National Economy and Patrimony.pdf

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento NATIONAL ECONOMY and PATRIMONY LEE HONG KOK v. DAVID 18 SCRA 372 Facts:

Petitioners filed a complaint to have the Torrens title of David over a parcel of land declared null and void. The lower court and the Court of appeals both ruled in favor of David and dismissed the complaint. The CA rejected petitioners' claim of ownership through accretion on the basis of their factual claims. It appears that David acquired lawful title to the land in question pursuant to his miscellaneous sales application in accordance with which an order of award and issuance of sales patent was made by the Director of Lands. Petitioners did not put up any opposition or adverse claim during all the proceedings in connection with the application of David up to the issuance of sales patent in his favor. Issue: Whether or not the title is null and void? Held: The SC ruled that A grant by the government through the appropriate public officials exercising the competence duly vested in them by law is not to be set at naught on the premise, unexpressed but implied, that land not otherwise passing into private ownership may not be disposed of by the state. Moreover, the fact that since the filing of the sales application of Aniano David and during all the proceedings in connection with said application, up to the actual issuance of the sales patent in his favor, the plaintiffsappellants did not put up any opposition or adverse claim thereto is fatal to them because after the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein.... Under Section 38 of Act 496 any question concerning the validity of the certificate of title based on fraud should be raised within one year from the date of the issuance of the patent. Thereafter the certificate of title based thereon becomes indefeasible. Lastly, it was stated by the SC that Only the Government, represented by the Director of Lands, or the Secretary of Agriculture and Natural Resources, can bring an action to cancel a void certificate of title issued pursuant to a void patent. The petition was dismissed. DIRECTOR OF LANDS v. IAC and J. ANTONIO ARANETA 219 SCRA 339 Facts: The subject land of this application for registration is TAMBAC ISLAND, Lingayen Gulf situated in Bani, Pangasinan. The original application was filed for Pacific Farms Inc. The Republic of the Philippines, thru the Director of Lands opposed the application alleging that the applicant, Pacific Farms, Inc. does not possess a fee simple title to the land nor did its predecessors possess the land for at least thirty (30) years immediately preceding the filing of application. The opposition likewise specifically alleged that the applicant is a private corporation disqualified under the (1973) new Philippine Constitution from acquiring alienable lands of the public domain citing Section 11, Article 14. The Director of Forest Development also entered its opposition alleging that the land is within the unclassified public land and, hence, inalienable. Other private parties also filed their oppositions, but were subsequently withdrawn.the applicant is a private corporation disqualified under the (1973) new Philippine Constitution from acquiring alienable lands of the public domain citing Section 11, Article 14. THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

In an amended application, Pacific Farms, Inc. filed a manifestation-motion to change the applicant from Pacific Farms, Inc. to J. Antonio Araneta. On October 4, 1979, the trial court rendered a decision adjudicating the subject property to J. Antonio Araneta. On appeal to the then Intermediate Appellate Court, the decision of the lower court was affirmed on December 12, 1985. Issue: Whether or not Tambac Island can be subject to registration? Held: NO. Lands of the public domain are classified under three main categories, namely: Mineral, Forest and Disposable or Alienable Lands. Under the Commonwealth Constitution, only agricultural lands were allowed to be alienated. Their disposition was provided for under Commonwealth Act No. 141 (Secs. 6-7), which states that it is only the President, upon the recommendation of the proper department head, who has the authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands. Mineral and Timber or forest lands are not subject to private ownership unless they are first reclassified as agricultural lands and so released for alienation. In the absence of such classification, the land remains as unclassified land until released therefrom and rendered open to disposition. Courts have no authority to do so. This is in consonance with the Regalian doctrine that all lands of the public domain belong to the State, and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony. Under the Regalian Doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. Hence, a positive act of the government is needed to declassify a forest land into alienable or disposable land for agricultural or other purposes. The burden of proof in overcoming the presumption of state ownership of the lands of the public domain is on the person applying for registration that the land subject of the application is alienable or disposable. Unless the applicant succeeds in showing by convincing evidence that the property involved was acquired by him or his ancestors either by composition title from the Spanish Government or by possessory information title, or any other means for the proper acquisition of public lands, the property must be held to be part of the public domain. The applicant must present evidence and persuasive proof to substantiate his claim. Since the subject property is still unclassified, whatever possession the applicant may have had and however long, cannot ripen into private ownership. The conversion of subject property does not automatically render the property as alienable and disposable. In effect what the courts a quo have done is to release the subject property from the unclassified category, which is beyond their competence and jurisdiction. We reiterate that the classification of public lands is an exclusive prerogative of the Executive Department of the Government and not of the Courts. In the absence of such classification, the land remains unclassified until released therefrom and rendered open to disposition. TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILIPPINES AND GMA NETWORK, INC. v. COMELEC 289 SCRA 337 Facts: In Osmeña v. COMELEC, we upheld the validity of § 11(b) of R.A. No. 6646 which prohibits the sale or donation of print space or air time for political ads, except to the Commission on Elections under §90, of B.P. No. 881, the Omnibus Election Code, with respect to print media, and §92, with respect to broadcast media. Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. is an organization of lawyers of radio and television broadcasting companies. Petitioner, 1

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento GMA Network, Inc., operates radio and television broadcasting stations throughout the Philippines under a franchise granted by Congress. Petitioners challenge the validity of §92 on the ground (1) that it takes property without due process of law and without just compensation; (2) that it denies radio and television broadcast companies the equal protection of the laws; and (3) that it is in excess of the power given to the COMELEC to supervise or regulate the operation of media of communication or information during the period of election. Issue:

Whether Sec. 92 is valid?

