1

G.R. No. L-28918 September 29, 1970

PACIENCIA BENIGA, ET AL., plaintiffs-appellants,
vs.
RUFINA BUGAS, defendant-appellant.

Paulino A. Conol for plaintiffs-appellants.

Lorenzo P. de Guzman and Pacito G. Mutia and Marcial G. Mendiola
for defendant-appellant.



REYES, J.B.L., Acting C.J.:

Joint appeal (Record on Appeal was approved on 23 March 1968)
directly taken to the Supreme Court by both the plaintiffs and the
defendant from an amended decision of the Court of First Instance of
Misamis Occidental, in its Civil Case No. 2598, declaring the former
as the owners and ordering the latter to deliver the possession of a
portion of parcel of land but "without (the latter) having to account for
the fruits and the produce of the same until actually delivered and to
pay the costs of the proceedings." 1

The findings of fact in the said decision were, based upon a
stipulation of facts and upon evidence adduced on controverted
matters not covered by the stipulation. Said findings are as follows:

The land in controversy is

Bounded on the North by Salimpono River, SOUTH by Magsirawang
Brook, EAST by V. Baol and R. Mabascog, WEST by D. Malon, A.
Beniga and M. Luzing, containing an area of 2.1680 hectares under
Tax Declaration No. 71458 in the name of the late Antonio
Mabascog, and assessed at P1,680.00

and constitutes a portion of a parcel of land situated in Barrio
Magsirawag (Guintomoyan), Jimenez, Misamis Occidental,
designated as Lot 2031, Pls-646 under Free Patent No. 232966,
containing an area of 47,429 square meters.

Free Patent No. 232966 was issued on 3 May 1963. The patentee,
Antonio Mabascog, died on 5 September 1966. Before his death,
however, he donated inter vivos, on 22 September 1965, the
controverted portion of the parcel of land to the descendant Rufina
Bugas, who, thenceforth, took possession of the property. 2 At the
time of the donation, both donor and donee did not know about the
issuance of the patent.

The deceased Antonio Mabascog was a widower at the time of the
donation. 3 He died without a descendant or ascendant, leaving as
his heirs the herein plaintiffs Paciencia Beniga Anselmo Burlat,
Dionisia Malon, Buenaventura Vale, Agapito Vale, Alfonso Vale,
Matea Vale and Manuel Vale, who are the children of the four
deceased sisters of Antonio Mabascog.

Upon the foregoing facts, the court a quo held that the donation was
null and void, being in violation of the 5 year prohibitory period
against alienation of lands acquired under free patent, pursuant to
Section 118 of Commonwealth Act 141 as amended by
Commonwealth Act 496 (sic, but obviously referring to CA No. 456)
and, therefore, the donation transferred no right to defendant Rufina
Bugas, but held her possession and enjoyment of the property in
litigation as made in good faith and, therefore, not accountable for
the fruits that she had gathered therefrom.

Appellant-defendant's theory is that the 5-year prohibitory period
should begin to run from the date of inscription of the patent in the
Registry Book, which was on 13 January 1966, in cases where the
contracting parties had no prior knowledge of the issuance of the
patent at the time they executed their contract; and pursuant to this
theory, she avers that the donation of 22 September 1965 does not
fall within the prohibited period, hence, the donation is not invalid.

Obviously, the defendant-appellant's thesis is untenable. It proceeds
on the unstated assumption that alienations by patentees to persons
or entities not excepted by law are invalidated only if made within the
five-year period from and after the issuance of the patent. This is
incorrect, for Section 118 of the Public Land Act (Commonwealth Act
2

No. 141 as amended by Commonwealth Act No. 456) recites as
follows:

SEC. 118. Except in favor of the Government or an of its branches,
units, or institutions, or legally constituted banking corporations,
lands acquired under free patent or homestead provisions shall not
be subject to encumbrance or alienation from the date of the
approval of the application and for a term of five years from and after
the date of issuance of the patentor grant nor shall they become
liable to the satisfaction of any debt contracted prior to the expiration
of said period; but the improvements or crops on the land may be
mortgaged or pledged to qualified persons, associations, or
corporations.

No alienation, transfer, or conveyance of any homestead after five
years and before twenty-five years after issuance of title shall be
valid without the approval of the Secretary of Agriculture and Natural
Resources, which approval shall not be denied except on
constitutional and legal grounds.

It is clear from the language of the law that the alienation of lands
acquired by homestead or free patent grants is forbidden "from the
date of approval of the application" up to and including the fifth year
"from and after the date of the issuance of the patent or grant."
Otherwise, the provision makes no sense, for the prohibition starting
from the date of approval of the application would have no terminal
date. Since the 1965 donation in favor of defendant-appellant was
clearly within the period of prohibited alienation, whether the same
be deemed to end five years counted from the issuance of the patent
or grant, or five years counted from its registration or recording with
the Register of Deeds, said donation is plainly void.

Anyway, it has been repeatedly held that the period is not computed
from the date of registration with the Register of Deeds or from the
date of the certificate of title. 4

Section 118 does exempt patentees and their purported transferees
who had no knowledge of the issuance of the patent from the
prohibition against alienation; for the law does not say that the five
years are to be counted "from knowledge or notice of issuance of the
patent or grant. The date of the issuance of the patent is
documented and is a matter of government and official record. As
such, it is more reliable and precise than mere knowledge, with its
inherent frailties. Indeed, the policy of the law, which is to give the
patentee a place where to live with his family that he may become a
happy citizen and a useful member of our society, 5 would be
defeated were ignorance of the issuance of a patent a ground for the
non-application of the prohibition.

Equity, as ground for the validation of the donation, may not be
invoked, for the prohibition under the aforesaid Section 118 is
mandatory, 6 and the "general principles of equity will not be applied
to frustrate the purpose of the laws or to thwart public policy." 7

As asserted by defendant-appellant donee, the donation of the land
in violation of Section 118 shall cause the reversion of the property to
the State, as provided for in Section 124 of the law. However, such
reversion, which could be of the entire land covered by the patent, 8
is "a matter between the State and the Grantee ... or his heirs" 9 but
does not preclude the heirs from suing to have the alienation
declared invalid, 10 for their right to the possession of the land is
superior to that of the transferee in the void
alienation. 11

On the part of the plaintiffs-appellants, they counter-assign as error,
the lower court's not ordering the defendant to pay damages, at least
from receipt of judicial summons. It is true that possession in good
faith ceases upon the possessor's becoming aware of the flaw of his
title and from there on, the possessor should be held accountable for
the fruits of the land. 12 However, in the instant case, the lower court
made no findings as to the amount of the produce, hence it becomes
necessary to remand the case to the court of origin for the
determination of the value of the fruits accrued from and after
summons, and of the deductions corresponding to the costs of
production.

FOR THE FOREGOING REASONS, the appealed decision, in so far
as it decrees the nullity of the donation in favor of appellant Rufina
Bugas, is hereby affirmed. The case is remanded to the court of
origin for determination of the net indemnity due from respondent
3

Bugas to the plaintiffs-appellants Beniga, et al. Without costs. So
ordered.

Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo,
Villamor and Makasiar, JJ., concur.

Concepcion, C.J., is on leave.



# Footnotes

1 As per Amended Decision (Record an Appeal, page 102).

2 The donee had been reared from infancy by, donor and his
predeceased wife.

3 See Exhibit "2," which is the deed of donation.

4 Register of Deeds v. Director of Lands, Re Consulta No. 1370, 72
Phil. 313; Arojo de Dumelod, et al. v. Vilaray, 92 Phil. 967: Crisanto
v. Tajon, 93 Phil. 1111, unrep., L-4455, 22 May 1953.

5 Jocson v. Soriano, 45 Phil. 375.

6 Republic v. Ruiz, L-23712, 29 April 1968, 23 SCRA 348.

7 30 C.J.S. 981.

8 Republic v. Garcia, 105 Phil. 826, 830.

9 Santos v. Roman Catholic Church of Midsayap, 94 Phil. 405.

10 Eugenio v. Perdido, 97 Phil. 41.

11 Castro v. Orpiano, 90 Phil. 491.

12 Articles 552 and 1123, Civil Code of the Philippines; Tolentino,
Com. & Jur. on the Civil Code of the Phil. 1963 ed., Vol. II, pages
242-243.









4


.G.R. No. L-14778 February 28, 1961

MARGARITA MANZANO, ROMANA MANZANO, FRANCISCA
MANZANO and CRISTINA MANZANO, petitioners,
vs.
RUFINO OCAMPO, LEONARDA ERNA and THE COURT OF
APPEALS, respondents.

Espinosa Law Office for petitioners.
Ignacio Nabong for respondent.

REYES, J.B.L., J.:

Appeal from the decision of the Court of Appeals affirming the
dismissal by the trial court of petitioner's complaint against
respondents for the annulment of a sale of a homestead.

The basic facts appear to be as follows:

Victoriano Manzano, now deceased, was granted a homestead
patent on June 25, 1934, and the land was registered in his name on
July 25, 1934 under Original Certificate of Title No. 4590. On
January 4, 1938, he and respondent Rufino Ocampo agreed on the
sale of said homestead for the amount of P1,900.00, P1,100.00 of
which was paid by Ocampo to Manzano on the same day, and for
the balance, he executed a promissory note, to wit:

Alangalang sa paglilipat sa akin ang lupang homestead ni
VICTORIANO MANZANO, sa pamamagitan nito ay aking
ipinangangakong babayaran kay nabanggit na VICTORIANO
MANZANO o sa kaniyang tagapagmana ang halagang WALONG
DAAN PISO (P800.00), Kualtang Pilipino, sa mga sumusunod na
fecha:

P500.00

sa o bago dumating ng Enero 15, 1939

300.00

sa o bago dumating ng Enero 15, 1940

P800.00

T o t a l


Ang nabanggit na halagang babayaran ko ay aking eentrega sa
kanila dito sa Cabanatuan, Nueva Ecija.

SA KATUNAYAN, ako'y naglagda ngayon ika 4 ng Enero, 1938 dito
sa bayang Cabanatuan, Nueva Ecija.

(Exh. "A")

Knowing, however, that any sale of the homestead at that time was
prohibited and void, the parties likewise agreed that the deed of sale
was to be made only after the lapse of five years from the date of
Manzano's patent. And to protect the buyer Ocampo's rights in the
agreed sale, Manzano executed in his favor a "Mortgage of
Improvements" over the homestead to secure the amount of
P1,100.00 already received as down payment on the price (Exh. "1").

Three months later, Manzano informed Ocampo that someone was
offering to buy his homestead for P3,000.00, and Ocampo agreed to
pay that same price therefor after Manzano's title would have ripened
into absolute ownership.

On October 17, 1939, the Undersecretary of Agriculture and Natural
Resources approved the proposed sale of Manzano's homestead to
Ocampo (Exh. "2"). Accordingly, the parties executed the formal
deed of Sale on October 19, 1939 for the price of P3,000.00, (Exh.
"9"), of which Ocampo paid only P1,900.00, because the amount of
P1,100.00 had already been delivered to Manzano on January 4,
1938. On the same day, the mortgage Exhibit "1" was released and
a transfer certificate of title over the homestead issued in Ocampo's
5

name (Exh. "4"). Ocampo did not, however, immediately take
possession of the land because Manzano requested that he be
permitted to harvest its standing palay crop. Ocampo demanded
from Manzano the return of his promissory note Exhibit "A", but the
latter informed him that the same was misplaced or lost. Two years
later, in 1940, the tax declaration over the homestead in question
was transferred to Ocampo's name (Exh. 7).

On June 22, 1954, Manzano commenced this action in the Court of
First Instance of Nueva Ecija for the annulment of the sale of his
homestead to Ocampo, on the theory that the same was executed
on the same date as the promissory note Exhibit "A" and, therefore,
within the prohibitory period of five years from the issuance of his
patent. During the pendency of the case, Manzano died and was
substituted by his heirs.

After trial, the court a quo found that the sale in question was in fact
made after the expiration of five years from the date of Manzano's
patent, and dismissed the complaint. Manzano's heirs appealed to
the Court of Appeals which, as already stated, affirmed the lower
court's judgment. Whereupon, Manzano's heirs resorted to this
Court, urging that the sale of the homestead in question was made
before, and not after, the expiration of five years from the date of
Manzano's patent and is, therefore, void.

In upholding the validity of the sale in question, the Court of Appeals
drew the following conclusions from the facts found to have been
established:

It was satisfactorily explained by appellee Ocampo that the
agreement of the parties was that Manzano would sell the
homestead for the price of P1,900.00 after the expiration of the
prohibitory period prescribed by law. The P800.00 stated in the
promissory note was the balance of the price to be paid. As correctly
observed by the lower court the phrase in tagalog "alangalang sa
paglilipat sa akin ang lupang homestead" appearing in the
promissory note, is futuristic in character meaning that the payment
of P800.00 was in consideration of the transfer of the homestead to
be made later. It should be noted that at the time the parties knew of
said period of inhibition and were fully aware that the said period of
five years had not yet transpired so that Manzano could not validly
sell or mortgage the homestead. It was so explained clearly to them
by Atty. Pacis. Owing to such knowledge the loan of P1,100.00 was
only guaranteed by the mortgage of the improvements of the land
(Exh. 1) and not by the homestead itself.

It appears that the said intended sale for only P1,900.00 after the
lapse of five-year period was later on abandoned by the parties.
Manzano himself, knowing perhaps that he could not be bound
thereby, backed out of it claiming that there was another offer of
P3,000.00 for the same property. Appellee Ocampo agreed to pay
this same amount. It was at this new price of P3,000.00 that the land
was actually sold to appellees on October 19, 1939. This sale,
evidenced by Exhibit 3, was a complete abandonment of that original
arrangement and is a totally distinct transaction from the promissory
note and the deed of mortgage (Exh. 1). The payment of P1,900.00
to Manzano on October 19, 1939 as complement of the price of
P3,000.00 is evidenced not only by said deed of sale, Exhibit 3, the
genuineness and due execution of which was admitted by the
plaintiffs, but also by the uncontradicted testimony of appellee
Ocampo and his witnesses Primo Lopez and Agustin Eugenio. It
goes without saying that the deed of sale, Exhibit 3, having been
executed after the period of five years from the date of the issuance
of the patent and previously approved by the corresponding Head of
Department, pursuant to Section 118 of the Commonwealth Act No.
141, as amended by Commonwealth Act No. 456, is perfectly valid. It
was only after the execution of said deed of sale (Exh. 3) that the
vendee took possession of the land and had it declared in his name
for taxation purposes.

We are constrained to disagree with the above conclusions.

From the findings of the Court of Appeals, it is clear that a perfected
contract of sale over the homestead in question had already been
entered into by the parties on January 4, 1938 (i.e., within the period
of prohibition) for the price of P1,900.00. There was nothing
"futuristic" in this agreement, except that, being fully aware that any
sale or conveyance of the homestead in question at the time was
prohibited by law, the parties agreed that the execution of the deed
of sale should be postponed to a future date, after Manzano's title
6

had ripened into absolute ownership. That a sale existed before the
statutory five years had expired is shown by the fact that Ocampo
had advanced to Manzano the amount of P1,100.00 as part of the
price, and had signed for the balance the promissory note Exhibit
"A", undertaking to pay P500 on or before January 15, 1939 (a date
also within the period of prohibition), and the remaining P300.00, on
or before January, 15, 1940. If no perfected sale had existed in
January, 1938, there would have been no obligation on the part of
Ocampo to pay part of the price, nor any reason or occasion for his
executing a promissory note (an express acknowledgement of
indebtedness) for the balance.

Knowing as they did, however, that any sale of the homestead in
question was prohibited by law in 1938, the parties had to devise
means and ways to circumvent the prohibition and at the same time
still protect themselves from non-compliance of the agreement after
the prohibitory period should have elapsed. Thus, the down-payment
of P1,100.00 on the price already made to Manzano by Ocampo was
made to appear as a loan secured by a "Mortgage of Improvements"
signed by Manzano on the same day of the agreement of sale,
January 4, 1938 (Exh. "12"), which mortgage is patently a simulated
contract, because although entitled "Mortgage of Improvements", the
subject-matter thereof was not any improvements on the homestead
but "my land more particularly described as follows ...", which is the
homestead itself. Indeed, appellees openly admitted in their brief (pp.
1-2) that the amount of P1,100.00 received by Manzano from
Ocampo on January 4, 1938 was not really a loan but an advance on
the agreed price of P1,900.00, and that it was only to protect the
rights of the buyer Ocampo in the "intended sale" that the mortgage
Exhibit "1" was executed. Upon the other hand the protection
furnished the vendor Manzano, who had yet to receive P800.00 on
the price, was the promissory note Exhibit "A" signed by Ocampo for
such unpaid balance. Even if not simulated, the mortgage would
have been void anyway, since section 118 of the Public Land Law
prohibited encumbrance of homestead land within five years from
issuance of the patent, unless the encumbrance should be in favor of
Governmental entities.

That the parties modified this original agreement three months later,
increasing the price to P3,000.00, with the understanding that the
buyer, Ocampo, would not pay the balance of the price until after
Manzano's homestead title had become absolute, does not imply
that their original contract was abandoned and an entirely new and
independent contract was entered into by them. For a partial
payment on the price had already been made, and the parties did
nothing more than increase the price originally stipulated and extend
the term of payment, for which reason "Ocampo did not pay the
amount stated in the promissory note" (Decision of Court of Appeals,
p. 6). And even granting that the parties' original agreement had
been novated "three months later" by the increase in price and
extension of the time to pay its balance, the second transaction was
still within the prohibitive period and is, therefore, as illegal and void
as the first sale.

True to his promise to execute the formal deed of sale after his title
would have become absolute, Manzano, on October 19, 1939,
having received the approval of the Undersecretary of Agriculture
and Natural Resources of the proposed sale (Exh. "2"), executed the
deed of sale Exhibit "3" in favor of Ocampo, on the strength of which
Ocampo obtained for himself Transfer Certificate of Title No. 15584
over the homestead in question (Exh. "4"). This execution of the
formal deed after the expiration of the prohibitory period did not and
could not legalize a contract that was void from its inception. Nor was
this formal deed of sale "a totally distinct transaction from the
promissory note and the deed of mortgagee as found by the Court of
Appeals, for it was executed only in compliance and fulfillment of the
vendor's previous promise, under the perfected sale of January 4,
1938, to execute in favor of his vendee the formal act of conveyance
after the lapse of the period of inhibition of five years from the date of
the homestead patent. What is more, the execution of the formal
deed of conveyance was postponed by the parties precisely to
circumvent the legal prohibition of their sale.

The law prohibiting any transfer or alienation of homestead land
within five years, from the issuance of the patent does not distinguish
between executory and consummated sales; and it would hardly be
in keeping with the primordial aim of this prohibition to preserve and
keep in the family of the homesteader the piece of land that the state
had gratuitously given to them,1 to hold valid a homestead sale
actually perfected during the period of prohibition but with the
7

execution of the formal deed of conveyance and the delivery of
possession of the land sold to the buyer deferred until after the
expiration of the prohibitory period, purposely to circumvent the very
law that prohibits and declares invalid such transaction to protect the
homesteader and his family. To hold valid such arrangements would
be to throw the door wide open to all possible fraudulent subterfuges
and schemes that persons interested in land given to homesteaders
may devise to circumvent and defeat the legal provision prohibiting
their alienation within five years from the issuance of the
homestead's patent.

