G.R. No. 224991, June 23, 2021
Heirs of Henry Leung, Represented by His Widow, Marilyn Leung, Petitioners, vs. Heirs of Miguel Madio, Represented by Eddie Madio, Respondents.

FACTS

The controversy involves Lot No. 8, P. Burgos Subdivision, Baguio City. On September 9, 1960, the Director of Lands issued an Order of Award in favor of Henry C. Leung, the winning bidder in a public auction under the Public Land Act (C.A. 141). On July 29, 1964, Miguel Madio and others filed a protest with the Bureau of Lands seeking cancellation of the award, claiming prior possession since 1947, lack of notice of the auction, Leung’s non-compliance with award conditions, and their own entitlement under R.A. 730. After hearings, the Regional Land Office of Dagupan City, through Director Bernardo C. Albano, issued an Order on July 13, 1967, dropping the protest and ordering the protestants to vacate, while directing an investigation into Leung’s compliance with the award conditions. A subsequent land investigator’s report found Madio had constructed a house on the lot in 1947 and Leung had introduced no improvements.
Madio filed subsequent petitions in 1973 and 1974, which were denied. On February 21, 1980, Madio filed a petition with the DENR Secretary to reopen the case. On June 16, 1992, the DENR Secretary rendered a Decision setting aside the 1967 Order and the 1960 Award, and ordering the sale of the lot to Madio under R.A. 730. The DENR found the auction invalid for non-compliance with publication requirements under C.A. 141, that Madio did not receive the 1967 Order (making it non-final), that Madio was denied due process when the protest was dismissed due to his co-protestants’ absence, and that Madio was entitled under R.A. 730.
Leung’s appeal to the Office of the President (OP) was initially dismissed for alleged failure to file an appeal memorandum, but the Court of Appeals and subsequently the Supreme Court (in G.R. No. 169161, August 17, 2007) annulled that dismissal and remanded the case to the OP. On remand, the OP, in a Decision dated March 1, 2011, denied Leung’s appeal and affirmed the DENR 1992 Decision. The Court of Appeals affirmed the OP Decision. The Heirs of Leung then filed the present Petition for Review.

ISSUE

Whether the Court of Appeals committed reversible error in affirming the OP Decision which upheld the DENR 1992 Decision cancelling the award to Leung and authorizing the sale of the subject property to Madio under R.A. 730.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals Decision. The Court held:
1. The public auction sale and the subsequent award to Leung were void for non-compliance with the mandatory publication requirement under Section 24 of C.A. 141. The law required publication of the notice of sale in the Official Gazette for six consecutive weeks. The records showed the notice was published only twice, rendering the auction and award void ab initio.
2. The July 13, 1967 Order of the Regional Land Director did not attain finality as to Madio. The DENR correctly found no proof that Madio received a copy of this order; a copy sent to him was returned unserved. An order does not become final as against a party who did not receive notice thereof.
3. Madio was not accorded due process in the proceedings leading to the July 13, 1967 Order. The order was effectively a summary judgment dismissing Madio’s protest. The investigation was cancelled due to the absence of Madio’s co-protestants, preventing Madio from presenting his evidence, which constituted a denial of due process.
4. Madio is entitled to acquire the lot under R.A. 730. The evidence established Madio’s actual occupation and possession of the lot since 1947, constructing a house thereon ten years prior to the 1957 auction. As a qualified applicant under R.A. 730, he possessed a preferential right to purchase the lot. The DENR Secretary correctly applied R.A. 730, which allows the sale of public lands for residential purposes without public auction to qualified applicants, a special law that prevails over the general provisions of C.A. 141 regarding town site reservations.
Therefore, the DENR 1992 Decision, as affirmed by the OP and the CA, validly set aside the void auction award to Leung and correctly authorized the sale of the property to Madio.