Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-17870

September 29, 1962

MINDANAO BUS COMPANY, petitioner,

vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,
respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.
LABRADOR, J.:
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding
that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance
and repair equipment hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned
equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground
that the same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so
petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment.
In the Court of Tax Appeals the parties submitted the following stipulation of facts:
Petitioner and respondents, thru their respective counsels agreed to the following
stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting passengers and
cargoes by motor trucks, over its authorized lines in the Island of Mindanao, collecting
rates approved by the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains
Branch Offices and/or stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur;
Davao City and Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the respondent as real properties are
the following:
(a) Hobart Electric Welder Machine, appearing in the attached photograph,
marked Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex
"B";
(c) Lathe machine with motor, appearing in the attached photograph, marked
Annex "C";
(d) Black and Decker Grinder, appearing in the attached photograph, marked
Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked
Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the attached
photograph, marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked
Annex "G".
4. That these machineries are sitting on cement or wooden platforms as may be seen in
the attached photographs which form part of this agreed stipulation of facts;
5. That petitioner is the owner of the land where it maintains and operates a garage for
its TPU motor trucks; a repair shop; blacksmith and carpentry shops, and with these
machineries which are placed therein, its TPU trucks are made; body constructed; and
same are repaired in a condition to be serviceable in the TPU land transportation
business it operates;
6. That these machineries have never been or were never used as industrial equipments
to produce finished products for sale, nor to repair machineries, parts and the like offered
to the general public indiscriminately for business or commercial purposes for which
petitioner has never engaged in, to date.
1awphl.nt

The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a
motion for reconsideration, petitioner brought the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that
the questioned assessments are valid; and that said tools, equipments or machineries
are immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil
Code, and holding that pursuant thereto the movable equipments are taxable realties, by
reason of their being intended or destined for use in an industry.
3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent
City Assessor's power to assess and levy real estate taxes on machineries is further
restricted by section 31, paragraph (c) of Republic Act No. 521; and
4. The Tax Court erred in denying petitioner's motion for reconsideration.
Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance
with paragraph 5 of Article 415 of the New Civil Code which provides:
Art. 415. The following are immovable properties:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the

tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works. (Emphasis
ours.)
Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms.
They can be moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu
Unjieng, 61 Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real
property to "machinery, liquid containers, instruments or implements intended by the
owner of any building or land for use in connection with any industry or trade being
carried on therein and which are expressly adapted to meet the requirements of such
trade or industry."
If the installation of the machinery and equipment in question in the central of the
Mabalacat Sugar Co., Inc., in lieu of the other of less capacity existing therein, for its
sugar and industry, converted them into real property by reason of their purpose, it
cannot be said that their incorporation therewith was not permanent in character
because, as essential and principle elements of a sugar central, without them the sugar
central would be unable to function or carry on the industrial purpose for which it was
established. Inasmuch as the central is permanent in character, the necessary
machinery and equipment installed for carrying on the sugar industry for which it has
been established must necessarily be permanent. (Emphasis ours.)
So that movable equipments to be immobilized in contemplation of the law must first be "essential and
principal elements" of an industry or works without which such industry or works would be "unable to
function or carry on the industrial purpose for which it was established." We may here distinguish,
therefore, those movable which become immobilized by destination because they are essential and
principal elements in the industry for those which may not be so considered immobilized because they
are merely incidental, not essential and principal. Thus, cash registers, typewriters, etc., usually found
and used in hotels, restaurants, theaters, etc. are merely incidentals and are not and should not be
considered immobilized by destination, for these businesses can continue or carry on their functions
without these equity comments. Airline companies use forklifts, jeep-wagons, pressure pumps, IBM
machines, etc. which are incidentals, not essentials, and thus retain their movable nature. On the other
hand, machineries of breweries used in the manufacture of liquor and soft drinks, though movable in
nature, are immobilized because they are essential to said industries; but the delivery trucks and adding
machines which they usually own and use and are found within their industrial compounds are merely
incidental and retain their movable nature.
Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of transporting passengers and cargoes by motor
trucks. They are merely incidentals acquired as movables and used only for expediency to facilitate
and/or improve its service. Even without such tools and equipments, its business may be carried on, as
petitioner has carried on, without such equipments, before the war. The transportation business could be
carried on without the repair or service shop if its rolling equipment is repaired or serviced in another
shop belonging to another.
The law that governs the determination of the question at issue is as follows:
Art. 415. The following are immovable property:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the

tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works; (Civil Code
of the Phil.)
Aside from the element of essentiality the above-quoted provision also requires that the industry or works

Aside from the element of essentiality the above-quoted provision also requires that the industry or works
be carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra,
the "machinery, liquid containers, and instruments or implements" are found in a building constructed on
the land. A sawmill would also be installed in a building on land more or less permanently, and the sawing
is conducted in the land or building.
But in the case at bar the equipments in question are destined only to repair or service the transportation
business, which is not carried on in a building or permanently on a piece of land, as demanded by the
law. Said equipments may not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in question are not absolutely
essential to the petitioner's transportation business, and petitioner's business is not carried on in a
building, tenement or on a specified land, so said equipment may not be considered real estate within the
meaning of Article 415 (c) of the Civil Code.
WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in
question declared not subject to assessment as real estate for the purposes of the real estate tax.
Without costs.
So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Paredes, Dizon and Makalintal, JJ., concur.
Regala, Concepcion and Barrera JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.
Jose V. Mancella for respondent.
DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate
Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later
specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of Rizal
Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981 of the
said appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and
Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned
several receivables with the former under a Receivable Purchase Agreement. To secure the collection of
the receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials
inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the properties
mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry
into private respondent's premises and was not able to effect the seizure of the aforedescribed
machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court of First Instance of
Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of
which was however subsequently restrained upon private respondent's filing of a motion for
reconsideration. After several incidents, the lower court finally issued on February 11, 1981, an order
lifting the restraining order for the enforcement of the writ of seizure and an order to break open the
premises of private respondent to enforce said writ. The lower court reaffirmed its stand upon private
respondent's filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent
and removed the main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized by
the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the new
Civil Code, the same being attached to the ground by means of bolts and the only way to remove it from
respondent's plant would be to drill out or destroy the concrete floor, the reason why all that the sheriff
could do to enfore the writ was to take the main drive motor of said machinery. The appellate court
rejected petitioner's argument that private respondent is estopped from claiming that the machine is real
property by constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has

A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has
brought the case to this Court for review by writ of certiorari. It is contended by private respondent,
however, that the instant petition was rendered moot and academic by petitioner's act of returning the
subject motor drive of respondent's machinery after the Court of Appeals' decision was promulgated.
The contention of private respondent is without merit. When petitioner returned the subject motor drive, it
made itself unequivocably clear that said action was without prejudice to a motion for reconsideration of
the Court of Appeals decision, as shown by the receipt duly signed by respondent's representative. 1
Considering that petitioner has reserved its right to question the propriety of the Court of Appeals'
decision, the contention of private respondent that this petition has been mooted by such return may not
be sustained.
The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is
real or personal property from the point of view of the parties, with petitioner arguing that it is a
personality, while the respondent claiming the contrary, and was sustained by the appellate court, which
accordingly held that the chattel mortgage constituted thereon is null and void, as contended by said
respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court,
speaking through Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by way of
chattel mortgage defendants-appellants could only have meant to convey the
house as chattel, or at least, intended to treat the same as such, so that they
should not now be allowed to make an inconsistent stand by claiming otherwise.
Moreover, the subject house stood on a rented lot to which defendantsappellants merely had a temporary right as lessee, and although this can not in
itself alone determine the status of the property, it does so when combined with
other factors to sustain the interpretation that the parties, particularly the
mortgagors, intended to treat the house as personality. Finally, unlike in the Iya
cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs. F.L. Strong
Machinery & Williamson, wherein third persons assailed the validity of the
chattel mortgage, it is the defendants-appellants themselves, as debtorsmortgagors, who are attacking the validity of the chattel mortgage in this case.
The doctrine of estoppel therefore applies to the herein defendants-appellants,
having treated the subject house as personality.
Examining the records of the instant case, We find no logical justification to exclude the rule out, as the
appellate court did, the present case from the application of the abovequoted pronouncement. If a house
of strong materials, like what was involved in the above Tumalad case, may be considered as personal
property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so
agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may
not be likewise treated as such. This is really because one who has so agreed is estopped from denying
the existence of the chattel mortgage.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays
stress on the fact that the house involved therein was built on a land that did not belong to the owner of
such house. But the law makes no distinction with respect to the ownership of the land on which the
house is built and We should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization of the subject machinery as chattel by the private
respondent is indicative of intention and impresses upon the property the character determined by the
parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the
parties to a contract may by agreement treat as personal property that which by nature would be real
property, as long as no interest of third parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it had never represented nor
agreed that the machinery in suit be considered as personal property but was merely required and
dictated on by herein petitioner to sign a printed form of chattel mortgage which was in a blank form at
the time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner and not
denied by the respondent, the status of the subject machinery as movable or immovable was never
placed in issue before the lower court and the Court of Appeals except in a supplemental memorandum
in support of the petition filed in the appellate court. Moreover, even granting that the charge is true, such
fact alone does not render a contract void ab initio, but can only be a ground for rendering said contract
voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There
is nothing on record to show that the mortgage has been annulled. Neither is it disclosed that steps were
taken to nullify the same. On the other hand, as pointed out by petitioner and again not refuted by
respondent, the latter has indubitably benefited from said contract. Equity dictates that one should not
benefit at the expense of another. Private respondent could not now therefore, be allowed to impugn the
efficacy of the chattel mortgage after it has benefited therefrom,
From what has been said above, the error of the appellate court in ruling that the questioned machinery
is real, not personal property, becomes very apparent. Moreover, the case of Machinery and Engineering
Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court is not applicable to the case at bar, the
nature of the machinery and equipment involved therein as real properties never having been disputed
nor in issue, and they were not the subject of a Chattel Mortgage. Undoubtedly, the Tumalad case bears
more nearly perfect parity with the instant case to be the more controlling jurisprudential authority.

WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and
set aside, and the Orders of the lower court are hereby reinstated, with costs against the private
respondent.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.
Abad Santos, J., concurs in the result.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-11139

April 23, 1958

SANTOS EVANGELISTA, petitioner,

vs.
ALTO SURETY & INSURANCE CO., INC., respondent.
Gonzalo D. David for petitioner.
Raul A. Aristorenas and Benjamin Relova for respondent.
CONCEPCION, J.:
This is an appeal by certiorari from a decision of the Court of Appeals.
Briefly, the facts are: On June 4, 1949, petitioner herein, Santos Evangelista, instituted Civil Case No.
8235 of the Court of First, Instance of Manila entitled " Santos Evangelista vs. Ricardo Rivera," for a sum
of money. On the same date, he obtained a writ of attachment, which levied upon a house, built by Rivera
on a land situated in Manila and leased to him, by filing copy of said writ and the corresponding notice of
attachment with the Office of the Register of Deeds of Manila, on June 8, 1949. In due course, judgment
was rendered in favor of Evangelista, who, on October 8, 1951, bought the house at public auction held in
compliance with the writ of execution issued in said case. The corresponding definite deed of sale was
issued to him on October 22, 1952, upon expiration of the period of redemption. When Evangelista
sought to take possession of the house, Rivera refused to surrender it, upon the ground that he had
leased the property from the Alto Surety & Insurance Co., Inc. respondent herein and that the latter
is now the true owner of said property. It appears that on May 10, 1952, a definite deed of sale of the
same house had been issued to respondent, as the highest bidder at an auction sale held, on September
29, 1950, in compliance with a writ of execution issued in Civil Case No. 6268 of the same court, entitled
"Alto Surety & Insurance Co., Inc. vs. Maximo Quiambao, Rosario Guevara and Ricardo Rivera," in which
judgment, for the sum of money, had been rendered in favor respondent herein, as plaintiff therein.
Hence, on June 13, 1953, Evangelista instituted the present action against respondent and Ricardo
Rivera, for the purpose of establishing his (Evangelista) title over said house, securing possession
thereof, apart from recovering damages.
In its answer, respondent alleged, in substance, that it has a better right to the house, because the sale
made, and the definite deed of sale executed, in its favor, on September 29, 1950 and May 10, 1952,
respectively, precede the sale to Evangelista (October 8, 1951) and the definite deed of sale in his favor
(October 22, 1952). It, also, made some special defenses which are discussed hereafter. Rivera, in effect,
joined forces with respondent. After due trial, the Court of First Instance of Manila rendered judgment for
Evangelista, sentencing Rivera and respondent to deliver the house in question to petitioner herein and to
pay him, jointly and severally, forty pesos (P40.00) a month from October, 1952, until said delivery, plus
costs.
On appeal taken by respondent, this decision was reversed by the Court of Appeals, which absolved said
respondent from the complaint, upon the ground that, although the writ of attachment in favor of
Evangelista had been filed with the Register of Deeds of Manila prior to the sale in favor of respondent,
Evangelista did not acquire thereby a preferential lien, the attachment having been levied as if the house
in question were immovable property, although in the opinion of the Court of Appeals, it is "ostensibly a
personal property." As such, the Court of Appeals held, "the order of attachment . . . should have been
served in the manner provided in subsection (e) of section 7 of Rule 59," of the Rules of Court, reading:
The property of the defendant shall be attached by the officer executing the order in the following
manner:
(e) Debts and credits, and other personal property not capable of manual delivery, by leaving with
the person owing such debts, or having in his possession or under his control, such credits or
other personal property, or with, his agent, a copy of the order, and a notice that the debts owing
by him to the defendant, and the credits and other personal property in his possession, or under
his control, belonging to the defendant, are attached in pursuance of such order. (Emphasis

his control, belonging to the defendant, are attached in pursuance of such order. (Emphasis
ours.)
However, the Court of Appeals seems to have been of the opinion, also, that the house of Rivera should
have been attached in accordance with subsection (c) of said section 7, as "personal property capable of
manual delivery, by taking and safely keeping in his custody", for it declared that "Evangelists could not
have . . . validly purchased Ricardo Rivera's house from the sheriff as the latter was not in possession
thereof at the time he sold it at a public auction."
Evangelista now seeks a review, by certiorari, of this decision of the Court of Appeals. In this connection,
it is not disputed that although the sale to the respondent preceded that made to Evangelists, the latter
would have a better right if the writ of attachment, issued in his favor before the sale to the respondent,
had been properly executed or enforced. This question, in turn, depends upon whether the house of
Ricardo Rivera is real property or not. In the affirmative case, the applicable provision would be
subsection (a) of section 7, Rule 59 of the Rules of Court, pursuant to which the attachment should be
made "by filing with the registrar of deeds a copy of the order, together with a description of the property
attached, and a notice that it is attached, and by leaving a copy of such order, description, and notice with
the occupant of the property, if any there be."
Respondent maintains, however, and the Court of Appeals held, that Rivera's house is personal property,
the levy upon which must be made in conformity with subsections (c) and (e) of said section 7 of Rule 59.
Hence, the main issue before us is whether a house, constructed the lessee of the land on which it is
built, should be dealt with, for purpose, of attachment, as immovable property, or as personal property.
It is, our considered opinion that said house is not personal property, much less a debt, credit or other
personal property not capable of manual delivery, but immovable property. As explicitly held, in Laddera
vs. Hodges (48 Off. Gaz., 5374), "a true building (not merely superimposed on the soil) is immovable or
real property, whether it is erected by the owner of the land or by usufructuary or lessee. This is the
doctrine of our Supreme Court in Leung Yee vs. Strong Machinery Company, 37 Phil., 644. And it is
amply supported by the rulings of the French Court. . . ."
It is true that the parties to a deed of chattel mortgage may agree to consider a house as personal
property for purposes of said contract (Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil Co. of
New York vs. Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil., 464). However, this view
is good only insofar as the contracting parties are concerned. It is based, partly, upon the principle of
estoppel. Neither this principle, nor said view, is applicable to strangers to said contract. Much less is it in
point where there has been no contract whatsoever, with respect to the status of the house involved, as in
the case at bar. Apart from this, in Manarang vs. Ofilada (99 Phil., 108; 52 Off. Gaz., 3954), we held:
The question now before us, however, is: Does the fact that the parties entering into a contract
regarding a house gave said property the consideration of personal property in their contract, bind
the sheriff in advertising the property's sale at public auction as personal property? It is to be
remembered that in the case at bar the action was to collect a loan secured by a chattel mortgage
on the house. It is also to be remembered that in practice it is the judgment creditor who points
out to the sheriff the properties that the sheriff is to levy upon in execution, and the judgment
creditor in the case at bar is the party in whose favor the owner of the house had conveyed it by
way of chattel mortgage and, therefore, knew its consideration as personal property.
These considerations notwithstanding, we hold that the rules on execution do not allow, and, we
should not interpret them in such a way as to allow, the special consideration that parties to a
contract may have desired to impart to real estate, for example, as personal property, when they
are, not ordinarily so. Sales on execution affect the public and third persons. The regulation
governing sales on execution are for public officials to follow. The form of proceedings prescribed
for each kind of property is suited to its character, not to the character, which the parties have
given to it or desire to give it. When the rules speak of personal property, property which is
ordinarily so considered is meant; and when real property is spoken of, it means property which is
generally known as real property. The regulations were never intended to suit the consideration
that parties may have privately given to the property levied upon. Enforcement of regulations
would be difficult were the convenience or agreement of private parties to determine or govern
the nature of the proceedings. We therefore hold that the mere fact that a house was the subject
of the chattel mortgage and was considered as personal property by the parties does not make
said house personal property for purposes of the notice to be given for its sale of public auction.
This ruling is demanded by the need for a definite, orderly and well defined regulation for official
and public guidance and would prevent confusion and misunderstanding.
We, therefore, declare that the house of mixed materials levied upon on execution, although
subject of a contract of chattel mortgage between the owner and a third person, is real property
within the purview of Rule 39, section 16, of the Rules of Court as it has become a permanent
fixture of the land, which, is real property. (42 Am. Jur. 199-200; Leung Yee vs. Strong Machinery
Co., 37 Phil., 644; Republic vs. Ceniza, et al., 90 Phil., 544; Ladera,, et al. vs. Hodges, et al.,
[C.A.] Off. Gaz. 5374.)" (Emphasis ours.)
The foregoing considerations apply, with equal force, to the conditions for the levy of attachment, for it
similarly affects the public and third persons.
It is argued, however, that, even if the house in question were immovable property, its attachment by
Evangelista was void or ineffective, because, in the language of the Court of Appeals, "after presenting a
Copy of the order of attachment in the Office of the Register of Deeds, the person who might then be in
possession of the house, the sheriff took no pains to serve Ricardo Rivera, or other copies thereof." This
finding of the Court of Appeals is neither conclusive upon us, nor accurate.

The Record on Appeal, annexed to the petition for Certiorari, shows that petitioner alleged, in paragraph 3
of the complaint, that he acquired the house in question "as a consequence of the levy of an attachment
and execution of the judgment in Civil Case No. 8235" of the Court of First Instance of Manila. In his
answer (paragraph 2), Ricardo Rivera admitted said attachment execution of judgment. He alleged,
however, by way a of special defense, that the title of respondent "is superior to that of plaintiff because it
is based on a public instrument," whereas Evangelista relied upon a "promissory note" which "is only a
private instrument"; that said Public instrument in favor of respondent "is superior also to the judgment in
Civil Case No. 8235"; and that plaintiff's claim against Rivera amounted only to P866, "which is much
below the real value" of said house, for which reason it would be "grossly unjust to acquire the property
for such an inadequate consideration." Thus, Rivera impliedly admitted that his house had been attached,
that the house had been sold to Evangelista in accordance with the requisite formalities, and that said
attachment was valid, although allegedly inferior to the rights of respondent, and the consideration for the
sale to Evangelista was claimed to be inadequate.
Respondent, in turn, denied the allegation in said paragraph 3 of the complaint, but only " for the reasons
stated in its special defenses" namely: (1) that by virtue of the sale at public auction, and the final deed
executed by the sheriff in favor of respondent, the same became the "legitimate owner of the house" in
question; (2) that respondent "is a buyer in good faith and for value"; (3) that respondent "took possession
and control of said house"; (4) that "there was no valid attachment by the plaintiff and/or the Sheriff of
Manila of the property in question as neither took actual or constructive possession or control of the
property at any time"; and (5) "that the alleged registration of plaintiff's attachment, certificate of sale and
final deed in the Office of Register of Deeds, Manila, if there was any, is likewise, not valid as there is no
registry of transactions covering houses erected on land belonging to or leased from another." In this
manner, respondent claimed a better right, merely under the theory that, in case of double sale of
immovable property, the purchaser who first obtains possession in good faith, acquires title, if the sale has
not been "recorded . . . in the Registry of Property" (Art. 1544, Civil Code of the Philippines), and that the
writ of attachment and the notice of attachment in favor of Evangelista should be considered
unregistered, "as there is no registry of transactions covering houses erected on land belonging to or
leased from another." In fact, said article 1544 of the Civil Code of the Philippines, governing double
sales, was quoted on page 15 of the brief for respondent in the Court of Appeals, in support of its fourth
assignment of error therein, to the effect that it "has preference or priority over the sale of the same
property" to Evangelista.
In other words, there was no issue on whether copy of the writ and notice of attachment had been served
on Rivera. No evidence whatsoever, to the effect that Rivera had not been served with copies of said writ
and notice, was introduced in the Court of First Instance. In its brief in the Court of Appeals, respondent
did not aver, or even, intimate, that no such copies were served by the sheriff upon Rivera. Service
thereof on Rivera had been impliedly admitted by the defendants, in their respective answers, and by
their behaviour throughout the proceedings in the Court of First Instance, and, as regards respondent, in
the Court of Appeals. In fact, petitioner asserts in his brief herein (p. 26) that copies of said writ and notice
were delivered to Rivera, simultaneously with copies of the complaint, upon service of summons, prior to
the filing of copies of said writ and notice with the register deeds, and the truth of this assertion has not
been directly and positively challenged or denied in the brief filed before us by respondent herein. The
latter did not dare therein to go beyond making a statement for the first time in the course of these
proceedings, begun almost five (5) years ago (June 18, 1953) reproducing substantially the
aforementioned finding of the Court of Appeals and then quoting the same.
Considering, therefore, that neither the pleadings, nor the briefs in the Court of Appeals, raised an issue
on whether or not copies of the writ of attachment and notice of attachment had been served upon
Rivera; that the defendants had impliedly admitted-in said pleadings and briefs, as well as by their
conduct during the entire proceedings, prior to the rendition of the decision of the Court of Appeals that
Rivera had received copies of said documents; and that, for this reason, evidently, no proof was
introduced thereon, we, are of the opinion, and so hold that the finding of the Court of Appeals to the
effect that said copies had not been served upon Rivera is based upon a misapprehension of the specific
issues involved therein and goes beyond the range of such issues, apart from being contrary to the
aforementioned admission by the parties, and that, accordingly, a grave abuse of discretion was
committed in making said finding, which is, furthermore, inaccurate.
Wherefore, the decision of the Court of Appeals is hereby reversed, and another one shall be entered
affirming that of the Court of First Instance of Manila, with the costs of this instance against respondent,
the Alto Surety and Insurance Co., Inc. It is so ordered.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J.B.L., Endencia and
Felix, JJ., concur.

Republic of the Philippines

SUPREME COURT

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 120098

October 2, 2001

RUBY L. TSAI, petitioner,

vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and MAMERTO R VILLALUZ, respondents.
x---------------------------------------------------------x
[G.R. No. 120109. October 2, 2001.]
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS and MAMERTO R VILLALUZ, respondents.
QUISUMBING, J.:
These consolidated cases assail the decision1 of the Court of Appeals in CA-G.R. CV No. 32986,
affirming the decision2 of the Regional Trial Court of Manila, Branch 7, in Civil Case No. 89-48265. Also
assailed is respondent court's resolution denying petitioners' motion for reconsideration.
On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX) obtained a three million peso
(P3,000,000.00) loan from petitioner Philippine Bank of Communications (PBCom). As security for the
loan, EVERTEX executed in favor of PBCom, a deed of Real and Chattel Mortgage over the lot under
TCT No. 372097, where its factory stands, and the chattels located therein as enumerated in a schedule
attached to the mortgage contract. The pertinent portions of the Real and Chattel Mortgage are quoted
below:
MORTGAGE
(REAL AND CHATTEL)
xxx

xxx

xxx

The MORTGAGOR(S) hereby transfer(s) and convey(s), by way of First Mortgage, to the
MORTGAGEE, . . . certain parcel(s) of land, together with all the buildings and
improvements now existing or which may hereafter exist thereon, situated in . . .
"Annex A"
(Real and Chattel Mortgage executed by Ever Textile Mills in favor of
PBCommunications continued)
LIST OF MACHINERIES & EQUIPMENT
A. Forty Eight (48) units of Vayrow Knitting Machines-Tompkins made in Hongkong:
Serial Numbers Size of Machines
xxx

xxx

xxx

B. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan.

xxx

xxx

xxx

C. Two (2) Circular Knitting Machines made in West Germany.

xxx

xxx

xxx

D. Four (4) Winding Machines.

xxx

xxx

xxx
SCHEDULE "A"

I. TCT # 372097 - RIZAL

xxx

xxx

xxx

II. Any and all buildings and improvements now existing or hereafter to exist on the
above-mentioned lot.
III. MACHINERIES & EQUIPMENT situated, located and/or installed on the abovementioned lot located at . . .
(a) Forty eight sets (48) Vayrow Knitting Machines . . .
(b) Sixteen sets (16) Vayrow Knitting Machines . . .
(c) Two (2) Circular Knitting Machines . . .
(d) Two (2) Winding Machines . . .
(e) Two (2) Winding Machines . . .
IV. Any and all replacements, substitutions, additions, increases and accretions to above
properties.
xxx

xxx

xxx3

On April 23, 1979, PBCom granted a second loan of P3,356,000.00 to EVERTEX. The loan was secured
by a Chattel Mortgage over personal properties enumerated in a list attached thereto. These listed

by a Chattel Mortgage over personal properties enumerated in a list attached thereto. These listed
properties were similar to those listed in Annex A of the first mortgage deed.
After April 23, 1979, the date of the execution of the second mortgage mentioned above, EVERTEX
purchased various machines and equipments.
On November 19, 1982, due to business reverses, EVERTEX filed insolvency proceedings docketed as
SP Proc. No. LP-3091-P before the defunct Court of First Instance of Pasay City, Branch XXVIII. The CFI
issued an order on November 24, 1982 declaring the corporation insolvent. All its assets were taken into
the custody of the Insolvency Court, including the collateral, real and personal, securing the two
mortgages as abovementioned.
In the meantime, upon EVERTEX's failure to meet its obligation to PBCom, the latter commenced
extrajudicial foreclosure proceedings against EVERTEX under Act 3135, otherwise known as "An Act to
Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages"
and Act 1506 or "The Chattel Mortgage Law". A Notice of Sheriff's Sale was issued on December 1,
1982.
On December 15, 1982, the first public auction was held where petitioner PBCom emerged as the
highest bidder and a Certificate of Sale was issued in its favor on the same date. On December 23, 1982,
another public auction was held and again, PBCom was the highest bidder. The sheriff issued a
Certificate of Sale on the same day.
On March 7, 1984, PBCom consolidated its ownership over the lot and all the properties in it. In
November 1986, it leased the entire factory premises to petitioner Ruby L. Tsai for P50,000.00 a month.
On May 3, 1988, PBCom sold the factory, lock, stock and barrel to Tsai for P9,000,000.00, including the
contested machineries.
On March 16, 1989, EVERTEX filed a complaint for annulment of sale, reconveyance, and damages with
the Regional Trial Court against PBCom, alleging inter alia that the extrajudicial foreclosure of subject
mortgage was in violation of the Insolvency Law. EVERTEX claimed that no rights having been
transmitted to PBCom over the assets of insolvent EVERTEX, therefore Tsai acquired no rights over such
assets sold to her, and should reconvey the assets.
Further, EVERTEX averred that PBCom, without any legal or factual basis, appropriated the contested
properties, which were not included in the Real and Chattel Mortgage of November 26, 1975 nor in the
Chattel Mortgage of April 23, 1979, and neither were those properties included in the Notice of Sheriff's
Sale dated December 1, 1982 and Certificate of Sale . . . dated December 15, 1982.
The disputed properties, which were valued at P4,000,000.00, are: 14 Interlock Circular Knitting
Machines, 1 Jet Drying Equipment, 1 Dryer Equipment, 1 Raisin Equipment and 1 Heatset Equipment.
The RTC found that the lease and sale of said personal properties were irregular and illegal because
they were not duly foreclosed nor sold at the December 15, 1982 auction sale since these were not
included in the schedules attached to the mortgage contracts. The trial court decreed:
WHEREFORE, judgment is hereby rendered in favor of plaintiff corporation and against
the defendants:
1. Ordering the annulment of the sale executed by defendant Philippine Bank of
Communications in favor of defendant Ruby L. Tsai on May 3, 1988 insofar as it affects
the personal properties listed in par. 9 of the complaint, and their return to the plaintiff
corporation through its assignee, plaintiff Mamerto R. Villaluz, for disposition by the
Insolvency Court, to be done within ten (10) days from finality of this decision;
2. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P5,200,000.00 as compensation for the use and possession of the properties in question
from November 1986 to February 1991 and P100,000.00 every month thereafter, with
interest thereon at the legal rate per annum until full payment;
3. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P50,000.00 as and for attorney's fees and expenses of litigation;
4. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P200,000.00 by way of exemplary damages;
5. Ordering the dismissal of the counterclaim of the defendants; and
6. Ordering the defendants to proportionately pay the costs of suit.
SO ORDERED.4
Dissatisfied, both PBCom and Tsai appealed to the Court of Appeals, which issued its decision dated
August 31, 1994, the dispositive portion of which reads:
WHEREFORE, except for the deletion therefrom of the award; for exemplary damages, and reduction of
the actual damages, from P100,000.00 to P20,000.00 per month, from November 1986 until subject
personal properties are restored to appellees, the judgment appealed from is hereby AFFIRMED, in all
other respects. No pronouncement as to costs.5
Motion for reconsideration of the above decision having been denied in the resolution of April 28, 1995,
PBCom and Tsai filed their separate petitions for review with this Court.
In G.R No. 120098, petitioner Tsai ascribed the following errors to the respondent court:

