THE DIRECTOR OF LANDS, petitioner,

vs.

INTERMEDIATE APPELLATE COURT and ACME PLYWOOD & VENEER CO.

(G.R. No. 73002)

FACTS:

The Director of Lands has brought this appeal by certiorari from a judgment of the
Intermediate Appellate Court (IAC) affirming the decision of the Court of First Instance
(CFI),ordering the registration of parcels of land in favor of Acme Plywood & Veneer
Co., Inc. (ACME)

Acme Plywood & Veneer Co. Inc. is a corporation duly organized in accordance with the
Philippine Laws and registered with Securities and Exchange Commission. It is
represented by Mr. Rodolfo Nazario.

The subject land was ancestrally acquired by ACME from Mariano Infiel and Acer Infiel,
both are members of the Dumagat tribe and as such are cultural minorities on October
29,1962. The applicable constitution at the time was the Republic Constitution of 1935.
The possession of the Irfiels over the subject land sold to ACME dates back before the
Philippines was even discovered by Magellan as the ancestors of the Infiels have
possessed and occupied the land from generation to generation, until the same came into
the possession of Mariano and Acer Irfiel. The possession of ACME, tacking the
possession of the Infielss was continuous, adverse and public from time immemorial.
Hence, the land is being sought to be registeredpursuant to Republic Act 3872 which
grants absolute ownership to members of the non-Christian Tribes on land occupied by
them or their ancestral lands, whether with the alienable or disposable land or within the
public domain. The applicant ACME has introduced more thanforty-five million
(P45,000,000.00) worth of improvements.

The Director of Lands takes no issues on the forgoing facts except as to the applicability
of the 1935 Constitution, asserting that the registration proceeding was only commenced
on July 1981, or long after the 1973 Constitution had gone into effect. The latter being
the applicable law at the time of the registration. Section 11 of Article XIV prohibits the
private corporations or associations from holding alienable lands of the public domain,
except by lease not to exceed 1,000 hectares. This provision is not found in the 1935
Constitution which was inforce in 1962 when Acme purchased the lands in question from
the Infiels. The question turns upon a determination of the character of the lands at the
time of the institution of the registration proceedings in 1981. If they were then still part
of the public domain, it cannot be sold to a private corporations or associations.
Otherwise, it the parcels of land were already private

lands, the constitutional prohibition against acquisition by private corporations or

ISSUE:

Whether the land is already a private land.

RULING:
Yes, the land is already a private land. As decided by the Supreme Court. That If it is
accepted — as it must be — that the land was already private land to which the Infiels
had a legally sufficient and transferable title on October 29, 1962 when Acme acquired it
from said owners, it must also be conceded that Acme had a perfect right to make such
acquisition, there being nothing in the 1935 Constitution then in force (or, for that matter,
in the 1973 Constitution which came into effect later) prohibiting corporations from
acquiring and owning private lands.

Even on the proposition that the land remained technically "public" land, despite
immemorial possession of the Infiels and their ancestors, until title in their favor was
actually confirmed in appropriate proceedings under the Public Land Act, there can be no
serious question of Acme's right to acquire the land at the time it did, there also being
nothing in the 1935 Constitution that might be construed to prohibit corporations from
purchasing or acquiring interests in public land to which the vendor had already acquired
that type of so-called "incomplete" or "imperfect" title.

The only limitation then extant was that corporations could not acquire, hold or lease
public agricultural lands in excess of 1,024 hectares.

The purely accidental circumstance that confirmation proceedings were brought under the
aegis of the 1973 Constitution which forbids corporations from owning lands of the
public domain cannot defeat a right already vested before that law came into effect, or
invalidate transactions then perfectly valid and proper. This Court has already held, in
analogous circumstances, that the Constitution cannot impair vested rights.

The fact, therefore, that the confirmation proceedings were instituted by Acme in its own
name must be regarded as simply another accidental circumstance, productive of a defect
hardly more than procedural and in nowise affecting the substance and merits of the right
of ownership sought to be confirmed in said proceedings, there being no doubt of Acme's
entitlement to the land. As it is unquestionable that in the light of the undisputed facts, the
Infiels, under either the 1935 or the 1973 Constitution, could have had title in themselves
confirmed and registered, only a rigid subservience to the letter of the law would deny the
same benefit to their lawful

successor-in-interest by valid conveyance which violates no constitutional mandate.

MANILA ELECTRIC COMPANY RULING, NO LONGER A BINDING

In this regard, attention has been invited to Manila Electric Company vs. Castro-
Bartolome, et al., where a similar set of facts prevailed.

● In that case, Manila Electric Company, a domestic corporation more than 60% of the
capital stock of which is Filipino-owned, had purchased in 1947 two lots in Tanay, Rizal
from the Piguing spouses.

● The lots had been possessed by the vendors and, before them, by their predecessor-in-
interest, Olimpia Ramos, since prior to the outbreak of the Pacific War in 1941.

● 1976 - Meralco applied to the CFI of Rizal, Makati Branch, for confirmation of title to
said lots. The court, assuming that the lots were public land, dismissed the application on
the ground that Meralco, a juridical person, was not qualified to apply for registration
under Section 48(b) of the Public Land Act which allows only Filipino citizens or natural
persons to apply for judicial confirmation of imperfect titles to public land. Meralco
appealed, and a majority of this Court UPHELD the dismissal.

● The Chief Justice entered a vigorous dissent, tracing the line of cases beginning with
Cariño in 1909, thru Susi in 1925 down to Herico in 1980, which developed, affirmed
and reaffirmed the doctrine that open, exclusive and undisputed possession of alienable
public land for the period prescribed by law creates the legal fiction whereby the land,
upon completion of the requisite period ipso jure and without the need of judicial or other
sanction, ceases to be public land and becomes private property. That said dissent
expressed what is the better — and, indeed, the correct, view — becomes evident from a
consideration of some of the principal rulings cited therein.

The Court, in the light of the foregoing, is of the view, and so holds, that the majority
ruling in Meralco must be reconsidered and no longer deemed to be binding precedent.

The correct rule, as enunciated in the line of cases already referred to, is that alienable
public land held by a possessor, personally or through his predecessors-in-interest,
openly, continuously and exclusively for the prescribed statutory period (30 years under
The Public Land Act, as amended) is converted to private property by the mere lapse or
completion of said period, ipso jure.

Following that rule and on the basis of the undisputed facts, the land subject of this
appeal was already private property at the time it was acquired from the Infiels by Acme.
Acme thereby acquired a registrable title, there being at the time no prohibition against
said corporation's holding or owning private land.

Reference to the 1973 Constitution and its Article XIV, Section 11, was only tangential,
limited to a brief paragraph in the main opinion, and may, in that context, be considered
as essentially obiter. Meralco, in short, decided no constitutional question.

Hence, the lands are already private lands not only in the right of grant but also by
operation of law.