The Republic's Complaint For Cancellation of Title

1
NAVY OFFICERS' VILLAGE ASSOCIATION, INC. (NOVAI), PETITIONER, VS. REPUBLIC OF THE PHILIPPINES,
RESPONDENT.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari[1] assailing the December 28, 2006 decision[2] and March
28, 2007 resolution[3]of the Court of Appeals (CA) in CA-G.R. CV No. 85179.
The CA reversed and set aside the August 20, 2004 decision[4] of the Regional Trial Court (RTC) Branch 67, Pasig
City, that dismissed the complaint filed by the Republic of the Philippines (respondent or the Republic) for the
cancellation of Transfer Certificate of Title (TCT) No. T-15387 issued in the name of Navy Officers' Village
Association, Inc. or NOVAI (petitioner).
The Factual Antecedents
TCT No. T-15387,[5] issued in NOVAI's name, covers a 475,009 square-meter parcel of land (the property)[6] situated
inside the former Fort Andres Bonifacio Military Reservation (FBMR) in Taguig, Metro Manila.
The property previously formed part of a larger 15,812,684 square-meter parcel of land situated at the former Fort
William McKinley, Rizal, which was covered by TCT No. 61524 issued in the name of the Republic of the Philippines.
On July 12, 1957, then President Carlos P. Garcia issued Proclamation No. 423[7] "reserving for military purposes
certain parcels of the public domain situated in the municipalities of Pasig, Taguig, Paraaque, province of Rizal,
and Pasay City," which included the 15,812,684 square-meter parcel of land covered by TCT No. 61524.
On September 29, 1965, then Pres. Diosdado Macapagal issued Proclamation No. 461[8] which excluded from Fort
McKinley "a certain portion of land embraced therein, situated in the municipalities of Taguig and Paraaque,
Province of Rizal, and Pasay City," with an area of 2,455,310 square meters, and declared the excluded area as "AFP
Officers' Village" to be disposed of under the provisions of Republic Act Nos. 274[9] and 730.[10]
Barely a month after, or on October 25, 1965, Pres. Macapagal issued Proclamation No. 478[11] "reserving for the
veterans rehabilitation, medicare and training center site purposes" an area of 537,520 square meters of the land
previously declared as AFP Officers' Village under Proclamation No. 461, and placed the reserved area under the
administration of the Veterans Federation of the Philippines (VFP).
The property is within the 537,520 square-meter parcel of land reserved in VFP's favor.
On November 15, 1991, the property was the subject of a Deed of Sale[12] between the Republic of the
Philippines, through former Land Management Bureau (LMB) Director Abelardo G. Palad, Jr., (Dir. Palad) and
petitioner NOVAI. The deed of sale was subsequently registered and from which TCT No. T-15387 was issued in
NOVAI's name.
The Republic's Complaint for Cancellation of Title
In its complaint[13] filed with the RTC on December 23, 1993, the Republic sought to cancel NOVAFs title based on
the following grounds: (a) the land covered by NOVAFs title is part of a military reservation; (b) the deed of sale
conveying the property to NOVAI, which became the basis for the issuance of TCT No. 15387, is fictitious; (c) the
LMB has no records of any application made by NOVAI for the purchase of the property, and of the NOVAFs alleged
payment of P14,250,270.00 for the property; and (d) the presidential proclamation, i.e., Proclamation No. 2487,
claimed to have been issued by then President Corazon C. Aquino in 1991 that authorized the transfer and titling of
the property to NOVAI, is fictitious.
NOVAI's Answer to the Complaint
In its answer (which was later amended) to the Republic's complaint, NOVAI counter-argued that the property was
no longer part of the public dominion, as the land had long been segregated from the military reservation pursuant
to Proclamation No. 461.
2
NOVAI claimed that, contrary to the Republic's contention that there were no records of the sale, it had actually
filed a letter-application for a sales patent over the property with the LMB which prepared, verified and approved
the property's plan and technical description; and that the LMB delivered to it a copy of the deed of sale, signed
and executed by Dir. Palad, after it had paid a portion of the P14,250,270.00 purchase price, corresponding taxes,
and other charges, with the balance to be paid in installments.
Also, NOVAI contended that, since any alleged irregularities that may have attended the sale pertained only to
formalities, the proper remedy for the Republic was to file an action for reformation of instrument, not for
cancellation of title. In any event, it added that the Republic's cause of action had prescribed because its title to the
property had already become indefeasible.
The RTC's decision
The RTC narrowed down the issues to: (a) the character of the property in question, i.e., whether the property in
question was part of the FBMR, and hence, inalienable; and (b) the validity of the deed of sale conveying the
property to NOVAI, i.e., whether the title over the property was acquired by NOVAI through fraud. The RTC
resolved both issues in NOVAI's favor.
In its decision, the RTC ruled that: (a) the property is alienable and disposable in character, as the land falls within
the area segregated from the FBMR pursuant to Proclamation No. 461; (b) the subject deed of sale should be
presumed valid on its face, as it was executed with all the formalities of a notarial certification; (c)
notwithstanding the claims of forgery, the signature of Dir. Palad on the deed of sale appeared genuine and
authentic; and (d) NOVAI's title to the property had attained indefeasibility since the Republic's action for
cancellation of title was filed close to two (2) years from the issuance of the title.
The CA's decision
The CA reversed and set aside the RTC's decision. It ruled that the property is inalienable land of the public
domain; thus, it cannot be disposed of or be the subject of a sale. It pointed out that, since NOVAI failed to
discharge its burden of proving the existence of Proclamation No. 2487 - the positive governmental act that
would have removed the property from the public domain the property remained reserved for veterans
rehabilitation purposes under Proclamation No. 478, the latest executive issuance affecting the property.
Since the property is inalienable, the CA held that the incontestability and indefeasibility generally accorded to a
Torrens title cannot apply because the property, as in this case, is unregistrable land; that a title issued by reason
or on account of any sale, alienation, or transfer of an inalienable property is void and a patent nullity; and that,
consequently, the Republic's action for the cancellation of NOVAI's title cannot be barred by prescription.
Also, the CA held that there can be no presumption of regularity in the execution of the subject deed of sale given
the questionable circumstances that surrounded the alleged sale of the property to NOVAI,[14] e.g., NOVAI's
failure to go through the regular process in the Department of Environment and Natural Resources (DENR) or the
LMB Offices in the filing of an application for sales patent and in the conduct of survey and investigation; the
execution of the deed of sale without payment of the full purchase price as required by policy; and the
appearances of forgery and falsification of Dir. Palad's signature on the deed of sale and on the receipts issued to
NOVAI for its installment payments on the property, among others.
Lastly, the CA held that the Court's observations and ruling in Republic of the Philippines v. Southside
Homeowners Association, Inc (Southside)[15] is applicable to the present case. In Southside, the Republic similarly
sought the cancellation of title - TCT No. 15084 - issued in favor of Southside Homeowners Association, Inc. (SHAI)
over a 39.99 hectare area of land situated in what was known as the Joint U.S. Military Assistance Group
(JUSMAG) housing area in Fort Bonifacio. The Court cancelled the certificate of title issued to SHAI, as the latter
failed to prove that the JUSMAG area had been withdrawn from the military reservation and had been declared
open for disposition. The Court therein ruled that, since the JUSMAG area was still part of the FBMR, its alleged
sale to SHAI is necessarily void and of no effect.
NOVAI sought reconsideration of the CA's decision, which the CA denied in its March 28, 2007
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resolution;[16] hence, this petition.
The Petition
NOVAI alleges that the CA erred in declaring that: (a) the property is inalienable land of the public domain, (b) the
deed of sale and Proclamation No. 2487 were void and nonexistent, respectively, (c) the Republic's action for
cancellation of title was not barred by prescription, and (d) the ruling in Southside was applicable to the present
case.
In support of its petition, NOVAI raises the following arguments:
The property is no longer part of the public domain because, by virtue of Proclamation No. 461, s. of 1965,
(a) the property was excluded from the FBMR and made available for disposition to qualified persons, subject
to the provisions of R.A. Nos. 274 and 720 in relation to the Public Land Act;
The deed of sale was, in all respects, valid and enforceable, as it was shown to have been officially executed
(b) by an authorized public officer under the provisions of the Public Land Act, and celebrated with all the
formalities of a notarial certification;
Proclamation No. 2487 is to be presumed valid until proven otherwise; that the Republic carried the burden
(c)
of proving that Proclamation No. 2487 was a forgery, and that it failed to discharge this burden;
The CA should not have considered as evidence the testimony of Senator Franklin Drilon on the
nonexistence of Proclamation No. 2487 because such testimony was given by Senator Drilon in another
(d)
case[17] and was not formally offered in evidence by the Republic during the trial of the present case before
the RTC;
The action for cancellation of title filed by the Republic is already barred by prescription because it was filed
(e) only on December 23, 1993, or close to two (2) years from the issuance of NOVAI's title on January 9, 1992;
and
The case of Southside is not a cognate or companion case to the present case because the two cases involve
(f) completely dissimilar factual and doctrinal bases; thus, the Court's observations and ruling
in Southside should not be applied to the present case.
The Republic's Comment to the Petition
Procedurally, the Republic assails the propriety of the issues raised by NOVAI, such as "whether Proclamation No.
2487 and the signature of LMB Director Palad on the assailed deed of sale are forged or fictitious," and "whether
the Republic had presented adequate evidence to establish the spuriousness of the subject proclamation," which
are factual in nature and not allowed in a Rule 45 petition.
On the petition's substance, the Republic counters that:
The property is inalienable public land incapable of private appropriation because, while the property
(a) formed part of the area segregated from the FBMR under Proclamation No. 461, it was subsequently
reserved for a specific public use or purpose under Proclamation No. 478;
Proclamation No. 2487, which purportedly revoked Proclamation No. 478, does not legally exist and thus
cannot be presumed valid and constitutional unless proven otherwise; the presumption of validity and
(b)
constitutionality of a law applies only where there is no dispute as to the authenticity and due execution of
the law in issue;
The deed of sale executed by NOVAI and by Dir. Palad was undeniably forged, as Dir. Palad categorically
(c) denied having signed the deed of sale, and a handwriting expert from the National Bureau of Investigation
(NBI) confirmed that Dir. Palad's signature was indeed a forgery;[18]
NOVAI, a private corporation, is disqualified from purchasing the property because R.A. Nos. 274 and 730,
(d) and the Public Land Act only allow the sale of alienable and disposable public lands to natural persons, not
juridical persons; and
The Court's decision in Southside applies to the present case because of the strong factual and evidentiary
(e)
relationship between the two cases.
BCDA's Comment-in-Intervention
On December 28, 2007, and while the case was pending before this Court, the Bases Conversion Development
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Authority (BCDA) filed a motion for leave to file comment-in-intervention and to admit the attached comment-in-
intervention.[19]
In a resolution dated February 18, 2008,[20] the Court allowed the BCDA's intervention.
As the Republic has done, the BCDA contends that NOVAI is disqualified from acquiring the property given the
constitutional and statutory provisions that prohibit the acquisition of lands of the public domain by a
corporation or association; that any sale of land in violation of the Constitution or of the provisions of R.A. Nos.
274 and 730, and the Public Land Act are null and void; and that any title which may have been issued by mistake
or error on the part of a public official can be cancelled at any time by the State.
The BCDA further contends that NOVAI miserably failed to comply with the legal requirements for the release of
the property from the military reservation. More specifically, (1) the Director of Lands did not cause the
property's subdivision, including the determination of the number of prospective applicants and the area of each
subdivision lot which should not exceed one thousand (1,000) square meters for residential purposes; (2) the
purchase price for the property was not fixed by the Director of Lands as approved by the DENR Secretary; (3)
NOVAI did not pay the purchase price or a portion of it to the LMB; and (4) the Deed of Sale was not signed by
the President of the Republic of the Philippines or by the Executive Secretary, but was signed only by the LMB
Director.
Also, the BCDA observed that NOVAI was incorporated only on December 11, 1991, while the deed of sale was
purportedly executed on November 15, 1991, which shows that NOVAI did not yet legally exist at the time of the
property's purported sale.
OUR RULING
We resolve to DENY NOVAI's petition for review on certiorari as we find no reversible error committed by the CA
in issuing its December 28, 2006 decision and March 28, 2007 resolution.
I. Procedural Objections
A. In the filing of the present petition before this Court
Under Section 1, Rule 45 of the Rules of Court, a party desiring to appeal from a judgment or final order of the CA
shall raise only questions of law which must be distinctly set forth.
A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence
on a certain state of facts.[21] The issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of the facts being admitted.[22] In contrast, a question of fact exists when a
doubt or difference arises as to the truth or falsehood of facts or when the query invites the calibration of the
whole evidence considering mainly the credibility of the witnesses; the existence and relevancy of specific
surrounding circumstances, as well as their relation to each other and to the whole; and the probability of the
situation.[23]
The rule that only questions of law may be the subject of a Rule 45 Petition before this Court, however, has
exceptions.[24] Among these exceptions is when there is conflict between the factual findings of the RTC and that
of the CA.
In this case, the CA totally reversed the RTC on the nature and character of the land, in question, and on
the,validity of the deed of sale between the parties. Due to the conflicting findings of the RTC and the CA on
these issues, we are allowed to reexamine the facts and the parties' evidence in order to finally resolve the
present controversy.
B. On BCD A's Intervention
In its reply[25] to the BCDA's comment-in-intervention, NOVAI primarily objects to the BCDA's intervention
because it was made too late.
Intervention is a proceeding in a suit or action by which a third person is permitted by the court to make himself a
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party, either joining the plaintiff or defendant, or demanding something adverse to both of them.[26] Its purpose is
to enable such third party to protect or preserve a right or interest which may be affected by the
proceeding,[27] such interest being actual, material, direct and immediate, not simply contingent and
expectant.[28]
As a general rule, intervention cannot be made at the appeal stage. Section 2, Rule 19 of the Rules of Court,
governing interventions, provides that "the motion to intervene may be filed at any time before rendition of
judgment by the trial court." This rule notwithstanding, intervention may be allowed after judgment where it is
necessary to protect some interest which cannot otherwise be protected, and may be allowed for the purpose of
preserving the intervenor's right to appeal.[29] "The rule on intervention, like all other rules of procedure, is
intended to make the powers of the Court fully and completely available for justice x x x and aimed to facilitate a
comprehensive adjudication of rival claims overriding technicalities on the timeliness of the filing thereof."[30]
Thus, in exceptional cases, the Court may allow intervention although the trial court has already rendered
judgment. In fact, the Court had allowed intervention in one case even when the petition for review was already
submitted for decision before it.[31]
In the present case, the BCDA is indisputably the agency specifically created under R.A. No. 7227[32] to own, hold
and/or administer military reservations including, among others, those located inside the FBMR. If we are to
affirm the CA's decision, the BCDA stands to benefit as a favorable ruling will enable it to pursue its mandate
under R.A. No. 7227. On the other hand, if we reverse the CA's decision, it stands to suffer as the contrary ruling
will greatly affect the BCDA's performance of its legal mandate as it will lose the property without the
opportunity to defend its right in court.
Indeed, the BCDA has such substantial and material interest both in the outcome of the case and in the disputed
property that a final adjudication cannot be made in its absence without affecting such interest. Clearly, the
BCDA's intervention is necessary; hence, we allow the BCDA's intervention although made beyond the period
prescribed under Section 2, Rule 19 of the Rules of Court.
II. Substantive Issues
A. The property is non-disposable land of the public domain reserved for public or quasi-public use or purpose
We agree with the CA that the property remains a part of the public domain that could not have been validly
disposed of in NOVAI's favor. NOVAI failed to discharge its burden of proving that the property was withdrawn
from the intended public or quasi-public use or purpose.
While the parties disagree on the character and nature of the property at the time of the questioned sale, they
agree, however, that the property formed part of the FBMR - a military reservation belonging to the public
domain. We note that the FBMR has been the subject of several presidential proclamations and statues issued
subsequent to Proclamation No. 423, which either removed or reserved for specific public or quasi-public use or
purpose certain of its portions.
On the one hand, NOVAI argues that Proclamation No. 461 had already transferred the property from the State's
"public domain" to its "private domain." On the other hand, the respondents argue that Proclamation No. 478, in
relation with RA 7227 and EO No. 40, had reverted the property to the inalienable property of the "public
domain."
The classification and disposition of lands of the public domain are governed by Commonwealth Act (C.A.) No.
141 or the Public Land Act, the country's primary law on the matter.
Under Section 6 of C.A. No. 141, the President of the Republic of the Philippines, upon the recommendation of
the Secretary of Agriculture and Natural Resources, may, from time to time, classify lands of the public domain
into alienable or disposable, timber and mineral lands, and transfer these lands from one class to another for
purposes of their administration and disposition.
Under Section 7 of C.A. No. 141, the President may, from time to time, upon recommendation of the Secretary of
Agriculture and Natural Resources and for purposes of the administration and disposition of alienable and
disposable public lands, declare what lands are open to disposition or concession under the Acts' provisions.[33]
6
Section 8 of C.A. No. 141 sets out the public lands open to disposition or concession and the requirement that
they have been officially delimited and classified, and when practicable, surveyed. Section 8 excludes (by
implication) from disposition or concession, public lands which have been reserved for public or quasi-public
uses; appropriated by the Government; or in any manner have become private property, or those on which a
private right authorized and recognized by the Act or any other valid law may be claimed. Further, Section 8
authorizes the President to suspend the concession or disposition of lands previously declared open to
disposition, until again declared open to disposition by his proclamation or by act of Congress.
Lands of the public domain classified as alienable and disposable are further classified, under Section 9 of C.A. No.
141, according to their use or purpose into: (1) agricultural; (2) residential, commercial, industrial, or for similar
productive purposes; (3) educational, charitable, or other similar purposes; and (4) reservations for townsites and
for public and quasi-public uses. Section 9 also authorizes the President to make the classifications and, at any
time, transfer lands from one class to another.
Section 83 of C.A. No. 141 defines public domain lands classified as reservations for public and quasi-public
uses as "any tract or tracts of land of the public domain" which the President, by proclamation and upon
recommendation of the Secretary of Agriculture and Natural Resources, may designate "as reservations for the
use of the Republic of the Philippines or any of its branches, or of the inhabitants thereof or "for quasi-public uses
or purposes when the public interest requires it."[34] Under Section 88 of the same Act, these "reserved tract or
tracts of lands shall be non-alienable and shall not be subject to occupation, entry, sale, lease or other
disposition until again declared alienable under the provisions of [CA No. 141] or by proclamation of the
President."[35]
As these provisions operate, the President may classify lands of the public domain as alienable and disposable,
mineral or timber land, and transfer such lands from one class to another at any time.
Within the class of alienable and disposable lands of the public domain, the President may further classify public
domain lands, according to the use or purpose to which they are destined, as agricultural: residential,
commercial, industrial, etc.; educational, charitable, etc.; and reservations for townsites and for public and quasi-
public uses; and, he may transfer such lands from one class to the other at any time.
Thus, the President may, for example, transfer a certain parcel of land from its classification as agricultural (under
Section 9 [a]), to residential, commercial, industrial, or for similar purposes (under Section 9 [b]) and declare it
available for disposition under any of the modes of disposition of alienable and disposable public lands available
under C.A. No. 141, as amended.
The modes of disposition of alienable and disposable lands available under C.A. No. 141 include: (1) by
homestead settlement (Chapter IV), by sale (Chapter V), by lease (Chapter VI) and by confirmation of imperfect or
incomplete titles (Chapters VII and VIII) for agricultural lands under Title II of C.A. No. 141 as amended; (2) by sale
or by lease for residential, commercial, or industrial lands under Title III of C.A. No. 141, as amended; (3) by
donation, sale, lease, exchange or any other form for educational and charitable lands under Title IV of C.A. No.
141, as amended; and (4) by sale by public auction for townsite reservations under Chapter XI, Title V of C.A. No.
141, as amended.
Once these parcels of lands are actually acquired by private persons, either by sale, grant, or other modes of
disposition, they are removed from the mass of land of the public domain and become, by operation of law, their
private property.
With particular regard, however, to parcels of land classified as reservations for public and quasi-public uses
(under Section 9 [d]), when the President transfers them to the class of .alienable and disposable public domain
lands destined for residential, commercial, industrial, or for similar purposes (under Section 9 [b]), or some other
class under Section 9, these reserved public domain lands become available for disposition under any of the
available modes of disposition under C.A. No. 141, as provided above. Once these re-classified lands (to
residential purposes from reservation for public and quasi-public uses) are actually acquired by private persons,
they become private property.
In the meantime, however, and until the parcels of land are actually granted to, acquired, or purchased by private
persons, they remain lands of the public domain which the President, under Section 9 of C.A. No. 141, may
classify again as reservations for public and quasi-public uses. The President may also, under Section 8 of C.A. No.
7
141, suspend their concession or disposition.
If these parcels of land are re-classified as reservations before they are actually acquired by private persons, or if
the President suspends their concession or disposition, they shall not be subject to occupation, entry, sale, lease,
or other disposition until again declared open for disposition by proclamation of the President pursuant to
Section 88 in relation with Section 8 of C.A. No. 141.
Thus, in a limited sense, parcels of land classified as reservations for public or quasi-public uses under Section 9
(d) of C.A. No. 141 are still non-alienable and non-disposable, even though they are, by the general classification
under Section 6, alienable and disposable lands of the public domain. By specific declaration under Section 88, in
relation with Section 8, these lands classified as reservations are non-alienable and non-disposable.
In short, parcels of land classified as reservations for public or quasi-public uses: (1) are non-alienable and non-
disposable in view of Section 88 (in relation with Section 8) of CA No. 141 specifically declaring them as non-
alienable and not subject to disposition; and (2) they remain public domain lands until they are actually disposed
of in favor of private persons.
Complementing and reinforcing this interpretation - that lands designated as reservations for public and quasi-
public uses are non-alienable and non-disposable and retain their character as land of the public domain is the
Civil Code with its provisions on Property that deal with lands in general. We find these provisions significant to
our discussion and interpretation as lands are property, whether they are public lands or private lands.[36]
In this regard, Article 419 of the Civil Code classifies property as either of public dominion or of private
ownership. Article 420[37] defines property of the public dominion as those which are intended for public use or,
while not intended for public use, belong to the State and are intended for some public service. Article 421, on
the other hand, defines patrimonial property as all other property of the State which is not of the character
stated in Article 420. While Article 422 states that public dominion property which is no longer intended for
public use or service shall form part of the State's patrimonial property.
Thus, from the perspective of the general Civil Code provisions on Property, lands which are intended for public
use or public service such as reservations for public or quasi-public uses are property of the public dominion and
remain to be so as long as they remain reserved.
As property of the public dominion, public lands reserved for public or quasi-public uses are outside the
commerce of man.[38] They cannot be subject to sale, disposition or encumbrance; any sale, disposition or
encumbrance of such property of the public dominion is void for being contrary to law and public policy.[39]
To be subject to sale, occupation or other disposition, lands of the public domain designated as reservations must
first be withdrawn, by act of Congress or by proclamation of the President, from the public or quasi-public use for
which it has been reserved or otherwise positively declared to have been converted to patrimonial property,
pursuant to Sections 8 and 88 of C.A. No. 141 and Article 422 of the Civil Code.[40] Without such express
declaration or positive governmental act, the reserved public domain lands remain to be public dominion
property of the State.[41]
To summarize our discussion:
(1) Lands of the public domain classified as reservations for public or quasi-public uses are non-alienable and shall
not be subject to disposition, although they are, by the general classification under Section 6 of C.A. No. 141,
alienable and disposable lands of the public domain, until declared open for disposition by proclamation of the
President; and
(2) Lands of the public domain classified as reservations are property of the public dominion; they remain to be
property of the public dominion until withdrawn from the public or quasi-public use for which they have been
reserved, by act of Congress or by proclamation of the President, or otherwise positively declared to have been
converted to patrimonial property.
Based on these principles, we now examine the various issuances affecting the property in order to determine
the property's character and nature, i.e., whether the property remains public domain property of the State or
has become its private property.
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For easier reference, we reiterate the various presidential proclamations and statutes affecting the property:
Proclamation No. 423, series of 1957 - established the FBMR, a military reservation; the property falls
(1)
within the FBMR;
Proclamation No. 461, series of (September) 1965 - segregated, from the FBMR, a portion of Parcel 3, plan
(2)
Psd-2031, which includes the property, for disposition in favor of the AFPOVAI;
Proclamation No. 478, series of (October) 1965 reserved the property in favor of the Veterans
(3)
Rehabilitation and Medical Training Center (VRMTC); and
RA No. 7227 (1992), as implemented by EO No. 40, series of 1992 - subject to certain specified exemptions,
(4)
transferred the military camps within Metro Manila, among others, to the BCDA.
1. Proclamation No. 461 was not the legal basis for the property's sale in favor of NOVAI
We agree with the respondents that while Proclamation No. 461, issued in September 1965, removed from the
FBMR a certain parcel of land that includes the property, Proclamation No. 478, issued in October 1965, in turn
segregated the property from the area made available for disposition under Proclamation No. 461, and reserved
it for the use of the VRMTC.
We find it clear that Proclamation No. 478 was issued after, not before, Proclamation No. 461. Hence, while
Proclamation No. 461 withdrew a certain area or parcel of land from the FBMR and made the covered area
available for disposition in favor of the AFPOVAI, Proclamation No. 478 subsequently withdrew the property from
the total disposable portion and reserved it for the use of the VRMTC. With the issuance of Proclamation No. 478,
the property was transferred back to that class of public domain land reserved for public or quasi-public use or
purpose which, consistent with Article 420 of the Civil Code, is property of the public dominion, not patrimonial
property of the State.
Even under the parties' deed of sale, Proclamation No. 2487, not Proclamation No. 461, was used as the authority
for the transfer and sale of the property to NOVAI. The subject deed of sale pertinently reads:
"This DEED OF SALE, made and executed in Manila, Philippines, by the Director of Lands, Pursuant to Batas
Pambansa Blg. 878 and in representation of the Republic of the Philippines, hereinafter referred to as the
Vendor, in favor of THE NAVY OFFICERS VILLAGE ASSOCIATION (NOVA) and residing in Fort Bonifacio, Metro
Manila, referred to as the Vendee, WITNESSETH:
WHEREAS, pursuant to Presidential proclamation No. 478 as amended by proclamation No. 2487 in relation to
the provision of Act No. 3038 and similar Acts supplemented thereto, the Vendee applied for the purchase of a
portion of the above-described Property which portion is identical to Lot 3, Swo-000183 and more particularly
described on page two hereof;
WHEREAS, the Vendee has complied with all other conditions required by Act No. 3038 in relation to
Commonwealth Act No. 141, as amended, and the rules and regulation promulgated thereunder.
Clearly, the legal basis of the property's sale could not have been Proclamation No. 461.
2. Proclamation No. 2487 which purportedly revoked Proclamation No. 478 does not legally exist; hence, it did not
withdraw the property from the reservation or from the public dominion
Neither can Proclamation No. 2487 serve as legal basis for the property's sale in NOVAI's favor. Proclamation No.
2487 purportedly revoked Proclamation No. 478 and declared the property open for disposition in favor of
NOVAI.
The Republic and the BCD A (now respondents) argue that Proclamation No. 2487 does not legally exist; it could
not have served to release the property from the mass of the non-alienable property of the State.
Hence, even if NOVAI relies on Proclamation No. 2487 - on which it did not as it relied on Proclamation No. 4.61 -
the sale and NOVAI's title are still void. NOVAI, on the other hand, claims in defense that Proclamation No. 2487
is presumed valid and constitutional, and the burden of proving otherwise rests on the respondents.
In insisting on the presumptive validity of law, NOVAI obviously failed to grasp and appreciate the thrust of the
9
respondents' arguments, including the impact of the evidence which they presented to support the question they
raised regarding the authenticity of Proclamation No. 2487.
Rather than the validity or constitutionality of Proclamation No. 2487, what the respondents assailed was its legal
existence, not whether it was constitutional or not. Put differently, they claimed that Proclamation No. 2487 was
never issued by former Pres. Aquino; hence, the presumptive validity and constitutionality of laws cannot apply.
Accordingly, after the respondents presented their evidence, it was NOVAI's turn to present its own evidence
sufficient to rebut that of the respondents. On this point, we find the Republic's evidence sufficiently convincing
to show that Proclamation No. 2487 does not legally exist. These pieces of evidence include:
First, the October 26, 1993 letter of the Solicitor General to the Office of the President inquiring about the
existence of Proclamation No. 2487.[42]
Second, the November 12, 1993 letter-reply of the Office of the President informing the Solicitor General that
Proclamation No. 2487 "is not among the alleged documents on file with [its] Office."[43]
Third, the testimony of the Assistant Director of the Records Office in Malacaang confirming that indeed, after
verifying their records or of the different implementing agencies, "[t]here is no existing document(s) in [their]
possession regarding that alleged Proclamation No. 2487;"[44] and
Fourth and last, the October 11, 1993 Memorandum of then Department of Justice Secretary Frahklin M. Drilon
(DOJ Secretary Drilon) to the NBI to investigate, among others, the circumstances surrounding the issuance of
Proclamation No. 2487.[45] Notably, this October 11, 1993 Memorandum of DOJ Secretary Drilon stated that:
"Proclamation No. 2487 is null and void x x x. [It] does not exist in the official records of the Office of the
President x x x [and] could riot have been issued by the former President since the last Proclamation issued
during her term was proclamation No. 932 dated 19 June 1992."[46]
In this regard, we quote with approval the CA's observations in its December 28, 2006 decision:
Cast against this backdrop, it stands to reason enough that the defendant-appellee NOVAI was inevitably duty
bound to prove and establish the very existence, as well as the genuineness or authenticity, of this Presidential
Proclamation No. 2487. For certain inexplicable reasons, however, the defendant-appellee did not do so, but
opted to build up and erect its case upon Presidential Proclamation No. 461.
To be sure, the existence of Presidential Proclamation No. 2487 could be easily proved, and established, by its
publication in the Official Gazette. But the defendant-appellee could not, as it did not, submit or present any
copy or issue of the Official Gazette mentioning or referring to this Presidential Proclamation No. 2487, this
even in the face of the Government's determined and unrelenting claim that it does not exist at all.[47] (emphasis
supplied)
A final point, we did not fail to notice the all too obvious and significant difference between the proclamation
number of Proclamation No. 2487 and the numbers of the proclamations actually issued by then President
Corazon C. Aquino on or about that time.
We take judicial notice that on September 25, 1991 - the very day when Proclamation No. 2487 was supposedly
issued - former Pres. Aquino issued Proclamation No. 800[48] and Proclamation No. 801.[49] Previously, on
September 20, 1991, Pres. Aquino issued Proclamation No. 799;[50] and thereafter, on September 27, 1991, she
issued Proclamation No. 802.[51]
Other proclamations issued around or close to September 25, 1991, included the following:
1. Proclamation No. 750 issued on July 1, 1991;[52]