I
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN EFFECT
MAKING A CONTRACT FOR THE PARTIES BY TREATING THE 1981 ACQUIRED
MACHINERIES AS CHATTELS INSTEAD OF REAL PROPERTIES WITHIN THEIR
EARLIER 1975 DEED OF REAL AND CHATTEL MORTGAGE OR 1979 DEED OF
CHATTEL MORTGAGE.
II
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING
THAT THE DISPUTED 1981 MACHINERIES ARE NOT REAL PROPERTIES DEEMED
PART OF THE MORTGAGE DESPITE THE CLEAR IMPORT OF THE EVIDENCE
AND APPLICABLE RULINGS OF THE SUPREME COURT.
III
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN DEEMING
PETITIONER A PURCHASER IN BAD FAITH.
IV
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
ASSESSING PETITIONER ACTUAL DAMAGES, ATTORNEY'S FEES AND EXPENSES
OF LITIGATION FOR WANT OF VALID FACTUAL AND LEGAL BASIS.
V
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING
AGAINST PETITIONER'S ARGUMENTS ON PRESCRIPTION AND LACHES.6
In G.R. No. 120098, PBCom raised the following issues:
I.
DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES LISTED UNDER PARAGRAPH
9 OF THE COMPLAINT BELOW AS PERSONAL PROPERTY OUTSIDE OF THE 1975 DEED OF REAL
ESTATE MORTGAGE AND EXCLUDED THEM FROM THE REAL PROPERTY EXTRAJUDICIALLY
FORECLOSED BY PBCOM DESPITE THE PROVISION IN THE 1975 DEED THAT ALL AFTERACQUIRED PROPERTIES DURING THE LIFETIME OF THE MORTGAGE SHALL FORM PART
THEREOF, AND DESPITE THE UNDISPUTED FACT THAT SAID MACHINERIES ARE BIG AND
HEAVY, BOLTED OR CEMENTED ON THE REAL PROPERTY MORTGAGED BY EVER TEXTILE
MILLS TO PBCOM, AND WERE ASSESSED FOR REAL ESTATE TAX PURPOSES?
II
CAN PBCOM, WHO TOOK POSSESSION OF THE MACHINERIES IN QUESTION IN GOOD FAITH,
EXTENDED CREDIT FACILITIES TO EVER TEXTILE MILLS WHICH AS OF 1982 TOTALLED
P9,547,095.28, WHO HAD SPENT FOR MAINTENANCE AND SECURITY ON THE DISPUTED
MACHINERIES AND HAD TO PAY ALL THE BACK TAXES OF EVER TEXTILE MILLS BE LEGALLY
COMPELLED TO RETURN TO EVER THE SAID MACHINERIES OR IN LIEU THEREOF BE
ASSESSED DAMAGES. IS THAT SITUATION TANTAMOUNT TO A CASE OF UNJUST ENRICHMENT?
7

The principal issue, in our view, is whether or not the inclusion of the questioned properties in the
foreclosed properties is proper. The secondary issue is whether or not the sale of these properties to
petitioner Ruby Tsai is valid.
For her part, Tsai avers that the Court of Appeals in effect made a contract for the parties by treating the
1981 acquired units of machinery as chattels instead of real properties within their earlier 1975 deed of
Real and Chattel Mortgage or 1979 deed of Chattel Mortgage.8 Additionally, Tsai argues that respondent
court erred in holding that the disputed 1981 machineries are not real properties.9 Finally, she contends
that the Court of Appeals erred in holding against petitioner's arguments on prescription and laches10 and
in assessing petitioner actual damages, attorney's fees and expenses of litigation, for want of valid
factual and legal basis.11
Essentially, PBCom contends that respondent court erred in affirming the lower court's judgment
decreeing that the pieces of machinery in dispute were not duly foreclosed and could not be legally
leased nor sold to Ruby Tsai. It further argued that the Court of Appeals' pronouncement that the pieces
of machinery in question were personal properties have no factual and legal basis. Finally, it asserts that
the Court of Appeals erred in assessing damages and attorney's fees against PBCom.
In opposition, private respondents argue that the controverted units of machinery are not "real properties"
but chattels, and, therefore, they were not part of the foreclosed real properties, rendering the lease and
the subsequent sale thereof to Tsai a nullity.12
Considering the assigned errors and the arguments of the parties, we find the petitions devoid of merit
and ought to be denied.
Well settled is the rule that the jurisdiction of the Supreme Court in a petition for review on certiorari
under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless
the factual findings complained of are devoid of support by the evidence on record or the assailed
judgment is based on misapprehension of facts.13 This rule is applied more stringently when the findings
of fact of the RTC is affirmed by the Court of Appeals.14

The following are the facts as found by the RTC and affirmed by the Court of Appeals that are decisive of
the issues: (1) the "controverted machineries" are not covered by, or included in, either of the two
mortgages, the Real Estate and Chattel Mortgage, and the pure Chattel Mortgage; (2) the said
machineries were not included in the list of properties appended to the Notice of Sale, and neither were
they included in the Sheriff's Notice of Sale of the foreclosed properties.15
Petitioners contend that the nature of the disputed machineries, i.e., that they were heavy, bolted or
cemented on the real property mortgaged by EVERTEX to PBCom, make them ipso facto immovable
under Article 415 (3) and (5) of the New Civil Code. This assertion, however, does not settle the issue.
Mere nuts and bolts do not foreclose the controversy. We have to look at the parties' intent.
While it is true that the controverted properties appear to be immobile, a perusal of the contract of Real
and Chattel Mortgage executed by the parties herein gives us a contrary indication. In the case at bar,
both the trial and the appellate courts reached the same finding that the true intention of PBCOM and the
owner, EVERTEX, is to treat machinery and equipment as chattels. The pertinent portion of respondent
appellate court's ruling is quoted below:
As stressed upon by appellees, appellant bank treated the machineries as chattels;
never as real properties. Indeed, the 1975 mortgage contract, which was actually real
and chattel mortgage, militates against appellants' posture. It should be noted that the
printed form used by appellant bank was mainly for real estate mortgages. But reflective
of the true intention of appellant PBCOM and appellee EVERTEX was the typing in
capital letters, immediately following the printed caption of mortgage, of the phrase "real
and chattel." So also, the "machineries and equipment" in the printed form of the bank
had to be inserted in the blank space of the printed contract and connected with the word
"building" by typewritten slash marks. Now, then, if the machineries in question were
contemplated to be included in the real estate mortgage, there would have been no
necessity to ink a chattel mortgage specifically mentioning as part III of Schedule A a
listing of the machineries covered thereby. It would have sufficed to list them as
immovables in the Deed of Real Estate Mortgage of the land and building involved.
As regards the 1979 contract, the intention of the parties is clear and beyond question. It
refers solely to chattels. The inventory list of the mortgaged properties is an itemization
of sixty-three (63) individually described machineries while the schedule listed only
machines and 2,996,880.50 worth of finished cotton fabrics and natural cotton fabrics.16
In the absence of any showing that this conclusion is baseless, erroneous or uncorroborated by the
evidence on record, we find no compelling reason to depart therefrom.
Too, assuming arguendo that the properties in question are immovable by nature, nothing detracts the
parties from treating it as chattels to secure an obligation under the principle of estoppel. As far back as
Navarro v. Pineda, 9 SCRA 631 (1963), an immovable may be considered a personal property if there is
a stipulation as when it is used as security in the payment of an obligation where a chattel mortgage is
executed over it, as in the case at bar.
In the instant case, the parties herein: (1) executed a contract styled as "Real Estate Mortgage and
Chattel Mortgage," instead of just "Real Estate Mortgage" if indeed their intention is to treat all properties
included therein as immovable, and (2) attached to the said contract a separate "LIST OF
MACHINERIES & EQUIPMENT". These facts, taken together, evince the conclusion that the parties'
intention is to treat these units of machinery as chattels. A fortiori, the contested after-acquired properties,
which are of the same description as the units enumerated under the title "LIST OF MACHINERIES &
EQUIPMENT," must also be treated as chattels.
Accordingly, we find no reversible error in the respondent appellate court's ruling that inasmuch as the
subject mortgages were intended by the parties to involve chattels, insofar as equipment and machinery
were concerned, the Chattel Mortgage Law applies, which provides in Section 7 thereof that: "a chattel
mortgage shall be deemed to cover only the property described therein and not like or substituted
property thereafter acquired by the mortgagor and placed in the same depository as the property
originally mortgaged, anything in the mortgage to the contrary notwithstanding."
And, since the disputed machineries were acquired in 1981 and could not have been involved in the 1975
or 1979 chattel mortgages, it was consequently an error on the part of the Sheriff to include subject
machineries with the properties enumerated in said chattel mortgages.
As the auction sale of the subject properties to PBCom is void, no valid title passed in its favor.
Consequently, the sale thereof to Tsai is also a nullity under the elementary principle of nemo dat quod
non habet, one cannot give what one does not have.17
Petitioner Tsai also argued that assuming that PBCom's title over the contested properties is a nullity, she
is nevertheless a purchaser in good faith and for value who now has a better right than EVERTEX.
To the contrary, however, are the factual findings and conclusions of the trial court that she is not a
purchaser in good faith. Well-settled is the rule that the person who asserts the status of a purchaser in
good faith and for value has the burden of proving such assertion.18 Petitioner Tsai failed to discharge this
burden persuasively.
Moreover, a purchaser in good faith and for value is one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and fair price for the
same, at the time of purchase, or before he has notice of the claims or interest of some other person in
the property.19 Records reveal, however, that when Tsai purchased the controverted properties, she knew
of respondent's claim thereon. As borne out by the records, she received the letter of respondent's

of respondent's claim thereon. As borne out by the records, she received the letter of respondent's
counsel, apprising her of respondent's claim, dated February 27, 1987.20 She replied thereto on March 9,
1987.21 Despite her knowledge of respondent's claim, she proceeded to buy the contested units of
machinery on May 3, 1988. Thus, the RTC did not err in finding that she was not a purchaser in good
faith.
Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where the disputed properties are
located is equally unavailing. This defense refers to sale of lands and not to sale of properties situated
therein. Likewise, the mere fact that the lot where the factory and the disputed properties stand is in
PBCom's name does not automatically make PBCom the owner of everything found therein, especially in
view of EVERTEX's letter to Tsai enunciating its claim.
Finally, petitioners' defense of prescription and laches is less than convincing. We find no cogent reason
to disturb the consistent findings of both courts below that the case for the reconveyance of the disputed
properties was filed within the reglementary period. Here, in our view, the doctrine of laches does not
apply. Note that upon petitioners' adamant refusal to heed EVERTEX's claim, respondent company
immediately filed an action to recover possession and ownership of the disputed properties. There is no
evidence showing any failure or neglect on its part, for an unreasonable and unexplained length of time,
to do that which, by exercising due diligence, could or should have been done earlier. The doctrine of
stale demands would apply only where by reason of the lapse of time, it would be inequitable to allow a
party to enforce his legal rights. Moreover, except for very strong reasons, this Court is not disposed to
apply the doctrine of laches to prejudice or defeat the rights of an owner.22
As to the award of damages, the contested damages are the actual compensation, representing rentals
for the contested units of machinery, the exemplary damages, and attorney's fees.
As regards said actual compensation, the RTC awarded P100,000.00 corresponding to the unpaid
rentals of the contested properties based on the testimony of John Chua, who testified that the
P100,000.00 was based on the accepted practice in banking and finance, business and investments that
the rental price must take into account the cost of money used to buy them. The Court of Appeals did not
give full credence to Chua's projection and reduced the award to P20,000.00.
Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but
must actually be proven with reasonable degree of certainty, premised upon competent proof or best
evidence obtainable of the actual amount thereof.23 However, the allegations of respondent company as
to the amount of unrealized rentals due them as actual damages remain mere assertions unsupported by
documents and other competent evidence. In determining actual damages, the court cannot rely on mere
assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best
evidence obtainable regarding the actual amount of loss.24 However, we are not prepared to disregard the
following dispositions of the respondent appellate court:
. . . In the award of actual damages under scrutiny, there is nothing on record warranting
the said award of P5,200,000.00, representing monthly rental income of P100,000.00
from November 1986 to February 1991, and the additional award of P100,000.00 per
month thereafter.
As pointed out by appellants, the testimonial evidence, consisting of the testimonies of
Jonh (sic) Chua and Mamerto Villaluz, is shy of what is necessary to substantiate the
actual damages allegedly sustained by appellees, by way of unrealized rental income of
subject machineries and equipments.
The testimony of John Cua (sic) is nothing but an opinion or projection based on what is
claimed to be a practice in business and industry. But such a testimony cannot serve as
the sole basis for assessing the actual damages complained of. What is more, there is
no showing that had appellant Tsai not taken possession of the machineries and
equipments in question, somebody was willing and ready to rent the same for
P100,000.00 a month.
xxx

xxx

xxx

Then, too, even assuming arguendo that the said machineries and equipments could
have generated a rental income of P30,000.00 a month, as projected by witness
Mamerto Villaluz, the same would have been a gross income. Therefrom should be
deducted or removed, expenses for maintenance and repairs . . . Therefore, in the
determination of the actual damages or unrealized rental income sued upon, there is a
good basis to calculate that at least four months in a year, the machineries in dispute
would have been idle due to absence of a lessee or while being repaired. In the light of
the foregoing rationalization and computation, We believe that a net unrealized rental
income of P20,000.00 a month, since November 1986, is more realistic and fair.25
As to exemplary damages, the RTC awarded P200,000.00 to EVERTEX which the Court of Appeals
deleted. But according to the CA, there was no clear showing that petitioners acted malevolently,
wantonly and oppressively. The evidence, however, shows otherwise.It is a requisite to award exemplary
damages that the wrongful act must be accompanied by bad faith,26 and the guilty acted in a wanton,
fraudulent, oppressive, reckless or malevolent manner.27 As previously stressed, petitioner Tsai's act of
purchasing the controverted properties despite her knowledge of EVERTEX's claim was oppressive and
subjected the already insolvent respondent to gross disadvantage. Petitioner PBCom also received the
same letters of Atty. Villaluz, responding thereto on March 24, 1987.28 Thus, PBCom's act of taking all the
properties found in the factory of the financially handicapped respondent, including those properties not
covered by or included in the mortgages, is equally oppressive and tainted with bad faith. Thus, we are in

covered by or included in the mortgages, is equally oppressive and tainted with bad faith. Thus, we are in
agreement with the RTC that an award of exemplary damages is proper.
The amount of P200,000.00 for exemplary damages is, however, excessive. Article 2216 of the Civil
Code provides that no proof of pecuniary loss is necessary for the adjudication of exemplary damages,
their assessment being left to the discretion of the court in accordance with the circumstances of each
case.29 While the imposition of exemplary damages is justified in this case, equity calls for its reduction. In
Inhelder Corporation v. Court of Appeals, G.R. No. L-52358, 122 SCRA 576, 585, (May 30, 1983), we laid
down the rule that judicial discretion granted to the courts in the assessment of damages must always be
exercised with balanced restraint and measured objectivity. Thus, here the award of exemplary damages
by way of example for the public good should be reduced to P100,000.00.
By the same token, attorney's fees and other expenses of litigation may be recovered when exemplary
damages are awarded.30 In our view, RTC's award of P50,000.00 as attorney's fees and expenses of
litigation is reasonable, given the circumstances in these cases.
WHEREFORE, the petitions are DENIED. The assailed decision and resolution of the Court of Appeals in
CA-G.R. CV No. 32986 are AFFIRMED WITH MODIFICATIONS. Petitioners Philippine Bank of
Communications and Ruby L. Tsai are hereby ordered to pay jointly and severally Ever Textile Mills, Inc.
the following: (1) P20,000.00 per month, as compensation for the use and possession of the properties in
question from November 198631 until subject personal properties are restored to respondent corporation;
(2) P100,000.00 by way of exemplary damages, and (3) P50,000.00 as attorney's fees and litigation
expenses. Costs against petitioners.
SO ORDERED.
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

THIRD DIVISION

[G.R. No. 137705. August 22, 2000]

SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY,

petitioners, vs. PCI LEASING AND FINANCE, INC.,
respondent.
DECISION
PANGANIBAN, J.:
After agreeing to a contract stipulating that a real or immovable property be
considered as personal or movable, a party is estopped from subsequently
claiming otherwise. Hence, such property is a proper subject of a writ of replevin
obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6,
1999 Decision of the Court of Appeals (CA) in CA-GR SP No. 47332 and its
February 26, 1999 Resolution denying reconsideration. The decretal portion of
the CA Decision reads as follows:

WHEREFORE, premises considered, the

assailed Order dated February 18, 1998 and
Resolution dated March 31, 1998 in Civil Case
No. Q-98-33500 are hereby AFFIRMED. The
writ of preliminary injunction issued on June 15,
1998 is hereby LIFTED.
In its February 18, 1998 Order, the Regional Trial Court (RTC) of Quezon
City (Branch 218) issued a Writ of Seizure. The March 18, 1998 Resolution

denied petitioners Motion for Special Protective Order, praying that the deputy
sheriff be enjoined from seizing immobilized or other real properties in
(petitioners) factory in Cainta, Rizal and to return to their original place whatever
immobilized machineries or equipments he may have removed.
The Facts
The undisputed facts are summarized by the Court of Appeals as follows:

On February 13, 1998, respondent PCI

Leasing and Finance, Inc. (PCI Leasing for
short) filed with the RTC-QC a complaint for [a]
sum of money (Annex E), with an application
for a writ of replevin docketed as Civil Case No.
Q-98-33500.
On March 6, 1998, upon an ex-parte
application of PCI Leasing, respondent judge
issued a writ of replevin (Annex B) directing its
sheriff to seize and deliver the machineries and
equipment to PCI Leasing after 5 days and
upon the payment of the necessary expenses.
On March 24, 1998, in implementation of
said writ, the sheriff proceeded to petitioners
factory, seized one machinery with [the] word
that he [would] return for the other machineries.
On March 25, 1998, petitioners filed a motion
for special protective order (Annex C), invoking
the power of the court to control the conduct of
its officers and amend and control its
processes, praying for a directive for the sheriff
to defer enforcement of the writ of replevin.
This motion was opposed by PCI Leasing
(Annex F), on the ground that the properties
[were] still personal and therefore still subject to
seizure and a writ of replevin.
In their Reply, petitioners asserted that the
properties sought to be seized [were]
immovable as defined in Article 415 of the Civil
Code, the parties agreement to the contrary
notwithstanding. They argued that to give effect
to the agreement would be prejudicial to
innocent third parties. They further stated that

PCI Leasing [was] estopped from treating these

machineries as personal because the contracts
in which the alleged agreement [were]
embodied [were] totally sham and farcical.
On April 6, 1998, the sheriff again sought to
enforce the writ of seizure and take possession
of the remaining properties. He was able to
take two more, but was prevented by the
workers from taking the rest.
On April 7, 1998, they went to [the CA] via an
original action for certiorari.
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the subject
machines were personal property, and that they had only been leased, not
owned, by petitioners. It also ruled that the words of the contract are clear and
leave no doubt upon the true intention of the contracting parties. Observing that
Petitioner Goquiolay was an experienced businessman who was not unfamiliar
with the ways of the trade, it ruled that he should have realized the import of the
document he signed. The CA further held:

Furthermore, to accord merit to this petition

would be to preempt the trial court in ruling
upon the case below, since the merits of the
whole matter are laid down before us via a
petition whose sole purpose is to inquire upon
the existence of a grave abuse of discretion on
the part of the [RTC] in issuing the assailed
Order and Resolution. The issues raised herein
are proper subjects of a full-blown trial,
necessitating presentation of evidence by both
parties. The contract is being enforced by one,
and [its] validity is attacked by the other a
matter x x x which respondent court is in the
best position to determine.
Hence, this Petition.

The Issues
In their Memorandum, petitioners submit the following issues for our
consideration:

A. Whether or not the machineries

purchased and imported by SERGS became
real property by virtue of immobilization.
B. Whether or not the contract between the
parties is a loan or a lease.
In the main, the Court will resolve whether the said machines are personal,
not immovable, property which may be a proper subject of a writ of replevin. As
a preliminary matter, the Court will also address briefly the procedural points
raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it
was being filed under Rule 45 or Rule 65 of the Rules of Court. It further alleges
that the Petition erroneously impleaded Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This
conclusion finds support in the very title of the Petition, which is Petition for
Review on Certiorari.
While Judge Laqui should not have been impleaded as a respondent,
substantial justice requires that such lapse by itself should not warrant the
dismissal of the present Petition. In this light, the Court deems it proper to
remove, motu proprio, the name of Judge Laqui from the caption of the present
case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were not
proper subjects of the Writ issued by the RTC, because they were in fact real
property. Serious policy considerations, they argue, militate against a contrary
characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for
the recovery of personal property only. Section 3 thereof reads:

SEC. 3. Order. -- Upon the filing of such

affidavit and approval of the bond, the court
shall issue an order and the corresponding writ
of replevin describing the personal property
alleged to be wrongfully detained and requiring
the sheriff forthwith to take such property into
his custody.
On the other hand, Article 415 of the Civil Code enumerates immovable or
real property as follows:

ART. 415. The following are immovable

property:
x x x....................................x x x....................................x x x

(5) Machinery, receptacles, instruments or

implements intended by the owner of the
tenement for an industry or works which may
be carried on in a building or on a piece of land,
and which tend directly to meet the needs of
the said industry or works;
x x x....................................x x x....................................x x x
In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own land.
Indisputably, they were essential and principal elements of their chocolatemaking industry. Hence, although each of them was movable or personal
property on its own, all of them have become immobilized by destination
because they are essential and principal elements in the industry. In that sense,
petitioners are correct in arguing that the said machines are real, not personal,
property pursuant to Article 415 (5) of the Civil Code.
Be that as it may, we disagree with the submission of the petitioners that the
said machines are not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real
property be considered as personal. After agreeing to such stipulation, they are
consequently estopped from claiming otherwise. Under the principle of estoppel,
a party to a contract is ordinarily precluded from denying the truth of any
material fact found therein.
Hence, in Tumalad v. Vicencio, the Court upheld the intention of the parties
to treat a house as a personal property because it had been made the subject of
a chattel mortgage. The Court ruled:

x x x. Although there is no specific statement

referring to the subject house as personal
property, yet by ceding, selling or transferring a
property by way of chattel mortgage
defendants-appellants could only have meant
to convey the house as chattel, or at least,
intended to treat the same as such, so that they
should not now be allowed to make an
inconsistent stand by claiming otherwise.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v.
Wearever Textile Mills also held that the machinery used in a factory and
essential to the industry, as in the present case, was a proper subject of a writ of
replevin because it was treated as personal property in a contract. Pertinent
portions of the Courts ruling are reproduced hereunder:

x x x. If a house of strong materials, like what

was involved in the above Tumalad case, may
be considered as personal property for
purposes of executing a chattel mortgage

thereon as long as the parties to the contract so

agree and no innocent third party will be
prejudiced thereby, there is absolutely no
reason why a machinery, which is movable in
its nature and becomes immobilized only by
destination or purpose, may not be likewise
treated as such. This is really because one who
has so agreed is estopped from denying the
existence of the chattel mortgage.
In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property. Specifically,
Section 12.1 of the Agreement reads as follows:

12.1 The PROPERTY is, and shall at all

times be and remain, personal property
notwithstanding that the PROPERTY or any
part thereof may now be, or hereafter become,
in any manner affixed or attached to or
embedded in, or permanently resting upon, real
property or any building thereon, or attached in
any manner to what is permanent.
Clearly then, petitioners are estopped from denying the characterization of
the subject machines as personal property. Under the circumstances, they are
proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should
be deemed personal property pursuant to the Lease Agreement is good only
insofar as the contracting parties are concerned. Hence, while the parties are
bound by the Agreement, third persons acting in good faith are not affected by
its stipulation characterizing the subject machinery as personal. In any event,
there is no showing that any specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and
not a lease. Submitting documents supposedly showing that they own the
subject machines, petitioners also argue in their Petition that the Agreement
suffers from intrinsic ambiguity which places in serious doubt the intention of the
parties and the validity of the lease agreement itself. In their Reply to
respondents Comment, they further allege that the Agreement is invalid.
These arguments are unconvincing. The validity and the nature of the
contract are the lis mota of the civil action pending before the RTC. A resolution
of these questions, therefore, is effectively a resolution of the merits of the case.
Hence, they should be threshed out in the trial, not in the proceedings involving
the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA, the Court explained that the policy
under Rule 60 was that questions involving title to the subject property
questions which petitioners are now raising -- should be determined in the trial.
In that case, the Court noted that the remedy of defendants under Rule 60 was
either to post a counter-bond or to question the sufficiency of the plaintiffs bond.
They were not allowed, however, to invoke the title to the subject property. The

Court ruled:

In other words, the law does not allow the

defendant to file a motion to dissolve or
discharge the writ of seizure (or delivery) on
ground of insufficiency of the complaint or of the
grounds relied upon therefor, as in proceedings
on preliminary attachment or injunction, and
thereby put at issue the matter of the title or
right of possession over the specific chattel
being replevied, the policy apparently being that
said matter should be ventilated and
determined only at the trial on the merits.
Besides, these questions require a determination of facts and a presentation
of evidence, both of which have no place in a petition for certiorari in the CA
under Rule 65 or in a petition for review in this Court under Rule 45.
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease
Agreement, for nothing on record shows that it has been nullified or annulled. In
fact, petitioners assailed it first only in the RTC proceedings, which had ironically
been instituted by respondent. Accordingly, it must be presumed valid and
binding as the law between the parties.
Makati Leasing and Finance Corporation is also instructive on this point. In
that case, the Deed of Chattel Mortgage, which characterized the subject
machinery as personal property, was also assailed because respondent had
allegedly been required to sign a printed form of chattel mortgage which was in
a blank form at the time of signing. The Court rejected the argument and relied
on the Deed, ruling as follows:

x x x. Moreover, even granting that the

charge is true, such fact alone does not render
a contract void ab initio, but can only be a
ground for rendering said contract voidable, or
annullable pursuant to Article 1390 of the new
Civil Code, by a proper action in court. There is
nothing on record to show that the mortgage
has been annulled. Neither is it disclosed that
steps were taken to nullify the same. x x x
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that if the Court allows these machineries to be seized,
then its workers would be out of work and thrown into the streets. They also
allege that the seizure would nullify all efforts to rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ. As
earlier discussed, law and jurisprudence support its propriety. Verily, the abovementioned consequences, if they come true, should not be blamed on this

Court, but on the petitioners for failing to avail themselves of the remedy under
Section 5 of Rule 60, which allows the filing of a counter-bond. The provision
states:

SEC. 5. Return of property. -- If the adverse

party objects to the sufficiency of the applicants
bond, or of the surety or sureties thereon, he
cannot immediately require the return of the
property, but if he does not so object, he may,
at any time before the delivery of the property
to the applicant, require the return thereof, by
filing with the court where the action is pending
a bond executed to the applicant, in double the
value of the property as stated in the applicants
affidavit for the delivery thereof to the applicant,
if such delivery be adjudged, and for the
payment of such sum to him as may be
recovered against the adverse party, and by
serving a copy bond on the applicant.
WHEREFORE, the Petition is DENIED and the assailed Decision of the
Court of Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-64261 December 26, 1984
JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J. BURGOS MEDIA SERVICES,
INC., petitioners,
vs.
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, THE CHIEF, PHILIPPINE
CONSTABULARY, THE CHIEF LEGAL OFFICER, PRESIDENTIAL SECURITY COMMAND, THE
JUDGE ADVOCATE GENERAL, ET AL., respondents.
Lorenzo M. Taada, Wigberto E. Taada, Martiniano Vivo, Augusto Sanchez, Joker P. Arroyo, Jejomar
Binay and Rene Saguisag for petitioners.
The Solicitor General for respondents.
ESCOLIN, J.:
Assailed in this petition for certiorari prohibition and mandamus with preliminary mandatory and
prohibitory injunction is the validity of two [2] search warrants issued on December 7, 1982 by respondent
Judge Ernani Cruz-Pano, Executive Judge of the then Court of First Instance of Rizal [Quezon City],
under which the premises known as No. 19, Road 3, Project 6, Quezon City, and 784 Units C & D, RMS
Building, Quezon Avenue, Quezon City, business addresses of the "Metropolitan Mail" and "We Forum"
newspapers, respectively, were searched, and office and printing machines, equipment, paraphernalia,
motor vehicles and other articles used in the printing, publication and distribution of the said newspapers,
as well as numerous papers, documents, books and other written literature alleged to be in the
possession and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper,
were seized.
Petitioners further pray that a writ of preliminary mandatory and prohibitory injunction be issued for the
return of the seized articles, and that respondents, "particularly the Chief Legal Officer, Presidential
Security Command, the Judge Advocate General, AFP, the City Fiscal of Quezon City, their
representatives, assistants, subalterns, subordinates, substitute or successors" be enjoined from using
the articles thus seized as evidence against petitioner Jose Burgos, Jr. and the other accused in Criminal
Case No. Q- 022782 of the Regional Trial Court of Quezon City, entitled People v. Jose Burgos, Jr. et al.
1

In our Resolution dated June 21, 1983, respondents were required to answer the petition. The plea for
preliminary mandatory and prohibitory injunction was set for hearing on June 28, 1983, later reset to July
7, 1983, on motion of the Solicitor General in behalf of respondents.
At the hearing on July 7, 1983, the Solicitor General, while opposing petitioners' prayer for a writ of
preliminary mandatory injunction, manifested that respondents "will not use the aforementioned articles
as evidence in the aforementioned case until final resolution of the legality of the seizure of the
aforementioned articles. ..." 2 With this manifestation, the prayer for preliminary prohibitory injunction was
rendered moot and academic.
Respondents would have this Court dismiss the petition on the ground that petitioners had come to this
Court without having previously sought the quashal of the search warrants before respondent judge.
Indeed, petitioners, before impugning the validity of the warrants before this Court, should have filed a
motion to quash said warrants in the court that issued them. 3 But this procedural flaw notwithstanding,
we take cognizance of this petition in view of the seriousness and urgency of the constitutional issues
raised not to mention the public interest generated by the search of the "We Forum" offices, which was
televised in Channel 7 and widely publicized in all metropolitan dailies. The existence of this special
circumstance justifies this Court to exercise its inherent power to suspend its rules. In the words of the
revered Mr. Justice Abad Santos in the case of C. Vda. de Ordoveza v. Raymundo, 4 "it is always in the
power of the court [Supreme Court] to suspend its rules or to except a particular case from its operation,
whenever the purposes of justice require it...".
Respondents likewise urge dismissal of the petition on ground of laches. Considerable stress is laid on
the fact that while said search warrants were issued on December 7, 1982, the instant petition impugning
the same was filed only on June 16, 1983 or after the lapse of a period of more than six [6] months.
Laches is failure or negligence for an unreasonable and unexplained length of time to do that which, by
exercising due diligence, could or should have been done earlier. It is negligence or omission to assert a
right within a reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. 5
Petitioners, in their Consolidated Reply, explained the reason for the delay in the filing of the petition thus:
Respondents should not find fault, as they now do [p. 1, Answer, p. 3,
Manifestation] with the fact that the Petition was filed on June 16, 1983, more
than half a year after the petitioners' premises had been raided.
The climate of the times has given petitioners no other choice. If they had waited
this long to bring their case to court, it was because they tried at first to exhaust
other remedies. The events of the past eleven fill years had taught them that
everything in this country, from release of public funds to release of detained
persons from custody, has become a matter of executive benevolence or
largesse
Hence, as soon as they could, petitioners, upon suggestion of persons close to
the President, like Fiscal Flaminiano, sent a letter to President Marcos, through
counsel Antonio Coronet asking the return at least of the printing equipment and
vehicles. And after such a letter had been sent, through Col. Balbino V. Diego,
Chief Intelligence and Legal Officer of the Presidential Security Command, they
were further encouraged to hope that the latter would yield the desired results.
After waiting in vain for five [5] months, petitioners finally decided to come to
Court. [pp. 123-124, Rollo]
Although the reason given by petitioners may not be flattering to our judicial system, We find no ground
to punish or chastise them for an error in judgment. On the contrary, the extrajudicial efforts exerted by
petitioners quite evidently negate the presumption that they had abandoned their right to the possession
of the seized property, thereby refuting the charge of laches against them.
Respondents also submit the theory that since petitioner Jose Burgos, Jr. had used and marked as
evidence some of the seized documents in Criminal Case No. Q- 022872, he is now estopped from
challenging the validity of the search warrants. We do not follow the logic of respondents. These
documents lawfully belong to petitioner Jose Burgos, Jr. and he can do whatever he pleases with them,
within legal bounds. The fact that he has used them as evidence does not and cannot in any way affect
the validity or invalidity of the search warrants assailed in this petition.
Several and diverse reasons have been advanced by petitioners to nullify the search warrants in
question.
1. Petitioners fault respondent judge for his alleged failure to conduct an examination under oath or
affirmation of the applicant and his witnesses, as mandated by the above-quoted constitutional provision
as wen as Sec. 4, Rule 126 of the Rules of Court . 6 This objection, however, may properly be considered
moot and academic, as petitioners themselves conceded during the hearing on August 9, 1983, that an
examination had indeed been conducted by respondent judge of Col. Abadilla and his witnesses.
2. Search Warrants No. 20-82[a] and No. 20- 82[b] were used to search two distinct places: No. 19, Road
3, Project 6, Quezon City and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City,
respectively. Objection is interposed to the execution of Search Warrant No. 20-82[b] at the latter address
on the ground that the two search warrants pinpointed only one place where petitioner Jose Burgos, Jr.
was allegedly keeping and concealing the articles listed therein, i.e., No. 19, Road 3, Project 6, Quezon
City. This assertion is based on that portion of Search Warrant No. 20- 82[b] which states:

Which have been used, and are being used as instruments and means of
committing the crime of subversion penalized under P.D. 885 as amended and
he is keeping and concealing the same at 19 Road 3, Project 6, Quezon City.
The defect pointed out is obviously a typographical error. Precisely, two search warrants were applied for
and issued because the purpose and intent were to search two distinct premises. It would be quite
absurd and illogical for respondent judge to have issued two warrants intended for one and the same
place. Besides, the addresses of the places sought to be searched were specifically set forth in the
application, and since it was Col. Abadilla himself who headed the team which executed the search
warrants, the ambiguity that might have arisen by reason of the typographical error is more apparent than
real. The fact is that the place for which Search Warrant No. 20- 82[b] was applied for was 728 Units C &
D, RMS Building, Quezon Avenue, Quezon City, which address appeared in the opening paragraph of
the said warrant. 7 Obviously this is the same place that respondent judge had in mind when he issued
Warrant No. 20-82 [b].
In the determination of whether a search warrant describes the premises to be searched with sufficient
particularity, it has been held "that the executing officer's prior knowledge as to the place intended in the
warrant is relevant. This would seem to be especially true where the executing officer is the affiant on
whose affidavit the warrant had issued, and when he knows that the judge who issued the warrant
intended the building described in the affidavit, And it has also been said that the executing officer may
look to the affidavit in the official court file to resolve an ambiguity in the warrant as to the place to be
searched." 8
3. Another ground relied upon to annul the search warrants is the fact that although the warrants were
directed against Jose Burgos, Jr. alone, articles b belonging to his co-petitioners Jose Burgos, Sr., Bayani
Soriano and the J. Burgos Media Services, Inc. were seized.
Section 2, Rule 126 of the Rules of Court, enumerates the personal properties that may be seized under
a search warrant, to wit:
Sec. 2. Personal Property to be seized. A search warrant may be issued for
the search and seizure of the following personal property:
[a] Property subject of the offense;
[b] Property stolen or embezzled and other proceeds or fruits of
the offense; and
[c] Property used or intended to be used as the means of
committing an offense.
The above rule does not require that the property to be seized should be owned by the person against
whom the search warrant is directed. It may or may not be owned by him. In fact, under subsection [b] of
the above-quoted Section 2, one of the properties that may be seized is stolen property. Necessarily,
stolen property must be owned by one other than the person in whose possession it may be at the time
of the search and seizure. Ownership, therefore, is of no consequence, and it is sufficient that the person
against whom the warrant is directed has control or possession of the property sought to be seized, as
petitioner Jose Burgos, Jr. was alleged to have in relation to the articles and property seized under the
warrants.
4. Neither is there merit in petitioners' assertion that real properties were seized under the disputed
warrants. Under Article 415[5] of the Civil Code of the Philippines, "machinery, receptables, instruments
or implements intended by the owner of the tenement for an industry or works which may be carried on in
a building or on a piece of land and which tend directly to meet the needs of the said industry or works"
are considered immovable property. In Davao Sawmill Co. v. Castillo 9 where this legal provision was
invoked, this Court ruled that machinery which is movable by nature becomes immobilized when placed
by the owner of the tenement, property or plant, but not so when placed by a tenant, usufructuary, or any
other person having only a temporary right, unless such person acted as the agent of the owner.
In the case at bar, petitioners do not claim to be the owners of the land and/or building on which the
machineries were placed. This being the case, the machineries in question, while in fact bolted to the
ground remain movable property susceptible to seizure under a search warrant.
5. The questioned search warrants were issued by respondent judge upon application of Col. Rolando N.
Abadilla Intelligence Officer of the P.C. Metrocom. 10 The application was accompanied by the Joint
Affidavit of Alejandro M. Gutierrez and Pedro U. Tango, 11 members of the Metrocom Intelligence and Security Group under
Col. Abadilla which conducted a surveillance of the premises prior to the filing of the application for the search warrants on December 7, 1982.

It is contended by petitioners, however, that the abovementioned documents could not have provided
sufficient basis for the finding of a probable cause upon which a warrant may validly issue in accordance
with Section 3, Article IV of the 1973 Constitution which provides:
SEC. 3. ... and no search warrant or warrant of arrest shall issue except upon
probable cause to be determined by the judge, or such other responsible officer
as may be authorized by law, after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be seized.
We find petitioners' thesis impressed with merit. Probable cause for a search is defined as such facts and
circumstances which would lead a reasonably discreet and prudent man to believe that an offense has
been committed and that the objects sought in connection with the offense are in the place sought to be
searched. And when the search warrant applied for is directed against a newspaper publisher or editor in

searched. And when the search warrant applied for is directed against a newspaper publisher or editor in
connection with the publication of subversive materials, as in the case at bar, the application and/or its
supporting affidavits must contain a specification, stating with particularity the alleged subversive material
he has published or is intending to publish. Mere generalization will not suffice. Thus, the broad
statement in Col. Abadilla's application that petitioner "is in possession or has in his control printing
equipment and other paraphernalia, news publications and other documents which were used and are all
continuously being used as a means of committing the offense of subversion punishable under
Presidential Decree 885, as amended ..." 12 is a mere conclusion of law and does not satisfy the requirements of probable cause.
Bereft of such particulars as would justify a finding of the existence of probable cause, said allegation cannot serve as basis for the issuance of a
search warrant and it was a grave error for respondent judge to have done so.

Equally insufficient as basis for the determination of probable cause is the statement contained in the
joint affidavit of Alejandro M. Gutierrez and Pedro U. Tango, "that the evidence gathered and collated by
our unit clearly shows that the premises above- mentioned and the articles and things above-described
were used and are continuously being used for subversive activities in conspiracy with, and to promote
the objective of, illegal organizations such as the Light-a-Fire Movement, Movement for Free Philippines,
and April 6 Movement." 13
In mandating that "no warrant shall issue except upon probable cause to be determined by the judge, ...
after examination under oath or affirmation of the complainant and the witnesses he may produce; 14 the
Constitution requires no less than personal knowledge by the complainant or his witnesses of the facts upon which the issuance of a search warrant
may be justified. In Alvarez v. Court of First Instance, 15 this Court ruled that "the oath required must refer to the truth of the facts within the personal
knowledge of the petitioner or his witnesses, because the purpose thereof is to convince the committing magistrate, not the individual making the
affidavit and seeking the issuance of the warrant, of the existence of probable cause." As couched, the quoted averment in said joint affidavit filed
before respondent judge hardly meets the test of sufficiency established by this Court in Alvarez case.

Another factor which makes the search warrants under consideration constitutionally objectionable is that
they are in the nature of general warrants. The search warrants describe the articles sought to be seized
in this wise:
1] All printing equipment, paraphernalia, paper, ink, photo (equipment,
typewriters, cabinets, tables, communications/recording equipment, tape
recorders, dictaphone and the like used and/or connected in the printing of the
"WE FORUM" newspaper and any and all documents communication, letters
and facsimile of prints related to the "WE FORUM" newspaper.
2] Subversive documents, pamphlets, leaflets, books, and other publication to
promote the objectives and piurposes of the subversive organization known as
Movement for Free Philippines, Light-a-Fire Movement and April 6 Movement;
and,
3] Motor vehicles used in the distribution/circulation of the "WE FORUM" and
other subversive materials and propaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;
2] DATSUN pick-up colored white with Plate No. NKV 969
3] A delivery truck with Plate No. NBS 524;
4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665;
and,
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 427 with
marking "Bagong Silang."
In Stanford v. State of Texas 16 the search warrant which authorized the search for "books, records, pamphlets, cards, receipts, lists,
memoranda, pictures, recordings and other written instruments concerning the Communist Party in Texas," was declared void by the U.S. Supreme
Court for being too general. In like manner, directions to "seize any evidence in connectionwith the violation of SDC 13-3703 or otherwise" have been
held too general, and that portion of a search warrant which authorized the seizure of any "paraphernalia which could be used to violate Sec. 54-197
of the Connecticut General Statutes [the statute dealing with the crime of conspiracy]" was held to be a general warrant, and therefore invalid. 17 The
description of the articles sought to be seized under the search warrants in question cannot be characterized differently.

In the Stanford case, the U.S. Supreme Courts calls to mind a notable chapter in English history: the era
of disaccord between the Tudor Government and the English Press, when "Officers of the Crown were
given roving commissions to search where they pleased in order to suppress and destroy the literature of
dissent both Catholic and Puritan Reference herein to such historical episode would not be relevant for it
is not the policy of our government to suppress any newspaper or publication that speaks with "the voice
of non-conformity" but poses no clear and imminent danger to state security.
As heretofore stated, the premises searched were the business and printing offices of the "Metropolitan
Mail" and the "We Forum newspapers. As a consequence of the search and seizure, these premises
were padlocked and sealed, with the further result that the printing and publication of said newspapers
were discontinued.
Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of the press
guaranteed under the fundamental law, 18 and constitutes a virtual denial of petitioners' freedom to express themselves in print. This
state of being is patently anathematic to a democratic framework where a free, alert and even militant press is essential for the political enlightenment
and growth of the citizenry.

Respondents would justify the continued sealing of the printing machines on the ground that they have
been sequestered under Section 8 of Presidential Decree No. 885, as amended, which authorizes "the
sequestration of the property of any person, natural or artificial, engaged in subversive activities against
the government and its duly constituted authorities ... in accordance with implementing rules and
regulations as may be issued by the Secretary of National Defense." It is doubtful however, if
sequestration could validly be effected in view of the absence of any implementing rules and regulations
promulgated by the Minister of National Defense.

Besides, in the December 10, 1982 issue of the Daily Express, it was reported that no less than
President Marcos himself denied the request of the military authorities to sequester the property seized
from petitioners on December 7, 1982. Thus:
The President denied a request flied by government prosecutors for
sequestration of the WE FORUM newspaper and its printing presses, according
to Information Minister Gregorio S. Cendana.
On the basis of court orders, government agents went to the We Forum offices in
Quezon City and took a detailed inventory of the equipment and all materials in
the premises.
Cendaa said that because of the denial the newspaper and its equipment
remain at the disposal of the owners, subject to the discretion of the court. 19
That the property seized on December 7, 1982 had not been sequestered is further confirmed by the
reply of then Foreign Minister Carlos P. Romulo to the letter dated February 10, 1983 of U.S.
Congressman Tony P. Hall addressed to President Marcos, expressing alarm over the "WE FORUM "
case. 20 In this reply dated February 11, 1983, Minister Romulo stated:
2. Contrary to reports, President Marcos turned down the recommendation of our
authorities to close the paper's printing facilities and confiscate the equipment
and materials it uses. 21
IN VIEW OF THE FOREGOING, Search Warrants Nos. 20-82[a] and 20-82[b] issued by respondent
judge on December 7, 1982 are hereby declared null and void and are accordingly set aside. The prayer
for a writ of mandatory injunction for the return of the seized articles is hereby granted and all articles
seized thereunder are hereby ordered released to petitioners. No costs.
SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Melencio-Herrera, Plana, Relova, Gutierrez, Jr.,
De la Fuente and Cuevas, JJ., concur.
Aquino, J., took no part.

Separate Opinions
ABAD SANTOS, J., concurring
I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At the same time I wish to state
my own reasons for holding that the search warrants which are the subject of the petition are utterly void.
The action against "WE FORUM" was a naked suppression of press freedom for the search warrants
were issued in gross violation of the Constitution.
The Constitutional requirement which is expressed in Section 3, Article IV, stresses two points, namely: "
(1) that no warrant shall issue but upon probable cause, to be determined by the judge in the manner set
forth in said provision; and (2) that the warrant shall particularly describe the things to be seized."
(Stonehill vs. Diokno, 126 Phil. 738, 747: 20 SCRA 383 [1967].)
Any search warrant is conducted in disregard of the points mentioned above will result in wiping "out
completely one of the most fundamental rights guaranteed in our Constitution, for it would place the
sanctity of the domicile and the privacy of communication and correspondence at the mercy of the whims
caprice or passion of peace officers." (Ibid, p. 748.)
The two search warrants were issued without probable cause. To satisfy the requirement of probable
cause a specific offense must be alleged in the application; abstract averments will not suffice. In the
case at bar nothing specifically subversive has been alleged; stated only is the claim that certain objects
were being used as instruments and means of committing the offense of subversion punishable under
P.D. No. 885, as amended. There is no mention of any specific provision of the decree. I n the words of
Chief Justice C Concepcion, " It would be legal heresy of the highest order, to convict anybody" of
violating the decree without reference to any determinate provision thereof.
The search warrants are also void for lack of particularity. Both search warrants authorize Col. Rolando
Abadilla to seize and take possession, among other things, of the following:
Subversive documents, pamphlets, leaflets, books and other publication to
promote the objectives and purposes of the subversive organizations known as
Movement for Free Philippines, Light-a-Fire Movement and April 6 Movement.
The obvious question is: Why were the documents, pamphlets, leaflets, books, etc. subversive? What did
they contain to make them subversive? There is nothing in the applications nor in the warrants which
answers the questions. I must, therefore, conclude that the warrants are general warrants which are
obnoxious to the Constitution.
In point of fact, there was nothing subversive published in the WE FORUM just as there is nothing
subversive which has been published in MALAYA which has replaced the former and has the same
content but against which no action has been taken.
Conformably with existing jurisprudence everything seized pursuant to the warrants should be returned to

Conformably with existing jurisprudence everything seized pursuant to the warrants should be returned to
the owners and all of the items are subject to the exclusionary rule of evidence.
Teehankee, J., concur.

Separate Opinions
ABAD SANTOS, J., concurring
I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At the same time I wish to state
my own reasons for holding that the search warrants which are the subject of the petition are utterly void.
The action against "WE FORUM" was a naked suppression of press freedom for the search warrants
were issued in gross violation of the Constitution.
The Constitutional requirement which is expressed in Section 3, Article IV, stresses two points, namely: "
(1) that no warrant shall issue but upon probable cause, to be determined by the judge in the manner set
forth in said provision; and (2) that the warrant shall particularly describe the things to be seized."
(Stonehill vs. Diokno, 126 Phil. 738, 747: 20 SCRA 383 [1967].)
Any search warrant is conducted in disregard of the points mentioned above will result in wiping "out
completely one of the most fundamental rights guaranteed in our Constitution, for it would place the
sanctity of the domicile and the privacy of communication and correspondence at the mercy of the whims
caprice or passion of peace officers." (Ibid, p. 748.)
The two search warrants were issued without probable cause. To satisfy the requirement of probable
cause a specific offense must be alleged in the application; abstract averments will not suffice. In the
case at bar nothing specifically subversive has been alleged; stated only is the claim that certain objects
were being used as instruments and means of committing the offense of subversion punishable under
P.D. No. 885, as amended. There is no mention of any specific provision of the decree. I n the words of
Chief Justice C Concepcion, " It would be legal heresy of the highest order, to convict anybody" of
violating the decree without reference to any determinate provision thereof.
The search warrants are also void for lack of particularity. Both search warrants authorize Col. Rolando
Abadilla to seize and take possession, among other things, of the following:
Subversive documents, pamphlets, leaflets, books and other publication to
promote the objectives and purposes of the subversive organizations known as
Movement for Free Philippines, Light-a-Fire Movement and April 6 Movement.
The obvious question is: Why were the documents, pamphlets, leaflets, books, etc. subversive? What did
they contain to make them subversive? There is nothing in the applications nor in the warrants which
answers the questions. I must, therefore, conclude that the warrants are general warrants which are
obnoxious to the Constitution.
In point of fact, there was nothing subversive published in the WE FORUM just as there is nothing
subversive which has been published in MALAYA which has replaced the former and has the same
content but against which no action has been taken.
Conformably with existing jurisprudence everything seized pursuant to the warrants should be returned to
the owners and all of the items are subject to the exclusionary rule of evidence.
Teehankee, J., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-10817-18

February 28, 1958

ENRIQUE LOPEZ, petitioner,

vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
Nicolas Belmonte and Benjamin T. de Peralta for petitioner.
Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc. Jose B. Macatangay for
respondent Plaza Theatre, Inc.

FELIX, J.:
Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of LopezCastelo Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a resident of the same province,
dropped at Lopez' house and invited him to make an investment in the theatre business. It was intimated
that Orosa, his family and close friends were organizing a corporation to be known as Plaza Theatre,
Inc., that would engage in such venture. Although Lopez expressed his unwillingness to invest of the
same, he agreed to supply the lumber necessary for the construction of the proposed theatre, and at
Orosa's behest and assurance that the latter would be personally liable for any account that the said
construction might incur, Lopez further agreed that payment therefor would be on demand and not cash
on delivery basis. Pursuant to said verbal agreement, Lopez delivered the lumber which was used for the
construction of the Plaza Theatre on May 17, 1946, up to December 4 of the same year. But of the total
cost of the materials amounting to P62,255.85, Lopez was paid only P20,848.50, thus leaving a balance
of P41,771.35.
We may state at this juncture that the Plaza Theatre was erected on a piece of land with an area of
679.17 square meters formerly owned by Vicente Orosa, Jr., and was acquired by the corporation on
September 25, 1946, for P6,000. As Lopez was pressing Orosa for payment of the remaining unpaid
obligation, the latter and Belarmino Rustia, the president of the corporation, promised to obtain a bank
loan by mortgaging the properties of the Plaza Theatre., out of which said amount of P41,771.35 would
be satisfied, to which assurance Lopez had to accede. Unknown to him, however, as early as November,
1946, the corporation already got a loan for P30,000 from the Philippine National Bank with the Luzon
Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in
favor of said company as counter-security. As the land at that time was not yet brought under the
operation of the Torrens System, the mortgage on the same was registered on November 16, 1946,
under Act No. 3344. Subsequently, when the corporation applied for the registration of the land under Act
496, such mortgage was not revealed and thus Original Certificate of Title No. O-391 was
correspondingly issued on October 25, 1947, without any encumbrance appearing thereon.
Persistent demand from Lopez for the payment of the amount due him caused Vicente Orosa, Jr. to
execute on March 17, 1947, an alleged "deed of assignment" of his 420 shares of stock of the Plaza
Theater, Inc., at P100 per share or with a total value of P42,000 in favor of the creditor, and as the
obligation still remained unsettled, Lopez filed on November 12, 1947, a complaint with the Court of First
Instance of Batangas (Civil Case No. 4501 which later became R-57) against Vicente Orosa, Jr. and
Plaza Theater, Inc., praying that defendants be sentenced to pay him jointly and severally the sum of
P41,771.35, with legal interest from the firing of the action; that in case defendants fail to pay the same,
that the building and the land covered by OCT No. O-391 owned by the corporation be sold at public
auction and the proceeds thereof be applied to said indebtedness; or that the 420 shares of the capital
stock of the Plaza Theatre, Inc., assigned by Vicente Orosa, Jr., to said plaintiff be sold at public auction
for the same purpose; and for such other remedies as may be warranted by the circumstances. Plaintiff
also caused the annotation of a notice of lis pendens on said properties with the Register of Deeds.
Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate answers, the first denying that the
materials were delivered to him as a promoter and later treasurer of the corporation, because he had
purchased and received the same on his personal account; that the land on which the movie house was
constructed was not charged with a lien to secure the payment of the aforementioned unpaid obligation;
and that the 420 shares of stock of the Plaza Theatre, Inc., was not assigned to plaintiff as collaterals but
as direct security for the payment of his indebtedness. As special defense, this defendant contended that
as the 420 shares of stock assigned and conveyed by the assignor and accepted by Lopez as direct
security for the payment of the amount of P41,771.35 were personal properties, plaintiff was barred from
recovering any deficiency if the proceeds of the sale thereof at public auction would not be sufficient to
cover and satisfy the obligation. It was thus prayed that he be declared exempted from the payment of
any deficiency in case the proceeds from the sale of said personal properties would not be enough to
cover the amount sought to be collected.
Defendant Plaza Theatre, Inc., on the other hand, practically set up the same line of defense by alleging
that the building materials delivered to Orosa were on the latter's personal account; and that there was
no understanding that said materials would be paid jointly and severally by Orosa and the corporation,
nor was a lien charged on the properties of the latter to secure payment of the same obligation. As
special defense, defendant corporation averred that while it was true that the materials purchased by
Orosa were sold by the latter to the corporation, such transactions were in good faith and for valuable
consideration thus when plaintiff failed to claim said materials within 30 days from the time of removal
thereof from Orosa, lumber became a different and distinct specie and plaintiff lost whatever rights he
might have in the same and consequently had no recourse against the Plaza Theatre, Inc., that the claim
could not have been refectionary credit, for such kind of obligation referred to an indebtedness incurred in
the repair or reconstruction of something already existing and this concept did not include an entirely new
work; and that the Plaza Theatre, Inc., having been incorporated on October 14, 1946, it could not have
contracted any obligation prior to said date. It was, therefore, prayed that the complaint be dismissed;
that said defendant be awarded the sum P 5,000 for damages, and such other relief as may be just and
proper in the premises.
The surety company, in the meantime, upon discovery that the land was already registered under the
Torrens System and that there was a notice of lis pendens thereon, filed on August 17, 1948, or within
the 1-year period after the issuance of the certificate of title, a petition for review of the decree of the land
registration court dated October 18, 1947, which was made the basis of OCT No. O-319, in order to
annotate the rights and interests of the surety company over said properties (Land Registration Case No.
17 GLRO Rec. No. 296). Opposition thereto was offered by Enrique Lopez, asserting that the amount

