Question VIII, Political Law, 2017 Bar Exam

A bank acquired a large tract of land as the highest bidder in the foreclosure sale of the mortgaged assets of its borrower. It appears that the land has been originally registered under the Torrens system in 1922 pursuant to the provisions of the Philippine Bill of 1902, the organic act of the Philippine Islands as a colony of the USA. Sec. 21 of the Philippine Bill of 1902 provided that "all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase, and the land in which they are found to occupation and purchase, by citizens of the United States, or of said Islands." Sec. 27 of the law declared that a holder of the mineral claim so located was entitled to all the minerals that lie within his claim, but he could not mine outside the boundary lines of his claim.

The 1935 Constitution expressly prohibited the alienation of natural resources except agricultural lands. Sec. 2, Art. XII of the 1987 Constitution contains a similar prohibition, and proclaims that all lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. This provision enunciates the Regalian Doctrine.

May the Government, on the basis of the Regalian Doctrine enunciated in the constitutional provisions, deny the bank it...