We therefore, hold that the sale in question is illegal and void for
having been made within five years from the date of Manzano's
patent, in violation of section 118 of the Public Land Law. Being void
from its inception, the approval thereof by the Undersecretary of
Agriculture and Natural Resources after the lapse of five years from
Manzano's patent did not legalize the sale (Santander v. Villanueva,
G.R. No. L-6184, Feb. 28, 1958; Cadiz v. Nicolas, G.R. No. L-9198,
Feb. 13, 1958). The result is that the homestead in question must be
returned to Manzano's heirs, petitioners herein, who are, in turn,
bound to restore to appellee Ocampo the, sum of P3,000.00
received by Manzano as the price thereof (Medel v. Eliazo, G. R. No.
L-12617, Aug. 27, 1959; Santander v. Villanueva, supra; Fences v.
Iriola, G.R. No. L- 11269, Feb. 28, 1958). The fruits of the land
should equitably compensate the interest on the price.

WHEREFORE, the judgment appealed from is reversed and another
one entered declaring null and void the sale of the homestead in
question to appellee Rufino Ocampo. The Register of Deeds for the
Province of Nueva Ecija is hereby ordered to cancel appellee
Ocampo's Transfer Certificate of Title No. 15584, and reissue to the
heirs of the deceased Victoriano Manzano the title to the homestead
in question. Petitioners are, however, ordered to return to appellee
Ocampo the amount of P3,000.00 received by their predecessor
Victoriano Manzano as the price of said homestead. No costs.

Bengzon, Actg. C.J., Padilla, Bautista Angelo, Labrador,
Concepcion, Barrera, Paredes and Dizon, JJ., concur.



Footnotes

1 Pascua v. Talens, 45 O.G. No. 9 (Supp.) 413; De los Santos v.
Roman Catholic Church of Midsayap, G.R. No. L- 6088, Feb. 25,
1954.


































8



G.R. No. L-6088 February 25, 1954

CATALINA DE LOS SANTOS, in her capacity as administratrix of the
intestate estate of the decased Julio Sarabillo, plaintiff-appellee,
vs.
ROMAN CATHOLIC CHURCH OF MIDSAYAP, Most Rev. LUIS DEL
ROSARIO and Rev. GERARD MONGEAU, defendants-appellants.

Manglapus and Gopengco for appellants.
Clemente M. Alio for appellee.

BAUTISTA ANGELO, J.:

On December 9, 1938, a homestead patent covering a tract of land
situated in the municipality of Midsayap, Province of Cotabato, was
granted to Julio Sarabillo and on March 17, 1939, Original Certificate
of Title No. RP-269 (1674) was issued in his favor.


On December 31, 1940, Julio Sarabillo sold two hectares of said
land to the Roman Catholic Church of Midsayap for the sum of P800
to be dedicated to educational and charitable purposes. It was
expressly agreed upon that the sale was subject to the approval of
the Secretar of Agriculture and Natural Resources.

In December, 1947, a request for said approval was submitted in
behalf of the Roman Catholic Church by Rev. Fr. Gerard Mongeau
stating therein that the land would be used solely for educational and
charitable purposes. The sale was approved on March 26, 1949, and
on March 29, 1950, the deed of sale was registered in the Office of
the Register of Deeds for the Province of Cotabato. No new title was
issued in favor of the Roman Catholic Church although the deed was
annotated on the back of the title issued to the homesteader.

In the meantime, Julio Sarabillo died and intestate proceedings were
instituted for the settlement of his estate and Catalina de los Santos
was appointed administratrix of the estate. And having found in the
course of her administration that the sale of the land to the Roman
Catholic Church was made in violation of section 118 of
Commonwealth Act No. 141, the administratrix instituted the present
action in the Court of First Instance of Cotabato praying that the sale
be declared null and void and of no legal effect.

In their answer defendants claim that the sale is legal and valid it
having been executed for educational and charitable purposes and
approved by the Secretary of Agriculture and Natural Resources.
They further claim that, even if it be declared null and void, its
immediate effect would be not the return of the land to appellee but
the reversion of the property to the State as ordained by law.
Defendants also set up as a defense the doctrine of pari delicto.

As a preliminary step, the court, upon petition of counsel for
defendants, directed the clerk of court, assisted by a representative
of both parties, to appraise the value of the improvements existing on
the controverted land and to submit to the court a report of his
findings. This was done, the clerk of court reporting that the value of
the improvements was done, the clerk of court reporting that the
value of the improvements was P601.

After the parties had submitted the case on the pleadings, in addition
to the report of the clerk of court as to the value of the improvements
existing on the land, the court rendered decision declaring the sale
null and void and ordering the plaintiff to reimburse to the defendants
the sum of P800 which was paid as purchase price, plus the
additional sum of P601 as value of the improvements, both sums to
bear interest at 6 per cent per annum from the date of the complaint,
and ordering defendants to vacate the land in question. Dissatisfied
with this decision, the case was taken to the Court of Appeals but it
was later certified to this Court on the ground that the appeal merely
involves questions of law.

It appears that the patent covering the tract of land which includes
the portion now disputed in this appeal was issued to the late Julio
Sarabillo on December 9, 1938, and the sale of the portion of two
hectares to the Roman Catholic Church took place on December 31,
1940. This shows that the sale was made before the expiration of the
period of five years from the date of the issuance of the patent and
as such is null and void it being in contravention of section 118 of
9

Commonwealth Act No. 141. The fact that it was expressly stipulated
in the deed of sale that it was subject to the approval of the
Secretary of Agriculture and Natural Resources and the approval
was sought and obtained on March 26, 1949, or more than ten years
after the date of the issuance of the patent, or the fact that the deed
of sale was registered in the Office of the Register of Deeds only on
March 29, 1950, and was annotated on the back of the title on that
date, cannot have the effect of validating the sale for the reason that
the approval of the Secretary of Agriculture and Natural Resources
does not have any valid curative effect. That approval is merely a
formality which the law requires if the sale is effected after the term
of five years but before the expiration of a period of 25 years for the
purpose of testing the validity of the sale on constitutional grounds.
But, as was ruled by this Court, the absence of such formality will not
render the transaction null and void (Evangelista vs. Montao,1 G.R.
No. L-5567). What is important is the period within which the sale is
executed. The provision of the law which prohibits the sale or
encumbrance of the homestead within five years after the grant of
the patent is mandatory. This cannot be obviated even if official
approval is granted beyond the expiration of that period, because the
purpose of the law is to promote a definite public policy, which is "to
preserve and keep in the family of the homesteader that portion of
public land which the State has gratuitously given to him." [Pascua
vs. Talens,2 45 Off. Gaz., No. 9, (Supplement) 413.]

The claim that the sale can be validated because it was made with
the avowed aim that the property would be dedicated solely to
educational and charitable purposes is likewise unmeritorious even
considering the law invoked by counsel for appellants in favor of its
validity. It is true that under section 121, Commonwealth Act No.
141, a corporation, association, or partnership may acquire any land
granted as homestead if the sale is done with the consent of the
grantee and the approval of the Secretary of Agriculture and Natural
Resources and is solely for commercial, industrial, educational,
religious, or charitable purposes, or for a right of way, and apparently
there is no limitation therein as to the time within which such
acquisition may be made. But this provision should be interpreted as
a mere authority granted to a corporation, association or partnership
to acquire a portion of the public land and not as an unbridled license
to acquire without restriction for such would be giving an advantage
to an entity over an individual which finds no legal justification. It is
our opinion that the authority granted by section 121 should be
interpreted as subject to the condition prescribed in section 118,
namely, that the acquisition should be after the period of five years
from the date of the issuance of the patent.

But appellants now contend that even if it be declared that the sale
made to them by the homesteader is null and void yet its immediate
effect would be not the return of the land to appellee but rather its
reversion to the State wherein the Government is the interested
party. (Section 124 of the Public Land Act). Appellants further claim
that the present action cannot be maintained by the appellee under
the principle of pari delicto.

The principles thus invoked by appellants are correct and cannot be
disputed. They are recognized not only be our law but by our
jurisprudence. Section 124 of the Public Land Act indeed provides
that any acquisition, conveyance or transfer executed in violation of
any of its provisions shall be null and void and shall produce the
effect of annulling and cancelling the grant or patent and cause the
reversion of the property to the State, and the principle of pari delicto
has been applied by this Court in a number of cases wherein the
parties to a transaction have proven to be guilty of having effected
the transaction with knowledge of the cause of its invalidity. (Bough
& Bough vs. Cantiveros & Hanopol, 40 Phil., 210, 216; Rellosa vs.
Gaw Chee Hun,3 G.R. No. L-1411; Trinidad Gonzaga de Cabauatan
vs. Uy Hoo, et al.,4 G.R. No. L-2207; Caoile vs. Yu Chiao Peng,5
G.R. No. L-4068; Talento, et al. vs. Makiki, et al.,6 G.R. No. L-3529.)
But we doubt if these principles can now be invoked considering the
philosophy and the policy behind the approval of the Public Land Act.
The principle underlying pari delicto as known here and in the United
States is not absolute in its application. It recognizes certain
exceptions one of them being when its enforcement or application
runs counter to an avowed fundamental policy or to public interest.
As stated by us in the Rellosa case, "This doctrine is subject to one
important limitation, namely, "whenever public policy is considered
advanced by allowing either party to sue for relief against the
transaction." (Rellosa vs. Gaw Chee Hu, supra.)

10

The case under consideration comes within the exception above
adverted to. Here appellee desires to nullify a transaction which was
done in violation of the law. Ordinarily the principle of pari delicto
would apply to her because her predecessor-in-interest has carried
out the sale with the presumed knowledge of its illegality (8 Manresa
4th ed., pp. 717-718), but because the subject of the transaction is a
piece of land, public policy requires that she, as heir, be not
prevented from re-acquiring it because it was given by law to her
family for her home and cultivation. This is the policy on which our
homestead law is predicated (Pascua vs. Talens, supra). This right
cannot be waived. "It is not within the competence of any citizen to
barter away what public policy by law seeks to preserve" (Gonzalo
Puyat & Sons, Inc. vs. Pantaleon de las Ama, et al., 74 Phil., 3). We
are, therefore, constrained to hold that appellee can maintain the
present action it being in furtherance of this fundamental aim of our
homestead law.

As regards the contention that because the immediate effect of the
nullification of the sale is the reversion of the property to the State
appellee is not the proper party to institute it but the State itself, that
is a point which we do not have, and do not propose, to decide. That
is a matter between the State and the Grantee of the homestead, or
his heirs. What is important to consider now is who of the parties is
the better entitled to the possession of the land while the government
does not take steps to assert its title to the homestead. Upon
annulment of the sale, the purchaser's claim is reduced to the
purchase price and its interest. As against the vendor or his heirs,
the purchaser is no more entitled to keep the land than any intruder.
Such is the situation of the appellants. Their right to remain in
possession of the land is no better than that of appellee and,
therefore, they should not be allowed to remain in it to the prejudice
of appellee during and until the government takes steps toward its
reversion to the State. (See Castro vs. Orpiano, G.R. No. L-4094,
November 29, 1951.)

Wherefore, the decision appealed from is affirmed, without
pronouncement as to costs.

Paras, C.J., Pablo, Bengzon, Montemayor, Jugo and Labrador, JJ.,
concur.
Padilla, J., concurs in the result.



Footnotes

1 93 Phil., 275.

2 80 Phil., 792

3 93 Phil., 827.

4 88 Phil., 103.

5 93 Phil., 861.

6 93 Phil., 855






















11



NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS B.
BUENA, EUSEBIA V. TABLADA, CANUTO G. TISBE, DAVID R.
CARULLO, SOFONIAS E. COLEGADO, FELIX B. BUENA, TORIBIO
C. EVANGELISTA, LEBRADA A. NICOLAS, ALECIA J. RAMOS,
MILA G. DE LOS REYES, SALVADOR I. DE LA TORRE, MOISES
CRUZ, RUFINO INFANTE, ALICIA ASTROLOGO, TRINIDAD
LUMIQUED, LUZMINIDA QUINIQUINI, & TEODORA C. TEMERAS,
petitioners, vs. CARMELINO M. SANTIAGO, respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

In this Petition for Review under Rule 45 of the Rules of Court,
petitioners pray for the reversal of the Decision of the Court of
Appeals in CA-G.R. CV No. 64957,[1] affirming the Order of the
Regional Trial Court (RTC) of San Mateo, Rizal, Branch 77, in Civil
Case No. 1220,[2] dismissing petitioners Complaint for declaration
of nullity of Original Certificate of Title (OCT) No. 670 and all other
titles emanating therefrom.

In their Complaint, petitioners alleged that they occupied and
possessed parcels of land, located in Sitio Panayawan, Barangay
San Rafael, Montalban (now Rodriquez), Province of Rizal (Subject
Property), by virtue of several Deeds of Assignment, dated 15 April
1994 and 02 June 1994, executed by a certain Ismael Favila y
Rodriguez.[3]

According to the Deeds of Assignment, the Subject Property was
part of a vast tract of land called Hacienda Quibiga, which extended
to Paraaque, Las Pias, Muntinlupa, Cavite, Batangas, Pasay,
Taguig, Makati, Pasig, Mandaluyong, Quezon City, Caloocan,
Bulacan, and Rizal; awarded to Don Hermogenes Rodriguez by the
Queen of Spain and evidenced by a Spanish title. Ismael Favila
claimed to be one of the heirs and successors-in-interest of Don
Hermogenes Rodriguez. Acting as Attorney-in-Fact pursuant to a
Special Power of Attorney executed by his mga kapatid on 25
February 1965, Ismael Favila signed the aforementioned Deeds of
Assignment, assigning portions of the Subject Property to the
petitioners, each portion measuring around 500 to 1,000 square
meters, in exchange for the labor and work done on the Subject
Property by the petitioners and their predecessors.[4]

Petitioners came by information that respondent was planning to
evict them from the Subject Property. Two of the petitioners had
actually received notices to vacate. Their investigations revealed
that the Subject Property was included in Transfer Certificates of
Titles (TCTs) No. 53028, No. 281660, No. N-39258 and No. 205270,
all originating from OCT No. 670, and now in the name of
respondent.[5]

OCT No. 670 was issued in the name of respondents mother, Isabel
Manahan y Francisco, and three other individuals, pursuant to
Decree No. 10248, dated 13 February 1913, in Case No. 8502 of the
Court of Land Registration of the Philippine Islands. The whole
property covered by OCT No. 670 was subsequently adjudicated in
favor of Isabel Manahan Santiago (formerly Isabel Manahan y
Francisco). Consequently, OCT No. 670 was cancelled and TCT
No. T-53028 was issued exclusively in the name of Isabel Manahan
Santiago. On 28 December 1968, Isabel Manahan Santiago
executed a Deed of Donation transferring the property to her son,
respondent herein, who subsequently secured TCTs No. 281660,
No. N-39258 and No. 205270 in his own name.[6]

Petitioners filed with the trial court, on 29 April 1996, an action for
declaration of nullity of respondents certificates of title on the basis
that OCT No. 670 was fake and spurious. Among the defects of
OCT No. 670 pointed out by petitioners were that: (1) OCT No. 670
was not signed by a duly authorized officer; (2) Material data therein
were merely handwritten and in different penmanships; (3) OCT No.
670 was not printed on the Official Form used in 1913, the year it
was issued; (4) It failed to indicate the Survey Plan which was the
basis of the Technical Description of the property covered by the
title; (5) Decree No. 10248 referred to in OCT No. 670 was issued
only on 11 April 1913, while OCT No. 670 was issued earlier, on 13
February 1913; and (6) Decree No. 10248 was issued over a
property other than the one described in OCT No. 670, although also
located in the Province of Rizal.[7]
12


Respondent filed his Answer with Prayer for Preliminary Hearing on
the Affirmative Defenses on 03 July 1996. According to respondent,
[t]he allegations in the Complaint would readily and patently show
that the same are flimsy, fabricated, malicious, without basis in law
and in fact[8]

As an affirmative defense, respondent claimed that the petitioners
had no legal capacity to file the Complaint, and thus, the Complaint
stated no cause of action. Since OCT No. 670 was genuine and
authentic on its face, then OCT No. 670 and all of respondents land
titles derived therefrom, are incontrovertible, indefeasible and
conclusive against the petitioners and the whole world.[9]

Citing the consolidated cases of Director of Forestry, et al. v. Hon.
Emmanuel M. Muoz, et al. and Pinagcamaligan Indo-Agro
Development Corporation v. Hon. Macario Peralta, Jr., et al.,[10]
respondent argued that the Spanish title, on which petitioners based
their claim, was neither indefeasible nor imprescriptible. Moreover,
Presidential Decree (P.D.) No. 892, which took effect on 16 February
1976, required all holders of Spanish titles or grants to apply for
registration of their lands under Republic Act No. 496, otherwise
known as the Land Registration Act,[11] within six months from
effectivity of the decree. After the given period, Spanish titles could
no longer be used as evidence of land ownership in any registration
proceedings under the Torrens System. [12]

Respondent also raised the affirmative defense of prescription. He
pointed out that any action against his certificates of title already
prescribed, especially with regard to OCT No. 670, which was issued
in 1913 or more than 83 years prior to the filing of the Complaint by
the petitioners. At the very least, respondent contended, it must be
presumed that the questioned land titles were issued by the public
officials concerned in the performance of their regular duties and
functions pursuant to the law.[13]

Even assuming arguendo that the petitioners entered and occupied
the Subject Property, they did so as mere intruders, squatters and
illegal occupants, bereft of any right or interest, since the Subject
Property was already covered by Torrens certificates of title in the
name of respondent and his predecessors-in-interest.[14]

Lastly, respondent denied knowing the petitioners, much less,
threatening to evict them. In fact, petitioners were not included as
defendants in Civil Case No. 783 entitled, Carmelino M. Santiago v.
Remigio San Pascual, et al., which respondent instituted before the
same trial court against squatters occupying the Subject Property.
In its decision, dated 01 July 1992, the trial court held that there is
no doubt that the plaintiff (respondent herein) is the owner of the land
involved in this case on which the defendants have built their houses
and shanties Although the decision in Civil Case No. 783 was
appealed to the Court of Appeals, it had become final and executory
for failure of the defendants-appellants therein to file their appellants
brief.[15]

In the instant case, the trial court held a preliminary hearing on the
affirmative defenses as prayed for by the respondent. During said
hearing, petitioners presented their lone witness, Engineer Placido
Naval, a supposed expert on land registration laws. In response to
questions from Honorable Judge Francisco C. Rodriguez of the trial
court, Engineer Naval answered that a parcel of land titled illegally
would revert to the State if the Torrens title was cancelled, and that it
was the State, through the Office of the Solicitor General, that should
file for the annulment or cancellation of the title. Respondent, on the
other hand, did not present any evidence but relied on all the
pleadings and documents he had so far submitted to the trial
court.[16]

After the preliminary hearing, the trial court issued the questioned
Order, dated 05 February 1999, dismissing petitioners Complaint.
Pertinent portions of the Order of the trial court read:

After considering the testimonial and documentary evidence
presented, this Court is inclined not to grant plaintiffs (sic) prayer.
Finding credence and giving weight to plaintiffs (sic) lone but expert
witness, it is crystal clear that, to quote:

1. a parcel of land titled illegally will revert to the State

13

2. it is the State who must file the corresponding case of
annulment of title through the Office of the Solicitor General, and

3. a land illegally titled in the name of private individual, the State
through the Office of the Solicitor General should file the
corresponding case for cancellation of title. (TSN August 26, 1997).

The above quoted testimony is straight from horse (sic) mouth so to
speak as this was the testimony of the plaintiffs (sic) expert witness.
And judging from the said testimony alone aforecited, plaintiffs (sic)
cause [of action] is bound to fail. Plaintiffs (sic) own testimony
wrote finis to their case. From the record, this case was initiated
and filed by private individuals, Nemencio Evangelista, et. al.,
contradicting their witness (sic) testimony. To reiterate, this Court
finds credence to the testimony of the plaintiffs (sic) witness, i.e., is
(sic) the State through the Office of the Solicitor General who must
initiate and file a case of this nature when title to a land is being
claimed to be obtained through fraud and allegedly spurious.