Held:

Sec. 92. Comelec time. — The commission shall procure radio and television time to be known as "Comelec Time" which shall be allocated equally and impartially among the candidates within the area of coverage of all radio and television stations. For this purpose, the franchise of all radio broadcasting and television stations are hereby amended so as to provide radio or television time, free of charge, during the period of the campaign. Thus, the law prohibits mass media from selling or donating print space and air time to the candidates and requires the COMELEC instead to procure print space and air time for allocation to the candidates. It will be noted that while §90 of B.P. Blg. 881 requires the COMELEC to procure print space which, as we have held, should be paid for, §92 states that air time shall be procured by the COMELEC free of charge. Petitioners contend that §92 of BP Blg. 881 violates the due process clause and the eminent domain provision of the Constitution by taking air time from radio and television broadcasting stations without payment of just compensation. Petitioners claim that the primary source of revenue of the radio and television stations is the sale of air time to advertisers and that to require these stations to provide free air time is to authorize a taking which is not "a de minimis temporary limitation or restraint upon the use of private property." According to petitioners, it stands to lose P58,980,850.00 in view of COMELEC'S requirement that radio and television stations provide at least 30 minutes of prime time daily for the COMELEC Time. Petitioners' argument is without merit. All broadcasting, whether by radio or by television stations, is licensed by the government. A franchise is thus a privilege subject, among other things, to amended by Congress in accordance with the constitutional provision that "any such franchise or right granted shall be subject to amendment, alteration or repeal by the Congress when the common good so requires." Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and television broadcast stations and, until the present case was brought, such provisions had not been thought of as taking property without just compensation. What better measure can be conceived for the common good than one for free air time for the benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully informed of the issues in an election? "[I]t is the right of the viewers and listeners, not the right of the broadcasters, which is paramount." In truth, radio and television broadcasting companies, which are given franchises, do not own the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the temporary privilege of using them. DISSENTING: Romero: Section 92 of BP 881, insofar as it requires radio and television stations to provide Comelec with radio and television time free of charge is a flagrant violation of the constitutional mandate that private property shall not be taken for public use without just compensation. While it is inherent in the State, the sovereign right to appropriate property has never been understood to include taking property for public purposes without the duty and responsibility of ordering compensation to the individual whose property has THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

been sacrificed for the good of the community. Apparently, Sec. 92 of BP 881 justices such taking under the guise of police power regulation which cannot be validly done. Police power must be distinguished from the power of eminent domain. In the exercise of police power, there is a restriction of property interest to promote public welfare or interest which involves no compensable taking. When the power of eminent domain, however, is exercised, property interest is appropriated and applied to some public purpose, necessitating compensation therefor. Traditional distinctions between police power and the power of eminent domain precluded application of both powers at the same time in the same subject. To the extent however that Sec 92 of BP 881 mandates that airtime be provided free of charge to respondent Comelec to be allocated equally among all candidates, the regulation exceeds the limits of police power and should be recognized as a taking. While there is no taking or appropriation of title to, and possession of the expropriated property in the case at bar, there is compensable taking inasmuch as them is a loss of the earnings for the airtime which the petitioner-intervenors are compelled to donate. While no franchises and rights are granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires, 14 this provides no license for government to disregard the cardinal rule that corporations with franchises are as much entitled to due process and equal protection of laws guaranteed under the Constitution. Panganiban:

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The State does not own the airwaves and broadcast frequencies. It merely allocates, supervises and regulates their proper use. Thus, other than collecting supervision or regulatory fees which it already does, it cannot exact any onerous and unreasonable post facto burdens from the franchise holders, without due process and just compensation. Moreover, the invocation of the "common good" does not excuse the unbridled and clearly excessive taking of a franchisee's property. Assuming arguendo that the State owns the air lanes, the broadcasting companies already pay rental fees to the government for their use. Hence, the seizure of air time cannot be justified by the theory of compensation. 3. Airwaves and frequencies alone, without the radio and television owner's humongous investments amounting to billions of pesos, cannot be utilized for broadcasting purposes. Hence, a forced donation of broadcast time is in actual fact a taking of such investments without due process and without payment of just compensation. I must point out that even Respondent Comelec expressly recognizes the need for just compensation. Thus, Section 2 of its Resolution No. 2983-A states that "[e]very radio broadcasting and television station operating under franchise shall grant the Commission, upon payment of just compensation, at least thirty (30) minutes of prime time daily to be known as 'Comelec Time' . . ." And yet, even with such a judicious legal position taken by the very agency tasked by the Constitution to administer elections, the majority still insists on an arbitrary seizure of precious property produced and owned by private enterprise.

