THE HEIRS OF PROCESO BAUTISTA REPRESENTED BY PEDRO BAUTISTA, PETITIONERS, VS. SPOUSES SEVERO BARZA AND ESTER P. BARZA, AND COURT OF APPEALS, RESPONDENTS.

The facts of this case began as far back as 1946, when the
Philippines was still a new republic and frontier lands and bountiful natural
resources down south beckoned the adventurous-like Proceso Bautista and Ester
Barza.

It was on October 25, 1946, to be exact, when Proceso Bautista
applied for a fishpond permit over a thirty-hectare parcel of marshy public
land located in Sitio Central, Lupon, Davao (Fishpond Application No.
1205). The application was acknowledged
on December 12, 1946, by the then Division of Fisheries. Said application was, however, rejected by
the same office on November 9, 1948 because the area applied for was needed for
firewood production as certified to by the Bureau of Forestry. The rejection covered an area of 49 hectares
as against the 30 hectares applied for by Proceso Bautista.^[1]
Between October 25, 1946 and November 9, 1948, Bautista occupied an area which
extended beyond the boundary of the one he had applied for and introduced improvements
thereon.^[2]

On September 23, 1948, Ester Barza filed a fishpond applica­tion
covering an area of approximately 14.85 hectares at Sitio Bundas, Lupon, Davao
(Fishpond Application No. 2984). Subsequent investigation revealed that the portion applied for by Barza
overlapped the area originally applied for by Proceso Bautista.^[3]

Despite the rejection of his application, Proceso Bautista filed
another fishpond application on February 8, 1949 with the Bureau of Fisheries
(Fishpond Application No. 3346). The 49
hectares applied for was in Sitio Bundas instead of Sitio Central.^[4]

The records of the Bureau of Fisheries further show that while
the 14.85 hectares applied for by Barza in Fishpond Application No. 2984 had
been released by the Bureau of Forestry as available for fishpond purposes, the
49 hectares applied for by Bautista in Fishpond Application No. 3346 had not
yet been similarly released by the said bureau. It must be emphasized that the area, including the portion
applied for by Barza had been greatly improved by Proceso Bautista.^[5]
As expected, an administrative case involving the two applicants arose.

On September 19, 1953, the Director of Fisheries ruled in favor
of Ester Barza. The dispositive portion^[6]
of his order reads:

“IN VIEW OF THE FOREGOING, Fp. A. No. 2984 of Ester F. Barza
should be, as hereby it is, GIVEN DUE COURSE, subject however to the
reimbursement of the amounts of improvements in the area to Proceso Bautista
within a period of sixty days from the date hereof, the said amounts to be
appraised and determined by the District Fishery Officer at Davao City; and Fp.
A. No. 3346 of Proceso Bautista should be, as hereby it is, REJECTED.

SO ORDERED.”

Bautista appealed the said order to the Secretary of Agri­culture
and Natural Resources (DANR Case No. 836). In a decision dated April 28, 1954, the Secretary, through
Undersecretary Jaime M. Ferrer, dismissed the appeal and affirmed in toto
the order of the Director of Fisheries giving due course to the fishpond
application of Barza.^[7]
Bautista moved for reconsideration but the
same was denied on October 8, 1954.^[8]

It was not until February 2, 1955, that the Director of
Fisheries, in pursuance of the order of September 19, 1953, required Ester
Barza to remit the amount of P3,391.34 which represented the value of the
improvements introduced by Bautista.^[9] This
figure was protested by Mrs. Barza in her letter dated March 6, 1955 where she
expressed her willingness to pay the amount of P1,763.31 only. On April 18, 1955, the Director of Fisheries
advised her to remit a reappraised amount of P2,263.33. Subsequent reappraisals on the value of the
improvements became neces­sary in view of Bautista’s claim that the
improvements were worth10 P14,000.^[10]