The opinion of this Court anent the testimony of the witness is not
without basis. Explicit is the pronouncement of the Supreme Court in
the recent case of Heirs of Marciano Nagano v. Court of Appeals, to
wit:

An action for reversion has to be instituted by the Solicitor General
pursuant to Section 101, Commonwealth Act No. 141. (282 SCRA
43).

As to the documentary evidence, having gone through with the
Deed of Assignment/s purportedly executed by and between a
certain Ismael Favila y Rodriguez and the plaintiffs, which is the
principal if not the only basis of plaintiffs claim ownership and
possession of the subject parcel of land, the same does not hold
water in a manner of speaking, for being self-serving. Assignor
Ismael Favila y Rodriguez claimed in said Deed that he is the
Attorney-in-Fact by virtue of an alleged Special Power of Attorney
executed in his favor by his mga kapatid on February 23, 1965, but
said Special Power of Attorney was not presented before this Court,
thus there arises a doubt as to its existence and execution not to
mention doubt on the existence of his mga kapatid who as alleged
executed said Special Power Attorney (sic) in his favor.

Even if this Court granting arguendo would admit the authenticity of
said Deeds of Assignment/s, that will not alter the outcome of the
pending incident/s before this Court. Why? Because the said Deed
of Assignment/s which were based on Spanish title have lost their
evidentiary value pursuant to the Presidential Decree No. 892 i.e.
DISCONTINUANCE OF THE SPANISH MORTGAGE SYSTEM OF
REGISTRATION AND OF THE USE OF SPANISH TITLES AS
EVIDENCE IN LAND REGISTRATION PROCEEDINGS.



There is no need to elaborate on the above-cited provisions of PD
892 as they are self-explanatory. Suffice it to say that there is no
showing, that plaintiffs complied with the said law i.e. to apply for
registration of their lands under Act No. 496, otherwise known as the
Land Registration Act, within six (6) months from the effectivity of this
decree (February 16, 1976). Thereafter, Spanish titles cannot be
used as evidence of land ownership in any registration proceedings
under the Torrens System.

This being the case and likewise being clear that plaintiffs were not
the lawful owners of the land subject of this case, for they did not
comply with PD 892, the said plaintiffs do not have the legal standing
to bring before this Court the instant complaint

Moreover, the principal issue in this case is for the declaration of
nullity of defendants title, which has nothing to do with plaintiffs (sic)
claim of ownership and possession even if we set aside, albeit
momentarily, the truth that plaintiffs (sic) claim were based on barred
Spanish Title/s, and thus plaintiffs were never the owners of the
parcel of land subject of this case.

Further, defendants (sic) title especially so with the mother title OCT
670 was entered and issued in 1913 or more than Eighty Three (83)
years ago, the same not having been questioned by any party. Only
now that it is being questioned, but sad to say, plaintiffs who are on
14

the offensive and relying on their lone expert witness, instead of
bolstering their case, unwittingly sealed their fate [17]

After the trial court denied petitioners Motion for Reconsideration in
its Order, dated 20 July 1999,[18] petitioners appealed both Orders
of the trial court to the Court of Appeals.

The Court of Appeals, in its Decision, dated 29 July 2002,[19]
affirmed the Order of the trial court, dated 05 February 1999,
dismissing petitioners Complaint. The Court of Appeals denied
petitioners Motion for Reconsideration in its Resolution, dated 14
February 2003.[20]

Thus, petitioners filed this Petition for Review [21] under Rule 45 of
the Rules of Court, raising the following issues and praying for the
reversal of the aforementioned Decision of the Court of Appeals
affirming the Order of dismissal of the trial court:

I. Whether the lower courts dismissal of the petitioners complaint
should be proscribed by the rules of evidence it being based inter
alia on Engr. Navals testimony, which was indisputably not based on
facts but conclusion of law.

II. Whether the lower courts dismissal of petitioners complaint
should be proscribed by the rules of evidence it being done sans
ample evidence except bare allegations of respondent.

III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be
used as evidence of land ownership in any registration proceedings
under the Torrens system, holds of an exception.

IV. Whether an action for quieting of title, specifically where
petitioners are in possession of subject land, can be subject of
prescription.

In his Comment,[22] the respondent, for the most part, reiterated the
findings of the trial court and the Court of Appeals.

The Court believes that the trial court rightfully dismissed petitioners
Complaint, but for reasons different from those relied upon by the
trial court and the Court of Appeals.

According to the respondent, petitioners had no legal capacity to file
the Complaint, and thus, the Complaint filed before the trial court
stated no cause of action.

Before anything else, it should be clarified that the plaintiff has no
legal capacity to sue[23] and the pleading asserting the claim
states no cause of action[24] are two different grounds for a motion
to dismiss or are two different affirmative defenses. Failure to
distinguish between the lack of legal capacity to sue from the lack
of personality to sue is a fairly common mistake. The difference
between the two is explained by this Court in Columbia Pictures, Inc.
v. Court of Appeals:[25]

Among the grounds for a motion to dismiss under the Rules of Court
are lack of legal capacity to sue and that the complaint states no
cause of action. Lack of legal capacity to sue means that the plaintiff
is not in the exercise of his civil rights, or does not have the
necessary qualification to appear in the case, or does not have the
character or representation he claims. On the other hand, a case is
dismissible for lack of personality to sue upon proof that the plaintiff
is not the real party-in-interest, hence grounded on failure to state a
cause of action. The term "lack of capacity to sue" should not be
confused with the term "lack of personality to sue." While the former
refers to a plaintiffs general disability to sue, such as on account of
minority, insanity, incompetence, lack of juridical personality or any
other general disqualifications of a party, the latter refers to the fact
that the plaintiff is not the real party- in-interest. Correspondingly, the
first can be a ground for a motion to dismiss based on the ground of
lack of legal capacity to sue; whereas the second can be used as a
ground for a motion to dismiss based on the fact that the complaint,
on the face thereof, evidently states no cause of action.

In the present case, this Court may assume that the respondent is
raising the affirmative defense that the Complaint filed by the
petitioners before the trial court stated no cause of action because
the petitioners lacked the personality to sue, not being the real party-
15

in-interest. It is the respondents contention that only the State can
file an action for annulment of his certificates of title, since such an
action will result in the reversion of the ownership of the Subject
Property to the State.

The affirmative defense that the Complaint stated no cause of action,
similar to a motion to dismiss based on the same ground, requires a
hypothetical admission of the facts alleged in the Complaint. In the
case of Garcon v. Redemptorist Fathers,[26] this Court laid down the
rules as far as this ground for dismissal of an action or affirmative
defense is concerned:

It is already well-settled by now that, in a motion to dismiss a
complaint based on lack of cause of action, the question submitted to
the court for determination is the sufficiency of the allegations of fact
made in the complaint to constitute a cause of action, and not on
whether these allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint;
that the test of the sufficiency of the facts alleged in the complaint is
whether or not, admitting the facts alleged, the court could render a
valid judgment upon the same in accordance with the prayer of said
complaint. Stated otherwise, the insufficiency of the cause of action
must appear in the face of the complaint in order to sustain a
dismissal on this ground, for in the determination of whether or not a
complaint states a cause of action, only the facts alleged therein and
no other matter may be considered, and the court may not inquire
into the truth of the allegations, and find them to be false before a
hearing is had on the merits of the case; and it is improper to inject in
the allegations of the complaint facts not alleged or proved, and use
these as basis for said motion.

In resolving whether or not the Complaint in the present case stated
a cause of action, the trial court should have limited itself to
examining the sufficiency of the allegations in the Complaint. It was
proscribed from inquiring into the truth of the allegations in the
Complaint or the authenticity of any of the documents referred or
attached to the Complaint, since these are deemed hypothetically
admitted by the respondent. The trial court evidently erred in making
findings as to the authenticity of the Deeds of Assignment executed
by Ismael Favila in favor of petitioners on 15 April 1994 and 02 June
1994; and questioning the existence and execution of the Special
Power of Attorney in favor of said Ismael Favila by his siblings on 25
February 1965. These matters may only be resolved after a proper
trial on the merits.

Petitioners alleged in their Complaint, and respondent hypothetically
admitted that: (1) Petitioners predecessors-in-interest, in the concept
of owners, had been in actual, physical, open, continuous and
adverse possession of the Subject Property against the whole world
since time immemorial; (2) The Subject Property was part of the vast
tract of land called Hacienda Quibiga awarded to Don Hermogenes
Rodriguez by the Queen of Spain by virtue of a Spanish title; (3)
Ismael Favila, an heir and successor-in-interest of Don Hermogenes
Rodriguez, acting as Attorney-in-Fact pursuant to a Special Power of
Attorney executed by his mga kapatid on 25 February 1965,
executed Deeds of Assignment covering the Subject Property in
favor of petitioners; (4) Petitioners still occupied and possessed the
Subject Property, on which their houses were erected, when they
discovered that the Subject Property was already covered by
Torrens certificates of title in the name of respondent; and (5) That
petitioners filed the Complaint to prevent their eviction by the
respondent. To determine whether these allegations are sufficient to
constitute a cause of action, it is important for this Court to establish
first the nature of petitioners action.

Indeed, petitioners Complaint filed before the trial court was
captioned as an action for declaration of nullity of respondents
certificates of title. However, the caption of the pleading should not
be the governing factor, but rather the allegations therein should
determine the nature of the action, because even without the prayer
for a specific remedy, the courts may nevertheless grant the proper
relief as may be warranted by the facts alleged in the Complaint and
the evidence introduced.[27]

The trial court believed that petitioners action was ultimately one for
reversion of the Subject Property to the public domain. Based on
the testimony of Engineer Naval and the case of Nagao v. Court of
Appeals,[28] it declared that the State, represented by the Office of
the Solicitor General, is the party-in-interest in an action for
cancellation of a certificate of title illegally issued in the name of a
16

private individual, because the eventual effect of such cancellation is
the reversion of the property to the State.

The Court disagrees in this pronouncement of the trial court, and
calls for a far closer review of its decision in Nagao v. Court of
Appeals,[29] wherein the Court held that

It is then clear from the allegations in the complaint that private
respondents claim ownership of the 2,250 square meter portion for
having possessed it in the concept of an owner, openly, peacefully,
publicly, continuously and adversely since 1920. This claim is an
assertion that the lot is private land, or that even assuming it was
part of the public domain, private respondents had already acquired
imperfect title thereto under Section 48(b) of C.A. No. 141, otherwise
known as the Public Land Act, as amended by R.A. No. 1942

Under Section 48, a subject lot is, for all legal intents and purposes,
segregated from the public domain, because the beneficiary is
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.

Consequently, merely on the basis of the allegations in the
complaint, the lot in question is apparently beyond the jurisdiction of
the Director of the Bureau of Lands and could not be the subject of a
Free Patent. Hence, dismissal of private respondents complaint
was premature and trial on the merits should have been conducted
to thresh out evidentiary matters.

It would have been entirely different if the action were clearly for
reversion, in which case, it would have to be instituted by the
Solicitor General pursuant to Section 101 of C.A. No. 141, which
provides:

Sec. 101. All actions for the reversion to the Government of lands of
the public domain or improvements thereon shall be instituted by the
Solicitor General or the officer acting in his stead, in the proper
courts, in the name of the [Republic] of the Philippines.

In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of
Honorio Dacut,[30] the difference between an action for declaration
of nullity of land titles from an action for reversion was more
thoroughly discussed as follows:

An ordinary civil action for declaration of nullity of free patents and
certificates of title is not the same as an action for reversion. The
difference between them lies in the allegations as to the character of
ownership of the realty whose title is sought to be nullified. In an
action for reversion, the pertinent allegations in the complaint would
admit State ownership of the disputed land. Hence, in Gabila vs.
Barriga [41 SCRA 131], where the plaintiff in his complaint admits
that he has no right to demand the cancellation or amendment of the
defendants title because even if the title were canceled or amended
the ownership of the land embraced therein or of the portion affected
by the amendment would revert to the public domain, we ruled that
the action was for reversion and that the only person or entity entitled
to relief would be the Director of Lands.

On the other hand, a cause of action for declaration of nullity of free
patent and certificate of title would require allegations of the plaintiffs
ownership of the contested lot prior to the issuance of such free
patent and certificate of title as well as the defendants fraud or
mistake, as the case may be, in successfully obtaining these
documents of title over the parcel of land claimed by plaintiff. In such
a case, the nullity arises strictly not from the fraud or deceit but from
the fact that the land is beyond the jurisdiction of the Bureau of
Lands to bestow and whatever patent or certificate of title obtained
therefore is consequently void ab initio. The real party-in-interest is
not the State but the plaintiff who alleges a pre-existing right of
ownership over the parcel of land in question even before the grant
of title to the defendant

In their Complaint, petitioners never alleged that the Subject Property
was part of the public domain. On the contrary, petitioners asserted
title over the Subject Property by virtue of their actual, physical,
open, continuous and adverse possession thereof, in the concept of
owners, by themselves and through their predecessors-in-interest,
since time immemorial. The Deeds of Assignment executed in their
favor and attached to their Complaint referred to a Spanish title
17

granted by the Queen of Spain to their predecessor-in-interest, Don
Hermogenes Rodriguez. Clearly, petitioners are asserting private
title over the Subject Property, and consequently, their action could
not be one for reversion.

In their instant Petition, petitioners further averred that rather than an
action for nullity of respondents certificates of title, theirs was more
appropriately an action to remove a cloud on or to quiet their title
over the Subject Property.

Article 476 of the Civil Code, on removal of a cloud on or quieting of
title, provides that:

Art. 476. Whenever there is a cloud on title to real property or any
interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast
upon title to real property or any interest therein.

Respondents certificates of title over the Subject Property appeared
valid or effective; but according to the petitioners, they were fake,
spurious and/or fraudulent, and a cloud on their title to the same
property that needed to be removed. A cloud on title has been
defined as follows:

Cloud on Title. A cloud on title is an outstanding instrument, record,
claim, encumbrance or proceeding which is actually invalid or
inoperative, but which may nevertheless impair or affect injuriously
the title to property. The matter complained of must have a prima
facie appearance of validity or legal efficacy. The cloud on title is a
semblance of title which appears in some legal form but which is in
fact unfounded. The invalidity or inoperativeness of the instrument is
not apparent on the face of such instrument, and it has to be proved
by extrinsic evidence[31]

Even as this Court agrees with the petitioners that their action was
one for removal of a cloud on or quieting of title, it does arrive at the
same conclusion as the trial court and the Court of Appeals that
petitioners had no personality to file the said action, not being the
parties-in-interest, and their Complaint should be dismissed for not
stating a cause of action.

According to Article 477 of the Civil Code, the plaintiff, in an action to
remove a cloud on or to quiet title, must have legal or equitable title
to, or interest in, the real property which is the subject matter of the
action.[32] Petitioners failed to establish in their Complaint that they
had any legal or equitable title to, or legitimate interest in, the Subject
Property so as to justify their right to file an action to remove a cloud
on or to quiet title.

Title to real property refers to that upon which ownership is based. It
is the evidence of the right of the owner or the extent of his interest,
by which means he can maintain control and, as a rule, assert right
to exclusive possession and enjoyment of the property.[33]

In their Complaint, petitioners claimed title to the Subject Property by
virtue of their actual and continuous possession of the same since
time immemorial, by themselves and through their predecessors-in-
interest. Yet, the Deeds of Assignment executed by Ismael Favila in
their favor, attached to and an integral part of their Complaint,
revealed that petitioners predecessors-in-interest based their right to
the Subject Property on the Spanish title awarded to Don
Hermogenes Rodriguez.

There existed a contradiction when petitioners based their claim of
title to the Subject Property on their possession thereof since time
immemorial, and at the same time, on the Spanish title granted to
Don Hermogenes Rodriguez. Possession since time immemorial
carried the presumption that the land had never been part of the
public domain or that it had been private property even before the
Spanish conquest.[34] If the Subject Property was already private
property before the Spanish conquest, then it would have been
beyond the power of the Queen of Spain to award or grant to
anyone.

18

The title to and possession of the Subject Property by petitioners
predecessors-in-interest could be traced only as far back as the
Spanish title of Don Hermogenes Rodriguez. Petitioners, having
acquired portions of the Subject Property by assignment, could
acquire no better title to the said portions than their predecessors-in-
interest, and hence, their title can only be based on the same
Spanish title.

Respondent maintained that P.D. No. 892 prevents petitioners from
invoking the Spanish title as basis of their ownership of the Subject
Property. P.D. No. 892 strengthens the Torrens system by
discontinuing the system of registration under the Spanish Mortgage
Law, and by categorically declaring all lands recorded under the
latter system, not yet covered by Torrens title, unregistered lands. It
further provides that within six months from its effectivity, all holders
of Spanish titles or grants should apply for registration of their land
under what is now P.D. No. 1529, otherwise known as the Land
Registration Decree. Thereafter, Spanish titles can no longer be
used as evidence of land ownership in any registration proceedings
under the Torrens system. [35] Indubitably, P.D. No. 892 divests the
Spanish titles of any legal force and effect in establishing ownership
over real property.

P.D. No. 892 became effective on 16 February 1976. The
successors of Don Hermogenes Rodriguez had only until 14 August
1976 to apply for a Torrens title in their name covering the Subject
Property. In the absence of an allegation in petitioners Complaint
that petitioners predecessors-in-interest complied with P.D. No. 892,
then it could be assumed that they failed to do so. Since they failed
to comply with P.D. No. 892, then the successors of Don
Hermogenes Rodriguez were already enjoined from presenting the
Spanish title as proof of their ownership of the Subject Property in
registration proceedings.

Registration proceedings under the Torrens system do not create or
vest title, but only confirm and record title already created and
vested.[36] By virtue of P.D. No. 892, the courts, in registration
proceedings under the Torrens system, are precluded from
accepting, confirming and recording a Spanish title. Reason
therefore dictates that courts, likewise, are prevented from accepting
and indirectly confirming such Spanish title in some other form of
action brought before them (i.e., removal of cloud on or quieting of
title), only short of ordering its recording or registration. To rule
otherwise would open the doors to the circumvention of P.D. No.
892, and give rise to the existence of land titles, recognized and
affirmed by the courts, but would never be recorded under the
Torrens system of registration. This would definitely undermine the
Torrens system and cause confusion and instability in property
ownership that P.D. No. 892 intended to eliminate.

Petitioners argued that the Spanish title may still be presented as
proof of ownership on the basis of the exception provided in the
fourth whereas clause of P.D. No. 892, which reads:

WHEREAS, Spanish titles to lands which have not yet been brought
under the operation of the Torrens system, being subject to
prescription, are now ineffective to prove ownership unless
accompanied by proof of actual possession; . . .

Since Petitioners alleged that they were in actual possession of the
Subject Property, then they could still present the Spanish title as
evidence of their ownership of the Subject Property. [37]

This Court cannot sustain petitioners argument. Actual proof of
possession only becomes necessary because, as the same whereas
clause points out, Spanish titles are subject to prescription. A holder
of a Spanish title may still lose his ownership of the real property to
the occupant who actually possesses the same for the required
prescriptive period.[38] Because of this inherent weakness of a
Spanish title, the applicant for registration of his Spanish title under
the Torrens system must also submit proof that he is in actual
possession of the real property, so as to discount the possibility that
someone else has acquired a better title to the same property by
virtue of prescription.

