Ayog vs. Cusi, Jr.

The constitutional prohibition in Section 11, Article XIV of the 1973 Constitution against private corporations purchasing public lands has no retroactive application where the corporation had already acquired a vested right to the land prior to the Constitution's effectivity, having fully complied with all requirements of the Public Land Act and paid the purchase price. A judgment in an ejectment suit, moreover, cannot be enforced against persons who were not parties to that litigation and who do not derive their right of possession from the defendants therein.

Biñan Development Co., Inc. filed Sales Application No. V-6834 in 1951 for Cadastral Lot No. 281, approximately 250 hectares of public land in Barrio Tamugan, Guianga, Davao City. Under Section 2, Article XIII of the 1935 Constitution, private corporations were permitted to purchase public agricultural lands not exceeding 1,024 hectares. The 1973 Constitution, which took effect on January 17, 1973, introduced Section 11, Article XIV, prohibiting private corporations from holding alienable lands of the public domain except by lease not exceeding 1,000 hectares. Petitioners are occupants of the awarded land, some of whom were defendants in an ejectment suit filed by the corporation and others who were not parties to that suit.

On January 21, 1953, the Director of Lands, after a bidding, awarded to Biñan Development Co., Inc. Cadastral Lot No. 281, located at Barrio Tamugan, Guianga (Baguio District), Davao City, covering approximately 250 hectares, on the basis of the corporation's 1951 Sales Application No. V-6834. Some occupants of the lot protested the sale. The Director of Lands, in his decision of August 30, 1957, dismissed the protests and ordered the occupants to vacate the lot and remove their improvements, finding that the protestants entered the land only after it was awarded to the corporation and could not be regarded as bona fide occupants. The Director characterized them as squatters and found that some claimants were fictitious persons. A writ of execution was issued, but the protestants defied it and refused to vacate.

Because the occupants refused to leave, the corporation filed an ejectment suit (accion publiciana) against forty defendants on February 27, 1961 in the Court of First Instance of Davao, docketed as Civil Case No. 3711. The trial court found that the protests of twenty of the defendants had been among those dismissed by the Director of Lands in 1957. On July 18, 1961, the corporation fully paid the purchase price of ten thousand pesos. On November 10, 1961, a Bureau of Lands official submitted a final investigation report stating that the corporation had complied with the cultivation and other requirements under the Public Land Law and had paid the purchase price. During trial, fifteen defendants testified that they had entered the disputed land long before 1951 and had planted it to coconuts, coffee, jackfruit, and other fruit trees. The trial court did not credit their testimonies, relying instead on the Bureau of Lands report that in 1953 the land was free from private claims and on the Director of Lands' decision dismissing the protests. An ocular inspection on November 8, 1964 revealed that the plantings could not be more than ten years old, meaning they were not existing in 1953 when the sales award was made. The trial court accordingly ordered the defendants to vacate and restore possession to the corporation.

The Court of Appeals affirmed that judgment on December 5, 1975 in CA-G.R. No. 37142-R. Review was denied by the Supreme Court on May 17, 1976 in Elpidio Okay vs. Court of Appeals, L-43505. More than thirteen years after the award, on August 14, 1975, Sales Patent No. 5681 was issued to the corporation for the lot, now with a reduced area of 175.3 hectares. The patent was registered and Original Certificate of Title No. P-5176 was issued. The Director of Lands, in his memorandum dated June 29, 1974 recommending approval of the sales patent, pointed out that the corporation had complied with all requirements long before the effectivity of the 1973 Constitution and that issuance of the patent conformed to the guidelines in Opinion No. 64, series of 1973, of Secretary of Justice Vicente Abad Santos, as an exception to the constitutional prohibition. Secretary of Natural Resources Jose J. Leido, Jr., in approving the patent, noted that the applicant had acquired a vested right to its issuance.

After the record was remanded to the trial court, the corporation filed a motion for execution. The defendants, some of whom are now petitioners, opposed the motion, contending that the adoption of the 1973 Constitution, which took effect on January 17, 1973, was a supervening fact rendering execution of the judgment legally impossible, invoking the prohibition that no private corporation may hold alienable lands of the public domain except by lease not exceeding 1,000 hectares. The lower court suspended action on the motion. On August 24, 1977, the instant prohibition action was filed. Some of the petitioners were not defendants in the ejectment case and occupy portions of the disputed land distinct and separate from those occupied by the defendants. During the pendency of this case, on December 12, 1978, employees of Crown Fruits and Cannery Corporation, to which Biñan Development Co., Inc. had leased the disputed land, bulldozed a portion occupied by petitioner Melquiades Emberador, destroying improvements worth approximately five thousand pesos. Emberador was not expressly named as a defendant in the ejectment suit. Petitioners moved to hold the tractor drivers and the corporation's manager in contempt for violating the temporary restraining order issued by the Court on August 29, 1977.