2. Proclamation No. 760 issued on July 18, 1991;[53]
3. Proclamation No. 770 issued on August 12, 1991;[54]
4. Proclamation No. 780 issued on August 26, 1991;[55]
5. Proclamation No. 790 issued on September 3, 1991;[56]
10

11. Proclamation No. 806 issued on October 2, 1991;[62]
14. Proclamation No. 834 issued on November 13, 1991;[65] and
15. Proclamation No. 840 issued on November 26, 1991.[66]
This list shows that the proclamations issued by former Pres. Aquino followed a series or sequential pattern with
each succeeding issuance bearing a proclamation number one count higher than the proclamation number of the
preceding Presidential Proclamation. It also shows that on or about the time Proclamation No. 2487 was
purportedly issued, the proclamation numbers of the proclamations issued by President Aquino did not go
beyond the hundreds series.
It is highly implausible that Proclamation No. 2487 was issued on September 25, 1991, or on any day close to
September 25, 1991, when the proclamations issued for the same period were sequentially numbered and bore
three-digit proclamation numbers.
As Proclamation No. 2487 does not legally exist and therefore could not have validly revoked Proclamation No.
478, we find, as the CA also correctly did, that Proclamation No. 478 stands as the most recent manifestation of
the State's intention to reserve the property anew for some public or quasi-public use or purpose. Thus,
consistent with Sections 88, in relation with Section 8, of C.A. No. 141 and Article 420 of the Civil Code, as
discussed above, the property which was classified again as reservation for public or quasi-public use or purpose
is non-alienable and not subject to disposition; it also remains property of the public dominion; hence, non-
alienable and non-disposable land of the public domain.
As a consequence, when R.A. No. 7227 took effect in 1992, the property subject of this case, which does not fall
among the areas specifically designated as exempt from the law's operation[67] was, by legal fiat, transferred to
the BCDA's authority.
B. As the property remains a reserved public domain land, its sale and the title issued pursuant to the sale are
void
As the property remains a reserved public domain land, it is outside the commerce of man. Property which are
intended for public or quasi- public use or for some public purpose are public dominion property of the
State[68] and are outside the commerce of man. NOVAI, therefore, could not have validly purchased the property
in 1991.
We reiterate and emphasize that property which has been reserved for public or quasi-public use or purpose are
non-alienable and shall not be subject to sale or other disposition until again declared alienable by law or by
proclamation of the President.[69] Any sale or disposition of property of the public dominion is void for being
contrary to law and public policy.[70]
Since the sale of the property, in this case, is void, the title issued to NOVAI is similarly void ab initio. It is a well-
settled doctrine that registration under the Torrens System does not, by itself, vest title as it is not a mode of
acquiring ownership;[71] that registration under the Torrens System merely confirms the registrant's already
existing title.[72]
Accordingly, the indefeasibility of a Torrens title does not apply in this case and does not attach to NOVAI's title.
The principle of indefeasibility does not apply when the sale of the property and the title based thereon are null
and void. Hence, the Republic's action to declare the nullity of NOVAI's void title has not prescribed.
NOVAI insists that the deed of sale carries the presumption of regularity in the performance of official duties as it
bears all the earmarks of a valid deed of sale and is duly notarized.
While we agree that duly notarized deeds of sale carry the legal presumption of regularity in the performance of
official duties,[73] the presumption of regularity in the performance of official duties, like all other disputable legal
presumptions, applies only in the absence of clear and convincing evidence establishing the contrary.[74]
When, as in this case, the evidence on record shows not only that the property was reserved for public use or
11
purpose, and thus, non-disposable - a fact that on its own defeats all the evidence which the petitioner may have
had to support the validity of the sale - but also shows that the sale and the circumstances leading to it are void in
form and in substance, the disputable presumption of regularity in the performance of official duties certainly
cannot apply.
C. Even assuming that Proclamation No. 2487 legally exists, the sale of the property to NOVAI is illegal.
1. Dir. Palad did not have the authority to sell and convey the property.
The subject deed of sale points to Proclamation No. 2487, purportedly amending Proclamation No. 478, in
relation with Act No. 3038,[75] as legal basis for authorizing the sale.
Section 1[76] of Act No. 3038 authorizes the sale or lease only: (i) of land of the private domain, not land of the
public domain; and (ii) by the Secretary of Agriculture and Natural Resources, not by the LMB Director. Section
2[77] of the said Act, in fact, specifically exempts from its coverage "land necessary for the public service." As the
sale was executed by the LMB Director covering the property that was reserved for the use of the VRMTC, it,
therefore, clearly violated the provisions of Act No. 3038.
2. The area subject of the sale far exceeded the area that the Director of Lands is authorized to convey.
Batas Pambansa (B.P.) Blg. 878[78] which, per the Deed of Sale, purportedly authorized the Director of Lands,
representing the Republic, to sell the property in favor of NOVAI, limits the authority of the Director of Lands to
sign patents or certificates covering lands to ten (10) hectares.
In this case, the subject deed of sale covers a total area of 475,009 square meters or 47.5009 hectares. Obviously,
the area covered by the deed of sale and which NOVAI purportedly purchased, far exceeds the area that the
Director of Lands is authorized to convey under B.P. Blg. 878.
3. The evidence on record and the highly suspect circumstances surrounding the sale fully supports the conclusion
that the property's sale to NOVAI is fictitious, thus, void.
We note the following irregularities that attended the sale of the property to NOVAI:
a. The absence, on file with the LMB, of any request for approval of any survey plan or of an approved
survey plan in NOVAI's name covering the property.[79] The approved survey plan relating to Lot 3, SWO-
13-000183 subject of NOVAI's TCT No. 15387 pertains to the AFPOVAI under Proclamation No. 461;[80]
b. The technical description, which the DENR prepared for the property as covered by TCT No. T-15387, was
issued upon NOVAI's request only for purposes of reference, not for registration of title, and was based
on the approved survey plan of the AFPOVAI;[81]
c. There is no record of any public land application filed by NOVAI with the LMB or with the DENR Office for
the purchase of the property or of any parcel of land in Metro Manila;[82]
d. LMB Dir. Palad categorically denied signing and executing the deed of sale;[83]
e. The findings of the NBI handwriting; expert, detailed in the Questioned Documents Report No. 815-1093
dated October 29, 1993,[84]revealed that the, signature of LMB Director Palad as it appeared on the Deed
of Sale and his standard/sample signature as they appeared on the submitted comparison documents
"were not written by one and the same person,"[85] and concluded that "[t]he questioned signature of
'ABELARDG G. PALAD, JR.' xxx is a TRACED FORGERY by carbon process;"[86] and
f. Lastly, the LMB Cashier's Office did not receive the amount of P14,250,270.00 allegedly paid by NOVAI as
consideration for the property. The receipts[87] - O.R. No. 8282851 dated November 28, 1991, for
P160,000.00 and O.R. No. 317024 dated December 23, 1992, for P200,000.00 - which NOVAI presented
as evidence of its alleged payment bore official receipt numbers which were not among the series of
official receipts issued by the National Printing Office to the LMB, and in fact, were not among the series
used by the LMB on the pertinent dates.[88]
12
In sum, we find - based on the facts, the law, and jurisprudence - that the property, at the time of the sale, was a
reserved public domain land. Its sale, therefore, and the corresponding title issued in favor of petitioner NOVAI, is
void.
WHEREFORE, we hereby DENY the present petition for review on certiorari. No reversible error attended the
decision dated December 28, 2006, and the resolution dated March 28, 2007, of the Court of Appeals in CA-G.R.
CV No. 85179.
SO ORDERED.
FLORENTINO C. OZAETA, doing business under the name and style of "GLASIK", petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EARRN GENERAL MERCHANDISING, INC., and ANGELA T. CHU, doing
business under the name and style of "MIRASHL CRYSTALETCH", respondents.
Leovillo C. Agustin Law Offices for petitioner.
Marlon P. Ontal for respondent EARRN.
Pedro D. Diwa Law Office for respondent Chu.
NOCON, J.:
Can a third party be legally bound to an agreement in which he did not take part? The answer would seem to be
obvious, but the present case had to be brought before us because of the conflicting decisions of the Regional
Trial Court 1 and the Court of Appeals. 2 The former says yes on the ground that said third person in the exercise
of his rights and in the performance of his duties, failed to act with justice, give everyone his due and observe
honesty and good faith as provided for by Article 19 of the Civil Code. But the appellate court thinks otherwise.
The facts, as summarized by the appellate court are as follows:
Virra Realty and development Corporation (hereinafter referred to as Virra), a corporation
existing and organized under Philippine Laws, obtained from Ortigas and Co., Inc. leasehold rights
over Virra Mall, a building located at Greenhills, San Juan Metro Manila.
On June 30, 1982, Virra, thru it Vice-President and General Manager Eduardo G. Ngan Tian, wrote
a letter to Florentino Ozaeta confirming its commitment to the latter for an exclusive right to
display and sell glass etchings at Virra Mall Shopping Center (Exhibit "A").
On October 8, Ozaeta, who is doing business under the name and style of "GLASIK", entered into
a "Contract to Sell Unit and to Assign Leasehold Rights" with VIRRA over Unit No. a-9 (Exhibit
"B"). The provision of the contract pertinent to this controversy reads:
2. Use of the Unit The UNIT, as determined by VIRRA with the express consent
of ORTIGAS, shall be used only as Etched Glass/Home Decor. In case shall cars,
trucks, motorcycles, motor vehicles, machinery and heavy equipment be sold or
displayed from and/or in the UNIT. The BUYER-ASSIGNEE should not alter the use
of the UNIT without the prior written consent of ORTIGAS, VIRRA and the
Corporation or Association or Owner/Buyers-Assignee of units within the
BUILDING, mentioned in paragraph 11 hereof. Furthermore, it is understood that
the use of the unit shall be subject to the terms and conditions of the LEASE
CONTRACT, to the Articles and By-Laws and the rules and regulations to be
promulgated by the aforesaid, Corporation or Association.
On October 3, 1983, VIRRA entered into another "Contract to Sell Unit and Assign Leasehold
Rights" with Earrn General Merchandising, Inc. (hereinafter referred to as EARNN) over Unit No.
A-12 of the same building (Exhibits "C" plaintiff, "1" defendant EARNN). This contract provides
that "the UNIT, as determined by VIRRA with the express consent of ORTIGAS, shall be used only
as Artworks & Furnishings. . . .
One year after, in its letter dated September 6, 1984, EARNN advised VIRRA that it had decided
to change its commercial activity in Unit No. A-12 to glass etching (Exhibit "D"). Because of its
prior commitment to give GLASIK the exclusive right to sell and display glass etching at Virra Mall,
VIRRA "disapproved the request" (Exhibit "E"). The opposition notwithstanding, EARRN
proceeded with the change. It displayed and sold glass etchings in the premises.
It was later found out that weeks prior to EARRN's letter of September 6, 1984, Unit A-12 had
already been (leased) by EARRN to a certain Angela T. Chu, doing business under the name and
style of "MIRASHL CRYSTALETCH" (ANNEX "A", Records, pp. 101-103). Chu also made use of the
leased premises to sell and display glass etchings.
13
Alleging that the acts of EARRN and Chu infringed his exclusive right to sell glass etchings at Virra
Mall and that he suffered financial losses as a consequence, Ozaeta filed this action for
injunction, specific performance and damages with a prayer for writ of preliminary prohibitory
and/or mandatory injunction against EARRN and VIRRA. The complaint was later amended on
November 27 to implead Angela Chu as additional defendant. 3
After trial, the Regional Trial Court rendered its judgment ordering Earrn and Angela Chu to pay damages to
petitioner but dismissed the case and all other claims, counterclaims and crossclaims against Virra. The trial court
said that notwithstanding its want of privity to the contract between Ozaeta and Virra, Earrn is still bound by the
prohibition and restriction embodied in the contract. It stressed that the provision of the contract is "crystal
clear," that the owners of the units are limited or restricted to the commercial activity as stated in the
agreement; in this case, "Etched Glass/Home Decor" for Glasik and "Artworks & Furnishings" for Earrn. 4
It ignored Earnn's argument that it did not violate its contract with Virra as "Artwokrs and Furnishings" are broad
enough to include etched glass or glass etching. Furthermore, the trial court opined that in pursuing the change
in its commercial activity despite Virra's objections and its prior knowledge of the exclusivity rights of Glasik,
Earrn failed to act with justice, and observe honesty and good faith as required in Art. 19 of the New Civil Code. 5
Reversing the decision of the trial court, the appellate court is of the view that it is immaterial whether the
controversial provision of the contract is meant to control or regulate the use of the unit. Instead it construed the
phrase "glass etchings or etched glass" as "used for home decoration (and) clearly (coming) under the general
concepts of artworks and furnishings." 6 The appellate court further stressed that not only were Earrn and Chu
not privy to the agreement between Virra and Ozaeta, but that they were not aware of the supposed exclusivity
in favor of petitioner to display and sell etched glass. Thus, it concluded that petitioner has no cause of action
against them.
Disagreeing with the ruling, petitioner submits that the above findings of the Court of Appeals are not in accord
with the evidence and the law.
We do not agree. Much as we sympathize with the cause of the petitioner, we do not find any reversible error in
the judgment of the appellate court.
Based on the facts presented, we find no cogent reason to deviate from the general rule that contracts take
effect only between the parties 7 and cannot be binding upon nor be enforced against one who is not a party to it.
Granting that Virra committed itself to give Glasik exclusive rights to display and sell etched glass within Virra
Mall, Earrn cannot, by any stretch of the imagination, be bound to such a commitment where it has no
knowledge of it and of which it was not informed. This was made clear in the testimony of Mr. Eduardo Ngan
Tian, to wit:
Q. And the exclusivity that you mentioned, you are referring to the exclusive
contract you had between Virra Realty and the plaintiff Florentino Ozaeta?
A. Yes, sir.
Q. That was a contract only between Virra Realty and Ozaeta?
A. Yes sir.
Q. Nobody was involved in the contract except Virra Realty which you were the
representative and the plaintiff Florentino Ozaeta?
xxx xxx xxx
A. Yes sir.
xxx xxx xxx
Q. And did you inform the other occupants and buyers of commercial units with
respect to this exclusivity of the contract with the plaintiff?
A. No sir. 8
And even assuming the existence of a restriction on Earrn to engage only on the display and sale of "Artworks
and Furnishings" as stated in provision 2 of the contract, we agree with the appellate court that etched glass
could fall under the general concepts of artworks and furnishings.
Webster dictionary defines "Artworks" as "la: the making of decorative or artistic objects by hand; b: the
decoration of artistic objects so made 2: artistic work produced in quantity." 9 While furnishings, is defined as "1:
the act or process of supplying furniture or equipment; 2a: an article or accessory of dress . . .; 3: an object of
fixture that tends to increase comfort or utility. . . ." 10 Petitioner contends that glass etchings or etched glass "is
basically a mirror; only that a design is etched on it; but the primary purpose is not for decoration but a a mirror
a mirror with a particular design." 11
Which ever way its is argued, however, an etched "mirror" is functional and therefore can be considered as
furnishing or a decorative artwork, because the making of an etched glass requires craftmanship and application
of artistic skill.
From the foregoing, we find that petitioner has no cause of action against Earrn not against Angela Chu, who is
merely a lessee of Unit A-12. Petitioner should have pursued its case against Virra, which is the real culprit, for
14
not protecting his interest. It is however unfortunate that petitioner did not appeal the dismissal of the complaint
against Virra.
WHEREFORE, judgment is hereby rendered DISMISSING the petition for lack of merit and AFFIRMING the decision
of the Court of Appeals in toto.
SO ORDERED.
SPS. SALVACION SERRANO G.R. No. 145874
LADANGA and AGUSTIN
LADANGA,
Petitioners,
Present :
PANGANIBAN, J., Chairman,
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
CARPIO MORALES and
GARCIA, JJ.
BERNARDO ASENETA,
Respondent. Promulgated :
September 30, 2005

