G.R. No.

178842 January 30, 2017

RENE H. IMPERIAL and NIDSLAND RESOURCES AND DEVELOPMENT

CORPORATION, Petitioners,
vs.
HON. EDGAR L. ARMES, Presiding Judge of Branch 4, Regional Trial Court, 5th
Judicial Region, Legazpi City and ALFONSO B. CRUZ, JR.,, Respondents.

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

G.R. No. 195509

ALFONSO B. CRUZ, Petitioner,

vs.
RENE IMPERIAL and NIDSLAND RESOURCES AND DEVELOPMENT
CORPORATION, Respondents.

DECISION

JARDELEZA, J.:

An action for the annulment of a void judgment, like the remedy of appeal, is a statutory
right. No party may invoke it unless a law expressly grants the right and identifies the
tribunal which has jurisdiction over this action. While a void judgment is no judgment at
all in legal contemplation, any action to challenge it must be done through the correct
remedy and filed before the appropriate tribunal. Procedural remedies and rules of
jurisdiction are in place in order to ensure that litigants are able to employ the proper
legal tools to obtain complete relief from the tribunal fully equipped to grant it.

The Case

Before us are two (2) consolidated petitions for review on certiorari under Rule 45 of the
Rules of Court. The first petition, docketed as G.R. No. 178842, is filed by Rene H.
Imperial (Imperial) and NIDSLAND Resources and Development Corporation
(NIDSLAND) against Alfonso B. Cruz, Jr. (Cruz). It seeks the reversal of the resolutions
of the Court of Appeals (CA) dated March 6, 2007 and July 3, 2007, respectively. The
second petition, G.R. No. 195509, filed by Cruz against Imperial and NIDSLAND, seeks
the reversal of the Decision of the CA dated September 13, 2010.

The Facts

On September 24, 1993, Julian C. Napal (Napal) and Imperial entered into a
Memorandum of Agreement1 to organize a domestic corporation to be named
NIDSLAND. Under the Memorandum of Agreement, Napal and Imperial agreed to
engage in the real estate business. For his capital contribution to the corporation, Napal
undertook to convey to NIDSLAND a tract of land consisting of four lots (the Property)
covered by Transfer Certificate of Title (TCT) Nos. 37737, 37738, 37739 and 21026,
and to Imperial a two hectare portion of the Property situated in Taysan, Legazpi
City.2 Napal and Imperial intended to develop this land into a subdivision. Imperial, on
the other hand, as his contribution to NIDSLAND, committed to perform the following
obligations: to settle Napal's obligation to the Rural Bank of Ligao, Inc., which was about
to foreclose its mortgage on the Property; pay Napal's tax liabilities to the Bureau of
Internal Revenue (BIR) which encumbered with a tax lien the largest portion of the
Property; fund NIDSLAND's initial operating capital; and provide for Napal's personal
drawings in an amount not exceeding ₱l,200,000.3

While Imperial faithfully complied with his obligations under the Memorandum of
Agreement, Napal failed to convey to NIDSLAND a certain portion of the Property, in
particular Lot 15-C covered by TCT No. 21026 (the Subject Property). 4 On July 24,
1996, Napal sold the Subject Property to Cruz as evidenced by a Deed of Absolute
Sale. 5 While the Deed of Absolute Sale between Napal and Cruz bore the date July 24,
1996, the sale was registered in the Registry of Deeds of Legazpi City only on August
27, 1996. 6

As Napal continued to refuse to convey the Subject Property to NIDSLAND under the
Memorandum of Agreement, Imperial filed on July 30, 1996, for himself and in
representation of NIDSLAND, a derivative suit (SEC Petition) before the Securities and
Exchange Commission (SEC).7 This was filed after the sale to Cruz but before its
registration. The case was docketed as SEC LEO Case No. 96-0004 (SEC Case).8 On
the same day, Imperial also filed a notice of lis pendens for the SEC Case with the
Registry of Deeds of Legazpi City. This was annotated on TCT No. 210269 as Entry No.
99956/99957. 10

Since the annotation of the lis pendens occurred after the sale of the Subject Property
to Cruz but before its registration with the Registry of Deeds, the notice of lis
pendens was carried over to the new TCT No. 4393611 issued in Cruz's
name. 12 Meanwhile, the SEC Case proceeded without the participation of Cruz who
had possession of the new TCT covering the Subject Property during the continuation of
the hearings.

On August 8, 1997 and during the pendency of the SEC Case, Imperial and NIDSLAND
filed an action for annulment of sale against Cruz (Annulment of Sale Action) before the
Regional Trial Court, Legazpi City (RTC Legazpi City). This was docketed as Civil Case
No. 9419. 13 On August 14, 1997, the R TC Legazpi City dismissed the action and held
that it should have been filed in the original case where the decree of registration was
entered. 14 Imperial and NIDSLAND elevated the case to the CA through an
appeal. 15 The CA affirmed the RTC Legazpi City's ruling. 16

On November 10, 1998, SEC Hearing Officer Santer G. Gonzales (SEC Hearing Officer
Gonzales) rendered a Decision 17 in favor of Imperial and NIDSLAND (SEC Decision).
The Decision declared the Deed of Absolute Sale between Napal and Cruz void ab
initio as the SEC found that the sale was simulated and was intentionally made to
appear to have been perfected prior to the filing of the notice of lis pendens. Thus, the
SEC ordered the cancellation of the TCT in the name of Cruz. Further, the SEC directed
Napal to execute the proper deed of conveyance of the Subject Property in favor of
NIDSLAND. The SEC also mandated Napal to deliver the possession of the Subject
Property to NIDSLAND. 18

Since Napal did not appeal the SEC Decision, it became final and executory and was
enforced on January 13, 1999. As ordered in the SEC Decision, a Deed of
Conveyance 19 was issued on the same date, transferring the Subject Property to
NIDSLAND. TCT No. 43936 in the name of Cruz was cancelled and a new TCT No.
49730 was issued in the name of NIDSLAND on January 19, 1999. 20

On February 18, 1999, Napal filed with the CA a Petition for Annulment of Judgment
under Rule 4 7 of the Rules of Court (Annulment of Judgment Action). This was
docketed as CA-G.R. SP No. 51258.21 Napal sought the nullification of the SEC
Decision as well as the orders and writs issued pursuant to it. Napal argued that the
SEC has no jurisdiction over the SEC Case as it did not involve any intra-corporate
controversy. On April 15, 1999, Cruz filed in the Annulment of Judgment Action a
Motion to Join as Party-Petitioner.22 In his motion, Cruz claimed that he is a
transferee pendente lite of the Subject Property.23

The CA promulgated a Decision24 on August 31, 1999 dismissing the Petition for
Annulment of Judgment. The CA explained that Rule 47 of the Rules of Court is not
available to annul the judgment of the SEC. According to the CA, the proper remedy in
this case is a special civil action for certiorari and prohibition. None of the parties
appealed the CA Decision. Thus, entry of judgment was made on November 16, 2000. 25

On January 22, 2001,26 Cruz filed a pleading denominated as a "Petition" before RTC
Legazpi City (RTC Petition),27 which sought to nullify the SEC Decision. This was
docketed as Civil Case No. SR-09 and raffled to Branch 4 of RTC Legazpi City.28 In the
RTC Petition, Cruz prayed for the following reliefs:

WHEREFORE, it is respectfully prayed that after hearing, judgment be rendered as

follows:

a) Declaring the Decision dated 10 November 1998 of respondent Gonzales to be null

and void insofar as it affects the property rights of petitioner to the Subject Property

b) Declaring the Deed of Conveyance dated January 13, 1999 as null and void for
having been issued pursuant to an invalid and void judgment

c) Declaring the cancellation of the TCT No. 43936 of petitioner, as well as the issuance
of TCT No. 49730 (and its derivatives TCT Nos. 50398, 50399, 50400 and 50401) of
respondent Nidsland, by respondent Register of Deeds of Legazpi City, to be invalid
and illegal.

d) Directing the respondent Register of Deeds of Legazpi City to duly cancel the TCT
Nos. 50398, 50399, 50400 and 50401, and restore the status of TCT No. 43936 of
plaintiff prior to its cancellation, or otherwise reconvey and/or issue a new title to the
Subject Property in the name of plaintiff,

e) Ordering respondents to solidarily pay to petitioner the amount of P500,000.00, as

and for moral damages.

f) Ordering respondents to solidarily pay attorney's fees in the amount of P100,000.00,

appearance fees and costs of suit.29

Presiding Judge Gregorio A. Consulta, without issuing summons, dismissed the

Petition motu proprio.30He justified his dismissal on the ground that regional trial courts
have no jurisdiction over the SEC and as such, an action assailing the decision of the
SEC should be brought before the CA. As his motion for reconsideration of the decision
was denied, 31 Cruz elevated the case to the CA by way of a special civil action
for certiorari. This was docketed as CA G.R. SP No. 65720.32 In a Decision33 dated
October 28, 2002, the CA held that R TC Legazpi City acted with grave abuse of
discretion in dismissing the Petition, and therefore ordered that the case be remanded
to RTC Legazpi City to be given due course.34

In accordance with the Decision of the CA, the RTC Petition was re-docketed as Civil
Case No. 10325 and was reraffled to Branch 3 of the RTC Legazpi City. 35 However,
even before summons could be issued, Presiding Judge Henry B. Basilla issued an
Order36 dated April 15, 2004 dismissing the Petition. The Order stated that the RTC
Petition failed to comply with the reglementary period and other procedural
requirements under Rule 65 for the proper filing of a special civil action for certiorari.

However, upon Cruz's motion for reconsideration, Judge Basilla reversed his ruling in
an Order37 dated May 7, 2004. Thus, RTC Legazpi City summoned Imperial and
NIDSLAND on July 1, 2004.38 On July 30, 2004, Imperial and NIDSLAND filed a motion
to dismiss39 which was denied by Judge Basilla.40

Imperial and NIDSLAND then failed to file their answer and were declared in
default. 41 Thus, Cruz was allowed to present evidence ex-parte. Judge Basilla
eventually set aside the order of default upon motion of Imperial and
NIDSLAND.42 Judge Basilla subsequently voluntarily inhibited himself, and the RTC
Petition was reraffled to Branch 4 presided by Respondent Judge Edgar L. Armes
(Respondent Judge Armes).43

After trial, the parties to the RTC Petition submitted their respective memoranda. In
Imperial and NIDSLAND's memorandum and supplemental memorandum, they again
sought the dismissal of the RTC Petition on the ground of lack of jurisdiction. Judge
Armes refused the dismissal.44

On August 22, 2006, Imperial and NIDSLAND filed an Omnibus Motion. This was
followed by a Supplemental Motion filed on September 7, 2006. 45 In the two motions,
Imperial and NIDSLAND once again prayed for the dismissal of the RTC Petition and
raised, for the first time, the following grounds:

1. The failure of herein private respondent CRUZ, as petitioner in Civil Case No. 10325,
to state the required material dates in his initiatory Petition necessary in order to
determine compliance with the 60-days reglementary period;

2. The failure of herein private respondent CRUZ, as petitioner in Civil Case No. 10325,
to show by any allegation in his initiatory Petition that there is no appeal or any other
plain, speedy and adequate remedy under the ordinary course of law against the
assailed decision in SEC LEO Case No. 96-0004 to warrant recourse to the extra-
ordinary writ of certiorari;

3. The indisputable fact that the Petition in Civil Case No. 10325 was filed by herein
private respondent CRUZ far beyond the 60-days reglementary period allowed under
Section 4 of Rule 65 of the Rules of Court in view of the admission by said respondent
CRUZ in the Motion to Join as Party-Petitioner that he filed in CA-G.R. SP No. 51258
wherein he expressly admitted having received a copy of the assailed decision in SEC
LEO Case No. 96-0004 in February, 1999; and

4. The decision in SEC LEO Case No. 96-0006, which has become final and had been
fully executed, is binding against herein private respondent CRUZ, he being a
successor-in-interest pendente lite to the title over the Subject Property, of therein
respondent Napal, pursuant to Section 19 of Rule 3 of the Rules of Court. 46

Respondent Judge Armes denied the Omnibus Motion and Supplemental Motion in an
Order dated September 21, 2006. 47 According to the Order, the issues raised by
Imperial and NIDSLAND have already been settled by the CA in the certiorari case filed
by Cruz. The Order held that the CA ruled that the RTC Legazpi City has jurisdiction
over the case and even directed the latter to give due course to the RTC Petition.

Imperial and NIDSLAND filed a motion for reconsideration of this RTC Order on October
6, 2006. 48 In this motion, Imperial and NIDSLAND argued that the ruling of the CA
pertained to an entirely different jurisdictional issue from that raised in their Omnibus
Motion and Supplemental Omnibus Motion.49 Respondent Judge Armes denied the
motion for reconsideration in an Order50 dated November 23, 2006. This Order
reiterated that the CA's directive that the RTC Legazpi City give due course to the RTC
Petition was unqualified and unconditional. Further, the Order explained that Imperial
and NIDSLAND's arguments had no merit for the following reasons:

1. This action is geared to declare the nullity of a void judgment. In the case of
Paluwagan ng Bayan Savings Bank vs. King, 172 SCRA 60, it was held that an action
to declare the nullity of a void judgment does not prescribe, citing also Ang Lam vs.
Rosillosa and Santiago, 86 Phil. 447-452. This imprescriptibility of the action places it
beyond the ambit of the 60-day reglementary period under Sec. 4, Rule 65 of the
Revised Rules of Court.
2. The petitioner in this case, not being a party in SEC LEO Case No. 96-0004, was
never officially notified of the assailed Decision, dated November 10 1998 by the
deciding authority simply because there was no basis therefor. The notice of the
judgment, order or resolution, from which the 60-day period shall be computed under
Sec. 4, Rule 65 of the Rules of Court, contemplates of an official notice from the
deciding authority and not mere informal information from other sources like what
happened in the case at bar[.] Since the official notice from the deciding authority in
SEC LEO Case No. 96-0004 was not and is not forthcoming because there was no
basis thereof, it follows that the 60-day period aforesaid is not applicable to the case at
bar. 51

FIRST CONSOLIDATED CASE-G.R. NO. 178842

Imperial and NIDSLAND then filed a Petition for Certiorari and Prohibition52 under Rule
65 of the Rules of Court before the CA. This petition assailed the validity of Respondent
Judge Armes' Orders dated September 21, 2006 and November 23, 2006. This was
docketed as CA-G.R. SP No. 97823. The CA rendered a Resolution dated March 6,
200753 (First Assailed Resolution) dismissing Imperial and NIDSLAND's Petition
for Certiorari and Prohibition for lack of merit. Imperial and NIDSLAND filed a motion for
reconsideration which was denied by the CA in a Resolution dated July 3,
200754 (Second Assailed Resolution).

Hence, on August 2, 2007, Imperial and NIDSLAND filed this Petition for Review
on Certiorari55under Rule 45 of the Rules of Court seeking a reversal of the two assailed
resolutions (First Petition). In their petition, Imperial and NIDSLAND argue that the CA
erred in affirming the RTC Decision on the RTC Petition. They argue that the CA should
have reversed the error of the RTC Legazpi City in allowing the filing of the RTC Petition
way beyond the 60-day period for the filing of a special civil action for certiorari. They
stress that the RTC Petition was filed three and a half years after the finality of the SEC
Decision and two years and three months from the time Cruz received notice of its
promulgation. They argue that neither the CA nor Cruz was able to present any
compelling reason for the relaxation of the reglementary period.

SECOND CONSOLIDATED CASE-G.R. No. 195509

While the First Petition was pending, RTC Legazpi City rendered a Decision 56 dated
March 24, 2009 (RTC Main Decision). The RTC Legazpi City ruled that SEC Hearing
Officer Gonzales acted with grave abuse of discretion when he annulled the Deed of
Sale of the Subject Property between Napal and Cruz, ordered the cancellation of
Cruz's TCT, and directed Napal to execute a deed of conveyance in favor of
NIDSLAND. According to the RTC Main Decision, the CA has already definitively settled
the issue of RTC Legazpi City's jurisdiction over the case. It held that there is no merit in
Imperial and NIDSLAND's contention that the RTC Petition should have been dismissed
for non-compliance with the 60-day period for the filing of a special civil action
for certiorari and for failure of the R TC Petition to state the material dates. On the other
hand, the RTC Main Decision found that the SEC had no jurisdiction over Cruz and as
such, in issuing orders affecting his ownership over the Subject Property, it violated
Cruz's right not to be deprived of property without due process of law. Further, the RTC
Main Decision stated that RTC Legazpi City cannot settle the issue as to the rightful
ownership of the Subject Property in a special civil action for certiorari. The RTC Main
Decision however affirmed the award of damages in favor of Imperial and NIDSLAND in
the SEC Case. The dispositive portion held-

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

petitioner, as follows:

1. The Decision in SEC-LEO Case No. 96-0004, dated November 10, 1998, signed by
respondent Santer G. Gonzales, is hereby DECLARED NULL AND VOID ONLY WITH
RESPECT TO PARAGRAPHS 1 AND 2 OF THE DISPOSITIVE PORTION THEREOF
regarding the annulment of the Deed of Sale of the subject property by Napal to
petitioner Cruz, the cancellation of the title issued pursuant to the said sale in the name
of petitioner Cruz and the directive to Napal to execute the deed of conveyance in favor
of respondent herein Nidsland as well as the delivery of possession of the subject
property to Nidsland and the designation of then Clerk of Court Atty. Antonio C.
Bagagnan to execute the proper deed of conveyance in the event ofrefusal on the part
of Napal.

2. The following documents are hereby DECLARED NULL AND VOID:

a) Deed of Conveyance, dated [January] 13, 1999 issued by Atty. Antonio C. Bagagnan,
Clerk of Court MTCC, Legazpi City (Exh. "E" and Exh. "11")

b) CT No. 49730 in the name of respondent Nidsland (Exh. "F" and Exh. "12")

c) TCT No. 50398 in the name of respondent Nidsland (Exh. "F-1" and Exh. "13")

d) TCT No. 50399 (Exh. "F-2" and Exh. "14")

e) TCT No. 50400 (Exh. "F-3" and Exh. "15")

f) TCT No. 50401 (Exh. "F-4" and Exh. "16")

3. Respondent Register of Deeds of Legazpi City Atty. Danilo B. Lorena is hereby

ordered to cancel the foregoing titles, to wit: TCT Nos. 49730; 50398; 50399; 50400;
and 50401;

4. Respondent Lorena is hereby further ordered to recall or lift the cancellation of TCT
No. 43936 in the name of petitioner Alfonso Cruz, Jr., covering the subject property.

The parties' claims and counterclaims on their respective damages are hereby ordered
DISMISSED.

SO ORDERED. 57

Aggrieved by the RTC Main Decision, Imperial and NIDSLAND filed before the CA an
appeal under Rule 41 of the Rules of Court. In a Decision 58 dated September 13, 2010
(Second Assailed Decision), the CA reversed the R TC Decision. The dispositive portion
of the Assailed Decision states-

WHEREFORE, the assailed decision dated March 24, 2009, issued by the Regional
Trial Court, Branch 4, Legazpi City is hereby REVERSED and SET ASIDE; accordingly,
Civil Case No. 10325 is hereby DISMISSED.

No costs.

SO ORDERED.59

On March 24, 2011, Cruz filed a Petition for Review on Certiorari60 (Second Petition)
challenging the Second Assailed Decision. Cruz raised the following arguments: first,
Cruz claimed that he is the registered owner of the Subject Property. He was thus an
indispensable party to the SEC Case and as such, should have been impleaded. Since
the SEC Case was a personal action and he was never impleaded, Cruz argues that the
SEC never acquired jurisdiction over him. Thus, any decision cannot prejudice his
property rights over the Subject Property. Further, as an indispensable party, any
judgment obtained by Imperial and NIDSLAND in the SEC Case has no binding effect
on Cruz. Second, Cruz also claims that since the property was already registered in his
name, any deed of conveyance which Napal executed pursuant to the SEC Decision
transfers no rights since Napal no longer had rights over the Subject Property at the
time. Third, Cruz states that the CA erred when it held that he is already estopped from
challenging the cancellation of his TCT. He explains that he could not have participated
in the SEC Case to protect his rights. The SEC Case pertained to an intracorporate
dispute. As he was obviously not a stockholder of NIDSLAND, he had no basis to
intervene. He also emphasizes that Imperial and NIDSLAND never prayed for the
cancellation of his TCT in the SEC Case and thus, had no real reason to interfere until
SEC Hearing Officer Gonzales ruled that his TCT should be cancelled. Cruz also raises
the argument that he could not have filed a separate action to protect his rights over the
property since Imperial and NIDSLAND had already filed the Annulment of Sale action
against him for the annulment of the sale and cancellation of his TCT before RTC
Legazpi City. Cruz claims that he actively participated in this case which attained finality
only in 2003. According to Cruz, filing another case while this case was pending would
have amounted to multiplicity of suits.

We resolve the issues raised in these two consolidated cases.

The Issues

The core issue is whether RTC Legazpi City has jurisdiction to declare the nullity of the
Decision of the SEC. To resolve this issue, we once again clarify the apparent clash of
jurisdiction between the SEC and the ordinary courts in cases involving Presidential
Decree No. 902-A61 (PD 902-A).

The Ruling of the Court

We rule that that the RTC Petition should have been dismissed for lack of jurisdiction.
We likewise rule that the SEC Decision was issued with grave abuse of discretion
amounting to an excess of jurisdiction.

Nature of a void judgment

A void judgment is no judgment at all in legal contemplation. In Canero v. University of

the Philippines62we held that-

x x x A void judgment is not entitled to the respect accorded to a valid judgment, but
may be entirely disregarded or declared inoperative by any tribunal in which effect is
sought to be given to it. It has no legal or binding effect or efficacy for any purpose or at
any place. It cannot affect, impair or create rights. It is not entitled to enforcement and
is, ordinarily, no protection to those who seek to enforce. In other words, a void
judgment is regarded as a nullity, and the situation is the same as it would be if there
was no judgment. x x x63

A judgment rendered without jurisdiction is a void judgment. This want of jurisdiction

may pertain to lack of jurisdiction over the subject matter or over the person of one of
the parties.

A void judgment may also arise from the tribunal's act constituting grave abuse of
discretion amounting to lack or excess of jurisdiction. In Yu v. Judge Reyes-
Carpio, 64 we explained-

The term "grave abuse of discretion" has a specific meaning. An act of a court or
tribunal can only be considered as with grave abuse of discretion when such act is done
in a "capricious or whimsical exercise of judgment as is equivalent to lack of
jurisdiction." x x x [T]he use of a petition for certiorari is restricted only to "truly
extraordinary cases wherein the act of the lower court or quasi-judicial body is wholly
void" x x x.65
In Guevarra v. Sandiganbayan, Fourth Division,66we further explained-

x x x However, if the Sandiganbayan acts in excess or lack of jurisdiction, or with grave

abuse of discretion amounting to excess or lack of jurisdiction in dismissing a criminal
case, the dismissal is null and void. A tribunal acts without jurisdiction if it does not have
the legal power to determine the case; there is excess of jurisdiction where a tribunal,
being clothed with the power to determine the case, oversteps its authority as
determined by law. A void judgment or order has no legal and binding effect, force or
efficacy for any purpose. In contemplation of law, it is nonexistent. Such judgment or
order may be resisted in any action or proceeding whenever it is involved. x x x67

To give flesh to these doctrines, the Rules of Court, particularly the 1997 Revised Rules
on Civil Procedure, provides for a remedy that may be used to assail a void judgment
on the ground of lack of jurisdiction. Rule 47 of the Rules of Court states that an action
for the annulment of judgment may be filed before the CA to annul a void judgment of
regional trial courts even after it has become final and executory. If the ground invoked
is lack of jurisdiction, which we have explained as pertaining to both lack of jurisdiction
over the subject matter and over the person, the action for the annulment of the
judgment may be filed at any time for as long as estoppel has not yet set in. In cases
where a tribunal's action is tainted with grave abuse of discretion, Rule 65 of the Rules
of Court provides the remedy of a special civil action for certiorari to nullify the act.

Void judgments may also be collaterally attacked. A collateral attack is done through an
action which asks for a relief other than the declaration of the nullity of the judgment but
requires such a determination if the issues raised are to be definitively settled.

Nature of the RTC Petition

The RTC Petition filed by Cruz has been treated by the CA and the parties as a special
civil action for certiorari. The RTC Petition, however, prays for the nullification of the
SEC Decision and thus purports to be an action for the annulment of a void judgment.
Ascertaining the true nature of the RTC Petition is crucial as it determines whether Cruz
properly invoked the correct remedy in assailing the SEC Decision.

The nature of an action is determined bythe material allegations in the complaint and
the type of relief prayed for. 68 We have examined the RTC Petition, and we rule that
contrary to the findings of the lower courts, it is an action for the annulment of judgment
on the ground of lack of jurisdiction. The meat of the RTC Petition's allegation is that the
SEC declared as void ab initio the sale between Napal and Cruz without impleading
Cruz in the proceedings. The SEC also had no power to order the transfer of title over
the Subject Property from Cruz to NIDSLAND because Cruz was never heard in these
proceedings. Cruz asserts that the SEC never acquired jurisdiction over his person.
Cruz thus prayed in the RTC Petition that the SEC Decision be declared null and void.

The RTC Petition clearly captures the material allegations in a petition for annulment of
judgment on the ground of lack of jurisdiction over the person of one of the parties
under Rule 4 7 of the Rules of Court. In sharp contrast, the RTC Petition makes no
allegations that the SEC Decision was rendered with grave abuse of discretion. It
cannot be treated as a special civil action for certiorari under Rule 65.

The necessary question before us now is whether Cruz invoked the proper remedy.
There have been several attempts to use an action for annulment of judgment under
Rule 4 7 of the Rules of Court to set aside a void judgment of a quasi-judicial body. We
retrace our jurisprudence on the matter in order to ascertain if this remedy may be
properly invoked. A review of the relevant cases reveals two interrelated issues. First,
whether this remedy is available to set aside a void judgment of a quasi-judicial body;
and second, which tribunal has jurisdiction over it.
Jurisdiction over annulment of

judgment of quasi-judicial

bodies

Prior to Batas Pambansa Bilang 129 (BP 129),69 we had the chance to rule on the
question of jurisdiction over the annulment of judgment of quasi-judicial bodies in BF
Northwest Homeowners Association, Inc. v. Intermediate Appellate Court. 70 In that
case, we held that regional trial courts can annul the judgment of quasi-judicial bodies
which are of the same rank as courts of first instance. This ruling established two things:
first, an action for the annulment of judgment is a remedy available against a void
judgment of a quasi-judicial body. Second, regional trial courts had jurisdiction
whenever the quasi-judicial body involved is of inferior rank.

With the passage of BP 129, this doctrine appears to have been altered. Section 9(a) of
BP 129 expressly vested the CA with jurisdiction over annulment of judgments of
regional trial courts. Notably, it does not mention jurisdiction over annulment of
judgment of quasi-judicial bodies. In fact, quasi-judicial bodies are mentioned only in
Section 9(3)771 which provides for the CA's appellate jurisdiction over their judgments,
orders, resolutions and awards.

In 1997, the new rules of civil procedure took effect. These rules provided, for the first
time, a remedy called annulment of judgment on the ground of extrinsic fraud and lack
of jurisdiction. Rule 47, however, limits its application to regional trial courts and
municipal trial courts.

We had the opportunity to apply these relevant provisions in the 2000 case of Cole v.
Court of Appeals. 72 In this case, we explained that the CA has no jurisdiction over a
petition for annulment of judgment under Rule 47 against a decision of the Housing and
Land Use Regulatory Board, a quasi-judicial body. Rule 47 allows a resort to the CA
only in instances where the judgment challenged was rendered by regional trial courts.
This was also the import of our ruling in Elcee Farms, Inc. v. Semillano73when we held
that the CA has no jurisdiction over the annulment of judgment of the National Labor
Relations Commission.

This was reiterated in the 2005 case Galang v. Court of Appeals 74 which dealt with
decisions rendered by the SEC. In that case, we categorically ruled that the CA has no
jurisdiction over annulment of a void judgment rendered by the SEC since Rule 47 of
the Rules of Court clearly states that this jurisdiction only pertains to judgments
rendered by regional trial courts.

Springfield Development Corporation, Inc. v. Presiding Judge, RTC, Misamis Oriental,

Br. 40, Cagayan de Oro City75summarized our foregoing rulings in determining whether
the CA has jurisdiction to annul a void judgment of the Department of Agrarian Reform
Adjudication Board (DARAB). This case was a significant development in the then
growing jurisprudence which all merely said that an action to annul a judgment of a
quasi-judicial body cannot be brought before the CA, and which did not categorically
state whether the action may be filed before any other court.

In Springfield, we explained that regional trial courts have no jurisdiction to annul

judgments of quasi-judicial bodies of equal rank. It then proceeded to state that the CA
also has no jurisdiction over such an action. Springfield emphasized that Section 9 of
BP 129 and Rule 4 7 of the Rules of Court both state that the CA has jurisdiction over
annulment of judgments of regional trial courts only. We ruled in this case that the
"silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or final orders
and resolutions of quasi-judicial bodies like the DARAB indicates its lack of such
authority."76 While this case explained that neither the regional trial courts nor the CA
possess jurisdiction over an action to annul the judgment of quasi-judicial bodies, it did
not categorically state that the remedy itself does not exist in the first place. Notably, we
disposed of this case by remanding the action filed before us-a special civil action for
prohibition- to the CA because the matter required a determination of facts which this
Court cannot do. We then held that the CA may rule upon the validity of the judgment by
noting that a void judgment may be collaterally attacked in a proceeding such as an
action for prohibition. 77

The seeming confusion in the string of cases pertaining to the jurisdiction over petitions
for annulment of judgment of quasi-judicial bodies is clarified when these cases are
read in conjunction with Macalalag v. Ombudsman.78While we repeated our consistent
ruling that Rule 47 of the Rules of Court only applies to judgments of regional trial
courts, Macalalag also explains that an action for the annulment of judgment is similar in
nature to an appeal-both are merely statutory. No right exists unless expressly granted
by law. 79 In Macalalag, we implied that the key to determining whether this remedy may
be had and where such action may be filed is to ascertain whether there is a law
expressly allowing a resort to this action before a particular tribunal. This then requires
an examination of the laws and rules relevant to a specified quasi-judicial body. While it
is correct that both the regional trial courts and the CA cannot take cognizance of a
petition for annulment of judgment of a quasi-judicial body under Rule 47 of the Rules of
Court, they may nevertheless do so, if a law categorically provides for such a remedy
and clearly provides them with jurisdiction.

Applying this to the present case, we rule that there is no law at the time pertinent to this
case, which allows the filing of a petition for annulment of judgment before the regional
trial courts and the CA to set aside a void judgment of the SEC on the basis of lack of
jurisdiction. We hasten to emphasize, however, that this pertains only to cases filed
prior to Republic Act No. 879980 (RA 8799) which transferred the jurisdiction over intra-
corporate disputes to regional trial courts designated as commercial courts. As to the
latter, Rule 47 clearly applies.

This leads to the conclusion that the RTC Petition is .not the proper remedy to assail the
SEC Decision. Since it is an action for the annulment of judgment, the R TC Petition
cannot prosper as we have already ruled that this remedy is not available in this
particular case.

However, the error in Cruz's RTC Petition does not automatically warrant a dismissal of
these proceedings. We rule that the SEC, in nullifying the sale between Napal and Cruz
and in ordering the cancellation of Cruz's TCTs in favor of NIDSLAND, overstepped its
jurisdiction. The SEC Decision was rendered with grave abuse of discretion.

Grave Abuse of Discretion and

the SEC 's Jurisdiction

In 1976, PD 902-A vested the SEC with the quasi-judicial power over intra-corporate
disputes. While this jurisdiction was eventually transferred to regional trial courts
designated as special commercial courts by The Securities Regulation Code in 2000,
the SEC had the authority over intra-corporate disputes at the time relevant to this case.

Through the years that the SEC had quasi-judicial power over intra-corporate
controversies, this Court explained the delineation of jurisdiction between the trial courts
and the SEC. Our finding in this case that the SEC acted with grave abuse of discretion
is rooted on the proper understanding of the limits of the jurisdiction of the SEC. We
now review this Court's pertinent rulings on the jurisdiction of the SEC.
Under Section 5 of PD 902-A, the applicable law at the time the SEC Case was filed,
the SEC has original and exclusive jurisdiction to hear and decide cases involving the
following:

(a) Devices or schemes employed by or any acts, of the board of directors, business
associates, its officers or partnership, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of the stockholder, partners,
members of associations or organizations registered with the Commission;

(b) Controversies arising out of intra-corporate or partnership relations, between and

among stockholders, members, or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership or association and
the state insofar as it concerns their individual franchise or right to exist as such entity;
and

(c) Controversies in the election or appointments of directors, trustees, officers or

managers; of such corporations, partnerships or associations

In Union Glass & Container Corporation v. Securities and Exchange Commission81we

said that "the law [PD 902-A] explicitly specified and delimited its jurisdiction to matters
intrinsically connected with the regulation of corporations, partnerships and associations
and those dealing with the internal affairs of such corporations, partnerships or
associations."82 We added that in order for the SEC to take cognizance of a case, the
controversy must pertain to any of the following relationships: (1) between the
corporation, partnership or association and the public; (2) between the corporation,
partnership or association and the state in so far as its franchise, permit or license to
operate is concerned; (3) between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among the stockholders, partners
or associates themselves. 83

This is the relationship test, under which the existence of any of these relationships
vested the SEC with jurisdiction. In Abejo v. De la Cruz,84we even declared that "an
intra-corporate controversy is one which arises between a stockholder and the
corporation. There is no distinction, qualification, nor any exemption whatsoever. The
provision is broad and covers all kinds of controversies between stockholders and
corporations."85

Later decisions of this Court, however, have moved away from this rather simplistic
determination of what constitutes an intra-corporate controversy. In the 1990 case
of Viray v. Court of Appeals, 86 we held, thus:

The establishment of any of the relationships mentioned in Union will not necessarily
always confer jurisdiction over the dispute on the SEC to the exclusion of the regular
courts. The statement made in one case that the rule admits of no exceptions or
distinctions is not that absolute. The better policy in determining which body has
jurisdiction over a case would be to consider not only the status or relationship of the
parties but also the nature of the question that is the subject of their controversy. 87

This is the controversy test. In Lozano v. De los Santos, 88 we explained that the
controversy test requires that the dispute among the parties be intrinsically connected
with the regulation of the corporation, partnership or association. 89 In Speed
Distribution Corp. v. Court of Appeals,90we added that "[i]f the nature of the controversy
involves matters that are purely civil in character, necessarily, the case does not involve
an intra-corporate controversy."91
Taking all these holdings together, the issue of whether the SEC has the power to hear
and decide a case depends on two determinants: (1) the status or relationship of the
parties; and (2) the nature of the question that is the subject of their controversy.92

The application of these two tests has allowed for the proper delineation of the seeming
overlap in the jurisdiction of the SEC and the courts.

By way of illustration, in Union Glass we ruled that the action filed by the dissenting
stockholders against their corporation Pioneer Glass Manufacturing (Pioneer)
questioning its dacion en pago of Pioneer's plant in favor of Union Glass is an intra-
corporate dispute as it clearly pertained to the internal affairs of the corporation.
However, we held that the recovery of the possession of the plant should have been
filed with the trial court because the SEC possesses no jurisdiction over Union Glass
(the third-party purchaser) because it has no intra-corporate relationship with any of the
parties.

