Beruflich Dokumente
Kultur Dokumente
SUPREME COURT
Manila
If the same thing should have been sold to different vendees, the ownership shall be transfer to the
person who may have the first taken possession thereof in good faith, if it should be personal
EN BANC property.
G.R. No. L-11658 February 15, 1918 Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.
LEUNG YEE, plaintiff-appellant, Should there be no entry, the property shall belong to the person who first took possession of it in
vs. good faith, and, in the absence thereof, to the person who presents the oldest title, provided there is
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees. good faith.
Booram and Mahoney for appellant. The registry her referred to is of course the registry of real property, and it must be apparent that the annotation
Williams, Ferrier and SyCip for appellees. or inscription of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect of
an inscription in the registry of real property. By its express terms, the Chattel Mortgage Law contemplates and
makes provision for mortgages of personal property; and the sole purpose and object of the chattel mortgage
CARSON, J.: registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property
executed in the manner and form prescribed in the statute. The building of strong materials in which the rice-
cleaning machinery was installed by the "Compaia Agricola Filipina" was real property, and the mere fact that
The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery company from the
the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its
defendant machinery company, and executed a chattel mortgage thereon to secure payment of the purchase
character as real property. It follows that neither the original registry in the chattel mortgage of the building and
price. It included in the mortgage deed the building of strong materials in which the machinery was installed,
the machinery installed therein, not the annotation in that registry of the sale of the mortgaged property, had any
without any reference to the land on which it stood. The indebtedness secured by this instrument not having
effect whatever so far as the building was concerned.
been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the
mortgage instrument, and was bought in by the machinery company. The mortgage was registered in the chattel
mortgage registry, and the sale of the property to the machinery company in satisfaction of the mortgage was We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by
annotated in the same registry on December 29, 1913. the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed
statement of facts in the court below discloses that neither the purchase of the building by the plaintiff nor his
inscription of the sheriff's certificate of sale in his favor was made in good faith, and that the machinery company
A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia Agricola Filipina" executed a
must be held to be the owner of the property under the third paragraph of the above cited article of the code, it
deed of sale of the land upon which the building stood to the machinery company, but this deed of sale, although
appearing that the company first took possession of the property; and further, that the building and the land were
executed in a public document, was not registered. This deed makes no reference to the building erected on the
sold to the machinery company long prior to the date of the sheriff's sale to the plaintiff.
land and would appear to have been executed for the purpose of curing any defects which might be found to
exist in the machinery company's title to the building under the sheriff's certificate of sale. The machinery
company went into possession of the building at or about the time when this sale took place, that is to say, the It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express
month of December, 1913, and it has continued in possession ever since. terms, in relation to "possession" and "title," but contain no express requirement as to "good faith" in relation to
the "inscription" of the property on the registry, it must be presumed that good faith is not an essential requisite
of registration in order that it may have the effect contemplated in this article. We cannot agree with this
At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor,
contention. It could not have been the intention of the legislator to base the preferential right secured under this
the "Compaia Agricola Filipina" executed another mortgage to the plaintiff upon the building, separate and apart
article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this
from the land on which it stood, to secure payment of the balance of its indebtedness to the plaintiff under a
section would open wide the door to fraud and collusion. The public records cannot be converted into
contract for the construction of the building. Upon the failure of the mortgagor to pay the amount of the
instruments of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect
indebtedness secured by the mortgage, the plaintiff secured judgment for that amount, levied execution upon the
given by law to an inscription in a public record presupposes the good faith of him who enters such inscription;
building, bought it in at the sheriff's sale on or about the 18th of December, 1914, and had the sheriff's certificate
and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot
of the sale duly registered in the land registry of the Province of Cavite.
accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription.
At the time when the execution was levied upon the building, the defendant machinery company, which was in
Construing the second paragraph of this article of the code, the supreme court of Spain held in its sentencia of
possession, filed with the sheriff a sworn statement setting up its claim of title and demanding the release of the
the 13th of May, 1908, that:
property from the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an indemnity bond in favor
of the sheriff in the sum of P12,000, in reliance upon which the sheriff sold the property at public auction to the
plaintiff, who was the highest bidder at the sheriff's sale. This rule is always to be understood on the basis of the good faith mentioned in the first paragraph;
therefore, it having been found that the second purchasers who record their purchase had
knowledge of the previous sale, the question is to be decided in accordance with the following
This action was instituted by the plaintiff to recover possession of the building from the machinery company.
paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon [1911] edition.)
The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery
Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of
company, on the ground that the company had its title to the building registered prior to the date of registry of the
the real property that is first recorded in the registry shall have preference, this provision must always
plaintiff's certificate.
be understood on the basis of the good faith mentioned in the first paragraph; the legislator could not
have wished to strike it out and to sanction bad faith, just to comply with a mere formality which, in
We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in
the court below should be affirmed with costs of this instance against the appellant. So ordered. xxx xxx xxx
Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur. 22. That defendant, Philippine National Bank, through its Branch Manager ... by virtue of
Torres, Avancea and Fisher, JJ., took no part. the request of defendant ... executed a document dated July 31, 1978, entitled
On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid
considering that the building was real property under article 415 (1) of the New Civil Code and therefore section Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2,
2(a) of Rule 4 should apply. 4 Rule 4) 10, which was timely raised (Section 1, Rule 16) 11.
Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with Petitioner's other contention that the case should proceed in so far as respondent Lacsamana is concerned as
damages is in the nature of a personal action, which seeks to recover not the title nor possession of the property she had already filed an Answer, which did not allege improper venue and, therefore, issues had already been
but to compel payment of damages, which is not an action affecting title to real property. joined, is likewise untenable. Respondent PNB is an indispensable party as the validity of the Amended Contract
of Sale between the former and respondent Lacsamana is in issue. It would, indeed, be futile to proceed with the
case against respondent Lacsamana alone.
On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss as follows:
WHEREFORE, the petition is hereby denied without prejudice to the refiling of the case by petitioner Antonio
Acting upon the 'Motion to Dismiss' of the defendant Philippine National Bank dated Punsalan, Jr. in the proper forum.
March 13, 1980, considered against the plaintiff's opposition thereto dated April 1, 1980,
including the reply therewith of said defendant, this Court resolves to DISMISS the
plaintiff's complaint for improper venue considering that the plaintiff's complaint which Costs against petitioner.
seeks for the declaration as null and void, the amendment to Deed of Absolute Sale
executed by the defendant Philippine National Bank in favor of the defendant Remedios
SO ORDERED.
T. Vda. de Lacsamana, on July 31, 1978, involves a warehouse allegedly owned and
constructed by the plaintiff on the land of the defendant Philippine National Bank situated
in the Municipality of Bamban, Province of Tarlac, which warehouse is an immovable Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
property pursuant to Article 415, No. 1 of the New Civil Code; and, as such the action of
the plaintiff is a real action affecting title to real property which, under Section 2, Rule 4 of
the New Rules of Court, must be tried in the province where the property or any part
thereof lies. 5
Footnotes
In his Motion for Reconsideration of the aforestated Order, petitioner reiterated the argument that the action to
annul does not involve ownership or title to property but is limited to the validity of the deed of sale and
emphasized that the case should proceed with or without respondent PNB as respondent Lacsamana had 1 Exhibits "R" and "U", Original Records.
already filed her Answer to the Complaint and no issue on venue had been raised by the latter.
2 pp. 17-21, Rollo.
On September 1, 1980,.respondent Court denied reconsideration for lack of merit.
3 pp, 22-25, Ibid.
Petitioner then filed a Motion to Set Case for Pre-trial, in so far as respondent Lacsamana was concerned, as the
issues had already been joined with the filing of respondent Lacsamana's Answer. 4 pp. 26 -28, Ibid.
5 p. 35, Ibid.
xxx The clauses in said document describing the property intended to be thus mortgage are expressed in the
following words:
7 3 Manresa 20.
Now, therefore, the mortgagor hereby conveys and transfer to the mortgage, by way of mortgage,
the following described personal property, situated in the City of Manila, and now in possession of
8 Leung Yee vs. Strong Machinery Co., 37 Phil. 644 (1918). the mortgagor, to wit:
9 Gavieres vs. Sanchez, et a]. 94 Phil. 760, (1954); Torres vs. J.M. Tuason & Co., 12 (1) All of the right, title, and interest of the mortgagor in and to the contract of lease hereinabove
SCRA 174 (1964); De Jesus vs. Coloso, 1 SCRA 272 (1961) referred to, and in and to the premises the subject of the said lease;
10 Section 2. Venue in Courts of First Instance.Actions affecting title, to or for recovery (2) The building, property of the mortgagor, situated on the aforesaid leased premises.
of possession or for partition or condemnation of, or foreclosure of mortgage on, real
property, shall be commenced and tried in the province where the property or any part
thereof Lies (Rule 4, Rules of Court). After said document had been duly acknowledge and delivered, the petitioner caused the same to be presented
to the respondent, Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the
same recorded in the book of record of chattel mortgages. Upon examination of the instrument, the respondent
11 Section 1. Grounds. Within the time for pleading a motion to dismiss the action may was of the opinion that it was not a chattel mortgage, for the reason that the interest therein mortgaged did not
be made on any of the following grounds: appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration was refused
on this ground only.
xxx
We are of the opinion that the position taken by the respondent is untenable; and it is his duty to accept the
proper fee and place the instrument on record. The duties of a register of deeds in respect to the registration of
c) That venue is improperly laid; (Rule 16)
chattel mortgage are of a purely ministerial character; and no provision of law can be cited which confers upon
him any judicial or quasi-judicial power to determine the nature of any document of which registration is sought
as a chattel mortgage.
Republic of the Philippines
SUPREME COURT The original provisions touching this matter are contained in section 15 of the Chattel Mortgage Law (Act No.
Manila 1508), as amended by Act No. 2496; but these have been transferred to section 198 of the Administrative Code,
where they are now found. There is nothing in any of these provisions conferring upon the register of deeds any
EN BANC authority whatever in respect to the "qualification," as the term is used in Spanish law, of chattel mortgage. His
duties in respect to such instruments are ministerial only. The efficacy of the act of recording a chattel mortgage
consists in the fact that it operates as constructive notice of the existence of the contract, and the legal effects of
G.R. No. L-20329 March 16, 1923 the contract must be discovered in the instrument itself in relation with the fact of notice. Registration adds
nothing to the instrument, considered as a source of title, and affects nobody's rights except as a specifies of
notice.
THE STANDARD OIL COMPANY OF NEW YORK, petitioner,
vs.
JOAQUIN JARAMILLO, as register of deeds of the City of Manila, respondent. Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating between real property and
personal property for purpose of the application of the Chattel Mortgage Law. Those articles state rules which,
considered as a general doctrine, are law in this jurisdiction; but it must not be forgotten that under given
Ross, Lawrence and Selph for petitioner. conditions property may have character different from that imputed to it in said articles. It is undeniable that the
City Fiscal Revilla and Assistant City Fiscal Rodas for respondent. parties to a contract may by agreement treat as personal property that which by nature would be real property;
and it is a familiar phenomenon to see things classed as real property for purposes of taxation which on general
principle might be considered personal property. Other situations are constantly arising, and from time to time
STREET, J.: are presented to this court, in which the proper classification of one thing or another as real or personal property
may be said to be doubtful.
This cause is before us upon demurrer interposed by the respondent, Joaquin Jaramillo, register of deeds of the
City of Manila, to an original petition of the Standard Oil Company of New York, seeking a The point submitted to us in this case was determined on September 8, 1914, in an administrative ruling
peremptory mandamus to compel the respondent to record in the proper register a document purporting to be a promulgated by the Honorable James A. Ostrand, now a Justice of this Court, but acting at that time in the
chattel mortgage executed in the City of Manila by Gervasia de la Rosa, Vda. de Vera, in favor of the Standard capacity of Judge of the fourth branch of the Court of First Instance of the Ninth Judicial District, in the City of
Oil Company of New York. Manila; and little of value can be here added to the observations contained in said ruling. We accordingly quote
therefrom as follows:
It appears from the petition that on November 27, 1922, Gervasia de la Rosa, Vda. de Vera, was the lessee of a
parcel of land situated in the City of Manila and owner of the house of strong materials built thereon, upon which It is unnecessary here to determine whether or not the property described in the document in
question is real or personal; the discussion may be confined to the point as to whether a register of
The demurrer is overruled; and unless within the period of five days from the date of the notification hereof, the
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a
respondent shall interpose a sufficient answer to the petition, the writ of mandamus will be issued, as prayed, but
number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third
without costs. So ordered.
persons. One of such persons is the appellee by assignment from the original mortgages.
Araullo, C.J., Malcolm, Avancea, Ostrand, Johns, and Romualdez, JJ., concur.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
To determine this question involves fixing the nature and character of the property from the point of
view of the rights of Valdes and its nature and character from the point of view of Nevers & G.R. No. L-15334 January 31, 1964
Callaghan as a judgment creditor of the Altagracia Company and the rights derived by them from the
execution levied on the machinery placed by the corporation in the plant. Following the Code
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON
Napoleon, the Porto Rican Code treats as immovable (real) property, not only land and buildings, but
CITY, petitioners,
also attributes immovability in some cases to property of a movable nature, that is, personal property,
vs.
because of the destination to which it is applied. "Things," says section 334 of the Porto Rican Code,
MANILA ELECTRIC COMPANY, respondent.
"may be immovable either by their own nature or by their destination or the object to which they are
applicable." Numerous illustrations are given in the fifth subdivision of section 335, which is as
follows: "Machinery, vessels, instruments or implements intended by the owner of the tenements for Assistant City Attorney Jaime R. Agloro for petitioners.
the industrial or works that they may carry on in any building or upon any land and which tend Ross, Selph and Carrascoso for respondent.
directly to meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et
seq. to and inclusive of article 534, recapitulating the things which, though in themselves movable,
may be immobilized.) So far as the subject-matter with which we are dealing machinery placed in PAREDES, J.:
the plant it is plain, both under the provisions of the Porto Rican Law and of the Code Napoleon,
that machinery which is movable in its nature only becomes immobilized when placed in a plant by
the owner of the property or plant. Such result would not be accomplished, therefore, by the placing From the stipulation of facts and evidence adduced during the hearing, the following appear:
of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right.
(Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and
On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board of
decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat
rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the
and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid.
possession or enjoyment of property is not presumed by the law to have applied movable property
Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were
belonging to him so as to deprive him of it by causing it by an act of immobilization to become the
embodied in Ordinance No. 44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for
property of another. It follows that abstractly speaking the machinery put by the Altagracia Company
short), became the transferee and owner of the franchise.
in the plant belonging to Sanchez did not lose its character of movable property and become
immovable by destination. But in the concrete immobilization took place because of the express
provisions of the lease under which the Altagracia held, since the lease in substance required the Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is
putting in of improved machinery, deprived the tenant of any right to charge against the lessor the transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to
cost such machinery, and it was expressly stipulated that the machinery so put in should become a the said City. These electric transmission wires which carry high voltage current, are fastened to insulators
part of the plant belonging to the owner without compensation to the lessee. Under such conditions attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in the province of
the tenant in putting in the machinery was acting but as the agent of the owner in compliance with Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers within Quezon
the obligations resting upon him, and the immobilization of the machinery which resulted arose in City, on land belonging to it. A photograph of one of these steel towers is attached to the petition for review,
legal effect from the act of the owner in giving by contract a permanent destination to the machinery. marked Annex A. Three steel towers were inspected by the lower court and parties and the following were the
descriptions given there of by said court:
xxx xxx xxx
The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The findings were
as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet,
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the
with an opening of about one (1) meter in diameter, decreased to about a quarter of a meter as it we
Altagracia Company, being, as regards Nevers & Callaghan, movable property, it follows that they
deeper until it reached the bottom of the post; at the bottom of the post were two parallel steel bars
had the right to levy on it under the execution upon the judgment in their favor, and the exercise of
attached to the leg means of bolts; the tower proper was attached to the leg three bolts; with two
that right did not in a legal sense conflict with the claim of Valdes, since as to him the property was a cross metals to prevent mobility; there was no concrete foundation but there was adobe stone
part of the realty which, as the result of his obligations under the lease, he could not, for the purpose
underneath; as the bottom of the excavation was covered with water about three inches high, it could
of collecting his debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
not be determined with certainty to whether said adobe stone was placed purposely or not, as the
place abounds with this kind of stone; and the tower carried five high voltage wires without cover or
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance any insulating materials.
to be paid by the appellant.
The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by
Villa-Real, Imperial, Butte, and Goddard, JJ., concur. the petitioner approximate more than one kilometer from the first tower. As in the first tower, the
ground around one of the four legs was excavate from seven to eight (8) feet deep and one and a
half (1-) meters wide. There being very little water at the bottom, it was seen that there was no
concrete foundation, but there soft adobe beneath. The leg was likewise provided with two parallel
steel bars bolted to a square metal frame also bolted to each corner. Like the first one, the second
tower is made up of metal rods joined together by means of bolts, so that by unscrewing the bolts,
the tower could be dismantled and reassembled.
The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate Court)
they do not constitute buildings or constructions adhered to the soil. They are not construction analogous to promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later specified herein, of
buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of Rizal Branch VI, issued in Civil
attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and Case No. 36040, as wen as the resolution dated September 22, 1981 of the said appellate court, denying
moved from place to place. They can not be included under paragraph 3, as they are not attached to an petitioner's motion for reconsideration.
immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration
upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal
strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and Finance
by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are not Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables
machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or with the former under a Receivable Purchase Agreement. To secure the collection of the receivables assigned,
works on the land. Petitioner is not engaged in an industry or works in the land in which the steel supports or private respondent executed a Chattel Mortgage over certain raw materials inventory as well as a machinery
towers are constructed. described as an Artos Aero Dryer Stentering Range.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the properties
P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as the City Treasurer is mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry into
not the real party in interest, but Quezon City, which was not a party to the suit, notwithstanding its capacity to private respondent's premises and was not able to effect the seizure of the aforedescribed machinery. Petitioner
sue and be sued, he should not be ordered to effect the refund. This question has not been raised in the court thereafter filed a complaint for judicial foreclosure with the Court of First Instance of Rizal, Branch VI, docketed
below, and, therefore, it cannot be properly raised for the first time on appeal. The herein petitioner is indulging as Civil Case No. 36040, the case before the lower court.
in legal technicalities and niceties which do not help him any; for factually, it was he (City Treasurer) whom had
insisted that respondent herein pay the real estate taxes, which respondent paid under protest. Having acted in
Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which
his official capacity as City Treasurer of Quezon City, he would surely know what to do, under the
was however subsequently restrained upon private respondent's filing of a motion for reconsideration. After
circumstances.
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
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners. writ. The lower court reaffirmed its stand upon private respondent's filing of a further motion for reconsideration.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala, JJ., concur. On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent and
Makalintal, J., concurs in the result. removed the main drive motor of the subject machinery.
Dizon, J., took no part.