Moreover, legislative intent must be ascertained from a consideration
of the statute as a whole, and not just a particular provision alone. A
word or phrase taken in the abstract may easily convey a meaning
quite different from the one actually intended and evident when the
word or phrase is considered with those with which it is associated.
19

An apparently general provision may have a limited application if
read together with other provisions of the statute.[39]

The fourth whereas clause of P.D. No. 892 should be interpreted and
harmonized with the other provisions of the whole statute.[40] Note
that the tenor of the whole presidential decree is to discontinue the
use of Spanish titles and to strip them of any probative value as
evidence of ownership. It had clearly set a deadline for the filing of
applications for registration of all Spanish titles under the Torrens
system (i.e., six months from its effectivity or on 14 August 1976),
after which, the Spanish titles may no longer be presented to prove
ownership.

All holders of Spanish titles should have filed applications for
registration of their title on or before 14 August 1976. In a land
registration proceeding, the applicant should present to the court his
Spanish title plus proof of actual possession of the real property.
However, if such land registration proceeding was filed and initiated
after 14 August 1976, the applicant could no longer present his
Spanish title to the court to evidence his ownership of the real
property, regardless of whether the real property was in his actual
possession.

Therefore, the fact that petitioners were in actual possession of the
Subject Property when they filed the Complaint with the trial court on
29 April 1996 does not exclude them from the application of P.D. No.
892, and their Spanish title remain inadmissible as evidence of their
ownership of the Subject Property, whether in a land registration
proceeding or in an action to remove a cloud on or to quiet title.

The preceding discussion does not bar holders of Spanish titles from
claiming ownership of the real property on some other basis, such as
those provided in either the Land Registration Decree[41] or the
Public Land Act.[42] Petitioners though failed to allege any other
basis for their titles in their Complaint aside from possession of the
Subject Property from time immemorial, which this Court has already
controverted; and the Spanish title, which is already ineffective to
prove ownership over the Subject Property.

Therefore, without legal or equitable title to the Subject Property, the
petitioners lacked the personality to file an action for removal of a
cloud on, or quieting of, title and their Complaint was properly
dismissed for failing to state a cause of action. In view of the
dismissal of the case on this ground, it is already unnecessary for
this Court to address the issue of prescription of the action.

Wherefore, this Court DENIES the instant petition and AFFIRMS the
Decision of the Court of Appeals, dated 29 July 2002, and the Order
of the Regional Trial Court of San Mateo, Rizal, Branch 77, dated 05
February 1999, dismissing petitioners Complaint for failure to state a
cause of action.

SO ORDERED.
























Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
20



G.R. No. L-37682 November 26, 1932

CLAUDE NEON LIGHTS, FEDERAL INC., U. S. A., petitioner,
vs.
PHILIPPINE ADVERTISING CORPORATION and FRANCISCO
SANTAMARIA, Judge of First Instance of Manila, respondents.

Gibbs & McDonough for petitioner.
Courtney Whitney for respondents.



BUTTE, J.:

This case is to be determined upon the petition for writ of certiorari
and the demurrer thereto filed by the respondents. The petition sets
up two causes of action: one attacking the validity of a writ of
attachment issued by the respondent judge on the petition and
affidavit of the respondent Philippine Advertising Corporation, on
April 6, 1932; the second, attacking the validity of the order of the
respondent judge issued the same day on the petition of the
respondent Philippine Advertising Corporation, appointing a receiver
of the property which was seized by the sheriff under said writ of
attachment.

On April 5, 1932, the respondent Philippine Advertising Corporation
filed suit against the petitioner in the Court of First Instance of
Manila, claiming P300,000 as damages for alleged breach of the
agency contract existing between the said respondent and the
petitioner. At the same time, said respondent filed in said court an
application for writ of attachment duly verified in which it is stated
that the defendant (petitioner herein) is a foreign corporation having
its principal place of business in the City of Washington, District of
Columbia. It is not alleged in said application that the defendant,
Claude Neon Lights, Inc. (the petitioner herein) was about to depart
from the Philippine Islands with intent to defraud its creditors or that it
was insolvent or had removed or disposed of its property or was
about to do so with intent to defraud its creditors. The only statutory
ground relied upon in the court below and in this court for the
issuance of the writ of attachment against the petitioner is paragraph
2 of section 424 of the Code of Civil Procedure, which provides that
plaintiff may have the property of the defendant attached "in an
action against a defendant not residing in the Philippine Islands".

On April 6, 1932, the respondent judge issued the writ of attachment
as prayed for, and the sheriff has attached all the properties of the
petitioner in the Philippine Islands. On the same date, on the ex
parte petition and nomination of the respondent, the respondent
judge appointed Manuel C. Grey receiver of said properties of the
petitioner, fixing his bond at P3,000.

Motions to dissolve said writ of attachment and receivership were
fled in the court below, supported by affidavits of the attorney in fact
for the petitioner in which it is recited, among other things, that the
petitioner is not indebted to the respondent in any sum whatever nor
has it in any way breached any contracts with the respondent or at
any time interfered in the management of its business in the
Philippine Islands as carried on by its agent, the respondent, and it
has faithfully complied with every condition of said contract; that the
attachment of the machinery and plants of the petitioner, as well as
its other assets, is highly prejudicial to it as it is unable to proceed
with its business in the Philippine Islands and irreparable loss will
result to it unless such attachment be raised; that the filing of said
suit was malicious, without foundation, and intended only to injure
the petitioner and to depreciate the value of its holdings in the
Philippine Islands. It does not appear that any answer was made to
said motion in which said allegations were denied or that any refuting
evidence was offered.

On June 20 1932, the court denied said motions to vacate the
attachment and receivership, declaring that the writ of attachment
conforms to section 424 of the Code of Civil Procedure.

The petitioner for certiorari prays that the writ of attachment issued
by the respondent judge on April 6, 1932, as well as the order of the
21

same date, appointing Manuel C. Grey receiver of the property of the
petitioner, be annulled.

The sufficiency of the application for the writ of attachment assailed
by the petitioner upon several grounds but we shall confine
ourselves to the consideration of the question whether or not
paragraph 2 of section 424 of the Code of Civil Procedure is
applicable to this petitioner.

The petitioner is a corporation duly organized under the laws of the
District of Columbia; it had complied with all the requirements of the
Philippine laws and the was duly licensed to do business in the
Philippine Islands on the date said writ of attachment was issues.
The petitioner was actively engaged in doing business in the
Philippine Islands and had considerable property therein, which
consisted to its manufacturing plant, machinery, merchandise and a
large income under valuable contracts, all of which property was in
the possession and under the control and management of the
respondent Philippine Advertising Corporation, as the agent of the
petitioner, on the date said attachment was levied. Considered from
a practical and economic viewpoint, its position in the business
community was indistinguishable from that of a domestic corporation.

Section 242 of the Code of Civil Procedure under which the
petitioner's property was attached, reads as follows:

Attachment. A plaintiff may, at the commencement of his action,
or at any time afterwards, have the property of the defendant
attached as security for the satisfaction of any judgment that may be
recovered, unless the defendant gives security to pay such
judgment, in the manner hereinafter provided, in the following cases.

1. In all the cases mentioned in section four hundred and twelve,
providing for the arrest of a defendant. But the plaintiff must make an
election as to whether he will ask for an order of arrest or an order of
attachment; he shall not be entitled to both orders;

2. In an action against a defendant not residing in the Philippine
Islands.

It may be observed at the outset that the words of section 424,
supra, taken in their literal sense seem to refer to a physical
defendant who is capable of being "arrested" or who is "not residing
in the Philippine Islands". It is only by a fiction that it can be held that
a corporation is "not residing in the Philippine Islands". A corporation
has no home or residence in the sense in which those terms are
applied to natural persons. For practical purposes, a corporation is
sometimes said, in a metaphorical sense, to be "a resident" of a
certain state or a "citizen" of a certain country, which is usually the
state or country by which or under the laws of which it was created.
But that fiction or analogy between corporations and natural persons
by no means extends so far that it can be said that every statute
applicable to natural persons is applicable to corporations. Indeed,
within the same jurisdiction a corporation has been held to be a
"citizen" of the state of its creation for the purpose of determining the
jurisdiction of the Federal courts (Wisconsin vs. Pelican Insurance
Co., 127 U. S., 265) but not a "citizen" within the meaning of section
2 of article 4 of the Constitution of the United States which provides
that the citizens of each state shall be entitled to all the privileges
and immunities of citizens of the several states (Paul vs. Virginia, 8
Wall., 169).

The question arises whether this petitioner, a foreign corporation,
shall, in a metaphorical sense, be deemed as "not residing in the
Philippine Islands" in the sense in which that expression would apply
to a natural person.

Having regard to the reason for the statute which is the protection of
the creditors of a non-resident, we are of the opinion that there is not
the same reason for subjecting a duly licensed foreign corporation to
the attachment of its property by a plaintiff under section 424,
paragraph 2, as may exist in the case of a natural person not
residing in the Philippine Islands. The law does not require the latter,
as it does the former, to appoint a resident agent for service of
process; nor to prove to the satisfaction of the Government before he
does business here, as the foreign corporation must prove, that he
"is solvent and in sound financial condition" (section 68, Act No.
1459, as amended, the Corporation Law), or to produce evidence of
"fair dealing" (ibid.). He pays no license fee nor is his business
subject at any time to investigation by the Secretary of Finance and
22

the Governor-General; nor is his right to continue to do business
revocable by the Government (Cf. section 71, Act No. 1459 of the
Corporation Law). His books and papers are not liable to
examination "at any time" by the Attorney-General, the Insular
Auditor, the Insular Treasurer, "or any other officer of the
Government" on the order of the Governor-General (section 54,
ibid.). He is not, like a foreign corporation "bound by all laws, rules
and regulations applicable to domestic corporations" . . . (section 73,
ibid.), which are designed to protect creditors and the public. He can
evade service of summons and other legal process, the foreign
corporation never. (Section 72, ibid.)

Corporations, as a rule, are less mobile than individuals. This is a
specially true of foreign corporations that are carrying on business by
proper authority in these Islands. They possess, as a rule, great
capital which is seeking lucrative and more or less permanent
investment in young and developing countries like our Philippines.
Some of them came here as far back as the Spanish regime and are
still important factors in our financial and industrial life. They are
anything but "fly-by-night" concerns. The latter, we believe, are
effectually excluded from our Islands both by our laws and by our
geographical and economic situation.

If, as we believe, section 424, paragraph 2, should not be held
applicable to foreign corporations duly licensed to do business in the
Philippine Islands both because the language and the reason of the
statute limit it to natural persons, we sustain and reinforce the
provisions of section 71 of the Corporation Law, Act No. 1459, which
provides in substance that if the Secretary of Finance or the
Secretary of Commerce and Communications and the Governor-
General find a duly licensed foreign corporation to be insolvent or
that its continuance in business will involve probable loss to its
creditors, they may revoke its license and "the Attorney-General shall
take such proceedings as may be proper to protect creditors and the
public". Section 71, supra, contemplates that the proceedings
instituted by the Attorney-General shall effect the protection of all
creditors and the public equally. Obviously, the benefit of that section
will be minimized, if not entirely defeated, if a creditor or a few
creditors can obtain privileged liens by writs of attachment based on
the sole allegation, which is easily and safely made, that the
corporation is "not residing in the Philippine Islands". (Cf. Kuenzle &
Streiff vs. Villanueva, 41 Phil., 611.)lawphil.net

Paragraph 2 of section 424, supra does not apply to a domestic
corporation. Our laws and jurisprudence indicate a purpose to
assimilate foreign corporations, duly licensed to do business here, to
the status of domestic corporations. (Cf. Section 73, Act No. 1459,
and Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil., 70, 76;
Yu Cong Eng vs. Trinidad, 47 Phil., 385, 411.) We think it would be
entirely out of line with this policy should we make a discrimination
against a foreign corporation, like the petitioner, and subject its
property to the harsh writ of seizure by attachment when it has
complied not only with every requirement of law made especially of
foreign corporations, but in addition with every requirement of law
made of domestic corporations. (Section 73, supra.)

It is true that the majority of the states in the American Union hold
the contrary rule. But our situation is obviously very dissimilar from
that of a state in the American Union. There forty-eight states and
the central government, all creating corporations which do a
tremendous interstate business, are contiguous and separated by
imaginary lines. A higher degree of protection against irresponsible
corporations may be more necessary there than here. We have no
interstate business. Only the central government grants charters to
corporations. But even in the American Union there is a minority rule
which we regard as the better reasoned and the better suited to our
conditions, both geographical and economical, and more nearly in
harmony with the policy of our law both under the Spanish regime
and since the American occupation. This minority rule is supported
by the following authorities: Brand vs. Auto Service Co. (New Jersey,
1907), 67 Atl., 19, 20; Mellor vs. Edward V. Hartford, Inc. (New
Jersey, 1929), 146 Atl., 206; Charles Friend & Co. vs. Gold Smith &
Co. (Illinois, 1923), 138 N. E., 185; Fullilove vs. Central State Bank
(Louisiana, 1926), 107 So., 590.

In the present instance, a particularly monstrous result has followed
as s consequence of the granting of the writ attaching all of the
property of the petitioner on the sole allegation that it "is not residing
in the Philippine Islands". As the petitioner's business was a going
concern, which the sheriff, who levied the writ, obviously could not
23

manage, it became necessary on the same day for the court to
appoint a receiver. This receiver, as the demurrer admits, "was and
is an employee working under the president of the respondent
Philippine Advertising Corporation, so that to all intents and
purposes, all the property of the petitioner in the Philippine Islands
was seized and delivered into the hands of the respondent Philippine
Advertising Corporation."


The prayer of the petitioner is granted. The order and writ of
attachment complained of are annulled and set aside and the court
below is directed to vacate the order appointing Manuel C. Grey
receiver of the property of the petitioner and to require said Manuel
C. Grey to submit his final report at the earliest practicable date.
Costs in both instances to be borne by the respondent, Philippine
Advertising Corporation. So ordered.

Avancea, C.J., Street, Malcolm, Villamor, Ostrand, Villa-Real, Abad
Santos, Vickers and Imperial, JJ., concur.





























24


G.R. Nos. 162335 & 162605 December 12, 2005

SEVERINO M. MANOTOK IV, FROILAN M. MANOTOK,
FERNANDO M. MANOTOK, FAUSTO MANOTOK III, MA.
MAMERTA M. MANOTOK, PATRICIA L. TIONGSON, PACITA L.
GO, ROBERTO LAPERAL III, MICHAEL MARSHALL V. MANOTOK,
MARY ANN MANOTOK, FELISA MYLENE V. MANOTOK, IGNACIO
MANOTOK, JR., MILAGROS V. MANOTOK, SEVERINO MANOTOK
III, ROSA R. MANOTOK, MIGUEL A.B. SISON, GEORGE M.
BOCANEGRA, MA. CRISTINA E. SISON, PHILIPP L. MANOTOK,
JOSE CLEMENTE L. MANOTOK, RAMON SEVERINO L.
MANOTOK, THELMA R. MANOTOK, JOSE MARIA MANOTOK,
JESUS JUDE MANOTOK, JR. and MA. THERESA L. MANOTOK,
represented by their Attorney-in-fact, Rosa R. Manotok, Petitioners,
vs.
HEIRS OF HOMER L. BARQUE, represented by TERESITA
BARQUE HERNANDEZ, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

These consolidated petitions for review assail, in G.R. No. 162335,
the February 24, 2004 Amended Decision1 of the Third Division of
the Court of Appeals in CA-G.R. SP No. 66642, ordering the
Register of Deeds of Quezon City to cancel petitioners TCT No. RT-
22481 and directing the Land Registration Authority (LRA) to
reconstitute respondents TCT No. 210177; and in G.R. No. 162605,
the November 7, 2003 Amended Decision2 of the Special Division of
Five of the Former Second Division in CA-G.R. SP No. 66700
directing the Register of Deeds of Quezon City to cancel petitioners
TCT No. RT-22481, and the LRA to reconstitute respondents TCT
No. T-210177 and the March 12, 2004 Resolution3 denying the
motion for reconsideration.

The facts as found by the Court of Appeals4 are as follows:

Petitioners, (respondents herein) as the surviving heirs of the late
Homer Barque, filed a petition with the LRA for administrative
reconstitution of the original copy of TCT No. 210177 issued in the
name of Homer L. Barque, which was destroyed in the fire that
gutted the Quezon City Hall, including the Office of the Register of
Deeds of Quezon City, sometime in 1988. In support of the petition,
petitioners submitted the owners duplicate copy of TCT No. 210177,
real estate tax receipts, tax declarations and the Plan FLS 3168 D
covering the property.

Upon being notified of the petition for administrative reconstitution,
private respondents (petitioners herein) filed their opposition thereto
claiming that the lot covered by the title under reconstitution forms
part of the land covered by their reconstituted title TCT No. RT-
22481, and alleging that TCT No. 210177 in the name of petitioners
predecessors-in-interest is spurious.

On June 30, 1997, Atty. Benjamin M. Bustos, as reconstituting
officer, denied the reconstitution of TCT No. 2101775 on grounds
that:

1. Lots 823-A and 823-B, Fls-3168-D, containing areas of 171,473
Sq. Mtrs. and 171,472 Sq. Mtrs., respectively, covered by TCT No.
210177, appear to duplicate Lot 823 Piedad Estate, containing an
area of 342,945 Sq. Mtrs., covered by TCT No. 372302 registered in
the name of Severino M. Manotok, et. al., reconstituted under Adm.
Reconstitution No. Q-213 dated February 01, 1991;

2. The submitted plan Fls-3168-D is a spurious document as
categorically stated by Engr. Privadi J.G. Dalire, Chief, Geodetic
Surveys Division, Land Management Bureau, in his letter dated
February 19, 1997.6

Respondents motion for reconsideration was denied in an order7
dated February 10, 1998 hence they appealed to the LRA.

The LRA ruled that the reconstituting officer should not have required
the submission of documents other than the owners duplicate
certificate of title as bases in denying the petition and should have
confined himself with the owners duplicate certificate of title.8 The
LRA further declared:

25

Based on the documents presented, petitioners have established by
clear and convincing evidence that TCT NO. 210177 was, at the time
of the destruction thereof, valid, genuine, authentic and effective.
Petitioners duly presented the original of the owners duplicate copy
of TCT No. 210177 .... The logbook of the Register of Deeds of
Quezon City lists TCT No. 210177 as among the titles lost .... The
Register of Deeds of Quezon City himself acknowledged the
existence and authenticity of TCT No. 210177 when he issued a
certification to the effect that TCT No. 210177 was one of the titles
destroyed and not salvaged from the fire that gutted the Quezon City
Hall on 11 June 1988 ....

It is likewise noteworthy that the technical description and
boundaries of the lot reflected in TCT No. 210177 absolutely conform
to the technical description and boundaries of Lot 823 Piedad Estate
... as indicated in the B. L. Form No. 28-37-R dated 11-8-94 and B.
L. Form No. 31-10 duly issued by the Bureau of Lands ....

It therefore becomes evident that the existence, validity, authenticity
and effectivity of TCT No. 210177 was established indubitably and
irrefutably by the petitioners. Under such circumstances, the
reconstitution thereof should be given due course and the same is
mandatory.9

It would be necessary to underscore that the certified copy of Plan
FLS 3168 D was duly issued by the office of Engr. Ernesto Erive,
Chief, Surveys Division LMS-DENR-NCR whose office is the lawful
repository of survey plans for lots situated within the National Capital
Region including the property in question. Said plan was duly signed
by the custodian thereof, Carmelito Soriano, Chief Technical
Records and Statistics Section, DENR-NCR. Said plan is likewise
duly supported by Republic of the Philippines Official Receipt No.
2513818 Q dated 9-23-96 .... Engr. Erive in his letter dated 28
November 1996 addressed to Atty. Bustos confirmed that a
microfilm copy of Plan FLS 3168D is on file in the Technical Records
and Statistics Section of his office. Engr. Dalire, in his letter dated 2
January 1997 addressed to Atty. Bustos even confirmed the
existence and authenticity of said plan.
The claim of Engr. Dalire in his letter dated 19 February 1997 that his
office has no records or information about Plan FLS 3168-D is belied
by the certified copy of the computer print-out duly issued by the
Bureau of Lands indicating therein that FLS 3168D is duly entered
into the microfilm records of the Bureau of Lands and has been
assigned Accession Number 410436 appearing on Page 79,
Preliminary Report No. 1, List of Locator Cards and Box Number
0400 and said computer print-out is duly supported by an Offical
Receipt .

