G.R. No. 240047, May 14, 2021
Authority of the Freeport Area of Bataan, Petitioner, vs. F.F. Cruz & Co., Inc., Respondent.

FACTS

The Authority of the Freeport Area of Bataan (AFAB) was created by Republic Act No. 9728 to manage the Freeport Area of Bataan (FAB). All properties, assets, and liabilities of the Philippine Economic Zone Authority (PEZA) in the Bataan Economic Zone were transferred to AFAB. PEZA’s predecessor agencies had managed lands in Mariveles, Bataan, reserved for foreign trade zone purposes under Presidential Proclamations Nos. 899 and 939. While transferring titles to its name, AFAB discovered that several parcels of land covered by these proclamations were registered under Transfer Certificates of Title (TCTs) in the name of F.F. Cruz & Co., Inc. (FFCCI), derived from Original Certificate of Title (OCT) No. 234 issued in 1972. AFAB, through the Office of the Government Corporate Counsel (OGCC), filed an Amended Complaint for Declaration of Nullity and Cancellation of Title against FFCCI, alleging the subject properties were inalienable public land when OCT No. 234 was issued, making it and the derivative TCTs null and void. FFCCI filed a Motion to Dismiss on grounds including failure to state a cause of action, that the action was in the nature of expropriation which AFAB could not undertake, that FFCCI was a buyer in good faith with indefeasible title, res judicata, prescription and laches, and non-payment of filing fees. The Regional Trial Court (RTC) denied the motion to dismiss. The Court of Appeals (CA) initially affirmed the RTC but, upon reconsideration, reversed and dismissed the complaint, holding that the action was one for reversion which only the State, through the Office of the Solicitor General (OSG), could institute, and that AFAB was not the real party-in-interest. AFAB filed a petition for review on certiorari.

ISSUE

Whether the Court of Appeals erred in dismissing the complaint on the ground that the action is one for reversion that can only be filed by the State through the Office of the Solicitor General, and that AFAB is not the real party-in-interest.

RULING

Yes. The Supreme Court granted the petition, reversed the Amended Decision of the Court of Appeals, and reinstated the Orders of the Regional Trial Court denying the motion to dismiss. The Court held that the action filed by AFAB is not an action for reversion. An action for reversion is filed by the State to revert land of the public domain that had been unlawfully granted to private individuals back to the public domain. In this case, AFAB is not seeking to revert the land to the public domain of the State. Rather, it seeks to establish that the subject properties, having been reserved for a specific public purpose (foreign trade zone) and subsequently transferred by law to AFAB, are owned by AFAB as a government instrumentality. The complaint is one for declaration of nullity of title and reconveyance based on AFAB’s ownership. The Court further ruled that AFAB is the real party-in-interest. As a government instrumentality vested with corporate powers, including the power to sue and be sued, and more importantly, as the entity to which ownership of the subject properties was transferred by Republic Act No. 9728, AFAB has a legal interest in the outcome of the case. The Court clarified that the determination of whether the lands are indeed part of the territory transferred to AFAB and whether OCT No. 234 was void for covering inalienable land are matters of evidence to be threshed out in a full-blown trial, not in a motion to dismiss. The complaint sufficiently stated a cause of action. The case was remanded to the RTC for further proceedings.