.
MCFC then filed a Motion to Dismiss Civil Case No. 106 for: (1) failure of the Republic to implead
indispensable parties because MCFC insisted it was not the owner of the parcels of land sought to
be expropriated; and (2) forum shopping considering the institution by the Republic on October 13,
2004 of an action for the reversion of the same parcels subject of the instant case for expropriation.
Judge Mangotara of RTC-Branch 1 issued a Resolution29 on July 12, 2005, denying for lack of merit
the Motion for Reconsideration of the Order dated April 4, 2005 filed by the Republic, and granting
the Motion to Dismiss Civil Case No. 106 filed by MCFC. Judge Mangotara justified the dismissal of
the Expropriation Case thus:
What the Republic seeks [herein] is the expropriation of the subject parcels of land. Since the
exercise of the power of eminent domain involves the taking of private lands intended for public use
upon payment of just compensation to the owner x x x, then a complaint for expropriation must, of
necessity, be directed against the owner of the land subject thereof. In the case at bar, the decision
of the Supreme Court in Cacho v. Government of the United States x x x, decreeing the registration
of the subject parcels of land in the name of the late Doña Demetria Cacho has long attained finality
and is conclusive as to the question of ownership thereof. Since MCFC, the only defendant left in
this case, is not a proper party defendant in this complaint for expropriation, the present case should
be dismissed.
This Court notes that the Republic [has filed reversion proceedings] dated September 27, 2004,
involving the same parcels of land, docketed as Case No. 6686 pending before the Regional Trial
Court of Lanao del Norte, Iligan City Branch 4. [The Republic], however, did not state such fact in its
"Verification and Certification of Non-Forum Shopping" attached to its Supplemental Complaint
dated September 28, 2004. [It is therefore] guilty of forum shopping. Moreover, considering that in
the Reversion case, [the Republic] asserts ownership over the subject parcels of land, it cannot be
allowed to take an inconsistent position in this expropriation case without making a mockery of
justice.30
The Republic filed a Motion for Reconsideration of the Resolution dated July 12, 2005, insofar as it
dismissed Civil Case No. 106, but said Motion was denied by Judge Mangatora in a
Resolution31 dated October 24, 2005.
On January 16, 2006, the Republic filed with this Court the consolidated Petition for Review on
Certiorari and Petition for Certiorari under Rules 45 and 65 of the Rules of Court, respectively,
docketed as G.R. No. 170375.
The Quieting of Title Case

(G.R. Nos. 178779 and 178894)
Demetria Vidal (Vidal) and AZIMUTH filed on November 18, 1998, a Petition32 for Quieting of Title
against Teofilo, Atty. Cabildo, and the Register of Deeds of Iligan City, which was docketed as Civil
Case No. 4452 and raffled to RTC-Branch 3.
In the Petition, Vidal claimed that she, and not Teofilo, was the late Doña Demetria’s sole surviving
heir, entitled to the parcels of land covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). She averred
that she is the daughter of Francisco Cacho Vidal (Francisco) and Fidela Arellano Confesor.
Francisco was the only child of Don Dionisio Vidal and Doña Demetria.
AZIMUTH, for its part, filed the Petition as Vidal’s successor-in-interest with respect to a 23-hectare
portion of the subject parcels of land pursuant to the Memorandum of Agreement dated April 2, 1998
and Deed of Conditional Conveyance dated August 13, 2004, which Vidal executed in favor of
AZIMUTH.
Teofilo opposed the Petition contending that it stated no cause of action because there was no title
being disturbed or in danger of being lost due to the claim of a third party, and Vidal had neither legal
nor beneficial ownership of the parcels of land in question; that the matter and issues raised in the
Petition had already been tried, heard, and decided by the RTC of Iligan City and affirmed with
finality by this Court in the 1997 Cacho case; and that the Petition was barred by the Statute of
Limitations and laches.
LANDTRADE, among other parties, was allowed by the RTC-Branch 3 to intervene in Civil Case No.
4452. LANDTRADE alleged that it is the owner of a portion of the subject parcels of land, measuring
270,255 square meters or about 27.03 hectares, which it purportedly acquired through a Deed of
Absolute Sale dated October 1, 1996 from Teofilo, represented by Atty. Cabildo. LANDTRADE
essentially argued that Vidal's right as heir should be adjudicated upon in a separate and
independent proceeding and not in the instant Quieting of Title Case.
During the pre-trial conference, the parties manifested that there was no possibility of any amicable
settlement among them.
Vidal and AZIMUTH submitted testimonial and documentary evidence during the trial before the
RTC-Branch 3. Teofilo and Atty. Cabildo failed to present any evidence as they did not appear at all
during the trial, while LANDTRADE was declared by the RTC-Branch 3 to have waived its right to
present evidence on its defense and counterclaim.
On July 17, 2004, the RTC-Branch 3 rendered its Decision33 in Civil Case No. 4452 in favor of Vidal
and AZIMUTH, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the petitioners and against the respondents
and intervenors:
1) DECLARING:
a.) Petitioner Demetria C. Vidal the sole surviving heir of the late Doña Demetria Cacho;
b.) Petitioner Demetria C. Vidal alone has the hereditary right to and interest in the Subject
Property;
c.) Petitioner Azimuth International Development Corporation is the successor-in-interest of

petitioner Demetria C. Vidal to a portion of the Subject Property to the extent provided in their
2 April 1998 Memorandum of Agreement and 13 August 1998 Deed of Conditional
Conveyance;
d.) Respondent Teofilo Cacho is not a son or heir of the late Dona Demetria Cacho; and
e.) Respondent Teofilo Cacho, Godofredo Cabildo and any of their transferees/assignees
have no valid right to or interest in the Subject Property.
2) ORDERING:
a.) Respondent Register of Deeds of Iligan City, and any other person acting in his behalf,
stop, cease and desist:
i) From accepting or registering any affidavit of self- adjudication or any other

document executed by respondents Teofilo Cacho, Godofredo Cabildo and/or any
other person which in any way transfers the title to the Subject Property from Dona
Demetria Cacho to respondent Teofilo Cacho, Godofredo Cabildo and/or any of their
transferees/assignees, including the intervenors.
ii) From cancelling the OCTs or any certificate of title over the Subject Property in the
name of Demetria Cacho or any successor certificate of title, and from issuing new
certificates of title in the name of respondents Teofilo Cacho, Godofredo Cabildo
their transferees/assignees, including the intervenors.
b) Respondents Teofilo Cacho, Godofredo Cabildo, their transferees/assignees, and any

other person acting in their behalf, to stop, cease and desist:
i) From executing, submitting to any Register of Deeds, or registering or causing to

be registered therein, any affidavit of self-adjudication or any other document which
in any way transfers title to the Subject Property from Demetria Cacho to
respondents Teofilo Cacho, Godofredo Cabildo and/or any of their
transferees/assignees, including the intervenors.
ii) From canceling or causing the cancellation of OCTs or any certificate of title over
the Subject Property in the name of Demetria Cacho or any successor certificate of
title, and from issuing new certificates of title in the name of respondent Teofilo
Cacho, Godofredo Cabildo and/or any of their transferees/assignees, including the
intervenors.
iii) From claiming or representing in any manner that respondent Teofilo Cacho is the
son or heir of Demetria Cacho or has rights to or interest in the Subject Property.
3) ORDERING respondents Teofilo Cacho and Atty. Godofredo Cabildo to pay petitioners, jointly
and severally, the following:
a) For temperate damages - ₱ 80,000.00
b) For nominal damages - ₱ 60,000.00
c) For moral damages - ₱500,000.00
d) For exemplary damages - ₱ 500,000.00
e) For attorney's fees (ACCRA Law)-₱1,000,000.00
f) For Attorney's fees - ₱500,000.00
(Atty. Voltaire Rovira)
g) For litigation expenses - ₱300,000.00
For lack of factual and legal basis, the counterclaim of Teofilo Cacho and Atty. Godofredo Cabildo is
hereby dismissed.
Likewise, the counterclaim of intervenor IDD/Investa is dismissed for lack of basis as the petitioners
succeeded in proving their cause of action.
On the cross-claim of intervenor IDD/Investa, respondents Teofilo Cacho and Atty. Godofredo
Cabildo are ORDERED to pay IDD/Investa, jointly and severally, the principal sum of P5,433,036
with 15% interest per annum.
For lack of legal basis, the counterclaim of Intervenor Landtrade Realty Development Corporation is
dismissed.
Likewise, Intervenor Manguera's counterclaim is dismissed for lack of legal basis.34
The joint appeal filed by LANDTRADE, Teofilo, and Atty. Cabildo with the Court of Appeals was
docketed as CA-G.R. CV No. 00456. The Court of Appeals, in its Decision35 of January 19, 2007,
affirmed in toto the Decision dated July 17, 2004 of the RTC-Branch 3.
According to the Court of Appeals, the RTC-Branch 3 did not err in resolving the issue on Vidal’s
status, filiation, and hereditary rights as it is determinative of the issue on ownership of the subject
properties. It was indubitable that the RTC-Branch 3 had jurisdiction over the person of Teofilo and
juridical personality of LANDTRADE as they both filed their Answers to the Petition for Quieting of
Title thereby voluntarily submitting themselves to the jurisdiction of said trial court. Likewise, the
Petition for Quieting of Title is in itself within the jurisdiction of the RTC-Branch 3. Hence, where
there is jurisdiction over the person and subject matter, the resolution of all other questions arising in
the case is but an exercise by the court of its jurisdiction. Moreover, Teofilo and LANDTRADE were
guilty of estoppel by laches for failing to assail the jurisdiction of the RTC-Branch 3 at the first
opportunity and even actively participating in the trial of the case and seeking affirmative reliefs.
In addition, the Court of Appeals held that the 1997 Cacho case only determined the validity and
efficacy of the Affidavit of Adjudication that Teofilo executed before the Philippine Consulate General
in the U.S.A. The decision of this Court in the 1997 Cacho case, which had become final and
executory, did not vest upon Teofilo ownership of the parcels of land as it merely ordered the re-
issuance of a lost duplicate certificate of title in its original form and condition.
The Court of Appeals agreed in the finding of the RTC-Branch 3 that the evidence on record
preponderantly supports Vidal’s claim of being the granddaughter and sole heiress of the late Doña
Demetria. The appellate court further adjudged that Vidal did not delay in asserting her rights over
the subject parcels of land. The prescriptive period for real actions over immovables is 30 years.
Vidal’s rights as Doña Demetria’s successor-in-interest accrued upon the latter’s death in 1974, and
only 24 years thereafter, in 1998, Vidal already filed the present Petition for Quieting of Title. Thus,
Vidal’s cause of action had not yet prescribed. And, where the action was filed within the prescriptive
period provided by law, the doctrine of laches was also inapplicable.
LANDTRADE, Teofilo, and Atty. Cabildo filed separate Motions for Reconsideration of the January
19, 2007 Decision of the Court of Appeals, which were denied in the July 4, 2007 Resolution36 of the
same court.
On August 24, 2007, LANDTRADE filed with this Court a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, which was docketed as G.R. No. 178779. On September 6, 2007,
Teofilo and Atty. Cabildo filed their own Petition for Review on Certiorari under Rule 45 of the Rules
of Court, which was docketed as G.R. No. 178894.
The Ejectment or Unlawful Detainer Case

(G.R. Nos. 170505, 173355-56, and 173563-64)
Three Petitions before this Court are rooted in the Unlawful Detainer Case instituted by
LANDTRADE against NAPOCOR and TRANSCO.
On August 9, 1952, NAPOCOR took possession of two parcels of land in Sitio Nunucan, Overton,
Fuentes, Iligan City, denominated as Lots 2029 and 2043, consisting of 3,588 square meters (or
0.36 hectares) and 3,177 square meters (or 0.32 hectares), respectively. On Lot 2029, NAPOCOR
constructed its power sub-station, known as the Overton Sub-station, while on Lot 2043, it built a
warehouse, known as the Agus 7 Warehouse, both for the use of its Agus 7 Hydro-Electric Power
Plant. For more than 30 years, NAPOCOR occupied and possessed said parcels of land pursuant to
its charter, Republic Act No. 6395.37 With the enactment in 2001 of Republic Act No. 9136, otherwise
known as the Electric Power Industry Reform Act (EPIRA), TRANSCO assumed the functions of
NAPOCOR with regard to electrical transmissions and took over possession of the Overton Sub-
station.
Claiming ownership of the parcels of land where the Overton Sub-station and Agus 7 Warehouse
are located, LANDTRADE filed with the MTCC on April 9, 2003 a Complaint for Unlawful Detainer
against NAPOCOR and TRANSCO, which was docketed as Civil Case No. 11475-AF.
In its Complaint, LANDTRADE alleged that it acquired from Teofilo, through Atty. Cabildo, two
parcels of land at Sitio Nunucan, Overton, Fuentes, Brgy. Maria Cristina, Iligan City, with a combined
area of 270,255 square meters or around 27.03 hectares, as evidenced by a Deed of Absolute
Sale38 dated October 1, 1996. Certain portions of said parcels of land were being occupied by the
Overton Sub-station and Agus 7 Warehouse of NAPOCOR and TRANSCO, through the tolerance of
LANDTRADE. Upon failure of NAPOCOR and TRANSCO to pay rentals or to vacate the subject
properties after demands to do so, LANDTRADE filed the present Complaint for Unlawful Detainer,
plus damages in the amount of ₱450,000.00 as yearly rental from date of the first extra-judicial
demand until NAPOCOR and TRANSCO vacate the subject properties.
In their separate Answers, NAPOCOR and TRANSCO denied the material allegations in the
Complaint and countered, by way of special and affirmative defenses, that the Complaint was barred
by res judicata; that the MTCC has no jurisdiction over the subject matter of the action; and that
LANDTRADE lacked the legal capacity to sue.
On February 17, 2004, the MTCC rendered its Decision39 in favor of LANDTRADE. The MTCC
disposed:
WHEREFORE, premises considered, judgment is hereby rendered in favor of Plaintiff Land Trade
Realty Corporation represented by Atty. Max C. Tabimina and against defendant National Power
Corporation represented by its President, Mr. Rogelio M. Murga and co-defendant TRANSCO
represented by its President Dr. Allan T. Ortiz and Engr. Lorrymir A. Adaza, Manager, NAPOCOR-
Mindanao, Regional Center, Ma. Cristina, Iligan City, ordering:
1. Defendants National Power Corporation and TRANSCO, their agents or representatives or

any person/s acting on its behalf or under its authority to vacate the premises;
2. Defendants NAPOCOR and TRANSCO to pay Plaintiff jointly and solidarily:
a. Php500,000.00 a month representing fair rental value or compensation since June

29, 1978 until defendant shall have vacated the premises;
b. Php20,000.00 for and as attorney’s fees and
c. Cost of suit.
Execution shall issue immediately upon motion, unless an appeal has been perfected and the
defendant to stay execution files a sufficient supersedeas bond, approved by this Court and
executed in favor of the plaintiff, to pay the rents, damages, and costs accruing down to the time of
judgment appealed from, and unless, during the pendency of the appeal, defendants deposit with
the appellate court the amount of ₱500,000.00 per month, as reasonable value of the use and
occupancy of the premises for the preceding month or period on or before the tenth day of each
succeeding month or period.40
NAPOCOR and TRANSCO seasonably filed a Joint Notice of Appeal. Their appeal, docketed as
Civil Case No. 6613, was initially assigned to the RTC-Branch 5, presided over by Judge Maximino
Magno Libre (Judge Libre).
LANDTRADE filed on June 24, 2004 a Motion for Execution, asserting that NAPOCOR and
TRANSCO had neither filed a supersedeas bond with the MTCC nor periodically deposited with the
RTC the monthly rental for the properties in question, so as to stay the immediate execution pending
appeal of the MTCC judgment. However, the said Motion failed to comply with the required notice of
hearing under Rule 15, Section 5 of the Rules of Court. LANDTRADE then filed a Motion to
Withdraw and/or Replace Notice of Hearing.
NAPOCOR and TRANSCO filed on July 13, 2004 a Joint Motion to Suspend Proceedings citing
Amagan v. Marayag,41 in which the Court ruled that if circumstances should require, the proceedings
in an ejectment case may be suspended in whatever stage it may be found. Since LANDTRADE
anchors its right to possession of the subject parcels of land on the Deed of Sale executed in its
favor by Teofilo on October 1, 1996, the ejectment case should be held in abeyance pending the
resolution of other cases in which title over the same properties are in issue, i.e., (1) Civil Case No.
6600, the action for the annulment of the Deed of Sale dated October 1, 1996 filed by Teofilo against
LANDTRADE pending before the RTC-Branch 4; and (2) Civil Case No. 4452, the Quieting of Title
Case filed by Vidal and AZIMUTH against Teofilo and Atty. Cabildo pending before the RTC-Branch
3.
LANDTRADE filed on July 19, 2004 another Motion for Execution, which was heard together with the
Joint Motion to Suspend Proceedings of NAPOCOR and TRANSCO. After said hearing, the RTC-
Branch 5 directed the parties to file their memoranda on the two pending Motions.
LANDTRADE, in its Memorandum, maintained that the pendency of Civil Case No. 4452, the
Quieting of Title Case, should not preclude the execution of the MTCC judgment in the Unlawful
Detainer Case because the issue involved in the latter was only the material possession or
possession de facto of the parcels of land in question. LANDTRADE also reported that Civil Case
No. 6600, the action for annulment of the Deed of Sale dated October 1, 1996 instituted by Teofilo,
was already dismissed given that the RTC-Branch 4 had approved the Compromise Agreement
executed between LANDTRADE and Teofilo.
NAPOCOR and TRANSCO likewise filed their respective Memoranda. Subsequently, NAPOCOR
filed a Supplement to its Memorandum to bring to the attention of the RTC-Branch 5 the Decision
rendered on July 17, 2004 by the RTC-Branch 3 in Civil Case No. 4452, the Quieting of Title Case,
categorically declaring Teofilo, the predecessor-in-interest of LANDTRADE, as having no right at all
to the subject parcels of land. Resultantly, the right of LANDTRADE to the two properties, which
merely emanated from Teofilo, was effectively declared as non-existent too.
On August 4, 2004, the RTC-Branch 5 issued an Order42 denying the Joint Motion to Suspend
Proceedings of NAPOCOR and TRANSCO. The RTC held that the pendency of other actions
involving the same parcels of land could not stay execution pending appeal of the MTCC judgment
because NAPOCOR and TRANSCO failed to post the required bond and pay the monthly rentals.
Five days later, on August 9, 2004, the RTC-Branch 5 issued another Order43 granting the Motion of
LANDTRADE for execution of the MTCC judgment pending appeal.
The next day, on August 10, 2004, the Acting Clerk of Court, Atty. Joel M. Macaraya, Jr., issued a
Writ of Execution Pending Appeal44 which directed Sheriff IV Alberto O. Borres (Sheriff Borres) to
execute the MTCC Decision dated February 17, 2004.
A day later, on August 11, 2004, Sheriff Borres issued two Notices of Garnishment45 addressed to
PNB and Land Bank of the Philippines in Iligan City, garnishing all the goods, effects, stocks,
interests in stocks and shares, and any other personal properties belonging to NAPOCOR and
TRANSCO which were being held by and under the possession and control of said banks. On even
date, Sheriff Borres also issued a Notification46 to NAPOCOR and TRANSCO for them to vacate the
subject parcels of land; and to pay LANDTRADE the sums of (a) ₱156,000,000.00, representing the
total fair rental value for the said properties, computed at ₱500,000.00 per month, beginning June
29, 1978 until June 29, 2004, or for a period of 26 years, and (b) ₱20,000.00 as attorney's fees.
Thereafter, NAPOCOR and TRANSCO each filed before the Court of Appeals in Cagayan de Oro
City a Petition for Certiorari, under Rule 65 of the Rules of Court, with prayer for the issuance of a
TRO and writ of preliminary injunction. The Petitions, docketed as CA-G.R. SP Nos. 85174 and
85841, were eventually consolidated.
The Court of Appeals issued on August 18, 2004 a TRO47 enjoining the enforcement and
implementation of the Order of Execution and Writ of Execution Pending Appeal of the RTC-Branch
5 and Notices of Garnishment and Notification of Sheriff Borres.
The Court of Appeals, in its Decision48 dated November 23, 2005, determined that public
respondents did commit grave abuse of discretion in allowing and/or effecting the execution of the
MTCC judgment pending appeal, since NAPOCOR and TRANSCO were legally excused from
complying with the requirements for a stay of execution specified in Rule 70, Section 19 of the Rules
of Court, particularly, the posting of a supersedeas bond and periodic deposits of rental payments.
The decretal portion of said appellate court Decision states:
ACCORDINGLY, the two petitions at bench are GRANTED; the Order dated 9 August 2004, the Writ
of Execution Pending Appeal dated 10 August 2004, the two Notices of Garnishment dated 11
August 2004, and the Notification dated 11 August 2004, are ANNULLED and SET ASIDE.49
Displeased, LANDTRADE elevated the case to this Court on January 10, 2006 via a Petition for
Review on Certiorari under Rule 45 of the Rules of Court, which was docketed as G.R. No. 170505.
In the meantime, with the retirement of Judge Libre and the inhibition50 of Judge Oscar Badelles, the
new presiding judge of RTC-Branch 5, Civil Case No. 6613 was re-raffled to the RTC-Branch 1,
presided over by Judge Mangotara. The RTC-Branch 1 promulgated on December 12, 2005 a
Decision51 in Civil Case No. 6613 which affirmed in toto the February 17, 2004 Decision of the MTCC
in Civil Case No. 11475-AF favoring LANDTRADE.
NAPOCOR and TRANSCO filed with the RTC-Branch 1 twin Motions, namely: (1) Motion for
Reconsideration of the Decision dated December 12, 2005; and (2) Motion for Inhibition of Judge
Mangotara. The RTC-Branch 1 denied both Motions in a Resolution dated January 30, 2006.
NAPOCOR and TRANSCO filed with the Court of Appeals separate Petitions for Review with prayer
for TRO and/or a writ of preliminary injunction, which were docketed as CA-G.R. SP Nos. 00854 and
00889, respectively. In a Resolution dated March 24, 2006, the Court of Appeals granted the prayer
for TRO of NAPOCOR and TRANSCO.
With the impending lapse of the effectivity of the TRO on May 23, 2006, NAPOCOR filed on May 15,
2006 with the Court of Appeals a Manifestation and Motion praying for the resolution of its
application for preliminary injunction.
On May 23, 2006, the same day the TRO lapsed, the Court of Appeals granted the motions for
extension of time to file a consolidated comment of LANDTRADE. Two days later, LANDTRADE
filed an Omnibus Motion seeking the issuance of (1) a writ of execution pending appeal, and (2) the
designation of a special sheriff in accordance with Rule 70, Section 21 of the Rules of Court.
In a Resolution52 dated June 30, 2006, the Court of Appeals granted the Omnibus Motion of
LANDTRADE and denied the applications for the issuance of a writ of preliminary injunction of
NAPOCOR and TRANSCO. In effect, the appellate court authorized the execution pending appeal of
the judgment of the MTCC, affirmed by the RTC-Branch 1, thus:
IN LIGHT OF THE ABOVE DISQUISITIONS, this Court resolves to grant the [LANDRADE]’s
omnibus motion for execution pending appeal of the decision rendered in its favor which is being
assailed in these consolidated petitions for review. Accordingly, the [NAPOCOR and TRANSCO’s]
respective applications for issuance of writ of preliminary injunction are both denied for lack of
factual and legal bases. The Municipal Trial Court in Cities, Branch 2, Iligan City, which at present
has the custody of the records of the case a quo, is hereby ordered to cause the immediate issuance
of a writ of execution relative to its decision dated 17 February 2004 in Civil Case No. 11475-AF.53
On July 20, 2006, NAPOCOR filed with this Court a Petition for Certiorari and Prohibition under Rule
65 of the Rules of Court with an urgent plea for a TRO, docketed as G.R. No. 173355-56. On August
2, 2006, TRANSCO filed with this Court its own Petition for Certiorari, docketed as G.R. No. 173563-
64.
On July 21, 2006, NAPOCOR filed an Urgent Motion for the Issuance of a TRO in G.R. No. 173355-
56. In a Resolution54 dated July 26, 2006, the Court granted the Motion of NAPOCOR and issued a
TRO,55 effective immediately, which enjoined public and private respondents from implementing the
Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889 and
the Decision dated February 17, 2004 of the MTCC in Civil Case No. 11475-AF.
On July 31, 2006, Vidal and AZIMUTH filed a Motion for Leave to Intervene and to Admit Attached
Comment-in-Intervention, contending therein that Vidal was the lawful owner of the parcels of land
subject of the Unlawful Detainer Case as confirmed in the Decision dated July 17, 2004 of the RTC-
Branch 3 in Civil Case No. 4452. In a Resolution dated September 30, 2006, the Court required the
parties to comment on the Motion of Vidal and AZIMUTH, and deferred action on the said Motion
pending the submission of such comments.
The Cancellation of Titles and Reversion Case
(G.R. No. 173401)
On October 13, 2004, the Republic filed a Complaint for the Cancellation of OCT Nos. 0-1200 (a.f.)
and 0-1201 (a.f.) and Reversion against the late Doña Demetria, represented by her alleged heirs,
Vidal and/or Teofilo, together with AZIMUTH and LANDTRADE. The Complaint, docketed as Civil
Case No. 6686, was raffled to the RTC-Branch 4.
The Republic sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) and the reversion
of the parcels of land covered thereby to the Government based on the following allegations in its
Complaint, under the heading "Cause of Action":
5. On October 15, 1998, Original Certificates of Title (OCTs) Nos. 0-1200 (a.f.) and 0-1201 (a.f.)
were issued in the name of "Demetria Cacho, widow, now deceased…" consisting of a total area of
Three Hundred Seventy-Eight Thousand Seven Hundred and Seven (378,707) square meters and
Three Thousand Seven Hundred Thirty-Five (3,635) square meters, respectively, situated in Iligan
City, x x x
xxxx
6. The afore-stated titles were issued in implementation of a decision rendered in LRC (GLRO)
Record Nos. 6908 and 6909 dated December 10, 1912, as affirmed by the Honorable Supreme
Court in Cacho v. Government of the United States, 28 Phil. 616 (December 10, 1914),
7. The decision in LRC (GLRO) Record Nos. 6908 and 6909, upon which the titles were issued, did
not grant the entire area applied for therein. x x x
xxxx
9. As events turned out, the titles issued in connection with LRC (GLRO) Record Nos. 6908 and
6909 – i.e. OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) – cover property MUCH LARGER in area than
that granted by the land registration court in its corresponding decision, supra.
10. While the LRC Decision, as affirmed by the Honorable Supreme Court, granted only the
southern part of the 37.87 hectare land subject of LRC (GLRO) Record Case No. 6909, the ENTIRE
37.87 hectares is indicated as the property covered by OCT 0-1200 (a.f.). Worse, OCT No. 0-1200
(a.f.) made reference to Case No. 6908 as basis thereof, yet, the decision in said case is clear:
(i) The parcel "object of Case No. 6908 is small" (Cacho vs. Government of the United States, 28
Phil. 616, p. 619)
(ii) "The parcel of land claimed by the applicant in Case No. 6909 is the bigger of two parcels and
contains 37.87 hectares…"
11. More significantly, the technical description in Original Certificate of Title No. 0-1200 (a.f.)
specifies the date of survey as "August 31 to September 1, 1910," which is EARLIER than the date
the Supreme Court, in Cacho supra, resolved LRC (GLRO) Record No. 6909 (involving 37.87
hectares). In resolving the application involving the 37.87 hectares, the Honorable Supreme Court
declared that only the southern part of the 37.87 hectare property applied for is granted and that a
new survey specifying the "southern part" thereof should be submitted. Accordingly, any survey
involving the "granted southern part" should bear a date subsequent to the December 10, 1914
Supreme Court decision. x x x
xxxx
12. The Honorable Supreme Court further declared that the Decision in LRC (GLRO) Record No.
6909 was reserved:
"Final decision in these case is reserved until the presentation of the … new plan." (28 Phil. 616, p.
631; Underscoring supplied)
In other words, as of December 10, 1914, when the Honorable Supreme Court rendered its Decision
on appeal in LRC (GLRO) Record No. 6909, "final decision" of the case was still reserved until the
presentation of a new plan. The metes and bounds of OCT No. 0-1200 (a.f.) could not have been the
technical description of the property granted by the court – described as "the southern part of the
large parcel object of expediente 6909 only" (Cacho vs. Government of the United States, 28 Phil.
617, 629). As earlier stated, the technical description appearing in said title was the result of a
survey conducted in 1910 or before the Supreme Court decision was rendered in 1914.
13. In the same vein, Original Certificate of Title No. 0-1201 (a.f.) specifies LRC (GLRO) Record No.
6909 as the basis thereof (see front page of OCT No. 0-1201 (a.f.)). Yet, the technical description
makes, as its reference, Lot 1, Plan II-3732, LR Case No. 047, LRC (GLRO) Record No. 6908 (see
page 2 of said title). A title issued pursuant to a decision may only cover the property subject of the
case. A title cannot properly be issued pursuant to a decision in Case 6909, but whose technical
description is based on Case 6908.
14. The decision in LRC (GLRO) Record Nos. 6908 and 6909 has become final and executory, and
it cannot be modified, much less result in an increased area of the property decreed therein.
xxxx
16. In sum, Original Certificates of Title Nos. 0-1200 (a.f.) and 0-1201 (a.f.), as issued, are null and
void since the technical descriptions vis-à-vis the areas of the parcels of land covered therein went
beyond the areas granted by the land registration court in LRC (GLRO) Record Nos. 6908 and
6909.56
Vidal and AZIMUTH filed a Motion to Dismiss dated December 23, 2004 on the grounds that (1) the
Republic has no cause of action; (2) assuming arguendo that the Republic has a cause of action, its
Complaint failed to state a cause of action; (3) assuming arguendo that the Republic has a cause of
action, the same is barred by prior judgment; (4) assuming further that the Republic has a cause of
action, the same was extinguished by prescription; and (4) the Republic is guilty of forum shopping.
Upon motion of the Republic, the RTC-Branch 4 issued an Order57 dated October 4, 2005, declaring
LANDTRADE and Teofilo, as represented by Atty. Cabildo, in default since they failed to submit their
respective answers to the Complaint despite the proper service of summons upon them.
LANDTRADE subsequently filed its Answer with Compulsory Counterclaim dated September 28,
2005. It also moved for the setting aside and reconsideration of the Order of Default issued against it
by the RTC-Branch 4 on October 20, 2005.
On December 13, 2005, the RTC-Branch 4 issued an Order58 dismissing the Complaint of the
Republic in Civil Case No. 6686, completely agreeing with Vidal and AZIMUTH.
The RTC-Branch 4 reasoned that the Republic had no cause of action because there was no
showing that the late Doña Demetria committed any wrongful act or omission in violation of any right
of the Republic. Doña Demetria had sufficiently proven her ownership over the parcels of land as
borne in the ruling of the LRC in GLRO Record Nos. 6908 and 6909. On the other hand, the
Republic had no more right to the said parcels of land. The Regalian doctrine does not apply in this
case because the titles were already issued to Doña Demetria and segregated from the mass of the
public domain.
The RTC-Branch 4 likewise held that the Republic failed to state a cause of action in its Complaint.
The arguments of the Republic – i.e., the absence of a new survey plan and deed, the titles covered
properties with much larger area than that granted by the LRC – had been answered squarely in the
1997 Cacho case. Also, the Complaint failed to allege that fraud had been committed in having the
titles registered and that the Director of Lands requested the reversion of the subject parcels of land.
The RTC-Branch 4 was convinced that the Complaint was barred by res judicata because the 1914
Cacho case already decreed the registration of the parcels of land in the late Doña Demetria’s name
and the 1997 Cacho case settled that there was no merit in the argument that the conditions
imposed in the first case have not been complied with.
The RTC-Branch 4 was likewise persuaded that the cause of action or remedy of the Republic was
lost or extinguished by prescription pursuant to Article 1106 of the Civil Code and Section 32 of
Presidential Decree No. 1529, otherwise known as the Land Registration Decree, which prescribes a
one-year period within which to file an action for the review of a decree of registration.
Finally, the RTC-Branch 4 found the Republic guilty of forum shopping because there is between this
case, on one hand, and the 1914 and 1997 Cacho cases, on the other, identity of parties, as well as
rights asserted and reliefs prayed for, as the contending parties are claiming rights of ownership over
the same parcels of land.
The Republic filed a Motion for Reconsideration of the dismissal of its Complaint but the same was
denied by the RTC-Branch 4 in its Order59 dated May 16, 2006.
Assailing the Orders dated December 13, 2005 and May 16, 2006 of the RTC-Branch 4, the
Republic filed on August 11, 2006 a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, which was docketed as G.R. No. 173401.
III
ISSUES AND DISCUSSIONS
Expropriation Case
(G.R. No. 170375)
The Republic, in its consolidated Petitions challenging the Resolutions dated July 12, 2005 and
October 24, 2005 of the RTC-Branch 1 in Civil Case No. 106, made the following assignment of
errors:
RESPONDENT JUDGE GRAVELY ERRED IN ORDERING THE DISMISSAL OF THE

