Saad Agro-Industries, Inc. vs. Republic

In an action for reversion, the State bears the burden of proving by clear and convincing evidence that the land was part of the inalienable public domain at the time the free patent and title were issued; a later statute or later land classification map cannot retroactively defeat a vested right.

Lot No. 1434 of Cad-315-D, located in Barangay Abugon, Sibonga, Cebu, was originally applied for by Socorro Orcullo and later acquired by SAAD Agro-Industries, Inc. from one of Orcullo's heirs. Pedro Urgello held a Fishpond Lease Agreement over an overlapping area. The dispute implicates the Regalian doctrine, under which all lands of the public domain belong to the State, and the remedy of reversion under the Public Land Act for recovering inalienable public land.

On 18 October 1967, Socorro Orcullo filed an application for a free patent over Lot No. 1434 of Cad-315-D, a 12.8477-hectare parcel located in Barangay Abugon, Sibonga, Cebu. On 14 February 1971, the Secretary of Agriculture and Natural Resources issued Free Patent No. 473408, and the Registry of Deeds for the Province of Cebu issued Original Certificate of Title No. 0-6667 over the lot. The subject lot was subsequently sold to SAAD Agro-Industries, Inc. by one of Orcullo's heirs.

Pedro Urgello held Fishpond Lease Agreement No. 4622, dated 29 October 1986 and with a period of 25 years, covering 12,8477 hectares in Sitio Abugon, Barrio Candaguit, Sibonga, Cebu; the area appeared to be the same area included in Free Patent No. 473408. Sometime in 1995, after Urgello filed a letter-complaint with the Regional Executive Director of the Forest Management Sector, DENR Region VII, Cebu City, about alleged illegal cutting of mangrove trees and construction of dikes within the area covered by his Fishpond Lease Agreement, the Republic of the Philippines, through the Solicitor General, filed a complaint for annulment of title and reversion of the lot covered by Free Patent No. 473408 and OCT No. 0-6667. The Republic alleged that the issuance of the free patent and title was irregular and erroneous because the lot was allegedly part of the timberland and forest reserve of Sibonga, Cebu. On 14 July 1995, Urgello filed a complaint-in-intervention against the heirs of Orcullo, adopting the allegations of respondent. The heirs failed to file an answer and were declared in default.

At the hearing on 6 June 1997, the trial court denied admission of L.C. Map No. 2961 for the purpose of showing that the subject lot fell within a timberland reserve, after respondent failed to submit either a certified true copy or an official publication thereof; the document presented was a mere photocopy of the purported original. Isabelo R. Montejo, Community Environment and Natural Resources Officer for Argao, Cebu, testified that there was no classification of the lands of the public domain in Sibonga, Cebu prior to 1980, and thus the subject lot remained an unclassified forest zone and incapable of private appropriation. Two foresters testified that the subject lot was a mangrove area. Respondent also claimed that the lot had very deep and muddy soil or was mudflat, unsuitable for fruit and non-fruit bearing trees.

The trial court found that respondent failed to show that the subject lot was part of the timberland or forest reserve or that it had been classified as such before the issuance of the free patent and original title. It found the issuance of the free patent and title regular and in order, and declared petitioner's purchase of the property legal and valid. The Court of Appeals, on the other hand, found a preponderance of evidence showing that the subject lot is within the timberland area.

• Retroactive Application of P.D. No. 705: Petitioner argued that the Court of Appeals erred in relying on the DENR officer's testimony that, under P.D. No. 705, unclassified land remains part of the public forest; P.D. No. 705 took effect on 19 May 1975, long after the 1971 free patent and OCT, and cannot be applied retroactively to prejudice vested rights.
• Improper Designation: Petitioner maintained that if the lot was public forest, it should have been designated as a Timberland Block, not as Cadastral Lot No. 1434, CAF-315-D, Sibonga Cadastre, which was the designation made by the Republic prior to 1972.
• Inadmissible L.C. Map: Petitioner contended that the Court of Appeals erred in relying on L.C. Map No. 2961, which the trial court had declared inadmissible for lack of proof of authenticity and contents; the map was neither a certified true copy nor attested by a DENR official with legal custody, and was a mere photocopy.
• Unreliable Survey: Petitioner argued that the DENR projection survey was not clear, precise, and conclusive because the foresters used a magnetic box compass, an unreliable instrument affected by high tension wires and stones with iron minerals.
• Presumption of Regularity and Burden of Proof: Petitioner asserted that respondent failed to overcome the presumption of regularity of the free patent and title and failed to prove that the lot was inside the timberland block, despite bearing the burden as original plaintiff in the reversion case.

