J.G. SUMMIT HOLDINGS, INC.
, Petitioner, versus COURT OF quasi-reorganization of PHILSECO to settle its huge obligations
APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and
Members; ASSET PRIVATIZATION TRUST; and PHILYARDS
HOLDINGS, INC., Respondents.
G.R. No. 124293 | 2005-01-31
SPECIAL FIRST DIVISION
RESOLUTION
PUNO, J.:
For resolution before this Court are two motions filed by the
petitioner, J.G. Summit Holdings, Inc. for reconsideration of
our Resolution dated September 24, 2003 and to elevate this
case to the Court En Banc. The petitioner questions the
Resolution which reversed our Decision of November 20, 2000,
which in turn reversed and set aside a Decision of the Court of
Appeals promulgated on July 18, 1995.
I. Facts
The undisputed facts of the case, as set forth in our Resolution
of September 24, 2003, are as follows:
On January 27, 1997, the National Investment and
Development Corporation (NIDC), a government corporation,
entered into a Joint Venture Agreement (JVA) with Kawasaki
Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the
construction, operation and management of the Subic
National Shipyard, Inc. (SNS) which subsequently became the
Philippine Shipyard and Engineering Corporation
(PHILSECO). Under the JVA, the NIDC and KAWASAKI will
contribute P330 million for the capitalization of PHILSECO in
the proportion of 60%-40% respectively. One of its salient
features is the grant to the parties of the right of first refusal
should either of them decide to sell, assign or transfer its
interest in the joint venture, viz:
1.4 Neither party shall sell, transfer or assign all or any part of
its interest in SNS [PHILSECO] to any third party without giving
the other under the same terms the right of first refusal. This
provision shall not apply if the transferee is a corporation
owned or controlled by the GOVERNMENT or by a KAWASAKI
affiliate.
On November 25, 1986, NIDC transferred all its rights, title and
interest in PHILSECO to the Philippine National Bank (PNB).
Such interests were subsequently transferred to the National
Government pursuant to Administrative Order No. 14. On
December 8, 1986, President Corazon C. Aquino issued
Proclamation No. 50 establishing the Committee on
Privatization (COP) and the Asset Privatization Trust (APT) to
take title to, and possession of, conserve, manage and dispose
of non-performing assets of the National Government.
Thereafter, on February 27, 1987, a trust agreement was
entered into between the National Government and the APT
wherein the latter was named the trustee of the National
Government's share in PHILSECO. In 1989, as a result of a
to PNB, the National Government's shareholdings in PHILSECO
increased to 97.41% thereby reducing KAWASAKI's
shareholdings to 2.59%.
In the interest of the national economy and the government,
the COP and the APT deemed it best to sell the National
Government's share in PHILSECO to private entities. After a
series of negotiations between the APT and KAWASAKI, they
agreed that the latter's right of first refusal under the JVA be
"exchanged" for the right to top by five percent (5%) the
highest bid for the said shares. They further agreed that
KAWASAKI would be entitled to name a company in which it
was a stockholder, which could exercise the right to top. On
September 7, 1990, KAWASAKI informed APT that Philyards
Holdings, Inc. (PHI)[1] would exercise its right to top.
At the pre-bidding conference held on September 18, 1993,
interested bidders were given copies of the JVA between NIDC
and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR)
drafted for the National Government's 87.6% equity share in
PHILSECO. The provisions of the ASBR were explained to the
interested bidders who were notified that the bidding would
be held on December 2, 1993. A portion of the ASBR reads:
1.0 The subject of this Asset Privatization Trust (APT) sale
through public bidding is the National Government's equity in
PHILSECO consisting of 896,869,942 shares of stock
(representing 87.67% of PHILSECO's outstanding capital stock),
which will be sold as a whole block in accordance with the rules
herein enumerated.
xxx xxx xxx
2.0 The highest bid, as well as the buyer, shall be subject to the
final approval of both the APT Board of Trustees and the
Committee on Privatization (COP).
2.1 APT reserves the right in its sole discretion, to reject any or
all bids.
3.0 This public bidding shall be on an Indicative Price Bidding
basis. The Indicative price set for the National Government's
87.67% equity in PHILSECO is PESOS: ONE BILLION THREE
HUNDRED MILLION (P1,300,000,000.00).
xxx xxx xxx
6.0 The highest qualified bid will be submitted to the APT
Board of Trustees at its regular meeting following the bidding,
for the purpose of determining whether or not it should be
endorsed by the APT Board of Trustees to the COP, and the
latter approves the same. The APT shall advise Kawasaki Heavy
Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc.,
that the highest bid is acceptable to the National Government.
Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings,
Inc. shall then have a period of thirty (30) calendar days from
the date of receipt of such advice from APT within which to
exercise their "Option to Top the Highest Bid" by offering a bid
equivalent to the highest bid plus five (5%) percent thereof.
6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS]
Holdings, Inc. exercise their "Option to Top the Highest Bid,"
they shall so notify the APT about such exercise of their option
and deposit with APT the amount equivalent to ten percent
(10%) of the highest bid plus five percent (5%) thereof within
the thirty (30)-day period mentioned in paragraph 6.0 above.
APT will then serve notice upon Kawasaki Heavy Industries, Inc.
and/or [PHILYARDS] Holdings, Inc. declaring them as the
preferred bidder and they shall have a period of ninety (90)
days from the receipt of the APT's notice within which to pay
the balance of their bid price.
6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS]
Holdings, Inc. fail to exercise their "Option to Top the Highest
Bid" within the thirty (30)-day period, APT will declare the
highest bidder as the winning bidder.
xxx xxx xxx
12.0 The bidder shall be solely responsible for examining with
appropriate care these rules, the official bid forms, including
any addenda or amendments thereto issued during the
bidding period. The bidder shall likewise be responsible for
informing itself with respect to any and all conditions
concerning the PHILSECO Shares which may, in any manner,
affect the bidder's proposal. Failure on the part of the bidder
to so examine and inform itself shall be its sole risk and no
relief for error or omission will be given by APT or COP. . . .
At the public bidding on the said date, petitioner J.G. Summit
Holdings, Inc.[2] submitted a bid of Two Billion and Thirty
Million Pesos (P2,030,000,000.00) with an acknowledgment of
KAWASAKI/[PHILYARDS'] right to top, viz:
4. I/We understand that the Committee on Privatization (COP)
has up to thirty (30) days to act on APT's recommendation
based on the result of this bidding. Should the COP approve
the highest bid, APT shall advise Kawasaki Heavy Industries,
Inc. and/or its nominee, [PHILYARDS] Holdings, Inc. that the
highest bid is acceptable to the National Government.
Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings,
Inc. shall then have a period of thirty (30) calendar days from
the date of receipt of such advice from APT within which to
exercise their "Option to Top the Highest Bid" by offering a bid
equivalent to the highest bid plus five (5%) percent thereof.
As petitioner was declared the highest bidder, the COP
approved the sale on December 3, 1993 "subject to the right
of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc.
to top JGSMI's bid by 5% as specified in the bidding rules."
On December 29, 1993, petitioner informed APT that it was
protesting the offer of PHI to top its bid on the grounds that:
(a) the KAWASAKI/PHI consortium composed of KAWASAKI,
[PHILYARDS], Mitsui, Keppel, SM Group, ICTSI and Insular Life
violated the ASBR because the last four (4) companies were the
losing bidders thereby circumventing the law and prejudicing
the weak winning bidder; (b) only KAWASAKI could exercise
the right to top; (c) giving the same option to top to PHI
constituted unwarranted benefit to a third party; (d) no right
of first refusal can be exercised in a public bidding or auction
sale; and (e) the JG Summit consortium was not estopped from
questioning the proceedings.
On February 2, 1994, petitioner was notified that PHI had fully
paid the balance of the purchase price of the subject bidding.
On February 7, 1994, the APT notified petitioner that PHI had
exercised its option to top the highest bid and that the COP had
approved the same on January 6, 1994. On February 24, 1994,
the APT and PHI executed a Stock Purchase Agreement.
Consequently, petitioner filed with this Court a Petition for
Mandamus under G.R. No. 114057. On May 11, 1994, said
petition was referred to the Court of Appeals. On July 18, 1995,
the Court of Appeals denied the same for lack of merit. It ruled
that the petition for mandamus was not the proper remedy to
question the constitutionality or legality of the right of first
refusal and the right to top that was exercised by
KAWASAKI/PHI, and that the matter must be brought "by the
proper party in the proper forum at the proper time and
threshed out in a full blown trial." The Court of Appeals further
ruled that the right of first refusal and the right to top are
prima facie legal and that the petitioner, "by participating in
the public bidding, with full knowledge of the right to top
granted to KAWASAKI/[PHILYARDS] is…estopped from
questioning the validity of the award given to [PHILYARDS]
after the latter exercised the right to top and had paid in full
the purchase price of the subject shares, pursuant to the
ASBR." Petitioner filed a Motion for Reconsideration of said
Decision which was denied on March 15, 1996. Petitioner thus
filed a Petition for Certiorari with this Court alleging grave
abuse of discretion on the part of the appellate court.
On November 20, 2000, this Court rendered x x x [a] Decision
ruling among others that the Court of Appeals erred when it
dismissed the petition on the sole ground of the impropriety
of the special civil action of mandamus because the petition
was also one of certiorari. It further ruled that a shipyard like
PHILSECO is a public utility whose capitalization must be sixty
percent (60%) Filipino-owned. Consequently, the right to top
granted to KAWASAKI under the Asset Specific Bidding Rules
(ASBR) drafted for the sale of the 87.67% equity of the National
Government in PHILSECO is illegal — not only because it
violates the rules on competitive bidding — but more so,
because it allows foreign corporations to own more than 40%
equity in the shipyard. It also held that "although the petitioner
had the opportunity to examine the ASBR before it
participated in the bidding, it cannot be estopped from
questioning the unconstitutional, illegal and inequitable
provisions thereof." Thus, this Court voided the transfer of the
national government's 87.67% share in PHILSECO to Philyard[s]
Holdings, Inc., and upheld the right of JG Summit, as the
highest bidder, to take title to the said shares, viz:
WHEREFORE, the instant petition for review on certiorari is
GRANTED. The assailed Decision and Resolution of the Court of
Appeals are REVERSED and SET ASIDE. Petitioner is ordered to
pay to APT its bid price of Two Billion Thirty Million Pesos
(P2,030,000,000.00), less its bid deposit plus interests upon
the finality of this Decision. In turn, APT is ordered to:
(a) accept the said amount of P2,030,000,000.00 less bid
deposit and interests from petitioner;
(b) execute a Stock Purchase Agreement with petitioner;
(c) cause the issuance in favor of petitioner of the certificates
of stocks representing 87.6% of PHILSECO's total capitalization;
(d) return to private respondent PHGI the amount of Two
Billion One Hundred Thirty-One Million Five Hundred
Thousand Pesos (P2,131,500,000.00); and
(e) cause the cancellation of the stock certificates issued to
PHI.
SO ORDERED.
In separate Motions for Reconsideration, respondents
submit[ted] three basic issues for x x x resolution: (1) Whether
PHILSECO is a public utility; (2) Whether under the 1977 JVA,
KAWASAKI can exercise its right of first refusal only up to 40%
of the total capitalization of PHILSECO; and (3) Whether the
right to top granted to KAWASAKI violates the principles of
competitive bidding.[3] (citations omitted)
In a Resolution dated September 24, 2003, this Court ruled in
favor of the respondents. On the first issue, we held that
Philippine Shipyard and Engineering Corporation (PHILSECO) is
not a public utility, as by nature, a shipyard is not a public
utility[4] and that no law declares a shipyard to be a public
utility.[5] On the second issue, we found nothing in the 1977
Joint Venture Agreement (JVA) which prevents Kawasaki
Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) from
acquiring more than 40% of PHILSECO’s total
capitalization.[6] On the final issue, we held that the right to
top granted to KAWASAKI in exchange for its right of first
refusal did not violate the principles of competitive bidding.[7]
On October 20, 2003, the petitioner filed a Motion for
Reconsideration[8] and a Motion to Elevate This Case to the
Court En Banc.[9] Public respondents Committee on
Privatization (COP) and Asset Privatization Trust (APT), and
private respondent Philyards Holdings, Inc. (PHILYARDS) filed
their Comments on J.G. Summit Holdings, Inc.’s (JG Summit’s)
Motion for Reconsideration and Motion to Elevate This Case to
the Court En Banc on January 29, 2004 and February 3, 2004,
respectively.
II. Issues
Based on the foregoing, the relevant issues to resolve to end
this litigation are the following:
1. Whether there are sufficient bases to elevate the case at bar
to the Court en banc.
2. Whether the motion for reconsideration raises any new
matter or cogent reason to warrant a reconsideration of this
Court’s Resolution of September 24, 2003.
Motion to Elevate this Case to the
Court En Banc
The petitioner prays for the elevation of the case to the Court
en banc on the following grounds:
1. The main issue of the propriety of the bidding process
involved in the present case has been confused with the policy
issue of the supposed fate of the shipping industry which has
never been an issue that is determinative of this case.[10]
2. The present case may be considered under the Supreme
Court Resolution dated February 23, 1984 which included
among en banc cases those involving a novel question of law
and those where a doctrine or principle laid down by the Court
en banc or in division may be modified or reversed.[11]
3. There was clear executive interference in the judicial
functions of the Court when the Honorable Jose Isidro
Camacho, Secretary of Finance, forwarded to Chief Justice
Davide, a memorandum dated November 5, 2001, attaching a
copy of the Foreign Chambers Report dated October 17, 2001,
which matter was placed in the agenda of the Court and noted
by it in a formal resolution dated November 28, 2001.[12]
Opposing J.G. Summit’s motion to elevate the case en banc,
PHILYARDS points out the petitioner’s inconsistency in
previously opposing PHILYARDS’ Motion to Refer the Case to
the Court En Banc. PHILYARDS contends that J.G. Summit
should now be estopped from asking that the case be referred
to the Court en banc. PHILYARDS further contends that the
Supreme Court en banc is not an appellate court to which
decisions or resolutions of its divisions may be appealed citing
Supreme Court Circular No. 2-89 dated February 7, 1989.[13]
PHILYARDS also alleges that there is no novel question of law
involved in the present case as the assailed Resolution was
based on well-settled jurisprudence. Likewise, PHILYARDS
stresses that the Resolution was merely an outcome of the
motions for reconsideration filed by it and the COP and APT
and is “consistent with the inherent power of courts to ‘amend
and control its process and orders so as to make them
conformable to law and justice.’ (Rule 135, sec. 5)”[14] Private
respondent belittles the petitioner’s allegations regarding the
change in ponente and the alleged executive interference as
shown by former Secretary of Finance Jose Isidro Camacho’s
memorandum dated November 5, 2001 arguing that these do
not justify a referral of the present case to the Court en banc.
In insisting that its Motion to Elevate This Case to the Court En
Banc should be granted, J.G. Summit further argued that: its
Opposition to the Office of the Solicitor General’s Motion to
Refer is different from its own Motion to Elevate; different
grounds are invoked by the two motions; there was
unwarranted “executive interference”; and the change in
ponente is merely noted in asserting that this case should be
decided by the Court en banc.[15]
We find no merit in petitioner’s contention that the propriety
of the bidding process involved in the present case has been
confused with the policy issue of the fate of the shipping
industry which, petitioner maintains, has never been an issue
that is determinative of this case. The Court’s Resolution of
September 24, 2003 reveals a clear and definitive ruling on the
propriety of the bidding process. In discussing whether the
right to top granted to KAWASAKI in exchange for its right of
first refusal violates the principles of competitive bidding, we
made an exhaustive discourse on the rules and principles of
public bidding and whether they were complied with in the
case at bar.[16] This Court categorically ruled on the
petitioner’s argument that PHILSECO, as a shipyard, is a public
utility which should maintain a 60%-40% Filipino-foreign
equity ratio, as it was a pivotal issue. In doing so, we
recognized the impact of our ruling on the shipbuilding
industry which was beyond avoidance.[17]
We reject petitioner’s argument that the present case may be
considered under the Supreme Court Resolution dated
February 23, 1984 which included among en banc cases those
involving a novel question of law and those where a doctrine
or principle laid down by the court en banc or in division may
be modified or reversed. The case was resolved based on
basic principles of the right of first refusal in commercial law
and estoppel in civil law. Contractual obligations arising from
rights of first refusal are not new in this jurisdiction and have
been recognized in numerous cases.[18] Estoppel is too known
a civil law concept to require an elongated
discussion. Fundamental principles on public bidding were
likewise used to resolve the issues raised by the petitioner. To
be sure, petitioner leans on the right to top in a public bidding
in arguing that the case at bar involves a novel issue. We are
not swayed. The right to top was merely a condition or a
reservation made in the bidding rules which was fully disclosed
to all bidding parties. In Bureau Veritas, represented by
Theodor H. Hunermann v. Office of the President, et al., [19]we
dealt with this conditionality, viz:
x x x It must be stressed, as held in the case of A.C. Esguerra &
Sons v. Aytona, et al., (L-18751, 28 April 1962, 4 SCRA 1245),
that in an "invitation to bid, there is a condition imposed upon
the bidders to the effect that the bidding shall be subject to
the right of the government to reject any and all bids subject
to its discretion. In the case at bar, the government has made
its choice and unless an unfairness or injustice is shown, the
losing bidders have no cause to complain nor right to dispute
that choice. This is a well-settled doctrine in this jurisdiction
and elsewhere."
The discretion to accept or reject a bid and award contracts is
vested in the Government agencies entrusted with that
function. The discretion given to the authorities on this matter
is of such wide latitude that the Courts will not interfere
therewith, unless it is apparent that it is used as a shield to a
fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x
x x The exercise of this discretion is a policy decision that
necessitates prior inquiry, investigation, comparison,
evaluation, and deliberation. This task can best be discharged
by the Government agencies concerned, not by the Courts. The
role of the Courts is to ascertain whether a branch or
instrumentality of the Government has transgressed its
constitutional boundaries. But the Courts will not interfere
with executive or legislative discretion exercised within those
boundaries. Otherwise, it strays into the realm of policy
decision-making.