Meanwhile, since the parties could not agree on the amount of
reimbursement, on October 13, 1956, Bautista moved for the rejection of the
fishpond application of Barza in view of her non-compliance with the order of
the Director of Fisheries dated September 19, 1953 mandating Barza’s deposit of
the value of the improvements.^[11]
Bautista appealed to the then Secretary of Agriculture and Natural Resources,
who, in his decision dated May 5, 1959 denied Bautista’s appeal thereby
enforcing the Director of Fisheries’ order of September 19, 1953.^[12]

On October 19, 1960, Jose Montilla, Assistant Director of
Fisheries, ordered Ester Barza by letter to reimburse Bautista P1,789.18, the
total value of the improvements pursuant to the appraisal report of District
Fishery Officer Crispin Mondragon dated October 31, 1958.^[13]
On December 22, 1960, Barza, agreeing to said appraisal, consigned the sum of
P1,789.18 with the then Justice of the Peace of Lupon, Davao.^[14]
Bautista, however, refused to accept the same. On July 11, 1961, another reappraisal of the improvements was made
establishing the value of the dikes, dams, trees and houses in the area
involved to be P14,569.08.^[15] On
December 12, 1962, this amount was reduced to P9,514.33 in view of the finding
that certain improvements were suitable for agricultural and not for fishpond
purposes.^[16]
In the meantime, the decision of the Secretary of Agriculture and Natural Re­sources
dated May 5, 1959 became final.^[17]

More than seven years after the last reappraisal of the
improvements or on December 12, 1968, Ester Barza and her husband Engr. Severo
M. Barza, filed in the then Court of First Instance of Davao Oriental, an
action against Bautista praying for recovery of possession over the
14.85-hectare fishpond area she had applied for a declaration of the validity
of the consignation made before the Justice of the Peace of Lupon, and damages
and attorney’s fees. On January 30,
1971, while the case was pending resolution, Proceso Bautista died.^[18]
Consequently, his heirs were substituted as party defendants.

The lower court at first dismissed the case for lack of
jurisdiction but later, it reconsidered the dismissal.^[19]
After a protracted trial, on November 15, 1983, the Regional Trial Court of
Davao, Oriental,^[20]
rendered a decision^[21] in
favor of defendant Bautista. While
disagreeing with the Bautistas that the priority rule in applications for
permits was inapplicable because Proceso Bautista’s application was made before
the area was declared available for fishpond purposes, the lower court ruled
that the Barzas had not acquired a vested right to possess the areas concerned
as they had not complied with the “condition precedent” to such
possession – the reimbursement of the value of the im­provements made by
Bautista. Hence, the court ruled, it
was premature for the Barzas to demand possession of the area.

On whether the action for recovery of possession had prescribed,^[22] the lower court said:

“x x x Besides, a review of the established facts and
circumstances would show that Proceso Bautista started to possess the property
adversely as early as 1946. It was
only on September 23, 1948 when Ester Barza filed her application and protest­ed
Bautista’s entry. Under Article
2253 of the New Civil Code; the Civil Code of 1899 and other previous laws
shall govern rights originating, under said laws, from acts done or events
which took place under their regime, even though this Code may regulate them in
a different manner or may not recognize them. Prescription therefore which started prior to the effectivity
of the New Civil Code on August 30, 1950 should be governed by the law prior to
the effectivity of the New Civil Code, which was the Code of Civil Procedure,
under which the action of recovery of (possession) prescribed within ten (10)
years. In this case, the adverse possession
of Proceso Bautista which could be a basis for prescription was interrupted
with the filing of the application of Ester Barza and her protest against the
acts of the former which she lodged with the Bureau of Fisheries in 1948. When the decision of the Department of
Agriculture and Natural Resources dated May 5, 1959 became final on July 4,
1959 as per Exhibit ‘D’ and as in fact admitted by the parties, the said
prescription by adverse possession continued (sic). This is clear from the provision of Art.
1123 of the New Civil Code which provides that civil interruption of possession
for the purpose of prescription is produced by the judicial summons to the
possessor which, in the conflict between the parties, took the form of the
fishpond application and the pro­test filed by Ester Barza with the Bureau of
Fish­eries in 1948. From July 4,
1959 to December 12, 1968, a period of more than nine (9) years elapsed, and as
the same should be tacked with, the period of almost two (2) years which
elapsed from 1946 to 1948, when Proceso Bautista started to adversely possess
the area and when, on September 23, 1948, Ester Barza filed her application,
more than ten (10) years had expired and therefore by reason of prescription,
the recovery of possession is also barred.”