• Jurisdiction and Authority of Bureau of Lands: Respondent claimed that Free Patent No. 473408 and OCT No. 0-6667 were erroneously and irregularly obtained because the Bureau of Lands did not acquire jurisdiction over the land and had no power or authority to dispose of it through a free patent, making them null and void ab initio.
• Unclassified Forest Zone: Respondent relied on the testimony of CENRO officer Isabelo R. Montejo that the lands of the public domain in Sibonga were unclassified until 1980 and therefore remained an unclassified forest zone incapable of private appropriation.
• L.C. Map as Proof: Respondent maintained that L.C. Map No. 2961 showed the subject lot was part of the timberland or forest reserve; it argued that presentation of the original map was unnecessary because it was in the custody of a public officer or recorded in a public office, and that the blue print was presented in court.
• Mangrove and Soil Conditions: Respondent presented foresters who testified that the subject lot was a mangrove area and claimed that the lot had very deep and muddy soil or mudflats unsuitable for fruit and non-fruit bearing trees.

• Retroactive Application of P.D. No. 705: Whether Section 13 of P.D. No. 705, providing that lands still to be classified remain part of the public forest, may be applied retroactively to invalidate a free patent and OCT issued in 1971.
• Admissibility of L.C. Map No. 2961: Whether the Court of Appeals erred in relying on L.C. Map No. 2961 despite the trial court's ruling denying its admission and the failure to present a certified true copy or official publication.
• Proof of Timberland or Forest Reserve Status and Burden of Proof: Whether the Republic, as plaintiff in an action for reversion, proved by clear and convincing evidence that Lot No. 1434 was part of the timberland or forest reserve at the time Free Patent No. 473408 and OCT No. 0-6667 were issued.
• Validity of Free Patent, OCT, and Sale to Petitioner: Whether the free patent and OCT were valid and regular, and whether the subsequent sale of the lot to SAAD Agro-Industries, Inc. was valid.

• Retroactive Application of P.D. No. 705: No. P.D. No. 705 took effect on 19 May 1975, four years after the 1971 free patent and OCT; Article 4 of the Civil Code bars retroactive application absent an express provision.
• Admissibility of L.C. Map No. 2961: No. The map was a mere photocopy, not a certified true copy or official publication; under the best evidence rule and the Rules of Court, the contents of a public record must be proved by a certified copy issued by the public officer in custody.
• Proof of Timberland or Forest Reserve Status and Burden of Proof: No. The Republic failed to prove by clear and convincing evidence that the lot was part of the timberland or forest reserve at the time of issuance; the 1980 L.C. Map and the CENRO testimony were insufficient.
• Validity of Free Patent, OCT, and Sale to Petitioner: Yes. The free patent and OCT were valid and regular, Orcullo having complied with the requisites under Commonwealth Act No. 141; the sale to petitioner was valid, and the reversion complaint was properly dismissed.