17 GLRO Rec. No. 296). Opposition thereto was offered by Enrique Lopez, asserting that the amount
demanded by him constituted a preferred lien over the properties of the obligors; that the surety company
was guilty of negligence when it failed to present an opposition to the application for registration of the
property; and that if any violation of the rights and interest of said surety would ever be made, same must
be subject to the lien in his favor.
The two cases were heard jointly and in a decision dated October 30, 1952, the lower Court, after making
an exhaustive and detailed analysis of the respective stands of the parties and the evidence adduced at
the trial, held that defendants Vicente Orosa, Jr., and the Plaza Theatre, Inc., were jointly liable for the
unpaid balance of the cost of lumber used in the construction of the building and the plaintiff thus
acquired the materialman's lien over the same. In making the pronouncement that the lien was merely
confined to the building and did not extend to the land on which the construction was made, the trial
judge took into consideration the fact that when plaintiff started the delivery of lumber in May, 1946, the
land was not yet owned by the corporation; that the mortgage in favor of Luzon Surety Company was
previously registered under Act No. 3344; that the codal provision (Art. 1923 of the old Spanish Civil
Code) specifying that refection credits are preferred could refer only to buildings which are also classified
as real properties, upon which said refection was made. It was, however, declared that plaintiff's lien on
the building was superior to the right of the surety company. And finding that the Plaza Theatre, Inc., had
no objection to the review of the decree issued in its favor by the land registration court and the inclusion
in the title of the encumbrance in favor of the surety company, the court a quo granted the petition filed by
the latter company. Defendants Orosa and the Plaza Theatre, Inc., were thus required to pay jointly the
amount of P41,771.35 with legal interest and costs within 90 days from notice of said decision; that in
case of default, the 420 shares of stock assigned by Orosa to plaintiff be sold at public auction and the
proceeds thereof be applied to the payment of the amount due the plaintiff, plus interest and costs; and
that the encumbrance in favor of the surety company be endorsed at the back of OCT No. O-391, with
notation I that with respect to the building, said mortgage was subject to the materialman's lien in favor of
Enrique Lopez.
Plaintiff tried to secure a modification of the decision in so far as it declared that the obligation of therein
defendants was joint instead of solidary, and that the lien did not extend to the land, but same was denied
by order the court of December 23, 1952. The matter was thus appealed to the Court of appeals, which
affirmed the lower court's ruling, and then to this Tribunal. In this instance, plaintiff-appellant raises 2
issues: (1) whether a materialman's lien for the value of the materials used in the construction of a
building attaches to said structure alone and does not extend to the land on which the building is adhered
to; and (2) whether the lower court and the Court of Appeals erred in not providing that the material mans
liens is superior to the mortgage executed in favor surety company not only on the building but also on
the land.
It is to be noted in this appeal that Enrique Lopez has not raised any question against the part of the
decision sentencing defendants Orosa and Plaza Theatre, Inc., to pay jointly the sum of P41,771.35, so
We will not take up or consider anything on that point. Appellant, however, contends that the lien created
in favor of the furnisher of the materials used for the construction, repair or refection of a building, is also
extended to the land which the construction was made, and in support thereof he relies on Article 1923 of
the Spanish Civil Code, pertinent law on the matter, which reads as follows:
ART. 1923. With respect to determinate real property and real rights of the debtor, the following are
preferred:
xxx

xxx

xxx

5. Credits for refection, not entered or recorded, with respect to the estate upon which the refection was
made, and only with respect to other credits different from those mentioned in four preceding paragraphs.
It is argued that in view of the employment of the phrase real estate, or immovable property, and
inasmuch as said provision does not contain any specification delimiting the lien to the building, said
article must be construed as to embrace both the land and the building or structure adhering thereto. We
cannot subscribe to this view, for while it is true that generally, real estate connotes the land and the
building constructed thereon, it is obvious that the inclusion of the building, separate and distinct from the
land, in the enumeration of what may constitute real properties1 could mean only one thing that a
building is by itself an immovable property, a doctrine already pronounced by this Court in the case of
Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and in view of the absence of any specific
provision of law to the contrary, a building is an immovable property, irrespective of whether or not said
structure and the land on which it is adhered to belong to the same owner.
A close examination of the provision of the Civil Code invoked by appellant reveals that the law gives
preference to unregistered refectionary credits only with respect to the real estate upon which the
refection or work was made. This being so, the inevitable conclusion must be that the lien so created
attaches merely to the immovable property for the construction or repair of which the obligation was
incurred. Evidently, therefore, the lien in favor of appellant for the unpaid value of the lumber used in the
construction of the building attaches only to said structure and to no other property of the obligors.
Considering the conclusion thus arrived at, i.e., that the materialman's lien could be charged only to the
building for which the credit was made or which received the benefit of refection, the lower court was right
in, holding at the interest of the mortgagee over the land is superior and cannot be made subject to the

in, holding at the interest of the mortgagee over the land is superior and cannot be made subject to the
said materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the decision appealed from is hereby
affirmed, with costs against appellant. It is so ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L. and Endencia, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-32917 July 18, 1988
JULIAN S. YAP, petitioner,
vs.
HON. SANTIAGO O. TAADA, etc., and GOULDS PUMPS INTERNATIONAL (PHIL.), INC.,
respondents.
Paterno P. Natinga for private respondent.
NARVASA, J.:
The petition for review on certiorari at bar involves two (2) Orders of respondent Judge Taada 1 in Civil
Case No. 10984. The first, dated September 16, 1970, denied petitioner Yap's motion to set aside
execution sale and to quash alias writ of execution. The second, dated November 21, 1970, denied
Yap's motion for reconsideration. The issues concerned the propriety of execution of a judgment claimed
to be "incomplete, vague and non-final," and the denial of petitioner's application to prove and recover
damages resulting from alleged irregularities in the process of execution.
The antecedents will take some time in the telling. The case began in the City Court of Cebu with the
filing by Goulds Pumps International (Phil.), Inc. of a complaint 2 against Yap and his wife 3 seeking
recovery of P1,459.30 representing the balance of the price and installation cost of a water pump in the
latter's premises. 4 The case resulted in a judgment by the City Court on November 25, 1968, reading as
follows:
When this case was called for trial today, Atty. Paterno Natinga appeared for the
plaintiff Goulds and informed the court that he is ready for trial. However, none
of the defendants appeared despite notices having been served upon them.
Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its evidence
ex-parte.
After considering the evidence of the plaintiff, the court hereby renders judgment
in favor of the plaintiff and against the defendant (Yap), ordering the latter to pay
to the former the sum of Pl,459.30 with interest at the rate of 12% per annum
until fully paid, computed from August 12, 1968, date of the filing of the
complaint; to pay the sum of P364.80 as reasonable attorney's fees, which is
equivalent " to 25% of the unpaid principal obligation; and to pay the costs, if
any.
Yap appealed to the Court of First Instance. The appeal was assigned to the sala of respondent Judge
Taada. For failure to appear for pre-trial on August 28, 1968, this setting being intransferable since the
pre-trial had already been once postponed at his instance, 5 Yap was declared in default by Order of
Judge Taada dated August 28, 1969, 6 reading as follows:
When this case was called for pre-trial this morning, the plaintiff and counsel
appeared, but neither the defendants nor his counsel appeared despite the fact
that they were duly notified of the pre-trial set this morning. Instead he filed an
Ex-Parte Motion for Postponement which this Court received only this morning,
and on petition of counsel for the plaintiff that the Ex-Parte Motion for
Postponement was not filed in accordance with the Rules of Court he asked that
the same be denied and the defendants be declared in default; .. the motion for
the plaintiff being well- grounded, the defendants are hereby declared in default
and the Branch Clerk of Court ..is hereby authorized to receive evidence for the
plaintiff and .. submit his report within ten (10) days after reception of evidence.
Goulds presented evidence ex parte and judgment by default was rendered the following day by Judge
Taada requiring Yap to pay to Goulds (1) Pl,459.30 representing the unpaid balance of the pump
purchased by him; (2) interest of 12% per annum thereon until fully paid; and (3) a sum equivalent to
25% of the amount due as attorney's fees and costs and other expenses in prosecuting the action.
Notice of the judgment was served on Yap on September 1, 1969. 7
On September 16, 1969 Yap filed a motion for reconsideration. 8 In it he insisted that his motion for
postponement should have been granted since it expressed his desire to explore the possibility of an
amicable settlement; that the court should give the parties time to arrive at an amicable settlement failing
which, he should be allowed to present evidence in support of his defenses (discrepancy as to the price
and breach of warranty). The motion was not verified or accompanied by any separate affidavit. Goulds

and breach of warranty). The motion was not verified or accompanied by any separate affidavit. Goulds
opposed the motion. Its opposition 9 drew attention to the eleventh-hour motion for postponement of Yap
which had resulted in the cancellation of the prior hearing of June 30, 1969 despite Goulds' vehement
objection, and the re-setting thereof on August 28, 1969 with intransferable character; it averred that Yap
had again sought postponement of this last hearing by another eleventh-hour motion on the plea that an
amicable settlement would be explored, yet he had never up to that time ever broached the matter, 10 and
that this pattern of seeking to obtain last-minute postponements was discernible also in the proceedings
before the City Court. In its opposition, Goulds also adverted to the examination made by it of the pump,
on instructions of the City Court, with a view to remedying the defects claimed to exist by Yap; but the
examination had disclosed the pump's perfect condition. Yap's motion for reconsideration was denied by
Order dated October 10, 1969, notice of which was received by Yap on October 4, 1969. 11
On October 15, 1969 Judge Taada issued an Order granting Goulds' Motion for Issuance of Writ of
Execution dated October 14, 1969, declaring the reasons therein alleged to be meritorious. 12 Yap
forthwith filed an "Urgent Motion for Reconsideration of Order" dated October 17, 1969, 13 contending
that the judgment had not yet become final, since contrary to Goulds' view, his motion for reconsideration
was not pro forma for lack of an affidavit of merit, this not being required under Section 1 (a) of Rule 37
of the Rules of Court upon which his motion was grounded. Goulds presented an opposition dated
October 22, 1969. 14 It pointed out that in his motion for reconsideration Yap had claimed to have a valid
defense to the action, i.e., ".. discrepancy as to price and breach of seller's warranty," in effect, that there
was fraud on Goulds' paint; Yap's motion for reconsideration should therefore have been supported by
an affidavit of merit respecting said defenses; the absence thereof rendered the motion for
reconsideration fatally defective with the result that its filing did not interrupt the running of the period of
appeal. The opposition also drew attention to the failure of the motion for reconsideration to specify the
findings or conclusions in the judgment claimed to be contrary to law or not supported by the evidence,
making it a pro forma motion also incapable of stopping the running of the appeal period. On October 23,
1969, Judge Taada denied Yap's motion for reconsideration and authorized execution of the judgment.
15
Yap sought reconsideration of this order, by another motion dated October 29, 1969. 16 This motion was
denied by Order dated January 26, 1970. 17 Again Yap moved for reconsideration, and again was
rebuffed, by Order dated April 28, 1970. 18
In the meantime the Sheriff levied on the water pump in question, 19 and by notice dated November 4,
1969, scheduled the execution sale thereof on November 14, 1969. 20 But in view of the pendency of
Yap's motion for reconsideration of October 29, 1969, suspension of the sale was directed by Judge
Taada in an order dated November 6, 1969. 21
Counsel for the plaintiff is hereby given 10 days time to answer the Motion,
dated October 29, 1969, from receipt of this Order and in the meantime, the
Order of October 23, 1969, insofar as it orders the sheriff to enforce the writ of
execution is hereby suspended.
It appears however that a copy of this Order was not transmitted to the Sheriff "through oversight,
inadvertence and pressure of work" of the Branch Clerk of Court. 22 So the Deputy Provincial Sheriff went
ahead with the scheduled auction sale and sold the property levied on to Goulds as the highest bidder. 23
He later submitted the requisite report to the Court dated November 17, 1969, 24 as well as the "Sheriffs
Return of Service" dated February 13, 1970, 25 in both of which it was stated that execution had been
"partially satisfied." It should be observed that up to this time, February, 1970, Yap had not bestirred
himself to take an appeal from the judgment of August 29, 1969.
On May 9, 1970 Judge Taada ordered the issuance of an alias writ of execution on Gould's ex parte
motion therefor. 26 Yap received notice of the Order on June 11. Twelve (1 2) days later, he filed a "Motion
to Set Aside Execution Sale and to Quash Alias Writ of Execution." 27 As regards the original, partial
execution of the judgment, he argued that
1) "the issuance of the writ of execution on October 16, 1969 was contrary to law, the judgment sought to
be executed not being final and executory;" and
2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New Rules of Court," i.e.,
notice by publication in case of execution sale of real property, the pump and its accessories being
immovable because attached to the ground with character of permanency (Art. 415, Civil Code).
And with respect to the alias writ, he argued that it should not have issued because
1) "the judgment sought to be executed is null and void" as "it deprived the defendant of his day in court"
and "of due process;"
2) "said judgment is incomplete and vague" because there is no starting point for computation of the
interest imposed, or a specification of the "other expenses incurred in prosecuting this case" which Yap
had also been ordered to pay;
3) "said judgment is defective because it contains no statement of facts but a mere recital of the
evidence; and
4) "there has been a change in the situation of the parties which makes execution unjust and inequitable"
because Yap suffered damages by reason of the illegal execution.
Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by Order dated
September 16, 1970. Judge Taada pointed out that the motion had "become moot and academic" since
the decision of August 29, 1969, "received by the defendant on September 1, 1969 had long become
final when the Order for the Issuance of a Writ of Execution was promulgated on October 15, 1969." His
Honor also stressed that

The defendant's Motion for Reconsideration of the Courts decision was in reality
one for new trial. Regarded as motion for new trial it should allege the grounds
for new trial, provided for in the Rules of Court, to be supported by affidavit of
merits; and this the defendant failed to do. If the defendant sincerely desired for
an opportunity to submit to an amicable settlement, which he failed to do extra
judicially despite the ample time before him, he should have appeared in the
pre- trial to achieve the same purpose.
Judge Taada thereafter promulgated another Order dated September 21, 1970 granting a motion of
Goulds for completion of execution of the judgment of August 29, 1969 to be undertaken by the City
Sheriff of Cebu. Once more, Yap sought reconsideration. He submitted a "Motion for Reconsideration of
Two Orders" dated October 13, 1970, 28 seeking the setting aside not only of this Order of September 21,
1970 but also that dated September 16, 1970, denying his motion to set aside execution dated June 23,
1970. He contended that the Order of September 21, 1970 (authorizing execution by the City Sheriff)
was premature, since the 30-day period to appeal from the earlier order of September 16, 1970 (denying
his motion to set aside) had not yet expired. He also reiterated his view that his motion for
reconsideration dated September 15, 1969 did not require that it be accompanied by an affidavit of
merits. This last motion was also denied for "lack of merits," by Order dated November 21, 1970. 29
On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to appeal to the Supreme
Court on certiorari only on questions of law, "from the Order ... of September 16, 1970 ... and from the
Order ... of November 21, 1970, ... pursuant to sections 2 and 3 of Republic Act No. 5440." He filed his
petition for review with this Court on January 5, 1971, after obtaining an extension therefor. 30
The errors of law he attributes to the Court a quo are the following: 31
1) refusing to invalidate the execution pursuant to its Order of October 16, 1969 although the judgment
had not then become final and executory and despite its being incomplete and vague;
2) ignoring the fact that the execution sale was carried out although it (the Court) had itself ordered
suspension of execution on November 6, 1969;
3) declining to annul the execution sale of the pump and accessories subject of the action although
made without the requisite notice prescribed for the sale of immovables; and
4) refusing to allow the petitioner to prove irregularities in the process of execution which had resulted in
damages to him.
Notice of the Trial Court's judgment was served on Yap on September 1, 1969. His motion for
reconsideration thereof was filed 15 days thereafter, on September 16, 1969. Notice of the Order
denying the motion was received by him on October 14, 1969. The question is whether or not the motion
for reconsideration which was not verified, or accompanied by an affidavit of merits (setting forth facts
constituting his meritorious defenses to the suit) or other sworn statement (stating facts excusing his
failure to appear at the pre-trial was pro forma and consequently had not interrupted the running of the
period of appeal. It is Yap's contention that his motion was not pro forma for lack of an affidavit of merits,
such a document not being required by Section 1 (a) of Rule 37 of the Rules of Court upon which his
motion was based. This is incorrect.
Section 2, Rule 37 precisely requires that when the motion for new trial is founded on Section 1 (a), it
should be accompanied by an affidavit of merit.
xxx xxx xxx
When the motion is made for the causes mentioned in subdivisions (a) and (b)
of the preceding section, it shall be proved in the manner provided for proof of
motions. Affidavit or affidavits of merits shall also be attached to a motion for the
cause mentioned in subdivision (a) which may be rebutted by counter-affidavits.
xxx xxx xxx 32
Since Yap himself asserts that his motion for reconsideration is grounded on Section 1 (a) of Rule 37, 33
i.e., fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded
against and by reason of which ... (the) aggrieved party has probably been impaired in his rights" this
being in any event clear from a perusal of the motion which theorizes that he had "been impaired in his
rights" because he was denied the right to present evidence of his defenses (discrepancy as to price and
breach of warranty) it was a fatal omission to fail to attach to his motion an affidavit of merits, i.e., an
affidavit "showing the facts (not conclusions) constituting the valid x x defense which the movant may
prove in case a new trial is granted." 34 The requirement of such an affidavit is essential because
obviously "a new trial would be a waste of the court's time if the complaint turns out to be groundless or
the defense ineffective." 35
In his motion for reconsideration, Yap also contended that since he had expressed a desire to explore
the possibility of an amicable settlement, the Court should have given him time to do so, instead of
declaring him in default and thereafter rendering judgment by default on Gould's ex parte evidence.
The bona fides of this desire to compromise is however put in doubt by the attendant circumstances. It
was manifested in an eleventh-hour motion for postponement of the pre-trial which had been scheduled
with intransferable character since it had already been earlier postponed at Yap's instance; it had never
been mentioned at any prior time since commencement of the litigation; such a possible compromise (at
least in general or preliminary terms) was certainly most appropriate for consideration at the pre-trial; in
fact Yap was aware that the matter was indeed a proper subject of a pre-trial agenda, yet he sought to
avoid appearance at said pre-trial which he knew to be intransferable in character. These considerations

and the dilatory tactics thus far attributable to him-seeking postponements of hearings, or failing to
appear therefor despite notice, not only in the Court of First Instance but also in the City Court
proscribe belief in the sincerity of his avowed desire to negotiate a compromise. Moreover, the disregard
by Yap of the general requirement that "(n)otice of a motion shall be served by the applicant to all parties
concerned at least three (3) days before the hearing thereof, together with a copy of the motion, and of
any affidavits and other papers accompanying it," 36 for which no justification whatever has been offered,
also militates against the bona fides of Yap's expressed wish for an amicable settlement. The relevant
circumstances do not therefore justify condemnation, as a grave abuse of discretion, or a serious
mistake, of the refusal of the Trial Judge to grant postponement upon this proferred ground.
The motion for reconsideration did not therefore interrupt the running of the period of appeal. The time
during which it was pending before the court from September 16, 1969 when it was filed with the
respondent Court until October 14, 1969 when notice of the order denying the motion was received by
the movant could not be deducted from the 30-day period of appeal. 37 This is the inescapable
conclusion from a consideration of Section 3 of Rule 41 which in part declares that, "The "time during
which a motion to set aside the judgment or order or for a new trial has been pending shall be deducted,
unless such motion fails to satisfy the requirements of Rule 37. 38
Notice of the judgment having been received by Yap on September 1, 1969, and the period of appeal
therefrom not having been interrupted by his motion for reconsideration filed on September 16, 1969, the
reglementary period of appeal expired thirty (30) days after September 1, 1969, or on October 1, 1969,
without an appeal being taken by Yap. The judgment then became final and executory; Yap could no
longer take an appeal therefrom or from any other subsequent orders; and execution of judgment
correctly issued on October 15, 1969, "as a matter of right." 39
The next point discussed by Yap, that the judgment is incomplete and vague, is not well taken. It is true
that the decision does not fix the starting time of the computation of interest on the judgment debt, but
this is inconsequential since that time is easily determinable from the opinion, i.e., from the day the buyer
(Yap) defaulted in the payment of his obligation, 40 on May 31, 1968. 41 The absence of any disposition
regarding his counterclaim is also immaterial and does not render the judgment incomplete. Yap's failure
to appear at the pre-trial without justification and despite notice, which caused the declaration of his
default, was a waiver of his right to controvert the plaintiff s proofs and of his right to prove the averments
of his answer, inclusive of the counterclaim therein pleaded. Moreover, the conclusion in the judgment of
the merit of the plaintiff s cause of action was necessarily and at the same time a determination of the
absence of merit of the defendant's claim of untenability of the complaint and of malicious prosecution.
Yap's next argument that the water pump had become immovable property by its being installed in his
residence is also untenable. The Civil Code considers as immovable property, among others, anything
"attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom
without breaking the material or deterioration of the object." 42 The pump does not fit this description. It
could be, and was in fact separated from Yap's premises without being broken or suffering deterioration.
Obviously the separation or removal of the pump involved nothing more complicated than the loosening
of bolts or dismantling of other fasteners.
Yap's last claim is that in the process of the removal of the pump from his house, Goulds' men had
trampled on the plants growing there, destroyed the shed over the pump, plugged the exterior casings
with rags and cut the electrical and conduit pipes; that he had thereby suffered actual-damages in an
amount of not less than P 2,000.00, as well as moral damages in the sum of P 10,000.00 resulting from
his deprivation of the use of his water supply; but the Court had refused to allow him to prove these acts
and recover the damages rightfully due him. Now, as to the loss of his water supply, since this arose from
acts legitimately done, the seizure on execution of the water pump in enforcement of a final and
executory judgment, Yap most certainly is not entitled to claim moral or any other form of damages
therefor.
WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders of September 16,
1970 and November 21, 1970 subject thereof, AFFIRMED in toto. Costs against petitioner.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
Republic of the Philippines
SUPREME COURT

SUPREME COURT
Manila
EN BANC
G.R. No. L-7057

October 29, 1954

MACHINERY & ENGINEERING SUPPLIES, INC., petitioner,

vs.
THE HONORABLE COURT OF APPEALS, HON. POTENCIANO PECSON, JUDGE OF THE COURT
OF FIRST INSTANCE OF MANILA, IPO LIMESTONE CO., INC., and ANTONIO VILLARAMA,
respondents.
Vicente J. Francisco for petitioner.
Capistrano and Capistrano for respondents.
CONCEPCION, J.:
This is an appeal by certiorari, taken by petitioner Machinery and Engineering Supplies Inc., from a
decision of the Court of Appeals denying an original petition for certiorari filed by said petitioner against
Hon. Potenciano Pecson, Ipo Limestone Co., Inc., and Antonio Villarama, the respondents herein.
The pertinent facts are set forth in the decision of the Court of Appeals, from which we quote:
On March 13, 1953, the herein petitioner filed a complaint for replevin in the Court of
First Instance of Manila, Civil Case No. 19067, entitled "Machinery and Engineering
Supplies, Inc., Plaintiff, vs. Ipo Limestone Co., Inc., and Dr. Antonio Villarama,
defendants", for the recovery of the machinery and equipment sold and delivered to said
defendants at their factory in barrio Bigti, Norzagaray, Bulacan. Upon application exparte of the petitioner company, and upon approval of petitioner's bond in the sum of
P15,769.00, on March 13,1953, respondent judge issued an order, commanding the
Provincial Sheriff of Bulacan to seize and take immediate possession of the properties
specified in the order (Appendix I, Answer). On March 19, 1953, two deputy sheriffs of
Bulacan, the said Ramon S. Roco, and a crew of technical men and laborers proceeded
to Bigti, for the purpose of carrying the court's order into effect. Leonardo Contreras,
Manager of the respondent Company, and Pedro Torres, in charge thereof, met the
deputy sheriffs, and Contreras handed to them a letter addressed to Atty. Leopoldo C.
Palad, ex-oficio Provincial Sheriff of Bulacan, signed by Atty. Adolfo Garcia of the
defendants therein, protesting against the seizure of the properties in question, on the
ground that they are not personal properties. Contending that the Sheriff's duty is
merely ministerial, the deputy sheriffs, Roco, the latter's crew of technicians and
laborers, Contreras and Torres, went to the factory. Roco's attention was called to the
fact that the equipment could not possibly be dismantled without causing damages or
injuries to the wooden frames attached to them. As Roco insisted in dismantling the
equipment on his own responsibility, alleging that the bond was posted for such
eventuality, the deputy sheriffs directed that some of the supports thereof be cut
(Appendix 2). On March 20, 1953, the defendant Company filed an urgent motion, with
a counter-bond in the amount of P15,769, for the return of the properties seized by the
deputy sheriffs. On the same day, the trial court issued an order, directing the Provincial
Sheriff of Bulacan to return the machinery and equipment to the place where they were
installed at the time of the seizure (Appendix 3). On March 21, 1953, the deputy sheriffs
returned the properties seized, by depositing them along the road, near the quarry, of
the defendant Company, at Bigti, without the benefit of inventory and without reinstalling hem in their former position and replacing the destroyed posts, which rendered
their use impracticable. On March 23, 1953, the defendants' counsel asked the
provincial Sheriff if the machinery and equipment, dumped on the road would be reinstalled tom their former position and condition (letter, Appendix 4). On March 24,
1953, the Provincial Sheriff filed an urgent motion in court, manifesting that Roco had
been asked to furnish the Sheriff's office with the expenses, laborers, technical men and
equipment, to carry into effect the court's order, to return the seized properties in the
same way said Roco found them on the day of seizure, but said Roco absolutely
refused to do so, and asking the court that the Plaintiff therein be ordered to provide the
required aid or relieve the said Sheriff of the duty of complying with the said order dated
March 20, 1953 (Appendix 5). On March 30, 1953, the trial court ordered the Provincial
Sheriff and the Plaintiff to reinstate the machinery and equipment removed by them in
their original condition in which they were found before their removal at the expense of
the Plaintiff (Appendix 7). An urgent motion of the Provincial Sheriff dated April 15,
1953, praying for an extension of 20 days within which to comply with the order of the
Court (appendix 10) was denied; and on May 4, 1953, the trial court ordered the Plaintiff
therein to furnish the Provincial Sheriff within 5 days with the necessary funds, technical
men, laborers, equipment and materials to effect the repeatedly mentioned reinstallation (Appendix 13). (Petitioner's brief, Appendix A, pp. I-IV.)
Thereupon petitioner instituted in the Court of Appeals civil case G.R. No. 11248-R, entitled "Machinery
and Engineering Supplies, Inc. vs. Honorable Potenciano Pecson, Provincial Sheriff of Bulacan, Ipo
Limestone Co., Inc., and Antonio Villarama." In the petition therein filed, it was alleged that, in ordering
the petitioner to furnish the provincial sheriff of Bulacan "with necessary funds, technical men, laborers,
equipment and materials, to effect the installation of the machinery and equipment" in question, the
Court of Firs Instance of Bulacan had committed a grave abuse if discretion and acted in excess of its

Court of Firs Instance of Bulacan had committed a grave abuse if discretion and acted in excess of its
jurisdiction, for which reason it was prayed that its order to this effect be nullified, and that, meanwhile, a
writ of preliminary injunction be issued to restrain the enforcement o said order of may 4, 1953. Although
the aforementioned writ was issued by the Court of Appeals, the same subsequently dismissed by the
case for lack of merit, with costs against the petitioner, upon the following grounds:
While the seizure of the equipment and personal properties was ordered by the
respondent Court, it is, however, logical to presume that said court did not authorize the
petitioner or its agents to destroy, as they did, said machinery and equipment, by
dismantling and unbolting the same from their concrete basements, and cutting and
sawing their wooden supports, thereby rendering them unserviceable and beyond
repair, unless those parts removed, cut and sawed be replaced, which the petitioner, not
withstanding the respondent Court's order, adamantly refused to do. The Provincial
Sheriff' s tortious act, in obedience to the insistent proddings of the president of the
Petitioner, Ramon S. Roco, had no justification in law, notwithstanding the Sheriffs'
claim that his duty was ministerial. It was the bounden duty of the respondent Judge to
give redress to the respondent Company, for the unlawful and wrongful acts committed
by the petitioner and its agents. And as this was the true object of the order of March
30, 1953, we cannot hold that same was within its jurisdiction to issue. The ministerial
duty of the Sheriff should have its limitations. The Sheriff knew or must have known
what is inherently right and inherently wrong, more so when, as in this particular case,
the deputy sheriffs were shown a letter of respondent Company's attorney, that the
machinery were not personal properties and, therefore, not subject to seizure by the
terms of the order. While it may be conceded that this was a question of law too
technical to decide on the spot, it would not have costs the Sheriff much time and
difficulty to bring the letter to the court's attention and have the equipment and
machinery guarded, so as not to frustrate the order of seizure issued by the trial court.
But acting upon the directives of the president of the Petitioner, to seize the properties
at any costs, in issuing the order sought to be annulled, had not committed abuse of
discretion at all or acted in an arbitrary or despotic manner, by reason of passion or
personal hostility; on the contrary, it issued said order, guided by the well known
principle that of the property has to be returned, it should be returned in as good a
condition as when taken (Bachrach Motor Co., Inc., vs. Bona, 44 Phil., 378). If any one
had gone beyond the scope of his authority, it is the respondent Provincial Sheriff. But
considering that fact that he acted under the pressure of Ramon S. Roco, and that the
order impugned was issued not by him, but by the respondent Judge, We simply
declare that said Sheriff' act was most unusual and the result of a poor judgment.
Moreover, the Sheriff not being an officer exercising judicial functions, the writ may not
reach him, for certiorari lies only to review judicial actions.
The Petitioner complains that the respondent Judge had completely disregarded his
manifestation that the machinery and equipment seized were and still are the
Petitioner's property until fully paid for and such never became immovable. The
question of ownership and the applicability of Art. 415 of the new Civil Code are
immaterial in the determination of the only issue involved in this case. It is a matter of
evidence which should be decided in the hearing of the case on the merits. The
question as to whether the machinery or equipment in litigation are immovable or not is
likewise immaterial, because the only issue raised before the trial court was whether the
Provincial Sheriff of Bulacan, at the Petitioner's instance, was justified in destroying the
machinery and in refusing to restore them to their original form , at the expense of the
Petitioner. Whatever might be the legal character of the machinery and equipment,
would not be in any way justify their justify their destruction by the Sheriff's and the said
Petitioner's. (Petitioner's brief, Appendix A, pp. IV-VII.)
A motion for reconsideration of this decision of the Court of Appeals having been denied , petitioner has
brought the case to Us for review by writ of certiorari. Upon examination of the record, We are satisfied,
however that the Court of Appeals was justified in dismissing the case.
The special civil action known as replevin, governed by Rule 62 of Court, is applicable only to "personal
property".
Ordinarily replevin may be brought to recover any specific personal property unlawfully
taken or detained from the owner thereof, provided such property is capable of
identification and delivery; but replevin will not lie for the recovery of real property or
incorporeal personal property. (77 C. J. S. 17) (Emphasis supplied.)
When the sheriff repaired to the premises of respondent, Ipo Limestone Co., Inc., machinery and
equipment in question appeared to be attached to the land, particularly to the concrete foundation of
said premises, in a fixed manner, in such a way that the former could not be separated from the latter
"without breaking the material or deterioration of the object." Hence, in order to remove said outfit, it
became necessary, not only to unbolt the same, but , also, to cut some of its wooden supports.
Moreover, said machinery and equipment were "intended by the owner of the tenement for an industry"
carried on said immovable and tended." For these reasons, they were already immovable property
pursuant to paragraphs 3 and 5 of Article 415 of Civil Code of the Philippines, which are substantially
identical to paragraphs 3 and 5 of Article 334 of the Civil Code of Spain. As such immovable property,
they were not subject to replevin.
In so far as an article, including a fixture annexed by a tenant, is regarded as part of the