In Embassy Farms, Inc. v. Court of Appeals,93the respondent, under a memorandum of

agreement, undertook to deliver certain parcels of land and shares of stock of Embassy
Farms, Inc. to the other party in exchange for the latter's payment of a certain amount.
When the other party failed to comply with his obligation to pay the amount, we held that
the conflict arising between them pertains to their contractual obligations under the
memorandum of agreement. It does not refer to the enforcement of rights and
obligations under the Corporation Code or the internal or intra-corporate affairs of the
corporation.

In Saura v. Saura, Jr., 94certain stockholders sold a parcel of land to a corporation

without the consent of the other stockholders. When the latter filed an action for the
annulment of the sale against the purchasing corporation and the selling stockholders
before the trial court, the question of whether the case is an intra-corporate dispute
arose. Applying the two tests, we found that the case is not intra-corporate. The action
was ultimately directed against a third party even if the selling stockholders of the
corporation were also impleaded.

Further, in Intestate Estate of Alexander T Ty v. Court of Appeals,95 where a stockholder

filed an action against the estate of another stockholder for the annulment of a sale of
shares which the former claims was simulated for lack of consideration, we ruled that
the jurisdiction properly belongs to the regional trial court. We explained that "[t]he
determination whether a contract is simulated or not is an issue that could be resolved
by applying pertinent provisions of the Civil Code, particularly those relative to
obligations and contracts. Disputes concerning the application of the Civil Code are
properly cognizable by courts of general jurisdiction."96

The development of both the concept and application of the relationship

test and controversy test reveals a growing emphasis on the delineated jurisdiction
between the SEC and ordinary courts. The delineation is based on the very purpose for
which the SEC was granted quasi-judicial powers in the first place. Under PD 902-A, the
SEC exercised jurisdiction over intra-corporate controversies precisely because it is a
highly-specialized administrative body in specialized corporate matters. It follows
therefore, that where the controversy does not call for the use of any technical
expertise, but the application of general laws, the case is cognizable by the ordinary
courts. In Macapalan v. Katalbas-Moscardon,97we said-

It is true that the trend is towards vesting administrative bodies like the SEC with the
power to adjudicate matters coming under their particular specialization, to insure a
more knowledgeable solution of the problems submitted to them. This would also
relieve the regular courts of a substantial number of cases that would otherwise swell
their already clogged dockets. But as expedient as this policy may be, it should not
deprive the courts of justice of their power to decide ordinary cases in accordance with
the general laws that do not require any particular expertise or training to interpret and
apply. Otherwise, the creeping take-over by the administrative agencies of the judicial
power vested in the courts would render the judiciary virtually impotent in the discharge
of the duties assigned to it by the Constitution.98

Applying these principles to this case, we rule that the SEC does not have jurisdiction to
order the cancellation of the sale between Napal and Cruz. It also has no jurisdiction to
cancel Cruz's TCT and order its transfer to NIDSLAND.

To assail the validity of the sale, Imperial and NIDSLAND sought to prove that the sale
to Cruz was simulated. This involves the application of the law on sales. As we have
already held in Intestate Estate of Alexander T. Ty, the issue of whether a sale is
simulated falls within the jurisdiction of ordinary civil courts. It does not concern an
adjudication of the rights of Imperial, NIDSLAND and Napal under the Corporation Code
and the internal rules of the corporation. The resolution of these questions requires the
application of an entire gamut of laws that goes well beyond the expertise of the SEC.

Meanwhile, the question of whether Cruz's TCT should be cancelled goes into the
proper application of Presidential Decree No. 1529 99 and related doctrines. Specifically,
there is a need to take into consideration whether the SEC Petition is a collateral attack
on the certificate of title which goes against the well-established rule of indefeasibility.
The resolution of this question demands the application of our laws on land title and
deeds, a matter outside the ambit of the SEC's special competence.

Indeed, our jurisprudence has leaned in favor of recognizing the jurisdiction of quasi-
judicial bodies. However, this jurisdiction must always be viewed within the context of its
grant. The law vests quasi-judicial powers to administrative bodies over matters that
require their particular competence and specialized expertise. This grant of jurisdiction
is not and should not be justification to deprive courts of law of their jurisdiction as
determined by law and the Constitution. Courts of law are the instruments for the
adjudication of legal disputes. In a system of government where courts of law exist
alongside quasi-judicial bodies, the need to harmonize apparent conflicts in jurisdiction
require a determination of whether the matter to be resolved pertains to a general
question of law which belongs to ordinary courts or whether it refers to a highly
specialized question that can be better resolved by a quasi-judicial body in accordance
with its power vested by law.

In overstepping its jurisdiction, the SEC committed grave abuse of discretion. Grave
abuse of discretion is the capricious and whimsical exercise of judgment. It is the
exercise of a power in an arbitrary manner. It must be so patent or gross as to amount
to the evasion of a positive duty or to a virtual refusal to perform a duty enjoined or to
act at all in contemplation of law. In Air Transportation Office v. Court of Appeals, 100 we
explained that grave abuse of discretion exists when the act is: (1) done contrary to the
Constitution, the law or jurisprudence; or (2) executed whimsically, capriciously or
arbitrarily out of malice, ill will or personal bias. 101

In Thenamaris Philippines Inc. v. Court of Appeals, 102 we ruled that grave abuse of
discretion exists where the assailed decision of the CA displayed patent errors. In Air
Transportation Office, the patent violation of the Rules of Court merited a finding that
there was grave abuse of discretion.

In this case, the SEC, in rendering the decision, disregarded established law and
jurisprudence on the jurisdiction of the SEC. Further, it adjudicated on the rights of Cruz,
cancelled the deed of sale, and took away his property without giving him the
opportunity to be heard. It is a breach of the basic requirements of due process.

Further, the incorrectness and impracticality of presenting these issues before the SEC
are highlighted by the reliefs granted by SEC Hearing Officer Gonzales in the SEC
Case. The SEC annulled the deed of sale between Napal and Cruz. This was based on
evidence presented during the SEC Hearing which consisted of Imperial's testimony
that the price that Cruz paid for the Subject Property was grossly below its value. While
we will not delve into the propriety of the SEC's factual findings, we note that there
appears nothing in the record, other than Imperial's statements, to support the
contention that the consideration was indeed grossly below the actual value of the
Subject Property. Furthermore, the SEC also found that the Deed of Sale was
antedated to make it appear that it took place prior to the annotation of the notice of lis
pendens. Again, this was based solely on Imperial's testimony during the SEC Hearing.
We note that there was nothing in the records, other than Imperial's bare statement, to
establish this.

The SEC Decision even went further and ordered the cancellation of Cruz's TCT. This
did not take into consideration the indefeasibility of a Torrens title. While this is not a
question that we seek to resolve in these consolidated cases, we emphasize that a
proper adjudication of this matter requires, at the very least, an analysis of the effect of
the notice of lis pendens, the rights of a transferee pendente lite, and the propriety of a
collateral attack on a certificate of title. Clearly, the SEC is not the appropriate forum to
delve into these civil law concepts.

The SEC also does not possess the expertise to go into the reception of evidence and
the conduct of hearings geared for the purpose of resolving issues proper for a civil
action. The resolution of a civil action requires preponderance of evidence as a burden
of proof. On the other hand, cases before quasi-judicial bodies require only substantial
evidence. Hence, the propriety of annulling a sale and cancelling a Torrens title-which
are in the nature of a civil action-on the basis merely of substantial evidence determined
by an administrative body raises due process concerns.

Effects of a void judgment

When grave abuse of discretion taints a judgment, it becomes wholly void. It may be
challenged by direct action which has for its object the declaration of the nullity of the
judgment. It may also be set aside through a collateral attack.

Thus, in Guevarra, we allowed the filing of a motion for reconsideration even if it was
made beyond the reglementary 15-day period We based our ruling on the ground that
the order challenged by the motion for reconsideration was issued with grave abuse of
discretion and is null and void. We explained-

Such judgment or order may be resisted in any action or proceeding whenever it is

involved. It is not even necessary to take any steps to vacate or avoid a void judgment
or final order; it may simply be ignored. 103

Our ruling in Gonzales v. Solid Cement Corporation104is more unequivocal.1âwphi1 In

this case, we found that the CA committed grave abuse of discretion amounting to lack
or excess of jurisdiction, therefore acting outside the contemplation of law. Hence, even
when the period to assail the CA decision had already lapsed, we ruled that it did not
become final and immutable. A void judgment never becomes final. We ruled thus-

The CA's actions outside its jurisdiction cannot produce legal effects and cannot
likewise be perpetuated by a simple reference to the principle of immutability of final
judgment; a void decision can never become final. "The only exceptions to the rule on
the immutability of final judgments are (1) the correction of clerical errors, (2) the so-
called nunc pro tunc entries which cause no prejudice to

any party, and (3) void judgments." x x x105

More, our ruling in Banco Español-Filipino v. Palanca106on the effects of a void
judgment has reappeared consistently in jurisprudence touching upon the matter. In this
case, we said that a void judgment is "a lawless thing, which can be treated as an
outlaw and slain at sight, or ignored wherever and whenever it exhibits its head." 107 In
concrete terms, this means that a void judgment creates no rights and imposes no
duties. Any act performed pursuant to it and any claim emanating from it have no legal
effect. 108 Thus, in Heirs of Mayor Nemencio Galvez v. Court of Appeals,109we nullified
an auction sale of a land as well as the resulting deed of sale and transfer certificate of
title as they were the offshoot of a writ of execution carried pursuant to a void judgment.

Hence, because the SEC Decision was issued with grave abuse of discretion and is
therefore void, all acts emanating from it have no force and effect. Thus, the Deed of
Conveyance issued pursuant to it has no legal effect.

Nevertheless, while the certificates of title issued in the name of NIDSLAND arose from
a void judgment, this Court cannot nullify them in these proceedings. The indefeasibility
of a Torrens title prevents us from doing so. Further, we are bound by rules on
jurisdiction and the nature of the proceedings before us.

Our Torrens system serves a very important purpose. As a general rule, a Torrens
certificate of title is conclusive proof of ownership. Thus, provided that the requirements
of law are met, a certificate of title under the Torrens system of registration is
indefeasible. The value of this rule finds real meaning when viewed in practical terms. A
registration under the Torrens system confirms that the person whose name appears as
owner of the land is indeed the true owner. Except for specific circumstances allowed by
law, a person who registers his or her ownership over a piece of land makes his or her
title indefeasible because the law does not allow any other person to attack or challenge
it. Because the title is indefeasible, third persons interested in the registered land can
simply look at the certificate of title and rely on the information stated in it. This creates
stability in our system of registration. This rule is so zealously protected that our laws
even prohibit a collateral attack of a void certificate of title.

This is the spirit that infused our ruling in Heirs of Spouses Benito

Gavina and Juana Euste v. Court of Appeals.110 In this case, we explained that the
general rule that the direct result of a void contract cannot be valid is inapplicable when
the integrity of the Torrens system is involved. Thus, a void certificate of title cannot be
cancelled in a proceeding not instituted for the purpose. We further said-

x x x The effect of such outright cancellation will be to impair public confidence in the
certificate of title. The sanctity of the Torrens system must be preserved; otherwise,
everyone dealing with the property registered under the system will have to inquire in
every instance as to whether the title had been regularly or irregularly issued, contrary
to the evident purpose of the law. Every person dealing with the registered land may
safely rely on the correctness of the certificate of title issued therefor and the law will in
no way oblige him to go behind the certificate to determine the condition of the
property. 111

We cited this ruling in subsequent cases such as Rabaja Ranch Development

Corporation v. AFP Retirement and Separation Benefits System, 112 Spouses Chua v.
Soriano, 113 and Republic v. Orfinada, Sr. 114 The stability and reliability of the Torrens
system is so important that we cannot, in this case, undermine it for the sake of
expediency.

Hence, we cannot order the direct cancellation of the certificates of title issued to
NIDSLAND even if they are the direct result of a void decision. The nullity of the
certificates of title should be threshed out in a petition for cancellation of title brought
before the proper court. 115
Moreover, there are procedural barriers that prevent us from determining the validity of
the certificates of title questioned in this case. First, we do not have jurisdiction over the
cancellation of certificates of title. Second, the nature of the action before us bars us
from going into the certificates of title themselves. We emphasize that this case is a
petition for review on certiorari of an action for annulment of judgment on the ground of
lack of jurisdiction. Our ruling is anchored on the lack of jurisdiction of the SEC to annul
the sale to Cruz and order the cancellation of the certificates of title. In this Decision, we
emphasized that the proper jurisdiction to annul the sale and to cancel the certificates of
title belongs to the regular courts, in particular, the regional trial courts. We must thus
also respect the rule on jurisdiction and exercise restraint in this case. The proper action
to cancel the void certificates of title must be brought before the tribunal designated by
law to possess jurisdiction over the matter. The proper party may, however, use this
Decision as it definitively settles that the certificates of title issued to NIDSLAND arose
out of a void judgment and as such, should have no force and effect. This Decision
is res judicata as to this question.

Further, we also cannot rule on the validity of the sale of the Subject Property to Cruz as
well as Napal's obligation to Imperial and NIDSLAND under the Memorandum of
Agreement. These matters require the presentation of facts before the proper forum and
through appropriate procedural remedies. While we endeavor to fully settle legal
disputes brought before us, we must also place premium on the importance of rules of
procedure. Rules of procedure serve to protect the interests of litigants who seek
redress before the courts. They ensure that litigants plead before the proper forum that
has the necessary expertise and legal tools to fully resolve a legal problem. They also
ensure that litigants employ the proper remedies that will allow them to successfully
obtain the appropriate relief. With this in mind, litigants must be more circumspect in
invoking the jurisdiction of the various tribunals and the multiple remedies available to
them.

WHEREFORE, the Court of Appeals' Resolution dated March 6, 2007 in the First
Consolidated Case is REVERSED and SET ASIDE. Further, we rule that Branch 4,
Regional Trial Court, Legazpi City has no jurisdiction over Cruz's Petition. Thus, the
Regional Trial Court's Decision dated March 24, 2009 is NULLIFIED.

The Court of Appeals' Decision dated September 13, 2010 in the Second Consolidated
Case is also REVERSED and SET ASIDE. We rule that the Securities and Exchange
Commission's Decision dated November 10, 1998 is VOID. Thus, the Deed of
Conveyance dated January 13, 1999 executed in compliance with this Decision
is NULLIFIED. The proper parties can file the appropriate petition for cancellation of title
in the trial court which has jurisdiction to nullify the certificates of title issued to
NIDSLAND by virtue of the void SEC Decision.

SO ORDERED.
G.R. No. L-49776 January 28, 1980

RODOLFO, ANDRELINA, NORMA, LYDIA, VIRGINIA, SONIA, ELSA, ROGELIO and

RAFAEL, all surnamed ZUÑIGA, petitioners,
vs.
COURT OF APPEALS (First Division), FELISA CERDENA, MARCIANA CERDENA,
Heirs of EUSTAQUIO CERDENA, Heirs of PLACIDO CERDENA, Heirs of ROSA
CERDENA, and Heirs of CELESTINA CERDENA, respondents.

Virginia Zuñiga-de Vega for and in his own behalf.

Dakila F. Castro & Associates for private respondents.

ANTONIO, J.:

Petition for review by certiorari, to set aside the decision of the Court of Appeals, dated
August 11, 1978 (CA-G.R. No. 50537-R), vacating the judgment of the Court of First
Instance of Bulacan of August 31, 1971. This decision of the trial court ordered the
registration of a parcel of land, situated in Meycauayan, Bulacan, described in Plan Ap-
19129 (Exhibit "E") and its accompanying technical description (Exhibit "F"), in ten (10)
undivided shares each in favor of Rodolfo, Andrelina, Norma, Lydia, Sonia, Virginia,
Elsa, Rafael and Rogelio, all surnamed Zuñiga, and the minors Pablito, Anselmo Marina
and Alex Zuñiga, represented by their mother, Adoracion Padilla. The thrust of the
petition is that the respondent Court of Appeals, in declaring that the trial court had no
jurisdiction in passing upon questions involving ownership of the land in dispute, had
decided the question in a manner contrary to law and applicable decisions of this Court.

The present proceedings originated from the application for the registration of title filed
on January 22, 1970 by Felisa Cerdeña, Marciana Cerdeña, and the Heirs of Eustaquio,
Placido, Rosa and Celestino, all surnamed Cerdeña, with the Court of First Instance of
Bulacan, over a certain parcel of land in Meycauayan, Bulacan. They alleged, among
others, that they are owners of the land in fee simple, having inherited the same from
their deceased parents, Canuto Cerdeña and Francisca Serrano.M

At the initial hearing, nobody appeared to oppose the application, except the heirs of
Felix Zuñiga. An order of general default was entered against the whole world, with the
exception of the aforementioned oppositors.

In their opposition, the oppositors (now petitioners) alleged, inter alia, that they are the
owners in fee simple and in undivided share and interest over the parcel of land subject
of registration, having inherited the same from their father, Felix Zuñiga, who died
intestate on January 31, 1966 in Meycauayan, Bulacan; that the property was
previously owned in common by Felix Zuñiga and Francisco Serrano, having purchased
the same on March 4, 1919 from Benita Francia y Abacan that after the death of
Francisca Serrano, her heirs, namely, Celestino, Rosa, Felisa, Marciana and Sixta all
surnamed Cerdeña, sold the share which they inherited from their mother, Francisca
Serrano, consisting of one-half (1/2) thereof to Felix Zuñiga and Rustica Tapispisan,
parents of the oppositors. Hence, the oppositors Rodolfo, Andrelina, Norma, Lydia,
Virginia, Sonia, Elsa, Rogelio and Rafael, all surnamed Zuñiga, together with their
nephews and nieces, as the legitimate heirs of Felix Zuñiga who died intestate on
January 31, 1966 at Meycauayan, Bulacan, became the exclusive and absolute owners
of the entire property. They further ' alleged therein that they had been in actual,
physical, peaceful, public, uninterrupted and continuous possession of the same as the
true and lawful owners thereof and have caused the cadastral survey of the land now
known as Lot No. 4400, Meycauayan Cadastre, and the issuance of Plan Ap-19129 in
the name of the Heirs of Felix Zuñiga.

During the course of the hearing, the applicants, Felisa Cerdeña, et al., filed on March
29, 1971, a motion praying that a document handwriting expert from the National
Bureau of Investigation be appointed to conduct an examination of the deeds or
documents submitted by oppositors at the hearing on February 22, 1971, consisting of;
(a) a deed of sale executed on March 4, 1919 by Benita Francia (Exhibit "1-
Oppositors"); and (b) a deed of sale executed on November 27, 1946 by Rosa Cerdeña
and Celestina Cerdeña (Exhibit "2-Oppositors"). This motion was granted by the trial
court on May 4, 1971. On May 27, 1971, Felisa Cerdeña, et al. filed with the trial court
an urgent ex parte motion for amendment/modification of the order of May 4, 1971 to
the effect "that the Provincial Assessor for the Province of Bulacan submits or
surrenders to the National Bureau of Investigation, Manila for examination purposes, the
documents (Exhibits 1 and 2, oppositors), as well as instruments available thereat
bearing sample standards of the thumbmarks of Benita Francia of Meycauayan,
Bulacan, ... and directing the National Bureau of Investigation to examine said
documents, firstly: to determine the genuineness and authenticity as to age, type and
execution, and secondly: to examine the thumbmarks appearing on said documents
with sample standards furnished by the Provincial Assessor for Bulacan, with respect to
Benita Francia, and those furnished by the applicants herein, the latter upon previous
notice to oppositors or counsel."

On May 31, 1971, the trial court issued an order, declaring that it was the duty of the
applicants "to search for and provide the documents to serve as standards of
comparison for the examination", and if the applicants are aware of such documents,"
they should submit the same to this Court for approval as standards, otherwise the
order for examination of the documents will be cancelled."

On June 11, 1971, applicants Felisa Cerdeña, et al. again presented a motion for the
transfer of the custody of the deeds of sale submitted by the oppositors from the
Provincial Assessor of Bulacan to the Acting Chief, Dactyloscopy Section, Criminalistics
Division, National Bureau of Investigation, Manila, for examination. This was granted by
the trial court on June 14, 1971.

On August 31, 1971, the trial court rendered decision, declaring and stating as follows:

The facts as found by the Court from the evidence are as follows: The land was
originally owned by Benita Francia, who sold it in 1919 to Francisca Serrano and Felix
Zuñiga. (Exh. 1, 1-A and 1-B). Felix Zuñiga was the grandson of Francisca Serrano,
being the son of the latter's daughter, Celestina Cerdeña. Francisca Serrano died in
1933, and her half of the property was inherited by her children Celestina, Rosa, Felisa
and Marciana Cerdeña. Under a public document dated November 27, 1946, they sold
their half of the property to Felix Zuñiga (Exh. 2). Ownership therefore became
consolidated in Felix Zuñiga, and upon his death on January 31, 1966 his heirs,
oppositors in this case, executed an extrajudicial settlement of the estate with waiver
(Exh. 4).

Applicants, who are led by Felisa Cerdeña and Sixta Cerdeña, denied that they
executed Exhibit 2 and that the thumbprints appearing thereon were theirs. The
document was submitted to the NBI for a determination of the authenticity of the
thumbprints. The NBI examiner, Tomas Toribio, found the question prints to be slurred,
smudged, or fragmentary, and declared that they cannot be used as basis for an
examination

The mere denial by Felisa Cerdeña and Sixta Cerdeña that the thumbmarks were theirs
is not sufficient to overcome the presumption that the notarial document was validly and
regularly executed.

It appears further that the Zuñigas have always been in possession of the property, to
the exclusion of the applicants. This fact bolsters the claim of the oppositors that their
father owned the property. This ownership, which is traced back to the purchase of the
property from Benita Francia in 1919 has lasted for at least 50 years.

It having been satisfactorily established that oppositors and their predecessors-in-

interests have been in open, public, continuous, adverse and notorious possession of
the land aforementioned under a bona fide claim of ownership for more than fifty years
prior to the filing of the application oppositors are therefore entitled to the registration
applied for under C.A. 141.

WHEREFORE, the Court hereby orders the registration of the parcel of land covered by
plan Ap-19129 (Exh. E) and its accompanying technical description (Exh. F) in the
following manner: 1/10 undivided shares each in favor of Rodolfo Zuñiga, married to
Lucia Urian; Andrelina Zuñiga, married to Luis Porras Norma Zuñiga, married to
Epifanio Diano; Lydia Zuñiga, married to Leopoldo Jaime, Jr., Virginia Zuñiga, married
to Arsenio de Vega; Elsa Zuñiga, married to Beltran Fitalcorin; Rafael Zuñiga, married
to Aida Arzadon; Rogelio Zuñiga, single; all of legal age, Filipinos, and residents of
Malhacan, Meycauayan, Bulacan; and 1/10 undivided shares in favor of Pablito,
Anselmo, Marissa, and Alex, all surnamed Zuñiga, represented by their mother,
Adoracion Padilla, minors, Filipinos, and residents of Malhacan, Meycauayan, Bulacan
as their exclusive property.

This decision was appealed by Felisa Cerdeña, et al. to the Court of Appeals,
contending that the lower court erred in finding that: (a) the land applied for was sold by
Benita Francia in 1919 to Francisco Serrano and Felix Zuñiga; (b) the heirs of Francisco
Serrano sold their half of the property to Felix Zuñiga; (c) the possession by the Zuñigas
of the property bolster their claim that their father owned the property, and, as a
consequence, in ordering the registration of the property — in the names of the
oppositors.

It was on the basis of the afore-cited facts that the Court of Appeal instead of solving the
factual issues raised, declared the court a quo as without jurisdiction to pass upon
questions involving the ownership of the land in dispute and vacated the judgment
appealed from without prejudice to having the issue of ownership litigated in an ordinary
action before a before court of first instance.

The purposes of the land registration law, in general, are: the ascertain once and for all
the absolute title over a given landed property; to make, so far as it is possible, a
certificate of title issued by the court to the owner of the land absolute proof of such title;
to quiet title to the land and to put a stop forever any question of legality to a title; and to
decree that land title to be final, irrevocable and, undisputable." 1

It is true that a court of first instance acting as a land registration court has limited and
special jurisdiction. lt cannot be denied, however, that when the law confers jurisdiction
upon a court, the latter is deemed to have all the necessary powers to exercise such
jurisdiction to make it effective. 2 The purpose of the applicant is to prove that he has an
absolute or simple title over the property sought to be registered, otherwise his
application will be denied. All absolute oppositor claims a dominical right totally adverse
to that of the applicant. If successful, registration will be decreed in favor of the
oppositor. As to whether or not private respondents have absolute or fee simple title
over the property sought to be registered necessarily requires a resolution of the
question as to whether or not the oppositors had a dominical right totally adverse to that
of the applicants. hence, the relevancy of the issue of the validity of the conveyances in
question. This issue is not foreign but intimately related to the principal question
involved in the registration proceedings. Conceding the materiality of this question, both
parties submitted for resolution to the court a quo the issue on the genuineness and
authenticity of the deed of sale, executed by Benita Francia on March 4, 1919 in favor of
Francisca Serrano and Felix Zuñiga (Exhibits "1", "1-A" and "I-B"). and the deed of sale
executed by applicants on November 27, 1946 in favor of Felix Zuñiga (Exhibit "2").
Thus, private respondents, as applicants in the afore-mentioned proceedings, moved on
March 29, 1971 before the land registration court, for the appointment of a handwriting
expert to conduct an examination of the aforesaid deed of sale submitted by oppositors
on the hearing of March 22, 1971. Even after this motion was granted by the trial court
on May 4, 1971, private respondents again on May 27, 1971 sought the modification of
the order of the trial court of May 4, 1971 to the effect that the Provincial Assessor of
Bulacan should submit to the National Bureau of Investigation for examination purposes
"the documents (Exhs. I and 2, Oppositors) as well as instruments available thereat
bearing sample standards of the thumbmarks of Benita Francia of Meycauayan,
Bulacan." Subsequently on June 11, 1971, applicants moved for the transfer of the
possession and custody of the afore-cited documents from the Provincial Assessor to
the Acting Chief, Dactyloscopy Section, Criminalistics Division, NBI, Manila for
examination, which motion was granted by the Court on June 14, 1971. The result of
the examination was discussed in the decision of the trial court. The validity of the
aforesaid conveyances was, therefore, duly threshed out in the hearings before the trial
court. Full opportunities were given to both parties in the presentation of their respective
sides and in the submission of evidence in support thereof. The evidence presented by
the parties was fully considered by the court in its decision. As a matter of fact, on
appeal, the main assignment of error of private respondents before the Court of Appeals
dealt with the sufficiency of the finding of fact of the trial court that the land in question
was sold to the oppositors. In Franco, et at v. Monte de Piedad 3 this court stated in
emphatic terms that although the general rule is that a land 'registration court has no
power to decide cases involving issues properly litigated in ordinary actions, yet
inasmuch as in this jurisdiction it is the courts of first instance that also function as
courts of land registration, our jurisprudence recognizes exceptions to said rule, where
the parties have acquiesced in submitting the issues for determination in the registration
proceedings. and they are given full opportunity to present their respective sides and
submit their evidence. 4 From the cases, it may be gathered that, from the otherwise
rigid rule that the jurisdiction of a land registration court, being special and limited in
character and proceedings thereon summary in nature, does not extend to issues
properly litigatable in ordinary civil action, deviations have been sanctioned under the
following conditions: (1) the parties mutually agreed or have acquiesced in submitting
the aforesaid issues for determination by the court in the registration proceedings; (2)
the parties have been given full opportunity in the presentation of their respective sides
of the issues and of the evidence in support thereof; and (3) the court has considered
the evidence already of record and is convinced that the same is sufficient and
adequate for rendering a decision upon the issues. 5 The foregoing situations exist in
the case at bar.

To require that this case be litigated anew in another action between the parties would
lead to multiplicity of suits, abet unnecessary delays in the administration of justice and
negate the constitutional right of all persons "to a speedy disposition of their cases
before all judicial, quasi-judicial, or administrative bodies." 6

WHEREFORE, in view of all the foregoing, the decision of respondent Court of Appeals
in CA-G.R. No. 50537-R is hereby set aside, and the respondent Court is hereby
directed to decide the appeal on the basis of the questions of fact raised by the parties.

SO ORDERED.

Concepcion, Jr., Barredo and Abad Santos, JJ. concur.

Separate Opinions

AQUINO, J., concurring:

I concur in the result. The Court of Appeals misapplied and misunderstood the rule that
"questions which involved the ownership of the litigated lands are not within the
province of a court of land registration" (Tomada vs. Tomada L-21887, July 30, 1969, 28
SCRA 1028).

That rule applies only to the exercise of jurisdiction by the Court of First Instance, acting
as a land registration court, subsequent to the original registration of the land, or to
incidents affecting registered land such as the cases arising under section 112 of Act
No. 496, regarding alteration or amendment of the certificate of title.

It does not apply to the land registration proceeding itself where the basic question in
issue is the ownership of the land or whether the applicant or oppositor has a
registerable title to the land or the land should be declared public land.

The instant case is an original land registration proceeding. So, naturally, the question of
ownership and all the incidents thereof have to be decided by the land registration court that is,
whether it is the Cerdeña applicants or the Zuñiga oppositors who have an imperfect title that
may be confirmed under section 48 of the Public Land Law. (See Oh Cho vs. Director of Lands,
75 Phil. 890.)

In this case, the Court of First Instance, in order to determine the issue of ownership or the
registerability of the title of the Cerdeñas or Zuñigas correctly passed upon the issue of whether
the deed of sale relied upon by the Zuñiga oppositors was forged or is authentic. That issue is a
mere incident in the proceeding. A separate action to determine that issue is not necessary.

The determination of that issue falls within the exclusive competence of the trial court acting as
a land registration court in an original land registration proceeding as distinguished from a
proceeding involving land already registered or a proceeding subsequent to the original land
registration proceeding.
G.R. no. 169970 January 20, 2009

PROTACIO VICENTE AND DOMINGA VICENTE, represented by Rondolf

Vicente, Petitioners,
vs.
DELIA SOLEDAD AVERA and RONBERTO VALINO, Sheriff IV, Regional Trial
Court, Branch 70, Pasig City, Respondents.

DECISION

PUNO, C.J.:

This Petition for Review on Certiorari seeks to set aside the Decision1 and
Resolution2 of the Court of Appeals (CA), dated June 16, 2005 and October 4, 2005
respectively, in CA-G.R. CV No. 79327, which reversed the Decision3 of the Regional
Trial Court (RTC), Branch 208, Mandaluyong City, dated March 30, 2003.

Jovencio Rebuquiao was the registered owner of the property in dispute, then covered
by Transfer Certificate of Title (TCT) No. 34351.4 On October 1, 1987, Rebuquiao
executed a Deed of Absolute Sale in favor of petitioners, spouses Protacio Vicente and
Dominga Vicente, over the property in dispute.5 Respondent Delia Soledad Avera
alleges that on October 9, 1987, Jose Rebuquiao, pursuant to a Special Power of
Attorney granted to him by Jovencio Rebuquiao, executed a Deed of Absolute Sale with
Assumption of Mortgage in favor of Roberto Domingo, Avera’s spouse at the time, and
herself.6

On May 29, 1991, Avera filed a Petition for Declaration of Nullity of Marriage before the
RTC, Branch 70, Pasig City, entitled "Delia Soledad Domingo, etc. v. Roberto Domingo"
and docketed as JDRC Case No. 1989-J (JDRC case).7 In this case, Avera asserted
exclusive ownership over the property in dispute.8 On January 23, 1992, a notice of lis
pendens was inscribed on TCT No. 34351, pertaining to the JDRC case pending at the
time.9

Since 1997, petitioners possessed the property in dispute.10 On July 22, 1998, TCT No.
34351 was cancelled, and in lieu thereof, the Registry of Deeds issued petitioners TCT
No. 14216 for the property in dispute, on the basis of the deed of sale executed on
October 1, 1987.11 The notice of lis pendens was carried over to TCT No. 14216.12

On November 28, 1994, the RTC, Branch 70, Pasig City, rendered a Decision in the
JDRC case, declaring the marriage of Avera and Domingo void and ordering the
property acquired during their cohabitation to be put in the custody of Avera, including
the property in dispute.13 After the decision in the JDRC case became final and
executory, the RTC, Branch 70, Pasig City, issued a Writ of Execution. 14 On June 13,
2001, the same trial court issued an Alias Writ of Execution, which reads:

Movant declared in her motion that the said property is now registered in the name of
another person, namely, Protacio Vicente, under TCT No. 14216 of the Register of
Deeds of Mandaluyong City. It appearing, however, that the transfer was made
notwithstanding the annotation thereon of the notice of lis pendens that the same
property is the subject of the instant case, it can still be the subject of a writ of execution
to satisfy the judgment in favor of herein petitioner.
WHEREFORE, let an alias writ of execution be issued over Transfer Certificate of Title
No. 34351, now covered by TCT No. 14216 of the Register of Deeds of Mandaluyong
City.1avvphil.zw+

SO ORDERED.15

Pursuant to the Alias Writ of Execution, respondent Ronberto Valino, in his capacity as
Sheriff IV of the RTC, Branch 70, Pasig City, served a Notice to Vacate dated August
15, 2001, on petitioners.16 On August 17, 2001, petitioners filed an Affidavit of Third
Party Claim before the RTC, Branch 70, Pasig City.17

On August 22, 2001, petitioners filed a Complaint for Injunction with Prayer for a
Temporary Restraining Order (TRO) before the RTC, Branch 208, Mandaluyong City, to
enjoin Sheriff Valino from implementing the alias writ of execution.18 On September 4,
2001, the trial court issued a TRO19 and, on May 29, 2002, a Writ of Preliminary
Injunction, enjoining respondents from enforcing the notice to vacate. 20 On March 30,
2003, it rendered a decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered making the writ of preliminary injunction

PERMANENT.

Defendants’ counterclaims are hereby dismissed for lack of merit.

SO ORDERED.21

It held that petitioners were entitled to permanent injunction considering the following:
(1) it is undisputed that petitioners are the registered owners of the subject property,
which certificate of title confers upon them conclusive ownership of the property; and (2)
the writ of execution issued in the JDRC case could only be issued against a party to
the action, and thus not to the petitioners.22

On appeal, the CA reversed and set aside the decision of the RTC, Branch 208,
Mandaluyong City.23 The CA held that petitioners are bound by the outcome of the
JDRC case, because the annotation of the notice of lis pendens (January 23, 1992) was
ahead of petitioners’ registration of the deed of sale executed on October 1, 1987 (July
22, 1998).24 Petitioners filed a Motion for Reconsideration, which the CA denied. 25

Petitioners raise the following issues before this Court:

The CA erred in ordering the dismissal of the complaint for injunction despite the fact
that the Petitioners are the registered owners of the property and as such cannot be
evicted out therefrom unless:

A. the sale from which they based their acquisition is declared void.

B. the title issued in their names based on the Deed of Sale is likewise declared void.

II

The CA erred in dismissing the complaint because in so doing, it made an implied

recognition that a real property titled under the torrens system may be attacked
collaterally in contravention of law and established jurisprudence[.]

III
The CA erred in concluding that the Petitioners are bound by the lis pendens it being
clear that the property was acquired long before the lis pendens was annotated.
Petitioners’ (sic) became owners of the property on October 1, 1987 and not on July 20,
1998 when their ownership was merely confirmed by the title issued by the Office of the
Register of Deeds.

Petitioners maintain that as the registered owners and actual possessors of the property
in dispute, they are entitled to a writ of injunction that will prevent the implementation of
the writ of execution corresponding to the JDRC case.