CORONA, J.:
Before us is a petition for review under Rule 45 of the Rules of Court seeking to reverse and set aside the
decision[1] of the Court of Appeals which affirmed the judgment[2] of Branch 93, Regional Trial Court (RTC),
Quezon City.
The facts follow.
Petitioner Salvacion Ladanga and respondent Bernardo Aseneta were first cousins. They were both
reared and educated by their aunt Clemencia Aseneta. Respondent Bernardo was adopted by Clemencia on June
30, 1961 in a special proceeding[3] before the then Juvenile and Domestic Relations Court (JDRC) of Manila.
In her lifetime, Clemencia Aseneta owned several parcels of land in Manila, Quezon City and Albay from which
she derived rentals. Among these properties was the disputed parcel of land located in Diliman, Quezon City.
Respondent Bernardo alleged that sometime in 1974, Clemencia complained that she was not receiving the
rentals from petitioner spouses to whom she had entrusted the administration of her properties. Bernardo
investigated the matter. He found out that Clemencia purportedly sold nine parcels of land[4] to petitioner
spouses on April 6, 1974. Among the properties sold was the land in Diliman, Quezon City covered by TCT No.
5813 (Diliman property). The deed of sale[5] showed that the land had been sold by Clemencia to petitioner
Salvacion for only P20,000 although the market value stated in the tax declaration was P134,130. TCT No. 197624
was then issued by the Register of Deeds of Quezon City to petitioner Salvacion Serrano Ladanga. The
consideration for the eight other properties sold to petitioner spouses on the same day amounted to P60,200
which was supposedly paid in cash to Clemencia.
Respondent Bernardo also found out that a parcel of land in Cubao, Quezon City and covered by TCT No. 177619
(Cubao property) had been sold by Clemencia to petitioner Salvacion on November 8, 1974. The lot was priced
at P12,000[6] although the market value stated in the tax declaration was P42,000. TCT No. 204090 was
correspondingly issued in the name of petitioner Salvacion Ladanga for this property.
Respondent Bernardo confronted Clemencia about the incredulous sales to petitioners. However, the latter
denied selling the properties to and receiving payment from them. This prompted respondent to file guardianship
proceedings[7] for Clemencia before the then JDRC of Quezon City.
In an order[8] dated April 17, 1975, the JDRC declared Clemencia Aseneta, a 76-year-old spinster, an
incompetent and an easy victim of deceit and exploitation. It further directed the issuance of Letters of
Guardianship[9] to respondent Bernardo for the person and properties of Clemencia.
15
Respondent Bernardo, as guardian of Clemencia, then filed in various courts actions for reconveyance and
accounting of rentals against petitioner spouses for the ten sales. For the Diliman and Cubao properties, the
action was brought before Branch 93, RTC Quezon City.[10]
In their answer[11], petitioner spouses alleged that Clemencia was disgusted with respondent Bernardo
who was purportedly cheating her of the rentals from her properties. She therefore appointed petitioner
Salvacions husband, Dr. Agustin Ladanga, as administrator in 1969 for the properties in Albay, and in 1972 for the
properties in Manila and Quezon City. Petitioner Agustin paid the income and realty taxes on the properties. He
also paid for the necessary repairs on the leased properties and all other fees in behalf of Clemencia. According to
petitioner spouses, Clemencia sold her properties to them because of her bitterness towards respondent
Bernardo and also out of gratitude to them for taking care of her. They further alleged that a certain Atty.
Arambulo prepared all the deeds of sale and that they paid Clemencia in the presence of the lawyers who
notarized the documents.
When Clemencia died[12] during the pendency of the proceedings in the trial court, respondent Bernardo
substituted her in the action as legal heir.[13]
At the hearing, respondent Bernardo presented Atty. Dominador Arambulo who notarized the deeds of
sale executed on April 6, 1974 and the deposition of Atty. Efren Barangan who notarized the deed of sale
executed on November 8, 1974. Both lawyers declared that the deeds of sale were already prepared when they
notarized them in their respective offices. They also denied witnessing the actual payment allegedly made by
petitioner spouses to Clemencia.
After a prolonged trial lasting 20 years, the court a quo rendered judgment declaring that no contract of
sale was perfected either for the Diliman or for the Cubao property. According to the trial court, there was no
clear agreement between the parties on the subject matter and consideration considering that while Miss
(Clemencia) Aseneta appear(ed) to have signed the subject documents, there were strong indications that she
was not aware of the import of the documents that she had signed. The trial court also observed that the
purported considerations of the properties sold by Clemencia to petitioner spouses were grossly
disproportionate to their market values as indicated in the tax declarations. The dispositive portion read:
WHEREFORE, premises considered by preponderance of evidence, the Court finds in favor of the
plaintiff and against the defendants, and hereby orders as follows:
A. For defendants spouses Ladanga to reconvey the titles and possession to the property now
covered (by) TCT Nos. 197624 and 294090 to the plaintiffs for and in behalf of Miss
Clemencia Aseneta;
B. For the Register of Deeds of Quezon City to cancel TCT Nos. 197624 and 204090 and to
issue new transfer certificates of title in lieu of those cancelled, upon payment of the
required fees by the plaintiff, in the name of Miss Clemencia Aseneta;
C. For the defendants spouses Ladanga to render within fifteen (15) days an accounting of
rentals received from the properties covered by TCT No. 197624 from April, 1974 up to the
present and so with the property under TCT No. 204090 from November, 1974 up to the
present and to remit said rentals to the plaintiff minus any amount paid by the defendants
Ladanga as realty taxes for the period mentioned;
D. For defendants Ladanga to pay plaintiff P10,000.00 as reasonable attorneys fees; and
E. Cost of suit.
SO ORDERED.[14]
In the meantime, the parties entered into a compromise agreement on the Cubao property and, after
securing court approval, sold it to a third party in 1987.
During the pendency of the appeal, respondent Bernardo filed a motion to cite petitioners in contempt
after they sold the Diliman property to a certain Bernardo Hizon on July 6, 1996 in spite of the annotation of lis
16
pendens at the back of the title. Respondent insisted that the sale amounted to a fraudulent deception, a
defiance of court authority and obstruction of justice because the property was in custodia legis and could not be
disposed of without the necessary court approval.
The motion was denied by the Court of Appeals which held that the property was not in custodia legis. It,
however, observed that Bernardo Hizon, being a transferee pendente lite, took the property subject to the
outcome of the appeal. The appellate court thereafter affirmed the trial courts judgment with respect to the
remaining Diliman property.[15]
Hence, this petition for review centered on the following issues:
(1) whether or not there was a perfected contract [of sale of the Diliman property];
(2) whether or not petitioners paid the purchase price mentioned in the contract; and
(3) whether the price was grossly disproportionate to the market value of the land in
question.[16]
The issues raised by petitioners are purely factual. The Court, not being a trier of facts, does not normally
re-examine the evidence submitted by the contending parties during the trial of a case. Findings of fact of the
Court of Appeals, affirming those of the trial court, are final and conclusive.[17] The jurisdiction of the Court in a
petition for review on certiorari is limited to reviewing only errors of law, not of fact, unless it is shown, inter alia,
that: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly
mistaken, absurd and impossible; (3) there is grave abuse of discretion; (4) the judgment is based on
misapprehension of facts; (5) the findings of fact are conflicting and (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both parties.[18]
We decline to review, much more reverse, the trial and appellate courts findings.
The facts of this case are the same as those of Ladanga v. Court of Appeals (L-55999)[19] promulgated on
August 24, 1984. In that case, we voided the sale between Clemencia and petitioner Salvacion of a Manila
property included in the nine parcels of land purportedly sold on April 6, 1974.
With respect to the seven remaining parcels of land located in Albay and ostensibly sold on the same day,
the Court of Appeals ruled in the same manner and nullified the various sales.[20] In its decision, the appellate
court held:
Plaintiffs [respondent Bernardos] theory that L-55999 is now the law of the case is never
doubted by this Court.
And because all lower Courts should take their bearings from the Supreme Court, this
Court has no other choice but to treat L-55999 as the law of this case, the properties involved
being same properties included in the deed of sale executed in one single day before the same
notary public using identical witnesses, same parties and same facts. So far there is no showing
that aforesaid ruling has been reversed and this Court has to meekly follow the light emanating
therefrom in order not to be lost.
Stare decisis et non quieta movere. Let the decision stand and disturb not what is already settled. The
doctrine of stare decisis is a salutary and necessary rule. When a court lays down a principle of law applicable to a
certain state of facts, it must adhere to such principle and apply it to all future cases in which the facts sued upon
are substantially the same.[21] Once a case is decided one way, then another case involving exactly the same point
at issue should be decided the same way.[22] It proceeds from the principle of justice that, absent any powerful
countervailing considerations, like cases ought to be decided alike.[23]
The ten cases for reconveyance brought by respondent Bernardo in various courts having jurisdiction
over the real properties sold on April 6, 1974 and November 8, 1974 were similar, except for the descriptions of
17
the properties. Only one has remained unresolved. The rest have either been settled or the contracts of sale
declared void by the courts for insufficiency of consideration. Thus, in Ladanga v. Court of Appeals:[24]
The questions ventilated by the Ladangas in their briefs and in their comment of April 3,
1984 may be reduced to the issue of the validity of the sale which the vendor Clemencia herself
assailed in her testimony on August 16 and December 3, 1976 when she was eighty years old.
Her testimony and that of the notary leave no doubt that the price xxx was never paid.
A contract of sale is void and produces no effect whatsoever where the price, which
appears therein as paid, has in fact never been paid by the purchaser to the vendor.
Such a sale is inexistent and cannot be considered consummated.
It was not shown that Clemencia intended to donate the xxx property to the Ladangas.
Her testimony and the notarys testimony destroyed any presumption that the sale was fair and
regular and for a true consideration.
xxx. [T]he Ladangas abused Clemencias confidence and defrauded her of properties with
a market value of P393,559.25 when she was already 78 years old. (citations omitted)
Hence, for the sake of certainty and the stability of case law, the conclusions reached in that earlier case
should be followed here.
As to the issue of contempt, suffice it to say that the Court of Appeals was correct. A notice of lis
pendens is an announcement to the whole world that a particular real property is in litigation and serves as a
warning that one who acquires an interest over said property does so at his own risk[25], or that he gambles on
the result of the litigation. The property subject of litigation is not by that fact alone in custodia legis. It is only
when property is lawfully taken by virtue of legal process that it becomes in custodia legis, and not otherwise.
Considering that the disputed property was not in the custody of the court, petitioner spouses cannot be held
liable for contempt when they sold it to a third person. The transferee Bernardo Hizon, however, being presumed
by law to be aware of the ongoing litigation over the property, is bound by this decision and shall transfer the
Diliman property back to the estate of Clemencia Aseneta, with financial recourse to petitioner spouses.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals AFFIRMED.
SOUTHEAST MINDANAO GOLD MINING CORPORATION, petitioner, vs. BALITE PORTAL MINING COOPERATIVE
and others similarly situated; and THE HONORABLE ANTONIO CERILLES, in his capacity as Secretary of
the Department of Environment and Natural Resources (DENR), PROVINCIAL MINING REGULATORY
BOARD OF DAVAO (PMRB-Davao), respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review of the March 19, 1998 decision of the Court of Appeals in CA-G.R. SP No. 44693,
dismissing the special civil action for certiorari, prohibition and mandamus, and the resolution dated August 19,
1998 denying petitioners motion for reconsideration.
The instant case involves a rich tract of mineral land situated in the Agusan-Davao-Surigao Forest Reserve
known as the Diwalwal Gold Rush Area. Located at Mt. Diwata in the municipalities of Monkayo and Cateel in
Davao Del Norte, the land has been embroiled in controversy since the mid-80s due to the scramble over gold
deposits found within its bowels.
From 1985 to 1991, thousands of people flocked to Diwalwal to stake their respective claims. Peace and
order deteriorated rapidly, with hundreds of people perishing in mine accidents, man-made or otherwise,
brought about by unregulated mining activities. The multifarious problems spawned by the gold rush assumed
gargantuan proportions, such that finding a win-win solution became a veritable needle in a haystack.
On March 10, 1988, Marcopper Mining Corporation (Marcopper) was granted Exploration Permit No. 133
(EP No. 133) over 4,491 hectares of land, which included the hotly-contested Diwalwal area.[1]Marcoppers
acquisition of mining rights over Diwalwal under its EP No. 133 was subsequently challenged before this Court
in Apex Mining Co., Inc., et al. v. Hon. Cancio C. Garcia, et al.,[2] where Marcoppers claim was sustained over that
of another mining firm, Apex Mining Corporation (Apex). The Court found that Apex did not comply with the
procedural requisites for acquiring mining rights within forest reserves.
18
Not long thereafter, Congress enacted on June 27, 1991 Republic Act No. 7076, or the Peoples Small-Scale
Mining Act. The law established a Peoples Small-Scale Mining Program to be implemented by the Secretary of the
DENR[3] and created the Provincial Mining Regulatory Board (PMRB) under the DENR Secretarys direct supervision
and control.[4] The statute also authorized the PMRB to declare and set aside small-scale mining areas subject to
review by the DENR Secretary[5] and award mining contracts to small-scale miners under certain conditions.[6]
On December 21, 1991, DENR Secretary Fulgencio S. Factoran issued Department Administrative Order
(DAO) No. 66, declaring 729 hectares of the Diwalwal area as non-forest land open to small-scale mining.[7] The
issuance was made pursuant to the powers vested in the DENR Secretary by Proclamation No. 369, which
established the Agusan-Davao-Surigao Forest Reserve.
Subsequently, a petition for the cancellation of EP No. 133 and the admission of a Mineral Production
Sharing Arrangement (MPSA) proposal over Diwalwal was filed before the DENR Regional Executive Director,
docketed as RED Mines Case No. 8-8-94 entitled, Rosendo Villaflor, et al. v. Marcopper Mining Corporation.
On February 16, 1994, while the RED Mines case was pending, Marcopper assigned its EP No. 133 to
petitioner Southeast Mindanao Gold Mining Corporation (SEM),[8] which in turn applied for an integrated MPSA
over the land covered by the permit.
In due time, the Mines and Geosciences Bureau Regional Office No. XI in Davao City (MGB-XI) accepted and
registered the integrated MPSA application of petitioner. After publication of the application, the following filed
their oppositions:
a) MAC Case No. 004(XI) - JB Management Mining Corporation;
b) MAC Case No. 005(XI) - Davao United Miners Cooperative;
c) MAC Case No. 006(XI) - Balite Integrated Small Scale Miners Cooperative;
d) MAC Case No. 007(XI) - Monkayo Integrated Small Scale Miners Association, Inc.;
e) MAC Case No. 008(XI) - Paper Industries Corporation of the Philippines;
f) MAC Case No. 009(XI) - Rosendo Villaflor, et al.;
g) MAC Case No. 010(XI) - Antonio Dacudao;
h) MAC Case No. 011(XI) - Atty. Jose T. Amacio;
i) MAC Case No. 012(XI) - Puting-Bato Gold Miners Cooperative;
j) MAC Case No. 016(XI) - Balite Communal Portal Mining Cooperative; and
k) MAC Case No. 97-01(XI) - Romeo Altamera, et al.
In the meantime, on March 3, 1995, Republic Act No. 7942, the Philippine Mining Act, was enacted. Pursuant
to this statute, the above-enumerated MAC cases were referred to a Regional Panel of Arbitrators (RPA) tasked
to resolve disputes involving conflicting mining rights. The RPA subsequently took cognizance of the RED Mines
case, which was consolidated with the MAC cases.
On April 1, 1997, Provincial Mining Regulatory Board of Davao passed Resolution No. 26, Series of 1997,
authorizing the issuance of ore transport permits (OTPs) to small-scale miners operating in the Diwalwal mines.
Thus, on May 30, 1997, petitioner filed a complaint for damages before the Regional Trial Court of Makati
City, Branch 61, against the DENR Secretary and PMRB-Davao. SEM alleged that the illegal issuance of the OTPs
allowed the extraction and hauling of P60,000.00 worth of gold ore per truckload from SEMs mining claim.
Meanwhile, on June 13, 1997, the RPA resolved the Consolidated Mines cases and decreed in an Omnibus
Resolution as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Exploration Permit No. 133 is hereby reiterated and all
the adverse claims against MPSAA No. 128 are DISMISSED.[9]
On June 24, 1997, the DENR Secretary issued Memorandum Order No. 97-03[10] which provided, among
others, that:
1. The DENR shall study thoroughly and exhaustively the option of direct state utilization of the mineral resources
in the Diwalwal Gold-Rush Area. Such study shall include, but shall not be limited to, studying and weighing the
feasibility of entering into management agreements or operating agreements, or both, with the appropriate
government instrumentalities or private entities, or both, in carrying out the declared policy of rationalizing the
mining operations in the Diwalwal Gold Rush Area; such agreements shall include provisions for profit-
sharing between the state and the said parties, including profit-sharing arrangements with small-scale miners, as
well as the payment of royalties to indigenous cultural communities, among others. The Undersecretary for Field
Operations, as well as the Undersecretary for Legal and Legislative Affairs and Attached Agencies, and the
Director of the Mines and Geo-sciences Bureau are hereby ordered to undertake such studies. x x x[11]
On July 16, 1997, petitioner filed a special civil action for certiorari, prohibition and mandamus before the
Court of Appeals against PMRB-Davao, the DENR Secretary and Balite Communal Portal Mining Cooperative
(BCPMC), which represented all the OTP grantees. It prayed for the nullification of the above-quoted
Memorandum Order No. 97-03 on the ground that the direct state utilization espoused therein would effectively
impair its vested rights under EP No. 133; that the DENR Secretary unduly usurped and interfered with the
jurisdiction of the RPA which had dismissed all adverse claims against SEM in the Consolidated Mines cases; and
19
that the memorandum order arbitrarily imposed the unwarranted condition that certain studies be conducted
before mining and environmental laws are enforced by the DENR.
Meanwhile, on January 6, 1998, the MAB rendered a decision in the Consolidated Mines cases, setting aside
the judgment of the RPA.[12] This MAB decision was then elevated to this Court by way of a consolidated petition,
docketed as G.R. Nos. 132475 and 132528.
On March 19, 1998, the Court of Appeals, through a division of five members voting 3-2,[13] dismissed the
petition in CA-G.R. SP No. 44693. It ruled that the DENR Secretary did not abuse his discretion in issuing
Memorandum Order No. 97-03 since the same was merely a directive to conduct studies on the various options
available to the government for solving the Diwalwal conflict. The assailed memorandum did not conclusively
adopt direct state utilization as official government policy on the matter, but was simply a manifestation of the
DENRs intent to consider it as one of its options, after determining its feasibility through studies. MO 97-03 was
only the initial step in the ladder of administrative process and did not, as yet, fix any obligation, legal
relationship or right. It was thus premature for petitioner to claim that its constitutionally-protected rights under
EP No. 133 have been encroached upon, much less, violated by its issuance.
Additionally, the appellate court pointed out that petitioners rights under EP No. 133 are not inviolable,
sacrosanct or immutable. Being in the nature of a privilege granted by the State, the permit can be revoked,
amended or modified by the Chief Executive when the national interest so requires. The Court of Appeals,
however, declined to rule on the validity of the OTPs, reasoning that said issue was within the exclusive
jurisdiction of the RPA.
Petitioner filed a motion for reconsideration of the above decision, which was denied for lack of merit on
August 19, 1998.[14]
Hence this petition, raising the following errors:
I. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR, AND HAS DECIDED A
QUESTION OF SUBSTANCE NOT THERETOFORE DETERMINED BY THIS HONORABLE SUPREME COURT,
OR HAS DECIDED IT IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE
DECISIONS OF THIS HONORABLE COURT IN UPHOLDING THE QUESTIONED ACTS OF RESPONDENT
DENR SECRETARY WHICH ARE IN VIOLATION OF MINING LAWS AND IN DEROGATION OF
PETITIONERS VESTED RIGHTS OVER THE AREA COVERED BY ITS EP NO. 133;
II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN HOLDING THAT AN ACTION
ON THE VALIDITY OF ORE TRANSPORT PERMIT (OTP) IS VESTED IN THE REGIONAL PANEL OF
ARBITRATORS.[15]
In a resolution dated September 11, 2000, the appealed Consolidated Mines cases, docketed as G.R. Nos.
132475 and 132528, were referred to the Court of Appeals for proper disposition pursuant to Rule 43 of the 1997
Rules of Civil Procedure.[16] These cases, which were docketed as CA-G.R. SP Nos. 61215 and 61216, are still
pending before the Court of Appeals.
In the first assigned error, petitioner insists that the Court of Appeals erred when it concluded that the
assailed memorandum order did not adopt the direct state utilization scheme in resolving the Diwalwal
dispute. On the contrary, petitioner submits, said memorandum order dictated the said recourse and, in effect,
granted management or operating agreements as well as provided for profit sharing arrangements to illegal
small-scale miners.
According to petitioner, MO 97-03 was issued to preempt the resolution of the Consolidated Mines
cases. The direct state utilization scheme espoused in the challenged memorandum is nothing but a legal
shortcut, designed to divest petitioner of its vested right to the gold rush area under its EP No. 133.
We are not persuaded.
We agree with the Court of Appeals ruling that the challenged MO 97-03 did not conclusively adopt direct
state utilization as a policy in resolving the Diwalwal dispute. The terms of the memorandum clearly indicate that
what was directed thereunder was merely a study of this option and nothing else. Contrary to petitioners
contention, it did not grant any management/operating or profit-sharing agreement to small-scale miners or to
any party, for that matter, but simply instructed the DENR officials concerned to undertake studies to determine
its feasibility. As the Court of Appeals extensively discussed in its decision:
x x x under the Memorandum Order, the State still had to study prudently and exhaustively the various options
available to it in rationalizing the explosive and ever perilous situation in the area, the debilitating adverse effects
of mining in the community and at the same time, preserve and enhance the safety of the mining operations and
ensure revenues due to the government from the development of the mineral resources and the exploitation
thereof. The government was still in earnest search of better options that would be fair and just to all parties
concerned, including, notably, the Petitioner. The direct state utilization of the mineral resources in the area was
only one of the options of the State. Indeed, it is too plain to see, x x x that before the State will settle on an
option, x x x an extensive and intensive study of all the facets of a direct state exploitation was directed by the
Public Respondent DENR Secretary. And even if direct state exploitation was opted by the government, the DENR
20
still had to promulgate rules and regulations to implement the same x x x, in coordination with the other
concerned agencies of the government.[17]
Consequently, the petition was premature. The said memorandum order did not impose any obligation on
the claimants or fix any legal relation whatsoever between and among the parties to the dispute.At this stage,
petitioner can show no more than a mere apprehension that the State, through the DENR, would directly take
over the mines after studies point to its viability. But until the DENR actually does so and petitioners fears turn
into reality, no valid objection can be entertained against MO 97-03 on grounds which are purely speculative and
anticipatory.[18]
With respect to the alleged vested rights claimed by petitioner, it is well to note that the same is invariably
based on EP No. 133, whose validity is still being disputed in the Consolidated Mines cases. A reading of the
appealed MAB decision reveals that the continued efficacy of EP No. 133 is one of the issues raised in said cases,
with respondents therein asserting that Marcopper cannot legally assign the permit which purportedly had
expired. In other words, whether or not petitioner actually has a vested right over Diwalwal under EP No. 133 is
still an indefinite and unsettled matter. And until a positive pronouncement is made by the appellate court in the
Consolidated Mines cases, EP No. 133 cannot be deemed as a source of any conclusive rights that can be
impaired by the issuance of MO 97-03.
Similarly, there is no merit in petitioners assertion that MO 97-03 sanctions violation of mining laws by
allowing illegal miners to enter into mining agreements with the State. Again, whether or not respondent BCMC
and the other mining entities it represents are conducting illegal mining activities is a factual matter that has yet
to be finally determined in the Consolidated Mines cases. We cannot rightfully conclude at this point that
respondent BCMC and the other mining firms are illegitimate mining operators. Otherwise, we would be
preempting the resolution of the cases which are still pending before the Court of Appeals.[19]
Petitioners reliance on the Apex Mining case to justify its rights under E.P. No. 133 is misplaced. For one, the
said case was litigated solely between Marcopper and Apex Mining Corporation and cannot thus be deemed
binding and conclusive on respondent BCMC and the other mining entities presently involved. While petitioner
may be regarded as Marcoppers successor to EP No. 133 and therefore bound by the judgment rendered in
the Apex Mining case, the same cannot be said of respondent BCMC and the other oppositor mining firms, who
were not impleaded as parties therein.
Neither can the Apex Mining case foreclose any question pertaining to the continuing validity of EP No. 133
on grounds which arose after the judgment in said case was promulgated. While it is true that the Apex
Mining case settled the issue of who between Apex and Marcopper validly acquired mining rights over the
disputed area by availing of the proper procedural requisites mandated by law, it certainly did not deal with the
question raised by the oppositors in the Consolidated Mines cases, i.e. whether EP No. 133 had already expired
and remained valid subsequent to its transfer by Marcopper to petitioner.Besides, as clarified in our decision in
the Apex Mining case:
x x x is conclusive only between the parties with respect to the particular issue herein raised and under the set of
circumstances herein prevailing. In no case should the decision be considered as a precedent to resolve or settle
claims of persons/entities not parties hereto. Neither is it intended to unsettle rights of persons/entities which
have been acquired or which may have accrued upon reliance on laws passed by appropriate agencies.[20]
Clearly then, the Apex Mining case did not invest petitioner with any definite right to the Diwalwal mines
which it could now set up against respondent BCMC and the other mining groups.
Incidentally, it must likewise be pointed out that under no circumstances may petitioners rights under EP
No. 133 be regarded as total and absolute. As correctly held by the Court of Appeals in its challenged decision, EP
No. 133 merely evidences a privilege granted by the State, which may be amended, modified or rescinded when
the national interest so requires. This is necessarily so since the exploration, development and utilization of the
countrys natural mineral resources are matters impressed with great public interest. Like timber permits, mining
exploration permits do not vest in the grantee any permanent or irrevocable right within the purview of the non-
impairment of contract and due process clauses of the Constitution,[21] since the State, under its all-encompassing
police power, may alter, modify or amend the same, in accordance with the demands of the general welfare.[22]
Additionally, there can be no valid opposition raised against a mere study of an alternative which the State,
through the DENR, is authorized to undertake in the first place. Worth noting is Article XII, Section 2, of the 1987
Constitution, which specifically provides:
SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-
21
five years, renewable for not more than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant. (Underscoring ours)
Likewise, Section 4, Chapter II of the Philippine Mining Act of 1995 states:
SEC. 4. Ownership of Mineral Resources. - Mineral Resources are owned by the State and the exploration,
development, utilization, and processing thereof shall be under its full control and supervision. The State may
directly undertake such activities or it may enter into mineral agreements with contractors. (Underscoring ours)
Thus, the State may pursue the constitutional policy of full control and supervision of the exploration,
development and utilization of the countrys natural mineral resources, by either directly undertaking the same or
by entering into agreements with qualified entities. The DENR Secretary acted within his authority when he
ordered a study of the first option, which may be undertaken consistently in accordance with the constitutional
policy enunciated above. Obviously, the State may not be precluded from considering a direct takeover of the
mines, if it is the only plausible remedy in sight to the gnawing complexities generated by the gold rush. As
implied earlier, the State need be guided only by the demands of public interest in settling for this option, as well
as its material and logistic feasibility.
In this regard, petitioners imputation of bad faith on the part of the DENR Secretary when the latter issued
MO 97-03 is not well-taken. The avowed rationale of the memorandum order is clearly and plainly stated in its
whereas clauses.[23] In the absence of any concrete evidence that the DENR Secretary violated the law or abused
his discretion, as in this case, he is presumed to have regularly issued the memorandum with a lawful intent and
pursuant to his official functions.
Given these considerations, petitioners first assigned error is baseless and premised on tentative
assumptions. Petitioner cannot claim any absolute right to the Diwalwal mines pending resolution of the
Consolidated Mines cases, much less ask us to assume, at this point, that respondent BCMC and the other mining
firms are illegal miners. These factual issues are to be properly threshed out in CA G.R. SP Nos. 61215 and 61216,
which have yet to be decided by the Court of Appeals. Any objection raised against MO 97-03 is likewise
premature at this point, inasmuch as it merely ordered a study of an option which the State is authorized by law
to undertake.
We see no need to rule on the matter of the OTPs, considering that the grounds invoked by petitioner for
invalidating the same are inextricably linked to the issues raised in the Consolidated Mines cases.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The decision of the Court of Appeals in
CA-G.R. SP No. 44693 is AFFIRMED.
SO ORDERED.
THE CITY GOVERNMENT OF G.R. No. 180206