In so far as an article, including a fixture annexed by a tenant, is regarded as part of the

realty, it is not the subject for personality; . . . .
. . . the action of replevin does not lie for articles so annexed to the realty as to be part
as to be part thereof, as, for example, a house or a turbine pump constituting part of a
building's cooling system; . . . (36 C. J. S. 1000 & 1001)
Moreover, as the provincial sheriff hesitated to remove the property in question, petitioner's agent and
president, Mr. Ramon Roco, insisted "on the dismantling at his own responsibility," stating that.,
precisely, "that is the reason why plaintiff posted a bond ." In this manner, petitioner clearly assumed the
corresponding risks.
Such assumption of risk becomes more apparent when we consider that, pursuant to Section 5 of Rule
62 of the Rules of Court, the defendant in an action for replevin is entitled to the return of the property in
dispute upon the filing of a counterbond, as provided therein. In other words, petitioner knew that the
restitution of said property to respondent company might be ordered under said provision of the Rules of
Court, and that, consequently, it may become necessary for petitioner to meet the liabilities incident to
such return.
Lastly, although the parties have not cited, and We have not found, any authority squarely in point
obviously real property are not subject to replevin it is well settled that, when the restitution of what
has been ordered, the goods in question shall be returned in substantially the same condition as when
taken (54 C.J., 590-600, 640-641). Inasmuch as the machinery and equipment involved in this case
were duly installed and affixed in the premises of respondent company when petitioner's representative
caused said property to be dismantled and then removed, it follows that petitioner must also do
everything necessary to the reinstallation of said property in conformity with its original condition.
Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs against the petitioner. So
ordered.
Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo and Reyes, J.B.L., JJ., concur.
Paras, C.J., concurs in the result.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of
Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON
T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND
BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE
GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents, their representatives and
agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306
Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We granted the
prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in
G.R. No. 92047) likewise prayes for a writ of mandamus to compel the respondents to fully
disclose to the public the basis of their decision to push through with the sale of the Roppongi
property inspire of strong public opposition and to explain the proceedings which effectively
prevent the participation of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March
13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were
required to file a comment by the Court's resolution dated February 22, 1990. The two petitions
were consolidated on March 27, 1990 when the memoranda of the parties in the Laurel case were
deliberated upon.
The Court could not act on these cases immediately because the respondents filed a motion for
an extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second motion
for an extension of another thirty (30) days which we granted on May 8, 1990, a third motion for
extension of time granted on May 24, 1990 and a fourth motion for extension of time which we
granted on June 5, 1990 but calling the attention of the respondents to the length of time the
petitions have been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked

petitions have been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked
for thirty (30) days to file a reply. We noted his motion and resolved to decide the two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on May 9,
1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of
approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy
Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square
meters and categorized as a commercial lot now being used as a warehouse and parking lot for
the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese government for
national development projects are part of the indemnification to the Filipino people for their
losses in life and property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in
twenty (20) years in accordance with annual schedules of procurements to be fixed by the
Philippine and Japanese governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the
Reparations Law, prescribes the national policy on procurement and utilization of reparations
and development loans. The procurements are divided into those for use by the government
sector and those for private parties in projects as the then National Economic Council shall
determine. Those intended for the private sector shall be made available by sale to Filipino
citizens or to one hundred (100%) percent Filipino-owned entities in national development
projects.
The Roppongi property was acquired from the Japanese government under the Second Year
Schedule and listed under the heading "Government Sector", through Reparations Contract No.
300 dated June 27, 1958. The Roppongi property consists of the land and building "for the
Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As
intended, it became the site of the Philippine Embassy until the latter was transferred to
Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure
of our government to provide necessary funds, the Roppongi property has remained
undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to
Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese
firm - Kajima Corporation which shall construct two (2) buildings in Roppongi and one (1)
building in Nampeidai and renovate the present Philippine Chancery in Nampeidai. The
consideration of the construction would be the lease to the foreign corporation of one (1) of the
buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The other
building in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the
lease period, all the three leased buildings shall be occupied and used by the Philippine
government. No change of ownership or title shall occur. (See Annex "B" to Reply to Comment)
The Philippine government retains the title all throughout the lease period and thereafter.
However, the government has not acted favorably on this proposal which is pending approval
and ratification between the parties. Instead, on August 11, 1986, President Aquino created a
committee to study the disposition/utilization of Philippine government properties in Tokyo and
Kobe, Japan through Administrative Order No. 3, followed by Administrative Orders Numbered 3A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or
entities to avail of separations' capital goods and services in the event of sale, lease or
disposition. The four properties in Japan including the Roppongi were specifically mentioned in
the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225
million. The first bidding was a failure since only one bidder qualified. The second one, after
postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was
restrained by his Court. Later, the rules on bidding were changed such that the $225 million floor
price became merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No.
92013 objects to the alienation of the Roppongi property to anyone while the petitioner in G.R.
No. 92047 adds as a principal objection the alleged unjustified bias of the Philippine government
in favor of selling the property to non-Filipino citizens and entities. These petitions have been
consolidated and are resolved at the same time for the objective is the same - to stop the sale of
the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine
Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell
the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the
government to alienate the Roppongi property assails the constitutionality of Executive Order
No. 296 in making the property available for sale to non-Filipino citizens and entities. He also
questions the bidding procedures of the Committee on the Utilization or Disposition of Philippine
Government Properties in Japan for being discriminatory against Filipino citizens and Filipinoowned entities by denying them the right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were
acquired as part of the reparations from the Japanese government for diplomatic and consular
use by the Philippine government. Vice-President Laurel states that the Roppongi property is
classified as one of public dominion, and not of private ownership under Article 420 of the Civil
Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended for public
service" in paragraph 2 of the above provision. He states that being one of public dominion, no
ownership by any one can attach to it, not even by the State. The Roppongi and related
properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings
and other improvements" (Second Year Reparations Schedule). The petitioner states that they
continue to be intended for a necessary service. They are held by the State in anticipation of an
opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the
commerce of man, or to put it in more simple terms, it cannot be alienated nor be the subject
matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use
of the Roppongi property at the moment, the petitioner avers that the same remains property of
public dominion so long as the government has not used it for other purposes nor adopted any
measure constituting a removal of its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the subject
property is not governed by our Civil Code but by the laws of Japan where the property is
located. They rely upon the rule of lex situs which is used in determining the applicable law
regarding the acquisition, transfer and devolution of the title to a property. They also invoke
Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used the
lex situs in explaining the inapplicability of Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is
applicable, the Roppongi property has ceased to become property of public dominion. It has
become patrimonial property because it has not been used for public service or for diplomatic
purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and because the
intention by the Executive Department and the Congress to convert it to private use has been
manifested by overt acts, such as, among others: (1) the transfer of the Philippine Embassy to
Nampeidai (2) the issuance of administrative orders for the possibility of alienating the four
government properties in Japan; (3) the issuance of Executive Order No. 296; (4) the enactment
by the Congress of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10,
1988 which contains a provision stating that funds may be taken from the sale of Philippine
properties in foreign countries; (5) the holding of the public bidding of the Roppongi property
but which failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future
date; thus an acknowledgment by the Senate of the government's intention to remove the
Roppongi property from the public service purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to
enjoin the second bidding of the Roppongi property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of
Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court
dismissed on August 1, 1989. He now avers that the executive order contravenes the
constitutional mandate to conserve and develop the national patrimony stated in the Preamble of
the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public domain to
Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of
Commonwealth Act 141).
itc-asl

(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering
the national economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade practices;
(4) The guarantee of the right of the people to information on all matters of public concern
(Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by
Filipino citizens of capital goods received by the Philippines under the Reparations Act (Sections
2 and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all transactions involving public
interest (Section 28, Article III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional
executive order is a misapplication of public funds He states that since the details of the bidding
for the Roppongi property were never publicly disclosed until February 15, 1990 (or a few days
before the scheduled bidding), the bidding guidelines are available only in Tokyo, and the
accomplishment of requirements and the selection of qualified bidders should be done in Tokyo,
interested Filipino citizens or entities owned by them did not have the chance to comply with
Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a
minimum price of $225 million from which price capital gains tax under Japanese law of about 50
to 70% of the floor price would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and
the three related properties were through reparations agreements, that these were assigned to
the government sector and that the Roppongi property itself was specifically designated under
the Reparations Agreement to house the Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is
dictated by the terms of the Reparations Agreement and the corresponding contract of
procurement which bind both the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the
property has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be
alienated. Its ownership is a special collective ownership for general use and enjoyment, an
application to the satisfaction of collective needs, and resides in the social group. The purpose
is not to serve the State as a juridical person, but the citizens; it is intended for the common and
public welfare and cannot be the object of appropration. (Taken from 3 Manresa, 66-69; cited in
Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks shores roadsteads, and
others of similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
ART. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code
as property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed because the
lot has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy service
does not automatically convert it to patrimonial property. Any such conversion happens only if
the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA
481 [1975]). A property continues to be part of the public domain, not available for private
appropriation or ownership until there is a formal declaration on the part of the government to
withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials insinuating a
change of intention. We emphasize, however, that an abandonment of the intention to use the
Roppongi property for public service and to make it patrimonial property under Article 422 of the
Civil Code must be definite Abandonment cannot be inferred from the non-use alone specially if
the non-use was attributable not to the government's own deliberate and indubitable will but to a
lack of financial support to repair and improve the property (See Heirs of Felino Santiago v.
Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct
legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the failure by the government to repair the building
in Roppongi is not abandonment since as earlier stated, there simply was a shortage of
government funds. The recent Administrative Orders authorizing a study of the status and
conditions of government properties in Japan were merely directives for investigation but did
not in any way signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a
provision in its text expressly authorizing the sale of the four properties procured from Japan for
the government sector. The executive order does not declare that the properties lost their public
character. It merely intends to make the properties available to foreigners and not to Filipinos
alone in case of a sale, lease or other disposition. It merely eliminates the restriction under Rep.
Act No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred

Act No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred
(100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of
other laws to the contrary notwithstanding, the above-mentioned
properties can be made available for sale, lease or any other manner of
disposition to non-Filipino citizens or to entities owned by non-Filipino
citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and
the three other properties were earlier converted into alienable real properties. As earlier stated,
Rep. Act No. 1789 differentiates the procurements for the government sector and the private
sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold to
end-users who must be Filipinos or entities owned by Filipinos. It is this nationality provision
which was amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of
funds for its implementation, the proceeds of the disposition of the properties of the Government
in foreign countries, did not withdraw the Roppongi property from being classified as one of
public dominion when it mentions Philippine properties abroad. Section 63 (c) refers to
properties which are alienable and not to those reserved for public use or service. Rep Act No.
6657, therefore, does not authorize the Executive Department to sell the Roppongi property. It
merely enumerates possible sources of future funding to augment (as and when needed) the
Agrarian Reform Fund created under Executive Order No. 299. Obviously any property outside of
the commerce of man cannot be tapped as a source of funds.
The respondents try to get around the public dominion character of the Roppongi property by
insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the ones to
insist that in the sale of extremely valuable government property, Japanese law and not
Philippine law should prevail. The Japanese law - its coverage and effects, when enacted, and
exceptions to its provision is not presented to the Court It is simply asserted that the lex loci
rei sitae or Japanese law should apply without stating what that law provides. It is a ed on faith
that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation exists.
A conflict of law situation arises only when: (1) There is a dispute over the title or ownership of
an immovable, such that the capacity to take and transfer immovables, the formalities of
conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a
conveyance, are to be determined (See Salonga, Private International Law, 1981 ed., pp. 377383); and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a
domestic law on the same matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question that the
property belongs to the Philippines. The issue is the authority of the respondent officials to
validly dispose of property belonging to the State. And the validity of the procedures adopted to
effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex
situs rule is misplaced. The opinion does not tackle the alienability of the real properties
procured through reparations nor the existence in what body of the authority to sell them. In
discussing who are capable of acquiring the lots, the Secretary merely explains that it is the
foreign law which should determine who can acquire the properties so that the constitutional
limitation on acquisition of lands of the public domain to Filipino citizens and entities wholly
owned by Filipinos is inapplicable. We see no point in belaboring whether or not this opinion is
correct. Why should we discuss who can acquire the Roppongi lot when there is no showing that
it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the
investigating committee to sell the Roppongi property was premature or, at the very least,
conditioned on a valid change in the public character of the Roppongi property. Moreover, the
approval does not have the force and effect of law since the President already lost her legislative
powers. The Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of public
dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government is a
party. In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the title
to real estate or to any other property the value of which is in excess of
one hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines
for approval by the same. Such deed, instrument, or contract shall be

for approval by the same. Such deed, instrument, or contract shall be

executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the Government of the Philippines
unless the authority therefor be expressly vested by law in another officer.
(Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of 1987
(Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly
vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in
the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her own
sole will. Any such conveyance must be authorized and approved by a law enacted by the
Congress. It requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the
Roppongi property does not withdraw the property from public domain much less authorize its
sale. It is a mere resolution; it is not a formal declaration abandoning the public character of the
Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting hearings
on Senate Resolution No. 734 which raises serious policy considerations and calls for a factfinding investigation of the circumstances behind the decision to sell the Philippine government
properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the
constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did not
uphold the authority of the President to sell the Roppongi property. The Court stated that the
constitutionality of the executive order was not the real issue and that resolving the
constitutional question was "neither necessary nor finally determinative of the case." The Court
noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition of
the Roppongi property." In emphasizing that "the decision of the Executive to dispose of the
Roppongi property to finance the CARP ... cannot be questioned" in view of Section 63 (c) of
Rep. Act No. 6657, the Court did not acknowledge the fact that the property became alienable nor
did it indicate that the President was authorized to dispose of the Roppongi property. The
resolution should be read to mean that in case the Roppongi property is re-classified to be
patrimonial and alienable by authority of law, the proceeds of a sale may be used for national
economic development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed
1990 sale of the Roppongi property. We are resolving the issues raised in these petitions, not the
issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property from
public domain to make it alienable and a need for legislative authority to allow the sale of the
property, we see no compelling reason to tackle the constitutional issues raised by petitioner
Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these questions are
properly raised in appropriate cases and their resolution is necessary for the determination of
the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional
question although properly presented by the record if the case can be disposed of on some
other ground such as the application of a statute or general law (Siler v. Louisville and Nashville
R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:
The Roppongi property is not just like any piece of property. It was given
to the Filipino people in reparation for the lives and blood of Filipinos who
died and suffered during the Japanese military occupation, for the
suffering of widows and orphans who lost their loved ones and kindred,
for the homes and other properties lost by countless Filipinos during the
war. The Tokyo properties are a monument to the bravery and sacrifice of
the Filipino people in the face of an invader; like the monuments of Rizal,
Quezon, and other Filipino heroes, we do not expect economic or financial
benefits from them. But who would think of selling these monuments?
Filipino honor and national dignity dictate that we keep our properties in
Japan as memorials to the countless Filipinos who died and suffered.
Even if we should become paupers we should not think of selling them.
For it would be as if we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese
government in atonement for its past belligerence for the valiant sacrifice
of life and limb and for deaths, physical dislocation and economic
devastation the whole Filipino people endured in World War II.
It is for what it stands for, and for what it could never bring back to life,
that its significance today remains undimmed, inspire of the lapse of 45
years since the war ended, inspire of the passage of 32 years since the
property passed on to the Philippine government.
Roppongi is a reminder that cannot should not be dissipated ...
(Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much because of the inflated
prices fetched by real property in Tokyo but more so because of its symbolic value to all
Filipinos veterans and civilians alike. Whether or not the Roppongi and related properties will
eventually be sold is a policy determination where both the President and Congress must
concur. Considering the properties' importance and value, the laws on conversion and
disposition of property of public dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is
issued enjoining the respondents from proceeding with the sale of the Roppongi property in
Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is made PERMANENT.
SO ORDERED.
Melencio-Herrera, Paras, Bidin, Grio-Aquino and Regalado, JJ., concur.

Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the
following observations only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the
Roppongi property. When asked to do so at the hearing on these petitions, the Solicitor General
was at best ambiguous, although I must add in fairness that this was not his fault. The fact is
that there is -no such authority. Legal expertise alone cannot conjure that statutory permission
out of thin air.
Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such
authority. Neither does Rep. Act No. 6657, which simply allows the proceeds of the sale of our
properties abroad to be used for the comprehensive agrarian reform program. Senate Res. No.
55 was a mere request for the deferment of the scheduled sale of tile Roppongi property,
possibly to stop the transaction altogether; and ill any case it is not a law. The sale of the said
property may be authorized only by Congress through a duly enacted statute, and there is no
such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men,
where every public official, from the lowest to the highest, can act only by virtue of a valid
authorization. I am happy to note that in the several cases where this Court has ruled against
her, the President of the Philippines has submitted to this principle with becoming grace.
PADILLA, J., concurring:
I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few
observations which could help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that lays
down or determines policies. The President executes such policies. The policies determined by
Congress are embodied in legislative enactments that have to be approved by the President to
become law. The President, of course, recommends to Congress the approval of policies but, in
the final analysis, it is Congress that is the policy - determining branch of government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted
by Congress and approved by the President, and presidential acts implementing such laws, are
in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the reparations
agreement between the Philippine and Japanese governments. Under such agreement, this
property was acquired by the Philippine government for a specific purpose, namely, to serve as
the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of
public dominion and intended for public service, squarely falling within that class of property
under Art. 420 of the Civil Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property is
first transformed into private property of the state otherwise known as patrimonial property of
the state. 1 The transformation of public dominion property to state patrimonial property
involves, to my mind, a policy decision. It is a policy decision because the treatment of the
property varies according to its classification. Consequently, it is Congress which can decide
and declare the conversion of Roppongi from a public dominion property to a state patrimonial
property. Congress has made no such decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state patrimonial
property) must be approved by Congress, for this again is a matter of policy (i.e. to keep or
dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1) For property belonging to and titled in the name of the
Republic of the Philippines, by the President, unless the
authority therefor is expressly vested by law in another
officer.
(2) For property belonging to the Republic of the
Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality.
(Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record is
likewise bare of any congressional authority extended to the President to sell Roppongi thru
public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public
bidding or otherwise without a prior congressional approval, first, converting Roppongi from a
public dominion property to a state patrimonial property, and, second, authorizing the President
to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary
restraining order earlier issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its
nature as property of public dominion, and hence, has become patrimonial property of the State.
I understand that the parties are agreed that it was property intended for "public service" within
the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of
State dominion, and beyond human commerce. The lone issue is, in the light of supervening
developments, that is non-user thereof by the National Government (for diplomatic purposes) for
the last thirteen years; the issuance of Executive Order No. 296 making it available for sale to
any interested buyer; the promulgation of Republic Act No. 6657, the Comprehensive Agrarian
Reform Law, making available for the program's financing, State assets sold; the approval by the
President of the recommendation of the investigating committee formed to study the property's
utilization; and the issuance of Resolution No. 55 of the Philippine Senate requesting for the
deferment of its disposition it, "Roppongi", is still property of the public dominion, and if it is
not, how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a
question our courts have debated early. In a 1906 decision, 1 it was held that property of the
public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for
purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been
held that land, originally private property, has become of public dominion upon its donation to
the town and its conversion and use as a public plaza. 3 It is notable that under these three
cases, the character of the property, and any change occurring therein, depends on the actual
use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the
Government, through the executive department or the Legislative, to the effect that the land . . .
is no longer needed for [public] service- for public use or for special industries, [it] continue[s] to
be part of the public [dominion], not available for private expropriation or ownership." 5 So also,
it was ruled that a political subdivision (the City of Cebu in this case) alone may declare (under
its charter) a city road abandoned and thereafter, to dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property
from public domain to make it alienable and a land for legislative authority to allow the sale of
the property" 7 the majority lays stress to the fact that: (1) An affirmative act executive or
legislative is necessary to reclassify property of the public dominion, and (2) a legislative
decree is required to make it alienable. It also clears the uncertainties brought about by earlier
interpretations that the nature of property-whether public or patrimonial is predicated on the
manner it is actually used, or not used, and in the same breath, repudiates the Government's
position that the continuous non-use of "Roppongi", among other arguments, for "diplomatic
purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other things,
that: (1) Property is presumed to be State property in the absence of any showing to the
contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public dominion
unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural
resources, under the Constitution, and subject to exceptional cases, belong to the State. 10
I am elated that the Court has banished previous uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E.
Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi,
5-Chome, Minato-ku Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be
characterized as property of public dominion, within the meaning of Article 420 (2) of the Civil
Code:
[Property] which belong[s] to the State, without being for public use, and
are intended for some public service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the
confines of the simple threefold classification found in Article 420 of the Civil Code ("property
for public use property "intended for some public service" and property intended "for the
development of the national wealth") all property owned by the Republic of the Philippines
whether found within the territorial boundaries of the Republic or located within the territory of
another sovereign State, is not self-evident. The first item of the classification property intended
for public use can scarcely be properly applied to property belonging to the Republic but
found within the territory of another State. The third item of the classification property intended
for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil Code
of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are
rarely, if ever, found within the territorial base of another sovereign State. The task of examining
in detail the applicability of the classification set out in Article 420 of our Civil Code to property
that the Philippines happens to own outside its own boundaries must, however, be left to
academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the
present time, before this Court. The issues before us relate essentially to authority to sell the
Roppongi property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been
converted into patrimonial property or property of the private domain of the State; and (b)
assuming an affirmative answer to (a), whether or not there is legal authority to dispose of the
Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some public
service, into property of the private domain of the Republic, it should be noted that the Civil
Code does not address the question of who has authority to effect such conversion. Neither
does the Civil Code set out or refer to any procedure for such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice
Sarmiento has pointed out in his concurring opinion. In Ignacio v. Director of Lands (108 Phils.
335 [1960]), petitioner Ignacio argued that if the land in question formed part of the public
domain, the trial court should have declared the same no longer necessary for public use or
public purposes and which would, therefore, have become disposable and available for private
ownership. Mr. Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion of the
shore is no longer washed by the waters of the sea and is not necessary
for purposes of public utility, or for the establishment of special
industries, or for coast-guard service, the government shall declare it to
be the property of the owners of the estates adjacent thereto and as an
increment thereof. We believe that only the executive and possibly the
legislative departments have the authority and the power to make the
declaration that any land so gained by the sea, is not necessary for
purposes of public utility, or for the establishment of special industries, or
for coast-guard service. If no such declaration has been made by said

for coast-guard service. If no such declaration has been made by said

departments, the lot in question forms part of the public domain.
(Natividad v. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case
of Vicente Joven y Monteverde v. Director of Lands, 93 Phil., 134 (cited in
Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon, nor
indeed in a position to determine whether any public land are to be used
for the purposes specified in Article 4 of the Law of Waters. Consequently,
until a formal declaration on the part of the Government, through the
executive department or the Legislature, to the effect that the land in
question is no longer needed for coast-guard service, for public use or for
special industries, they continue to be part of the public domain not
available for private appropriation or ownership. (108 Phil. at 338-339;
emphasis supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may convert
property of the State of public dominion into patrimonial property of the State. No particular
formula or procedure of conversion is specified either in statute law or in case law. Article 422 of
the Civil Code simply states that: "Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of the State". I
respectfully submit, therefore, that the only requirement which is legitimately imposable is that
the intent to convert must be reasonably clear from a consideration of the acts or acts of the
Executive Department or of the Legislative Department which are said to have effected such
conversion.
The same legal situation exists in respect of conversion of property of public dominion
belonging to municipal corporations, i.e., local governmental units, into patrimonial property of
such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council of
Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the
same not being included in the city development plan". Subsequently, by another resolution, the
City Council of Cebu authorized the acting City Mayor to sell the land through public bidding.
Although there was no formal and explicit declaration of conversion of property for public use
into patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's application
for registration of title was withdrawn from public use, it follows that such
withdrawn portion becomes patrimonial property which can be the object
of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public
dominion, when no longer intended for public use of for public service,
shall form part of the patrimonial property of the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in
very clear and unequivocal terms, states that "Property thus withdrawn
from public servitude may be used or conveyed for any purpose for which
other real property belonging to the City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the property in question from public use
and its subsequent sale to the petitioner is valid. Hence, the petitioner has
a registrable title over the lot in question. (66 SCRA at 484-; emphasis
supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property
owned by municipal corporations simple non-use or the actual dedication of public property to
some use other than "public use" or some "public service", was sufficient legally to convert
such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del
Norte v. City of Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in respect of' property of municipal
corporations but also in respect of property of the State itself. Manresa in commenting on Article
341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil Code by
Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el
momento en que los bienes de dominio publico dejan de serlo. Si la
Administracion o la autoridad competente legislative realizan qun acto en
virtud del cual cesa el destino o uso publico de los bienes de que se trata
naturalmente la dificultad queda desde el primer momento resuelta. Hay
un punto de partida cierto para iniciar las relaciones juridicas a que
pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion
expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el
destino publico de los bienes; ahora bien, en este caso, y para los efectos
juridicos que resultan de entrar la cosa en el comercio de los hombres,'

juridicos que resultan de entrar la cosa en el comercio de los hombres,'

se entedera que se ha verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por
la afirmativa, y por nuestra parte creemos que tal debe ser la soluciion. El
destino de las cosas no depende tanto de una declaracion expresa como
del uso publico de las mismas, y cuanda el uso publico cese con respecto
de determinados bienes, cesa tambien su situacion en el dominio publico.
Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via
publica se abandona tambien por constituir otro nuevo an mejores
condiciones....ambos bienes cesan de estar Codigo, y leyes especiales
mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil
Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)
The majority opinion says that none of the executive acts pointed to by the Government
purported, expressly or definitely, to convert the Roppongi property into patrimonial property
of the Republic. Assuming that to be the case, it is respectfully submitted that cumulative effect
of the executive acts here involved was to convert property originally intended for and devoted
to public service into patrimonial property of the State, that is, property susceptible of
disposition to and appropration by private persons. These executive acts, in their totality if not
each individual act, make crystal clear the intent of the Executive Department to effect such
conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the
disposition/utilization of the Government's property in Japan, The Committee was composed of
officials of the Executive Department: the Executive Secretary; the Philippine Ambassador to
Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization
Trust. On 19 September 1988, the Committee recommended to the President the sale of one of
the lots (the lot specifically in Roppongi) through public bidding. On 4 October 1988, the
President approved the recommendation of the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese
Ministry of Foreign Affairs of the Republic's intention to dispose of the property in Roppongi.
The Japanese Government through its Ministry of Foreign Affairs replied that it interposed no
objection to such disposition by the Republic. Subsequently, the President and the Committee
informed the leaders of the House of Representatives and of the Senate of the Philippines of the
proposed disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that
the majority opinion is right in saying that Executive Order No. 296 is insufficient to authorize the
sale of the Roppongi property, it is here submitted with respect that Executive Order No. 296 is
more than sufficient to indicate an intention to convert the property previously devoted to public
service into patrimonial property that is capable of being sold or otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public
purposes. Assuming (but only arguendo) that non-use does not, by itself, automatically convert
the property into patrimonial property. I respectfully urge that prolonged non-use, conjoined with
the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial
property of the State. Actually, as already pointed out, case law involving property of municipal
corporations is to the effect that simple non-use or the actual dedication of public property to
some use other than public use or public service, was sufficient to convert such property into
patrimonial property of the local governmental entity concerned. Also as pointed out above,
Manresa reached the same conclusion in respect of conversion of property of the public domain
of the State into property of the private domain of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone
especially if the non-use was attributable not to the Government's own deliberate and
indubitable will but to lack of financial support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved here,
certainly no abandonment of property or of property rights. What is involved is the charge of the
classification of the property from property of the public domain into property of the private
domain of the State. Moreover, if for fourteen (14) years, the Government did not see fit to
appropriate whatever funds were necessary to maintain the property in Roppongi in a condition
suitable for diplomatic representation purposes, such circumstance may, with equal logic, be
construed as a manifestation of the crystalizing intent to change the character of the property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale
of the lot in Roppongi. The circumstance that this bidding was not successful certainly does not
argue against an intent to convert the property involved into property that is disposable by
bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole, show
at least the intent on the part of the Executive Department (with the knowledge of the Legislative
Department) to convert the property involved into patrimonial property that is susceptible of
being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address the
second issue of whether or not there exists legal authority for the sale or disposition of the

second issue of whether or not there exists legal authority for the sale or disposition of the
Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which
reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is a
party. In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the title
to real estate or to any other property the value of which is in excess of
one hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines
for approval by the same. Such deed, instrument, or contract shall be
executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the authority therefor be expressly
vested by law in another officer. (Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in Section
4, Book I of the Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly
vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in
the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific
approval of Congress when the price of the real property being disposed of is in excess of One
Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has
been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present
Administrative Code refers to is authorization by law for the conveyance. Section 48 does not
purport to be itself a source of legal authority for conveyance of real property of the
Government. For Section 48 merely specifies the official authorized to execute and sign on
behalf of the Government the deed of conveyance in case of such a conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition of
real property of the private domain of the Government, has been granted by Congress both in
the form of (a) a general, standing authorization for disposition of patrimonial property of the
Government; and (b) specific legislation authorizing the disposition of particular pieces of the
Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines
is provided by Act No. 3038, entitled "An Act Authorizing the Secretary of Agriculture and
Natural Resources to Sell or Lease Land of the Private Domain of the Government of the
Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of
this statute is as follows:
Be it enacted by the Senate and House of Representatives of the
Philippines in Legislature assembled and by the authority of the same:
SECTION 1. The Secretary of Agriculture and Natural Resources (now
Secretary of the Environment and Natural Resources) is hereby
authorized to sell or lease land of the private domain of the Government of
the Philippine Islands, or any part thereof, to such persons, corporations
or associations as are, under the provisions of Act Numbered Twentyeight hundred and seventy-four, (now Commonwealth Act No. 141, as
amended) known as the Public Land Act, entitled to apply for the
purchase or lease or agricultural public land.
SECTION 2. The sale of the land referred to in the preceding section shall,
if such land is agricultural, be made in the manner and subject to the
limitations prescribed in chapters five and six, respectively, of said Public
Land Act, and if it be classified differently, in conformity with the
provisions of chapter nine of said Act: Provided, however, That the land
necessary for the public service shall be exempt from the provisions of
this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the
State, it must be noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9
of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both statutes

of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both statutes
refer to: "any tract of land of the public domain which being neither timber nor mineral land, is
intended to be used for residential purposes or for commercial or industrial purposes other than
agricultural" (Emphasis supplied). In other words, the statute covers the sale or lease or
residential, commercial or industrial land of the private domain of the State.
itc-asl