EXPROPRIATION COMPLAINT IN CIVIL CASE NO. 106 CONSIDERING THAT:
(a) THE NON-JOINDER OF PARTIES IS NOT A GROUND FOR THE DISMISSAL

OF AN ACTION PURSUANT TO SECTION 11, RULE 3 OF THE 1997 RULES OF
CIVIL PROCEDURE;
(b) AN EXPROPRIATION PROCEEDING IS AN ACTION QUASI IN REM WHEREIN
THE FACT THAT THE OWNER OF THE PROPERTY IS MADE A PARTY TO THE
ACTION IS NOT ESSENTIALLY INDISPENSABLE;
(c) PETITIONER DID NOT COMMIT ANY FORUM SHOPPING WITH THE FILING
OF THE REVERSION COMPLAINT DOCKETED AS CIVIL CASE NO. 6686 WHICH
IS PENDING BEFORE BRANCH 4 OF THE REGIONAL TRIAL COURT OF ILIGAN
CITY.60
Filing of consolidated petitions under both Rules 45 and 65
At the outset, the Court notes that the Republic filed a pleading with the caption Consolidated
Petitions for Review on Certiorari (Under Rule 45) and Certiorari (Under Rule 65) of the Rules of
Court. The Republic explains that it filed the Consolidated Petitions pursuant to Metropolitan
Waterworks and Sewerage System (MWSS) v. Court of Appeals61 (MWSS case).
The reliance of the Republic on the MWSS case to justify its mode of appeal is misplaced, taking the
pronouncements of this Court in said case out of context.
The issue in the MWSS case was whether a possessor in good faith has the right to remove useful
improvements, and not whether consolidated petitions under both Rules 45 and 65 of the Rules of
Court can be filed. Therein petitioner MWSS simply filed an appeal by certiorari under Rule 45 of the
Rules of Court, but named the Court of Appeals as a respondent. The Court clarified that the only
parties in an appeal by certiorari under Rule 45 of the Rules of Court are the appellant as petitioner
and the appellee as respondent. The court which rendered the judgment appealed from is not a
party in said appeal. It is in the special civil action of certiorari under Rule 65 of the Rules of Court
where the court or judge is required to be joined as party defendant or respondent. The Court,
however, also acknowledged that there may be an instance when in an appeal by certiorari under
Rule 45, the petitioner-appellant would also claim that the court that rendered the appealed
judgment acted without or in excess of its jurisdiction or with grave abuse of discretion, in which
case, such court should be joined as a party-defendant or respondent. While the Court may have
stated that in such an instance, "the petition for review on certiorari under Rule 45 of the Rules of
Court is at the same time a petition for certiorari under Rule 65," the Court did not hold that
consolidated petitions under both Rules 45 and 65 could or should be filed.
The Court, in more recent cases, had been stricter and clearer on the distinction between these two
modes of appeal. In Nunez v. GSIS Family Bank,62 the Court elucidated:
In Ligon v. Court of Appeals where the therein petitioner described her petition as "an appeal under
Rule 45 and at the same time as a special civil action of certiorari under Rule 65 of the Rules of
Court," this Court, in frowning over what it described as a "chimera," reiterated that the remedies of
appeal and certiorari are mutually exclusive and not alternative nor successive.
To be sure, the distinctions between Rules 45 and 65 are far and wide. However, the most apparent
is that errors of jurisdiction are best reviewed in a special civil action for certiorari under Rule 65
while errors of judgment can only be corrected by appeal in a petition for review under Rule 45.
But in the same case, the Court also held that:

This Court, x x x, in accordance with the liberal spirit which pervades the Rules of Court and in the
interest of justice may treat a petition for certiorari as having been filed under Rule 45, more so if the
same was filed within the reglementary period for filing a petition for review.63
It is apparent in the case at bar that the Republic availed itself of the wrong mode of appeal by filing
Consolidated Petitions for Review under Rule 45 and for Certiorari under Rule 65, when these are
two separate remedies that are mutually exclusive and neither alternative nor successive.
Nevertheless, the Court shall treat the Consolidated Petitions as a Petition for Review on Certiorari
under Rule 45 and the allegations therein as errors of judgment. As the records show, the Petition
was filed on time under Rules 45. Before the lapse of the 15-day reglementary period to appeal
under Rule 45, the Republic filed with the Court a motion for extension of time to file its petition. The
Court, in a Resolution64 dated January 23, 2006, granted the Republic a 30-day extension, which
was to expire on December 29, 2005. The Republic was able to file its Petition on the last day of the
extension period.
Hierarchy of courts
The direct filing of the instant Petition with this Court did not violate the doctrine of hierarchy of
courts.
According to Rule 41, Section 2(c)65 of the Rules of Court, a decision or order of the RTC may be
appealed to the Supreme Court by petition for review on certiorari under Rule 45, provided that such
petition raises only questions of law.66
A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted.67 A
question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or
when the query invites calibration of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the situation.68
Here, the Petition of the Republic raises pure questions of law, i.e., whether Civil Case No. 106
should have been dismissed for failure to implead indispensable parties and for forum shopping.
Thus, the direct resort by the Republic to this Court is proper.
The Court shall now consider the propriety of the dismissal by the RTC-Branch 1 of the Complaint
for Expropriation of the Republic.
The proper parties in the expropriation proceedings
The right of the Republic to be substituted for ISA as plaintiff in Civil Case No. 106 had long been
affirmed by no less than this Court in the ISA case. The dispositive portion of the ISA case reads:
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to
the extent that it affirmed the trial court’s order dismissing the expropriation proceedings, is hereby
REVERSED and SET ASIDE and the case is REMANDED to the court a quo which shall allow the
substitution of the Republic of the Philippines for petitioner Iron Steel Authority for further
proceedings consistent with this Decision. No pronouncement as to costs.69
The ISA case had already become final and executory, and entry of judgment was made in said
case on August 31, 1998. The RTC-Branch 1, in an Order dated November 16, 2001, effected the
substitution of the Republic for ISA.
The failure of the Republic to actually file a motion for execution does not render the substitution
void. A writ of execution requires the sheriff or other proper officer to whom it is directed to enforce
the terms of the writ.70 The November 16, 2001 Order of the RTC-Branch 1 should be deemed as
voluntary compliance with a final and executory judgment of this Court, already rendering a motion
for and issuance of a writ of execution superfluous.
Besides, no substantive right was violated by the voluntary compliance by the RTC-Branch 1 with
the directive in the ISA case even without a motion for execution having been filed. To the contrary,
the RTC-Branch 1 merely enforced the judicially determined right of the Republic to the substitution.
While it is desirable that the Rules of Court be faithfully and even meticulously observed, courts
should not be so strict about procedural lapses that do not really impair the administration of justice.
If the rules are intended to insure the orderly conduct of litigation it is because of the higher objective
they seek which is the protection of the substantive rights of the parties.71
The Court also observes that MCFC did not seek any remedy from the Order dated November 16,
2001 of the RTC-Branch 1. Consequently, the said Order already became final, which even the
RTC-Branch 1 itself cannot reverse and set aside on the ground of "honest mistake."
The RTC-Branch 1 dismissed the Complaint in Civil Case No. 106 on another ground: that MCFC is
not a proper party to the expropriation proceedings, not being the owner of the parcels of land
sought to be expropriated. The RTC-Branch 1 ratiocinated that since the exercise of the power of
eminent domain involves the taking of private land intended for public use upon payment of just
compensation to the owner, then a complaint for expropriation must be directed against the owner of
the land sought to be expropriated.
The Republic insists, however, that MCFC is a real party-in-interest, impleaded as a defendant in the
Complaint for Expropriation because of its possessory or occupancy rights over the subject parcels
of land, and not by reason of its ownership of the said properties. In addition, the Republic maintains
that non-joinder of parties is not a ground for the dismissal of an action.
Rule 67, Section 1 of the then Rules of Court72 described how expropriation proceedings should be
instituted:
Section 1. The complaint. – The right of eminent domain shall be exercised by the filing of a
complaint which shall state with certainty the right and purpose of condemnation, describe the real or
personal property sought to be condemned, and join as defendants all persons owning or claiming to
own, or occupying, any part thereof or interest therein, showing, so far as practicable, the interest of
each defendant separately. If the title to any property sought to be condemned appears to be in the
Republic of the Philippines, although occupied by private individuals, or if the title is otherwise
obscure or doubtful so that the plaintiff cannot with accuracy or certainty specify who are the real
owners, averment to that effect may be made in the complaint.73 (Emphases supplied.)
For sure, defendants in an expropriation case are not limited to the owners of the property to be
expropriated, and just compensation is not due to the property owner alone. As this Court held in De
Knecht v. Court of Appeals74:
The defendants in an expropriation case are not limited to the owners of the property condemned.
They include all other persons owning, occupying or claiming to own the property. When [property] is
taken by eminent domain, the owner x x x is not necessarily the only person who is entitled to
compensation. In the American jurisdiction, the term ‘owner’ when employed in statutes relating to
eminent domain to designate the persons who are to be made parties to the proceeding, refer, as is
the rule in respect of those entitled to compensation, to all those who have lawful interest in the
property to be condemned, including a mortgagee, a lessee and a vendee in possession under an
executory contract. Every person having an estate or interest at law or in equity in the land taken is
entitled to share in the award. If a person claiming an interest in the land sought to be condemned is
not made a party, he is given the right to intervene and lay claim to the compensation. (Emphasis
supplied.)
At the time of the filing of the Complaint for Expropriation in 1983, possessory/occupancy rights of
MCFC over the parcels of land sought to be expropriated were undisputed. In fact, Letter of
Instructions No. 127775 dated November 16, 1982 expressly recognized that portions of the lands
reserved by Presidential Proclamation No. 2239, also dated November 16, 1982, for the use and
immediate occupation by the NSC, were then occupied by an idle fertilizer plant/factory and related
facilities of MCFC. It was ordered in the same Letter of Instruction that:
(1) NSC shall negotiate with the owners of MCFC, for and on behalf of the Government, for
the compensation of MCFC's present occupancy rights on the subject lands at an amount of
Thirty (P30.00) Pesos per square meter or equivalent to the assessed value thereof (as
determined by the City Assessor of Iligan), whichever is higher. NSC shall give MCFC the
option to either remove its aforesaid plant, structures, equipment, machinery and other
facilities from the lands or to sell or cede ownership thereof to NSC at a price equivalent to
the fair market value thereof as appraised by the Asian Appraisal Inc. as may be mutually
agreed upon by NSC and MCFC.
(2) In the event that NSC and MCFC fail to agree on the foregoing within sixty (60) days from
the date hereof, the Iron and Steel Authority (ISA) shall exercise its authority under
Presidential Decree (PD) No. 272, as amended, to initiate the expropriation of the
aforementioned occupancy rights of MCFC on the subject lands as well as the plant,
structures, equipment, machinery and related facilities, for and on behalf of NSC, and
thereafter cede the same to NSC. During the pendency of the expropriation proceedings,
NSC shall take possession of the properties, subject to bonding and other requirements of
P.D. 1533. (Emphasis supplied.)
Being the occupant of the parcel of land sought to be expropriated, MCFC could very well be named
a defendant in Civil Case No. 106. The RTC-Branch 1 evidently erred in dismissing the Complaint
for Expropriation against MCFC for not being a proper party.
Also erroneous was the dismissal by the RTC-Branch 1 of the original Complaint for Expropriation
for having been filed only against MCFC, the occupant of the subject land, but not the owner/s of the
said property.
Dismissal is not the remedy for misjoinder or non-joinder of parties. According to Rule 3, Section 11
of the Rules of Court:
SEC. 11. Misjoinder and non-joinder of parties. – Neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on motion
of any party or on its own initiative at any stage of the action and on such terms as are just. Any
claim against a misjoined party may be severed and proceeded with separately. (Emphasis
supplied.)
MCFC contends that the aforequoted rule does not apply in this case where the party not joined, i.e.,
the owner of the property to be expropriated, is an indispensable party.
An indispensable party is a party-in-interest without whom no final determination can be had of an

action.76
Now, is the owner of the property an indispensable party in an action for expropriation? Not
necessarily. Going back to Rule 67, Section 1 of the Rules of Court, expropriation proceedings may
be instituted even when "title to the property sought to be condemned appears to be in the Republic
of the Philippines, although occupied by private individuals." The same rule provides that a complaint
for expropriation shall name as defendants "all persons owning or claiming to own, or occupying, any
part thereof or interest" in the property sought to be condemned. Clearly, when the property already
appears to belong to the Republic, there is no sense in the Republic instituting expropriation
proceedings against itself. It can still, however, file a complaint for expropriation against the private
persons occupying the property. In such an expropriation case, the owner of the property is not an
indispensable party.
To recall, Presidential Proclamation No. 2239 explicitly states that the parcels of land reserved to
NSC are part of the public domain, hence, owned by the Republic. Letter of Instructions No. 1277
recognized only the occupancy rights of MCFC and directed NSC to institute expropriation
proceedings to determine the just compensation for said occupancy rights. Therefore, the owner of
the property is not an indispensable party in the original Complaint for Expropriation in Civil Case
No. 106.
Assuming for the sake of argument that the owner of the property is an indispensable party in the
expropriation proceedings, the non-joinder of said party would still not warrant immediate dismissal
of the complaint for expropriation. In Vda. De Manguerra v. Risos,77 the Court applied Rule 3,
Section 11 of the Rules of Court even in case of non-joinder of an indispensable party, viz:
[F]ailure to implead an indispensable party is not a ground for the dismissal of an action. In such a
case, the remedy is to implead the non-party claimed to be indispensable. Parties may be added by
order of the court, on motion of the party or on its own initiative at any stage of the action and/or
such times as are just. If the petitioner/plaintiff refuses to implead an indispensable party despite the
order of the court, the latter may dismiss the complaint/petition for the petitioner's/plaintiff's failure to
comply. (Emphasis supplied.)
In this case, the RTC-Branch 1 did not first require the Republic to implead the alleged owner/s of
the parcel of land sought to be expropriated. Despite the absence of any order from the Court, the
Republic – upon becoming aware that the parcels of land involved in the 1914 Cacho case and 1997
Cacho case, claimed by Teofilo and LANDTRADE, and Vidal and AZIMUTH, encroached into and
overlapped with the parcel of land subject of Civil Case No. 106 – sought leave of court to file a
Supplemental Complaint to implead these four parties. The RTC-Branch 1 did not take the
Supplemental Complaint of the Republic into consideration. Instead, it dismissed outright the original
Complaint for Expropriation against MCFC.
Forum shopping
The RTC-Branch 1 further erred in finding that the Republic committed forum shopping by (1)
simultaneously instituting the actions for expropriation (Civil Case No. 106) and reversion (Civil Case
No. 6686) for the same parcels of land; and (2) taking inconsistent positions when it conceded lack
of ownership over the parcels of land in the expropriation case but asserted ownership of the same
properties in the reversion case.
There is no dispute that the Republic instituted reversion proceedings (Civil Case No. 6686) for the
same parcels of land subject of the instant Expropriation Case (Civil Case No. 106). The Complaint
for Cancellation of Titles and Reversion78 dated September 27, 2004 was filed by the Republic with
the RTC on October 13, 2004. The records, however, do not show when the Supplemental
Complaint for Expropriation79 dated September 28, 2004 was filed with the RTC. Apparently, the
Supplemental Complaint for Expropriation was filed after the Complaint for Cancellation of Titles and
Reversion since the Republic mentioned in the former the fact of filing of the latter.80 Even then, the
Verification and Certification of Non-Forum Shopping81 attached to the Supplemental Complaint for
Expropriation did not disclose the filing of the Complaint for Cancellation of Titles and Reversion.
Notwithstanding such non-disclosure, the Court finds that the Republic did not commit forum
shopping for filing both Complaints.
In NBI-Microsoft Corporation v Hwang,82 the Court laid down the circumstances when forum
shopping exists:
Forum-shopping takes place when a litigant files multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable judgment.
Thus, it exists where the elements of litis pendentia are present, namely: (a) identity of parties, or
at least such parties who represent the same interests in both actions; (b) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to
the two preceding particulars in the two cases is such that any judgment that may be rendered in the
pending case, regardless of which party is successful, would amount to res judicata in the other
case. Forum-shopping is an act of malpractice because it abuses court processes. x x x.
Here, the elements of litis pendencia are wanting. There is no identity of rights asserted and reliefs
prayed for in Civil Case No. 106 and Civil Case No. 6686.
Civil Case No. 106 was instituted against MCFC to acquire, for a public purpose, its
possessory/occupancy rights over 322,532 square meters or 32.25 hectares of land which, at the
time of the filing of the original Complaint in 1983, was not yet covered by any certificate of title. On
the other hand, Civil Case No. 6686 sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.), which was entered into registration on December 4, 1998 in Doña Demetria’s name, on the
argument that the parcels of land covered by said certificates exceeded the areas granted by the
LRC to Doña Demetria in GLRO Record Nos. 6908 and 6909, as affirmed by this Court in the 1914
Cacho case.
Expropriation vis-à-vis reversion
The Republic is not engaging in contradictions when it instituted both expropriation and reversion
proceedings for the same parcels of land. The expropriation and reversion proceedings are distinct
remedies that are not necessarily exclusionary of each other.
The filing of a complaint for reversion does not preclude the institution of an action for expropriation.
Even if the land is reverted back to the State, the same may still be subject to expropriation as
against the occupants thereof.
Also, Rule 67, Section 1 of the Rules of Court allows the filing of a complaint for expropriation even
when "the title to any property sought to be condemned appears to be in the Republic of the
Philippines, although occupied by private individuals, or if the title is otherwise obscure or doubtful so
that the plaintiff cannot with accuracy or certainty specify who are the real owners." Rule 67, Section
9 of the Rules of Court further provides:
SEC. 9. Uncertain ownership; conflicting claims. – If the ownership of the property taken is
uncertain, or there are conflicting claims to any part thereof, the court may order any sum or
sums awarded as compensation for the property to be paid to the court for the benefit of the person
adjudged in the same proceeding to be entitled thereto. But the judgment shall require the payment
of the sum or sums awarded to either the defendant or the court before the plaintiff can enter upon
the property, or retain it for the public use or purpose if entry has already been made. (Emphasis
supplied.)
Hence, the filing by the Republic of the Supplemental Complaint for Expropriation impleading
Teofilo, Vidal, LANDTRADE, and AZIMUTH, is not necessarily an admission that the parcels of land
sought to be expropriated are privately owned. At most, the Republic merely acknowledged in its
Supplemental Complaint that there are private persons also claiming ownership of the parcels of
land. The Republic can still consistently assert, in both actions for expropriation and reversion, that
the subject parcels of land are part of the public domain.
In sum, the RTC-Branch 1 erred in dismissing the original Complaint and disallowing the
Supplemental Complaint in Civil Case No. 106. The Court reverses and sets aside the Resolutions
dated July 12, 2005 and October 24, 2005 of the RTC-Branch 1 in Civil Case 106, and reinstates the
Complaint for Reversion of the Republic.
The Quieting of Title Case