It is only upon a clear showing of grave abuse of discretion that
the Courts will set aside the award of a contract made by a
government entity. Grave abuse of discretion implies a
capricious, arbitrary and whimsical exercise of power (Filinvest
Credit Corp. v. Intermediate Appellate Court, No. 65935, 30
September 1988, 166 SCRA 155). The abuse of discretion must
be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform a duty enjoined by law,
as to act at all in contemplation of law, where the power is
exercised in an arbitrary and despotic manner by reason of
passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et
al[.], L-40867, 26 July 1988, 163 SCRA 489).
The facts in this case do not indicate any such grave abuse of
discretion on the part of public respondents when they
awarded the CISS contract to Respondent SGS. In the
"Invitation to Prequalify and Bid" (Annex "C," supra), the CISS
Committee made an express reservation of the right of the
Government to "reject any or all bids or any part thereof or
waive any defects contained thereon and accept an offer most
advantageous to the Government." It is a well-settled rule that
where such reservation is made in an Invitation to Bid, the
highest or lowest bidder, as the case may be, is not entitled to
an award as a matter of right (C & C Commercial Corp. v.
Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the
lowest Bid or any Bid may be rejected or, in the exercise of
sound discretion, the award may be made to another than the
lowest bidder (A.C. Esguerra & Sons v. Aytona, supra, citing 43
Am. Jur., 788). (emphases supplied)
Like the condition in the Bureau Veritas case, the right to top
was a condition imposed by the government in the bidding
rules which was made known to all parties. It was a condition
imposed on all bidders equally, based on the APT’s exercise of
its discretion in deciding on how best to privatize the
government’s shares in PHILSECO. It was not a whimsical or
arbitrary condition plucked from the ether and inserted in the
bidding rules but a condition which the APT approved as the
best way the government could comply with its contractual
obligations to KAWASAKI under the JVA and its mandate of
getting the most advantageous deal for the government. The
right to top had its history in the mutual right of first refusal in
the JVA and was reached by agreement of the government and
KAWASAKI.
Further, there is no “executive interference” in the functions
of this Court by the mere filing of a memorandum by Secretary
of Finance Jose Isidro Camacho. The memorandum was
merely “noted” to acknowledge its filing. It had no further
legal significance. Notably too, the assailed Resolution dated
September 24, 2003 was decided unanimously by the Special
First Division in favor of the respondents.
Again, we emphasize that a decision or resolution of a Division
is that of the Supreme Court[20] and the Court en banc is not
an appellate court to which decisions or resolutions of a
Division may be appealed.[21]
For all the foregoing reasons, we find no basis to elevate this
case to the Court en banc.
Motion for Reconsideration
Three principal arguments were raised in the petitioner’s
Motion for Reconsideration. First, that a fair resolution of the
case should be based on contract law, not on policy
considerations; the contracts do not authorize the right to top
to be derived from the right of first refusal.[22] Second, that
neither the right of first refusal nor the right to top can be
legally exercised by the consortium which is not the proper
party granted such right under either the JVA or the Asset
Specific Bidding Rules (ASBR).[23] Third, that the maintenance
of the 60%-40% relationship between the National Investment
and Development Corporation (NIDC) and KAWASAKI arises
from contract and from the Constitution because PHILSECO is
a landholding corporation and need not be a public utility to
be bound by the 60%-40% constitutional limitation.[24]
On the other hand, private respondent PHILYARDS asserts that
J.G. Summit has not been able to show compelling reasons to
warrant a reconsideration of the Decision of the Court.[25]
PHILYARDS denies that the Decision is based mainly on policy
considerations and points out that it is premised on principles
governing obligations and contracts and corporate law such as
the rule requiring respect for contractual stipulations,
upholding rights of first refusal, and recognizing the assignable
nature of contracts rights.[26] Also, the ruling that shipyards
are not public utilities relies on established case law and
fundamental rules of statutory construction. PHILYARDS
stresses that KAWASAKI’s right of first refusal or even the right
to top is not limited to the 40% equity of the latter.[27] On the
landholding issue raised by J.G. Summit, PHILYARDS
emphasizes that this is a non-issue and even involves a
question of fact. Even assuming that this Court can take
cognizance of such question of fact even without the benefit
of a trial, PHILYARDS opines that landholding by PHILSECO at
the time of the bidding is irrelevant because what is essential
is that ultimately a qualified entity would eventually hold
PHILSECO’s real estate properties.[28] Further, given the
assignable nature of the right of first refusal, any applicable
nationality restrictions, including landholding limitations,
would not affect the right of first refusal itself, but only the
manner of its exercise.[29] Also, PHILYARDS argues that if this
Court takes cognizance of J.G. Summit’s allegations of fact
regarding PHILSECO’s landholding, it must also recognize
PHILYARDS’ assertions that PHILSECO’s landholdings were sold
to another corporation.[30] As regards the right of first refusal,
private respondent explains that KAWASAKI’s reduced
shareholdings (from 40% to 2.59%) did not translate to a
deprivation or loss of its contractually granted right of first
refusal.[31] Also, the bidding was valid because PHILYARDS
exercised the right to top and it was of no moment that losing
bidders later joined PHILYARDS in raising the purchase
price.[32]
In cadence with the private respondent PHILYARDS, public
respondents COP and APT contend:
1. The conversion of the right of first refusal into a right to top
by 5% does not violate any provision in the JVA between NIDC
and KAWASAKI.
2. PHILSECO is not a public utility and therefore not governed
by the constitutional restriction on foreign ownership.
3. The petitioner is legally estopped from assailing the validity
of the proceedings of the public bidding as it voluntarily
submitted itself to the terms of the ASBR which included the
provision on the right to top.
4. The right to top was exercised by PHILYARDS as the nominee
of KAWASAKI and the fact that PHILYARDS formed a
consortium to raise the required amount to exercise the right
to top the highest bid by 5% does not violate the JVA or the
ASBR.
5. The 60%-40% Filipino-foreign constitutional requirement for
the acquisition of lands does not apply to PHILSECO because as
admitted by petitioner itself, PHILSECO no longer owns real
property.
6. Petitioner’s motion to elevate the case to the Court en banc
is baseless and would only delay the termination of this
case.[33]
In a Consolidated Comment dated March 8, 2004, J.G. Summit
countered the arguments of the public and private
respondents in this wise:
1. The award by the APT of 87.67% shares of PHILSECO to
PHILYARDS with losing bidders through the exercise of a right
to top, which is contrary to law and the constitution is null and
void for being violative of substantive due process and the
abuse of right provision in the Civil Code.
a. The bidders[’] right to top was actually exercised by losing
bidders.
b. The right to top or the right of first refusal cannot co-exist
with a genuine competitive bidding.
c. The benefits derived from the right to top were
unwarranted.
2. The landholding issue has been a legitimate issue since the
start of this case but is shamelessly ignored by the
respondents.
a. The landholding issue is not a non-issue.
b. The landholding issue does not pose questions of fact.
c. That PHILSECO owned land at the time that the right of first
refusal was agreed upon and at the time of the bidding are
most relevant.
d. Whether a shipyard is a public utility is not the core issue in
this case.
3. Fraud and bad faith attend the alleged conversion of an
inexistent right of first refusal to the right to top.
a. The history behind the birth of the right to top shows fraud
and bad faith.
b. The right of first refusal was, indeed, “effectively useless.”
4. Petitioner is not legally estopped to challenge the right to
top in this case.
a. Estoppel is unavailing as it would stamp validity to an act
that is prohibited by law or against public policy.
b. Deception was patent; the right to top was an attractive
nuisance.
c. The 10% bid deposit was placed in escrow.
J.G. Summit’s insistence that the right to top cannot be
sourced from the right of first refusal is not new and we have
already ruled on the issue in our Resolution of September 24,
2003. We upheld the mutual right of first refusal in the
JVA.[34] We also ruled that nothing in the JVA prevents
KAWASAKI from acquiring more than 40% of PHILSECO’s total
capitalization.[35] Likewise, nothing in the JVA or ASBR bars
the conversion of the right of first refusal to the right to top. In
sum, nothing new and of significance in the petitioner’s
pleading warrants a reconsideration of our ruling.
Likewise, we already disposed of the argument that neither the
right of first refusal nor the right to top can legally be exercised
by the consortium which is not the proper party granted such
right under either the JVA or the ASBR. Thus, we held:
The fact that the losing bidder, Keppel Consortium (composed
of Keppel, SM Group, Insular Life Assurance, Mitsui and ICTSI),
has joined PHILYARDS in the latter's effort to raise P2.131
billion necessary in exercising the right to top is not contrary
to law, public policy or public morals. There is nothing in the
ASBR that bars the losing bidders from joining either the
winning bidder (should the right to top is not exercised) or
KAWASAKI/PHI (should it exercise its right to top as it did), to
raise the purchase price. The petitioner did not allege, nor was
it shown by competent evidence, that the participation of the
losing bidders in the public bidding was done with fraudulent
intent. Absent any proof of fraud, the formation by
[PHILYARDS] of a consortium is legitimate in a free enterprise
system. The appellate court is thus correct in holding the
petitioner estopped from questioning the validity of the
transfer of the National Government's shares in PHILSECO to
respondent.[36]
Further, we see no inherent illegality on PHILYARDS’ act in
seeking funding from parties who were losing bidders. This is
a purely commercial decision over which the State should not
interfere absent any legal infirmity. It is emphasized that the
case at bar involves the disposition of shares in a corporation
which the government sought to privatize. As such, the
persons with whom PHILYARDS desired to enter into business
with in order to raise funds to purchase the shares are basically
its business. This is in contrast to a case involving a contract
for the operation of or construction of a government
infrastructure where the identity of the buyer/bidder or
financier constitutes an important consideration. In such
cases, the government would have to take utmost precaution
to protect public interest by ensuring that the parties with
which it is contracting have the ability to satisfactorily
construct or operate the infrastructure.
On the landholding issue, J.G. Summit submits that since
PHILSECO is a landholding company, KAWASAKI could exercise
its right of first refusal only up to 40% of the shares of
PHILSECO due to the constitutional prohibition on landholding
by corporations with more than 40% foreign-owned equity. It
further argues that since KAWASAKI already held at least 40%
equity in PHILSECO, the right of first refusal was inutile and as
such, could not subsequently be converted into the right to
top. [37] Petitioner also asserts that, at present, PHILSECO
continues to violate the constitutional provision on
landholdings as its shares are more than 40% foreign-
owned.[38] PHILYARDS admits that it may have previously held
land but had already divested such landholdings.[39] It
contends, however, that even if PHILSECO owned land, this
would not affect the right of first refusal but only the exercise
thereof. If the land is retained, the right of first refusal, being
a property right, could be assigned to a qualified party. In the
alternative, the land could be divested before the exercise of
the right of first refusal. In the case at bar, respondents assert
that since the right of first refusal was validly converted into a
right to top, which was exercised not by KAWASAKI, but by
PHILYARDS which is a Filipino corporation (i.e., 60% of its
shares are owned by Filipinos), then there is no violation of the
Constitution.[40] At first, it would seem that questions of fact
beyond cognizance by this Court were involved in the
issue. However, the records show that PHILYARDS admits it
had owned land up until the time of the bidding.[41] Hence,
the only issue is whether KAWASAKI had a valid right of first
refusal over PHILSECO shares under the JVA considering that
PHILSECO owned land until the time of the bidding and
KAWASAKI already held 40% of PHILSECO’s equity.
We uphold the validity of the mutual rights of first refusal
under the JVA between KAWASAKI and NIDC. First of all, the
right of first refusal is a property right of PHILSECO
shareholders, KAWASAKI and NIDC, under the terms of their
JVA. This right allows them to purchase the shares of their co-
shareholder before they are offered to a third party. The
agreement of co-shareholders to mutually grant this right to
each other, by itself, does not constitute a violation of the
provisions of the Constitution limiting land ownership to
Filipinos and Filipino corporations. As PHILYARDS correctly
puts it, if PHILSECO still owns land, the right of first refusal can
be validly assigned to a qualified Filipino entity in order to
maintain the 60%-40% ratio. This transfer, by itself, does not
amount to a violation of the Anti-Dummy Laws, absent proof
of any fraudulent intent. The transfer could be made either to
a nominee or such other party which the holder of the right of
first refusal feels it can comfortably do business
with. Alternatively, PHILSECO may divest of its landholdings,
in which case KAWASAKI, in exercising its right of first refusal,
can exceed 40% of PHILSECO’s equity. In fact, it can even be
said that if the foreign shareholdings of a landholding
corporation exceeds 40%, it is not the foreign stockholders’
ownership of the shares which is adversely affected but the
capacity of the corporation to own land – that is, the
corporation becomes disqualified to own land. This finds
support under the basic corporate law principle that the
corporation and its stockholders are separate juridical
entities. In this vein, the right of first refusal over shares
pertains to the shareholders whereas the capacity to own land
pertains to the corporation. Hence, the fact that PHILSECO
owns land cannot deprive stockholders of their right of first
refusal. No law disqualifies a person from purchasing shares in
a landholding corporation even if the latter will exceed the
allowed foreign equity, what the law disqualifies is the
corporation from owning land. This is the clear import of the
following provisions in the Constitution:
Section 2. All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall
not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control
and supervision of the State. The State may directly undertake
such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law.
In cases of water rights for irrigation, water supply, fisheries,
or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.
xxx xxx xxx
Section 7. Save in cases of hereditary succession, no private
lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands
of the public domain.[42] (emphases supplied)
The petitioner further argues that “an option to buy land is
void in itself (Philippine Banking Corporation v. Lui She, 21
SCRA 52 [1967]). The right of first refusal granted to
KAWASAKI, a Japanese corporation, is similarly void. Hence,
the right to top, sourced from the right of first refusal, is also
void.”[43] Contrary to the contention of petitioner, the case of
Lui She did not that say “an option to buy land is void in itself,”
for we ruled as follows:
x x x To be sure, a lease to an alien for a reasonable period is
valid. So is an option giving an alien the right to buy real
property on condition that he is granted Philippine citizenship.
As this Court said in Krivenko vs. Register of Deeds:
[A]liens are not completely excluded by the Constitution from
the use of lands for residential purposes. Since their residence
in the Philippines is temporary, they may be granted
temporary rights such as a lease contract which is not
forbidden by the Constitution. Should they desire to remain
here forever and share our fortunes and misfortunes, Filipino
citizenship is not impossible to acquire.
But if an alien is given not only a lease of, but also an option to
buy, a piece of land, by virtue of which the Filipino owner
cannot sell or otherwise dispose of his property, this to last for
50 years, then it becomes clear that the arrangement is a
virtual transfer of ownership whereby the owner divests
himself in stages not only of the right to enjoy the land (jus
possidendi, jus utendi, jus fruendi and jus abutendi) but also of
the right to dispose of it (jus disponendi) — rights the sum total
of which make up ownership. It is just as if today the
possession is transferred, tomorrow, the use, the next day, the
disposition, and so on, until ultimately all the rights of which
ownership is made up are consolidated in an alien. And yet this
is just exactly what the parties in this case did within this pace
of one year, with the result that Justina Santos'[s] ownership
of her property was reduced to a hollow concept. If this can be
done, then the Constitutional ban against alien landholding in
the Philippines, as announced in Krivenko vs. Register of
Deeds, is indeed in grave peril.[44] (emphases supplied;
Citations omitted)
In Lui She, the option to buy was invalidated because it land.[48] It does not extend to immovable or real property as
amounted to a virtual transfer of ownership as the owner defined under Article 415 of the Civil Code. Otherwise, we
could not sell or dispose of his properties. The contract in Lui would have a strange situation where the ownership of
She prohibited the owner of the land from selling, donating, immovable property such as trees, plants and growing fruit
mortgaging, or encumbering the property during the 50-year attached to the land[49] would be limited to Filipinos and
period of the option to buy. This is not so in the case at bar Filipino corporations only.
where the mutual right of first refusal in favor of NIDC and
KAWASAKI does not amount to a virtual transfer of land to a III.
non-Filipino. In fact, the case at bar involves a right of first
refusal over shares of stock while the Lui She case involves an WHEREFORE, in view of the foregoing, the petitioner’s Motion
option to buy the land itself. As discussed earlier, there is a for Reconsideration is DENIED WITH FINALITY and the
distinction between the shareholder’s ownership of shares decision appealed from is AFFIRMED. The Motion to Elevate
and the corporation’s ownership of land arising from the This Case to the Court En Banc is likewise DENIED for lack of
separate juridical personalities of the corporation and its merit.
shareholders.
SO ORDERED.
We note that in its Motion for Reconsideration, J.G. Summit
alleges that PHILSECO continues to violate the Constitution as
its foreign equity is above 40% and yet owns long-term
leasehold rights which are real rights.[45] It cites Article 415 of
the Civil Code which includes in the definition of immovable
property, “contracts for public works, and servitudes and other
real rights over immovable property.”[46] Any existing
landholding, however, is denied by PHILYARDS citing its recent
financial statements.[47] First, these are questions of fact, the
veracity of which would require introduction of evidence. The
Court needs to validate these factual allegations based on
competent and reliable evidence. As such, the Court cannot
resolve the questions they pose. Second, J.G. Summit
misreads the provisions of the Constitution cited in its own
pleadings, to wit:

29.2 Petitioner has consistently pointed out in the past that

private respondent is not a 60%-40% corporation, and this
violates the Constitution x x x The violation continues to this
day because under the law, it continues to own real property…

xxx xxx xxx

32. To review the constitutional provisions involved, Section

14, Article XIV of the 1973 Constitution (the JVA was signed in
1977), provided:

“Save in cases of hereditary succession, no private lands shall

be transferred or conveyed except to individuals, corporations,
or associations qualified to acquire or hold lands of the public
domain.”

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

1987 Constitution.

32.2 Under the Public Land Act, corporations qualified to

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

As correctly observed by the public respondents, the

prohibition in the Constitution applies only to ownership of
THE REGISTER OF DEEDS OF RIZAL, petitioner-appellee, vs.
UNG SIU SI TEMPLE, respondent-appellant.
G.R. No. L-6776 | 1955-05-21
DECISION
REYES J.B.L., J.:
The Register of Deeds for the province of Rizal refused to
accept for record a deed of donation executed in due form on
January 22, 1953, by Jesus Dy, a Filipino citizen, conveying a
parcel of residential land, in Caloocan, Rizal, known as lot No.
2, block 48-D, PSD-4212, G.L.R.O. Record No. 11267, in favor of
the unregistered religious organization "Ung Siu Si Temple",
operating through three trustees all of Chinese nationality. The
donation was duly accepted by Yu Juan, of Chinese nationality,
founder and deaconess of the Temple, acting in representation
and in behalf of the latter and its trustees.
The refusal of the Registrar was elevated en Consulta to the
IVth Branch of the Court of First Instance of Manila. On March
14, 1953, the Court upheld the action of the Rizal Register of
Deeds, saying:
"The question raised by the Register of Deeds in the above
transcribed consulta is whether a deed of donation of a parcel
of land executed in favor of a religious organization whose
founder, trustees and administrator are Chinese citizens
should be registered or not.
It appearing from the record of the Consulta that UNG SIU SI
TEMPLE is a religious organization whose deaconess, founder,
trustees and administrator are all Chinese citizens, this Court
is of the opinion and so hold that in view of the provisions of
the sections 1 and 5 of Article XIII of the Constitution of the
Philippines limiting the acquisition of land in the Philippines to
its citizens, or to corporations or associations at least sixty per
centum of the capital stock of which is owned by such citizens
adopted after the enactment of said Act No. 271, and the
decision of the Supreme Court in the case of Krivenko vs. the
Register of Deeds of Manila, the deed of donation in question
should not be admitted for registration." (Printed Rec. App. pp.
17-18).
Not satisfied with the ruling of the Court of First Instance,
counsel for the donee Uy Siu Si Temple has appealed to this
Court, claiming: (1) that the acquisition of the land in question,
for religious purposes, is authorized and permitted by Act No.
271 of the old Philippine Commission, providing as follows:
"SECTION 1. It shall be lawful for all religious associations, of
whatever sort or denomination, whether incorporated in the
Philippine Islands or in the name of other country, or not
incorporated at all, to hold land in the Philippine Islands upon
which to build churches, parsonages, or educational or
charitable institutions.
"SEC. 2. Such religious institutions, if not incorporated, shall
hold the land in the name of three Trustees for the use of such
associations; . . ." (Printed Rec. App. p. 5.)
and (2) that the refusal of the Register of Deeds violates the
freedom of religion clause of our Constitution [Art. III, Sec.
1(7)].
We are of the opinion that the Court below has correctly held
that in view of the absolute terms of section 5, Title XIII, of the
Constitution, the provisions of Act No. 271 of the old Philippine
Commission must be deemed repealed since the Constitution
was enacted, in so far as incompatible therewith. In providing
that, -
"Save in cases of hereditary succession, no private agricultural
land shall be transferred or assigned except to individuals,
corporations or associations qualified to acquire or hold lands
of the public domain in the Philippines",
the Constitution makes no exception in favor of religious
associations. Neither is there any such saving found in sections
1 and 2 of Article XIII, restricting the acquisition of public
agricultural lands and other natural resources to "corporations
or associations at least sixty per centum of the capital of which
is owned by such citizens" (of the Philippines).
The fact that the appellant religious organization has no capital
stock does not suffice to escape the Constitutional inhibition,
since it is admitted that its members are of foreign nationality.
The purpose of the sixty per centum requirement is obviously
to ensure that corporations or associations allowed to acquire
agricultural land or to exploit natural resources shall be
controlled by Filipinos, and the spirit of the Constitution
demands that in the absence of capital stock, the controlling
membership should be composed of Filipino citizens.
To permit religious associations controlled by non-Filipinos to
acquire agricultural lands would be to drive the opening wedge
to revive alien religious land holdings in this country. We can
not ignore the historical fact that complaints against land
holdings of that kind were among the factors that sparked the
revolution of 1896.
As to the complaint that the disqualification under article XIII
is violative of the freedom of religion guaranteed by Article III
of the Constitution, we are by no means convinced (nor has it
been shown) that land tenure is indispensable to the free
exercise and enjoyment of religious profession or worship; or
that one may not worship the Deity according to the dictates
of his own conscience unless upon land held in fee simple. The
resolution appealed from is affirmed, with costs against
appellant.
Pablo, Acting C.J., Bengzon, Montemayor, Reyes, A. Bautista
Angelo, Labrador and Concepcion, JJ., concur.
THE ROMAN CATHOLIC APOSTOLIC ADMINISTRATOR OF
DAVAO, INC., petitioner,
vs. THE LAND REGISTRATION COMMISSION and THE
REGISTER OF DEEDS OF DAVAO CITY, respondents.
G.R. No. L-8451 | 1957-12-20
EN BANC
DECISION
FELIX, J.:
This is a petition for mandamus filed by the Roman Catholic
Apostolic Administrator of Davao seeking the reversal of a
resolution by the Land Registration Commissioner in L.R.C.
Consulta No. 14. The facts of the case are as follows:
On October 4, 1954, Mateo L. Rodis, a Filipino citizen and
resident of the City of Davao, executed a deed of sale of a
parcel of land located in the same city covered by Transfer
Certificate No. 2263, in favor of the Roman Catholic Apostolic
Administrator of Davao Inc., s corporation sole organized and
existing in accordance with Philippine Laws, with Msgr. Clovis
Thibault, a Canadian citizen, as actual incumbent. When the
deed of sale was presented to Register of Deeds of Davao for
registration, the latter.
having in mind a previous resolution of the Fourth Branch of
the Court of First Instance of Manila wherein the Carmelite
Nuns of Davao were made to prepare an affidavit to the effect
that 60 per cent of the members of their corporation were
Filipino citizens when they sought to register in favor of their
congregation of deed of donation of a parcel of land—
required said corporation sole to submit a similar affidavit
declaring that 60 per cent of the members thereof were
Filipino citizens.
The vendee in the letter dated June 28, 1954, expressed
willingness to submit an affidavit, both not in the same tenor
as that made the Progress of the Carmelite Nuns because the
two cases were not similar, for whereas the congregation of
the Carmelite Nuns had five incorporators, the corporation
sole has only one; that according to their articles of
incorporation, the organization of the Carmelite Nuns became
the owner of properties donated to it, whereas the case at bar,
the totality of the Catholic population of Davao would become
the owner of the property bought to be registered.
As the Register of Deeds entertained some doubts as to the
registerability if the document, the matter was referred to the
Land Registration Commissioner en consulta for resolution in
accordance with section 4 of Republic Act No. 1151. Proper
hearing on the matter was conducted by the Commissioner
and after the petitioner corporation had filed its
memorandum, a resolution was rendered on September 21,
1954, holding that in view of the provisions of Section 1 and 5
of Article XIII of the Philippine Constitution, the vendee was
not qualified to acquire private lands in the Philippines in the
absence of proof that at least 60 per centum of the capital,
property, or assets of the Roman Catholic Apostolic
Administrator of Davao, Inc., was actually owned or controlled
by Filipino citizens, there being no question that the present
incumbent of the corporation sole was a Canadian citizen. It
was also the opinion of the Land Registration Commissioner
that section 159 of the corporation Law relied upon by the
vendee was rendered operative by the aforementioned
provisions of the Constitution with respect to real estate,
unless the precise condition set therein — that at least 60 per
cent of its capital is owned by Filipino citizens — be present,
and, therefore, ordered the Registered Deeds of Davao to deny
registration of the deed of sale in the absence of proof of
compliance with such condition.
After the motion to reconsider said resolution was denied, an
action for mandamus was instituted with this Court by said
corporation sole, alleging that under the Corporation Law as
well as the settled jurisprudence on the matter, the deed of
sale executed by Mateo L. Rodis in favor of petitioner is
actually a deed of sale in favor of the Catholic Church which is
qualified to acquire private agricultural lands for the
establishment and maintenance of places of worship, and
prayed that judgment be rendered reserving and setting aside
the resolution of the Land Registration Commissioner in
question. In its resolution of November 15, 1954, this Court
gave due course to this petition providing that the procedure
prescribed for appeals from the Public Service Commission of
the Securities and Exchange Commissions (Rule 43), be
followed.
Section 5 of Article XIII of the Philippine Constitution reads as
follows:
SEC. 5. Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned except to
individuals, corporations, or associations qualified to acquire
or hold lands of the public domain in the Philippines.
Section 1 of the same Article also provides the following:
SECTION 1. All agricultural, timber, and mineral lands of the
public domain, water, 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 cititzens 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
CONSTITUTION. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license,
concession, or leases for the exploitation, development, or
utilization of any of the natural resources shall be granted for
a period exceeding twenty-five years, renewable for another
twenty-five years, except as to water rights for irrigation,
water supply, fisheries, or industrial uses other than the
development of water power, in which cases other than the
development and limit of the grant.
In virtue of the foregoing mandates of the Constitution, who
are considered "qualified" to acquire and hold agricultural
lands in the Philippines? What is the effect of these
constitutional prohibition of the right of a religious corporation
recognized by our Corporation Law and registered as a
corporation sole, to possess, acquire and register real estates
in its name when the Head, Manager, Administrator or actual
incumbent is an alien?
Petitioner consistently maintained that a corporation sole,
irrespective of the citizenship of its incumbent, is not
prohibited or disqualified to acquire and hold real properties.
The Corporation Law and the Canon Law are explicit in their
provisions that a corporation sole or "ordinary" is not the
owner of the of the properties that he may acquire but merely
the administrator thereof. The Canon Law also specified that
church temporalities are owned by the Catholic Church as a
"moral person" or by the diocess as minor "moral persons"
with the ordinary or bishop as administrator.
And elaborating on the composition of the Catholic Church in
the Philippines, petitioner explained that as a religious society
or organization, it is made up of 2 elements or divisions — the
clergy or religious members and the faithful or lay members.
The 1948 figures of the Bureau of Census showed that there
were 277,551 Catholics in Davao and aliens residing therein
numbered 3,465. Ever granting that all these foreigners are
Catholics, petitioner contends that Filipino citizens form more
than 80 per cent of the entire Catholics population of that area.
As to its clergy and religious composition, counsel for
petitioner presented the Catholic Directory of the Philippines
for 1954 (Annex A) which revealed that as of that year, Filipino
clergy and women novices comprise already 60.5 per cent of
the group. It was, therefore, allowed that the constitutional
requirement was fully met and satisfied.
Respondents, on the other hand, averred that although it
might be true that petitioner is not the owner of the land
purchased, yet he has control over the same, with full power
to administer, take possession of, alienate, transfer,
encumber, sell or dispose of any or all lands and their
improvements registered in the name of the corporation sole
and can collect, receive, demand or sue for all money or values
of any kind that may be kind that may become due or owing to
said corporation, and vested with authority to enter into
agreements with any persons, concerns or entities in
connection with said real properties, or in other words,
actually exercising all rights of ownership over the properties.
It was their stand that the theory that properties registered in
the name of the corporation sole are held in true for the
benefit of the Catholic population of a place, as of Davao in the
case at bar should be sustained because a conglomeration of
persons cannot just be pointed out as the cestui que trust or
recipient of the benefits from the property allegedly
administered in their behalf. Neither can it be said that the
mass of people referred to as such beneficiary exercise ant
right of ownership over the same. This set-up, respondents
argued, falls short of a trust. The respondents instead tried to
prove that in reality, the beneficiary of ecclesiastical properties
are not members or faithful of the church but someone else,
by quoting a portion a portion of the ought of fidelity
subscribed by a bishop upon his elevation to the episcopacy
wherein he promises to render to the Pontificial Father or his
successors an account of his pastoral office and of all things
appertaining to the state of this church.
Respondents likewise advanced the opinion that in construing
the constitutional provision calling for 60 per cent of Filipino
citizenship, the criterion of the properties or assets thereof.
In solving the problem thus submitted to our consideration,
We can say the following: A corporation sole is a special form
of corporation usually associated with the clergy. Conceived
and introduced into the common law by sheer necessity, this
legal creation which was referred to as "that unhappy freak of
English law" was designed to facilitate the exercise of the
functions of ownership carried on by the clerics for and on
behalf of the church which was regarded as the property
owner (See I Couvier's Law Dictionary, p. 682-683).
A corporation sole consists of one person only, and his
successors (who will always be one at a time), in some
particular station, who are incorporated by law in order to give
them some legal capacities and advantages, particularly that
of perpetuity, which in their natural persons they could not
have had. In this sense, the king is a sole corporation; so is a
bishop, or dens, distinct from their several chapters (Reid vs.
Barry, 93 Fla. 849, 112 So. 846).
The provisions of our Corporation law on religious
corporations are illuminating and sustain the stand of
petitioner. Section 154 thereof provides:
SEC. 154. — For the administration of the temporalities of any
religious denomination, society or church and the
management of the estates and the properties thereof, it shall
be lawful for the bishop, chief priest, or presiding either of any
such religious denomination, society or church to become a
corporation sole, unless inconsistent wit the rules, regulations
or discipline of his religious denomination, society or church or
forbidden by competent authority thereof.
See also the pertinent provisions of the succeeding sections of
the same Corporation Law copied hereunder:
SEC. 155. In order to become a corporation sole the bishop,
chief priest, or presiding elder of any religious denomination,
society or church must file with the Securities and Exchange
Commissioner articles of incorporation setting forth the
following facts:
xxx xxx xxx.
(3) That as such bishop, chief priest, or presiding elder he is
charged with the administration of the temporalities and the
management of the estates and properties of his religious
denomination, society, or church within its territorial
jurisdiction, describing it;
xxx xxx xxx.
(As amended by Commonwealth Act No. 287).
SEC. 157. From and after the filing with the Securities and
Exchange Commissioner of the said articles of incorporation,
which verified by affidavit or affirmation as aforesaid and
accompanied by the copy of the commission, certificate of
election, or letters of appointment of the bishop, chief priest,
or presiding elder, duly certified as prescribed in the section
immediately preceding such the bishop, chief priest, or
presiding elder, as the case may be, shall become a corporation
sole and all temporalities, estates, and properties the religious
denomination, society, or church therefore administered or
managed by him as such bishop, chief priest, or presiding
elder, shall be held in trust by him as a corporation sole, for the
use, purpose, behalf, and sole benefit of his religious
denomination, society, or church, including hospitals, schools,
colleges, orphan, asylums, parsonages, and cemeteries
thereof. For the filing of such articles of incorporation, the
Securities and Exchange Commissioner shall collect twenty-
five pesos. (As amended by Commonwealth Act. No. 287); and.
SEC. 163. The right to administer all temporalities and all
property held or owned by a religious order or society, or by
the diocese, synod, or district organization of any religious
denomination or church shall, on its incorporation, pass to the
corporation and shall be held in trust for the use, purpose
behalf, and benefit of the religious society, or order so
incorporated or of the church of which the diocese, or district
organization is an organized and constituent part.
The Cannon Law contains similar provisions regarding the
duties of the corporation sole or ordinary as administrator of
the church properties, as follows:
Al Ordinario local pertenence vigilar diligentemente sobre la
administracion de todos los bienes eclesiasticos que se hallan
en su territorio y no estuvieren sustraidos de su jurisdiccion,
salvs las prescriciones legitimas que le concedan mas aamplios
derechos.
Teniendo en cuenta los derechos y las legitimas costumbres y
circunstancias, procuraran los Ordinarios regular todo lo
concerniente a la administracion de los bienes eclesciasticos,
dando las oportunas instucciones particularles dentro del
narco del derecho comun. (Title XXVIII, Codigo de Derecho
Canonico, Lib. III, Canon 1519).1
That leaves no room for doubt that the bishops or archbishops,
as the case may be, as corporation's sole are merely
administrators of the church properties that come to their
possession, in which they hold in trust for the church. It can
also be said that while it is true that church properties could
be administered by a natural persons, problems regarding
succession to said properties can not be avoided to rise upon
his death. Through this legal fiction, however, church
properties acquired by the incumbent of a corporation sole
pass, by operation of law, upon his death not his personal heirs
but to his successor in office. It could be seen, therefore, that
a corporation sole is created not only to administer the
temporalities of the church or religious society where he
belongs but also to hold and transmit the same to his successor
in said office. If the ownership or title to the properties do not
pass to the administrators, who are the owners of church
properties?.
Bouscaren and Elis, S.J., authorities on cannon law, on their
treatise comment:
In matters regarding property belonging to the Universal
Church and to the Apostolic See, the Supreme Pontiff exercises
his office of supreme administrator through the Roman Curia;
in matters regarding other church property, through the
administrators of the individual moral persons in the Church
according to that norms, laid down in the Code of Cannon Law.
This does not mean, however, that the Roman Pontiff is the
owner of all the church property; but merely that he is the
supreme guardian (Bouscaren and Ellis, Cannon Law, A Text
and Commentary, p. 764).
and this Court, citing Campes y Pulido, Legislacion y
Jurisprudencia Canonica, ruled in the case of Trinidad vs.
Roman Catholic Archbishop of Manila, 63 Phil. 881, that:
The second question to be decided is in whom the ownership
of the properties constituting the endowment of the
ecclesiastical or collative chaplaincies is vested.
Canonists entertain different opinions as to the persons in
whom the ownership of the ecclesiastical properties is vested,
with respect to which we shall, for our purpose, confine
ourselves to stating with Donoso that, while many doctors
cited by Fagnano believe that it resides in the Roman Pontiff as
Head of the Universal Church, it is more probable that
ownership, strictly speaking, does not reside in the latter, and,
consequently, ecclesiastical properties are owned by the
churches, institutions and canonically established private
corporations to which said properties have been donated.
Considering that nowhere can We find any provision
conferring ownership of church properties on the Pope
although he appears to be the supreme administrator or
guardian of his flock, nor on the corporation sole or heads of
dioceses as they are admittedly mere administrators of said
properties, ownership of these temporalities logically fall and
develop upon the church, diocese or congregation acquiring
the same. Although this question of ownership of ecclesiastical
properties has off and on been mentioned in several decisions
of the Court yet in no instance was the subject of citizenship of
this religious society been passed upon.
We are not unaware of the opinion expressed by the late
Justice Perfecto in his dissent in the case of Agustines vs. Court
of First Instance of Bulacan, 80 Phil. 565, to the effect that "the
Roman Catholic Archbishop of Manila is only a branch of a
universal church by the Pope, with permanent residence in
Rome, Italy". There is no question that the Roman Catholic
Church existing in the Philippines is a tributary and part of the
international religious organization, for the word "Roman"
clearly expresses its unity with and recognizes the authority of
the Pope in Rome. However, lest We become hasty in drawing
conclusions, We have to analyze and take note of the nature
of the government established in the Vatican City, of which it
was said:
GOVERNMENT. In the Roman Catholic Church supreme
authority and jurisdiction over clergy and laity alike as held by
the pope who (since the Middle Ages) is elected by the
cardinals assembled in conclave, and holds office until his
death or legitimate abdication. . . While the pope is obviously
independent of the laws made, and the officials appointed, by
himself or his predecessors, he usually exercises his
administrative authority according to the code of canon law
and through the congregations, tribunals and offices of the
Curia Romana. In their respective territories (called generally
dioceses) and over their respective subjects, the patriarchs,