Implementing regulations have been issued for the carrying out of the provisions of Act No.
3038. On 21 December 1954, the then Secretary of Agriculture and Natural Resources
promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the
Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands of
Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in
effect and has not been repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the State
is illustrated by certain earlier statutes. The first of these was Act No. 1120, enacted on 26 April
1904, which provided for the disposition of the friar lands, purchased by the Government from
the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In
Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were held to be private and
patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914, authorized the
sale of the San Lazaro Estate located in the City of Manila, which had also been purchased by
the Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act
No. 2360 by including therein all lands and buildings owned by the Hospital and the Foundation
of San Lazaro theretofor leased by private persons, and which were also acquired by the
Philippine Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one
statute authorizing the President to dispose of a specific piece of property. This statute is
Republic Act No. 905, enacted on 20 June 1953, which authorized the
President to sell an Identified parcel of land of the private domain of the National Government to
the National Press Club of the Philippines, and to other recognized national associations of
professionals with academic standing, for the nominal price of P1.00. It appears relevant to note
that Republic Act No. 905 was not an outright disposition in perpetuity of the property involvedit provided for reversion of the property to the National Government in case the National Press
Club stopped using it for its headquarters. What Republic Act No. 905 authorized was really a
donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative authorization
for disposition of the Roppongi property which, in my view, has been converted into patrimonial
property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the
State located in the Philippines but also to patrimonial property found outside the Philippines,
may appear strange or unusual. I respectfully submit that such position is not any more unusual
or strange than the assumption that Article 420 of the Civil Code applies not only to property of
the Republic located within Philippine territory but also to property found outside the boundaries
of the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments are
alter egos of the President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of
the constitutional power of control exercised by the President over department heads (Article VII,
Section 17,1987 Constitution), the President herself may carry out the function or duty that is
specifically lodged in the Secretary of the Department of Environment and Natural Resources
(Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the President retains the power to
approve or disapprove the exercise of that function or duty when done by the Secretary of
Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the
austere question of existence of legal power or authority. They have nothing to do with much
debated questions of wisdom or propriety or relative desirability either of the proposed
disposition itself or of the proposed utilization of the anticipated proceeds of the property
involved. These latter types of considerations He within the sphere of responsibility of the
political departments of government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and
92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the
following observations only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the

It is clear that the respondents have failed to show the President's legal authority to sell the
Roppongi property. When asked to do so at the hearing on these petitions, the Solicitor General
was at best ambiguous, although I must add in fairness that this was not his fault. The fact is
that there is -no such authority. Legal expertise alone cannot conjure that statutory permission
out of thin air.
Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such
authority. Neither does Rep. Act No. 6657, which simply allows the proceeds of the sale of our
properties abroad to be used for the comprehensive agrarian reform program. Senate Res. No.
55 was a mere request for the deferment of the scheduled sale of tile Roppongi property,
possibly to stop the transaction altogether; and ill any case it is not a law. The sale of the said
property may be authorized only by Congress through a duly enacted statute, and there is no
such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men,
where every public official, from the lowest to the highest, can act only by virtue of a valid
authorization. I am happy to note that in the several cases where this Court has ruled against
her, the President of the Philippines has submitted to this principle with becoming grace.
PADILLA, J., concurring:
I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few
observations which could help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that lays
down or determines policies. The President executes such policies. The policies determined by
Congress are embodied in legislative enactments that have to be approved by the President to
become law. The President, of course, recommends to Congress the approval of policies but, in
the final analysis, it is Congress that is the policy - determining branch of government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted
by Congress and approved by the President, and presidential acts implementing such laws, are
in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the reparations
agreement between the Philippine and Japanese governments. Under such agreement, this
property was acquired by the Philippine government for a specific purpose, namely, to serve as
the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of
public dominion and intended for public service, squarely falling within that class of property
under Art. 420 of the Civil Code, which provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property is
first transformed into private property of the state otherwise known as patrimonial property of
the state. 1 The transformation of public dominion property to state patrimonial property
involves, to my mind, a policy decision. It is a policy decision because the treatment of the
property varies according to its classification. Consequently, it is Congress which can decide
and declare the conversion of Roppongi from a public dominion property to a state patrimonial
property. Congress has made no such decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state patrimonial
property) must be approved by Congress, for this again is a matter of policy (i.e. to keep or
dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1) For property belonging to and titled in the name of the
Republic of the Philippines, by the President, unless the
authority therefor is expressly vested by law in another
officer.
(2) For property belonging to the Republic of the
Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality.
(Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record is
likewise bare of any congressional authority extended to the President to sell Roppongi thru
public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public
bidding or otherwise without a prior congressional approval, first, converting Roppongi from a

bidding or otherwise without a prior congressional approval, first, converting Roppongi from a
public dominion property to a state patrimonial property, and, second, authorizing the President
to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary
restraining order earlier issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its
nature as property of public dominion, and hence, has become patrimonial property of the State.
I understand that the parties are agreed that it was property intended for "public service" within
the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of
State dominion, and beyond human commerce. The lone issue is, in the light of supervening
developments, that is non-user thereof by the National Government (for diplomatic purposes) for
the last thirteen years; the issuance of Executive Order No. 296 making it available for sale to
any interested buyer; the promulgation of Republic Act No. 6657, the Comprehensive Agrarian
Reform Law, making available for the program's financing, State assets sold; the approval by the
President of the recommendation of the investigating committee formed to study the property's
utilization; and the issuance of Resolution No. 55 of the Philippine Senate requesting for the
deferment of its disposition it, "Roppongi", is still property of the public dominion, and if it is
not, how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a
question our courts have debated early. In a 1906 decision, 1 it was held that property of the
public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for
purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been
held that land, originally private property, has become of public dominion upon its donation to
the town and its conversion and use as a public plaza. 3 It is notable that under these three
cases, the character of the property, and any change occurring therein, depends on the actual
use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the
Government, through the executive department or the Legislative, to the effect that the land . . .
is no longer needed for [public] service- for public use or for special industries, [it] continue[s] to
be part of the public [dominion], not available for private expropriation or ownership." 5 So also,
it was ruled that a political subdivision (the City of Cebu in this case) alone may declare (under
its charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property
from public domain to make it alienable and a land for legislative authority to allow the sale of
the property" 7 the majority lays stress to the fact that: (1) An affirmative act executive or
legislative is necessary to reclassify property of the public dominion, and (2) a legislative
decree is required to make it alienable. It also clears the uncertainties brought about by earlier
interpretations that the nature of property-whether public or patrimonial is predicated on the
manner it is actually used, or not used, and in the same breath, repudiates the Government's
position that the continuous non-use of "Roppongi", among other arguments, for "diplomatic
purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other things,
that: (1) Property is presumed to be State property in the absence of any showing to the
contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public dominion
unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural
resources, under the Constitution, and subject to exceptional cases, belong to the State. 10
I am elated that the Court has banished previous uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E.
Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi,
5-Chome, Minato-ku Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be
characterized as property of public dominion, within the meaning of Article 420 (2) of the Civil
Code:
[Property] which belong[s] to the State, without being for public use, and
are intended for some public service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the
confines of the simple threefold classification found in Article 420 of the Civil Code ("property
for public use property "intended for some public service" and property intended "for the
development of the national wealth") all property owned by the Republic of the Philippines
whether found within the territorial boundaries of the Republic or located within the territory of
another sovereign State, is not self-evident. The first item of the classification property intended
for public use can scarcely be properly applied to property belonging to the Republic but
found within the territory of another State. The third item of the classification property intended
for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil Code

for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil Code
of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are
rarely, if ever, found within the territorial base of another sovereign State. The task of examining
in detail the applicability of the classification set out in Article 420 of our Civil Code to property
that the Philippines happens to own outside its own boundaries must, however, be left to
academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the
present time, before this Court. The issues before us relate essentially to authority to sell the
Roppongi property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been
converted into patrimonial property or property of the private domain of the State; and (b)
assuming an affirmative answer to (a), whether or not there is legal authority to dispose of the
Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some public
service, into property of the private domain of the Republic, it should be noted that the Civil
Code does not address the question of who has authority to effect such conversion. Neither
does the Civil Code set out or refer to any procedure for such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice
Sarmiento has pointed out in his concurring opinion. In Ignacio v. Director of Lands (108 Phils.
335 [1960]), petitioner Ignacio argued that if the land in question formed part of the public
domain, the trial court should have declared the same no longer necessary for public use or
public purposes and which would, therefore, have become disposable and available for private
ownership. Mr. Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion of the
shore is no longer washed by the waters of the sea and is not necessary
for purposes of public utility, or for the establishment of special
industries, or for coast-guard service, the government shall declare it to
be the property of the owners of the estates adjacent thereto and as an
increment thereof. We believe that only the executive and possibly the
legislative departments have the authority and the power to make the
declaration that any land so gained by the sea, is not necessary for
purposes of public utility, or for the establishment of special industries, or
for coast-guard service. If no such declaration has been made by said
departments, the lot in question forms part of the public domain.
(Natividad v. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case
of Vicente Joven y Monteverde v. Director of Lands, 93 Phil., 134 (cited in
Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon, nor
indeed in a position to determine whether any public land are to be used
for the purposes specified in Article 4 of the Law of Waters. Consequently,
until a formal declaration on the part of the Government, through the
executive department or the Legislature, to the effect that the land in
question is no longer needed for coast-guard service, for public use or for
special industries, they continue to be part of the public domain not
available for private appropriation or ownership. (108 Phil. at 338-339;
emphasis supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may convert
property of the State of public dominion into patrimonial property of the State. No particular
formula or procedure of conversion is specified either in statute law or in case law. Article 422 of
the Civil Code simply states that: "Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of the State". I
respectfully submit, therefore, that the only requirement which is legitimately imposable is that
the intent to convert must be reasonably clear from a consideration of the acts or acts of the
Executive Department or of the Legislative Department which are said to have effected such
conversion.
The same legal situation exists in respect of conversion of property of public dominion
belonging to municipal corporations, i.e., local governmental units, into patrimonial property of
such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council of
Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the
same not being included in the city development plan". Subsequently, by another resolution, the
City Council of Cebu authorized the acting City Mayor to sell the land through public bidding.
Although there was no formal and explicit declaration of conversion of property for public use
into patrimonial property, the Supreme Court said:

xxx xxx xxx

(2) Since that portion of the city street subject of petitioner's application
for registration of title was withdrawn from public use, it follows that such
withdrawn portion becomes patrimonial property which can be the object
of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public
dominion, when no longer intended for public use of for public service,
shall form part of the patrimonial property of the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in
very clear and unequivocal terms, states that "Property thus withdrawn
from public servitude may be used or conveyed for any purpose for which
other real property belonging to the City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the property in question from public use
and its subsequent sale to the petitioner is valid. Hence, the petitioner has
a registrable title over the lot in question. (66 SCRA at 484-; emphasis
supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property
owned by municipal corporations simple non-use or the actual dedication of public property to
some use other than "public use" or some "public service", was sufficient legally to convert
such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del
Norte v. City of Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in respect of' property of municipal
corporations but also in respect of property of the State itself. Manresa in commenting on Article
341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil Code by
Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el
momento en que los bienes de dominio publico dejan de serlo. Si la
Administracion o la autoridad competente legislative realizan qun acto en
virtud del cual cesa el destino o uso publico de los bienes de que se trata
naturalmente la dificultad queda desde el primer momento resuelta. Hay
un punto de partida cierto para iniciar las relaciones juridicas a que
pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion
expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el
destino publico de los bienes; ahora bien, en este caso, y para los efectos
juridicos que resultan de entrar la cosa en el comercio de los hombres,'
se entedera que se ha verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por
la afirmativa, y por nuestra parte creemos que tal debe ser la soluciion. El
destino de las cosas no depende tanto de una declaracion expresa como
del uso publico de las mismas, y cuanda el uso publico cese con respecto
de determinados bienes, cesa tambien su situacion en el dominio publico.
Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via
publica se abandona tambien por constituir otro nuevo an mejores
condiciones....ambos bienes cesan de estar Codigo, y leyes especiales
mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil
Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)
The majority opinion says that none of the executive acts pointed to by the Government
purported, expressly or definitely, to convert the Roppongi property into patrimonial property
of the Republic. Assuming that to be the case, it is respectfully submitted that cumulative effect
of the executive acts here involved was to convert property originally intended for and devoted
to public service into patrimonial property of the State, that is, property susceptible of
disposition to and appropration by private persons. These executive acts, in their totality if not
each individual act, make crystal clear the intent of the Executive Department to effect such
conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the
disposition/utilization of the Government's property in Japan, The Committee was composed of
officials of the Executive Department: the Executive Secretary; the Philippine Ambassador to
Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization
Trust. On 19 September 1988, the Committee recommended to the President the sale of one of
the lots (the lot specifically in Roppongi) through public bidding. On 4 October 1988, the
President approved the recommendation of the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese
Ministry of Foreign Affairs of the Republic's intention to dispose of the property in Roppongi.
The Japanese Government through its Ministry of Foreign Affairs replied that it interposed no
objection to such disposition by the Republic. Subsequently, the President and the Committee

objection to such disposition by the Republic. Subsequently, the President and the Committee
informed the leaders of the House of Representatives and of the Senate of the Philippines of the
proposed disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that
the majority opinion is right in saying that Executive Order No. 296 is insufficient to authorize the
sale of the Roppongi property, it is here submitted with respect that Executive Order No. 296 is
more than sufficient to indicate an intention to convert the property previously devoted to public
service into patrimonial property that is capable of being sold or otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public
purposes. Assuming (but only arguendo) that non-use does not, by itself, automatically convert
the property into patrimonial property. I respectfully urge that prolonged non-use, conjoined with
the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial
property of the State. Actually, as already pointed out, case law involving property of municipal
corporations is to the effect that simple non-use or the actual dedication of public property to
some use other than public use or public service, was sufficient to convert such property into
patrimonial property of the local governmental entity concerned. Also as pointed out above,
Manresa reached the same conclusion in respect of conversion of property of the public domain
of the State into property of the private domain of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone
especially if the non-use was attributable not to the Government's own deliberate and
indubitable will but to lack of financial support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved here,
certainly no abandonment of property or of property rights. What is involved is the charge of the
classification of the property from property of the public domain into property of the private
domain of the State. Moreover, if for fourteen (14) years, the Government did not see fit to
appropriate whatever funds were necessary to maintain the property in Roppongi in a condition
suitable for diplomatic representation purposes, such circumstance may, with equal logic, be
construed as a manifestation of the crystalizing intent to change the character of the property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale
of the lot in Roppongi. The circumstance that this bidding was not successful certainly does not
argue against an intent to convert the property involved into property that is disposable by
bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole, show
at least the intent on the part of the Executive Department (with the knowledge of the Legislative
Department) to convert the property involved into patrimonial property that is susceptible of
being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address the
second issue of whether or not there exists legal authority for the sale or disposition of the
Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which
reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is a
party. In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the title
to real estate or to any other property the value of which is in excess of
one hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines
for approval by the same. Such deed, instrument, or contract shall be
executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the authority therefor be expressly
vested by law in another officer. (Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in Section
4, Book I of the Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly
vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in
the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific
approval of Congress when the price of the real property being disposed of is in excess of One

approval of Congress when the price of the real property being disposed of is in excess of One
Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has
been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present
Administrative Code refers to is authorization by law for the conveyance. Section 48 does not
purport to be itself a source of legal authority for conveyance of real property of the
Government. For Section 48 merely specifies the official authorized to execute and sign on
behalf of the Government the deed of conveyance in case of such a conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition of
real property of the private domain of the Government, has been granted by Congress both in
the form of (a) a general, standing authorization for disposition of patrimonial property of the
Government; and (b) specific legislation authorizing the disposition of particular pieces of the
Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines
is provided by Act No. 3038, entitled "An Act Authorizing the Secretary of Agriculture and
Natural Resources to Sell or Lease Land of the Private Domain of the Government of the
Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of
this statute is as follows:
Be it enacted by the Senate and House of Representatives of the
Philippines in Legislature assembled and by the authority of the same:
SECTION 1. The Secretary of Agriculture and Natural Resources (now
Secretary of the Environment and Natural Resources) is hereby
authorized to sell or lease land of the private domain of the Government of
the Philippine Islands, or any part thereof, to such persons, corporations
or associations as are, under the provisions of Act Numbered Twentyeight hundred and seventy-four, (now Commonwealth Act No. 141, as
amended) known as the Public Land Act, entitled to apply for the
purchase or lease or agricultural public land.
SECTION 2. The sale of the land referred to in the preceding section shall,
if such land is agricultural, be made in the manner and subject to the
limitations prescribed in chapters five and six, respectively, of said Public
Land Act, and if it be classified differently, in conformity with the
provisions of chapter nine of said Act: Provided, however, That the land
necessary for the public service shall be exempt from the provisions of
this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the
State, it must be noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9
of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both statutes
refer to: "any tract of land of the public domain which being neither timber nor mineral land, is
intended to be used for residential purposes or for commercial or industrial purposes other than
agricultural" (Emphasis supplied). In other words, the statute covers the sale or lease or
residential, commercial or industrial land of the private domain of the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No.
3038. On 21 December 1954, the then Secretary of Agriculture and Natural Resources
promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the
Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands of
Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in
effect and has not been repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the State
is illustrated by certain earlier statutes. The first of these was Act No. 1120, enacted on 26 April
1904, which provided for the disposition of the friar lands, purchased by the Government from
the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In
Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were held to be private and
patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914, authorized the
sale of the San Lazaro Estate located in the City of Manila, which had also been purchased by
the Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act
No. 2360 by including therein all lands and buildings owned by the Hospital and the Foundation
of San Lazaro theretofor leased by private persons, and which were also acquired by the
Philippine Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one
statute authorizing the President to dispose of a specific piece of property. This statute is
Republic Act No. 905, enacted on 20 June 1953, which authorized the
President to sell an Identified parcel of land of the private domain of the National Government to
the National Press Club of the Philippines, and to other recognized national associations of
professionals with academic standing, for the nominal price of P1.00. It appears relevant to note

professionals with academic standing, for the nominal price of P1.00. It appears relevant to note
that Republic Act No. 905 was not an outright disposition in perpetuity of the property involvedit provided for reversion of the property to the National Government in case the National Press
Club stopped using it for its headquarters. What Republic Act No. 905 authorized was really a
donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative authorization
for disposition of the Roppongi property which, in my view, has been converted into patrimonial
property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the
State located in the Philippines but also to patrimonial property found outside the Philippines,
may appear strange or unusual. I respectfully submit that such position is not any more unusual
or strange than the assumption that Article 420 of the Civil Code applies not only to property of
the Republic located within Philippine territory but also to property found outside the boundaries
of the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments are
alter egos of the President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of
the constitutional power of control exercised by the President over department heads (Article VII,
Section 17,1987 Constitution), the President herself may carry out the function or duty that is
specifically lodged in the Secretary of the Department of Environment and Natural Resources
(Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the President retains the power to
approve or disapprove the exercise of that function or duty when done by the Secretary of
Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the
austere question of existence of legal power or authority. They have nothing to do with much
debated questions of wisdom or propriety or relative desirability either of the proposed
disposition itself or of the proposed utilization of the anticipated proceeds of the property
involved. These latter types of considerations He within the sphere of responsibility of the
political departments of government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and
92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24661 February 28, 1974
BENJAMIN RABUCO, VENANCIO G. GUIRNALDA, LEODEGARIO ALOBA, ELEUTERIO IBAES,
ROGELIO ARAGONES, ASENCIO ABANCO, BENEDICTO BAUTISTA, MAXIMO AQUINO, PAULINA
DALUMIAS, NENITA RAMOS, GUILLERMO VARIAS, EMELDA ARELLANO, PEDRO BILBAO,
ERNESTO BONBALES, ROSITA OCA BAUTISTA, TERESITA ESTEBAN, JOSE BENJAMIN,
LORENZO BELDEVER, LEODEGARIO TUMLOS, PATRICIO MALATE, ANSELMO CORTEJOS,
ANACLETA ADUCA, SALOME BARCELONA, ENRICO CELSO, IRENE CAMBA, MARIA COLLADO,
RUFINO CANTIL, ANANIAS CANILLO, MAXIMO DE CASTRO, CEFERINO SALAZAR, PATRIA
ANAYA, FELISA VELASCO, IGNACIO SARASPI, FLAVIO DINAGUIT, REMEDIOS BAROMETRO,
PEDRO GEBANIA, RUBEN GEGABALEN, EMETRIO EDAO, LUCIANO ARAGONES, ADRIANO
ESTRELLADO, BONIFACIO EVARISTO, ISIDORO EDORIA, TIMOTEA ECARUAN, BIENVENIDO
COLLADO, CENON DAJUYA, RAFAELA FERNANDEZ, ALFONSO FAUSTINO, AVELINO GARCIA,
RICARDO GUIRNALDA, FRANCISCO HENERAL, CARMEN KIONESALA, FELICIANO LUMACTOD,
DOLORES VILLACAMPA, NARCISO LIM, EUFEMIO LEGASPI, MATILDE MABAQUIAO, EULOGIO
VIA, MACARIO ANTONIO, JEREMIAS DE LA CRUZ, MARTIN MANGABAN, SIMEON MANGABA
T., CARIDAD MER MILLA, FELIX MAHINAY, NAPOLEON MARZAN, ISAIAS MANALASTAS,
JOSEFA CORVERA, JOSE APRUEDO, ARSENIO REYES, EUGENIA A. ONO, CORNELIO
OPOLENCIA, SEDECIAS PASCUA, ABUNDIO PAGUNTALAN, ESPERANZA DE QUIROS,
CRESENCIO SALEM, MOISES FERNANDEZ, FORTUNATO GONZALES, SOCORRO R. VALEN,
RODOLFO COLLADO, VENERIO CELSO, GREGORIO DE LA CRUZ, CELSO ALCERA, NICOLAS
ARAGONES, JOSEFINA MANANSALA, ADELAIDA CALASIN , JOSE AGUSTIN, TOMAS JOSEPH,
MANUEL DADOR, SERGIO LIPATON, ERNESTO SUMAYDING, MARCELINO DIOSO, MIGUEL
ALCERA, CRISANTA ENAMER, JUAN VIADO HILARION CHIOCO, EUROPIA CABAHUG,
VICTORIA DUERO, CONSORCIO ENOC, MAMERTO GAMONIDO, BONIFACIO SABADO, MARIA
INTROLIZO, HENRY ENOLBA, REYNALDO LIM, FORTUNATO LIPON, ERNESTO MALLOS,
FLORENTINA PATRICIO, MAMERTO PALAPALA, RAMON DE PERALTA, JOSE PARRAS,
APOLINARIO YAP, JUAN ROQUE, FELIX ROQUE, GLICERIA SALAZAR, MIGUELA SABIO,
AGAPITO SAYAS, PAULINO SARROZA, PACIFICO JUANICO, LIBERADO TULAWAN, LIGAYA
LAUS, ERNESTO VERZOSA, LEOPOLDO BERNALES, JAIME VISTA, ISAIAS AMURAO, BENITA M.
BARENG, and BRIGIDA SANCHEZ, petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF
MANILA, HON. LADISLAO J. TOLENTINO, City Engineer of Manila, their agents, employees,