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
Republic of the Philippines the ground by means of bolts and the only way to remove it from respondent's plant would be to drill out or
SUPREME COURT destroy the concrete floor, the reason why all that the sheriff could do to enfore the writ was to take the main
Manila 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.
SECOND DIVISION
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has brought
G.R. No. L-58469 May 16, 1983 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.
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
The contention of private respondent is without merit. When petitioner returned the subject motor drive, it made
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.
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
Loreto C. Baduan for petitioner. 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.
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:
Examining the records of the instant case, We find no logical justification to exclude the rule out, as the appellate EN BANC
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 G.R. No. L-17870 September 29, 1962
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 MINDANAO BUS COMPANY, petitioner,
is really because one who has so agreed is estopped from denying the existence of the chattel mortgage.
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays stress on City, respondents.
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
Binamira, Barria and Irabagon for petitioner.
not lay down distinctions not contemplated by law.
Vicente E. Sabellina for respondents.
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 LABRADOR, J.:
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.
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
Private respondent contends that estoppel cannot apply against it because it had never represented nor agreed
equipment hereunder referred to.
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 Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned
of the subject machinery as movable or immovable was never placed in issue before the lower court and the equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the
Court of Appeals except in a supplemental memorandum in support of the petition filed in the appellate court. same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed
Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio, but can with the Court of Tax Appeals a petition for the review of the assessment.
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 In the Court of Tax Appeals the parties submitted the following stipulation of facts:
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, Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:
From what has been said above, the error of the appellate court in ruling that the questioned machinery is real, 1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor
not personal property, becomes very apparent. Moreover, the case of Machinery and Engineering Supplies, Inc. trucks, over its authorized lines in the Island of Mindanao, collecting rates approved by the Public
v. CA, 96 Phil. 70, heavily relied upon by said court is not applicable to the case at bar, the nature of the Service Commission;
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 2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices
with the instant case to be the more controlling jurisprudential authority. and/or stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe,
Bukidnon Province;
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. 3. That the machineries sought to be assessed by the respondent as real properties are the
following:
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B"; 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.)
(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";
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
(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D"; Phil. 663, the Supreme Court said:
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E"; 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
(f) Battery charger (Tungar charge machine) appearing in the attached photograph,
adapted to meet the requirements of such trade or industry."
marked Annex "F"; and
If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex
Co., Inc., in lieu of the other of less capacity existing therein, for its sugar and industry, converted
"G".
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,
4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached without them the sugar central would be unable to function or carry on the industrial purpose for
photographs which form part of this agreed stipulation of facts; 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.)
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 So that movable equipments to be immobilized in contemplation of the law must first be "essential and principal
serviceable in the TPU land transportation business it operates; 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
6. That these machineries have never been or were never used as industrial equipments to produce which may not be so considered immobilized because they are merely incidental, not essential and principal.
finished products for sale, nor to repair machineries, parts and the like offered to the general public Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are merely
indiscriminately for business or commercial purposes for which petitioner has never engaged in, to incidentals and are not and should not be considered immobilized by destination, for these businesses can
date.1awphl.nt 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
The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a motion in nature, are immobilized because they are essential to said industries; but the delivery trucks and adding
for reconsideration, petitioner brought the case to this Court assigning the following errors: machines which they usually own and use and are found within their industrial compounds are merely incidental
and retain their movable nature.
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 Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and
taxable real properties. 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
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and 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
holding that pursuant thereto the movable equipments are taxable realties, by reason of their being
service shop if its rolling equipment is repaired or serviced in another shop belonging to another.
intended or destined for use in an industry.
The law that governs the determination of the question at issue is as follows:
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 Art. 415. The following are immovable property:
4. The Tax Court erred in denying petitioner's motion for reconsideration. xxx xxx xxx
Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance with (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
paragraph 5 of Article 415 of the New Civil Code which provides: 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.)
Art. 415. The following are immovable properties:
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 The building or shed, the elevated water tank, the car hoist under a separate shed, the air
specified land, so said equipment may not be considered real estate within the meaning of Article 415 (c) of the compressor, the underground gasoline tank, neon lights signboard, concrete fence and
Civil Code. pavement and the lot where they are all placed or erected, all of them used in the
pursuance of the gasoline service station business formed the entire gasoline service-
station.
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.
As to whether the subject properties are attached and affixed to the tenement, it is clear
they are, for the tenement we consider in this particular case are (is) the pavement
So ordered. covering the entire lot which was constructed by the owner of the gasoline station and the
improvement which holds all the properties under question, they are attached and affixed
to the pavement and to the improvement.
Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Paredes, Dizon and Makalintal, JJ., concur.
Regala, Concepcion and Barrera JJ., took no part.
The pavement covering the entire lot of the gasoline service station, as well as all the
improvements, machines, equipments and apparatus are allowed by Caltex (Philippines)
Inc. ...
Republic of the Philippines
SUPREME COURT
Manila The underground gasoline tank is attached to the shed by the steel pipe to the pump, so
with the water tank it is connected also by a steel pipe to the pavement, then to the
electric motor which electric motor is placed under the shed. So to say that the gasoline
SECOND DIVISION pumps, water pumps and underground tanks are outside of the service station, and to
consider only the building as the service station is grossly erroneous. (pp. 58-60, Rollo).
G.R. No. L-50466 May 31, 1982
The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease
CALTEX (PHILIPPINES) INC., petitioner, agreement or receipt. It is stipulated in the lease contract that the operators, upon demand, shall return to Caltex
the machines and equipment in good condition as when received, ordinary wear and tear excepted.
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY, respondents.
The lessor of the land, where the gas station is located, does not become the owner of the machines and
equipment installed therein. Caltex retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable
AQUINO, J.:
realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax
appeals ruled that they are personalty. The assessor appealed to the Central Board of Assessment Appeals.
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in its gas
stations located on leased land.
The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary of Justice
Catalino Macaraig, Jr. and Secretary of Local Government and Community Development Jose Roo, held in its
The machines and equipment consists of underground tanks, elevated tank, elevated water tanks, water tanks, decision of June 3, 1977 that the said machines and equipment are real property within the meaning of sections
gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air compressors and 3(k) & (m) and 38 of the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1,
tireflators. The city assessor described the said equipment and machinery in this manner: 1974, and that the definitions of real property and personal property in articles 415 and 416 of the Civil Code are
not applicable to this case.
A gasoline service station is a piece of lot where a building or shed is erected, a water
tank if there is any is placed in one corner of the lot, car hoists are placed in an adjacent The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its resolution
shed, an air compressor is attached in the wall of the shed or at the concrete wall fence. of January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was received by its lawyer on
April 2, 1979.
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes
The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this real property by destination. In the Davao Saw Mills case the question was whether the machinery mounted on
case is not correct. When Republic act No. 1125 created the Tax Court in 1954, there was as yet no Central foundations of cement and installed by the lessee on leased land should be regarded as real property
Board of Assessment Appeals. Section 7(3) of that law in providing that the Tax Court had jurisdiction to review for purposes of execution of a judgment against the lessee. The sheriff treated the machinery as personal
by appeal decisions of provincial or city boards of assessment appeals had in mind the local boards of property. This Court sustained the sheriff's action. (Compare with Machinery & Engineering Supplies, Inc. vs.
assessment appeals but not the Central Board of Assessment Appeals which under the Real Property Tax Code Court of Appeals, 96 Phil. 70, where in a replevin case machinery was treated as realty).
has appellate jurisdiction over decisions of the said local boards of assessment appeals and is, therefore, in the
same category as the Tax Court.
Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas
station and pavement (which are indubitably taxable realty) should be subject to the realty tax. This question is
Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment different from the issue raised in the Davao Saw Mill case.
Appeals shall become final and executory after the lapse of fifteen days from the receipt of its decision by the
appellant. Within that fifteen-day period, a petition for reconsideration may be filed. The Code does not provide
for the review of the Board's decision by this Court. Improvements on land are commonly taxed as realty even though for some purposes they might be considered
personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar phenomenon to see things classed as real
property for purposes of taxation which on general principle might be considered personal property" (Standard
Consequently, the only remedy available for seeking a review by this Court of the decision of the Central Board Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
of Assessment Appeals is the special civil action of certiorari, the recourse resorted to herein by Caltex
(Philippines), Inc.
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil.
328, where Meralco's steel towers were considered poles within the meaning of paragraph 9 of its franchise
The issue is whether the pieces of gas station equipment and machinery already enumerated are subject to which exempts its poles from taxation. The steel towers were considered personalty because they were attached
realty tax. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real to square metal frames by means of bolts and could be moved from place to place when unscrewed and
Property Tax Code. dismantled.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair shop of a
machinery, and other improvements" not specifically exempted in section 3 thereof. This provision is reproduced bus company which were held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City
with some modification in the Real Property Tax Code which provides: Assessor, 116 Phil. 501).
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed and The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city
collected in all provinces, cities and municipalities an annual ad valorem tax on real assessor's is imposition of the realty tax on Caltex's gas station and equipment.
property, such as land, buildings, machinery and other improvements affixed or attached
to real property not hereinafter specifically exempted.
WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are
affirmed. The petition for certiorari is dismissed for lack of merit. No costs.
The Code contains the following definitions in its section 3:
SO ORDERED.
k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing labor or
capital and intended to enhance its value, beauty or utility or to adapt it for new or further Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
purposes.
Concepcion, Jr. and Abad Santos, JJ., took no part.
m) Machinery shall embrace machines, mechanical contrivances, instruments,
appliances and apparatus attached to the real estate. It includes the physical facilities
available for production, as well as the installations and appurtenant service facilities, THIRD DIVISION
together with all other equipment designed for or essential to its manufacturing, industrial
or agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by
[G.R. No. 137705. August 22, 2000]
Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station,
for without them the gas station would be useless, and which have been attached or affixed permanently to the
SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND
gas station site or embedded therein, are taxable improvements and machinery within the meaning of the
FINANCE, INC., respondent.
Assessment Law and the Real Property Tax Code.
DECISION
Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in
a plant by the owner of the property or plant but not when so placed by a tenant, a usufructuary, or any person PANGANIBAN, J.:
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.[9] The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
The Facts A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of
immobilization.
[10]
The undisputed facts are summarized by the Court of Appeals as follows:
On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one The Petition is not meritorious.
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 Preliminary Matter:Procedural Questions
sheriff to defer enforcement of the writ of replevin.
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
This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still personal and impleadedJudge Hilario Laqui as respondent.
therefore still subject to seizure and a writ of replevin.
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.[13]
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 While Judge Laqui should not have been impleaded as a respondent,[14] substantial justice
the agreement would be prejudicial to innocent third parties. They further stated that PCI Leasing [was] estopped requires that such lapse by itself should not warrant the dismissal of the present Petition. In this
from treating these machineries as personal because the contracts in which the alleged agreement [were] light, the Court deems it proper to remove, motu proprio, the name of Judge Laqui from the caption
embodied [were] totally sham and farcical. of the present case.
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.
Main Issue: Nature of the Subject Machinery
On April 7, 1998, they went to [the CA] via an original action for certiorari.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of
personal property only.[15] Section 3 thereof reads: 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
SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the what is permanent.
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. 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
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as Seizure.
follows:
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
ART. 415. The following are immovable property: are concerned.[22] 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. [23] In
x x x....................................x x x....................................x x x any event, there is no showing that any specific third party would be adversely affected.
(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; Validity of the Lease Agreement
x x x....................................x x x....................................x x x In their Memorandum, petitioners contend that the Agreement is a loan and not a
lease.[24]Submitting documents supposedly showing that they own the subject machines,
In the present case, the machines that were the subjects of the Writ of Seizure were placed petitioners also argue in their Petition that the Agreement suffers from intrinsic ambiguity which
by petitioners in the factory built on their own land. Indisputably, they were essential and principal places in serious doubt the intention of the parties and the validity of the lease agreement
elements of their chocolate-making industry. Hence, although each of them was movable or itself.[25] In their Reply to respondents Comment, they further allege that the Agreement is
personal property on its own, all of them have become immobilized by destination because they invalid.[26]
are essential and principal elements in the industry.[16] In that sense, petitioners are correct in
arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of the These arguments are unconvincing. The validity and the nature of the contract are the lis
Civil Code.[17] 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,
Be that as it may, we disagree with the submission of the petitioners that the said machines not in the proceedings involving the issuance of the Writ of Seizure.
are not proper subjects of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy under Rule 60
The Court has held that contracting parties may validly stipulate that a real property be was that questions involving title to the subject property questions which petitioners are now
consideredas personal.[18] After agreeing to such stipulation, they are consequently estopped from raising -- should be determined in the trial. In that case, the Court noted that the remedy of
claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily precluded defendants under Rule 60 was either to post a counter-bond or to question the sufficiency of the
from denying the truth of any material fact found therein. plaintiffs bond. They were not allowed, however, to invoke the title to the subject property. The
Court ruled:
Hence, in Tumalad v. Vicencio,[19] 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: 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
x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding, the specific chattel being replevied, the policy apparently being that said matter should be ventilated and
selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant to determined only at the trial on the merits.[28]
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. 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
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile review in this Court under Rule 45.[29]
Mills[20] 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:
This case was originally commenced by defendants-appellants in the municipal court of Manila in Civil Case No.
43073, for ejectment. Having lost therein, defendants-appellants appealed to the court a quo (Civil Case No.
Alleged Injustice Committed on the Part of Petitioners 30993) which also rendered a decision against them, the dispositive portion of which follows:
Petitioners contend that if the Court allows these machineries to be seized, then its workers
WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and against
would be out of work and thrown into the streets.[31] They also allege that the seizure would nullify
the defendants, ordering the latter to pay jointly and severally the former a monthly rent of
all efforts to rehabilitate the corporation.
P200.00 on the house, subject-matter of this action, from March 27, 1956, to January 14,
Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, 1967, with interest at the legal rate from April 18, 1956, the filing of the complaint, until
law and jurisprudence support its propriety. Verily, the above-mentioned consequences, if they fully paid, plus attorney's fees in the sum of P300.00 and to pay the costs.
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 It appears on the records that on 1 September 1955 defendants-appellants executed a chattel mortgage in favor
states: of plaintiffs-appellees over their house of strong materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo,
Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which were being rented from Madrigal & Company, Inc. The
SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of the mortgage was registered in the Registry of Deeds of Manila on 2 September 1955. The herein mortgage was
surety or sureties thereon, he cannot immediately require the return of the property, but if he does not so object, executed to guarantee a loan of P4,800.00 received from plaintiffs-appellees, payable within one year at 12%
he may, at any time before the delivery of the property to the applicant, require the return thereof, by filing with per annum. The mode of payment was P150.00 monthly, starting September, 1955, up to July 1956, and the
the court where the action is pending a bond executed to the applicant, in double the value of the property as lump sum of P3,150 was payable on or before August, 1956. It was also agreed that default in the payment of
stated in the applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the any of the amortizations, would cause the remaining unpaid balance to becomeimmediately due and Payable
payment of such sum to him as may be recovered against the adverse party, and by serving a copy bond on the and
applicant.
the Chattel Mortgage will be enforceable in accordance with the provisions of Special Act
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of
No. 3135, and for this purpose, the Sheriff of the City of Manila or any of his deputies is
Appeals AFFIRMED. Costs against petitioners.
hereby empowered and authorized to sell all the Mortgagor's property after the necessary
publication in order to settle the financial debts of P4,800.00, plus 12% yearly interest,
SO ORDERED.
and attorney's fees... 2
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 March
1956, the house was sold at public auction pursuant to the said contract. As highest bidder, plaintiffs-appellees
Republic of the Philippines were issued the corresponding certificate of sale. 3 Thereafter, on 18 April 1956, plaintiffs-appellant commenced
SUPREME COURT Civil Case No. 43073 in the municipal court of Manila, praying, among other things, that the house be vacated
Manila and its possession surrendered to them, and for defendants-appellants to pay rent of P200.00 monthly from 27
March 1956 up to the time the possession is surrendered. 4 On 21 September 1956, the municipal court
EN BANC rendered its decision
... ordering the defendants to vacate the premises described in the complaint; ordering
further to pay monthly the amount of P200.00 from March 27, 1956, until such (time that)
the premises is (sic) completely vacated; plus attorney's fees of P100.00 and the costs of
G.R. No. L-30173 September 30, 1971 the suit. 5
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees, Defendants-appellants, in their answers in both the municipal court and court a quo impugned the legality of the
vs. chattel mortgage, claiming that they are still the owners of the house; but they waived the right to introduce
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants. evidence, oral or documentary. Instead, they relied on their memoranda in support of their motion to dismiss,
predicated mainly on the grounds that: (a) the municipal court did not have jurisdiction to try and decide the case
because (1) the issue involved, is ownership, and (2) there was no allegation of prior possession; and (b) failure
Castillo & Suck for plaintiffs-appellees. to prove prior demand pursuant to Section 2, Rule 72, of the Rules of Court. 6
... it is obvious that the inclusion of the building, separate and distinct from the land, in the
On 7 October 1957, the appellate court of First Instance rendered its decision, the dispositive portion of which is enumeration of what may constitute real properties (art. 415, New Civil Code) could only
quoted earlier. The said decision was appealed by defendants to the Court of Appeals which, in turn, certified the mean one thing that a building is by itself an immovable property irrespective of
appeal to this Court. Plaintiffs-appellees failed to file a brief and this appeal was submitted for decision without it. whether or not said structure and the land on which it is adhered to belong to the same
owner.
Defendants-appellants submitted numerous assignments of error which can be condensed into two questions,
namely: . Certain deviations, however, have been allowed for various reasons. In the case of Manarang and Manarang vs.
Ofilada, 17 this Court stated that "it is undeniable that the parties to a contract may by agreement treat as
personal property that which by nature would be real property", citing Standard Oil Company of New York vs.
(a) Whether the municipal court from which the case originated had jurisdiction to Jaramillo. 18 In the latter case, the mortgagor conveyed and transferred to the mortgagee by way of mortgage
adjudicate the same; "the following described personal property." 19 The "personal property" consisted of leasehold rights and a
building. Again, in the case of Luna vs. Encarnacion, 20 the subject of the contract designated as Chattel
Mortgage was a house of mixed materials, and this Court hold therein that it was a valid Chattel mortgage
(b) Whether the defendants are, under the law, legally bound to pay rentals to the
because it was so expressly designated and specifically that the property given as security "is a house of mixed
plaintiffs during the period of one (1) year provided by law for the redemption of the
materials, which by its very nature is considered personal property." In the later case of Navarro vs.
extrajudicially foreclosed house.