Respondents assert that petitioners are not entitled to the writ of injunction, because the
petitioners are subject to the outcome of the JDRC case and thus the implementation of
the writ of execution due to the notice of lis pendens annotated on their TCT. They
further allege: (1) that there was no sale by Rebuquiao in favor of petitioners on October
1, 1987; and (2) if there was a sale, the same happened in 1997, the year petitioners
registered the deed of sale executed in their favor.26

The core issue in the case at bar is whether injunction lies in favor of the petitioners to
prevent the respondents from interfering in the exercise of their rights over the property
in dispute.

We find merit in the petition.

Injunction, as a preservative remedy, aims to protect substantive rights and

interests.27 To be entitled to a writ of injunction, the complainant must establish the
following requisites: (1) there must be a right in esse or the existence of a right to be
protected; and (2) the act against which injunction is to be directed is a violation of such
right.28 The grant of the writ is conditioned on the existence of the complainant’s clear
legal right, which means one clearly founded in or granted by law or is "enforceable as a
matter of law."29

As the registered owners and actual possessors of the property in question, petitioners
have a clear legal right to the property in dispute. Section 51 of Presidential Decree
(P.D.) No. 1529 provides that registration is the operative act that conveys or affects
registered land as against third persons.30 Thus, a TCT is the best proof of ownership of
land.31 In the case at bar, it is undisputed that petitioners are the registered owners and
actual possessors of the subject property. Moreover, as the registered owners,
petitioners have the right to the possession of the property, which is one of the attributes
of ownership.32

It was erroneous for respondents to assail the deed of sale executed on October 1,
1987 in favor of petitioners, because this constitutes a collateral attack on petitioners’
TCT. Section 48 of P.D. No. 1529 prohibits a collateral attack on a Torrens title. 33 This
Court has held that a petition which, in effect, questioned the validity of a deed of sale
for registered land constitutes a collateral attack on a certificate of title. 34 In the case at
bar, respondents’ allegation, that the deed of sale executed on October 1, 1987 in favor
of petitioners does not exist, clearly constitutes a collateral attack on a certificate of title.
The allegation of the inexistence of the deed of sale in effect attacks the validity of the
TCT issued in the petitioners’ names.

Petitioners’ title to the property in dispute is not subject to the outcome of the litigation
covered by the notice of lis pendens annotated on January 23, 1992. Section 24, Rule
14 of the 1964 Rules of Civil Procedure provides that a purchaser of the property
affected by the notice of lis pendens is deemed to have constructive notice of the
pendency of the action only from the time of filing such notice. 35 Section 14, Rule 13 of
the 1997

Rules of Civil Procedure reiterates this rule.36 Thus, a notice of lis pendens affects a
transferee pendente lite, who by virtue of the notice, is bound by any judgment, which
may be rendered for or against the transferor, and his title is subject to the results of the
pending litigation.37

A notice of lis pendens neither affects the merits of a case nor creates a right or a
lien.38 It serves to protect the real rights of the registrant while the case involving such
rights is pending resolution.39 While the notice of lis pendens remains on a certificate of
title, the registrant could rest secure that he would not lose the property or any part of it
during the litigation.40 Once a notice of lis pendens has been duly registered, any
subsequent transaction affecting the land involved would have to be subject to the
outcome of the litigation. For this reason, the Court has pronounced that a "purchaser
who buys registered land with full notice of the fact that it is in litigation between the
vendor and a third party stands in the shoes of his vendor and his title is subject to the
incidents and result of the pending litigation."41

In the case at bar, the notice of lis pendens does not affect petitioners’ title to the property in
dispute. A notice of lis pendens concerns litigation between a transferor and a third party, where
the transferee who acquires land with a notice of lis pendens annotated on the corresponding
certificate of title stands in the shoes of his predecessor and in which case the transferee’s title
is subject to the results of the pending litigation. The notice of lis pendens does not concern
litigation involving Rebuquiao, who transferred his title to the property in dispute to petitioners,
and his title. The notice of lis pendens pertains to the JDRC case, an action for nullity of the
marriage between Avera and Domingo. Since Rebuquiao’s title to the property in dispute is not
subject to the results of the JDRC case, petitioners’ title to the same property is also not subject
to the results of the JDRC case.

To determine whether the second requisite for granting a writ of injunction exists, that the act
against which injunction is to be directed is a violation of the complainant’s right, we must
examine the implications regarding the implementation of the writ of execution over TCT No.
14216. Pursuant to this writ of execution, Sheriff Valino served petitioners with a notice to
vacate.

If allowed to be carried out, the act against which the injunction is directed, the implementation
of the writ of execution, would violate petitioners’ rights as the registered owners and actual
possessors of the property in dispute. The registered owner has the right to possess and enjoy
his property, without any limitations other than those imposed by law.42 The implementation of
the writ of execution would unduly deprive petitioners, as the registered owners, of their right to
possess the subject property, which is one of the attributes of ownership.43

We must stress that until petitioners’ title is annulled in a proper proceeding, Avera has no
enforceable right over the property in dispute. At this point, petitioners’ possession of the subject
property must be respected. Since Avera failed to prove her indubitable right over the subject
property, we rule that petitioners possess a clear and unmistakable right over the property in
dispute that requires the issuance of a writ of injunction to prevent any damage to their interests
as registered owners.

IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 79327, dated June 16, 2005 and October 4, 2005 respectively, are
REVERSED and SET ASIDE.

SO ORDERED.
G.R. No. 120154 June 29, 1998

HEIRS OF SPOUSES BENITO GAVINO and JUANA EUSTE represented by

AMPARO G. PESEBRE and BELEN G. VERCELUZ, petitioners,
vs.
COURT OF APPEALS and JUANA VDA. DE AREJOLA represented by FLAVIA
REYES, respondents.

BELLOSILLO, J.:

In a conflict of rights over registered land subject of intestate proceedings which is sold
without express authority of the court, which right should prevail: those of the innocent
purchasers for value in good faith, or those of the heirs of the estate?

This petition emanates from a case for Annulment of Fraudulent Sales of Registered
Property with Reconveyance and for Damages filed in 1968 with the Court of First
Instance (now Regional Trial Court), Naga City, by Juana Vda. de Arejola, Justiniano R.
Exequiel and Dominador Aureas, as administrators of the Intestate Estate of Luis P.
Arejola, against Atty. Jacobo Briones and his spouse Natividad Olivan, and the spouses
Benito Gavino and Juana Euste. 1

In 1976 the original records of the case were burned in a fire which gutted the old
Provincial Capitol Building housing Branch 22 of the court. 2 The records were
eventually reconstituted although partially. Five (5) judges successively presided
over the case: Judges Delfin Vir. Sunga, Jorge S. Imperial, Juan B. Montecillo,
Ignacio S. Calleja, Jr., and Angel S. Malaya. Several substitutions of counsel also
took place. In 1977 plaintiff Juana Vda. de Arejola died. Defendants Jacobo
Briones and the Gavino spouses also died some years later.

Culled from the reconstituted records, in 1953 a parcel of land measuring 9.3540
hectares covered by TCT No. 896 of the Registry of Deeds of Camarines Sur and
originally registered in the name of the Rehabilitation Finance Corporation
(RFC) 3 was sold by the corporation on installment basis to Luis P. Arejola under
a Deed of Conditional Sale. The vendee however died on 25 September 1958
without completing his payments. 4

Subsequently, a petition for settlement of his intestate estate was commenced by

his surviving spouse Juana Vda. de Arejola who on 11 October 1958 was
appointed special administratrix and on 2 February 1959 as regular administratrix
in Sp. Proc. No. R-9 (771). Atty. Jacobo Briones was engaged as lawyer of the
estate. 5 However, the lot purchased from the RFC was not included in the
inventory of properties submitted by Juana to the intestate court, although she
reserved the right to include in the list all other properties belonging to her
husband's estate that would come later to her knowledge. 6

In April 1960, after being informed that the land bought by her deceased husband
from the RFC was about to be foreclosed for non-payment of amortizations,
Juana made arrangements with the Development Bank of the Philippines (DBP),
successor in interest of RFC, to save the property. After proper negotiations, she
executed with the bank a "Revival and Re-amortization of Deed of Conditional
Sale" and signed the document in her own behalf as vendee and as administratrix
of the estate of her deceased husband. This transaction in effect revived the
conditional sale entered into by the RFC with her husband Luis 7 with the
imprimatur of the intestate court. 8

On 3 September 1962 Juana was granted judicial authority to sell properties of

the decedent's estate. However, with her removal as administratrix on 3 October
1962, this authority became functus oficio.

On 14 February 1963, armed with the authority to sell earlier granted to her by the
court, without revealing however that her appointment as adminstratrix had
already been revoked, Juana sold to the Gavino spouses the subject property by
way of pacto de retro for P6,650.00. 9

Meanwhile, upon full payment to DBP of the purchase price, a final Deed of
Sale was executed on 15 February 1963 between Juana and DBP which resulted
in the cancellation of TCT No. 896 and the issuance of TCT No. 4873 in the name
of Juana Vda. de Arejola. 10 On 6 March 1963, despite her earlier sale of the land
to the Gavino spouses, Juana fictitiously sold the same property to the estate's
lawyer, Atty. Jacobo Briones, so that the latter could secure a mortgage thereon
in her behalf. 11 At any rate, the sale to Atty. Briones was registered; accordingly,
TCT No. 4873 was cancelled and TCT No. 4874 was issued in the name of Atty.
Jacobo Briones. 12

On 22 April 1963 Juana Vda. de Arejola asked for and was given by the Gavino
spouses an additional amount of P1,000.00 and a new deed of pacto de retro with
option to buy was executed thus formalizing the earlier sale to the spouses and
indicating therein the actual purchase price of P7,650.00. However, the certificate
of title described in the contract of sale was still TCT No. 896 13 despite the fact
that it had already been cancelled and substituted by TCT No. 4873 in the name of
Juana, and then by TCT No. 4874 in favor of Atty. Jacobo Briones.

On 18 July 1963 Atty. Briones mortgaged the property to PNB for

P4,000.00, 14 and a month later, the amount was increased by P700.00. 15

On 15 October 1963 Atty. Briones sold the property to the Gavino spouses. The
latter alleged that they were constrained to buy the land because of their
apprehension that they might lose their earlier investment of P7,650.00 on the
same land under the sale by Juana in their favor on 22 April 1963. As a
consequence, TCT No. 4874 was cancelled and TCT No. 5244 was issued in the
name of Benito Gavino married to Juana Euste. 16

On 12 January 1968 Juana Vda. de Arejola together with the other judicial
administrators of the estate of Luis P. Arejola, namely, Justiniano Exequiel and
Dominador Aureas, manifesting that all of the foregoing sales executed by Juana
were done without judicial authority to sell through the manipulations of Atty.
Briones who acted for his own benefit, filed the instant case against him, his wife
and the Gavino spouses.

On 31 March 1969, during the pendency of the case, one Sulpicio Lovendino filed
a complaint-in-intervention alleging that on 25 February 1969 the property was
sold to him by the Gavino spouses for P15,000.00 and that by virtue thereof TCT
No. 5244 was cancelled and TCT No. 10503 was issued in his name. 17
After Lovendino died his heirs manifested that they were not interested in
substituting him because the lot had already been sold to a certain Gerardo
Pesebre in 1971. 18 Be that as it may, it is undisputed that the property is now in
the hands of Amparo Gavino Pesebre and Belen Gavino Verceluz, daughters of
the spouses Benito Gavino and Juana Euste.

On the basis of the antecedent facts a decision was rendered by the trial court on
29 August 1991 declaring the sales of the land to defendant spouses Benito
Gavino and Juana Euste valid and lawful. It ordered that in the final distribution of
the intestate estate of Luis P. Arejola the subject property be excluded from the
estate chargeable however against Juana Vda. de Arejola's share, interest and
participation therein, and that the Gavino spouses be granted attorney's fees of
P5,000.00. 19

The plaintiffs (now private respondents) appealed to the Court of Appeals

asserting in the main that the sale of the property by Juana Vda. de Arejola and
Atty. Jacobo Briones to the Gavino spouses was invalid and unlawful so that the
property must be included in the final distribution of the intestate estate of Luis P.
Arejola. 20

Respondent appellate court upheld the validity of the sale to the Gavinos but only
insofar as the individual share of Juana Vda. de Arejola was
concerned. 21 Consequently, the two (2) daughters of Benito Gavino, namely,
Amparo G. Pesebre and Belen G. Verceluz, then already the registered owners of
the property, were ordered to convey the remaining undivided portion thereof to
the estate of Luis P. Arejola, retaining in their name only the undivided portion
equivalent to the share of his widow Juana. It also directed the estate of Luis P.
Arejola to refund to the Gavino spouses a proportionate share of the amount of
P7,650.00 which they paid to Juana for the land. The appellate court denied the
claim for damages and deleted the award of attorney's fees.

Petitioners now pray for the adjudication of the entire lot to them, Juana Vda. de
Arejola being the sole owner of the property as evidenced by the transfer
certificates of title shown to them and, consequently, had full authority to sell or
otherwise dispose of it. They also ask that since they simply relied on the
information contained in the certificates of title they should be declared innocent
purchasers for value and in good faith. 22

Respondents, on the other hand, claim that the entire lot should be considered
part of the estate of Luis P. Arejola because the sale by Juana Vda. de Arejola to
the Gavinos was invalid considering that the property was in custodia legis and
could not be disposed of without the imprimatur of the intestate court. They
suggest that Juana was a victim of the malicious machinations of the estate's
counsel, Atty. Jacobo Briones. 23

We do not agree with the finding of the Court of Appeals nor of the Regional Trial
Court that the contested parcel of land belonged entirely to Luis P. Arejola, ergo,
formed part of his estate. In the proceedings before the trial court, plaintiffs
presented the Deed of Conditional Sale executed by the RFC describing vendee
Luis P. Arejola as married to Juana Arejola, ineluctably showing that he acquired
his right over the land during his marriage to Juana. This being the case, the land
is presumed to be conjugal, hence, Art. 160 24 of the New Civil Code will have to
be applied, i.e., all property of the marriage is presumed to belong to the conjugal
partnership unless it be proved that it pertains exclusively to the husband or to
the wife. Although this presumption is rebuttable, it can only be overcome by
strong, clear and convincing evidence of exclusive ownership of one of the
spouses. In the case at bar, the quantum of proof demanded by law has not been
satisfied. For nowhere in the exhibits presented by both parties, documentary or
testimonial, has it been demonstrated that the land in question was inherited by
Luis nor acquired by him with his own capital or exclusive funds. The
presumption not having been overthrown, the conclusion is that the contested
land is conjugal property.

It is this conjugal nature of the property that vested in Juana Vda. de Arejola, as
surviving co-owner, the right to agree to a revival of the conditional sale. This
should explain why the Deed of Revival and Re-amortization of Conditional
Sale was signed by her not only as administratrix of her husband's estate but
also in her own behalf. There should be no doubt that the property in question is
not entirely owned by the estate of Luis for what rightfully belongs to it is only
one-half, the other half being Juana's share as conjugal partner. It must be
recalled that when Juana and the DBP (formerly RFC) agreed on reviving the
conditional sale, Juana was still the administratrix of the intestate estate. Thus,
where an executor or administrator receives by virtue of his representative
capacity property to which the decedent became entitled after his death, he holds
such property as asset of the estate and is liable therefor in his representative
capacity. 25 He cannot acquire by purchase, even by public auction, the property
of the estate under his administration. 26 Consequently, with regard to the portion
of land held by Juana for the estate of her late husband in her capacity as
administratrix, she had no right to acquire ownership over it and have the entire
lot titled in her name alone.

After the DBP had been fully paid the purchase price of the property Juana Vda.
de Arejola ceased to be the administratrix of the estate. As a result, if that portion
of the land pertaining to the share of Luis in the conjugal partnership had been
held by Juana beyond the period of her judicial administration she only did so in
trust for the estate. 27 But this trust was breached when after the land had been
fully paid for, Juana deliberately caused the issuance of a new certificate of title
in her name as sole owner thereby depriving the estate of Luis P. Arejola of its
rightful share therein.

Private respondents insist that the sale of the land by Juana Vda. de Arejola to
the Gavino spouses was illegal and invalid because her lawyer, Atty. Jacobo
Briones, manipulated her into selling the property. This is difficult to accept. The
evidence on record shows that while Juana may have been improperly and
improvidently advised by her lawyer on the matter, the ultimate decision was still
hers. It was with full knowledge and consent that she entered into the sale
transaction with the Gavinos.

The claim of respondents that the invalidity of the sale is aggravated by the
absence of judicial imprimatur cannot be sustained. If the sale was without
judicial approval, it could only be attributable to Juana's own fault because she
knew very well that she was no longer administratrix of the estate and therefore
could not be empowered by the intestate court to sell the property. And yet,
despite this knowledge, she proceeded with the sale. Justice and reason
therefore dictate that she, not the Gavinos, should suffer the consequences of
her foolhardy act. Apropos to this, we quote the findings of the Regional Trial
Court 28 —

. . . . the vendee Gavino acted in good faith when he purchased the subject
property from one who Gavino knows to be an heir and entitled to a share of the
land under administration, of course subject to the final distribution of the estate .
...

and the findings of the Court of Appeals 29 —

. . . . When they purchased the same from Juana R. vda. de Arejola, they were
made to believe that she had court authority to sell. They cannot be faulted for
not knowing that the said authority had already lapsed. When they purchased the
same property from Atty. Jocobo Briones, to protect their investment as
aforesaid, they relied on the certificate of title in his name. Hence, it cannot be
said that they were purchasers in bad faith.

The above factual findings of the courts below that the Gavinos were innocent
purchasers for value cannot be disturbed. It is axiomatic that findings of fact of
the trial court are entitled to great respect and carry more weight when affirmed
by the Court of Appeals. 30

Insofar as the contract of sale executed by Atty. Briones in favor of the Gavinos is
concerned, the Court of Appeals also ruled that the vendee spouses could not be
considered in bad faith for they simply relied on the vendor's Torrens title. In so
concluding, the appellate court considered three (3) varying situational accounts:

First, the Gavinos claimed that they employed adequate safeguards in verifying
the real owner of the land by checking with the PNB and the Register of Deeds.
Benito Gavino recounted that Juana Vda. de Arejola always came up with what
appeared to him to be an alibi why she could not turn over to him the documents
covering the land in litigation. 31 In the first week of August 1963 Atty. Briones
went to their house and asked them if it was true that they bought the land from
Juana by way of pacto de retro. When they confirmed that they did, Atty. Briones
told them that he was already the owner and, if they wanted, they could check
with PNB and the Register of Deeds to ascertain who the real owner was. 32

Upon verification with PNB, the Gavinos learned that the property was mortgaged
with the bank to secure a loan of P4,700.00 in the name of the registered owner,
Atty. Jacobo Briones. The spouses also learned from the Register of Deeds that
the land was indeed registered in the name of Atty. Briones. Benito Gavino then
approached Juana Vda. de Arejola and asked her why the property that was
already sold to them by way of pacto de retro was also sold to Atty. Briones, but
the latter simply assured him that she would take care of the matter including the
P7,650.00 which the Gavinos gave her in consideration of the sale. 33

In October of 1963 Atty. Briones approached the Gavinos and told them that he
wanted to sell the land. Petitioner Gavino went to his lawyer, a certain Atty.
Catimbang, and explained the matter to him. Atty. Catimbang told him that the
papers appeared to be in order so petitioners could buy the property if they had
the money. Upon this advice, the Gavinos bought the property. The parties
agreed on the purchase price of P14,350.00 with Gavino imposing the condition
that the mortgage indebtedness of P4,700.00 be deducted from the
consideration. 34

Second, Atty. Briones alleged that Atty. Catimbang, then representing the
Gavinos, informed him that the property mortgaged by him with the PNB was also
sold to the Gavinos. 35 Thereafter, Atty. Briones went to see Juana Vda. de Arejola
and recommended to her that to avoid an estafa suit the sale should be
consolidated in the name of the Gavinos provided the latter assumed the
mortgage indebtedness, to which the widow agreed. For purposes of
convenience, Atty. Briones was designated as vendor instead of Juana because
at this point the latter no longer had the personality to sell. 36

Third, Juana Vda. de Arejola claimed that she was a victim of the manipulative
designs of Atty. Briones and the Gavino spouses. But her acts and omissions
adequately supported by evidence demonstrate that she had a hand in the
transactions that transpired. It seems reasonable therefore to infer that the sale
by Juana to Atty. Briones was only simulated in order for the latter to mortgage
the same with the PNB for Juana's own benefit after she had sold the property
by pacto de retro to the Gavinos.

We are convinced, more than ever, that all the problems over the land were
caused by Atty. Jacobo Briones and the widow, Juana Vda. de Arejola, whom
Atty. Briones described as "always strapped for cash and living beyond her
means." 37 As admitted by him in his testimony, this was not the first time that he
entered into shady deals with and for the widow. 38

In determining whether the Gavinos were purchasers in good faith, we call to

mind the edict in Fule v. de Legare 39 —

A purchaser in good faith is one who buys property of another, without notice
that some other person has a right to or interest in, such property and pays a full
and fair price of the same at the time of such purchase, or before he has notice of
the claim or interest of some other persons in the property. Good faith consists in
an honest intention to abstain from taking any unconscientious advantage of
another (emphasis supplied).

When the Gavinos learned that after all Atty. Briones' predecessor in interest was
Juana Vda. de Arejola, a person known to be an heir of her late husband Luis P.
Arejola and a logical transferee of the property, the Gavinos could not have
sensed any foul play. In fact, despite such knowledge, they checked with Juana
herself who confirmed having sold the land to Atty. Briones. The transfer
certificate of title covering the land was in the name of Atty. Briones. The tax
declarations were in the name of Juana Vda. de Arejola and, later, in the name of
Atty. Jacobo Briones. 40 The records with PNB and the Register of Deeds, as
already adverted to, confirmed that Atty. Briones was the registered owner of the
land. The Gavinos also sought the advice of Atty. Catimbang who found all the
papers to be in order and consequently advised them to buy the land.

Under the circumstances, it cannot be said that the Gavinos did not exert efforts
to ascertain the legality and fairness of the transaction they entered into.
According to the Court of Appeals, citing Macquiling v. Umadhay, 41
. . . 'she took all the necessary precautions to ascertain the true ownership of the
property having engaged the services of a lawyer for the specific purpose, and it
was only after said counsel had assured her that everything was in order did she
make the final arrangements to purchase the property." The appellate court's
conclusion that respondent . . . was a purchaser in good faith and for value is
correct, and the title she has thereby acquired is good and indefeasible.

Resolving now the core issue, we hold that the rights of innocent purchasers for
value should prevail. Even assuming that the sale by Atty. Briones to the Gavinos
was void — being based on a fictitious transfer from Juana to Atty. Briones — as
the former did not own the property in its entirety when sold, the general rule that
the direct result of a previous void contract cannot be valid, is inapplicable in this
case as it will directly contravene the Torrens system of registration. Where
innocent third persons, relying on the correctness of the certificate of title thus
issued, acquire rights over the property, the court cannot disregard such rights
and order the cancellation of the certificate. 42 The effect of such outright
cancellation will be to impair public confidence in the certificate of title. The
sanctity of the Torrens system must be preserved; otherwise, everyone dealing
with the property registered under the system will have to inquire in every
instance as to whether the title had been regularly or irregularly issued, contrary
to the evident purpose of the law. Every person dealing with the registered land
may safely rely on the correctness of the certificate of title issued therefor and
the law will in no way oblige him to go behind the certificate to determine the
condition of the property. 43

The Court can do no less. The philosophy of the Torrens system must be upheld.
The present registered owners of the land cannot be disturbed in their ownership
and possession thereof and be ordered to return the property for inclusion in the
final settlement of the intestate estate of Luis P. Arejola. It is for this reason that
we cannot entirely affirm the decision of the Court of Appeals. This is not to say
however that Juana Vda. de Arejola is not liable to the estate for willfully causing
the transfer to her of the sole ownership of the entire land including that
pertaining to the share of her husband in their conjugal partnership of gains.

WHEREFORE, the petition is GRANTED and the assailed decision of the Court of
Appeals awarding to petitioners only a portion of the disputed property as well as
its Resolution denying reconsideration thereof is SET ASIDE. Accordingly, the
Decision of the Regional Trial Court of Naga City awarding the entire property of
9.3540 hectares originally covered by TCT No. 896 to the petitioners; declaring
valid, lawful and binding the sale of subject parcel of land to the late Luis P.
Arejola and Juana Vda. de Arejola and later to petitioner Benito Gavino married to
Juana Euste; ordering the exclusion thereof in the final distribution of the estate
of Luis P. Arejola in Sp. Proc. No. R-9 (771) but chargeable against respondent
Juana Vda. de Arejola's share, interest and participation in the estate; and,
granting to petitioners P5,000.00 as attorney's fees, is REINSTATED and
AFFIRMED. No costs.

SO ORDERED.
.R. No. 154270 March 9, 2010

TEOFISTO OÑO, PRECY O. NAMBATAC, VICTORIA O. MANUGAS and POLOR O.

CONSOLACION, Petitioners,
vs.
VICENTE N. LIM, Respondent.

DECISION

BERSAMIN, J.:

The subject of controversy is Lot No. 943 of the Balamban Cadastre in Cebu City,
covered by Original Certificate of Title (OCT) No. RO-9969-(O-20449), over which the
contending parties in this action for quieting of title, initiated by respondent Vicente N.
Lim (Lim) in the Regional Trial Court (RTC) in Cebu City, assert exclusive ownership, to
the exclusion of the other. In its decision dated July 30, 1996,1 the RTC favored Lim,
and ordered the cancellation of OCT No. RO-9969-(O-20449) and the issuance of a
new certificate of title in the name of Luisa Narvios-Lim (Luisa), Lim’s deceased mother
and predecessor-in-interest.

On appeal (CA-GR CV No. 57823), the Court of Appeals (CA) affirmed the RTC on
January 28, 2002.2 It later denied the petitioners’ motion for reconsideration through the
resolution dated June 17, 2002.3

Hence, this appeal via petition for review on certiorari.

Antecedents

On October 23, 1992, Lim filed in the RTC in Cebu City a petition for the reconstitution
of the owner’s duplicate copy of OCT No. RO-9969-(O-20449), alleging that said OCT
had been lost during World War II by his mother, Luisa; 4 that Lot No. 943 of the
Balamban Cadastre in Cebu City covered by said OCT had been sold in 1937 to Luisa
by Spouses Diego Oño and Estefania Apas (Spouses Oño), the lot’s registered owners;
and that although the deed evidencing the sale had been lost without being registered,
Antonio Oño (Antonio), the only legitimate heir of Spouses Oño, had executed on April
23, 1961 in favor of Luisa a notarized document denominated as confirmation of
sale,5 which was duly filed in the Provincial Assessor’s Office of Cebu.

Zosimo Oño and petitioner Teofisto Oño (Oños) opposed Lim’s petition, contending that
they had the certificate of title in their possession as the successors-in-interest of
Spouses Oño.

On account of the Oños’ opposition, and upon order of the RTC, Lim converted the
petition for reconstitution into a complaint for quieting of title, 6 averring additionally that
he and his predecessor-in-interest had been in actual possession of the property since
1937, cultivating and developing it, enjoying its fruits, and paying the taxes
corresponding to it. He prayed, inter alia, that the Oños be ordered to surrender the
reconstituted owner’s duplicate copy of OCT No. RO-9969-(O-20449), and that said
OCT be cancelled and a new certificate of title be issued in the name of Luisa in lieu of
said OCT.

In their answer,7 the Oños claimed that their predecessors-in-interest, Spouses Oño,
never sold Lot No. 943 to Luisa; and that the confirmation of sale purportedly executed
by Antonio was fabricated, his signature thereon not being authentic.
RTC Ruling

On July 30, 1996, after trial, the RTC rendered its decision,8 viz:

WHEREFORE, premises considered, judgment is hereby rendered quieting plaintiff's

title to Lot No. 943 of the Balamban (Cebu) Cadastre, and directing the Register of
Deeds of Cebu —

(1) To register the aforestated April 23, 1961 Confirmation of Sale of Lot No. 943 of the
Balamban, Cebu Cadastre by Antonio Oño in favor of Luisa Narvios-Lim;

(2) To cancel the original certificate of title covering the said Lot No. 943 of the
Balamban, Cebu Cadastre; and,

(3) To issue in the name of Luisa Narvios-Lim, a new duplicate certificate of title No.
RO-9969 (O-20449) of the Register of Deeds of Cebu, which shall contain a
memorandum of the fact that it is issued in place of the lost duplicate certificate of title,
and shall in all respects be entitled to like faith and credit as the original certificate, and
shall be regarded as such for all purposes of this decree, pursuant to the last paragraph
of Section 109, Presidential Decree No. 1529.

Without special pronouncement as to costs.

SO ORDERED.9

The RTC found that the Lims had been in peaceful possession of the land since 1937;
that their possession had never been disturbed by the Oños, except on two occasions in
1993 when the Oños seized the harvested copra from the Lims’ caretaker; that the Lims
had since declared the lot in their name for taxation purposes, and had paid the taxes
corresponding to the lot; that the signature of Antonio on the confirmation of sale was
genuine, thereby giving more weight to the testimony of the notary public who had
notarized the document and affirmatively testified that Antonio and Luisa had both
appeared before him to acknowledge the instrument as true than to the testimony of the
expert witness who attested that Antonio’s signature was a forgery.

CA Ruling

On appeal, the Oños maintained that the confirmation of sale was spurious; that the
property, being a titled one, could not be acquired by the Lims through prescription; that
their (the Oños) action to claim the property could not be barred by laches; and that the
action instituted by the Lims constituted a collateral attack against their registered
title.1avvphi1

The CA affirmed the RTC, however, and found that Spouses Oño had sold Lot No. 943
to Luisa; and that such sale had been confirmed by their son Antonio. The CA ruled that
the action for quieting of title was not a collateral, but a direct attack on the title; and that
the Lims’ undisturbed possession had given them a continuing right to seek the aid of
the courts to determine the nature of the adverse claim of a third party and its effect on
their own title.

Nonetheless, the CA corrected the RTC, by ordering that the Office of the Register of
Deeds of Cebu City issue a new duplicate certificate of title in the name of Luisa,
considering that the owner’s duplicate was still intact in the possession of the Oños.

The decree of the CA decision was as follows:

WHEREFORE, the appeal is DISMISSED for lack of merit. However, the dispositive
portion of the decision appealed from is CORRECTED as follows:

(1) Within five (5) days from finality of the decision, defendants-appellants are directed
to present the owner's duplicate copy of OCT No. RO-9969 (O-20449) to the Register of
Deeds who shall thereupon register the "Confirmation of Sale" of Lot No. 943,
Balamban Cadastre, Cebu, executed on April 23, 1961 by Antonio Oño in favor of Luisa
Narvios-Lim, and issue a new transfer certificate of title to and in the name of the latter
upon cancellation of the outstanding original and owner's duplicate certificate of title.

(2) In the event defendants-appellants neglect or refuse to present the owner's copy of
the title to the Register of Deeds as herein directed, the said title, by force of this
decision, shall be deemed annulled, and the Register of Deeds shall make a
memorandum of such fact in the record and in the new transfer certificate of title to be
issued to Luisa Narvios-Lim.

(3) Defendants-appellants shall pay the costs.

SO ORDERED.10

The CA denied the Oños’ motion for reconsideration11 on June 17, 2002.12

Hence, this appeal.

Issues

The petitioners raise the following issues:

1. Whether or not the validity of the OCT could be collaterally attacked through an
ordinary civil action to quiet title;

2. Whether or not the ownership over registered land could be lost by prescription,
laches, or adverse possession;

3. Whether or not there was a deed of sale executed by Spouses Oño in favor of Luisa
and whether or not said deed was lost during World War II;

4. Whether or not the confirmation of sale executed by Antonio in favor of Luisa existed;
and

5. Whether or not the signature purportedly of Antonio in that confirmation of sale was
genuine.

Ruling of the Court

The petition has no merit.

A.

Action for cancellation of title is not an attack on the title

The petitioners contend that this action for quieting of title should be disallowed because
it constituted a collateral attack on OCT No. RO-9969-(O-20449), citing Section 48 of
Presidential Decree No. 1529, viz:
Section 48. Certificate not subject to collateral attack.– A certificate of title shall not be
subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct
proceeding in accordance with law.

The petitioners’ contention is not well taken.

An action or proceeding is deemed an attack on a title when its objective is to nullify the
title, thereby challenging the judgment pursuant to which the title was decreed. 13 The
attack is direct when the objective is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral when, in an action to
obtain a different relief, an attack on the judgment is nevertheless made as an incident
thereof.14

Quieting of title is a common law remedy for the removal of any cloud, doubt, or
uncertainty affecting title to real property.15 Whenever there is a cloud on title to real
property or any interest in real property by reason of any instrument, record, claim,
encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in
fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an action may be brought to remove such cloud or to quiet the title. 16 In such action, the
competent court is tasked to determine the respective rights of the complainant and the
other claimants, not only to place things in their proper places, and to make the
claimant, who has no rights to said immovable, respect and not disturb the one so
entitled, but also for the benefit of both, so that whoever has the right will see every
cloud of doubt over the property dissipated, and he can thereafter fearlessly introduce
the improvements he may desire, as well as use, and even abuse the property as he
deems fit.17

Lim’s complaint pertinently alleged:

18. If indeed, the genuine original of the Owner's Duplicate of the Reconstituted Original
Certificate of Title No. RO-9699 (O-20449) for Lot 943, Balamban Cadastre xxx is in
Defendant's (Oño’s) possession, then VNL submits the following PROPOSITIONS:

xxx

18.2. Therefore, the Original of Owner’s Duplicate Certificate (which Respondents

[Defendants Oños] claim in their Opposition is in their possession) must be surrendered
to VNL upon order of this Court, after the Court shall have determined VNL's mother's
acquisition of the attributes of ownership over said Lot 943, in this action, in accordance
with Section 107, P.D. 1529, Property Registration Decree xxx

xxx

[t]hat OCT 20449 be cancelled and new title for Lot 943 be issued directly in favor of
LUISA NARVIOS, to complete her title to said Lot;18

The averments readily show that the action was neither a direct nor a collateral attack
on OCT No. RO-9969-(O-20449), for Lim was asserting only that the existing title
registered in the name of the petitioners’ predecessors had become inoperative due to
the conveyance in favor of Lim’s mother, and resultantly should be cancelled. Lim did
not thereby assail the validity of OCT No. RO-9969-(O-20449), or challenge the
judgment by which the title of the lot involved had been decreed. In other words, the
action sought the removal of a cloud from Lim’s title, and the confirmation of Lim’s
ownership over the disputed property as the successor-in-interest of Luisa.
B.

Prescription was not relevant

The petitioners assert that the lot, being titled in the name of their predecessors-in-
interest, could not be acquired by prescription or adverse possession.

The assertion is unwarranted.

Prescription, in general, is a mode of acquiring or losing ownership and other real rights
through the lapse of time in the manner and under the conditions laid down by
law.19 However, prescription was not relevant to the determination of the dispute herein,
considering that Lim did not base his right of ownership on an adverse possession over
a certain period. He insisted herein, instead, that title to the land had been voluntarily
transferred by the registered owners themselves to Luisa, his predecessor-in-interest.

Lim showed that his mother had derived a just title to the property by virtue of sale; that
from the time Luisa had acquired the property in 1937, she had taken over its
possession in the concept of an owner, and had performed her obligation by paying real
property taxes on the property, as evidenced by tax declarations issued in her
name;20 and that in view of the delivery of the property, coupled with Luisa’s actual
occupation of it, all that remained to be done was the issuance of a new transfer
certificate of title in her name.