MANILA, HON. LADISLAO J. TOLENTINO, City Engineer of Manila, their agents, employees,
assistants and all persons acting under them; HON. BENJAMIN GOZON, Administrator, Land
Reform Authority substituted by HON CONRADO ESTRELLA as Secretary of the Department of
Agrarian Reforms and his agents, employees, assistants and all persons acting under his orders,
respondent. 1
G.R. No. L-24915 February 28, 1974
BENJAMIN RABUCO, et al., (the same co-petitioners in L-24661), petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF
MANILA, et al., (the same co-respondents in L-24661), respondents.
G.R. No. L-24916 February 28, 1974
BENJAMIN RABUCO, et al. (the same co-petitioners in L-24661), petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF
MANILA, et al., (the same co-respondents in L-24661), respondents-appellees.
Manuel D. Melotindos and Ricardo M. Guirnalda for petitioners.
Second Assistant City Fiscal Manuel T. Reyes for respondents.
TEEHANKEE, J.:p
The Court herein upholds the constitutionality of Republic Act 3120 on the strength of the established
doctrine that the subdivision of communal land of the State (although titled in the name of the municipal
corporation) and conveyance of the resulting subdivision lots by sale on installment basis to bona fide
occupants by Congressional authorization and disposition does not constitute infringements of the due
process clause or the eminent domain provisions of the Constitution but operates simply as a
manifestation of the legislature's right of control and power to deal with State property.
The origin and background of the cases at bar which deal with the decisive issue of constitutionality of
Republic Act 3120 enacted on June 17, 1961, as raised by respondent mayor of Manila in resisting
petitioners' pleas that respondent mayor not only lacks the authority to demolish their houses or eject
them as tenants and bona fide occupants of a parcel of land in San Andres, Malate 2 but is also
expressly prohibited from doing so by section 2 of the Act, may be summarized from the Court of
Appeals' 3 certification of resolution of May 31, 1965 as follows:
Case L-24916 involves petitioners' appeal to the Court of Appeals 4 from the decision of the Manila court
of first instance dismissing their petition for injunction and mandamus to enjoin the demolition of their
houses and the ejectment from the public lots in question and to direct respondent administrator of the
Land Authority (now Secretary of Agrarian Reform) to implement the provisions of Republic Act 3120 for
the subdivision and sale on installment basis of the subdivided lots to them as the tenants and bona fide
occupants thereof, and instead ordering their ejectment.
Case L-24915 involves petitioners' independent petition for injunction filed directly with the Court of
Appeals January 29, 1965 5 to forestall the demolition overnight of their houses pursuant to the order of
demolition set for January 30, 1965 at 8 a.m. issued by respondents city officials pending the elevation
of their appeal. The appellate court gave due course thereto and issued the writ of preliminary injunction
as prayed for.
The two cases were ordered "consolidated into one" since they were "unavoidably interlaced." The
appellate court, finding that the constitutionality of Republic Act 3120 was "the dominant and inextricable
issue in the appeal" over which it had no jurisdiction and that the trial court incorrectly "sidetracked" the
issue, thereafter certified the said cases to this Court, as follows:
The validity of Republic Act 3120 which was seasonably posed in issue in the
court below was sidetracked by the trial court, thus:
The constitutionality of Republic Act No. 3120 need not be
passed upon as the principal question in issue is whether the
houses of the petitioners are public nuisances, which the court
resolved in the affirmative. As a matter of fact even if the
petitioners were already the owners of the land on which their
respected houses are erected, the respondent city officials
could cause the removal thereof as they were constructed in
violation of city ordinances and constitute public nuisance.
It is significant to note, however, that what is sought by the respondent City
Mayor and City Engineer of Manila is not only the demolition of the petitioners'
houses in the premises in controversy, but their ejectment as well. Moreover,
Republic Act 3120 does intend not only the dismissal of the ejectment
proceedings against the petitioners from the land in controversy upon their
motion, but as well that any demolition order issued against them shall also
have to be dismissed. The law says:
Upon approval of this Act no ejectment proceedings against
any tenants or bona fide occupant shall be instituted and any
proceedings against any such tenant or bona fide occupant
shall be dismissed upon motion of the defendant. Provided,

shall be dismissed upon motion of the defendant. Provided,

That any demolition order directed against any tenant or bona
fide occupant thereof, shall be dismissed. (Sec. 2, R. A. 3120).
Indeed, the petitioners-appellants, who contended in the court below that it was
not necessary to decide on the validity or constitutionality of the law, now
asseverate that 'Republic Act No. 3120 expressly prohibits ejectment and
demolition of petitioners' home.' The petitioners' argument in their appeal to this
Court runs as follows:
1. Petitioners-appellants are entitled to the remedies of
injunction and mandamus, being vested with lawful possession
over Lot 21-B, Block 610, granted by law, Republic Act No.
3120.
2. Civil Case No. 56092 has not been barred by any prior
judgment, as wrongly claimed by respondents-appellees.
3. Ejectment and demolition against petitioners-appellants are
unlawful and clearly prohibited by Republic Act No. 3120.
The defense of the respondents Mayor and City Engineer of Manila to
arguments 2 and 3 is the invalidity of the said Republic Act 3120 for being in
violation of the Constitutional prohibition against the deprivation of property
without due process of law and without just compensation. So that even if
argument 2 interposed by the petitioners-appellants should be rejected, still
they may claim a right, by virtue of the aforesaid provisions of Republic Act
3120, to continue possession and occupation of the premises and the lifting of
the order of demolition issued against them. The constitutionality of the said
Republic Act 3120, therefore, becomes the dominant and inextricable issue of
the appeal.
Case L-24661 for the continuation and maintenance of the writ of preliminary injunction previously
issued by the Court of Appeals for preservation of the status quo was filed by petitioners directly with
this Court on June 21, 1965, pending transmittal of the records of Cases L-24915 and L-24916 to this
Court as certified by the Court of Appeals which declared itself without jurisdiction over the principal and
decisive issue of constitutionality of Republic Act 3120.
The Court gave due course thereto and on August 17, 1965 issued upon a P1,000 bond the writ of
preliminary injunction as prayed for enjoining respondents "from demolishing and/or continuing to
demolish the houses of herein petitioners situated in Lot No. 21-B, Block No. 610 of the Cadastral
Survey of the City of Manila, or from performing any act constituting an interference in or disturbance of
their present possession."
The records of two cases certified by the appellate court, L-24915 and L-24916, were eventually
forwarded to this Court which per its resolution of August 24, 1965 ordered that they be docketed and be
considered together with case L-24661.
In the early morning of April 19, 1970, a large fire of undetermined origin gutted the Malate area
including the lot on which petitioners had built their homes and dwellings. Respondents city officials then
took over the lot and kept petitioners from reconstructing or repairing their burned dwellings. At
petitioners' instance, the Court issued on June 17, 1970 a temporary restraining order enjoining
respondents city officials "from performing any act constituting an interference in or disturbance of herein
petitioners' possession of Lot No. 21-B, Block No. 610, of the Cadastral Survey of the City of Manila" as
safeguarded them under the Court's subsisting preliminary injunction of August 17, 1965.
The "dominant and inextricable issue" at bar, as correctly perceived by the appellate court is the
constitutionality of Republic Act 3120 whereby Congress converted the lot in question together with
another lot in San Andres, Malate "which are reserved as communal property" into "disposable or
alienable lands of the State to be placed under the administration and disposal of the Land Tenure
Administration" for subdivision into small lots not exceeding 120 square meters per lot for sale on
installment basis to the tenants or bona fide occupants thereof 6 and expressly prohibited ejectment and
demolition of petitioners' homes under section 2 of the Act as quoted in the appellate court's certification
resolution, supra.
The incidental issue seized upon by the trial court as a main issue for "sidetracking" the decisive issue of
constitutionality, to wit, that petitioners' houses as they stood at the time of its judgment in 1965 "were
constructed in violation of city ordinances and constituted public nuisances" whose removal could be
ordered "even if petitioners were already the owners of the land on which their respective houses are
erected" has become moot with the burning down of the petitioners' houses in the fire of April 19, 1970.
If the Act is invalid and unconstitutional for constituting deprivation of property without due process of
law and without just compensation as contended by respondents city officials, then the trial court's
refusal to enjoin ejectment and demolition of petitioners' houses may be upheld. Otherwise, petitioners'
right under the Act to continue possession and occupation of the premises and to the lifting and
dismissal of the order of demolition issued against them must be enforced and the trial court's judgment
must be set aside.
Respondents city officials' contention that the Act must be stricken down as unconstitutional for
depriving the city of Manila of the lots in question and providing for their sale in subdivided small lots to
bona fide occupants or tenants without payment of just compensation is untenable and without basis,
since the lots in question are manifestly owned by the city in its public and governmental capacity and

since the lots in question are manifestly owned by the city in its public and governmental capacity and
are therefore public property over which Congress had absolute control as distinguished from
patrimonial property owned by it in its private or proprietary capacity of which it could not be deprived
without due process and without just compensation. 7
Here, Republic Act 3120 expressly declared that the properties were "reserved as communal property"
and ordered their conversion into "disposable and alienable lands of the State" for sale in small lots to
the bona fide occupants thereof. It is established doctrine that the act of classifying State property calls
for the exercise of wide discretionary legislative power which will not be interfered with by the courts.
The case of Salas vs. Jarencio 8 wherein the Court upheld the constitutionality of Republic Act 4118
whereby Congress in identical terms as in Republic Act 3120 likewise converted another city lot (Lot 1B-2-B of Block 557 of the cadastral survey of Manila also in Malate) which was reserved as communal
property into disposable land of the State for resale in small lots by the Land Tenure, Administration to
the bona fide occupants is controlling in the case at bar.
The Court therein reaffirmed the established general rule that "regardless of the source or classification
of land in the possession of a municipality, excepting those acquired with its own funds in its private or
corporate capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it
be for governmental or proprietary purposes. It holds such lands subject to the paramount power of the
legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of
a part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes
of local administration. Accordingly, the legal situation is the same as if the State itself holds the property
and puts it to a different use" 9 and stressed that "the property, as has been previously shown, was not
acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its
name a registered title is not questioned, but this title should be deemed to be held in trust for the State
as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon
its creation." 10
There as here, the Court holds that the Acts in question (Republic Acts 4118 in Salas and Republic Act
3120 in the case at bar) were intended to implement the social justice policy of the Constitution and the
government program of land for the landless and that they were not "intended to expropriate the
property involved but merely to confirm its character as communal land of the State and to make it
available for disposition by the National Government: ... The subdivision of the land and conveyane of
the resulting subdivision lots to the occupants by Congressional authorization does not operate as an
exercise of the power of eminent domain without just compensation in violation of Section 1, subsection
(2), Article III of the Constitution, 11 but simply as a manifestation of its right and power to deal with state
property." 12
Since the challenge of respondents city officials against the constitutionality of Republic Act 3120 must
fail as the City was not deprived thereby of anything it owns by acquisition with its private or corporate
funds either under the due process clause or under the eminent domain provisions of the Constitution,
the provisions of said Act must be enforced and petitioners are entitled to the injunction as prayed for
implementing the Act's prohibition against their ejectment and demolition of their houses.
WHEREFORE, the appealed decision of the lower court (in Case No. L-24916) is hereby set aside, and
the preliminary injunction heretofore issued on August 17, 1965 is hereby made permanent. The
respondent Secretary of Agrarian Reform as successor agency of the Land Tenure Administration may
now proceed with the due implementation of Republic Act 3120 in accordance with its terms and
provisions. No costs.
Makalintal, C.J., Zaldivar, Castro, Barredo, Makasiar, Antonio, Esguerra, Muoz Palma and Aquino, JJ.,
concur.
Fernandez, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 97764 August 10, 1992

LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan Traffic Command,
petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial Court of Makati,
Metro Manila, MUNICIPALITY OF PARAAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN
FOR SERVICE, respondents.
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.
Manuel de Guia for Municipality of Paraaque.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision
of the Regional Trial Court of Makati, Branch 62, which granted the writ of preliminary injunction applied
for by respondents Municipality of Paraaque and Palanyag Kilusang Bayan for Service (Palanyag for
brevity) against petitioner herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which
authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets
located at Baclaran, Paraaque, Metro Manila and the establishment of a flea market thereon. The said
ordinance was approved by the municipal council pursuant to MMC Ordinance No. 2, Series of 1979,
authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within
Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the
municipal council of respondent municipality subject to the following conditions:
1. That the aforenamed streets are not used for vehicular traffic, and that the
majority of the residents do not oppose the establishment of the flea
market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall be
marked distinctly, and that the 2 meters on both sides of the road shall be used
by pedestrians;
3. That the time during which the vending area is to be used shall be clearly
designated;
4. That the use of the vending areas shall be temporary and shall be closed
once the reclaimed areas are developed and donated by the Public Estate
Authority.
On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing Paraaque Mayor
Walfrido N. Ferrer to enter into contract with any service cooperative for the establishment, operation,
maintenance and management of flea markets and/or vending areas.
On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered
into an agreement whereby the latter shall operate, maintain and manage the flea market in the
aforementioned streets with the obligation to remit dues to the treasury of the municipal government of
Paraaque. Consequently, market stalls were put up by respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan
Traffic Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
Baclaran. These stalls were later returned to respondent Palanyag.
On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent Palanyag giving
the latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial court a joint
petition for prohibition and mandamus with damages and prayer for preliminary injunction, to which the
petitioner filed his memorandum/opposition to the issuance of the writ of preliminary injunction.
On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner from
enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of preliminary
injunction.
On December 17, 1990, the trial court issued an order upholding the validity of Ordinance No. 86 s.
1990 of the Municipality' of Paraaque and enjoining petitioner Brig. Gen. Macasiano from enforcing his
letter-order against respondent Palanyag.
Hence, this petition was filed by the petitioner thru the Office of the Solicitor General alleging grave
abuse of discretion tantamount to lack or excess of jurisdiction on the part of the trial judge in issuing the
assailed order.
The sole issue to be resolved in this case is whether or not an ordinance or resolution issued by the
municipal council of Paraaque authorizing the lease and use of public streets or thoroughfares as sites
for flea markets is valid.
The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public service

The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public service
and are therefore public properties; that as such, they cannot be subject to private appropriation or
private contract by any person, even by the respondent Municipality of Paraaque. Petitioner submits
that a property already dedicated to public use cannot be used for another public purpose and that
absent a clear showing that the Municipality of Paraaque has been granted by the legislature specific
authority to convert a property already in public use to another public use, respondent municipality is,
therefore, bereft of any authority to close municipal roads for the establishment of a flea market.
Petitioner also submits that assuming that the respondent municipality is authorized to close streets, it
failed to comply with the conditions set forth by the Metropolitan Manila Authority for the approval of the
ordinance providing for the establishment of flea markets on public streets. Lastly, petitioner contends
that by allowing the municipal streets to be used by market vendors the municipal council of respondent
municipality violated its duty under the Local Government Code to promote the general welfare of the
residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court ruled:
. . . that Chanter II Section 10 of the Local Government Code is a statutory
grant of power given to local government units, the Municipality of Paraaque
as such, is empowered under that law to close its roads, streets or alley subject
to limitations stated therein (i.e., that it is in accordance with existing laws and
the provisions of this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi Macasiano, though apparently
within its power is in fact an encroachment of power legally vested to the
municipality, precisely because when the municipality enacted the ordinance in
question the authority of the respondent as Police Superintendent ceases to
be operative on the ground that the streets covered by the ordinance ceases to
be a public thoroughfare. (pp. 33-34, Rollo)
We find the petition meritorious. In resolving the question of whether the disputed municipal ordinance
authorizing the flea market on the public streets is valid, it is necessary to examine the laws in force
during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337, otherwise known as
Local Government Code, in connection with established principles embodied in the Civil Code an
property and settled jurisprudence on the matter.
The property of provinces, cities and municipalities is divided into property for public use and patrimonial
property (Art. 423, Civil Code). As to what consists of property for public use, Article 424 of Civil Code
states:
Art. 424. Property for public use, in the provinces, cities and municipalities,
consists of the provincial roads, city streets, the squares, fountains, public
waters, promenades, and public works for public service paid for by said
provinces, cities or municipalities.
All other property possessed by any of them is patrimonial and shall be
governed by this Code, without prejudice to the provisions of special laws.
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are
local roads used for public service and are therefore considered public properties of respondent
municipality. Properties of the local government which are devoted to public service are deemed public
and are under the absolute control of Congress (Province of Zamboanga del Norte v. City of
Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). Hence, local governments have no authority
whatsoever to control or regulate the use of public properties unless specific authority is vested upon
them by Congress. One such example of this authority given by Congress to the local governments is
the power to close roads as provided in Section 10, Chapter II of the Local Government Code, which
states:
Sec. 10. Closure of roads. A local government unit may likewise, through its
head acting pursuant to a resolution of its sangguniang and in accordance with
existing law and the provisions of this Code, close any barangay, municipal, city
or provincial road, street, alley, park or square. No such way or place or any
part of thereof shall be close without indemnifying any person prejudiced
thereby. A property thus withdrawn from public use may be used or conveyed
for any purpose for which other real property belonging to the local unit
concerned might be lawfully used or conveyed. (Emphasis ours).
However, the aforestated legal provision which gives authority to local government units to close roads
and other similar public places should be read and interpreted in accordance with basic principles
already established by law. These basic principles have the effect of limiting such authority of the
province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays
down the basic principle that properties of public dominion devoted to public use and made available to
the public in general are outside the commerce of man and cannot be disposed of or leased by the local
government unit to private persons. Aside from the requirement of due process which should be
complied with before closing a road, street or park, the closure should be for the sole purpose of
withdrawing the road or other public property from public use when circumstances show that such
property is no longer intended or necessary for public use or public service. When it is already
withdrawn from public use, the property then becomes patrimonial property of the local government unit
concerned (Article 422, Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474,

August 29, 1975, 66 SCRA 481). It is only then that the respondent municipality can "use or convey
them for any purpose for which other real property belonging to the local unit concerned might be
lawfully used or conveyed" in accordance with the last sentence of Section 10, Chapter II of Blg. 337,
known as Local Government Code. In one case, the City Council of Cebu, through a resolution, declared
the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned road, the same not being
included in the City Development Plan. Thereafter, the City Council passes another resolution
authorizing the sale of the said abandoned road through public bidding. We held therein that the City of
Cebu is empowered to close a city street and to vacate or withdraw the same from public use. Such
withdrawn portion becomes patrimonial property which can be the object of an ordinary contract (Cebu
Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are available to the
public in general and ordinarily used for vehicular traffic are still considered public property devoted to
public use. In such case, the local government has no power to use it for another purpose or to dispose
of or lease it to private persons. This limitation on the authority of the local government over public
properties has been discussed and settled by this Court en banc in "Francisco V. Dacanay, petitioner v.
Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6, 1992." This Court ruled:
There is no doubt that the disputed areas from which the private respondents'
market stalls are sought to be evicted are public streets, as found by the trial
court in Civil Case No. C-12921. A public street is property for public use hence
outside the commerce of man (Arts. 420, 424, Civil Code). Being outside the
commerce of man, it may not be the subject of lease or others contract
(Villanueva, et al. v. Castaeda and Macalino, 15 SCRA 142 citing the
Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v. Municipal Council of
Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the right to occupy
portions of the public street, the City Government, contrary to law, has been
leasing portions of the streets to them. Such leases or licenses are null and void
for being contrary to law. The right of the public to use the city streets may not
be bargained away through contract. The interests of a few should not prevail
over the good of the greater number in the community whose health, peace,
safety, good order and general welfare, the respondent city officials are under
legal obligation to protect.
The Executive Order issued by acting Mayor Robles authorizing the use of
Heroes del '96 Street as a vending area for stallholders who were granted
licenses by the city government contravenes the general law that reserves city
streets and roads for public use. Mayor Robles' Executive Order may not
infringe upon the vested right of the public to use city streets for the purpose
they were intended to serve: i.e., as arteries of travel for vehicles and
pedestrians.
Even assuming, in gratia argumenti, that respondent municipality has the authority to pass the disputed
ordinance, the same cannot be validly implemented because it cannot be considered approved by the
Metropolitan Manila Authority due to non-compliance by respondent municipality of the conditions
imposed by the former for the approval of the ordinance, to wit:
1. That the aforenamed streets are not used for vehicular traffic, and that the
majority of the residents do(es) not oppose the establishment of the flea
market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall be
marked distinctly, and that the 2 meters on both sides of the road shall be used
by pedestrians;
3. That the time during which the vending area is to be used shall be clearly
designated;
4. That the use of the vending areas shall be temporary and shall be closed
once the reclaimed areas are developed and donated by the Public Estate
Authority. (p. 38, Rollo)
Respondent municipality has not shown any iota of proof that it has complied with the foregoing
conditions precedent to the approval of the ordinance. The allegations of respondent municipality that
the closed streets were not used for vehicular traffic and that the majority of the residents do not oppose
the establishment of a flea market on said streets are unsupported by any evidence that will show that
this first condition has been met. Likewise, the designation by respondents of a time schedule during
which the flea market shall operate is absent.
Further, it is of public notice that the streets along Baclaran area are congested with people, houses and
traffic brought about by the proliferation of vendors occupying the streets. To license and allow the
establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena
streets in Baclaran would not help in solving the problem of congestion. We take note of the other
observations of the Solicitor General when he said:
. . . There have been many instances of emergencies and fires where
ambulances and fire engines, instead of using the roads for a more direct
access to the fire area, have to maneuver and look for other streets which are

access to the fire area, have to maneuver and look for other streets which are
not occupied by stalls and vendors thereby losing valuable time which could,
otherwise, have been spent in saving properties and lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its
ambulances and the people rushing their patients to the hospital cannot pass
through G.G. Cruz because of the stalls and the vendors. One can only imagine
the tragedy of losing a life just because of a few seconds delay brought about
by the inaccessibility of the streets leading to the hospital.
The children, too, suffer. In view of the occupancy of the roads by stalls and
vendors, normal transportation flow is disrupted and school children have to get
off at a distance still far from their schools and walk, rain or shine.
Indeed one can only imagine the garbage and litter left by vendors on the
streets at the end of the day. Needless to say, these cause further pollution,
sickness and deterioration of health of the residents therein. (pp. 21-22, Rollo)
Respondents do not refute the truth of the foregoing findings and observations of petitioners. Instead,
respondents want this Court to focus its attention solely on the argument that the use of public spaces
for the establishment of a flea market is well within the powers granted by law to a local government
which should not be interfered with by the courts.
Verily, the powers of a local government unit are not absolute. They are subject to limitations laid down
by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should
be subservient to paramount considerations of health and well-being of the members of the community.
Every local government unit has the sworn obligation to enact measures that will enhance the public
health, safety and convenience, maintain peace and order, and promote the general prosperity of the
inhabitants of the local units. Based on this objective, the local government should refrain from acting
towards that which might prejudice or adversely affect the general welfare.
As what we have said in the Dacanay case, the general public have a legal right to demand the
demolition of the illegally constructed stalls in public roads and streets and the officials of respondent
municipality have the corresponding duty arising from public office to clear the city streets and restore
them to their specific public purpose.
The instant case as well as the Dacanay case, involves an ordinance which is void and illegal for lack of
basis and authority in laws applicable during its time. However, at this point, We find it worthy to note
that Batas Pambansa Blg. 337, known as Local Government Lode, has already been repealed by
Republic Act No. 7160 known as Local Government Code of 1991 which took effect on January 1, 1992.
Section 5(d) of the new Code provides that rights and obligations existing on the date of effectivity of the
new Code and arising out of contracts or any other source of prestation involving a local government
unit shall be governed by the original terms and conditions of the said contracts or the law in force at the
time such rights were vested.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional Trial Court
dated December 17, 1990 which granted the writ of preliminary injunction enjoining petitioner as PNP
Superintendent, Metropolitan Traffic Command from enforcing the demolition of market stalls along J.
Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets is hereby RESERVED and SET
ASIDE.
SO ORDERED.
Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr.,
Romero, Nocon and Bellosillo, JJ., concur.

THIRD DIVISION

[G.R. No. 100709. November 14, 1997]

REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF

LANDS, petitioner, vs. COURT OF APPEALS, JOSEFINA L.
MORATO, SPOUSES NENITA CO and ANTONIO QUILATAN AND
THE REGISTER OF DEEDS OF QUEZON PROVINCE,
respondents.

DECISION
PANGANIBAN, J.:

Will the lease and/or mortgage of a portion of a realty acquired through free patent
constitute sufficient ground for the nullification of such land grant? Should such
property revert to the State once it is invaded by the sea and thus becomes foreshore
land?
The Case
These are the two questions raised in the petition before us assailing the Court of
Appeals Decision in CA-G.R. CV No. 02667 promulgated on June 13, 1991 which
answered the said questions in the negative. Respondent Courts Decision dismissed
petitioners appeal and affirmed in toto the decision of the Regional Trial Court of
Calauag, Quezon, dated December 28, 1983 in Civil Case No. C-608. In turn, the
Regional Trial Courts decision dismissed petitioners complaint for cancellation of the
Torrens Certificate of Title of Respondent Morato and for reversion of the parcel of land
subject thereof to the public domain.
The Facts
The petition of the solicitor general, representing the Republic of the Philippines,
recites the following facts:
Sometime in December, 1972, respondent Morato filed a Free Patent
Application No. III-3-8186-B on a parcel of land with an area of 1,265 square
meters situated at Pinagtalleran, Calauag, Quezon. On January 16, 1974, the
patent was approved and the Register of Deeds of Quezon at Lucena City
issued on February 4, 1974 Original Certificate of Title No. P-17789. Both the
free patent and the title specifically mandate that the land shall not be alienated
nor encumbered within five (5) years from the date of the issuance of the
patent (Sections 118 and 124 of CA No. 141, as amended).
Subsequently, the District Land Officer in Lucena City, acting upon reports
that respondent Morato had encumbered the land in violation of the condition of
the patent, conducted an investigation. Thereafter, it was established that the
subject land is a portion of the Calauag Bay, five (5) to six (6) feet deep under
water during high tide and two (2) feet deep at low tide, and not suitable to
vegetation. Moreover, on October 24, 1974, a portion of the land was
mortgaged by respondent Morato to respondents Nenita Co and Antonio
Quilatan for P10,000.00 (pp. 2, 25, Folder of Exhibits). The spouses Quilatan
constructed a house on the land. Another portion of the land was leased to
Perfecto Advincula on February 2, 1976 at P100.00 a month, where a
warehouse was constructed.
On November 5, 1978, petitioner filed an amended complaint against
respondents Morato, spouses Nenita Co and Antonio Quilatan, and the
Register of Deeds of Quezon for the cancellation of title and reversion of a
parcel of land to the public domain, subject of a free patent in favor of
respondent Morato, on the grounds that the land is a foreshore land and was
mortgaged and leased within the five-year prohibitory period (p. 46, Records).
After trial, the lower court, on December 28, 1983, rendered a decision
dismissing petitioners complaint. In finding for private respondents, the lower
court ruled that there was no violation of the 5-year period ban against
alienating or encumbering the land, because the land was merely leased and
not alienated. It also found that the mortgage to Nenita Co and Antonio
Quilatan covered only the improvement and not the land itself.
On appeal, the Court of Appeals affirmed the decision of the trial court. Thereafter,
the Republic of the Philippines filed the present petition.

The Issues
Petitioner alleges that the following errors were committed by Respondent Court:
I

Respondent Court erred in holding that the patent granted and certificate of title
issued to Respondent Morato cannot be cancelled and annulled since the
certificate of title becomes indefeasible after one year from the issuance of the
title.
II

Respondent Court erred in holding that the questioned land is part of a

disposable public land and not a foreshore land.
The Courts Ruling
The petition is meritorious.
First Issue: Indefeasibility of a Free Patent Title
In resolving the first issue against petitioner, Respondent Court held:
x x x. As ruled in Heirs of Gregorio Tengco vs. Heirs of Jose Alivalas, 168
SCRA 198. x x. The rule is well-settled that an original certificate of title issued
on the strength of a homestead patent partakes of the nature of a certificate of
title issued in a judicial proceeding, as long as the land disposed of is really
part of the disposable land of the public domain, and becomes indefeasible and
incontrovertible upon the expiration of one year from the date of promulgation
of the order of the Director of Lands for the issuance of the patent. (Republic v.
Heirs of Carle, 105 Phil. 1227 (1959); Ingaran v. Ramelo, 107 Phil. 498 (1960);
Lopez v. Padilla, (G.R. No. L-27559, May 18, 1972, 45 SCRA 44). A
homestead patent, one registered under the Land Registration Act, becomes
as indefeasible as a Torrens Title. (Pamintuan v. San Agustin, 43 Phil. 558
(1982); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Duran v. Oliva, 113 Phil.
144 (1961); Pajomayo v. Manipon, G.R. No. L-33676, June 30, 1971, 39 SCRA
676). (p. 203).
Again, in Lopez vs. Court of Appeals, 169 SCRA 271, citing Iglesia ni Cristo
v. Hon. Judge, CFI of Nueva Ecija, Branch I, (123 SCRA 516 (1983) and
Pajomayo, et al. v. Manipon, et al. (39 SCRA 676 (1971) held that once a
homestead patent granted in accordance with the Public Land Act is registered
pursuant to Section 122 of Act 496, the certificate of title issued in virtue of said
patent has the force and effect of a Torrens Title issued under the Land
Registration Act.
Indefeasibility of the title, however, may not bar the State, thru the Solicitor
General, from filing an action for reversion, as ruled in Heirs of Gregorio Tengo
v. Heirs of Jose Aliwalas, (supra), as follows:
But, as correctly pointed out by the respondent Court of Appeals,
Dr. Aliwalas title to the property having become incontrovertible, such
may no longer be collaterally attacked. If indeed there had been any
fraud or misrepresentation in obtaining the title, an action for reversion
instituted by the Solicitor General would be the proper remedy (Sec.
101, C.A. No. 141; Director of Lands v. Jugado, G.R. No. L-14702, May
21, 1961, 2 SCRA 32; Lopez v. Padilla, supra). (p. 204).
Petitioner contends that the grant of Free Patent (IV-3) 275 and the subsequent
issuance of Original Certificate of Title No. P-17789 to Respondent Josefina L. Morato
were subject to the conditions provided for in Commonwealth Act (CA) No. 141. It
alleges that on October 24, 1974, or nine (9) months and eight (8) days after the grant
of the patent, Respondent Morato, in violation of the terms of the patent, mortgaged a

portion of the land to Respondent Nenita Co, who thereafter constructed a house
thereon. Likewise, on February 2, 1976 and within the five-year prohibitory period,
Respondent Morato leased a portion of the land to Perfecto Advincula at a monthly rent
of P100.00 who, shortly thereafter, constructed a house of concrete materials on the
subject land. Further, petitioner argues that the defense of indefeasibility of title is
inaccurate. The original certificate of title issued to Respondent Morato contains the
seeds of its own cancellation: such certificate specifically states on its face that it is
subject to the provisions of Sections 118, 119, 121, 122, 124 of CA No. 141, as
amended.
Respondent Morato counters by stating that although a portion of the land was
previously leased, it resulted from the fact that Perfecto Advincula built a warehouse in
the subject land without [her] prior consent. The mortgage executed over the
improvement cannot be considered a violation of the said grant since it can never affect
the ownership. She states further:
x x x. the appeal of the petitioner was dismissed not because of the
principle of indefeasibility of title but mainly due to failure of the latter to support
and prove the alleged violations of respondent Morato. The records of this case
will readily show that although petitioner was able to establish that Morato
committed some acts during the prohibitory period of 5 years, a perusal thereof
will also show that what petitioner was able to prove never constituted a
violation of the grant.
Respondent-Spouses Quilatan, on the other hand, state that the mortgage contract
they entered into with Respondent Morato can never be considered as [an] alienation
inasmuch as the ownership over the property remains with the owner. Besides, it is the
director of lands and not the Republic of the Philippines who is the real party in interest
in this case, contrary to the provision of the Public Land Act which states that actions
for reversion should be instituted by the solicitor general in the name of Republic of the
Philippines.
We find for petitioner.
Quoted below are relevant sections of Commonwealth Act No. 141, otherwise
known as the Public Land Act:
Sec. 118. Except in favor of the Government or any of its branches, units or
institutions, or legally constituted banking corporations, lands acquired under
free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of five
years from and after the date of issuance of the patent or grant nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration
of said period; but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years
and before twenty-five years after issuance of title shall be valid without the
approval of the Secretary of Agriculture and Natural Resources, which approval
shall not be denied except on constitutional and legal grounds. (As amended
by Com. Act No. 456, approved June 8, 1939.)
xxx

x x x

x x x

Sec. 121. Except with the consent of the grantee and the approval of the
Secretary of Agriculture and Natural Resources, and solely for educational,
religious, or charitable purposes or for a right of way, no corporation,
association, or partnership may acquire or have any right, title, interest, or
property right whatsoever to any land granted under the free patent,
homestead, or individual sale provisions of this Act or to any permanent
improvement on such land. (As amended by Com. Act No. 615, approved May
5, 1941)
Sec. 122. No land originally acquired in any manner under the provisions of
this Act, nor any permanent improvement on such land, shall be encumbered,
alienated or transferred, except to persons, corporations, association, or
partnerships who may acquire lands of the public domain under this Act or to

corporations organized in the Philippines authorized therefore by their charters.