Pineda,21 this Court stated that
On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-appellants' contentions as In the contract now before Us, the house on rented land is not only expressly designated as Chattel Mortgage; it
not supported by evidence and accordingly dismissed the charge, 8 confirming the earlier finding of the municipal specifically provides that "the mortgagor ... voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
court that "the defense of ownership as well as the allegations of fraud and deceit ... are mere allegations." 9 Mortgage 23 the property together with its leasehold rights over the lot on which it is constructed and participation
..." 24Although 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
It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that "the answer is a mere statement of the facts convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be
which the party filing it expects to prove, but it is not evidence; 11 and further, that when the question to be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject house stood on a rented lot
determined is one of title, the Court is given the authority to proceed with the hearing of the cause until this fact to which defendats-appellants merely had a temporary right as lessee, and although this can not in itself alone
is clearly established. In the case of Sy vs. Dalman, 12 wherein the defendant was also a successful bidder in an determine the status of the property, it does so when combined with other factors to sustain the interpretation
auction sale, it was likewise held by this Court that in detainer cases the aim of ownership "is a matter of defense that the parties, particularly the mortgagors, intended to treat the house as personalty. Finally unlike in the Iya
and raises an issue of fact which should be determined from the evidence at the trial." What determines cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Strong Machinery and
jurisdiction are the allegations or averments in the complaint and the relief asked for. 13 Williamson, 26 wherein third persons assailed the validity of the chattel mortgage, 27 it is the defendants-
appellants themselves, as debtors-mortgagors, 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 personalty.
Appellants mortgagors question this award, claiming that they were entitled to remain in possession without any Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and Makasiar,
obligation to pay rent during the one year redemption period after the foreclosure sale, i.e., until 27 March 1957. JJ., concur.
On this issue, We must rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No. 1508. 28 Section 14 of this
Act allows the mortgagee to have the property mortgaged sold at public auction through a public officer in almost
EN BANC
the same manner as that allowed by Act No. 3135, as amended by Act No. 4118, provided that the requirements
of the law relative to notice and registration are complied with. 29 In the instant case, the parties specifically
stipulated that "the chattel mortgage will be enforceable in accordance with the provisions of Special Act No. G.R. No. L-17898 October 31, 1962
3135 ... ." 30 (Emphasis supplied).
PASTOR D. AGO, Petitioner, vs. THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ,
Section 6 of the Act referred to 31 provides that the debtor-mortgagor (defendants-appellants herein) may, at any
Judge of the Court of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO
time within one year from and after the date of the auction sale, redeem the property sold at the extra judicial
and GRACE PARK ENGINEERING, INC., Respondents.
foreclosure sale. Section 7 of the same Act 32 allows the purchaser of the property to obtain from the court the
possession during the period of redemption: but the same provision expressly requires the filing of a petition with
the proper Court of First Instance and the furnishing of a bond. It is only upon filing of the proper motion and the Jose M. Luison for petitioner.
approval of the corresponding bond that the order for a writ of possession issues as a matter of course. No Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
discretion is left to the court. 33 In the absence of such a compliance, as in the instant case, the purchaser can The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.
not claim possession during the period of redemption as a matter of right. In such a case, the governing
provision is Section 34, Rule 39, of the Revised Rules of Court 34 which also applies to properties purchased in
extrajudicial foreclosure proceedings. 35 Construing the said section, this Court stated in the aforestated case LABRABOR, J.:
of Reyes vs. Hamada.
Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R
In other words, before the expiration of the 1-year period within which the judgment- entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:
debtor or mortgagor may redeem the property, the purchaser thereof is not entitled, as a
matter of right, to possession of the same. Thus, while it is true that the Rules of Court
allow the purchaser to receive the rentals if the purchased property is occupied by In this case for certiorari and prohibition with preliminary injunction, it appears from the records
tenants, he is, nevertheless, accountable to the judgment-debtor or mortgagor as the that the respondent Judge of the Court of First Instance of Agusan rendered judgment (Annex
case may be, for the amount so received and the same will be duly credited against the "A") in open court on January 28, 1959, basing said judgment on a compromise agreement
redemption price when the said debtor or mortgagor effects the redemption. Differently between the parties.chanroblesvirtualawlibrarychanrobles virtual law library
stated, the rentals receivable from tenants, although they may be collected by the
purchaser during the redemption period, do not belong to the latter but still pertain to the
debtor of mortgagor. The rationale for the Rule, it seems, is to secure for the benefit of On August 15, 1959, upon petition, the Court of First Instance issued a writ of
the debtor or mortgagor, the payment of the redemption amount and the consequent execution.chanroblesvirtualawlibrarychanrobles virtual law library
return to him of his properties sold at public auction. (Emphasis supplied)
Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did
The Hamada case reiterates the previous ruling in Chan vs. Espe. 36 not receive a formal and valid notice of said decision, which motion for reconsideration was denied
by the court below in the order of November 14, 1959.chanroblesvirtualawlibrarychanrobles
Since the defendants-appellants were occupying the house at the time of the auction sale, they are entitled to virtual law library
remain in possession during the period of redemption or within one year from and after 27 March 1956, the date
of the auction sale, and to collect the rents or profits during the said period.
Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the
execution without valid and formal notice of the decision.chanroblesvirtualawlibrarychanrobles
It will be noted further that in the case at bar the period of redemption had not yet expired when action was virtual law library
instituted in the court of origin, and that plaintiffs-appellees did not choose to take possession under Section 7,
Act No. 3135, as amended, which is the law selected by the parties to govern the extrajudicial foreclosure of the
chattel mortgage. Neither was there an allegation to that effect. Since plaintiffs-appellees' right to possess was A compromise agreement is binding between the parties and becomes the law between them.
not yet born at the filing of the complaint, there could be no violation or breach thereof. Wherefore, the original (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-
complaint stated no cause of action and was prematurely filed. For this reason, the same should be ordered 12439, May 22, 1959) .chanroblesvirtualawlibrarychanrobles virtual law library
dismissed, even if there was no assignment of error to that effect. The Supreme Court is clothed with ample
authority to review palpable errors not assigned as such if it finds that their consideration is necessary in arriving
It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not
at a just decision of the cases. 37
appealable and is immediately executory, unless a motion is filed on the ground fraud, mistake or
IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the
ordering the execution of the judgment. The petition for certiorari is hereby dismissed and the writ rendition of judgment on compromise in open court on January 1959 was a sufficient notice; and
of preliminary injunction heretofore dissolved, with costs against the (2) in not resolving the other issues raised before it, namely, (a) the legality of the public auction
petitioner.chanroblesvirtualawlibrarychanrobles virtual law library sale made by the sheriff, and (b) the nature of the machineries in question, whether they are
movables or immovables.chanroblesvirtualawlibrarychanrobles virtual law library
IT IS
The Court of Appeals held that as a judgment was entered by the court below in open court upon
The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought the submission of the compromise agreement, the parties may be considered as having been
sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc., notified of said judgment and this fact constitutes due notice of said judgment. This raises the
executing a chattel mortgage over said machineries and equipments to secure the payment of following legal question: Is the order dictated in open court of the judgment of the court, and is
balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on the fact the petitioner herein was present in open court was the judgment was dictated, sufficient
installment basis.chanroblesvirtualawlibrarychanrobles virtual law library notice thereof? The provisions of the Rules of Court decree otherwise. Section 1 of Rule 35
describes the manner in which judgment shall be rendered, thus:
Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc.
instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure, SECTION 1. How judgment rendered. - All judgments determining the merits of cases shall be in
petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The writing personally and directly prepared by the judge, and signed by him, stating clearly and
parties to the case arrived at a compromise agreement and submitted the same in court in distinctly the facts and the law on which it is based, filed with the clerk of the court.
writing, signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz,
Judge of the Court of First Instance of Agusan, then presiding, dictated a decision in open court on The court of first instance being a court of record, in order that a judgment may be considered as
January 28, 1959.chanroblesvirtualawlibrarychanrobles virtual law library rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk
of court. The mere pronouncement of the judgment in open court with the stenographer taking
Petitioner continued to default in his payments as provided in the judgment by compromise, so note thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the
Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was granted signed decision with the clerk of court that constitutes rendition. While it is to be presumed that
by the court on August 15, 1959. A writ of execution, dated September 23, 1959, later the judgment that was dictated in open court will be the judgment of the court, the court may still
followed.chanroblesvirtualawlibrarychanrobles virtual law library modify said order as the same is being put into writing. And even if the order or judgment has
already been put into writing and signed, while it has not yet been delivered to the clerk for filing
it is still subject to amendment or change by the judge. It is only when the judgment signed by
The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment.
the lower court, levied upon and ordered the sale of the sawmill machineries and equipments in Prior thereto, it could still be subject to amendment and change and may not, therefore,
question. These machineries and equipments had been taken to and installed in a sawmill building constitute the real judgment of the court.chanroblesvirtualawlibrarychanrobles virtual law library
located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom,
petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower
court but before levy by the Sheriff).chanroblesvirtualawlibrarychanrobles virtual law library Regarding the notice of judgment, the mere fact that a party heard the judge dictating the
judgment in open court, is not a valid notice of said judgment. If rendition thereof is constituted
by the filing with the clerk of court of a signed copy (of the judgment), it is evident that the fact
Having been advised by the sheriff that the public auction sale was set for December 4, 1959, that a party or an attorney heard the order or judgment being dictated in court cannot be
petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary considered as notice of the real judgment. No judgment can be notified to the parties unless it has
injunction with respondent Court of Appeals, alleging that a copy of the aforementioned judgment previously been rendered. The notice, therefore, that a party has of a judgment that was being
given in open court on January 28, 1959 was served upon counsel for petitioner only on dictated is of no effect because at the time no judgment has as yet been signed by the judge and
September 25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of filed with the clerk.chanroblesvirtualawlibrarychanrobles virtual law library
execution having been issued by the lower court before counsel for petitioner received a copy of
the judgment, its resultant last order that the "sheriff may now proceed with the sale of the
properties levied constituted a grave abuse of discretion and was in excess of its jurisdiction; and Besides, the Rules expressly require that final orders or judgments be served personally or by
that the respondent Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of registered mail. Section 7 of Rule 27 provides as follows:
execution by levying the same upon the sawmill machineries and equipments which have become
real properties of the Golden Pacific sawmill, Inc., and is about to proceed in selling the same SEC. 7. Service of final orders or judgments. - Final orders or judgments shall be served either
without prior publication of the notice of sale thereof in some newspaper of general circulation as personally or by registered mail.
required by the Rules of Court.chanroblesvirtualawlibrarychanrobles virtual law library
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill Makalintal, JJ., concur.
machineries and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment Padilla, J., took no part.
of his subscription to the shares of stock of said corporation. Thereafter the sawmill machinery
and equipments were installed in a building and permanently attached to the ground. By reason of [G.R. No. 6295. September 1, 1911.]
such installment in a building, the said sawmill machineries and equipment became real estate
properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus:
THE UNITED STATES, Plaintiff-Appellee, v. IGNACIO CARLOS, Defendant-
Appellant.
ART. 415. The following are immovable property:
Considering that the machineries and equipments in question valued at more than P15,000.00
appear to have been sold without the necessary advertisement of sale by publication in a PER CURIAM:
newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:
SEC. 16. Notice of sale of property on execution. - Before the sale of property on execution, notice The information filed in this case is as follows: jgc:chan robles. com.ph
Philippine Islands, without the consent of the owner thereof; to the damage and
prejudice of the said Manila Electric Railroad and Light Company in the said sum The demurrer was overruled on the same day and the defendant having refused
of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency, to plead, a plea of not guilty was entered by direction of the court for him and
equal to and the equivalent of 4,546 pesetas Philip pine currency. All contrary to the trial proceeded.
law.
After due consideration of all the proofs presented and the arguments of counsel
(Sgd. )L.M. SOUTHWORTH, the trial court found the defendant guilty of the crime charged and sentenced
him to one year eight months and twenty-one days presidio correccional, to
Prosecuting Attorney indemnify the offended party, The Manila Electric Rail road and Light Company,
in the sum of P865.26, to the corresponding subsidiary imprisonment in case of
"Subscribed and sworn to before me this 4th day of March, 1910, in the city of insolvency and to the payment of the costs. From this judgment the defendant
Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney for the city appealed and makes the following assignments of error: cha nrob1e s virtual 1aw lib rary
of Manila.
"I
(Sgd.) "CHARLES S. LOBINGIER,
"Judge, First Instance. "The court erred in overruling the objection of the accused to the jurisdiction of
the court, because he was not given a preliminary investigation as required by
"A preliminary investigation has heretofore been con ducted in this case, under law, and in overruling his demurrer for the same reason.
my direction, having examined the witnesses under oath, in accordance with the
provisions of section 39 of Act No. 183 of the Philippine Commission, as "II.
amended by section 2 of Act No. 6-12 of the Philippine Commission.
(Sgd.) "L. M. SOUTHWORTH, "The court erred in declaring the accused to be guilty, in view of the evidence
submitted.
"Prosecuting Attorney.
"III.
"Subscribed and sworn to before me this 4th day of March, 1910, in the city of
Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney for the city
of Manila.
"The court erred in declaring that electrical energy may be stolen.
(Sgd.) "CHARLES S. LOBINGIER,
"IV.
"Judge, First Instance." cralaw virtua 1aw lib rary
A warrant for the arrest of the defendant was issued by the Honorable J. C. "The court erred in not declaring that the plaintiff consented to the taking of the
Jenkins on the 4th of March and placed in the hands of the sheriff. The sheriffs current.
return shows that the defendant gave bond for his appearance. On the 14th of
the same month counsel for the defendant demurred to the complaint on the "V
following grounds: jg c:chan roble s.com. ph
"Is there any other satisfactory explanation of the jumpers presence? The only
"For considerably more than a year previous to the filing of this complaint the one sought to be offered is the statement by the son of the accused, a boy of
accused had been a consumer of electricity furnished by the Manila Electric twelve years, that he saw the jumper placed there by the witness Porter, an
Railroad and Light Company for a building containing the residence of the employee of the Light Company. The boy is the only witness who so testifies and
accused and three other residences, and which was equipped, according to the Porter himself squarely denies it. We can Dot agree with counsel for the defense
defendants testimony, with thirty electric lights. On March 15, 1909, the that the boys interest in the outcome of this case is less than that of the
representatives of the company, believing that more light was being used than witnesses for the prosecution. It seems to us that his natural desire to shield his
their meter showed, installed an additional meter (Exhibit A) on a pole outside of father would far outweigh any interest such an employee like Porter would have
defendants house, and both it and the meter (Exhibit B) which had been and which, at most, would be merely pecuniary.
previously installed in the house were read on said date. Exhibit A read 218
kilowatt hours; Exhibit B, 746 kilowatt hours. On March 3, 1910, each was read "There is, however, one witness whom so far as appears, has no interest in the
again, Exhibit A showing 2,718 kilo watt hours and Exhibit B, 968. It is matter whatsoever. This is officer Hartpence, who executed the search warrant.
undisputed that the current which supplied the house passed through both He testifies that after inspecting other articles and places in the building as he
meters and the city electrician testifies that each meter was tested on the date and the other spectators, including the accused, approached the cabinet in which
of the last reading and was "in good condition." The result of this registration the jumper was found, the officers attention was called to the defendants
therefore is that while the outside meter (Exhibit A) showed a consumption in appearance and the former noticed that the latter was becoming nervous. Where
defendants building of 2,500 kilowatt hours of electricity, the inside meter the only two witnesses who are supposed to know anything of the matter thus
(Exhibit B) showed but 223 kilowatt hours. In other words the actual contradict each other this item of testimony by the officer is of more than
consumption, according to the outside meter, was more than ten times as great ordinary significance; for if, as the accused claims, the jumper was placed in
as that registered by the one inside. (obviously this difference could not be due the cabinet for the first time by Porter there would be no occasion for any
to normal causes, for while the electrician called by the defense (Lanusa) change of demeanor on the part of the accused. We do not think that the
testifies to the possibility of a difference between two such meters, he places the officers declination to wait until defendant should secure a notary public shows
extreme limit of such difference between them at 5 per cent. Here, as we have bias. The presence of such an official was neither required nor authorized by law
seen. the difference is more than 900 per cent. Besides, according to the and the very efficacy of a search often depends upon its swiftness.
defendants electrician, the outside meter should normally run faster, while
according to the test made in this case the inside meter (Exhibit B) ran the "We must also agree with the prosecuting attorney that the attending
faster. The city electrician also testifies that the electric current could have been circumstances do not strengthen the story told by the boy; that the latter would
deflected from the inside meter by placing thereon a device known as a jumper have been likely to call out at the time he saw the jumper being placed in the
connecting the two outside wires, and there is other testimony that there were drawer, or at least directed his fathers attention to it immediately instead of
marks on the insulation of the meter Exhibit B which showed the use of such a waiting, as he says, until the latter was called by the officer. Finally, to accept
device. There is further evidence that the consumption of 223 kilowatt hours, the boys story we must believe that this company or its representatives
registered by the inside meter would not be a reasonable amount for the number deliberately conspired not merely to lure the defendant into the commission of a
of lights installed in defendants building during the period in question, and the crime but to fasten upon him a crime which he did not commit and thus convict
the store situated at No. 154 Escolta, Manila, was using a contrivance known as
a "jumper" on the electric meter installed by the Manila Electric Rail road and "There is nothing in the nature of gas used for illuminating purposes which
Light Company. As a result of the use of this "jumper" the meter, instead of renders it incapable of being feloniously taken and carried away. It is a valuable
making one revolution in every four seconds, registered one in seventy-seven article of merchandise, bought and sold like other personal property, susceptible
seconds, thereby reducing the current approximately 95 per cent. Genato was of being severed from a mass or larger quantity, and of being transported from
charged in the municipal court with a violation of a certain ordinance of the city place to place. In the present case it appears that it was the property of the
of Manila, and was sentenced to pay a fine of P200. He appealed to the Court of Boston Gas Light Company; that it was in their possession by being confined in
First Instance, was again tried and sentenced to pay the same fine. An appeal conduits and tubes which belonged to them, and that the defendant severed a
was taken from the judgment of the Court of First Instance to the Supreme portion of that which was in the pipes of the company by taking it into her house
Court on the ground that the ordinance in question was null and void. It is true and there consuming it. All this being proved to have been done by her secretly
that the only question directly presented was that of the validity of the city and with intent to deprive the company of their property and to appropriate it to
ordinance. The court, after holding that said ordinance was valid, said: jgc:chanro bles. com.ph her own use, clearly constitutes the crime of larceny." cralaw virt ua1aw libra ry
"Even without them (ordinances), the right of ownership of electric current is Electricity, the same as gas, is a valuable article of merchandise, bought and
secured by articles 517 and 518 of the Penal Code; the application of these sold like other personal property and is capable of appropriation by another. So
articles in cases of substraction of gas, a fluid used for lighting, and in some no error was committed by the trial court in holding that electricity is a subject
respects resembling electricity, is confirmed by the rule laid down in the of larceny.
decisions of the supreme court of Spain January 20, 1887, and April 1, 1897,
construing and enforcing the provisions of articles 530 and 531 of the penal code It is urged in support of the fourth assignment of error that if it be true that the
of that country, articles identical with articles 517 and 518 of the code in force in appellant did appropriate to his own use the electricity as charged he can not be
these Islands."cralaw virtua1aw l ibra ry held guilty of larceny for any part of the electricity thus appropriated, after the
first month, for the reason that the complaining party, the Manila Electric
Article 517 of the Penal Code above referred to reads as follows: jgc:c hanro bles. com.ph Railroad and Light Company, knew of this misappropriation and consented
thereto.