• Constitutional Prohibition as Supervening Fact: Petitioners contended that the adoption of the 1973 Constitution, which took effect on January 17, 1973, was a supervening fact rendering it legally impossible to execute the lower court's judgment, invoking the prohibition that no private corporation or association may hold alienable lands of the public domain except by lease not to exceed 1,000 hectares in area.
• Due Process for Non-Parties: Petitioners' counsel claimed that Biñan Development Co., Inc. sought to execute the ejectment judgment against some petitioners who were not defendants in Civil Case No. 3711, who are not successors-in-interest of the defendants, and who do not derive their right of possession from the defendants but occupy portions of the disputed land distinct and separate from those of the defendants.
• Contempt of Court: Petitioners moved that the four tractor drivers and the manager of Biñan Development Co., Inc. be declared in contempt for having disregarded the temporary restraining order issued by the Court on August 29, 1977, by bulldozing a portion of the disputed land occupied by petitioner Melquiades Emberador and destroying his improvements.

• Retroactivity of Constitutional Prohibition: Whether Section 11, Article XIV of the 1973 Constitution, prohibiting private corporations from purchasing public lands, applies retroactively to a sales award made in 1953 for which a sales patent and Torrens title were issued in 1975, thereby barring execution of the 1964 ejectment judgment.
• Enforceability Against Non-Parties: Whether the ejectment judgment in Civil Case No. 3711 can be enforced against petitioners who were not defendants in that suit and who occupy portions of the disputed land distinct from those of the defendants.
• Contempt of Court: Whether the bulldozing of a portion of the disputed land occupied by petitioner Emberador during the pendency of the case constituted contempt of the temporary restraining order issued by the Court.

• Retroactivity of Constitutional Prohibition: No. The prohibition has no retroactive application because the corporation had already acquired a vested right to the land before the 1973 Constitution took effect, having fully complied with all requirements of the Public Land Act and paid the purchase price in 1961.
• Enforceability Against Non-Parties: No. The judgment cannot be enforced against petitioners who were not defendants in the ejectment case, who were not summoned and heard, and who occupy portions of the land distinct from those of the defendants, as that would violate due process of law.
• Contempt of Court: No. The temporary restraining order was directed specifically to Judge Vicente N. Cusi and the provincial sheriff, not to Biñan Development Co., Inc., its officers, agents, or privies, and Emberador was not named in the trial court's judgment as one of the occupants to be ejected.

• Retroactivity of Constitutional Prohibition: The corporation's right to purchase the land had become fixed and established and was no longer open to doubt or controversy prior to the effectivity of the 1973 Constitution. Its full payment of the purchase price on July 18, 1961, and its compliance with the cultivation and other requirements of the Public Land Law, as confirmed by the Bureau of Lands' final investigation report of November 10, 1961, had the effect of segregating the land from the public domain. A vested right — defined as "the right to enjoyment [that] has become the property of some particular person or persons as a present interest" — cannot be abrogated by a new constitution. The due process clause prohibits the annihilation of vested rights, whether by legislative enactment, municipal ordinance, or constitutional change, except in a legitimate exercise of police power. The contemporaneous construction of the constitutional prohibition by Secretary of Justice Abad Santos in his 1973, 1974, and 1976 opinions — ruling that where an applicant had fully complied with all obligations under the Public Land Act before the Constitution took effect, there was no legal or equitable justification for refusing to issue the sales patent — was accorded great weight as a correct interpretation of Section 11, Article XIV. The petitioners' prohibition action was therefore barred by the doctrine of vested rights in constitutional law.

• Enforceability Against Non-Parties: It is an axiom of the law that no man shall be affected by proceedings to which he is a stranger. To enforce the ejectment judgment against petitioners who were not parties to Civil Case No. 3711, who were not summoned and heard, and who occupy portions of the disputed land distinct and separate from those occupied by the defendants, would be violative of due process of law — the law which hears before it condemns, which proceeds upon inquiry, and renders judgment only after trial. Those petitioners are not successors-in-interest of the defendants and do not derive their right of possession from them. The judgment is binding only on the parties to the ejectment suit and their successors in interest by title subsequent to the commencement of the action.

• Contempt of Court: The temporary restraining order issued on August 29, 1977 enjoined specifically Judge Vicente N. Cusi and the provincial sheriff from enforcing the decision in the ejectment suit. It was not directed to Biñan Development Co., Inc., its officers, agents, or privies. Moreover, Emberador was not expressly named as a defendant in the ejectment suit and was not included in the trial court's decision. For the redress of whatever wrong was committed against Emberador by the destruction of his improvements, his remedy lies not in a contempt proceeding but in appropriate civil and criminal actions against the destroyers.

• Vested Rights Doctrine — A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest — some right or interest in property which has become fixed and established and is no longer open to doubt or controversy. The due process clause prohibits the annihilation of vested rights by constitutional change, legislative enactment, or repeal of municipal ordinance, except in a legitimate exercise of police power. In this case, the corporation's full compliance with all requirements of the Public Land Law and full payment of the purchase price before the 1973 Constitution took effect vested in it the right to obtain a sales patent, and that right could not be divested by the new Constitution's prohibition against corporate purchases of public lands.

