G.R. No. L-30852 February 26, 1988
CITY OF ILIGAN, plaintiff-appellant, vs. DIRECTOR OF LANDS, THE DISTRICT LAND OFFICER OF LANAO DEL NORTE, and MARCELO STEEL CORPORATION, defendants-appellees.

FACTS

The case involves a dispute over parcels of land originally part of the Camp Overton Military Reservation. In 1952, President Elpidio Quirino issued Proclamation No. 335, reserving these lands for the National Power Corporation (NPC). The NPC constructed the Maria Cristina Fertilizer Plant on the land. In 1960, NPC sold the plant, including the right to use the land, to Marcelo Tire and Rubber Corporation. Subsequent proclamations (Nos. 20 of 1962 and 198 of 1964) excluded the plant site from the NPC reservation and opened it for disposition under the Public Land Act. Marcelo Steel Corporation, a sister company, filed a Miscellaneous Sales Application for the land.
On October 4, 1965, President Diosdado Macapagal issued Proclamation No. 469, which excluded specific lots from the NPC reservation and, pursuant to Section 60 of Commonwealth Act No. 141 (the Public Land Act), granted and donated these lots to Iligan City. Despite the city’s claim of ownership and request to halt the sale, the Director of Lands proceeded to schedule a public auction for the land based on Marcelo Steel’s application. Iligan City filed an injunction suit. During the pendency of the case, President Ferdinand Marcos issued Proclamation No. 94 in 1966, which excluded the same lots from Proclamation No. 469 and again declared them open for disposition.

ISSUE

The primary issue is whether Proclamation No. 469 validly transferred ownership of the subject parcels of land to Iligan City, thereby rendering the subsequent Proclamation No. 94 and the scheduled public auction void.

RULING

The Supreme Court reversed the lower court and ruled in favor of Iligan City. The legal logic is anchored on the President’s authority under the Public Land Act and the nature of the grant. Section 60 of Commonwealth Act No. 141 explicitly authorizes the President to grant, donate, or transfer lands of the public domain to any province, municipality, or branch of the government for public use. Proclamation No. 469 was a valid exercise of this executive power. Upon its issuance, the subject lands were effectively segregated from the public domain, and ownership vested in Iligan City. The city’s immediate acts of survey and development negotiations confirmed its acceptance and exercise of ownership rights.
Consequently, once the land was validly granted to a municipal corporation, it ceased to be part of the alienable public domain. The Court emphasized that under Section 60, such granted land cannot be alienated, encumbered, or disposed of in a manner affecting its title except when authorized by Congress. Therefore, President Marcos’s subsequent Proclamation No. 94, which attempted to revest the land back to the public domain and open it for private disposition, was issued without legal authority and is null and void. The Director of Lands had no right to proceed with the auction sale of property that was no longer under the administrative jurisdiction of the Bureau of Lands, as it had become the exclusive property of Iligan City.