"The following are guilty of larceny: jgc:chanro bles. com.ph
The outside meter was installed on March 15, 1909, and read 218 kilowatt
"(1) Those who with intent of gain and without violence or intimidation against hours. On the same day the inside meter was read and showed 745 kilowatt
the person, or force against things, shall take anothers personal property hours. Both meters were again read on March 3, 1910, and the outside one
lighting purposes. It could not stop the misappropriation without cutting off the
current entirely. It could not reduce the current so as to just furnish sufficient for "The said defect constitutes one of the dilatory pleas indicated by section 21, and
the lighting of two, three, or five lights, as claimed by the defendant that he the accused ought to have raised the point before the trial began. Had this been
used during the most of this times but the current must always be sufficiently done, the complaint might have been amended in time, because it is merely a
strong to furnish current for the thirty lights, at any time the defendant desired defect of form easily remedies. . . . Inasmuch as in the first instance the accused
to use them. did not make the corresponding dilatory plea to the irregularity of the complaint,
it must be understood that she has waived such objection, and is not now
There is no pretense that the accused was solicited by the company or any one entitled to raise for the first time any question in reference thereto when
else to commit the acts charged At most there was a mere passive submission submitting to this court her assignment of errors. Apart from the fact that the
on the part of the company that the current should be taken and no indication defense does not pretend that any of the essential rights of the accused have
that it wished it to be taken, and no knowledge by the defendant that the been injured, the allegation of the defect above alluded to, which in any case
company wished him to take the current, and no mutual understanding between would only affect the form of the complaint, can not justify a reversal of the
the company and the defendant, and no measures of induce ment of any kind judgment appealed from, according to the provisions of section 10 of General
were employed by the company for the purpose of leading the defendant into Orders, No. 58." cralaw virtua 1aw lib rary
temptation, and no preconcert whatever between him and the company: The
original design to misappropriate this current was formed by the defendant In the case at bar it is not pointed out wherein any of the essential rights of the
absolutely independent of any acts on the part of the company or its agents. It is defendant have been prejudiced by reason of the fact that the complaint covered
true, no doubt, as a general proposition, that larceny is not committed when the the entire period. If twelve distinct and separate complaints had been filed
property is taken with the consent of its owner. It may be difficult in some against the defendant, one for each month, the sum total of the penalties
instances to determine whether certain acts constitute, in law, such "consent." imposed might have been very much greater than that imposed by the court in
But under the facts in the case at bar it is not difficult to reach a conclusion that this case. The covering of the entire period by one charge has been beneficial, if
the acts performed by the plaintiff company did not constitute a consent on its anything, and not prejudicial to the rights of the defendant. The prosecuting
part that the defendant take its property. We have been unable to find a well attorney elected to cover the entire period with one charge and the accused
considered case holding a contrary opinion under similar facts, but, there are having been convicted for this offense, he can not again be prosecuted for the
numerous cases holding that such acts do not constitute such consent as would stealing of the current at any time within that period. Then, again, we are of the
relieve the taker of criminal responsibility. The fourth assignment of error is, opinion that the charge was properly laid. The electricity was stolen from the
therefore, not well founded. same person, in the same manner, and in the same place. It was substantially
one continuous act, although the "jumper" might have been removed and
It is also contended that since the "jumper" was not used continuously, the replaced daily or monthly. The defendant was moved by one impulse to
defendant committed not a single offense but a series of offenses. It is, no appropriate to his own use the current, and the means adopted by him for the
doubt, true that the defendant did not allow the "jumper" to remain in place taking of the current were in the execution of a general fraudulent plan.
continuously for any number of days as the company inspected monthly the
inside meter. So the "jumper" was put on and taken off at least monthly, if not "A person stole gas for the use of a manufactory by means of a pipe, which drew
daily, in order to avoid detection, and while the "jumper" was off the defendant off the gas from the main without allowing it to pass through the meter. The gas
was not misappropriating the current. The complaint alleged that the defendant from this pipe was burnt everyday, and turned off at night. The pipe was never
did on, during, and between the 13th day of February, 1909, and the 3d of closed at its junction with the main, and consequently always remained full of
March, 1910, willfully, unlawfully, and feloniously take, steal, and carry away gas. It was held, that if the pipe always remained full, there was, in fact, a
2,277 kilowatts of electric current of the value of P909. No demurrer was continuous taking of the gas and not a series of separate takings. It was held
presented against this complaint on the ground that more than one crime was also that even if the pipe had not been kept full, the taking would have been
The judgment being strictly in accordance with the law and the merits of the
case, same is hereby affirmed, with costs against the Appellant. PLDT alleges that one of the alternative calling patterns that constitute
network fraud and violate its network integrity is that which is known as
Arellano, C.J., Torres, Mapa, and Carson, JJ., International Simple Resale (ISR). ISR is a method of routing and
completing international long distance calls using International Private
Separate Opinions Leased Lines (IPL), cables, antenna or air wave or frequency, which
connect directly to the local or domestic exchange facilities of the
G.R. No. 155076 February 27, 2006 terminating country (the country where the call is destined). The IPL is
linked to switching equipment which is connected to a PLDT telephone
LUIS MARCOS P. LAUREL, Petitioner, line/number. In the process, the calls bypass the IGF found at the
vs. terminating country, or in some instances, even those from the originating
HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial country.4
Court, Makati City, Branch 150, PEOPLE OF THE PHILIPPINES&
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondents. One such alternative calling service is that offered by Baynet Co., Ltd.
(Baynet) which sells "Bay Super Orient Card" phone cards to people who
DECISION call their friends and relatives in the Philippines. With said card, one is
entitled to a 27-minute call to the Philippines for about 37.03 per minute.
CALLEJO, SR., J.: After dialing the ISR access number indicated in the phone card, the ISR
operator requests the subscriber to give the PIN number also indicated in
Before us is a Petition for Review on Certiorari of the Decision1 of the Court the phone card. Once the callers identity (as purchaser of the phone card)
of Appeals (CA) in CA-G.R. SP No. 68841 affirming the Order issued by is confirmed, the ISR operator will then provide a Philippine local line to the
Judge Zeus C. Abrogar, Regional Trial Court (RTC), Makati City, Branch requesting caller via the IPL. According to PLDT, calls made through the
150, which denied the "Motion to Quash (With Motion to Defer IPL never pass the toll center of IGF operators in the Philippines. Using the
Arraignment)" in Criminal Case No. 99-2425 for theft. local line, the Baynet card user is able to place a call to any point in the
Philippines, provided the local line is National Direct Dial (NDD) capable.5
Philippine Long Distance Telephone Company (PLDT) is the holder of a
legislative franchise to render local and international telecommunication PLDT asserts that Baynet conducts its ISR activities by utilizing an IPL to
services under Republic Act No. 7082.2 Under said law, PLDT is course its incoming international long distance calls from Japan. The IPL is
authorized to establish, operate, manage, lease, maintain and purchase linked to switching equipment, which is then connected to PLDT telephone
telecommunication systems, including transmitting, receiving and switching lines/numbers and equipment, with Baynet as subscriber. Through the use
stations, for both domestic and international calls. For this purpose, it has of the telephone lines and other auxiliary equipment, Baynet is able to
installed an estimated 1.7 million telephone lines nationwide. PLDT also connect an international long distance call from Japan to any part of the
offers other services as authorized by Certificates of Public Convenience Philippines, and make it appear as a call originating from Metro Manila.
Consequently, the operator of an ISR is able to evade payment of access,
The prosecution further alleged that "international business calls and In its Order19 dated December 11, 2001, the RTC denied the movants
revenues constitute personal property envisaged in Article 308 of the Motion for Reconsideration. This time, it ruled that what was stolen from
Revised Penal Code." Moreover, the intangible telephone services/facilities PLDT was its "business" because, as alleged in the Amended Information,
belong to PLDT and not to the movant and the other accused, because the international long distance calls made through the facilities of PLDT
they have no telephone services and facilities of their own duly authorized
Laurel further posited that an electric companys business is the production which is abstract and intangible in form, it is nevertheless considered
and distribution of electricity; a gas companys business is the production "property" under Article 308 of the Revised Penal Code. The CA opined
and/or distribution of gas (as fuel); while a water companys business is the that PLDTs business of providing international calls is personal property
production and distribution of potable water. He argued that the "business" which may be the object of theft, and cited United States v. Carlos28 to
in all these cases is the commercial activity, while the goods and support such conclusion. The tribunal also cited Strochecker v.
merchandise are the products of such activity. Thus, in prosecutions for Ramirez,29 where this Court ruled that one-half interest in a days business
theft of certain forms of energy, it is the electricity or gas which is alleged to is personal property under Section 2 of Act No. 3952, otherwise known as
be stolen and not the "business" of providing electricity or gas. However, the Bulk Sales Law. The appellate court held that the operations of the ISR
since a telephone company does not produce any energy, goods or are not subsumed in the charge for violation of P.D. No. 401.
merchandise and merely renders a service or, in the words of PLDT, "the
connection and interconnection to their telephone lines/facilities," such Laurel, now the petitioner, assails the decision of the CA, contending that -
service cannot be the subject of theft as defined in Article 308 of the
Revised Penal Code.23
THE COURT OF APPEALS ERRED IN RULING THAT THE
PERSONAL PROPERTY ALLEGEDLY STOLEN PER THE
Art. 308. Who are liable for theft. Theft is committed by any person who, Solamente las cosas muebles y corporales pueden ser objeto de hurto. La
with intent to gain but without violence, against or intimidation of persons sustraccin de cosas inmuebles y la cosas incorporales (v. gr., los
nor force upon things, shall take personal property of another without the derechos, las ideas) no puede integrar este delito, pues no es posible
latters consent. asirlas, tomarlas, para conseguir su apropiacin. El Codigo emplea la
expresin "cosas mueble" en el sentido de cosa que es susceptible de ser
llevada del lugar donde se encuentra, como dinero, joyas, ropas, etctera,
The provision was taken from Article 530 of the Spanish Penal Code which
asi que su concepto no coincide por completo con el formulado por el
reads:
Codigo civil (arts. 335 y 336).54
1. Los que con nimo de lucrarse, y sin violencia o intimidacin en las
Thus, movable properties under Article 308 of the Revised Penal Code
personas ni fuerza en las cosas, toman las cosas muebles ajenas sin la
should be distinguished from the rights or interests to which they relate. A
voluntad de su dueo.50
naked right existing merely in contemplation of law, although it may be very
valuable to the person who is entitled to exercise it, is not the subject of
For one to be guilty of theft, the accused must have an intent to steal theft or larceny.55 Such rights or interests are intangible and cannot be
(animus furandi) personal property, meaning the intent to deprive another "taken" by another. Thus, right to produce oil, good will or an interest in
of his ownership/lawful possession of personal property which intent is business, or the right to engage in business, credit or franchise are
apart from and concurrently with the general criminal intent which is an properties. So is the credit line represented by a credit card. However, they
essential element of a felony of dolo (dolus malus).
In the State of Illinois in the United States of America, theft of labor or In the State of Alabama, Section 13A-8-10(a)(1) of the Penal Code of
services or use of property is penalized: Alabama of 1975 penalizes theft of services:
(a) A person commits theft when he obtains the temporary use of property, "A person commits the crime of theft of services if: (a) He intentionally
labor or services of another which are available only for hire, by means of obtains services known by him to be available only for compensation by
threat or deception or knowing that such use is without the consent of the deception, threat, false token or other means to avoid payment for the
person providing the property, labor or services. services "
In 1980, the drafters of the Model Penal Code in the United States of In the Philippines, Congress has not amended the Revised Penal Code to
America arrived at the conclusion that labor and services, including include theft of services or theft of business as felonies. Instead, it
professional services, have not been included within the traditional scope approved a law, Republic Act No. 8484, otherwise known as the Access
of the term "property" in ordinary theft statutes. Hence, they decided to Devices Regulation Act of 1998, on February 11, 1998. Under the law, an
incorporate in the Code Section 223.7, which defines and penalizes theft of access device means any card, plate, code, account number, electronic
services, thus: serial number, personal identification number and other telecommunication
services, equipment or instrumentalities-identifier or other means of
account access that can be used to obtain money, goods, services or any
Significantly, a prosecution under the law shall be without prejudice to any THE MUNICIPALITY OF CAVITE, plaintiff-appellant,
liability for violation of any provisions of the Revised Penal Code inclusive vs.
of theft under Rule 308 of the Revised Penal Code and estafa under Article HILARIA ROJAS and her husband TIUNG SIUKO, alias
315 of the Revised Penal Code. Thus, if an individual steals a credit card SIWA, defendants-appellees.
and uses the same to obtain services, he is liable of the following: theft of
the credit card under Article 308 of the Revised Penal Code; violation of
Attorney-General Villamor for appellant.
Republic Act No. 8484; and estafa under Article 315(2)(a) of the Revised
J. Y. Pinzon for appellees.
Penal Code with the service provider as the private complainant. The
petitioner is not charged of estafa before the RTC in the Amended
Information. TORRES, J.:
Section 33 of Republic Act No. 8792, Electronic Commerce Act of 2000 Appeal filed through bill of exceptions by the Attorney-General,
provides: representing the plaintiff municipality of Cavite, from the judgment of March
27, 1913, whereby the Honorable Herbert D. Gale, judge, dismissed the
complaint with costs against the plaintiff party, declaring that the said
Sec. 33. Penalties. The following Acts shall be penalized by fine and/or
municipality had no right to require that the defendants vacate the land in
imprisonment, as follows:
question.
a) Hacking or cracking which refers to unauthorized access into or
By an instrument dated December 5, 1911, afterwards amended on March
interference in a computer system/server or information and
14, 1912, the provincial fiscal of Cavite, representing the municipality of
communication system; or any access in order to corrupt, alter, steal, or
that name, filed a complaint in the Court of First Instance of said province
destroy using a computer or other similar information and communication
alleging that the plaintiff municipal corporation, duly organized and
devices, without the knowledge and consent of the owner of the computer
constituted in accordance with Act No. 82, and as the successor to the
or information and communications system, including the introduction of
rights s aid entity had under the late Spanish government, and by virtue of
computer viruses and the like, resulting on the corruption, destruction,
Act No. 1039, had exclusive right, control and administration over the
alteration, theft or loss of electronic data messages or electronic
streets, lanes, plazas, and public places of the municipality of Cavite; that
documents shall be punished by a minimum fine of One hundred thousand
the defendants, by virtue of a lease secured from the plaintiff municipality,
pesos (P100,000.00) and a maximum commensurate to the damage
occupy a parcel of land 93 square meters in area that forms part o the
incurred and a mandatory imprisonment of six (6) months to three (3)
public plaza known under the name of Soledad, belonging to the
years.
municipality of Cavite, the defendants having constructed thereon a house,
through payment to the plaintiff for occupation thereof of a rental of P5,58 a
quarter in advance, said defendants being furthermore obligated to vacate
Acting on the petition, the Court required the respondents to comment IN VIEW OF THE FOREGOING, the Court Resolved to set aside the
thereon. However, before respondents could do so, petitioners manifested Compromise Agreement and declare the same null and void for being
that for lack of interest on the part of respondent Alfredo Maza, the contrary to law and public policy. The Court further resolved to DISMISS
awardee in the public bidding of the fishpond, the parties desire to the instant petition for lack of merit.
amicably settle the case by submitting to the Court a Compromise
Agreement praying that judgment be rendered recognizing the ownership SO ORDERED.
of petitioners over the land the body of water found within their titled
properties, stating therein, among other things, that "to pursue the case, G.R. No. 153726 March 28, 2007
the same will not amount to any benefit of the parties, on the other hand it
is to the advantage and benefit of the municipality if the ownership of the
REPUBLIC OF THE PHILIPPINES, Petitioner,
land and the water found therein belonging to petitioners be recognized in
vs.
their favor as it is now clear that after the National Irrigation Administration
DEMOCRITO T. MENDOZA, SR., GWENDOLYN MENDOZA, VILMA
[NIA] had built the dike around the land, no water gets in or out of the
MENDOZA, DEMOCRITO MENDOZA, JR., MENCA DEVELOPMENT
land. 1
CORP., CARMEN VELEZ TING and JACINTO VELEZ,
JR., Respondents.
The stipulations contained in the Compromise Agreement partake of the
nature of an adjudication of ownership in favor of herein petitioners of the
x-----------------------x
fishpond in dispute, which, as clearly found by the lower and appellate
courts, was originally a creek forming a tributary of the Agno River.
Considering that as held in the case of Mercado vs. Municipal President of G.R. No. 154014 March 28, 2007
Macabebe, 59 Phil. 592 [1934], a creek, defined as a recess or arm
extending from a river and participating in the ebb and flow of the sea, is a SILOT BAY FISHERMANS ASSOCIATION, INC., Petitioner,
property belonging to the public domain which is not susceptible to private vs.
appropriation and acquisitive prescription, and as a public water, it cannot REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF
be registered under the Torrens System in the name of any individual LANDS MANAGEMENT BUREAU, Respondent.
[Diego v. Court of Appeals, 102 Phil. 494; Mangaldan v. Manaoag, 38 Phil.
4551; and considering further that neither the mere construction of DECISION
irrigation dikes by the National Irrigation Administration which prevented
the water from flowing in and out of the subject fishpond, nor its conversion CHICO-NAZARIO, J.:
into a fishpond, alter or change the nature of the creek as a property of the
public domain, the Court finds the Compromise Agreement null and Before Us are consolidated Petitions for Review on Certiorari under Rule
void and of no legal effect, the same being contrary to law and public 45 of the Rules of Civil Procedure, assailing the Decision1 of the Court of
policy. Appeals in CA-G.R. CV No. 57069, dated 30 March 2001, which reversed
and set aside the Decision2 of the Regional Trial Court (RTC) of Cebu,
The finding that the subject body of water is a creek belonging to the public Branch 14, and dismissed for lack of merit Civil Case No. CEB-9563.
domain is a factual determination binding upon this Court. The Municipality
of Bugallon, acting thru its duly-constituted municipal council is clothed with
authority to pass, as it did the two resolutions dealing with its municipal
1. Identify the exact locations and area of these 700,000 hectares In compliance with the process for sales patent application, Democrito
of fishpond areas on or before February 28, 1967. x x x. Mendoza, Sr. secured and submitted separate certifications from
concerned government agencies such as the Provincial Engineer of Cebu,
2. Within the month of March 1967, all these fishpond areas shall the District Engineer of Cebu, the Municipal Council of Liloan, Cebu, the
be released by the Bureau of Forestry to the Bureau of Lands as Commissioner of Customs, the Secretary of Public Works and Highways,
alienable and disposable, but subject to the disposal of the Bureau among other offices, to determine if there were objections to his
of Fisheries for fishpond purposes.3 application. Based on these certifications issued upon Democrito
Mendoza, Sr.s request, it was ascertained that there was no objection to
Thereafter, on 24 September 1969, Democrito Mendoza, Sr. filed an said application and that the same did not interfere with any function or
application for sales patent4 to purchase the area covered by Ordinary proposed project of the government.