• Retroactive Application of P.D. No. 705: Reliance on Section 13 of P.D. No. 705 was misplaced. P.D. No. 705 was promulgated on 19 May 1975, four years after the free patent and title were awarded to Orcullo in 1971. Article 4 of the Civil Code provides that laws shall have no retroactive effect unless the contrary is provided, and no intention to ordain retroactive application was inferred. Prior forestry laws, including P.D. No. 389, which P.D. No. 705 revised, did not contain a similar provision. Even assuming the parcel was unclassified when Orcullo applied, the issuance of the free patent and title in 1971 segregated it from the mass of the public domain; it could no longer be considered unclassified and forming part of the public forest under P.D. No. 705.
• Admissibility of L.C. Map No. 2961: Respondent's main basis for asserting that the lot was part of the timberland or forest reserve was L.C. Map No. 2961. At the 6 June 1997 hearing, the trial court denied admission of the map after respondent failed to submit a certified true copy or an official publication. The document presented was a mere photocopy, not the blue print respondent claimed. Under the best evidence rule, the original must be produced except in specified cases; for public records, the contents must be proved by a certified copy issued by the public officer in custody. While a public document may be prima facie evidence of the facts stated, it must be evidenced by an official publication or a copy attested by the officer having legal custody. The rules of admissibility apply uniformly to the Government, which cannot have a superior advantage when it litigates with a citizen. The map was therefore inadmissible.
• Proof of Timberland or Forest Reserve Status and Burden of Proof: In an action for reversion, the State, as the party alleging fraud and misrepresentation in the patent application, bears the burden of proof. Fraud and misrepresentation as grounds for cancellation of a patent and annulment of title must be proved by clear and convincing evidence, not mere preponderance. The Solicitor General claimed that the free patent and OCT were erroneously and irregularly obtained because the Bureau of Lands lacked jurisdiction and authority, but respondent failed to prove this. The Court of Appeals relied on Montejo's testimony that the land was unclassified until 1980 and thus an unclassified forest zone incapable of private appropriation; that testimony rested on Section 13 of P.D. No. 705, which was inapplicable. The CENRO officers' testimony ultimately depended on the inadmissible L.C. Map. The foresters' observation that mangroves grew on the lot was not conclusive as to the land's nature at the time the patent and title were issued, and there was no proof that the area was not planted with trees and crops when Orcullo applied. Respondent also failed to establish that the lot had very deep and muddy soil or was mudflat. Even assuming the L.C. Map was admissible, it was made only in 1980, nine years after the free patent. Under Republic vs. Court of Appeals, the Government may classify portions of public land as forestry land, but the primary right of a private individual who possessed and cultivated the land in good faith prior to classification must be recognized and not prejudiced by after-events. Private interests had intervened: Orcullo and her predecessors-in-interest possessed and cultivated the lot since 1930, and a free patent and title were issued in 1971. The records did not show that the lot was considered a forest reserve before the patent and OCT. To declare the land as forest land on the authority of the 1980 map would unduly deprive petitioner of registered property. The Regalian doctrine remains enshrined, but fairness and due process must be observed in claims by the Government against citizens.
• Validity of Free Patent, OCT, and Sale to Petitioner: The issuance of the free patent and certificate of title was regular and in order. Orcullo complied with the requisites for acquisition of a free patent under Commonwealth Act No. 141, as certified by the Director of Lands and approved by the Secretary of Agriculture and Natural Resources. Respondent failed to show that the subject lot was part of the timberland or forest reserve it claimed. In the face of the uncontroverted status of Free Patent No. 473408 and OCT No. 0-6667 as valid and regular issuances, respondent's insistence on the classification of the lot as part of the forest reserve was rejected. The RTC Decision dismissing the complaint for reversion and the complaint-in-intervention was reinstated, and the sale to petitioner was upheld.

• Regalian doctrine (jura regalia) — All lands of the public domain belong to the State, and the State is the source of any asserted right to ownership in land and is charged with conserving such patrimony. Lands not otherwise appearing clearly within private ownership are presumed to belong to the State. The Court recognized the doctrine but held that it did not authorize reversion where the State failed to prove that the land was inalienable at the time the free patent and title were issued.
• Reversion and burden of proof — Reversion is an action where the ultimate relief sought is to revert land to the government under the Regalian doctrine. It involves a serious controversy, a question of fraud and misrepresentation committed against the government, and is aimed at returning disputed public domain and cancelling titles procured through fraud. The State, as the party alleging fraud and misrepresentation, bears the burden of proving it by clear and convincing evidence; mere preponderance is not adequate.
• Non-retroactivity of laws — Article 4 of the Civil Code provides that laws shall have no retroactive effect unless the contrary is provided. Section 13 of P.D. No. 705, which states that lands still to be classified remain part of the public forest, could not apply to a free patent and OCT issued in 1971 because P.D. No. 705 took effect only on 19 May 1975; prior forestry laws, including P.D. No. 389, contained no similar provision.
• Best evidence rule and public records — The original document must be produced, except when the original is a public record in the custody of a public officer or recorded in a public office. To prove the contents of a public record, a certified copy issued by the public officer in custody must be presented. For admissibility, a public record must be evidenced by an official publication or a copy attested by the officer having legal custody. A mere photocopy does not qualify. The Government must submit to the rules of procedure and cannot have a superior advantage.
• Private rights intervening before forest classification — The Government may in the first instance decide what portions of public land shall be considered forestry land by reservation, unless private interests have intervened before such reservation is made. A private individual who possessed and cultivated the land in good faith prior to classification has a better right and should not be prejudiced by after-events. Orcullo and her predecessors possessed and cultivated the lot since 1930, and the free patent and title were issued in 1971, before the 1980 L.C. Map.
• Presumption of regularity of patent and title — A free patent and original certificate of title issued by the proper administrative officers are presumed regular. Respondent failed to overcome this presumption, and the trial court's finding that the issuance was regular and in order was upheld.

• "P.D. No. 705 was promulgated only on 19 May 1975, or four (4) years after the free patent and title were awarded to Orcullo. Thus, it finds no application in the instant case." — States the ratio for rejecting retroactive application of the Revised Forestry Code to the 1971 free patent and title.
• "A mere photocopy does not qualify as competent evidence of the existence of the L.C. Map." — States the best-evidence ground for holding L.C. Map No. 2961 inadmissible.
• "Fraud and misrepresentation, as grounds for cancellation of patent and annulment of title, should never be presumed but must be proved by clear and convincing evidence, mere preponderance of evidence not even being adequate." — Defines the State's burden in a reversion action and explains why the Republic's evidence failed.
• "While the Government has the right to classify portions of public land, the primary right of a private individual who possessed and cultivated the land in good faith much prior to such classification must be recognized and should not be prejudiced by after-events which could not have been anticipated." — States the doctrine that private rights intervening before forest classification prevail over later government classification.