(G.R. Nos. 178779 and 178894)
Essentially, in their Petitions for Review on Certiorari under Rule 45 of the Rules of Court,
LANDTRADE and Teofilo, and/or Atty. Cabildo are calling upon this Court to determine whether the
Court of Appeals, in its Decision dated January 19, 2007 in CA-G.R. CV No. 00456, erred in (1)
upholding the jurisdiction of the RTC-Branch 3 to resolve the issues on Vidal's status, filiation, and
heirship in Civil Case No. 4452, the action for quieting of title; (2) not holding that Vidal and
AZIMUTH have neither cause of action nor legal or equitable title or interest in the parcels of land
covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.); (3) finding the evidence sufficient to establish
Vidal’s status as Doña Demetria’s granddaughter and sole surviving heir; and (4) not holding that
Civil Case No. 4452 was already barred by prescription.
In their Comment, Vidal and AZIMUTH insisted on the correctness of the Court of Appeals Decision
dated January 19, 2007, and questioned the propriety of the Petition for Review filed by
LANDTRADE as it supposedly raised only factual issues.
The Court rules in favor of Vidal and AZIMUTH.
Petitions for review under Rule 45
A scrutiny of the issues raised, not just in the Petition for Review of LANDTRADE, but also those in
the Petition for Review of Teofilo and/or Atty. Cabildo, reveals that they are both factual and legal.
The Court has held in a long line of cases that in a petition for review on certiorari under Rule 45 of
the Rules of Court, only questions of law may be raised as the Supreme Court is not a trier of facts.
It is settled that as a rule, the findings of fact of the Court of Appeals especially those affirming the
trial court are final and conclusive and cannot be reviewed on appeal to the Supreme Court. The
exceptions to this rule are: (a) when the conclusion is a finding grounded entirely on speculations,
surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible;
(c) when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension
of facts; (e) when the findings of fact are conflicting; (f) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (g) where the Court of Appeals manifestly overlooked certain relevant facts
not disputed by the parties and which, if properly considered, would justify a different conclusion;
and (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court, or
are mere conclusions without citation of specific evidence, or where the facts set forth by the
petitioner are not disputed by the respondent, or where the findings of fact of the Court of Appeals
are premised on absence of evidence but are contradicted by the evidence on record.83 None of
these exceptions exists in the Petitions at bar.
Be that as it may, the Court shall address in full-length all the issues tendered in the instant Petitions
for Review, even when factual, if only to bolster the conclusions reached by the RTC-Branch 3 and
the Court of Appeals, with which the Court fully concurs.
Jurisdiction vis-à-vis exercise of jurisdiction
LANDTRADE, Teofilo, and/or Atty. Cabildo argue that the RTC-Branch 3 had no jurisidiction to
resolve the issues of status, filiation, and heirship in an action for quieting of title as said issues
should be ventilated and adjudicated only in special proceedings under Rule 90, Section 1 of the
Rules of Court, pursuant to the ruling of this Court in Agapay v. Palang84 (Agapay case) and Heirs of
Guido Yaptinchay and Isabel Yaptinchay v. Del Rosario85 (Yaptinchay case). Even on the
assumption that the RTC-Branch 3 acquired jurisdiction over their persons, LANDTRADE, Teofilo,
and/or Atty. Cabildo maintain that the RTC-Branch 3 erred in the exercise of its jurisdiction by
adjudicating and passing upon the issues on Vidal’s status, filiation, and heirship in the Quieting of
Title Case. Moreover, LANDTRADE, Teofilo, and/or Atty. Cabildo aver that the resolution of issues
regarding status, filiation, and heirship is not merely a matter of procedure, but of jurisdiction which
cannot be waived by the parties or by the court.
The aforementioned arguments fail to persuade.
In the first place, jurisdiction is not the same as the exercise of jurisdiction. The Court distinguished
between the two, thus:
Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of
jurisdiction, jurisdiction is the authority to decide a cause, and not the decision rendered
therein. Where there is jurisdiction over the person and the subject matter, the decision on all
other questions arising in the case is but an exercise of the jurisdiction. And the errors which
the court may commit in the exercise of jurisdiction are merely errors of judgment which are the
proper subject of an appeal.86 (Emphasis supplied.)
Here, the RTC-Branch 3 unmistakably had jurisdiction over the subject matter and the parties in Civil
Case No. 4452.
Jurisdiction over the subject matter or nature of the action is conferred only by the Constitution or by
law. Once vested by law on a particular court or body, the jurisdiction over the subject matter or
nature of the action cannot be dislodged by anybody other than by the legislature through the
enactment of a law. The power to change the jurisdiction of the courts is a matter of legislative
enactment, which none but the legislature may do. Congress has the sole power to define, prescribe
and apportion the jurisdiction of the courts.87
The RTC has jurisdiction over an action for quieting of title under the circumstances described in
Section 19(2) of Batas Pambansa Blg. 129, as amended:
SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxxx
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (₱20,000.00)
or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (₱50,000.00)
except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction
over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts.
Records show that the parcels of land subject of Civil Case No. 4452 have a combined assessed
value of ₱35,398,920.00,88 undisputedly falling within the jurisdiction of the RTC-Branch 3.
The RTC-Branch 3 also acquired jurisdiction over the person of Teofilo when he filed his Answer to
the Complaint of Vidal and AZIMUTH; and over the juridical personality of LANDTRADE when the
said corporation was allowed to intervene in Civil Case No. 4452.
Considering that the RTC-Branch 3 had jurisdiction over the subject matter and parties in Civil Case
No. 4452, then it can rule on all issues in the case, including those on Vidal’s status, filiation, and
heirship, in exercise of its jurisdiction. Any alleged erroneous finding by the RTC-Branch 3
concerning Vidal’s status, filiation, and heirship in Civil Case No. 4452, is merely an error of
judgment subject to the affirmation, modification, or reversal by the appellate court when appealed.
The Agapay and Yaptinchay cases
LANDTRADE, Teofilo, and/or Atty. Cabildo cannot rely on the cases of Agapay and Yaptinchay to
support their position that declarations on Vidal’s status, filiation, and heirsip, should be made in
special proceedings and not in Civil Case No. 4452.
In the Agapay case, the deceased Miguel Agapay (Miguel) contracted two marriages. Miguel
married Carlina (sometimes referred to as Cornelia) in 1949, and they had a daughter named
Herminia, who was born in 1950. Miguel left for Hawaii a few months after his wedding to Carlina.
When Miguel returned to the Philippines in 1972, he did not live with Carlina and Herminia. He
married Erlinda in 1973, with whom he had a son named Kristopher, who was born in 1977. Miguel
died in 1981. A few months after Miguel’s death, Carlina and Herminia filed a complaint for recovery
of ownership and possession with damages against Erlinda over a riceland and house and lot in
Pangasinan, which were allegedly purchased by Miguel during his cohabitation with Erlinda. The
RTC dismissed the complaint, finding little evidence that the properties pertained to the conjugal
property of Miguel and Carlina. The RTC went on to provide for the intestate shares of the parties,
particularly of Kristopher, Miguel’s illegitimate son. On appeal, the Court of Appeals: (1) reversed the
RTC judgment; (2) ordered Erlinda to vacate and deliver the properties to Carlina and Herminia; and
(3) ordered the Register of Deeds to cancel the Transfer Certificates of Title (TCTs) over the subject
property in the name of Erlinda and to issue new ones in the names of Carlina and Herminia. Erlinda
filed a Petition for Review with this Court.
In resolving Erlinda’s Petition, the Court held in the Agapay case that Article 148 of the Family Code
applied to Miguel and Erlinda. Article 148 specifically governs the property relations of a man and a
woman who are not capacitated to marry each other and live exclusively with each other as husband
and wife without the benefit of marriage or under a void marriage. Under said provision, only the
properties acquired by both parties through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their respective contributions. In this
case, the Court found that the money used to buy the subject properties all came from Miguel.
The Court then proceeded to address another issue in the Agapay case, more relevant to the one at
bar:
The second issue concerning Kristopher Palang’s status and claim as an illegitimate son and heir to
Miguel’s estate is here resolved in favor of respondent court’s correct assessment that the trial court
erred in making pronouncements regarding Kristopher’s heirship and filiation "inasmuch as
questions as to who are the heirs of the decedent, proof of filiation of illegitimate children and the
determination of the estate of the latter and claims thereto should be ventilated in the proper probate
court or in a special proceeding instituted for the purpose and cannot be adjudicated in the instant
ordinary civil action which is for recovery of ownership and possession."89
The Yaptinchay case involved two parcels of land in Cavite which were supposedly owned by Guido
and Isabel Yaptinchay (spouses Yaptinchay). Upon the death of the spouses Yaptinchay, their heirs
(Yaptinchay heirs) executed an Extra-Judicial Settlement of the deceased spouses’ estate. However,
the Yaptinchay heirs discovered that the properties were already covered by TCTs in the name of
Golden Bay Realty Corporation (Golden Bay), prompting the Yaptinchay heirs to file with the RTC a
complaint against Golden Bay for the annulment and/or declaration of nullity of TCT Nos. 493363 to
493367 and all their derivatives, or in the alternative, the reconveyance of realty with a prayer for a
writ of preliminary injunction and/or restraining order with damages. The Yaptinchay heirs later filed
an amended complaint to include additional defendants to whom Golden Bay sold portions of the
subject properties. The RTC initially dismissed the amended complaint, but acting on the motion for
reconsideration of the Yaptinchay heirs, eventually allowed the same. Golden Bay and its other co-
defendants presented a motion to dismiss the amended complaint, which was granted by the RTC.
The Yaptinchay heirs came before this Court via a Petition for Certiorari.
The Court first observed in the Yaptinchay case that the Yaptinchay heirs availed themselves of the
wrong remedy. An order of dismissal is the proper subject of an appeal, not a petition for certiorari.
Next, the Court affirmed the dismissal of the amended complaint, thus:
Neither did the respondent court commit grave abuse of discretion in issuing the questioned Order
dismissing the Second Amended Complaint of petitioners, x x x.
xxxx
In Litam, etc., et al. v. Rivera, this court opined that the declaration of heirship must be made in an
administration proceeding, and not in an independent civil action. This doctrine was reiterated in
Solivio v. Court of Appeals where the court held:
"In Litam, et al. v. Rivera, 100 Phil. 364, where despite the pendency of the special proceedings for
the settlement of the intestate estate of the deceased Rafael Litam, the plaintiffs-appellants filed a
civil action in which they claimed that they were the children by a previous marriage of the deceased
to a Chinese woman, hence, entitled to inherit his one-half share of the conjugal properties acquired
during his marriage to Marcosa Rivera, the trial court in the civil case declared that the plaintiffs-
appellants were not children of the deceased, that the properties in question were paraphernal
properties of his wife, Marcosa Rivera, and that the latter was his only heir. On appeal to this Court,
we ruled that ‘such declarations (that Marcosa Rivera was the only heir of the decedent) is improper,
in Civil Case No. 2071, it being within the exclusive competence of the court in Special Proceedings
No. 1537, in which it is not as yet, in issue, and, will not be, ordinarily, in issue until the presentation
of the project of partition.’ (p. 378)."
The trial court cannot make a declaration of heirship in the civil action for the reason that such a
declaration can only be made in a special proceeding. Under Section 3, Rule 1 of the 1997 Revised
Rules of Court, a civil action is defined as "one by which a party sues another for the enforcement or
protection of a right, or the prevention or redress of a wrong’ while a special proceeding is "a remedy
by which a party seeks to establish a status, a right, or a particular fact." It is then decisively clear
that the declaration of heirship can be made only in a special proceeding inasmuch as the petitioners
here are seeking the establishment of a status or right.90
LANDTRADE, Teofilo, and/or Atty. Cabildo missed one vital factual distinction between the Agapay
and Yaptinchay cases, on one hand, and the present Petitions, on the other, by reason of which, the
Court shall not apply the prior two to the last.
The Agapay and Yaptinchay cases, as well as the cases of Litam v. Rivera91 and Solivio v. Court of
Appeals,92 cited in the Yaptinchay case, all arose from actions for reconveyance; while the instant
Petitions stemmed from an action for quieting of title. The Court may have declared in previous
cases that an action for reconveyance is in the nature of an action for quieting of title,93 but the two
are distinct remedies.
Ordinary civil action for reconveyance vis-a-vis special proceeding for quieting of title
The action for reconveyance is based on Section 55 of Act No. 496, otherwise known as the Land
Registration Act, as amended, which states "[t]hat in all cases of registration procured by fraud the
owner may pursue all his legal and equitable remedies against the parties to such fraud, without
prejudice, however, to the rights of any innocent holder for value of a certificate of title."
The Court, in Heirs of Eugenio Lopez, Sr. v. Enriquez,94 described an action for reconveyance as
follows:
An action for reconveyance is an action in personam available to a person whose property has been
wrongfully registered under the Torrens system in another’s name. Although the decree is
recognized as incontrovertible and no longer open to review, the registered owner is not necessarily
held free from liens. As a remedy, an action for reconveyance is filed as an ordinary action in the
ordinary courts of justice and not with the land registration court. Reconveyance is always available
as long as the property has not passed to an innocent third person for value. x x x (Emphases
supplied.)
On the other hand, Article 476 of the Civil Code lays down the circumstances when a person may
institute an action for quieting of title:
ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.
In Calacala v. Republic,95 the Court elucidated on the nature of an action to quiet title:
Regarding the nature of the action filed before the trial court, quieting of title is a common law
remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real
property. Originating in equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a
claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever afterward free from any danger of hostile
claim.’ In an action for quieting of title, the competent court is tasked to determine the respective
rights of the complainant and other claimants, ‘x x x not only to place things in their proper place, to
make the one who has no rights to said immovable respect and not disturb the other, but also for the
benefit of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he may desire, to use,
and even to abuse the property as he deems best x x x . (Emphases supplied.)
The Court expounded further in Spouses Portic v. Cristobal96 that:
Suits to quiet title are characterized as proceedings quasi in rem. Technically, they are neither in rem
nor in personam. In an action quasi in rem, an individual is named as defendant. However, unlike
suits in rem, a quasi in rem judgment is conclusive only between the parties.
Generally, the registered owner of a property is the proper party to bring an action to quiet title.
However, it has been held that this remedy may also be availed of by a person other than the
registered owner because, in the Article reproduced above, "title" does not necessarily refer to the
original or transfer certificate of title. Thus, lack of an actual certificate of title to a property does not
necessarily bar an action to quiet title. x x x (Emphases supplied.)
The Court pronounced in the Agapay and Yaptinchay cases that a declaration of heirship cannot be
made in an ordinary civil action such as an action for reconveyance, but must only be made in a
special proceeding, for it involves the establishment of a status or right.
The appropriate special proceeding would have been the settlement of the estate of the decedent.
Nonetheless, an action for quieting of title is also a special proceeding, specifically governed by Rule
63 of the Rules of Court on declaratory relief and similar remedies.97 Actions for declaratory relief
and other similar remedies are distinguished from ordinary civil actions because:
2. In declaratory relief, the subject-matter is a deed, will, contract or other written instrument, statute,
executive order or regulation, or ordinance. The issue is the validity or construction of these
documents. The relief sought is the declaration of the petitioner’s rights and duties thereunder.
The concept of a cause of action in ordinary civil actions does not apply to declaratory relief as this
special civil action presupposes that there has been no breach or violation of the instruments
involved. Consequently, unlike other judgments, the judgment in an action for declaratory relief does
not essentially entail any executional process as the only relief to be properly granted therein is a
declaration of the rights and duties of the parties under the instrument, although some exceptions
have been recognized under certain situations.98
Civil Case No. 4452 could not be considered an action for reconveyance as it is not based on the
allegation that the two parcels of land, Lots 1 and 2, have been wrongfully registered in another
person’s name. OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), covering the subject properties, are still in
Doña Demetria’s name. Vidal and Teofilo each claims to have inherited the two parcels of land from
the late Doña Demetria as said decedent’s sole heir, but neither Vidal nor Teofilo has been able to
transfer registration of the said properties to her/his name as of yet.
Instead, Civil Case No. 4452 is indisputably an action for quieting of title, a special proceeding
wherein the court is precisely tasked to determine the rights of the parties as to a particular parcel of
land, so that the complainant and those claiming under him/her may be forever free from any danger
of hostile claim. Vidal asserted title to the two parcels of land as Doña Demetria’s sole heir. The
cloud on Vidal’s title, which she sought to have removed, was Teofilo’s adverse claim of title to the
same properties, also as Doña Demetria’s only heir. For it to determine the rights of the parties in
Civil Case No. 4452, it was therefore crucial for the RTC-Branch 3 to squarely make a finding as to
the status, filiation, and heirship of Vidal in relation to those of Teofilo. A finding that one is Doña
Demetria’s sole and rightful heir would consequently exclude and extinguish the claim of the other.
Even assuming arguendo that the proscription in the Agapay and Yaptinchay cases against making
declarations of heirship in ordinary civil actions also extends to actions for quieting of title, the same
is not absolute.
In Portugal v. Portugal-Beltran99 (Portugal case), the Court recognized that there are instances when
a declaration of heirship need not be made in a separate special proceeding:
The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to
the estate of a decedent or parties to the special proceedings for its settlement is that if the special
proceedings are pending, or if there are no special proceedings filed but there is, under the
circumstances of the case, a need to file one, then the determination of, among other issues,
heirship should be raised and settled in said special proceedings. Where special proceedings had
been instituted but had been finally closed and terminated, however, or if a putative heir has lost the
right to have himself declared in the special proceedings as co-heir and he can no longer ask for its
re-opening, then an ordinary civil action can be filed for his declaration as heir in order to bring about
the annulment of the partition or distribution or adjudication of a property or properties belonging to
the estate of the deceased.100
In the Portugal case itself, the Court directed the trial court to already determine petitioners’ status
as heirs of the decedent even in an ordinary civil action, i.e., action for annulment of title, because:
It appearing x x x that in the present case the only property of the intestate estate of Portugal is the
Caloocan parcel of land, to still subject it, under the circumstances of the case, to a special
proceeding which could be long, hence, not expeditious, just to establish the status of petitioners as
heirs is not only impractical; it is burdensome to the estate with the costs and expenses of an
administration proceeding. And it is superfluous in light of the fact that the parties to the civil case—
subject of the present case, could and had already in fact presented evidence before the trial court
which assumed jurisdiction over the case upon the issues it defined during pre-trial.
In fine, under the circumstances of the present case, there being no compelling reason to still
subject Portugal’s estate to administration proceedings since a determination of petitioners’ status as
heirs could be achieved in the civil case filed by petitioners, the trial court should proceed to evaluate
the evidence presented by the parties during the trial and render a decision thereon upon the issues
it defined during pre-trial, x x x.101
Another case, Heirs of Teofilo Gabatan v. Court of Appeals102 (Gabatan case), involved an action for
recovery of ownership and possession of property with the opposing parties insisting that they are
the legal heirs of the deceased. Recalling the Portugal case, the Court ruled:
Similarly, in the present case, there appears to be only one parcel of land being claimed by the
contending parties as their inheritance from Juan Gabatan. It would be more practical to dispense
with a separate special proceeding for the determination of the status of respondent as the sole heir
of Juan Gabatan, specially in light of the fact that the parties to Civil Case No. 89-092, had
voluntarily submitted the issue to the RTC and already presented their evidence regarding the issue
of heirship in these proceeding. Also the RTC assumed jurisdiction over the same and consequently
rendered judgment thereon.
In Fidel v. Court of Appeals103 (Fidel case), therein respondents, the heirs of the late Vicente Espineli
(Vicente) from his first marriage, instituted an action to annul the sale of Vicente’s property to therein
petitioners, the spouses Fidel. The subject property was sold to petitioners by Vicente’s heirs from
his second marriage. Even though one’s legitimacy can only be questioned in a direct action
seasonably filed by the proper party, the Court held that it was necessary to pass upon respondents’
relationship to Vicente in the action for annulment of sale so as to determine respondents’ legal
rights to the subject property. In fact, the issue of whether respondents are Vicente’s heirs was
squarely raised by petitioners in their Pre-Trial Brief. Hence, petitioners were estopped from
assailing the ruling of the trial court on respondents’ status.
In Civil Case No. 4452, Teofilo and/or Atty. Cabildo themselves asked the RTC-Branch 3 to resolve
the issue of Vidal's legal or beneficial ownership of the two parcels of land.104 During trial, Vidal
already presented before the RTC-Branch 3 evidence to establish her status, filiation, and heirship.
There is no showing that Doña Demetria left any other property that would have required special
administration proceedings. In the spirit of the Portugal, Gabatan, and Fidel cases, the Court deems
it more practical and expeditious to settle the issue on Vidal’s status, filiation, and heirship in Civil
Case No. 4452.
"Title" in quieting of title
LANDTRADE, Teofilo, and/or Atty. Cabildo further contend that Vidal and AZIMUTH have no cause
of action for quieting of title since Vidal has no title to the two parcels of land. In comparison,
Teofilo’s title to the same properties, as Doña Demetria’s only heir, was already established and
recognized by this Court in the 1997 Cacho case.
Again, the Court cannot sustain the foregoing contention of LANDTRADE, Teofilo, and/or Atty.
Cabildo.
It must be borne in mind that the concept of a cause of action in ordinary civil actions does not apply
to quieting of title. In declaratory relief, the subject-matter is a deed, will, contract or other written
instrument, statute, executive order or regulation, or ordinance. The issue is the validity or
construction of these documents. The relief sought is the declaration of the petitioner’s rights and
duties thereunder. Being in the nature of declaratory relief, this special civil action presupposes that
there has yet been no breach or violation of the instruments involved.105
In an action for quieting of title, the subject matter is the title sought to have quieted. "Title" is not
limited to the certificate of registration under the Torrens System (i.e., OCT or TCT). Pursuant to
Article 477 of the Civil Code, the plaintiff must have legal or equitable title to, or interest in, the real
property subject of the action for quieting of title. The plaintiff need not even be in possession of the
property. If she is indeed Doña Demetria’s sole heir, Vidal already has equitable title to or interest in
the two parcels of land by right of succession, even though she has not yet secured certificates of
title to the said properties in her name.
LANDTRADE, Teofilo, and/or Atty. Cabildo mistakenly believe that the 1997 Cacho case had
conclusively settled Teofilo's identity and existence as Doña Demetria’s sole heir. They failed to
appreciate that the 1997 Cacho case involved Teofilo’s petition for reconstitution of title, treated as a
petition for the re-issuance of Decree Nos. 10364 and 18969. The grant by the RTC of Teofilo’s
petition, affirmed by this Court, only conclusively established the prior issuance and existence and
the subsequent loss of the two decrees, thus, entitling Teofilo to the re-issuance of the said decrees
in their original form and condition.
As the Court of Appeals pointed out in its assailed Decision dated January 19, 2007, the issue of
Teofilo’s heirship was not the lis mota of the 1997 Cacho case. It was addressed by the Court in the
1997 Cacho case for the simple purpose of determining Teofilo’s legal interest in filing a petition for
the re-issuance of the lost decrees. The Court merely found therein that Teofilo’s Affidavit of
Adjudication, executed in the U.S.A. before the Philippine Consulate General, enjoyed the
presumption of regularity and, thus, sufficiently established Teofilo’s legal interest. The 1997 Cacho
case, however, did not conclusively settle that Teofilo is indeed Doña Demetria’s only heir and the
present owner, by right of succession, of the subject properties.
Factual findings of the RTC-Branch 3 and the Court of Appeals
LANDTRADE, Teofilo, and/or Atty. Cabildo additionally posit that the evidence presented by Vidal
and AZIMUTH were insufficient to prove the fact of Vidal's filiation and heirship to Doña Demetria.
LANDTRADE, Teofilo, and/or Atty. Cabildo particularly challenged the reliance of the RTC-Branch 3
on Vidal’s baptismal certificate, arguing that it has no probative value and is not conclusive proof of
filiation.
Alternative means of proving an individual’s filiation have been recognized by this Court in Heirs of
Ignacio Conti v. Court of Appeals.106 The property in litigation in said case was co-owned by Lourdes
Sampayo (Sampayo) and Ignacio Conti, married to Rosario Cuario (collectively referred to as the
spouses Conti). Sampayo died without issue. Therein respondents, claiming to be Sampayo’s
collateral relatives, filed a petition for partition of the subject property, plus damages. To prove that
they were collaterally related to Sampayo through the latter’s brothers and sisters, respondents
submitted photocopies of the birth certificates, certifications on the non-availability of records of
births, and certified true copies of the baptismal certificates of Sampayo’s siblings. The spouses
Conti questioned the documentary evidence of respondents’ filiation on the ground that these were
incompetent and inadmissible, but the Court held that:
Under Art. 172 of the Family Code, the filiation of legitimate children shall be proved by any other
means allowed by the Rules of Court and special laws, in the absence of a record of birth or a
parent’s admission of such legitimate filiation in a public or private document duly signed by the
parent. Such other proof of one’s filiation may be a baptismal certificate, a judicial admission, a
family Bible in which his name has been entered, common reputation respecting his pedigree,
admission by silence, the testimonies of witnesses and other kinds of proof admissible under Rule
130 of the Rules of Court. By analogy, this method of proving filiation may also be utilized in the
instant case.
xxxx
The admissibility of baptismal certificates offered by Lydia S. Reyes, absent the testimony of the
officiating priest or the official recorder, was settled in People v. Ritter, citing U.S. v. de Vera (28 Phil.
105 [1914]), thus -
x x x the entries made in the Registry Book may be considered as entries made in the course of the
business under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms
administered by the church are one of its transactions in the exercise of ecclesiastical duties and
recorded in the book of the church during the course of its business.
It may be argued that baptismal certificates are evidence only of the administration of the sacrament,
but in this case, there were four (4) baptismal certificates which, when taken together, uniformly
show that Lourdes, Josefina, Remedios and Luis had the same set of parents, as indicated therein.
Corroborated by the undisputed testimony of Adelaida Sampayo that with the demise of Lourdes and
her brothers Manuel, Luis and sister Remedios, the only sibling left was Josefina Sampayo Reyes,
such baptismal certificates have acquired evidentiary weight to prove filiation.107
Thus, Vidal’s baptismal certificate is not totally bereft of any probative value. It may be appreciated,
together with all the other documentary and testimonial evidence submitted on Vidal’s filiation, to wit:
The first issue proposed by petitioners for resolution is whether or not petitioner Demetria C. Vidal is
the sole surviving heir of the late Doña Demetria Cacho. To prove that, indeed, she is the sole
surviving heir of the late Doña Demetria Cacho, she testified in open court and identified the
following documentary evidence, to wit:
Exhibit "A" – Birth Certificate of Demetria C. Vidal
Exhibit "B" – Partida de Bautismo of Demetria C. Vidal
Exhibit "C" – Certificate of Baptism Demetria C. Vidal
Exhibit "D" – Cacho Family Tree
Exhibit "D-1" – Branch of Demetria Cacho
Exhibit "F" – Death Certificate of Demetria Cacho.
Exhibit "P" – Driver’s license of Demetria C. Vidal.
Exhibit "Q" to "Q5" – The book entitled "CACHO", the introductory page on March 1988
when the data were compiled, page 58 on the Vidal branch of the Cacho family, page 62 on
Demetria Cacho and her descendants, page 69 on the family member with the then latest
birth day 26 March 1988, and page 77 with the picture of Demetria Cacho Vidal, Dionisio
Vidal and Francisco Vidal.108
In contrast, LANDTRADE, Teofilo, and/or Atty. Cabildo failed to present any evidence at all in
support of their claims. According to the RTC-Branch 3:
Landtrade was also declared to have waived its right to present evidence on its defense and
counterclaim in the above-entitled case in view of its failure to present evidence on their scheduled
trial date.
xxxx
Since respondents Teofilo Cacho and Atty. Godofredo Cabildo opted not to adduce evidence in this
case as they failed to appear during the scheduled trial dates, the court shall decide on the basis of
the evidence for the respondents-intervenor and petitioners.109
Based on the evidence presented before it, the RTC-Branch 3 made the following factual findings:
From the evidence adduced, both testimonial and documentary, the court is convinced that petitioner
Vidal is the granddaughter of Demetria Cacho Vidal, the registered owner of the subject property
covered by decree Nos. 10364 & 18969, reissued as Decrees No. 19364 and No. 16869. Such
being the case, she is an heir of Demetria Cacho Vidal.
Petitioner Vidal’s Certificate of Birth (Exh. "A") shows that she was born on June 3, 1941, with the
name Demetria Vidal. [Her] father was Francisco Vidal and her mother was Fidela Confesor,
Francisco Vidal is the son of Dionisio Vidal and Demetria Cacho as shown by [his] Partida de
Bautismo (Baptismal Certificate). Moreover, it was shown in the same document that her godmother
was Demetria Cacho. By inference, this Demetria Cacho is actually Demetria Cacho Vidal because
she was married to Dionisio Vidal, the father of Francisco Vidal.
Now then, is Demetria Cacho Vidal the same person referred to in Cacho v. Government of the
United States (28 Phil. 616 [1914])? Page 618, Vol. 28 of the Philippine Reports would indicate that
the applicant for registration was Doña Demetria Cacho y Soriano (Exh. "R-1"). The Death
Certificate of Demetria Cacho Vidal shows that her mother was Candelaria Soriano (Exh. "F").
Necessarily, they are one and the same person. This is further confirmed by the fact that the
husband of Demetria Cacho Vidal, Señor Dionisio Vidal, was quoted in pp. 629-630 of the aforecited
decision as the husband of Demetria Cacho (Exh. "R-3").
The book "CACHO" (Exhs. "Q" to "Q-5") and the Cacho Family Tree (Exhs. "D" to "D-1") further
strengthen the aforecited findings of this Court.
It was established by petitioner Vidal’s own testimony that at the time of Doña Demetria Cacho's
death, she left no heir other than petitioner Vidal. Her husband, Don Dionisio, died even before the
war, while her only child, Francisco Cacho Vidal – xxx Vidal’s father – died during the war.
Petitioner’s only sibling – Francisco Dionisio – died at childbirth.
xxxx
The next factual issue proposed by petitioners is whether or not respondent Teofilo Cacho is the son
or heir of the late Doña Demetria Cacho. The following facts and circumstances negate the
impression that he is the son, as he claims to be, of Doña Demetria Cacho. Thus:
a) Doña Demetria Cacho was married to Don Dionisio Vidal, and thus her full name was
Doña Demetria Cacho Vidal. Her only child, expectedly, carried the surname Vidal
(Francisco Cacho Vidal). Had Teofilo Cacho actually been a son of Demetria Cacho, he
would and should have carried the name "Teofilo Cacho Vidal", but he did not.
b) Teofilo Cacho admits to being married to one Elisa Valderrama in the Special Power of
Attorney he issued to Atty. Godofredo [Cabildo] (Exh. "O"). Teofilo Cacho married Elisa
Valderrama on 27 May 1953, in the Parish of the Immaculate Conception, Bani, Pangasinan.
The Certificate of Marriage shows that Teofilo Cacho is the son of Agustin Cacho and
Estefania Cordial, not Demetria Cacho. In his Certificate of Baptism (Exh. "G"), he was born
to Agustin Cacho and Estefania Cordial on May 1930 (when Doña Demetria Cacho was
already 50 years old).
c) The Cacho Family Tree (Exh. "D") (that is, the Cacho Family to which Doña Demetria
Cacho belonged) as well as the book on the Cacho Family (Exh. "Q") are bereft of any
mention of Teofilo Cacho or his wife Elisa Valderrama, or even his real father Agustin Cacho,
or mother Estefania Cordial. They are not known to be related to the Cacho family of Doña
Demetria Cacho.
d) Paragraph 1.11 of the Petition charges respondent Teofilo Cacho of having falsely and
fraudulently claiming to be the son and sole heir of the late Doña Demetria Cacho. In his
answer to this particular paragraph, he denied the same for lack of knowledge or information
to form a belief. He should know whether this allegation is true or not because it concerns
him. If true, he should admit and if false, he opted to deny the charges for lack of knowledge
or information to form a belief. The Court considers his denial as an admission of the
allegation that he is falsely and fraudulently claiming to be the son and sole heir of the late
Doña Demetria Cacho.110
Considering the aforequoted factual findings, the RTC-Branch 3 arrived at the following legal
conclusions, quieting the titles of Vidal and AZIMUTH, viz:
The first proposed legal issue to be resolved had been amply discussed under the first factual issue.
Certainly, petitioner Vidal has hereditary rights, interest, or title not only to a portion of the Subject
Property but to the entire property left by the late Doña Demetria Cacho Vidal, subject, however, to
the Deed of Conditional Conveyance executed by petitioner Vidal of a portion of the Subject
Property in favor of petitioner Azimuth International Development Corporation (Exh. "J") executed
pursuant to their Memorandum of Agreement (Exh. "I"). Consequently, it goes without saying that
petitioner Azimuth International Development Corporation has a right, interest in, or title to a portion
of the subject property.
As discussed earlier in this decision, Teofilo Cacho, not being the son, as he claims to be, of the late
Doña Demetria Cacho Vidal, has no hereditary rights to the Subject Property left by Doña Demetria
Cacho Vidal. He failed to show any evidence that he is the son of the late Doña Demetria Cacho
Vidal as he and his co respondent, Atty. Godofredo Cabildo, even failed to appear on the scheduled
trial date.
It is, therefore, safe to conclude that respondents Teofilo Cacho and/or Atty. Godofredo Cabildo and
their transferees/assignees have no right, interest in, or title to the subject property.
Prescinding from the finding of this Court that respondent Teofilo Cacho is not the son of the
registered owner of the Subject Property, the late Doña Demetria Cacho Vidal, respondent Cacho
committed false pretenses and fraudulent acts in representing himself as son and sole heir of Doña
Demetria Cacho (Vidal) in his petition in court, which eventually led to the reconstitution of the titles
of Doña Demetria Cacho (Vidal). Certainly, his misrepresentation in the reconstitution case, which
apparently is the basis of his claim to the subject property, casts clouds on [respondents'] title to the
subject property.
It is only right that petitioner Vidal should seek protection of her ownership from acts tending to cast
doubt on her title. Among the legal remedies she could pursue, is this petition for Quieting of Title
under Chapter 3, Title I, Book II of the Civil Code, Articles 476 to 481 inclusive. x x x.111
The Court of Appeals affirmed in toto the judgment of the RTC-Branch 3. The appellate court even
soundly trounced Teofilo’s attack on the factual findings of the trial court:
[T]he material facts sought to be established by the afore-mentioned documentary evidence

