(1) Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. (2) Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead or grant.

REPUBLIC OF THE PHILIPPINES, Petitioner, v. T.A.N. PROPERTIES, INC., Respondent. [G.R. NO. 154953 : June 26, 2008]

“x x x.

Land Application by a Corporation

Petitioner asserts that respondent, a private corporation, cannot apply for registration of the land of the public domain in this case.

We agree with petitioner.

Section 3, Article XII of the 1987 Constitution provides:

Sec. 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor.

The 1987 Constitution absolutely prohibits private corporations from acquiring any kind of alienable land of the public domain. In Chavez v. Public Estates Authority,³⁵ the Court traced the law on disposition of lands of the public domain. Under the 1935 Constitution, there was no prohibition against private corporations from acquiring agricultural land. The 1973 Constitution limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. Under the 1973 Constitution, private corporations, even if wholly owned by Filipino citizens, were no longer allowed to acquire alienable lands of the public domain. The present 1987 Constitution continues the prohibition against private corporations from acquiring any kind of alienable land of the public domain.³⁶ The Court explained in Chavez:

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from acquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public domain only through lease. x x x x

[I]f the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of alienable lands of the public domain that corporations could acquire. The Constitution could have followed the limitations on individuals, who could acquire not more than 24 hectares of alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under the 1987 Constitution.

If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation would be more effective in preventing the break-up of farmlands. If the farmland is registered in the name of a corporation, upon the death of the owner, his heirs would inherit shares in the corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-up of farmlands into smaller and smaller plots from one generation to the next.

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of the public domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his means would allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain.

The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public domain, since the vehicle to circumvent the constitutional intent is removed. The available alienable public lands are gradually decreasing in the face of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the public domain only to individuals. This, it would seem, is the practical benefit arising from the constitutional ban.³⁷

In Director of Lands v. IAC,³⁸ the Court allowed the land registration proceeding filed by Acme Plywood & Veneer Co., Inc. (Acme) for five parcels of land with an area of 481,390 square meters, or 48.139 hectares, which Acme acquired from members of the Dumagat tribe. The issue in that case was whether the title could be confirmed in favor of Acme when the proceeding was instituted after the effectivity of the 1973 Constitution which prohibited private corporations or associations from holding alienable lands of the public domain except by lease not to exceed 1,000 hectares. The Court ruled that the land was already private land when Acme acquired it from its owners in 1962, and thus Acme acquired a registrable title. Under the 1935 Constitution, private corporations could acquire public agricultural lands not exceeding 1,024 hectares while individuals could acquire not more than 144 hectares.³⁹

In Director of Lands, the Court further ruled that open, exclusive, and undisputed possession of alienable land for the period prescribed by law created 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. The Court ruled:

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and duration prescribed by statute as the equivalent of an express grant from the State than the dictum of the statute itself that the possessor(s) "x x x shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title x x x." No proof being admissible to overcome a conclusive presumption, confirmation proceedings would, in truth be little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character and length of time; and registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private land, but only confirm such a conversion already effected by operation of law from the moment the required period of possession became complete.

x x x [A]lienable public land held by a possessor, personally or through his predecessors-in-interest, openly, continuously and exclusively for the prescribed statutory period of (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. x x x.⁴⁰ (Emphasis supplied)cralawlibrary

Director of Lands is not applicable to the present case. In Director of Lands, the "land x x x was already private property at the time it was acquired x x x by Acme." In this case, respondent acquired the land on 8 August 1997 from Porting, who, along with his predecessors-in-interest, has not shown to have been, as of that date, in open, continuous, and adverse possession of the land for 30 years since 12 June 1945. In short, when respondent acquired the land from Porting, the land was not yet private property.

For Director of Lands to apply and enable a corporation to file for registration of alienable and disposable land, the corporation must have acquired the land when its transferor had already a vested right to a judicial confirmation of title to the land by virtue of his open, continuous and adverse possession of the land in the concept of an owner for at least 30 years since 12 June 1945.

Thus, in Natividad v. Court of Appeals,⁴¹ the Court declared:

Under the facts of this case and pursuant to the above rulings, the parcels of land in question had already been converted to private ownership through acquisitive prescription by the predecessors-in-interest of TCMC when the latter purchased them in 1979. All that was needed was the confirmation of the titles of the previous owners or predecessors-in-interest of TCMC.

Being already private land when TCMC bought them in 1979, the prohibition in the 1973 Constitution against corporations acquiring alienable lands of the public domain except through lease (Article XIV, Section 11, 1973 Constitution) did not apply to them for they were no longer alienable lands of the public domain but private property.

What is determinative for the doctrine in Director of Lands to apply is for the corporate applicant for land registration to establish that when it acquired the land, the same was already private land by operation of law because the statutory acquisitive prescriptive period of 30 years had already lapsed. The length of possession of the land by the corporation cannot be tacked on to complete the statutory 30 years acquisitive prescriptive period. Only an individual can avail of such acquisitive prescription since both the 1973 and 1987 Constitutions prohibit corporations from acquiring lands of the public domain.

Admittedly, a corporation can at present still apply for original registration of land under the doctrine in Director of Lands. 

Republic Act No. 9176⁴² (RA 9176) further amended the Public Land Act⁴³ and extended the period for the filing of applications for judicial confirmation of imperfect and incomplete titles to alienable and disposable lands of the public domain until 31 December 2020.

Thus:

Sec. 2. Section 47, Chapter VIII of the same Act, as amended, is hereby further amended to read as follows:

Sec. 47. The persons specified in the next following section are hereby granted time, not to extend beyond December 31, 2020 within which to avail of the benefits of this Chapter: Provided, That this period shall apply only where the area applied for does not exceed twelve (12) hectares: Provided, further, That the several periods of time designated by the President in accordance with Section Forty-five of this Act shall apply also to the lands comprised in the provisions of this Chapter, but this Section shall not be construed as prohibiting any of said persons from acting under this Chapter at any time prior to the period fixed by the President.

Sec. 3. All pending applications filed before the effectivity of this amendatory Act shall be treated as having been filed in accordance with the provisions of this Act.

Under RA 9176, the application for judicial confirmation is limited only to 12 hectares, consistent with Section 3, Article XII of the 1987 Constitution that a private individual may only acquire not more than 12 hectares of alienable and disposable land. Hence, respondent, as successor-in-interest of an individual owner of the land, cannot apply for registration of land in excess of 12 hectares.  Since respondent applied for 56.4007 hectares, the application for the excess area of 44.4007 hectares is contrary to law, and thus void ab initio. In applying for land registration, a private corporation cannot have any right higher than its predecessor-in-interest from whom it derived its right.  This assumes, of course, that the corporation acquired the land, not exceeding 12 hectares, when the land had already become private land by operation of law. In the present case, respondent has failed to prove that any portion of the land was already private land when respondent acquired it from Porting in 1997.

X x x.”