• Sps. Reyes vs. Court of Appeals, 356 Phil. 606, 624 — Cited for the Regalian doctrine: all lands of the public domain belong to the State, and lands not clearly within private ownership are presumed to belong to the State.
• Director of Lands vs. Intermediate Appellate Court, 219 SCRA 340 — Cited in Sps. Reyes vs. Court of Appeals for the same Regalian doctrine principle.
• Caro vs. Sucaldito, G.R. No. 157536, 16 May 2005, 458 SCRA 595, 605 — Cited for the rule that, because land subject of the action originated from a grant by the government, its cancellation is a matter between the grantor and the grantee.
• Morandarte vs. Court of Appeals, G.R. No. 123586, 12 August 2004, 436 SCRA 213, 223 — Cited for the rule that a complaint for reversion involves a serious controversy, a question of fraud and misrepresentation against the government, and that the State bears the burden of proof.
• Republic vs. Sebastian, 166 SCRA 140, 144 (1998) — Cited in Morandarte vs. Court of Appeals for the same reversion and fraud principle.
• Republic vs. Court of Appeals, No. L-46048, 29 November 1988, 168 SCRA 77 — Followed for the rule that a private individual who possessed and cultivated land in good faith prior to its classification as timberland has a better right, and the Government's power to classify public land does not prejudice private interests that intervened before classification.
• Ankron vs. Government of the Philippine Islands, 40 Phil. 10, 16 (1919) — Cited in Republic vs. Court of Appeals for the principle that the Government may decide what portions of public land are forestry land unless private interests have intervened before reservation.
• National Housing Authority vs. Baello, G.R. No. 143230, 20 August 2004, 437 SCRA 86, 106 — Cited for the rule that when the Government litigates with a citizen, it must submit to the rules of procedure and cannot have a superior advantage.
• Carr vs. United States, 98 U.S. 433 (1878) — Cited in National Housing Authority vs. Baello for the same principle that the sovereign, upon submitting to court jurisdiction, is bound by the same rules as private parties.

• Article 4, Civil Code — Provides that laws shall have no retroactive effect unless the contrary is provided. Applied to bar retroactive application of Section 13 of P.D. No. 705 to the 1971 free patent and OCT.
• Section 13, P.D. No. 705 (Revised Forestry Code) — States that lands still to be classified under the present system shall continue to remain as part of the public forest. Held inapplicable because P.D. No. 705 took effect on 19 May 1975, after the free patent and title were issued.
• Section 101, Commonwealth Act No. 141 (Public Land Act) — Provides that actions for reversion to the Government of lands of the public domain or improvements thereon shall be instituted by the Solicitor-General or the officer acting in his stead, in the proper courts, in the name of the Commonwealth of the Philippines. Cited in the discussion of reversion.
• Commonwealth Act No. 141 (Public Land Act) — The law governing acquisition of free patent. The Court found that Orcullo complied with the requisites for acquisition of a free patent, as certified by the Director of Lands and approved by the Secretary of Agriculture and Natural Resources.
• P.D. No. 389 (Forestry Reform Code) — Promulgated on 5 February 1974 and later revised by P.D. No. 705. The Court noted that it did not contain a provision similar to Section 13 of P.D. No. 705.
• Rules of Court, Rule 130, Section 3 — The best evidence rule: the original document must be produced, except in the enumerated cases, including when the original is a public record in the custody of a public officer or recorded in a public office. Applied to reject the photocopy of L.C. Map No. 2961.
• Rules of Court, Rule 130, Section 7 — Provides that to prove the contents of a public record, a certified copy issued by the public officer in custody thereof must be presented. Applied to the L.C. Map.
• Rules of Court, Rule 132, Section 23 — Provides that a public document may be prima facie evidence of the facts stated therein. Cited but held insufficient without compliance with admissibility requirements.
• Rules of Court, Rule 132, Section 24 — Provides that a public record must be evidenced by an official publication thereof or by a copy attested by the officer having legal custody of the record. Applied to the L.C. Map.
• 1935, 1973, and present Constitutions — The Regalian doctrine is enshrined in the present Constitution and was also recognized in the 1935 and 1973 Constitutions. The Court affirmed the doctrine but required fairness and due process in applying it against citizens.

Justice Quisumbing (Chairperson), Justice Carpio, Justice Carpio-Morales, and Justice Velasco, Jr. concurred.