corroborated by the testimony of VIDAL, whose testimony or credibility neither Teofilo and
LANDTRADE even attempted to impeach, only proves one thing, that she is the granddaughter of
DOÑA DEMETRIA and the sole heiress thereof.
xxxx
Hence, it is now too late for appellant TEOFILO to assail before Us the facts proven during the trial,
which he failed to refute in open court. Verily, TEOFILO’s lackadaisical attitude in the conduct of his
defense only shows that he has no proof to offer in refutation of the evidence advanced by appellee
VIDAL.
Otherwise stated, appellant TEOFILO is an impostor, a pretender and bogus heir of DOÑA
DEMETRIA.
xxxx
Besides, it is quite unnatural and against human nature for a rightful heir, if TEOFILO is really one, to
merely stand still with folded arms, while the accusing finger of VIDAL is right on his very nose. In all
likelihood, and with all his might and resources, a rightful heir may even be expected to cross
continents and reach distant shores to protect his interest over the subject properties, which in this
case is arguably worth more than a King’s ransom.
It stands on record that TEOFILO CACHO has all along even prior to executing his Affidavit of
Adjudication in 1985 in Chicago, United States of America, and in simultaneously executing a
Special Power of Attorney in favor of ATTY. CABILDO, had remained in the United States, and not
for a single moment appeared in court except through his agents or representatives. To Our mind,
this fact alone adversely affects his pretension in claiming to be an heir of DOÑA DEMETRIA.112
As a rule, the findings of fact of the trial court when affirmed by the Court of Appeals are final and
conclusive, and cannot be reviewed on appeal by this Court as long as they are borne out by the
record or are based on substantial evidence. It is not the function of the Court to analyze or weigh all
over again the evidence or premises supportive of such factual determination. The Court has
consistently held that the findings of the Court of Appeals and other lower courts are, as a rule,
accorded great weight, if not binding upon it, save for the most compelling and cogent
reasons.113 There is no justification for the Court to deviate from the factual findings of the RTC-
Branch 3 and the Court of Appeals which are clearly supported by the evidence on record.
Prescription
LANDTRADE finally asserts that the action for quieting of title of Vidal and AZIMUTH already
prescribed since LANDTRADE has been in possession of the two parcels of land in question. The
prescriptive period for filing said action lapsed in 1995, ten years from the time Teofilo executed his
Affidavit of Adjudication in 1985. Yet, Vidal and AZIMUTH instituted Civil Case No. 4452 only in
1998.
It is too late in the day for LANDTRADE to raise the issue of prescription of Civil Case No. 4452 for
the first time before this Court. In this jurisdiction, the defense of prescription cannot be raised for the
first time on appeal. Such defense may be waived, and if it was not raised as a defense in the trial
court, it cannot be considered on appeal, the general rule being that the Appellate Court is not
authorized to consider and resolve any question not properly raised in the lower court.114
But even if the Court takes cognizance of the issue of prescription, it will rule against LANDTRADE.
A real action is one where the plaintiff seeks the recovery of real property or, as indicated in what is
now Rule 4, Section 1 of the Rules of Court, a real action is an action affecting title to or recovery of
possession of real property.115 An action for quieting of title to real property, such as Civil Case No.
4452, is indubitably a real action.
Article 1141 of the Civil Code plainly provides that real actions over immovables prescribe after thirty
years. Doña Demetria died in 1974, transferring by succession, her title to the two parcels of land to
her only heir, Vidal. Teofilo, through Atty. Cabildo, filed a petition for reconstitution of the certificates
of title covering said properties in 1978. This is the first palpable display of Teofilo’s adverse claim to
the same properties, supposedly, also as Doña Demetria’s only heir. When Vidal and AZIMUTH
instituted Civil Case No. 4452 in 1998, only 20 years had passed, and the prescriptive period for
filing an action for quieting of title had not yet prescribed.
Nevertheless, the Court notes that Article 1411 of the Civil Code also clearly states that the 30-year
prescriptive period for real actions over immovables is without prejudice to what is established for
the acquisition of ownership and other real rights by prescription. Thus, the Court must also look into
the acquisitive prescription periods of ownership and other real rights.
Acquisitive prescription of dominion and real rights may be ordinary or extraordinary. 116
Ordinary acquisitive prescription requires possession of things in good faith and with just title for the
time fixed by law.117 In the case of ownership and other real rights over immovable property, they are
acquired by ordinary prescription through possession of 10 years.118
LANDTRADE cannot insist on the application of the 10-year ordinary acquisitive prescription period
since it cannot be considered a possessor in good faith. The good faith of the possessor consists in
the reasonable belief that the person from whom he received the thing was the owner thereof, and
could transmit his ownership.119
LANDTRADE came to possession of the two parcels of land after purchasing the same from Teofilo.
The Court stresses, however, that Teofilo is not the registered owner of the subject properties. The
said properties are still registered in Doña Demetria’s name under OCT Nos. 0-1200 (a.f.) and 0-
1201 (a.f.). The Affidavit of Adjudication, by which Teofilo declared himself to be the sole heir of
Doña Demetria’s estate, is not even annotated on the OCTs. Worse, LANDTRADE is not dealing
directly with Teofilo, but only with the latter’s attorney-in-fact, Atty. Cabildo. It is axiomatic that one
who buys from a person who is not a registered owner is not a purchaser in good faith.120
Furthermore, in its Complaint for Unlawful Detainer against NAPOCOR and TRANSCO, which was
docketed as Civil Case No. 11475-AF before the MTCC, LANDTRADE itself alleged that when it
bought the two parcels of land from Teofilo, portions thereof were already occupied by the Overton
Sub-station and Agus 7 Warehouse of NAPOCOR and TRANSCO. This is another circumstance
which should have prompted LANDTRADE to investigate or inspect the property being sold to it. It
is, of course, expected from the purchaser of a valued piece of land to inquire first into the status or
nature of possession of the occupants, i.e., whether or not the occupants possess the land en
concepto de dueño, in concept of owner. As is the common practice in the real estate industry, an
ocular inspection of the premises involved is a safeguard a cautious and prudent purchaser usually
takes. Should he find out that the land he intends to buy is occupied by anybody else other than the
seller who, as in this case, is not in actual possession, it would then be incumbent upon the
purchaser to verify the extent of the occupant’s possessory rights. The failure of a prospective buyer
to take such precautionary steps would mean negligence on his part and would thereby preclude
him from claiming or invoking the rights of a "purchaser in good faith."121
Since the ordinary acquisitive prescription period of 10 years does not apply to LANDTRADE, then
the Court turns its attention to the extraordinary acquisitive prescription period of 30 years set by
Article 1137 of the Civil Code, which reads:
ART. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted
adverse possession thereof for thirty years, without need of title or of good faith.
LANDTRADE adversely possessed the subject properties no earlier than 1996, when it bought the
same from Teofilo, and Civil Case No. 4452 was already instituted two years later in 1998.
LANDTRADE cannot tack its adverse possession of the two parcels of land to that of Teofilo
considering that there is no proof that the latter, who is already residing in the U.S.A., adversely
possessed the properties at all.
Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the RTC-Branch 3
which declared, among other things, that (a) Vidal is the sole surviving heir of Doña Demetria, who
alone has rights to and interest in the subject parcels of land; (b) AZIMUTH is Vidal’s successor-in-
interest to portions of the said properties in accordance with the 1998 Memorandum of Agreement
and 2004 Deed of Conditional Conveyance; (c) Teofilo is not the son or heir of Doña Demetria; and
(d) Teofilo, Atty. Cabildo, and their transferees/assignees, including LANDTRADE, have no valid
right to or interest in the same properties.
The Ejectment or Unlawful Detainer Case

(G.R. Nos. 170505, 173355-56, and 173563-64)
The Petitions in G.R. Nos. 170505, 173355-56, and 173563-64 all concern the execution pending
appeal of the Decision dated February 17, 2004 of the MTCC in Civil Case No. 11475-AF, which
ordered NAPOCOR and TRANSCO to vacate the two parcels of land in question, as well as to pay
rent for the time they occupied said properties.
LANDTRADE filed its Petition for Review in G.R. No. 170505 when it failed to have the MTCC
Decision dated February 17, 2004 executed while Civil Case No. 6613, the appeal of the same
judgment by NAPOCOR and TRANSCO, was still pending before the RTC-Branch 5.
NAPOCOR and TRANSCO sought recourse from this Court through their Petitions for Certiorari and
Prohibition in G.R. Nos. 173355-56 and 173563-64 after the RTC-Branch 1 (to which Civil Case No.
6613 was re-raffled) already rendered a Decision dated December 12, 2005 in Civil Case No. 6613,
affirming the MTCC Decision dated February 17, 2004. Expectedly, NAPOCOR and TRANSCO
appealed the judgment of the RTC-Branch 1 to the Court of Appeals. The Court of Appeals granted
the motion for execution pending appeal of LANDTRADE, and denied the application for preliminary
injunction of NAPOCOR and TRANSCO.
The requirements of posting a supersedeas bond and depositing rent to stay execution
The pivotal issue in G.R. No. 170505 is whether LANDTRADE is entitled to the execution of the
MTCC Decision dated February 17, 2004 even while said judgment was then pending appeal before
the RTC-Branch 5. The RTC-Branch 5 granted the motion for immediate execution pending appeal
of LANDTRADE because of the failure of NAPOCOR and TRANSCO to comply with the
requirements for staying the execution of the MTCC judgment, as provided in Rule 70, Section 19 of
the Rules of Court. The Court of Appeals subsequently found grave abuse of discretion on the part
of RTC-Branch 5 in issuing the Order dated August 9, 2004 which granted execution pending appeal
and the Writ of Execution Pending Appeal dated August 10, 2004; and on the part of Sheriff Borres,
in issuing the Notices of Garnishment and Notification to vacate, all dated August 11, 2004.
According to the appellate court, NAPOCOR and TRANSCO are exempt from the requirements of
filing a supersedeas bond and depositing rent in order to stay the execution of the MTCC judgment.
Rule 70, Section 19 of the Rules of Court lays down the requirements for staying the immediate
execution of the MTCC judgment against the defendant in an ejectment suit:
SEC. 19. Immediate execution of judgment; how to stay same. – If judgment is rendered against the
defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and
the defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial
Court and executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to
the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits
with the appellate court the amount of rent due from time to time under the contract, if any, as
determined by the judgment of the Municipal Trial Court. In the absence of a contract, he shall
deposit with the Regional Trial Court the reasonable value of the use and occupation of the premises
for the preceding month or period at the rate determined by the judgment of the lower court on or
before the tenth day of each succeeding month or period. The supersedeas bond shall be
transmitted by the Municipal Trial Court, with the other papers, to the clerk of the Regional Trial
Court to which the action is appealed.
All amounts so paid to the appellate court shall be deposited with said court or authorized
government depositary bank, and shall be held there until the final disposition of the appeal, unless
the court, by agreement of the interested parties, or in the absence of reasonable grounds of
opposition to a motion to withdraw, or for justifiable reasons, shall decree otherwise. Should the
defendant fail to make the payments above prescribed from time to time during the pendency of the
appeal, the appellate court, upon motion of the plaintiff, and upon proof of such failure, shall order
the execution of the judgment appealed from with respect to the restoration of possession, but such
execution shall not be a bar to the appeal taking its course until the final disposition thereof on the
merits.
After the case is decided by the Regional Trial Court, any money paid to the court by the defendant
for purposes of the stay of execution shall be disposed of in accordance with the provisions of the
judgment of the Regional Trial Court. In any case wherein it appears that the defendant has been
deprived of the lawful possession of land or building pending the appeal by virtue of the execution of
the judgment of the Municipal Trial Court, damages for such deprivation of possession and
restoration of possession may be allowed the defendant in the judgment of the Regional Trial Court
disposing of the appeal. (Emphases supplied.)
The Court had previously recognized the exemption of NAPOCOR from filing a supersedeas bond.
The Court stated in Philippine Geothermal, Inc. v. Commissioner of Internal Revenue122 that a
chronological review of the NAPOCOR Charter will show that it has been the lawmakers’ intention
that said corporation be completely exempt not only from all forms of taxes, but also from filing fees,
appeal bonds, and supersedeas bonds in any court or administrative proceedings. The Court traced
the history of the NAPOCOR Charter, thus:
Republic Act No. 6395 (10 September 1971) enumerated the details covered by the exemptions by
stating under Sec. 13 that "The Corporation shall be non-profit and shall devote all its returns from its
capital investment, as well as excess revenues from its operation, for expansion…the Corporation is
hereby declared exempt from the payment of all taxes, duties, fees, imposts, charges, costs and
service fees in any court or administrative proceedings in which it may be a party, restrictions and
duties to the Republic of the Philippines, its provinces, cities, municipalities and other government
agencies and instrumentalities . . ." Subsequently, Presidential Decree No. 380 (22 January 1974),
Sec. 10 made even more specific the details of the exemption of NPC to cover, among others, both
direct and indirect taxes on all petroleum products used in its operation. Presidential Decree No. 938
(27 May 1976), Sec. 13 amended the tax exemption by simplifying the same law in general terms. It
succinctly exempts service fees, including filing fees, appeal bonds, supersedeas bonds, in any
court or administrative proceedings. The use of the phrase "all forms" of taxes demonstrate the
intention of the law to give NPC all the exemption it has been enjoying before. The rationale for this
exemption is that being non-profit, the NPC "shall devote all its return from its capital investment as
well as excess revenues from its operation, for expansion.123 (Emphases supplied.)
As presently worded, Section 13 of Republic Act No. 6395, the NAPOCOR Charter, as amended,
reads:
SEC. 13. Non-profit Character of the Corporation; Exemption from All Taxes, Duties, Fees, Imposts
and Other Charges by the Government and Government Instrumentalities. – The Corporation shall
be non-profit and shall devote all its returns from its capital investment as well as excess revenues
from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations
and in furtherance and effective implementation of the policy enunciated in Section One of this Act,
the Corporation, including its subsidiaries, is hereby declared exempt from the payment of all forms
of taxes, duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds,
supersedeas bonds, in any court or administrative proceedings. (Emphasis supplied.)
In A.M. No. 05-10-20-SC, captioned In Re: Exemption of the National Power Corporation from
Payment of Filing/Docket Fees, the Court addressed the query of a Clerk of Court from the RTC of
Urdaneta, Pangasinan on whether NAPOCOR is exempt from the payment of filing fees and
Sheriff’s Trust Fund. In its Resolution dated December 6, 2005, the Court, upon the recommendation
of the Court Administrator, declared that NAPOCOR is still exempt from the payment of filing fees,
appeal bonds, and supersedeas bonds.
Consistent with the foregoing, the Court of Appeals rendered its Decision dated November 23, 2005
in CA-G.R. SP Nos. 85714 and 85841 declaring that NAPOCOR was exempt from filing a
supersedeas bond to stay the execution of the MTCC judgment while the same was pending appeal
before the RTC-Branch 5. The appellate court also held that the exemption of NAPOCOR extended
even to the requirement for periodical deposit of rent, ratiocinating that:
On the whole, the posting of supersedeas bond and the making of the periodical deposit are
designed primarily to insure that the plaintiff would be paid the back rentals and the compensation
for the use and occupation of the premises should the municipal trial court’s decision be eventually
affirmed on appeal. Elsewise stated, both the posting of the supersedeas bond and the payment of
monthly deposit are required to accomplish one and the same purpose, namely, to secure the
performance of, or to satisfy the judgment appealed from in case it is affirmed on appeal by the
appellate court.
xxxx
Thus viewed, the inescapable conclusion is, and so We hold, that although the term "making of
monthly deposit in ejectment cases" is not expressly or specifically mentioned in Section 13 of R.A.
6395, however, inasmuch as it has the same or similar function, purpose, and essence as a
supersedeas bond, it should be deemed included in the enumeration laid down under the said
provision. This accords well with the principle of ejusdem generis which says that where a statute
uses a general word followed by an enumeration of specific words embraced within the general word
merely as examples, the enumeration does not restrict the meaning of the general word which
should be construed to include others of the same class although not enumerated therein; or where
a general word or phrase follows an enumeration of particular and specific words of the same class
or where the latter follow the former, the general word or phrase is to be construed to include
persons, things or cases akin to, resembling, or of the same kind or class as those specifically
mentioned.
In a nutshell, We hold that petitioner NAPOCOR enjoys exemption not only from posting
supersedeas bond in courts in appealed ejectment cases, but also from periodically depositing the
amount of the monthly rental or the reasonable compensation of the use and occupancy of the
property, as determined in the municipal trial court’s decision.124
The Court of Appeals further adjudged that the exemptions of NAPOCOR similarly applied to
TRANSCO since "[i]t is all too obvious that the interests of NAPOCOR and TRANSCO over the
premises in litigation are so interwoven and dependent upon each other, such that whatever is
adjudged in regard to the former, whether favorable or adverse, would ineluctably and similarly affect
the latter[;]" and "[c]onsequently, x x x the stay of the execution of the appealed decision insofar as
NAPOCOR is concerned necessarily extends and inures to its co-defendant TRANSCO, not by
virtue of the former’s statutory exemption privilege from filing supersedeas bond and making periodic
deposits, but by the indisputably operative fact that the rights and liabilities in litis of BOTH
defendants are so intimately interwoven, interdependent, and indivisible."125
Only recently, however, the Court reversed its stance on the exemption of NAPOCOR from filing
fees, appeal bonds, and supersedeas bonds. Revisiting A.M. No. 05-10-20-SC, the Court issued
Resolutions dated October 27, 2009 and March 10, 2010, wherein it denied the request of
NAPOCOR for exemption from payment of filing fees and court fees for such request appears to run
counter to Article VIII, Section 5(5)126 of the Constitution, on the rule-making power of the Supreme
Court over the rules on pleading, practice and procedure in all courts, which includes the sole power
to fix the filing fees of cases in courts. The Court categorically pronounced that NAPOCOR can no
longer invoke its amended Charter as basis for exemption from the payment of legal fees.
Nevertheless, in this case, the RTC-Branch 1 already promulgated its Decision in Civil Case No.
6613 on December 12, 2005, denying the appeal of NAPOCOR and TRANSCO and affirming the
MTCC judgment against said corporations. NAPOCOR and TRANSCO presently have pending
appeals of the RTC-Branch 1 judgment before the Court of Appeals.
Rule 70, Section 19 of the Rules of Court applies only when the judgment of a Municipal Trial Court
(and any same level court such as the MTCC) in an ejectment case is pending appeal before the
RTC. When the RTC had already resolved the appeal and its judgment, in turn, is pending appeal
before the Court of Appeals, then Rule 70, Section 21 of the Rules of Court governs.
The Court already pointed out in Northcastle Properties and Estate Corporation v. Paas127 that
Section 19 applies only to ejectment cases pending appeal with the RTC, and Section 21 to those
already decided by the RTC. The Court again held in Uy v. Santiago128 that:
[I]t is only execution of the Metropolitan or Municipal Trial Courts’ judgment pending appeal with the
Regional Trial Court which may be stayed by a compliance with the requisites provided in Rule 70,
Section 19 of the 1997 Rules on Civil Procedure. On the other hand, once the Regional Trial Court
has rendered a decision in its appellate jurisdiction, such decision shall, under Rule 70, Section 21 of
the 1997 Rules on Civil Procedure, be immediately executory, without prejudice to an appeal, via a
Petition for Review, before the Court of Appeals and/or Supreme Court. (Emphases supplied.)
According to Rule 70, Section 21 of the Rules of Court, "[t]he judgment of the Regional Trial Court
against the defendant shall be immediately executory, without prejudice to a further appeal that may
be taken therefrom." It no longer provides for the stay of execution at such stage.
Thus, subsequent events have rendered the Petition of LANDTRADE in G.R. No. 170505 moot and
academic. It will serve no more purpose for the Court to require NAPOCOR and TRANSCO to still
comply with the requirements of filing a supersedeas bond and depositing rent to stay execution
pending appeal of the MTCC judgment, as required by Rule 70, Section 19 of the Rules of Court,
when the appeal had since been resolved by the RTC.
Preliminary injunction to stay execution of RTC judgment against defendant in an ejectment case
The issues raised by NAPOCOR and TRANSCO in their Petitions in G.R. Nos. 173355-56 and
173563-64 boil down to the sole issue of whether the Court of Appeals committed grave abuse of
discretion amounting to lack or excess of jurisdiction in refusing to enjoin the execution of the
Decision dated December 12, 2005 of the RTC-Branch 1 in Civil Case No. 6613 while the same is
pending appeal before the appellate court.
The Court of Appeals granted the issuance of a writ of execution in favor of LANDTRADE and
denied the application for writ of preliminary injunction of NAPOCOR and TRANSCO because Rule
70, Section 21 of the Rules of Court explicitly provides that the RTC judgment in an ejectment case,
which is adverse to the defendant and pending appeal before the Court of Appeals, shall be
immediately executory and can be enforced despite further appeal. Therefore, the execution of the
RTC judgment pending appeal is the ministerial duty of the Court of Appeals, specifically enjoined by
law to be done.
NAPOCOR and TRANSCO argue that neither the rules nor jurisprudence explicitly declare that Rule
70, Section 21 of the Rules of Court bars the application of Rule 58 on preliminary injunction.
Regardless of the immediately executory character of the RTC judgment in an ejectment case, the
Court of Appeals, before which said judgment is appealed, is not deprived of power and jurisdiction
to issue a writ of preliminary injunction when circumstances so warrant.
There is merit in the present Petitions of NAPOCOR and TRANSCO.
The Court expounded on the nature of a writ of preliminary injunction in Levi Strauss & Co. v. Clinton
Apparelle, Inc. 129:
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any
stage of an action prior to the judgment or final order requiring a party or a court, agency or a person
to refrain from a particular act or acts. Injunction is accepted as the strong arm of equity or a
transcendent remedy to be used cautiously as it affects the respective rights of the parties, and only
upon full conviction on the part of the court of its extreme necessity. An extraordinary remedy,
injunction is designed to preserve or maintain the status quo of things and is generally availed of to
prevent actual or threatened acts until the merits of the case can be heard. It may be resorted to only
by a litigant for the preservation or protection of his rights or interests and for no other purpose
during the pendency of the principal action. It is resorted to only when there is a pressing necessity
to avoid injurious consequences, which cannot be remedied under any standard compensation. The
resolution of an application for a writ of preliminary injunction rests upon the existence of an
emergency or of a special recourse before the main case can be heard in due course of
proceedings.
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of a preliminary
injunction:
SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be granted
when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.
Under the cited provision, a clear and positive right especially calling for judicial protection must be
shown. Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not
issue to protect a right not in esse and which may never arise, or to restrain an act which does not
give rise to a cause of action. There must exist an actual right. There must be a patent showing by
the complaint that there exists a right to be protected and that the acts against which the writ is to be
directed are violative of said right.
Benedicto v. Court of Appeals130 sets forth the following elucidation on the applicability of Rule 58 vis-
à-vis Rule 70, Section 21 of the Rules of Court:
This section [Rule 70, Section 21] presupposes that the defendant in a forcible entry or unlawful
detainer case is unsatisfied with the judgment of the Regional Trial Court and decides to appeal to a
superior court. It authorizes the RTC to immediately issue a writ of execution without prejudice to the
appeal taking its due course. It is our opinion that on appeal the appellate court may stay the said
writ should circumstances so require.
In the case of Amagan v. Marayag, we reiterated our pronouncement in Vda. de Legaspi v.

