G.R. No. L-25132; September 25, 1968
FRANCISCO DUQUE, in his capacity as Secretary of the Department of Health, plaintiff-appellant, vs. GAVINA CRUZ and THE DIRECTOR OF LANDS, defendants-appellees.

FACTS

The City of Baguio, later substituted by Secretary of Health Francisco Duque, filed a complaint for injunction to enjoin defendant Gavina Cruz from constructing on and occupying a disputed lot, and to order the Director of Lands to cancel her provisional permit. The plaintiff claimed the lot formed part of the Baguio General Hospital reservation. A preliminary injunction was issued but lifted upon Cruz posting a bond. Cruz, in her answer, asserted the lot was disposable public land, for which she had filed a proper sales application, and sought damages. The parties submitted a stipulation of facts: The Philippine Commission set aside Lot No. 84, Res. Sec. ‘A’ for Sanatorium Reservation in 1908. This lot was surveyed (1911-1912) and subdivided into Lots 84-A and 84-B in 1920, with the subdivision approved by the Director of Lands in 1928. Cruz filed a townsite sales application (T.S.A. No. V-7302) over a portion of Lot 84-A, paid fees, obtained a revocable permit from the City Engineer (who certified the area was not needed by the City), and built her house thereon. The lower court dismissed the complaint, holding that the Director of Lands’ 1928 approval of the subdivision indicated Lot 84-A was disposable public domain, and Cruz had acquired rights in good faith under due process.

ISSUE

Whether the lower court erred in dismissing the complaint, thereby upholding the Director of Lands’ authority to classify the disputed lot (Lot 84-A) as disposable public land and validating Gavina Cruz’s application and occupation.

RULING

The Supreme Court AFFIRMED the appealed decision. The Court held that the 1928 decision of the Director of Lands, approving the subdivision of the original reservation lot and thereby effectively classifying Lot 84-A as disposable public land, was conclusive. The Director of Lands, under the law (Commonwealth Act No. 141, Section 4), has direct executive control over the disposition of public lands, and his decisions on questions of fact, when approved by the Secretary of Agriculture and Natural Resources, are conclusive on the courts. Although no such Secretary’s approval was shown here, the 1928 decision had long become final and unappealed. The principle of finality of administrative decisions, as illustrated in Director of Lands v. Manuel, applies to ensure stability of property rights. Furthermore, the plaintiff (and the City of Baguio before it) slept on its rights for decades (from 1928 until the complaint in 1961) without challenging the Director of Lands’ action. Thus, both on legal grounds (the conclusive nature of the Director of Lands’ determination) and equitable grounds (laches), the complaint correctly failed.