Emphasizing that Barza’s failure to reimburse Bautista for the
improvements introduced on the area was inconsistent with good faith, the lower
court held that the order of the Director of Fisheries giving due course to her
fishpond application and the decision of the Secretary of Agriculture and
Natural Re­sources “had all become stale.” Moreover, the consignation
of the amount of P1,789.18 was illegal as it was not in accordance with Art.
1258 of the New Civil Code and, the court added, Barza’s failure to pay the sum
required of her and to file the necessary action within ten years was
tantamount to a non-user of her rights under the September 19, 1953 order of
the Director of Fisheries. Citing by
analogy Art. 506 of the Civil Code providing that the right to make use of
public waters is extinguished by the lapse of the concession and by non-user
for five (5) years, the lower court held that the cancellation of Barza’s
application, as recommended by Fishery Product Examiner Abdul Bakir, was
proper.

On the other hand, the lower court ruled that Bautista’s right to
retain possession over his improvements was implied by the order of September
19, 1953 while Barza’s failure to pay the value of the improvements was
“unfair and unsporting” and viola­tive of Art. 19 of the New Civil
Code. The lower court believed that
P9,514.33 was the “right amount” that Barza should have properly
consigned. The dispositive portion of
the decision^[23]
reads:

“WHEREFORE, judgment is hereby rendered in favor of the
defendants and against the plaintiffs, dismissing the complaint and the
plaintiffs are hereby directed to pay defendants the sum of P10,000 by way of
litigation expenses and P10,000 by way of attorney’s fees and to pay the costs.

SO ORDERED.”

The Barzas appealed to the Court of Appeals. On June 30, 1986 said court reversed the
decision of the lower court.^[24] It
interpreted the decision of the Secretary of Agriculture and Natural Resources as an “official
imprimatur” on the application of Barza and as an implication that
Bautista had no right to continue possession over the 49 hectares covered by
Fishpond Application No. 3346.

While stating that consignation in an action for recovery of possession of realty
is not required by law and that the reim­bursement of the value of the improvements is not an obligation, the
appellate court nonetheless held
that the consignation of
P1,789.18 was “proper and
effective.”^[25]
It found that Bautista was not a possesor in good faith nor a planter in good
faith because he filed Fishpond Application No. 3346 after Barza had filed
Fishpond Application No. 2984. It
concluded that Bautista claim to prescriptive rights, acquired or vested, did
not arise “because it infringe(d) on the rights of other(s) like Barza whose
Fishpond Application No. 2984 was given due course by the proper officials of
the government.”^[26] It
disposed of the case as follows:

“Wherefore, the decision a quo is hereby set
aside and reversed and another one is rendered ordering the heirs of Proceso
Bautis­ta to accept or withdraw the sum of P1,789.18 from the Municipal Trial
Court Lupon, Davao Oriental (formerly Municipal Court of Lupon, Davao Oriental)
representing the value of the improvements introduced on the controverted area
and to surrender possession of the con­tested area to the heirs of Ester Barza
both within 10 days from receipt of the entry of judgment. No damages and cost.

SO ORDERED.” (Rollo, p. 55)

On July 29, 1986, petitioners filed a motion for reconsideration
of the decision of the Court of Appeals but the same was denied on June 18,
1987.^[27]

Hence, this recourse. Petitioners contend that the private respondents cannot be given the
right to possess the fishpond in question as they themselves did not comply
with the Director of Fisheries’ order to reimburse Bautista for the
improvements thereon. They assert that
whatever rights the Barzas had under their fishpond application had become
stale by non-user.