Avendaño that the proceedings in an ejectment case may be suspended in whatever stage it may be
found. We further drew a fine line between forcible entry and unlawful detainer, thus:
Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and
the right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial
proceeding, it is more equitable and just and less productive of confusion and disturbance of
physical possession, with all its concomitant inconvenience and expenses. For the Court in which
the issue of legal possession, whether involving ownership or not, is brought to restrain, should a
petition for preliminary injunction be filed with it, the effects of any order or decision in the unlawful
detainer case in order to await the final judgment in the more substantive case involving legal
possession or ownership. It is only where there has been forcible entry that as a matter of public
policy the right to physical possession should be immediately set at rest in favor of the prior
possession regardless of the fact that the other party might ultimately be found to have superior
claim to the premises involved thereby to discourage any attempt to recover possession thru force,
strategy or stealth and without resorting to the courts.
Patently, even if RTC judgments in unlawful detainer cases are immediately executory, preliminary
injunction may still be granted. There need only be clear showing that there exists a right to be
protected and that the acts against which the writ is to be directed violate said right. (Emphasis
supplied.)
As in Benedicto, substantial considerations exist herein that compels the Court to issue a writ of
preliminary injunction enjoining the execution of the February 17, 2004 Decision of the MTCC, as
affirmed by the December 12, 2005 Decision of the RTC-Branch 1, until the appeal of latter
judgment, sought by NAPOCOR and TRANSCO, is finally resolved by the Court of Appeals.
First, the two parcels of land claimed by LANDTRADE are the subject of several other cases. In fact,
Vidal and AZIMUTH, who instituted the Quieting of Title Case against Teofilo and LANDTRADE
(also presently before the Court in G.R. Nos. 178779 and 178894) have filed a Motion For Leave to
Intervene in the instant case, thus, showing that there are other parties who, while strangers to the
ejectment case, might be greatly affected by its result and who want to protect their interest in the
subject properties. And although cases involving title to real property, i.e., quieting of title, accion
publiciana, etc., are not prejudicial to and do not suspend an ejectment case,131 the existence of such
cases should have already put the Court of Appeals on guard that the title of LANDTRADE to the
subject properties – on which it fundamentally based its claim of possessory right – is being fiercely
contested.
Second, it is undisputed that TRANSCO and its predecessor, NAPOCOR, have been in possession
of the disputed parcels of land for more than 40 years. Upon said properties stand the TRANSCO
Overton Sub-station and Agus 7 Warehouse. The Overton Sub-station, in particular, is a crucial
facility responsible for providing the power requirements of a large portion of Iligan City, the two
Lanao Provinces, and other nearby provinces. Without doubt, having TRANSCO vacate its Overton
Sub-station, by prematurely executing the MTCC judgment of February 17, 2004, carries serious
and irreversible implications, primordial of which is the widespread disruption of the electrical power
supply in the aforementioned areas, contributing further to the electric power crisis already plaguing
much of Mindanao.
Lastly, allowing execution pending appeal would result in the payment of an astronomical amount in
rentals which, per Sheriff Borres’s computation, already amounted to ₱156,000,000.00 by August
11, 2004, when he issued the Notices of Garnishment and Notification against NAPOCOR and
TRANSCO; plus, ₱500,000.0 each month thereafter. Payment of such an amount may seriously put
the operation of a public utility in peril, to the detriment of its consumers.
These circumstances altogether present a pressing necessity to avoid injurious consequences, not
just to NAPOCOR and TRANSCO, but to a substantial fraction of the consuming public as well,
which cannot be remedied under any standard compensation. The issuance by the Court of Appeals
of a writ of preliminary injunction is justified by the circumstances.
The Court must emphasize though that in so far as the Ejectment Case is concerned, it has only
settled herein issues on the propriety of enjoining the execution of the MTCC Decision dated
February 17, 2004 while it was on appeal before the RTC, and subsequently, before the Court of
Appeals. The Court of Appeals has yet to render a judgment on the appeal itself. But it may not be
amiss for the Court to also point out that in G.R. Nos. 178779 and 178894 (Quieting of Title Case), it
has already found that Vidal, not Teofilo, is the late Doña Demetria’s sole heir, who alone inherits
Doña Demetria’s rights to and interests in the disputed parcels of land. This conclusion of the Court
in the Quieting of Title Case will inevitably affect the Ejectment Case still pending appeal before the
Court of Appeals since LANDTRADE is basing its right to possession in the Ejectment Case on its
supposed title to the subject properties, which it derived from Teofilo.
The Cancellation of Titles and Reversion Case
(G.R. No. 173401)
The Republic is assailing in its Petition in G.R. No. 173401 the (1) Order dated December 13, 2005
of the RTC-Branch 4 dismissing Civil Case No. 6686, the Complaint for Cancellation of Titles and
Reversion filed by the Republic against the deceased Doña Demetria, Vidal and/or Teofilo, and
AZIMUTH and/or LANDTRADE; and (2) Order dated May 16, 2006 of the same trial court denying
the Motion for Reconsideration of the Republic, averring that:
With due respect, the trial court decided a question of substance contrary to law and jurisprudence in
ruling:
(i) THAT PETITIONER HAD NO CAUSE OF ACTION IN INSTITUTING THE SUBJECT

COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 0-1201 (A.F.),
INCLUDING ALL DERIVATIVE TITLES, AND REVERSION.
(ii) THAT PETITIONER’S COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200 (A.F.)
AND 0-1201 (A.F.) INCLUDING ALL DERIVATIVE TITLES, AND REVERSION IS BARRED
BY THE DECISIONS IN CACHO VS GOVERNMENT OF THE UNITED STATES (28 PHIL.
616 [1914] AND CACHO VS COURT OF APPEALS (269 SCRA 159 [1997].
(iii) THAT PETITIONER’S CAUSE OF ACTION HAS PRESCRIBED; AND
(iv) THAT PETITIONER IS GUILTY OF FORUM SHOPPING.132
The Court finds merit in the present Petition.
Cause of action for reversion
The Complaint in Civil Case No. 6686 seeks the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.), with all their derivative titles, and reversion. The Complaint was dismissed by the RTC-Branch
4 in its Order dated December 13, 2005, upon Motion of Vidal and AZIMUTH, on the ground that the
State does not have a cause of action for reversion. According to the RTC-Branch 4, there was no
showing that the late Doña Demetria committed any wrongful act or omission in violation of any right
of the Republic. Additionally, the Regalian doctrine does not apply to Civil Case No. 6686 because
said doctrine does not extend to lands beyond the public domain. By the own judicial admission of
the Republic, the two parcels of land in question are privately owned, even before the same were
registered in Doña Demetria’s name.
The Court disagrees.
Rule 2, Section 2 of the Rules of Court defines a cause of action as "the act or omission by which a
party violates a right of another." Its essential elements are the following: (1) a right in favor of the
plaintiff; (2) an obligation on the part of the named defendant to respect or not to violate such right;
and (3) such defendant’s act or omission that is violative of the right of the plaintiff or constituting a
breach of the obligation of the former to the latter.133
Reversion is an action where the ultimate relief sought is to revert the land back to the government
under the Regalian doctrine. Considering that the land subject of the action originated from a grant
by the government, its cancellation is a matter between the grantor and the
grantee.134http://www.lawphil.net/judjuris/juri2005/may2005/gr_157536_2005.html - fnt30 In Estate of
the Late Jesus S. Yujuico v. Republic135 (Yujuico case), reversion was defined as an action which
seeks to restore public land fraudulently awarded and disposed of to private individuals or
corporations to the mass of public domain. It bears to point out, though, that the Court also allowed
the resort by the Government to actions for reversion to cancel titles that were void for reasons other
than fraud, i.e., violation by the grantee of a patent of the conditions imposed by law;136 and lack of
jurisdiction of the Director of Lands to grant a patent covering inalienable forest land137 or portion of a
river, even when such grant was made through mere oversight.138 In Republic v. Guerrero,139 the
Court gave a more general statement that the remedy of reversion can be availed of "only in cases
of fraudulent or unlawful inclusion of the land in patents or certificates of title."
The right of the Republic to institute an action for reversion is rooted in the Regalian doctrine. Under
the Regalian doctrine, all lands of the public domain belong to the State, and that the State is the
source of any asserted right to ownership in land and charged with the conservation of such
patrimony. This same doctrine also states that all lands not otherwise appearing to be clearly within
private ownership are presumed to belong to the State.140 It is incorporated in the 1987 Philippine
Constitution under Article XII, Section 2 which declares "[a]ll lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. x x x" No public
land can be acquired by private persons without any grant, express or implied, from the government;
it is indispensable that there be a showing of the title from the State.141
The reversion case of the Republic in Civil Case No. 6686 rests on the main argument that OCT
Nos. 0-1200 (a.f.) and 0-1201 (a.f.), issued in Doña Demetria’s name, included parcels of lands
which were not adjudicated to her by the Court in the 1914 Cacho case. Contrary to the statement
made by the RTC-Branch 4 in its December 13, 2005 Order, the Republic does not make any
admission in its Complaint that the two parcels of land registered in Doña Demetria’s name were
privately owned even prior to their registration. While the Republic does not dispute that that two
parcels of land were awarded to Doña Demetria in the 1914 Cacho case, it alleges that these were
not the same as those covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) issued in Doña
Demetria’s name 84 years later. If, indeed, the parcels of land covered by said OCTs were not those
granted to Doña Demetria in the 1914 Cacho case, then it can be presumed, under the Regalian
doctrine, that said properties still form part of the public domain belonging to the State.
Just because OCTs were already issued in Doña Demetria’s name does not bar the Republic from
instituting an action for reversion. Indeed, the Court made it clear in Francisco v. Rodriguez142 that
Section 101 of the Public Land Act "may be invoked only when title has already vested in the
individual, e.g., when a patent or a certificate of title has already been issued[,]" for the basic
premise in an action for reversion is that the certificate of title fraudulently or unlawfully included land
of the public domain, hence, calling for the cancellation of said certificate. It is actually the issuance
of such a certificate of title which constitutes the third element of a cause of action for reversion.
The Court further finds that the Complaint of the Republic in Civil Case No. 6686 sufficiently states a
cause of action for reversion, even though it does not allege that fraud was committed in the
registration or that the Director of Lands requested the reversion.
It is a well-settled rule that the existence of a cause of action is determined by the allegations in the
complaint. In the resolution of a motion to dismiss based on failure to state a cause of action, only
the facts alleged in the complaint must be considered. The test in cases like these is whether a court
can render a valid judgment on the complaint based upon the facts alleged and pursuant to the
prayer therein. Hence, it has been held that a motion to dismiss generally partakes of the nature of a
demurrer which hypothetically admits the truth of the factual allegations made in a complaint.143 The
hypothetical admission extends to the relevant and material facts well pleaded in the complaint and
inferences fairly deducible therefrom. Hence, if the allegations in the complaint furnish sufficient
basis by which the complaint can be maintained, the same should not be dismissed regardless of
the defense that may be assessed by the defendants.144
In Vergara v. Court of Appeals,145 the Court additionally explained that:

In determining whether allegations of a complaint are sufficient to support a cause of action, it must
be borne in mind that the complaint does not have to establish or allege facts proving the existence
of a cause of action at the outset; this will have to be done at the trial on the merits of the case. To
sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for
relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite
or uncertain.
The Republic meticulously presented in its Complaint the discrepancies between the 1914 Cacho
case, on one hand, which granted Doña Demetria title to two parcels of land; and OCT Nos. 0-1200
(a.f.) and 0-1201 (a.f.), on the other, which were supposedly issued pursuant to the said case. In
paragraphs 9 and 16 of its Complaint, the Republic clearly alleged that OCT Nos. 0-1200 (a.f.) and
0-1201 (a.f.) cover properties much larger than or areas beyond those granted by the land
registration court in GLRO Record Nos. 6908 and 6909. Thus, the Republic was able to satisfactorily
allege the unlawful inclusion, for lack of an explicit grant from the Government, of parcels of public
land into Doña Demetria’s OCTs, which, if true, will justify the cancellation of said certificates and the
return of the properties to the Republic.
That the Complaint in Civil Case No. 6686 does not allege that it had been filed by the Office of the
Solicitor General (OSG), at the behest of the Director of Lands, does not call for its dismissal on the
ground of failure to state a cause of action. Section 101 of Commonwealth Act No. 141, otherwise
known as the Public Land Act, as amended, simply requires that:
SEC. 101. All actions for the reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead, in
the proper courts, in the name of the Republic of the Philippines. (Emphasis supplied.)
Clear from the aforequoted provision that the authority to institute an action for reversion, on behalf
of the Republic, is primarily conferred upon the OSG. While the OSG, for most of the time, will file an
action for reversion upon the request or recommendation of the Director of Lands, there is no basis
for saying that the former is absolutely bound or dependent on the latter.
RTC-Branch 4 cited Sherwill Development Corporation v. Sitio Niño Residents Association,

Inc. 146 (Sherwill case), to support its ruling that it is "absolutely necessary" that an investigation and a
determination of fraud should have been made by the Director of Lands prior to the filing of a case
for reversion. The Sherwill case is not in point and does not constitute a precedent for the case at
bar. It does not even involve a reversion case. The main issue therein was whether the trial court
properly dismissed the complaint of Sherwill Development Corporation for quieting of title to two
parcels of land, considering that a case for the declaration of nullity of its TCTs, instituted by the Sto.
Niño Residents Association, Inc., was already pending before the Land Management Bureau (LMB).
The Court recognized therein the primary jurisdiction of the LMB over the dispute, and affirmed the
dismissal of the quieting of title case on the grounds of litis pendentia and forum shopping.
Res judicata
Public policy and sound practice enshrine the fundamental principle upon which the doctrine of res
judicata rests that parties ought not to be permitted to litigate the same issues more than once. It is a
general rule common to all civilized system of jurisprudence, that the solemn and deliberate
sentence of the law, pronounced by its appointed organs, upon a disputed fact or a state of facts,
should be regarded as a final and conclusive determination of the question litigated, and should
forever set the controversy at rest. Indeed, it has been well said that this maxim is more than a mere
rule of law; more even than an important principle of public policy; and that it is not too much to say
that it is a fundamental concept in the organization of every jural system. Public policy and sound
practice demand that, at the risk of occasional errors, judgments of courts should become final at
some definite date fixed by law. The very object for which courts were constituted was to put an end
to controversies.147
The doctrine of res judicata comprehends two distinct concepts - (1) bar by former judgment, and (2)
conclusiveness of judgment. For res judicata to serve as an absolute bar to a subsequent action, the
following requisites must concur: (1) the former judgment or order must be final; (2) the judgment or
order must be on the merits; (3) it must have been rendered by a court having jurisdiction over the
subject matter and parties; and (4) there must be between the first and second actions, identity of
parties, of subject matter, and of causes of action. When there is no identity of causes of action, but
only an identity of issues, there exists res judicata in the concept of conclusiveness of judgment.
Although it does not have the same effect as res judicata in the form of bar by former judgment
which prohibits the prosecution of a second action upon the same claim, demand, or cause of action,
the rule on conclusiveness of judgment bars the relitigation of particular facts or issues in another
litigation between the same parties on a different claim or cause of action.148
The 1914 Cacho case does not bar the Complaint for reversion in Civil Case No. 6686 by res
judicata in either of its two concepts.
There is no bar by prior judgment because the 1914 Cacho case and Civil Case No. 6686 do not
have the same causes of action and, even possibly, they do not involve identical subject matters.
Land registration cases, such as GLRO Record Nos. 6908 and 6909, from which the 1914 Cacho
case arose, are special proceedings where the concept of a cause of action in ordinary civil actions
does not apply. In special proceedings, the purpose is to establish a status, condition or fact; in land
registration proceedings, the ownership by a person of a parcel of land is sought to be
established.149 Civil Case No. 6686 is an action for reversion where the cause of action is the alleged
unlawful inclusion in OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) of parcels of public land that were not
among those granted to Doña Demetria in the 1914 Cacho case. Thus, Civil Case No. 6686 even
rests on supposition that the parcels of land covered by the certificates of title in Doña Demetria’s
name, which the Republic is seeking to have cancelled, are different from the parcels of land that
were the subject matter of the 1914 Cacho case and adjudged to Doña Demetria.
Res judicata in the concept of conclusiveness of judgment, likewise, does not apply as between the
1914 Cacho case and Civil Case No. 6686. A careful study of the Complaint in Civil Case No. 6686
reveals that the Republic does not seek to re-litigate any of the issues resolved in the 1914 Cacho
case. The Republic no longer questions in Civil Case No. 6686 that Doña Demetria was adjudged
the owner of two parcels of land in the 1914 Cacho case. The Republic is only insisting on the strict
adherence to the judgment of the Court in the 1914 Cacho case, particularly: (1) the adjudication of
a smaller parcel of land, consisting only of the southern portion of the 37.87-hectare Lot 2 subject of
Doña Demetria’s application in GLRO Record No. 6909; and (2) the submission of a new technical
plan for the adjudicated southern portion of Lot 2 in GLRO Record No. 6909, and the deed executed
by Datto Darondon, husband of Alanga, renouncing all his rights to Lot 1, in GLRO Record No. 6908,
in Doña Demetria’s favor.150
Similarly, the 1997 Cacho case is not an obstacle to the institution by the Republic of Civil Case No.
6686 on the ground of res judicata.
Bar by prior judgment does not apply for lack of identity of causes of action between the 1997 Cacho
case and Civil Case No. 6686. The 1997 Cacho case involves a petition for re-issuance of decrees
of registration. In the absence of principles and rules specific for such a petition, the Court refers to
those on reconstitution of certificates of title, being almost of the same nature and granting closely
similar reliefs.
Reconstitution denotes a restoration of the instrument which is supposed to have been lost or
destroyed in its original form or condition. The purpose of the reconstitution of title or any document
is to have the same reproduced, after observing the procedure prescribed by law, in the same form
they were when the loss or destruction occurred.151 Reconstitution is another special proceeding
where the concept of cause of action in an ordinary civil action finds no application.
The Court, in the 1997 Cacho case, granted the reconstitution and re-issuance of the decrees of
registration considering that the NALTDRA, through then Acting Commissioner Santiago M.
Kapunan,152 its Deputy Clerk of Court III, the Head Geodetic Engineer, and the Chief of Registration,
certified that "according to the Record Book of Decrees for Ordinary Land Registration Case, Decree
No. 18969 was issued in GLRO Record No. 6909 and Decree No. 10364 was issued in GLRO
Record No. 6908[;]"153 thus, leaving no doubt that said decrees had in fact been issued.
The 1997 Cacho case only settled the issuance, existence, and subsequent loss of Decree Nos.
10364 and 18969. Consequently, said decrees could be re-issued in their original form or condition.
The Court, however, could not have passed upon in the 1997 Cacho case the issues on whether
Doña Demetria truly owned the parcels of land covered by the decrees and whether the decrees and
the OCTs subsequently issued pursuant thereto are void for unlawfully including land of the public
domain which were not awarded to Doña Demetria.
The following pronouncement of the Court in Heirs of Susana de Guzman Tuazon v. Court of
Appeals154 is instructive:
Precisely, in both species of reconstitution under Section 109 of P.D. No. 1529 and R.A. No. 26, the
nature of the action denotes a restoration of the instrument which is supposed to have been lost or
destroyed in its original form and condition. The purpose of the action is merely to have the same
reproduced, after proper proceedings, in the same form they were when the loss or destruction
occurred, and does not pass upon the ownership of the land covered by the lost or destroyed title. It
bears stressing at this point that ownership should not be confused with a certificate of title.
Registering land under the Torrens System does not create or vest title because registration is not a
mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the
particular property described therein. Corollarily, any question involving the issue of ownership must
be threshed out in a separate suit, which is exactly what the private respondents did when they filed
Civil Case No. 95-3577 before Branch 74. The trial court will then conduct a full-blown trial wherein
the parties will present their respective evidence on the issue of ownership of the subject properties
to enable the court to resolve the said issue. x x x. (Emphases supplied.)
Whatever findings the Court made on the issue of ownership in the 1997 Cacho case are mere
obiter dictum. As the Court held in Amoroso v. Alegre, Jr.155:
Petitioner claims in his petition that the 3 October 1957 Decision resolved the issue of ownership of
the lots and declared in the body of the decision that he had "sufficiently proven uncontroverted facts
that he had been in possession of the land in question since 1946 x x x [and] has been in
possession of the property with sufficient title." However, such findings made by the CFI in the said
decision are mere obiter, since the ownership of the properties, titles to which were sought to be
reconstituted, was never the issue in the reconstitution case. Ownership is not the issue in a petition
for reconstitution of title. A reconstitution of title does not pass upon the ownership of the land
covered by the lost or destroyed title.
It may perhaps be argued that ownership of the properties was put in issue when petitioner opposed
the petition for reconstitution by claiming to be the owner of the properties. However, any ruling that
the trial court may make on the matter is irrelevant considering the court’s limited authority in
petitions for reconstitution. In a petition for reconstitution of title, the only relief sought is the issuance
of a reconstituted title because the reconstituting officer’s power is limited to granting or denying a
reconstituted title. As stated earlier, the reconstitution of title does not pass upon the ownership of
the land covered by the lost or destroyed title, and any change in the ownership of the property must
be the subject of a separate suit. (Emphases supplied.)
The Court concedes that the 1997 Cacho case, by reason of conclusiveness of judgment, prevents
the Republic from again raising as issues in Civil Case No. 6686 the issuance and existence of
Decree Nos. 10364 and 18969, but not the validity of said decrees, as well as the certificates of title
issued pursuant thereto.
Forum shopping
Forum shopping is the filing of multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. A party
violates the rule against forum shopping if the elements of litis pendentia are present; or if a final
judgment in one case would amount to res judicata in the other.156
There is forum shopping when the following elements are present: (a) identity of parties, or at least
such parties as represent the same interests in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding
particulars, is such that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration; said requisites are also
constitutive of the requisites for auter action pendant or lis pendens.157
Given the preceding disquisition of the Court that the 1914 and 1997 Cacho cases do not constitute
res judicata in Civil Case No. 6686, then the Court also cannot sustain the dismissal by the RTC-
Branch 4 of the Complaint of the Republic in Civil Case No. 6686 for forum shopping.
Prescription
According to the RTC-Branch 4, the cause of action for reversion of the Republic was already lost or
extinguished by prescription, citing Section 32 of the Property Registration Decree, which provides:
SEC. 32. Review of decree of registration; Innocent purchaser for value. – The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court for reversing judgment, subject,
however, to the right of any person, including the government and the branches thereof, deprived of
land or of any estate or interest therein by such adjudication or confirmation of title obtained by
actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the entry of such decree of
registration, but in no case shall such petition be entertained by the court where an innocent
purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced.
Whenever the phrase "innocent purchaser of value" or an equivalent phrase occurs in this Decree, it
shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title
issued shall become incontrovertible. Any person aggrieved by such decree of registration in any
case may pursue his remedy by action for damages against the applicant or any other persons
Decree No. 10364 in GLRO Record No. 6908 was issued on May 9, 1913, while Decree No. 18969
in GLRO Record No. 6909 was issued on July 8, 1915. In the course of eight decades, the decrees
were lost and subsequently reconstituted per order of this Court in the 1997 Cacho case. The
reconstituted decrees were issued on October 15, 1998 and transcribed on OCT Nos. 0-1200 (a.f.)
and 0-1201 (a.f.). The reconstituted decrees were finally entered into the Registration Book for Iligan
City on December 4, 1998 at 10:00 a.m. Almost six years had elapsed from entry of the decrees by
the time the Republic filed its Complaint in Civil Case No. 6686 on October 13, 2004.
Nonetheless, elementary is the rule that prescription does not run against the State and its
subdivisions. When the government is the real party in interest, and it is proceeding mainly to assert
its own right to recover its own property, there can as a rule be no defense grounded on laches or
prescription. Public land fraudulently included in patents or certificates of title may be recovered or
reverted to the State in accordance with Section 101 of the Public Land Act. The right of reversion or
reconveyance to the State is not barred by prescription.158
The Court discussed lengthily in Republic v. Court of Appeals159 the indefeasibility of a decree of

registration/certificate of title vis-à-vis the remedy of reversion available to the State:
The petitioner invokes Republic v. Animas, where this Court declared that a title founded on fraud
may be cancelled notwithstanding the lapse of one year from the issuance thereof. Thus:
x x x The misrepresentations of the applicant that he had been occupying and cultivating the land
and residing thereon are sufficient grounds to nullify the grant of the patent and title under Section
91 of the Public Land Law which provides as follows:
"The statements made in the application shall be considered as essential conditions or parts of any
concession, title or permit issued on the basis of such application, and any false statement thereon
or omission of facts, changing, or modifying the consideration of the facts set forth in such
statement, and any subsequent modification, alteration, or change of the material facts set forth in
the application shall ipso facto produce the cancellation of the concession, title or permit granted. x x
x"
A certificate of title that is void may be ordered cancelled. A title will be considered void if it is
procured through fraud, as when a person applies for registration of the land under his name
although the property belongs to another. In the case of disposable public lands, failure on the part
of the grantee to comply with the conditions imposed by law is a ground for holding such title void.
The lapse of the one year period within which a decree of title may be reopened for fraud would not
prevent the cancellation thereof, for to hold that a title may become indefeasible by registration, even
if such title had been secured through fraud or in violation of the law, would be the height of
absurdity. Registration should not be a shield of fraud in securing title.
This doctrine was reiterated in Republic v. Mina, where Justice Relova declared for the Court:
A certificate of title that is void may be ordered cancelled. And, a title will be considered void if it is
procured through fraud, as when a person applies for registration of the land on the claim that he
has been occupying and cultivating it. In the case of disposable public lands, failure on the part of
the grantee to comply with the conditions imposed by law is a ground for holding such title void. x x x
The lapse of one (1) year period within which a decree of title may be reopened for fraud would not
prevent the cancellation thereof for to hold that a title may become indefeasible by registration, even
if such title had been secured through fraud or in violation of the law would be the height of
absurdity. Registration should not be a shield of fraud in securing title.
Justifying the above-quoted provision, the Court declared in Piñero, Jr. v. Director of Lands:
It is true that under Section 122 of the Land Registration Act, a Torrens title issued on the basis of a
free patent or a homestead patent is as indefeasible as one judicially secured. And in repeated
previous decisions of this Court that indefeasibility has been emphasized by Our holding that not
even the Government can file an action for annulment, but at the same time, it has been made clear
that an action for reversion may be instituted by the Solicitor General, in the name of the Republic of
the Philippines. It is to the public interest that one who succeeds in fraudulently acquiring title to a
public land should not be allowed to benefit therefrom, and the State should, therefore, have an even
existing authority, thru its duly authorized officers, to inquire into the circumstances surrounding the
issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer
who may be authorized by law, may file the corresponding action for the reversion of the land
involved to the public domain, subject thereafter to disposal to other qualified persons in accordance
with law. In other words, the indefeasibility of a title over land previously public is not a bar to an
investigation by the Director of Lands as to how such title has been acquired, if the purpose of such
investigation is to determine whether or not fraud had been committed in securing such title in order
that the appropriate action for reversion may be filed by the Government.
Private respondent PNB points out that Animas involved timberland, which is not alienable or
disposable public land, and that in Piñero the issue raised was whether the Director of Lands would
be enjoined by a writ of prohibition from investigating allegations of fraud that led to the issuance of
certain free patents. Nevertheless, we find that the doctrine above quoted is no less controlling even
if there be some factual disparities (which are not material here), especially as it has been
buttressed by subsequent jurisprudence.
In Director of Lands v. Jugado, upon which the appellate court based its ruling, the Court declared
meaningfully that:
There is, however, a section in the Public Land Law (Sec. 101 of Commonwealth Act 141), which
affords a remedy whereby lands of the public domain fraudulently awarded may be recovered or
reverted back to its original owner, the Government. But the provision requires that all such actions
for reversion shall be instituted by the Solicitor General or the officer acting in his stead, in the proper
courts, in the name of the Republic of the Philippines (See Director of Lands v. De Luna, supra). As
the party in interest in this case is the Director of Lands and not the Republic of the Philippines, the
action cannot prosper in favor of the appellant.
The reference was to the Public Land Law which authorizes the reversion suit under its Sec. 101,
thus:
Sec. 101. All actions for the reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead, in
the proper courts, in the name of the Republic of the Philippines.
This remedy was recently affirmed by the Court in Heirs of Gregorio Tengco v. Heirs of Jose and
Victoria Aliwalas, thus:
x x x Title to the property having become incontrovertible, such may no longer be collaterally
attacked. If indeed there had been any fraud or misrepresentation in obtaining the title, an action for
reversion instituted by the Solicitor General would be the proper remedy.
It is evident from the foregoing jurisprudence that despite the lapse of one year from the entry of a
decree of registration/certificate of title, the State, through the Solicitor General, may still institute an
action for reversion when said decree/certificate was acquired by fraud or misrepresentation.
Indefeasibility of a title does not attach to titles secured by fraud and misrepresentation. Well-settled
is the doctrine that the registration of a patent under the Torrens system does not by itself vest title; it
merely confirms the registrant’s already existing one. Verily, registration under the Torrens system is
not a mode of acquiring ownership.160
But then again, the Court had several times in the past recognized the right of the State to avail itself
of the remedy of reversion in other instances when the title to the land is void for reasons other than
having been secured by fraud or misrepresentation. One such case is Spouses Morandarte v. Court
of Appeals,161 where the Bureau of Lands (BOL), by mistake and oversight, granted a patent to the
spouses Morandarte which included a portion of the Miputak River. The Republic instituted an action
for reversion 10 years after the issuance of an OCT in the name of the spouses Morandarte. The
Court ruled:
Be that as it may, the mistake or error of the officials or agents of the BOL in this regard cannot be
invoked against the government with regard to property of the public domain. It has been said that
the State cannot be estopped by the omission, mistake or error of its officials or agents.
It is well-recognized that if a person obtains a title under the Public Land Act which includes, by
oversight, lands which cannot be registered under the Torrens system, or when the Director of
Lands did not have jurisdiction over the same because it is a public domain, the grantee does not, by
virtue of the said certificate of title alone, become the owner of the land or property illegally included.
Otherwise stated, property of the public domain is incapable of registration and its inclusion in a title
nullifies that title.
1avvphi1
Another example is the case of Republic of the Phils. v. CFI of Lanao del Norte, Br. IV,162 in which
the homestead patent issued by the State became null and void because of the grantee’s violation of
the conditions for the grant. The Court ordered the reversion even though the land subject of the
patent was already covered by an OCT and the Republic availed itself of the said remedy more than
11 years after the cause of action accrued, because:
There is merit in this appeal considering that the statute of limitation does not lie against the State.
Civil Case No. 1382 of the lower court for reversion is a suit brought by the petitioner Republic of the
Philippines as a sovereign state and, by the express provision of Section 118 of Commonwealth Act
No. 141, any transfer or alienation of a homestead grant within five (5) years from the issuance of
the patent is null and void and constitute a cause for reversion of the homestead to the State. In
Republic vs. Ruiz, 23 SCRA 348, We held that "the Court below committed no error in ordering the
reversion to plaintiff of the land grant involved herein, notwithstanding the fact that the original
certificate of title based on the patent had been cancelled and another certificate issued in the
names of the grantee heirs. Thus, where a grantee is found not entitled to hold and possess in fee
simple the land, by reason of his having violated Section 118 of the Public Land Law, the Court may
properly order its reconveyance to the grantor, although the property has already been brought
under the operation of the Torrens System. And, this right of the government to bring an appropriate
action for reconveyance is not barred by the lapse of time: the Statute of Limitations does not run
against the State." (Italics supplied). The above ruling was reiterated in Republic vs. Mina, 114
SCRA 945.
If the Republic is able to establish after trial and hearing of Civil Case No. 6686 that the decrees and
OCTs in Doña Demetria’s name are void for some reason, then the trial court can still order the
reversion of the parcels of land covered by the same because indefeasibility cannot attach to a void
decree or certificate of title. The RTC-Branch 4 jumped the gun when it declared that the cause of
action of the Republic for reversion in Civil Case No. 6686 was already lost or extinguished by
prescription based on the Complaint alone.
All told, the Court finds that the RTC-Branch 4 committed reversible error in dismissing the
Complaint for Cancellation of Titles and Reversion of the Republic in Civil Case No. 6686.
Resultantly, the Court orders the reinstatement of said Complaint. Yet, the Court also deems it
opportune to recall the following statements in Saad-Agro Industries, Inc. v. Republic163:
It has been held that a complaint for reversion involves a serious controversy, involving a question of
fraud and misrepresentation committed against the government and it is aimed at the return of the
disputed portion of the public domain. It seeks to cancel the original certificate of registration, and
nullify the original certificate of title, including the transfer certificate of title of the successors-in-
interest because the same were all procured through fraud and misrepresentation. Thus, the State,
as the party alleging the fraud and misrepresentation that attended the application of the free patent,
bears that burden of proof. Fraud and misrepresentation, as grounds for cancellation of patent and
annulment of title, should never be presumed but must be proved by clear and convincing evidence,
mere preponderance of evidence not even being adequate. It is but judicious to require the
Government, in an action for reversion, to show the details attending the issuance of title over the
alleged inalienable land and explain why such issuance has deprived the State of the claimed
property. (Emphasis supplied.)
It may do well for the Republic to remember that there is a prima facie presumption of regularity in
the issuance of Decree Nos. 10364 and 18969, as well as OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.),
in Doña Demetria’s name, and the burden of proof falls upon the Republic to establish by clear and
convincing evidence that said decrees and certificates of title are null and void.
IV
DISPOSITIVE PART
WHEREFORE, premises considered, the Court renders the following judgment in the Petitions at
bar:
1) In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition for Review of