To sum up, the Bill of Rights of our Constitution expressly guarantees the following rights: 1. No person, whether rich or poor, shall be deprived of property without due process; 2. Such property shall not be taken by the government, even for the use of the general public, without first paying just compensation to the owner; 3. No one, regardless of social or financial status, shall be denied equal protection of the law. The majority, however, peremptorily brushes aside all these sacred guarantees and prefers to rely on the nebulous legal theory that broadcast stations are mere recipients of state-granted franchises which 2

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento can be altered or withdrawn anytime or otherwise burdened with post facto elephantine yokes. REPUBLIC v. COURT OF APPEALS AND BERNABE 148 SCRA 480 Facts: Emilio Bernabe and members of his family (the Bernabes) filed a claim for Lot No. 622 in the Mariveles Cadastral Court. They alleged that they acquired ownership over Lot No. 622 by their open, continuous, exclusive and notorious possession of said land. (Note: Lot No. 622 is approximately 400,000 sq. m.) Before the war, the SC issued a ruling denying the claim of the Bernabes and declared that the lot was part of public land. However in 1965, the said lot was reclassified as agricultural land through a proclamation by the Bureau of Forestry. In 1967 the Bernabes filed a petition in the CFI of Bataan to reopen the case. They re-asserted the fact that they had been in continuous possession of the lot for more than 30 years. They sought for registration of the lot in their names as owners. In 1968, the trial court ruled in favor of the Bernabes and granted them ownership of the land. The Court ordered the issuance of registration decrees in favor of the Bernabes. In 1969, the Commissioner of Land Registration issued the corresponding registration decrees to the Bernabes. The Bernabes then conveyed portions of the lots to different buyers. In 1970, the Solicitor General in behalf of the Republic of the Phil. filed a petition for review against the decision. The Sol Gen contended that: 1) The Bernabes did not acquire the land by prescription because the lot was public land and became agricultural only when it was reclassified as such in 1965. Thus, in 1967–when the decision was rendered, the Bernabes has only been in open possession for 2 years. This period was way below the required 30-year prescriptive period provided by the Public Land Act. 2) The conveyances made by the Bernabes immediately after the issuance of the registration decrees were fictitious. As such the alleged buyers were not innocent purchasers for value being mere dummies of the Bernabes. The trial court denied the petition. On appeal to the CA, the CA affirmed the decision. The Sol Gen appealed to the SC. Issues: (1) Did the Bernabes acquire the disputed lot through prescription as provided by the Public Land Act? (2) Were the alleged buyers entitled to the land? (3) The Sol Gen claimed that when the case was reopened, he was not given copies of the notices, orders and decision. Was he entitled to such notices? Held: (1) No. First, the SC recognized the case filed by the Bernabes before the war. In the said case, the SC had already ruled that the land was a public land, and was therefore inalienable. By the doctrine of res judicata, the case could not be re-opened. The trial court which reopened the case in 1967 had no jurisdiction to do so. Thus, its decision was null and void. Second, the SC declared that under the Public Land Act only agricultural lands could be the subject of judicial confirmation of title. Forest or public land cannot ripen into private ownership however long the possession. Lot No. 622 was public land until it was reclassified as agricultural in 1965. The start of the 30-year prescriptive period for open and continuous possession started only in 1965. So, in 1967, when the case was reopened, the Bernabes had only been in open THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

possession for less than 2 years. The period of possession pertaining to the time when the land was classified as public cannot be counted since a public land cannot be alienated. For not meeting the required 30-year prescriptive period mandated by the Public Land Act, the Bernabes did not acquire ownership over the said land. (2) No. The SC declared that the buyers were not deemed to be innocent purchasers for value. The said buyers made no verifications as to whether or not the lots they bought were in dispute. Also, the title issued by the Registrar was void, since the decision rendered by the trial court was void. A void title in the hands of an innocent purchaser for value is to be cancelled. Thus the alleged buyers are not entitled to the land. (3) Yes. The Sol Gen was entitled to such notices because the case involved land owned by the Government. Thus notices must be given to the Sol Gen to bind the Government. The Court reversed the decision of the trial court and ordered the cancellation of the certificates of registration previously issued to the Bernabes. REPUBLIC v. IMPERIAL GR No. 130906 February 11, 1999 Facts: On September 12, 1917, the late Elias Imperial was issued Original. Certificate of Title (OCT) 408 (500) pursuant to Decree No. 55173 of the then Court of First Instance of Albay, covering a parcel of land in Legaspi City. The said OCT was further subdivided resulting in the issuance of several titles, which are now the subject of this case, in the name of the defendants. Antonio F. Aguilar, requested that OCT No. 408 (500) be cancelled. Subsequent investigation conducted by the DENR, Region V, Legazpi City, upon the request of the Office of the Solicitor General (OSG) disclosed that OCT No. 408 (500), from where titles of the defendants were derived is null and void, considering that it has the features of a foreshore land. A motion to dismiss was anchored on the following grounds: (a) the lands covered by the defendants' transfer certificate of titles which were derived from OCT No. 408 (500) was already the subject of the cadastral proceedings in 1917 and which has been implemented by the issuance of OCT No. 408 (500) under the Torrens system.It further assailed that the adjudication made by the cadastral court is binding against the whole world including the plaintiff since cadastral proceedings are in rem. Upon hearing the motion, the trial court dismissed the complaint on the ground that the judgment rendered by the cadastral court decreed that the parcel of land covered by OCT No. 408 was not foreshore and that the 1917 cadastral proceeding was binding upon the government, which had initiated the same and had been an active and direct participant thereon. The court further considered as forum shopping petitioner's attempt to seek a favorable opinion after it was declared in related cases questioning the title of a certain Jose Baritua, which was also derived from OCT NO. 408(500), that the land in question was not a foreshore land. Petitioner filed an appeal to the Court of Appeals. CA dismissed the case for failure to file the appellant's brief within the extended period. Issue: Whether the parcels of land in question are foreshore lands. Held: Foreshore land is a part of the alienable land of the public domain and may be disposed of only by lease and not otherwise. The classification of public lands is a function of the executive branch of government, specifically the director of lands (now the director of the Lands Management Bureau). The decision of the director of lands when approved 3