C.

Forgery, being a question of fact, could not be dealt with now

The petitioners submit that Lim’s evidence did not preponderantly show that the
ownership of the lot had been transferred to Luisa; and that both the trial and the
appellate courts disregarded their showing that Antonio’s signature on the confirmation
of sale was a forgery.

Clearly, the petitioners hereby seek a review of the evaluation and appreciation of the
evidence presented by the parties.

The Court cannot anymore review the evaluation and appreciation of the evidence,
because the Court is not a trier of facts.21 Although this rule admits of certain
exceptions, viz: (1) when the conclusion is a finding grounded entirely on speculation,
surmises, or conjecture; (2) when the inference made is manifestly mistaken; (3) where
there is a grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the
Court of Appeals, in making its findings, went beyond the issues of the case, and the
findings are contrary to the admissions of both appellant and appellee; (7) when the
findings of the Court of Appeals are contrary to those of the trial court; (8) when the
findings of fact are conclusions without specific evidence on which they are based; (9)
when the facts set forth in the petition as well in the petitioners’ main and reply briefs
are not disputed by the respondents; and, (10) when the findings of fact of the Court of
Appeals are premised on the supposed absence of evidence and are contradicted by
the evidence on record,22 it does not appear now that any of the exceptions is present
herein. We thus apply the rule without hesitation, and reject the appeal for that reason.

It is emphasized, too, that the CA upheld the conclusion arrived at by the RTC that the
signature of Antonio had not been simulated or forged. The CA ruled that the testimony
of the notary public who had notarized the confirmation of sale to the effect that Antonio
and Luisa had appeared before him prevailed over that of the petitioners’ expert
witness. The concurrence of their conclusion on the genuineness of Antonio’s signature
now binds the Court.23

In civil cases, the party having the burden of proof must establish his case by a
preponderance of evidence. Preponderance of evidence is the weight, credit, and value
of the aggregate evidence on either side, and is usually considered to be synonymous
with the term greater weight of the evidence or greater weight of the credible evidence.
Preponderance of evidence is a phrase that means, in the last analysis, probability of
the truth.24 It is evidence that is more convincing to the court as worthy of belief than
that which is offered in opposition thereto.

Lim successfully discharged his burden of proof as the plaintiff. He established by

preponderant evidence that he had a superior right and title to the property. In contrast,
the petitioners did not present any proof of their better title other than their copy of the
reconstituted certificate of title. Such proof was not enough, because the registration of
a piece of land under the Torrens system did not create or vest title, such registration
not being a mode of acquiring ownership. The petitioners need to be reminded that a
certificate of title is merely an evidence of ownership or title over the particular property
described therein. Its issuance in favor of a particular person does not foreclose the
possibility that the real property may be co-owned with persons not named in the
certificate, or that it may be held in trust for another person by the registered owner. 25

WHEREFORE, the petition for review on certiorari is denied, and the decision dated
January 28, 2002 is affirmed.

The petitioners are ordered to pay the costs of suit.

SO ORDERED.

\
G.R. No. 133698 April 4, 2001

ANTONIO TALUSAN and CELIA TALUSAN, petitioners,

vs.
HERMINIGILDO* TAYAG and JUAN HERNANDEZ, respondents.

PANGANIBAN, J.:

For purposes of real property taxation, the registered owner of a property is deemed the
taxpayer and, hence, the only one entitled to a notice of tax delinquency and the
resultant proceedings relative to an auction sale. Petitioners, who allegedly acquired the
property through an unregistered deed of sale, are not entitled to such notice, because
they are not the registered owners. Moral lessons: real property buyers must register
their purchases as soon as possible and, equally important, they must pay their taxes
on time.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the November 20, 1997 Decision1 of the Court of Appeals (CA) in CA-GR CV
No. 41586. The dispositive portion of the challenged Decision is hereunder reproduced
as follows:

"WHEREFORE, premises considered, the appealed decision (dated February 4, 1993)

of the Regional Trial Court (Branch 7) in Baguio City in Civil Case No. 1456-R is hereby
AFFIRMED, with costs against plaintiffs/appellants."

Also assailed is the April 27, 1998 CA Resolution2 which denied petitioners’ Motion for
Reconsideration.

The questioned CA ruling affirmed the Decision3 of Branch 7 of the Regional Trial Court
(RTC) of Baguio City in Civil Case No. 1456-R. The RTC, in turn, dismissed an action
for the annulment of the auction sale of a condominium unit, covered by Condominium
Certificate of Title No. 651 and located in Building IV, Europa Condominium Villas,
Baguio City.

The Facts

The CA summarized the antecedents of this case in this wise:4

"On June 28, 1988, [herein petitioners] filed a complaint wherein they alleged, inter
alia, that:

--They bought the subject property covered by Condominium Certificate of Title No.
651, from its former owner, Elias Imperial, as evidenced by a Deed of Absolute Sale:

--On October 15, 1985, ‘[herein Respondent] Juan D. Hernandez, x x x sued x x x in his
capacity as City Treasurer of Baguio City, wrote a letter to the former owner Elias
Imperial informing him that the above described property would be sold at public auction
on December 9, 1985, x x x to satisfy the delinquent real estate taxes, penalties and
cost of sale, and demanded payment of the sum of P4,039.80, representing total taxes
due and penalties thereon;

--‘Elias Imperial and his entire family emigrated to Australia in 1974.’ Elias Imperial
never authorized ‘a certain Dante Origan x x x to receive any letter or mail matter for
and on his behalf;’
--[Respondent] Hernandez sold the above-described property to [Respondent] Tayag
for P4,400.00 ‘without any notice to the former owner thereof, [or] to [petitioners], and
without compliance with the provisions of PD No. 464, as evidenced by the Certificate of
Sale;’

--A final bill of sale was later issued ‘in favor of the [Respondent] Hermenegildo Tayag.’
The assessed value alone of the said property is P37,310.00 and the fair market value
of the same is more than P300,000.00 and both [respondents] knew these;

--The bid price of P4,400 ‘is so unconscionably low and shocking to the conscience,’
thus, the sale ‘for the alleged unpaid taxes in the sum of P4,039.79, including penalties’
is ‘null and void ab initio;’

--‘[Petitioners] have been in actual possession of the Unit in question, since they bought
the same from its former owners, and their possession is open, public, continuous,
adverse and in the concept of owners, while [Respondent] Hermegildo Tayag has never
been in possession of the said property;’

--[Petitioners] through intermediaries offered ‘to pay to the [respondents] the sum of
P4,400 plus all interests and expenses which [they] might have incurred x x x but said
offer was rejected without any just [or] lawful cause.’

There is a need to issue a writ of preliminary injunction to ‘preserve the status quo.’

They asked for: moral damages of not less than P50,000.00; exemplary damages of not
less than P20,000.00; attorney’s fee of P30,000.00, plus appearance fee of P2,000.00
for every appearance; and litigation expenses of not less than P5,000.00 to prosecute
the case. (pages 3-8 of the Record)

On July 14, 1988, [Respondent] Hermenegildo Tayag filed his [A]nswer with
[C]ounterclaim (pages 28-32 of the Record), wherein he substantially denied the
allegations in the complaint and, at the same time, raised the following affirmative
defenses, among others:

--‘(T)he ownership of the Condominium unit registered under Condominium Certificate

of Title No. 651, Baguio City, has been consolidated in his name by virtue of the
decision of the Regional Trial Court of Baguio, Branch 6, on September 16, 1987 x x x .
The said decision has [become] final and executory as evidenced by the Certificate of
Finality issued on October 8, 1987;’

--[Petitioners have] no cause of action against him, he being a ‘buyer in good faith in a
regular and lawful public bidding in which any person is qualified to participate.’

--The lower court has no jurisdiction over [petitioners’] claim ‘because the [petitioners]
pray for the annulment of the Certificate of the Sale and the Final Bill of Sale, which was
affirmed by virtue of the decision of the Regional Trial Court of Baguio, Branch 6, on
September 16, 1987 x x x. The said decision has [become] final and executory as
evidenced by the Certificate of Finality issued on October 8, 1987;’

--The public auction sale complied with ‘the requirements of Presidential Decree No.
464’ – hence, the same is ‘lawful and valid:’

--‘[Respondent] Tayag is not bound by the alleged [D]eed of [S]ale in favor of the
[petitioners] by Elias [I]mperial, because it was not registered and recorded with the
Registry of Deeds of Baguio City.’
[Respondent] Tayag then prayed for the award in his favor, of: moral damages of at
least P50,000.00; exemplary damages; attorney’s fees in the sum of P10,000.00; and,
expenses of litigation.

[Respondent] Hernandez likewise filed an [A]nswer on July 18. 1988, wherein he denied
the material averments in the complaint and stated that ‘no irregularity or illegality was
committed in the conduct of the proceedings with respect to the delinquent real property
of Elias Imperial and the actuations of the defendant herein were all within the limits of
his authority and in accordance with the provisions of the law pertaining to delinquent
real property, particularly, P.D. 464 otherwise known as the Real Property Tax Code
and therefore, no damages may be imputed against him.’ He also claimed, by way of
affirmative defenses, that:

--The complaint states no cause of action against the [respondent] herein:

--‘[Petitioners] have not complied with x x x Section 83 of P.D. No. 464 x x x thus, the
case cannot prosper;’

--‘Granting that a Deed of Sale was actually issued in favor of the plaintiffs [because of]
the fact that it is unregistered, the same does not bind third persons including defendant
herein.’"

In their Complaint, petitioners alleged that on December 7, 1981, they had acquired the
condominium from Elias Imperial, the original registered owner, for P100,000. The sale
was purportedly evidenced by a Deed of Sale which, however, had not and thenceforth
never been registered with the Register of Deeds.

Petitioners also averred that on December 9, 1985, Baguio City Treasurer Juan
Hernandez sold the property at a public auction due to nonpayment of delinquent real
estate taxes thereon. The property was sold to Respondent Herminigildo Tayag
for P4,400 which represented the unpaid taxes.

Thus, petitioners filed a Complaint seeking the annulment of the auction sale. They
cited irregularities in the proceedings and noncompliance with statutory requirements.

Dismissing the Complaint, Branch 7 of the RTC of Baguio City cited the December 16,
1987 judgment of Branch 6 of the same court in LRC Adm. Case No.207-R. This earlier
Branch 6 Decision had consolidated ownership of the condominium unit in favor of
Respondent Tayag. The Branch 7 Decision also cited the May 31, 1988 Order of
Branch 5 of the same court which had granted a Petition for the Cancellation of
Condominium Certificate of Title No. 651 in the name of Elias Imperial and directed the
Register of Deeds to issue a new Certificate of Title in the name of Respondent Tayag.
According to the trial court, the Decision in LRC Adm. Case No. 207-R had already
upheld the legality of the questioned auction sale. Hence, to rule again on the same
issue would amount to passing upon a judgment made by a coequal court, contrary to
the principle of "conclusiveness of judgment."

Ruling of the CA

The appellate court affirmed the trial court’s ruling and ratiocination. The CA explained
that LRC Adm. Case No. 207-R had already ruled on the validity of the auction sale of
the subject condominium unit. It further sustained the validity of that sale, because the
city treasurer complied with the requirements of notice, publication and posting. It added
that "[i]f [petitioners] never received the notices sent to Elias Imperial, then they have
only themselves to blame for failing to register the deed of sale between them and the
former owner x x x."

Rejecting petitioners’ contention that the purchase price was inadequate, the CA ruled
that such inadequacy could not nullify the auction sale. It likewise held that petitioners
had not established bad faith on the part of respondents in conducting the auction sale.
Finally, it agreed with the latter’s contention that the former were "remiss in causing the
registration of the sale in their favor of the subject property and they likewise did not
fulfill their obligation to pay taxes. It [is] thus clear x x x they should only have
themselves to blame. Laws exist to be followed, failing in which the price must be paid."

Hence, this recourse.5

The Issues

Petitioners assigned the following alleged errors for the consideration of this Court: 6

"I. FIRST ASSIGNMENT OF ERROR

The Honorable Court of Appeals grievously erred in failing to consider that the
petitioners were deprived of their right to due process in this case due to the gross and
inexcusable negligence of their former counsel who failed to inform them of the decision
in this case and protect their interest.

"II. SECOND ASSIGNMENT OF ERROR

The Honorable Court of Appeals grievously erred in failing to nullify the auction sale of
the subject property of petitioners due to alleged tax delinquency when there was no
compliance with the mandatory requirement of Section 46 of P.D. 464 that such notice
of delinquency of the payment of the property tax should be published.

"III. THIRD ASSIGNMENT OF ERROR

The Honorable Court of Appeals grievously erred in failing to consider the lack of
personal notice of the sale for public auction of the subject property to its owner which
nullifies the said proceeding.

"IV. FOURTH ASSIGNMENT OF ERROR

The Honorable Court of Appeals grievously erred in holding that the decision of the trial
court in the petition for the consolidation of the title case filed by the private respondent
in LRC Admin. Case 207 is a bar to this proceeding.

"V. FIFTH ASSIGNMENT OF ERROR

The Honorable Court of Appeals erred in not nullifying the auction sale of subject
property on equitable considerations."

We deem it appropriate to simplify the issues in this wise: (1) whether the RTC Decision
in LRC Adm. Case No. 207-R is a bar to this proceeding; and (2) whether the auction
sale of the subject condominium unit should be annulled on the grounds of (a) non-
publication of the notice of delinquency for the payment of property tax, (b) lack of
personal notice of the sale or public auction of the subject property and (c) equitable
considerations. As a preliminary matter, we shall also consider petitioners’ submission
that they were deprived of due process because of their counsel’s failure to inform them
immediately of the receipt of the CA Decision.
Preliminary Matter:

Negligence of Petitioners’ Former Counsel

Petitioners aver that their former counsel informed them of the CA Decision only on
February 5, 1998, more than two months after he had received a copy on December 3,
1997. According to petitioners, their former counsel’s negligence effectively deprived
them of their right to due process.

We disagree. Notwithstanding its late filing, their Motion for Reconsideration was
accepted and considered by the CA. Hence, this issue has become moot, a fact which
petitioners themselves admitted in their Memorandum: "As a matter of fact, in the very
resolution of the Court of Appeals of April 27, 1998 (Annex ‘C’ to Petition) denying the
motion for reconsideration, wherein the matter of inexcusable negligence of counsel in
not informing petitioners immediately of the decision of the court a quo, were among the
grounds thereof, it was held that the issues raised therein had already been considered
in the Decision of November 20, 1997. The Court of Appeals obviously considered that
the Motion for Reconsideration was validly filed by petitioners so that the Court of
Appeals favorably considered the plea of petitioners to be afforded due process by
acting on the Motion for Reconsideration. Otherwise, it could have just denied said
Motion for late filing or simply noted the same without action." 7

Moreover, petitioners themselves declared in their Reply Memorandum 8 that this matter
is no longer in issue: "At any rate this issue was raised in the Motion for
Reconsideration of the Decision of the appellate court and obviously it was favorably
considered as the said Court denied the merit of said Motion by stating that the issues
raised have already been treated in the Decision, instead of outrightly denying the same
for late filing. Hence, this is no longer in issue in this proceeding." 9

First Issue:

Bar by Earlier Judgment

Petitioners contend that the Decision in LRC Adm. Case No. 207-R, rendered by the
Regional Trial Court of Baguio City (Branch 6), did not preclude the filing of a separate
action to annul the auction sale. Citing Tiongco v. Philippine Veterans Bank,10 they aver
that this RTC Branch had no jurisdiction to rule on the validity of that sale. Hence, its
Decision in the LRC case cannot bar the present proceedings.

Petitioners’ reliance on Tiongco is misplaced, considering that its factual incidents are
different from those of the present controversy. In that case, the trial court was acting on
a Petition for the Surrender of Certificates of Title. In LRC Adm. Case No. 207-R, the
trial court was faced with a Petition for Consolidation of Ownership. It had jurisdiction to
rule on all matters necessary for the determination of the issue of ownership, including
the validity of the auction sale.

Indeed, this Court in several cases11 has previously declared that a petition for the
surrender of the owner’s duplicate certificate involves contentious questions which
should be threshed out in an ordinary case, because the land registration court has no
jurisdiction to try them.1âwphi1.nêt

Presidential Decree (PD) 1529, however, intended to avoid a multiplicity of suits and to
promote the expeditious termination of cases. In more recent cases, 12 therefore, the
Court declared that this Decree had eliminated the distinction between general
jurisdiction vested in the regional trial court and the latter’s limited jurisdiction when
acting merely as a land registration court. Land registration courts, as such, can now
hear and decide even controversial and contentious cases, as well as those involving
substantial issues.13

Thus, petitioners err in contending that the RTC is, in a land registration case, barred
from ruling on the validity of the auction sale. That court now has the authority to act not
only on applications for original registration, but also on all petitions filed after the
original registration of title. Coupled with this authority is the power to hear and
determine all questions arising upon such applications or petitions. 14 Especially where
the issue of ownership is ineluctably tied up with the question of registration, the land
registration court commits no error in assuming jurisdiction.15

It is equally important to consider that a land registration court’s decision ordering the
confirmation and the registration of title, being the result of a proceeding in rem, binds
the whole world.16 Thus, the trial court’s ruling consolidating the ownership and the title
of the property in the name of herein respondent is valid and binding not only on
petitioners, but also on everyone else who may have any claim thereon.

Second Issue:

Validity of the Auction sale

Petitioners contend that the auction sale was invalid, because several requisites
regarding notice and publication were not satisfied. We are not convinced.

It has been held that matters of notice and publication in tax sales are factual questions
that cannot be determined by this Court.17 Moreover, a recourse under Rule 45 of the
Rules of Court, as in this case, generally precludes the determination of factual issues.
This Court will not, as a rule, inquire into the evidence relied upon by the lower courts to
support their findings.18 In this case, the CA had already ruled on the question of
compliance with the requirements of notice and publication in this wise:

"In the case at bench, it cannot be denied that the requirements of notice, publication
and posting have been complied with by the public defendant prior to the auction sale
wherein the subject condominium unit was sold. x x x Ergo, there was nothing irregular
in the questioned public auction -- thus, the validity of the same must be upheld in
accordance with the aforementioned cases."19

The CA ruling notwithstanding, we shall proceed to discuss these factual issues in order
to assure petitioners of a complete adjudication of their case, and not a mere disposition
of procedural technicalities.

The Non-Publication of Notice of Real Property Tax Delinquency

Petitioners assert that the tax sale should be annulled because of noncompliance with
the requirement of publication prescribed in Section 65 of PD 464.

In this regard, we note that unlike land registration proceedings which are in rem, cases
involving an auction sale of land for the collection of delinquent taxes are in
personam. Thus, notice by publication, though sufficient in proceedings in rem, does not
as a rule satisfy the requirement of proceedings in personam.20 As such, mere
publication of the notice of delinquency would not suffice, considering that the
procedure in tax sales is in personam. It was, therefore, still incumbent upon the city
treasurer to send the notice of tax delinquency directly to the taxpayer in order to protect
the interests of the latter.

In the present case, the notice of delinquency was sent by registered mail to the
permanent address of the registered owner in Manila. In that notice, the city treasurer of
Baguio City directed him to settle the charges immediately and to protect his interest in
the property. Under the circumstances, we hold that the notice sent by registered mail
adequately protected the rights of the taxpayer, who was the registered owner of the
condominium unit.

For purposes of the real property tax, the registered owner of the property is deemed
the taxpayer. Hence, only the registered owner is entitled to a notice of tax delinquency
and other proceedings relative to the tax sale. Not being registered owners of the
property, petitioners cannot claim to have been deprived of such notice. In fact, they
were not entitled to it.

Lack of Personal Notice of the Sale or of the Public Auction of the Subject
Property

Petitioners also contend that the registered owner was not given personal notice of the
public auction. They cite Section 73 of PD 464, the pertinent portion of which is
reproduced hereunder:

"x x x. Copy of the notices shall forthwith be sent either by registered mail or by
messenger, or through messenger, or through the barrio captain, to the delinquent
taxpayer, at the address shown in the tax rolls or property tax records of the municipality
or city where the property is located, or at his residence, if known to said treasurer or
barrio captain. x x x." (Underscoring supplied by petitioners in their Memorandum)

According to petitioners, the notice of public auction should have been sent to the
address appearing in the tax roll or property records of the City of Baguio. That address
is Unit No. 5, Baden #4105, Europa Condominium Villas, Baguio City; not the known
address or residence of the registered owner at 145 Ermin Garcia Street, Cubao,
Quezon City. They contend that notice may be sent to the residence of the taxpayer,
only when the tax roll does not show any address of the property.

The above-cited provision, however, shows that the determination of the taxpayer’s
address to which the notice may be sent is the treasurer’s discretionary prerogative. In
this case, the city treasurer deemed it best to send the notice of public auction to the
residence of the taxpayer. The former validly exercised this option, inasmuch as the
address of the latter was known to him. Moreover, it was more practical and favorable to
the registered owner that the notice of delinquency be sent to his permanent residence
in Manila, because he was using the subject condominium unit merely as a vacation
house and not as a residence.

This Court in Pecson v. Court of Appeals21 made a clear and categorical ruling on the
matter, when it declared as follows:

"Under the said provisions of law, notices of the sale of the public auction may be sent
to the delinquent taxpayer, either (I) at the address as shown in the tax rolls or property
tax record cards of the municipality or city where the property is located or (ii) at his
residence, if known to such treasurer or barrio captain." (emphasis supplied)
To reiterate, for purposes of the collection of real property taxes, the registered owner of
the property is considered the taxpayer. Although petitioners have been in possession
of the subject premises by virtue of an unregistered deed of sale, such transaction has
no binding effect with respect to third persons who have no knowledge of it.

The importance of registration and its binding effect is stated in Section 51 of the
Property Registration Decree or PD 1529, which reads:

"Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered
land may convey, mortgage, lease, charge or otherwise deal with the same in
accordance with existing laws. He may use such forms, deeds, mortgages, leases or
other voluntary instrument as are sufficient in law. But no deed, mortgage, lease or
other voluntary instrument, except a will purporting to convey or effect registered
land, shall take effect as a conveyance or bind the land, but shall operate only as
a contract between the parties and as evidence of authority to the Registry of
Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned, and in all cases under this Decree, the
registration shall be made in the Office of the Register of Deeds for the province or the
city where the land lies."

Thus, insofar as third persons are concerned, it is the registration of the deed of sale
that can validly transfer or convey a person’s interest in a property. 22 In the absence of
registration, the registered owner whose name appears on the certificate of title is
deemed the taxpayer to whom the notice of auction sale should be sent. Petitioners,
therefore, cannot claim to be taxpayers. For this reason, the annulment of the auction
sale may not be invoked successfully.

The Annulment of the Auction Sale on Equitable Considerations

As correctly pointed out by respondents, equitable considerations will not find

application, if the statutes or rules of procedure explicitly provide for the requisites and
standards by which the matters at bench can be resolved.

While it may be assumed that both petitioners and Respondent Tayag are innocent
purchasers of the subject property, it is a well-settled principle that between two
purchasers, the one who has registered the sale in one’s favor has a preferred right
over the other whose title has not been registered, even if the latter is in actual
possession of the subject property.23

Likewise, we cannot help but point out the fact that petitioners brought this misfortune
upon themselves. They neither registered the Deed of Sale after its execution nor
moved for the consolidation of ownership of title to the property in their name. Worse,
they failed to pay the real property taxes due. Although they had been in possession of
the property since 1981, they did not take the necessary steps to protect and legitimize
their interest.

Indeed, petitioners’ suit is now barred by laches.24 The law helps the vigilant, but not
those who sleep on their rights, for time is a means of obliterating actions. Verily, time
runs against the slothful and the contemners of their own rights.25
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.
G.R. No. 208350, November 14, 2016

REPUBLIC OF THE PHILIPPINES, Petitioner, v. HEIRS OF SPOUSES TOMASA

ESTACIO AND EULALIO OCOL, Respondents.

DECISION

PERALTA,***J.:

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court
which seeks the reversal of the Decision2 dated February 20, 2013, and
Resolution3 dated July 26, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 96879.
The CA affirmed the Order4 of the Regional Trial Court (RTC) in LRC Case No. N-11598
granting respondents' application for registration and confirmation of title over three (3)
parcels of land located at Barangay Calzada, Taguig City with a total area of 11,380
square meters.

The factual antecedents are as follows:

chanRoblesvirtualLawlibraryOn September 19, 2008,5 respondents, Heirs of Spouses

Tomasa Estacio and Eulalio Ocol filed with the RTC of Pasig City, Branch 266 an
application for land registration under Presidential Decree No. 1529 (PD 1529)
otherwise known as the Property Registration Decree. The application covers three (3)
parcels of land described as follows: a) Lot 2 under approved survey plan Ccs-00-
000258 with an area of 3,731 square meters; b) Lot 1672-A under approved subdivision
plan Csd-00-001798 consisting of 1,583 square meters; c) a lot under approved survey
plan Cvn-00-000194 consisting of 6,066 square meters.6 The total assessed value of
the parcels of land is P288,970.007chanrobleslaw

On October 6, 2008, the RTC issued a Notice of Initial Hearing, copy furnished the Land
Registration Authority (LRA). The notice was sent to the Official Gazette for publication
and was served on all the adjoining owners. It was likewise posted conspicuously on
each parcel of land included in the application.8 During the initial hearing on January 13,
2010, respondents, by counsel, presented the jurisdictional requirements (Exhibits "A"
to "I" and their sub-markings). There being no private oppositor, an Order of General
Default was issued except against the Republic of the Philippines.

At the ex-parte presentation of evidence on January 22, 2010, respondents Rosa Ocol,
72 years old, and Felipe Ocol, 70 years old, testified that they are the children of the late
Tomasa Estacio and Eulalio Ocol (Exhibits "U" and "V"). They inherited the subject lots
from their father and mother who died on February 1, 1949 and March 22, 1999,
respectively. When Felipe Ocol was only about eight years old and Rosa was still in
grade school, their parents developed and cultivated the subject lots as rice fields. In
the 1940's, there were only a few houses around their house. At present, one of the lots
is residential while the two remaining lots have become idle. Their parents and
grandparents had been in continuous, actual and physical possession of the lots without
any interruption for more than sixty five (65) years. Felipe and Rosa have been in
possession of the land for more than fifty (50) years. There is n0 existing mortgage or
encumbrance over the said lots.9chanrobleslaw

Respondents presented witness Antonia Marcelo who was 85 years old at the time she
testified. She is the neighbor of Tomasa Estacio and Eulalio Ocol in Barangay Calzada
where she has been residing for more than fifty (50) years. She testified that during her
childhood days, she used to play on the subject lots and had seen the spouses Ocol
cultivate the lots by planting vegetables, rice and trees. 10chanrobleslaw

In support of their application, respondents presented documentary evidence which

sought to establish the following:

1. The first lot which is Lot 2 of the conv. Subd. plan Ccs-00-000258 with an area of
3,731 square meters was declared for taxation purposes in the names of Tomasa
Estacio and Eulalio Ocol in the years 1966, 1974, 1979, 1985, 2000 and 2002
(Exhibits "T" to "T-7");

2. The second lot which is Lot 1672-A under approved subdivision plan Csd-00-
001798 consisting of 1,583 square meters was declared for taxation purposes in
the names of Tomasa Estacio and Eulalio Ocol in the years 1942, 1949, 1966,
1974, 1979, 1985, 1994, 2000 and 2002 (Exhibits "R" to "R-10");

3. The third lot which is a lot under approved survey plan CVN-00-000194
consisting of 6,066 square meters, being a conversion of Lot 1889, MCadm, 590-
D Taguig Cadastral Mapping, was declared for taxation purposes in the names of
Tomasa Estacio and Eulalio Ocol in the years 1949, 1974, 1979, 1985, 2000 and
2002 (Exhibits "S" to "S-6");

4. The subject lots used to have larger areas but certain portions were taken and
designated as legal easements. On December 17, 2009, the real property tax on
the subject lots, declared in the names of Tomasa Estacio and Eulalio Ocol as
owners, were paid (Exhibits "Q", "Q-1" and "Q-2");

5. The subject lots were surveyed for Tomasa Vda. de Ocol as evidenced by the
Geodetic Engineers' Certificates and Conversion Subdivision Plans (Exhibits "J",
"K", "L", "P", "P-1", and "P-2");

6. The subject lots are verified to be within alienable and disposable land under
Project No. 27-B Taguig Cadastral Mapping as per LC Map No. 2623 approved
on January 3, 1968 as evidenced by Certifications dated January 28, 2010
issued by the Department of Environment and Natural Resources-National
Capital Region (Exhibits "J-3, "K-2" and "L-3").11

On February 11, 2010, respondents formally offered their documentary evidence. The
RTC set the case for presentation of evidence of the government on April 16, 2010. On
the date of the hearing, there was no appearance from the government. Hence, the
court, upon motion of applicants, considered the case submitted for resolution.

On August 12, 2010, the RTC issued an Order granting the respondents' application for
registration of title to the subject properties, viz.:ChanRoblesVirtualawlibrary

WHEREFORE, judgment is hereby rendered thus: the title of the heirs of Tomasa
Estacio and Eulalio Ocol, namely, Rosa Ocol; and Felipe Ocol, to the three (3) parcels
of land above-described is hereby CONFIRMED.

Upon the finality of the judgment, let the proper Decree of Registration and Certificates
of Title be issued to the applicants pursuant to Section 39 of P.D. 1529.
Let two (2) copies of this Order be furnished the Land registration Authority
Administrator Benedicta B. Ulep thru Salvador L. Oriel, the Chief of the Docket Division
of said Office, East Avenue, Quezon City.

SO ORDERED.12chanroblesvirtuallawlibrary

The RTC found that respondents were able to prove that their predecessors-in-interest
possessed the subject lots from 1966 until 2002 with respect to the first lot; from 1942 to
2002, with respect to the second lot; and from 1949 to 2002 with respect to the third lot,
as shown in the tax declarations. The court posited that even if the subject lots were
declared as alienable and disposable public land only on January 3, 1968, respondents
had already "acquired title to the land according to P.D. 1529" by virtue of the continued
possession of the respondents and their predecessors-in-interest from January 3, 1968
to the present.13chanrobleslaw

A motion for reconsideration was filed by the petitioner raising the following grounds:

chanRoblesvirtualLawlibrary

(a) Respondents did not comply with the requirements in acquiring ownership of the
subject lots by prescription because the few tax declarations of respondents failed
to substantiate the requirement of open, continuous, notorious and exclusive
possession of the subject lots for the required period as stated in the case of Wee
vs. Republic;14

(b) The evidence is insufficient to establish the nature of possession because the
testimony of witness Antonia Marcelo with regard to the cultivation of the subject
properties by spouses Ocol does not convincingly prove possession and
enjoyment of the subject lots to the exclusion of other people;

(c) There was no declaration, either in the form of a law or a presidential proclamation,
showing that the lots are no longer intended for public use or for the development
of national wealth, or that it has been converted to patrimonial property as stated in
the case of Heirs of Malabanan v. Republic.15

The Motion for Reconsideration was denied by the RTC on February 15, 2011.

The RTC opined that the case of Wee vs. Republic16 is not applicable in the instant
case because the parcels of land involved in the said case are "unirrigated ricefields". In
the instant case, the first and third lots are ricefields while the second lot is a residential
one as shown in the tax declarations. The RTC averred that, even prior to the dates
stated in the tax declarations specifically during the 1940s, spouses Tomasa and Eulalio
Ocol had started planting rice on the first and third lots as testified to by respondents.
The testimony was corroborated by witness Antonia Marcelo, who is 15 years older than
the respondents, when she testified that she played on the subject lots and had seen
the spouses Ocol cultivate the same by planting vegetables, rice and trees in the 1930s.
As to the second lot, the RTC gave credence to the testimony of respondents that in the
1940s, respondents' house was already erected on the said lot. According to the court,
such is proof that the lot has been used for residential purposes even prior to 1942
which is the earliest date of the tax declaration on the lot.

The RTC further held that the case of Heirs of Malabanan vs. Republic17 does not apply
in the case at bar because the said case involved a 71,324-square-meter lot, while the
subject lots have a total area of 11,380 square meters only. The court pointed out that
respondents are not just entitled to a grant of their application under Section 14(1) of PD
1529 but also under Section 14(2) of the same law because respondents had proven
that their predecessors-in-interest were in possession of the subject lands earlier than
1945. Thus, there is no need for an express government manifestation that the property
is patrimonial, or that such is no longer intended for public service or for the
development of national wealth.

Aggrieved, petitioner filed an appeal before the CA. In a Decision dated February 20,
2013, the CA affirmed the Decision of the RTC. The fallo of the Decision
states:ChanRoblesVirtualawlibrary

WHEREFORE, the instant appeal is DISMISSED, and the Order dated August 12,
2010, of the Regional Trial Court of Pasig City, Branch 266, in L.R.C. Case No. N-
11598 (LRA Record No. N-79393) is AFFIRMED IN TOTO.

SO ORDERED.18chanroblesvirtuallawlibrary

In affirming the RTC Order, the CA made the following

ratiocinations:ChanRoblesVirtualawlibrary

In the case at bar, the applicants-appellees seek the confirmation of their ownership to
the subject lands not based on prescription, but based on their claim that "they have
been in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bonafide claim of
ownership since June 12, 1945, or earlier". (Section 14[1], PD 1529). The requirement
of prior declaration that the property is patrimonial property of the State, therefore, does
not apply. As explained in Heirs of Malabanan, for application based on Section 14(1) of
the Property Registration Decree, it is enough that the property is alienable and
disposable property of the State and the applicant has been in open, continuous,
exclusive, and notorious possession and occupation of the subject land under
a bonafide claim of ownership from June 12, 1945 or earlier. Both of these requirements
are present in this case.19chanroblesvirtuallawlibrary

A motion for reconsideration was filed by the petitioner but the same was denied by the
CA on July 26, 2013.

Hence, this petition, raising the following errors:ChanRoblesVirtualawlibrary

1. THE RECORD IS BEREFT OF PROOF THAT THE SUBJECT PROPERTIES

HAD BEEN CLASSIFIED AS ALIENABLE AND DISPOSABLE;

2. THE RECORD IS BEREFT OF PROOF THAT RESPONDENTS HAVE BEEN IN

OPEN, CONTINUOUS, EXCLUSIVE AND NOTORIOUS POSSESSION Of THE
SUBJECT LOTS UNDER A BONA FIDE CLAIM OF OWNERSHIP SINCE JUNE
12, 1945, OR EARLIER;

3. ALTERNATIVELY, RESPONDENTS CANNOT INVOKE PRESCRIPTION

UNDER SECTION 14(2) OF PRESIDENTIAL DECREE NO. 1529. THE
 SUBJECT LOTS HAVE NOT BEEN CONVERTED INTO PATRIMONIAL
PROPERTY OF THE STATE.20

On the first ground, petitioner states that respondents failed to present a copy of the
original certification, approved by the DENR Secretary and certified as a true copy by
the legal custodian, which would support respondents' claim that the subject lands are
alienable and disposable. The certification of Senior Forest Management Specialist
Corazon D. Calamno and Chief of the Forest Utilization and Law Enforcement Division
of the DENR should not be treated as sufficient compliance with the requirements of the
law because she was not presented during trial to testify on the contents of the
certification.