the Republic of the Philippines. It REVERSES and SETS ASIDE the Resolutions dated July
12, 2005 and October 24, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del
Norte. It further ORDERS the reinstatement of the Complaint in Civil Case No. 106, the
admission of the Supplemental Complaint of the Republic, and the return of the original
record of the case to the court of origin for further proceedings. No costs.
2) In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the Court DENIES the
consolidated Petitions for Review of Landtrade Realty Corporation, Teofilo Cacho, and/or
Atty. Godofredo Cabildo for lack of merit. It AFFIRMS the Decision dated January 19, 2007
and Resolution dated July 4, 2007 of the Court of Appeals in CA-G.R. CV. No. 00456,
affirming in toto the Decision dated July 17, 2004 of the Regional Trial Court, Branch 3 of
Iligan City, Lanao del Norte, in Civil Case No. 4452. Costs against Landtrade Realty
Corporation, Teofilo Cacho, and Atty. Godofredo Cabildo.
3) In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case – execution pending

appeal before the Regional Trial Court), the Court DENIES the Petition for Review of
Landtrade Realty Corporation for being moot and academic given that the Regional Trial
Court, Branch 1 of Iligan City, Lanao del Norte had already rendered a Decision dated
December 12, 2005 in Civil Case No. 6613. No costs.
4) In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful Detainer Case –

execution pending appeal before the Court of Appeals), the Court GRANTS the consolidated
Petitions for Certiorari and Prohibition of the National Power Corporation and National
Transmission Corporation. It SETS ASIDE the Resolution dated June 30, 2006 of the Court
of Appeals in CA-G.R. SP Nos. 00854 and 00889 for having been rendered with grave
abuse of discretion amounting to lack or excess of jurisdiction. It further ORDERS the Court
of Appeals to issue a writ of preliminary injunction enjoining the execution of the Decision
dated December 12, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del
Norte, in Civil Case No. 6613, while the same is pending appeal before the Court of Appeals
in CA-G.R. SP Nos. 00854 and 00889. It finally DIRECTS the Court of Appeals to resolve
without further delay the pending appeals before it, in CA-G.R. SP Nos. 00854 and 00889, in
a manner not inconsistent with this Decision. No costs.
5) In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the Court GRANTS the

Petition for Review of the Republic of the Philippines. It REVERSES and SETS ASIDE the
Orders dated December 13, 2005 and May 16, 2006 of the Regional Trial Court, Branch 4 of
Iligan City in Civil Case No. 6686. It further ORDERS the reinstatement of the Complaint in
Civil Case No. 6686 and the return of the original record of the case to the court of origin for
further proceedings. No costs.
SO ORDERED.
G.R. No. 175375 June 23, 2009
CONRADO O. LASQUITE and TEODORA I. ANDRADE, Petitioners,

vs.
VICTORY HILLS, INC., Respondent.
DECISION
QUISUMBING, J.:
This appeal seeks to annul the Decision1 dated November 8, 2006 of the Court of Appeals in CA
G.R. CV No. 77599. The Court of Appeals had set aside the Decision2 dated July 2, 2002 of the
Regional Trial Court (RTC) of San Mateo, Rizal, Branch 77 in Civil Case No. 548 which upheld
Original Certificate of Title (OCT) Nos. NP-1973 and NP-198,4 in the names of petitioners Andrade
and Lasquite, respectively.
The antecedent facts are as follows:
On May 4, 1971, Jose Manahan5 executed a Deed of Quitclaim/Assignment of Rights6 over a parcel

of land designated as Lot No. 3050 at Barrio Ampid, San Mateo, Rizal in favor of Conrado O.
Lasquite. Lasquite applied for a free patent over the lot, and pending approval of the application,
sold half of the land to Juanito L. Andrade on January 11, 1981.7 Upon the grant of the patent
application, OCT Nos. NP-197 and NP-198 were issued in the names of Andrade and Lasquite,
respectively, on June 18, 1981.
Thereafter, on August 22, 19838 and October 22, 1983,9 Simeona, Armentina, Herminia, Zenaida,
Gloria, Yolanda and Rodolfo, all surnamed Prescilla, filed a protest with the Bureau of Lands to
question the grant of free patent in favor of petitioners. They claimed to have been in possession
in concepto de dueno of Lot No. 3050, planting and cultivating crops thereon since 1940. On March
8, 1989, the Prescillas also instituted a case for reconveyance and damages against petitioners
before the RTC of San Mateo, Rizal, Branch 77 which was docketed as Civil Case No. 548-SM.
They alleged that Lasquite forged the signature of Jose M. Manahan in the Deed of
Quitclaim/Assignment of Rights since the latter has died on April 11, 1968.10
It also appears that a second complaint,11 for annulment of title, reconveyance and damages, was
filed by Roberto and Raquel Manahan, Maria Gracia M. Natividad, the heirs of Leocadio Manahan,
and the heirs of Joaquin Manahan against petitioners on June 1, 1990. The Manahans asserted title
over Lot No. 3050 as successors of Jose S. Manahan whom they claimed to have died on October
12, 1947.12 The case was docketed as Civil Case No. 680-90-SM and raffled to Branch 76 of the San
Mateo, Rizal RTC. Upon learning of Civil Case No. 548-SM initiated by the Prescillas against
petitioners, the Manahans filed a Complaint in Intervention13 on June 23, 1993, and Civil Case No.
680-90-SM was consolidated with Civil Case No. 548-SM.
It also appears that on January 11, 1994, respondent Victory Hills, Inc. (Victory Hills) also intervened
in Civil Case No. 548-SM. Victory Hills likewise claimed to be the owner of the subject lot. Victory
Hills traced its title to Lot No. 3050 to OCT No. 38014 which was allegedly registered on January 4,
1937 to Jose H. Manahan by virtue of Homestead Patent No. H-1956215 dated December 14, 1936.
According to Victory Hills, Jose H. Manahan sold Lot No. 3050 to Rufino Hieras on May 17, 1944 to
whom Transfer Certificate of Title (TCT) No. 4621916 was issued. Hieras then conveyed the lot to
spouses Serafin and Veronica Angeles, and Catalina Cayetano who obtained TCT No. 8508217 in
their names. Later, the lot was transferred to Victory Hills on September 6, 1961 under TCT No.
90816.18
On November 27, 1991, Victory Hills filed an Ex-Parte Motion for Relocation Survey19 with the
Department of Environment and Natural Resources (DENR). Upon grant of the motion, the DENR
released a Narration Report of the Relocation Survey20 on December 9, 1993. The report noted that:
xxxx
1. H-19562 and H-19887 had been accepted by Cad. 375-D, San Mateo Cadastre
and identical to Lot [No.] 3050 and Lot [No.] 258 respectively[;]
2. H-19562 had been issued a free patent and Original Certificate of Title No. 380 in favor
[of] Jose Manahan on June 4, 1937. That said title was transferred to Rufin[o] Hieras on May
17, 1944 with TCT [No.] 46219, cancelling O[CT] [No.] 3[8]0. Again TCT [No.] 46219-T-237
was cancelled and TCT [No.] [8]5082 was issued to [Spouses] Serafin Angeles and
[Veronica] D. Angeles and Catalina Cayetano [on] March 17, 1961;
3. A consolidate[d] subdivision survey of H-19562 and H-19887 had been approved by the
LRC designated as plan (LRC) Pcs [-] [1586] surveyed June 1-15, 1961; which was not
projected in Cad. 375-D, San Mateo Cadastre;
4. Lot [No.] 3050 which is identical to H-19562 was subdivided and designated as plan Cad-
04-002023-D, into two lots. (Emphasis supplied.)21
xxxx
Notwithstanding the said report, Branch 77 of the Rizal RTC, on July 2, 2002, promulgated a
Decision which upheld the title of petitioners to Lot No. 3050. It decreed:
Accordingly, the title of defendants, Conrado Lasquite and Jose Andrade, involving the subject
parcel of land under OCT No. NP-198 and OCT No. NP-197 registered on June 18, 1981, are
sustained. Likewise, the title issued to plaintiffs Prescilla, under OCT No. ON-333 involving Lot 3052
is sustained.
WHEREFORE, premises considered, judgment is hereby rendered dismissing these cases.
No Costs.
SO ORDERED.22
The trial court disregarded OCT No. 380 and ruled that it was spurious as it lacked the signature of
then Secretary of Agriculture and Commerce Eulogio Rodriguez. The RTC also ruled that the
complaints for reconveyance of the Precillas, the Manahans and Victory Hills, which were all
founded on extrinsic fraud, had prescribed since more than four (4) years have elapsed since the
land was registered before they filed cases in court.
The Prescillas, the Manahans and Victory Hills interposed an appeal to the Court of Appeals. On
November 8, 2006, the appellate court set aside the ruling of the RTC and declared Victory Hills the
absolute owner of Lot No. 3050. The appellate court ruled:
WHEREFORE, the Decision dated July 2, 2002 rendered by the Regional Trial Court of San Mateo,
Rizal, Branch 77 is ANNULLED and SET ASIDE and a new one entered DECLARING VICTORY
HILLS, INC. the absolute owner of the parcel of land designated as Lot 3050 subject of the instant
case and ORDERING the Register of Deeds of Rizal to cancel OCT No. NP-198 and OCT No. NP-
197 in the names of defendants-appellees Conrado Lasquite and Juanito Andrade.
SO ORDERED.23
Aggrieved, petitioners elevated the case to us. Petitioners contend that the Court of Appeals erred in
I.
…HOLDING THAT RESPONDENT’S OCT NO. 380 AND HOMESTEAD PATENT NO. H-19562
ARE VALIDLY ISSUED;
II.
…HOLDING THAT RESPONDENT VICTORY HILLS, INC. HAS A BETTER RIGHT OF TITLE AND
OWNERSHIP OVER THE SUBJECT PROPERTY VIS-A-VIS PETITIONERS CONRADO O.
LASQUITE AND TEODORA I. ANDRADE;
III.
…GIVING WEIGHT AND CREDENCE TO RESPONDENT’S HOMESTEAD PATENT NO. H-19562

DESPITE THE FACT THAT A COPY OF SAID HOMESTEAD PATENT WAS NEVER PRESENTED
DURING THE TRIAL NOR IN THE APPEAL;
IV.
…HOLDING THAT OCT NO. 380 IS AN EN TOTO TRANSCRIPTION OF HOMESTEAD PATENT

NO. H-19562 NOTWITHSTANDING THE FACT THAT NO EVIDENCE RELATIVE THERETO WAS
ADDUCED IN THE LOWER COURT;
V.
…NOT RESOLVING THE ISSUE THAT RESPONDENT’S CLAIM HAD ALREADY PRESCRIBED.24
Condensed, the twin issues for our determination are: (1) whether respondent Victory Hills, Inc. is
entitled to reconveyance of Lot No. 3050; and (2) whether respondent’s claim had prescribed.
Petitioners assail the validity of OCT No. 380 as the source of respondent’s derivative title. They
fault the appellate court for according weight to the certificate of title even if it does not bear the
signature of the Secretary of Agriculture and Commerce. They stress that the Bureau of Lands has
no record of Patent No. H-19562 which respondent cited as the basis for the issuance of its title to
Lot No. 3050 and yet the appellate court still concluded that the transcription of Patent No. H-19562
in OCT No. 380 was conclusive proof of its due execution. Petitioners likewise call for a review of the
facts in this case owing to the conflicting findings of the RTC and the Court of Appeals.
On the other hand, respondent relies on OCT No. 380 as evidence of the earlier registration of Lot
No. 3050 in the name of its predecessor, Jose H. Manahan. Such recording, respondent asserts,
has rendered OCT No. 380 indefeasible one year following its issuance on January 4, 1937 and has
effectively segregated Lot No. 3050 from the domain of public lands. Respondent further justifies
that the notation "sgd" in OCT No. 380 was sufficient indication that the original copy of Homestead
Patent No. H-19562 had been signed by then Secretary of Agriculture and Commerce Eulogio
Rodriguez. In any case, respondent invokes the presumption of regularity in the performance of duty
by the Register of Deeds in issuing OCT No. 380. It finally argues against the issue of prescription
since petitioners raised the same only for the first time on appeal.
Often cited but rarely heeded is the rule that the Supreme Court is not a trier of facts. In the exercise
of its power of review, the Court does not normally undertake a re-examination of the evidence
presented by the contending parties during the trial of the case considering that the findings of fact of
the Court of Appeals are conclusive and binding on the Court. However, there are several
recognized exceptions25 in which factual issues may be resolved by this Court. Two of these
exceptions find application in the present case, to wit: (1) when the findings of fact of the appellate
court are contrary to those of the trial court;26 and (2) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record.
The assailed Decision of the Court of Appeals upheld OCT No. 380 as the origin of TCT No. 90816
in the name of respondent Victory Hills. The appellate court ruled that the homestead patent which
was awarded to respondent’s predecessor, Jose H. Manahan, in 1936 cannot simply be defeated by
the subsequent grant of free patent to petitioners 45 years later. It accepted the transcript of
Homestead Patent No. H-19562 in OCT No. 380 as a faithful reproduction of the original. Also, the
Court of Appeals recognized the notation "sgd" in OCT No. 380 as customary to signify that the
original copy of the patent had been signed by the Secretary of Agriculture and Commerce. 1avvphi1
After carefully poring over all the evidence submitted in this case, we find the petition to be
impressed with merit.
The relocation survey conducted by the DENR on October 25, 1993 positively confirmed that the
mother title of respondent’s TCT and the OCTs of petitioners cover the same land. We are
confronted, therefore, with a case of successive registration, in the event of which we have been
constantly guided that:
In successive registrations, where more than one certificate is issued in respect of a particular estate
or interest in land, the person claiming under the prior certificate is entitled to the estate or interest;
and the person is deemed to hold under the prior certificate who is the holder of, or whose claim is
derived directly or indirectly from the person who was the holder of the earliest certificate issued in
respect thereof.27
However, we find that the circumstances attendant in this case militate against a forthright
application of this rule.
Section 105 of Act No. 2874,28 the governing law when Homestead Patent No. H-19562 was
purportedly issued, speaks of who must sign the patents and certificates granted pursuant to the Act:
Sec. 105. All patents or certificates for lands granted under this Act shall be prepared in the
Bureau of Lands and shall issue in the name of the Government of the Philippine Islands under the
signature of the Governor-General, countersigned by the Secretary of Agriculture and Natural
Resources, but such patents or certificates shall be effective only for the purposes defined in
section one hundred and twenty-two of the Land Registration Act; and the actual conveyance of the
land shall be effected only as provided in said section. (Emphasis supplied.)
Noteworthy, Section 4729 of Act No. 496 or the Land Registration Act30 provides that a certified true
copy of an original certificate of title shall be admissible as evidence in our courts and shall be
conclusive as to all matters contained therein except as otherwise provided by the Act. This is
complementary to the rule on the admissibility of public documents as evidence under Section 23,
Rule 132 of the Rules of Court:
SEC. 23. Public documents as evidence. -Documents consisting of entries in public records made in

the performance of a duty by a public officer are prima facie evidence of the facts therein stated. All
other public documents are evidence, even against a third person, of the fact which gave rise to their
execution and of the date of the latter.
1avvphi1
Thus, the evidentiary value of public documents must be sustained in the absence of strong,
complete and conclusive proof of its falsity or nullity.31
In the case at bar, the appellate court gave credence to the certified true copy of OCT No. 380 as
proof of ownership of respondent’s predecessor. Yet, it is readily apparent from a cursory reading of
said copy that OCT No. 380 was supposedly signed,32 not by the Secretary of Agriculture and
Natural Resources, as mandated by law, but by the Secretary of Agriculture and Commerce. Hence,
it is plain to see that to give OCT No. 380 probative value in court would be to allow variance or an
evasion or circumvention of the requirement laid down in Section 105 of Act No. 2874. We are thus
warned that any title sourced from the flawed OCT No. 380 could be void. On this basis, we are
justified to consider with great care any claims derived therefrom.
What taints OCT No. 380 even more is the fact that the records of the Community Environment and
Natural Resources Office (CENRO) are devoid of evidence to prove that Homestead Patent No. H-
19562,33 much less a patent application34 for Lot No. 3050 with the Bureau of Lands ever existed.
The certification35 from the Bureau of Lands that Lot No. 3050 was surveyed in the name of Jose
Manahan suggests, at best, that he was a survey claimant. Neither do we find the derivative titles of
OCT No. 380 free from any taint of irregularity. While TCT No. 46219 in the name of Hieras indicated
January 4, 1937 as the original registration date of Lot No. 3050, the TCTs of subsequent
transferees designated a different date – May 17, 1944.
True, a duly-registered certificate of title is considered a public document and the entries found in it
are presumed correct, unless the party who contests its accuracy can produce evidence establishing
otherwise.36 Even then, records of public officers which are admissible in evidence are limited to
those matters which the public officer has authority to record.37 Indisputably, it was beyond the power
of the Register of Deeds to register a public land based on an invalid, much worse, a non-existent
patent. To sanction an otherwise invalid document in the guise of upholding the stability of our land
registration system would run counter to the judicial devotion towards purging the system of illicit
titles, in accordance with our base task as the ultimate citadel of justice and legitimacy.38
The established legal principle in actions for annulment or reconveyance of title is that a party
seeking it should establish not merely by a preponderance of evidence but by clear and convincing
evidence that the land sought to be reconveyed is his.39 It is rather obvious from the foregoing
disquisition that respondent failed to dispense such burden. Indeed, the records are replete with
proof that respondent declared the lots comprising Lot No. 3050 for taxation purposes only after it
had instituted the present case in court. This is not to say of course that tax receipts are evidence of
ownership, since they are not, albeit they are good indicia of possession in the concept of owner, for
no one would ordinarily be paying taxes for a property not in his actual or at least constructive
possession.40
Other than paying taxes from 1994-1997, however, respondent has not shown that it exercised
dominion over Lot No. 3050. In contrast, petitioner Lasquite has been continuously paying taxes on
the land since 1972,41 and has utilized the land as a farm, planted fruit trees and raised goats
thereon. Petitioners have likewise built structures and managed to entrust the property to the care of
certain individuals without any objection from respondent. 1avvphi1
Respondent avers that petitioner Lasquite forged the Deed of Quitclaim/Assignment of Rights to
make it appear that Jose Manahan conveyed Lot No. 3050 to him. It must be stressed, however, that
whoever alleges forgery has the burden of proving the same. Forgery cannot be presumed but
should be substantiated with clear and convincing evidence.42
Regrettably, Victory Hills was unable to establish that the Jose H. Manahan from whom it derived its
title is the same Jose Manahan from whom petitioner Lasquite bought Lot No. 3050. During the trial
of this case, several death certificates had been proferred by the parties, albeit, inconclusive to
establish the identity of Jose Manahan as the common origin of all their titles. Respondent Victory
Hills obtained its title from Jose H. Manahan. Meanwhile, the records disclose that the
Jose S. Manahan from whom the Manahans derived title was 54 years old and married when he
died of infectious hepatitis on October 12, 1947.43 For their part, the Prescillas traced their title from
Jose M. Manahan, who was supposedly 68 years old and single when he succumbed to acute
myocardial infarction on April 11, 1968.44 This was however belied by the List of Register of Deaths
in the Municipality of San Mateo Rizal for the year 1968.45 1awphi1
Relevant to the issue of prescription, we have ruled that to determine when the prescriptive period
commenced in an action for reconveyance, the plaintiff’s possession of the disputed property is
material. An action for reconveyance based on an implied trust prescribes in 10 years. The reference
point of the 10-year prescriptive period is the date of registration of the deed or the issuance of the
title. The prescriptive period applies only if there is an actual need to reconvey the property as when
the plaintiff is not in possession of the property. However, if the plaintiff, as the real owner of the
property also remains in possession of the property, the prescriptive period to recover title and
possession of the property does not run against him. In such a case, an action for reconveyance, if
nonetheless filed, would be in the nature of a suit for quieting of title, an action that is
imprescriptible.46
The records reveal that it was only on January 11, 1994 or nearly 13 years after OCT Nos. NP-197
and NP-198 were issued that respondent filed a Motion for Leave to Admit Complaint in
Intervention47 and Complaint in Intervention48 before the RTC of Rizal. Nevertheless, respondent
claimed to be in actual possession in concepto de dueno of a sizeable portion of Lot No. 3050. Thus,
the action assumed the nature of a suit to quiet title; hence, imprescriptible.
However, in our view, respondent Victory Hills has failed to show its entitlement to a reconveyance
of the land subject of the action.
WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2006 of the Court of
Appeals in CA G.R. CV No. 77599 is hereby REVERSED and SET ASIDE. The Decision dated July
2, 2002 of the Regional Trial Court of San Mateo, Rizal, Branch 77, is REINSTATED. No
pronouncement as to costs.
SO ORDERED.
G.R. No. 179540 March 13, 2009
PERFECTA CAVILE, JOSE DE LA CRUZ and RURAL BANK OF BAYAWAN, INC., Petitioners,

vs.
JUSTINA LITANIA-HONG, accompanied and joined by her husband, LEOPOLDO HONG and
GENOVEVA LITANIA, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, which seeks to
reverse and set aside the Decision2 dated 8 March 2007 and the Resolution3 dated 3 September
2007 of the Court of Appeals in CA-G.R. CV No. 66873. The assailed Decision of the appellate court
reversed and set aside the Decision4 dated 29 February 2000 of the Regional Trial Court (RTC) of
Negros Oriental, Branch 35, in Civil Case No. 6111, dismissing the complaint of respondents Justina
Litania-Hong, her husband Leopoldo Hong, and her sister Genoveva Litania; and declaring petitioner
spouses Perfecta Cavile and Jose de la Cruz to be the absolute owners of the parcels of land
subjects of this case. The assailed Resolution of the appellate court denied petitioner spouses’
Motion for Reconsideration of its decision.
The factual and procedural antecedents of the case proceed as follows:
On 5 April 1937, a Deed of Partition5 was entered into by the heirs of the spouses Bernardo Cavile
and Tranquilina Galon. Said heirs included the legitimate children of Bernardo and Tranquilina,
namely, (1) Susana Cavile, (2) Castor Cavile, and (3) Benedicta Cavile; as well as the children of
Bernardo by his previous marriages, specifically: (4) Simplicia Cavile, (5) Fortunato Cavile, and (6)
Vevencia Cavile.6 Subject of the Deed of Partition were several parcels of land situated in the
Municipality of Tolong, Negros Oriental, which were then covered by Tax Declarations No. 5615, No.
5729, No. 7143, No. 7421 and No. 7956, all under the name of Bernardo.
Of particular interest in this case are the lots covered by Tax Declarations No. 7421 and No. 7956.
The lot covered by Tax Declaration No. 7421 was described in the Deed of Partition as "bounded on
the North by Simplicio Cavile antes Roman Echaves, on the East by Rio Bayawan, on the South by
Riachuelo Napasu-an, and on the West by Riachuelo Napasu-an y Julian Calibug antes Francisco
Tacang." The lot covered by Tax Declaration No. 7956 was identified to be the one "bounded on the
North by Hilario Navaro, on the East by Silverio Yunting, on the South by Fortunato Cavile, and on
the West by Maximiano Balasabas."
In accordance with the Deed of Partition, the conjugal properties of Bernardo and Tranquilina were
divided into two parts. The first part, corresponding to Bernardo’s share, was further divided into six
equal shares and distributed among his six heirs. The second part, corresponding to Tranquilina’s
share, was subdivided only into three shares and distributed among her children with Bernardo, i.e.,
Susana, Castor, and Benedicta.
Also stated in the Deed of Partition was the sale by the other aforementioned legal heirs to their co-
heir Castor of their aliquot shares in the lots covered by Tax Declarations No. 7143, No. 7421, and
No. 7956; thus, making Castor the sole owner of the said properties. Similarly, the Deed of Partition
acknowledged the sale by all the legal heirs to Ulpiano Cavile of their respective shares in the lot
covered by Tax Declaration No. 5729, thus, transferring to the latter absolute ownership of said
parcel of land.
Thereafter, on 5 August 1960, Castor and Susana executed a Confirmation of Extrajudicial