Fishpond Permit No. F-6029-Y.5 The fishpond permit indicated that the
area covered by said permit was only 70.07 hectares; however, upon Subsequently, notices of sale were published in the Nueva Era and the
resurvey by the Bureau of Lands, the area was reported to be measuring Mindanao Mail, in addition to the publication in the Official Gazette. The
xxxx "This Court is mindful of the well entrenched principle that the government
is never estopped from the collecting of taxes because of the mistakes or
Fourth, the sales patents and certificates of titles issued in the name of the errors on the part of its agents, but this rule admits of exceptions in the
Mendozas cannot, after the lapse of one (1) year from their issuance, be interest of justice and fair play x x x.
successfully challenged on the ground of fraud or misrepresentation. The
reason is simple. After the due registration of a patent and the issuance of xxxx
the corresponding title, the covered area is deemed to have been brought
under the aegis of the Torrens system entitled to all guarantees implied in Then, too, it has been the long standing policy and practice of this Court to
such system of registration. xxx respect the conclusions arrived at by quasi-judicial agencies x x x which by
the nature of its functions, is dedicated exclusively to the study and
As may be noted, the one-year prescriptive period in the underscored consideration of x x x problems, and which has thus developed an
portion of Section 32, P.D. No. 1529 applies even to the government. expertise on the subject, unless an abuse or improvident exercise of its
Accordingly, the government if deprived of property through fraud, as the authority is shown. x x x"
trial court seems to imply, and as intervenor-appellee have at every turn
postulated, must institute the proper petition in court for the reopening and The Bureau of Land Management and the intervenor-appellee, at this late
review of the decree of registration including of course the patent issued hour, can no longer assail the issuance of the patents and titles to the
within one (1) year from and after the date of entry of such decree of Mendozas on the ground of fraud or irregularity. This is as it should be,
registration. Failing in this, the decree becomes inconvertible even as because the sales patents in question, and the certificates of title issued by
against the government itself. Hence, since the sales patents in question virtue thereof, have become incontrovertible and are binding against all
In the Petition at bar, the Mendozas were given clearances and There can be no debate at all on petitioners submission that no amount of
certifications on the lack of objections to their sales patent applications by legal technicality may serve as a solid foundation for the enjoyment of the
the Director of Forestry, Provincial Engineer of Cebu, the District Engineer fruits of fraud. It is thus understandable why petitioner chants the dogma
of Cebu, the Municipal Council of Liloan, Cebu, and the Commissioner of of fraus et jus nunquam cohabitant.
Customs, and the Secretary of Public Works and Highways. Subsequently,
their sales patent applications were approved by the Director of the Bureau Significantly, however, in the cases cited by petitioner Republic, as well as
of Lands, the Secretary of the Department of Natural Resources, and the in those other cases where the doctrine of fraus et jus nunquam
President of the Republic. Based on their patents, the Mendozas were able cohabitant was applied against a patent and title procured thru fraud or
to acquire original certificates of tile from the Registry of Deeds. Without misrepresentation, we note that the land covered thereby is either a part of
any allegation and evidence that these government officials committed any the forest zone which is definitely non-disposable, as in Animas, or that
mistake, error or irregularity in the approval of the sales patent applications said patent and title are still in the name of the person who committed the
and issuance of the certificates of title in the name of the Mendozas, then fraud or misrepresentation, as in Acot, Animas, Republic vs. CA and Del
their acts in relation thereto estop the Republic from questioning the Mundo and Director of Lands vs. Abanilla, et al. and, in either instance,
validity of the said sales patents and the certificates of title. there were yet no innocent third parties standing in the way.
Finally, it should be borne in mind that that the contested areas and titles If the titles of innocent buyers were recognized and protected in the afore-
thereto had already passed on to third parties who acquired the same from mentioned circumstances, even when the original title to the property was
the Mendozas in good faith and for value. When the Mendozas sales obtained through fraud, then the titles of the purchasers in good faith and
patents were registered, they were brought under the operation of for value of the fishpond areas in the present case better deserve our
Presidential Decree No. 11529, otherwise know as the Land Registration recognition and protection considering that the sales patents and original
Decree. certificates of title of their predecessors-in-interest were found to be legally
and validly issued.
According to Section 103 of the Land Registration Decree, whenever
public lands is by the Government alienated, granted, or conveyed to any WHEREFORE, premises considered, the instant petition is hereby
person, the same shall be brought under the operation of the said Decree DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 57069
and shall be deemed to registered lands to all intents and purposes under is hereby AFFIRMED.
FAUSTINO IGNACIO, applicant-appellant, On the other hand, the Director of Lands sought to prove that the parcel is
vs. foreshore land, covered by the ebb and flow of the tide and, therefore,
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositors- formed part of the public domain.
appellees.
After hearing, the trial court dismissed the application, holding that the
Acting Assistant Solicitor General Pacifico P. de Castro and Solicitor parcel formed part of the public domain. In his appeal, Ignacio assigns the
Crispin V. Bautista for appellee Director of Lands. following errors:
Benjamin H. Aquino for appellee Laureano Veleriano.
I. The lower court erred in holding that the land in question, altho
MONTEMAYOR, J.: an accretion to the land of the applicant-appellant, does not belong
to him but forms part of the public domain.
Faustino Ignacio is appealing the decision of the Court of First Instance of
Rizal, dismissing his application for the registration of a parcel of land. II. Granting that the land in question forms part of the public
domain, the lower court nevertheless erred in not declaring the
On January 25, 1950, Ignacio filed an application for the registration of a same to be the necessary for any public use or purpose and in not
parcel of land (mangrove), situated in barrio Gasac, Navotas, Rizal, with an ordering in the present registration proceedings.
area of 37,877 square meters. Later, he amended his application by
alleging among others that he owned the parcel applied for by right of III. The lower court erred in not holding that the land in question
accretion. To the application, the Director of Lands, Laureano Valeriano now belongs to the applicant-appellant by virtue of acquisitive
and Domingo Gutierrez filed oppositions. Gutierrez later withdrew his prescription, the said land having ceased to be of the public
opposition. The Director of Lands claimed the parcel applied for as a domain and became the private or patrimonial property of the
portion of the public domain, for the reason that neither the applicant nor State.
his predecessor-in-interest possessed sufficient title thereto, not having
acquired it either by composition title from the Spanish government or by IV. The lower court erred in not holding that the oppositor Director
possessory information title under the Royal Decree of February 13, 1894, of Lands is now in estoppel from claiming the land in question as a
and that he had not possessed the same openly, continuously and land of the public domain.
adversely under a bona fide claim of ownership since July 26, 1894. In his
turn, Valeriano alleged he was holding the land by virtue of a permit Appellant contends that the parcel belongs to him by the law of accretion,
granted him by the Bureau of Fisheries, issued on January 13, 1947, and having been formed by gradual deposit by action of the Manila Bay, and he
approved by the President. cites Article 457 of the New Civil Code (Article 366, Old Civil Code), which
provides that:
It is not disputed that the land applied for adjoins a parcel owned by the
applicant which he had acquired from the Government by virtue of a free To the owners of lands adjoining the banks of rivers belong the
patent title in 1936. It has also been established that the parcel in question accretion which they gradually receive from the effects of the
was formed by accretion and alluvial deposits caused by the action of the current of the waters.
Manila Bay which boarders it on the southwest. Applicant Ignacio claims
that he had occupied the land since 1935, planting it with api-api trees, and
G.R. No. 97764 August 10, 1992 1. That the aforenamed streets are not used for vehicular
traffic, and that the majority of the residents do not oppose
LEVY D. MACASIANO, Brigadier General/PNP Superintendent, the establishment of the flea market/vending areas thereon;
Metropolitan Traffic Command, petitioner,
vs. 2. That the 2-meter middle road to be used as flea
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, market/vending area shall be marked distinctly, and that
Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF the 2 meters on both sides of the road shall be used by
PARAAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN FOR pedestrians;
SERVICE, respondents.
3. That the time during which the vending area is to be
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service. used shall be clearly designated;
Manuel de Guia for Municipality of Paraaque. 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.
MEDIALDEA, J.: 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
This is a petition for certiorari under Rule 65 of the Rules of Court seeking
management of flea markets and/or vending areas.
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 On August 8, 1990, respondent municipality and respondent Palanyag, a
Service (Palanyag for brevity) against petitioner herein. 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
The antecedent facts are as follows:
government of Paraaque. Consequently, market stalls were put up by
respondent Palanyag on the said streets.
On June 13, 1990, the respondent municipality passed Ordinance No. 86,
Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz,
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP
Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran,
Superintendent of the Metropolitan Traffic Command, ordered the
Paraaque, Metro Manila and the establishment of a flea market thereon.
destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
The said ordinance was approved by the municipal council pursuant to
Baclaran. These stalls were later returned to respondent Palanyag.
MMC Ordinance No. 2, Series of 1979, authorizing and regulating the use
As the stallholders pay fees to the City Government for the 4. That the use of the vending areas shall be temporary
right to occupy portions of the public street, the City and shall be closed once the reclaimed areas are
Government, contrary to law, has been leasing portions of developed and donated by the Public Estate Authority. (p.
the streets to them. Such leases or licenses are null and 38, Rollo)
void for being contrary to law. The right of the public to use
the city streets may not be bargained away through Respondent municipality has not shown any iota of proof that it has
contract. The interests of a few should not prevail over the complied with the foregoing conditions precedent to the approval of the
good of the greater number in the community whose ordinance. The allegations of respondent municipality that the closed
health, peace, safety, good order and general welfare, the streets were not used for vehicular traffic and that the majority of the
respondent city officials are under legal obligation to residents do not oppose the establishment of a flea market on said streets
protect. are unsupported by any evidence that will show that this first condition has
been met. Likewise, the designation by respondents of a time schedule
The Executive Order issued by acting Mayor Robles during which the flea market shall operate is absent.
authorizing the use of Heroes del '96 Street as a vending
area for stallholders who were granted licenses by the city Further, it is of public notice that the streets along Baclaran area are
government contravenes the general law that reserves city congested with people, houses and traffic brought about by the
streets and roads for public use. Mayor Robles' Executive proliferation of vendors occupying the streets. To license and allow the
Order may not infringe upon the vested right of the public to establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
use city streets for the purpose they were intended to Garcia Extension and Opena streets in Baclaran would not help in solving
serve: i.e., as arteries of travel for vehicles and the problem of congestion. We take note of the other observations of the
pedestrians. Solicitor General when he said:
Even assuming, in gratia argumenti, that respondent municipality has the . . . There have been many instances of emergencies and
authority to pass the disputed ordinance, the same cannot be validly fires where ambulances and fire engines, instead of using
implemented because it cannot be considered approved by the the roads for a more direct access to the fire area, have to
Metropolitan Manila Authority due to non-compliance by respondent maneuver and look for other streets which are not occupied
municipality of the conditions imposed by the former for the approval of the by stalls and vendors thereby losing valuable time which
ordinance, to wit: could, otherwise, have been spent in saving properties and
lives.
1. That the aforenamed streets are not used for vehicular
traffic, and that the majority of the residents do(es) not Along G.G. Cruz Street is a hospital, the St. Rita Hospital.
oppose the establishment of the flea market/vending areas However, its ambulances and the people rushing their
thereon; patients to the hospital cannot pass through G.G. Cruz
because of the stalls and the vendors. One can only
2. That the 2-meter middle road to be used as flea imagine the tragedy of losing a life just because of a few
market/vending area shall be marked distinctly, and that seconds delay brought about by the inaccessibility of the
the 2 meters on both sides of the road shall be used by streets leading to the hospital.
pedestrians;
Indeed one can only imagine the garbage and litter left by ACCORDINGLY, the petition is GRANTED and the decision of the
vendors on the streets at the end of the day. Needless to respondent Regional Trial Court dated December 17, 1990 which granted
say, these cause further pollution, sickness and the writ of preliminary injunction enjoining petitioner as PNP
deterioration of health of the residents therein. (pp. 21- Superintendent, Metropolitan Traffic Command from enforcing the
22, Rollo) demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets is hereby RESERVED and SET
Respondents do not refute the truth of the foregoing findings and ASIDE.
observations of petitioners. Instead, respondents want this Court to focus
its attention solely on the argument that the use of public spaces for the SO ORDERED.
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. G.R. No. L40474 August 29, 1975
Verily, the powers of a local government unit are not absolute. They are CEBU OXYGEN & ACETYLENE CO., INC., petitioner,
subject to limitations laid down by toe Constitution and the laws such as vs.
our Civil Code. Moreover, the exercise of such powers should be HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th
subservient to paramount considerations of health and well-being of the Judicial District, and JOSE L. ESPELETA, Assistant Provincial Fiscal,
members of the community. Every local government unit has the sworn Province of Cebu, representing the Solicitor General's Office and the
obligation to enact measures that will enhance the public health, safety and Bureau of Lands, respondents.
convenience, maintain peace and order, and promote the general
prosperity of the inhabitants of the local units. Based on this objective, the Jose Antonio R Conde for petitioner.
local government should refrain from acting towards that which might
prejudice or adversely affect the general welfare.
Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant
Solicitor General Octavio R. Ramirez and Trial Attorney David R. Hilario for
As what we have said in the Dacanay case, the general public have a legal respondents. .
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.
CONCEPCION, Jr., J.:
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 This is a petition for the review of the order of the Court of First Instance of
during its time. However, at this point, We find it worthy to note that Batas Cebu dismissing petitioner's application for registration of title over a parcel
Pambansa Blg. 337, known as Local Government Lode, has already been of land situated in the City of Cebu.
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 The parcel of land sought to be registered was only a portion of M. Borces
provides that rights and obligations existing on the date of effectivity of the Street, Mabolo, Cebu City. On September 23, 1968, the City Council of
On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to 5. So it is, that appellant may not challenge the city
dismiss the application on the ground that the property sought to be council's act of withdrawing a strip of Lapu-Lapu Street at
registered being a public road intended for public use is considered part of its dead end from public use and converting the remainder
the public domain and therefore outside the commerce of man. thereof into an alley. These are acts well within the ambit of
Consequently, it cannot be subject to registration by any private the power to close a city street. The city council, it would
individual. 5 seem to us, is the authority competent to determine
whether or not a certain property is still necessary for public
After hearing the parties, on October 11, 1974 the trial court issued an use.
order dismissing the petitioner's application for registration of title. 6 Hence,
the instant petition for review.
Such power to vacate a street or alley is discretionary. And
the discretion will not ordinarily be controlled or interfered
For the resolution of this case, the petitioner poses the following questions: with by the courts, absent a plain case of abuse or fraud or
collusion. Faithfulness to the public trust will be presumed.
(1) Does the City Charter of Cebu City (Republic Act No. So the fact that some private interests may be served
3857) under Section 31, paragraph 34, give the City of incidentally will not invalidate the vacation ordinance.
Cebu the valid right to declare a road as abandoned? and
(2) Since that portion of the city street subject of petitioner's application for
(2) Does the declaration of the road, as abandoned, make registration of title was withdrawn from public use, it follows that such
it the patrimonial property of the City of Cebu which may be withdrawn portion becomes patrimonial property which can be the object of
the object of a common contract? an ordinary contract.
(1) The pertinent portions of the Revised Charter of Cebu City provides: Article 422 of the Civil Code expressly provides that "Property of public
dominion, when no longer intended for public use or for public service,
Section 31. Legislative Powers. Any provision of law and shall form part of the patrimonial property of the State."
executive order to the contrary notwithstanding, the City
Council shall have the following legislative powers: Besides, the Revised Charter of the City of Cebu heretofore quoted, in very
clear and unequivocal terms, states that: "Property thus withdrawn from
xxx xxx xxx 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."
These are two petitions for prohibition seeking to enjoin respondents, (2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an
their representatives and agents from proceeding with the bidding for area of around 764.72 square meters and categorized as a
the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome commercial lot now being used as a warehouse and parking lot for
Minato-ku Tokyo, Japan scheduled on February 21, 1990. We granted the consulate staff; and
the prayer for a temporary restraining order effective February 20,
(2) Does the Chief Executive, her officers and agents, have the The respondents, for their part, refute the petitioner's contention by
authority and jurisdiction, to sell the Roppongi property? 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
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the rule of lex situs which is used in determining the applicable law
the authority of the government to alienate the Roppongi property regarding the acquisition, transfer and devolution of the title to a
assails the constitutionality of Executive Order No. 296 in making the property. They also invoke Opinion No. 21, Series of 1988, dated
property available for sale to non-Filipino citizens and entities. He January 27, 1988 of the Secretary of Justice which used the lex
also questions the bidding procedures of the Committee on the situs in explaining the inapplicability of Philippine law regarding a
Utilization or Disposition of Philippine Government Properties in property situated in Japan.
Japan for being discriminatory against Filipino citizens and Filipino-
owned entities by denying them the right to be informed about the The respondents add that even assuming for the sake of argument
bidding requirements. that the Civil Code is applicable, the Roppongi property has ceased
to become property of public dominion. It has become patrimonial
II property because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now (Citing Article
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi 422, Civil Code) and because the intention by the Executive
property and the related lots were acquired as part of the reparations Department and the Congress to convert it to private use has been
from the Japanese government for diplomatic and consular use by manifested by overt acts, such as, among others: (1) the transfer of
the Philippine government. Vice-President Laurel states that the the Philippine Embassy to Nampeidai (2) the issuance of
Roppongi property is classified as one of public dominion, and not of administrative orders for the possibility of alienating the four
private ownership under Article 420 of the Civil Code (See infra). 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
The petitioner submits that the Roppongi property comes under
contains a provision stating that funds may be taken from the sale of
"property intended for public service" in paragraph 2 of the above
Philippine properties in foreign countries; (5) the holding of the
provision. He states that being one of public dominion, no ownership
public bidding of the Roppongi property but which failed; (6) the
by any one can attach to it, not even by the State. The Roppongi and
deferment by the Senate in Resolution No. 55 of the bidding to a
related properties were acquired for "sites for chancery, diplomatic,
future date; thus an acknowledgment by the Senate of the
and consular quarters, buildings and other improvements" (Second
government's intention to remove the Roppongi property from the
Year Reparations Schedule). The petitioner states that they continue
public service purpose; and (7) the resolution of this Court
to be intended for a necessary service. They are held by the State in
dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No.
anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it
87478 which sought to enjoin the second bidding of the Roppongi
cannot be appropriated, is outside the commerce of man, or to put it
property scheduled on March 30, 1989.
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 III
petitioner avers that the same remains property of public dominion
so long as the government has not used it for other purposes nor 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
(5) The prohibition against the sale to non-Filipino citizens or entities As property of public dominion, the Roppongi lot is outside the
not wholly owned by Filipino citizens of capital goods received by the commerce of man. It cannot be alienated. Its ownership is a special
Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act collective ownership for general use and enjoyment, an application to
No. 1789); and 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
(6) The declaration of the state policy of full public disclosure of all citizens; it is intended for the common and public welfare and cannot
transactions involving public interest (Section 28, Article III, be the object of appropration. (Taken from 3 Manresa, 66-69; cited in
Constitution). Tolentino, Commentaries on the Civil Code of the Philippines, 1963
Edition, Vol. II, p. 26).
