G.R. No. L-40912 September 30, 1976
Republic of the Philippines, represented by the Mindanao Medical Center, petitioner, vs. Hon. Court of Appeals and Alejandro Y. De Jesus, respondents.

FACTS

Eugenio de Jesus, father of respondent Alejandro, filed a sales application for a 33-hectare land in Davao in 1921. After a valid bidding in 1934 where he was the lone bidder, the Director of Lands issued an Order of Award on November 23, 1934, awarding him the land at a set price. A subsequent survey subdivided the land. On August 28, 1936, the Director of Lands amended the sales application to exclude a 12.8081-hectare portion (Lot 1176-B-2) needed for a military camp. This exclusion was formalized by Presidential Proclamation No. 85 on September 7, 1936. Eugenio de Jesus thereafter made installment payments only for the remaining 20.6400 hectares and was eventually granted a sales patent for that reduced area in 1948. In 1956, President Magsaysay revoked the military reservation and later re-reserved the same Lot 1176-B-2 for a medical center site. The petitioner Mindanao Medical Center subsequently applied for its Torrens registration based on this executive proclamation.

ISSUE

Whether the Republic, through the Mindanao Medical Center, acquired a registerable title to Lot 1176-B-2 by virtue of the executive proclamation reserving it for medical center purposes.

RULING

No. The Supreme Court affirmed the Court of Appeals’ decision granting registration to Alejandro de Jesus. The Court held that the 1936 amendment to the sales application and the subsequent presidential proclamation, which withdrew the lot from sale, could not divest Eugenio de Jesus of a vested right. A vested right to the land had already accrued in favor of Eugenio upon the issuance of the Order of Award in 1934, which was a final determination of his right to purchase the land upon compliance with the terms. This award created a contract of sale between the government and the applicant. The subsequent exclusion of a portion of the awarded land, without his consent and after his right had vested, was invalid. The government could no longer unilaterally alter the contract. The executive proclamation reserving the land for public use could not prevail over this pre-existing, perfected contractual obligation. The Court emphasized that while the state has the power to reserve public lands, this power cannot be exercised to impair vested rights. Since Eugenio de Jesus had complied with the conditions of the award for the entire land, including the disputed portion, his right thereto became irrevocable. The patent issued in 1948 for the reduced area did not extinguish his claim to the excluded lot, as the exclusion itself was void. Therefore, the subsequent reservation for the medical center was ineffectual against this vested right.