G.R. No. 50685 - Agura vs. Serfino Sr.

On December 10, 1965, private respondent Federico Serfino, Sr. filed Miscellaneous Sales Application (MSA) No. (V-3)2 for a 4,172 square meter parcel in San Patricio, Bacolod City.
On February 18, 1966, his son, Federico Serfino, Jr., filed MSA No. (V-3)1 for an adjoining lot of 1,358 square meters.
The Director of Lands approved the survey plans for both MSAs following initial investigations and reports.

A preliminary investigation was conducted on February 21, 1966, by Land Investigator Rodolfo Magbanua, who noted improvements on both parcels (residential buildings, piggery, and bodega) and evidence of occupancy since 1947.
Magbanua recommended that the MSAs be given further due course based on the improvements introduced and the long-term occupancy evidence.
Subsequent referrals were made to various government offices (Public Works, Public Highways, City Engineer, Collector of Customs) without any objections raised.

After a series of approvals, the Director of Lands approved the surveys on July 26, 1966, and notices for public auction were posted on September 28, 1967, and in the Official Gazette on November 13 and 20, 1967.
The auction was scheduled for December 27, 1967, with the Undersecretary of Natural Resources pegging the price at P5.00 per square meter.
At auction, only the private respondents (the Serfinos) bid—Sr. with P20,860.00 and Jr. with P6,790.00—and paid the required 10% of their respective bids.
Although purchase prices and annual real estate taxes were fully paid, the Bureau of Lands had not yet issued an Order awarding the lots.

On March 11, 1968, an investigation was ordered regarding a conflict (D.L.O. Conflict No. (V-3)220(N)) between the MSA of Sr. Serfino and an unnumbered Revocable Permit Application (RPA) by Primitivo Donozo.
On April 2, 1968, another investigation (B.L. Conflict No. 217(N)) was initiated concerning the conflict between Serfino, Jr.’s MSA and RPAs of petitioners (Agura, Alib, Sta. Rita, and Domingo Natividad).
Land Investigator Ernesto Siriban conducted a preliminary investigation, focusing on the occupancy and usage of the land, and advised formal hearings to resolve conflicting claims; however, not all proceedings were duly recorded.

In August 1969, petitioners (Agura, Alib, Sta. Rita, and 106 others) sent a petition to the President requesting that the parcels, which they had been occupying for 30 years, be awarded to them.
Regional Land Officer Cipriano Zabala of Region V conducted an investigation, submitting a preliminary report on October 13, 1969, describing the physical characteristics of the land, its accretion from the sea, and the occupancy pattern by both the Serfinos and petitioners.
Zabala’s final report, submitted on December 3, 1969, provided detailed sketches and descriptions of three distinct lots:

The lot under Serfino, Jr.’s MSA of 1,358 square meters, with approximately 34 houses belonging to petitioners.
The lot under Serfino, Sr.’s MSA of 4,172 square meters, with a residential house, a bodega, and 38 petitioners’ houses.
A third lot (approximately 3,650 square meters) not covered by any survey plan, occupied by 58 petitioner houses.

Zabala also noted pending ejectment cases against petitioners and recommended that further action on the private respondents’ MSAs be held in abeyance pending resolution of these conflicts.

Following Land Investigator Villamarzo’s recommendation (February 10, 1971), the Director of Lands, on July 6, 1971, issued an order amending the MSAs to exclude areas occupied by petitioners, thereby giving petitioners preferential rights over those portions through a subsequent public land application process.
On August 7, 1971, private respondents moved for reconsideration, alleging the denial of an opportunity to introduce evidence. This motion was ultimately denied on August 16, 1974, with officials asserting that the petitioners had established preferential possession through actual occupation.

On October 7, 1976, the Secretary of Natural Resources set aside the Director’s Order of July 6, 1971. The Secretary’s decision ordered petitioners to vacate the lots within 30 days and affirmed that the MSAs should continue to be processed.
Key findings in the Secretary’s decision included:

Confirmation that the required public notices and bidding processes were properly followed.
The observation that petitioners had not participated in the public auction and that their adverse claims were filed nearly two years after the sale.
The application of the legal rule that public lands should be disposed of to the highest bidder, with mere prior possession being immaterial.

On September 20, 1977, the Presidential Assistant for Legal Affairs affirmed the Secretary’s decision. The Office of the President dismissed petitioners’ arguments regarding foreshore issues, limits under R.A. No. 730, and social justice concerns.
Petitioners filed a motion for reconsideration and later initiated a special civil action for certiorari in the trial court seeking nullification of the decisions of both the Presidential Assistant for Legal Affairs and the Secretary of Natural Resources.
The trial court, on April 30, 1979, affirmed the previous decisions, effectively dismissing the petitioners’ challenge and upholding the sale by public auction.
Subsequent filings and briefs led to the Supreme Court’s review, with the petitioners asserting several alleged errors by the lower courts and administrative officials regarding findings of arbitrary conduct and misinterpretation of R.A. No. 730.

Whether the findings of fact and conclusions rendered by the respondent public officials were made arbitrarily and with grave abuse of discretion.
Whether the reliance on the administrative findings, without independent judicial review, constituted an error.

Whether petitioners’ adverse claims, based on their prolonged occupancy, should override the results of the public auction.
Whether their claims entitled them to preferential rights over the contested lots.

Whether Section 1 of R.A. No. 730 effectively amended or overruled the provisions of Sections 61 and 67 of the Public Land Act regarding the sale of public lands for residential purposes.
Whether the limitations prescribed in R.A. No. 730 (sale only up to 1,000 square meters via private sale) were applicable in this case, wherein the area sold exceeded that limit.

Whether the sale of the lots in question through public auction, conducted in accordance with the Public Land Act, was legally valid despite the subsequent filing of adverse claims by petitioners.
Whether prior possession alone could justify a departure from the established process of public bidding in the disposition of public lands.