metropolitans or archbishops and bishops exercise a
jurisdiction which is called ordinary (as attached by law to an
office given to a person. . . (Collier's Encyclopedia, Vol. 17, p.
93).
While it is true and We have to concede that in the profession
of their faith, the Roman Pontiff is the supreme head; that in
the religious matters, in the exercise of their belief, the
Catholic congregation of the faithful throughout the world
seeks the guidance and direction of their Spiritual Father in the
Vatican, yet it cannot be said that there is a merger of
personalities resultant therein. Neither can it be said that the
political and civil rights of the faithful, inherent or acquired
under the laws of their country, are affected by that
relationship with the Pope. The fact that the Roman Catholic
Church in almost every country springs from that society that
saw its beginning in Europe and the fact that the clergy of this
faith derive their authorities and receive orders from the Holy
See do not give or bestow the citizenship of the Pope upon
these branches. Citizenship is a political right which cannot be
acquired by a sort of "radiation". We have to realize that
although there is a fraternity among all the catholic countries
and the dioceses therein all over the globe, the universality
that the word "catholic" implies, merely characterize their
faith, a uniformity in the practice and the interpretation of
their dogma and in the exercise of their belief, but certainly
they are separate and independent from one another in
jurisdiction, governed by different laws under which they are
incorporated, and entirely independent on the others in the
management and ownership of their temporalities. To allow
theory that the Roman Catholic Churches all over the world
follow the citizenship of their Supreme Head, the Pontifical
Father, would lead to the absurdity of finding the citizens of a
country who embrace the Catholic faith and become members
of that religious society, likewise citizens of the Vatican or of
Italy. And this is more so if We consider that the Pope himself
may be an Italian or national of any other country of the world.
The same thing be said with regard to the nationality or
citizenship of the corporation sole created under the laws of
the Philippines, which is not altered by the change of
citizenship of the incumbent bishops or head of said
corporation sole.
We must therefore, declare that although a branch of the
Universal Roman Catholic Apostolic Church, every Roman
Catholic Church in different countries, if it exercises its mission
and is lawfully incorporated in accordance with the laws of the
country where it is located, is considered an entity or person
with all the rights and privileges granted to such artificial being
under the laws of that country, separate and distinct from the
personality of the Roman Pontiff or the Holy See, without
prejudice to its religious relations with the latter which are
governed by the Canon Law or their rules and regulations.
We certainly are conscious of the fact that whatever
conclusion We may draw on this matter will have a far reaching
influence, nor can We overlook the pages of history that
arouse indignation and criticisms against church landholdings.
This nurtured feeling that snowbailed into a strong
nationalistic sentiment manifested itself when the provisions
on natural to be embodied in the Philippine Constitution were
framed, but all that has been said on this regard referred more
particularly to landholdings of religious corporations known as
"Friar Estates" which have already bee acquired by our
government, and not to properties held by corporations sole
which, We repeat, are properties held in trust for the benefit
of the faithful residing within its territorial jurisdiction. Though
that same feeling probably precipitated and influenced to a
large extent the doctrine laid down in the celebrated Krivenco
decision, We have to take this matter in the light of legal
provisions and jurisprudence actually obtaining, irrespective of
sentiments.
The question now left for our determination is whether the
Universal Roman Catholic Apostolic Church in the Philippines,
or better still, the corporation sole named the Roman Catholic
Apostolic Administrator of Davao, Inc., is qualified to acquire
private agricultural lands in the Philippines pursuant to the
provisions of Article XIII of the Constitution.
We see from sections 1 and 5 of said Article quoted before,
that only persons or corporations qualified to acquire hold
lands of the public domain in the Philippines may acquire or be
assigned and hold private agricultural lands. Consequently, the
decisive factor in the present controversy hinges on the
proposition or whether or not the petitioner in this case can
acquire agricultural lands of the public domain.
From the data secured from the Securities and Exchange
Commission, We find that the Roman Catholic Bishop of
Zamboanga was incorporated (as a corporation sole) in
September, 1912, principally to administer its temporalities
and manage its properties. Probably due to the ravages of the
last war, its articles of incorporation were reconstructed in the
Securities and Exchange Commission on April 8, 1948. At first,
this corporation sole administered all the temporalities of the
church existing or located in the island of Mindanao. Later on,
however, new dioceses were formed and new corporations
sole were created to correspond with the territorial
jurisdiction of the new dioceses, one of them being petitioner
herein, the Roman Catholic Apostolic Administrator of Davao,
Inc., which was registered with the Securities and Exchange
Commission on September 12, 1950, and succeeded in the
administrative for all the "temporalities" of the Roman
Catholic Church existing in Davao.
According to our Corporation Law, Public Act No. 1549,
approved April 1, 1906, a corporation sole.
is organized and composed of a single individual, the head of
any religious society or church, for the ADMINISTRATION of the
temporalities of such society or church. By "temporalities" is
meant estate and properties not used exclusively for religious
worship. The successor in office of such religious head or chief
priest incorporated as a corporation sole shall become the
corporation sole on ascension to office, and shall be permitted
to transact business as such on filing with the Securities and
Exchange Commission a copy of his commission, certificate of
election or letter of appointment duly certified by any notary
public or clerk of court of record (Guevara's The Philippine
Corporation Law, p. 223).
The Corporation Law also contains the following provisions:
SECTION 159. Any corporation sole may purchase and hold real
estate and personal; property for its church, charitable,
benevolent, or educational purposes, and may receive
bequests or gifts of such purposes. Such corporation may
mortgage or sell real property held by it upon obtaining an
order for that purpose from the Court of First Instance of the
province in which the property is situated; but before making
the order proof must be made to the satisfaction of the Court
that notice of the application for leave to mortgage or sell has
been given by publication or otherwise in such manner and for
such time as said Court or the Judge thereof may have
directed, and that it is to the interest of the corporation that
leave to mortgage or sell must be made by petition, duly
verified by the bishop, chief priest, or presiding elder acting as
corporation sole, and may be opposed by any member of the
religious denomination, society or church represented by the
corporation sole: Provided, however, That in cases where the
rules, regulations, and discipline of the religious denomination,
society or church concerned represented by such corporation
sole regulate the methods of acquiring, holding, selling and
mortgaging real estate and personal property, such rules,
regulations, and discipline shall control and the intervention of
the Courts shall not be necessary.
It can, therefore, be noticed that the power of a corporation
sole to purchase real property, like the power exercised in the
case at bar, it is not restricted although the power to sell or
mortgage sometimes is, depending upon the rules,
regulations, and discipline of the church concerned
represented by said corporation sole. If corporations sole can
purchase and sell real estate for its church, charitable,
benevolent, or educational purposes, can they register said
real properties? As provided by law, lands held in trust for
specific purposes me be subject of registration (section 69, Act
496), and the capacity of a corporation sole, like petitioner
herein, to register lands belonging to it is acknowledged, and
title thereto may be issued in its name (Bishop of Nueva
Segovia vs. Insular Government, 26 Phil. 300-1913). Indeed it
is absurd that while the corporations sole that might be in need
of acquiring lands for the erection of temples where the
faithful can pray, or schools and cemeteries which they are
expressly authorized by law to acquire in connection with the
propagation of the Roman Catholic Apostolic faith or in
furtherance of their freedom of religion they could not register
said properties in their name. As professor Javier J.
Nepomuceno very well says "Man in his search for the
immortal and imponderable, has, even before the dawn of
recorded history, erected temples to the Unknown God, and
there is no doubt that he will continue to do so for all time to
come, as long as he continues 'imploring the aid of Divine
Providence'" (Nepomuceno's Corporation Sole, VI Ateneo Law
Journal, No. 1, p. 41, September, 1956). Under the
circumstances of this case, We might safely state that even
before the establishment of the Philippine Commonwealth
and of the Republic of the Philippines every corporation sole
then organized and registered had by express provision of law
the necessary power and qualification to purchase in its name
private lands located in the territory in which it exercised its
functions or ministry and for which it was created,
independently of the nationality of its incumbent unique and
single member and head, the bishop of the dioceses. It can be
also maintained without fear of being gainsaid that the Roman
Catholic Apostolic Church in the Philippines has no nationality
and that the framers of the Constitution, as will be hereunder
explained, did not have in mind the religious corporations sole
when they provided that 60 per centum of the capital thereof
be owned by Filipino citizens.
There could be no controversy as to the fact that a duly
registered corporation sole is an artificial being having the right
of succession and the power, attributes, and properties
expressly authorized by law or incident to its existence (section
1, Corporation Law). In outlining the general powers of a
corporation. Public Act. No. 1459 provides among others:
SEC. 13. Every corporation has the power:
(5) To purchase, hold, convey, sell, lease, lot, mortgage,
encumber, and otherwise deal with such real and personal
property as the purpose for which the corporation was formed
may permit, and the transaction of the lawful business of the
corporation may reasonably and necessarily require, unless
otherwise prescribed in this Act: . . .
In implementation of the same and specially made applicable
to a form of corporation recognized by the same law, Section
159 aforequoted expressly allowed the corporation sole to
purchase and hold real as well as personal properties
necessary for the promotion of the objects for which said
corporation sole is created. Respondent Land Registration
Commissioner, however, maintained that since the Philippine
Constitution is a later enactment than public Act No. 1459, the
provisions of Section 159 in amplification of Section 13 thereof,
as regard real properties, should be considered repealed by
the former.
There is a reason to believe that when the specific provision of
the Constitution invoked by respondent Commissioner was
under consideration, the framers of the same did not have in
mind or overlooked this particular form of corporation. It is
undeniable that the naturalization and conservation of our
national resources was one of the dominating objectives of the
Convention and in drafting the present Article XII of the
Constitution, the delegates were goaded by the desire (1) to
insure their conservation for Filipino posterity; (2) to serve as
an instrument of national defense, helping prevent the
extension into the country of foreign control through peaceful
economic penetration; and (3) to prevent making the
Philippines a source of international conflicts with the
consequent danger to its internal security and independence
(See The Framing of the Philippine Constitution by Professor
Jose M. Aruego, a Delegate to the Constitutional Convention,
Vol. II. P. 592-604). In the same book Delegate Aruego,
explaining the reason behind the first consideration, wrote:
At the time of the framing of Philippine Constitution, Filipino
capital had been to be rather shy. Filipinos hesitated s a
general rule to invest a considerable sum of their capital for
the development, exploitation and utilization of the natural
resources of the country. They had not as yet been so used to
corporate as the peoples of the west. This general apathy, the
delegates knew, would mean the retardation of the
development of the natural resources, unless foreign capital
would be encouraged to come and help in that development.
They knew that the naturalization of the natural resources
would certainly not encourage the INVESTMENT OF FOREIGN
CAPITAL into them. But there was a general feeling in the
Convention that it was better to have such a development
retarded or even postpone together until such time when the
Filipinos would be ready and willing to undertake it rather than
permit the natural resources to be placed under the ownership
or control of foreigners in order that they might be
immediately be developed, with the Filipinos of the future
serving not as owners but utmost as tenants or workers under
foreign masters. By all means, the delegates believed, the
natural resources should be conserved for Filipino posterity.
It could be distilled from the foregoing that the farmers of the
Constitution intended said provisions as barrier for foreigners
or corporations financed by such foreigners to acquire, exploit
and develop our natural resources, saving these undeveloped
wealth for our people to clear and enrich when they are
already prepared and capable of doing so. But that is not the
case of corporations sole in the Philippines, for, We repeat,
they are mere administrators of the "temporalities" or
properties titled in their name and for the benefit of the
members of their respective religion composed of an
overwhelming majority of Filipinos. No mention nor allusion
whatsoever is made in the Constitution as to the prohibition
against or the liability of the Roman Catholic Church in the
Philippines to acquire and hold agricultural lands. Although
there were some discussions on landholdings, they were
mostly confined in the inclusion of the provision allowing the
Government to break big landed estates to put an end to
absentee landlordism.
But let us suppose, for the sake of argument, that the above
referred to inhibitory clause of Section 1 of Article XIII of the
constitution does have bearing on the petitioner's case; even
so the clause requiring that at least 60 per centum of the
capital of the corporation be owned by Filipinos is
subordinated to the petitioner's aforesaid right already
existing at the time of the inauguration of the Commonwealth
and the Republic of the Philippines. In the language of Mr.
Justice Jose P. Laurel (a delegate to the Constitutional
Convention), in his concurring opinion of the case of Gold
Creek mining Corporation, petitioner vs. Eulogio Rodriguez,
Secretary of Agriculture and Commerce, and Quirico Abadilla,
Director of the Bureau of Mines, respondent, 66 Phil. 259:
The saving clause in the section involved of the Constitution
was originally embodied in the report submitted by the
Committee on Naturalization and Preservation of Land and
Other Natural Resources to the Constitutional Convention on
September 17, 1954. It was later inserted in the first draft of
the Constitution as section 13 of Article XIII thereof, and finally
incorporated as we find it now. Slight have been the changes
undergone by the proviso from the time when it comes out of
the committee until it was finally adopted. When first
submitted and as inserted to the first draft of the Constitution
it reads: 'subject to any right, grant, lease, or concession
existing in respect thereto on the date of the adoption of the
Constitution'. As finally adopted, the proviso reads: 'subject to
any existing right, grant, lease, or concession at the time of the
inauguration of the Government established under this
Constitution'. This recognition is not mere graciousness but
springs form the just character of the government established.
The framers of the Constitution were not obscured by the
rhetoric of democracy or swayed to hostility by an intense
spirit of nationalism. They well knew that conservation of our
natural resources did not mean destruction or annihilation of
acquired property rights. Withal, they erected a government
neither episodic nor stationary but well-nigh conservative in
the protection of property rights. This notwithstanding
nationalistic and socialistic traits discoverable upon even a
sudden dip into a variety of the provisions embodied in the
instrument.
The writer of this decision wishes to state at this juncture that
during the deliberation of this case he submitted to the
consideration of the Court the question that may be termed
the "vested right saving clause" contained in Section 1, Article
XII of the Constitution, but some of the members of this Court
either did not agree with the theory of the writer, or were not
ready to take a definite stand on the particular point I am now
to discuss deferring our ruling on such debatable question for
a better occasion, inasmuch as the determination thereof is
not absolutely necessary for the solution of the problem
involved in this case. In his desire to face the issues squarely,
the writer will endeavor, at least as a disgression, to explain
and develop his theory, not as a lucubration of the Court, but
of his own, for he deems it better and convenient to go over
the cycle of reasons that are linked to one another and that
step by step lead Us to conclude as We do in the dispositive
part of this decision.
It will be noticed that Section 1 of Article XIII of the
Constitution provides, among other things, that "all
agricultural lands of the public domain and their disposition
shall be limited to citizens of the Philippines or to corporations
at least 60 per centum of the capital of which is owned by such
citizens, SUBJECT TO ANY EXISTING RIGHT AT THE TIME OF THE
INAUGURATION OF THE GOVERNMENT ESTABLISHED UNDER
THIS CONSTITUTION."
As recounted by Mr. Justice Laurel in the aforementioned case
of Gold Creek Mining Corporation vs. Rodriguez et al., 66 Phil.
259, "this recognition (in the clause already quoted), is not
mere graciousness but springs from the just character of the
government established. The farmers of the Constitution were
not obscured by the rhetoric of democracy or swayed to
hostility by an intense spirit of nationalism. They well knew
that conservation of our natural resources did not mean
destruction or annihilation of ACQUIRED PROPERTY RIGHTS".
But respondents' counsel may argue that the preexisting right
of acquisition of public or private lands by a corporation which
does not fulfill this 60 per cent requisite, refers to purchases of
the Constitution and not to later transactions. This argument
would imply that even assuming that petitioner had at the time
of the enactment of the Constitution the right to purchase real
property or right could not be exercised after the effectivity of
our Constitution, because said power or right of corporations
sole, like the herein petitioner, conferred in virtue of the
aforequoted provisions of the Corporation Law, could no
longer be exercised in view of the requisite therein prescribed
that at least 60 per centum of the capital of the corporation
had to be Filipino. It has been shown before that: (1) the
corporation sole, unlike the ordinary corporations which are
formed by no less than 5 incorporators, is composed of only
one persons, usually the head or bishop of the diocese, a unit
which is not subject to expansion for the purpose of
determining any percentage whatsoever; (2) the corporation
sole is only the administrator and not the owner of the
temporalities located in the territory comprised by said
corporation sole; (3) such temporalities are administered for
and on behalf of the faithful residing in the diocese or territory
of the corporation sole; and (4) the latter, as such, has no
nationality and the citizenship of the incumbent Ordinary has
nothing to do with the operation, management or
administration of the corporation sole, nor effects the
citizenship of the faithful connected with their respective
dioceses or corporation sole.
In view of these peculiarities of the corporation sole, it would
seem obvious that when the specific provision of the
Constitution invoked by respondent Commissioner (section 1,
Art. XIII), was under consideration, the framers of the same did
not have in mind or overlooked this particular form of
corporation. If this were so, as the facts and circumstances
already indicated tend to prove it to be so, then the
inescapable conclusion would be that this requirement of at
least 60 per cent of Filipino capital was never intended to apply
to corporations sole, and the existence or not a vested right
becomes unquestionably immaterial.
But let us assumed that the questioned proviso is material. yet
We might say that a reading of said Section 1 will show that it
does not refer to any actual acquisition of land up to the right,
qualification or power to acquire and hold private real
property. The population of the Philippines, Catholic to a high
percentage, is ever increasing. In the practice of religion of
their faithful the corporation sole may be in need of more
temples where to pray, more schools where the children of the
congregation could be taught in the principles of their religion,
more hospitals where their sick could be treated, more hallow
or consecrated grounds or cemeteries where Catholics could
be buried, many more than those actually existing at the time
of the enactment of our Constitution. This being the case,
could it be logically maintained that because the corporation
sole which, by express provision of law, has the power to hold
and acquire real estate and personal property of its churches,
charitable benevolent, or educational purposes (section 159,
Corporation Law) it has to stop its growth and restrain its
necessities just because the corporation sole is a non-stock
corporation composed of only one person who in his unity
does not admit of any percentage, especially when that person
is not the owner but merely an administrator of the
temporalities of the corporation sole? The writer leaves the
answer to whoever may read and consider this portion of the
decision.
Anyway, as stated before, this question is not a decisive factor
in disposing the case, for even if We were to disregard such
saving clause of the Constitution, which reads: subject to any
existing right, grant, etc., at the same time of the inauguration
of the Government established under this Constitution, yet We
would have, under the evidence on record, sufficient grounds
to uphold petitioner's contention on this matter.
In this case of the Register of Deeds of Rizal vs. Ung Sui Si
Temple, 2 G.R. No. L-6776, promulgated May 21, 1955,
wherein this question was considered from a different angle,
this Court through Mr. Justice J.B.L. Reyes, said:
The fact that the appellant religious organization has no capital
stock does not suffice to escape the Constitutional inhibition,
since it is admitted that its members are of foreign nationality.
The purpose of the sixty per centum requirement is obviously
to ensure that corporation or associations allowed to acquire
agricultural land or to exploit natural resources shall be
controlled by Filipinos; and the spirit of the Constitution
demands that in the absence of capital stock, the controlling
membership should be composed of Filipino citizens.