BAGUIO CITY,
ATTY. BRAIN MASWENG, Regional
Officer-National Commission on
Indigenous People-CAR, ELVIN
GUMANGAN, NARCISO BASATAN
and LAZARO BAWAS,
Respondents.
Petitioners, the City Government of Baguio City, represented by its Mayor, Reinaldo Bautista, Jr., the
Anti-Squatting Committee, represented by Atty. Melchor Carlos R. Rabanes; the City Buildings and Architecture
Office, represented by Oscar Flores; and the Public Order and Safety Office, represented by Emmanuel Reyes and
later substituted by Gregorio Deligero, assail the Decision[1] of the Court of Appeals in CA G.R. SP No. 96895,
dated April 16, 2007, and its Resolution[2] dated September 11, 2007, which affirmed the injunctive writ issued by
the National Commission on Indigenous Peoples (NCIP) against the demolition orders of petitioners.
The following undisputed facts are culled from the assailed Decision:
The case stemmed from the three (3) Demolition Orders issued by the City Mayor of
Baguio City, Braulio D. Yaranon, ordering the demolition of the illegal structures constructed by
Lazaro Bawas, Alexander Ampaguey, Sr. and a certain Mr. Basatan on a portion of the Busol
Watershed Reservation located at Aurora Hill, Baguio City, without the required building permits
and in violation of Section 69 of Presidential Decree No. 705, as amended, Presidential Decree
No. 1096 and Republic Act No. 7279.
22
Pursuant thereto, the corresponding demolition advices dated September 19, 2006 were
issued informing the occupants thereon of the intended demolition of the erected structures on
October 17 to 20, 2006. Consequently, Elvin Gumangan, Narciso Basatan and Lazaro Bawas
(hereinafter private respondents) filed a petition for injunction with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction against the Office of the City
Mayor of Baguio City through its Acting City Mayor, Reynaldo Bautista, the City Building and
Architecture Office, the Anti-Squatting Task Force, and the Public Order and Safety Division,
among others, (collectively called petitioners) before the National Commission on Indigenous
Peoples, Cordillera Administrative Region (NCIP-CAR), Regional Hearing Office, La Trinidad,
Benguet, docketed as Case No. 31-CAR-06.
In their petition, private respondents basically claimed that the lands where their
residential houses stand are their ancestral lands which they have been occupying and possessing
openly and continuously since time immemorial; that their ownership thereof have been
expressly recognized in Proclamation No. 15 dated April 27, 1922 and recommended by the
Department of Environment and Natural Resources (DENR) for exclusion from the coverage of
the Busol Forest Reserve. They, thus, contended that the demolition of their residential houses is
a violation of their right of possession and ownership of ancestral lands accorded by the
Constitution and the law, perforce, must be restrained.
On October 16 and 19, 2006, Regional Hearing Officer Atty. Brain S. Masweng of the NCIP
issued the two (2) assailed temporary restraining orders (TRO) directing the petitioners and all
persons acting for and in their behalf to refrain from enforcing Demolition Advice dated
September 18, 2006; Demolition Order dated September 19, 2006; Demolition Order No. 25,
Series of 2004; Demolition Order No. 33, Series of 2005; and Demolition Order No. 28, Series of
2004, for a total period of twenty (20) days.
Subsequently, the NCIP issued the other assailed Resolution dated November 10,
2006 granting the private respondents application for preliminary injunction subject to the
posting of an injunctive bond each in the amount of P10,000.00.[3]
Acting on the petition for certiorari filed by petitioners,[4] the Court of Appeals upheld the jurisdiction of
the NCIP over the action filed by private respondents and affirmed the temporary restraining orders dated
October 16[5] and 19, 2006,[6] and the Resolution dated November 10, 2006,[7] granting the application for a writ
of preliminary injunction, issued by the NCIP. The appellate court also ruled that Baguio City is not exempt from
the coverage of Republic Act No. 8371, otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA).
Petitioners assert that the NCIP has no jurisdiction to hear and decide main actions for injunction such as
the one filed by private respondents. They claim that the NCIP has the authority to issue temporary restraining
orders and writs of preliminary injunction only as auxiliary remedies to cases pending before it.
Further, the IPRA provides that Baguio City shall be governed by its Charter. Thus, private respondents
cannot claim their alleged ancestral lands under the provisions of the IPRA.
Petitioners contend that private respondents are not entitled to the protection of an injunctive writ
because they encroached upon the Busol Forest Reservation and built structures thereon without the requisite
permit. Moreover, this Court, in Heirs of Gumangan v. Court of Appeals,[8] had already declared that the Busol
Forest Reservation is inalienable and possession thereof, no matter how long, cannot convert the same into
private property. Even assuming that private respondents have a pending application for ancestral land claim,
their right is at best contingent and cannot come under the protective mantle of injunction.
Petitioners also claim that the Busol Forest Reservation is exempt from ancestral claims as it is needed for
public welfare. It is allegedly one of the few remaining forests in Baguio City and is the citys main watershed.
Finally, petitioners contend that the demolition orders were issued pursuant to the police power of the
local government.
23
In their Comment[9] dated March 1, 2007, private respondents defend the jurisdiction of the NCIP to take
cognizance of and decide main actions for injunction arguing that the IPRA does not state that the NCIP may only
issue such writs of injunction as auxiliary remedies. Private respondents also contend that the IPRA does not
exempt Baguio Cityfrom its coverage nor does it state that there are no ancestral lands in Baguio City.
As members of the Ibaloi Indigenous Community native to Baguio City, private respondents are treated
as squatters despite the fact that they hold native title to their ancestral land. The IPRA allegedly now recognizes
ancestral lands held by native title as never to have been public lands.
Private respondents aver that the Busol Forest Reservation is subject to ancestral land claims. In fact,
Proclamation No. 15[10] dated April 27, 1922, which declared the area a forest reserve, allegedly did not nullify the
vested rights of private respondents over their ancestral lands and even identified the claimants of the particular
portions within the forest reserve. This claim of ownership is an exception to the governments contention that
the whole area is a forest reservation.
Lastly, private respondents assert that the power of the city mayor to order the demolition of certain
structures is not absolute. Regard should be taken of the fact that private respondents cannot be issued building
permits precisely because they do not have paper titles over their ancestral lands, a requirement for the issuance
of a building permit under the National Building Code.
Petitioners Reply to Comment[11] dated June 11, 2008 merely reiterates their previous arguments.
We shall first dispose of the elemental issue of the NCIPs jurisdiction.
The NCIP is the primary government agency responsible for the formulation and implementation of
policies, plans and programs to protect and promote the rights and well-being of indigenous cultural
communities/indigenous peoples (ICCs/IPs) and the recognition of their ancestral domains as well as their rights
thereto.[12] In order to fully effectuate its mandate, the NCIP is vested with jurisdiction over all claims and
disputes involving the rights of ICCs/IPs. The only condition precedent to the NCIPs assumption of jurisdiction
over such disputes is that the parties thereto shall have exhausted all remedies provided under their customary
laws and have obtained a certification from the Council of Elders/Leaders who participated in the attempt to
settle the dispute that the same has not been resolved.[13]
In addition, NCIP Administrative Circular No. 1-03 dated April 9, 2003, known as the Rules on Pleadings,
Practice and Procedure Before the NCIP, reiterates the jurisdiction of the NCIP over claims and disputes involving
ancestral lands and enumerates the actions that may be brought before the commission. Sec. 5, Rule III thereof
provides:
Sec. 5. Jurisdiction of the NCIP.The NCIP through its Regional Hearing Offices shall
exercise jurisdiction over all claims and disputes involving rights of ICCs/IPs and all cases
pertaining to the implementation, enforcement, and interpretation of R.A. 8371, including but
not limited to the following:
(1) Original and Exclusive Jurisdiction of the Regional Hearing Office (RHO):
a. Cases involving disputes and controversies over ancestral lands/domains of ICCs/IPs;

b. Cases involving violations of the requirement of free and prior and informed consent of
ICCs/IPs;
c. Actions for enforcement of decisions of ICCs/IPs involving violations of customary laws
or desecration of ceremonial sites, sacred places, or rituals;
d. Actions for redemption/reconveyance under Section 8(b) of R.A. 8371; and
e. Such other cases analogous to the foregoing.
(2) Original Jurisdiction of the Regional Hearing Officer:
a. Cases affecting property rights, claims of ownership, hereditary succession, and

settlement of land disputes, between and among ICCs/IPs that have not been settled
under customary laws; and
b. Actions for damages arising out of any violation of Republic Act No. 8371.
24
(3) Exclusive and Original Jurisdiction of the Commission:
a. Petition for cancellation of Certificate of Ancestral Domain Titles/Certificate of Ancestral

Land Titles (CADTs/CALTs) alleged to have been fraudulently acquired by, and issued to,
any person or community as provided for under Section 54 of R.A. 8371. Provided that
such action is filed within one (1) year from the date of registration.
In order to determine whether the NCIP has jurisdiction over the dispute in accordance with the
foregoing provisions, it is necessary to resolve, on the basis of the allegations in their petition, whether private
respondents are members of ICCs/IPs. In their petition[14] filed before the NCIP, private respondents, members of
the Ibaloi tribe who first settled in Baguio City, were asserting ownership of portions of the Busol Forest
Reservation which they claim to be their ancestral lands. Correctly denominated as a petition for injunction as it
sought to prevent the enforcement of the demolition orders issued by the City Mayor, the petition traced private
respondents ancestry to Molintas and Gumangan and asserted their possession, occupation and utilization of
their ancestral lands. The petition also alleged that private respondents claim over these lands had been
recognized by Proclamation No. 15 which mentions the names of Molintas and Gumangan as having claims over
portions of the Busol Forest Reservation.[15]
Clearly then, the allegations in the petition, which axiomatically determine the nature of the action and
the jurisdiction of a particular tribunal,[16] squarely qualify it as a dispute(s) or controversy(s) over ancestral
lands/domains of ICCs/IPs within the original and exclusive jurisdiction of the NCIP-RHO.
The IPRA, furthermore, endows the NCIP with the power to issue temporary restraining orders and writs
of injunction. Sec. 69 thereof states:
Sec. 69. Quasi-Judicial Powers of the NCIP.The NCIP shall have the power and authority:
a) To promulgate rules and regulations governing the hearing and disposition of cases filed
before it as well as those pertaining to its internal functions and such rules and regulations as
may be necessary to carry out the purposes of this Act;
b) To administer oaths, summon the parties to a controversy, issue subpoenas requiring

the attendance and testimony of witnesses or the production of such books, papers, contracts,
records, agreements, and other document of similar nature as may be material to a just
determination of the matter under investigation or hearing conducted in pursuance of this Act;
c) To hold any person in contempt, directly or indirectly, and impose appropriate penalties
therefor; and
d) To enjoin any or all acts involving or arising from any case pending before it which, if
not restrained forthwith, may cause grave or irreparable damage to any of the parties to the
case or seriously affect social or economic activity. [Emphasis supplied]
NCIP Administrative Circular No. 1-03 echoes the above-quoted provision in Sec. 82, Rule XV, which
provides:
Sec. 82. Preliminary Injunction and Temporary Restraining Order.A writ of preliminary
injunction or restraining order may be granted by the Commission pursuant to the provisions of
Sections 59 and 69 of R.A. [No.] 8371 when it is established, on the basis of sworn allegations in a
petition, that the acts complained of involving or arising from any case, if not restrained
forthwith, may cause grave or irreparable damage or injury to any of the parties, or seriously
affect social or economic activity. This power may also be exercised by RHOs in cases pending
before them in order to preserve the rights of the parties.
As can be gleaned from the foregoing provisions, the NCIP may issue temporary restraining orders and
writs of injunction without any prohibition against the issuance of the writ when the main action is for injunction.
The power to issue temporary restraining orders or writs of injunction allows parties to a dispute over which the
NCIP has jurisdiction to seek relief against any action which may cause them grave or irreparable damage or
injury. In this case, the Regional Hearing Officer issued the injunctive writ because its jurisdiction was called upon
to protect and preserve the rights of private respondents who are undoubtedly members of ICCs/IPs.
25
Parenthetically, in order to reinforce the powers of the NCIP, the IPRA even provides that no restraining
order or preliminary injunction may be issued by any inferior court against the NCIP in any
case, dispute or controversy arising from or necessary to the
interpretation of the IPRA and other laws relating to ICCs/IPs and ancestral domains.[17]
Petitioners argue that Baguio City is exempt from the provisions of the IPRA, and necessarily the
jurisdiction of the NCIP, by virtue of Sec. 78 thereof, which states:
SEC. 78. Special Provision.The City of Baguio shall remain to be governed by its Charter and all
lands proclaimed as part of its townsite reservation shall remain as such until otherwise
reclassified by appropriate legislation: Provided, That prior land rights and titles recognized
and/or acquired through any judicial, administrative or other processes before the effectivity
of this Act shall remain valid: Provided, further, That this provision shall not apply to any territory
which becomes part of the City of Baguio after the effectivity of this Act. [Emphasis supplied]
The foregoing provision indeed states that Baguio City is governed by its own charter. Its exemption from the
IPRA, however, cannot ipso facto be deduced because the law concedes the validity of prior land rights
recognized or acquired through any process before its effectivity. The IPRA demands that the citys charter
respect the validity of these recognized land rights and titles.
The crucial question to be asked then is whether private respondents ancestral land claim was indeed
recognized by Proclamation No. 15, in which case, their right thereto may be protected by an injunctive
writ. After all, before a writ of preliminary injunction may be issued, petitioners must show that there exists a
right to be protected and that the acts against which injunction is directed are violative of said right.[18]
Proclamation No. 15, however, does not appear to be a definitive recognition of private respondents
ancestral land claim. The proclamation merely identifies the Molintas and Gumangan families, the predecessors-
in-interest of private respondents, as claimants of a portion of the Busol Forest Reservation but does not
acknowledge vested rights over the same. In fact, Proclamation No. 15 explicitly withdraws the Busol Forest
Reservation from sale or settlement. It provides:
Pursuant to the provisions of section eighteen hundred and twenty-six of Act Numbered
Twenty-seven Hundred and eleven[,] I hereby establish the Busol Forest Reservation to be
administered by the Bureau of Forestry for the purpose of conserving and protecting water and
timber, the protection of the water supply being of primary importance and all other uses of the
forest are to be subordinated to that purpose. I therefore withdraw from sale or settlement the
following described parcels of the public domain situated in the Township of La Trinidad, City
of Baguio, Mountain Province, Island of Luzon, to wit:
The fact remains, too, that the Busol Forest Reservation was declared by the Court as inalienable in Heirs
of Gumangan v. Court of Appeals.[19] The declaration of the Busol Forest Reservation as such precludes its
conversion into private property. Relatedly, the courts are not endowed with jurisdictional competence to
adjudicate forest lands.
All told, although the NCIP has the authority to issue temporary restraining orders and writs of injunction,
we are not convinced that private respondents are entitled to the relief granted by the Commission.
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals in CA G.R. SP No.
96895 dated April 16, 2007 and its Resolution dated September 11, 2007 are REVERSED and SET ASIDE. Case No.
31-CAR-06 entitled, Elvin Gumangan, Narciso Basatan and Lazaro Bawas v. Office of the City Mayor of Baguio
City, et al. is DISMISSED. No pronouncement as to costs.
DELFIN LAMSIS, MAYNARD MONDIGUING, JOSE G.R. No. 173021
VALDEZ, JR. and Heirs of AGUSTIN KITMA,
represented by EUGENE KITMA, Present:
Petitioners, CORONA, C. J., Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
26
MARGARITA SEMON DONG-E, Promulgated:

Respondent. October 20, 2010
DEL CASTILLO, J.
There is laches when a party is aware, even in the early stages of the proceedings, of a possible jurisdictional objection, and
has every opportunity to raise said objection, but fails to do so, even on appeal.
This is a Petition for Review[1] assailing the March 30, 2006 Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No. 78987 as
well as its May 26, 2006 Resolution[3] which denied petitioners motion for reconsideration. The dispositive portion of the
assailed Decision reads:
WHEREFORE, in view of the foregoing, the appeal is hereby DISMISSED for lack of merit and the judgment
dated January 8, 2003 of the Regional Trial Court of Baguio City in Civil Case No. 4140-R is AFFIRMED in
toto.
Factual antecedents
This case involves a conflict of ownership and possession over an untitled parcel of land, denominated as Lot No. 1, with an
area of 80,736 square meters. The property is located along Km. 5 Asin Road, Baguio City and is part of a larger parcel of land
with an area of 186,090 square meters. While petitioners are the actual occupants of Lot No. 1, respondent is claiming
ownership thereof and is seeking to recover its possession from petitioners.
According to respondent Margarita Semon Dong-E (Margarita), her familys ownership and occupation of Lot No. 1 can be
traced as far back as 1922 to her late grandfather, Ap-ap.[5] Upon Ap-aps death, the property was inherited by his children,
who obtained a survey plan in 1964 of the 186,090-square meter property, which included Lot No. 1.[6] On the same year,
they declared the property for taxation purposes in the name of The Heirs of Ap-ap.[7] The 1964 tax declaration bears a
notation that reads: Reconstructed from an old Tax Declaration No. 363 dated May 10, 1922 per true of same presented.[8]
The heirs of Ap-ap then executed, for a P500.00 consideration, a Deed of Quitclaim[9] on February 26, 1964 in favor of their
brother Gilbert Semon (Margaritas father).
Sometime between 1976 and 1978,[10] Gilbert Semon together with his wife Mary Lamsis, allowed his in-laws Manolo Lamsis
and Nancy Lamsis-Kitma, to stay on a portion of Lot No. 1 together with their respective families.[11] They were allowed to
erect their houses, introduce improvements, and plant trees thereon. When Manolo Lamsis and Nancy Lamsis-Kitma died
sometime in the 1980s, their children, petitioners Delfin Lamsis (Delfin) and Agustin Kitma (Agustin), took possession of
certain portions of Lot No. 1. Delfin possessed 4,000 square meters of Lot No. 1, while Agustin occupied 5,000 square meters
thereof.[12] Nevertheless, the heirs of Gilbert Semon tolerated the acts of their first cousins.
When Gilbert Semon died in 1983,[13] his children extrajudicially partitioned the property among themselves and allotted Lot
No. 1 thereof in favor of Margarita.[14] Since then, Margarita allegedly paid the realty tax over Lot No. 1[15] and occupied and
improved the property together with her husband; while at the same time, tolerating her first cousins occupation of
portions of the same lot.
This state of affairs changed when petitioners Delfin and Agustin allegedly began expanding their occupation on the subject
property and selling portions thereof.[16] Delfin allegedly sold a 400-square meter portion of Lot No. 1 to petitioner
Maynard[17] Mondiguing (Maynard) while Agustin sold another portion to petitioner Jose Valdez (Jose).[18]
With such developments, Margarita filed a complaint[19] for recovery of ownership, possession, reconveyance and damages
against all four occupants of Lot No. 1 before the Regional Trial Court (RTC) of Baguio City. The case was docketed as Civil
Case No. 4140-R and raffled to Branch 59. The complaint prayed for the annulment of the sales to Maynard and Jose and for
petitioners to vacate the portions of the property which exceed the areas allowed to them by Margarita.[20] Margarita
claimed that, as they are her first cousins, she is willing to donate to Delfin and Agustin a portion of Lot No. 1, provided that
she retains the power to choose such portion.[21]
Petitioners denied Margaritas claims of ownership and possession over Lot No. 1. According to Delfin and Agustin, Lot No. 1
is a public land claimed by the heirs of Joaquin Smith (not parties to the case).[22] The Smiths gave their permission for Delfin
27
and Agustins parents to occupy the land sometime in 1969 or 1970. They also presented their neighbors who testified that it
was Delfin and Agustin as well as their respective parents who occupied Lot No. 1, not Margarita and her parents.
Delfin and Agustin also assailed the muniments of ownership presented by Margarita as fabricated, unauthenticated, and
invalid. It was pointed out that the Deed of Quitclaim, allegedly executed by all of Ap-aps children, failed to include two Rita
Bocahan and Stewart Sito.[23] Margarita admitted during trial that Rita Bocahan and Stewart Sito were her uncle and aunt,
but did not explain why they were excluded from the quitclaim.
According to Maynard and Jose, Delfin and Agustin were the ones publicly and openly in possession of the land and who
introduced improvements thereon. They also corroborated Delfin and Agustins allegation that the real owners of the
property are the heirs of Joaquin Smith.[24]
In order to debunk petitioners claim that the Smiths owned the subject property, Margarita presented a certified copy of a
Resolution from the Land Management Office denying the Smiths application for recognition of the subject property as part
of their ancestral land.[25] The resolution explains that the application had to be denied because the Smiths did not possess,
occupy or utilize all or a portion of the property x x x. The actual occupants (who were not named in the resolution) whose
improvements are visible are not in any way related to the applicant or his co-heirs.[26]
To bolster her claim of ownership and possession, Margarita introduced as evidence an unnumbered resolution of the
Community Special Task Force on Ancestral Lands (CSTFAL) of the Department of Environment and Natural Resources
(DENR), acting favorably on her and her siblings ancestral land claim over a portion of the 186,090-square meter
property.[27] The said resolution states:
The land subject of the instant application is the ancestral land of the herein applicants. Well-
established is the fact that the land treated herein was first declared for taxation purposes in 1922 under
Tax Declaration No. 363 by the applicants grandfather Ap-Ap (one name). Said application was
reconstructed in 1965 after the original got lost during the war. These tax declarations were issued and
recorded in the Municipality of Tuba, Benguet, considering that the land was then within the territorial
jurisdiction of the said municipality. That upon the death of declarant Ap-Ap his heirs x x x transferred the
tax declaration in their name, [which tax declaration is] now with the City assessors office of Baguio.
The land consisting of four (4) lots with a total area of ONE HUNDRED EIGHTY SIX THOUSAND NINETY
(186,090) SQUARE METERS, is covered by Psu-198317 duly approved by the Director of Lands on October
4, 1963 in the name of Ap-Ap (one name). In 1964, the same land was the subject of a petition filed by
Gilbert Semon, as petitioner, before the Court of First Instance of the City of Baguio in the reopening of
Judicial Proceedings under Civil Case No. 1, GLRO Record No. 211 for the registration and the issuance of
Certificate of Title of said land. The land registration case was however overtaken by the decision of the
Supreme Court declaring such judicial proceedings null and void because the courts of law have no
jurisdiction.
It has been sufficiently substantiated by the applicants that prior to and at the time of the pendency of the
land registration case and henceforth up to and including the present, the herein applicants by themselves
and through their predecessor-in-interest have been in exclusive, continuous, and material possession and
occupation of the said parcel of land mentioned above under claim of ownership, devoting the same for
residential and agricultural purposes. Found are the residential houses of the applicants as well as those of
their close relatives, while the other areas planted to fruit trees, coffee and banana, and seasonal
crops.Also noticeable therein are permanent stone and earthen fences, terraces, clearings, including
irrigation gadgets.
On the matter of the applicant[s] indiguinity [sic] and qualifications, there is no doubt that they are
members of the National Cultural Communities, particularly the Ibaloi tribe. They are the legitimate
grandchildren of Ap-Ap (one name) who lived along the Asin Road area. His legal heirs are: Orani Ap-Ap,
married to Calado Salda; Rita Ap-Ap, married to Jose Bacacan; Sucdad Ap-Ap, married to Oragon Wakit;
and Gilbert Semon, a former vice-mayor of Tuba, Benguet, [who] adopted the common name of their
father Semon, as it is the customary practice among the early Ibalois. x x x
On the matter regarding the inheritance of the heirs of Ap-Ap, it is important to state [that] Gilbert Semon
consolidated ownership thereof and became the sole heir in 1964, by way of a Deed of Quitclaim executed
by the heirs in his favor. As to the respective share of the applicants[] co-heirs, the same was properly
28
adjudicated in 1989 with the execution of an Extrajudicial Settlement/ Partition of Estate with Waiver of
Rights.
With regard to the overlapping issue, it is pertinent to state that application No. Bg-L-066 of Thomas Smith
has already been denied by us in our Resolution dated November 1997. As to the other adverse claims
therein by reason of previous conveyances in favor of third parties, the same were likewise excluded
resulting in the reduction of the area originally applied from ONE HUNDRED EIGHTY SIX THOUSAND
NINETY (186,090) SQUARE METERS, more or less to ONE HUNDRED TEN THOUSAND THREE HUNDRED
FORTY TWO (110,342) SQUARE METERS, more or less. Considering the foregoing developments, we find
no legal and procedural obstacle in giving due course to the instant application.
Now therefore, we hereby [resolve] that the application for Recognition of Ancestral Land Claim filed by
the Heirs of Gilbert Semon, represented by Juanito Semon, be granted [and] a Certificate of Ancestral Land
Claim (CALC) be issued to the herein applicants by the Secretary, Department of Environment and Natural
Resources, Visayas Avenue, Diliman, Quezon City, through the Regional Executive Director, DENR-CAR,
Diego Silang Street, Baguio City. The area of the claim stated herein above is however subject to the
outcome of the final survey to be forthwith executed.
Carried this 23rd day of June 1998.[28]
The resolution was not signed by two members of the CSTFAL on the ground that the signing of the unnumbered resolution
was overtaken by the enactment of the Republic Act (RA) No. 8371 or the Indigenous Peoples Rights Act of 1997 (IPRA). The
IPRA removed the authority of the DENR to issue ancestral land claim certificates and transferred the same to the National
Commission on Indigenous Peoples (NCIP).[29] The Ancestral Land Application No. Bg-L-064 of the Heirs of Gilbert Semon was
transferred to the NCIP, Cordillera Administrative Region, La Trinidad, Benguet and re-docketed as Case No. 05-RHO-CAR-
03.[30] The petitioners filed their protest in the said case before the NCIP. The same has been submitted for resolution.
Ruling of the Regional Trial Court[31]
After summarizing the evidence presented by both parties, the trial court found that it preponderates in favor of
respondents long-time possession of and claim of ownership over the subject property.[32] The survey plan of the subject
property in the name of the Heirs of Ap-ap executed way back in 1962 and the tax declarations thereafter issued to the
respondent and her siblings all support her claim that her family and their predecessors-in-interest have all been in
possession of the property to the exclusion of others. The court likewise gave credence to the documentary evidence of the
transfer of the land from the Heirs of Ap-ap to respondents father and, eventually to respondent herself. The series of
transfers of the property were indications of the respondents and her predecessors interest over the property. The court
opined that while these pieces of documentary evidence were not conclusive proof of actual possession, they lend credence
to respondents claim because, in the ordinary course of things, persons will not execute legal documents dealing with real
property, unless they believe, and have the basis to believe, that they have an interest in the property subject of the legal
documents x x x.[33]
In contrast, the trial court found nothing on record to substantiate the allegations of the petititioners that they and their
parents were the long-time possessors of the subject property. Their own statements belied their assertions. Petitioner
Maynard and Jose both admitted that they could not secure title for the property from the Bureau of Lands because there
were pending ancestral land claims over the property.[34] Petitioner Agustins Townsite Sales Application over the property
was held in abeyance because of respondents own claim, which was eventually favorably considered by the CSTFAL.[35]
The dispositive portion of the trial courts Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the [respondent] and against
the [petitioners]
(1) Declaring the transfer of a portion of Lot 1 of PSU 198317 made by the [petitioner] Delfin
Lamsis to Menard Mondiguing and Jose Valdez, Jr. null and void;
(2) Ordering the [petitioners] Delfin Lamsis, Agustin Kitma, Menard Mondiguing and Jose Valdez,
Jr., to vacate the area they are presently occupying that is within Lot 1 of PSU 198317 belonging to the
[respondent] and to surrender possession thereof to the [respondent];
29
(3) To pay [respondent] attorneys fees in the amount of P10,000.00; and
(4) To pay the costs of suit.
SO ORDERED.[36]
It appears that no motion for reconsideration was filed before the trial court. Nevetheless, the trial court issued an
Order[37] allowing the petitioners Notice of Appeal.[38]
Ruling of the Court of Appeals[39]
The sole issue resolved by the appellate court was whether the trial court erred in ruling in favor of respondent in light of the
adduced evidence. Citing the rule on preponderance of evidence, the CA held that the respondent was able to discharge her
burden in proving her title and interest to the subject property. Her documentary evidence were amply supported by the
testimonial evidence of her witnesses.
In contrast, petitioners only made bare allegations in their testimonies that are insufficient to overcome respondents
documentary evidence.
Petitioners moved for a reconsideration[40] of the adverse decision but the same was denied.
Hence this petition, which was initially denied for failure to show that the CA committed any reversible error.[41] Upon
petitioners motion for reconsideration,[42] the petition was reinstated in the Courts January 15, 2007 Resolution.[43]
Petitioners arguments
Petitioners assign as error the CAs appreciation of the evidence already affirmed and considered by the trial court. They
maintain that the change in the presiding judges who heard and decided their case resulted in the appreciation of what
would otherwise be inadmissible evidence.[44] Petitioners ask that the Court exempt their petition from the general rule that
a trial judges assessment of the credibility of witnesses is accorded great respect on appeal.
To support their claim that the trial and appellate courts erred in ruling in favor of respondent, they assailed the various
pieces of evidence offered by respondent. They maintain that the Deed of Quitclaim executed by the Heirs of Ap-ap is
spurious and lacks the parties and witnesses signatures. Moreover, it is a mere photocopy, which was never authenticated
by the notary public in court and no reasons were proferred regarding the existence, loss, and contents of the original
copy.[45] Under the best evidence rule, the Deed of Quitclaim is inadmissible in evidence and should have been disregarded
by the court.
Respondent did not prove that she and her husband possessed the subject property since time immemorial. Petitioners
argue that respondent admitted possessing and cultivating only the land that lies outside the subject property.[46]
Petitioners next assail the weight to be given to respondents muniments of ownership, such as the tax declarations and the
survey plan. They insist that these are not indubitable proofs of respondents ownership over the subject property given that
there are other claimants to the land (who are not parties to this case) who also possess a survey plan over the subject
property.[47]
Petitioners then assert their superior right to the property as the present possessors thereof. They cite pertinent provisions
of the New Civil Code which presume good faith possession on the part of the possessor and puts the burden on the plaintiff
in an action to recover to prove her superior title.[48]
Petitioners next assert that they have a right to the subject property by the operation of acquisitive prescription. They posit
that they have been in possession of a public land publicly, peacefully, exclusively and in the concept of owners for more
than 30 years. Respondents assertion that petitioners are merely possessors by tolerance is unsubstantiated.[49]
Petitioners also maintain that the reivindicatory action should be dismissed for lack of jurisdiction in light of the enactment of
the IPRA, which gives original and exclusive jurisdiction over disputes involving ancestral lands and domains to the
NCIP.[50] They assert that the customary laws of the Ibaloi tribe of the Benguet Province should be applied to their dispute as
mandated by Section 65, Chapter IX of RA 8371, which states: When disputes involve ICCs/IPs,[51] customary laws and
practices shall be used to resolve the dispute.
30
In the alternative that jurisdiction over an accion reivindicatoria is held to be vested in the trial court, the petitioners insist
that the courts should dismiss the reivindicatory action on the ground of litis pendentia.[52] They likewise argue that NCIP has
primary jurisdiction over ancestral lands, hence, the courts should not interfere when the dispute demands the exercise of
sound administrative discretion requiring special knowledge, experience and services of the administrative tribunal x x x In
cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself the authority to
resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special
competence.[53] The courts should stand aside in order to prevent the possibility of creating conflicting decisions.[54]
Respondents arguments
Respondent opines that the appellate court did not commit any reversible error in affirming the trial courts decision. The
present petition is a mere dilatory tactic to frustrate the speedy administration of justice.[55]
Respondent also asserts that questions of fact are prohibited in a Rule 45 petition.[56] Thus, the appreciation and
consideration of the factual issues are no longer reviewable.[57]
The issue of lack of jurisdiction is raised for the first time in the petition before this Court. It was never raised before the trial
court or the CA. Thus, respondent insists that petitioners are now barred by laches from attacking the trial courts jurisdiction
over the case. Citing Aragon v. Court of Appeals,[58] respondent argues that the jurisdictional issue should have been raised at
the appellate level at the very least so as to avail of the doctrine that the ground lack of jurisdiction over the subject matter
of the case may be raised at any stage of the proceedings even on appeal.[59]
Respondent maintains that there is no room for the application of litis pendentia because the issues in the application for
ancestral land claim are different from the issue in a reivindicatory action. The issue before the NCIP is whether the
Government, as grantor, will recognize the ancestral land claim of respondent over a public alienable land; while the issue in
the reivindicatory case before the trial court is ownership, possession, and right to recover the real property.[60]
Given that the elements of lis pendens are absent in case at bar, the allegation of forum-shopping is also bereft of merit. Any
judgment to be rendered by the NCIP will not amount to res judicata in the instant case.[61]
Issues
The petitioners present the following issues for our consideration:
1. Whether the appellate court disregarded material facts and circumstances in affirming the trial courts decision;
2. Whether petitioners have acquired the subject property by prescription;
3. Whether the trial court has jurisdiction to decide the case in light of the effectivity of RA 8371 or the Indigenous
Peoples Rights Act of 1997 at the time that the complaint was instituted;
4. If the trial court retains jurisdiction, whether the ancestral land claim pending before the NCIP should take
precedence over the reivindicatory action.[62]
Our Ruling
Whether the appellate court disregarded material facts and

circumstances in affirming the trial courts decision
Both the trial and the appellate courts ruled that respondent has proven her claims of ownership and possession with a
preponderance of evidence. Petitioners now argue that the two courts erred in their appreciation of the evidence. They ask
the Court to review the evidence of both parties, despite the CAs finding that the trial court committed no error in
appreciating the evidence presented during trial. Hence, petitioners seek a review of questions of fact, which is beyond the
province of a Rule 45 petition. A question of fact exists if the uncertainty centers on the truth or falsity of the alleged
facts.[63] Such questions as whether certain items of evidence should be accorded probative value or weight, or rejected as
feeble or spurious, or whether 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.[64]
31
Since it raises essentially questions of fact, this assignment of error must be dismissed for it is settled that only
questions of law may be reviewed in an appeal by certiorari.[65] There is a question of law when there is doubt as to what the
law is on a certain state of facts. Questions of law can be resolved without having to re-examine the probative value of
evidence presented, the truth or falsehood of facts being admitted.[66] The instant case does not present a compelling reason
to deviate from the foregoing rule, especially since both trial and appellate courts agree that respondent had proven her
claim of ownership as against petitioners claims. Their factual findings, supported as they are by the evidence, should be
accorded great respect.
In any case, even if petitioners arguments attacking the authenticity and admissibility of the Deed of Quitclaim executed in
favor of respondents father are well-taken, it will not suffice to defeat respondents claim over the subject property. Even
without the Deed of Quitclaim, respondents claims of prior possession and ownership were adequately supported and
corroborated by her other documentary and testimonial evidence. We agree with the trial courts observation that, in the
ordinary course of things, people will not go to great lengths to execute legal documents and pay realty taxes over a real
property, unless they have reason to believe that they have an interest over the same.[67]
The fact that respondents documents traverse several decades, from the 1960s to the 1990s, is an indication that she and
her family never abandoned their right to the property and have continuously exercised rights of ownership over the same.
Moreover, respondents version of how the petitioners came to occupy the property coincides with the same timeline given
by the petitioners themselves. The only difference is that petitioners maintain they came into possession by tolerance of the
Smith family, while respondent maintains that it was her parents who gave permission to petitioners. Given the context
under which the parties respective statements were made, the Court is inclined to believe the respondents version, as both
the trial and appellate courts have concluded, since her version is corroborated by the documentary evidence.
Whether petitioners have acquired the subject property by prescription
Assuming that the subject land may be acquired by prescription, we cannot accept petitioners claim of acquisition by
prescription. Petitioners admitted that they had occupied the property by tolerance of the owner thereof. Having made this
admission, they cannot claim that they have acquired the property by prescription unless they can prove acts of
repudiation. It is settled that possession, in order to ripen into ownership, must be in the concept of an owner, public,
peaceful and uninterrupted. Possession not in the concept of owner, such as the one claimed by petitioners, cannot ripen
into ownership by acquisitive prescription, unless the juridical relation is first expressly repudiated and such repudiation has
been communicated to the other party. Acts of possessory character executed due to license or by mere tolerance of the
owner are inadequate for purposes of acquisitive prescription. Possession by tolerance is not adverse and such possessory
acts, no matter how long performed, do not start the running of the period of prescription.[68]
In the instant case, petitioners made no effort to allege much less prove any act of repudiation sufficient for the reckoning of
the acquisitive prescription. At most, we can find on record the sale by petitioners Delfin and Agustin of parts of the property
to petitioners Maynard and Jose; but the same was done only in 1998, shortly before respondent filed a case against
them. Hence, the 30-year period necessary for the operation of acquisitve prescription had yet to be attained.
Whether the ancestral land claim pending before the National