Except in cases of hereditary successions, no land or any portion thereof
originally acquired under the free patent, homestead, or individual sale
provisions of this Act, or any permanent improvement on such land, shall be
transferred or assigned to any individual, nor shall such land or any permanent
improvement thereon be leased to such individual, when the area of said land,
added to that of his own, shall exceed one hundred and forty-four hectares.
Any transfer, assignment, or lease made in violation hereto shall be null and
void. (As amended by Com. Act No. 615, Id.)
xxx

x x x

x x x

Sec. 124. Any acquisition, conveyance, alienation, transfer, or other

contract made or executed in violation of any of the provisions of sections one
hundred and eighteen, one hundred and twenty, one hundred and twenty-one,
one hundred and twenty-two, and one hundred and twenty-three of this Act
shall be unlawful and null and void from its execution and shall produce the
effect of annulling and cancelling the grant, title, patent, or permit originally
issued, recognized or confirmed, actually or presumptively, and cause the
reversion of the property and its improvements to the State. (Underscoring
supplied.)
The foregoing legal provisions clearly proscribe the encumbrance of a parcel of
land acquired under a free patent or homestead within five years from the grant of such
patent. Furthermore, such encumbrance results in the cancellation of the grant and the
reversion of the land to the public domain. Encumbrance has been defined as
[a]nything that impairs the use or transfer of property; anything which constitutes a
burden on the title; a burden or charge upon property; a claim or lien upon property. It
may be a legal claim on an estate for the discharge of which the estate is liable; an
embarrassment of the estate or property so that it cannot be disposed of without being
subject to it; an estate, interest, or right in lands, diminishing their value to the general
owner; a liability resting upon an estate. Do the contracts of lease and mortgage
executed within five (5) years from the issuance of the patent constitute an
encumbrance and violate the terms and conditions of such patent? Respondent Court
answered in the negative:
From the evidence adduced by both parties, it has been proved that the
area of the portion of the land, subject matter of the lease contract (Exh. B)
executed by and between Perfecto Advincula and Josefina L. Morato is only 10
x 12 square meters, whereas the total area of the land granted to Morato is
1,265 square meters. It is clear from this that the portion of the land leased by
Advincula does not significantly affect Moratos ownership and possession.
Above all, the circumstances under which the lease was executed do not
reflect a voluntary and blatant intent to violate the conditions provided for in the
patent issued in her favor. On the contrary, Morato was compelled to enter into
that contract of lease out of sympathy and the goodness of her heart to
accommodate a fellow man. x x x
It is indisputable, however, that Respondent Morato cannot fully use or enjoy the
land during the duration of the lease contract. This restriction on the enjoyment of her
property sufficiently meets the definition of an encumbrance under Section 118 of the
Public Land Act, because such contract impairs the use of the property by the grantee.
In a contract of lease which is consensual, bilateral, onerous and commutative, the
owner temporarily grants the use of his or her property to another who undertakes to
pay rent therefor. During the term of the lease, the grantee of the patent cannot enjoy
the beneficial use of the land leased. As already observed, the Public Land Act does
not permit a grantee of a free patent from encumbering any portion of such land. Such
encumbrance is a ground for the nullification of the award.
Moratos resort to equity, i.e. that the lease was executed allegedly out of the
goodness of her heart without any intention of violating the law, cannot help her. Equity,
which has been aptly described as justice outside legality, is applied only in the
absence of, and never against, statutory law or judicial rules of procedure. Positive
rules prevail over all abstract arguments based on equity contra legem.
Respondents failed to justify their position that the mortgage should not be

considered an encumbrance. Indeed, we do not find any support for such contention.
The questioned mortgage falls squarely within the term encumbrance proscribed by
Section 118 of the Public Land Act. Verily, a mortgage constitutes a legal limitation on
the estate, and the foreclosure of such mortgage would necessarily result in the auction
of the property.
Even if only part of the property has been sold or alienated within the prohibited
period of five years from the issuance of the patent, such alienation is a sufficient
cause for the reversion of the whole estate to the State. As a condition for the grant of
a free patent to an applicant, the law requires that the land should not be encumbered,
sold or alienated within five years from the issuance of the patent. The sale or the
alienation of part of the homestead violates that condition.
The prohibition against the encumbrance -- lease and mortgage included -- of a
homestead which, by analogy applies to a free patent, is mandated by the rationale for
the grant, viz.:
It is well-known that the homestead laws were designed to distribute
disposable agricultural lots of the State to land-destitute citizens for their home
and cultivation. Pursuant to such benevolent intention the State prohibits the
sale or encumbrance of the homestead (Section 116) within five years after the
grant of the patent. After that five-year period the law impliedly permits
alienation of the homestead; but in line with the primordial purpose to favor the
homesteader and his family the statute provides that such alienation or
conveyance (Section 117) shall be subject to the right of repurchase by the
homesteader, his widow or heirs within five years. This section 117 is
undoubtedly a complement of section 116. It aims to preserve and keep in the
family of the homesteader that portion of public land which the State had
gratuitously given to him. It would, therefore, be in keeping with this
fundamental idea to hold, as we hold, that the right to repurchase exists not
only when the original homesteader makes the conveyance, but also when it is
made by his widow or heirs. This construction is clearly deducible from the
terms of the statute.
By express provision of Section 118 of Commonwealth Act 141 and in conformity
with the policy of the law, any transfer or alienation of a free patent or homestead within
five years from the issuance of the patent is proscribed. Such transfer nullifies said
alienation and constitutes a cause for the reversion of the property to the State.
The prohibition against any alienation or encumbrance of the land grant is a proviso
attached to the approval of every application. Prior to the fulfillment of the requirements
of law, Respondent Morato had only an inchoate right to the property; such property
remained part of the public domain and, therefore, not susceptible to alienation or
encumbrance. Conversely, when a homesteader has complied with all the terms and
conditions which entitled him to a patent for [a] particular tract of public land, he
acquires a vested interest therein and has to be regarded an equitable owner thereof.
However, for Respondent Moratos title of ownership over the patented land to be
perfected, she should have complied with the requirements of the law, one of which
was to keep the property for herself and her family within the prescribed period of five
(5) years. Prior to the fulfillment of all requirements of the law, Respondent Moratos title
over the property was incomplete. Accordingly, if the requirements are not complied
with, the State as the grantor could petition for the annulment of the patent and the
cancellation of the title.
Respondent Morato cannot use the doctrine of the indefeasibility of her Torrens title
to bar the state from questioning its transfer or encumbrance. The certificate of title
issued to her clearly stipulated that its award was subject to the conditions provided for
in Sections 118, 119, 121, 122 and 124 of Commonwealth Act (CA) No. 141. Because
she violated Section 118, the reversion of the property to the public domain necessarily
follows, pursuant to Section 124.
Second Issue: Foreshore Land Reverts to the Public Domain
There is yet another reason for granting this petition.
Although Respondent Court found that the subject land was foreshore land, it

nevertheless sustained the award thereof to Respondent Morato:

First of all, the issue here is whether the land in question, is really part of
the foreshore lands. The Supreme Court defines foreshore land in the case of
Republic vs. Alagad, 169 SCRA 455, 464, as follows:
Otherwise, where the rise in water level is due to, the extraordinary
action of nature, rainful, for instance, the portions inundated thereby
are not considered part of the bed or basin of the body of water in
question. It cannot therefore be said to be foreshore land but land
outside of the public dominion, and land capable of registration as
private property.
A foreshore land, on the other hand has been defined as follows:
... that part of (the land) which is between high and low
water and left dry by the flux and reflux of the tides x x x x
(Republic vs. C.A., Nos. L-43105, L-43190, August 31, 1984,
131 SCRA 532; Government vs. Colegio de San Jose, 53 Phil
423)
The strip of land that lies between the high and low water
marks and that is alternatively wet and dry according to the
flow of the tide. (Rep. vs. CA, supra, 539).
The factual findings of the lower court regarding the nature of the parcel of land in
question reads:
Evidence disclose that the marginal area of the land radically
changed sometime in 1937 up to 1955 due to a strong earthquake
followed by frequent storms eventually eroding the land. From 1955 to
1968, however, gradual reclamation was undertaken by the lumber
company owned by the Moratos. Having thus restored the land thru
mostly human hands employed by the lumber company, the area
continued to be utilized by the owner of the sawmill up to the time of
his death in 1965. On or about March 17, 1973, there again was a
strong earthquake unfortunately causing destruction to hundreds of
residential houses fronting the Calauag Bay including the Santiago
Building, a cinema house constructed of concrete materials. The
catastrophe totally caused the sinking of a concrete bridge at
Sumulong river also in the municipality of Calauag, Quezon.
On November 13, 1977 a typhoon code named Unding wrought
havoc as it lashed the main land of Calauag, Quezon causing again
great erosion this time than that which the area suffered in 1937. The
Court noted with the significance of the newspaper clipping entitled
Baryo ng Mangingisda Kinain ng Dagat (Exh. 11).
xxx

x x x

x x x

Evidently this was the condition of the land when on or about

December 5, 1972 defendant Josefina L. Morato filed with the Bureau
of Lands her free patent application. The defendant Josefina Morato
having taken possession of the land after the demise of Don Tomas
Morato, she introduced improvement and continued developing the
area, planted it to coconut trees. Having applied for a free patent,
defendant had the land area surveyed and an approved plan (Exh. 9)
based on the cadastral survey as early as 1927 (Exh. 10) was secured.
The area was declared for taxation purposes in the name of defendant
Josefina Morato denominated as Tax Declaration No. 4115 (Exh. 8)
and the corresponding realty taxes religiously paid as shown by Exh.
8-A). (pp. 12-14, DECISION).
Being supported by substantial evidence and for failure of the appellant to
show cause which would warrant disturbance, the afore-cited findings of the
lower court, must be respected.
Petitioner correctly contends, however, that Private Respondent Morato cannot

own foreshore land:

Through the encroachment or erosion by the ebb and flow of the tide, a
portion of the subject land was invaded by the waves and sea advances.
During high tide, at least half of the land (632.5 square meters) is 6 feet deep
under water and three (3) feet deep during low tide. The Calauag Bay shore
has extended up to a portion of the questioned land.
While at the time of the grant of free patent to respondent Morato, the land
was not reached by the water, however, due to gradual sinking of the land
caused by natural calamities, the sea advances had permanently invaded a
portion of subject land. As disclosed at the trial, through the testimony of the
court-appointed commissioner, Engr. Abraham B. Pili, the land was under water
during high tide in the month of August 1978. The water margin covers half of
the property, but during low tide, the water is about a kilometer (TSN, July 19,
1979, p. 12). Also, in 1974, after the grant of the patent, the land was covered
with vegetation, but it disappeared in 1978 when the land was reached by the
tides (Exhs. E-1; E-14). In fact, in its decision dated December 28, 1983, the
lower court observed that the erosion of the land was caused by natural
calamities that struck the place in 1977 (Cf. Decision, pp. 17-18).
Respondent-Spouses Quilatan argue, however, that it is unfair and unjust if
Josefina Morato will be deprived of the whole property just because a portion thereof
was immersed in water for reasons not her own doing.
As a general rule, findings of facts of the Court of Appeals are binding and
conclusive upon this Court, unless such factual findings are palpably unsupported by
the evidence on record or unless the judgment itself is based on a misapprehension of
facts. The application for a free patent was made in 1972. From the undisputed factual
findings of the Court of Appeals, however, the land has since become foreshore.
Accordingly, it can no longer be subject of a free patent under the Public Land Act.
Government of the Philippine Islands vs. Cabagis explained the rationale for this
proscription:
Article 339, subsection 1, of the Civil Code, reads:
Art. 339. Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, riverbanks,
shores, roadsteads, and that of a similar character.
*

Article 1, case 3, of the Law of Waters of August 3, 1866, provides as

follows:
ARTICLE 1.
open to public use:
*

The following are part of the national domain

*

3. The Shores. By the shore is understood that space covered and

uncovered by the movement of the tide. Its interior or terrestrial limit is
the line reached by the highest equinoctal tides. Where the tides are
not appreciable, the shore begins on the land side at the line reached
by the sea during ordinary storms or tempests.
In the case of Aragon vs. Insular Government (19 Phil. 223), with
reference to article 339 of the Civil Code just quoted, this Court said:
We should not be understood, by this decision, to hold that in a
case of gradual encroachment or erosion by the ebb and flow of the
tide, private property may not become property of public ownership. as
defined in article 339 of the code, where it appear that the owner has
to all intents and purposes abandoned it and permitted it to be totally
destroyed, so as to become a part of the playa (shore of the sea), rada
(roadstead), or the like. * * *
In the Enciclopedia Jurdica Espaola, volume XII, page 558, we read the

following:
With relative frequency the opposite phenomenon occurs; that is,
the sea advances and private properties are permanently invaded by
the waves, and in this case they become part of the shore or beach.
They then pass to the public domain, but the owner thus dispossessed
does not retain any right to the natural products resulting from their
new nature; it is a de facto case of eminent domain, and not subject to
indemnity.
In comparison, Article 420 of the Civil Code provides:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others
of similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
When the sea moved towards the estate and the tide invaded it, the invaded
property became foreshore land and passed to the realm of the public domain. In fact,
the Court in Government vs. Cabangis annulled the registration of land subject of
cadastral proceedings when the parcel subsequently became foreshore land. In
another case, the Court voided the registration decree of a trial court and held that said
court had no jurisdiction to award foreshore land to any private person or entity. The
subject land in this case, being foreshore land, should therefore be returned to the
public domain.
WHEREFORE, the petition is GRANTED. This Court hereby REVERSES and
SETS ASIDE the assailed Decision of Respondent Court and ORDERS the
CANCELLATION of Free Patent No. (IV-3) 275 issued to Respondent Morato and the
subsequent Original Certificate of Title No. P-17789. The subject land therefore
REVERTS to the State. No costs.
SO ORDERED.
Romero, Melo, and Francisco, JJ., concur.
Narvasa, C.J., (Chairman), on leave.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24440

March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,

vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL
REVENUE, defendants-appellants.
Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.
Office of the Solicitor General for defendants-appellants.
BENGZON, J.P., J.:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the
provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was
approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act also
provided that
Buildings and properties which the province shall abandon upon the transfer of
the capital to another place will be acquired and paid for by the City of Zamboanga at a
price to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some buildings constructed
thereon, located in the City of Zamboanga and covered individually by Torrens certificates of title in the
name of Zamboanga Province. As far as can be gleaned from the records, 1 said properties were being
utilized as follows

No. of Lots
Use
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
1 ................................................ Hydro-Electric Site (Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was transferred to Dipolog. 2
Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the municipality of Molave
and making it the capital of Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to
Commonwealth Act 39, fixed the value of the properties and buildings in question left by Zamboanga
Province in Zamboanga City at P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two
(2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the old
province were to be divided between the two new ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other properties and the
obligations of the province of Zamboanga shall be divided equitably between the
Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the
President of the Philippines, upon the recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and
obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and
45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39% of
P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by
Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President, issued a ruling 4 holding
that Zamboanga del Norte had a vested right as owner (should be co-owner pro-indiviso) of the
properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price thereof, payable
by Zamboanga City. This ruling revoked the previous Cabinet Resolution of July 13, 1951 conveying all
the said 50 lots and buildings thereon to Zamboanga City for P1.00, effective as of 1945, when the
provincial capital of the then Zamboanga Province was transferred to Dipolog.
The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an
amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the quarter
ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the first quarter of the
fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was credited to the province of
Zamboanga del Norte, in partial payment of the P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of
Commonwealth Act 39 by providing that
All buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby transferred, free of
charge, in favor of the said City of Zamboanga. (Stressed for emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of Internal
Revenue to stop from effecting further payments to Zamboanga del Norte and to return to Zamboanga
City the sum of P57,373.46 taken from it out of the internal revenue allotment of Zamboanga del Norte.
Zamboanga City admits that since the enactment of Republic Act 3039, P43,030.11 of the P57,373.46
has already been returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a complaint
entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance of
Zamboanga del Norte against defendants-appellants Zamboanga City, the Secretary of Finance and the
Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039 be declared
unconstitutional for depriving plaintiff province of property without due process and just compensation;
(b) Plaintiff's rights and obligations under said law be declared; (c) The Secretary of Finance and the
Internal Revenue Commissioner be enjoined from reimbursing the sum of P57,373.46 to defendant City;
and (d) The latter be ordered to continue paying the balance of P704,220.05 in quarterly installments of
25% of its internal revenue allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed for.
After defendants filed their respective answers, trial was held. On August 12, 1963, judgment was
rendered, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039
unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private

unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private

properties, consisting of 50 parcels of land and the improvements thereon under
certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of
Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of
P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue
allotment equivalent to 25% thereof every quarter until said amount shall have been
fully paid; ordering defendant Secretary of Finance to direct defendant Commissioner of
Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment
for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del
Norte until said sum of P704,220.05 shall have been fully paid; ordering plaintiff
Zamboanga del Norte to execute through its proper officials the corresponding public
instrument deeding to defendant City of Zamboanga the 50 parcels of land and the
improvements thereon under the certificates of title (Exhibits "A" to "A-49") upon
payment by the latter of the aforesaid sum of P704,220.05 in full; dismissing the
counterclaim of defendant City of Zamboanga; and declaring permanent the preliminary
mandatory injunction issued on June 8, 1962, pursuant to the order of the Court dated
June 4, 1962. No costs are assessed against the defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a motion to
reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in lump sum with
6% interest per annum. Over defendants' opposition, the lower court granted plaintiff province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of declaratory relief filed in the lower
court on the assertion that the law had already been violated and that plaintiff sought to give it coercive
effect, since assuming the same to be true, the Rules anyway authorize the conversion of the
proceedings to an ordinary action, 5 We proceed to the more important and principal question of the
validity of Republic Act 3039.
The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in
question. For, the matter involved here is the extent of legislative control over the properties of a
municipal corporation, of which a province is one. The principle itself is simple: If the property is owned
by the municipality (meaning municipal corporation) in its public and governmental capacity, the property
is public and Congress has absolute control over it. But if the property is owned in its private or
proprietary capacity, then it is patrimonial and Congress has no absolute control. The municipality
cannot be deprived of it without due process and payment of just compensation. 6
The capacity in which the property is held is, however, dependent on the use to which it is
intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining under the
law of Municipal Corporations, must be used in classifying the properties in question?
The Civil Code classification is embodied in its Arts. 423 and 424 which provide:

1wph1.t

ART. 423. The property of provinces, cities, and municipalities is divided into
property for public use and patrimonial property.
ART. 424. Property for public use, in the provinces, cities, and municipalities,
consists of the provincial roads, city streets, municipal streets, the squares, fountains,
public waters, promenades, and public works for public service paid for by said
provinces, cities, or municipalities.
All other property possessed by any of them is patrimonial and shall be governed by this
Code, without prejudice to the provisions of special laws. (Stressed for emphasis).
Applying the above cited norm, all the properties in question, except the two (2) lots used as High
School playgrounds, could be considered as patrimonial properties of the former Zamboanga province.
Even the capital site, the hospital and leprosarium sites, and the school sites will be considered
patrimonial for they are not for public use. They would fall under the phrase "public works for public
service" for it has been held that under the ejusdem generis rule, such public works must be for free and
indiscriminate use by anyone, just like the preceding enumerated properties in the first paragraph of Art
424. 7 The playgrounds, however, would fit into this category.
This was the norm applied by the lower court. And it cannot be said that its actuation was without
jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands, 8 and in Municipality of
Tacloban v. Director of Lands, 9 it was held that the capitol site and the school sites in municipalities
constitute their patrimonial properties. This result is understandable because, unlike in the classification
regarding State properties, properties for public service in the municipalities are not classified as public.
Assuming then the Civil Code classification to be the chosen norm, the lower court must be affirmed
except with regard to the two (2) lots used as playgrounds.
On the other hand, applying the norm obtaining under the principles constituting the law of
Municipal Corporations, all those of the 50 properties in question which are devoted to public service are
deemed public; the rest remain patrimonial. Under this norm, to be considered public, it is enough that
the property be held and, devoted for governmental purposes like local administration, public education,
public health, etc. 10
Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. DIRECTOR OF
LANDS, 11 where it was stated that "... where the municipality has occupied lands distinctly for public
purposes, such as for the municipal court house, the public school, the public market, or other

purposes, such as for the municipal court house, the public school, the public market, or other
necessary municipal building, we will, in the absence of proof to the contrary, presume a grant from the
States in favor of the municipality; but, as indicated by the wording, that rule may be invoked only as to
property which is used distinctly for public purposes...." (2) VIUDA DE TANTOCO V. MUNICIPAL
COUNCIL OF ILOILO 12 held that municipal properties necessary for governmental purposes are public
in nature. Thus, the auto trucks used by the municipality for street sprinkling, the police patrol
automobile, police stations and concrete structures with the corresponding lots used as markets were
declared exempt from execution and attachment since they were not patrimonial properties. (3)
MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipal lot which had always
been devoted to school purposes is one dedicated to public use and is not patrimonial property of a
municipality.
Following this classification, Republic Act 3039 is valid insofar as it affects the lots used as capitol
site, school sites and its grounds, hospital and leprosarium sites and the high school playground sites
a total of 24 lots since these were held by the former Zamboanga province in its governmental
capacity and therefore are subject to the absolute control of Congress. Said lots considered as public
property are the following:
TCT Number
Lot Number
Use
2200
...................................... 4-B

...................................... Capitol Site

2816

...................................... 149

...................................... School Site

3281

...................................... 1224

...................................... Hospital Site

3282

...................................... 1226

...................................... Hospital Site

3283

...................................... 1225

...................................... Hospital Site

3748

...................................... 434-A-1

...................................... School Site

5406

...................................... 171

...................................... School Site

5564

...................................... 168

...................................... High School Play-ground

5567

...................................... 157 & 158 ...................................... Trade School

5583

...................................... 167

...................................... High School Play-ground

6181

...................................... (O.C.T.)

...................................... Curuan School

11942

...................................... 926

...................................... Leprosarium

11943

...................................... 927

...................................... Leprosarium

11944

...................................... 925

...................................... Leprosarium

5557

...................................... 170

...................................... Burleigh School

5562

...................................... 180

...................................... Burleigh School

5565

...................................... 172-B

...................................... Burleigh

5570

...................................... 171-A

...................................... Burleigh

5571

...................................... 172-C

...................................... Burleigh

5572

...................................... 174

...................................... Burleigh

5573

...................................... 178

...................................... Burleigh

5585

...................................... 171-B

...................................... Burleigh

5586

...................................... 173

...................................... Burleigh

5587

...................................... 172-A

...................................... Burleigh

We noticed that the eight Burleigh lots above described are adjoining each other and in turn are
between the two lots wherein the Burleigh schools are built, as per records appearing herein and in the
Bureau of Lands. Hence, there is sufficient basis for holding that said eight lots constitute the
appurtenant grounds of the Burleigh schools, and partake of the nature of the same.
Regarding the several buildings existing on the lots above-mentioned, the records do not disclose
whether they were constructed at the expense of the former Province of Zamboanga. Considering
however the fact that said buildings must have been erected even before 1936 when Commonwealth
Act 39 was enacted and the further fact that provinces then had no power to authorize construction of
buildings such as those in the case at bar at their own expense, 14 it can be assumed that said buildings
were erected by the National Government, using national funds. Hence, Congress could very well
dispose of said buildings in the same manner that it did with the lots in question.
But even assuming that provincial funds were used, still the buildings constitute mere accessories
to the lands, which are public in nature, and so, they follow the nature of said lands, i.e., public.
Moreover, said buildings, though located in the city, will not be for the exclusive use and benefit of city
residents for they could be availed of also by the provincial residents. The province then and its
successors-in-interest are not really deprived of the benefits thereof.
But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value
of the rest of the 26 remaining lots which are patrimonial properties since they are not being utilized for
distinctly, governmental purposes. Said lots are:
TCT Number
Lot Number
Use
5577
...................................... 177 ...................................... Mydro, Magay
13198

...................................... 127-0 ...................................... San Roque

5569

...................................... 169

...................................... Burleigh 15

5558

...................................... 175

...................................... Vacant

5559

...................................... 188

......................................

"

5560

...................................... 183

......................................

"

5561

...................................... 186

......................................

"

5563

...................................... 191

......................................

"

5566

...................................... 176

......................................

"

5568

...................................... 179

......................................

"

5574

...................................... 196

......................................

"

5575

...................................... 181-A ......................................

"

5576

...................................... 181-B ......................................

"

5578

...................................... 182

......................................

"

5579

...................................... 197

......................................

"

5580

...................................... 195

......................................

"

5581

...................................... 159-B ......................................

"

5582

...................................... 194

......................................

"

5584

...................................... 190

......................................

"

5588

...................................... 184

......................................

"

5589

...................................... 187

......................................

"

5590

...................................... 189

......................................

"

5591

...................................... 192

......................................

"

5592

...................................... 193

......................................

"

5593

...................................... 185

......................................

"

7379

...................................... 4147 ......................................

"

Moreover, the fact that these 26 lots are registered strengthens the proposition that they are truly
private in nature. On the other hand, that the 24 lots used for governmental purposes are also registered
is of no significance since registration cannot convert public property to private. 16
We are more inclined to uphold this latter view. The controversy here is more along the domains
of the Law of Municipal Corporations State vs. Province than along that of Civil Law. Moreover, this
Court is not inclined to hold that municipal property held and devoted to public service is in the same
category as ordinary private property. The consequences are dire. As ordinary private properties, they
can be levied upon and attached. They can even be acquired thru adverse possession all these to
the detriment of the local community. Lastly, the classification of properties other than those for public
use in the municipalities as patrimonial under Art. 424 of the Civil Code is "... without prejudice to the
provisions of special laws." For purpose of this article, the principles, obtaining under the Law of
Municipal Corporations can be considered as "special laws". Hence, the classification of municipal
property devoted for distinctly governmental purposes as public should prevail over the Civil Code
classification in this particular case.
Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is without merit.
Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct Zamboanga Province
arose only in 1949 after the Auditor General fixed the value of the properties in question. While in 1951,
the Cabinet resolved transfer said properties practically for free to Zamboanga City, a reconsideration
thereof was seasonably sought. In 1952, the old province was dissolved. As successor-in-interest to
more than half of the properties involved, Zamboanga del Norte was able to get a reconsideration of the
Cabinet Resolution in 1959. In fact, partial payments were effected subsequently and it was only after
the passage of Republic Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in
1962. All the foregoing, negative laches.
It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the
former's 54.39% share in the 26 properties which are patrimonial in nature, said share to computed on
the basis of the valuation of said 26 properties as contained in Resolution No. 7, dated March 26, 1949,
of the Appraisal Committee formed by the Auditor General.
Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already
returned to defendant City. The return of said amount to defendant was without legal basis. Republic Act
3039 took effect only on June 17, 1961 after a partial payment of P57,373.46 had already been made.
Since the law did not provide for retroactivity, it could not have validly affected a completed act. Hence,
the amount of P43,030.11 should be immediately returned by defendant City to plaintiff province. The
remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by
defendant City in the same manner originally adopted by the Secretary of Finance and the
Commissioner of Internal Revenue, and not in lump sum. Plaintiff's prayer, particularly pars. 5 and 6,
read together with pars. 10 and 11 of the first cause of action recited in the complaint 17 clearly shows
that the relief sought was merely the continuance of the quarterly payments from the internal revenue
allotments of defendant City. Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to
justify lump sum payment is inapplicable since there has been so far in legal contemplation no complete

justify lump sum payment is inapplicable since there has been so far in legal contemplation no complete
delivery of the lots in question. The titles to the registered lots are not yet in the name of defendant
Zamboanga City.
WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby
entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in
lump sum the amount of P43,030.11 which the former took back from the latter out of the sum of
P57,373.46 previously paid to the latter; and
(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance
remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting therefrom the sum of
P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal Committee formed
by the Auditor General, by way of quarterly payments from the allotments of defendant City, in the
manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue. No
costs. So ordered.
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ.,
concur.
Concepcion, C.J., is on leave.