In that case respondent-appellant Ung Siu Si Temple was not a
corporation sole but a corporation aggregate, i.e., an
unregistered organization operating through 3 trustees, all of
Chinese nationality, and that is why this Court laid down the
doctrine just quoted. With regard to petitioner, which likewise
is a non-stock corporation, the case is different, because it is a
registered corporation sole, evidently of no nationality and
registered mainly to administer the temporalities and manage
the properties belonging to the faithful of said church residing
in Davao. But even if we were to go over the record to inquire
into the composing membership to determine whether the
citizenship requirement is satisfied or not, we would find
undeniable proof that the members of the Roman Catholic
Apostolic faith within the territory of Davao are predominantly
Filipino citizens. As indicated before, petitioner has presented
evidence to establish that the clergy and lay members of this
religion fully covers the percentage of Filipino citizens required
by the Constitution. These facts are not controverted by
respondents and our conclusion in this point is sensibly
obvious.
Dissenting Opinion—Discussed. — After having developed our
theory in the case and arrived at the findings and conclusions
already expressed in this decision. We now deem it proper to
analyze and delve into the basic foundation on which the
dissenting opinion stands up. Being aware of the
transcendental and far-reaching effects that Our ruling on the
matter might have, this case was thoroughly considered from
all points of view, the Court sparing no effort to solve the
delicate problems involved herein.
At the deliberations had to attain this end, two ways were
open to a prompt dispatch of the case: (1) the reversal of the
doctrine We laid down in the celebrated Krivenko case by
excluding urban lots and properties from the group of the term
"private agricultural lands" use in this section 5, Article XIII of
the Constitution; and (2) by driving Our reasons to a point that
might indirectly cause the appointment of Filipino bishops or
Ordinary to head the corporations sole created to administer
the temporalities of the Roman Catholic Church in the
Philippines. With regard to the first way, a great majority of the
members of this Court were not yet prepared nor agreeable to
follow that course, for reasons that are obvious. As to the
second way, it seems to be misleading because the nationality
of the head of a diocese constituted as a corporation sole has
no material bearing on the functions of the latter, which are
limited to the administration of the temporalities of the Roman
Catholic Apostolic Church in the Philippines.
Upon going over the grounds on which the dissenting opinion
is based, it may be noticed that its author lingered on the
outskirts of the issues, thus throwing the main points in
controversy out of focus. Of course We fully agree, as stated
by Professor Aruego, that the framers of our Constitution had
at heart to insure the conservation of the natural resources of
Our motherland of Filipino posterity; to serve them as an
instrument of national defense, helping prevent the extension
into the country of foreign control through peaceful economic
penetration; and to prevent making the Philippines a source of
international conflicts with the consequent danger to its
internal security and independence. But all these precautions
adopted by the Delegates to Our Constitutional Assembly
could have not been intended for or directed against cases like
the one at bar. The emphasis and wonderings on the
statement that once the capacity of a corporation sole to
acquire private agricultural lands is admitted there will be no
limit to the areas that it may hold and that this will pave the
way for the "revival or revitalization of religious landholdings
that proved so troublesome in our past", cannot even furnish
the "penumbra" of a threat to the future of the Filipino people.
In the first place, the right of Filipino citizens, including those
of foreign extraction, and Philippine corporations, to acquire
private lands is not subject to any restriction or limit as to
quantity or area, and We certainly do not see any wrong in
that. The right of Filipino citizens and corporations to acquire
public agricultural lands is already limited by law. In the second
place, corporations sole cannot be considered as aliens
because they have no nationality at all. Corporations sole are,
under the law, mere administrators of the temporalities of the
Roman Catholic Church in the Philippines. In the third place,
every corporation, be it aggregate or sole, is only entitled to
purchase, convey, sell, lease, let, mortgage, encumber and
otherwise deal with real properties when it is pursuant to or in
consonance with the purposes for which the corporation was
formed, and when the transactions of the lawful business of
the corporation reasonably and necessarily require such
dealing — section 13-(5) of the Corporation Law, Public Act No.
1459 — and considering these provisions in conjunction with
Section 159 of the same law which provides that a corporation
sole may only "purchase and hold real estate and personal
properties for its church, charitable, benevolent or educational
purposes", the above mentioned fear of revitalization of
religious landholdings in the Philippines is absolutely dispelled.
The fact that the law thus expressly authorizes the
corporations sole to receive bequests or gifts of real properties
(which were the main source that the friars had to acquire
their big haciendas during the Spanish regime), is a clear
indication that the requisite that bequests or gifts of real estate
be for charitable, benevolent, or educational purposes, was, in
the opinion of the legislators, considered sufficient and
adequate protection against the revitalization of religious
landholdings.
Finally, and as previously stated, We have reason to believe
that when the Delegates to the Constitutional Convention
drafted and approved Article XIII of the Constitution they do
not have in mind the corporation sole. We come to this finding
because the Constitutional Assembly, composed as it was by a
great number of eminent lawyers and jurists, was like any
other legislative body empowered to enact either the
Constitution of the country or any public statute, presumed to
know the conditions existing as to particular subject matter
when it enacted a statute (Board of Commerce of Orange
Country vs. Bain, 92 S.E. 176; N. C. 377).
Immemorial customs are presumed to have been always in the
mind of the Legislature in enacting legislation. (In re Kruger's
Estate, 121 A. 109; 277 P. 326).
The Legislative is presumed to have a knowledge of the state
of the law on the subjects upon which it legislates. (Clover
Valley Land and Stock Co. vs. Lamb et al., 187, p. 723,726.)
The Court in construing a statute, will assume that the
legislature acted with full knowledge of the prior legislation on
the subject and its construction by the courts. (Johns vs. Town
of Sheridan, 89 N. E. 899, 44 Ind. App. 620.).
The Legislature is presumed to have been familiar with the
subject with which it was dealing . . . . (Landers vs.
Commonwealth, 101 S. E. 778, 781.).
The Legislature is presumed to know principles of statutory
construction. (People vs. Lowell, 230 N. W. 202, 250 Mich. 349,
followed in P. vs. Woodworth, 230 N.W. 211, 250 Mich. 436.).
It is not to be presumed that a provision was inserted in a
constitution or statute without reason, or that a result was
intended inconsistent with the judgment of men of common
sense guided by reason" (Mitchell vs. Lawden, 123 N.E. 566,
288 Ill. 326.) See City of Decatur vs. German, 142 N. E. 252, 310
Ill. 591, and may other authorities that can be cited in support
hereof.
Consequently, the Constitutional Assembly must have known:
1. That a corporation sole is organized by and composed of a
single individual, the head of any religious society or church
operating within the zone, area or jurisdiction covered by said
corporation sole (Article 155, Public Act No. 1459);
2. That a corporation sole is a non-stock corporation;
3. That the Ordinary ( the corporation sole proper) does not
own the temporalities which he merely administers;
4. That under the law the nationality of said Ordinary or of any
administrator has absolutely no bearing on the nationality of
the person desiring to acquire real property in the Philippines
by purchase or other lawful means other than by hereditary
succession, who according to the Constitution must be a
Filipino (sections 1 and 5, Article XIII).
5. That section 159 of the Corporation Law expressly
authorized the corporation sole to purchase and hold real
estate for its church, charitable, benevolent or educational
purposes, and to receive bequests or gifts for such purposes;
6. That in approving our Magna Carta the Delegates to the
Constitutional Convention, almost all of whom were Roman
Catholics, could not have intended to curtail the propagation
of the Roman Catholic faith or the expansion of the activities
of their church, knowing pretty well that with the growth of
our population more places of worship, more schools where
our youth could be taught and trained; more hallow grounds
where to bury our dead would be needed in the course of time.
Long before the enactment of our Constitution the law
authorized the corporations sole even to receive bequests or
gifts of real estates and this Court could not, without any clear
and specific provision of the Constitution, declare that any real
property donated, let as say this year, could no longer be
registered in the name of the corporation sole to which it was
conveyed. That would be an absurdity that should not receive
our sanction on the pretext that corporations sole which have
no nationality and are non-stock corporations composed of
only one person in the capacity of administrator, have to
establish first that at least sixty per centum of their capital
belong to Filipino citizens. The new Civil Code even provides:
ART. 10. — In case of doubt in the interpretation or application
of laws, it is presumed that the lawmaking body intended right
and justice to prevail.
Moreover, under the laws of the Philippines, the administrator
of the properties of a Filipino can acquire, in the name of the
latter, private lands without any limitation whatsoever, and
that is so because the properties thus acquired are not for and
would not belong to the administrator but to the Filipino
whom he represents. But the dissenting Justice inquires: If the
Ordinary is only the administrator, for whom does he
administer? And who can alter or overrule his acts? We will
forthwith proceed to answer these questions. The
corporations sole by reason of their peculiar constitution and
form of operation have no designed owner of its temporalities,
although by the terms of the law it can be safely implied that
the Ordinary holds them in trust for the benefit of the Roman
Catholic faithful to their respective locality or diocese.
Borrowing the very words of the law, We may say that the
temporalities of every corporation sole are held in trust for the
use, purpose, behalf and benefit of the religious society, or
order so incorporated or of the church to which the diocese,
synod, or district organization is an organized and constituent
part (section 163 of the Corporation Law).
In connection with the powers of the Ordinary over the
temporalities of the corporation sole, let us see now what is
the meaning and scope of the word "control". According to the
Merriam-Webster's New International Dictionary, 2nd ed., p.
580, on of the acceptations of the word "control" is:
4. To exercise restraining or directing influence over; to
dominate; regulate; hence, to hold from action; to curb;
subject; also, Obs. — to overpower.
SYN: restrain, rule, govern, guide, direct; check, subdue.
It is true that under section 159 of the Corporation Law, the
intervention of the courts is not necessary, to mortgage or sell
real property held by the corporation sole where the rules,
regulations and discipline of the religious denomination,
society or church concerned presented by such corporation
sole regulates the methods of acquiring, holding, selling and
mortgaging real estate, and that the Roman Catholic faithful
residing in the jurisdiction of the corporation sole has no say
either in the manner of acquiring or of selling real property. It
may be also admitted that the faithful of the diocese cannot
govern or overrule the acts of the Ordinary, but all this does
not mean that the latter can administer the temporalities of
the corporation sole without check or restraint. We must not
forget that when a corporation sole is incorporated under
Philippine laws, the head and only member thereof subjects
himself to the jurisdiction of the Philippine courts of justice and
these tribunals can thus entertain grievances arising out of or
with respect to the temporalities of the church which came
into the possession of the corporation sole as administrator. It
may be alleged that the courts cannot intervene as to the
matters of doctrine or teachings of the Roman Catholic Church.
That is correct, but the courts may step in, at the instance of
the faithful for whom the temporalities are being held in trust,
to check undue exercise by the corporation sole of its power
as administrator to insure that they are used for the purpose
or purposes for which the corporation sole was created.
American authorities have these to say:
It has been held that the courts have jurisdiction over an action
brought by persons claiming to be members of a church, who
allege a wrongful and fraudulent diversion of the church
property to uses foreign to the purposes of the church, since
no ecclesiastical question is involved and equity will protect
from wrongful diversion of the property (Hendryx vs. Peoples
United Church, 42 Wash. 336, 4 L.R.A. — n.s. — 1154).
The courts of the State have no general jurisdiction and control
over the officers of such corporations in respect to the
performance of their official duties; but as in respect to the
property which they hold for the corporation, they stand in
position of TRUSTEES and the courts may exercise the same
supervision as in other cases of trust (Ramsey vs. Hicks, 174
Ind. 428, 91 N.E. 344, 92 N.E. 164, 30 L.R.A. — n.s. — 665;
Hendryx vs. Peoples United Church, supra.).
Courts of the state do not interfere with the administration of
church rules or discipline unless civil rights become involved
and which must be protected (Morris St., Baptist Church vs.
Dart, 67 S.C. 338, 45 S.E. 753, and others). (All cited in Vol. II,
Cooley's Constitutional Limitations, p. 960-964.).
If the Constitutional Assembly was aware of all the facts above
enumerated and of the provisions of law relative to existing
conditions as to management and operation of corporations
sole in the Philippines, and if, on the other hand, almost all of
the Delegates thereto embraced the Roman Catholic faith, can
it be imagined even for an instant that when Article XIII of the
Constitution was approved the framers thereof intended to
prevent or curtail from then on the acquisition sole, either by
purchase or donation, of real properties that they might need
for the propagation of the faith and for there religious and
Christian activities such as the moral education of the youth,
the care, attention and treatment of the sick and the burial of
the dead of the Roman Catholic faithful residing in the
jurisdiction of the respective corporations sole? The mere
indulgence in said thought would impress upon Us a feeling of
apprehension and absurdity. And that is precisely the leit motiv
that permeates the whole fabric of the dissenting opinion.
It seems from the foregoing that the main problem We are
confronted with in this appeal, hinges around the necessity of
a proper and adequate interpretation of sections 1 and 5 of
Article XIII of the Constitution. Let Us then be guided by the
principles of statutory construction laid down by the
authorities on the matter:
The most important single factor in determining the intention
of the people from whom the constitution emanated is the
language in which it is expressed. The words employed are to
be taken in their natural sense, except that legal or technical
terms are to be given their technical meaning. The
imperfections of language as a vehicle for conveying meanings
result in ambiguities that must be resolved by result to
extraneous aids for discovering the intent of the framers.
Among the more important of these are a consideration of the
history of the times when the provision was adopted and of
the purposes aimed at in its adoption. The debates of
constitutional convention, contemporaneous construction,
and practical construction by the legislative and executive
departments, especially if long continued, may be resorted to
resolve, but not to create, ambiguities. . . . Consideration of the
consequences flowing from alternative constructions of
doubtful provisions constitutes an important interpretative
device. . . . The purposes of many of the broadly phrased
constitutional limitations were the promotion of policies that
do not lend themselves to definite and specific formulation.
The courts have had to define those policies and have often
drawn on natural law and natural rights theories in doing so.
The interpretation of constitutions tends to respond to
changing conceptions of political and social values. The extent
to which these extraneous aids affect the judicial construction
of constitutions cannot be formulated in precise rules, but
their influence cannot be ignored in describing the essentials
of the process (Rottschaeffer on Constitutional Law, 1939 ed.,
p. 18-19).
There are times that when even the literal expression of
legislation may be inconsistent with the general objectives of
policy behind it, and on the basis of equity or spirit of the
statute the courts rationalize a restricted meaning of the latter.
A restricted interpretation is usually applied where the effect
of literal interpretation will make for injustice and absurdity or,
in the words of one court, the language must be so
unreasonable 'as to shock general common sense'. (Vol. 3,
Sutherland on Statutory Construction, 3rd ed., 150.).
A constitution is not intended to be a limitation on the
development of a country nor an obstruction to its progress
and foreign relations (Moscow Fire Ins. Co. of Moscow, Russia
vs. Bank of New York and Trust Co., 294 N. Y. S.648; 56 N.E. 2d.
745, 293 N.Y. 749).
Although the meaning or principles of a constitution remain
fixed and unchanged from the time of its adoption, a
constitution must be construed as if intended to stand for a
great length of time, and it is progressive and not static.
Accordingly, it should not receive too narrow or literal an
interpretation but rather the meaning given it should be
applied in such manner as to meet new or changed conditions
as they arise (U.S. vs. Lassic, 313 U.S. 299, 85 L. Ed., 1368).
Effect should be given to the purpose indicated by a fair
interpretation of the language used and that construction
which effectuates, rather than that which destroys a plain
intent or purpose of a constitutional provision, is not only
favored but will be adopted (State ex rel. Randolph Country vs.
Walden, 206 S.W. 2d 979).
It is quite generally held that in arriving at the intent and
purpose the construction should be broad or liberal or
equitable, as the better method of ascertaining that intent,
rather than technical (Great Southern Life Ins. Co. vs. City of
Austin, 243 S.W. 778).
All these authorities uphold our conviction that the framers of
the Constitution had not in mind the corporations sole, nor
intended to apply them the provisions of section 1 and 5 of said
Article XIII when they passed and approved the same. And if it
were so as We think it is, herein petitioner, the Roman Catholic
Apostolic Administrator of Davao, Inc., could not be deprived
of the right to acquire by purchase or donation real properties
for charitable, benevolent and educational purposes, nor of
the right to register the same in its name with the Register of
Deeds of Davao, an indispensable requisite prescribed by the
Land Registration Act for lands covered by the Torrens system.
We leave as the last theme for discussion the much debated
question above referred to as "the vested right saving clause"
contained in section 1, Article XIII of the Constitution. The
dissenting Justice hurls upon the personal opinion expressed
on the matter by the writer of the decision the most pointed
darts of his severe criticism. We think, however, that this
strong dissent should have been spared, because as clearly
indicated before, some members of this Court either did not
agree with the theory of the writer or were not ready to take
a definite stand on that particular point, so that there being no
majority opinion thereon there was no need of any dissension
therefrom. But as the criticism has been made the writer
deems it necessary to say a few words of explanation.
right to receive such bequests or gifts (which implies donations
in futuro), is not a mere potentiality that could be impaired
without any specific provision in the Constitution to that
effect, especially when the impairment would disturbingly
affect the propagation of the religious faith of the immense
majority of the Filipino people and the curtailment of the
activities of their Church. That is why the writer gave us a basis
of his contention what Professor Aruego said in his book "The
Framing of the Philippine Constitution" and the enlightening
opinion of Mr. Justice Jose P. Laurel, another Delegate to the
Constitutional Convention, in his concurring opinion in the
case of Goldcreek Mining Co. vs. Eulogio Rodriguez et al., 66
Phil. 259. Anyway the majority of the Court did not deem
necessary to pass upon said "vested right saving clause" for the
final determination of this case.
JUDGMENT
Wherefore, the resolution of the respondent Land Registration
Commission of September 21, 1954, holding that in view of the
provisions of sections 1 and 5 of Article XIII of the Philippine
Constitution the vendee (petitioner) is not qualified to acquire
lands in the Philippines in the absence of proof that at least 60
per centum of the capital, properties or assets of the Roman
Catholic Apostolic Administrator of Davao, Inc. is actually
owned or controlled by Filipino citizens, and denying the
registration of the deed of sale in the absence of proof of
compliance with such requisite, is hereby reversed.
Consequently, the respondent Register of Deeds of the City of
Davao is ordered to register the deed of sale executed by
Mateo L. Rodis in favor of the Roman Catholic Apostolic
Administrator of Davao, Inc., which is the subject of the
present litigation. No pronouncement is made as to costs. It is
so ordered.