Commission on Indigenous Peoples (NCIP) should take precedence over
the reivindicatory action
The application for issuance of a Certificate of Ancestral Land Title pending before the NCIP is akin to a registration
proceeding. It also seeks an official recognition of ones claim to a particular land and is also in rem. The titling of ancestral
lands is for the purpose of officially establishing ones land as an ancestral land.[69] Just like a registration proceeding, the
titling of ancestral lands does not vest ownership[70] upon the applicant but only recognizes ownership[71] that has already
vested in the applicant by virtue of his and his predecessor-in-interests possession of the property since time immemorial. As
aptly explained in another case:
It bears stressing at this point that ownership should not be confused with a certificate of
title. Registering land under the Torrens system does not create or vest title because registration is not a
mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the
particular property described therein. Corollarily, any question involving the issue of ownership must be
threshed out in a separate suit x x x The trial court will then conduct a full-blown trial wherein the parties
32
will present their respective evidence on the issue of ownership of the subject properties to enable the
court to resolve the said issue. x x x[72] (Emphasis supplied)
Likewise apropos is the following explanation:
The fact that the [respondents] were able to secure [TCTs over the property] did not operate to vest upon
them ownership of the property. The Torrens system does not create or vest title. It has never been
recognized as a mode of acquiring ownership x x x If the [respondents] wished to assert their ownership,
they should have filed a judicial action for recovery of possession and not merely to have the land
registered under their respective names. x x x Certificates of title do not establish ownership.[73] (Emphasis
supplied)
A registration proceeding is not a conclusive adjudication of ownership. In fact, if it is later on found in another case
(where the issue of ownership is squarely adjudicated) that the registrant is not the owner of the property, the real owner
can file a reconveyance case and have the title transferred to his name.[74]
Given that a registration proceeding (such as the certification of ancestral lands) is not a conclusive adjudication of
ownership, it will not constitute litis pendentia on a reivindicatory case where the issue is ownership.[75] For litis pendentia to
be a ground for the dismissal of an action, the following requisites must concur: (a) identity of parties, or at least such parties
who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (c) the identity with respect to the two preceding particulars in the two cases is such
that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res
judicata in the other case.[76] The third element is missing, for any judgment in the certification case would not constitute res
judicata or be conclusive on the ownership issue involved in the reivindicatory case. Since there is no litis pendentia, there is
no reason for the reivindicatory case to be suspended or dismissed in favor of the certification case.
Moreover, since there is no litis pendentia, we cannot agree with petitioners contention that respondent committed forum-
shopping. Settled is the rule that forum shopping exists where the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in the other.[77]
Whether the trial court has jurisdiction to decide the case in light of the
effectivity of RA 8371 or the Indigenous Peoples Rights Act of 1997 at
the time that the complaint was instituted
For the first time in the entire proceedings of this case, petitioners raise the trial courts alleged lack of jurisdiction over the
subject-matter in light of the effectivity[78] of the IPRA at the time that the complaint was filed in 1998. They maintain that,
under the IPRA, it is the NCIP which has jurisdiction over land disputes involving indigenous cultural communities and
indigenous peoples.
As a rule, an objection over subject-matter jurisdiction may be raised at any time of the proceedings. This is because
jurisdiction cannot be waived by the parties or vested by the agreement of the parties. Jurisdiction is vested by law, which
prevails at the time of the filing of the complaint.
An exception to this rule has been carved by jurisprudence. In the seminal case of Tijam v. Sibonghanoy,[79] the Court ruled
that the existence of laches will prevent a party from raising the courts lack of jurisdiction. Laches is defined as the failure or
neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should
have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting the presumption
that the party entitled to assert it either has abandoned or declined to assert it.[80] Wisely, some cases[81] have cautioned
against applying Tijam, except for the most exceptional cases where the factual milieu is similar to Tijam.
In Tijam, the surety could have raised the issue of lack of jurisdiction in the trial court but failed to do so. Instead, the surety
participated in the proceedings and filed pleadings, other than a motion to dismiss for lack of jurisdiction. When the case
reached the appellate court, the surety again participated in the case and filed their pleadings therein. It was only after
receiving the appellate courts adverse decision that the surety awoke from its slumber and filed a motion to dismiss, in lieu
of a motion for reconsideration. The CA certified the matter to this Court, which then ruled that the surety was already
barred by laches from raising the jurisdiction issue.
33
In case at bar, the application of the Tijam doctrine is called for because the presence of laches cannot be ignored. If the
surety in Tijam was barred by laches for raising the issue of jurisdiction for the first time in the CA, what more for petitioners
in the instant case who raised the issue for the first time in their petition before this Court.
At the time that the complaint was first filed in 1998, the IPRA was already in effect but the petitioners never raised the
same as a ground for dismissal; instead they filed a motion to dismiss on the ground that the value of the property did not
meet the jurisdictional value for the RTC. They obviously neglected to take the IPRA into consideration.
When the amended complaint was filed in 1998, the petitioners no longer raised the issue of the trial courts lack of
jurisdiction. Instead, they proceeded to trial, all the time aware of the existence of the IPRA as evidenced by the cross-
examination[82] conducted by petitioners lawyer on the CSTFAL Chairman Guillermo Fianza. In the cross-examination, it was
revealed that the petitioners were aware that the DENR, through the CSTFAL, had lost its jurisdiction over ancestral land
claims by virtue of the enactment of the IPRA. They assailed the validity of the CSTFAL resolution favoring respondent on the
ground that the CSTFAL had been rendered functus officio under the IPRA. Inexplicably, petitioners still did not question the
trial courts jurisdiction.
When petitioners recoursed to the appellate court, they only raised as errors the trial courts appreciation of the evidence
and the conclusions that it derived therefrom. In their brief, they once again assailed the CSTFALs resolution as having been
rendered functus officio by the enactment of IPRA.[83] But nowhere did petitioners assail the trial courts ruling for having
been rendered without jurisdiction.
It is only before this Court, eight years after the filing of the complaint, after the trial court had already conducted a full-
blown trial and rendered a decision on the merits, after the appellate court had made a thorough review of the records, and
after petitioners have twice encountered adverse decisions from the trial and the appellate courts that petitioners now want
to expunge all the efforts that have gone into the litigation and resolution of their case and start all over again. This practice
cannot be allowed.
Thus, even assuming arguendo that petitioners theory about the effect of IPRA is correct (a matter which need not
be decided here), they are already barred by laches from raising their jurisdictional objection under the circumstances.
WHEREFORE, premises considered, the petition is denied for lack of merit. The March 30, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 78987 and its May 26, 2006 Resolution denying the motion for reconsideration are AFFIRMED.
PHILIPPINE ECONOMIC ZONE AUTHORITY,

represented herein by DIRECTOR GENERAL LILIA
B. DE LIMA,
Petitioner,
JOSEPH JUDE CARANTES, ROSE CARANTES, and all

the other HEIRS OF MAXIMINO CARANTES,
Respondents.
VILLARAMA, JR., J.:
This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
seeks to reverse and set aside the Decision[1] dated October 26, 2007 of the Court of Appeals (CA) in CA-G.R. CV
No. 73230. The Court of Appeals had affirmed the Order[2] dated October 2, 2001 of the Regional Trial Court
(RTC), Branch 5, Baguio City in Civil Case No. 4339-R, granting the respondents Petition[3] for injunction.
The facts are gathered from the records of the case.
Respondents Joseph Jude Carantes, Rose Carantes and the heirs of Maximino Carantes are in possession of a 30,368-
square meter parcel of land located in Loakan Road, Baguio City.On June 20, 1997, they obtained Certificate of
Ancestral Land Claim (CALC) No. CAR-CALC-022[4] over the land from the Department of Environment and Natural
Resources (DENR). On the strength of said CALC, respondents secured a building permit[5] and a fencing permit[6] from
the Building Official of Baguio City, Teodoro G. Barrozo. Before long, they fenced the premises and began constructing
a residential building thereon.
Soon, respondents received a letter[7] dated February 9, 1999 from Digna D. Torres, the Zone
Administrator of the Philippine Economic Zone Authority (PEZA), informing them that the house they built had
overlapped PEZAs territorial boundary. Torres advised respondents to demolish the same within sixty (60) days
from notice. Otherwise, PEZA would undertake its demolition at respondents expense.
Without answering PEZAs letter, respondents filed a petition for injunction, with prayer for the issuance
of a temporary restraining order (TRO) and writ of preliminary injunction before the RTC of Baguio City. By
34
Order[8] dated April 8, 1999, the RTC of Baguio City issued a TRO, which enjoined PEZA to cease and desist from
threatening respondents with the demolition of their house before respondents prayer for a writ of preliminary
injunction can be heard. On September 19, 2001, the RTC likewise issued an Order,[9] which directed the parties
to maintain the status quo pending resolution of the case.
On October 2, 2001, the RTC granted respondents petition and ordered the issuance of a writ of
injunction against PEZA, thus:
WHEREFORE, the petition is herein GRANTED and a writ of injunction is hereby issued
enjoining the respondents, their agents, representatives or anybody acting in their behalf from
dispossessing, notifying or disturbing in any [manner] the peaceful possession and occupation of
the land by the petitioners.
SO ORDERED.[10]
The trial court ruled that respondents are entitled to possess, occupy and cultivate the subject lots on the basis of
their CALC. The court a quo explained that by the very definition of an ancestral land under Republic Act (R.A.)
No. 8371[11] or the Indigenous Peoples Rights Act of 1997, said lots have been segregated from lands of the public
domain. As such, the rights of respondents to the land are already vested in them and cannot be disturbed by
Proclamation No. 1825,[12] which included said land within the export processing zone of Baguio City.
On appeal, the CA affirmed the RTC ruling. In the assailed Decision dated October 26, 2007, the appellate court
echoed the trial courts declaration that the subject lots have been set aside from the lands of the public domain.
On February 1, 2008, the Office of the Solicitor General (OSG), as counsel for petitioner PEZA, filed a Motion to
Admit[13] petition, with the present Petition[14] attached.Petitioner challenges the CA decision on two (2) issues:
I.
WHETHER OR NOT IT IS THE PETITIONER OR THE CITY ENGINEER OF BAGUIO CITY WHO HAS THE
LEGAL AUTHORITY TO ISSUE BUILDING AND FENCING PERMITS FOR CONSTRUCTIONS WITHIN
THE PEZA-BCEZ.
II.
WHETHER OR NOT RESPONDENTS CALC IS SUFFICIENT TO DISREGARD THE PROVISIONS OF THE
NATIONAL BUILDING CODE OF THE PHILIPPINES.[15]
Amplified, the issue for our determination is whether petitioner can require respondents to demolish the
structures they had built within the territory of PEZA-BCEZ (Baguio City Economic Zone).
The OSG, at the outset, explains the delay in appealing the CA decision. It attributes the delay to the inadvertence
of Senior State Solicitor Rodolfo Geronimo M. Pineda, the temporarily-designated officer-in-charge (OIC) of
Division XV, who took over the case when State Solicitor Maricar S.A. Prudon-Sison went on maternity
leave. Pineda allegedly merely noted receipt of the CA decision without noticing that it was adverse to PEZA. The
OSG adds that the sparse complement of three (3) lawyers left at the time could not tackle at once the horde of
cases assigned to the division.
On substantive grounds, petitioner claims exclusive authority to issue building and fencing permits within
ecozones under Section 6[16] of Presidential Decree (P.D.) No. 1716,[17] amending P.D. No. 66.[18] Alongside,
petitioner asserts concurrent authority to require owners of structures without said permits to remove or
demolish such structures under Section 14 (i)[19] of R.A. No. 7916.[20]
For their part, respondents rely on CAR-CALC-022 for their right to fence the lots and build a house
thereon. They insist that the function of issuing building and fencing permits, even within the Baguio City
Economic Zone, pertains to the Office of the City Mayor and the Building Official of Baguio City, respectively.
Respondents likewise assail the petition for being filed late, stressing that it was filed only after almost three (3)
months from petitioners receipt of the CA decision.
We grant the petition.
It is settled that an appeal must be perfected within the reglementary period provided by law; otherwise,
the decision becomes final and executory.[21] Before the Supreme Court, a petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure, as amended, must be filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed from, or of the denial of the petitioners motion for new trial or
reconsideration filed in due time after notice of the judgment. Even then, review is not a matter of right, but of
sound judicial discretion, and may be granted only when there are special and important reasons therefor.
In the case at bar, the Docket Division of the OSG received a copy of the CA decision on November 7,
2007. It was not until February 1, 2008 or almost three (3) months however, that the OSG, for petitioner, filed a
petition for review on certiorari with this Court. The OSG pleads for understanding considering the scarcity of its
lawyers and the inadvertence of the temporarily-designated OIC of Division XV in overlooking that the CA
decision was adverse to PEZA.
While the Court realizes the OSGs difficulty in having only three (3) lawyers working full time on its cases,
the OSG could have easily asked for an extension of time within which to file the petition. More importantly, as
35
the government agency tasked to represent the government in litigations, the OSG should perform its duty with
promptness and utmost diligence.
However, upon careful consideration of the merits of this case, the Court is inclined to overlook this
procedural lapse in the interest of substantial justice. Although a party is bound by the acts of its counsel,
including the latters mistakes and negligence, a departure from this rule is warranted where such mistake or
neglect would result in serious injustice to the client. Indeed, procedural rules may be relaxed for persuasive
reasons to relieve a litigant of an injustice not commensurate with his failure to comply with the prescribed
procedure.[22] More so, when to allow the assailed decision to go unchecked would set a precedent that will
sanction a violation of substantive law. Such is the situation in this case.
Injunction is a judicial writ, process or proceeding whereby a party is directed either to do a particular
act, in which case it is called a mandatory injunction or to refrain from doing a particular act, in which case it is
called a prohibitory injunction. As a main action, injunction seeks to permanently enjoin the defendant through a
final injunction issued by the court and contained in the judgment. Section 9, Rule 58 of the 1997 Rules of Civil
Procedure, as amended, provides,
SEC. 9. When final injunction granted. If after the trial of the action it appears that the
applicant is entitled to have the act or acts complained of permanently enjoined, the court shall
grant a final injunction perpetually restraining the party or person enjoined from the commission
or continuance of the act or acts or confirming the preliminary mandatory injunction.
Two (2) requisites must concur for injunction to issue: (1) there must be a right to be protected and (2)
the acts against which the injunction is to be directed are violative of said right.[23] Particularly, in actions
involving realty, preliminary injunction will lie only after the plaintiff has fully established his title or right thereto
by a proper action for the purpose. To authorize a temporary injunction, the complainant must make out at least
a prima facie showing of a right to the final relief. Preliminary injunction will not issue to protect a right
not in esse.[24] These principles are equally relevant to actions seeking permanent injunction.
At the onset, we must stress that petitioner does not pose an adverse claim over the subject
land. Neither does petitioner dispute that respondents hold building and fencing permits over the lots. For
petitioner, the question that must be answered is whether respondents may build structures within the Baguio
City Economic Zone on the basis of their CAR-CALC-022, and the building and fencing permits issued by the City
Building Official.
We rule in the negative.
In the parallel case of Philippine Economic Zone Authority (PEZA) v. Borreta,[25] Benedicto Carantes
invoked CAR-CALC-022, the same CALC invoked by respondents in this case, to put up structures in the land
subject of said case. The Court, speaking through Justice Angelina Sandoval-Gutierrez, refused to recall the writ of
demolition issued by the trial court therein. We held that Carantes is a mere applicant for the issuance of a
certificate of ownership of an ancestral land who has yet to acquire a vested right as owner thereof so as to
exclude the land from the areas under PEZA. We perceive no good reason to depart from this ruling as we find
respondents herein to be similarly situated.
As holders of a CALC, respondents possess no greater rights than those enumerated in Par. 1, Section 2,
Article VII of DENR Department Administrative Order (DAO) No. 02, Series of 1993:
SECTION 2. Rights and Responsibilities of Ancestral Land Claimants
1. Rights
1. The right to peacefully occupy and cultivate the land, and utilize the natural
resources therein, subject to existing laws, rules and regulations applicable
thereto;
2. The right of the heirs to succeed to the claims subject to existing rules and
regulations;
3. The right to exclude from the claim any other person who does not belong to
the family or clan; and
4. The right to utilize trees and other forest products inside the ancestral land
subject to these rules as well as customary laws. (Emphasis supplied.)
Respondents being holders of a mere CALC, their right to possess the subject land is limited to occupation
in relation to cultivation. Unlike No. 1,[26] Par. 1, Section 1, Article VII of the same DENR DAO, which expressly
allows ancestral domain claimants to reside peacefully within the domain, nothing in Section 2 grants ancestral
land claimants a similar right, much less the right to build permanent structures on ancestral lands an act of
ownership that pertains to one (1) who has a recognized right by virtue of a Certificate of Ancestral Land Title. On
this score alone, respondents action for injunction must fail.
Yet, even if respondents had established ownership of the land, they cannot simply put up fences or build
structures thereon without complying with applicable laws, rules and regulations. In particular, Section 301 of
P.D. No. 1096, otherwise known as the National Building Code of the Philippines mandates:
36
SECTION 301. Building Permits

No person, firm or corporation, including any agency or instrumentality of the
government shall erect, construct, alter, repair, move, convert or demolish any building or
structure or cause the same to be done without first obtaining a building permit therefor from
the Building Official assigned in the place where the subject building is located or the building
work is to be done.
Supplementary to a building permit, a fencing permit must also be secured from the Building Official
concerned before fences may be installed in the premises.
In the present case, petitioner refuses to honor the building and fencing permits issued by the City
Building Official to respondents. Petitioner PEZA maintains that the function of administering and enforcing the
provisions of P.D. No. 1096 within the areas owned and administered by it, pertains to PEZA. Hence, it is PEZA,
and not the local Building Official of Baguio City, which may properly issue building and fencing permits within
PEZA.
On this point, Section 205 of P.D. No. 1096 is pertinent:
SECTION 205. Building Officials
Except as otherwise provided herein, the Building Official shall be responsible for carrying
out the provisions of this Code in the field as well as the enforcement of orders and decisions
made pursuant thereto.
Due to the exigencies of the service, the Secretary may designate incumbent Public
Works District Engineers, City Engineers and Municipal Engineers to act as Building Officials in
their respective areas of jurisdiction.
The designation made by the Secretary under this Section shall continue until regular
positions of Building Official are provided or unless sooner terminated for causes provided by law
or decree.
The position of Building Official is a regular item in the organizational structure of the local
government. Only in case of urgent necessity may the Secretary of Public Works designate the incumbent District
Engineer, Municipal Engineer or City Engineer, as the case may be. This was the applicable law even for areas
covered by the Export Processing Zone Authority (EPZA) until P.D. No. 1716 was enacted on August 21, 1980.
P.D. No. 1716 further amended P.D. No. 66,[27] the law creating the EPZA, by creating the PEZA. Section
11 of R.A. No. 7916 provides that the existing EPZA created under P.D. No. 66 shall evolve into and be referred to
as the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for the
purpose.
Thus, on October 30, 1995, Executive Order No. 282[28] was enacted. Under Section 1 thereof, all the
powers, functions and responsibilities of EPZA under P.D. No. 66, as amended, insofar as they are not
inconsistent with the powers, functions and responsibilities of the PEZA, under R.A. No. 7916, shall be assumed
and exercised by PEZA.
Among such powers is the administration and enforcement of the National Building Code of the
Philippines in all zones and areas owned or administered by EPZA, as expressly provided in Section 6 of P.D. No.
1716:
SEC. 6. The administration and enforcement of the provisions of Presidential Decree No.
1096, otherwise known as the National Building Code of the Philippines in all zones and areas
owned or administered by the Authority shall be vested in the Administrator or his duly
authorized representative. He shall appoint such EPZA qualified personnel as may be necessary
to act as Building Officials who shall be charged with the duty of issuing Building Permits in the
different zones. All fees and dues collected by the Building Officials under the National Building
Code shall accrue to the Authority. (Emphasis supplied.)
This function, which has not been repealed and does not appear to be inconsistent with any of the
powers and functions of PEZA under R.A. No. 7916, subsists.Complimentary thereto, Section 14 (i) of R.A. No.
7916 states:
SEC. 14. Powers and Functions of the Director General. - The director general shall be the
overall [coordinator] of the policies, plans and programs of the ECOZONES. As such, he shall
provide overall supervision over and general direction to the development and operations of
these ECOZONES. He shall determine the structure and the staffing pattern and personnel
complement of the PEZA and establish regional offices, when necessary, subject to the approval
of the PEZA Board.
In addition, he shall have the following specific powers and responsibilities:
xxxx
(i) To require owners of houses, buildings or other structures constructed without the
necessary permit whether constructed on public or private lands, to remove or demolish such
37
houses, buildings, structures within sixty (60) days after notice and upon failure of such owner to
remove or demolish such house, building or structure within said period, the director general or
his authorized representative may summarily cause its removal or demolition at the expense of
the owner, any existing law, decree, executive order and other issuances or part thereof to the
contrary notwithstanding; (Emphasis supplied.)
By specific provision of law, it is PEZA, through its building officials, which has authority to issue building
permits for the construction of structures within the areas owned or administered by it, whether on public or
private lands. Corollary to this, PEZA, through its director general may require owners of structures built without
said permit to remove such structures within sixty (60) days. Otherwise, PEZA may summarily remove them at
the expense of the owner of the houses, buildings or structures.
As regards the issuance of fencing permits on ancestral lands, particularly within Baguio City and the rest
of the Cordilleras, DENR-Circular No. 03-90 (Rules on the Acceptance, Identification, Evaluation, and Delineation
of Ancestral Land Claims by the Special Task Force Created by the Virtue of DENR Special Order Nos. 31 and 31-A
both Series of 1990) prescribes in Section 12:
SEC. 12. The Regional Land Management Services or the CENROs, through their
respective Provincial Environment and Natural Resources Officer (PENRO), shall prepare and
submit to the Special Task Force a report on each and every application surveyed and delineated.
Thereafter, the Special Task Force after evaluating the reports, shall endorse valid ancestral land
claims to the Secretary through the Indigenous Community Affairs Division, Special Concerns
Office for the issuance of a Certificate of Ancestral Land Claim. As soon as ancestral land claim is
found to be valid and in meritorious cases, the Special Task Force may recommend to the
City/Municipal Mayors Office the issuance of a fencing permit to the applicant over areas
actually occupied at the time of filing. (Emphasis supplied.)
This is the general rule. Considering, however, that in this case, a fencing permit is issued complementary
to a building permit and that within the premises of PEZA, it is the Authority that may properly issue a building
permit, it is only fitting that fencing permits be issued by the Authority.
From the foregoing disquisition, it clearly appears that respondents likewise failed to satisfy the second
requisite in order that an injunction may issue: that the acts against which the injunction is to be directed, are
violative of said right. PEZA acted well within its functions when it demanded the demolition of the structures
which respondents had put up without first securing building and fencing permits from the Authority.
WHEREFORE, the Petition is GRANTED. The Decision dated October 26, 2007 of the Court of Appeals in
CA-G.R. CV No. 73230 affirming the Order dated October 2, 2001 of the court a quo in Civil Case No. 4339-R
is REVERSED and SET ASIDE. Respondents are hereby DIRECTED to demolish the residential building they had
built within the premises of PEZA within sixty (60) days from notice.
NICASIO I. ALCANTARA, petitioner, vs. COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, SECRETARY OF
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES ANTONIO CERILLES, THE DEPARTMENT
OF ENVIRONMENT AND NATURAL RESOURCES, ROLANDO PAGLANGAN, ET AL., respondents.
HEIRS OF DATU ABDUL S. PENDATUN, REP. BY DATU NASSER B. PENDATUN, AL HAJ., HEIRS OF SABAL MULA,
and GAWAN CLAN, REP. BY TRIBAL CHIEFTAIN LORETO GAWAN, intervenors.
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari assailing the Decision of the Court of Appeals dated June 22, 2000 in
CA-G.R. SP No. 53159[1] and its Resolution dated October 16, 2000 denying petitioners motion for
reconsideration.
The facts of the case are as follows:
Sometime in 1993, petitioner Nicasio Alcantara was granted Forest Land Grazing Lease Agreement No. 542
(FLGLA No. 542) by the Department of Environment and Natural Resources (DENR). Under said FLGLA, Alcantara
was allowed to lease Nine Hundred Twenty-Three (923) hectares of public forest land at Sitio Lanton, Barrio
Apopong, General Santos City for grazing purposes for a period of twenty-five (25) years to expire on 31
December 2018.
As early as 1990, however, private respondent Rolando Paglangan together with Esmael Sabel and Lasid
Acop filed a letter-complaint with the Commission on Settlement of Land Problems (COSLAP)seeking the
cancellation of FLGLA No. 542 and the reversion of the entire 923 hectares to the Blaan and Maguindanaoan
tribes. The case was docketed as COSLAP Case No. 98-052.
Petitioner filed his Answer questioning the jurisdiction of the COSLAP over the case, since the dispute
involved a claim for recovery of ancestral land. Petitioner claimed that the case should have been filed with the
DENR since it is the latter which has jurisdiction to administer and dispose of public lands, including grazing lands.
Notwithstanding petitioners objection to the COSLAPs exercise of jurisdiction over the case, said body
continued the hearings thereon. Petitioner alleged that COSLAP did not conduct formal hearings on the case, and
38
that he was not notified nor given the opportunity to be present and participate in the field interviews and ocular
inspections conducted by COSLAP.[2]
On August 3, 1998, the COSLAP issued a Decision ordering the cancellation of FLGLA No. 542. Petitioner
appealed the same to the Court of Appeals by petition for review on certiorari.
The Court of Appeals dismissed the petition in its Decision dated June 22, 2000, and also denied petitioners
motion for reconsideration in a Resolution dated October 16, 2000.[3]
Hence, the present petition.
Petitioner contends that the Court of Appeals erred in ruling that he had earlier recognized the jurisdiction
of the COSLAP over the case. He stated further that the appellate court should have considered that the COSLAP
does not possess the historical, genealogical and anthropological expertise to act on ancestral land claims, and
that it is the National Commission on Indigenous Peoples (NCIP), under the Indigenous Peoples Rights Act of
1997[4] which has jurisdiction over such claims. Petitioner thus submits that the COSLAPs decision ordering the
cancellation of FLGLA No. 542 and declaring the area being claimed by private respondent as ancestral land is
void for having been issued by a body which does not have jurisdiction over said matters.[5]
In his Comment, private respondent Rolando Paglangan argued that the petition should be dismissed since
the petition for certiorari filed by petitioner in the Court of Appeals was filed out of time.[6] He also contended
that the COSLAP has the power to entertain cases involving indigenous cultural communities when the DENR or
the NCIP fails or refuses to act on a complaint or grievance brought before them.[7] He alleged that the dispute
between petitioner and the Blaan tribe antedated the creation of the NCIP, hence, filing of the petition for
cancellation of the FLGLA with the COSLAP.[8]
On April 6, 2001, a Motion for Leave to Intervene and to File Complaint-in-Intervention was filed with this
Court by the Heirs of Datu Abdul S. Pendatun, represented by Datu Nasser B. Pendatun, Al Haj; the Heirs of Sabal
Mula, represented by Hadji Latip K. Mula; and the Gawan Clan, represented by their Tribal Chieftain Loreto
Gawan.
Subsequently, on May 24, 2001, they filed an Amended Motion for Leave to Intervene and to File Amended
Complaint-in-Intervention. In their Amended Complaint-in-Intervention, they allege that the parcels of land in
dispute form part of their ancestral lands, and that they have been in open, continuous, exclusive and notorious
possession under claim of ownership of the same. They stated further that private respondent Rolando
Paglangan acts only as agent of the Mula clan, and not of the other intervenors.[9]
The Court finds no reason to disturb the ruling of the Court of Appeals.
The Court of Appeals did not commit any reversible error in the assailed decision. The Court agrees with the
appellate court that petitioner is estopped from questioning the jurisdiction of the COSLAP since he participated
actively in the proceedings before said body by filing an Answer, a Motion for Reconsideration of the COSLAPs
decision and a Supplement to Respondents Motion for Reconsideration.The Court also notes the appellate courts
observation that petitioner began to question the jurisdiction of the COSLAP only when he realized that his
period to appeal the COSLAPs decision had already lapsed.[10] It has been repeatedly held by this Court that the
active participation of a respondent in the case pending against him before a court or a quasi-judicial body is
tantamount to a recognition of that courts or bodys recognition and a willingness to abide by the resolution of
the case and will bar said party from later on impugning the courts or bodys jurisdiction.[11]
Moreover, Executive Order No. 561 creating the COSLAP, the law then prevailing when private respondents
filed their complaint for cancellation of FLGLA No. 542, provides in Section 3, paragraph 2(a) thereof that said
Commission may assume jurisdiction over land disputes involving occupants of the land in question and pasture
lease agreement holders:
Sec. 3. Powers and Functions. -- The Commission shall have the following powers and functions:
xxx
2. Refer and follow-up for immediate action by the agency having appropriate jurisdiction any land problem or
dispute referred to the Commission: Provided, That the Commission, may, in the following cases, assume
jurisdiction and resolve land problems or disputes which are critical and explosive in nature considering, for
instance, the large number of the parties involved, the presence or emergence of social tension or unrest, or
other similar critical situations requiring immediate action:
(a) Between occupants/squatters and pasture lease agreement holders or timber concessionaires;
(b) Between occupants/squatters and government reservation grantees;
(c) Between occupants/squatters and public land claimants or applicants;
(d) Petitions for classification, release and/or subdivision of lands of the public domain; and
(e) Other similar land problems of grave urgency and magnitude.
The Commission shall promulgate such rules of procedure as will insure expeditious resolution and action on the
above cases. The resolution, order or decision of the Commission on any of the foregoing cases shall have the
force and effect of a regular administrative resolution, order or decision and shall be binding upon the parties
therein and upon the agency having jurisdiction over the same. Said resolution, order or decision shall become
39
final and executory within thirty (30) days from its promulgation and shall be appealable by certiorari only to the
Supreme Court. (Emphasis supplied.)
The Court of Appeals also stated that based on the records, the the land area being claimed by private
respondents belongs to the Blaan indigenous cultural community since they have been in possession of, and have
been occupying and cultivating the same since time immemorial, a fact has not been disputed by petitioner.[12] It
was likewise declared by the appellate court that FLGLA No. 542 granted to petitioner violated Section 1 of
Presidential Decree No. 410[13] which states that all unappropriated agricultural lands forming part of the public
domain are declared part of the ancestral lands of the indigenous cultural groups occupying the same, and these
lands are further declared alienable and disposable, to be distributed exclusively among the members of the
indigenous cultural group concerned.
The Court finds no reason to depart from such finding by the appellate court, it being a settled rule that
findings of fact of the Court of Appeals are binding and conclusive upon the Supreme Court absent any showing
that such findings are not supported by the evidence on record.[14]
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
MCDONALDS CORPORATION and G.R. No. 143993