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento by the Secretary of the DENR as to questions of fact is conclusive upon the court. The principle behind this ruling is that the subject has been exhaustively weighed and discussed and must therefore be given credit. This doctrine finds no application, however, when the decision of the director of lands is revoked by, or in conflict with that of, the DENR Secretary. There is allegedly a conflict between the findings of the Director of Lands and the DENR, Region V, in the present case. Respondents contend that the Director of Lands found Jose Baritua's land covered by TCT No.18655, which stemmed from OCT 408(500), to be "definitely outside of the foreshore area." 23 Petitioner, on the other hand, claims that subsequent investigation of the DENR, Region V, Legazpi City, disclosed that the land covered by OCT No. 408 (500) from whence the titles were derived "has the features of a foreshore land." 24 The contradictory views of the Director of Lands and the DENR, Region V, Legazpi City, on the true nature of the land, which contradiction was neither discussed nor resolved by the RTC, cannot be the premise of any conclusive classification of the land involved. The need, therefore, to determine once and for all whether the lands subject of petitioner's reversion efforts are foreshore lands constitutes good and sufficient cause for relaxing procedural rules and granting the third and fourth motions for extension to file appellant's brief. Petitioner's appeal presents an exceptional circumstance impressed with public interest and must then be given due course. Hence, the case was remanded to the CA for further proceedings. ONG CHING PO v. COURT OF APPEALS 239 SCRA 341 Facts: On July 23, 1947, Ong Joi Jong sold a parcel of land located at Fundidor Street, San Nicolas to private respondent Soledad Parian, the wife of Ong Yee. The latter, the brother of petitioner Ong Ching Po, died in January 1983; while petitioner Ong Ching Po died in October 1986. The said sale was evidenced by a notarized Deed of Sale written in English. Subsequently, the document was registered with the Register of Deeds. According to private respondent, she entrusted the administration of the lot and building to petitioner Ong Ching Po when she and her husband settled in Iloilo. When her husband died, she demanded that the lot be vacated because she was going to sell it. Unfortunately, petitioners refused to vacate the said premises. respondent filed a case for unlawful detainer against petitioner Ong Ching Po. Petitioners, on the other hand, claimed that on July 23, 1946, petitioner Ong Ching Po bought the said parcel of land from Ong Joi Jong. The sale was evidenced by a photo copy of a Deed of Sale written in Chinese. On December 6, 1983, petitioner Ong Ching Po executed a Deed of Absolute Sale conveying to his children the same property sold by Ong Joi Jong to private respondent in 1947. On December 12 1985, petitioners filed an action for reconveyance and damages against private respondent. On July 26, 1986, private respondent filed an action for quieting of title against petitioners. On May 30 1990, the trial court rendered a decision in favor of private respondent. On appeal by petitioners to the Court of Appeals, the said court affirmed the decision of the Regional Trial Court. Issue: Whether or not Ong Ching Po acquired ownership of the land? Held: No. Being an alien he was disqualified to own real property in the Philippines. The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or conveyed only to individuals or entities "qualified to acquire lands of the public domain. The 1935 Constitution reserved the right to participate in the "disposition, exploitation, development and utilization" of all "lands of the public domain and other natural THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

resources of the Philippines" for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands. The deed of sale executed by Ong Joi Jong in favor of private respondent is a notarized document. It is not correct to say that private respondent never took possession of the property. Under the law, possession is transferred to the vendee by virtue of the notarized deed of conveyance. Under Article 1498 of the Civil Code of the Philippines, "when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. There is no document showing the establishment of an express trust by petitioner Ong Ching Po as trustor and private respondent as trustee. The oral testimony to prove the existence of the express trust will not suffice. Under Article 1443 of the Civil Code of the Philippines, "No express trust concerning an immovable or any interest therein may be proved by parole evidence." FRANCISCO BAGUIO v. REPUBLIC OF THE PHILIPPINES, RICARDO T. MICHAEL, in his capacity as Heir-Successor of WILLIAM MICHAEL, SR., and as President of MICHAEL SLIPWAYS, INC., and COURT OF APPEALS GR No. 119682 January 21, 1999 Facts:

This is a petition for review of the decision of the CA affirming the decision of the RTCof Mandaue City, nullifying Free Patent No. 7757 and Original Certificate of Title No. 0-15457 issued in the name of petitioner Francisco Baguio.The patent and certificate of title cover a parcel of land, consisting of 5,870 sq. m., in Catarman, Liloan, Cebu. Known as Lot 1426, Case 2, Pls. 823, the land was declared by the government public land in 1963. It is shown that private respondent Ricardo Michael's predecessor-in-interest, William Michael, filed with the Bureau of Lands an application for foreshore lease of the land. Michael was granted a provisional permit to occupy the land for one year. By virtue of said permit, e made some reclamation on the land, built a fence around the premises, and constructed a bridge over a portion which was under water. Upon the expiration of the permit, the Highways District Engineer recommended to the Director of Lands that the land be leased to Michael. On the other hand, the land investigator recommended granting Michael the authority to survey the foreshore land in view of the completion of the reclamation made by him on the premises. Michael filed a miscellaneous sales application covering the reclaimed foreshore land. Petitioner Baguio applied to the Bureau of Lands for a free patent covering the same land. In his application, petitioner stated that the land was agricultural land and not claimed or occupied by any other person and that he had been in actual and continuous possession and cultivation of the same. On the basis of these representations, a free patent was issued to him and, Original Certificate of Title No. 0-15457 was issued in his name by the Register of Deeds of Cebu. Petitioner demanded payment of rentals from William Michael for the use of the land occupied by Michael Slipways Inc.. Petitioner filed an opposition to Michael's miscellaneous sales application covering the land on the ground that he was the registered owner thereof.William Michael in turn protested the issuance by the Bureau of Lands of a free patent to petitioner. He claimed that he had been in actual possession of the land since 1963 and that he had introduced substantial improvements thereon. Upon the recommendation of the Land Management Bureau of the DENR, the government, represented by the Director of Lands, filed a petition for cancellation of title and/or reversion of land against petitioner Baguio and the Register of Deeds of Cebu. The case was filed in the RTC of Mandaue City which granted private respondent Ricardo Michael leave to intervene as heir and successor-in-interest of William Michael and as president of Michael Slipways, Inc. The RTC rendered a decision canceling the free patent and the certificate of title of petitioner Baguio, ordering the reversion of the land to the public domain, and 4

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento declaring private respondent Michael the true and lawful occupant of the land. The trial court ruled that the false statements made by petitioner Baguio in his application for free patent had the effect of ipso facto canceling the free patent and the title of petitioner. Petitioner appealed to the CA, which, affirmed the decision of the RTC. Hence, this petition for review. Issue: Did the CA err in not declaring that respondent Republic of the Philippines’ action was already barred by prescription? (NOTE: Here, the action for reversion was only filed on February 16, 1989 while the free patent and the corresponding OCT was issued in Baguio’s favor on January 10, 1978.) Held: NO. It is true that, once a patent is registered and the corresponding certificate of title is issued, the land covered by them ceases to be part of the public domain and becomes private property, and the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one year from the date of issuance of such patent. However, as held in Director of Lands v. De Luna, even after the lapse of one year, the State may still bring an action under §101 of Commonwealth Act No. 141 for the reversion to the public domain of land which has been fraudulently granted to private individuals. Such action is not barred by prescription, and this is settled law. Indeed, the indefeasibility of a certificate of title cannot be invoked by one who procured the title by means of fraud. Public policy demands that one who obtains title to public land through fraud should not be allowed to benefit therefrom. HEIRS OF WILSON P. GAMBOA v. TEVES 682 SCRA 397 (2012) Facts: This is a petition to nullify the sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC) by the government of the Republic of the Philippines, acting through the Inter-Agency Privatization Council (IPC), to Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate of First Pacific Company Limited (First Pacific), a Hong Kong-based investment management and holding company and a shareholder of the Philippine Long Distance Telephone Company (PLDT). The petitioner questioned the sale on the ground that it also involved an indirect sale of 12 million shares (or about 6.3 percent of the outstanding common shares) of PLDT owned by PTIC to First Pacific. With the this sale, First Pacific’s common shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing the total common shareholdings of foreigners in PLDT to about 81.47%. This, according to the petitioner, violates Section 11, Article XII of the 1987 Philippine Constitution which limits foreign ownership of the capital of a public utility to not more than 40%, thus: Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. (Emphasis supplied)

THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

Issue: Does the term “capital” in Section 11, Article XII of the Constitution refer to the total common shares only, or to the total outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility? Held: [The Court partly granted the petition and held that the term “capital” in Section 11, Article XII of the Constitution refers only to shares of stock entitled to vote in the election of directors of a public utility, i.e., to the total common shares in PLDT.] Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have no voting rights, the term “capital” in Section 11, Article XII of the Constitution refers only to common shares. However, if the preferred shares also have the right to vote in the election of directors, then the term “capital” shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term “capital” in Section 11, Article XII of the Constitution refers only to shares of stock that can vote in the election of directors. To construe broadly the term “capital” as the total outstanding capital stock, including both common and non-voting preferred shares, grossly contravenes the intent and letter of the Constitution that the “State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.” A broad definition unjustifiably disregards who owns the all-important voting stock, which necessarily equates to control of the public utility. Holders of PLDT preferred shares are explicitly denied of the right to vote in the election of directors. PLDT’s Articles of Incorporation expressly state that “the holders of Serial Preferred Stock shall not be entitled to vote at any meeting of the stockholders for the election of directors or for any other purpose or otherwise participate in any action taken by the corporation or its stockholders, or to receive notice of any meeting of stockholders.” On the other hand, holders of common shares are granted the exclusive right to vote in the election of directors. PLDT’s Articles of Incorporation state that “each holder of Common Capital Stock shall have one vote in respect of each share of such stock held by him on all matters voted upon by the stockholders, and the holders of Common Capital Stock shall have the exclusive right to vote for the election of directors and for all other purposes.” It must be stressed, and respondents do not dispute, that foreigners hold a majority of the common shares of PLDT. In fact, based on PLDT’s 2010 General Information Sheet (GIS), which is a document required to be submitted annually to the Securities and Exchange Commission, foreigners hold 120,046,690 common shares of PLDT whereas Filipinos hold only 66,750,622 common shares. In other words, foreigners hold 64.27% of the total number of PLDT’s common shares, while Filipinos hold only 35.73%. Since holding a majority of the common shares equates to control, it is clear that foreigners exercise control over PLDT. Such amount of control unmistakably exceeds the allowable 40 percent limit on foreign ownership of public utilities expressly mandated in Section 11, Article XII of the Constitution. As shown in PLDT’s 2010 GIS, as submitted to the SEC, the par value of PLDT common shares is P5.00 per share, whereas the par value of preferred shares is P10.00 per share. In other words, preferred shares have twice the par value of common shares but cannot elect directors and have only 1/70 of the dividends of common shares. Moreover, 99.44% of the preferred shares are owned by Filipinos while foreigners own only a minuscule 0.56% of the preferred shares. Worse, preferred shares constitute 77.85% of the authorized capital stock of PLDT while common shares constitute only 22.15%. This undeniably shows that beneficial interest in PLDT is not with the non-voting preferred shares but with the common shares, blatantly violating the constitutional requirement of 60 percent Filipino control and Filipino beneficial ownership in a public utility. In short, Filipinos hold less than 60 percent of the voting stock, and earn less than 60 percent of the dividends, of PLDT. This directly contravenes the express command 5