The writer fully agrees with the dissenting Justice that

ordinarily "a capacity to acquire (property) in futuro, is not in
itself a vested or existing property right that the Constitution
protects from impairment. For a property right to be vested (or
acquired) there must be a transition from the potential or
contingent to the actual, and the proprietary interest must
have attached to a thing; it must have become 'fixed and
established'" (Balboa vs. Farrales, 51 Phil. 498). But the case at
bar has to be considered as an exception to the rule because
among the rights granted by section 159 of the Corporation
Law was the right to receive bequests or gifts of real properties
for charitable, benevolent and educational purposes. And this
UNITED CHURCH BOARD FOR WORLD MINISTRIES, as owner
of BROKENSHIRE MEMORIAL HOSPITAL, petitioner, vs. HON.
JUDGE ALEJANDRO E. SEBASTIAN, as Presiding Judge of the
CFI of Davao del Norte, and MELENCIO B. DELENA and
MAURO GEMENTIZA, as Co-Executors of the Testate Estate of
DAVID JACOBSON, respondents.
G.R. No. L-34672 | 1988-03-30
DECISION
CRUZ, J.:
This case is unusual because it arose not out of greed but of
generosity. The only question to be resolved is the identity and
eligibility of the beneficiary in the light of the pertinent
constitutional provisions and the evidence of record.
David Jacobson was an American citizen who had been a
resident of the Philippines for more than thirty years and up to
the time of his death in 1970. 1 He left a will in which he
"devised and bequeathed" to the Brokenshire Memorial
Hospital 60% of his shares of stocks in the Tagdangua
Plantation Co., Inc. which was incorporated under Philippine
law in 1948. 2 This corporation was the registered owner of a
tract of land in Pantuhan, Davao del Norte, with a total area of
about 445 hectares acquired by virtue of a sales patent issued
to it in 1953. 3
In Special Proceeding No. 1695 of the Court of First Instance of
Davao del Norte, Judge Alejandro E. Sebastian disallowed the
above-described legacy on the ground that it was in effect an
alienation of private agricultural land in favor of a transferee
which was not qualified under the Constitution of 1935. 4 The
finding was that the Brokenshire Memorial Hospital was
owned by the United Church Board for World Ministries
(UCBWM), the herein petitioner, which was a non-stock
corporation organized in the United States by virtue of a
charter granted by the state legislature of Massachusetts. 5
The basis of this ruling was Article XII, Sections 1 and 5 of the
1935 Constitution, which barred foreigners, including
Americans, from acquiring agricultural lands in this country
except only by hereditary succession. The court directed that a
copy of its order be sent to the Solicitor General so he could
take the proper action, in view of the invalidity of the transfer,
for the escheat of the subject property to the State. 6
Its motion for reconsideration having been denied, the
petitioner came to this Court, contending that the above-cited
constitutional provisions were not applicable because the
object of the legacy was not land but shares of stocks.
Moreover, even assuming that what was really involved was a
transfer of land, the petitioner was nonetheless qualified to
acquire it under the provisions of the Parity Amendment and
the Laurel-Langley Agreement.
The Solicitor General disagreed at first, insisting that the legacy
was prohibited by the 1935 Constitution and did not come
under any of the allowed exceptions. During the protracted
exchange of pleadings among the parties, however, certain
events transpired to considerably change the original situation
and, consequently, also the position of government.
It now appears from the voluminous documents submitted in
this case that at the time the will was executed in 1966, the
land on which the Brokenshire Memorial Hospital was situated
was already registered in the name of the Mindanao District
Conference, an affiliate of the United Church of Christ in the
Philippines (UCCP). 7 It was this non-stock corporation,
organized in 1949 under Philippine law with a 100% Filipino
membership, that owned and was operating the Hospital at
the time of Jacobson's death. 8 Later, the Brokenshire
Memorial Hospital was itself incorporated as a charitable
institution, with Filipinos constituting the majority of its
membership, 9 and on December 16, 1970, became the
successor-in-interest of the UCCP to the devised parcel of land.
10
In proof of these circumstances, the new counsel for
Brokenshire presented, among many other documents, the
articles of incorporation of the UCCP and the Hospital and their
corresponding certificates of registration issued by the
Securities and Exchange Commission, the licenses issued by
the Board of Medical Sciences for the operation of the Hospital
to the UCCP from 1968 to 1972 and to the Brokenshire
Memorial Hospital, Inc. from 1973 to 1974, and the certificate
of title over the subject land in the name of the "Mindanao
District Conference, commonly known as the Brokenshire
Memorial Hospital." 11
These facts were not brought earlier to the attention of the
probate court by the former counsel of the Hospital, Atty. Juan
V. Faune, for reasons that do not appear in the record. It was
for such omission (the new counsel would call it
"misrepresentation") that Atty. Faune was replaced by Atty.
Rodolfo D. de la Cruz, who disavowed his predecessor's
representations. At any rate, the above-stated documents
have now made it clear that the United Church for Christ in the
Philippines and not the United Church Board for World
Ministries was the owner of the Hospital at the time of the
execution of the will in 1966 and of the testator's death in
1970. It is also not disputed that such ownership passed to the
Brokenshire Memorial Hospital itself upon its incorporation in
1970 when it thus became the proper party-in-interest to claim
the property directly devised by Jacobson to it.
That the United Church Board for World Ministries no longer
claims the subject property (if indeed it really did claim it
before), is manifest in its sur-rejoinder to the rejoinder of the
movant Brokenshire Memorial Hospital, Inc., which had asked
to be substituted for the former as petitioner in this case. The
body of this pleading is reproduced in full as follows:
"PETITIONER, by the Undersigned Counsel, to this Honorable "(Sgd.) JUAN V. FAUNE
Court most respectfully states:
Counsel for Petitioner
"1. That upon its organization in 1948 the United Church of
Christ in the Philippines succeeded to the religious work, United Church Board for
service and mission of the United Church Board for World
Ministries and other religious boards in the United States of World Ministries
America;
185-B And a Street, Davao City.
"2. It was the intention, following the independence of the
Philippines from the U.S. and the constitution of an "WITH OUR CONCURRENCE:
independent and autonomous United Church of Christ in the
Philippines, to eventually transfer all properties, schools, and UNITED CHURCH BOARD FOR WORLD MINISTRIES.
hospitals established by said mission boards, to the United
Church of Christ in the Philippines; "by:

"3. That the United Church Board for World Ministries had, in
fact, transferred the ownership of most of its properties in the
Philippines to the United Church of Christ in the Philippines, its
religious organizations and/or instrumentalities;
"4. That when the Brokenshire Memorial Hospital was
destroyed by fire in 1964, reconstruction efforts and
responsibilities was assumed by the United Church of Christ in
the Philippines, it was the intention of the United Church Board
for World Ministries to relinquish the rights, interests and
ownership to the Brokenshire Memorial Hospital, now
Brokenshire Memorial Hospital, Inc. and considered it so
relinquished, with continuing funding assistance from the
United Church Board for World Ministries and other mission
boards overseas;
"The United Church Board for World Ministries continues to
this date, with its fraternal and cooperative relationship with
the United Church of Christ in the Philippines;
"5. That as has already been stated, the United Church Board
for World Ministries does not intend to take, possess, or enjoy
the legacy of David Jacobson and has manifested and
mandated that all properties that may be derived therefrom
shall be used entirely and exclusively for the work of the
Brokenshire Memorial Hospital and its School of Nursing in
accordance with the wishes of David Jacobson;
"6. Considering the clear intention of David Jacobson to
support the life and work of Brokenshire Memorial Hospital
and its School of Nursing, and further considering that what
was bequeathed are shares of stocks in a corporation, there
exists no legal and moral impediment for the legacy to be
delivered to the Brokenshire Memorial Hospital, Inc., an
instrumentality of the United Church of Christ in the
Philippines, that has succeeded to the ownership of and the
humanitarian, and charitable service of said Hospital.
"Respectfully submitted.
"September 3, 1983, Davao City, Philippines.
"(Sgd.) BYRON W. CLARK
"Treasurer
"NO OBJECTION TO THE DELIVERY OF THE LEGACY TO
BROKENSHIRE MEMORIAL HOSPITAL, INC.
"(Sgd.) MELENCIO B. DELENA (Sgd.) DARIO C. RAMA
"Executor-Respondent Counsel for the Estate
and Respondents
Melencio Delena and
the late Mauro
Gementiza
(deceased-Executor)
Security Bank Bldg.
Magsaysay Ave., Davao City.
"(Sgd.) DEAN CLAIR (Sgd.) ROSALINO D. ISIDRO
"Executor Counsel for the Estate
and Executor Dean Clair
205 Aldavinco Bldg.,
C.M. Recto Ave., Davao City" 12
Parenthetically, it should be observed, in fairness to Judge
Sebastian, that he was unaware of these circumstances when
he declared the legacy invalid to enforce the nationalistic
provisions of Article XIII of the 1935 Constitution. For his
vigilance in the protection of the national patrimony, he should
be, as he is hereby, commenced.
Even on the assumption that the UCBWM was really the owner
of the Hospital at the time of the effectivity of the will and that
the devise was for that reason unenforceable, the defect in the
will should be deemed rectified by the subsequent transfer of
the property to the Brokenshire Memorial Hospital, Inc. Our
consistent ruling on this matter is that if land is invalidly
transferred to an alien who subsequently becomes a citizen or
transfers it to a citizen, the flaw in the original transaction is
considered cured and the title of the transferee is rendered
valid.
Thus, in Sarsosa vda. de Barsobia v. Cuenco, 13 where a Filipino
citizen sold her land to an alien who later sold it to a Filipino,
we held that the invalidity of the initial transfer to the alien was
corrected by the subsequent transfer of the property to a
citizen. A similar ruling was made in Godinez v. Fong Pak Luen,
14 involving a similar set of facts, where we also cited Vasquez
v. Li Seng Giap, 15 and Herrera v. Luy King Guan. 16 In Yap v.
Maravillas, 17 we validated the sale of agricultural land to an
alien who, after the purchase, was naturalized as a Filipino and
so became qualified to acquire it. The facts were slightly
different in De Castro v. Teng, 18 where, upon the death of an
alien who had purchased a residential lot, his heirs entered
into an extrajudicial partition of his estate and transferred the
land to one of his sons who was a naturalized Filipino. We also
sustained the sale.

This action has been pending for quite some time now because
of the confusion regarding the status of the Brokenshire
Memorial Hospital as the ultimate beneficiary of the
challenged legacy. The curious thing is that this case was mired
in factual and legal complications caused by needless
misunderstanding among the parties which, it now appears,
were never in any substantial disagreement over the
ownership of the Hospital. Their common concern for its
welfare, in line with the charitable spirit and purposes of the
testator, should have avoided all this tedious and acrimonious
dispute.

WHEREFORE, the Brokenshire Memorial Hospital, Inc. is

hereby substituted for the United Church Board for World
Ministries as petitioner in this case and DECLARED to be
qualified to accept the legacy of the late David Jacobson. The
petition as thus modified is GRANTED. The order of the
respondent judge dated December 9, 1971, and his Resolution
dated December 9, 1971, are SET ASIDE. This decision is
immediately executory. No costs.