• Due Process — Non-Parties Not Bound by Judgments — No man shall be affected by proceedings to which he is a stranger. A judgment cannot be enforced against persons who were not parties to the litigation, who were not summoned and heard, and who occupy portions of the disputed land distinct and separate from those occupied by the defendants. The Court applied this principle to hold that the ejectment judgment in Civil Case No. 3711 could not be enforced against petitioners who were not defendants in that case.

• Contempt — Scope of Restraining Orders — A temporary restraining order cannot be the basis for a contempt charge against persons or entities to whom it was not directed. The Court found no contempt because the TRO was issued specifically against Judge Cusi and the provincial sheriff, not against Biñan Development Co., Inc. or its agents.

• "We hold that the said constitutional prohibition has no retroactive application to the sales application of Biñan Development Co., Inc. because it had already acquired a vested right to the land applied for at the time the 1973 Constitution took effect." — This is the ratio decidendi of the case, establishing that the 1973 Constitution's prohibition on corporate purchases of public lands does not operate retroactively where a vested right had attached prior to effectivity.

• "A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest" — This passage provides the canonical definition of vested rights relied upon by the Court, drawn from 16 C.J.S. 1173 and frequently cited in Philippine constitutional jurisprudence.

• "it is an axiom of the law that no man shall be affected by proceedings to which he is a stranger" — This formulation of the due process principle regarding non-parties, quoted from Ed. A. Keller & Co. vs. Ellerman & Bucknall Steamship Co., 38 Phil. 514, 520, anchors the Court's ruling that the ejectment judgment cannot bind petitioners who were not parties to the suit.

• "To enforce the judgment against those who were not parties to the case and who occupy portions of the disputed land distinct and separate from the portions occupied by the defendants in the ejectment suit, would be violative of due process of law, the law which, according to Daniel Webster in his argument in the Dartmouth College case, is the law of the land, a law which hears before it condemns, which proceeds upon inquiry and renders judgment only after trial." — This passage articulates the due process rationale for limiting the enforceability of judgments to parties and their privies, invoking Daniel Webster's classic formulation.

• Director of Lands vs. CA, 123 Phil. 919 — Followed. The Court cited this case for the proposition that the corporation's right to obtain a patent for the land, having complied with the requirements of the Public Land Law, is protected by law and cannot be deprived without due process.

• Balboa vs. Farrales, 51 Phil. 498 — Followed. Cited for the definition of a vested right as "some right or interest in property which has become fixed and established and is no longer open to doubt or controversy," quoting Downs vs. Blount.

• Ed. A. Keller & Co. vs. Ellerman & Bucknall Steamship Co., 38 Phil. 514 — Followed. Cited for the axiom that no man shall be affected by proceedings to which he is a stranger, supporting the ruling that the ejectment judgment cannot be enforced against non-parties.

• Lopez vs. Director of Lands, 47 Phil. 23 — Followed. Cited in connection with the due process principle that every citizen shall hold his life, liberty, property, and immunities under the protection of the general rules which govern society.

• Ariem vs. Delos Angeles, 49 SCRA 343 — Cited in the concurring opinion of Vasquez, J., for the proposition that a judgment in an ejectment case may be enforced not only against the defendants but also against their family, relatives, or privies who derive their right of possession from the defendants, clarifying the scope of the dispositive.

• Section 11, Article XIV, 1973 Constitution — Provides that no private corporation or association may hold alienable lands of the public domain except by lease not to exceed 1,000 hectares in area. The Court held this provision has no retroactive application to the corporation's sales application because a vested right had already accrued before the Constitution's effectivity.

• Section 2, Article XIII, 1935 Constitution — Allowed private corporations to purchase public agricultural lands not exceeding 1,024 hectares. This provision governed the corporation's sales application at the time the award was made and the requirements were fulfilled.

• Public Land Act — The corporation's compliance with the cultivation and other requirements of this law, along with full payment of the purchase price, had the effect of segregating the land from the public domain and vesting in the corporation the right to a sales patent.

• Section 49(b), Rule 39, Rules of Court — Cited in the concurring opinion for the rule that a judgment is binding and enforceable not only against the parties but also against their successors in interest by title subsequent to the commencement of the action, clarifying that the dispositive excludes only those petitioners who do not derive their right of possession from any of the defendants.

Concepcion, Jr., Guerrero, Abad Santos, Relova, and Gutierrez, Jr., JJ., concur.

Vasquez, J., filed a separate concurring opinion, joined by Fernando, C.J., Teehankee, Melencio-Herrera, Plana, Makasiar, and De Castro, JJ., clarifying that the dispositive should not be read to exclude from the effect of the ejectment judgment those petitioners who, though not named defendants, are successors-in-interest or privies deriving their right of possession from the defendants. Citing Section 49(b), Rule 39 of the Rules of Court and Ariem vs. Delos Angeles, 49 SCRA 343, Vasquez, J. emphasized that ejectment judgments are enforceable against the defendants' family, relatives, or privies, and that only petitioners who do not derive their right of possession from any defendant should be excluded.

Escolin, J., took no part.