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento in Section 11, Article XII of the Constitution that “[n]o franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to x x x corporations x x x organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens x x x.” To repeat, (1) foreigners own 64.27% of the common shares of PLDT, which class of shares exercises the sole right to vote in the election of directors, and thus exercise control over PLDT; (2) Filipinos own only 35.73% of PLDT’s common shares, constituting a minority of the voting stock, and thus do not exercise control over PLDT; (3) preferred shares, 99.44% owned by Filipinos, have no voting rights; (4) preferred shares earn only 1/70 of the dividends that common shares earn; (5) preferred shares have twice the par value of common shares; and (6) preferred shares constitute 77.85% of the authorized capital stock of PLDT and common shares only 22.15%. This kind of ownership and control of a public utility is a mockery of the Constitution. [Thus, the Respondent Chairperson of the Securities and Exchange Commission was DIRECTED by the Court to apply the foregoing definition of the term “capital” in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law.] BANK OF COMMERCE v. PLANTERS DEVELOPMENT BANK 681 SCRA 52 Facts: The Rizal Commercial Banking Corporation (RCBC) was the registered owner of seven Central Bank (CB) bills with a total face value of P70 million, issued on January 2, 1994 and would mature on January 2, 1995. As evidenced by a “Detached Assignment” dated April 8, 1994, the RCBC sold these CB bills to the BOC. As evidenced by another “Detached Assignment” of even date, the BOC, in turn, sold these CB bills to the PDB. The BOC delivered the Detached Assignments to the PDB. On April 15, 1994 (April 15 transaction), the PDB, in turn, sold to the BOC Treasury Bills worth P70 million, with maturity date of June 29, 1994, as evidenced by a Trading Order and a Confirmation of Sale. However, instead of delivering the Treasury Bills, the PDB delivered the seven CB bills to the BOC, as evidenced by a PDB Security Delivery Receipt, bearing a “note: ** substitution in lieu of 06-29-94” – referring to the Treasury Bills.10 Nevertheless, the PDB retained possession of the Detached Assignments. It is basically the nature of this April 15 transaction that the PDB and the BOC cannot agree on. On April 20, 1994, according to the BOC, it “sold back”11 to the PDB three of the seven CB bills. In turn, the PDB transferred these three CB bills to Bancapital Development Corporation (Bancap). On April 25, 1994, the BOC bought the three CB bills from Bancap – so, ultimately, the BOC reacquired these three CB bills. On April 20, 1994, the BOC sold the remaining four (4) CB bills to Capital One Equities Corporation13 which transferred them to All-Asia Capital and Trust Corporation (All Asia). On September 30, 1994, All Asia further transferred the four CB bills back to the RCBC. On November 16, 1994, the RCBC sold back to All Asia one of these 4 CB bills. When the BSP refused to release the amount of this CB bill on maturity, the BOC purchased from All Asia this lone CB bill. As the registered owner of the remaining three CB bills, the RCBC sold them to IVI Capital and Insular Savings Bank. Again, when the BSP refused to release the amount of this CB bill on maturity, the RCBC paid back its transferees, reacquired these three CB bills and sold them to the BOC – ultimately, the BOC acquired these three CB bills. All in all, the BOC acquired the first set of seven CB bills. On April 19, 1994, the RCBC, as registered owner, (i) sold two CB bills with a total face value of P20 million to the PDB and (ii) delivered to the PDB the corresponding Detached Assignment. THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