The said Plan FLS 3168D is indeed authentic and valid coming as it
does from the legal repository and duly signed by the custodian
thereof. The documentary evidence presented is much too
overwhelming to be simply brushed aside and be defeated by the
fabricated statements and concoctions made by Engr. Dalire in his
19 February 1997 letter. 10

Nevertheless, notwithstanding its conclusion that petitioners title was
fraudulently reconstituted, the LRA noted that it is only the Regional
Trial Court (RTC) which can declare that the same was indeed
fraudulently reconstituted. It thus opined that respondents title may
only be reconstituted after a judicial declaration that petitioners title
was void and should therefore be cancelled.11

The dispositive portion of the LRAs decision reads:

WHEREFORE, in view of the foregoing, it is hereby ordered that
reconstitution of TCT No. 210177 in the name of Homer L. Barque,
Sr. shall be given due course after cancellation of TCT No. RT-
22481 (372302) in the name of Manotoks upon order of a court of
competent jurisdiction.

SO ORDERED.12

Petitioners filed a motion for reconsideration which was opposed by
respondents with a prayer that reconstitution be ordered
immediately.

On June 14, 2001, petitioners motion for reconsideration and
respondents prayer for immediate reconstitution were denied.13

26

From the foregoing, respondents filed a petition for review14 with the
Court of Appeals docketed as CA-G.R. SP No. 66700 and praying
that the LRA be directed to immediately reconstitute TCT No.
210177 without being subjected to the condition that petitioners TCT
No. RT-22481 [372302] should first be cancelled by a court of
competent jurisdiction.15 Petitioners likewise filed a petition for
review with the Court of Appeals docketed as CA-G.R. SP No.
66642.

In CA-G.R. SP No. 66700, the Second Division of the Court of
Appeals rendered a Decision16 on September 13, 2002, the
dispositive portion of which reads:

WHEREFORE, the foregoing premises considered the assailed
Resolution of the LRA dated June 24, 1998 is AFFIRMED in toto and
the petition for review is ordered DISMISSED. No pronouncement as
to costs.

SO ORDERED.17

Respondents moved for reconsideration.18 On November 7, 2003,
the Special Division of Five of the Former Second Division rendered
an Amended Decision in CA-G.R. SP No. 66700, the dispositive
portion of which reads:

WHEREFORE, our decision dated 13 September 2002 is hereby
reconsidered. Accordingly, the Register of Deeds of Quezon City is
hereby directed to cancel TCT No. RT-22481 of private respondents
and the LRA is hereby directed to reconstitute forthwith petitioners
valid, genuine and existing Certificate of Title No. T-210177.

No pronouncement as to costs.

SO ORDERED.19

Petitioners motion for reconsideration of the amended decision in
CA-G.R. SP No. 66700 was denied,20 hence, this petition docketed
as G.R. No. 162605.

Meanwhile, in CA-G.R. SP No. 66642, the Third Division of the Court
of Appeals rendered a Decision21 on October 29, 2003, the
dispositive portion of which reads:

WHEREFORE, the petition is hereby DENIED. The Resolution of the
LRA dated 24 June 1998 is hereby AFFIRMED.

SO ORDERED.22

In so ruling, the Third Division of the Court of Appeals declared that
the LRA correctly deferred in giving due course to the petition for
reconstitution since there is yet no final judgment upholding or
annulling respondents title.23

Respondents motion for reconsideration was granted by the Third
Division of the Court of Appeals on February 24, 2004, thus:

WHEREFORE, the Motion for Reconsideration is hereby GRANTED.
The Decision of this Court dated 29 October 2003 is
RECONSIDERED and a new one is entered ordering the Register of
Deeds of Quezon City to cancel petitioners TCT No. RT-22481 and
directing the LRA to reconstitute forthwith respondents TCT No. T-
210177.

SO ORDERED.24

From the foregoing decisions of the Court of Appeals in CA-G.R. SP
No. 66700 and CA-G.R. SP No. 66642, petitioners filed separate
petitions for review before this Court docketed as G.R. No. 162605
and G.R. No. 162335, respectively.

In G.R. No. 162605, petitioners argue that:

I

THE MAJORITY JUSTICES ACTED WITHOUT JURISDICTION IN
ORDERING THE CANCELLATION OF PETITIONERS EXISTING
TITLE, CONSIDERING THAT:

27

a. THEY ORDERED THE CANCELLATION OF TITLE DESPITE
THE FACT THAT THE SAME IS NOT PART OF THE RELIEF
SOUGHT IN A RECONSTITUTION PROCEEDINGS.

b. THEY ALLOWED A COLLATERAL ATTACK ON A TORRENS
CERTIFICATE OF TITLE; and

c. THE COURT OF APPEALS, IN RESOLVING AN APPEAL OF
THE DECISION OF THE LAND REGISTRATION AUTHORITY,
DOES NOT HAVE JURISDICTION TO ORDER THE
CANCELLATION OF TITLE, SINCE ONLY A PROPER REGIONAL
TRIAL COURT CAN ORDER THE ANNULMENT/CANCELLATION
OF A TORRENS TITLE. BY ALLOWING A "SHORT CUT", THE
MAJORITY JUSTICES DEPRIVED THE PETITIONERS OF THEIR
PROPERTY AND THEIR CONSTITUTIONALLY PROTECTED
RIGHT TO DUE PROCESS OF LAW.

II

THE MAJORITY JUSTICES GRAVELY MISAPPLIED THE RULING
OF THIS HONORABLE COURT IN ORTIGAS V. VELASCO,
CONSIDERING THAT:

a. IN THE ORTIGAS CASE, THERE WERE TWO TITLES
EXISTING OVER THE SAME PARCEL OF LAND, AS A RESULT
OF THE RECONSTITUTED TITLE ISSUED IN THE NAME OF
MOLINA. IN THE INSTANT CASE, ONLY PETITIONERS HOLD
TITLE TO THE PROPERTY IN QUESTION, AS RESPONDENTS
ARE MERELY TRYING TO HAVE TITLE RECONSTITUTED IN
THEIR NAMES.

b. IN ORTIGAS, THERE WERE SEVERAL DECISIONS OF THE
SUPREME COURT WHICH PREVIOUSLY RESOLVED THE ISSUE
OF OWNERSHIP OF ORTIGAS PROPERTY. HENCE, THERE
WAS SUFFICIENT GROUND TO ANNUL MOLINAS TITLE
OUTRIGHT. IN THE INSTANT CASE, THERE ARE NO SUCH
DECISIONS IN FAVOR OF RESPONDENTS WHICH WOULD
JUSTIFY THE CANCELLATION OF THE TITLE OF PETITIONERS
WITHOUT ANY HEARING.25

In G.R. No. 162335, petitioners raise the following issues:

I. THE HONORABLE COURT OF APPEALS (THIRD DIVISION)
COMMITTED GRAVE ABUSE OF DISCRETION AND GROSS
IGNORANCE OF THE LAW IN ORDERING THE LAND
REGISTRATION AUTHORITY TO CANCEL TCT NO. RT-22481 OF
PETITIONERS MANOTOK NOTWITHSTANDING THE FACT THAT
SAID COURT WAS FULLY COGNIZANT THAT IT HAS NO
JURISDICTION TO EXERCISE SUCH AUTHORITY AND POWER
AND THE LAND REGISTRATION AUTHORITY IS EQUALLY
DEVOID OF JURISDICTION ON THE MATTER BECAUSE UNDER
THE JUDICIARY REORGANIZATION ACT OF 1980
SPECIFICALLY SECTION 19 (2) THEREOF, ONLY THE
REGIONAL TRIAL COURTS HAVE EXCLUSIVE ORIGINAL
JURISDICTION OVER CIVIL ACTIONS WHICH INVOLVES TITLE
TO, OR POSSESSION OF, REAL PROPERTY, OR ANY INTEREST
THEREIN.

II. THE HONORABLE COURT OF APPEALS (THIRD DIVISION)
COMMITTED GRAVE ABUSE OF DISCRETION AND GROSS
IGNORANCE OF THE LAW IN INVOKING EQUITABLE
CONSIDERATION TO JUSTIFY ITS CHALLENGED AMENDED
DECISION DATED FEBRUARY 24, 2004 DIRECTING LRA TO
CANCEL PETITIONERS MANOTOKS TITLE NOTWITHSTANDING
THE FACT, AS STATED, THE LAW EXPLICITLY VESTS
EXCLUSIVE ORIGINAL JURISDICTION TO THE REGIONAL TRIAL
COURTS OVER CIVIL ACTIONS WHICH INVOLVES TITLE TO, OR
POSSESSION OF, REAL PROPERTY, OR ANY INTEREST
THEREIN.

III. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS
OF JURISDICTION IN FAILING TO ORDER THE SETTING ASIDE
OF THE CHALLENGED RESOLUTION DATED JUNE 24, 1998 OF
RESPONDENT LAND REGISTRATION AUTHORITY IN LRC
ADMIN. CASE NO. Q-547 [97] VIEWED FROM THE FACT THAT
SAID RESOLUTION OF LRA IS PATENTLY AT WAR WITH LAW
AND CONTROLLING JURISPRUDENCE THAT PROHIBITS
RECONSTITUTION OF TITLE BY THIRD PARTY ALLEGED TO
28

HAVE BEEN LOST OR DESTROYED IF ANOTHER VALID TITLE
IS EXISTING COVERING THE LAND SUBJECT THEREOF.

IV. THE LRA COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
ORDERING THE RECONSTITUTION OF THE TITLE OF HOMER
BARQUE, SR. SUBJECT ONLY TO THE CONDITION THAT THE
TITLE OF PETITIONERS MANOTOK SHOULD FIRST BE
ORDERED CANCELLED BY COURT OF COMPETENT
JURISDICTION IN THE FACE OF THE GLARING FACTS THAT
SAID TITLE IS HIGHLY SUSPECT AND BEARS BADGES OF
FABRICATION AND FALSIFICATION AND THEREFORE NO
OTHER LOGICAL AND CREDIBLE CONCLUSION CAN BE
DRAWN EXCEPT THAT IT IS A FAKE AND SPURIOUS TITLE.

V. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF IN EXCESS
OF JURISDICTION IN ALLOWING RESPONDENTS MOTION FOR
RECONSIDERATION WHICH WAS CLEARLY FILED OUT OF
TIME.26

On August 2, 2004, the petition in G.R. No. 162605 was consolidated
with the petition in G.R. No. 162335.27

In sum, petitioners contend that (a) the LRA has no authority to annul
their title; (b) the reconstitution of respondents Torrens title would be
a collateral attack on petitioners existing title; (c) they were not given
the opportunity to be heard, specifically the chance to defend the
validity of their Torrens title; (d) the Court of Appeals, in resolving the
appeal from the LRA, has no jurisdiction to order the cancellation of
petitioners title; and (e) the ruling in Ortigas was misapplied.

The petitions must be denied.

The LRA properly ruled that the reconstituting officer should have
confined himself to the owners duplicate certificate of title prior to the
reconstitution. Section 3 of Republic Act (RA) No. 2628 clearly
provides:

Section 3. Transfer certificates of title shall be reconstituted from
such of the sources hereunder enumerated as may be available, in
the following order:

(a) The owners duplicate of the certificate of title;

....

When respondents filed the petition for reconstitution, they submitted
in support thereof the owners duplicate certificate of title, real estate
tax receipts and tax declaration. Plainly, the same should have more
than sufficed as sources for the reconstitution pursuant to Section 3
of RA No. 26 which explicitly mandates that the reconstitution shall
be made following the hierarchy of sources as enumerated by law. In
addition, Section 12 of the same law requires that the petition shall
be accompanied with a plan and technical description of the property
only if the source of the reconstitution is Section 3(f) of RA No. 26.
Thus:

Section 12. Provided, That in case the reconstitution is to be
made exclusively from sources enumerated in section 2(f) or 3(f) of
this Act, the petition shall further be accompanied with a plan and
technical description of the property duly approved by the Chief of
the General Land Registration Office, or with a certified copy of the
description taken from a prior certificate of title covering the same
property.29

Since respondents source of reconstitution is the owners duplicate
certificate of title, there is no need for the reconstituting officer to
require the submission of the plan, much less deny the petition on
the ground that the submitted plan appears to be spurious. By
enumerating the hierarchy of sources to be used for the
reconstitution, it is the intent of the law to give more weight and
preference to the owners duplicate certificate of title over the other
enumerated sources.

The factual finding of the LRA that respondents title is authentic,
genuine, valid, and existing, while petitioners title is sham and
spurious, as affirmed by the two divisions of the Court of Appeals, is
conclusive before this Court. It should remain undisturbed since only
29

questions of law may be raised in a petition for review under Rule 45
of the Rules of Court.

Findings of fact of administrative bodies are accorded respect, even
finality by this Court and, when affirmed by the Court of Appeals, are
no longer reviewable except only for very compelling reasons. Basic
is the rule that factual findings of agencies exercising quasi-judicial
functions are accorded not only respect but even finality, aside
from the consideration that this Court is essentially not a trier of
facts.30

Such questions as whether certain items of evidence should be
accorded probative value or weight, or rejected as feeble or
spurious, or whether or not the proofs on one side or the other are
clear and convincing and adequate to establish a proposition in
issue, are without doubt questions of fact. Whether or not the body of
proofs presented by a party, weighed and analyzed in relation to
contrary evidence submitted by adverse party, may be said to be
strong, clear and convincing; whether or not certain documents
presented by one side should be accorded full faith and credit in the
face of protests as to their spurious character by the other side;
whether or not inconsistencies in the body of proofs of a party are of
such gravity as to justify refusing to give said proofs weight all
these are issues of fact. Questions like these are not reviewable by
this court which, as a rule, confines its review of cases decided by
the Court of Appeals only to questions of law raised in the petition
and therein distinctly set forth.31 A petition for review should only
cover questions of law. Questions of fact are not reviewable.32

In Dolfo v. Register of Deeds for the Province of Cavite,33 this Court
categorically declared:

Second. Both the trial court and the Court of Appeals made a factual
finding that petitioners title to the land is of doubtful authenticity.

Having jurisdiction only to resolve questions of law, this Court is
bound by the factual findings of the trial court and the Court of
Appeals....

In view of the foregoing, it is no longer necessary to remand the case
to the RTC for the determination of which title, petitioners' or
respondents', is valid or spurious. This has been ruled upon by the
LRA and duly affirmed by the two divisions of the Court of Appeals.

The LRA has the jurisdiction to act on petitions for administrative
reconstitution. It has the authority to review, revise, reverse, modify
or affirm on appeal the decision of the reconstituting officer. The
function is adjudicatory in nature it can properly deliberate on the
validity of the titles submitted for reconstitution. Logically, it can
declare a title as sham or spurious, or valid on its face. Otherwise, if
it cannot make such declaration, then there would be no basis for its
decision to grant or deny the reconstitution. The findings of fact of
the LRA, when supported by substantial evidence, as in this case,
shall be binding on the Court of Appeals.34

In the reconstitution proceedings, the LRA is bound to determine
from the evidence submitted which between or among the titles is
genuine and existing to enable it to decide whether to deny or
approve the petition. Without such authority, the LRA would be a
mere robotic agency clothed only with mechanical powers.

The Court of Appeals also properly exercised its appellate
jurisdiction over the judgment of the LRA. Under Sections 1 and 3,
Rule 43 of the Rules of Court, the appellate court has jurisdiction on
appeals from judgments or final orders of the LRA, whether the
appeal involves questions of fact, of law, or mixed questions of fact
and law.

Indeed, it would be needlessly circuitous to remand the case to the
RTC to determine anew which of the two titles is sham or spurious
and thereafter appeal the trial courts ruling to the Court of Appeals.
After all, the LRA and the two divisions of the appellate court have
already declared that petitioners title is forged. In Mendoza v. Court
of Appeals,35 we ruled that:

Now, technically, the revocation and cancellation of the deed of sale
and the title issued in virtue thereof in de los Santos favor should be
had in appropriate proceedings to be initiated at the instance of the
Government. However, since all the facts are now before this Court,
30

and it is not within de los Santos power in any case to alter those
facts at any other proceeding, or the verdict made inevitable by said
facts, for this Court to direct at this time that cancellation proceedings
be yet filed to nullify the sale to de los Santos and his title, would be
needlessly circuitous and would unnecessarily delay the termination
of the controversy at bar, .... This Court will therefore make the
adjudication entailed by the facts here and now, without further
proceedings, as it has done in other cases in similar premises.

No useful purpose will be served if a case or the determination of an
issue in a case is remanded to the trial court only to have its decision
raised again to the Court of Appeals and then to the Supreme Court.
The remand of the case or of an issue to the lower court for further
reception of evidence is not necessary where the Court is in position
to resolve the dispute based on the records before it and particularly
where the ends of justice would not be subserved by the remand
thereof.36

The Register of Deeds, the LRA and the Court of Appeals have
jurisdiction to act on the petition for administrative reconstitution. The
doctrine laid down in Alabang Dev. Corp., et al. v. Hon. Valenzuela,
etc., et al.37 does not apply in the instant case. In Alabang, the Court
stressed that:

[L]ands already covered by duly issued existing Torrens Titles
cannot be the subject of petitions for reconstitution of allegedly lost
or destroyed titles filed by third parties without first securing by final
judgment the cancellation of such existing titles. The courts simply
have no jurisdiction over petitions by such third parties for
reconstitution of allegedly lost or destroyed titles over lands that are
already covered by duly issued subsisting titles in the names of their
duly registered owners. The very concept of stability and
indefeasibility of titles covered under the Torrens System of
registration rules out as anathema the issuance of two certificates of
title over the same land to two different holders thereof. 38

The Alabang ruling was premised on the fact that the existing
Torrens title was duly issued and that there is only one title
subsisting at the time the petition for reconstitution was filed. In the
instant case, it cannot be said that petitioners title was duly issued
much less could it be presumed valid considering the findings of the
LRA and the Court of Appeals that the same is sham and spurious.

The Court of Appeals properly applied the doctrine laid down in
Ortigas in refusing to remand the case to the trial court. As expressly
declared in Ortigas & Company Limited Partnership v. Velasco:39

Ordinarily, the relief indicated by the material facts would be the
remand of the reconstitution case (LRC No. Q-5405) to the Court of
origin with instructions that Ortigas and the Solicitor Generals
appeals from the judgment rendered therein, which were wrongly
disallowed, be given due course and the records forthwith
transmitted to the appellate tribunal. This, in fact, is a relief
alternatively prayed for by petitioner Ortigas. Considering however
the fatal infirmities afflicting Molinas theory or cause of action,
evident from the records before this Court, such a remand and
subsequent appeal proceedings would be pointless and unduly
circuitous. Upon the facts, it is not possible for Molinas cause to
prosper. To defer adjudication thereon would be unwarranted and
unjust.

The same rationale should apply in the instant case. As already
discussed, the validity of respondents and petitioners title have
been squarely passed upon by the LRA and reviewed and affirmed
by the Court of Appeals, which factual findings are no longer
reviewable by this Court.