On the second ground, petitioner argues that there is insufficient evidence of acts of
dominion on the part of respondents and their predecessors-in-interest for the following
reasons:

chanRoblesvirtualLawlibrary

(a) Respondents did not explain how the properties were acquired. The only
explanation as to the acquisition of Lot 1672-A was that it was first acquired from a
certain Gregorio, without even mentioning the date of acquisition as well as any
document evidencing the same.21

(b) It was unusual for respondents' parents to possess and occupy three (3) parcels of
land that are not contiguous to one another;

(c) Respondents were able to present a tax receipt only for the year 2009;

(d) In terms of improvements, respondents did not go to the extent of specifying

whether fences were erected on the lots. While they claim that crops were planted,
it did not appear that they exclusively and continuously enjoyed the possession of
the lots;

(e) While respondents consistently affirm the development of the lots as ricefields,
they failed to consider the fact that the second lot, Lot 1672-A, is a residential land
as stated on the tax declaration of the land.

On the third ground, petitioner avers that respondents cannot invoke prescription under
Section 14(2) of P.D. 1529 because they failed to present the necessary documents
which would show that the subject properties are no longer intended for public service
or no longer used for the development of the national wealth. They did not present a
declaration in the form of a law or a Presidential Proclamation.

In their Comment,22 respondents counter that the certifications issued by the DENR
constitute substantial compliance with the legal requirement, and that with their
continuous possession of the subject lots for more than thirty (30) years, they had
acquired ownership over the subject lots through prescription under Section 14(2) of
P.D. 1529.
In Reply,23 petitioner maintains that respondents failed to establish their compliance with
the requisites for original registration either under Section 14 (1) or Section 14 (2) of
P.D. No. 1529. The certifications of Senior Forest Management specialist Corazon C.
Calamno and the Chief of the Forest Utilization and Law Enforcement Division of the
DENR did not comply with the legal requirements for lack of approval by the DENR
Secretary and for lack of certification by its legal custodian. Respondents failed to
establish that the State expressly declared, either through a law or a presidential
proclamation, that the parcels ofland are no longer retained for public service or the
development of national wealth, or that they had been converted into patrimonial
properties. Without such, the subject lots remain part of public dominion.

Petitioner further maintains that the tax declarations do not represent regular assertion
of ownership because of the large gaps in the years between declarations. Such
sporadic assertion of alleged ownership does not prove open, continuous, exclusive and
notorious possession and occupation in the concept of an owner. And that, since the
parcels of land are not contiguous, alleged possession and occupation over one parcel
of land cannot prove possession and occupation over the other parcels of
land.24chanrobleslaw

The petition is meritorious.

Under the Regalian Doctrine, which is embodied in our Constitution, all lands of the
public domain belong to the State, which is the source of any asserted right to any
ownership of land. All lands not appearing to be clearly within private ownership are
presumed to belong to the State. Accordingly, public lands not shown to have been
reclassified or released as alienable agricultural land, or alienated to a private person by
the State, remain part of the inalienable public; domain. The burden of proof in
overcoming the presumption of State ownership of the lands of the public domain is on
the person applying for registration, who must prove that the land subject of the
application is alienable or disposable. To overcome this presumption, incontrovertible
evidence must be presented to establish that the land subject of the application is
alienable or disposable.25cralawredchanrobleslaw

Section 14 (1) of PD 1529, otherwise known as the Property Registration

Decree provides:ChanRoblesVirtualawlibrary

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

chanRoblesvirtualLawlibrary(1) Those who by themselves or through their

predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12, 1945, or earlier.

(2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.

xxx
In the Order of the RTC granting the registration of the subject lots, it was stated that
respondents had "acquired title to the land according to P.D. 1529" by virtue of the
continued possession of the respondents and their predecessors-in-interest from
January 3, 1968 to present. On motion for reconsideration, however, the court added
that respondents are not just entitled to a grant of their application under Section 14(2)
of the P.D. 1529, but also under Section 14(1) of the same law because respondents
had proven that their predecessors-in-interest were in possession of the subject lots
earlier than 1945. The CA explained, however, that the confirmation of the ownership to
the subject lots is not based on prescription, but on Section 14 (1), since it was
established that the lots are alienable and disposable, and the applicants are in
continuous possession thereof since June 12, 1945 or earlier.

To distinguish between registration under Section 14(1) of P.D. No. 1529 from the one
filed under Section 14(2) of P.D. No. 1529, this Court held in the case of Heirs of Mario
Malabanan v. Republic:26

Section 14(1) mandates registration on the basis of possession, while Section 14(2)
entitles registration on the basis of prescription. Registration under Section 14(1) is
extended under the aegis of the Property Registration Decree and the Public Land
Act while registration under Section 14(2) is made available both by the Property
Registration Decree and the Civil Code.27chanroblesvirtuallawlibrary

Registration under Section 14(1) of P.D. No. 1529 is based on possession and
occupation of the alienable and disposable land of the public domain since June 12,
1945 or earlier, without regard to whether the land was susceptible to private ownership
at that time. The applicant needs only to show that the land had already been declared
alienable and disposable at any time prior to the filing of the application for
registration.28chanrobleslaw

On the other hand, registration under Section 14(2) of P.D. No. 1529 is based on
acquisitive prescription and must comply with the law on prescription as provided by the
Civil Code. In that regard, only the patrimonial property of the State may be acquired by
prescription pursuant to the Civil Code. For acquisitive prescription to set in, therefore,
the land being possessed and occupied must already be classified or declared as
patrimonial property of the State. Otherwise, no length of possession would vest any
right in the possessor ifthe property has remained land of the public
dominion.29chanrobleslaw

Moreover, Section 14(1) of P.D. No. 1529 refers to the judicial confirmation of imperfect
or incomplete titles to public land acquired under Section 48(b) of Commonwealth Act
No. 141, or the Public Land Act, as amended by P.D. No. 1073. 30 Under Section 14(1),
respondents need to prove that: (1) the land forms part of the alienable and disposable
land of the public domain; and (2) they, by themselves or through their predecessors-in-
interest, have been in open, continuous, exclusive, and notorious possession and
occupation of the subject land under a bona fide claim of ownership from June 12, 1945
or earlier. These the respondents must prove by no less than clear, positive and
convincing evidence.31chanrobleslaw

In the case at bar, the first requirement was not satisfied. To prove that the subject
property forms part of the alienable and disposable lands of the public domain, the
respondents presented three certifications - two are dated January 29, 2010 (Exhibits
"J-3" and "K-2") and one is dated January 28, 2010 (Exhibits "L-3") - issued by Senior
Forest Management Specialist Corazon D. Calamno and Chief of the Forest Utilization
and Law Enforcement Division of the DENR-National Capital Region.32 The certification
attests that the lots are verified to be within alienable and disposable land under Project
No. 27-B Taguig Cadastral Mapping as per LC Map No. 2623 approved on January 3,
1968, thus:ChanRoblesVirtualawlibrary

This is to certify that the tract of land as shown and described at the reverse side hereof
xxx as surveyed by Geodetic Engineer Jose S. Agres, Jr. for Tomasa Vda de Ocol is
verified to be within the Alienable and Disposable Land, under Project No. 27-B of
Taguig City as per LC Map 2623, approved on January 3,
33
1968. chanroblesvirtuallawlibrary

However, the certifications presented by the respondents are insufficient to prove that
the subject properties are alienable and disposable. We reiterate the standing doctrine
that land of the public domain, to be the subject of appropriation, must be declared
alienable and disposable either by the President or the Secretary of the DENR.
Applicants must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the records. In Republic of
the Philippines v. T.A.N. Properties, Inc.,34 this Court explicitly
ruled:ChanRoblesVirtualawlibrary

Further, it is not enough for the PENRO or CENRO35 to certify that a land is alienable
and disposable. The applicant for land registration must prove that the DENR Secretary
had approved the land classification and released the land of the public domain as
alienable and disposable, and that the land subject of the application for registration
falls within the approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must present a copy of the
original classification approved by the DENR Secretary and certified as a true
copy by the legal custodian of the official records. These facts must be
established to prove that the land is alienable and disposable. Respondent failed to
do so because the certifications presented by respondent do not, by themselves, prove
that the land is alienable and disposable.36chanroblesvirtuallawlibrary

In Republic v. Bantigue Point Development Corporation,37 this Court deemed it

appropriate to reiterate the ruling in T.A.N. Properties, viz.:ChanRoblesVirtualawlibrary

The Regalian doctrine dictates that all lands of the public domain belong to the State.
The applicant for land registration has the burden of overcoming the presumption of
State ownership by establishing through incontrovertible evidence that the land sought
to be registered is alienable or disposable based on a positive act of the
government. We held in Republic v. T.A.N. Properties, Inc. that a CENRO certification
is insufficient to prove the alienable and disposable character of the land sought to be
registered. The applicant must also show sufficient proof that the DENR Secretary has
approved the land classification and released the land in question as alienable and
disposable.

Thus, the present rule is that an application for original registration must be
accompanied by (1) a CENRO or PENRO Certification; and (2) a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records.
Here, respondent Corporation only presented a CENRO certification in support of its
application. Clearly, this falls short of the requirements for original
registration.38chanroblesvirtuallawlibrary

Similarly, in Republic v. Cortez,39 this Court declared that:ChanRoblesVirtualawlibrary

xxx. To prove that the subject property forms part of the alienable and disposable lands
of the public domain, Cortez adduced in evidence a survey plan Csd-00-000633
(conversion-subdivision plan of Lot 2697, MCadm 594-D, Pateros Cadastral Mapping)
prepared by Geodetic Engineer Oscar B. Fernandez and dertified by the Lands
Management Bureau of the DENR. The said survey plan contained the following
annotation:ChanRoblesVirtualawlibrary

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

However, Cortez' reliance on the foregoing annotation in the survey plan is amiss;
it ciloes not constitute incontrovertible evidence to overcome the presumption
that the subject property remains part of the inalienable public domain.
In Republic of the Philippines v. Tri-Plus Corporation,40 the Court clarified that, the
applicant must at the very least submit a certification froi:n the proper government
agency stating that the parcel of land subject of he application for registration is indeed
alienable and disposable, viz.:ChanRoblesVirtualawlibrary

It must be stressed that incontrovertible evidence must be presented to establish that

the land subject of the application is alie table or disposable.

In the present case, the only evidence to prove the character of the subject lands as
required by law is the notation appearinin the Advance Plan stating in effect that the
said properties are alienable and disposable. However, this is hardly the kind of proof
required by law. To prove that the land subject of an application for registration is
alienable, an appficant must establish the existence of a positive act of the government
such as a presidential proclamation or an executive order, an administrative action,
investigation reports of Bureau of Lands investigators, andla legislative act or statute.
The applicant may also secure certification from the Government that the lands applied:
for are alienable and disposable. In the case at bar, while the Advance Plan bearing
the notation was certified by the Lands Management Services of the DENR, the
cert fication refers only to the technical correctness of the survey plotted in the
said plan and has nothing to do wh tsoever with the nature and character of the
property surveyed. Respondents failed to submit a certification fromithe proper
government agency to prove that the lands subject for registration are indeed alienable
and disposable.41chanroblesvirtuallawlibrary

Clearly, the aforestated doctrine unavoidably means that the mere certification issued
by the DENR does not suffice to support the application for registration, because the
applicant must also submit a copy of the original classification of the land as alienable
and disposable as approved by the DENR Secretary and certified as a true copy by the
legal custodian of the official records.42chanrobleslaw

Hence, in the instant case, the DENR certifications that were presented by the
respondents in support of their application for registration are not sufficient to prove that
the subject properties are indeed classified by the DENR Secretary as alienable and
disposable. It is still imperative for the respondents to present a copy of the original
classification approved by the DENR Secretary, which must be certified by the legal
custodian thereof as a true copy. Accordingly, the lower courts erred in granting the
application for registration in spite o£ the failure of the respondents to prove by well-nigh
incontrovertible evidence that the subject properties are alienable and
disposable.43chanrobleslaw

Anent the second requirement, the tax declarations do not prove respondents'
assertion. Although respondents claim that they possessed the subject lots through their
predecessors-in-interest since the 1930s, their tax declarations belie the same. The
earliest tax declarations presented for the first lot was issued only in 1966, while the
earliest tax declaration for the third lot was issued in 1949.

If it is true that the parents of respondents had been in possession of the properties in
the 1930s as testified to by witness Antonia Marcelo, why was the first lot declared for
taxation purposes for the first time only in 1966, and the third lot was declared only in
1949? While belated declaration of a property for taxation purposes does not
necessarily negate the fact of possession, tax declarations or realty tax payments of
property are, nevertheless, good indicia of possession in the concept of an owner, for
no one in his right mind would be paying taxes for a property that is not in his actual or,
at least, constructive possession.44chanrobleslaw

That the subject properties were first declared for taxation purposes only in those
mentioned years gives rise to the presumption that the respondents claimed ownership
or possession of the subject properties starting in the year 1966 only with respect to the
first lot; and year 1949, with respect to the third lot. 45 The voluntary declaration of a
piece of property for taxation purposes not only manifests one's sincere and honest
desire to obtain title to the property, but also announces an adverse claim against the
State and all other interested parties with an intention to contribute needed revenues to
the government. Such an act strengthens ones bona fide claim of acquisition of
ownership.46chanrobleslaw

Likewise, this Court notes that the tax declarations on the subject properties presented
by the respondents were only for the years 1966, 1974, 1979, 1985, 2000 and 2002
with respect to the first lot (Lot 2 of the conv. Subd. plan Ccs-00-000258 with an area of
3,731 square meters); for the years 1942, 1949, 1966, 1974, 1979, 1985, 1994, 2000
and 2002 with respect to the second lot (Lot 1672-A under approved subdivision plan
Csd-00-001798 consisting of 1,583 square meters); for the years 1949, 1974, 1979,
1985,2000 and 2002 with respect to the third lot (a lot under approved survey plan
CVN-00-000194 consisting of 6,066 square meters being a conversion of Lot 1889,
MCadm, 590-D Taguig Cadastral Mapping).

Thus, there are only six tax declarations for the first lot, nine tax declarations for the
second lot and five tax declarations for the third lot within the alleged actual and
physical possession of the lands without any interruption for more than sixty five (65)
years. In Wee v. Republic of the Philippines,47 this Court stated
that:ChanRoblesVirtualawlibrary

It bears stressing that petitioner presented only five tax declarations (for the years
1957, 1961, 1967, 1980 and 1985) for a claimed possession and occupation of more
than 45 years (1945-1993). This type of intermittent and sporadic assertion of
alleged ownership does not prove open, continuous, exclusive and notorious
possession and occupation. In any event, in the absence of other competent
evidence, tax declarations do not conclusively establish either possession or declarant's
right to registration of title.48chanroblesvirtuallawlibrary

Moreover, this Court emphasizes that respondents paid the taxes due on the parcels of
land subject of the application only in 2009, a year after the filing of the application.
There is no showing of any tax payments before 2009. This Court held in the case
of Tan, et al. vs. Republic:49

Tax declarations per se do not qualify as competent evidence of actual possession for
purposes of prescription. More so, if the payment of the taxes due on the property is
episodic, irregular and random such as in this case. Indeed, how can the
petitioners claim of possession for the entire prescriptive period be ascribed any
ounce of credibility when taxes were paid only on eleven (11) occasions within
the 40-year period from 1961 to 2001?50chanroblesvirtuallawlibrary

From the foregoing, this Court doubts the respondents' claim that their predecessors-in-
interest have been in continuous, exclusive, and adverse possession and occupation
thereof in the concept of owners from June 12, 1945, or earlier. The evidence presented
by the respondents does not prove title thru possession and occupation of public land
under Section 14(1) of P.D. 1529.

Further, the RTC ruled that with the continuous possession of the subject lots for more
than 30 years, respondents had acquired ownership over the subject lots through
prescription under Section 14(2) of P.D. 529. This view was adopted by the respondents
in their Comment,51 to the petition.

An application for original registration of land of the public domain under Section 14(2)
of Presidential Decree (PD) No. 1529 must show not only that the land has previously
been declared alienable and disposable, but also that the land has been declared
patrimonial property of the State at the onset of the 30-year or 10-year period of
possession and occupation required under the law on acquisitive
52
prescription. chanrobleslaw

It was elucidated in Heirs of Malabanan53 that possession and occupation of an

alienable and disposable public land for the periods provided under the Civil Code will
not convert it to patrimonial or private property. There must be an express declaration
that the property is no longer intended for public service or the development of national
wealth. In the absence thereof, the property remains to be alienable and disposable and
may not be acquired by prescription under Section 14(2) of P.D. No. 1529.

This Court, therefore, stresses that there must be an official declaration by the State
that the public dominion property is no longer intended for public use, public service, or
for the development of national wealth before it can be acquired by prescription; that a
mere declaration by government officials that a land of the public domain is already
alienable and disposable would not suffice for purposes of registration under Section
14(2) of P.D. No. 1529. The period of acquisitive prescription would only begin to run
from the time that the State officially declares that the public dominion property is no
longer intended for public use, public service, or for the development of national
wealth54.
In Republic v. Rizalvo, Jr.,55 this Court reiterated the ruling in Malabanan,
viz.:ChanRoblesVirtualawlibrary

On this basis, respondent would have been eligible for application for registration
because his claim of ownership and possession over the subject property even exceeds
thirty (30) years. However, it is jurisprudentially clear that the thirty (30)-year period of
prescription for purposes of acqmring ownership and registration of public land under
Section 14 (2) of P.D. No. 1529 only begins from the moment the State expressly
declares that the public dominion property is no longer intended for public service or the
development of the national wealth or that the property has been converted into
patrimonial. xxx

In this case, there is no evidence showing that the parcels of land in question were
within an area expressly declared by law either to be the patrimonial property of the
State, or to be no longer intended for public service or the development of the national
wealth.

Evidently, there being no compliance, with either the first or second paragraph of
Section 14 of PD 1529, the Regalian presumption stands and must be enforced in this
case.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated
February 20, 2013, in CA-G.R. CV No. 96879, affirming the Decision of the Regional
Trial Court of Pasig City, Branch 266, in LRC Case No. N-11598,
is REVERSED and SET ASIDE. The application for registration and confirmation of title
filed by respondents Heirs of Spouses Tomasa Estacio and Eulalio Ocol over three
parcels of land, with a total area of eleven thousand three hundred eighty (11,380)
square meters situated at Barangay Calzada, Taguig City, Metro Manila, is DENIED.

SO ORDERED.chan robles virtuallawli

G.R. No. 162243 December 3, 2009

HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her

capacity as Secretary of the Department of Environment and Natural
Resources, Petitioner,
vs.
PICOP RESOURCES, INC., Respondent.

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

G.R. No. 164516

PICOP RESOURCES, INC., Petitioner,

vs.
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her
capacity as Secretary of the Department of Environment and Natural
Resources Respondent.

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

G.R. No. 171875

THE HON. ANGELO T. REYES (formerly Hon. Elisea G. Gozun), in his capacity as
Secretary of the Department of Environment and Natural Resources
(DENR), Petitioner,
vs.
PAPER INDUSTRIES CORP. OF THE PHILIPPINES (PICOP), Respondent.

RESOLUTION

CHICO-NAZARIO, J.:

The cause of action of PICOP Resources, Inc. (PICOP) in its Petition for Mandamus
with the trial court is clear: the government is bound by contract, a 1969 Document
signed by then President Ferdinand Marcos, to enter into an Integrated Forest
Management Agreement (IFMA) with PICOP. Since the remedy of mandamus lies only
to compel an officer to perform a ministerial duty, and since the 1969 Document itself
has a proviso requiring compliance with the laws and the Constitution, the issues in this
Motion for Reconsideration are the following: (1) firstly, is the 1969 Document a contract
enforceable under the Non-Impairment Clause of the Constitution, so as to make the
signing of the IFMA a ministerial duty? (2) secondly, did PICOP comply with all the legal
and constitutional requirements for the issuance of an IFMA?

To recall, PICOP filed with the Department of Environment and Natural Resources
(DENR) an application to have its Timber License Agreement (TLA) No. 43 converted
into an IFMA. In the middle of the processing of PICOP’s application, however, PICOP
refused to attend further meetings with the DENR. Instead, on 2 September 2002,
PICOP filed before the Regional Trial Court (RTC) of Quezon City a Petition for
Mandamus1 against then DENR Secretary Heherson T. Alvarez. PICOP seeks the
issuance of a privileged writ of mandamus to compel the DENR Secretary to sign,
execute and deliver an IFMA to PICOP, as well as to –

[I]ssue the corresponding IFMA assignment number on the area covered by the IFMA,
formerly TLA No. 43, as amended; b) to issue the necessary permit allowing petitioner
to act and harvest timber from the said area of TLA No. 43, sufficient to meet the raw
material requirements of petitioner’s pulp and paper mills in accordance with the
warranty and agreement of July 29, 1969 between the government and PICOP’s
predecessor-in-interest; and c) to honor and respect the Government Warranties and
contractual obligations to PICOP strictly in accordance with the warranty and agreement
dated July 29, [1969] between the government and PICOP’s predecessor-in-interest. x x
x.2

On 11 October 2002, the RTC rendered a Decision granting PICOP’s Petition for
Mandamus, thus:

WHEREFORE, premises considered, the Petition for Mandamus is hereby GRANTED.

The Respondent DENR Secretary Hon. Heherson Alvarez is hereby ordered:

1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and issue
the corresponding IFMA assignment number on the area covered by the IFMA, formerly
TLA No. 43, as amended;

2. to issue the necessary permit allowing petitioner to act and harvest timber from the
said area of TLA No. 43, sufficient to meet the raw material requirements of petitioner’s
pulp and paper mills in accordance with the warranty and agreement of July 29, 1969
between the government and PICOP’s predecessor-in-interest; and

3. to honor and respect the Government Warranties and contractual obligations to

PICOP strictly in accordance with the warranty and agreement dated July 29, 1999 (sic)
between the government and PICOP’s predecessor-in-interest (Exhibits "H", "H-1" to
"H-5", particularly the following:

a) the area coverage of TLA No. 43, which forms part and parcel of the government
warranties;

b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut, collect and
remove sawtimber and pulpwood for the period ending on April 26, 1977; and said
period to be renewable for [an]other 25 years subject to compliance with constitutional
and statutory requirements as well as with existing policy on timber concessions; and

c) The peaceful and adequate enjoyment by PICOP of the area as described and
specified in the aforesaid amended Timber License Agreement No. 43.

The Respondent Secretary Alvarez is likewise ordered to pay petitioner the sum of ₱10
million a month beginning May 2002 until the conversion of TLA No. 43, as amended, to
IFMA is formally effected and the harvesting from the said area is granted. 3

On 25 October 2002, the DENR Secretary filed a Motion for Reconsideration.4 In a 10

February 2003 Order, the RTC denied the DENR Secretary’s Motion for
Reconsideration and granted PICOP’s Motion for the Issuance of Writ of Mandamus
and/or Writ of Mandatory Injunction.5 The fallo of the 11 October 2002 Decision was
practically copied in the 10 February 2003 Order, although there was no mention of the
damages imposed against then DENR Secretary Alvarez.6 The DENR Secretary filed a
Notice of Appeal7 from the 11 October 2002 Decision and the 10 February 2003 Order.

On 19 February 2004, the Seventh Division of the Court of Appeals affirmed 8 the
Decision of the RTC, to wit:
WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the
order directing then DENR Secretary Alvarez "to pay petitioner-appellee the sum of P10
million a month beginning May, 2002 until the conversion to IFMA of TLA No. 43, as
amended, is formally effected and the harvesting from the said area is granted" is
hereby deleted. 9

Challenging the deletion of the damages awarded to it, PICOP filed a Motion for Partial
Reconsideration10 of this Decision, which was denied by the Court of Appeals in a 20
July 2004 Resolution.11

The DENR Secretary and PICOP filed with this Court separate Petitions for Review of
the 19 February 2004 Court of Appeals Decision. These Petitions were docketed as
G.R. No. 162243 and No. 164516, respectively. These cases were consolidated with
G.R. No. 171875, which relates to the lifting of a Writ of Preliminary Injunction enjoining
the execution pending appeal of the foregoing Decision.

On 29 November 2006, this Court rendered the assailed Decision on the Consolidated
Petitions:

WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of the Court
of Appeals insofar as it affirmed the RTC Decision granting the Petition for Mandamus
filed by Paper Industries Corp. of the Philippines (PICOP) is hereby REVERSED and
SET ASIDE. The Petition in G.R. No. 164516 seeking the reversal of the same Decision
insofar as it nullified the award of damages in favor of PICOP is DENIED for lack of
merit. The Petition in G.R. No. 171875, assailing the lifting of the Preliminary Mandatory
Injunction in favor of the Secretary of Environment and Natural Resources is
DISMISSED on the ground of mootness.12

On 18 January 2006, PICOP filed the instant Motion for Reconsideration, based on the
following grounds:

I.

THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT WITH

PRESIDENTIAL WARRANTY SIGNED BY THE PRESIDENT OF THE REPUBLIC ON
29 JUNE 1969 ISSUED TO PICOP IS A MERE PERMIT OR LICENSE AND IS NOT A
CONTRACT, PROPERTY OR PROPERTY RIGHT PROTECTED BY THE DUE
PROCESS CLAUSE OF THE CONSTITUTION

II.

THE EVALUATION OF PICOP’S MANAGEMENT OF THE TLA 43 NATURAL FOREST

CLEARLY SHOWED SATISFACTORY PERFORMANCE FOR KEEPING THE
NATURAL FOREST GENERALLY INTACT AFTER 50 YEARS OF FOREST
OPERATIONS. THIS COMPLETES THE REQUIREMENT FOR AUTOMATIC
CONVERSION UNDER SECTION 9 OF DAO 99-53.

III.

WITH DUE RESPECT, THE HONORABLE COURT, IN REVERSING THE FINDINGS

OF FACTS OF THE TRIAL COURT AND THE COURT OF APPEALS,
MISAPPRECIATED THE EVIDENCE, TESTIMONIAL AND DOCUMENTARY, WHEN
IT RULED THAT:

i.
PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST PROTECTION PLAN AND A
SEVEN-YEAR REFORESTATION PLAN FOR THE YEARS UNDER REVIEW.

ii.

PICOP FAILED TO COMPLY WITH THE PAYMENT OF FOREST CHARGES.

iii.

PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR A CERTIFICATION

FROM THE NCIP THAT THE AREA OF TLA 43 DOES NOT OVERLAP WITH ANY
ANCESTRAL DOMAIN.

iv.

PICOP FAILED TO HAVE PRIOR CONSULTATION WITH AND APPROVAL FROM

THE SANGUNIAN CONCERNED, AS REQUIRED BY SECTION 27 OF THE
REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE OF 1991.

v.

PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY UNDER PRESIDENTIAL

DECREE NO. 1586.

IV

THE MOTIVATION OF ALVAREZ IN RECALLING THE CLEARANCE FOR

AUTOMATIC CONVERSION HE ISSUED ON 25 OCTOBER 2001 WAS NOT DUE TO
ANY SHORTCOMING FROM PICOP BUT DUE TO HIS DETERMINATION TO
EXCLUDE 28,125 HECTARES FROM THE CONVERSION AND OTHER THINGS.

On 15 December 2008, on Motion by PICOP, the Third Division of this Court resolved to
refer the consolidated cases at bar to the Court en banc. On 16 December 2008, this
Court sitting en banc resolved to accept the said cases and set them for oral arguments.
Oral arguments were conducted on 10 February 2009.

PICOP’s Cause of Action: Matters PICOP Should Have Proven to Be Entitled to a Writ
of Mandamus

In seeking a writ of mandamus to compel the issuance of an IFMA in its favor, PICOP
relied on a 29 July 1969 Document, the so-called Presidential Warranty approved by
then President Ferdinand E. Marcos in favor of PICOP’s predecessor-in-interest, Bislig
Bay Lumber Company, Inc. (BBLCI). PICOP’s cause of action is summarized in
paragraphs 1.6 and 4.19 of its Petition for Mandamus:

1.6 Respondent Secretary impaired the obligation of contract under the said Warranty
and Agreement of 29 July 1969 by refusing to respect the tenure; and its renewal for
another twenty five (25) years, of PICOP over the area covered by the said Agreement
which consists of permanent forest lands with an aggregate area of 121,587 hectares
and alienable and disposable lands with an aggregate area of approximately 21,580
hectares, and petitioner’s exclusive right to cut, collect and remove sawtimber and
pulpwood therein and the peaceful and adequate enjoyment of the said area as
described and specified in petitioner’s Timber License Agreement (TLA) No. 43
guaranteed by the Government, under the Warranty and Agreement of 29 July 1969. 13
4.19 Respondent is in violation of the Constitution and has impaired the obligation of
contract by his refusal to respect: a) the tenurial rights of PICOP over the forest area
covered by TLA No. 43, as amended and its renewal for another twenty five (25) years;
b) the exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood
therein; and c) PICOP’s peaceful and adequate enjoyment of the said area which the
government guaranteed under the Warranty and Agreement of 29 July 1969. 14

The grounds submitted by PICOP in its Petition for Mandamus are as follows:

Respondent secretary has unlawfully refused and/or neglected to sign and execute the
IFMA contract of PICOP even as the latter has complied with all the legal requirements
for the automatic conversion of TLA No. 43, as amended, into an IFMA.

II

Respondent Secretary acted with grave abuse of discretion and/or in excess of

jurisdiction in refusing to sign and execute PICOP’s IFMA contract, notwithstanding that
PICOP had complied with all the requirements for Automatic Conversion under DAO 99-
53, as in fact Automatic Conversion was already cleared in October, 2001, and was a
completed process.

III

Respondent Secretary has impaired the obligation of contract under a valid and binding
warranty and agreement of 29 July 1969 between the government and PICOP’s
predecessor-in-interest, by refusing to respect: a) the tenure of PICOP, and its renewal
for another twenty five (25) years, over the TLA No.43 area covered by said agreement;
b) the exclusive right to cut, collect and remove sawtimber and pulpwood timber; and c)
the peaceful and adequate enjoyment of the said area.

IV

As a result of respondent Secretary’s unlawful refusal and/or neglect to sign and deliver
the IFMA contract, and violation of the constitutional rights of PICOP against non-
impairment of the obligation of contract (Sec. 10, Art. III, 1997 [sic] Constitution), PICOP
suffered grave and irreparable damages.15

Petitions for Mandamus are governed by Rule 65 of the Rules of Court, Section 3 of
which provides:

SEC. 3. Petition for mandamus.—When any tribunal, corporation, board, officer or

person unlawfully neglects the performance of an act which the law specifically enjoins
as a duty resulting from an office, trust, or station, or unlawfully excludes another from
the use and enjoyment of a right or office to which such other is entitled, and there is no
other plain, speedy and adequate remedy in the ordinary course of law, the person
aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the respondent,
immediately or at some other time to be specified by the court, to do the act required to
be done to protect the rights of the petitioner, and to pay the damages sustained by the
petitioner by reason of the wrongful acts of the respondent. (Emphasis supplied.)
PICOP is thus asking this Court to conclude that the DENR Secretary is specifically
enjoined by law to issue an IFMA in its favor. An IFMA, as defined by DENR
Administrative Order (DAO) No. 99-53,16 is -

[A] production-sharing contract entered into by and between the DENR and a qualified
applicant wherein the DENR grants to the latter the exclusive right to develop, manage,
protect and utilize a specified area of forestland and forest resource therein for a period
of 25 years and may be renewed for another 25-year period, consistent with the
principle of sustainable development and in accordance with an approved CDMP, and
under which both parties share in its produce.17

PICOP stresses the word "automatic" in Section 9 of this DAO No. 99-53:

Sec. 9. Qualifications of Applicants. – The applicants for IFMA shall be:

(a) A Filipino citizen of legal age; or,

(b) Partnership, cooperative or corporation whether public or private, duly registered

under Philippine laws.

However, in the case of application for conversion of TLA into IFMA, an automatic
conversion after proper evaluation shall be allowed, provided the TLA holder shall have
signified such intention prior to the expiry of the TLA, PROVIDED further, that the TLA
holder has showed satisfactory performance and have complied in the terms of
condition of the TLA and pertinent rules and regulations. (Emphasis supplied.) 18

This administrative regulation provision allowing automatic conversion after proper

evaluation can hardly qualify as a law, much less a law specifically enjoining the
execution of a contract. To enjoin is "to order or direct with urgency; to instruct with
authority; to command."19 "‘Enjoin’ is a mandatory word, in legal parlance, always; in
common parlance, usually."20 The word "allow," on the other hand, is not equivalent to
the word "must," and is in no sense a command.21

As an extraordinary writ, the remedy of mandamus lies only to compel an officer to

perform a ministerial duty, not a discretionary one; mandamus will not issue to control
the exercise of discretion of a public officer where the law imposes upon him the duty to
exercise his judgment in reference to any manner in which he is required to act,
because it is his judgment that is to be exercised and not that of the court. 22

The execution of agreements, in itself, involves the exercise of discretion. Agreements

are products of negotiations and mutual concessions, necessitating evaluation of their
provisions on the part of both parties. In the case of the IFMA, the evaluation on the part
of the government is specifically mandated in the afore-quoted Section 3 of DAO No.
99-53. This evaluation necessarily involves the exercise of discretion and judgment on
the part of the DENR Secretary, who is tasked not only to negotiate the sharing of the
profit arising from the IFMA, but also to evaluate the compliance with the requirements
on the part of the applicant.

Furthermore, as shall be discussed later, the period of an IFMA that was merely
automatically converted from a TLA in accordance with Section 9, paragraph 2 of DAO
No. 99-53 would only be for the remaining period of the TLA. Since the TLA of PICOP
expired on 26 April 2002, the IFMA that could have been granted to PICOP via the
automatic conversion provision in DAO No. 99-53 would have expired on the same
date, 26 April 2002, and the PICOP’s Petition for Mandamus would have become moot.
This is where the 1969 Document, the purported Presidential Warranty, comes into
play. When PICOP’s application was brought to a standstill upon the evaluation that
PICOP had yet to comply with the requirements for such conversion, PICOP refused to
attend further meetings with the DENR and instead filed a Petition for Mandamus,
insisting that the DENR Secretary had impaired the obligation of contract by his refusal
to respect: a) the tenurial rights of PICOP over the forest area covered by TLA No. 43,
as amended, and its renewal for another twenty-five (25) years; b) the exclusive right of
PICOP to cut, collect and remove sawtimber and pulpwood therein; and c) PICOP’s
peaceful and adequate enjoyment of the said area which the government guaranteed
under the Warranty and Agreement of 29 July 1969. 23

PICOP is, thus, insisting that the government is obligated by contract to issue an IFMA
in its favor because of the 1969 Document.

A contract, being the law between the parties, can indeed, with respect to the State
when it is a party to such contract, qualify as a law specifically enjoining the
performance of an act. Hence, it is possible that a writ of mandamus may be issued to
PICOP, but only if it proves both of the following:

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

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

If PICOP fails to prove any of these two matters, the grant of a privileged writ of
mandamus is not warranted. This was why we pronounced in the assailed Decision that
the overriding controversy involved in the Petition was one of law. 24 If PICOP fails to
prove any of these two matters, more significantly its assertion that the 1969 Document
is a contract, PICOP fails to prove its cause of action.25 Not even the satisfactory
compliance with all legal and administrative requirements for an IFMA would save
PICOP’s Petition for Mandamus.

The reverse, however, is not true. The 1969 Document expressly states that the
warranty as to the tenure of PICOP is "subject to compliance with constitutional and
statutory requirements as well as with existing policy on timber concessions." Thus, if
PICOP proves the two above-mentioned matters, it still has to prove compliance with
statutory and administrative requirements for the conversion of its TLA into an IFMA.