MCGEORGE FOOD INDUSTRIES, INC.,
Petitioners,
Present:
Davide, Jr., C.J.,
Chairman,
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
L.C. BIG MAK BURGER, INC.,

FRANCIS B. DY, EDNA A. DY,
RENE B. DY, WILLIAM B. DY,
JESUS AYCARDO, ARACELI Promulgated:
AYCARDO, and GRACE HUERTO,
Respondents. August 18, 2004
CARPIO, J.:
The Case
This is a petition for review[1] of the Decision dated 26 November 1999 of the Court of Appeals[2] finding
respondent L.C. Big Mak Burger, Inc. not liable for trademark infringement and unfair competition and ordering
petitioners to pay respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000 denying
reconsideration. The Court of Appeals Decision reversed the 5 September 1994 Decision[3] of the Regional Trial
Court of Makati, Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and
unfair competition.
The Facts
Petitioner McDonalds Corporation (McDonalds) is a corporation organized under the laws of Delaware,
United States. McDonalds operates, by itself or through its franchisees, a global chain of fast-food restaurants.
McDonalds[4] owns a family of marks[5] including the Big Mac mark for its double-decker hamburger
sandwich.[6]McDonalds registered this trademark with the United States Trademark Registry on 16 October
1979.[7] Based on this Home Registration, McDonalds applied for the registration of the same mark in
the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology (PBPTT), now the
Intellectual Property Office (IPO). Pendingapproval of its application, McDonalds introduced its Big Mac
hamburger sandwiches in the Philippine market in September 1981. On 18 July 1985, the PBPTT allowed
registration of the Big Mac mark in the Principal Register based on its Home Registration in the United States.
40
Like its other marks, McDonalds displays the Big Mac mark in items[8] and paraphernalia[9] in its
restaurants, and in its outdoor and indoor signages. From 1982 to 1990, McDonalds spent P10.5 million in
advertisement for Big Mac hamburger sandwiches alone.[10]
Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic corporation, is McDonalds

Philippine franchisee.[11]
Respondent L.C. Big Mak Burger, Inc. (respondent corporation) is a domestic corporation which operates
fast-food outlets and snack vans in Metro Manila and nearby provinces.[12] Respondent corporations menu
includes hamburger sandwiches and other food items.[13] Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy,
William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto (private respondents) are the incorporators,
stockholders and directors of respondent corporation.[14]
On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the Big Mak mark for
its hamburger sandwiches. McDonalds opposed respondent corporations application on the ground that Big Mak
was a colorable imitation of its registered Big Mac mark for the same food products. McDonalds also informed
respondent Francis Dy (respondent Dy), the chairman of the Board of Directors of respondent corporation, of its
exclusive right to the Big Mac mark and requested him to desist from using the Big Mac mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990 sued respondents in the
Regional Trial Court of Makati, Branch 137 (RTC), for trademark infringement and unfair competition. In its Order
of 11 July 1990, the RTC issued a temporary restraining order (TRO) against respondents enjoining them from
using the Big Mak mark in the operation of their business in the National Capital Region.[15] On 16 August 1990,
the RTC issued a writ of preliminary injunction replacing the TRO.[16]
In their Answer, respondents admitted that they have been using the name Big Mak Burger for their fast-food
business. Respondents claimed, however, that McDonalds does not have an exclusive right to the Big Mac mark
or to any other similar mark. Respondents point out that the Isaiyas Group of Corporations (Isaiyas Group)
registered the same mark for hamburger sandwiches with the PBPTT on 31 March 1979. One Rodolfo Topacio
(Topacio) similarly registered the same mark on 24 June 1983, prior to McDonalds registration on 18 July
1985. Alternatively, respondents claimed that they are not liable for trademark infringement or for unfair
competition, as the Big Mak mark they sought to register does not constitute a colorable imitation of the Big Mac
mark. Respondents asserted that they did not fraudulently pass off their hamburger sandwiches as those of
petitioners Big Mac hamburgers.[17] Respondents sought damages in their counterclaim.
In their Reply, petitioners denied respondents claim that McDonalds is not the exclusive owner of the Big Mac
mark. Petitioners asserted that while the Isaiyas Group and Topacio did register the Big Mac mark ahead of
McDonalds, the Isaiyas Group did so only in the Supplemental Register of the PBPTT and such registration does
not provide anyprotection. McDonalds disclosed that it had acquired Topacios rights to his registration in a Deed
of Assignment dated 18 May 1981.[18]
The Trial Courts Ruling
On 5 September 1994, the RTC rendered judgment (RTC Decision) finding respondent corporation liable for
trademark infringement and unfair competition. However, the RTC dismissed the complaint against private
respondents and the counterclaim against petitioners for lack of merit and insufficiency of evidence. The RTC
held:
Undeniably, the mark B[ig] M[ac] is a registered trademark for plaintiff McDonalds,
and as such, it is entitled [to] protection against infringement.
There exist some distinctions between the names B[ig] M[ac] and B[ig] M[ak] as appearing in the
respective signages, wrappers and containers of the food products of the parties. But
infringement goes beyond the physical features of the questioned name and the original
name. There are still other factors to be considered.
41
Significantly, the contending parties are both in the business of fast-food chains and
restaurants. An average person who is hungry and wants to eat a hamburger sandwich may not
be discriminating enough to look for a McDonalds restaurant and buy a B[ig] M[ac]
hamburger. Once he sees a stall selling hamburger sandwich, in all likelihood, he will dip into his
pocket and order a B[ig] M[ak] hamburger sandwich. Plaintiff McDonalds fast-food chain
has attained wide popularity and acceptance by the consuming public so much so that its air-
conditioned food outlets and restaurants will perhaps not be mistaken by many to be the same
as defendant corporations mobile snack vans located along busy streets or highways. But the
thing is that what is being sold by both contending parties is a food item a hamburger sandwich
which is for immediate consumption, so that a buyer may easily be confused or deceived into
thinking that the B[ig] M[ak] hamburger sandwich he bought is a food-product of plaintiff
McDonalds, or a subsidiary or allied outlet thereof. Surely, defendant corporation has its own
secret ingredients to make its hamburger sandwiches as palatable and as tasty as the other
brands in the market, considering the keen competition among mushrooming hamburger stands
and multinational fast-food chains and restaurants. Hence, the trademark B[ig] M[ac] has been
infringed by defendant corporation when it used the name B[ig] M[ak] in its signages, wrappers,
and containers in connection withits food business. xxxx
Did the same acts of defendants in using the name B[ig] M[ak] as a trademark or tradename in
their signages, or in causing the name B[ig] M[ak] to be printed on the wrappers and containers
of their food products also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader and more inclusive than
the law concerning the infringement of trademark, which is of more limited range, but within its
narrower range recognizes a more exclusive right derived by the adoption and registration of the
trademark by the person whose goods or services are first associated therewith.
xxxNotwithstanding the distinction between an action for trademark infringement and an action
for unfair competition, however, the law extends substantially the same relief to the injured
party for both cases. (See Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to pass off on the
public the goods of one man as the goods of another. The choice of B[ig] M[ak] as tradename by
defendant corporation is not merely for sentimental reasons but was clearly made to take
advantage of the reputation, popularity and the established goodwill of plaintiff McDonalds. For,
as stated in Section 29, a person is guilty of unfair competition who in selling his goods shall give
them the general appearance, of goods of another manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would likely influence
purchasers to believe that the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs have established their valid cause of
action against the defendants for trademark infringement and unfair competition and for
damages.[19]
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonalds Corporation and

McGeorge Food Industries, Inc. and against defendant L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990] is made
permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual damages in
the amount of P400,000.00, exemplary damages in the amount of P100,000.00, and attorneys
fees and expenses of litigation in the amount of P100,000.00;
42
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B. Dy, Wiliam B. Dy,
Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well as all counter-claims, are dismissed for
lack of merit as well as for insufficiency of evidence.[20]
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment (Court of Appeals Decision) reversing the RTC
Decision and ordering McDonalds to pay respondents P1,600,000 as actual and compensatory damages
and P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court that the use
of defendants-appellants of its corporate name the whole L.C. B[ig] M[ak] B[urger], I[nc]. which
appears on their food packages, signages and advertisements is an infringement of their
trademark B[ig] M[ac] which they use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonalds logo of umbrella M stamped
thereon, together with the printed mark in red bl[o]ck capital letters, the words being separated
by a single space.Specifically, plaintiffs-appellees argue that defendants-appellants use of their
corporate name is a colorable imitation of their trademark Big Mac.
To Our mind, however, this Court is fully convinced that no colorable imitation exists. As the
definition dictates, it is not sufficient that a similarity exists in both names, but that more
importantly, the over-all presentation, or in their essential, substantive and distinctive parts is
such as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way the trademark B[ig] M[ac] is being used by
plaintiffs-appellees and corporate name L.C. Big Mak Burger, Inc. by defendants-appellants,
would readily reveal that no confusion could take place, or that the ordinary purchasers would be
misled by it. As pointed out by defendants-appellants, the plaintiffs-appellees trademark is used
to designate only one product, a double decker sandwich sold in a Styrofoam box with the
McDonalds logo. On the other hand, what the defendants-appellants corporation is using is not a
trademark for its food product but a business or corporate name. They use the business name
L.C. Big Mak Burger, Inc. in their restaurant business which serves diversified food items such as
siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants corporate or business name appearing in the food
packages and signages are written in silhouette red-orange letters with the b and m in upper case
letters. Above the words Big Mak are the upper case letter L.C.. Below the words Big Mak are the
words Burger, Inc. spelled out in upper case letters. Furthermore, said corporate or business
name appearing in such food packages and signages is always accompanied by the company
mascot, a young chubby boy named Maky who wears a red T-shirt with the upper case m
appearing therein and a blue lower garment. Finally, the defendants-appellants food packages
are made of plastic material.
[I]t is readily apparent to the naked eye that there appears a vast difference in the appearance of
the product and the manner that the tradename Big Mak is being used and presented to the
public. As earlier noted, there are glaring dissimilarities between plaintiffs-appellees trademark
and defendants-appellants corporate name. Plaintiffs-appellees product carrying the trademark
B[ig] M[ac] is a double decker sandwich (depicted in the tray mat containing photographs of the
various food products xxx sold in a Styrofoam box with the McDonalds logo and trademark in red,
bl[o]ck capital letters printed thereon xxx at a price which is more expensive than the
defendants-appellants comparable food products. In order to buy a Big Mac, a customer needs to
visit an air-conditioned McDonalds restaurant usually located in a nearby commercial center,
advertised and identified by its logo - the umbrella M, and its mascot Ronald McDonald. A typical
McDonalds restaurant boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow customers with cars to make orders
without alighting from their vehicles, the interiors of the building are well-lighted, distinctly
decorated and painted with pastel colors xxx. In buying a B[ig] M[ac], it is necessary to specify it
by its trademark. Thus, a customer needs to look for a McDonalds and enter it first before he can
43
find a hamburger sandwich which carry the mark Big Mac. On the other hand, defendants-
appellants sell their goods through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair competition, We likewise find
the same untenable.
Unfair competition is defined as the employment of deception or any other means contrary to
good faith by which a person shall pass off the goods manufactured by him or in which he deals,
or his business, or service, for those of another who has already established good will for his
similar good, business or services, or any acts calculated to produce the same result (Sec. 29, Rep.
Act No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow that there was malice and
that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffs-appellees that

defendants-appellants deliberately tried to pass off the goods manufactured by them for those of
plaintiffs-appellees. The mere suspected similarity in the sound of the defendants-appellants
corporate name with the plaintiffs-appellees trademark is not sufficient evidence to conclude
unfair competition. Defendants-appellants explained that the name M[ak] in their corporate
name was derived from both the first names of the mother and father of defendant Francis Dy,
whose names are Maxima and Kimsoy. With this explanation, it is up to the plaintiffs-appellees to
prove bad faith on the part of defendants-appellants. It is a settled rule that the law always
presumes good faith such that any person who seeks to be awarded damages due to acts of
another has the burden of proving that the latter acted in bad faith or with ill motive. [21]
Petitioners sought reconsideration of the Court of Appeals Decision but the appellate court denied their motion
in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS CORPORATE NAME L.C. BIG
MAK BURGER, INC. IS NOT A COLORABLE IMITATION OF THE MCDONALDS TRADEMARK BIG
MAC, SUCH COLORABLE IMITATION BEING AN ELEMENT OF TRADEMARK INFRINGEMENT.
A. Respondents use the words Big Mak as trademark for their products and not merely
as their business or corporate name.
B. As a trademark, respondents Big Mak is undeniably and unquestionably similar to

petitioners Big Mac trademark based on the dominancy test and the idem
sonans test resulting inexorably in confusion on the part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE INHERENT SIMILARITY
BETWEEN THE MARK BIG MAK AND THE WORD MARK BIG MAC AS AN INDICATION OF
RESPONDENTS INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF ESTABLISHING UNFAIR
COMPETITION.[22]
Petitioners pray that we set aside the Court of Appeals Decision and reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety of this petition as it allegedly raises
only questions of fact. On the merits, respondents contend that the Court of Appeals committed no reversible
error in finding them not liable for trademark infringement and unfair competition and in ordering petitioners to
pay damages.
44
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for a petition for review under
Rule 45.
2. On the merits, (a) whether respondents used the words Big Mak not only as part of the corporate
name L.C. Big Mak Burger, Inc. but also as a trademark for their hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and unfair competition.[23]
The Courts Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are

Proper for a Petition for Review
A party intending to appeal from a judgment of the Court of Appeals may file with this Court a petition for review
under Section 1 of Rule 45 (Section 1)[24] raising only questions of law. A question of law exists when the doubt or
difference arises on what the law is on a certain state of facts. There is a question of fact when the doubt or
difference arises on the truth or falsity of the alleged facts. [25]
Here, petitioners raise questions of fact and law in assailing the Court of Appeals findings on respondent
corporations non-liability for trademark infringement and unfair competition. Ordinarily, the Court can deny due
course to such a petition. In view, however, of the contradictory findings of fact of the RTC and Court of Appeals,
the Court opts to accept the petition, this being one of the recognized exceptions to Section 1.[26] We took a
similar course of action in Asia Brewery, Inc. v. Court of Appeals[27] which also involved a suit for trademark
infringement and unfair competition in which the trial court and the Court of Appeals arrived at conflicting
findings.
On the Manner Respondents Used