A careful examination of the case of Spouses Cayetano, et al. v. CA,
et al.,40 where this Court, as claimed by petitioners, have affirmed
their title over the disputed property, would reveal that the sole issue
resolved therein is whether or not a tenancy relationship exists
between the parties.41 There was no adjudication on ownership. In
fact, it cannot even be discerned if the property subject of the
Spouses Cayetano case refers to the property subject of the instant
controversy.

There is no basis in the allegation that petitioners were deprived of
"their property" without due process of law when the Court of
Appeals ordered the cancellation of their Torrens title, even without a
direct proceeding in the RTC. As already discussed, there is no need
31

to remand the case to the RTC for a re-determination on the validity
of the titles of respondents and petitioners as the same has been
squarely passed upon by the LRA and affirmed by the appellate
court. By opposing the petition for reconstitution and submitting their
administratively reconstituted title, petitioners acquiesced to the
authority and jurisdiction of the reconstituting officer, the LRA and the
Court of Appeals, and recognized their authority to pass judgment on
their title. All the evidence presented was duly considered by these
tribunals. There is thus no basis to petitioners claim that they were
deprived of their right to be heard and present evidence, which is the
essence of due process.

As held in Yusingco v. Ong Hing Lian:42

Therefore, it appearing from the records that in the previous petition
for reconstitution of certificates of title, the parties acquiesced in
submitting the issue of ownership for determination in the said
petition, and they were given the full opportunity to present their
respective sides of the issues and evidence in support thereof, and
that the evidence presented was sufficient and adequate for
rendering a proper decision upon the issue, the adjudication of the
issue of ownership was valid and binding.


The reconstitution would not constitute a collateral attack on
petitioners title which was irregularly and illegally issued in the first
place.43 As pertinently held in Dolfo v. Register of Deeds for the
Province of Cavite:44

The rule that a title issued under the Torrens System is presumed
valid and, hence, is the best proof of ownership of a piece of land
does not apply where the certificate itself is faulty as to its purported
origin.

In this case, petitioner anchors her arguments on the premise that
her title to the subject property is indefeasible because of the
presumption that her certificate of title is authentic. However, this
presumption is overcome by the evidence presented, consisting of
the LRA report that TCT No. T-320601 was issued without legal
basis

.

Thus, petitioner cannot invoke the indefeasibility of her certificate of
title. It bears emphasis that the Torrens system does not create or
vest title but only confirms and records one already existing and
vested. Thus, while it may be true, as petitioner argues, that a land
registration court has no jurisdiction over parcels of land already
covered by a certificate of title, it is equally true that this rule applies
only where there exists no serious controversy as to the authenticity
of the certificate.

Under similar circumstances, this Court has ruled that wrongly
reconstituted certificates of title secured through fraud and
misrepresentation cannot be the source of legitimate rights and
benefits.45

WHEREFORE, the petitions are DENIED. In G.R. No. 162335, the
February 24, 2004 Amended Decision of the Third Division of the
Court of Appeals in CA-G.R. SP No. 66642, ordering the Register of
Deeds of Quezon City to cancel petitioners TCT No. RT-22481 and
directing the Land Registration Authority to reconstitute respondents
TCT No. 210177; and in G.R. No. 162605, the November 7, 2003
Amended Decision of the Special Division of Five of the Former
Second Division in CA-G.R. SP No. 66700 directing the Register of
Deeds of Quezon City to cancel petitioners TCT No. RT-22481, and
the Land Registration Authority to reconstitute respondents TCT No.
T-210177 and the March 12, 2004 Resolution denying the motion for
reconsideration, are AFFIRMED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR


32



G.R. No. L-14869 October 27, 1920

THE DIRECTOR OF LANDS, applicant-appelle,
vs.
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, objector-
appellant.
JUSTA DE GUZMAN, ET AL., objectors-appellees.

Hartigan and Welch for appellant.
Gregorio C. Concepcion for appellees.



MALCOLM, J.:

In 1913, cadastral proceedings were begun to settle the title to a
considerable tract of land situated in the Province of Rizal. Thirteen
of the cadastral lots were claimed by the municipality of Cainta,
Province of Rizal, the Roman Catholic Archbishop of Manila, and
various private individuals. The judgment of the trial court
adjudicated the parcels in question to the private claimants. From
this judgment both the Roman Catholic Archbishop of Manila and the
municipality of Cainta appealed, but subsequently the appeal of the
latter wad dismissed for failure to prosecute. The contest has thus
narrowed down to one between the Church as appellant and various
individuals as appellees.

A ruling as to four of the lots can quickly be made. By stipulation
during the trial, and by admission of counsel for appellant, Policarpio
Buenviaje is conceded to have title to lot 2187. As to lot 2186, the
only evidence before us, confirmed by the findings of the trial court,
is, that Mamerta Roxas went into possession of the same in 1895;
and when counsel for the Church made his offer to present rebuttal
testimony, he failed to mention this lot. Likewise, as to lots 2213 and
2214, the only evidence before us, confirmed by the findings of the
trial court, is, that Antonio, Benito, and Gervasio dela Paz went into
possession of the same in 1896; the record states that "ambas
partes dan por terminadas sus pruebas," while counsel for the
Church in making his offer of rebuttal testimony again failed to
include these two lots.

A more difficult situation has arisen with reference to the nine
remaining cadastral lots. To understand it, a brief narration of the
course of the proceedings in the trial court will have to be made.

The trial as to the land now before us opened with a stipulation to the
effect that the composition title of the Church with the spanish
Government included this land. The Church presented one witness
and rested. The private oppositors then called their respective
witnesses. Each endeavored to prove title by possession, best
understood by the following table:

Parcel No. Oppositor. Possession began Acts of possession
2176, 2191, 2182 Justa de Guzman 1895 Planted rice; paid taxes
2178, 2180, 2190 Melecio S. Buenaventura 1882 Planted rice
2184, 2185 Justo S. Buenaventura 1885 Cultivation and harvest
2192 Justo Javier 1885 Planted rice; harvested.

Counsel for the Church, thereupon, made an offer to present
additional testimony with reference to lots 2176, 2178, 2180, 2182,
2184, 2185, 2190, 2191, and 2192, or the lots above enumerated in
the table. Three witnesses were called to the stand, but each time,
before any pertinent testimony could be secured from them, an
objection was made by counsel for the oppositors that the proof
related to the evidence in chief of the Church, and this was sustained
by the court.

To resolve the facts into their simplest terms, it is evident that when
an admission was made of the royal title, the Church had shown that
it was the legitimate owner of the land to which it refers. The most
perfect title could, however, be lost by abandonments. When,
therefore, the private oppositors showed possession for the
prescriptive period, they had made their case, and the burden of
proof had shifted. To overcome this burden, it was then incumbent
upon the Church to demonstrate that such possession had been
interrupted, or that it was merely possession through the tolerance of
the Church.
33


This brings us to the specific consideration of assignment of error
No. 2 of the appellant to the effect that the court erred in refusing to
admit evidence tendered by this claimant and appellant in answer to
rival claims. A correct ruling can most appropriately be arrived at by
a consideration of the nature of cadastral proceedings, with
reference to the usual rules of trial practice and evidence.

The object of a cadastral petition, as all know, is that the title to the
various lots embraced in the survey may be settled and adjudicated.
It is in the nature of a proceeding in rem, promoted by the Director of
Lands, somewhat, akin to a judicial inquiry and investigation leading
to a judicial decree. In one sense, there is no plaintiff and there is no
defendant. In another sense, the Government is the plaintiff and all
the claimants are defendants. (Act No. 2259, sec. 10.) The trial is
conducted in the same manner as ordinary trials and proceedings in
the Court of Land Registration. (Sec. 11.) As to this court, now
abolished, the Land Registration Act provides that it "shall conform,
as near as may be, to the practice in special proceedings in courts of
first instance." (Act No. 496, sec. 2) The Code of Civil Procedure,
which is thus brought into relation with the Cadastral Act, prescribes
the order in which the trial must proceed. (Secs. 56, 132). The usual
rules of practice, procedure, and evidence govern registration
proceedings.

Obviously, orderly procedure must be followed if injurious surprises
and annoying delays in the administration of justice are to be
avoided. Evidence cannot be given piecemeal. The strict rule is that
the plaintiff must try his case out when he commences.
Nevertheless, a relaxation of the rule is permitted in the sound
discretion of the court. "The proper rule for the exercise of this
discretion," it has been said by an eminent author, "is, that material
testimony should not be excluded because offered by the plaintiff
after the defendant has rested, although not in rebuttal, unless it has
been kept back by a trick, and for the purpose of deceiving the
defendant and affecting his case injuriously." (1 Thompson on Trials,
sec. 346.)1awph!l.net

These principles find their echo in Philippine remedial law. While the
general rule is rightly recognized, the Code of Civil Procedure
authorizes the judge "for special reasons," to change the order of the
trial, and "for good reason, in the furtherance of justice," to permit the
parties "to offer evidence upon their original case." (Sec. 132.) These
exceptions are made stronger when one considers the character of
registration proceedings and the fact that where so many parties are
involved, and action is taken quickly and abruptly, conformity with
precise legal rules should not always be expected. Even at the risk of
violating legal formul, an opportunity should be given to parties to
submit additional corroborative evidence in support of their claims of
title, if the ends of justice so require. (Rodriquez vs. Director of Lands
[1915], 31 Phil., 272; Government of the Philippine Islands vs. Abural
[1919], 39 Phil., 996.)

We believe that the offer of counsel for the Church could property be
classified as evidence in denial of an affirmative fact; but that even if
not technically rebuttal evidence, yet in the interest of justice and the
ascertainment of the truth it should be received. Whether such
evidence would be sufficient to overcome the case which exists in
favor of the claimants of the nine lots cannot now be determined.

In so far as the judgment relates to lots No. 2186, 2187, 2213, and
2214, it is affirmed, and in so far as it relates to lots Nos. 2176, 2178,
2180, 2182, 2184, 2185, 2190, 2191, and 2192, it is reversed, and
the record shall be returned to the lower court for the taking of
additional evidence under the offer of counsel for the Church found
on page 83 of the stenographic notes. No finding as to costs is made
in this instance. So ordered.

Mapa, C.J., Johnson, Araullo, Avancea and Villamor, JJ., concur.








34

REPUBLIC OF THE PHILIPPINES,

Petitioner,
- versus -


SOUTHSIDE HOMEOWNERS ASSOCIATION, INC. and the REGISTER
OF DEEDS OF PASIG, RIZAL,

Respondents.

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



BASES CONVERSION DEVELOPMENT AUTHORITY,

Intervenor,

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



DEPARTMENT OF NATIONAL DEFENSE, represented by HON.
SECRETARY ANGELO T. REYES, and the ARMED FORCES OF THE
PHILIPPINES, represented by CHIEF OF STAFF, AFP, GENERAL
NARCISO L. ABAYA,

Intervenors.

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



RENE A.V. SAGUISAG, MGEN. MARCIANO ILAGAN (Ret.), MGEN.
PONCIANO MILLENA (Ret.), BGEN. JUANITO MALTO (Ret.), BGEN.
RAYMUNDO JARQUE (Ret.) and COL. DOMINADOR P. AMADOR
(Ret.),

Petitioners,



- versus -



L/T. GEN. HERMOGENES C. ESPERON, JR.,

Respondent.

G.R. No. 156951



Present:



PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.
35



Promulgated:


September 22, 2006




G.R. No. 173408



D E C I S I O N



GARCIA, J.:




Before the Court are these two petitions having, as common
denominator, the issue of ownership of a large tract of land.



In the first, a petition for review under Rule 45 of the Rules of Court
and docketed as G.R. No. 156951, the petitioner Republic of the
Philippines seeks to nullify and set aside the Decision[1] dated
January 28, 2003 of the Court of Appeals (CA) in CA-G.R. CV No.
59454, affirming the dismissal by the Regional Trial Court (RTC) of
Pasig City, Branch 71, of the Republics complaint for declaration of
nullity and cancellation of a land title against the herein private
respondent, the Southside Homeowners Association, Inc. (SHAI).



In the second, docketed as G.R. No. 173408, petitioners Rene
Saguisag and five (5) retired military officers pray that Lt. Gen.
Hermogenes C. Esperon, Jr., the present Chief of Staff of the Armed
Forces of the Philippines (AFP), be asked to show cause why he
should not be cited for contempt for having announced time and
again that the military officers and their families in the contempt
action would be ousted and evicted from the property subject of
the main petition even before the issue of ownership thereof is
finally resolved by the Court.



After the private respondent SHAI had filed its Comment[2] to the
petition in G.R. No. 156951, the Bases Conversion Development
Authority (BCDA), followed by the Department of National Defense
(DND) and the AFP, joined causes with the petitioner Republic and
thus sought leave to intervene. The Court, per its Resolutions dated
September 3, 2003,[3] and September 29, 2003,[4] respectively,
allowed the intervention and admitted the corresponding petitions-
for-intervention.



Per Resolution of the Court dated August 09, 2006, both petitions
were ordered consolidated.



36

The Republics recourse in G.R. No. 156951 is cast against the
following backdrop:



On July 12, 1957, then President Carlos P. Garcia issued
Proclamation No. 423[5] establishing a military reservation known
as Fort William McKinley later renamed Fort Andres Bonifacio
Military Reservation (FBMR). The proclamation withdr*ew+ from
sale or settlement and reserve[d] for military purposes, under the
administration of the Chief of Staff of the *AFP+ the *certain+
parcels of the public domain [indicated in plan Psu-2031+ situated
in the several towns and a city of what was once the Province of
Rizal. On its face, the proclamation covers three (3) large parcels of
land, to wit: Parcel No. 2 (portion), Parcel No. 3 (or 3-A) and Parcel
No. 4 (or 4-A). Parcel No. 3 with an area of 15,912,684 square
meters and Parcel No. 4 with an area of 7,660,128 square meters
are described in the proclamation as situated inside Fort McKinley,
Rizal. Specifically mentioned as excluded from Parcel No. 4 albeit
within its boundaries are the American Battle Monument Cemetery
(606,985 sq. m.), the Traffic Circle (7,093 sq. m.) and the Diplomatic
and Consular area (100,000 sq.m.).



Several presidential proclamations would later issue excluding
certain defined areas from the operation of Proclamation No. 423
and declaring them open for disposition. These are Proclamation
No. 461[6] and Proclamation No. 462,[7] both series of 1965,
excluding portions of the reservation and declaring them the AFP
Officers Village and the AFP EMs Village, respectively, to be
disposed of under Republic Act (R.A.) 274[8] and R.A. 730[9] in
relation to the Public Land Act (C.A. 141, as amended). Excluded,
too, under Proclamation No. 172 dated October 16, 1987 and to be
disposed pursuant to the same laws aforementioned, save those
used or earmarked for public/quasi-public purposes, are portions of
the reservation known as Lower and Upper Bicutan, Western
Bicutan and the Signal Village, all in Taguig, Metro Manila.



In 1992, Congress enacted the Bases Conversion and Development
Act (R.A. 7227, as amended), investing the BCDA the power to own,
hold and administer portions of Metro Manila military camps that
may be transferred to it by the President[10] and to dispose, after
the lapse of a number of months, portions of Fort Bonifacio.[11]



At the core of the instant proceedings for declaration of nullity of
title are parcels of land with a total area of 39.99 hectares, more or
less, known as or are situated in what is referred to as the JUSMAG
housing area in Fort Bonifacio. As may be gathered from the
pleadings, military officers, both in the active and retired services,
and their respective families, have been occupying housing units
and facilities originally constructed by the AFP on the JUSMAG area.



Private respondent SHAI is a non-stock corporation organized
mostly by wives of AFP military officers. Records show that SHAI
was able to secure from the Registry of Deeds of the Province of
Rizal a title Transfer Certificate of Title (TCT) No. 15084[12] - in its
name to the bulk of, if not the entire, JUSMAG area. TCT No. 15084
particularly describes the property covered thereby as follows:



37

A parcel of land (Lot 3-Y-1, Psd-76057, being a portion of Parcel 3 of
plan Psu-2031) situated in Jusmang (sic) Area, Fort Bonifacio,
Province of Rizal. containing an area of (398,602) SQUARE
METERS. xxx.



A parcel of land (Lot 3-Y-2, Psd-76057 as shown on subdivision Plan
Psd 76057, being a portion of parcel 3 of plan Psu-2031, LRC Rec.
No.) situated in Jusmang (sic) Area, Fort Bonifacio, Province of Rizal.
containing an area of (1,320) SQUARE METERS xxx..
(Underscoring added.)



The Rizal Registry issued TCT No. 15084 on October 30, 1991 on the
basis of a notarized Deed of Sale[13] purportedly executed on the
same date by then Director Abelardo G. Palad, Jr. (Palad, for brevity)
of the Lands Management Bureau (LMB) in favor of SHAI. The total
purchase price as written in the conveying deed was P11,997,660.00
or P30.00 per square meter.



It appears that in the process of the investigation conducted by the
Department of Justice on reported land scams at the FBMR, a copy
of the aforesaid October 30, 1991 deed of sale surfaced and
eventually referred to the National Bureau of Investigation (NBI) for
examination. The results of the examination undertaken by NBI
Document Examiner Eliodoro Constantino are embodied in his
Questioned Documents Report (QDR) No. 815-1093.[14] Its
highlights:


QUESTIONED SPECIMENS:

1. Original copy of the Deed of Sale issued in favor of the
Navy Officers Village Association (NOVA) containing the
signature of ABELARDO G. PALAD, JR. designated as Q-961 .



2. Original copy of the Deed of Sale issued in favor of
SHAI containing the signature of ABELARDO G. PALAD, JR. ...
designated as Q-962.



PURPOSE OF EXAMINATION:

To determine whether or not the questioned and sample/specimen
signatures ABELARDO G. PALAD, JR. were written by one and the
same person.



FINDINGS:



Scientific comparative examination and analysis of the specimens,
submitted, under stereoscopic microscope and magnifying lens,
with the aid of photographic enlargement reveals that there exist
fundamental, significant differences in writing characteristics
between the questioned and the standard/sample signatures
"ABELARDO G. PALAD, JR." such as in:


38


- The questioned signatures show slow, drawn, painstaking
laborious manner in execution of strokes; that of the
standard/sample signatures show free, rapid coordinated and
spontaneous strokes in the manner of execution of
letters/elements.


Furthermore, the questioned signature "ABELARDO G. PALAD, JR."
marked "Q-961" is a product of TRACING PROCESS by CARBON-
OUTLINE METHOD.


CONCLUSION:



Based on the above FINDINGS, the questioned and the
standard/sample signatures "ABELARDO G. PALAD, JR." were not
written by one and the same person.



The questioned signature "ABELARDO G. PALAD, JR." marked "Q-
961" is a TRACED FORGERY by carbon process.



REMARKS:



The other questioned Deeds of Sale containing the signatures of
"ABELARDO G. PALAD, JR." are still in the process of
examination.[15]


On October 16, 1993, then President Fidel V. Ramos issued
Memorandum Order No. 173[16] directing the Office of the
Solicitor General (OSG) to institute action towards the cancellation
of TCT No. 15084 and the title acquired by the Navy Officers Village
Association (NOVA) over a bigger parcel within the reservation. A
month later, the OSG, in behalf of the petitioner Republic, filed with
the RTC of Pasig City the corresponding nullification and
cancellation of title suit against the private respondent SHAI. In its
complaint, docketed as Civil Case No. 63883 and eventually raffled
to Branch 71 of the court, the Republic alleged that fraud attended
SHAIs procurement of TCT No. 15084. In paragraph No. 5 of the
complaint, the Republic alleged that TCT No. 15084 is void owing,
inter alia, to the following circumstances: a) the conveying deed is
spurious as the purported signature thereon of Palad is a forgery;
b) there are no records with the LMB of (i) the application to
purchase and (ii) the alleged payment of the purchase price; and c)
the property in question is inalienable, being part of a military
reservation established under Proclamation No. 423.[17]



In its ANSWER with counterclaim, respondent SHAI denied the
material allegations of the complaint and countered that the
impugned title as well as the October 30, 1991 Deed of Sale are
valid documents which the Republic is estopped to deny.[18] SHAI
also alleged paying in full the purchase price indicated in the deed
as evidenced by Official Receipt No. 6030203-C dated October 29,
1991.