Partition,7 whereby Castor recognized and confirmed that the lots covered by Tax Declarations No.
2039 and No. 2040 were the just and lawful shares of Susana in the properties left by their deceased
parents Bernardo and Tranquilina, and that Susana was in actual possession of the said properties.
According to the Confirmation of Extrajudicial Partition, the lot covered by Tax Declaration No. 2039
was "bounded on the North by Simplicio Cavile, on the East by Rio Bayawan, on the South by
Napasu-an, and on the West by Napasu-an Creek and Julian Calibog;" while the one covered by
Tax Declaration No. 2040 was "bounded on the North by Hilario Navvaro (sic), on the South by
Fortunato Cavile, on the East by Silverio Yunting, and on the West by Maximino (sic) Balasabas."
The descriptions of the lots covered by Tax Declarations No. 2039 and No. 2040 in the Confirmation
of Extrajudicial Partition were strikingly close to those of the lots covered by Tax Declarations No.
7421 and No. 7956, respectively, in the Deed of Partition.
Fourteen years after the execution of the Confirmation of Extrajudicial Partition in 1960, respondents
filed on 23 December 1974 a Complaint for Reconveyance and Recovery of Property with Damages
before the RTC against Perfecta Cavile, the daughter of Castor, Jose de la Cruz, the husband of
Perfecta (hereinafter petitioner spouses), and the Rural Bank of Bayawan, Inc. The Complaint was
docketed as Civil Case No. 6111.8
Respondents averred in the Complaint that respondents Justina and Genoveva inherited two parcels
of land, covered by Tax Declarations No. 07408 and No. 07409 (subject lots),9 from their mother
Susana, who, in turn, inherited the same from her parents Bernardo and Tranquilina. Respondents
invoked the Confirmation of Extrajudicial Partition dated 5 August 1960 wherein Castor purportedly
recognized Susana’s ownership of the subject lots. Susana had enjoyed undisputed ownership and
possession of the subject lots, paying the realty taxes due and introducing improvements thereon.
Susana was even able to obtain a loan from the Rural Bank of Dumaguete City sometime in 1960,
mortgaging the subject lots as security for the same.
After Susana’s death in 1965, the subject lots were inherited by her daughters, respondents Justina
and Genoveva, who then assumed the mortgage thereon. However, respondents alleged that Castor
and petitioner spouses eventually intruded upon and excluded respondents from the subject lots.
When Castor died in 1968, petitioner spouses continued their unlawful occupancy of the subject lots,
planting on the same and harvesting the products. Respondents claimed that they exerted efforts to
settle the matter, but petitioner spouses stubbornly refused to accede. In 1974, prior to the filing of
the Complaint, respondents again sought an audience with petitioner spouses, yet the latter only
presented to them the Original Certificates of Title (OCTs) No. FV-4976,10 No. FV-4977,11 and No.
FV-497812 covering the subject lots, issued by the Registry of Deeds for the Province of Negros
Oriental, on 9 October 1962, in the name of petitioner Perfecta. Respondents were, thus,
constrained to institute Civil Case No. 6111 against petitioner spouses and the Rural Bank of
Bayawan, Inc., seeking the cancellation of the OCTs in the name of petitioner Perfecta or,
alternatively, the reconveyance by petitioner spouses of the subject lots to respondents, plus award
for damages. The Rural Bank of Bayawan, Inc. was impleaded as a defendant in the Complaint
since petitioner spouses mortgaged the subject lots in its favor as security for a loan in the amount of
₱42,227.50. However, the bank was later dropped as a party after the aforesaid loan was settled.
Petitioner spouses countered in their Answer to the Complaint that, by virtue of the Deed of Partition
dated 5 April 1937, the heirs of both Bernardo and Tranquilina took exclusive possession of their
respective shares in the inheritance. Castor fully possessed the lots covered by Tax Declarations
No. 7143, No. 7421 and No. 7956, after his co-heirs sold to him their shares therein. In 1962, Castor
sold to petitioner Perfecta the lots covered by Tax Declarations No. 7421 and No. 7956, which
corresponded to the subject lots in the Complaint. Following the sale, petitioner Perfecta took
possession of the subject lots and filed with the Bureau of Lands an application for the issuance of
title over the same. The Bureau issued free patent titles over the subject lots in favor of petitioner
Perfecta and, by virtue thereof, she was able to secure on 9 October 1962, OCTs No. FV-4976, No.
FV-4977, and No. FV-4978 in her name.
Petitioner spouses asserted that the Confirmation of Extrajudicial Partition dated 5 August 1960
involving the subject lots was a nullity since said properties were never owned nor adjudicated in
favor of Susana, respondents’ predecessor-in-interest. Castor and Susana executed the
Confirmation of Extrajudicial Partition merely to accommodate the latter who then needed security
for the loan she was trying to obtain from the Rural Bank of Dumaguete City. Respondents would not
be able to deny the said accommodation arrangement, given that neither Susana nor respondents
actually possessed the subject lots or applied for titles thereto. Respondents did not even know that
the subject lots were divided into three lots after a Government survey. If Susana and respondents
paid realty taxes for the subject lots, it was only to convince the Rural Bank of Dumaguete to renew
their loan from year to year, secured as it was by the mortgage on the subject lots. Thus, petitioner
spouses posited that no ownership could then be transferred to respondents after Susana’s death.
Trial in Civil Case No. 6111 thereafter ensued before the RTC.13
On 29 February 2000, the RTC promulgated its Decision, with the following dispositive portion:
WHEREFORE, premises considered, judgment is hereby rendered declaring [herein petitioner

spouses] as the absolute owners over the parcels of land in litigation. Consequently, [herein
respondents’] complaint is ordered dismissed. [Respondents’] counterclaim is likewise entered
dismissed for lack of merit.14
The RTC ruled that the petitioner spouses’ evidence was more worthy of credence in establishing
their ownership of the subject lots. As petitioner Perfecta testified before the RTC, Castor
immediately took possession of the subject lots after the Deed of Partition was executed in 1937.
This fact was supported by the unrebutted testimony of Luciana Navarra, petitioner Perfecta’s
cousin, who declared that her husband was petitioner Perfecta’s tenant on the subject lots since
1947 and that respondents never actually occupied the said properties. The RTC observed that it
was highly questionable and contrary to human experience that respondents waited nine long years
after their ejection from the subject lots in 1965 before taking any legal step to assert their rights over
the same.
The RTC further subscribed to the testimony of Perfecta that the Confirmation of Extrajudicial
Partition was executed by Castor solely to accommodate Susana, enabling her to obtain a bank loan
using the subject lots as collateral. It noted that Susana did not bother to apply for the issuance of
title to the subject lots in her name. Contrarily, it was Perfecta who applied for and obtained title to
the subject lots, which, surprisingly, respondents were not even aware of. The RTC found that the
contemporaneous and subsequent acts of the parties after the execution of the Confirmation of
Extrajudicial Partition evidently demonstrated their intention to merely accommodate Susana in her
loan application. Hence, the RTC concluded that the Confirmation of Extrajudicial Partition was a
simulated contract which was void and without any legal effect.
Without seeking a reconsideration of the above RTC Decision, respondents challenged the same by
way of appeal before the Court of Appeals, docketed as CA-G.R. CV No. 66873.
On 8 March 2007, the Court of Appeals rendered the assailed Decision in favor of respondents, the
decretal portion of which provides:
WHEREFORE, the assailed decision is REVERSED AND SET ASIDE and a new one entered
ORDERING [herein petitioner spouses] and/or their heirs, assigns and representatives as follows:
1. To reconvey to [herein respondents] the possession and title to the litigated parcels of
land.
2. Upon reconveyance of the litigated properties, the Register of Deeds of Dumaguete City is
ordered to cancel Certificate of Title No. 4877 (sic), 4976 and 4978 and to issue a new
certificate to [respondents] or their successors in interest.
3. With costs against [petitioner spouses].15
The Court of Appeals agreed in the respondents’ contention that the Confirmation of Extrajudicial
Partition was not a simulated document. The said document should be entitled to utmost respect,
credence, and weight as it was executed by and between parties who had firsthand knowledge of
the Deed of Partition of 1937. Moreover, the Confirmation of Extrajudicial Partition constituted
evidence that was of the highest probative value against the declarant, Castor, because it was a
declaration against his proprietary interest. Other than petitioner Perfecta’s testimony, the appellate
court found no other proof extant in the records to establish that the Confirmation of Extrajudicial
Partition was a simulated document or that it did not express the true intent of the parties. The Court
of Appeals likewise highlighted the fact that Castor did not attempt to have the subject lots declared
in his name during his lifetime and that petitioner Perfecta herself admitted that she only started
paying real estate taxes for the subject lots in 1993. It was Susana and, later, her children,
respondents Justina and Genoveva, who had been paying for the realty taxes on the subject lots
since 1937.
Petitioner spouses filed a Motion for Reconsideration16 of the foregoing Decision, but it was denied
by the Court of Appeals in a Resolution17 dated 3 September 2007.
Petitioner spouses filed the instant Petition, raising the following issues for the Court’s consideration:
I.
WHETHER [OR NOT] THE HONORABLE COURT OF APPEALS ACTED IN ACCORDANCE WITH
LAW IN RULING THAT EXTRANEOUS EVIDENCE IN THE FORM OF AN AFFIDAVIT, THE
"CONFIRMATION OF EXTRAJUDICIAL PARTITION," MAY BE ADMITTED IN EVIDENCE TO
VARY THE TERMS OF A JUDICIALLY DECLARED VALID AGREEMENT ENTITLED "DEED OF
PARTITION"?
II.
WHETHER [OR NOT] THE HONORABLE COURT OF APPEALS COMMITTED A LEGAL ERROR
IN NOT DISMISSING THE COMPLAINT ON THE GROUND OF RES JUDICATA?
III.
WHETHER [OR NOT] THE COMPLAINT FILED BY THE RESPONDENTS SHOULD BE

DISMISSED ON THE GROUND OF FORUM-SHOPPING?
IV.
WHETHER [OR NOT] THE FREE PATENT TITLES ISSUED TO THE PETITIONERS MAY BE
RECONVEYED TO THE RESPONDENTS?18
Essentially, the Court finds that the fundamental issue that must be settled in this case is who,
among the parties herein, have the better right to the subject lots.
The Court notes prefatorily that in resolving the present case, an examination of the respective
evidence of the parties must necessarily be undertaken. Although the jurisdiction of the Court in a
petition for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors
of law, we find that an exception19 to this rule is present in the instant case in that the Court of
Appeals made findings of fact which were contrary to those of the RTC.
Before proceeding, the Court further establishes as a foregone fact, there being no issue raised on
the matter, that the subject lots covered by Tax Declarations No. 07408 and No. 07409 described in
the Complaint in Civil Case No. 6111 are the very same lots covered by Tax Declarations No. 7956
and No. 7421 included in the Deed of Partition, and by Tax Declarations No. 2040 and No. 2039
subject of the Confirmation of Extrajudicial Partition.
Respondents, as plaintiffs before the RTC in Civil Case No. 6111, sought the reconveyance and
recovery of the subject lots purportedly illegally usurped by petitioner spouses who succeeded in
having the same titled in the name of petitioner Perfecta. Respondent Justina testified in open court
that the subject lots were inherited by her and co-respondent Genoveva’s mother, Susana, from their
grandparents, Bernardo and Tranquilina.20 As proof of Susana’s ownership of the subject lots,
respondents presented the Confirmation of Extrajudicial Partition executed on 5 August 1960 by
Castor and Susana. In said document, Castor ostensibly recognized and confirmed Susana’s
ownership and possession of the subject lots.21 Tax declarations22 covering the subject lots in the
names of Susana and respondents were also offered to the court a quo to lend support to
respondents’ claims of ownership.
On the other hand, to prove their entitlement to the subject lots, petitioner spouses presented before
the RTC the Deed of Partition23 entered into by the heirs of spouses Bernardo and Tranquilina on 5
April 1937. By virtue thereof, Castor acquired through sale the shares of his co-heirs in the subject
lots. Petitioner Perfecta testified before the trial court that right after the execution of said Deed, she
and her father, Castor, assumed possession of the subject lots, planting coconuts, rice, and corn
thereon.24 She additionally testified that realty taxes on the subject lots had since been paid by
Castor and, subsequently, by her.25 Possession of the subject lots by Castor and petitioner spouses
was corroborated by the testimony of Luciana Navarra, who insisted that respondents never
occupied the said lots.26 Finally, petitioner spouses presented OCTs No. FV-4976, No. FV-4977, and
No. FV-4978, covering the subject lots, issued by the Registry of Deeds for the Province of Negros
Oriental on 9 October 1962 in the name of petitioner Perfecta.
After a careful evaluation of the evidence adduced by the parties in the instant case, the Court rules
in favor of petitioner spouses.
At this point, let it be stated that the validity and due execution of the Deed of Partition executed in
1937 is not directly assailed in this case, thus, the Court need not pass upon the same. Under the
said Deed of Partition, the other heirs of Bernardo and Tranquilina clearly and unequivocally sold
their shares in the subject lots to Castor, petitioner Perfecta’s father. What appeared to be the clear
right of ownership of Castor over the subject lots was put in doubt by the execution of the
Confirmation of Extrajudicial Partition by Castor and his sister Susana in 1960. Respondents,
children and heirs of Susana, base their claim of ownership of the subject lots on the said document,
while petitioner spouses denounce the same to be simulated, executed for purposes other than to
transfer ownership of the subject lots, and cannot legally alter the terms of the previously duly
executed Deed of Partition.
As held by the Court of Appeals, the Confirmation of Extrajudicial Partition partakes of the nature of
an admission against a person’s proprietary interest.27 As such, the same may be admitted as
evidence against Castor and petitioner spouses, his successors-in-interest. The theory under which
declarations against interest are received in evidence, notwithstanding that they are hearsay, is that
the necessity of the occasion renders the reception of such evidence advisable and, further, that the
reliability of such declaration asserts facts which are against his own pecuniary or moral interest.28
Nevertheless, the Confirmation of Extrajudicial Partition is just one piece of evidence against
petitioner spouses. It must still be considered and weighed together with respondents’ other
evidence vis-à-vis petitioner spouses’ evidence. In civil cases, the party having the burden of proof
must establish his case by a preponderance of evidence. "Preponderance of evidence" is the weight,
credit, and value of the aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of the evidence" or "greater weight of the credible
evidence." "Preponderance of evidence" is a phrase which, in the last analysis, means probability of
the truth. It is evidence which is more convincing to the court as worthy of belief than that which is
offered in opposition thereto.29 Rule 133, Section 1 of the Rules of Court provides the guidelines in
determining preponderance of evidence, thus:
In civil cases, the party having the burden of proof must establish his case by a preponderance of
evidence. In determining where the preponderance or superior weight of evidence on the issues
involved lies, the court may consider all the facts and circumstances of the case, the witnesses’
manner of testifying, their intelligence, their means and opportunity of knowing the facts to which
they are testifying, the nature of the facts to which they testify, the probability or improbability of their
testimony, their interest or want of interest, and also their personal credibility so far as the same may
legitimately appear upon the trial. The court may also consider the number of witnesses, though the
preponderance is not necessarily with the greater number.
Herein, despite the admission made by Castor in the Confirmation of Extrajudicial Partition against
his own interest, the Court is still convinced that the evidence adduced by the petitioner spouses
preponderated over that of the respondents.
In analyzing the two vital documents in this case, the Court discerns that while the Deed of Partition
clearly explained how Castor came to fully own the subject lots, the Confirmation of Extrajudicial
Partition, even though confirming Susana’s ownership of the subject lots, failed to shed light on why
or how the said properties wholly pertained to her when her parents Bernardo and Tranquilina
clearly had other heirs who also had shares in the inheritance.
Other than the Confirmation of Extrajudicial Partition, respondents were only able to present as
evidence of their title to the subject lots tax declarations covering the same, previously, in the name
of Susana and, subsequently, in their own names. We find such tax declarations insufficient to
establish respondents’ ownership of the subject lots. That the disputed property has been declared
for taxation purposes in the name of any party does not necessarily prove ownership. Jurisprudence
is consistent that tax declarations are not conclusive evidence of ownership of the properties stated
therein. A disclaimer is even printed on the face of such tax declarations that they are "issued only in
connection with real property taxation [and] should not be considered as title to the property." At
best, tax declarations are indicia of possession in the concept of an owner.30 Conversely, non-
declaration of a property for tax purposes does not necessarily negate ownership.31
On the other hand, the Court is at a loss as to how the Court of Appeals failed to give due
consideration to the Torrens titles issued in the name of petitioner Perfecta when it rendered its
assailed Decision.
Sometime in 1962, petitioner Perfecta applied for and was granted by the Bureau of Lands free
patents over the subject lots. Pursuant thereto, Original Certificates of Title No. FV-4976, No. FV-
4977, and No. FV-4978, covering the subject lots, were issued by the Registry of Deeds for the
Province of Negros Oriental, on 9 October 1962, in the name of petitioner Perfecta. Given this
crucial fact, the Court pronounces that respondents’ Complaint for reconveyance of the subject lots
and damages filed only on 23 December 1974 is already barred.
A Torrens title issued on the basis of the free patents become as indefeasible as one which was
judicially secured upon the expiration of one year from date of issuance of the patent.32 However, this
indefeasibility cannot be a bar to an investigation by the State as to how such title has been
acquired, if the purpose of the investigation is to determine whether or not fraud has been committed
in securing the title. Indeed, one who succeeds in fraudulently acquiring title to public land should not
be allowed to benefit from it.33
On this matter, Section 101 of Commonwealth Act No. 14134 provides that all actions for the
reversion to the government of lands of the public domain or improvements thereon shall be
instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the name
of the Commonwealth [now Republic] of the Philippines. Such is the rule because whether the grant
of a free patent is in conformity with the law or not is a question which the government may raise, but
until it is so raised by the government and set aside, another claiming party may not question it. The
legality of the grant is a question between the grantee and the government.35 Thus, private parties,
like respondents in the instant case, cannot challenge the validity of the patent and the
corresponding title, as they had no personality to file the suit.
Although jurisprudence recognizes an exception to this case, the respondents may not avail
themselves of the same.
Verily, an aggrieved party may still file an action for reconveyance based on implied or constructive
trust, which prescribes in 10 years from the date of the issuance of the Certificate of Title over the
property, provided that the property has not been acquired by an innocent purchaser for value. An
action for reconveyance is one that seeks to transfer property, wrongfully or fraudulently registered
by another, to its rightful and legal owner.36 If the registered owner, be he the patentee or his
successor-in-interest to whom the free patent was transferred, knew that the parcel of land
described in the patent and in the Torrens title belonged to another, who together with his
predecessors-in-interest had been in possession thereof, and if the patentee and his successor-in-
interest were never in possession thereof, the true owner may bring an action to have the ownership
of or title to the land judicially settled. The court in the exercise of its equity jurisdiction, without
ordering the cancellation of the Torrens titled issued upon the patent, may direct the defendant, the
registered owner, to reconvey the parcel of land to the plaintiff who has been found to be the true
owner thereof.37
In the instant case, respondents brought the action for reconveyance of the subject lots before the
RTC only on 23 December 2004, or more than 12 years after the Torrens titles were issued in favor
of petitioner Perfecta on 9 October 1962. The remedy is, therefore, already time-barred.
And even if respondents’ Complaint was filed on time, the Court would still rule that respondents
failed to satisfactorily prove that they were in possession of the subject lots prior to the grant of free
patents and issuance of Torrens titles over the same in favor petitioner Perfecta. The bare testimony
of respondent Justina that Susana had been in the peaceful and undisturbed possession of the
subject lots since 1937 up to the time of her death in 1965 was entirely bereft of substantiation and
details. No information was provided as to how said possession of the subject lots was actually
exercised or demonstrated by Susana. In contrast, the possession of the subject lots by Castor, and
later on by petitioner spouses, was established not just by the testimony of petitioner Perfecta, but
was corroborated by the testimony of Luciana Navarra, whose husband was a tenant working on the
subject lots. Petitioner spouses possessed the subject lots by planting thereon coconuts, rice, and
corn - a claim which respondents were unable to refute.
Furthermore, respondents’ allegation that petitioner Perfecta committed fraud and breach of trust in
her free patent application is specious. The fact that the document evidencing the sale of the subject
lots by Castor to petitioner Perfecta was not presented does not automatically mean that said
contract was never in existence. Also undeserving of much consideration without sufficient proof is
respondents’ averment that the subject lots were private lands which could no longer be granted to
any person via free patent. Respondents ought to remember that mere allegation of fraud is not
enough. Specific, intentional acts to deceive and deprive another party of his right, or in some
manner injure him, must be alleged and proved.38 Also, the issuance by Bureau of Lands of free
patents over the subject property to petitioner Perfecta enjoys the presumption of regularity.
WHEREFORE, premises considered, the Petition for Review under Rule 45 of the Rules of Court is
hereby GRANTED. The assailed Decision dated 8 March 2007 and Resolution dated 3 September
2007 of the Court of Appeals in CA-G.R. CV No. 66873 are hereby REVERSED AND SET ASIDE.
The Decision dated 29 February 2000 of the RTC of Negros Oriental, Branch 35, in Civil Case No.
6111 is hereby REINSTATED. No costs.
SO ORDERED.
G.R. No. L-33261 September 30, 1987
LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL,

DIBARATUN, MATABALAO, MINDALANO DIBARATUN, DIPUNDUGUN MORO, and MANUCAO
MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.
SARMIENTO, J.:
This is a petition for review on certiorari of the decision 1 of the then Court of First Instance of Lanao del Sur, Branch
III, Marawi City, in Civil Case No. 1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under Republic Act No. 5400, "as only
question of law is raised." 2
The only issue for resolution is the prescriptive period of an action for reconveyance of real property
which has been wrongfully or erroneously registered under the Torrens System in another's name. In
other words, what is the prescriptive period for the action to reconvey the title to real property arising
from an implied or constructive trust and, corrolarily reference. The petitioners herein, defendants in
the trial court, assert that they have ten years to bring the action, while the respondent, plaintiff in the
court below, claims the prescriptive period is four years. The trial court ruled tor the plaintiff, now
respondent.
We reverse. We hold that the prescriptive period for such an action for reconveyance, as this case,
is ten years. The point of reference is, or the ten-year prescriptive period commences to run from,
the. date of the issuance of the certificate of title over the real property.
There is no issue as to the facts, this case having been elevated to this Court, as aforestated, on
purely a question of law. Be that as it may, in order to satisfy constitutional requirements as well as
to place the question of law in proper perspective, there is need to state the facts of the case. On
this regard, the findings of the trial court would best serve the stated purposes.
xxx xxx xxx
From the evidence submitted during the trial there is no dispute concerning the fact
relative to the Identity of the land in litigation. It is commonly known as Lot No. 524,
Pls-126 and technically described and bounded in the sketch (Exh. "7 "). This is the
very tract of land alleged by the plaintiff to have been forcibly entered into by the
defendants and which plaintiff now w&s to recover possession thereof. It has also
been proven that the same lot was covered by two free patent applications: — (l) that
of defendant Liwalug Datomanong (erroneously surnamed Amerol) which he filed on
the 4th day of September, 1953, and (2) that of Molok Bagumbaran which was filed
on December 27, 1954. There is also no question regarding the fact that as to these
two free patent applications, that of plaintiff Molok Bagumbaran was given due
course as a result of which Free Patent No. V-19050 was issued on August 16,1955
by authority of the President of the Philippines Ramon Magsaysay, by Jaime Ferrer,
Undersecretary of Agriculture and Natural Resources and duly registered with the
office of the Register of Deeds of the Province of Lanao (now Lanao del Sur) in the
mm year whereupon Original Certificate of Title No. P-466 was duly issued, owner's
duplicate certificate having been furnished the herein plaintiff.
This court is also inclined to believe that defendant Liwalug Datomanong had never
known of plaintiff's free patent application on the land in question nor was he ever
notified or participated in the administrative proceedings relative to plaintiff's free
patent application. In the meantime, since the date he purchased the land from
Mandal Tondo, said defendant has been and up to the present in con. tinuous
occupation and cultivation of the same. His co-defendants named in the complaint
are merely his tenants.
It is also incontrovertible fact that said defendant did not take appropriate action to
annul the patent and title of the plaintiff within one year from issuance thereof and
that the first step taken by him to contest said patent and title was a formal protest
(Exh. "12", p. 408, Record) dated April 24, 1964, filed before the Bureau of Lands
after the lapse of Nine (9) long years from the issuance of patent in favor of the
plaintiff. The second step he took was his counterclaim contained in his answer to
the complaint in the above entitled case, which answer was filed with this court on
December 4, 1964. In said counterclaim, defendant reiterated his stand that plaintiff
secured patent on the land by means of deceit and fraud, wherefore, defendant
prayed that said title be annulled, or, alternatively, plaintiff be ordered to reconvey the
said land to the said defendant Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff is guilty of fraud or

misrepresentation in securing the Free Patent No. V-19050 covering the land in
question.
Upon a thorough examination of the evidence, proofs are sufficient to support

defendant's contention that plaintiff is guilty of fraud and misrepresentation. In the
first place, proofs are abundant tending to show that since 1952 when Mandal Tando
transferred the land to said defendant, the latter occupied, took possession thereof
and cultivated the same continuously, publicly, adversely against any claimant and in
the concept of owner up to the present; that said defendant had introduced
considerable improvements such as coconut and coffee plantations and other fruit
trees besides his farm house, a mosque, cassava plantation and clearing and full
cultivation of the entire area. The fact of possession on the part of said defendant
has been attested to by competent and creditable witnesses like Mandal Tando who
conveyed the land to the defendant; Hadji Sirad Gomandang, the barrio captain of
Montay, Malabang, Lanao del Sur, Hadji Rasol Maruhom and Hadji Abdulcadir
Pagayawan, both of Pialot, Malabang, Lanao del Sur who are farmers and barrio-
mates of said defendant; and also Disomnong Dimna Macabuat, an employee in the
office of the District Land Officer at Marawi City who had officially conducted occular
inspection and investigation of the premises in connection with the protest of said
defendant found thereon the above-mentioned improvements introduced by the said
defendant.
What is more, on or before filing his free patent application, plaintiff knew that the
land in question which was covered by his free patent application was then actually
occupied and cultivated by defendant Liwalug Datomanong if not by Mandal Tando,
the original occupant. Be it remembered that Mandal Tando had transferred to
defendant Liwalug Datomanong Twenty Four (24) hectares, more than eleven
hectares of which is (sic) outside the military reservation and designated as Lot No.
524, Pls-126 and the rest which is in the southern portion lies within the military
reservation. Now, immediately adjacent thereto on the south is the land claimed and
occupied by the herein plaintiff also consisting of Twenty Four (24) hectares but
wholly within the military reservation. It appears that plaintiff declared this Twenty
four hectares for the first time on October 24, 1950 for taxation purposes (Tax
Declaration No. 1529, Record) and stated in said tax declaration (Exhs. "8" and "8-
A," p. 414, Record) regarding the boundaries that the adjacent owner on the north is
Mandal Tando. In other words, plaintiff had expressly recognized the fact that Mandal
Tando is an adjacent land owner north of plaintiff's property. On February 19, 1951
herein plaintiff revised the above-stated tax declaration and secured another (Tax
Declaration No. 1794, Exh. "9" and "9-A," p. 413, Record) and still plaintiff stated
therein that his boundary land owner on the north is Hadji Abdul
Gani. [a.k.a.Liwalug Datomanong(Amerol)].
3 4
xxx xxx xxx
Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial court denied the
counterclaim of the defendants, now petitioners, for the affirmative relief of reconveyance on the
ground of prescription. Said the court:
xxx xxx xxx
The patent of the plaintiff having been registered back in 1955 and in contemplation
of law registration thereof is notice to the whole world and yet defendant exerted no
effort whatsoever either to annul the title or institute proceedings for reconveyance
except in his counterclaim contained in his answer to the complaint in this case at bar
which answer and counter-claim was filed on December 4, 1964, some nine long
years from the date of registration of the patent, defendant unfortunately lost his right
to reconveyance within the period of four (4) years from the date of registration of
said patent. 5
xxx xxx xxx
Thus, the dispositive portion of the assailed decision stated:
xxx xxx xxx
PREMISES CONSIDERED, judgment is hereby rendered as follows: (1) declaring

the herein plaintiff the registered owner of Lot No. 524, Pls-126 and sustaining and
respecting the validity of the plaintiff's Original Certificate of Title No. P-466 covering
the said land; (2) ordering the defendants to vacate the premises of Lot No. 524; Pls-
126 and deliver possession thereof to the herein plaintiff under certain terms and
conditions herein below stated; (3) denying and hereby dismissing the counterclaim
of the herein defendants and consequently the prayer to annul the title and/or for
reconveyance of the land to said defendant Liwalug Datomanong must Likewise be
denied; (4) that before plaintiff could take possession of said premises he must
reimburse defendant Liwalug Datomanong the total sum of Six Thousand Seven
Hundred Fifty-Two Pesos and Sixty-Two Centavos (P6,752.62) which he incurred for
the necessary and useful expenses on the land in question with the right of said
defendant to retain possession of the premises if said reimbursement be not
completely made. No pronouncement as to costs. 6
xxx xxx xxx