Exhaustion of Administrative Remedies

PICOP uses the same argument –– that the government is bound by contract to issue
the IFMA –– in its refusal to exhaust all administrative remedies by not appealing the
alleged illegal non-issuance of the IFMA to the Office of the President. PICOP claimed
in its Petition for Mandamus with the trial court that:

1.10 This petition falls as an exception to the exhaustion of administrative remedies.

The acts of respondent DENR Secretary complained of in this petition are patently
illegal; in derogation of the constitutional rights of petitioner against non-impairment of
the obligation of contracts; without jurisdiction, or in excess of jurisdiction or so
capriciously as to constitute an abuse of discretion amounting to excess or lack of
jurisdiction; and moreover, the failure or refusal of a high government official such as a
Department head from whom relief is brought to act on the matter was considered
equivalent to exhaustion of administrative remedies (Sanoy v. Tantuico, 50 SCRA 455
[1973]), and there are compelling and urgent reasons for judicial intervention (Bagatsing
v. Ramirez, 74 SCRA 306 [1976]).

Thus, if there has been no impairment of the obligation of contracts in the DENR
Secretary’s non-issuance of the IFMA, the proper remedy of PICOP in claiming that it
has complied with all statutory and administrative requirements for the issuance of the
IFMA should have been with the Office of the President. This makes the issue of the
enforceability of the 1969 Document as a contract even more significant.

The Nature and Effects of the Purported 29 July 1969 Presidential Warranty

Base Metals Case

PICOP challenges our ruling that the 1969 Document is not a contract. Before we
review this finding, however, it must be pointed out that one week after the assailed
Decision, another division of this Court promulgated a Decision concerning the very
same 1969 Document. Thus, in PICOP Resources, Inc. v. Base Metals Mineral
Resources Corporation,26 five other Justices who were still unaware of this Division’s
Decision,27 came up with the same conclusion as regards the same issue of whether
former President Marcos’s Presidential Warranty is a contract:

Finally, we do not subscribe to PICOP’s argument that the Presidential Warranty dated
September 25, 1968 is a contract protected by the non-impairment clause of the 1987
Constitution.

An examination of the Presidential Warranty at once reveals that it simply reassures

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

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

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

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

‘A license is merely a permit or privilege to do what otherwise would be unlawful, and is

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

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

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

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

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

cannot be invoked.

The Presidential Warranty cannot, in any manner, be construed as a contractual

undertaking assuring PICOP of exclusive possession and enjoyment of its concession
areas. Such an interpretation would result in the complete abdication by the State in
favor of PICOP of the sovereign power to control and supervise the exploration,
development and utilization of the natural resources in the area.28

The Motion for Reconsideration was denied with finality on 14 February 2007. A Second
Motion for Reconsideration filed by PICOP was denied on 23 May 2007.

PICOP insists that the pronouncement in Base Metals is a mere obiter dictum, which
would not bind this Court in resolving this Motion for Reconsideration. In the oral
arguments, however, upon questioning from the ponente himself of Base Metals, it was
agreed that the issue of whether the 1969 Document is a contract was necessary in the
resolution of Base Metals:

JUSTICE TINGA:

And do you confirm that one of the very issues raised by PICOP in that case [PICOP
Resources Inc. v. Base Metal Mineral Resources Corporation] revolves around its claim
that a Presidential Warranty is protected by the non-impairment c[l]ause of the
Constitution.

ATTY. AGABIN:

Yes, I believe that statement was made by the Court, your Honor.

JUSTICE TINGA:

Yes. And that claim on the part of PICOP necessarily implies that the Presidential
Warranty according to PICOP is a contract protected by the non-impairment clause.

ATTY. AGABIN:
Yes, Your Honor.

JUSTICE TINGA:

Essentially, the PICOP raised the issue of whether the Presidential Warranty is a
contract or not.

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE TINGA:

And therefore any ruling on the part of the Court on that issue could not be an obiter
dictum.

ATTY. AGABIN:

Your Honor, actually we believe that the basic issue in that case was whether or not
Base Metals could conduct mining activities underneath the forest reserve allotted to
PICOP and the Honorable Court ruled that the Mining Act of 1995 as well as the
Department Order of DENR does not disallow mining activity under a forest reserve.

JUSTICE TINGA:

But it was PICOP itself which raised the claim that a Presidential Warranty is a contract.
And therefore be, should be protected on the under the non-impairment clause of the
Constitution.

ATTY. AGABIN:

Yes, Your Honor. Except that…

JUSTICE TINGA:

So, how can you say now that the Court merely uttered, declared, laid down an obiter
dictum in saying that the Presidential Warranty is not a contract, and it is not being a
contract, it is not prohibited by the non-impairment clause.

ATTY. AGABIN:

This Honorable Court could have just ruled, held that the mining law allows mining
activities under a forest reserve without deciding on that issue that was raised by
PICOP, your Honor, and therefore we believe….

JUSTICE TINGA:

It could have been better if PICOP has not raised that issue and had not claimed that
the Presidential Warranty is not a contract.

ATTY. AGABIN:

Well, that is correct, your Honor except that the Court could have just avoided that
question. Because…

JUSTICE TINGA:

Why[?]
ATTY. AGABIN:

It already settled the issue, the basic issue.

JUSTICE TINGA:

Yes, because the Court in saying that merely reiterated a number of rulings to the effect
that the Presidential Warranty, a Timber License for that matter is not a contract
protected by the non-impairment laws.

ATTY. AGABIN:

Well, it is our submission, your Honor, that it is obiter because, that issue even a phrase
by PICOP was not really fully argued by the parties for the Honorable Court and it
seems from my reading at least it was just an aside given by the Honorable Court to
decide on that issue raised by PICOP but it was not necessary to the decision of the
court.

JUSTICE TINGA:

It was not necessary[?]

ATTY. AGABIN:

To the decision of the Court.

JUSTICE TINGA:

It was.

ATTY. AGABIN:

It was not necessary.

JUSTICE TINGA:

It was.

ATTY. AGABIN:

Yes.

JUSTICE TINGA:

And PICOP devoted quite a number of pages in [its] memorandum to that issue and so
did the Court [in its Decision].

ATTY. AGABIN:

Anyway, your Honor, we beg the Court to revisit, not to…29

Interpretation of the 1969 Document That Would Be in Harmony with the Constitution

To remove any doubts as to the contents of the 1969 Document, the purported
Presidential Warranty, below is a complete text thereof:

Republic of the Philippines

Department of Agriculture and Natural Resources
OFFICE OF THE SECRETARY
Diliman, Quezon City

D-53, Licenses (T.L.A. No. 43)

Bislig Bay Lumber Co., Inc.
(Bislig, Surigao)

July 29, 1969

Bislig Bay Lumber Co., Inc.

[unreadable word] Bldg.
Makati, Rizal

S i r s:

This has reference to the request of the Board of Investments through its Chairman in a
letter dated July 16, 1969 for a warranty on the boundaries of your concession area
under Timber License Agreement No. 43, as amended.

We are made to understand that your company is committed to support the first large
scale integrated wood processing complex hereinafter called: "The Project") and that
such support will be provided not only in the form of the supply of pulpwood and other
wood materials from your concession but also by making available funds generated out
of your own operations, to supplement PICOP’s operational sources of funds and other
financial arrangements made by him. In order that your company may provide such
support effectively, it is understood that you will call upon your stockholders to take such
steps as may be necessary to effect a unification of managerial, technical, economic
and manpower resources between your company and PICOP.

It is in the public interest to promote industries that will enhance the proper conservation
of our forest resources as well as insure the maximum utilization thereof to the benefit of
the national economy. The administration feels that the PICOP project is one such
industry which should enjoy priority over the usual logging operations hitherto practiced
by ordinary timber licensees: For this reason, we are pleased to consider favorably the
request.

We confirm that your Timber License Agreement No. 43, as amended (copy of which is
attached as Annex "A" hereof which shall form part and parcel of this warranty)
definitely establishes the boundary lines of your concession area which consists of
permanent forest lands with an aggregate area of 121,587 hectares and alienable or
disposable lands with an aggregate area of approximately 21,580 hectares.

We further confirm that your tenure over the area and exclusive right to cut, collect and
remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said
period to be renewable for other 25 years subject to compliance with constitutional and
statutory requirements as well as with existing policy on timber concessions.

The peaceful and adequate enjoyment by you of your area as described and specified
in your aforesaid amended Timber License Agreement No. 43 is hereby warranted
provided that pertinent laws, regulations and the terms and conditions of your license
agreement are observed.

Very truly yours,

(Sgd.) FERNANDO LOPEZ
Secretary of Agriculture
and Natural Resources

Encl.:

RECOMMENDED BY:

(Sgd.) JOSE VIADO

Acting Director of Forestry

APPROVED:

(Sgd.) FERDINAND E. MARCOS

President of the Philippines

ACCEPTED:

BISLIG BAY LBR. CO., INC.

By:

(Sgd.) JOSE E. SORIANO

President

PICOP interprets this document in the following manner:

6.1 It is clear that the thrust of the government warranty is to establish a particular area
defined by boundary lines of TLA No. 43 for the PICOP Project. In consideration for
PICOP’s commitment to pursue and establish the project requiring huge
investment/funding from stockholders and lending institutions, the government provided
a warranty that ensures the continued and exclusive right of PICOP to source its raw
materials needs from the forest and renewable trees within the areas established.

6.2 As a long-term support, the warranty covers the initial twenty five (25) year period
and is renewable for periods of twenty five (25) years provided the project continues to
exist and operate. Very notably, the wording of the Presidential Warranty connotes that
for as long as the holder complies with all the legal requirements, the term of the
warranty is not limited to fifty (50) years but other twenty five (25) years.

6.3 Note must be made that the government warranted that PICOP’s tenure over the
area and exclusive right to cut, collect and remove saw timber and pulpwood shall be
for the period ending on 26 April 1977 and said period to be renewable for other 25
years subject to "compliance with constitutional and statutory requirements as well as
existing policy on timber requirements". It is clear that the renewal for other 25 years,
not necessarily for another 25 years is guaranteed. This explains why on 07 October
1977, TLA No. 43, as amended, was automatically renewed for another period of twenty
five (25) years to expire on 26 April 2002.30

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

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per centum of whose capital is
owned by such citizens. Such agreements may be for a period not exceeding twenty-
five years, renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for irrigation, water
supply fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.

Mr. Justice Dante O. Tinga’s interpretation of the 1969 Document is much more in
accord with the laws and the Constitution. What one cannot do directly, he cannot do
indirectly. Forest lands cannot be alienated in favor of private entities. Granting to
private entities, via a contract, a permanent, irrevocable, and exclusive possession of
and right over forest lands is tantamount to granting ownership thereof. PICOP, it
should be noted, claims nothing less than having exclusive, continuous and
uninterrupted possession of its concession areas,31 where all other entrants are
illegal,32 and where so-called "illegal settlers and squatters" are apprehended.33

IFMAs are production-sharing agreements concerning the development and utilization

of natural resources. As such, these agreements "may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms
and conditions as may be provided by law." Any superior "contract" requiring the State
to issue TLAs and IFMAs whenever they expire clearly circumvents Section 2, Article
XII of the Constitution, which provides for the only permissible schemes wherein the full
control and supervision of the State are not derogated: co-production, joint venture, or
production-sharing agreements within the time limit of twenty-five years, renewable for
another twenty-five years.

On its face, the 1969 Document was meant to expire on 26 April 2002, upon the
expiration of the expected extension of the original TLA period ending on 26 April 1977:

We further confirm that your tenure over the area and exclusive right to cut, collect and
remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said
period to be renewable for other 25 years subject to compliance with constitutional and
statutory requirements as well as with existing policy on timber concessions.1avvphi1

Any interpretation extending the application of the 1969 Document beyond 26 April
2002 and any concession that may be granted to PICOP beyond the said date would
violate the Constitution, and no amount of legal hermeneutics can change that.
Attempts of PICOP to explain its way out of this Constitutional provision only led to
absurdities, as exemplified in the following excerpt from the oral arguments:

JUSTICE CARPIO:

The maximum trend of agreement to develop and utilize natural resources like forest
products is 25 years plus another 25 years or a total of 50 years correct?

ATTY. AGABIN

Yes, Your Honor.

JUSTICE CARPIO:
That is true for the 1987, 1973, 1935 Constitution, correct?

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

The TLA here, TLA 43, expired, the first 25 years expired in 1977, correct?

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

And it was renewed for another 25 years until 2002, the 50th year?

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

Now, could PICOP before the end of the 50th year let’s say in 2001, one year before the
expiration, could it have asked for an extension of another 25 years of its TLA
agreement[?]

ATTY. AGABIN:

I believe so, Your Honor.

JUSTICE CARPIO:

But the Constitution says, maximum of fifty years. How could you ask for another 25
years of its TLA.

ATTY. AGABIN:

Well, your Honor, we believe on a question like this, this Honorable Court should
balance the interest.

JUSTICE CARPIO:

The Constitution is very clear, you have only a maximum of 50 years, 25 plus another
25. PICOP could never have applied for an extension, for a third 25-year term whether
under the 1935 Constitution, the 1973 Constitution and the 1987 Constitution, correct?

ATTY. AGABIN:

Your Honor, except that we are invoking the warranty, the terms of the warranty….

JUSTICE CARPIO:

Can the warranty prevail over the Constitution?

ATTY. AGABIN:

Well, it is a vested right, your Honor.

JUSTICE CARPIO:

Yes, but whatever it is, can it prevail over the Constitution?

ATTY. AGABIN:

The Constitution itself provides that vested rights should be ….

JUSTICE CARPIO:

If it is not in violation of specific provision of the Constitution. The Constitution says, 25

years plus another 25 years, that’s the end of it. You mean to say that a President of the
Philippines can give somebody 1,000 years license?

ATTY. AGABIN:

Well, that is not our position, Your Honor. Because our position is that ….

JUSTICE CARPIO:

My question is, what is the maximum term, you said 50 years. So, my next question is,
can PICOP apply for an extension of another 25 years after 2002, the 50th year?

ATTY. AGABIN:

Yes, based on the contract of warranty, Your Honor, because the contract of
warranty….

JUSTICE CARPIO:

But in the PICOP license it is very clear, it says here, provision 28, it says the license
agreement is for a total of 50 years. I mean it is very simple, the President or even
Congress cannot pass a law extending the license, whatever kind of license to utilize
natural resources for more than fifty year[s]. I mean even the law cannot do that. It
cannot prevail over the Constitution. Is that correct, Counsel?

ATTY. AGABIN:

It is correct, Your Honor, except that in this case, what is actually our application is that
the law provides for the conversion of existing TLA into IFMA.

JUSTICE CARPIO:

So, they file the petition for conversion before the end of the 50th year for IFMA.

ATTY. AGABIN:

Yes, Your Honor.

JUSTICE CARPIO:

But IFMA is the same, it is based on Section 2, Article 12 of the Constitution, develop
and utilize natural resources because as you said when the new constitution took effect
we did away with the old licensing regime, we have now co-production, a production
sharing, joint venture, direct undertaking but still the same developing and utilizing the
natural resources, still comes from section 2, Art. 12 of the Constitution. It is still a
license but different format now.

ATTY. AGABIN:
It is correct, Your Honor, except that the regimes of joint venture, co-production and
production sharing are what is referred to in the constitution, Your Honor, and still
covered…

JUSTICE CARPIO:

Yes, but it is covered by same 25 year[s], you mean to say people now can circumvent
the 50 year maximum term by calling their TLA as IFMA and after fifty years calling it
ISMA, after another 50 years call it MAMA.

ATTY. AGABIN:

Yes, Your Honor. Because…

JUSTICE CARPIO:

It can be done.

ATTY. AGABIN:

That is provided for by the department itself.34

PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide a
way to circumvent the provisions of the Constitution limiting agreements for the
utilization of natural resources to a maximum period of fifty years. Official duties are,
however, disputably considered to be regularly performed, 35 and good faith is always
presumed.

DAO No. 99-53 was issued to change the means by which the government enters into
an agreement with private entities for the utilization of forest products. DAO No. 99-53 is
a late response to the change in the constitutional provisions on natural resources from
the 1973 Constitution, which allowed the granting of licenses to private entities, 36 to the
present Constitution, which provides for co-production, joint venture, or production-
sharing agreements as the permissible schemes wherein private entities may
participate in the utilization of forest products. Since the granting of timber licenses
ceased to be a permissible scheme for the participation of private entities under the
present Constitution, their operations should have ceased upon the issuance of DAO
No. 99-53, the rule regulating the schemes under the present Constitution. This would
be iniquitous to those with existing TLAs that would not have expired yet as of the
issuance of DAO No. 99-53, especially those with new TLAs that were originally set to
expire after 10 or even 20 or more years. The DENR thus inserted a provision in DAO
No. 99-53 allowing these TLA holders to finish the period of their TLAs, but this time as
IFMAs, without the rigors of going through a new application, which they have probably
just gone through a few years ago.

Such an interpretation would not only make DAO No. 99-53 consistent with the
provisions of the Constitution, but would also prevent possible discrimination against
new IFMA applicants:

ASSOCIATE JUSTICE DE CASTRO:

I ask this question because of your interpretation that the period of the IFMA, if your
TLA is converted into IFMA, would cover a new a fresh period of twenty-five years
renewable by another period of twenty-five years.

DEAN AGABIN:
Yes, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:

Don’t you think that will, in effect, be invidious discrimination with respect to other
applicants if you are granted a fresh period of twenty-five years extendible to another
twenty-five years?

DEAN AGABIN:

I don’t think it would be, Your Honor, considering that the IFMA is different regime from
the TLA. And not only that, there are considerations of public health and ecology which
should come into play in this case, and which we had explained in our opening
statement and, therefore the provision of the Constitution on the twenty-five limits for
renewal of co-production, joint venture and production sharing agreements, should be
balanced with other values stated in the Constitution, like the value of balanced ecology,
which should be in harmony with the rhythm of nature, or the policy of forest
preservation in Article XII, Section 14 of the Constitution. These are all important policy
considerations which should be balanced against the term limits in Article II of the
Constitution.

ASSOCIATE JUSTICE DE CASTRO:

The provision of this Administrative Order regarding automatic conversion may be

reasonable, if, I want to know if you agree with me, if we limit this automatic conversion
to the remaining period of the TLA, because in that case there will be a valid ground to
make a distinction between those with existing TLA and those who are applying for the
first time for IFMA?

DEAN AGABIN:

Well, Your Honor, we beg to disagree, because as I said TLA’s are completely different
from IFMA. The TLA has no production sharing or co-production agreement or
condition. All that the licensee has to do is, to pay forest charges, taxes and other
impositions from the local and national government. On the other hand, the IFMAs
contained terms and conditions which are completely different, and that they either
impose co-production, production sharing or joint venture terms. So it’s a completely
different regime, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:

Precisely, that is the reason why there should be an evaluation of what you mentioned
earlier of the development plan.

DEAN AGABIN:

Yes, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:

So it will be reasonable to convert a TLA into an IFMA without considering the

development plan submitted by other applicants or the development plan itself of one
seeking conversion into IFMA if it will only be limited to the period, the original period of
the TLA. But once you go beyond the period of the TLA, then you will be, the DENR is I
think should evaluate the different proposals of the applicants if we are thinking of a
fresh period of twenty-five years, and which is renewable under the Constitution by
another twenty-five years. So the development plan will be important in this case, the
submission of the development plan of the different applicants must be considered. So I
don’t understand why you mentioned earlier that the development plan will later on be a
subject matter of negotiation between the IFMA grantee and the government. So it
seems that it will be too late in the day to discuss that if you have already converted the
TLA into IFMA or if the government has already granted the IFMA, and then it will later
on study the development plan, whether it is viable or not, or it is sustainable or not, and
whether the development plan of the different applicants are, are, which of the
development plan of the different applicants is better or more advantageous to the
government.37

PICOP insists that the alleged Presidential Warranty, having been signed on 29 July
1969, could not have possibly considered the limitations yet to be imposed by future
issuances, such as the 1987 Constitution. However, Section 3, Article XVIII of said
Constitution, provides:

Section 3. All existing laws, decrees, executive orders, proclamations, letters of

instructions, and other executive issuances not inconsistent with this Constitution shall
remain operative until amended, repealed, or revoked.

In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear import of this provision is
that all existing laws, executive orders, proclamations, letters of instructions and other
executive issuances inconsistent or repugnant to the Constitution are repealed."

When a provision is susceptible of two interpretations, "the one that will render them
operative and effective and harmonious with other provisions of law" 39 should be
adopted. As the interpretations in the assailed Decision and in Mr. Justice Tinga’s
ponencia are the ones that would not make the subject Presidential Warranty
unconstitutional, these are what we shall adopt.

Purpose of the 1969 Document: Assurance That the Boundaries of Its Concession Area
Would Not Be Altered Despite the Provision in the TLA that the DENR Secretary Can
Amend Said Boundaries

In the assailed Decision, we ruled that the 1969 Document cannot be considered a
contract that would bind the government regardless of changes in policy and the
demands of public interest and social welfare. PICOP claims this conclusion "did not
take into consideration that PICOP already had a valid and current TLA before the
contract with warranty was signed in 1969."40 PICOP goes on: "The TLA is a license
that equips any TLA holder in the country for harvesting of timber. A TLA is signed by
the Secretary of the DANR now DENR. The Court ignored the significance of the need
for another contract with the Secretary of the DANR but this time with the approval of
the President of the Republic."41 PICOP then asks us: "If PICOP/BBLCI was only an
ordinary TLA holder, why will it go through the extra step of securing another contract
just to harvest timber when the same can be served by the TLA signed only by the
Secretary and not requiring the approval of the President of the Republic(?)" 42

The answer to this query is found in TLA No. 43 itself wherein, immediately after the
boundary lines of TLA No. 43 were established, the following conditions were given:

This license is granted to the said party of the second part upon the following express
conditions:
I. That authority is granted hereunder to the party of the second part 43 to cut, collect or
remove firewood or other minor forest products from the area embraced in this license
agreement except as hereinafter provided.

II. That the party of the first part44 may amend or alter the description of the boundaries
of the area covered by this license agreement to conform with official surveys and that
the decision of the party of the first part as to the exact location of the said boundaries
shall be final.

III. That if the party of the first part deems it necessary to establish on the ground the
boundary lines of the area granted under this license agreement, the party of the
second part shall furnish to the party of the first part or its representatives as many
laborers as it needs and all the expenses to be incurred on the work including the
wages of such laborers shall be paid by the party of the second part.45

Thus, BBLCI needed an assurance that the boundaries of its concession area, as
established in TLA No. 43, as amended, would not be altered despite this
provision. Hence, BBLCI endeavored to obtain the 1969 Document, which provides:

We confirm that your Timber License Agreement No. 43, as amended (copy of which is
attached as Annex "A" hereof which shall form part and parcel of this warranty)
definitely establishes the boundary lines of your concession area which consists of
permanent forest lands with an aggregate area of 121,587 hectares and alienable or
disposable lands with an aggregate area of approximately 21,580 hectares.

We further confirm that your tenure over the area and exclusive right to cut, collect and
remove sawtimber and pulpwood shall be for the period ending on April 26, 1977; said
period to be renewable for other 25 years subject to compliance with constitutional and
statutory requirements as well as with existing policy on timber concessions.

The peaceful and adequate enjoyment by you of your area as described and specified
in your aforesaid amended Timber License Agreement No. 43 is hereby warranted
provided that pertinent laws, regulations and the terms and conditions of your license
agreement are observed.46

In Koa v. Court of Appeals,47 we ruled that a warranty is a collateral undertaking and is

merely part of a contract. As a collateral undertaking, it follows the principal wherever it
goes. When this was pointed out by the Solicitor General, PICOP changed its
designation of the 1969 Document from "Presidential Warranty" or "government
warranty" in all its pleadings prior to our Decision, to "contract with warranty" in its
Motion for Reconsideration. This, however, is belied by the statements in the 29 July
1969 Document, which refers to itself as "this warranty."

Re: Allegation That There Were Mutual Contract Considerations

Had the 29 July 1969 Document been intended as a contract, it could have easily said
so. More importantly, it could have clearly defined the mutual considerations of the
parties thereto. It could have also easily provided for the sanctions for the breach of the
mutual considerations specified therein. PICOP had vigorously argued that the 1969
Document was a contract because of these mutual considerations, apparently referring
to the following paragraph of the 1969 Document:

We are made to understand that your company is committed to support the first large
scale integrated wood processing complex hereinafter called: "The Project") and that
such support will be provided not only in the form of the supply of pulpwood and other
wood materials from your concession but also by making available funds generated out
of your own operations, to supplement PICOP’s operational surces (sic) of funds and
other financial arrangements made by him. In order that your company may provide
such support effectively, it is understood that you will call upon your stockholders to take
such steps as may be necessary to effect a unification of managerial, technical,
economic and manpower resources between your company and PICOP.1avvphi1

This provision hardly evinces a contract consideration (which, in PICOP’s interpretation,

is in exchange for the exclusive and perpetual tenure over 121,587 hectares of forest
land and 21,580 hectares of alienable and disposable lands). As elucidated by PICOP
itself in bringing up the Investment Incentives Act which we shall discuss later, and as
shown by the tenor of the 1969 Document, the latter document was more of a
conferment of an incentive for BBLCI’s investment rather than a contract creating
mutual obligations on the part of the government, on one hand, and BBLCI, on the
other. There was no stipulation providing for sanctions for breach if BBLCI’s being
"committed to support the first large scale integrated wood processing complex"
remains a commitment. Neither did the 1969 Document give BBLCI a period within
which to pursue this commitment.

According to Article 1350 of the Civil Code, "(i)n onerous contracts the cause is
understood to be, for each contracting party, the prestation or promise of a thing or
service by the other."48 Private investments for one’s businesses, while indeed
eventually beneficial to the country and deserving to be given incentives, are still
principally and predominantly for the benefit of the investors. Thus, the "mutual" contract
considerations by both parties to this alleged contract would be both for the benefit of
one of the parties thereto, BBLCI, which is not obligated by the 1969 Document to
surrender a share in its proceeds any more than it is already required by its TLA and by
the tax laws.

PICOP’s argument that its investments can be considered as contract consideration

derogates the rule that "a license or a permit is not a contract between the sovereignty
and the licensee or permittee, and is not a property in the constitutional sense, as to
which the constitutional proscription against the impairment of contracts may extend."
All licensees obviously put up investments, whether they are as small as a tricycle unit
or as big as those put up by multi-billion-peso corporations. To construe these
investments as contract considerations would be to abandon the foregoing rule, which
would mean that the State would be bound to all licensees, and lose its power to revoke
or amend these licenses when public interest so dictates.

The power to issue licenses springs from the State’s police power, known as "the most
essential, insistent and least limitable of powers, extending as it does to all the great
public needs."49 Businesses affecting the public interest, such as the operation of public
utilities and those involving the exploitation of natural resources, are mandated by law to
acquire licenses. This is so in order that the State can regulate their operations and
thereby protect the public interest. Thus, while these licenses come in the form of
"agreements," e.g., "Timber License Agreements," they cannot be considered contracts
under the non-impairment clause.50

PICOP found this argument "lame," arguing, thus:

43. It is respectfully submitted that the aforesaid pronouncement in the Decision is an

egregious and monumental error.
44. The Decision could not dismiss as "preposterous" the mutual covenants in the
Presidential Warranty which calls for a huge investment of Php500 million at that time in
1969 out of which Php268,440,000 raised from domestic foreign lending institution to
establish the first large scale integrated wood processing complex in the Philippines.

45. The Decision puts up a lame explanation that "all licensees put up investments in
pursuing their business"

46. Now there are about a hundred timber licenses issued by the Government thru the
DENR, but these are ordinary timber licenses which involve the mere cutting of timber in
the concession area, and nothing else. Records in the DENR shows that no timber
licensee has put up an integrated large wood processing complex in the Philippines
except PICOP.51

PICOP thus argues on the basis of quantity, and wants us to distinguish between the
investment of the tricycle driver and that of the multi-billion corporation. However, not
even billions of pesos in investment can change the fact that natural resources and,
therefore, public interest are involved in PICOP’s venture, consequently necessitating
the full control and supervision by the State as mandated by the Constitution. Not even
billions of pesos in investment can buy forest lands, which is practically what PICOP is
asking for by interpreting the 1969 Document as a contract giving it perpetual and
exclusive possession over such lands. Among all TLA holders in the Philippines, PICOP
has, by far, the largest concession area at 143,167 hectares, a land area more than the
size of two Metro Manilas.52 How can it not expect to also have the largest investment?

Investment Incentives Act

PICOP then claims that the contractual nature of the 1969 Document was brought about
by its issuance in accordance with and pursuant to the Investment Incentives Act.
According to PICOP:

The conclusion in the Decision that to construe PICOP’s investments as a consideration

in a contract would be to stealthily render ineffective the principle that a license is not a
contract between the sovereignty and the licensee is so flawed since the contract with
the warranty dated 29 July 1969 was issued by the Government in accordance with and
pursuant to Republic Act No. 5186, otherwise known as "The Investment Incentives
Act."53

PICOP then proceeds to cite Sections 2 and 4(d) and (e) of said act:

Section 2. Declaration of Policy – To accelerate the sound development of the national

economy in consonance with the principles and objectives of economic nationalism, and
in pursuance of a planned, economically feasible and practicable dispersal of industries,
under conditions which will encourage competition and discharge monopolies, it is
hereby declared to be the policy of the state to encourage Filipino and foreign
investments, as hereinafter set out, in projects to develop agricultural, mining and
manufacturing industries which increase national income most at the least cost,
increase exports, bring about greater economic stability, provide more opportunities for
employment, raise the standards of living of the people, and provide for an equitable
distribution of wealth. It is further declared to be the policy of the state to welcome and
encourage foreign capital to establish pioneer enterprises that are capital intensive and
would utilize a substantial amount of domestic raw materials, in joint venture with
substantial Filipino capital, whenever available.
Section 4. Basic Rights and Guarantees. – All investors and enterprises are entitled to
the basic rights and guarantees provided in the constitution. Among other rights
recognized by the Government of the Philippines are the following:

xxxx

d) Freedom from Expropriation. – There shall be no expropriation by the government of

the property represented by investments or of the property of enterprises except for
public use or in the interest of national welfare and defense and upon payment of just
compensation. x x x.

e) Requisition of Investment. – There shall be no requisition of the property represented

by the investment or of the property of enterprises, except in the event of war or national
emergency and only for the duration thereof. Just compensation shall be determined
and paid either at the time of requisition or immediately after cessation of the state of
war or national emergency. Payments received as compensation for the requisitioned
property may be remitted in the currency in which the investment was originally made
and at the exchange rate prevailing at the time of remittance, subject to the provisions
of Section seventy-four of republic Act Numbered Two hundred sixty-five.

Section 2 speaks of the policy of the State to encourage Filipino and foreign
investments. It does not speak of how this policy can be implemented. Implementation
of this policy is tackled in Sections 5 to 12 of the same law, 54 which PICOP failed to
mention, and for a good reason. None of the 24 incentives enumerated therein relates
to, or even remotely suggests that, PICOP’s proposition that the 1969 Document is a
contract.

PICOP could indeed argue that the enumeration is not exclusive. Certainly, granting
incentives to investors, whether included in the enumeration or not, would be an
implementation of this policy. However, it is presumed that whatever incentives may be
given to investors should be within the bounds of the laws and the Constitution. The
declaration of policy in Section 2 cannot, by any stretch of the imagination, be read to
provide an exception to either the laws or, heaven forbid, the Constitution. Exceptions
are never presumed and should be convincingly proven. Section 2 of the Investment
Incentives Act cannot be read as exempting investors from the Constitutional provisions
(1) prohibiting private ownership of forest lands; (2) providing for the complete control
and supervision by the State of exploitation activities; or (3) limiting exploitation
agreements to twenty-five years, renewable for another twenty-five years.

Section 4(d) and (e), on the other hand, is a recognition of rights already guaranteed
under the Constitution. Freedom from expropriation is granted under Section 9 of Article
III55 of the Constitution, while the provision on requisition is a negative restatement of
Section 6, Article XII.56

Refusal to grant perpetual and exclusive possession to PICOP of its concession area
would not result in the expropriation or requisition of PICOP’s property, as these forest
lands belong to the State, and not to PICOP. This is not changed by PICOP’s allegation
that:

Since it takes 35 years before the company can go back and harvest their residuals in a
logged-over area, it must be assured of tenure in order to provide an inducement for the
company to manage and preserve the residuals during their growth period. This is a
commitment of resources over a span of 35 years for each plot for each cycle. No
company will undertake the responsibility and cost involved in policing, preserving and
managing residual forest areas until it were sure that it had firm title to the timber.57

The requirement for logging companies to preserve and maintain forest areas, including
the reforestation thereof, is one of the prices a logging company must pay for the
exploitation thereof. Forest lands are meant to be enjoyed by countless future
generations of Filipinos, and not just by one logging company. The requirements of
reforestation and preservation of the concession areas are meant to protect them, the
future generations, and not PICOP. Reforestation and preservation of the concession
areas are not required of logging companies so that they would have something to cut
again, but so that the forest would remain intact after their operations. That PICOP
would not accept the responsibility to preserve its concession area if it is not assured of
tenure thereto does not speak well of its corporate policies.

Conclusion

In sum, PICOP was not able to prove either of the two things it needed to prove to be
entitled to a Writ of Mandamus against the DENR Secretary. The 1969 Document is not
a contract recognized under the non-impairment clause and, even if we assume for the
sake of argument that it is, it did not enjoin the government to issue an IFMA in 2002
either. These are the essential elements in PICOP’s cause of action, and the failure to
prove the same warrants a dismissal of PICOP’s Petition for Mandamus, as not even
PICOP’s compliance with all the administrative and statutory requirements can save its
Petition now.

Whether PICOP Has Complied with the Statutory and Administrative Requirements for
the Conversion of the TLA to an IFMA

In the assailed Decision, our ruling was based on two distinct grounds, each one being
sufficient in itself for us to rule that PICOP was not entitled to a Writ of Mandamus: (1)
the 1969 Document, on which PICOP hinges its right to compel the issuance of an
IFMA, is not a contract; and (2) PICOP has not complied with all administrative and
statutory requirements for the issuance of an IFMA.

When a court bases its decision on two or more grounds, each is as authoritative as the
other and neither is obiter dictum.58 Thus, both grounds on which we based our ruling in
the assailed Decision would become judicial dictum, and would affect the rights and
interests of the parties to this case unless corrected in this Resolution on PICOP’s
Motion for Reconsideration. Therefore, although PICOP would not be entitled to a Writ
of Mandamus even if the second issue is resolved in its favor, we should nonetheless
resolve the same and determine whether PICOP has indeed complied with all
administrative and statutory requirements for the issuance of an IFMA.

While the first issue (on the nature of the 1969 Document) is entirely legal, this second
issue (on PICOP’s compliance with administrative and statutory requirements for the
issuance of an IFMA) has both legal and factual sub-issues. Legal sub-issues include
whether PICOP is legally required to (1) consult with and acquire an approval from the
Sanggunian concerned under Sections 26 and 27 of the Local Government Code; and
(2) acquire a Certification from the National Commission on Indigenous Peoples (NCIP)
that the concession area does not overlap with any ancestral domain. Factual sub-
issues include whether, at the time it filed its Petition for Mandamus, PICOP had
submitted the required Five-Year Forest Protection Plan and Seven-Year Reforestation
Plan and whether PICOP had paid all forest charges.
For the factual sub-issues, PICOP invokes the doctrine that factual findings of the trial
court, especially when upheld by the Court of Appeals, deserve great weight. However,
deserving of even greater weight are the factual findings of administrative agencies that
have the expertise in the area of concern. The contentious facts in this case relate to
the licensing, regulation and management of forest resources, the determination of
which belongs exclusively to the DENR:

SECTION 4. Mandate. – The Department shall be the primary government agency

responsible for the conservation, management, development and proper use of the
country’s environment and natural resources, specifically forest and grazing lands,
mineral resources, including those in reservation and watershed areas, and lands of the
public domain, as well as the licensing and regulation of all natural resources as may be
provided for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of Filipinos. 59

When parties file a Petition for Certiorari against judgments of administrative agencies
tasked with overseeing the implementation of laws, the findings of such administrative
agencies are entitled to great weight. In the case at bar, PICOP could not have filed a
Petition for Certiorari, as the DENR Secretary had not yet even determined whether
PICOP should be issued an IFMA. As previously mentioned, when PICOP’s application
was brought to a standstill upon the evaluation that PICOP had yet to comply with the
requirements for the issuance of an IFMA, PICOP refused to attend further meetings
with the DENR and instead filed a Petition for Mandamus against the latter. By jumping
the gun, PICOP did not diminish the weight of the DENR Secretary’s initial
determination.