39



On October 19, 1994, the case was heard on pre-trial in the
course of which the Republic, as plaintiff therein, marked (and later
offered in evidence) the Deed of Sale dated October 30, 1991 as its
Exhibit "A," and TCT No. 15084 as Exhibit "B." Respondent, then
defendant SHAI adopted Exhibits "A" and B as its Exhibits "1" and
2, respectively. As the pre-trial order was written, it would appear
that the parties agreed to limit the issue to the due execution and
genuineness of Exhs. A and B.*19+



During the trial, the Republic presented as expert witness NBI
Document Examiner Eliodoro Constantino who testified on NBI QDR
No. 815-1093 and asserted that the signature of Palad in Exhibit A
is a forgery. For his part, Palad dismissed as forged his signature
appearing in the same document and denied ever signing the same,
let alone in front of a notary public holding office outside of the
LMB premises. Pressing the point, Palad stated that he could not
have had signed the conveying deed involving as it did a reservation
area which, apart from its being outside of the LMBs jurisdiction, is
inalienable in the first place. The testimony of other witnesses
revolved around the absence of bureau records respecting SHAIs
application to acquire, payment of the purchase price and Psd-
76057, the plan described in TCT No. 15084. [20]



For its part, then defendant SHAI presented an opposing expert
witness in the person of Police Inspector Redencion Caimbon who
brought with him PNP QDR No. 001-96 and testified that Palads
signature in Exhibit A (same as Exh. 1) is genuine. Mrs. Virginia
Santos, then SHAI president, likewise testified, saying that
applications to purchase were signed and then filed with the LMB
by one Engr. Eugenia Balis,[21] followed by the payment in full of
the contract price. Atty. Vicente Garcia, the then Register of Deeds
of Rizal, also testified about his having endorsed to Palad a letter-
inquiry he received from SHAI respecting the authenticity of TCT No.
15084. Palads response-letter dated January 23, 1992 (Exh. 10),
according to Atty. Garcia, is to the effect that TCT No. 15084 must
be genuine as it emanated from the Registrys office on the basis of
the October 30, 1991 Deed of Sale.[22]



On rebuttal, Palad would deny authorship of Exhibit 10 and an
LMB official would disclaim transmitting the same to Atty. Garcia.



Eventually, in a decision[23] dated October 7, 1997, the trial court
rendered judgment dismissing the Republics complaint, to wit:



WHEREFORE, in view of the foregoing, the Complaint dated
November 15, 1991 is hereby DISMISSED without pronouncement
as to costs.



The counterclaims are also DISMISSED.



SO ORDERED.

40



In not so many words, the trial court considered the parcels
covered by the deed in question as no longer part of the FBMR.



Therefrom, the Republic went on appeal to the CA whereat its
appellate recourse was docketed as CA-G.R. CV No. 59454.



In the herein assailed Decision[24] dated January 28, 2003, the
appellate court affirmed in toto that of the trial court.

Hence, this petition of the Republic on the threshold abstract
submission that the CA completely ignored, overlooked and/or
grossly misappreciated facts of substance which, if duly considered,
will materially affect the outcome of this case.


In its COMMENT To Petition, private respondent SHAI parlays
the what-can-be-raised line. It urges the dismissal of the petition
on the ground that the issues raised therein, particularly those
bearing on the authenticity of Exhibit A/1, are mainly questions
of fact, adding that the matter of the inalienability of the area
purportedly sold is outside the issue agreed upon during the pre-
trial stage.


The desired dismissal cannot be granted on the bases of the
reasons proffered above.


While the Court, in a petition for review of CA decisions under Rule
45 of the Rules of Court, usually limits its inquiry only to questions
of law, this rule is far from absolute. Reyes v. Court of Appeals,[25]
citing Floro v. Llenado,[26] for one, suggests as much. In Floro, we
wrote:



xxx There are, however, exceptional circumstances that would
compel the Court to review the finding of facts of the [CA],
summarized in and subsequent cases as follows: 1) when the
inference made is manifestly mistaken, absurd or impossible; 2)
when there is grave abuse of discretion; 3) when the finding is
grounded entirely on speculations, surmises or conjectures; 4) when
the judgment of the [CA] are based on misapprehension of facts; 5)
when the findings of facts are conflicting; 6) ; 7) ; 8) ; 9) when
the [CA] manifestly overlooked certain relevant facts not disputed
by the parties and which if properly considered would justify a
different conclusion; and 10) when the findings of facts are
premised on the absence of evidence and are contradicted by the
evidence on record. (Words in bracket, added.)



To the mind of the Court, the instant case is within the
purview of at least three of the exceptions listed above, foremost of
which is item #9.


Private respondent SHAIs stance about the petitioner Republic
being barred from raising the issue of inalienability since it failed to
plead or assert the same at the pre-trial proceedings is, to a degree,
correct. For the general rule, as articulated in Permanent Concrete
Products, Inc. v. Teodoro,[27] is that the determination of issues at
41

a pre-trial conference bars the consideration of others on appeal. It
should be pointed out, however, that the rationale for such
preliminary, albeit mandatory, conference is to isolate as far as
possible the trial out of the realm of surprises and back-handed
maneuverings. And lest it be overlooked, the adverted rule on the
procedure to be observed in pre-trials is, as Bergano v. Court of
Appeals[28] teaches, citing Gicano v. Gegato,[29] subject to
exceptions. And without meaning to diminish the importance of the
same rule, the Court is possessed with inherent power to suspend
its own rules or to except a particular case from its operations
whenever the demands of justice so require.[30]



Given the foregoing considerations, the rule to be generally
observed in pre-trial conferences hardly poses an insurmountable
obstacle to tackling the question of inalienability which, under the
premises, is an issue more legal than factual. As it were, the
element of surprise is not really present here. For the issue of
inalienability, which is central to the Republics cause of action, was
raised in its basic complaint, passed upon by the CA and, before it,
by the trial court[31] and of which at least one witness (Palad) was
examined as follows:


Q: Mr. Witness you stated that the parcel of land in question at the
time of the land alleged sale was part of the *FBMR+. Now as part
of the *FBRM+ do you know whether the said parcel of land can be
the subject of disposition?



A: If it is part of the reservation it cannot be sold and it is already
part of those government lands that has been assigned to other
government agencies that is no longer within my jurisdiction.
Meaning to say I have no more say on that because the
proclamation to the effect was reserving this for particular purpose
under the DND .*32+ (Words in bracket added.)




At any rate, Palads testimony drew nary an objection from private
respondent SHAI. It even cross-examined said witness.[33] The rule
obtains that the introduction of evidence bearing on an issue not
otherwise included in the pre-trial order amounts to implied
consent conferring jurisdiction on the court to try such issue.[34]




Digressing from the procedural aspects of this case, we now
consider the clashing assertions regarding the JUSMAG area. Was it,
during the period material, alienable or inalienable, as the case may
be, and, therefore, can or cannot be subject of a lawful private
conveyance?


Petitioner Republic, as do the intervenors, asserts the inalienable
character of the JUSMAG area, the same having not effectively been
separated from the military reservation and declared as alienable
and disposable.


The Republics and the intervenors parallel assertions are correct.


42

The President, upon the recommendation of the Secretary of
Environment and Natural Resources, may designate by
proclamation any tract or tracts of land of the public domain as
reservations for the use of the Republic or any of its branches, or for
quasi-public uses or purposes.[35] Such tract or tracts of land thus
reserved shall be non-alienable and shall not be subject to sale or
other disposition until again declared alienable.[36] Consistent with
the foregoing postulates, jurisprudence teaches that a military
reservation, like the FBMR, or a part thereof is not open to private
appropriation or disposition and, therefore, not registrable,[37]
unless it is in the meantime reclassified and declared as disposable
and alienable public land.[38] And until a given parcel of land is
released from its classification as part of the military reservation
zone and reclassified by law or by presidential proclamation as
disposable and alienable, its status as part of a military reservation
remains,[39] even if incidentally it is devoted for a purpose other
than as a military camp or for defense. So it must be here.


There can be no quibbling that the JUSMAG area subject of the
questioned October 30, 1991 sale formed part of the FBMR as
originally established under Proclamation No. 423. And while
private respondent SHAI would categorically say that the petitioner
Republic had not presented evidence that subject land is within
military reservation,*40+ and even dared to state that the JUSMAG
area is the private property of the government and therefore
removed from the concept of public domain per se,[41] its own
evidence themselves belie its posture. We start with its Exhibit 2
(petitioners Exh. B), a copy of TCT No. 15084, which described the
area covered thereby measuring 399,922 square meters as a
portion of Parcel 3 of plan Psu-2031 situated in Jusmang (sic) area
Fort Bonifacio. Complementing its Exhibit 2 is its Exhibit 1 -
the deed of sale - which technically described the property
purportedly being conveyed to private respondent SHAI as follows:

A PARCEL OF LAND (Lot 3-Y-1, Psd-76067, being a portion of Parcel 3
of plan Psu-2031) situated in Jusmag (sic) area, Fort Bonifacio,
Province of Rizal. Xxx (Emphasis added)


As the Court distinctly notes, the disputed property, as described in
private respondents Exhibits 1 and 2, formed part of that wide
expanse under Proclamation No. 423 which lists, as earlier stated,
three (3) parcels of land of the public domain as falling within its
coverage. These include, inter alia, the entire 15,912,684-square
meter area constituting Parcel No. 3 of Plan Psu 2031 located inside
the now renamed Fort Mckinley which, to a redundant point, was
declared a military reservation.



The Court has, on the issue of inalienability, taken stock of the
Compilation Map of Approved Surveys Plan inside Parcels 1, 2, 3 and
4, of plan Psu 2031[42] prepared in September 1995 and certified
by the Department of Environment and Natural Resources (DENR).
It indicates in colored ink the outlines of Parcels 2, 3 and 4 covered
by Proclamation No. 423. As there also shown, the 399,992-square
meter area embraced by SHAIs TCT No. 15084, defined in the
legend by red-colored stripes, is within the violet-colored borders of
Parcel No. 3 and Parcel No. 4 of Proclamation No. 423.


Indubitably, the area covered by SHAIs TCT No. 15084 was and is
still part of the FBMR, more particularly within the 15,912,684-
square meter Parcel No. 3 of the reservation. The petitioner
Republic, joined by the intervenors BCDA, DND and AFP in this
appellate proceedings, has maintained all along this thesis. Towards
discharging its burden of proving that the disputed property is part
43

of the reservation, the petitioner Republic need only to
demonstrate that all of the 15,912,684 square meters of Parcel No.
3 of Plan Psu 2031 have been reserved for military purposes. The
evidence, however, of the fact of reservation is the law or, to be
more precise, Proclamation No. 423 itself, the contents and
issuance of which courts can and should take judicial notice of
under Section 1, Rule 129 of the Rules of Court.[43]


The Republic has, since the filing of its underlying complaint,
invoked Proclamation No. 423. In the process, it has invariably
invited attention to the proclamations specific area coverage to
prove the nullity of TCT No. 15084, inasmuch as the title embraced
a reserved area considered inalienable, and hence, beyond the
commerce of man. In this regard, the appellate court seemed to
have glossed over, if not entirely turned a blind eye on, certain
admissions made by the private respondent, the most basic being
those made in its answer to the Republics allegations in paragraph
5 (e) and (g) of its complaint. To the Republics allegations that the
property covered by TCT No. 15084 was and remains part the
FBMR, SHAIs answer thereto reads:


2. It specifically denies the allegations in paragraphs 5 of the
complaint, the truth of the matter being that in the Deed of Sale
, the Director of Lands Certificate (sic) that he is authorized under
the law to sell the subject property and that the lots were duly
awarded by the [LBM] to the vendee.[44] ( Emphasis and word in
bracket added.)




In net effect, private respondent SHAI admitted what the petitioner
Republic alleged in par. 5 (e) and (g) of the complaint, the formers
denial to such allegations on the inalienable nature of the property
covered by TCT No. 15084 being in the nature of a general denial.
Under the rules on pleadings, a specific, not a general, denial is
required; a denial is not specific because it is so qualified or termed
specific by the pleader.*45+ The defendant must specify each
material factual allegation the truth of which he absolutely denies
and, whenever practicable, shall set forth the substance of the
matters upon which he will rely to support his denial.[46] Else, the
denial will be regarded as general and will, therefore, be regarded
as an admission of a given material fact/s stated in the complaint.


What private respondent SHAI did under the premises was to enter
what, under the Rules, is tantamount to a general denial of the
Republics averments that what SHAIs TCT No. 15084 covers is part
of the military reservation. In the process, private respondent SHAI
is deemed to admit the reality of such averment.


To be sure, the petitioner Republic, as plaintiff below, had more
than sufficiently established its claim on the inalienability of the
parcels of land covered by TCT No. 15084. In fine, it had discharged
the burden of proof on the issue of inalienability. Be that as it may,
the burden of evidence to disprove inalienability or, to be precise,
that said parcels of land had, for settlement purposes, effectively
been withdrawn from the reservation or excluded from the
coverage of Proclamation No. 423, devolves upon the private
respondent. This is as it should be for the cogency of SHAIs claim
respecting the validity of both the underlying deed of sale (Exh.
A/1) and its TCT No. 15084 (Exh. B/2) rests on the postulate
that what it purportedly bought from the LMB had ceased to be
part of the reserved lands of the public domain. Elsewise put, SHAI
44

must prove that the JUSMAG area had been withdrawn from the
reservation and declared open for disposition, failing which it has no
enforceable right over the area as against the State.


Private respondent SHAI has definitely not met its burden by reason
of lack of evidence. To be sure, it has not, because it cannot even if
it wanted to, pointed to any presidential act specifically
withdrawing the disputed parcels from the coverage of
Proclamation No. 423. Worse still, its own Exhibit 5,*47+ a letter
dated March 19, 1991 of then PA Commanding General, M/Gen
Lisandro Abadia, to one Mrs. Gabon, then President of the SHAI,
cannot but be viewed as a partys judicial admission that the
disputed land has yet to be excluded from the military reservation.
The Abadia letter, with its feature dis-serving to private respondent
SHAI, reads in part as follows:


Dear Mrs. Gabon:

This is in connection with your move to make a petition to President
Aquino regarding the possible exclusion of Southside Housing Area
from the military reservation and for its eventual allotment to the
military officers presently residing thereat. Allow me to state that I
interpose no objection . I find it helpful to our officers to be
provided a portion of the Fort Bonifacio military reservation .
(Underscoring added.)




Owing to the foregoing considerations, the Court is hard put to
understand how the CA could still have found for SHAI.. The
appellate court, apparently swayed by what SHAI said in its Brief for
the Appellees[48] that:


Appellant [petitioner Republic+ is probably unaware that , then
President Diosdado Macapagal issued Proclamation 461 when he
excluded from the operation of Proclamation No. 423 an area of
2,455,810 square meters more or less. Likewise on October 16,
1987, then President Corazon Aquino issued Proclamation No. 172
excluding five (5) parcels of land from the operation of Proclamation
No. 423 also located at Fort Bonifacio containing an area of 4,436,
478 . So if we deduct the 6,892,288 *2,455,810 + 4,436,478 =
6,892,288] square meters covered by Proclamation Nos. 461 and
172 of the areas reserved for military purposes of 7,053,143 square
meters, what is only left is 160,857 square meters or more or less
16 hectares .*49+



justified its holding on the alienability of the disputed land with the
following disquisition:


The foregoing admission aside, appellants *now petitioners+
reliance on Proclamation No. 493 [should be 423] in insisting that
the land in litigation is inalienable because it is part of the [FBMR] is
too general to merit serous consideration. While it is true that,
under the said July 12, 1957 Proclamation, then President Carlos P.
Garcia reserved the area now known as Fort Bonifacio for military
purposes, appellee [now respondent] correctly calls our attention to
the fact, among other matters, that numerous exceptions thereto
had already been declared through the years. The excluded areas
under Proclamation No. 461, dated September 29, 1965 and
45

Proclamation No. 172, dated October 16, 1987 alone already total
6,892,338 square meters. (Figures in bracket added.)





The CAs justifying line does not commend itself for concurrence.



For one, it utilizes SHAIs misleading assertion as a springboard to
justify speculative inferences. Per our count, Proclamation 423
reserved for military purposes roughly a total area of 25,875,000
square meters, not 7,053,143. On the other hand, Proclamation
Nos. 461 and 172 excluded a combined area of 6,892,338 square
meters. Now then, the jump from an acknowledgment of the
disputed parcels of land having been reserved for military purposes
to a rationalization that they must have been excluded from the
reservation because 6,892,338 square meters had already been
withdrawn from Proclamation 423 is simply speculative. Needless
to stress, factual speculations do not make for proof.



Corollary to the first reason is the fact that private respondent SHAI
- and quite understandably, the appellate court - had not pointed to
any proclamation, or legislative act for that matter, segregating the
property covered by TCT No. 15084 from the reservation and
classifying the same as alienable and disposable lands of the public
domain. To reiterate what we earlier said, lands of the public
domain classified as a military reservation remains as such until, by
presidential fiat or congressional act, the same is released from such
classification and declared open to disposition.[50] The October 30,
1991 Deed of Sale purportedly executed by Palad, assuming for the
nonce its authenticity, could not plausibly be the requisite
classifying medium converting the JUSMAG area into a disposable
parcel. And private respondent SHAIs unyielding stance that would
have the Republic in estoppel to question the transfer to it by the
LMB Director of the JUSMAG area is unavailing. It should have
realized that the Republic is not usually estopped by the mistake or
error on the part of its officials or agents.[51]



Since the parcels of land in question allegedly sold to the private
respondent are, or at least at the time of the supposed transaction
were, still part of the FBMR, the purported sale is necessarily void
ab initio.



The Court can hypothetically concede, as a matter of fact, the
withdrawal of the JUSMAG area from the ambit of Proclamation No.
423 and its reclassification as alienable and disposable lands of the
public domain. Still, such hypothesis would not carry the day for
private respondent SHAI. The reason therefor is basic: Article XII,
Section 3[52] of the 1987 Constitution forbids private corporations
from acquiring any kind of alienable land of the public domain,
except through lease for a limited period. While Fr. Bernas had
stated the observation that the reason for the ban is not very clear
under existing jurisprudence,[53] the fact remains that private
corporations, like SHAI, are prohibited from purchasing or otherwise
acquiring alienable public lands.


Even if on the foregoing score alone, the Court could write finis to
this disposition. An appropriate closure to this case could not be
46

had, however, without delving to an extent on the issue of the
validity of the October 30, 1991 Deed of Sale which necessarily
involves the question of the authenticity of what appears to be
Palads signature thereon.


With the view we take of the case, the interplay of
compelling circumstances and inferences deducible therefrom,
would, as a package, cast doubt on the authenticity of such deed, if
not support a conclusion that the deed is spurious. Consider:




1. Palad categorically declared that his said signature on the
deed is a forgery. The Court perceives no reason why he should lie,
albeit respondent states, without elaboration, that Palads
declaration is aimed at avoiding criminal prosecution.*54+ The NBI
signature expert corroborated Palads allegation on forgery.*55+
Respondent SHAIs expert witness from the PNP, however, disputes
the NBIs findings. In net effect, both experts from the NBI and the
PNP cancel each other out.