Petitioner Ojeda warns that the use of public funds in the execution
of an unconstitutional executive order is a misapplication of public The applicable provisions of the Civil Code are:
funds He states that since the details of the bidding for the Roppongi
property were never publicly disclosed until February 15, 1990 (or a ART. 419. Property is either of public dominion or of
few days before the scheduled bidding), the bidding guidelines are private ownership.
available only in Tokyo, and the accomplishment of requirements and
the selection of qualified bidders should be done in Tokyo, interested ART. 420. The following things are property of public
Filipino citizens or entities owned by them did not have the chance to dominion
comply with Purchase Offer Requirements on the Roppongi. Worse,
the Roppongi shall be sold for a minimum price of $225 million from (1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed
It is exceedingly strange why our top government officials, of all The subsequent approval on October 4, 1988 by President Aquino of
people, should be the ones to insist that in the sale of extremely the recommendation by the investigating committee to sell the
valuable government property, Japanese law and not Philippine law Roppongi property was premature or, at the very least, conditioned
should prevail. The Japanese law - its coverage and effects, when on a valid change in the public character of the Roppongi property.
enacted, and exceptions to its provision is not presented to the Moreover, the approval does not have the force and effect of law
Court It is simply asserted that the lex loci rei sitae or Japanese law since the President already lost her legislative powers. The Congress
should apply without stating what that law provides. It is a ed on faith had already convened for more than a year.
that Japanese law would allow the sale.
Assuming for the sake of argument, however, that the Roppongi
We see no reason why a conflict of law rule should apply when no property is no longer of public dominion, there is another obstacle to
conflict of law situation exists. A conflict of law situation arises only its sale by the respondents.
when: (1) There is a dispute over the title or ownership of an
immovable, such that the capacity to take and transfer immovables, There is no law authorizing its conveyance.
the formalities of conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a conveyance, are to be Section 79 (f) of the Revised Administrative Code of 1917 provides
determined (See Salonga, Private International Law, 1981 ed., pp. 377-
383); and (2) A foreign law on land ownership and its conveyance is Section 79 (f ) Conveyances and contracts to which the
asserted to conflict with a domestic law on the same matters. Hence, Government is a party. In cases in which the
the need to determine which law should apply. Government of the Republic of the Philippines is a
party to any deed or other instrument conveying the
In the instant case, none of the above elements exists. title to real estate or to any other property the value of
which is in excess of one hundred thousand pesos, the
The issues are not concerned with validity of ownership or title. There respective Department Secretary shall prepare the
is no question that the property belongs to the Philippines. The issue necessary papers which, together with the proper
is the authority of the respondent officials to validly dispose of recommendations, shall be submitted to the Congress
property belonging to the State. And the validity of the procedures of the Philippines for approval by the same. Such deed,
adopted to effect its sale. This is governed by Philippine Law. The instrument, or contract shall be executed and signed
rule of lex situs does not apply. by the President of the Philippines on behalf of the
Once again, we have affirmed the principle that ours is a government (1) ...
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 (2) Those which belong to the State, without being for
to note that in the several cases where this Court has ruled against public use, and are intended for some public service or
her, the President of the Philippines has submitted to this principle for the development of the national wealth. (339a)
with becoming grace.
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
PADILLA, J., concurring: state. 1 The transformation of public dominion property to state
patrimonial property involves, to my mind, a policy decision. It is a policy
I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only decision because the treatment of the property varies according to its
wish to make a few observations which could help in further classification. Consequently, it is Congress which can decide and
clarifying the issues. declare the conversion of Roppongi from a public dominion property to a
state patrimonial property. Congress has made no such decision or
declaration.
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 Moreover, the sale of public property (once converted from public
Congress are embodied in legislative enactments that have to be dominion to state patrimonial property) must be approved by
approved by the President to become law. The President, of course, Congress, for this again is a matter of policy (i.e. to keep or dispose
recommends to Congress the approval of policies but, in the final of the property). Sec. 48, Book 1 of the Administrative Code of 1987
analysis, it is Congress that is the policy - determining branch of provides:
government.
SEC. 48. Official Authorized to Convey Real Property.
The judiciary interprets the laws and, in appropriate cases, Whenever real property of the Government is
determines whether the laws enacted by Congress and approved by authorized by law to be conveyed, the deed of
the President, and presidential acts implementing such laws, are in conveyance shall be executed in behalf of the
accordance with the Constitution. government by the following:
The Roppongi property was acquired by the Philippine government (1) For property belonging to and titled
pursuant to the reparations agreement between the Philippine and in the name of the Republic of the
It is therefore, clear that the President cannot sell or order the sale of On 21 March 1997, the Office of the Government Corporate Counsel
Roppongi thru public bidding or otherwise without a prior (OGCC) issued Opinion No. 061. The OGCC opined that the Local
congressional approval, first, converting Roppongi from a public Government Code of 1991 withdrew the exemption from real estate tax
dominion property to a state patrimonial property, and, second, granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA
authorizing the President to sell the same. negotiated with respondent City of Paraaque to pay the real estate tax
imposed by the City. MIAA then paid some of the real estate tax already
ACCORDINGLY, my vote is to GRANT the petition and to make due.
PERMANENT the temporary restraining order earlier issued by this
Court. On 28 June 2001, MIAA received Final Notices of Real Estate Tax
Delinquency from the City of Paraaque for the taxable years 1992 to
G.R. No. 155650 July 20, 2006 2001. MIAA's real estate tax delinquency is broken down as follows:
(a) The value of fixed assets including airport facilities, runways Section 88 of the Corporation Code provides that non-stock corporations
and equipment and such other properties, movable and are "organized for charitable, religious, educational, professional, cultural,
immovable[,] which may be contributed by the National recreational, fraternal, literary, scientific, social, civil service, or similar
Government or transferred by it from any of its agencies, the purposes, like trade, industry, agriculture and like chambers." MIAA is not
valuation of which shall be determined jointly with the Department organized for any of these purposes. MIAA, a public utility, is organized to
of Budget and Management and the Commission on Audit on the operate an international and domestic airport for public use.
date of such contribution or transfer after making due allowances
for depreciation and other deductions taking into account the loans Since MIAA is neither a stock nor a non-stock corporation, MIAA does not
and other liabilities of the Authority at the time of the takeover of qualify as a government-owned or controlled corporation. What then is the
the assets and other properties; legal status of MIAA within the National Government?
(b) That the amount of P605 million as of December 31, 1986 MIAA is a government instrumentality vested with corporate powers to
representing about seventy percentum (70%) of the unremitted perform efficiently its governmental functions. MIAA is like any other
share of the National Government from 1983 to 1986 to be remitted government instrumentality, the only difference is that MIAA is vested with
to the National Treasury as provided for in Section 11 of E. O. No. corporate powers. Section 2(10) of the Introductory Provisions of the
903 as amended, shall be converted into the equity of the National Administrative Code defines a government "instrumentality" as follows:
Government in the Authority. Thereafter, the Government
contribution to the capital of the Authority shall be provided in the SEC. 2. General Terms Defined. x x x x
General Appropriations Act.
(10) Instrumentality refers to any agency of the National
Clearly, under its Charter, MIAA does not have capital stock that is divided Government, not integrated within the department framework,
into shares. vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds,
Section 3 of the Corporation Code10 defines a stock corporation as one and enjoying operational autonomy, usually through a charter. x x x
whose "capital stock is divided into shares and x x x authorized to (Emphasis supplied)
distribute to the holders of such shares dividends x x x." MIAA has
capital but it is not divided into shares of stock. MIAA has no stockholders When the law vests in a government instrumentality corporate powers, the
or voting shares. Hence, MIAA is not a stock corporation. instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains
a government instrumentality exercising not only governmental but also
The terminal fees MIAA charges to passengers, as well as the landing fees The Civil Code, article 1271, prescribes that everything which is not
MIAA charges to airlines, constitute the bulk of the income that maintains outside the commerce of man may be the object of a contract, and
the operations of MIAA. The collection of such fees does not change the plazas and streets are outside of this commerce, as was decided
character of MIAA as an airport for public use. Such fees are often termed by the supreme court of Spain in its decision of February 12, 1895,
user's tax. This means taxing those among the public who actually use a which says: "Communal things that cannot be sold because
public facility instead of taxing all the public including those who never use they are by their very nature outside of commerce are those
the particular public facility. A user's tax is more equitable a principle of for public use, such as the plazas, streets, common lands,
taxation mandated in the 1987 Constitution.21 rivers, fountains, etc." (Emphasis supplied) 23
The Airport Lands and Buildings of MIAA, which its Charter calls the Again in Espiritu v. Municipal Council, the Court declared that properties
"principal airport of the Philippines for both international and domestic air of public dominion are outside the commerce of man:
traffic,"22 are properties of public dominion because they are intended for
public use. As properties of public dominion, they indisputably belong xxx Town plazas are properties of public dominion, to be
to the State or the Republic of the Philippines. devoted to public use and to be made available to the public in
general. They are outside the commerce of man and cannot be
b. Airport Lands and Buildings are Outside the Commerce of Man disposed of or even leased by the municipality to private parties.
While in case of war or during an emergency, town plazas may be
The Airport Lands and Buildings of MIAA are devoted to public use and occupied temporarily by private individuals, as was done and as
thus are properties of public dominion. As properties of public dominion, was tolerated by the Municipality of Pozorrubio, when the
the Airport Lands and Buildings are outside the commerce of man. emergency has ceased, said temporary occupation or use must
The Court has ruled repeatedly that properties of public dominion are also cease, and the town officials should see to it that the town
outside the commerce of man. As early as 1915, this Court already ruled plazas should ever be kept open to the public and free from
in Municipality of Cavite v. Rojas that properties devoted to public use encumbrances or illegal private constructions.24 (Emphasis
are outside the commerce of man, thus: supplied)
The MIAA Charter, which is a law, transferred to MIAA the title to the The whereas clauses of the MIAA Charter explain the rationale for the
Airport Lands and Buildings from the Bureau of Air Transportation of the transfer of the Airport Lands and Buildings to MIAA, thus:
Department of Transportation and Communications. The MIAA Charter
provides: WHEREAS, the Manila International Airport as the principal airport
of the Philippines for both international and domestic air traffic, is
SECTION 3. Creation of the Manila International Airport Authority. required to provide standards of airport accommodation and
xxxx service comparable with the best airports in the world;
The land where the Airport is presently located as well as the WHEREAS, domestic and other terminals, general aviation and
surrounding land area of approximately six hundred hectares, other facilities, have to be upgraded to meet the current and future
are hereby transferred, conveyed and assigned to the air traffic and other demands of aviation in Metro Manila;
ownership and administration of the Authority, subject to
existing rights, if any. The Bureau of Lands and other appropriate WHEREAS, a management and organization study has indicated
government agencies shall undertake an actual survey of the area that the objectives of providing high standards of
transferred within one year from the promulgation of this Executive accommodation and service within the context of a financially
Order and the corresponding title to be issued in the name of the viable operation, will best be achieved by a separate and
Authority. Any portion thereof shall not be disposed through autonomous body; and
sale or through any other mode unless specifically approved
by the President of the Philippines. (Emphasis supplied) WHEREAS, under Presidential Decree No. 1416, as amended by
Presidential Decree No. 1772, the President of the Philippines is
SECTION 22. Transfer of Existing Facilities and Intangible Assets. given continuing authority to reorganize the National
All existing public airport facilities, runways, lands, buildings Government, which authority includes the creation of new
and other property, movable or immovable, belonging to the entities, agencies and instrumentalities of the Government[.]
Airport, and all assets, powers, rights, interests and (Emphasis supplied)
privileges belonging to the Bureau of Air Transportation relating
to airport works or air operations, including all equipment which are The transfer of the Airport Lands and Buildings from the Bureau of Air
necessary for the operation of crash fire and rescue facilities, are Transportation to MIAA was not meant to transfer beneficial ownership of
hereby transferred to the Authority. (Emphasis supplied) these assets from the Republic to MIAA. The purpose was merely
to reorganize a division in the Bureau of Air Transportation into a
The argument of the minority is fatally flawed. Section 193 of the Local The minority's theory directly contradicts and completely negates Section
Government Code expressly withdrew the tax exemption of all juridical 133(o) of the Local Government Code. This theory will result in gross
persons "[u]nless otherwise provided in this Code." Now, Section absurdities. It will make the national government, which itself is a juridical
133(o) of the Local Government Code expressly provides otherwise, person, subject to tax by local governments since the national government
specifically prohibiting local governments from imposing any kind of tax is not included in the enumeration of exempt entities in Section 193. Under
on national government instrumentalities. Section 133(o) states: this theory, local governments can impose any kind of local tax, and not
only real estate tax, on the national government.
Second, Section 133 is entitled "Common Limitations on the Taxing The minority then concludes that reliance on the Administrative Code
Powers of Local Government Units." Section 133 limits the grant to local definition is "flawed."
governments of the power to tax, and not merely the exercise of a
delegated power to tax. Section 133 states that the taxing powers of local
The minority's argument is a non sequitur. True, Section 2 of the
governments "shall not extend to the levy" of any kind of tax on the
Administrative Code recognizes that a statute may require a different
national government, its agencies and instrumentalities. There is no clearer
meaning than that defined in the Administrative Code. However, this does
limitation on the taxing power than this.
not automatically mean that the definition in the Administrative Code does
not apply to the Local Government Code. Section 2 of the Administrative
Since Section 133 prescribes the "common limitations" on the taxing Code clearly states that "unless the specific words x x x of a particular
powers of local governments, Section 133 logically prevails over Section statute shall require a different meaning," the definition in Section 2 of the
193 which grants local governments such taxing powers. By their very Administrative Code shall apply. Thus, unless there is specific language in
meaning and purpose, the "common limitations" on the taxing power the Local Government Code defining the phrase "government-owned or
prevail over the grant or exercise of the taxing power. If the taxing power of controlled corporation" differently from the definition in the Administrative
local governments in Section 193 prevails over the limitations on such Code, the definition in the Administrative Code prevails.
taxing power in Section 133, then local governments can impose any kind
of tax on the national government, its agencies and instrumentalities a
The minority does not point to any provision in the Local Government Code
gross absurdity.
defining the phrase "government-owned or controlled corporation"
differently from the definition in the Administrative Code. Indeed, there is
Local governments have no power to tax the national government, its none. The Local Government Code is silent on the definition of the phrase
agencies and instrumentalities, except as otherwise provided in the Local "government-owned or controlled corporation." The Administrative Code,
Government Code pursuant to the saving clause in Section 133 stating however, expressly defines the phrase "government-owned or controlled
"[u]nless otherwise provided in this Code." This exception which is an corporation." The inescapable conclusion is that the Administrative Code
exception to the exemption of the Republic from real estate tax imposed by definition of the phrase "government-owned or controlled corporation"
local governments refers to Section 234(a) of the Code. The exception applies to the Local Government Code.
to the exemption in Section 234(a) subjects real property owned by the
Republic, whether titled in the name of the national government, its
The third whereas clause of the Administrative Code states that the Code
agencies or instrumentalities, to real estate tax if the beneficial use of such
"incorporates in a unified document the major structural, functional and
property is given to a taxable entity.
procedural principles and rules of governance." Thus, the Administrative
Code is the governing law defining the status and relationship of
The minority also claims that the definition in the Administrative Code of government departments, bureaus, offices, agencies and instrumentalities.
the phrase "government-owned or controlled corporation" is not controlling. Unless a statute expressly provides for a different status and relationship
Clearly, the test of economic viability does not apply to government entities 5. The Aviation Security Command of the Philippine National
vested with corporate powers and performing essential public services. Police, to prevent the entry of terrorists and the escape of
The State is obligated to render essential public services regardless of the criminals, as well as to secure the airport premises from terrorist
economic viability of providing such service. The non-economic viability of attack or seizure;
rendering such essential public service does not excuse the State from
withholding such essential services from the public.
6. The Air Traffic Office of the Department of Transportation and
Communications, to authorize aircraft to enter or leave Philippine
However, government-owned or controlled corporations with special airspace, as well as to land on, or take off from, the airport; and
charters, organized essentially for economic or commercial objectives,
must meet the test of economic viability. These are the government-owned
7. The MIAA, to provide the proper premises such as runway
or controlled corporations that are usually organized under their special
and buildings for the government personnel, passengers, and
charters as stock corporations, like the Land Bank of the Philippines and
airlines, and to manage the airport operations.
the Development Bank of the Philippines. These are the government-
owned or controlled corporations, along with government-owned or
controlled corporations organized under the Corporation Code, that fall All these agencies of government perform government functions essential
under the definition of "government-owned or controlled corporations" in to the operation of an international airport.
Section 2(10) of the Administrative Code.
MIAA performs an essential public service that every modern State must
The MIAA need not meet the test of economic viability because the provide its citizens. MIAA derives its revenues principally from the
legislature did not create MIAA to compete in the market place. MIAA does mandatory fees and charges MIAA imposes on passengers and airlines.
not compete in the market place because there is no competing The terminal fees that MIAA charges every passenger are regulatory or
international airport operated by the private sector. MIAA performs an administrative fees47 and not income from commercial transactions.
essential public service as the primary domestic and international airport of
the Philippines. The operation of an international airport requires the MIAA falls under the definition of a government instrumentality under
presence of personnel from the following government agencies: Section 2(10) of the Introductory Provisions of the Administrative Code,
which provides:
1. The Bureau of Immigration and Deportation, to document the
arrival and departure of passengers, screening out those without SEC. 2. General Terms Defined. x x x x
visas or travel documents, or those with hold departure orders;
(10) Instrumentality refers to any agency of the National
Government, not integrated within the department framework,
WHEREFORE, we GRANT the petition. We SET ASIDE the assailed [Respondent] seeks to collect from [petitioner] real property taxes
Resolutions of the Court of Appeals of 5 October 2001 and 27 September as well as business taxes, computed from the last quarter of 1984
2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and up to fourth quarter of 1988.
Buildings of the Manila International Airport Authority EXEMPT from the
real estate tax imposed by the City of Paraaque. We declare VOID all the [Respondent] alleges that [petitioner] is engaged in the business of
real estate tax assessments, including the final notices of real estate tax arrastre and stevedoring services and the leasing of real estate for
delinquencies, issued by the City of Paraaque on the Airport Lands and which it should be obligated to pay business taxes. It further
Buildings of the Manila International Airport Authority, except for the alleges that [petitioner] is the declared and registered owner of a
portions that the Manila International Airport Authority has leased to private warehouse which is used in the operation of its business and is
parties. We also declare VOID the assailed auction sale, and all its effects, also thereby subject to real property taxes.
of the Airport Lands and Buildings of the Manila International Airport
Authority. It demands the aggregate amount of P510,888.86 in realty and
business taxes as of December 1988 (real property tax last
No costs. quarter of 1984 to 1988; business tax- 1984 to 1988) including its
corresponding interests and penalty charges.