Forest Protection and Reforestation Plans

The Performance Evaluation Team tasked to appraise PICOP’s performance on its TLA
No. 43 found that PICOP had not submitted its Five-Year Forest Protection Plan and its
Seven-Year Reforestation Plan.60

In its Motion for Reconsideration, PICOP asserts that, in its Letter of Intent dated 28
August 2000 and marked as Exhibit L in the trial court, there was a reference to a Ten-
Year Sustainable Forest Management Plan (SFMP), in which a Five-Year Forest
Protection Plan and a Seven-Year Reforestation Plan were allegedly incorporated.
PICOP submitted a machine copy of a certified photocopy of pages 50-67 and 104-110
of this SFMP in its Motion for Reconsideration. PICOP claims that the existence of this
SFMP was repeatedly asserted during the IFMA application process. 61

Upon examination of the portions of the SFMP submitted to us, we cannot help but
notice that PICOP’s concept of forest protection is the security of the area against
"illegal" entrants and settlers. There is no mention of the protection of the wildlife
therein, as the focus of the discussion of the silvicultural treatments and the SFMP itself
is on the protection and generation of future timber harvests. We are particularly
disturbed by the portions stating that trees of undesirable quality shall be removed.

However, when we required the DENR Secretary to comment on PICOP’s Motion for
Reconsideration, the DENR Secretary did not dispute the existence of this SFMP, or
question PICOP’s assertion that a Ten-Year Forest Protection Plan and a Ten-Year
Reforestation Plan are already incorporated therein. Hence, since the agency tasked to
determine compliance with IFMA administrative requirements chose to remain silent in
the face of allegations of compliance, we are constrained to withdraw our
pronouncement in the assailed Decision that PICOP had not submitted a Five-Year
Forest Protection Plan and a Seven-Year Reforestation Plan for its TLA No. 43. As
previously mentioned, the licensing, regulation and management of forest resources are
the primary responsibilities of the DENR.62

The compliance discussed above is, of course, only for the purpose of determining
PICOP’s satisfactory performance as a TLA holder, and covers a period within the
subsistence of PICOP’s TLA No. 43. This determination, therefore, cannot prohibit the
DENR from requiring PICOP, in the future, to submit proper forest protection and
reforestation plans covering the period of the proposed IFMA.

Forest Charges

In determining that PICOP did not have unpaid forest charges, the Court of Appeals
relied on the assumption that if it were true that PICOP had unpaid forest charges, it
should not have been issued an approved Integrated Annual Operation Plan (IAOP) for
the year 2001-2002 by Secretary Alvarez himself.63

In the assailed Decision, we held that the Court of Appeals had been selective in its
evaluation of the IAOP, as it disregarded the part thereof that shows that the IAOP was
approved subject to several conditions, not the least of which was the submission of
proof of the updated payment of forest charges from April 2001 to June 2001. 64 We also
held that even if we considered for the sake of argument that the IAOP should not have
been issued if PICOP had existing forestry accounts, the issuance of the IAOP could
not be considered proof that PICOP had paid the same. Firstly, the best evidence of
payment is the receipt thereof. PICOP has not presented any evidence that such
receipts were lost or destroyed or could not be produced in court. 65 Secondly, the
government cannot be estopped by the acts of its officers. If PICOP has been issued an
IAOP in violation of the law, allegedly because it may not be issued if PICOP had
existing forestry accounts, the government cannot be estopped from collecting such
amounts and providing the necessary sanctions therefor, including the withholding of
the IFMA until such amounts are paid.

We therefore found that, as opposed to the Court of Appeals’ findings, which were
based merely on estoppel of government officers, the positive and categorical evidence
presented by the DENR Secretary was more convincing with respect to the issue of
payment of forestry charges:

1. Forest Management Bureau (FMB) Senior Forest Management Specialist (SFMS)

Ignacio M. Evangelista testified that PICOP had failed to pay its regular forest charges
covering the period from 22 September 2001 to 26 April 2002 in the total amount of
₱15,056,054.0566 PICOP also allegedly paid late most of its forest charges from 1996
onwards, by reason of which, PICOP is liable for a surcharge of 25% per annum on the
tax due and interest of 20% per annum which now amounts to
₱150,169,485.02.67 Likewise, PICOP allegedly had overdue and unpaid silvicultural
fees in the amount of ₱2,366,901.00 as of 30 August 2002.68 Summing up the
testimony, therefore, it was alleged that PICOP had unpaid and overdue forest charges
in the sum of ₱167,592,440.90 as of 10 August 2002.69

2. Collection letters were sent to PICOP, but no official receipts are extant in the DENR
record in Bislig City evidencing payment of the overdue amount stated in the said
collection letters.70 There were no official receipts for the period covering 22 September
2001 to 26 April 2002.
We also considered these pieces of evidence more convincing than the other ones
presented by PICOP:

1. PICOP presented the certification of Community Environment and Natural Resources

Office (CENRO) Officer Philip A. Calunsag, which refers only to PICOP’s alleged
payment of regular forest charges covering the period from 14 September 2001 to 15
May 2002.71 We noted that it does not mention similar payment of the penalties,
surcharges and interests that PICOP incurred in paying late several forest charges,
which fact was not rebutted by PICOP.

2. The 27 May 2002 Certification by CENRO Calunsag specified only the period
covering 14 September 2001 to 15 May 2002 and the amount of P53,603,719.85 paid
by PICOP without indicating the corresponding volume and date of production of the
logs. This is in contrast to the findings of SFMS Evangelista, which cover the period
from CY 1996 to 30 August 2002 and includes penalties, interests, and surcharges for
late payment pursuant to DAO 80, series of 1987.

3. The 21 August 2002 PICOP-requested certification issued by Bill Collector Amelia D.

Arayan, and attested to by CENRO Calunsag himself, shows that PICOP paid only
regular forest charges for its log production covering 1 July 2001 to 21 September 2001.
However, there were log productions after 21 September 2001, the regular forest
charges for which have not been paid, amounting to ₱15,056,054.05. 72 The same
certification shows delayed payment of forest charges, thereby corroborating the
testimony of SFMS Evangelista and substantiating the imposition of penalties and
surcharges.

In its Motion for Reconsideration, PICOP claims that SFMS Evangelista is assigned to
an office that has nothing to do with the collection of forest charges, and that he based
his testimony on the Memoranda of Forest Management Specialist II (FMS II) Teofila
Orlanes and DENR, Bislig City Bill Collector Amelia D. Arayan, neither of whom was
presented to testify on his or her Memorandum. PICOP also submitted an Addendum to
Motion for Reconsideration, wherein it appended certified true copies of CENRO
Summaries with attached Official Receipts tending to show that PICOP had paid a total
of ₱81,184,747.70 in forest charges for 10 January 2001 to 20 December 2002,
including the period during which SFMS Evangelista claims PICOP did not pay forest
charges (22 September 2001 to 26 April 2002).

Before proceeding any further, it is necessary for us to point out that, as with our ruling
on the forest protection and reforestation plans, this determination of compliance with
the payment of forest charges is exclusively for the purpose of determining PICOP’s
satisfactory performance on its TLA No. 43. This cannot bind either party in a possible
collection case that may ensue.

An evaluation of the DENR Secretary’s position on this matter shows a heavy reliance
on the testimony of SFMS Evangelista, making it imperative for us to strictly scrutinize
the same with respect to its contents and admissibility.

PICOP claims that SFMS Evangelista’s office has nothing to do with the collection of
forest charges. According to PICOP, the entity having administrative jurisdiction over it
is CENRO, Bislig City by virtue of DENR Administrative Order No. 96-36, dated 20
November 1996, which states:
1. In order for the DENR to be able to exercise closer and more effective supervision,
management and control over the forest resources within the areas covered by TLA No.
43, PTLA No. 47 and IFMA No. 35 of the PICOP Resources, Inc., (PRI) and, at the
same time, provide greater facility in the delivery of DENR services to various publics,
the aforesaid forest holdings of PRI are hereby placed under the exclusive jurisdiction of
DENR Region No. XIII with the CENR Office at Bislig, Surigao del Sur, as directly
responsible thereto. x x x.

We disagree. Evangelista is an SFMS assigned at the Natural Forest Management

Division of the FMB, DENR. In Evangelista’s aforementioned affidavit submitted as part
of his direct examination, Evangelista enumerated his duties and functions as SFMS:

1. As SFMS, I have the following duties and functions:

a) To evaluate and act on cases pertaining to forest management referred to in the

Natural forest Management Division;

b) To monitor, verify and validate forest management and related activities by timber
licences as to their compliance to approved plans and programs;

c) To conduct investigation and verification of compliance by timber licenses/permittees

to existing DENR rules and regulations;

d) To gather field data and information to be used in the formulation of forest policies
and regulations; and

e) To perform other duties and responsibilities as may be directed by superiors.73

PICOP also alleges that the testimony of SFMS Evangelista was based on the
aforementioned Memoranda of Orlanes and Arayan and that, since neither Orlanes nor
Arayan was presented as a witness, SFMS Evangelista’s testimony should be deemed
hearsay. SFMS Evangelista’s 1 October 2002 Affidavit,74 which was offered as part of
his testimony, provides:

2. Sometime in September, 2001 the DENR Secretary was furnished a copy of forest
Management Specialist II (FMS II) Teofila L. Orlanes’ Memorandum dated September
24, 2001 concerning unopaid forest charges of PICOP. Attached to the said
Memorandum was a Memorandum dated September 19, 2001 of Amelia D. Arayan, Bill
collector of the DENR R13-14, Bislig City. Copies of the said Memoranda are attached
as Annexes 1 and 2, respectively.

3. The said Memoranda were referred to the FMB Director for appropriate action.

4. Thus, on August 5, 2002, I was directed by the FMB Director to proceed to Region 13
to gather forestry-related data and validate the report contained in the Memoranda of
Ms. Orlanes and Arayan.

5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig City. A copy of my

Travel Order is attached as Annex 3.

6. Upon my arrival at CENRO, Bislig, surigao del Sur, I coordinated with CENRO Officer
Philip A. Calunsag and requested him to make available to me the records regarding
the forest products assessments of PICOP.

7. After I was provided with the requested records, I evaluated and collected the data.
8. After the evaluation, I found that the unpaid forest charges adverted to in the
Memoranda of Mr. Orlanes and Arayan covering the period from May 8, 2001 to July 7,
2001 had already been paid but late. I further found out that PICOP had not paid its
forest charges covering the period from September 22, 2001 to April 26, 2002 in the
total amount of ₱15,056,054.05.

9. I also discovered that from 1996 up to august 30, 2002, PICOP paid late some of its
forest charges in 1996 and consistently failed to pay late its forest charges from 1997 up
to the present time.

10. Under Section 7.4 of DAO No. 80 Series of 197\87 and Paragraph (4a), Section 10
of BIR revenue Regulations No. 2-81 dated November 18, 1980, PICOP is mandated to
pay a surcharge of 25% per annum of the tax due and interest of 20% per annum for
late payment of forest charges.

11. The overdue unpaid forest charges of PICOP as shown in the attached tabulation
marked as Annex 4 hereof is ₱150,169,485.02. Likewise, PICOP has overdue and
unpaid silvicultural fees in the amount of ₱2,366,901.00 from 1996 to the present.

12. In all, PICOP has an outstanding and overdue total obligation of ₱167,592,440.90
as of August 30, 2002 based on the attached tabulation which is marked as Annex 5
hereof.75

Clearly, SFMS Evangelista had not relied on the Memoranda of Orlanes and Arayan.
On the contrary, he traveled to Surigao del Sur in order to verify the contents of these
Memoranda. SFMS Evangelista, in fact, revised the findings therein, as he discovered
that certain forest charges adverted to as unpaid had already been paid.

This does not mean, however, that SFMS Evangelista’s testimony was not hearsay. A
witness may testify only on facts of which he has personal knowledge; that is, those
derived from his perception, except in certain circumstances allowed by the
Rules.76 Otherwise, such testimony is considered hearsay and, hence, inadmissible in
evidence.77

SFMS Evangelista, while not relying on the Memoranda of Orlanes and Arayan,
nevertheless relied on records, the preparation of which he did not participate
in.78 These records and the persons who prepared them were not presented in court,
either. As such, SFMS Evangelista’s testimony, insofar as he relied on these records,
was on matters not derived from his own perception, and was, therefore, hearsay.

Section 44, Rule 130 of the Rules of Court, which speaks of entries in official records as
an exception to the hearsay rule, cannot excuse the testimony of SFMS Evangelista.
Section 44 provides:

SEC. 44. Entries in official records. – Entries in official records made in the performance
of his duty by a public officer of the Philippines, or by a person in the performance of a
duty specially enjoined by law, are prima facie evidence of the facts therein stated.

In Africa v. Caltex,79 we enumerated the following requisites for the admission of entries
in official records as an exception to the hearsay rule: (1) the entries were made by a
public officer or a private person in the performance of a duty; (2) the performance of
the duty is especially enjoined by law; (3) the public officer or the private person had
sufficient knowledge of the facts stated by him, which must have been acquired by him
personally or through official information.
The presentation of the records themselves would, therefore, have been admissible as
an exception to the hearsay rule even if the public officer/s who prepared them
was/were not presented in court, provided the above requisites could be adequately
proven. In the case at bar, however, neither the records nor the persons who prepared
them were presented in court. Thus, the above requisites cannot be sufficiently proven.
Also, since SFMS Evangelista merely testified based on what those records contained,
his testimony was hearsay evidence twice removed, which was one step too many to be
covered by the official-records exception to the hearsay rule.

SFMS Evangelista’s testimony of nonpayment of forest charges was, furthermore,

based on his failure to find official receipts corresponding to billings sent to PICOP. As
stated above, PICOP attached official receipts in its Addendum to Motion for
Reconsideration to this Court. While this course of action is normally irregular in judicial
proceedings, we merely stated in the assailed Decision that "the DENR Secretary has
adequately proven that PICOP has, at this time, failed to comply with administrative and
statutory requirements for the conversion of TLA No. 43 into an IFMA," 80 and that "this
disposition confers another chance to comply with the foregoing requirements." 81

In view of the foregoing, we withdraw our pronouncement that PICOP has unpaid
forestry charges, at least for the purpose of determining compliance with the IFMA
requirements.

NCIP Certification

The Court of Appeals held that PICOP need not comply with Section 59 of Republic Act
No. 8371, which requires prior certification from the NCIP that the areas affected do not
overlap with any ancestral domain before any IFMA can be entered into by the
government. According to the Court of Appeals, Section 59 should be interpreted to
refer to ancestral domains that have been duly established as such by the continuous
possession and occupation of the area concerned by indigenous peoples since time
immemorial up to the present. The Court of Appeals held that PICOP had acquired
property rights over TLA No. 43 areas, being in exclusive, continuous and uninterrupted
possession and occupation of these areas since 1952 up to the present.

In the assailed Decision, we reversed the findings of the Court of Appeals. Firstly, the
Court of Appeals ruling defies the settled jurisprudence we have mentioned earlier, that
a TLA is neither a property nor a property right, and that it does not create a vested
right.82

Secondly, the Court of Appeals’ resort to statutory construction is misplaced, as Section

59 of Republic Act No. 8379 is clear and unambiguous:

SEC. 59. Certification Precondition. – All departments and other governmental agencies
shall henceforth be strictly enjoined from issuing, renewing or granting any concession,
license or lease, or entering into any production-sharing agreement, without prior
certification from the NCIP that the area affected does not overlap with any ancestral
domain. Such certification shall only be issued after a field-based investigation is
conducted by the Ancestral Domains Office of the area concerned: Provided, That no
certification shall be issued by the NCIP without the free and prior informed and written
consent of the ICCs/IPs concerned: Provided, further, That no department, government
agency or government-owned or controlled corporation may issue new concession,
license, lease, or production sharing agreement while there is a pending application for
a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend, in
accordance with this Act, any project that has not satisfied the requirement of this
consultation process.

PICOP had tried to put a cloud of ambiguity over Section 59 of Republic Act No. 8371
by invoking the definition of Ancestral Domains in Section 3(a) thereof, wherein the
possesssion by Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) must
have been continuous to the present. However, we noted the exception found in the
very same sentence invoked by PICOP:

a) Ancestral domains – Subject to Section 56 hereof, refers to all areas generally

belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural
resources therein, held under a claim of ownership, occupied or possessed by
ICCs/IPs, by themselves or through their ancestors, communally or individually since
time immemorial, continuously to the present except when interrupted by war, force
majeure or displacement by force, deceit, stealth or as a consequence of government
projects or any other voluntary dealings entered into by government and private
individuals/corporations, and which are necessary to ensure their economic, social and
cultural welfare. It shall include ancestral lands, forests, pasture, residential, agricultural,
and other lands individually owned whether alienable and disposable or otherwise,
hunting grounds, burial grounds, worship areas, bodies of water, mineral and other
natural resources, and lands which may no longer be exclusively occupied by ICCs/IPs
but from which they traditionally had access to for their subsistence and traditional
activities, particularly the home ranges of ICCs/IPs who are still nomadic and/or shifting
cultivators;

Ancestral domains, therefore, remain as such even when possession or occupation of

these areas has been interrupted by causes provided under the law, such as voluntary
dealings entered into by the government and private individuals/corporations.
Consequently, the issuance of TLA No. 43 in 1952 did not cause the ICCs/IPs to lose
their possession or occupation over the area covered by TLA No. 43.

Thirdly, we held that it was manifestly absurd to claim that the subject lands must first
be proven to be part of ancestral domains before a certification that the lands are not
part of ancestral domains can be required, and invoked the separate opinion of now
Chief Justice Reynato Puno in Cruz v. Secretary of DENR83:

As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a precondition for the
issuance of any concession, license or agreement over natural resources, that a
certification be issued by the NCIP that the area subject of the agreement does not lie
within any ancestral domain. The provision does not vest the NCIP with power over the
other agencies of the State as to determine whether to grant or deny any concession or
license or agreement. It merely gives the NCIP the authority to ensure that the ICCs/IPs
have been informed of the agreement and that their consent thereto has been obtained.
Note that the certification applies to agreements over natural resources that do not
necessarily lie within the ancestral domains. For those that are found within the said
domains, Sections 7(b) and 57 of the IPRA apply.

PICOP rejects the entire disposition of this Court on the matter, relying on the following
theory:

84. It is quite clear that Section 59 of R.A. 8371 does not apply to the automatic
conversion of TLA 43 to IFMA.
First, the automatic conversion of TLA 43 to an IFMA is not a new project. It is a mere
continuation of the harvesting process in an area that PICOP had been managing,
conserving and reforesting for the last 50 years since 1952. Hence any pending
application for a CADT within the area, cannot affect much less hold back the automatic
conversion. That the government now wishes to change the tenurial system to an IFMA
could not change the PICOP project, in existence and operating for the last 30 (sic)
years, into a new one.84

PICOP’s position is anything but clear. What is clearly provided for in Section 59 is that
it covers "issuing, renewing or granting (of) any concession, license or lease, or entering
into any production sharing agreement." PICOP is implying that, when the government
changed the tenurial system to an IFMA, PICOP’s existing TLA would just be upgraded
or modified, but would be the very same agreement, hence, dodging the inclusion in the
word "renewing." However, PICOP is conveniently leaving out the fact that its TLA
expired in 2002. If PICOP really intends to pursue the argument that the conversion of
the TLA into an IFMA would not create a new agreement, but would only be a
modification of the old one, then it should be willing to concede that the IFMA expired as
well in 2002. An automatic modification would not alter the terms and conditions of the
TLA except when they are inconsistent with the terms and conditions of an IFMA.
Consequently, PICOP’s concession period under the renewed TLA No. 43, which is
from the year 1977 to 2002, would remain the same.

PICOP cannot rely on a theory of the case whenever such theory is beneficial to it, but
refute the same whenever the theory is damaging to it. In the same way, PICOP cannot
claim that the alleged Presidential Warranty is "renewable for other 25 years" and later
on claim that what it is asking for is not a renewal. Extensions of agreements must
necessarily be included in the term renewal. Otherwise, the inclusion of "renewing" in
Section 59 would be rendered inoperative.

PICOP further claims:

85. Verily, in interpreting the term "held under claim of ownership," the Supreme Court
could not have meant to include claims that had just been filed and not yet recognized
under the provisions of DENR Administrative Order No. 2 Series of 1993, nor to any
other community / ancestral domain program prior to R.A. 8371.

xxxx

87. One can not imagine the terrible damage and chaos to the country, its economy, its
people and its future if a mere claim filed for the issuance of a CADC or CADT will
already provide those who filed the application, the authority or right to stop the renewal
or issuance of any concession, license or lease or any production-sharing agreement.
The same interpretation will give such applicants through a mere application the right to
stop or suspend any project that they can cite for not satisfying the requirements of the
consultation process of R.A. 8371. If such interpretation gets enshrined in the statures
of the land, the unscrupulous and the extortionists can put any ongoing or future project
or activity to a stop in any part of the country citing their right from having filed an
application for issuance of a CADC or CADT claim and the legal doctrine established by
the Supreme Court in this PICOP case.85

We are not sure whether PICOP’s counsels are deliberately trying to mislead us, or are
just plainly ignorant of basic precepts of law. The term "claim" in the phrase "claim of
ownership" is not a document of any sort. It is an attitude towards something. The
phrase "claim of ownership" means "the possession of a piece of property with the
intention of claiming it in hostility to the true owner." 86 It is also defined as "a party’s
manifest intention to take over land, regardless of title or right." 87 Other than in Republic
Act No. 8371, the phrase "claim of ownership" is thoroughly discussed in issues relating
to acquisitive prescription in Civil Law.

Before PICOP’s counsels could attribute to us an assertion that a mere attitude or

intention would stop the renewal or issuance of any concession, license or lease or any
production-sharing agreement, we should stress beforehand that this attitude or
intention must be clearly shown by overt acts and, as required by Section 3(a), should
have been in existence "since time immemorial, continuously to the present except
when interrupted by war, force majeure or displacement by force, deceit, stealth or as a
consequence of government projects or any other voluntary dealings entered into by
government and private individuals/corporations."

Another argument of PICOP involves the claim itself that there was no overlapping:

Second, there could be no overlapping with any Ancestral Domain as proven by the
evidence presented and testimonies rendered during the hearings in the Regional Trial
Court. x x x.

x x x x.

88. The DENR issued a total of 73 CADCs as of December 11, 1996. The DENR
Undersecretary for Field Operations had recommended another 11 applications for
issuance of CADCs. None of the CADCs overlap the TLA 43 area.

89. However former DENR Secretary Alvarez, in a memorandum dated 13 September,

2002 addressed to PGMA, insisted that PICOP had to comply with the requirement to
secure a Free and Prior Informed Concent because CADC 095 was issued covering
17,112 hectares of TLA 43.

90. This CADC 095 is a fake CADC and was not validly released by the DENR. While
the Legal Department of the DENR was still in the process of receiving the filings for
applicants and the oppositors to the CADC application, PICOP came across filed copies
of a CADC 095 with the PENRO of Davao Oriental as part of their application for a
Community Based Forest Management Agreement (CBFMA). Further research came
across the same group filing copies of the alleged CADC 095 with the Mines and
Geosciences Bureau in Davao City for a mining agreement application. The two
applications had two different versions of the CADCs second page. One had Mr. Romeo
T. Acosta signing as the Social reform Agenda Technical Action Officer, while the other
had him signing as the Head, Community-Based Forest Management Office. One had
the word "Eight" crossed out and "Seven" written to make it appear that the CADC was
issued on September 25, 1997, the other made it appear that there were no alterations
and the date was supposed to be originally 25 September 1997.

What is required in Section 59 of Republic Act No. 8379 is a Certification from the NCIP
that there was no overlapping with any Ancestral Domain. PICOP cannot claim that the
DENR gravely abused its discretion for requiring this Certification, on the ground that
there was no overlapping. We reiterate that it is manifestly absurd to claim that the
subject lands must first be proven to be part of ancestral domains before a certification
that they are not can be required. As discussed in the assailed Decision, PICOP did not
even seek any certification from the NCIP that the area covered by TLA No. 43, subject
of its IFMA conversion, did not overlap with any ancestral domain. 88

Sanggunian Consultation and Approval

While PICOP did not seek any certification from the NCIP that the former’s concession
area did not overlap with any ancestral domain, PICOP initially sought to comply with
the requirement under Sections 26 and 27 of the Local Government Code to procure
prior approval of the Sanggunians concerned. However, only one of the many provinces
affected approved the issuance of an IFMA to PICOP. Undaunted, PICOP nevertheless
submitted to the DENR the purported resolution89 of the Province of Surigao del Sur
indorsing the approval of PICOP’s application for IFMA conversion, apparently hoping
either that the disapproval of the other provinces would go unnoticed, or that the
Surigao del Sur approval would be treated as sufficient compliance.

Surprisingly, the disapproval by the other provinces did go unnoticed before the RTC
and the Court of Appeals, despite the repeated assertions thereof by the Solicitor
General. When we pointed out in the assailed Decision that the approval must be by all
the Sanggunians concerned and not by only one of them, PICOP changed its theory of
the case in its Motion for Reconsideration, this time claiming that they are not required
at all to procure Sanggunian approval.

Sections 2(c), 26 and 27 of the Local Government Code provide:

SEC. 2. x x x.

xxxx

(c) It is likewise the policy of the State to require all national agencies and offices to
conduct periodic consultations with appropriate local government units,
nongovernmental and people’s organizations, and other concerned sectors of the
community before any project or program is implemented in their respective
jurisdictions.

SEC. 26. Duty of National Government Agencies in the Maintenance of Ecological

Balance. – It shall be the duty of every national agency or government-owned or
controlled corporation authorizing or involved in the planning and implementation of any
project or program that may cause pollution, climatic change, depletion of non-
renewable resources, loss of crop land, rangeland, or forest cover, and extinction of
animal or plant species, to consult with the local government units, nongovernmental
organizations, and other sectors concerned and explain the goals and objectives of the
project or program, its impact upon the people and the community in terms of
environmental or ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.

SEC. 27. Prior Consultations Required. – No project or program shall be implemented

by government authorities unless the consultations mentioned in Sections 2(c) and 26
hereof are complied with, and prior approval of the sanggunian concerned is obtained:
Provided, That occupants in areas where such projects are to be implemented shall not
be evicted unless appropriate relocation sites have been provided, in accordance with
the provisions of the Constitution.

As stated in the assailed Decision, the common evidence of the DENR Secretary and
PICOP, namely, the 31 July 2001 Memorandum of Regional Executive Director (RED)
Elias D. Seraspi, Jr., enumerated the local government units and other groups which
had expressed their opposition to PICOP’s application for IFMA conversion:

7. During the conduct of the performance evaluation of TLA No. 43 issues complaints
against PRI were submitted thru Resolutions and letters. It is important that these are
included in this report for assessment of what are their worth, viz:

xxxx

7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council and
Barangay Tribal Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing the
conversion of TLA No. 43 into IFMA over the 17,112 hectares allegedly covered with
CADC No. 095.

7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan
Tribal Council of Elders (BBMTCE) strongly demanding none renewal of PICOP TLA.
They claim to be the rightful owner of the area it being their alleged ancestral land.

7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting
not to renew TLA 43 over the 900 hectares occupied by them.

7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao del
Sur not to grant the conversion of TLA 43 citing the plight of former employees of PRI
who were forced to enter and farm portion of TLA No. 43, after they were laid off.

7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the Sanguniang
Panglungsod of Bislig City (ANNEXES K & L) requesting to exclude the area of TLA No.
43 for watershed purposes.

7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang
Panglungsod of Bislig City opposing the conversion of TLA 43 to IFMA for the reason
that IFMA do not give revenue benefits to the City.90

PICOP had claimed that it complied with the Local Government Code requirement of
obtaining prior approval of the Sanggunian concerned by submitting a purported
resolution91 of the Province of Surigao del Sur indorsing the approval of PICOP’s
application for IFMA conversion. We ruled that this cannot be deemed sufficient
compliance with the foregoing provision. Surigao del Sur is not the only province
affected by the area covered by the proposed IFMA. As even the Court of Appeals
found, PICOP’s TLA No. 43 traverses the length and breadth not only of Surigao del Sur
but also of Agusan del Sur, Compostela Valley and Davao Oriental. 92

On Motion for Reconsideration, PICOP now argues that the requirement under Sections
26 and 27 does not apply to it:

97. PICOP is not a national agency. Neither is PICOP government owned or controlled.
Thus Section 26 does not apply to PICOP.

98. It is very clear that Section 27 refers to projects or programs to be implemented by

government authorities or government-owned and controlled corporations. PICOP’s
project or the automatic conversion is a purely private endevour. First the PICOP project
has been implemented since 1969. Second, the project was being implemented by
private investors and financial institutions.
99. The primary government participation is to warrant and ensure that the PICOP
project shall have peaceful tenure in the permanent forest allocated to provide raw
materials for the project. To rule now that a project whose foundations were
commenced as early as 1969 shall now be subjected to a 1991 law is to apply the law
retrospectively in violation of Article 4 of the Civil Code that laws shall not be applied
retroactively.

100. In addition, under DAO 30, Series of 1992, TLA and IFMA operations were not
among those devolved function from the National Government / DENR to the local
government unit. Under its Section 03, the devolved function cover only:

a) Community Based forestry projects.

b) Communal forests of less than 5000 hectares

c) Small watershed areas which are sources of local water supply.93

We have to remind PICOP again of the contents of Section 2, Article XII of 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.

All projects relating to the exploration, development and utilization of natural resources
are projects of the State. While the State 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 these citizens, such as PICOP, the
projects nevertheless remain as State projects and can never be purely private
endeavors.

Also, despite entering into co-production, joint venture, or production-sharing

agreements, the State remains in full control and supervision over such projects.
PICOP, thus, cannot limit government participation in the project to being merely its
bouncer, whose primary participation is only to "warrant and ensure that the PICOP
project shall have peaceful tenure in the permanent forest allocated to provide raw
materials for the project."

PICOP is indeed neither a national agency nor a government-owned or controlled

corporation. The DENR, however, is a national agency and is the national agency
prohibited by Section 27 from issuing an IFMA without the prior approval of the
Sanggunian concerned. As previously discussed, PICOP’s Petition for Mandamus can
only be granted if the DENR Secretary is required by law to issue an IFMA. We,
however, see here the exact opposite: the DENR Secretary was actually prohibited by
law from issuing an IFMA, as there had been no prior approval by all the other
Sanggunians concerned.

As regards PICOP’s assertion that the application to them of a 1991 law is in violation of
the prohibition against the non-retroactivity provision in Article 4 of the Civil Code, we
have to remind PICOP that it is applying for an IFMA with a term of 2002 to 2027.
Section 2, Article XII of the Constitution allows exploitation agreements to last only "for a
period not exceeding twenty-five years, renewable for not more than twenty-five years."
PICOP, thus, cannot legally claim that the project’s term started in 1952 and extends all
the way to the present.

Finally, the devolution of the project to local government units is not required before
Sections 26 and 27 would be applicable. Neither Section 26 nor 27 mentions such a
requirement. Moreover, it is not only the letter, but more importantly the spirit of
Sections 26 and 27, that shows that the devolution of the project is not required. The
approval of the Sanggunian concerned is required by law, not because the local
government has control over such project, but because the local government has the
duty to protect its constituents and their stake in the implementation of the project.
Again, Section 26 states that it applies to projects that "may cause pollution, climatic
change, depletion of non-renewable resources, loss of crop land, rangeland, or forest
cover, and extinction of animal or plant species." The local government should thus
represent the communities in such area, the very people who will be affected by
flooding, landslides or even climatic change if the project is not properly regulated, and
who likewise have a stake in the resources in the area, and deserve to be adequately
compensated when these resources are exploited.

Indeed, it would be absurd to claim that the project must first be devolved to the local
government before the requirement of the national government seeking approval from
the local government can be applied. If a project has been devolved to the local
government, the local government itself would be implementing the project. That the
local government would need its own approval before implementing its own project is
patently silly.

EPILOGUE AND DISPOSITION

PICOP’c cause of action consists in the allegation that the DENR Secretary, in not
issuing an IFMA, violated its constitutional right against non-impairment of contracts.
We have ruled, however, that the 1969 Document is not a contract recognized under
the non-impairment clause, much less a contract specifically enjoining the DENR
Secretary to issue the IFMA. The conclusion that the 1969 Document is not a contract
recognized under the non-impairment clause has even been disposed of in another
case decided by another division of this Court, PICOP Resources, Inc. v. Base Metals
Mineral Resources Corporation,94 the Decision in which case has become final and
executory. PICOP’s Petition for Mandamus should, therefore, fail.

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

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

WHEREFORE, the Motion for Reconsideration of PICOP Resources, Inc. is DENIED.

SO ORDERED.
G.R. No. 179987 September 3, 2013

HEIRS OF MARIO MALABANAN, (Represented by Sally A. Malabanan), Petitioners,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

RESOLUTION

BERSAMIN, J.:

For our consideration and resolution are the motions for reconsideration of the parties
who both assail the decision promulgated on April 29, 2009, whereby we upheld the
ruling of the Court of Appeals (CA) denying the application of the petitioners for the
registration of a parcel of land situated in Barangay Tibig, Silang, Cavite on the ground
that they had not established by sufficient evidence their right to the registration in
accordance with either Section 14(1) or Section 14(2) of Presidential Decree No. 1529
(Property Registration Decree).

Antecedents

The property subject of the application for registration is a parcel of land situated in
Barangay Tibig, Silang Cavite, more particularly identified as Lot 9864-A, Cad-452-D,
with an area of 71,324-square meters. On February 20, 1998, applicant Mario
Malabanan, who had purchased the property from Eduardo Velazco, filed an application
for land registration covering the property in the Regional Trial Court (RTC) in Tagaytay
City, Cavite, claiming that the property formed part of the alienable and disposable land
of the public domain, and that he and his predecessors-in-interest had been in open,
continuous, uninterrupted, public and adverse possession and occupation of the land for
more than 30 years, thereby entitling him to the judicial confirmation of his title. 1

To prove that the property was an alienable and disposable land of the public domain,
Malabanan presented during trial a certification dated June 11, 2001 issued by the
Community Environment and Natural Resources Office (CENRO) of the Department of
Environment and Natural Resources (DENR), which reads:

This is to certify that the parcel of land designated as Lot No. 9864 Cad 452-D, Silang
Cadastre as surveyed for Mr. Virgilio Velasco located at Barangay Tibig, Silang, Cavite
containing an area of 249,734 sq. meters as shown and described on the Plan Ap-04-
00952 is verified to be within the Alienable or Disposable land per Land Classification
Map No. 3013 established under Project No. 20-A and approved as such under FAO 4-
1656 on March 15, 1982.2

After trial, on December 3, 2002, the RTC rendered judgment granting Malabanan’s
application for land registration, disposing thusly:

WHEREFORE, this Court hereby approves this application for registration and thus
places under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as
Property Registration Law, the lands described in Plan Csd-04-0173123-D, Lot 9864-A
and containing an area of Seventy One Thousand Three Hundred Twenty Four (71,324)
Square Meters, as supported by its technical description now forming part of the record
of this case, in addition to other proofs adduced in the name of MARIO MALABANAN,
who is of legal age, Filipino, widower, and with residence at Munting Ilog, Silang, Cavite.
Once this Decision becomes final and executory, the corresponding decree of
registration shall forthwith issue.