2. Palad signed the supposed deed of sale in Manila, possibly
at the LMB office at Plaza Cervantes, Binondo. Even if he acted in
an official capacity, Palad nonetheless proceeded on the same day
to Pasig City to appear before the notarizing officer. The deed was
then brought to the Rizal Registry and there stamped Received by
the entry clerk. That same afternoon, or at 3:14 p.m. of October
30, 1991 to be precise, TCT No. 15084 was issued. In other words,
the whole conveyance and registration process was done in less
than a day. The very unusual dispatch is quite surprising. Stranger
still is why a bureau head, while in the exercise of his functions as
the bureaus authorized contracting officer, has to repair to another
city just to have a deed notarized.


3. There is absolutely no record of the requisite public land
application to purchase required under Section 89 of the Public
Land Act.[56] There is also no record of the deed of sale and of
documents usually accompanying an application to purchase,
inclusive of the investigation report and the property valuation. The
Certification under the seal of the LMB bearing date November 24,
1994 and issued/signed by Alberto Recalde, OIC, Records
Management Division of the LMB pursuant to a subpoena issued by
the trial court[57] attest to this fact of absence of records. Atty.
Alice B. Dayrit, then Chief, Land Utilization and Disposition Division,
LMB, testified having personally looked at the bureau record book,
but found no entry pertaining to SHAI.[58]


4. In its Answer as defendant a quo, respondent SHAI states
that the deed of sale specifically meritorious Official Receipt No.
6030203C dated 29 October 1991, (sic) as evidence of full
payment of the agreed purchase price.. An official receipt
(O.R.) is doubtless the best evidence to prove payment. While it
kept referring to O.R. No. 6030203 as its evidence of the required
payment,[59] it failed to present and offer the receipt in evidence.
A Certification under date September 15, 1993 of the OIC Cash
Division, LMB, states that OR # 6030203 in the amount of
P11,977,000.00 supposedly paid by [SHAI] is not among the series of
[ORs] issued at any time by the National Printing Office to the
Cashier, LMB, Central Office.*60+ A copy of the OR receipt is not
appended to any of the pleadings filed before the Court. We can
thus validly presume that no such OR exists or, if it does, that its
presentation would be adverse to SHAI.

47


A contract of sale is void where the price, which appears in the
document as paid has, in fact, never been paid.[61]


5. The purchase price was, according to the witnesses for SHAI, paid
in full in cash to the cashier of the LMB the corresponding amount
apparently coming in a mix of P500 and P100 denominations. Albeit
plausible, SHAIs witnesses account taxes credulity to the limit.




A final consideration in G.R. No. 156951. This case could not
have come to pass without the participation of a cabal of cheats out
to make a dishonest buck at the expense of the government and
most likely the members of SHAI. No less than its former president
(Ms. Virginia Santos) testified that a facilitator did, for a fee, the
necessary paper and leg work before the LMB and the Registry of
Deeds that led to the execution of the Deed of Sale and issuance of
the certificate of title in question.[62] Ms. Santos identified Eugenia
Balis, a geodetic engineer, as the facilitator*63+ who facilitated all
these presentation of documents,*64] and most of the time,
directly transacted with the LMB and the Register of Deeds
leading to acquisition of title.[65] Engr. Balis was, in the course of
Ms. Santos testimony, directly mentioned by name for at least
fifteen (15) times. Not surprisingly, Engr. Balis did not appear in
court, despite SHAIs stated intention to present her as witness.*66+



The extent of the misappropriation of the Fort Bonifacio land
involved in this and the NOVA area litigations is, as described in the
Report of the FactFinding Commission,*67+ so epic in scale as to
make the overpricing of land complained of in the two hundred
AFP [Retirement and Separation Benefits System] RSBS cases (P703
million) seem like petty shoplifting in comparison.*68+ The
members of private respondent SHAI may very well have paid for
what they might have been led to believe as the purchase price of
the JUSMAG housing area. The sad reality, however, is that the over
P11 Million they paid, if that be the case, for a piece of real estate
contextually outside the commerce of man apparently fell into the
wrong hands and did not enter the government coffers. Else, there
must be some memorials of such payment.



At bottom, this disposition is nothing more than restoring the
petitioner Republic, and eventually the BCDA, to what rightfully
belongs to it in law and in fact. There is nothing unjust to this
approach.


With the foregoing disquisitions, the petition for contempt in
G.R. No. 173408 need not detain us long. As it were, the question
raised by the petitioners therein respecting the ownership of the
JUSMAG area and, accordingly, of the right of the petitioning retired
military officers to remain in the housing units each may be
occupying is now moot and academic. However, contempt
petitioners expressed revulsion over the efforts of the military
establishment, particularly the AFP Chief of Staff, to oust them from
their respective dwellings, if that really be the case, even before
G.R. No. 156951 could be resolved, is understandable as it is
justified. We thus end this ponencia with a reminder to all and
sundry that might is not always right; that ours is still a government
of laws and not of men, be they in the civilian or military sector.
Accordingly, the Court will not treat lightly any attempt to trifle,
intended or otherwise, with its processes and proceedings. A
48

becoming respect to the majesty of the law and the prerogatives of
the Court is a must for the orderly administration of justice to
triumph.


WHEREFORE, the petition in G.R. No. 156951 is GRANTED and the
appealed CA Decision is REVERSED and SET ASIDE. Accordingly, the
Deed of Sale dated October 30, 1991 (Exh. A/1) purportedly
executed in favor of private respondent SHAI and TCT No.
15084 (Exh. B/2) of the Registry of Deeds of Rizal issued on the
basis of such deed are declared VOID. The Register of Deeds of
Pasig or Taguig, as the case may be, is hereby ordered to
CANCEL TCT No. 15084 in the name of SHAI and the area covered
thereby is DECLARED part of the Fort Bonifacio Military Reservation,
unless the same has, in the interim, been duly excluded by law
or proclamation from such reservation. Private respondent SHAI, its
members, representatives and/or their assigns shall vacate the
subject parcels of land immediately upon the finality of this
decision, subject to the provisions of Republic Act No. 7227,
otherwise known as the Bases Conversion and Development Act.














Cost against the private respondent SHAI.


Having said our piece in G.R. No. 173408, we need not
speak any further thereon other than to deny as we hereby similarly
DENY the same.


SO ORDERED.

























49


G.R. No. 144057 January 17, 2005

REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and CORAZON NAGUIT,
respondents.

D E C I S I O N

TINGA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure, seeking to review the Decision1 of the
Sixth Division of the Court of Appeals dated July 12, 2000 in CA-
G.R. SP No. 51921. The appellate court affirmed the decisions of
both the Regional Trial Court (RTC),2 Branch 8, of Kalibo, Aklan
dated February 26, 1999, and the 7th Municipal Circuit Trial Court
(MCTC)3 of Ibajay-Nabas, Aklan dated February 18, 1998, which
granted the application for registration of a parcel of land of Corazon
Naguit (Naguit), the respondent herein.

The facts are as follows:

On January 5, 1993, Naguit, a Filipino citizen, of legal age and
married to Manolito S. Naguit, filed with the MCTC of Ibajay-Nabas,
Aklan, a petition for registration of title of a parcel of land situated in
Brgy. Union, Nabas, Aklan. The parcel of land is designated as Lot
No. 10049, Cad. 758-D, Nabas Cadastre, AP 060414-014779, and
contains an area of 31,374 square meters. The application seeks
judicial confirmation of respondents imperfect title over the aforesaid
land.

On February 20, 1995, the court held initial hearing on the
application. The public prosecutor, appearing for the government,
and Jose Angeles, representing the heirs of Rustico Angeles,
opposed the petition. On a later date, however, the heirs of Rustico
Angeles filed a formal opposition to the petition. Also on February 20,
1995, the court issued an order of general default against the whole
world except as to the heirs of Rustico Angeles and the government.

The evidence on record reveals that the subject parcel of land was
originally declared for taxation purposes in the name of Ramon
Urbano (Urbano) in 1945 under Tax Declaration No. 3888 until
1991.4 On July 9, 1992, Urbano executed a Deed of Quitclaim in
favor of the heirs of Honorato Maming (Maming), wherein he
renounced all his rights to the subject property and confirmed the
sale made by his father to Maming sometime in 1955 or 1956.5
Subsequently, the heirs of Maming executed a deed of absolute sale
in favor of respondent Naguit who thereupon started occupying the
same. She constituted Manuel Blanco, Jr. as her attorney-in-fact and
administrator. The administrator introduced improvements, planted
trees, such as mahogany, coconut and gemelina trees in addition to
existing coconut trees which were then 50 to 60 years old, and paid
the corresponding taxes due on the subject land. At present, there
are parcels of land surrounding the subject land which have been
issued titles by virtue of judicial decrees. Naguit and her
predecessors-in-interest have occupied the land openly and in the
concept of owner without any objection from any private person or
even the government until she filed her application for registration.

After the presentation of evidence for Naguit, the public prosecutor
manifested that the government did not intend to present any
evidence while oppositor Jose Angeles, as representative of the
heirs of Rustico Angeles, failed to appear during the trial despite
notice. On September 27, 1997, the MCTC rendered a decision
ordering that the subject parcel be brought under the operation of the
Property Registration Decree or Presidential Decree (P.D.) No. 1529
and that the title thereto registered and confirmed in the name of
Naguit.6

The Republic of the Philippines (Republic), thru the Office of the
Solicitor General (OSG), filed a motion for reconsideration. The OSG
stressed that the land applied for was declared alienable and
disposable only on October 15, 1980, per the certification from
Regional Executive Director Raoul T. Geollegue of the Department
of Environment and Natural Resources, Region VI.7 However, the
court denied the motion for reconsideration in an order dated
February 18, 1998.81awphi1.nt
50


Thereafter, the Republic appealed the decision and the order of the
MCTC to the RTC, Kalibo, Aklan, Branch 8. On February 26, 1999,
the RTC rendered its decision, dismissing the appeal.9

Undaunted, the Republic elevated the case to the Court of Appeals
via Rule 42 of the 1997 Rules of Civil Procedure. On July 12, 2000,
the appellate court rendered a decision dismissing the petition filed
by the Republic and affirmed in toto the assailed decision of the
RTC.

Hence, the present petition for review raising a pure question of law
was filed by the Republic on September 4, 2000.10

The OSG assails the decision of the Court of Appeals contending
that the appellate court gravely erred in holding that there is no need
for the governments prior release of the subject lot from the public
domain before it can be considered alienable or disposable within
the meaning of P.D. No. 1529, and that Naguit had been in
possession of Lot No. 10049 in the concept of owner for the required
period.11

Hence, the central question for resolution is whether is necessary
under Section 14(1) of the Property Registration Decree that the
subject land be first classified as alienable and disposable before the
applicants possession under a bona fide claim of ownership could
even start.

The OSG invokes our holding in Director of Lands v. Intermediate
Appellate Court12 in arguing that the property which is in open,
continuous and exclusive possession must first be alienable. Since
the subject land was declared alienable only on October 15, 1980,
Naguit could not have maintained a bona fide claim of ownership
since June 12, 1945, as required by Section 14 of the Property
Registration Decree, since prior to 1980, the land was not alienable
or disposable, the OSG argues.

Section 14 of the Property Registration Decree, governing original
registration proceedings, bears close examination. It expressly
provides:

SECTION 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.

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

. . . .

There are three obvious requisites for the filing of an application for
registration of title under Section 14(1) that the property in question
is alienable and disposable land of the public domain; that the
applicants by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession
and occupation, and; that such possession is under a bona fide claim
of ownership since June 12, 1945 or earlier.

Petitioner suggests an interpretation that the alienable and
disposable character of the land should have already been
established since June 12, 1945 or earlier. This is not borne out by
the plain meaning of Section 14(1). "Since June 12, 1945," as used
in the provision, qualifies its antecedent phrase "under a bonafide
claim of ownership." Generally speaking, qualifying words restrict or
modify only the words or phrases to which they are immediately
associated, and not those distantly or remotely located.13 Ad
proximum antecedents fiat relation nisi impediatur sentencia.

Besides, we are mindful of the absurdity that would result if we adopt
petitioners position. Absent a legislative amendment, the rule would
be, adopting the OSGs view, that all lands of the public domain
which were not declared alienable or disposable before June 12,
1945 would not be susceptible to original registration, no matter the
51

length of unchallenged possession by the occupant. Such
interpretation renders paragraph (1) of Section 14 virtually
inoperative and even precludes the government from giving it effect
even as it decides to reclassify public agricultural lands as alienable
and disposable. The unreasonableness of the situation would even
be aggravated considering that before June 12, 1945, the Philippines
was not yet even considered an independent state.

Instead, the more reasonable interpretation of Section 14(1) is that it
merely requires the property sought to be registered as already
alienable and disposable at the time the application for registration of
title is filed. If the State, at the time the application is made, has not
yet deemed it proper to release the property for alienation or
disposition, the presumption is that the government is still reserving
the right to utilize the property; hence, the need to preserve its
ownership in the State irrespective of the length of adverse
possession even if in good faith. However, if the property has already
been classified as alienable and disposable, as it is in this case, then
there is already an intention on the part of the State to abdicate its
exclusive prerogative over the property.

This reading aligns conformably with our holding in Republic v. Court
of Appeals .14 Therein, the Court noted that "to prove that the land
subject of an application for registration is alienable, an applicant
must establish the existence of a positive act of the government such
as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute."15 In that case, the
subject land had been certified by the DENR as alienable and
disposable in 1980, thus the Court concluded that the alienable
status of the land, compounded by the established fact that therein
respondents had occupied the land even before 1927, sufficed to
allow the application for registration of the said property. In the case
at bar, even the petitioner admits that the subject property was
released and certified as within alienable and disposable zone in
1980 by the DENR.16

This case is distinguishable from Bracewell v. Court of Appeals,17
wherein the Court noted that while the claimant had been in
possession since 1908, it was only in 1972 that the lands in question
were classified as alienable and disposable. Thus, the bid at
registration therein did not succeed. In Bracewell, the claimant had
filed his application in 1963, or nine (9) years before the property
was declared alienable and disposable.1awphi1.nt Thus, in this
case, where the application was made years after the property had
been certified as alienable and disposable, the Bracewell ruling does
not apply.

A different rule obtains for forest lands,18 such as those which form
part of a reservation for provincial park purposes19 the possession
of which cannot ripen into ownership.20 It is elementary in the law
governing natural resources that forest land cannot be owned by
private persons. As held in Palomo v. Court of Appeals,21 forest land
is not registrable and possession thereof, no matter how lengthy,
cannot convert it into private property, unless such lands are
reclassified and considered disposable and alienable.22 In the case
at bar, the property in question was undisputedly classified as
disposable and alienable; hence, the ruling in Palomo is inapplicable,
as correctly held by the Court of Appeals.23

It must be noted that the present case was decided by the lower
courts on the basis of Section 14(1) of the Property Registration
Decree, which pertains to original registration through ordinary
registration proceedings. The right to file the application for
registration derives from a bona fide claim of ownership going back
to June 12, 1945 or earlier, by reason of the claimants open,
continuous, exclusive and notorious possession of alienable and
disposable lands of the public domain.

A similar right is given under Section 48(b) of the Public Land Act,
which reads:

Sec. 48. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such
land or an interest therein, but those 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 therefor, under the Land Registration
Act, to wit:

52

xxx xxx xxx

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

When the Public Land Act was first promulgated in 1936, the period
of possession deemed necessary to vest the right to register their
title to agricultural lands of the public domain commenced from July
26, 1894. However, this period was amended by R.A. No. 1942,
which provided that the bona fide claim of ownership must have
been for at least thirty (30) years. Then in 1977, Section 48(b) of the
Public Land Act was again amended, this time by P.D. No. 1073,
which pegged the reckoning date at June 12, 1945. This new starting
point is concordant with Section 14(1) of the Property Registration
Decree.

Indeed, there are no material differences between Section 14(1) of
the Property Registration Decree and Section 48(b) of the Public
Land Act, as amended. True, the Public Land Act does refer to
"agricultural lands of the public domain," while the Property
Registration Decree uses the term "alienable and disposable lands of
the public domain." It must be noted though that the Constitution
declares that "alienable lands of the public domain shall be limited to
agricultural lands."24 Clearly, the subject lands under Section 48(b)
of the Public Land Act and Section 14(1) of the Property Registration
Decree are of the same type.

Did the enactment of the Property Registration Decree and the
amendatory P.D. No. 1073 preclude the application for registration of
alienable lands of the public domain, possession over which
commenced only after June 12, 1945? It did not, considering Section
14(2) of the Property Registration Decree, which governs and
authorizes the application of "those who have acquired ownership of
private lands by prescription under the provisions of existing laws."

Prescription is one of the modes of acquiring ownership under the
Civil Code.25 There is a consistent jurisprudential rule that properties
classified as alienable public land may be converted into private
property by reason of open, continuous and exclusive possession of
at least thirty (30) years.26 With such conversion, such property may
now fall within the contemplation of "private lands" under Section
14(2), and thus susceptible to registration by those who have
acquired ownership through prescription. Thus, even if possession of
the alienable public land commenced on a date later than June 12,
1945, and such possession being been open, continuous and
exclusive, then the possessor may have the right to register the land
by virtue of Section 14(2) of the Property Registration Decree.

The land in question was found to be cocal in nature, it having been
planted with coconut trees now over fifty years old.27 The inherent
nature of the land but confirms its certification in 1980 as alienable,
hence agricultural. There is no impediment to the application of
Section 14(1) of the Property Registration Decree, as correctly
accomplished by the lower courts.l^vvphi1.net

The OSG posits that the Court of Appeals erred in holding that
Naguit had been in possession in the concept of owner for the
required period. The argument begs the question. It is again hinged
on the assertionshown earlier to be unfoundedthat there could
have been no bona fide claim of ownership prior to 1980, when the
subject land was declared alienable or disposable.

We find no reason to disturb the conclusion of both the RTC and the
Court of Appeals that Naguit had the right to apply for registration
owing to the continuous possession by her and her predecessors-in-
interest of the land since 1945. The basis of such conclusion is
primarily factual, and the Court generally respects the factual
findings made by lower courts. Notably, possession since 1945 was
established through proof of the existence of 50 to 60-year old trees
at the time Naguit purchased the property as well as tax declarations
executed by Urbano in 1945. Although tax declarations and realty tax
payment of property are not conclusive evidence of ownership,
53

nevertheless, they are good indicia of the possession in the concept
of 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.
They constitute at least proof that the holder has a claim of title over
the property. The voluntary declaration of a piece of property for
taxation purposes manifests not only ones sincere and honest
desire to obtain title to the property and announces his adverse claim
against the State and all other interested parties, but also the
intention to contribute needed revenues to the Government. Such an
act strengthens ones bona fide claim of acquisition of ownership.28

Considering that the possession of the subject parcel of land by the
respondent can be traced back to that of her predecessors-in-
interest which commenced since 1945 or for almost fifty (50) years, it
is indeed beyond any cloud of doubt that she has acquired title
thereto which may be properly brought under the operation of the
Torrens system. That she has been in possession of the land in the
concept of an owner, open, continuous, peaceful and without any
opposition from any private person and the government itself makes
her right thereto undoubtedly settled and deserving of protection
under the law.

WHEREFORE, foregoing premises considered, the assailed
Decision of the Court of Appeals dated July 12, 2000 is hereby
AFFIRMED. No costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario,
JJ., concur.