SO ORDERED.
On July 19, 1989, [petitioner] filed a motion to dismiss but [it] was
G.R. No. 109791 July 14, 2003 denied by this court. A motion for reconsideration was filed, but the
same was still denied, after which [petitioner] filed its answer.
PHILIPPINE PORTS AUTHORITY, petitioner,
vs. During the pre-trial conference, the following factual and legal
CITY OF ILOILO, respondent. issues were defined and clarified.
Before us is a petition for review on certiorari assailing the Decision of the 1. Whether or not [petitioner] is engaged in business;
Regional Trial Court of Iloilo City, Branch 39, dated February 26, 1993 in
Civil Case No. 18477, a case for collection of a sum of money. Seeking to 2. Whether or not the assessment of tax by [respondent] is
raise questions purely of law, petitioner Philippine Ports Authority (PPA) accurate as of 4th quarter of 1988 from the year 1984; real
would want us to set aside the ruling ordering it to pay real property and property tax in the amount of P180,953.93 and business tax in the
business taxes to respondent City of Iloilo. amount of P329,934.93 as of December 31, 1988.
The factual antecedents are summarized by the trial court: Legal Issues:
This is an action for the "recovery of sum of money" filed by 1. Whether or not Philippine Ports Authority is exempt from the
[respondent] City of Iloilo, a public corporation organized under the payment of real property tax and business tax;
laws of the Republic of the Philippines, represented by the Hon.
[Emphasis supplied] Contrary to petitioners claim, we find that the new issue raised is not a
purely legal question. It must be emphasized that the enumeration of
Insisting that the subject warehouse is considered as part of its port, it properties of public dominion under Article 420 of the Civil Code
points to Section 3 (e) of its charter quoted hereunder: specifically states "ports constructed by the State." Thus, in order to
consider the port in the case at bar as falling under the said classification,
e) "port" means a place where ships may anchor or tie up for the the fact that the port was constructed by the State must first be established
purpose of shelter, repair, loading or discharge of cargo, or for by sufficient evidence. This fact proved crucial in Santos v.
other such activities connected with water-borne commerce, Moreno,12 where the issue raised was whether the canals constructed by
and including all the land and water areas and the structures, private persons were of public or private ownership. We ruled that the
equipment and facilities related to these functions. [Emphasis canals were privately owned, thus:
supplied]
Under Art. 420, canals constructed by the State and devoted and
A perusal of the records shows that this thesis was never presented nor devoted to public use are of public ownership. Conversely, canals
discussed at the trial stage. constructed by private persons within private lands and devoted
exclusively for private use must be of private ownership.
As a rule, a party who deliberately adopts a certain theory upon which the
case is tried and decided by the lower court will not be permitted to change In the case at bar, no proof was adduced to establish that the port was
theory on appeal.7 Points of law, theories, issues and arguments not constructed by the State. Petitioner cannot have us automatically conclude
brought to the attention of the lower court need not be, and ordinarily will that its port qualified as "property of public dominion." It would be unfair to
not be, considered by a reviewing court, as these cannot be raised for the respondent, which would be deprived of its opportunity to present evidence
first time at such late stage. Basic considerations of due process underlie to disprove the factual basis of the new theory. It is thus clear that
this rule.8 It would be unfair to the adverse party who would have no the Lianga exception cannot apply in the case at bar.
opportunity to present further evidence material to the new theory, which it
could have done had it been aware of it at the time of the hearing before Moreover, as correctly pointed out by respondent, we cannot ignore the
the trial court.9 To permit petitioner in this case to change its theory on fact that petitioners new position runs contrary to its own admission in the
appeal would thus be unfair to respondent, and offend the basic rules of pleadings filed in the trial court. Under paragraph 3 of respondents
fair play, justice and due process.10 complaint quoted hereunder, the fact of petitioners ownership of the
property was specifically alleged as follows:
Petitioner however cites an exception to the rule, as enunciated in Lianga
Lumber Co. v. Lianga Timber Co., Inc.,11wherein we said: III
[I]n the interest of justice and within the sound discretion of the Defendant is likewise the declared and registered owner of a
appellate court, a party may change his theory on appeal only warehouse standing on Lot No. 1065 situated at Bgy. Concepcion,
when the factual bases thereof would not require presentation of City Proper, declared under Tax Declaration No. 56325. Xerox
(a) Real property owned by the Republic of the Philippines or any SECTION 1. The provisions of any general or special law to the
of its political subdivisions and any government-owned corporation contrary notwithstanding, all tax and duty incentives granted to
so exempt by its charter: Provided; however, That this exemption government and private entities are hereby withdrawn, except:
shall not apply to real property of the above-named entities the
beneficial use of which has been granted, for consideration or xxx xxx xxx
otherwise, to a taxable person.
e) those conferred under four basic codes namely:
Petitioners charter, P.D. 857,27 further specifically exempted it from real
property taxes:
(i) the Tariff and Customs Code, as amended;
MIAA is also not a non-stock corporation because it has no Some of the national government instrumentalities vested by
members. Section 87 of the Corporation Code defines a non- law with juridical personalities are: Bangko Sentral ng Pilipinas,
stock corporation as "one where no part of its income is Philippine Rice Research Institute, Laguna Lake Development
distributable as dividends to its members, trustees or Authority, Fisheries Development Authority, Bases Conversion
officers." A non-stock corporation must have members. Even if we Development Authority, Philippine Ports Authority, Cagayan de Oro
assume that the Government is considered as the sole member of Port Authority, San Fernando Port Authority, Cebu Port Authority,
MIAA, this will not make MIAA a non-stock corporation. Non-stock and Philippine National Railways.
corporations cannot distribute any part of their income to their
members. Section 11 of the MIAA Charter mandates MIAA to remit Indeed, the Authority is not a GOCC but an instrumentality of the
20% of its annual gross operating income to the National Treasury. government. The Authority has a capital stock but it is not divided into
This prevents MIAA from qualifying as a non-stock corporation. shares of stocks.12 Also, it has no stockholders or voting shares. Hence, it
is not a stock corporation. Neither it is a non-stock corporation because it
Section 88 of the Corporation Code provides that non-stock has no members.
corporations are "organized for charitable, religious, educational,
professional, cultural, recreational, fraternal, literary, scientific, The Authority is actually a national government instrumentality which is
social, civil service, or similar purposes, like trade, industry, defined as an agency of the national government, not integrated within the
agriculture and like chambers." MIAA is not organized for any of department framework, vested with special functions or jurisdiction by law,
these purposes. MIAA, a public utility, is organized to operate an endowed with some if not all corporate powers, administering special
international and domestic airport for public use. funds, and enjoying operational autonomy, usually through a
charter.13 When the law vests in a government instrumentality corporate
Since MIAA is neither a stock nor a non-stock corporation, MIAA powers, the instrumentality does not become a corporation. Unless the
does not qualify as a government-owned or controlled government instrumentality is organized as a stock or non-stock
corporation.10 (Emphasis supplied) corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers.
Thus, for an entity to be considered as a GOCC, it must either be
organized as a stock or non-stock corporation. Two requisites must concur Thus, the Authority which is tasked with the special public function to carry
before one may be classified as a stock corporation, namely: (1) that it has out the governments policy "to promote the development of the countrys
capital stock divided into shares, and (2) that it is authorized to distribute fishing industry and improve the efficiency in handling, preserving,
dividends and allotments of surplus and profits to its stockholders. If only marketing, and distribution of fish and other aquatic products," exercises
one requisite is present, it cannot be properly classified as a stock the governmental powers of eminent domain,14 and the power to levy fees
corporation. As for non-stock corporations, they must have members and and charges.15 At the same time, the Authority exercises "the general
must not distribute any part of their income to said members.11
(b) Foreshore; (2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development
(c) Marshy lands or lands covered with water bordering of the national wealth.
upon the shores or banks of navigable lakes or rivers;
The Iloilo fishing port which was constructed by the State for public use
(d) Lands not included in any of the foregoing classes. and/or public service falls within the term "port" in the aforecited provision.
Being a property of public dominion the same cannot be subject to
xxxx execution or foreclosure sale.22 In like manner, the reclaimed land on which
the IFPC is built cannot be the object of a private or public sale without
Sec. 61. The lands comprised in classes (a), (b), and (c) of Congressional authorization. Whether there are improvements in the
section fifty-nine shall be disposed of to private parties by fishing port complex that should not be construed to be embraced within
lease only and not otherwise, as soon as the President, upon the term "port," involves evidentiary matters that cannot be addressed in
recommendation by the Secretary of Agriculture, shall declare the present case. As for now, considering that the Authority is a national
WHEREFORE, the petition is GRANTED and the June 21, 2005 Decision The Public Estates Authority (PEA) is a government corporation created by
of the Court of Appeals in CA-G.R. SP No. 81228 is SET ASIDE. The real virtue of Presidential Decree (P.D.) No. 1084 (Creating the Public Estates
property tax assessments issued by the City Iloilo on the land and Authority, Defining its Powers and Functions, Providing Funds Therefor
buildings of the Iloilo Fishing Port Complex, is declared VOID except those and For Other Purposes) which took effect on February 4,
pertaining to the portions leased to private parties. The City of Iloilo
is DIRECTED to refrain from levying on the Iloilo Fishing Port Complex to 1977 to provide a coordinated, economical and efficient reclamation of
satisfy the payment of the real property tax delinquency. lands, and the administration and operation of lands belonging to,
managed and/or operated by, the government with the object of
No costs. maximizing their utilization and hastening their development consistent
with public interest.
SO ORDERED.
On February 14, 1979, by virtue of Executive Order (E.O.) No. 525 issued
G.R. No. 191109 July 18, 2012 by then President Ferdinand Marcos, PEA was designated as the agency
primarily responsible for integrating, directing and coordinating all
REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE reclamation projects for and on behalf of the National Government.
RECLAMATION AUTHORITY (PRA), Petitioner,
vs. On October 26, 2004, then President Gloria Macapagal-Arroyo issued E.O.
CITY OF PARANAQUE, Respondent. No. 380 transforming PEA into PRA, which shall perform all the powers
and functions of the PEA relating to reclamation activities.
DECISION
By virtue of its mandate, PRA reclaimed several portions of the foreshore
MENDOZA, J.: and offshore areas of Manila Bay, including those located in Paraaque
City, and was issued Original Certificates of Title (OCT Nos. 180, 202, 206,
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of 207, 289, 557, and 559) and Transfer Certificates of Title (TCT Nos.
Civil Procedure, on pure questions of law, assailing the January 8, 2010 104628, 7312, 7309, 7311, 9685, and 9686) over the reclaimed lands.
Order1 of the Regional Trial Court, Branch 195, Parafiaque City (RTC),
which ruled that petitioner Philippine Reclamation Authority (PRA) is a On February 19, 2003, then Paraaque City Treasurer Liberato M.
government-owned and controlled corporation (GOCC), a taxable entity, Carabeo (Carabeo) issued Warrants of Levy on PRAs reclaimed
On April 4, 2003, PRA sent a letter to Carabeo requesting the latter not to THAT PETITIONER IS AN INCORPORATED INSTRUMENTALITY OF
proceed with the public auction of the subject reclaimed properties on April THE NATIONAL GOVERNMENT AND IS, THEREFORE, EXEMPT FROM
7, 2003. In response, Carabeo sent a letter stating that the public auction PAYMENT OF REAL PROPERTY TAX UNDER SECTIONS 234(A) AND
could not be deferred because the RTC had already denied PRAs TRO 133(O) OF REPUBLIC ACT 7160 OR THE LOCAL GOVERNMENT CODE
application. VIS--VIS MANILA INTERNATIONAL AIRPORT AUTHORITY V. COURT
OF APPEALS.
On April 25, 2003, the RTC denied PRAs prayer for the issuance of a writ
of preliminary injunction for being moot and academic considering that the II
auction sale of the subject properties on April 7, 2003 had already been
consummated. THE TRIAL COURT GRAVELY ERRED IN FAILING TO CONSIDER
THAT RECLAIMED LANDS ARE PART OF THE PUBLIC DOMAIN AND,
On August 3, 2009, after an exchange of several pleadings and the failure HENCE, EXEMPT FROM REAL PROPERTY TAX.
of both parties to arrive at a compromise agreement, PRA filed a Motion for
Leave to File and Admit Attached Supplemental Petition which sought to PRA asserts that it is not a GOCC under Section 2(13) of the Introductory
declare as null and void the assessment for real property taxes, the levy Provisions of the Administrative Code. Neither is it a GOCC under Section
based on the said assessment, the public auction sale conducted on April 16, Article XII of the 1987 Constitution because it is not required to meet
7, 2003, and the Certificates of Sale issued pursuant to the auction sale. the test of economic viability. Instead, PRA is a government instrumentality
vested with corporate powers and performing an essential public service
On January 8, 2010, the RTC rendered its decision dismissing PRAs pursuant to Section 2(10) of the Introductory Provisions of the
petition. In ruling that PRA was not exempt from payment of real property Administrative Code. Although it has a capital stock divided into shares, it
taxes, the RTC reasoned out that it was a GOCC under Section 3 of P.D. is not authorized to distribute dividends and allotment of surplus and profits
No. 1084. It was organized as a stock corporation because it had an to its stockholders. Therefore, it may not be classified as a stock
authorized capital stock divided into no par value shares. In fact, PRA corporation because it lacks the second requisite of a stock corporation
admitted its corporate personality and that said properties were registered which is the distribution of dividends and allotment of surplus and profits to
in its name as shown by the certificates of title. Therefore, as a GOCC, the stockholders.
local tax exemption is withdrawn by virtue of Section 193 of Republic Act
(R.A.) No. 7160 Local Government Code (LGC) which was the prevailing It insists that it may not be classified as a non-stock corporation because it
law in 2001 and 2002 with respect to real property taxation. The RTC also has no members and it is not organized for charitable, religious,
ruled that the tax exemption claimed by PRA under E.O. No. 654 had educational, professional, cultural, recreational, fraternal, literary, scientific,
On the other hand, the City of Paraaque (respondent) argues that PRA (10) Instrumentality refers to any agency of the National Government, not
since its creation consistently represented itself to be a GOCC. PRAs very integrated within the department framework, vested with special functions
own charter (P.D. No. 1084) declared it to be a GOCC and that it has or jurisdiction by law, endowed with some if not all corporate powers,
entered into several thousands of contracts where it represented itself to administering special funds, and enjoying operational autonomy, usually
be a GOCC. In fact, PRA admitted in its original and amended petitions through a charter. x x x
and pre-trial brief filed with the RTC of Paraaque City that it was a GOCC.
From the above definitions, it is clear that a GOCC must be "organized as
Respondent further argues that PRA is a stock corporation with an a stock or non-stock corporation" while an instrumentality is vested by law
authorized capital stock divided into 3 million no par value shares, out of with corporate powers. Likewise, when the law makes a government
which 2 million shares have been subscribed and fully paid up. Section 193 instrumentality operationally autonomous, the instrumentality remains part
xxxx When local governments invoke the power to tax on national government
instrumentalities, such power is construed strictly against local
(o) Taxes, fees or charges of any kinds on the National Government, its governments. The rule is that a tax is never presumed and there must be
agencies and instrumentalities, and local government units. [Emphasis clear language in the law imposing the tax. Any doubt whether a person,
supplied] article or activity is taxable is resolved against taxation. This rule applies
with greater force when local governments seek to tax national government
instrumentalities.
It is clear from Section 234 that real property owned by the Republic of the
Philippines (the Republic) is exempt from real property tax unless the
beneficial use thereof has been granted to a taxable person. In this case, Another rule is that a tax exemption is strictly construed against the
there is no proof that PRA granted the beneficial use of the subject taxpayer claiming the exemption. However, when Congress grants an
reclaimed lands to a taxable entity. There is no showing on record either exemption to a national government instrumentality from local taxation,
that PRA leased the subject reclaimed properties to a private taxable such exemption is construed liberally in favor of the national government
entity. instrumentality. As this Court declared in Maceda v. Macaraig, Jr.:
This exemption should be read in relation to Section 133(o) of the same The reason for the rule does not apply in the case of exemptions running to
Code, which prohibits local governments from imposing "taxes, fees or the benefit of the government itself or its agencies. In such case the
charges of any kind on the National Government, its agencies and practical effect of an exemption is merely to reduce the amount of money
instrumentalities x x x." The Administrative Code allows real property that has to be handled by government in the course of its operations. For
owned by the Republic to be titled in the name of agencies or these reasons, provisions granting exemptions to government agencies
instrumentalities of the national government. Such real properties remain may be construed liberally, in favor of non tax-liability of such agencies.
owned by the Republic and continue to be exempt from real estate tax.
There is, moreover, no point in national and local governments taxing each
Indeed, the Republic grants the beneficial use of its real property to an other, unless a sound and compelling policy requires such transfer of
agency or instrumentality of the national government. This happens when public funds from one government pocket to another.
the title of the real property is transferred to an agency or instrumentality
even as the Republic remains the owner of the real property. Such There is also no reason for local governments to tax national government
arrangement does not result in the loss of the tax exemption, unless "the instrumentalities for rendering essential public services to inhabitants of
beneficial use thereof has been granted, for consideration or otherwise, to local governments. The only exception is when the legislature clearly
a taxable person."10 intended to tax government instrumentalities for the delivery of essential
public services for sound and compelling policy considerations. There must
The rationale behind Section 133(o) has also been explained in the case of be express language in the law empowering local governments to tax
the Manila International Airport Authority,11 to wit: national government instrumentalities. Any doubt whether such power
exists is resolved against local governments.
"Justice Holmes, speaking for the Supreme Court, made reference to the Similarly, Article 420 of the Civil Code enumerates properties belonging to
entire absence of power on the part of the States to touch, in that way the State:
(taxation) at least, the instrumentalities of the United States (Johnson v.
Maryland, 254 US 51) and it can be agreed that no state or political Art. 420. The following things are property of public dominion:
subdivision can regulate a federal instrumentality in such a way as to
prevent it from consummating its federal responsibilities, or even to (1) Those intended for public use, such as roads, canals, rivers,
seriously burden it in the accomplishment of them." (Antieau, Modern torrents, ports and bridges constructed by the State, banks, shores,
Constitutional Law, Vol. 2, p. 140, emphasis supplied) roadsteads, and others of similar character;
Otherwise, mere creatures of the State can defeat National policies thru (2) Those which belong to the State, without being for public use,
extermination of what local authorities may perceive to be undesirable and are intended for some public service or for the development of
activities or enterprise using the power to tax as "a tool for regulation." the national wealth. [Emphases supplied]
(U.S. v. Sanchez, 340 US 42)
Here, the subject lands are reclaimed lands, specifically portions of the
The power to tax which was called by Justice Marshall as the "power to foreshore and offshore areas of Manila Bay. As such, these lands remain
destroy" (McCulloch v. Maryland, supra) cannot be allowed to defeat an public lands and form part of the public domain. In the case of Chavez v.
instrumentality or creation of the very entity which has the inherent power Public Estates Authority and AMARI Coastal Development
to wield it. [Emphases supplied] Corporation,12 the Court held that foreshore and submerged areas
irrefutably belonged to the public domain and were inalienable unless
The Court agrees with PRA that the subject reclaimed lands are still part of reclaimed, classified as alienable lands open to disposition and further
the public domain, owned by the State and, therefore, exempt from declared no longer needed for public service. The fact that alienable lands
payment of real estate taxes. of the public domain were transferred to the PEA (now PRA) and issued
land patents or certificates of title in PEAs name did not automatically
Section 2, Article XII of the 1987 Constitution reads in part, as follows: make such lands private. This Court also held therein that reclaimed lands
retained their inherent potential as areas for public use or public service.