SO ORDERED.3

The Office of the Solicitor General (OSG) appealed the judgment to the CA, arguing that
Malabanan had failed to prove that the property belonged to the alienable and
disposable land of the public domain, and that the RTC erred in finding that he had
been in possession of the property in the manner and for the length of time required by
law for confirmation of imperfect title.

On February 23, 2007, the CA promulgated its decision reversing the RTC and
dismissing the application for registration of Malabanan. Citing the ruling in Republic v.
Herbieto (Herbieto),4 the CA declared that under Section 14(1) of the Property
Registration Decree, any period of possession prior to the classification of the land as
alienable and disposable was inconsequential and should be excluded from the
computation of the period of possession. Noting that the CENRO-DENR certification
stated that the property had been declared alienable and disposable only on March 15,
1982, Velazco’s possession prior to March 15, 1982 could not be tacked for purposes of
computing Malabanan’s period of possession.

Due to Malabanan’s intervening demise during the appeal in the CA, his heirs elevated
the CA’s decision of February 23, 2007 to this Court through a petition for review on
certiorari.

The petitioners assert that the ruling in Republic v. Court of Appeals and Corazon
Naguit5 (Naguit) remains the controlling doctrine especially if the property involved is
agricultural land. In this regard, Naguit ruled that any possession of agricultural land
prior to its declaration as alienable and disposable could be counted in the reckoning of
the period of possession to perfect title under the Public Land Act (Commonwealth Act
No. 141) and the Property Registration Decree. They point out that the ruling in
Herbieto, to the effect that the declaration of the land subject of the application for
registration as alienable and disposable should also date back to June 12, 1945 or
earlier, was a mere obiter dictum considering that the land registration proceedings
therein were in fact found and declared void ab initio for lack of publication of the notice
of initial hearing.

The petitioners also rely on the ruling in Republic v. T.A.N. Properties, Inc. 6 to support
their argument that the property had been ipso jure converted into private property by
reason of the open, continuous, exclusive and notorious possession by their
predecessors-in-interest of an alienable land of the public domain for more than 30
years. According to them, what was essential was that the property had been
"converted" into private property through prescription at the time of the application
without regard to whether the property sought to be registered was previously classified
as agricultural land of the public domain.

As earlier stated, we denied the petition for review on certiorari because Malabanan
failed to establish by sufficient evidence possession and occupation of the property on
his part and on the part of his predecessors-in interest since June 12, 1945, or earlier.

Petitioners’ Motion for Reconsideration

In their motion for reconsideration, the petitioners submit that the mere classification of
the land as alienable or disposable should be deemed sufficient to convert it into
patrimonial property of the State. Relying on the rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and Republic v. T.A.N. Properties, Inc.,9 they argue that
the reclassification of the land as alienable or disposable opened it to acquisitive
prescription under the Civil Code; that Malabanan had purchased the property from
Eduardo Velazco believing in good faith that Velazco and his predecessors-in-interest
had been the real owners of the land with the right to validly transmit title and ownership
thereof; that consequently, the ten-year period prescribed by Article 1134 of the Civil
Code, in relation to Section 14(2) of the Property Registration Decree, applied in their
favor; and that when Malabanan filed the application for registration on February 20,
1998, he had already been in possession of the land for almost 16 years reckoned from
1982, the time when the land was declared alienable and disposable by the State.

The Republic’s Motion for Partial Reconsideration

The Republic seeks the partial reconsideration in order to obtain a clarification with
reference to the application of the rulings in Naguit and Herbieto.

Chiefly citing the dissents, the Republic contends that the decision has enlarged, by
implication, the interpretation of Section 14(1) of the Property Registration Decree
through judicial legislation. It reiterates its view that an applicant is entitled to
registration only when the land subject of the application had been declared alienable
and disposable since June 12, 1945 or earlier.

Ruling

We deny the motions for reconsideration.

In reviewing the assailed decision, we consider to be imperative to discuss the different

classifications of land in relation to the existing applicable land registration laws of the
Philippines.

Classifications of land according to ownership

Land, which is an immovable property,10 may be classified as either of public dominion

or of private ownership.11 Land is considered of public dominion if it either: (a) is
intended for public use; or (b) belongs to the State, without being for public use, and is
intended for some public service or for the development of the national wealth. 12 Land
belonging to the State that is not of such character, or although of such character but no
longer intended for public use or for public service forms part of the patrimonial property
of the State.13 Land that is other than part of the patrimonial property of the State,
provinces, cities and municipalities is of private ownership if it belongs to a private
individual.

Pursuant to the Regalian Doctrine (Jura Regalia), a legal concept first introduced into
the country from the West by Spain through the Laws of the Indies and the Royal
Cedulas,14 all lands of the public domain belong to the State.15 This means that the
State is the source of any asserted right to ownership of land, and is charged with the
conservation of such patrimony.16

All lands not appearing to be clearly under private ownership are presumed to belong to
the State. Also, public lands remain part of the inalienable land of the public domain
unless the State is shown to have reclassified or alienated them to private persons. 17
Classifications of public lands
according to alienability

Whether or not land of the public domain is alienable and disposable primarily rests on
the classification of public lands made under the Constitution. Under the 1935
Constitution,18 lands of the public domain were classified into three, namely, agricultural,
timber and mineral.19 Section 10, Article XIV of the 1973 Constitution classified lands of
the public domain into seven, specifically, agricultural, industrial or commercial,
residential, resettlement, mineral, timber or forest, and grazing land, with the reservation
that the law might provide other classifications. The 1987 Constitution adopted the
classification under the 1935 Constitution into agricultural, forest or timber, and mineral,
but added national parks.20 Agricultural lands may be further classified by law according
to the uses to which they may be devoted.21 The identification of lands according to their
legal classification is done exclusively by and through a positive act of the Executive
Department.22

Based on the foregoing, the Constitution places a limit on the type of public land that
may be alienated. Under Section 2, Article XII of the 1987 Constitution, only agricultural
lands of the public domain may be alienated; all other natural resources may not be.

Alienable and disposable lands of the State fall into two categories, to wit: (a)
patrimonial lands of the State, or those classified as lands of private ownership under
Article 425 of the Civil Code,23 without limitation; and (b) lands of the public domain, or
the public lands as provided by the Constitution, but with the limitation that the lands
must only be agricultural. Consequently, lands classified as forest or timber, mineral, or
national parks are not susceptible of alienation or disposition unless they are
reclassified as agricultural.24 A positive act of the Government is necessary to enable
such reclassification,25 and the exclusive prerogative to classify public lands under
existing laws is vested in the Executive Department, not in the courts. 26 If, however,
public land will be classified as neither agricultural, forest or timber, mineral or national
park, or when public land is no longer intended for public service or for the development
of the national wealth, thereby effectively removing the land from the ambit of public
dominion, a declaration of such conversion must be made in the form of a law duly
enacted by Congress or by a Presidential proclamation in cases where the President is
duly authorized by law to that effect.27 Thus, until the Executive Department exercises
its prerogative to classify or reclassify lands, or until Congress or the President declares
that the State no longer intends the land to be used for public service or for the
development of national wealth, the Regalian Doctrine is applicable.

Disposition of alienable public lands

Section 11 of the Public Land Act (CA No. 141) provides the manner by which alienable
and disposable lands of the public domain, i.e., agricultural lands, can be disposed of, to
wit:

Section 11. Public lands suitable for agricultural purposes can be disposed of only as
follows, and not otherwise:

(1) For homestead settlement;

(2) By sale;

(3) By lease; and

(4) By confirmation of imperfect or incomplete titles;

(a) By judicial legalization; or

(b) By administrative legalization (free patent).

The core of the controversy herein lies in the proper interpretation of Section 11(4), in
relation to Section 48(b) of the Public Land Act, which expressly requires possession by
a Filipino citizen of the land since June 12, 1945, or earlier, viz:

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

xxxx

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

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

Note that Section 48(b) of the Public Land Act used the words "lands of the public
domain" or "alienable and disposable lands of the public domain" to clearly signify that
lands otherwise classified, i.e., mineral, forest or timber, or national parks, and lands of
patrimonial or private ownership, are outside the coverage of the Public Land Act. What
the law does not include, it excludes. The use of the descriptive phrase "alienable and
disposable" further limits the coverage of Section 48(b) to only the agricultural lands of
the public domain as set forth in Article XII, Section 2 of the 1987 Constitution. Bearing
in mind such limitations under the Public Land Act, the applicant must satisfy the
following requirements in order for his application to come under Section 14(1) of the
Property Registration Decree,28 to wit:

1. The applicant, by himself or through his predecessor-in-interest, has been in

possession and occupation of the property subject of the application;

2. The possession and occupation must be open, continuous, exclusive, and notorious;

3. The possession and occupation must be under a bona fide claim of acquisition of
ownership;

4. The possession and occupation must have taken place since June 12, 1945, or
earlier; and

5. The property subject of the application must be an agricultural land of the public
domain.

Taking into consideration that the Executive Department is vested with the authority to
classify lands of the public domain, Section 48(b) of the Public Land Act, in relation to
Section 14(1) of the Property Registration Decree, presupposes that the land subject of
the application for registration must have been already classified as agricultural land of
the public domain in order for the provision to apply. Thus, absent proof that the land is
already classified as agricultural land of the public domain, the Regalian Doctrine
applies, and overcomes the presumption that the land is alienable and disposable as
laid down in Section 48(b) of the Public Land Act. However, emphasis is placed on the
requirement that the classification required by Section 48(b) of the Public Land Act is
classification or reclassification of a public land as agricultural.

The dissent stresses that the classification or reclassification of the land as alienable
and disposable agricultural land should likewise have been made on June 12, 1945 or
earlier, because any possession of the land prior to such classification or reclassification
produced no legal effects. It observes that the fixed date of June 12, 1945 could not be
minimized or glossed over by mere judicial interpretation or by judicial social policy
concerns, and insisted that the full legislative intent be respected.

We find, however, that the choice of June 12, 1945 as the reckoning point of the
requisite possession and occupation was the sole prerogative of Congress, the
determination of which should best be left to the wisdom of the lawmakers. Except that
said date qualified the period of possession and occupation, no other legislative intent
appears to be associated with the fixing of the date of June 12, 1945. Accordingly, the
Court should interpret only the plain and literal meaning of the law as written by the
legislators.

Moreover, an examination of Section 48(b) of the Public Land Act indicates that
Congress prescribed no requirement that the land subject of the registration should
have been classified as agricultural since June 12, 1945, or earlier. As such, the
applicant’s imperfect or incomplete title is derived only from possession and occupation
since June 12, 1945, or earlier. This means that the character of the property subject of
the application as alienable and disposable agricultural land of the public domain
determines its eligibility for land registration, not the ownership or title over it.

Alienable public land held by a possessor, either personally or through his

predecessors-in-interest, openly, continuously and exclusively during the prescribed
statutory period is converted to private property by the mere lapse or completion of the
period.29 In fact, by virtue of this doctrine, corporations may now acquire lands of the
public domain for as long as the lands were already converted to private ownership, by
operation of law, as a result of satisfying the requisite period of possession prescribed
by the Public Land Act.30 It is for this reason that the property subject of the application
of Malabanan need not be classified as alienable and disposable agricultural land of the
public domain for the entire duration of the requisite period of possession.

To be clear, then, the requirement that the land should have been classified as
alienable and disposable agricultural land at the time of the application for registration is
necessary only to dispute the presumption that the land is inalienable.

The declaration that land is alienable and disposable also serves to determine the point
at which prescription may run against the State. The imperfect or incomplete title being
confirmed under Section 48(b) of the Public Land Act is title that is acquired by reason
of the applicant’s possession and occupation of the alienable and disposable
agricultural land of the public domain. Where all the necessary requirements for a grant
by the Government are complied with through actual physical, open, continuous,
exclusive and public possession of an alienable and disposable land of the public
domain, the possessor is deemed to have acquired by operation of law not only a right
to a grant, but a grant by the Government, because it is not necessary that a certificate
of title be issued in order that such a grant be sanctioned by the courts.31

If one follows the dissent, the clear objective of the Public Land Act to adjudicate and
quiet titles to unregistered lands in favor of qualified Filipino citizens by reason of their
occupation and cultivation thereof for the number of years prescribed by law 32 will be
defeated. Indeed, we should always bear in mind that such objective still prevails, as a
fairly recent legislative development bears out, when Congress enacted legislation
(Republic Act No. 10023)33 in order to liberalize stringent requirements and procedures
in the adjudication of alienable public land to qualified applicants, particularly residential
lands, subject to area limitations.34

On the other hand, if a public land is classified as no longer intended for public use or
for the development of national wealth by declaration of Congress or the President,
thereby converting such land into patrimonial or private land of the State, the applicable
provision concerning disposition and registration is no longer Section 48(b) of the Public
Land Act but the Civil Code, in conjunction with Section 14(2) of the Property
Registration Decree.35 As such, prescription can now run against the State.

To sum up, we now observe the following rules relative to the disposition of public land
or lands of the public domain, namely:

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

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

(a) Agricultural lands of the public domain are rendered alienable and disposable
through any of the exclusive modes enumerated under Section 11 of the Public Land
Act. If the mode is judicial confirmation of imperfect title under Section 48(b) of the
Public Land Act, the agricultural land subject of the application needs only to be
classified as alienable and disposable as of the time of the application, provided the
applicant’s possession and occupation of the land dated back to June 12, 1945, or
earlier. Thereby, a conclusive presumption that the applicant has performed all the
conditions essential to a government grant arises,36 and the applicant becomes the
owner of the land by virtue of an imperfect or incomplete title. By legal fiction, the land
has already ceased to be part of the public domain and has become private property. 37

(b) Lands of the public domain subsequently classified or declared as no longer

intended for public use or for the development of national wealth are removed from the
sphere of public dominion and are considered converted into patrimonial lands or lands
of private ownership that may be alienated or disposed through any of the modes of
acquiring ownership under the Civil Code. If the mode of acquisition is prescription,
whether ordinary or extraordinary, proof that the land has been already converted to
private ownership prior to the requisite acquisitive prescriptive period is a condition sine
qua non in observance of the law (Article 1113, Civil Code) that property of the State not
patrimonial in character shall not be the object of prescription.

To reiterate, then, the petitioners failed to present sufficient evidence to establish that
they and their predecessors-in-interest had been in possession of the land since June
12, 1945. Without satisfying the requisite character and period of possession -
possession and occupation that is open, continuous, exclusive, and notorious since
June 12, 1945, or earlier - the land cannot be considered ipso jure converted to private
property even upon the subsequent declaration of it as alienable and disposable.
Prescription never began to run against the State, such that the land has remained
ineligible for registration under Section 14(1) of the Property Registration Decree.
Likewise, the land continues to be ineligible for land registration under Section 14(2) of
the Property Registration Decree unless Congress enacts a law or the President issues
a proclamation declaring the land as no longer intended for public service or for the
development of the national wealth.1âwphi1

WHEREFORE, the Court DENIES the petitioners' Motion for Reconsideration and the
respondent's Partial Motion for Reconsideration for their lack of merit.

SO ORDERED.
G.R. No. 219070

CONRADO R. ESPIRITU, JR., TERESITA ESPIRITU-GUTIERREZ, MARIETTA R.

ESPIRITU-CRUZ, OSCAR R. ESPIRITU, and ALFREDO R. ESPIRITU, Petitioners
vs.
REPUBLIC OF THE PHILIPPINES, Respondent

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the March 20,
2015 Decision1 and June 18, 2015 Resolution 2 of the Court of Appeals {CA) in CA-G.R.
CV No. 101002, which reversed and set aside the July 30, 2012 Decision 3 of the
Regional Trial Court, Branch 274, Parañaque City (RTC) in Land Registration Case No.
10-0026 (LRC No. 10- 0026), which approved the application for land registration filed
by the petitioners.

The Antecedents

On March 1, 2010, the petitioners, with their now deceased sibling, Carmen Espiritu,
filed before the RTC an Application for Registration of Title to Land4 covering a parcel of
land with an area of 6,971 square meters, located at Barangay La Huerta, Parafiaque
City, Metro Manila, and identified as Lot 4178, Cad. 299 of the Paranaque Cadastre
Case 3 (subject land).

Attached to the petitioners' application were copies of the following documents: (1)
Special Powers of Attorney respectively executed by petitioners Oscar Espiritu
(Oscar)5 and Alfredo Espiritu (Alfredo )6 in favor of petitioner Conrado Espiritu,
Jr. (Conrado, Jr.), to represent them in the proceedings relating to the application; (2)
Advanced Survey Plan7 of Lot No. 4178, Cad. 299 of the Parafiaque Cadastre Case 3;
(3) Technical Description8 of Lot 4178, AP-04-003281, being an advanced survey of Lot
4178, Cad. 299, Parafiaque Cadastre Case 3; and (4) Tax Declaration (T.D.) No. E-005-
01718-TR.9

The petitioners alleged that their deceased parents, Conrado Espiritu, Sr. (Conrado,
Sr.) and Felicidad Rodriguez-Espiritu (Felicidad), were the owners of the subject land;
that they inherited the subject land after their parents passed away; and that they, by
themselves and through their predecessors-in-interest, have been in open, public, and
continuous possession of the subject land in the concept of owner for more than thirty
(30) years.

Subsequently, the RTC determined that it had jurisdiction to act on the application.
Thereafter, trial ensued, during which Oscar, Conrado, Jr., Ludivina
Aromin (Aromin), Ferdinand Encarnacion (Encarnacion), and Marrieta Espiritu-
Cruz (Marrieta), were presented as witnesses.

Encarnacion, a staff in the Docket Division of the Land Registration Authority, testified
that the notices relative to the application for registration of the subject land were served
on the owners of the, adjoining lots.

Marrieta testified that she is one of the children of Conrado, Sr. and Felicidad; that she
was born on February 23, 1933; that she has known the subject land since she was
seven (7) years old because her parents owned the same; that before her parents, her
grandparents and Felicidad's parents, Dalmacio Rodriguez and Dominga Catindig were
the owners of the subject land; that she, together with her siblings, inherited the subject
land from Conrado, Sr. and Felicidad, who died in March 1984 and on January 10,
1986, respectively; that they possessed the subject land openly and continuously since
the death of their parents; that the subject land was agricultural in nature because it was
being used as salt land during summer and as fishpond during rainy season; and that
there were no adverse claimants over the subject land.

Oscar corroborated Marietta's testimony. He reiterated that they were in possession and
occupation of the subject land because they could visit the property whenever they
wanted to, introduce improvements thereon, and prevent intruders from entering it.

Conrado, Jr. testified that he commissioned the survey of the subject land; that he
requested and received from Laureano B. Lingan, Jr., Regional Technical Director of
the Forest Management Services (FMS), Department of Environment and Natural
Resources-National Capital Region (DENRNCR), a Certification, 10 dated October 6,
2010, stating that the subject land was part of the alienable and disposable land of the
public domain; and that they utilized the subject land in their salt-making business,
which they inherited from their parents.

On cross-examination, Conrado, Jr. admitted that their salt-making business ceased

operation in 2004, and that the subject land had become idle.

For her part, Aromin, the Chief of the Technical Services of the DENR-NCR, testified
that their office issued a certified copy of the technical description of Lot No. 4178 (AP
04-003281) on February 18, 201 O; and that the technical description was verified to be
consistent with the approved survey plan of Lot No. 4178.

In addition to the testimonies of their witnesses, the petitioners also presented in

evidence several tax declarations covering the subject land, the earliest of which was
T.D. No. 318011 issued on April 28, 1970; a Certification, 12 dated January 26, 2011,
issued by the Parañaque City Treasurer's Office stating that the real property tax for the
subject land had been fully settled up to year 201 O; and the DENR-NCR certification
alluded to by Conrado, Jr. during his direct examination, to the effect that the subject
land was verified to be within the alienable and disposable land under Project No. 25 of
Parañaque City, as per LC Map 2623, and that it is not needed for forest purposes.

The RTC Ruling

In its decision, dated July 30, 2012, the RTC granted the application for registration. The
trial court opined that the petitioners were able to establish possession and occupation
over the subject land under a bona fide claim of ownership since June 12, 1945 or
earlier. It gave credence to the testimony of Marrieta that she had known that the
subject land belonged to their parents as early as 1940 because she was already seven
(7) years old at that time.

The trial court was convinced that the petitioners were able to prove that the subject
land was part of the alienable and disposable land of the public domain. In so ruling, it
relied on the contents of the DENR-NCR certification. The dispositive portion of the
decision reads:

WHEREFORE, pursuant to Section 29 of P.D. No. 1529 as amended, judgment is

hereby rendered granting the application of the applicants, namely, Carmen R. Espiritu,
Conrado R. Espiritu, Jr., Marrieta R. Espiritu, Oscar R. Espiritu, Alfredo R. Espiritu, and
Teresita R. Espiritu, confirming the title of said applicants over the parcel of land fully
described on its technical description described as follows:

xxx

and ordering the registration of said parcel of land in the name of the applicants.

Once this Decision becomes final, let the corresponding Order for the issuance of the
Decree be issued.

SO ORDERED.13 (Boldface omitted)

The Republic moved for reconsideration, but its motion was denied by the R TC in its
resolution, dated April 1, 2013.

Aggrieved, the Republic, through the OSG, elevated an appeal to the CA. 14

The CA Ruling

In its assailed decision, dated March 20, 2015, the CA reversed and set aside the July
30, 2012 RTC decision. In reversing the trial court, the appellate court reiterated the
prevailing doctrine that to successfully register a parcel of land, the application must be
accompanied by: (1) a CENRO or PENRO certification stating the alienable and
disposable character of the land applied for; and (2) a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of
the official records. It opined that the DENR-NCR certification presented by the
petitioners would not suffice to prove that the subject land was indeed classified by the
DENR Secretary as alienable and disposable. The CA explained that under Department
of Agriculture Orders (DAO) Nos. 20 and 38, the Regional Technical Director of the
FMS had no authority to issue certificates of land classification; and that the petitioners
failed to present a certified true copy of the original classification approved by the DENR
Secretary. The dispositive portion of the decision states:

WHEREFORE, in view of the foregoing, the instant appeal is hereby GRANTED. The
Decision dated July 30, 2012 of the Regional Trial Court, Branch 274 in Parafiaque City
in LRC Case No. 10-0026 is hereby ANNULLED and SET ASIDE. The application for
registration of land title filed by the applicants-appellees Carmen R. Espiritu, Conrado R.
Espiritu, Jr., Marrieta R. Espiritu, Oscar R. Espiritu, Alfredo R. Espiritu and Teresita R.
Espiritu is hereby DENIED.

SO ORDERED.15 (Boldface omitted)

The petitioners moved for reconsideration, but their motion was denied by the CA in its
resolution, dated June 18, 2015.

Hence, this petition.

ISSUE

WHETHER THE APPELLATE COURT ERRED IN REVERSING THE TRIAL COURT

AND DISMISSING THE PETITIONERS' APPLICATION FOR REGISTRATION OF
TITLE.

The petitioners, relying on the cases of Republic of the Philippines v. Serrano

(Serrano )16 and Republic v. Vega (Vega), 17 argue that they had substantially complied
with the presentation of the required proof that the land applied for registration is
alienable and disposable part of the public domain. They assert that the DENR-NCR
certification they submitted, together with all the documentary evidence they presented,
constituted substantial compliance with the legal requirement that the land must be
proved to be alienable and disposable part of the public domain. The petitioners insist
that the DENR-NCR certification they submitted was sufficient proof of the character of
the subject land because under DAO No. 2012-09,18 dated November 14, 2012, the
Regional Executive Director of the DENR is vested with authority to issue certifications
on land classification for lands situated in Metro Manila.

The petitioners further claimed that they already submitted a certified true copy of the
original land classification covering the subject land. They assert that in their Motion for
Reconsideration, dated May 3, 2015, filed before the CA, they attached a copy of
Forestry Administrative Order (PAO) No. 4-1141, dated January 3, 1968, signed by
Arturo R. Tanco, Jr., then Secretary of Agriculture and Natural Resources.

In its Comment, 19 the Republic countered that the petitioners failed to comply with the
requirements that the application for original registration must be accompanied by (1) a
CENRO/PENRO certification; and (2) a certified true copy of the original classification
approved by the DENR Secretary. It contended that the petitioners' reliance
on Serrano and Vega were misplaced, because the rulings therein on substantial
compliance were mere pro hac vice. The Republic further av.erred that while the
petitioners were able to present a copy of PAO No. 4-1141, the same had no probative
value as it was not presented during the proceedings before the RTC. Lastly, it claimed
that assuming arguendo that the petitioners had sufficiently established the character of
the subject land as alienable and disposable, registration would still not be proper,
considering that they failed to establish the necessary possession and occupation for
the period required by law.

In their Reply,20 dated July 21, 2016, the petitioners insisted on the application
of Serrano and Vega to the present case. They also assert that even if their copy of F
AO No. 4-1141 was not presented during the proceedings before the RTC, the same
still have probative value. On the basis of Natividad Sta. Ana Victoria v. Republic of the
Philippines (Sta. AnaVictoria),21 the petitioners claim that in land registration cases, the
Court has allowed the presentation of additional certifications to prove the alienability
and disposability of the land sought to be registered when the authenticity thereof were
not sufficiently contested.

The Court's Ruling

The petition lacks merit.

The Court notes that the subject application was filed under Section 14(2) of
Presidential Decree (P.D.) No. 1529, considering the allegation therein of possession
and occupation in the concept of owner for more than thirty (30) years. The trial court,
however, granted the application under Section 14(1) of the same decree after finding
that the petitioners were able to establish open, continuous, and exclusive possession
and occupation of the subject land under a bona fide claim of ownership since June 12,
1945 or earlier.

Manifestly, there has been some uncertainty under what provision of law the present
application for registration is being sought because the requirements and basis for
registration under these two provisions of law differ from one another. Section 14(1)
mandates registration on the basis of possession, while Section 14(2) entitles
registration on the basis of prescription.22 Nevertheless, for the proper resolution of the
issues and arguments raised herein, the present application would be scrutinized based
on the requirements of the provisions of Sections 14(1) and (2) of P.D. No. 1529.

Registration under

Section 14(1) of P.D. No. 1529

Section 14, paragraph 1 of P.D. No. 1529 provides:

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

(1) Those who by themselves or through their predecessors-in interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim of ownership since June
12, 1945, or earlier.

Registration under Section 14(1) of P.D. No. 1529 is based on possession and
occupation of the alienable and disposable land of the public domain since June 12,
1945 or earlier, without regard to whether the land was susceptible to private ownership
at that time. 23 Thus, for registration under Section 14(1) to prosper, the applicant for
original registration of title to land must establish the following: (1) that the subject land
forms part of the disposable and alienable lands of the public domain; (2) that the
applicants by themselves and their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation thereof; and (3) that
the possession is under a bona fide claim of ownership since June 12, 1945, or
earlier.24

Petitioners failed to prove

that the subject land is
alienable and disposable

The rule is that applicants for land registration bear the burden of proving that the land
applied for registration is alienable and disposable. 25 In this regard, the applicant for
land registration must prove that the DENR Secretary had approved the land
classification and released the land of the public domain as alienable and disposable,
and that the land subject of the application for registration falls within the approved area
per verification through survey by the PENRO or CENRO. In addition, he must also
present a copy of the original classification approved by the DENR Secretary and
certified as a true copy by the legal custodian of the official records. These facts must
be established to prove that the land is alienable and disposable.26

In this case, during the proceedings before the RTC, to prove the alienable and
disposable character of the subject land, the petitioners presented the DENR-NCR
certification stating that the subject land was verified to be within the alienable and
disposable part of the public domain. This piece of evidence is insufficient to overcome
the presumption of State ownership. As already discussed, the present rule requires the
presentation, not only of the certification from the CENRO/PENRO, but also the
submission of a copy of the original classification approved by the DENR Secretary and
certified as a true copy by the legal custodian of the official records.27
Likewise, the petitioners' claim of substantial compliance does not warrant approval of
the application.

The rule on strict compliance enunciated in Republic of the Philippines v. T.A.N.

Properties (T.A.N. Properties)28 remains to be the governing rule in land registration
cases. This rule was neither abandoned nor modified by the subsequent
pronouncements in Vega and Serrano as these latter cases were mere pro hac vice. In
fact, in Vega, the Court clarified that the ruling on substantial compliance applies pro
hac vice and did not, in any way, detract from the Court's ruling in T.A.N Properties and
similar cases which impose a strict requirement to prove that the land applied for
registration is alienable and disposable.

Further, in Republic of the Philippines v. San Mateo (San Mateo), 29 the Court
expounded on the reason behind the subsequent decisions which granted applications
for land registration on the basis of substantial compliance, viz.:

In Vega, the Court was mindful of the fact that the trial court rendered its decision on
November 13, 2003, way before the rule on strict compliance was laid down in T.A.N.
Properties on June 26, 2008. Thus, the trial court was merely applying the rule
prevailing at the time, which was substantial compliance. Thus, even if the case
reached the Supreme Court after the promulgation of T.A.N. Properties, the Court
allowed the application of substantial compliance, because there was no opportunity for
the registrant to comply with the Court's ruling in T.A.N. Properties, the trial court and
the CA already having decided the case prior to the promulgation of T.A.N.
Properties. 30 (Italics omitted)

From the foregoing, it is clear that substantial compliance may be applied, at the
discretion of the courts, only if the trial court rendered its decision on the application
prior to June 26, 2008, the date of the promulgation of T.A.N. Properties. In this case,
the application for registration, which was filed on March 1, 2010, was granted by the
RTC only on July 30, 2012, or four (4) years after the promulgation of T.A.N.
Properties. Evidently, the courts did not have discretion to apply the rule on substantial
compliance. Thus, the petitioners' reliance on Vega and Serrano, as well as on Sta. Ana
Victoria, which similarly appreciated substantial compliance, is clearly misplaced.
Hence, the petitioners failed to prove the first requisite for registration under Section
14(1).

Petitioners failed to prove possession and occupation of the subject land under a bona
fide claim of ownership since June 12, 1945 or earlier

As to the second and third requisites, the Court concurs with the appellate court that the
petitioners failed to establish that they and their predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession and occupation of the subject
land on or before June 12, 1945.

In this case, the petitioners presented several tax declarations in their names, the
earliest of which dates back only to 1970.1âwphi1 This period of possession and
occupation is clearly insufficient to give the petitioners the right to register the subject
land in their names because the law requires that possession and occupation under
a bona fide claim of ownership should be since June 12, 1945 or earlier.

In a similar vein, the respective testimonies of petitioners Marietta, Oscar, and Conrado,
Jr. were insufficient to support their claim of possession and occupation of the subject
land. The only relevant testimonies offered by the petitioners were to the effect that they
had known the subject land since they were children, as the same were owned by their
parents; that it was used as a fishpond during the rainy season and in their salt-making
business during the summer, which business, however, ceased operation in 2004; and
that they could visit the subject land whenever they wanted to, introduce improvements
on it, and prevent intruders therefrom.

In Republic of the Philippines v. Remman Enterprises, Inc.,31 the Court held that for
purposes of land registration under Section 14(1) of P .D. No. 1529, proof of specific
acts of ownership must be presented to substantiate the claim of open, continuous,
exclusive, and notorious possession and occupation of the land subject of the
application. Applicants for land registration cannot just offer general statements which
are mere conclusions of law rather than factual evidence of possession. Actual
possession consists in the manifestation of acts of dominion over it of such nature as a
party would actually exercise over his own property. 32

In this case, the petitioners failed to sufficiently show that on or before June 12, 1945,
they and their predecessors-in-interest actually exercised acts of dominion over the
subject land. Their assertion that they could visit the subject land could not be
considered an act of dominion which would vest upon them the right to own the subject
land. Likewise, their general claim that they could prevent any person from intruding
thereto was unsubstantiated by any evidence aside from their allegations.

Finally, assuming that the use of the land in salt-making and as a fishpond could be
considered as a manifestation of acts of dominion, the petitioners still failed to satisfy
the requirements of the law for registration of the subject land. Although the petitioners
claim that they inherited the salt-making and fishpond businesses from their parents, no
mention was made when the aforesaid businesses actually started operation on the
subject land. Thus, they failed to demonstrate cultivation or use of the subject land since
June 12, 1945 or earlier. Hence, the petitioners failed to establish possession and
occupation of the subject land under a bona fide claim of ownership within the period
required by law.

From the foregoing, the subject land cannot be registered in the name of the petitioners
under Section 14(1) of P.D. No. 1529 for their failure to prove its alienable and
disposable character, and their possession and occupation from June 12, 1945 or
earlier.

Petitioners failed to comply with the requirements under Section 14(2) of P.D. No. 1529

Neither could the subject land be registered under Section 14(2), which reads:

(2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.

In Heirs of Mario Malabanan v. Republic of the Philippines, 33 the Court explained that
when Section 14(2) of P.D. No. 1529 provides that persons "who have acquired
ownership over private lands by prescription under the provisions of existing laws," it
unmistakably refers to the Civil Code as a valid basis for the registration of lands.

For registration under this provision to prosper, the applicant must establish the
following requisites: (a) the land is an alienable and disposable, and patrimonial
property of the public domain; (b) the applicant and its predecessors-in-interest have
been in possession of the land for at least 10 years, in good faith and with just title, or
for at least 30 years, regardless of good faith or just title; and (c) the land had already
been converted to or declared as patrimonial property of the State at the beginning of
the said 10- year or 30-year period of possession.34

As regards the first and most important requisite, the Court has ruled that declaration of
alienability and disposability is not enough for the registration of land under Section
14(2) of P.D. No. 1529. There must be an express declaration that the public dominion
property is no longer intended for public service or the development of the national
wealth or that the property has been converted into patrimonial property. 35 This is only
logical because acquisitive prescription could only run against private properties, which
include patrimonial properties of the State, but never against public properties.

Here, the petitioners failed to present any competent evidence which could show that
the subject land had been declared as part of the patrimonial property of the State. The
DENR-NCR certification presented by the petitioners only certified that the subject land
was not needed for forest purposes. This is insufficient because the law mandates that
to be subjected to acquisitive prescription, there must be a declaration by the State that
the land applied for is no longer intended for public service or for the development of the
national wealth pursuant to Article 422 of the Civil Code. Clearly, the petitioners failed to
prove that they acquired the subject land through acquisitive prescription. Thus, the
same could not be registered under Section 14(2) of P.D. No. 1529.

In fine, the petitioners failed to satisfy all the requisites for registration of title to land
under either Sections 14(1) or (2) of P.D. No. 1529. The CA's reversal of the July 30,
2012 RTC decision, and denial of the petitioners' application for original registration of
imperfect title over Lot No. 4178 must be affirmed.

WHEREFORE, the petition is DENIED. The March 20, 2015 Decision and June 18,
2015 Resolution of the Court of Appeals in CA-G.R. CV No. 101002
are AFFIRMED. The petitioners' application for original registration of title of Lot No.
4178 in LRC Case No. 10-0026 is DENIED, without prejudice.

SO ORDERED.