On even date, the PDB delivered to Bancap the two CB bills18 (April 19 transaction). In turn, Bancap sold the CB bills to Al-Amanah Islamic Investment Bank of the Philippines, which in turn sold it to the BOC. On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB informed20 the Officer-in-Charge of the BSP’s Government Securities Department,21 Lagrimas Nuqui, of the PDB’s claim over these CB bills, based on the Detached Assignments in its possession. The PDB requested the BSP22 to record its claim in the BSP’s books, explaining that its non-possession of the CB bills is “on account of imperfect negotiations thereof and/or subsequent setoff or transfer.” Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations Governing Open Market Operations, Stabilization of the Securities Market, Issue, Servicing and Redemption of the Public Debt) which requires the presentation of the bond before a registered bond may be transferred on the books of the BSP. In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not “asking for the transfer of the CB Bills…. [rather] it [intends] to put the [BSP] on formal notice that whoever is in possession of said bills is not a holder in due course,” and, therefore the BSP should not make payment upon the presentation of the CB bills on maturity.26 Nuqui responded that the BSP was “not in a position at [that] point in time to determine who is and who is not the holder in due course [since it] is not privy to all acts and time involving the transfers or negotiation” of the CB bills. Nuqui added that the BSP’s action shall be governed by CB Circular No. 28, as amended. On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita that (i) a notation in the BSP’s books be made against the transfer, exchange, or payment of the bonds and the payment of interest thereon; and (ii) the presenter of the bonds upon maturity be required to submit proof as a holder in due course (of the first set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28. In light of these BSP responses and the impending maturity of the CB bills, the PDB filed29 with the RTC two separate petitions for Mandamus, Prohibition and Injunction with prayer for Preliminary Injunction and Temporary Restraining Order, docketed as Civil Case No. 94-3233 (covering the first set of CB bills) and Civil Case 943254 (covering the second set of CB bills) against Nuqui, the BSP and the RCBC. On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying the face value of the CB bills on maturity.32 On January 10, 1995, the PDB filed an Amended Petition, additionally impleading the BOC and All Asia. In a January 13, 1995 Order, the cases were consolidated. On January 17, 1995, the RTC granted the PDB’s application for a writ of preliminary prohibitory injunction. The BOC filed its Answer, praying for the dismissal of the petition. It argued that the PDB has no cause of action against it since the PDB is no longer the owner of the CB bills. Contrary to the PDB’s “warehousing theory,” the BOC asserted that the (i) April 15 transaction and the (ii) April 19 transaction – covering both sets of CB bills - were valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15 transaction) upon the PDB’s delivery of the 1st set of CB bills in substitution of the Treasury Bills the PDB originally intended to sell, and (ii) to Bancap (in the April 19 transaction) upon the PDB’s delivery of the 2nd set of CB bills to Bancap, likewise by way of substitution. On the other hand, the BSP countered that the PDB cannot invoke Section 10 (d) 4 of CB Circular No. 28 because this section applies only to an “owner” and a “person presenting the bond,” of which the PDB is neither. The PDB has not presented to the BSP any assignment of the subject CB bills, duly recorded in the BSP’s books, in its favor to clothe it with the status of an “owner.” In light of the developments, on May 4, 1998, the RTC required the parties to manifest their intention regarding the case and to inform the court of any amicable settlement; “otherwise, th[e] case shall be dismissed for lack of interest.” Complying with the RTC’s order, the BOC moved (i) that the case be set for pre-trial and (ii) for further proceeding to resolve the remaining issues between the BOC and the PDB, particularly on “who has a better right over the subject CB bills.”55 The PDB joined the BOC in its motion. 6

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTC’s jurisdiction over the BOC’s “additional counterclaims.” The PDB argues that its petitions pray for the BSP (not the RTC) to determine who among the conflicting claimants to the CB bills stands in the position of the bona fide holder for value. The RTC cannot entertain the BOC’s counterclaim, regardless of its nature, because it is the BSP which has jurisdiction to determine who is entitled to receive the proceeds of the CB bills. In a January 10, 2002 Order, the RTC dismissed the PDB’s petition, the BOC’s counterclaim and the BSP’s counter-complaint/cross-claim for interpleader, holding that under CB Circular No. 28, it has no jurisdiction (i) over the BOC’s “counterclaims” and (ii) to resolve the issue of ownership of the CB bills.64 With the denial of their separate motions for reconsideration,65 the BOC and the BSP separately filed the present petitions for review on certiorari. Issue: Whether or not BSP has quasi-judicial powers over a class of cases which does not include the adjudication of ownership of the CB bills in question? Held:

The BSP is not simply a corporate entity but qualifies as an administrative agency created, pursuant to constitutional mandate,100 to carry out a particular governmental function.101 To be able to perform its role as central monetary authority, the Constitution granted it fiscal and administrative autonomy. In general, administrative agencies exercise powers and/or functions which may be characterized as administrative, investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of these five, as may be conferred by the Constitution or by statute. While the very nature of an administrative agency and the raison d'être for its creation103 and proliferation dictate a grant of quasi-judicial power to it, the matters over which it may exercise this power must find sufficient anchorage on its enabling law, either by express provision or by necessary implication. Once found, the quasi-judicial power partakes of the nature of a limited and special jurisdiction, that is, to hear and determine a class of cases within its peculiar competence and expertise. In other words, the provisions of the enabling statute are the yardsticks by which the Court would measure the quantum of quasi-judicial powers an administrative agency may exercise, as defined in the enabling act of such agency. The primary objective of the BSP is to maintain price stability. The BSP has a number of monetary policy instruments at its disposal to promote price stability. To increase or reduce liquidity in the financial system, the BSP uses open market operations, among others. Open market operation is a monetary tool where the BSP publicly buys or sells government securities from (or to) banks and financial institutions in order to expand or contract the supply of money. By controlling the money supply, the BSP is able to exert some influence on the prices of goods and services and achieve its inflation objectives. While R.A. No. 7653 empowers the BSP to conduct administrative hearings and render judgment for or against an entity under its supervisory and regulatory powers and even authorizes the BSP Governor to “render decisions, or rulings x x x on matters regarding application or enforcement of laws pertaining to institutions supervised by the [BSP] and laws pertaining to quasi-banks, as well as regulations, policies or instructions issued by the Monetary Board,” it is precisely the text of the BSP’s own regulation (whose validity is not here raised as an issue) that points to the BSP’s limited role in case of an allegedly fraudulent assignment to simply (i) issuing and circularizing a ‘“stop order” against the transfer, exchange, redemption of the certificate of indebtedness, including the payment of interest coupons, and (ii) withholding action on the certificate. In other words, the grant of quasi-judicial authority to the BSP cannot possibly extend to situations which do not call for the exercise by the BSP of its supervisory or regulatory functions over entities within its jurisdiction. The fact alone that the parties involved are banking institutions does not necessarily call for the exercise by the BSP of its quasi-judicial powers under the law. THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