SO ORDERED.
REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE COURT OF
APPEALS AND SPOUSES MARIO B. LAPIÑA AND FLOR DE
VEGA, respondents.
G.R. No. 108998 | 1994-08-24
EN BANC
DECISION
BIDIN, J.:
Can a foreign national apply for registration of title over a
parcel of land which he acquired by purchase while still a
citizen of the Philippines, from a vendor who has complied
with the requirements for registration under the Public Land
Act (CA 141)?
The Republic would have us rule on the negative and asks this
Court to nullify the decision of the appellate court which
affirmed the judgment of the court a quo in granting
application of respondent spouses for registration over the lots
in question.
On June 17, 1978, respondent spouses bought Lots 347 and
348, Cad. s38-D, as their residence with a total area of 91.77
sq. m. situated in San Pablo City, from one Cristela Dazo Belen
(Rollo, p. 41). At the time of the purchase, respondent spouses
were then natural-born Filipino citizens.
On February 5, 1987, the spouses filed an application for
registration of title of the two (2) parcels of land before the
Regional Trial Court of San Pablo City, Branch XXXI. This time,
however, they were no longer Filipino citizens and have opted
to embrace Canadian citizenship through naturalization.
An opposition was filed by the Republic and after the parties
have presented their respective evidence, the court a quo
rendered a decision confirming private respondents' title to
the lots in question, the dispositive portion of which reads as
follows:
"WHEREFORE, in view of the foregoing, this court hereby
approves the said application and confirms the title and
possession of herein applicants over Lots 347 and 348, Ap-04-
003755 in the names of spouses Mario B. Lapiña and Flor de
Vega, all of legal age, Filipino citizens by birth but now
Canadian citizens by naturalization and residing at 14 A. Mabini
Street, San Pablo City and/or 201-1170-124 Street, Edmonton,
Alberta T5M-OK9, Canada.
"Once this Decision becomes final, let the corresponding
decree of registration be issued. In the certificate of title to be
issued, there shall be annotated an easement of 6.25 meters
road right-of-way."
"SO ORDERED." (Rollo, p. 25)
On appeal, respondent court affirmed the decision of the trial
court based on the following ratiocination:
In the present case, it is undisputed that both applicants were
still Filipino citizens when they bought the land in controversy
from its former owner. For this reason, the prohibition against
the acquisition of private lands by aliens could not apply. In
justice and equity, they are the rightful owners of the subject
realty considering also that they had paid for it quite a large
sum of money. Their purpose in initiating the instant action is
merely to confirm their title over the land, for, as has been
passed upon, they had been the owners of the same since
1978. It ought to be pointed out that registration is not a mode
of acquiring ownership. The Torrens System was not
established as a means for the acquisition of title to private
land. It is intended merely to confirm and register the title
which one may already have (Municipality of Victorias vs.
Court of Appeals, G.R. No. L-31189, March 31, 1987). With
particular reference to the main issue at bar, the High Court
has ruled that title and ownership over lands within the
meaning and for the purposes of the constitutional prohibition
dates back to the time of their purchase, not later. The fact that
the applicants-appellees are not Filipino citizens now cannot
be taken against them for they were not disqualified from
acquiring the land in question (Bollozos vs. Yu Tieng Su, G.R.
No. L-29442, November 11, 1987)." (Rollo, pp. 27-28)
Expectedly, respondent court's disposition did not merit
petitioner's approval, hence this present recourse, which was
belatedly filed.
Ordinarily, this petition would have been denied outright for
having been filed out of time had it not been for the
constitutional issue presented therein.
At the outset, petitioner submits that private respondents
have not acquired proprietary rights over the subject
properties before they acquired Canadian citizenship through
naturalization to justify the registration thereof in their favor.
It maintains that even privately owned unregistered lands are
presumed to be public lands under the principle that land of
whatever classification belong to the State under the Regalian
doctrine. Thus, before the issuance of the certificate of title,
the occupant is not in the juridical sense the true owner of the
land since it still pertains to the State. Petitioner further argued
that it is only when the court adjudicates the land to the
applicant for confirmation of title would the land become
privately owned land, for in the same proceeding, the court
may declare it public land, depending on the evidence.
As found by the trial court:
"The evidence thus presented established that applicants, by
themselves and their predecessors-in-interest, had been in
open, public, peaceful, continuous, exclusive and notorious
possession and occupation of the two adjacent parcels of land
applied for registration of title under a bona-fide claim of
ownership long before June 12, 1945. Such being the case, it is
conclusively presumed that all the conditions essential to the
confirmation of their title over the two adjacent parcels of land
are sought to be registered have been complied with thereby
entitling them to the issuance of the corresponding certificate
of title pursuant to the provisions of Presidential Decree No.
1529, otherwise known as the Property Registration Decree."
(Rollo, p. 26)
Respondent court echoed the court a quo's observation, thus:
"The land sought to be registered has been declared to be
within the alienable and disposable zone established by the
Bureau of Forest Development (Exhibit `P'). The investigation
conducted by the Bureau of Lands, Natural Resources District
(IV-2) reveals that the disputed realty had been occupied by
the applicants `whose house of strong materials stands
thereon'; that it had been declared for taxation purposes in the
name of applicants-spouses since 1979; that they acquired the
same by means of a public instrument entitled 'Kasulatan ng
Bilihang Tuluyan' duly executed by the vendor, Cristeta Dazo
Belen, on June 17, 1978 (Exhibits 'I' and 'J'); and that applicants
and their predecessors in interest had been in possession of
land for more than 30 years prior to the filing of the application
for registration. But what is of great significance in the instant
case is the circumstance that at the time the applicants
purchased the subject lot in 1978, both of them were Filipino
citizens such that when they filed their application for
registration in 1987, ownership over the land in dispute had
already passed to them." (Rollo, p.27)
The Republic disagrees with the appellate court's concept of
possession and argues:
"17. The Court of Appeals found that the land was declared for
taxation purposes in the name of respondent spouses only
since 1979. However, tax declarations or realty tax payments
of property are not conclusive evidence of ownership. (citing
cases)
"18. Then again, the appellate court found that applicants
(respondents) and their predecessors-in-interest had been in
possession of the land for more than 30 years prior to the filing
of the application for registration.' This is not, however, the
same as saying that respondents have been in possession
'since June 12, 1945.' (PD No. 1073, amending Sec. 48 [b], CA
No. 141; see also Sec. 14, PD No. 1529). So there is a void in
respondents' possession. They fall short of the required
possession since June 12, 1945 or prior thereto. And, even if
they needed only to prove thirty (30) years possession prior to
the filing of their application (on February 5, 1987), they would
still be short of the required possession if the starting point is
1979 when, according to the Court of Appeals, the land was
declared for taxation purposes in their name." (Rollo, pp. 14-
15)
The argument is myopic, to say the least. Following the logic of
petitioner, any transferee is thus foreclosed to apply for
registration of title over a parcel of land notwithstanding the
fact that the transferor, or his predecessor-in-interest has
been in open, notorious and exclusive possession thereof for
thirty (30) years or more. This is not, however, what the law
provides.
As petitioner itself argues, Section 48 of the Public Land Act (CA
141) reads:
"Sec. 48. The following-described citizens of the Philippines,
occupying lands of the public domain or claiming interest
therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance (now
Regional Trial Court) of the province where the land is located
for confirmation of their claims and the issuance of a certificate
of title thereof under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive, and
notorious possession and occupation of agricultural lands of
the public domain, under a bona fide claim of acquisition or
ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title except when
prevented by wars or force majeure. These shall be
conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this charter."
(Emphasis supplied)
As amended by PD 1073:
"Sec. 4. The provisions of Section 48(b) and Section 48(c),
Chapter VIII, of the Public Land Act are hereby amended in the
sense that these provisions shall apply only to alienable and
disposable lands of the public domain which have been in
open, continuous, exclusive and notorious possession and
occupation by the applicant himself or thru his predecessor-in-
interest, under a bona fide claim of acquisition or ownership,
since June 12, 1945."
It must be noted that with respect to possession and
occupation of the alienable and disposable lands of the public
domain, the law employs the terms "by themselves", the
applicant himself or through his predecessor-in-interest".
Thus, it matters not whether the vendee/applicant has been in
possession of the subject property for only a day so long as the
period and/or legal requirements for confirmation of title has
been complied with by his predecessor-in-interest, the said
period is tacked to his possession. In the case at bar,
respondents' predecessors-in-interest have been in open,
continuous, exclusive and notorious possession of the
disputed land not only since June 12, 1945, but even as early
as 1937. Petitioner does not deny this except that respondent
spouses, in its perception, were in possession of the land
sought to be registered only in 1987 and therefore short of the
required length of time. As aforesaid, the disputed parcels of
land were acquired by private respondents through their
predecessors-in-interest, who, in turn, have been in open and
continued possession thereof since 1937. Private respondents
stepped into the shoes of their predecessors-in-interest and by
virtue thereof, acquired all the legal rights necessary to
confirm what could otherwise be deemed as an imperfect title.
At this juncture, petitioner's reliance in Republic v. Villanueva
(114 SCRA 875 [1982]) deserves scant consideration. There, it
was held that before the issuance of the certificate of title, the
occupant is not in the juridical sense the true owner of the land
since it still pertains to the State.
Suffice it to state that the ruling in Republic v. Villanueva
(supra), has already been abandoned in 1986 case of Director
of Lands v. Intermediate Appellate Court (146 SCRA 509; and
reiterated in Director of Lands v. Iglesia ni Cristo, 200 SCRA 606
[1991]) where the Court, through then Associate Justice, now
Chief Justice Narvasa, declared that:
"(The weight of authority is) that open, exclusive and
undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby the land,
upon completion of the requisite period ipso jure and without
the need of judicial or other sanction, ceases to be public land
and becomes private property. . . .
"Herico in particular, appears to be squarely affirmative:
". . . . Secondly, under the provisions of Republic Act No. 1942,
which the respondent Court held to be inapplicable to the
petitioner's case, with the latter's proven occupation and
cultivation for more than 30 years since 1914, by himself and
by his predecessors-in-interest, title over the land has vested
on petitioner so as to segregate the land from the mass of
public land. Thereafter, it is no longer disposable under the
Public Land Act as by free patent. . . .
xxx xxx xxx
'As interpreted in several cases, when the conditions as
specified in the foregoing provision are complied with, the
possessor is deemed to have acquired, by operation of law, a
right to grant, a government grant, without the necessity of a
certificate of title being issued. The land, therefore, ceases to
be of the public domain and beyond the authority of the
Director of Lands to dispose of. The application for
confirmation is mere formality, the lack of which does not
affect the legal sufficiency of the title as would be evidenced
by the patent and the Torrens title to be issued upon the
strength of said patent.'
"Nothing can be more clearly demonstrate the logical
inevitability of considering possession of public land which is
of the character and duration prescribed by the statute as the
equivalent of an express grant from the State than the dictum
of the statute itself (Section 48[b]) that the possessor(s) '. . .
shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be
entitled to a certificate of title . . . .' No proof being admissible
to overcome a conclusive presumption, confirmation
proceedings would, in truth be little more than formality, at
the most limited to ascertaining whether the possession claims
is of the required character and length of time; and registration
thereunder would not confer title, but simply recognize a title
already vested. The proceedings would not originally convert
the land from public to private land, but only confirm such a
conversion already affected by operation of law from the
moment the required period of possession became complete.
As was so well put in Cariño, '. . . (There are indications that
registration was expected from all, but none sufficient to show
that, for want of it, ownership actually gained would be lost.
The effect of the proof, wherever made, was not to confer title,
but simply to establish it, as already conferred by the decree,
if not by earlier law." (Emphasis supplied)
Subsequent cases have hewed to the above pronouncement
such that open, continuous and exclusive possession for at
least 30 years of alienable public land ipso jure converts the
same to private property (Director of Lands v. IAC, 214 SCRA
604 [1992]; Pineda v. CA, 183 SCRA 602 [1990]). This means
that occupation and cultivation for more than 30 years by an
applicant and his predecessors-in- interest, vest title on such
applicant so as to segregate the land from the mass of public
land (National Power Corporation v. CA, 218 SCRA 41 [1993]).
The Public Land Act requires that the applicant must prove that
(a) the land is alienable public land and (b) his possession, in
the concept above stated, must be either since time
immemorial or for the period prescribed in the Public Land Act
(Director of Lands v. Buyco, 216 SCRA 78 [1992]). When the
conditions set by law are complied with, the possessor of the
land, by operation of law, acquires a right to grant, a
government grant, without the necessity of a certificate of title
being issued (National Power Corporation v. CA, supra). As
such, the land ceases to be a part of the public domain and
goes beyond the authority of the Director of Lands to dispose
of.
In other words, the Torrens system was not established as a
means for the acquisition of title to private land (Municipality
of Victorias v. CA, 149 SCRA 32 [1987]). It merely confirms, but
does not confer ownership. As could be gleaned from the
evidence adduced, private respondents were able to establish
the nature of possession of their predecessors-in-interest.
Evidence was offered to prove that their predecessors-in-
interest had paid taxes on the subject land and introduced
improvements thereon (Exhibits "F" to "F9"). A certified true
copy of the affidavit executed by Cristeta Dazo and her sister
Simplicia was also formally offered to prove that the subject
parcels of land were inherited by vendor Cristeta Dazo from
her father Pedro Dazo with the conformity of her only sister
Simplicia (Exhibit "G"). Likewise, a report from the Bureau of
Lands was presented in evidence together with a letter from
the Bureau of Forest Development, to prove that the
questioned lots were part of the alienable and disposable zone
of the government and that no forestry interest was affected
(CA GR No. 28953, Records, p. 33).
In the main, petitioner seeks to defeat respondents'
application for registration of title on the ground of foreign
nationality. Accordingly, the ruling in the Director of Lands v.
Buyco (supra) supports petitioner's thesis.
We disagree.
In Buyco, the applicants therein were likewise foreign
nationals but were natural-born Filipino citizens at the time of
their supposed acquisition of the property. But this is where
the similarity ends. the applicants in Buyco sought to register
a large tract of land under the provisions of the Land
Registration Act, and in the alternative, under the provisions of
the Public Land Act. The land registration court decided in
favor of the applicants and was affirmed by the appellate court
on appeal. The Director of Lands brought the matter before us
on review and we reversed.
This Court, speaking through Justice Davide, Jr., stated:
"As we could be gleaned from the evidence adduced, the
private respondents do not rely on fee simple ownership based
on a Spanish grant or possessory information title under
Section 19 of the Land Registration Act; the private
respondents did not present any proof that they or their
predecessors-in-interest derived title from an old Spanish
grant such as (a) the 'titulo real' or royal grant (b) the
'concession especial' or special grant; (c) the 'composicion con
el estado' title or adjustment title; (d) the 'titulo de compra' or
title by purchase; and (e) the 'informacion posesoria' or
possessory information title, which would become a 'titulo
gratuito' or a gratuitous title (Director of Forestry v. Muñoz, 23
SCRA 1183 [1968]). The primary basis of their claim is
possession, by themselves and the predecessors-in-interest,
since time immemorial.
"If indeed private respondents and their predecessors have
been in possession since time immemorial, the rulings of both
courts could be upheld for, as this Court stated in Oh Cho v.
Director of Lands (75 Phil. 890 [1946]):
'. . . All lands that were not acquired from the Government,
either by purchase or by grant, belong to the public domain.
An exception to the rule would be any land that should have
been in the possession of an occupant and of his predecessors
in interest since time immemorial, for such possession would
justify the presumption that the land had never been part of
the public domain or that if had been a private property even
before the Spanish conquest (Cariño v. Insular Government, 41
Phil. 935 [1909]; 212 U.S. 449; 53 Law. Ed., 594) The applicant
does not come under the exception, for the earliest possession
of the lot by his first predecessor in interest began in 1880.'
'. . . alienable public land held by a possessor, personally or
through his predecessors-in-interest, openly, continuously and
exclusively for the prescribed statutory period (30 years under
the Public Land Act, as amended) is converted to private
property by the mere lapse or completion of said period ipso
jure.' (Director of Lands v. Intermediate Appellate Court,
supra)
"It is obvious from the foregoing rule that the applicant must
prove that (a) the land is alienable public land and (b) his
possession, in the concept above stated, must be either since
time immemorial, as ruled in both Cariño and Susi, or for the
period prescribed in the Public Land Act. As to the latter, this
Court, in Gutierrez Hermanos v. Court of Appeals (178 SCRA 37
[1989]), adopted the rule enunciated by the Court of Appeals,
per then Associate Justice Hugo R. Gutierrez, Jr., . . . , that an
applicant for registration under Section 48 of the Public Land
Act must secure a certification from the Government that the
lands which he claims to have possessed as owner for more
than thirty (30) years are alienable and disposable. It is the
burden of the applicant to prove its positive averments.
"In the instant case, private respondents offered no evidence
at all to prove that the property subject of the application is an
alienable and disposable land. On the contrary, the entire
property . . . was pasture land (and therefore inalienable under
the then 1973 Constitution).
". . . (P)rivate respondents' evidence miserably failed to
establish their imperfect title to the property in question. Their
allegation of possession since time immemorial, . . ., is patently
baseless. . . . When referring to possession, specifically
'immemorial possession,' it means possession of which no man
living has seen the beginning, and the existence of which he
has learned form his elders (Susi v. Razon, supra). Such
possession was never present in the case of private
respondents. . . .
". . ., there does not even exist a reasonable basis for the
finding that the private respondents and their predecessors-in-
interest possessed the land for more than eighty (80) years. . .
.
xxx xxx xxx
"To this Court's mind, private respondents failed to prove that
(their predecessor-in-interest) had possessed the property
allegedly covered by Tax Declaration No. 15853 and made the
subject of both his last will and testament and the project of
partition of his estate among his heirs - in such manner as to
remove the same from the public domain under the Cariño and
Susi doctrines. Thus, (when the predecessor-in-interest) died
on 31 May 1937, he transmitted no right whatsoever, with
respect to the said property, to his heirs. This being the case,
his possession cannot be tacked to that of the private
respondents for the latter's benefit pursuant to Section 48(b)
of the Public Land Act, the alternative ground relied upon in
their application. . . .
xxx xxx xxx

"Considering that the private respondents became American
citizens before such filing, it goes without saying that they had
acquired no vested right, consisting of an imperfect title, over
the property before they lost their Philippine citizenship."
(Emphasis supplied)
Clearly, the applicants in Buyco were denied registration of
title not merely because they were American citizens at the
time of their application therefor. Respondents therein failed
to prove possession of their predecessor-in-interest since time
immemorial or possession in such a manner that the property
has been segregated from public domain; such that at the time
of their application, as American citizens, they have acquired
no vested rights over the parcel of land.
In the case at bar, private respondents were undoubtedly
natural-born Filipino citizens at the time of the acquisition of
the properties and by virtue thereof, acquired vested rights
thereon, tacking in the process, the possession in the concept
of owner and the prescribed period of time held by their
predecessors-in-interest under the Public Land Act. In
addition, private respondents have constructed a house of
strong materials on the contested property, now occupied by
respondent Lapiña's mother.
But what should not be missed in the disposition of this case is
the fact that the Constitution itself allows private respondents
to register the contested parcels of land in their favor. Sections
7 and 8 of Article XII of the Constitution contain the following
pertinent provisions, to wit:
"Sec. 7. Save in cases of hereditary succession, no private lands
shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands
of the public domain."
"Sec. 8 Notwithstanding the provisions of Section 7 of this
Article, a natural-born citizen of the Philippines who has lost
his Philippine citizenship may be a transferee of private lands,
subject to limitations provided by law." (Emphasis supplied)
Section 8, Article XII of the 1987 Constitution above quoted is
similar to Section 15. Article XIV of the then 1973 Constitution
which reads:
"Sec. 15. Notwithstanding the provisions of Section 14 of this
Article, a natural-born citizen of the Philippines who has lost
his citizenship may be a transferee of private land, for use by
him as his residence, as the Batasang Pambansa may provide."
Pursuant thereto, Batas Pambansa Blg. 185 was passed into
law, the relevant provision of which provides:
"Sec. 2. Any natural-born citizen of the Philippines who has lost
his Philippine citizenship and who has the legal capacity to
enter into a contract under Philippine laws may be a transferee
of a private land up to a maximum area of one thousand square
meters, in the case of urban land, or one hectare in the case of
rural land, to be used by him as his residence. In the case of
married couples, one of them may avail of the privilege herein
granted; Provided, That if both shall avail of the same, the total
area acquired shall not exceed the maximum herein fixed.
"In case the transferee already owns urban or rural lands for
residential purposes, he shall be entitled to be a transferee of
an additional urban or rural lands for residential purposes
which, when added to those already owned by him, shall not
exceed the maximum areas herein authorized."
From the adoption of the 1987 Constitution up to the present,
no other law has been passed by the legislature on the same
subject. Thus, what governs the disposition of private lands in
favor of a natural-born Filipino citizen who has lost his
Philippine citizenship remains to be BP 185.
Even if private respondents were already Canadian citizens at
the time they applied for registration of the properties in
question, said properties as discussed above were already
private lands; consequently, there could be no legal
impediment for the registration thereof by respondents in
view of what the Constitution ordains. The parcels of land
sought to be registered no longer form part of the public
domain. They are already private in character since private
respondents' predecessors-in-interest have been in open,
continuous and exclusive possession and occupation thereof
under claim of ownership prior to June 12, 1945 or since 1937.
The law provides that a natural-born citizen of the Philippines
who has lost his Philippine citizenship may be a transferee of a
private land up to a maximum area of 1,000 sq. m., if urban, or
one (1) hectare in case of rural land, to be used by him as his
residence (BP 185).
It is undisputed that private respondents, as vendees of a
private land, were natural born citizens of the Philippines. For
the purpose of transfer and/or acquisition of a parcel of
residential land, it is not significant whether private
respondents are no longer Filipino citizens at the time they
purchased or registered the parcels of land in question. What
is important is that private respondents were formerly natural-
born citizens of the Philippines, and as transferees of a private
land, they could apply for registration in accordance with the
mandate of Section 8, Article XII of the Constitution.
Considering that private respondents were able to prove the
requisite period and character of possession of their
predecessors-in-interest over the subject lots, their application
for registration of title must perforce be approved.
The dissenting opinion, however, states that the requirements
in BP 185, must also be complied with by private respondents.
Specifically, it refers to Section 6, which provides:
"Sec. 6. In addition to the requirements provided for in other
laws for the registration of titles to lands, no private land shall
be transferred under this Act, unless the transferee shall
submit to the register of deeds of the province or city where
the property is located a sworn statement showing the date
and place of birth; the names and addresses of his parents, of
his spouse and children, if any; the area, the location and the
mode of acquisition of his landholdings in the Philippines, if
any; his intention to reside permanently in the Philippines; the
date he lost his Philippine citizenship and the country of which
he is presently a citizen; and such other information as may be
required under Section 8 of this Act."

The Court is of the view that the requirements in Sec. 6 of BP

185 do not apply in the instant case since said requirements
are primarily directed to the register of deeds before whom
compliance therewith is to be submitted. Nowhere in the
provision is it stated much less implied, that the requirements
must likewise be submitted before the land registration court
prior to the approval of an application for registration of title.
An application for registration of title before a land registration
court should not be confused with the issuance of a certificate
of title by the register of deeds. It is only when the judgment
of the land registration court approving the application for
registration has become final that a decree of registration is
issued. And that is the time when the requirements of Sec. 6,
BP 185, before the register of deeds should be complied with
by the applicants. The decree of registration is the one that is
submitted to the office of the register of deeds for issuance of
the certificate of title in favor of the applicant. Prior to the
issuance of the decree of registration, the register of deeds has
no participation in the approval of the application for
registration of title as the decree of registration is yet to be
issued.

WHEREFORE, the petition is DISMISSED and the decision

appealed from is hereby AFFIRMED.