At the outset, it should be remembered that until timber or
forest lands are released as disposable or alienable, neither the Bureau of
Lands nor the Bureau of Fisheries has authority to lease, grant, sell, or
otherwise dispose of these lands for homesteads, sales patents, leases for
grazing purposes, fishpond leases and other modes of utilization.^[28]
On October 25, 1946 when Bautista filed Fishpond Application No. 1205, the area
applied for could not yet be granted to him as it was yet to be released for
public utilization. The situation,
however, changed when Barza filed Fishpond Application No. 2984 for the area
had, by then, been opened for fishpond purposes.

Thus, even if Bautista were ahead of Barza by two years in terms
of occupation, possession and introduction of substantial improvements, he was
not placed in a better position than Barza. The priority rule under Fisheries Administrative Order No. 14 applies
only to public lands already released by the Bureau of Fisheries. Until such lands had been properly declared
available for fishpond purposes, any application is ineffective because there
is no disposable land to speak of.^[29]
Accordingly, Bautista’s application was premature and the ruling of the
Director of Fisheries on this matter was, therefore, correct.

Although an administrative decision does not necessarily bind us,
it is entitled to great weight and respect. It should be stressed that the function of administering and
disposing of lands of the public domain in the manner prescribed by law is not entrusted to the courts but
to executive officials.^[30]
Matters involved in the grant, cancellation, reinstatement and revision of
fishpond licenses and permits are vested under the executive supervision of the
appropriate department head who in this case is the Secretary of Agriculture
and Natural Resources. As such, his
discretion must be respected in the absence of a clear showing of abuse.^[31]
This is in consonance with our well settled ruling that administrative decisions on matters within the jurisdiction
of the executive department can only be set aside on proof of gross
abuse of jurisdiction, fraud or error of law.^[32] As
earlier noted, and there being no motion for its reconsideration, the decision of the Secretary of Agriculture and
Natural Resources became final on July 3, 1959, thirty (30) days from receipt
by the parties of copies of the decision.^[33]

Petitioners’ contention that the action for recovery of
possession had prescribed when the Barzas filed it on December 12, 1968 is
erroneous for it was filed within the ten-year period for enforcing a judgment,
which in this case is the May 1959 decision of the Secretary of Agriculture and
Natural Resources, as provided for in Art. 1144 of the Civil Code. Hence, the ulti­mate issue in this case is
whether or not the Barzas may rightfully seek enforcement of the decision of
the Director of Fisheries and that of the Secretary of Agriculture and Natural
Resources, notwithstanding their refusal to reimburse the Bautistas for the
improvements in the area. We find that
the peculiar circumstances of this case compel as to rule in the affirmative.

Although Bautista was in possession of the area for quite a
number of years, he ceased to become a bona fide possessor upon
receipt of the decision of the Director of Fisheries granting due course to
Barza’s fishpond application. Under
Art. 528 of the Civil Code, “(p)ossession acquired in good faith does not
lose its character except in the case and from the moment facts exist which
show that the possessor is not unaware that he possesses the thing improperly
or wrongfully.” Thus, Bautista should
have desisted from introducing improvements on the property when he learned
that Barza’s application had been approved.

However, Bautista may not be solely faulted for holding on to the
area notwithstanding that he had no right over it. The Barzas, after receiving the administrative decision in their
favor, should have complied with its directive to reimburse the Bautistas for
the improvements introduced thereon. This is not to say, however that such failure to abide by the decision
of the Director of Fisheries rendered “stale” the said decision. There is also the established fact that
Bautista refused the payments tendered by the Barzas. However, the Barzas failure to question the last reappraisal of
the improvements constituted inaction on their part, for which they should bear
its consequences.

WHEREFORE, the decision of the Court of Appeals is hereby
AFFIRMED subject to the modification that the petitioners shall he REIMBURSED
the amount of P9,514.33 (inclusive of the consigned amount of P1,789.18) with
legal interest from December 12, 1962 until fully paid. Upon payment of said reimbursement, the
Bautis­tas shall SURRENDER possession of the 14.85 hectares, including the
improvements thereon, for which the Barzas had been granted the right to
operate as fishpond. This decision is
immediately executory. No costs.