BAGONG KAPISANAN v. DOLOT 680 SCRA 164 Facts: A memorandum of Agreement signed by two barangays - Barangay 901, represented by Bgy. Chairman Azer Dolot, and Barangay 92, represented by Bgy Chairman Silverio Tañada and Inpart Engineering, represented by Antonio Benzon. The MOA was formulated to address the repair and rehabilitation of the water system of Punta Tenement and to manage the water distribution in the tenement as well as to handle the payment of the back accounts of its tenants to Metropolitan Waterworks and Sewerage System (MWSS). Punta Tenement filed a complaint for dishonesty and corruption before the Office of the Ombudsman against Bgy Chairmen Dolot and Tañada, Benzon and other barangay kagawads. Punta Tenement alleged that herein respondents did not remit to MWSS the agreed barangay share of P0.125 or 50% of P0.25 per 20 liter-container from the cost of water collection paid by the tenement residents which was intended to pay the back account with MWSS as instructed by the MOA. The MWSS back account was said to be around P2,214,792.87 covering the years 2000-2003. The Ombudsman found all the respondents guilty of dishonesty and imposed the penalty of dismissal from the service. The Ombudsman found that Inpart was already reneging on its MOA obligation as early as 1999, but the respondents failed to act on the problem. It opined that the respondents, at that point, should have noticed that the funds intended for the MWSS back account were not being remitted by Inpart and should have resolved it. They, however, chose to ignore it. It also found the authority of Dolot and Tañada to appoint aguadores, or those who would collect water payments, questionable. The respondents filed a motion for reconsideration which was denied. They filed an appeal before the Court of Appeals. The appellate court reversed the ruling of the Ombudsman. The Ombudsman asked for a re-evaluation. The Court of Appeals then amended its decision. It ruled that the respondents were indeed remiss of their dutes but the penalty of dismissal is too harsh. Punta Tenement argued that the penalty of dismissal is but right. Hence this petition. Issue: Whether the penalty of dismissal is proper. Held: In the case at bench, the supposed acts of dishonesty by Dolot and Tañada were convincingly established. Based on the contract, both barangays were to receive P0.25/20 liter as their share in the water distribution arrangement. From the said amount, 50% was allocated for the payment of back account with MWSS, while the remaining 50% was earmarked to their other barangay-related projects. The provision was very clear and categorical. Inpart was never tasked to pay the barangays’ back account as the money allocated for payment was agreed to be deducted from the barangays’ share. Apart from the self-serving declaration of Dolot and Tañada that it was Inpart’s obligation to remit payments to MWSS, nothing in the records would show that they had an arrangement to such effect. Thus, the Court cannot accept their flimsy excuse that it was the contractor’s job to remit payments to the MWSS. As public servants and representatives of their respective barangays, it behooves upon Dolot and Tañada to ensure that the main goals of the MOA, which were to distribute water to the tenants and pay the tenement’s back account with the MWSS, are faithfully followed. Even assuming that Inpart was the one delegated to pay the barangays’ back account, the respondents should have checked on the status of the payment. They failed to demand accountability from Inpart to ensure that their payments were properly documented and remitted to MWSS. Their inaction demonstrated a lack of concern for the welfare of their constituents. Simply stated, they reneged on their sworn 7

Political Law Review Case Digest SBCA AY 2013-2014 Commissioner Sarmiento duty to be true to their constituents. In administrative cases, only substantial evidence is required to support any findings. Substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. Evidently, the circumstances of the case all point to the inexcusable misfeasance of Dolot and Tañada. Dishonesty is a malevolent act that puts serious doubt upon one’s ability to perform his duties with the integrity and uprightness demanded of a public officer or employee. Section 52, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service classifies dishonesty as a grave offense punishable with dismissal from the service even for the first offense. Moreover, dismissal from service carries administrative disabilities specified under Section 54 of the Uniform Rules such as cancellation of eligibility, forfeiture of retirement benefits, and the perpetual disqualification for reemployment in the government service, unless otherwise provided in the decision. When an individual is found guilty of dishonesty, the corresponding penalty is dismissal from employment or service. The underlying reason for this is because when a public official or government employee is disciplined, the object sought is not the punishment of such officer or employee but the improvement of the public service and the preservation of the public’s faith and confidence in the government. A finding of dishonesty necessarily carries with it the penalty of dismissal from the office he is holding or serving.

THE MONMON COMMISSION Catalla. Precion. Sta.Maria. Triños-Peralta

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