Authority of the Freeport Area of Bataan v. Cruz
REITERATIONFacts
The Antecedents: Republic Act (R.A.) No. 5490 established Mariveles, Bataan as a Foreign Trade Zone. Proclamation Nos. 899 and 939 reserved parcels of land for quarry and foreign trade zone purposes. Presidential Decree (P.D.) No. 66 created the Export Processing Zone Authority (EPZA), which later became the Philippine Economic Zone Authority (PEZA) through R.A. No. 7916. R.A. No. 9728 converted the Bataan Economic Zone into the Freeport Area of Bataan (FAB) and created the Authority of the Freeport Area of Bataan (AFAB) to manage it. AFAB discovered that several parcels of land reserved for the FAB were erroneously registered under the name of F.F. Cruz & Company, Inc. (FFCCI). AFAB filed an Amended Complaint for Declaration of Nullity and Cancellation of Title against FFCCI, seeking to nullify FFCCI's titles and reconvey the properties to AFAB. Procedural History: FFCCI filed a Motion to Dismiss, arguing that AFAB failed to state a cause of action, that the action was akin to expropriation, that FFCCI was a buyer in good faith, that res judicata applied, and that the action was barred by prescription and laches. The Regional Trial Court (RTC) denied the Motion to Dismiss. FFCCI filed a Petition for Certiorari with the Court of Appeals (CA), which initially affirmed the RTC. However, upon FFCCI's Motion for Reconsideration, the CA reversed its decision and dismissed AFAB's complaint, finding that it failed to state a cause of action, that the RTC lacked jurisdiction, and that the action was one for reversion that could only be filed by the State through the Office of the Solicitor General (OSG). The Petition: AFAB filed a petition for review on certiorari with the Supreme Court, assailing the CA's Amended Decision.
Issue(s)
Whether the CA committed reversible error in setting aside its previous Decision and granting FFCCI's Motion to Dismiss; and whether the CA gravely erred when it ruled that AFAB's Amended Complaint fails to state a cause of action. Whether the CA gravely erred when it ruled the action before the RTC is one of reversion that may be brought only by the State through the Office of the Solicitor General. Whether the CA gravely erred when it ruled that the RTC has no jurisdiction over the case. Whether prescription or res judicata can bar reversion proceedings.
Ruling
The petition is denied. The Amended Decision dated June 7, 2018 of the Court of Appeals in CA-G.R. SP No. 146039 is affirmed. The Amended Complaint for Declaration of Nullity and Cancellation of Title filed by the Authority of the Freeport Area of Bataan is dismissed, without prejudice to the institution of the proper action for reversion by the State, through the Office of the Solicitor General.
Ratio Decidendi
On the sufficiency of the Amended Complaint and cause of action; and on the issue of the State being the Real Party in Interest for Reversion: While the Court ultimately affirmed the dismissal based on the lack of standing of AFAB, it also addressed the sufficiency of the complaint. The Court agreed with the CA's original stance that the Amended Complaint sufficiently stated a cause of action. The technical descriptions of the lands were considered evidentiary matters, not ultimate facts required in a complaint. The complaint alleged AFAB's ownership of reserved lands, their inalienable status, and that FFCCI's titles were obtained in derogation of these facts, which are sufficient to establish the elements of a cause of action for reversion. However, this sufficiency was rendered moot by the procedural defect of AFAB not being the real party in interest. The Court affirmed the CA's ruling that the action was one for reversion. An action for reversion is instituted to cancel or annul a certificate of title and revert public land to the State, particularly in cases of fraudulent or unlawful inclusion of land in patents or certificates of title, or unlawful grants made by mistake or oversight. Section 101 of the Public Land Act mandates that such actions may only be instituted by the Solicitor General or the officer acting in his stead, in the name of the Republic of the Philippines. This doctrine was reinforced in cases involving government instrumentalities, such as Republic v. Heirs of Ma. Teresita Bernabe, which held that the State remains the real party in interest even if lands are titled in the name of a government instrumentality, as the instrumentality is merely a trustee and the State retains beneficial ownership. The Court clarified that AFAB, being a government instrumentality vested with corporate powers but not a GOCC, holds the lands as a mere trustee for the State. Therefore, AFAB, not being the real party in interest, could not institute the action for reversion. On the nature of the action as reversion: The Court agreed with the CA that the case was one for reversion. AFAB's allegations that the Subject Properties are lands of the public domain reserved for the FAB, that FFCCI's titles were acquired unlawfully, and its prayer to nullify FFCCI's titles and revert the properties to the State clearly substantiate an action for reversion. The Court distinguished this from an action for annulment of title, emphasizing that reversion is specifically for recovering public lands erroneously registered under private titles. On the jurisdiction of the RTC and the CA's Amended Decision: The Court found no reversible error in the CA's Amended Decision. The CA correctly identified the action as one for reversion, which falls under the exclusive jurisdiction of the State through the OSG. The RTC's denial of the motion to dismiss was based on a misapprehension of the nature of the action. The CA's subsequent amendment of its decision, granting the motion to dismiss, was therefore proper as it corrected this jurisdictional error. The Court reiterated that the RTC would not have jurisdiction over an action for reversion, as it is a matter between the grantor (the State) and the grantee (the private party). On prescription and laches; and on res judicata: The Court reiterated the well-settled principle that prescription does not run against the government. In actions for reversion of public land, the State's right cannot be barred by prescription or laches. The reservation of the lands for the FAB since 1969 and subsequent issuances provided notice of their inalienable status. Therefore, even if OCT No. 234 was issued in 1972, it would be void if the land was already inalienable public domain, and the State's right to recover it would not be extinguished by prescription or laches. The Court held that res judicata cannot bar reversion proceedings if the lands involved belonged to the public domain and the land registration court lacked jurisdiction to award title. If the Subject Properties are determined to be reserved lands for the FAB, the court that approved OCT No. 234 acted without authority, rendering its decision invalid and precluding the application of res judicata. The principle of res judicata requires a judgment rendered by a court having jurisdiction over the subject matter.
Main Doctrine
An action for reversion of public land, even if titled in the name of a government instrumentality, must be instituted by the State through the Office of the Solicitor General, as the State remains the beneficial owner and real party in interest. Such action cannot be barred by prescription or laches, nor by res judicata if the original title was issued without jurisdiction.