SO ORDERED.

Gutierrez, Jr., (Chairman), Feliciano, and Davide, Jr., JJ., concur.

Bidin, J., No part. I participated in the appealed decision of
respondent court.

^[1]
Exh. A; Plaintiff’s Folder of Exhibits, p. 1.

^[2]
Ibid.

^[3]
Ibid.

^[4]
Ibid.

^[5]
Exhibit A, p. 2.

^[6]
Ibid.

^[7]
Exh. B; supra, pp. 3-6.

^[8]
Exh., C; supra, p. 6.

^[9]
Exh. 12; Defendant’s Folder of Exhibits, p. 17.

^[10]
Exh. B; Plaintiff’s Folder of Exhibits, pp. 6-7.

^[11]
Exh. 13; Defendant’s Folder of Exhibits, pp. 18, 20.

^[12]
Exh. C; Plaintiff’s Folder of Exhibits,
p. 7.

^[13]
Exh. E; supra, pp. 9-10.

^[14]
Exhs. N & 0; supra,
p. 26.

^[15]
Exh 5-A; Defendant’s Folder of
Exhibits, p. 2.

^[16]
Exhibit 16-D; supra, p. 30.

^[17]
Exh. D; Plaintiff’s Folder of Exhibits, p. 8.

^[18]
Exh. 8; Defendant’s Folder of Exhibits, p. 6.

^[19]
Records, p. 216.

^[20]
Judge Jose C. Estrada, presiding.

^[21]
Rollo, p. 86.

^[22]
Decision, pp. 17-19; Rollo, pp.
76-78.

^[23]
Rollo, p. 86.

^[24]
The decision was penned by Justice Porfirio V. Sison with Justices Abdulwahid
A. Bidin, Ramon B. Britanico and Josue N. Bellosillo; concurring.

^[25]
Court of Appeals Decision, pp. 3-4; Rollo,
pp. 53-54.

^[26]
Ibid, p. 5

^[27]
The resolution was penned by Justice
Oscar Victoriano and concurred in by Justices Josue N. Bellosillo and Oscar M. Herrera.

^[28]
Yngson v. Secretary of Agriculture and Natural Resources, L­36847, July
20, 1983, 123 SCRA 440; Mapa v. Insular Government, 10 Phil. 175 (1908);
Ankron v. Government of the Philippine Is­lands, 40 Phil. 40 (1919);
Vda. de Alfafara v. Mapa, 95 Phil. 125 (1954); and Director of Forestry v.
Muñoz, L-24796, June 28, 1968, 23 SCRA 1183.

^[29]
Yngson v. Secretary of
Agriculture and Natural Resources, supra and Bonilla v.
Secretary of Agriculture and Natural Resources L-20083, April 27, 1967; 19 SCRA
836.

^[30]
Cerdon v. Court of Appeals, G.R. No. 47422, April 6, 1990, 184 SCRA 198 citing Sec.
4 of the Public Land Act (Commonwealth Act No. 141).

^[31]
Pastor v. Echavez, L-30593, September 30, 1977, 79 SCRA 220; Nera v. Titong, L-25559, March 21, 1974, 56 SCRA 40.

^[32]
Assistant Executive Secretary for Legal Affairs of the Office of the President v.
Court of Appeals, G.R. No. 76761, January 9, 1989, 169 SCRA 27; Lovina v.
Moreno, 1-17821, November 29, 1963, 9 SCRA 557; Timbancaya v. Vicente,
L-19100, December 27, 1963, 9 SCRA 852.

^[33]
Sec. 10 of Fisheries Administrative Order No. 22 states: “The decision Of the Secretary of
Agriculture and Natural Resources on an appealed case shall become final,
unless otherwise specifically stated therein, after the lapse of 30 days from
the receipt of a copy thereof by the interested parties.” (44 O.G. 431).