Big Mak in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate name L.C. Big Mak Burger, Inc.
appears in the packaging for respondents hamburger products and not the words Big Mak only.
The contention has merit.
The evidence presented during the hearings on petitioners motion for the issuance of a writ of preliminary
injunction shows that the plastic wrappings and plastic bags used by respondents for their hamburger
sandwiches bore the words Big Mak. The other descriptive words burger and 100% pure beef were set in smaller
type, along with the locations of branches.[28] Respondents cash invoices simply refer to their hamburger
sandwiches as Big Mak.[29] It is respondents snack vans that carry the words L.C. Big Mak Burger, Inc.[30]
It was only during the trial that respondents presented in evidence the plastic wrappers and bags for their
hamburger sandwiches relied on by the Court of Appeals.[31]Respondents plastic wrappers and bags were
identical with those petitioners presented during the hearings for the injunctive writ except that the letters L.C.
and the words Burger, Inc. in respondents evidence were added above and below the words Big
Mak, respectively. Since petitioners complaint was based on facts existing before and during the hearings on the
injunctive writ, the facts established during those hearings are the proper factual bases for the disposition of the
issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law applicable to this case, [32] defines
trademark infringement as follows:
45
Infringement, what constitutes. Any person who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of
such business; or [2] reproduce, counterfeit, copy, or colorably imitate any such mark or trade-
name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a civil action by the registrant
for any or all of the remedies herein provided.[33]
Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly used, without
petitioners consent, a colorable imitation of the Big Mac mark in advertising and selling respondents hamburger
sandwiches. This likely caused confusion in the mind of the purchasing public on the source of the hamburgers or
the identity of the business.
To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiffs
mark; (2) the plaintiffs ownership of the mark; and (3) the use ofthe mark or its colorable imitation by
the alleged infringer results in likelihood of confusion.[34] Of these, it is the element of likelihood of confusion that
is the gravamen of trademark infringement.[35]
On the Validity of the Big MacMark

and McDonalds Ownership of such Mark
A mark is valid if it is distinctive and thus not barred from

registration under Section 4[36] of RA 166 (Section 4). However, once registered, not only the marks validity but
also the registrants ownership of the mark is prima facie presumed.[37]
Respondents contend that of the two words in the Big Mac mark, it is only the word Mac that is valid
because the word Big is generic and descriptive (proscribed under Section 4[e]), and thus incapable of exclusive
appropriation.[38]
The contention has no merit. The Big Mac mark, which should be treated in its entirety and not dissected word
for word,[39] is neither generic nor descriptive. Generic marks are commonly used as the name or description of
a kind of goods,[40] such as Lite for beer[41] or Chocolate Fudge for chocolate soda drink.[42] Descriptive marks, on
the other hand, convey the characteristics, functions, qualities or ingredients of a product to one who has never
seen it or does not know it exists,[43] such as Arthriticare for arthritis medication.[44] On the contrary, Big Mac falls
under the class of fanciful or arbitrary marks as it bears no logical relation to the actual characteristics of the
product it represents.[45] As such, it is highly distinctive and thus valid. Significantly, the trademark Little Debbie
for snack cakes was found arbitrary or fanciful.[46]
The Court also finds that petitioners have duly established McDonalds exclusive ownership of the Big Mac
mark. Although Topacio and the Isaiyas Group registered the Big Mac mark ahead of McDonalds, Topacio, as
petitioners disclosed, had already assigned his rights to McDonalds. The Isaiyas Group, on the other hand,
registered its trademark only in the Supplemental Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no real protection.[47] Indeed, we have held that registration in
the Supplemental Register is not even a prima facie evidence of the validity of the registrants exclusive right to
use the mark on the goods specified in the certificate.[48]
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or colorable imitation marks, namely,
confusion of goods (product confusion) and confusion of business (source or origin confusion). In Sterling
Products International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,[49] the Court
distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of goods in which event
the ordinarily prudent purchaser would be induced to purchase one product in the belief that he
was purchasing the other. xxx The other is the confusion of business: Here though the goods of
46
the parties are different, the defendants product is such as might reasonably be assumed to
originate with the plaintiff, and the public would then be deceived either into that belief or into
the belief that there is some connection between the plaintiff and defendant which, in fact, does
not exist.
Under Act No. 666,[50] the first trademark law, infringement was limited to confusion of goods only, when the
infringing mark is used on goods of a similar kind.[51] Thus, no relief was afforded to the party whose registered
mark or its colorable imitation is used on different although related goods. To remedy this situation, Congress
enacted RA 166 on 20 June 1947. In defining trademark infringement, Section 22 of RA 166 deleted the
requirement in question and expanded its scope to include such use of the mark or its colorable imitation that is
likely to result in confusion on the
source or origin of such goods or services, or identity of such business.[52] Thus, while there is confusion of goods
when the products are competing, confusion of business exists when the products are non-competing but related
enough to produce confusion of affiliation.[53]
On Whether Confusion of Goods and

Confusion of Business are Applicable
Petitioners claim that respondents use of the Big Mak mark on respondents hamburgers results in confusion of
goods, particularly with respect to petitioners hamburgers labeled Big Mac. Thus, petitioners alleged in their
complaint:
1.15. Defendants have unduly prejudiced and clearly infringed upon the property
rights of plaintiffs in the McDonalds Marks, particularly the mark B[ig] M[ac]. Defendants
unauthorized acts are likely, and calculated, to confuse, mislead or deceive the public into
believing that the products and services offered by defendant Big Mak Burger, and the business
it is engaged in, are approved and sponsored by, or affiliated with, plaintiffs.[54] (Emphasis
supplied)
Since respondents used the Big Mak mark on the same goods, i.e. hamburger sandwiches, that petitioners Big
Mac mark is used, trademark infringement through confusion of goods is a proper issue in this case.
Petitioners also claim that respondents use of the Big Mak mark in the sale of hamburgers, the same business
that petitioners are engaged in, results in confusion of business.Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of plaintiff McDonalds nor its
licensee/franchisee, plaintiff McGeorge, and in clear violation of plaintiffs exclusive right to
use and/or appropriate the McDonalds marks, defendant Big Mak Burger acting through
individual defendants, has been operating Big Mak Burger, a fast food restaurant business
dealing in the sale of hamburger and cheeseburger sandwiches, french fries and other food
products, and has caused to be printed on the wrapper of defendants food products and
incorporated in its signages the name Big Mak Burger, which is confusingly similar to and/or is a
colorable imitation of the plaintiff McDonalds mark B[ig] M[ac], xxx. Defendant Big Mak Burger
has thus unjustly created the impression that its business is approved and sponsored by, or
affiliated with, plaintiffs. xxxx
2.2 As a consequence of the acts committed by defendants, which unduly prejudice and
infringe upon the property rights of plaintiffs McDonalds and McGeorge as the real owner and
rightful proprietor, and the licensee/franchisee, respectively, of the McDonalds marks, and which
are likely to have caused confusion or deceived the public as to the true source, sponsorship or
affiliation of defendants food products and restaurant business, plaintiffs have suffered and
continue to suffer actual damages in the form of injury to their business reputation and goodwill,
and of the dilution of the distinctive quality of the McDonalds marks, in particular, the mark B[ig]
M[ac].[55] (Emphasis supplied)
47
Respondents admit that their business includes selling hamburger sandwiches, the same food product that
petitioners sell using the Big Mac mark. Thus, trademark infringement through confusion of business is also a
proper issue in this case.
Respondents assert that their Big Mak hamburgers cater mainly to the low-income group while
petitioners Big Mac hamburgers cater to the middle and upper income groups. Even if this is true, the likelihood
of confusion of business remains, since the low-income group might be led to believe that the Big Mak
hamburgers are the low-end hamburgers marketed by petitioners. After all, petitioners have the exclusive right
to use the Big Mac mark. On the other hand, respondents would benefit by associating their low-end hamburgers,
through the use of the Big Mak mark, with petitioners high-end Big Mac hamburgers, leading to likelihood of
confusion in the identity of business.
Respondents further claim that petitioners use the Big Mac mark only on petitioners double-decker
hamburgers, while respondents use the Big Mak mark on hamburgers and other products like siopao, noodles
and pizza. Respondents also point out that petitioners sell their Big Mac double-deckers in a styrofoam box with
the McDonalds logo and trademark in red, block letters at a price more expensive than the hamburgers of
respondents. In contrast, respondents sell their Big Mak hamburgers in plastic wrappers and plastic bags.
Respondents further point out that petitioners restaurants are air-conditioned buildings with drive-thru service,
compared to respondents mobile vans.
These and other factors respondents cite cannot negate the undisputed fact that respondents use their
Big Mak mark on hamburgers, the same food product that petitioners sell with the use of their registered mark
Big Mac. Whether a hamburger is single, double or triple-decker, and whether wrapped in plastic or styrofoam, it
remains the same hamburger food product. Even respondents use of the Big Mak mark on non-hamburger food
products cannot excuse their infringement of petitioners registered mark, otherwise registered marks will lose
their protection under the law.
The registered trademark owner may use his mark on the same or similar products, in different segments
of the market, and at different price levels depending on variations of the products for specific segments of the
market. The Court has recognized that the registered trademark owner enjoys protection in product and market
areas that are the normal potential expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a trademark is entitled
is not limited to guarding his goods or business from actual market competition with identical or
similar products of the parties, but extends to all cases in which the use by a junior appropriator
of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal potential expansion of his business (v.
148 ALR, 77, 84; 52 Am. Jur. 576, 577).[56] (Emphasis supplied)
On Whether Respondents Use of the Big Mak

Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the
holistic test.[57] The dominancy test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion. In contrast, the holistic test requires the court to consider the entirety of
the marks as applied to the products, including the labels and packaging, in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that could arise in the use
of respondents Big Mak mark on hamburgers, relied on the holistic test. Thus, the Court of Appeals ruled that it is
not sufficient that a similarity exists in both name(s), but that more importantly, the overall presentation, or in
their essential, substantive and distinctive parts is such as would likely MISLEAD or CONFUSE persons in the
ordinary course of purchasing the genuine article. The holistic test considers the two marks in their entirety, as
they appear on the goods with their labels and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.[58]
Respondents now vigorously argue that the Court of Appeals application of the holistic test to this case is
correct and in accord with prevailing jurisprudence.
48
This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy test considers
the dominant features in the competing marks in determiningwhether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark, disregarding minor differences.[59] Courts will
consider more the aural and visual impressions created by the marks in the public mind, giving little weight to
factors like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,[60] the Court ruled:
xxx It has been consistently held that the question of infringement of a trademark is to
be determined by the test of dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement takes place. Duplication
or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort
to imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,[61] Phil. Nut Industry, Inc. v.
Standard Brands Inc.,[62] Converse Rubber Corporation v. Universal Rubber Products, Inc.,[63] and Asia Brewery,
Inc. v. Court of Appeals.[64] In the 2001 case of Societe Des Produits Nestl, S.A. v. Court of Appeals,[65] the Court
explicitly rejected the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the law on trademarks
and unfair competition that confusing similarity is to be determined on the basis of visual, aural,
connotative comparisons and overall impressions engendered by the marks in controversy as
they are encountered in the realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property
Code which defines infringement as the colorable imitation of a registered mark xxx or a dominant
feature thereof.
Applying the dominancy test, the Court finds that respondents use of the Big Mak mark results in
likelihood of confusion. First, Big Mak sounds exactly the same as Big Mac. Second, the first word in Big Mak
is exactly the same as the first word in Big Mac. Third, the first two letters in Mak are the same as the first two
letters in Mac. Fourth, the last letter in Mak while a k sounds the same as c when the word Mak is
pronounced. Fifth, in Filipino, the letter k replaces c in spelling, thus Caloocan is spelled Kalookan.
In short, aurally the two marks are the same, with the first word of both marks phonetically the same,
and the second word of both marks also phonetically the same.Visually, the two marks have both two words and
six letters, with the first word of both marks having the same letters and the second word having the same first
two letters. In spelling, considering the Filipino language, even the last letters of both marks are the same.
Clearly, respondents have adopted in Big Mak not only the dominant but also almost all the features of
Big Mac. Applied to the same food product of hamburgers, the two marks will likely result in confusion in the
public mind.
The Court has taken into account the aural effects of the words and letters contained in the marks
in determining the issue of confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et
al.,[66] the Court held:
The following random list of confusingly similar sounds in the matter of trademarks,
culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce our view that
SALONPAS and LIONPAS are confusingly similar in sound: Gold Dust and Gold Drop; Jantzen and
Jass-Sea; Silver Flash and Supper Flash; Cascarete and Celborite; Celluloid and Cellonite;
Chartreuse and Charseurs; Cutex and Cuticlean; Hebe and Meje; Kotex and Femetex; Zuso and
Hoo Hoo. Leon Amdur, in his book Trade-Mark Law and Practice, pp. 419-421, cities, as
49
coming within the purview of the idem sonans rule, Yusea and U-C-A, Steinway Pianos and
Steinberg Pianos, and Seven-Up and Lemon-Up. In Co Tiong vs. Director of Patents, this Court
unequivocally said that Celdura and Cordura are confusingly similar in sound; this Court held in
Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name Lusolin is an infringement of the trademark
Sapolin, as the sound of the two names is almost the same. (Emphasis supplied)
Certainly, Big Mac and Big Mak for hamburgers create even greater confusion, not only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big Mak by their sound. When one hears a Big Mac or
Big Mak hamburger advertisement over the radio, one would not know whether the Mac or Mak ends with a c or
a k.
Petitioners aggressive promotion of the Big Mac mark, as borne by their advertisement expenses, has built
goodwill and reputation for such mark making it one of the easily recognizable marks in the market today.
This increases the likelihood that consumers will mistakenly associate petitioners hamburgers and business with
those of respondents.
Respondents inability to explain sufficiently how and why they came to choose Big Mak for their hamburger
sandwiches indicates their intent to imitate petitioners Big Mac mark. Contrary to the Court of Appeals finding,
respondents claim that their Big Mak mark was inspired by the first names of respondent Dys mother (Maxima)
and father (Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at a more creative
choice for a corporate name by using the names of his parents, especially since he was allegedly
driven by sentimental reasons. For one, he could have put his fathers name ahead of his mothers,
as is usually done in this patriarchal society, and derived letters from said names in that order.Or,
he could have taken an equal number of letters (i.e., two) from each name, as is the more usual
thing done. Surely, the more plausible reason behind Respondents choice of the word M[ak],
especially when taken in conjunction with the word B[ig], was their intent to take advantage of
Petitioners xxx B[ig] M[ac] trademark, with their alleged sentiment-focused explanation merely
thought of as a convenient, albeit unavailing, excuse or defense for such an unfair choice of
name.[67]
Absent proof that respondents adoption of the Big Mak mark was due to honest mistake or was
fortuitous,[68] the inescapable conclusion is that respondents adopted the Big Mak mark to ride on the coattails of
the more established Big Mac mark.[69] This saves respondents much of the expense in advertising to create
market recognition of their mark and hamburgers.[70]
Thus, we hold that confusion is likely to result in the public mind. We sustain petitioners claim of
trademark infringement.
On the Lack of Proof of

Actual Confusion
Petitioners failure to present proof of actual confusion does not negate their claim of trademark infringement. As
noted in American Wire & Cable Co. v. Director of Patents,[71]Section 22 requires the less stringent standard
of likelihood of confusion only. While proof of actual confusion is the best evidence of infringement, its absence
is inconsequential.[72]
On the Issue of Unfair Competition
Section 29 (Section 29)[73] of RA 166 defines unfair competition, thus:

xxxx
Any person who will employ deception or any other means contrary to good faith by which
he shall pass off the goods manufactured by him or in which he deals, or his business, or services
for those of the one having established such goodwill, or who shall commit any acts calculated to
50
produce said result, shall be guilty of unfair competition, and shall be subject to an
action therefor.
In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of goods of
another manufacturer or dealer, either as to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices or words thereon, or in any feature of their
appearance, which would be likely to influence purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public and defraud
another of his legitimate trade, or any subsequent vendor of such goods or any agent
of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to
induce the false belief that such person is offering the services of another who has identified such
services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated to discredit the
goods, business or services of another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the public and defraud a competitor.[74] The confusing
similarity may or may not result from similarity in the marks, but may result from other external factors
in the packaging or presentation of the goods. The intent to deceive and defraud may be inferred from the
similarity of the appearance of the goods as offered for sale to the public.[75] Actual fraudulent intent need not be
shown.[76]
Unfair competition is broader than trademark infringement and includes passing off goods with or
without trademark infringement. Trademark infringement is a form of unfair competition.[77] Trademark
infringement constitutes unfair competition when there is not merely likelihood of confusion, but also actual or
probable deception on the public because of the general appearance of the goods. There can be trademark
infringement without unfair competition as when the infringer discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being deceived that the goods originate from the
trademark owner.[78]
To support their claim of unfair competition, petitioners allege that respondents fraudulently passed off
their hamburgers as Big Mac hamburgers. Petitioners add that respondents fraudulent intent can be inferred
from the similarity of the marks in question.[79]
Passing off (or palming off) takes place where the defendant, by imitative devices on the general
appearance of the goods, misleads prospective purchasers into buying his merchandise under the impression
that they are buying that of his competitors.[80] Thus, the defendant gives his goods the general appearance of the
goods of his competitor with the intention of deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and respondents in this wise:
The mark B[ig] M[ac] is used by plaintiff McDonalds to identify its double decker
hamburger sandwich. The packaging material is a styrofoam box with the McDonalds logo and
trademark in red with block capital letters printed on it. All letters of the B[ig] M[ac] mark are
also in red and block capital letters. On the other hand, defendants B[ig] M[ak] script print is
in orange with only the letter B and M being capitalized and the packaging material is plastic
wrapper. xxxx Further, plaintiffs logo and mascot are the umbrella M and Ronald
McDonalds, respectively, compared to the mascot of defendant Corporation which is a chubby
boy called Macky displayed or printed between the words Big and Mak.[81] (Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not give their hamburgers the general
appearance of petitioners Big Mac hamburgers.
The dissimilarities in the packaging are minor compared to the stark similarities in the words that give respondents Big Mak
hamburgers the general appearance of petitioners Big Mac hamburgers. Section 29(a) expressly provides that the similarity
51
in the general appearance of the goods may be in the devices or words used on the wrappings. Respondents have applied
on their plastic wrappers and bags almost the same words that petitioners use on their styrofoam box. What attracts the
attention of the buying public are the words Big Mak which are almost the same, aurally and visually, as the words Big
Mac. The dissimilarities in the material and other devices are insignificant compared to the glaring similarity in the words
used in the wrappings.
Section 29(a) also provides that the defendant gives his goods the general appearance of goods of
another manufacturer. Respondents goods are hamburgers which are also the goods of petitioners. If
respondents sold egg sandwiches only instead of hamburger sandwiches, their use of the Big Mak mark would
not give their goods the general appearance of petitioners Big Mac hamburgers. In such case, there is only
trademark infringement but no unfair competition. However, since respondents chose to apply the Big Mak mark
on hamburgers, just like petitioners use of the Big Mac mark on hamburgers, respondents have obviously clothed
their goods with the general appearance of petitioners goods.
Moreover, there is no notice to the public that the Big Mak hamburgers are products of L.C. Big Mak Burger,
Inc. Respondents introduced during the trial plastic wrappers and bags with the words L.C. Big Mak Burger, Inc. to
inform the public of the name of the seller of the hamburgers. However, petitioners introduced during the injunctive
hearings plastic wrappers and bags with the Big Mak mark without the name L.C. Big Mak Burger, Inc. Respondents
belated presentation of plastic wrappers and bags bearing the name of L.C. Big Mak Burger, Inc. as the seller of the
hamburgers is an after-thought designed to exculpate them from their unfair business conduct. As earlier stated, we
cannot consider respondents evidence since petitioners complaint was based on facts existing before and during the
injunctive hearings.
Thus, there is actually no notice to the public that the Big Mak hamburgers are products of L.C. Big Mak
Burger, Inc. and not those of petitioners who have the exclusive right to the Big Mac mark. This clearly shows
respondents intent to deceive the public. Had respondents placed a notice on their plastic wrappers and bags
that the hamburgers are sold by L.C. Big Mak Burger, Inc., then they could validly claim that they did not intend to
deceive the public. In such case, there is only trademark infringement but no unfair competition.[82] Respondents,
however, did not give such notice. We hold that as found by the RTC, respondent corporation is liable for unfair
competition.
The Remedies Available to Petitioners
Under Section 23[83] (Section 23) in relation to Section 29 of RA 166, a plaintiff who successfully maintains trademark
infringement and unfair competition claims is entitled to injunctive and monetary reliefs. Here, the RTC did not
err in issuing the injunctive writ of 16 August 1990 (made permanent in its Decision of 5 September 1994) and in
ordering the payment of P400,000 actual damages in favor of petitioners. The injunctive writ is indispensable to
prevent further acts of infringement by respondent corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent corporations gross sales for three (1988-1989 and 1991) of the six
years (1984-1990) respondents have used the Big Mak mark.[84]
The RTC also did not err in awarding exemplary damages by way of correction for the public good[85] in
view of the finding of unfair competition where intent to deceive the public is essential. The award of attorneys
fees and expenses of litigation is also in order.[86]
WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision dated 26 November 1999 of the
Court of Appeals and its Resolution dated 11 July 2000 and REINSTATE the Decision dated 5 September 1994 of
the Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.

The Republic's Complaint For Cancellation of Title

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The Republic's Complaint For Cancellation of Title

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1

The Factual Antecedents

The Republic's Complaint for Cancellation of Title

NOVAI's Answer to the Complaint

The RTC's decision

The CA's decision

resolution;[16] hence, this petition.

In support of its petition, NOVAI raises the following arguments:

The Republic's Comment to the Petition

On the petition's substance, the Republic counters that:

A. In the filing of the present petition before this Court

B. On BCD A's Intervention

II. Substantive Issues

141, suspend their concession or disposition.

To summarize our discussion:

1. Proclamation No. 750 issued on July 1, 1991;[52]

9. Proclamation No. 804 issued on September 30, 1991;[60]

September 30, 2005

The facts follow.

Hence, this petition for review centered on the following issues:

Such a sale is inexistent and cannot be considered consummated.

THE CITY GOVERNMENT OF G.R. No. 180206

We shall first dispose of the elemental issue of the NCIPs jurisdiction.

a. Cases involving disputes and controversies over ancestral lands/domains of ICCs/IPs;

(2) Original Jurisdiction of the Regional Hearing Officer:

a. Cases affecting property rights, claims of ownership, hereditary succession, and

(3) Exclusive and Original Jurisdiction of the Commission:

a. Petition for cancellation of Certificate of Ancestral Domain Titles/Certificate of Ancestral

b) To administer oaths, summon the parties to a controversy, issue subpoenas requiring

MARGARITA SEMON DONG-E, Promulgated:

Carried this 23rd day of June 1998.[28]

Ruling of the Regional Trial Court[31]

The dispositive portion of the trial courts Decision reads:

(3) To pay [respondent] attorneys fees in the amount of P10,000.00; and

(4) To pay the costs of suit.

Ruling of the Court of Appeals[39]

The petitioners present the following issues for our consideration:

2. Whether petitioners have acquired the subject property by prescription;

Whether the appellate court disregarded material facts and

Whether petitioners have acquired the subject property by prescription

Whether the ancestral land claim pending before the National

Likewise apropos is the following explanation:

PHILIPPINE ECONOMIC ZONE AUTHORITY,

JOSEPH JUDE CARANTES, ROSE CARANTES, and all

SECTION 301. Building Permits

MCDONALDS CORPORATION and G.R. No. 143993

L.C. BIG MAK BURGER, INC.,

Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic corporation, is McDonalds

The Trial Courts Ruling

The answer is in the affirmative. xxxx

The dispositive portion of the RTC Decision provides:

WHEREFORE, judgment is rendered in favor of plaintiffs McDonalds Corporation and

Respondents appealed to the Court of Appeals.

The Ruling of the Court of Appeals

In the case at bar, We find no sufficient evidence adduced by plaintiffs-appellees that

Hence, this petition for review.

Petitioners raise the following grounds for their petition:

B. As a trademark, respondents Big Mak is undeniably and unquestionably similar to

The issues are:

The Courts Ruling

The petition has merit.

On Whether the Questions Raised in the Petition are

On the Manner Respondents Used