Republic v. Capital Resources Corp.
REITERATIONFacts
The Antecedents: Vitaliano Dumuk was granted a Homestead Patent in 1924, resulting in Original Certificate of Title (OCT) No. 137. This title was subsequently transferred to spouses Cecilio and Laura Milo, who then sold the property to Capital Resources Corporation (CRC) and Romeo Roxas (Respondents), resulting in Transfer Certificate of Title (TCT) No. T-23343. Respondents subdivided the property, with Block 35 identified as a "salvage zone" and a portion of Block 36 overlapping the China Sea. A cadastral survey in 1987 indicated Blocks 35 and 36 as part of foreshore land and seabed. Alberto Hidalgo filed a Foreshore Lease Application (FLA) over a parcel of land that encroached upon the subject property. Respondents protested, claiming encroachment. Hidalgo counter-protested, assailing the validity of TCT No. T-23343, alleging it covered foreshore land, salvage zone, and seabed. A Regional Fact-Finding Committee concluded that Blocks 35 and 36 were within the foreshore area and recommended the revocation of the cancellation order of the subdivision plan and the reversion of the homestead patent. DENR recommended instituting an action for cancellation of TCT No. T-23343 and reversion of Blocks 35 and 36. Procedural History: The Republic of the Philippines (Republic) filed a Complaint for Cancellation of Title and Reversion against Respondents and the Register of Deeds, alleging that Blocks 35 and 36 had been washed out by sea waters and formed part of the public domain. The Republic prayed for the declaration of TCT No. T-23343 as null and void, surrender of the owner's duplicate copy, cessation of acts of ownership, and reversion of the land to the public domain. Respondents denied the allegations, asserting good faith purchase and that the land was not foreshore or seabed. The RTC ordered the cancellation of TCT No. T-23343 only for the portions pertaining to Blocks 35 and 36 and their reversion to the public domain. The Republic filed a Motion for Partial Reconsideration, raising issues of inconsistencies in land area and CRC's ineligibility to acquire the property, which were not included in the original complaint or pre-trial order. Both parties appealed to the CA. The CA affirmed the RTC's decision, ordering a resurvey of the property to segregate Blocks 35 and 36 before cancellation of TCT No. T-23343. The Petition: The Republic filed a Petition for Certiorari with the Supreme Court, reiterating the issues raised in its Motion for Partial Reconsideration regarding land area inconsistencies and CRC's ineligibility to acquire the property.
Issue(s)
Whether the Court may consider the issues of land area inconsistencies and respondent CRC's ineligibility to acquire the Subject Property, which were not raised in the Complaint and Pre-Trial Order. Whether the remaining portion of the Subject Property, beyond Blocks 35 and 36, may be reverted to the public domain.
Ruling
The Supreme Court denied the Petition for lack of merit and affirmed the Decision of the Court of Appeals. The Court held that issues not timely raised in the lower court are barred by estoppel. The Republic failed to raise the issues of land area inconsistencies and CRC's ineligibility in its Complaint and Pre-Trial Order, thus it cannot raise them for the first time on appeal. The Court also affirmed the CA's ruling that the subject property became private property upon issuance of the homestead patent and title, thus the prohibition against corporations acquiring alienable lands of the public domain does not apply. The reversion of Blocks 35 and 36 to the public domain was affirmed.
Ratio Decidendi
On the issue of whether the Court may consider new issues raised for the first time on appeal: The Court held that issues not timely raised in the proceedings before the lower court are barred by estoppel. A party is not permitted to change its theory on appeal, as this would be offensive to the rules of fair play, justice, and due process. In this case, the Republic failed to raise the issues of land area inconsistencies between TCT No. T-23343 and subdivision plan Psd-1-009891, and respondent CRC's ineligibility to acquire the Subject Property, in its Complaint and Pre-Trial Order. These issues were only raised in the Republic's Motion for Partial Reconsideration. The Court emphasized that it is the allegations in the complaint, not the prayer, that determine the basis of the relief, and the prayer will not be construed as enlarging the complaint to embrace a cause of action not pleaded therein. Therefore, the Republic could not raise these new issues before the Supreme Court. On the issue of whether the remaining portion of the Subject Property may be reverted to the public domain: The Court affirmed the CA's ruling that the Republic failed to show its entitlement to the reversion of the entire Subject Property. The Court reiterated that the prohibition against corporations acquiring alienable lands of the public domain does not apply if the property acquired is private property. In this case, the subject property became private property upon the issuance of OCT No. 137 to Vitaliano Dumuk on August 25, 1924. Consequently, when CRC and Romeo Roxas acquired the property in 1982, it was no longer part of the alienable lands of the public domain but private property. The Court also noted that even if CRC were considered ineligible, Romeo Roxas, an individual, is not barred from acquiring the subject property. The Court found no legal basis to warrant the outright cancellation of TCT No. T-23343 and the reversion of the entire Subject Property based on mere discrepancies in land area, especially since the CA ordered a resurvey to determine the actual area and segregate Blocks 35 and 36.
Main Doctrine
Issues not timely raised in the proceedings before the lower court are barred by estoppel, and a party is not permitted to change his theory on appeal. The allegations in the complaint, not the prayer, determine the basis of the relief. A corporation may acquire land granted under a homestead patent if it is used solely for commercial, industrial, educational, religious, or charitable purposes or for a right of way, with the consent of the grantee and approval of the Secretary of Natural Resources. Land covered by a homestead patent and issued a certificate of title ceases to be public domain and becomes private property, thus not subject to the prohibition against corporations acquiring alienable lands of the public domain.