7
The petitioners in their Brief assign the following two errors allegedly committed by the trial court:
8
I.
THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT PETITIONERS
RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION OF AN IMPLIED TRUST
PRESCRIBED AFTER FOUR YEARS FROM THE REGISTRATION OF THE PATENT OF
RESPONDENT.
II.
THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS BASIS IN

THE ASSESSMENT OF THE FAIR MARKET VALUE OF THE IMPROVEMENT INTRODUCED ON
THE LAND IN GOOD FAITH BY PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT
UPON PURE AND SIMPLE GUESS WORKS AND WILD ESTIMATIONS.
The first assignment of error is well-taken as adverted to at the outset.
Indubitably, the act of respondent in misrepresenting that he was in actual possession and
occupation of the property in question, obtaining a patent and Original Certificate of Title No. P- 466
in his name, created an implied trust in favor of the actual possessor of the said property. The Civil
Code provides:
ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining
it is by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes.
In this case, the land in question was patented and titled in respondent's name by and through his
false pretenses. Molok Bagumbaran fraudulently misrepresented that he was the occupant and
actual possessor of the land in question when he was not because it was Liwalug Datomanong.
Bagumbaran falsely pretended that there was no prior applicant for a free patent over the land but
there was — Liwalug Datomanong. By such fraudulent acts, Molok Bagumbaran is deemed to hold
the title of the property in trust and for the benefit of petitioner Liwalug Datomanong. Notwithstanding
the irrevocability of the Torrens title already issued in the name of respondent, he, even being
already the registered owner under the Torrens system, may still be compelled under the law to
reconvey the subject property to Liwalug Datomanong. After all, the Torrens system was not
designed to shield and protect one who had committed fraud or misrepresentation and thus holds
title in bad faith. Further, contrary to the erroneous claim of the respondent, reconveyance does not 9
work to set aside and put under review anew the findings of facts of the Bureau of Lands. In an
action for reconveyance, the decree of registration is respected as incontrovertible. What is sought
instead is the transfer of the property, in this case the title thereof, which has been wrongfully or
erroneously registered in another person's name, to its rightful and legal owner, 10 or to one with a better
right. That is what reconveyance is all about.
Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute. It is
subject to extinctive prescription. 11 Happily, both parties agree on this point. The seeming impediment however, is that while
the petitioners assert that the action prescribes in ten years, the respondent avers that it does in only four years.
In support of his submission, the respondent invokes several cases. We have examined the
invocations and find them inapplicable. For instance, the case of Fabian vs. Fabian, 12 relied on by the
respondent, does not square with the present case. In Fabian, the party who prayed for reconveyance was not in actual possession and
occupation of the property. It was instead the party to whom title over the property had been issued who occupied and possessed it. Further,
the litigated property had been in the adverse possession of the registered owner for well-nigh over twenty-nine big years, hence,
reconveyance had been irretrievably lost.
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual occupant and possessor of the controverted parcel
of land, after having been enticed by Leonor Reyes, an ambulatory notary public, with promise of help, engaged and retained the services of
the latter to facilitate the issuance of a patent for the said land in his (Miguel's) favor. Thus, there existed between the parties a relationship
very much akin to that of lawyer-client and which is similarly fiduciary in character. But Reyes, inspite of his compensation of one-fifth of the
yearly produce of the property, still violated the trust reposed on him and instead worked for the issuance of the patent in the name of his
own wife. So, after the demise of Leonor Reyes, the property was fraudulently patented and titled in his widow's favor. The reconveyance of
the property was decreed by the Court based on "breach of fiduciary relations and/or fraud." It was shown that the parties were legally bound
to each other by a bond of fiduciary trust, a bond lacking in the case at bar.
Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of because the period of prescription was not
there definitely and squarely settled. In fact, Ramirez underscores a vacillation between the four-year and the ten-year rule. There it was
stated that "an action for relief on the ground of fraud — to which class the remedy prayed for by Paguia belong — scan only be brought
within four years after accrual of the right of action, or from the discovery of the fraud." If the decision just stayed pat on that statement, there
would be merit in the respondent's presentation. But Ramirez continues: "(I)ndepedently, however, of the alleged fraud on the part of
Ramirez, the right to demand a reconveyance prescribes after 10 years from accrual of the cause of action, June 22, 1944, the date of
registration of the patent and of the issuance of OCT No. 282- A in his name." 15
Significantly, the three cases cited by the respondent to buttress his position and support the ruling
of the trial court have a common denominator, so to speak. The cause of action assailing the frauds
committed and impugning the Torrens titles issued in those cases, all accrued prior to the effectivity
of the present Civil Code. The accrual of the cause of action in Fabian was in 1928, in Miguel,
February, 1950, and in Ramirez, 1944. It must be remembered that before August 30, 1950, the date
of the effectivity of the new Civil Code, the old Code of Civil Procedure (Act No. 190) governed
prescription. It provided:
SEC. 43. Other civil actions; how limited-Civil actions other than for the recovery of
real property can only be brought within the following periods after the right of action
accrues:
xxx xxx xxx
3. Within four years: x x x An action for relief on the ground of fraud, but the right of
action in such case shall not be deemed to have accrued until the discovery of the
fraud;
xxx xxx xxx

In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an
offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the
property and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription,
Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must perforce prescribed in ten
years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that,
illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an
implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the
property. 16 The only discordant note, it seems, is Balbin vs. Medalla, 17 which states that the prescriptive period for a reconveyance
action is four years. However, this variance can be explained by the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the
fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190, was applied, the new Civil Code not coming into effect until
August 30, 1950 as mentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article 1456, are new provisions. They have
no counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then resorted to as legal basis of the four-year
prescriptive period for an action for reconveyance of title of real property acquired under false pretenses.
It is abundantly clear from all the foregoing that the action of petitioner Datomanong for
reconveyance, in the nature of a counterclaim interposed in his Answer, filed on December 4, 1964,
to the complaint for recovery of possession instituted by the respondent, has not yet prescribed.
Between August 16, 1955, the date of reference, being the date of the issuance of the Original
Certificate of Title in the name of the respondent, and December 4, 1964, when the period of
prescription was interrupted by the filing of the Answer cum Counterclaim, is less than ten years.
The respondent also interposed as a deterrent to reconveyance the existence of a mortgage on the
property. It is claimed by the respondent that reconveyance would not be legally possible because
the property under litigation has already been mortgaged by him to the Development Bank of the
Philippines. 19 This claim is untenable otherwise the judgment for reconveyance could be negated at the will of the holder of the title. By
the simple expedient of constituting a mortgage or other encumbrance on the property, the remedy of reconveyance would become illusory.
In the instant case, the respondent being doubly in bad faith — for applying for and obtaining a patent and the Original Certificate of Title
therefor without being in possession of the land and for mortgaging it to the Development Bank knowing that his Original Certificate of Title
was issued under false pretenses — must alone suffer the consequences.
Besides, given the undisputed facts, we cannot consider the mortgage contracted by the respondent
in favor of the Development Bank of the Philippines as valid and binding against petitioner Liwalug
Datomanong. It would be most unjust to saddle him, as owner of the land, with a mortgage lien not
of his own making and from which he derived no benefit whatsoever. The consequences of the void
mortgage must be left between the mortgagor and the mortgagee. In no small measure the
Development Bank of the Philippines might even be faulted for not making the requisite investigation
on the possession of the land mortgaged.
Premises considered, we deemed it superfluous to rule on the second assignment of error raised by
the petitioners.
WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of the then Court of
First Instance of Lanao del Sur in Civil Case No. 1354 is hereby ANNULLED and SET ASIDE and a
new one entered ORDERING the respondent to RECONVEY Original Certificate of Title No. P-466
in favor of petitioner Liwalug Datomanong, free of any encumbrance. Costs against the respondent.
SO ORDERED.
G.R. No. 159578 February 18, 2009
ROGELIA DACLAG and ADELINO DACLAG (deceased), substituted by RODEL M. DACLAG,

and ADRIAN M. DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG, CONRADO MACAHILIG, LORENZA HABER and
BENITA DEL ROSARIO, Respondents.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
Before us is petitioners' Motion for Reconsideration of our Decision dated July 28, 2008 where we
affirmed the Decision dated October 17, 2001 and the Resolution dated August 7, 2003 of the Court
of Appeals (CA) in CA-G.R. CV No. 48498.
Records show that while the land was registered in the name of petitioner Rogelia in 1984,
respondents’ complaint for reconveyance was filed in 1991, which was within the 10-year
prescriptive period.
We ruled that since petitioners bought the property when it was still an unregistered land, the
defense of having purchased the property in good faith is unavailing. We affirmed the Regional Trial
Court (RTC) in finding that petitioners should pay respondents their corresponding share in the
produce of the subject land from the time they were deprived thereof until the possession is restored
to them.
In their Motion for Reconsideration, petitioners contend that the 10-year period for reconveyance is
applicable if the action is based on an implied or a constructive trust; that since respondents' action
for reconveyance was based on fraud, the action must be filed within four years from the discovery
of the fraud, citing Gerona v. De Guzman,1 which was reiterated in Balbin v. Medalla.2
We do not agree.
In Caro v. Court of Appeals,3 we have explicitly held that "the prescriptive period for the
reconveyance of fraudulently registered real property is 10 years reckoned from the date of
the issuance of the certificate of title x x x."4
However, notwithstanding petitioners' unmeritorious argument, the Court deems it necessary to

make certain clarifications. We have earlier ruled that respondents' action for reconveyance had not
prescribed, since it was filed within the 10-year prescriptive period.
However, a review of the factual antecedents of the case shows that respondents' action for
reconveyance was not even subject to prescription.
The deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima was
not the owner of the land she sold to petitioners, and the one-half northern portion of such land was
owned by respondents. Being an absolute nullity, the deed is subject to attack anytime, in
accordance with Article 1410 of the Civil Code that an action to declare the inexistence of a void
contract does not prescribe. Likewise, we have consistently ruled that when there is a showing of
such illegality, the property registered is deemed to be simply held in trust for the real owner by the
person in whose name it is registered, and the former then has the right to sue for the reconveyance
of the property.5 An action for reconveyance based on a void contract is imprescriptible.6 As long as
the land wrongfully registered under the Torrens system is still in the name of the person who
caused such registration, an action in personam will lie to compel him to reconvey the property to the
real owner.7 In this case, title to the property is in the name of petitioner Rogelia; thus, the trial court
correctly ordered the reconveyance of the subject land to respondents.
Petitioners next contend that they are possessors in good faith, thus, the award of damages should
not have been imposed. They further contend that under Article 544, a possessor in good faith is
entitled to the fruits received before the possession is legally interrupted; thus, if indeed petitioners
are jointly and severally liable to respondents for the produce of the subject land, the liability should
be reckoned only for 1991 and not 1984.
We find partial merit in this argument.
Article 528 of the Civil Code provides that possession acquired in good faith does not lose this
character, except in a case and from the moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully. Possession in good faith ceases from
the moment defects in the title are made known to the possessors, by extraneous evidence or by
suit for recovery of the
property by the true owner. Whatever may be the cause or the fact from which it can be deduced
that the possessor has knowledge of the defects of his title or mode of acquisition, it must be
considered sufficient to show bad faith.8 Such interruption takes place upon service of summons.9 lawphil.net
Article 544 of the same Code provides that a possessor in good faith is entitled to the fruits only so
long as his possession is not legally interrupted. Records show that petitioners received a summons
together with respondents' complaint on August 5, 1991;10 thus, petitioners' good faith ceased on the
day they received the summons. Consequently, petitioners should pay respondents 10 cavans
of palay per annum beginning August 5, 1991 instead of 1984.
Finally, petitioner would like this Court to look into the finding of the RTC that "since Maxima died in
October 1993, whatever charges and claims petitioners may recover from her expired with her"; and
that the proper person to be held liable for damages to be awarded to respondents should be
Maxima Divison or her estate, since she misrepresented herself to be the true owner of the subject
land.
We are not persuaded.
Notably, petitioners never raised this issue in their appellants' brief or in their motion for
reconsideration filed before the CA. In fact, they never raised this matter before us when they filed
their petition for review. Thus, petitioners cannot raise the same in this motion for reconsideration
without offending the basic rules of fair play, justice and due process, specially since Maxima was
not substituted at all by her heirs after the promulgation of the RTC Decision.
WHEREFORE, petitioners’ Motion for Reconsideration is PARTLY GRANTED. The Decision of the

Court of Appeals dated July 28, 2008 is MODIFIED only with respect to prescription as discussed in
the text of herein Resolution, and the dispositive portion of the Decision is MODIFIED to the effect
that petitioners are ordered to pay respondents 10 cavans of palay per annum beginning August 5,
1991 instead of 1984.
SO ORDERED.
G.R. No. L-21362 November 29, 1968
DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,

vs.
LOURDES GASPAR BAUTISTA, THE DIRECTOR OF THE LANDS and THE NATIONAL
TREASURER OF THE PHILIPPINES, defendants-appellees.
Jesus A. Avanceña for plaintiff-appellant.

Lourdes Gaspar Bautista in her own behalf as defendant-appellee.
Assistant Solicitor General Antonio Torres, Solicitor Francisco J. Bautista and Special Attorney
Daniel G. Florida for defendants-appelles Director of Lands, et al.
FERNANDO, J.:
The question this appeal from a judgment of a lower court presents is one that possesses both
novelty and significance. It is this: What is the right, if any, of a creditor which previously satisfied its
claim by foreclosing extrajudicially on a mortgage executed by the debtor, whose title was thereafter
nullified in a judicial proceeding where she was not brought in as a party?
As creditor, the Development Bank of the Philippines now appellant, filed a complaint against one of
its debtors, Lourdes Gaspar Bautista, now appellee, for the recovery of a sum of money representing
the unpaid mortgage indebtedness, which previously had been wiped out with the creditor bank
acquiring the title of the mortgaged property in an extrajudicial sale. Thereafter, the title was nullified
in a judicial proceeding, the land in question being adjudged as belonging to another claimant,
without, however, such debtor, as above noted, having been cited to appear in such court action.
The Development Bank was unsuccessful, the lower court being of the view that with the due
process requirement thus flagrantly disregarded, since she was not a party in such action where her
title was set aside, such a judgment could in no wise be binding on her and be the source of a claim
by the appellant bank. The complaint was thus dismissed by the lower court, then presided by
Judge, now Justice, Magno Gatmaitan of the Court of Appeals. Hence, this appeal by appellant
bank.
Such dismissal is in accordance with law. There is no occasion for us to repudiate the lower court.
From the very statement of facts in the brief for appellant bank, the following appears: "On or before
May 31, 1949, the defendant-appellee, Lourdes Gaspar Bautista, who shall hereafter be referred to
as Bautista, applied to the Government for the sale favor of a parcel of land with an area of 12 has.,
44 ares, and 22 centares, located at Bo. Barbara, San Jose, Nueva Ecija. After proper investigation,
Sales Patent no. V-132 covering said property was issued in her favor on June 1, 1949 (Exh. A-1) by
the Director of Lands. Sales Patent No. V-132 was registered in the office of the Register of Deeds
of Nueva Ecija pursuant to Section 122 of Act 496 on June 3, 1949 (Exh. A), as a result of which
Original Certificate of Title No. P-389 was issued in her favor."1
How the loan was contracted by now appellee Bautista was therein set forth. Thus: "On July 16,
1949, Bautista applied for a loan with the Rehabilitation Finance Corporation (RFC), predecessor in
interest of the plaintiff-appellee Development Bank of the Philippines (DBP), offering as security the
parcel of land covered by O.C.T. No. P-389. Aside from her certificate of title, Bautista also
submitted to the RFC other documents to show her ownership and possession of the land in
question, namely, Tax Declaration No. 5153 (Exh. A-4) in her name and the blueprint plan of the
land. On the basis of the documents mentioned and the appraisal of the property by its appraiser,
the RFC approved a loan of P4,000.00 in favor of Bautista. On July 16, 1949, Bautista executed the
mortgage contract over the property covered by O.C.T. No. P-389 and the promissory note for
P4,000.00 in favor of RFC (Exhs. C and C-1), after which the proceeds of the loan were released."2
The satisfaction of the mortgage debt with the acquisition of the title to such property by appellant
Bank, by virtue of an extrajudicial foreclosure sale, and such title losing its validity in view of a court
proceeding, where however, appellee Bautista, was not made a party, was next taken up in the brief
of plaintiff-appellant. Thus: "Bautista failed to pay the amortization on the loan so that the RFC took
steps to foreclose the mortgage extra-judicially under Act 3135, as amended. In the ensuing auction
sale conducted by the sheriff of Nueva Ecija on June 27, 1951, the RFC acquired the mortgaged
property as the highest bidder (Exh. D). On the date of the sale, the total obligation of Bautista with
the RFC was P4,858.48 (Exh. I). On July 21, 1952, upon failure of Bautista to redeem the property
within the one (1) year period as provided bylaw, plaintiff-appellant RFC consolidated its ownership
thereon (Exhs. E and E-I). On July 26, 1952, the Register of Deeds of Nueva Ecija cancelled O.C.T.
No. P-389 and replaced it with T.C.T. No. NT-12108 in the name of the RFC (Exhs. F and F-1). On
or about this time, however, an action (Civil Case No. 870) was filed by Rufino Ramos and Juan
Ramos in the Court of First Instance of Nueva Ecija against the Government of the Republic of the
Philippines and the RFC (as successor in interest of Bautista) claiming ownership of the land in
question and seeking the annulment of T.C.T. No. 2336 in the name of the Government, O.C.T. No.
P-389 in the name of Bautista and T.C.TG. No. NT-12108 in the name of the RFC. A decision
thereon was rendered on June 27, 1955 (Exhs. G, G-1, and G-3) whereby the aformentioned
certificates of title were declared null and void."3
Why the complaint had to be dismissed was explained thus in the decision now on appeal: "The
Court after examining the proofs, is constrained to sustain her on that; it will really appear that she
had never been placed within the jurisdiction of the Nueva Ecija Court; as the action there was one
to annual the title, it was an action strictly in personam, if that was the case as it was, the judgment
there could not in any way bind Lourdes who had not acquired in said decision in any way for what
only happened is that as to the mortgage, the Bank foreclosed, and then sold unto Conrada and
when the title had been annulled, the Bank reimbursed Conrada; stated otherwise, the annulment of
Lourdes' title was a proceeding ex parte as far as she was concerned and could not bind her at all;
and her mortgage was foreclosed an the Bank realized on it, when the Bank afterwards acquiesced
in the annulment of the title and took it upon itself to reimburse Conrada, the Bank was acting on its
own peril because it could not have by that, bound Lourdes at all."4
As stated at the outset, the decision must be affirmed. The fundamental due process requirement
having been disregarded, appellee Bautista could not in any wise be made to suffer, whether directly
or indirectly, from the effects of such decision. After appellant bank had acquired her title by such
extrajudicial foreclosure sale and thus, through its own act, seen to it that her obligation had been
satisfied, it could not thereafter, seek to revive the same on the allegation that the title in question
was subsequently annulled, considering that she was not made a party on the occasion of such
nullification.
If it were otherwise, then the cardinal requirement that no party should be made to suffer in person
or property without being given a hearing would be brushed aside. The doctrine consistently adhered
to by this Court whenever such a question arises in a series of decisions is that a denial of due
process suffices to cast on the official act taken by whatever branch of the government the impress
of nullity.5
A recent decision, Macabingkil v. Yatco,6 possesses relevance. "A 1957 decision, Cruzcosa v.

Concepcion, is even more illuminating in so far as the availability of the remedy sought is concerned.
In the language of this Court, speaking through Justice J.B.L. Reyes: 'The petition is clearly
meritorious. Petitioners were conclusively found by the Court of Appeals to be co-owners of the
building in question. Having an interest therein, they should have been made parties to the
ejectment proceedings to give them a chance to protect their rights: and not having been made
parties thereto, they are not bound and can not be affected by the judgment rendered therein against
their co-owner Catalino Cruzcosa. Jr. ....' Two due process cases deal specifically with a writ of
execution that could not validly be enforced against a party who was not given his day in court, Sicat
v. Reyes, and Hamoy v. Batingoplo. According to the former: 'The above agreement, which served
as basis for the ejectment of Alipio Sicat, cannot be binding and conclusive upon the latter, who is
not a party to the case. Indeed, that order, as well as the writ of execution, cannot legally be
enforced against Alipio Sicat for the simple reason that he was not given his day in court.' From the
latter: 'The issue raised in the motion of Rangar is not involved in the appeal for it concerns a right
which he claims over the property which has not so far been litigated for the reason that he was not
made a party to the case either as plaintiff for a defendant. He only came to know of the litigation
when he was forced out of the property by the sheriff, and so he filed the present motion to be heard
and prove his title to the property. This he has the right to do as the most expeditious manner to
protect his interest instead of filing a separate action which generally is long, tedious and
protracted.'"
Reinforcement to the above conclusion comes from a codal provision. According to the Civil
Code:7 "The vendor shall not be obliged to make good the proper warranty, unless he is summoned
in the suit for eviction at the instance of the vendee. "While not directly in point, the principle on
which the above requirement is based sustains the decision of the lower court. In effect, appellant
bank would hold appellee Bautista liable for the warranty on her title, its annullment having the same
effect as that of an eviction. In such a case, it is wisely provided by the Civil Code that appellee
Bautista, as vendor, should have been summoned and given the opportunity to defend herself. In
view of her being denied her day in court, it would to be respected, that she is not "obliged to made
good the proper warranty."
In the suit before the lower court, the Director of Lands and the National Treasurer of the Philippines
were likewise made defendants by appellant bank because of its belief that if no right existed as
against appellee Bautista, recovery could be had from the Assurance Fund. Such a belief finds no
support in the applicable, law, which allows recovery only upon a showing that there be no
negligence on the part of the party sustaining any loss or damage or being deprived of any land or
interest therein by the operation of the Land Registration Act.8 This certainly is not the case here,
plaintiff-appellant being solely responsible for the light in which it now finds itself. Accordingly, the
Director of Lands and the National Treasurer of the Philippines are likewise exempt from any liability.
WHEREFORE, the judgment appealed from is affirmed, with costs against the Development Bank of
the Philippines

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G.R. No.

166577 February 3, 2010

SPOUSES MORRIS CARPO and SOCORRO CARPO, Petitioners,

No copy of TCT No. T-4366 was attached to the complaint.

The complaint prayed that the trial court render judgment:

(d) To pay the costs.17

(3) The concerned Register of Deeds is hereby ORDERED to cancel plaintiffs-appellees’

A THE COURT OF APPEALS ERRED IN DECLARING THAT THE TITLE OF RESPONDENT IS

B. THE COURT OF APPEALS ERRED IN DECLARING PETITIONERS GUILTY OF LACHES AND

D. THE COURT OF APPEALS ERRED IN DECLARING THAT THERE IS RES JUDICATA

Preliminary discussion regarding subject matter of the controversy

We now discuss each assignment of error raised in the petition.

First Assignment of Error

Section 3. Disputable presumptions. — The following presumptions are satisfactory if

(m) That official duty has been regularly performed;

Thus, we held in Herce, Jr. v. Municipality of Cabuyao, Laguna31:

Second Assignment of Error

In sum, we find no reason to disturb the CA’s finding that:

Third Assignment of Error

THE DIRECTOR OF LANDS, petitioner,

Statement of the Case

Unsatisfied, private respondents appealed to Respondent Court of Appeals which, as earlier

. . . although the requirement of publication in the Official Gazette and in a newspaper of

The Court's Ruling

We find for petitioner.

Newspaper Publication Mandatory

REPUBLIC OF THE PHILIPPINES, Petitioner,

The factual milieu of this case is as follows:

The petition is meritorious.

Respondents' reliance on the afore-mentioned annotation is misplaced.

Further, in Republic v. Tri-plus Corporation,18 the Court held that:

REPUBLIC OF THE PHILIPPINES, petitioners,

*Additional Member as per Special Order No. 520.

Hence, the present petition for review on certiorari.

In their Comment14 and Memorandum15, the respondents contend that the appellate court correctly

We find merit in the petition.

In Heirs of Marina C. Regalado v. Republic17, we ruled:

xxx xxx xxx

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED. The assailed

August 1985 for lack of merit. 5

among others, thus—

land registration proceedings ." 13

REPUBLIC OF THE PHILIPPINES, Petitioner,

Notably, Shipside has attained some measure of prominence as precedent on still another point,

WHEREFORE, the Petition is DENIED. No pronouncement as to costs.

G.R. No. L-32065 February 23,1990

LEOPOLDO VENCILAO, SOFRONIO ROLLON, AURELIO ELIVERA, FRANCISCO PAGAORA,

G.R. No. L-33677 February 23, 1990

LEOPOLDO VENCILAO, SOFRONIO ROLLON, AURELIO ELIVERA, FRANCISCO PAGAORA,

Lord Marapao and Lorenzo A. Lopena for petitioners.

Roque R. Luspo for respondents.

The antecedent facts are as follows:

G.R. No. 25660

WHEREFORE, the cases herein of the plaintiffs Alejandro Renoblas, Fausto

THE TRIAL COURT ERRED IN DISMISSING THE CASES OF THE PLAINTIFFS-

THE TRIAL COURT ERRED IN DENYING THE MOTION OF THE PLAINTIFFS-

'It is settled that notwithstanding the difference in the form of two

'Accordingly, a final judgment in an ordinary civil action, determining

xxx xxx xxx

xxx xxx xxx