SO ORDERED.
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
ORENCLA, 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.
G.R. No. 77770 | 1988-12-15
DECISION
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, 9,10, 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, 1 wherein this Court declared Consolacion M. Gomez
owner of certain lots in Sitio Poponto, 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 3 expressly
stating that the decision of 5 August 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 n o
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. 4 Petitioners moved for reconsideration but the
motion was denied by respondent judge on 6 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, 7 dismissing the petition and stating, among others,
thus
"In resumá©, prior to the issuance of the decree of
registration, the 138 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. 8
Hence, this recourse.
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 26
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. 9 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
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. 12
They are specifically called upon to "extend assistance to
courts in ordinary and cadastral 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."
"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 . . ." 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.
REPUBLIC OF THE PHILIPPINES, Petitioner, versus LOURDES
ABIERA NILLAS, Respondent.
G.R. No. 159595 | 2007-01-23
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 Decision[6] 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.
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 Decision[7] 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 Appeals[10] 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 Poras[17] 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 earli er 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.
SPOUSES MARIANO and ERLINDA LABURADA, represented
by their attorney-in-fact, MANUEL SANTOS, JR., petitioners,
vs. LAND REGISTRATION AUTHORITY, respondent.
G.R. No. 101387 | 1998-03-11
FIRST DIVISION
DECISION
PANGANIBAN, J:
In an original land registration proceeding in which applicants
have been adjudged to have a registrable title, may the Land
Registration Authority (LRA) refuse to issue a decree of
registration if it has evidence that the subject land may already
be included in an existing Torrens certificate of title? Under
this circumstance, may the LRA be compelled by mandamus to
issue such decree?
The Case
These are the questions confronting this Court in this special
civil action for mandamus 1 under Rule 65 which asks this
Court to direct the Land Registration Authority (LRA) to issue
the corresponding decree of registration in Land Registration
Case (LRC) No. N-11022. 2
The Facts
Petitioners were the applicants in LRC Case No. N-11022 for
the registration of Lot 3-A, Psd-1372, located in Mandaluyong
City. On January 8, 1991, the trial court, acting as a land
registration court, rendered its decision disposing thus: 3
"WHEREFORE, finding the application meritorious and it
appearing that the applicants, Spouses Marciano [sic] and
Erlinda Laburada, have a registrable title over the parcel of
land described as Lot 3A, Psd-1372, the Court declares,
confirms and orders the registration of their title thereto.
As soon as this decision shall become final, let the
corresponding decree be issued in the name of spouses
Marciano [sic] and Erlinda Laburada, both of legal age,
married, with residence and postal address at No. 880 Rizal
Ave., Manila."
After the finality of the decision, the trial court, upon motion
of petitioners, issued an order 4 dated March 15, 1991
requiring the LRA to issue the corresponding decree of
registration. However, the LRA refused. Hence, petitioners
filed this action for mandamus. 5
Attached to the LRA's comment on the petition is a report
dated April 29, 1992 signed by Silverio G. Perez, director of the
LRA Department of Registration, which explained public
respondent's refusal to issue the said decree: 6
"In connection with the Petition for Mandamus filed by
Petitioners through counsel, dated August 27, 1991 relative to
the above-noted case/record, the following comments are
respectfully submitted:
On March 6, 1990, an application for registration of title of a
parcel of land Lot 3-A of the subdivision plan Psd-1372 a
portion of Lot 3, Block No. 159, Swo-7237, situated in the
Municipality of San Felipe Neri, Province of Rizal was filed by
Spouses Marciano [sic] Laburada and Erlinda Laburada;
After plotting the aforesaid plan sought to be registered in our
Municipal Index Sheet, it was found that it might be a portion
of the parcels of land decreed in Court of Land Registration
(CLR) Case Nos. 699, 875 and 817, as per plotting of the
subdivision plan (LRC) Psd-319932, a copy of said subdivision
plan is Annex 'A' hereof;
The records on file in this Authority show that CLR Case Nos.
699, 875 & 917 were issued Decree Nos. 240, 696 and 1425 on
August 25, 1904, September 14, 1905 and April 26, 1905,
respectively;
On May 23, 1991, a letter of this Authority was sent to the
Register of Deeds, Pasig, Metro Manila, a copy is Annex 'B'
hereof, requesting for a certified true copy of the Original
Certificate of Title No. 355, issued in the name of Compania
Agricola de Ultramar;
On May 20, 1991, a certified true copy of the Original
Certificate of Title (OCT) No. 355 was received by this
Authority, a copy is Annex 'C' hereof, per unsigned letter of the
Register of Deeds of Pasig, Metro Manila, a copy is Annex 'D'
hereof;
After examining the furnished OCT NO. 355, it was found that
the technical description of the parcel of land described
therein is not readable, that prompted this Authority to send
another letter dated April 15, 1992 to the Register of Deeds of
Pasig, Metro Manila, a copy is Annex 'E' hereof, requesting for
a certified typewritten copy of OCT No. 355, or in lieu thereof
a certified copy of the subsisting certificate of title with
complete technical description of the parcel of land involved
therein. To date, however, no reply to our letter has as yet
been received by this Authority;
After verification of the records on file in the Register of Deeds
for the Province of Rizal, it was found that Lot 3-B of the
subdivision plan Psd-1372 being a portion of Lot No. 3, Block
No. 159, Plan S.W.O. -7237, is covered by Transfer Certificate
of Title No. 29337 issued in the name of Pura Escurdia Vda. de
Buenaflor, a copy is attached as Annex 'F' hereof. Said TCT No.
29337 is a transfer from Transfer Certificate of Title No. 6595.
However, the title issued for Lot 3-A of the subdivision plan
Psd-1372 cannot be located because TCT No. 6595 consisting
of several sheets are [sic] incomplete.
For this Authority to issue the corresponding decree of
registration sought by the petitioners pursuant to the Decision
dated January 8, 1991 and Order dated March 15, 1991, it
would result in the duplication of titles over the same parcel of
land, and thus contravene the policy and purpose of the
Torrens registration system, and destroy the integrity of the
same (G.R. No. 63189, Pedro E. San Jose vs. Hon. Eutropio
Migriño, et al.,); . . ."
In view of the foregoing explanation, the solicitor general prays
that the petition be dismissed for being premature.
After the filing of memoranda by the parties, petitioners filed
an urgent motion, dated September 4, 1995, 7 for an early
resolution of the case. To this motion, the Court responded
with a Resolution, dated October 23, 1995, which ordered: 8
". . . Acting on the urgent motion for early resolution of the
case dated 04 September 1995 filed by petitioner Erlinda
Laburada herself, the Court resolved to require the Solicitor
General to report to the Court in detail, within fifteen (15) days
from receipt of this Resolution, what concrete and specific
steps, if any, have been taken by respondent since 19 May
1993 (the date of respondent's Memorandum) to actually
verify whether the lot subject of LRC Case No. N-11022
(Regional Trial Court of Pasig, Branch 68), described as Lot 3A,
Psd-1372 and situated in Mandaluyong City, might be a portion
of the parcels of land decreed in Court of Land Registration
Case (CLR) Nos. 699, 875 and 917."
On December 29, 1995, the solicitor general submitted his
compliance with the above resolution, to which was attached
a letter dated November 27, 1997, of Felino M. Cortez, chief of
the LRA Ordinary and Cadastral Decree Division, which states:
9 property subject of petitioners' application for registration."
"With reference to your letter dated November 13, 1995,
enclosed herewith is a copy of our letter dated 29 April 1992
addressed to Hon. Ramon S. Desuasido stating among others
that Lot 3-B, of the subdivision plan Psd-1372, a portion of Lot
3, Blk. 159, Swo-7237 is really covered by Transfer Certificate
of Title No. 29337 issued in the name of Pura Escurdia Vda. de
Bunaflor [sic] which was transfer[ed] from Transfer Certificate
of Title No. 6395, per verification of the records on file in the
Register of Deeds of Rizal. However, the title issued for the
subject lot, Lot 3-A of the subdivision plan Psd-1372, cannot be
located because TCT #6595 is incomplete.
It was also informed [sic] that for this Authority to issue the
corresponding decree of registration sought by the petitioners
pursuant to the decision dated January 9, 1991 and order
dated March 15, 1991, would result in the duplication of [the]
title over the same parcel of land, and thus contravene the
policy and purposes of the torrens registration system, and
destroy the integrity of the same (O.R. No. 63189 Pedro K. San
Jose vs. Hon. Eutropio Migriño, et. al.).
Hence, this case will be submitted to the Court for dismissal to
avoid duplication of title over the same parcel of land."
Issue
Petitioners submit this lone issue: 10
"Whether or not Respondent Land Registration Authority can
be compelled to issue the corresponding decree in LRC Case
No. N-11022 of the Regional Trial Court of Pasig, Branch LXVIII
(68)."
The Court's Ruling
The petition is not meritorious.
Sole Issue : Is Mandamus the Right Remedy?
Petitioners contend that mandamus is available in this case, for
the LRA "unlawfully neglect[ed] the performance of an act
which the law specifically enjoins as a duty resulting from an
office . . . ." They cite four reasons why the writ should be
issued. First, petitioners claim that they have a "clear legal
right to the act being prayed for and the LRA has the
imperative duty to perform" because, as land registration is an
in rem proceeding, the "jurisdictional requirement of notices
and publication should be complied with.'' 11 Since there was
no showing that the LRA filed an opposition in this proceeding,
it cannot refuse to issue the corresponding decree. Second, it
is not the duty of the LRA to "take the cudgels for the private
persons in possession of OCT No. 355, TCT No. 29337 snf [sic]
TCT No. 6595." Rather, it is the "sole concern of said private
person-holders of said titles to institute in a separate but
proper action whatever claim they may have against the
Third, petitioners contend that they suffered from the delay in
the issuance of their title, because of "the failure of the
Register of Deeds of Pasig, Metro Manila to furnish LRA of [sic]
the certified copies of TCT No. 29337 and TCT No. 6595"
notwithstanding the lack of opposition from the holders of said
titles. 12 Fourth, the State "consented to its being sued" in this
case[;] thus, the legislature must recognize any judgment that
may be rendered in this case "as final and make provision for
its satisfaction." 13
On the other hand, the LRA, represented by the solicitor
general, contends that the decision of the trial court is not
valid, considering that "[the] Court of First Instance has no
jurisdiction to decree again the registration of land already
decreed in an earlier land registration case and [so] a second
decree for the same land is null and void." 14 On the question
of whether the LRA can be compelled to issue a decree of
registration, the solicitor general cites Ramos vs. Rodriguez 15
which held:16
"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 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 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." (Emphasis supplied.)
We agree with the solicitor general. We hold that mandamus
is not the proper remedy for three reasons.
First : Judgment Is Not Yet Executory
Contrary to the petitioners' allegations, the judgment they
seek to enforce in this petition is not yet executory and
incontrovertible under the Land Registration Law. That is, they
do not have any clear legal right to implement it. We have
unambiguously ruled that a judgment of registration does not
become executory until after the expiration of one year after
the entry of the final decree of registration. We explained this
in Gomez vs. Court of Appeals: 17
"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, 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."
Second : A Void Judgment Is Possible
That the LRA hesitates in issuing a decree of registration is
understandable. Rather than a sign of negligence or
nonfeasance in the performance of its duty, the LRA's reaction
is reasonable, even imperative. Considering the probable
duplication of titles over the same parcel of land, such issuance
may contravene the policy and the purpose, and thereby
destroy the integrity, of the Torrens system of registration.
In Ramos vs. Rodriguez, 18 this Court ruled that the LRA is
mandated to refer to the trial court any doubt it may have in
regard to the preparation and the issuance of a decree of
registration. In this respect, LRA officials act not as
administrative officials but as officers of said court, 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."
True, land registration is an in rem proceeding and, therefore,
the decree of registration is binding upon and conclusive
against all persons including the government and its branches,
irrespective of whether they were personally notified of the
application for registration, and whether they filed an answer
to said application. This stance of petitioners finds support in
Sec. 38 of Act 496 which provides:
"SEC. 38. 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, or 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. Upon the
expiration of said term of one year, every decree or certificate
of title issued in accordance with this section shall be
incontrovertible. If there is any such purchaser, the decree of
registration shall not be opened, but shall remain in full force
and effect forever, subject only to the right of appeal
hereinbefore provided: Provided, however, That no decree or
certificate of title issued to persons not parties to the appeal
shall be cancelled or annulled. But any person aggrieved by
such decree in any case may pursue his remedy by action for
damages against the applicant or any other person for fraud in
procuring the decree. Whenever the phrase 'innocent
purchaser for value' or an equivalent phrase occurs in this Act,
it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value. (As amended by Sec. 3, Act
No. 3621; and Sec. 1, Act No. 3630, and PD 1529, Sec 39)."
However, we must point out that the letters of Silverio G. Perez
and Felino M. Cortez, dated April 29, 1992 and November 27,
1995, respectively, clearly stated that, after verification from
the records submitted by the Registry of Deeds of Rizal, the
property which petitioners are seeking to register - Lot 3-A of
Subdivision Plan Psd-1372 - is a portion of Lot No. 3, Block 159,
Plan S.W.O.-7237, over which TCT No. 6595 has already been
issued. Upon the other hand, in regard to Lot 3-B of said Lot 3,
TCT No. 29337 was issued in lieu of TCT No. 6595. Thus, the
LRA's refusal to issue a decree of registration is based on
documents which, if verified, may render the judgment of the
trial court void.
It is settled that a land registration court has no jurisdiction to
order the registration of land already decreed in the name of
another in an earlier land registration case. A second decree
for the same land would be null and void, 19 since the principle
behind original registration is to register a parcel of land only
once. 20 Thus, if it is proven that the land which petitioners are
seeking to register has already been registered in 1904 and
1905, the issuance of a decree of registration to petitioners will
run counter to said principle. As ruled in Duran vs. Olivia: 21
"As the title of the respondents, who hold certificates of title
under the Land Registration Act becomes indefeasible, it
follows that the Court of First Instance has no power or
jurisdiction to entertain proceedings for the registration of the
same parcels of land covered by the certificates of title of the
respondents. Such has been our express ruling in the case of
Rojas, et al. v. The City of Tagaytay, et al., G.R. No. L-13333,
prom. November 24, 1959, in which this Court, through Mr.
Justice Barrera, said:
'As thus viewed, the pivotal issue is one of jurisdiction on the
part of the lower court. All the other contentions of
respondent regarding possession in good faith, laches or
claims of better right, while perhaps valid in an appropriate
ordinary action, as to which we here express no opinion, can
not avail in the case at bar if the court a quo, sitting as land
registration court, had no jurisdiction over the subject matter
in decreeing on June 30, 1957, the registration, in favor of
respondent city, of a lot already previously decreed and
registered in favor of the petitioners.
'In a quite impressive line of decisions, it has been well-settled
that a Court of First Instance has no jurisdiction to decree again
the registration of land already decreed in an earlier land
registration case and a second decree for the same land is null
and void. This is so, because when once decreed by a court of
competent jurisdiction, the title to the land thus determined is
already a res judicata binding on the whole world, the
proceedings being in rem. The court has no power in a
subsequent proceeding (not based on fraud and within the
statutory period) to adjudicate the same title in favor of
another person. Furthermore, the registration of the property
in the name of first registered owner in the Registration Book
is a standing notice to the world that said property is already
registered in his name. Hence, the latter applicant is
chargeable with notice that the land he applied for is already
covered by a title so that he has no right whatsoever to apply
for it. To declare the later title valid would defeat the very
purpose of the Torrens system which is to quiet title to the
property and guarantee its indefeasibility. It would undermine
the faith and confidence of the people in the efficacy of the
registration law."
Third: Issuance of a Decree Is Not a Ministerial Act
The issuance of a decree of registration is part of the judicial
function of courts and is not a mere ministerial act which may
be compelled through mandamus. Thus, this Court held in
Valmonte and Jacinto vs. Nable: 22
"Moreover, after the rendition of a decision by a registration
or cadastral court, there remain many things to be done before
the final decree can be issued, such as the preparation of
amended plans and amended descriptions, especially where
the decision orders a subdivision of a lot, the segregation
therefrom of a portion being adjudicated to another party, to
fit the said decision. As said by this Court in the case of De los
Reyes vs. De Villa, 48 Phil., 227, 234:
'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 trained 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).'
Furthermore, although the final decree is actually prepared by
the Chief of the General Land Registration Office, the
administrative officer, the issuance of the final decree can
hardly be considered a ministerial act for the reason that said
Chief of the General Land Registration Office acts not as an
administrative officer but as an officer of the court and so the
issuance of a final decree is a judicial function and not an
administrative one (De los Reyes vs. De Villa, supra). . . "
Indeed, it is well-settled that the issuance of such decree is not
compellable by mandamus because it is a judicial act involving
the exercise of discretion. 23 Likewise, the writ of mandamus
can be awarded only when the petitioners' legal right to the
performance of the particular act which is sought to be
compelled is clear and complete. 24 Under Rule 65 of the Rules
of Court, a clear legal right is a right which is indubitably
granted by law or is inferable as a matter of law. If the right is
clear and the case is meritorious, objections raising merely
technical questions will be disregarded. 25 But where the right
sought to be enforced is in substantial doubt or dispute, as in
this case, mandamus cannot issue.

A court may be compelled by mandamus to pass and act upon

a question submitted to it for decision, but it cannot be
enjoined to decide for or against one of the parties. 26 As
stated earlier, a judicial act is not compellable by mandamus.
27 The court has to decide a question according to its own
judgment and understanding of the law. 28

In view of the foregoing, it is not legally proper to require the

LRA to issue a decree of registration. However, to avoid
multiplicity of suits and needless delay, this Court deems it
more appropriate to direct the LRA to expedite its study, to
determine with finality whether Lot 3-A is included in the
property described in TCT No. 6595, and to submit a report
thereon to the court of origin within sixty (60) days from
receipt of this Decision, after which the said court shall act with
deliberate speed according to the facts and the law, as herein
discussed.

WHEREFORE, the petition is hereby DISMISSED but the case is

REMANDED to the court of origin in Pasig City. The Land
Registration Authority, on the other hand, is ORDERED to
submit to the court a quo a report determining with finality
whether Lot 3-A is included in the property described in TCT
No. 6595, within sixty (60) days from notice. After receipt of
such report, the land registration court, in turn, is ordered to
ACT, with deliberate and judicious speed, to settle the issue of
whether the LRA may issue the decree of registration,
according to the facts and the law as herein discussed.

SO ORDERED.