Section 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or As the central implementing agency tasked to undertake reclamation
timber, wildlife, flora and fauna, and other natural resources are owned by projects nationwide, with authority to sell reclaimed lands, PEA took the
Under Section 2, Article XII of the 1987 Constitution, the foreshore and REYES, J.:
submerged areas of Manila Bay are part of the "lands of the public domain,
waters x x x and other natural resources" and consequently "owned by the This is a petition for review under Rule 45 of the Decision1 dated July 6,
State." As such, foreshore and submerged areas "shall not be alienated," 2009 and Resolution2 dated August 12, 2010 Resolution of the Court of
unless they are classified as "agricultural lands" of the public domain. The Appeals (CA) in CA-G.R. CV No. 88995. The facts leading to its filing are
mere reclamation of these areas by PEA does not convert these as follows:
inalienable natural resources of the State into alienable or disposable lands
The CA gave due course to the appeal filed by the Republic of the The petitioners moved for reconsideration but this was denied by the CA in
Philippines. By way of the assailed Decision, the CA ruled that the its August 12, 2010 Resolution.7
petitioners failed to prove that they and their predecessors-in-interest have
been in possession of the subject property for the requisite period of 30 The petitioners question the conclusion arrived at by the CA, alleging that
years. The CA posit: the evidence they presented prove that they and their predecessors-in-
interest have been in possession and occupation of the subject property for
We now determine if appellees have the right to register their title on such more than 30 years. The petitioners claim that the following sufficed to
land despite the fact that their possession commenced only after 12 June demonstrate that they acquired title over the subject property by
1945. Records show that the appellees possession over the subject prescription:
property can be reckoned only from 21 June 1983, the date when
i. the petitioners have been in actual, notorious and open d. Tax Declaration Nos. 2935, 2405 and 1823 for the years 1961, 1967 and
possession of the subject property since the time they 1974 in the name of Victorio Garcia;8
purchased the same in 1996;
e. Tax Declaration Nos. 1534 and 3850 for the years 1980 and 1985 in the
ii. the petitioners have regularly paid the taxes due on the name of Felipe Gatdula;9
subject property;
f. Tax Declaration Nos. 22453-A and 2925 for the years 1991 and 1994 in
iii. the petitioners predecessors-in-interest, Victorio Garcia, the name of Gregonio Gatdula;10
Felipe Gatdula and Gregonio Gatdula, had been in
possession of the subject property for more than 30 years g. Tax Declaration Nos. 21956-A, 22096-A, 22097-A and 97-05078 in the
and had religiously paid the taxes due thereon; and name of the petitioners;11
iv. the subject property is agricultural, alienable and h. Resolution No. 69, Series of 1998, of the Sangguniang Bayan of Indang,
disposable; Cavite, which approved the reclassification of several lots, including the
subject property, from agricultural to residential/commercial;12
b. the testimony of the caretaker of the subject property, Margarito Pena,
stating that: i. DARCO Conversion Order No. 040210005-(340)-99, Series of 2000,
issued by the Department of Agrarian Reform on July 13, 2000, which
i. he resides near the subject property; converted several parcels of land, including the subject property, from
agricultural to residential/commercial;13
ii. he witnessed the execution of the deed of sale that
petitioners entered into with Gregonio Gatdula; and j. Certification issued by the Department of Environment and Natural
Resources (DENR) CALABARZON dated October 29, 2002, stating that
iii. the petitioners and predecessors-in-interest have been "the subject area falls within the Alienable and Disposable Land Project
in possession of the subject property for more than 30 No. 13-A of Indang, Cavite per LC Map 3091 certified on June 21, 1983".14
years;
Issue
c. the testimony of Ferdinand Encarnacion, a clerk in the Docket Division of
the Land Registration Authority (LRA), stating that: This Court is faced with the lone issue of whether the petitioners have
proven themselves qualified to the benefits under the relevant laws on the
i. no opposition to the petitioners application was filed confirmation of imperfect or incomplete titles.
before the LRA;
Our Ruling
ii. an examiner of the LRA found nothing wrong with the
petitioners application; and Commonwealth Act No. 141, otherwise known as the "Public Land Act"
governs the classification and disposition of lands forming part of the public
domain. Section 11 thereof provides that one of the modes of disposing
(2) Those who have acquired ownership of private lands by Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public
prescription under the provision of existing laws. dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State." It is this provision
(3) Those who have acquired ownership of private lands or that controls how public dominion property may be converted into
abandoned river beds by right of accession or accretion under the patrimonial property susceptible to acquisition by prescription. After all,
existing laws. Article 420 (2) makes clear that those property "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" are public dominion property.
(4) Those who have acquired ownership of land in any other
For as long as the property belongs to the State, although already
manner provided for by law.
classified as alienable or disposable, it remains property of the public
dominion if when it is "intended for some public service or for the
As this Court clarified in Heirs of Malabanan v. Republic of the development of the national wealth". (emphasis supplied)
Philippines,15 and Republic of the Philippines v. East Silverlane Realty
Development Corporation,16 Section 14(1) covers "alienable and
Accordingly, there must be an express declaration by the State that
disposable lands" while Section 14(2) covers "private property". Thus, for
the public dominion property is no longer intended for public service
ones possession and occupation of an alienable and disposable public
or the development of the national wealth or that the property has
land to give rise to an imperfect title, the same should have commenced on
been converted into patrimonial. Without such express declaration,
June 12, 1945 or earlier. On the other, for one to claim that his possession
the property, even if classified as alienable or disposable, remains
and occupation of private property has ripened to imperfect title, the same
property of the public dominion, pursuant to Article 420(2), and thus
should have been for the prescriptive period provided under the Civil Code.
incapable of acquisition by prescription. It is only when such
Without need for an extensive extrapolation, the private property
The petitioners application is obviously anchored on Section 14(2) of P.D. In East Silverlane, it was emphasized that adverse, continuous, open,
No. 1529 as they do not claim to have possessed, by themselves or their public possession in the concept of an owner is a conclusion of law and the
predecessors-in-interest, the subject property since June 12, 1945 or burden to prove it by clear, positive and convincing evidence is on the
earlier. That it was thru prescription that they had acquired an imperfect applicant. A claim of ownership will not proper on the basis of tax
title over the subject property is the foundation upon which the petitioners declarations if unaccompanied by proof of actual possession.21
rest their application.
While there was an attempt to supplement the tax declaration by
Unfortunately, this Court finds the evidence presented by the petitioners to testimonial evidence, the same is futile and frivolous. The testimonies of
be wanting. The petitioners failed to demonstrate that they and their Margarito Pena and Ma. Wilhelmina Tobias do not merit consideration and
predecessors-in-interest possessed the property in the requisite manner, do not make up for the inherent inadequacy of the eleven (11) tax
which this Court explained as follows: declarations submitted by the petitioners. Such witnesses did not state
what specific acts of ownership or dominion were performed by the
It is concerned with lapse of time in the manner and under conditions laid petitioners and predecessors-in-interest and simply made that general
down by law, namely, that the possession should be in the concept of an assertion that the latter possessed and occupied the subject property for
owner, public, peaceful, uninterrupted and adverse. Possession is open more than thirty (30) years, which, by all means, is a mere conclusion of
when it is patent, visible, apparent, notorious and not clandestine. It is law. The RTC should have tackled evidence of such nature with a
continuous when uninterrupted, unbroken and not intermittent or disposition to incredulity, if not with an outright rejection.
1w phi 1
G.R. No. 192088 October 9, 2012 Respondent PSALM is a government-owned and controlled corporation
created by virtue of Republic Act No. 9136,1otherwise known as the
INITIATIVES FOR DIALOGUE AND EMPOWERMENT THROUGH "Electric Power Industry Reform Act of 2001" (EPIRA). The EPIRAprovided
ALTERNATIVE LEGAL SERVICES, INC. (IDEALS, INC.), represented a framework for the restructuring of the electric power industry, including
by its Executive Director, Mr. Edgardo Ligon, and FREEDOM FROM the privatization of the assets of the National Power Corporation (NPC),
DEBT COALITION (FDC), represented by its Vice President Rebecca the transition to the desired competitive structure, and the definition of the
L. Malay, AKBAYAN CITIZEN'S ACTION PARTY, represented by its responsibilities of the various government agencies and private entities.
Chair Emeritus Loretta Anne P. Rosales, ALLIANCE OF Said law mandated PSALM to manage the orderly sale, disposition, and
PROGRESSIVE LABOR, represented by its Chairperson, Daniel L. privatization of NPC generation assets, real estate and other disposable
Edralin, REP. WALDEN BELLO, in his capacity as duly-elected assets, and Independent Power Producer (IPP) contracts with the objective
Member of the House of Representatives, Petitioners, of liquidating all NPC financial obligations and stranded contract costs in
vs. an optimal manner, which liquidation is to be completed within PSALMs
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT 25-year term of existence.2
CORPORATION (PSALM), represented by its Acting President and
Chief Executive Officer Atty. Ma. Luz L. Caminero, METROPOLITAN Sometime in August 2005, PSALM commenced the privatization of the
WATERWORKS AND SEWERAGE SYSTEM (MWSS), represented by 246-megawatt (MW) AHEPP located in San Lorenzo, Norzagaray,
its Administrator Atty. Diosdado M. Allado, NATIONAL IRRIGATION Bulacan. AHEPPs main units built in 1967 and 1968, and 5 auxiliary units,
ADMINISTRATION (NIA), represented by its Administrator Carlos S. form part of the Angat Complex which includes the Angat Dam, Angat
Salazar, KOREA WATER RESOURCES CORPORATION, represented Reservoir and the outlying watershed area. A portion of the AHEPP - the
by its Chief Executive Officer, Kim Kuen-Ho and/or Attorneys-in-fact, 10 MW Auxiliary Unit No. 4 completed on June 16, 1986 and the 18 MW
Atty. Anna Bianca L. Torres and Atty. Luther D. Ramos, FIRST GEN Auxiliary Unit No. 5 completed on January 14, 1993 - is owned by
NORTHERN ENERGY CORP., represented by its President, Mr. respondent Metropolitan Waterworks and Sewerage System
On December 15, 2009, PSALMs Board of Directors approved the Bidding All participating bidders were required to comply with the following:
Procedures for the privatization of the AHEPP. An Invitation to Bid was
published on January 11, 12 and 13, 2010 in three major national (a) submission of a Letter of Interest; (b) execution of Confidentiality
newspapers. Subject of the bid was the AHEPP consisting of 4 main units Agreement and Undertaking; and (c) payment of a non-refundable fee of
and 3 auxiliary units with an aggregate installed capacity of 218 MW. The US$ 2,500 as Participation Fee.5 After holding pre-bid conferences and
two auxiliary units owned by MWSS were excluded from the bid. forum discussions with various stakeholders, PSALM received the
following bids from six competing firms:
The following terms and conditions for the purchase of AHEPP were set
forth in the Bidding Package: K-Water US$ 440,880,000.00
First Gen Northern Energy 365,000,678.00
IB-05 CONDITION OF THE SALE Corporation
San Miguel Corporation 312,500,000.00
The Asset shall be sold on an "AS IS, WHERE IS" basis.
SNAboitiz Power-Pangasinan, Inc. 256,000,000.00
Trans-Asia Oil & Energy 237,000,000.00
The Angat Dam (which is part of the Non-Power Components) is a multi-
Development Corporation
purpose hydro facility which currently supplies water for domestic use,
irrigation and power generation. The four main units of the Angat Plant DMCI Power Corporation 188,890,000.00
release water to an underground trailrace that flows towards the Bustos
Dam which is owned and operated by the National Irrigation Administration On May 5, 2010, and after a post-bid evaluation, PSALMs Board of
("NIA") and provides irrigation requirements to certain areas in Bulacan. Directors approved and confirmed the issuance of a Notice of Award to the
The water from the auxiliary units 1, 2 and 3 flows to the Ipo Dam which is highest bidder, K-Water.6
owned and operated by MWSS and supplies domestic water to Metro
Manila and other surrounding cities. On May 19, 2010, the present petition with prayer for a temporary
restraining order (TRO) and/or writ of preliminary injunction was filed by the
The priority of water usage under Philippine Law would have to be Initiatives for Dialogue and Empowerment Through Alternative Legal
observed by the Buyer/Operator. Services, Inc. (IDEALS), Freedom from Debt Coalition (FDC), AKBAYAN
Citizens Action Party (AKBAYAN) and Alliance of Progressive Labor.
The Winning Bidder/Buyer shall be requested to enter into an operations
and maintenance agreement with PSALM for the Non-Power Components On May 24, 2010, this Court issued a Status QuoAnte Order directing the
in accordance with the terms and conditions of the O & M Agreement to be respondents to maintain the status quo prevailing before the filing of the
issued as part of the Final Transaction Documents. The Buyer, as petition and to file their respective Comments on the petition.7
6) Violation of the Water Code provisions on the grant of water rights; and There can be no doubt that the matter of ensuring adequate water supply
for domestic use is one of paramount importance to the public. That the
7) Failure of PSALM to comply with Sec. 47 (e) of EPIRA. continued availability of potable water in Metro Manila might be
compromised if PSALM proceeds with the privatization of the hydroelectric
Mootness and Locus Standi power plant in the Angat Dam Complex confers upon petitioners such
personal stake in the resolution of legal issues in a petition to stop its
implementation.
PSALMs contention that the present petition had already been mooted by
the issuance of the Notice of Award to K-Water is misplaced. Though
petitioners had sought the immediate issuance of injunction against the Moreover, we have held that if the petition is anchored on the peoples
bidding commenced by PSALM -- specifically enjoining it from proceeding right to information on matters of public concern, any citizen can be the
to the next step of issuing a notice of award to any of the bidders -- they real party in interest. The requirement of personal interest is satisfied by
further prayed that PSALM be permanently enjoined from disposing of the the mere fact that the petitioner is a citizen, and therefore, part of the
AHEPP through privatization. The petition was thus filed not only as a general public which possesses the right. There is no need to show any
means of enforcing the States obligation to protect the citizens "right to special interest in the result. It is sufficient that petitioners are citizens and,
water" that is recognized under international law and legally enforceable as such, are interested in the faithful execution of the laws.27
under our Constitution, but also to bar a foreign corporation from exploiting
our water resources in violation of Sec. 2, Art. XII of the 1987 Constitution. Violation of Right to Information
If the impending sale of the AHEPP to K-Water indeed violates the
Constitution, it is the duty of the Court to annul the contract award as well The peoples right to information is provided in Section 7, Article III of the
as its implementation. As this Court held in Chavez v. Philippine Estates Constitution, which reads:
Authority,23 "supervening events, whether intended or accidental, cannot
prevent the Court from rendering a decision if there is a grave violation of Sec. 7. The right of the people to information on matters of public concern
the Constitution." shall be recognized. Access to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to
We also rule that petitioners possess the requisite legal standing in filing government research data used as basis for policy development, shall be
this suit as citizens and taxpayers.
In Chavez v. Public Estates Authority32 involving the execution of an Chavez v. Public Estates Authority thus laid down the rule that the
Amended Joint Venture Agreement on the disposition of reclaimed lands constitutional right to information includes official information on on-going
without public bidding, the Court held: negotiations before a final contract. The information, however, must
constitute definite propositions by the government and should not cover
recognized exceptions like privileged information, military and diplomatic
x x xBefore the consummation of the contract, PEA must, on its own and
secrets and similar matters affecting national security and public order. In
without demand from anyone, disclose to the public matters relating to the
addition, Congress has prescribed other limitations on the right to
disposition of its property. These include the size, location, technical
information in several legislations.33
description and nature of the property being disposed of, the terms and
conditions of the disposition, the parties qualified to bid, the minimum price
and similar information. PEA must prepare all these data and disclose In this case, petitioners first letter dated April 20, 2010 requested for
them to the public at the start of the disposition process, long before the documents such as Terms of Reference and proposed bids submitted by
consummation of the contract, because the Government the bidders. At that time, the bids were yet to be submitted at the bidding
The States policy on the management of water resources is implemented Appropriation of water, as used in this Code, is the acquisition of rights
through the regulation of water rights. Presidential Decree No. 1067, over the use of waters or the taking or diverting of waters from a natural
otherwise known as "The Water Code of the Philippines" is the basic law source in the manner and for any purpose allowed by law.
governing the ownership, appropriation utilization, exploitation,
development, conservation and protection of water resources and rights to Art. 10. Water may be appropriated for the following
land related thereto. The National Water Resources Council (NWRC) was purposes:
created in 1974 under P.D. No. 424 and was subsequently renamed as
National Water Resources Board (NWRB) pursuant to Executive Order No. x xxx
124-A.59 The NWRB is the chief coordinating and regulating agency for all
water resources management development activities which is tasked with
(d) Power generation
the formulation and development of policies on water utilization and
appropriation, the control and supervision of water utilities and franchises,
and the regulation and rationalization of water rates.60 x xxx
The pertinent provisions of Art. 3, P.D. No. 1067 provide: Art. 13. Except as otherwise herein provided, no person including
government instrumentalities or government-owned or controlled
corporations, shall appropriate water without a water right, which shall be
Art. 3. The underlying principles of this code are:
evidenced by a document known as a water permit.
a. All waters belong to the State.
Water right is the privilege granted by the government to appropriate and
use water.
b. All waters that belong to the State can not be the subject
to acquisitive prescription.
x xxx
c. The State may allow the use or development of waters
Art. 15. Only citizens of the Philippines, of legal age, as well as juridical
by administrative concession.
persons, who are duly qualified by law to exploit and develop water
resources, may apply for water permits. (Emphasis supplied.)
d. The utilization, exploitation, development, conservation
and protection of water resources shall be subject to the
It is clear that the law limits the grant of water rights only to Filipino citizens
control and regulation of the government through the
and juridical entities duly qualified by law to exploit and develop water
National Water Resources Council x xx
resources, including private corporations with sixty percent of their capital
owned by Filipinos. In the case of Angat River, the NWRB has issued
e. Preference in the use and development of waters shall separate water permits to MWSS, NPC and NIA.61
consider current usages and be responsive to the changing
needs of the country.
Under the EPIRA, the generation of electric power, a business affected
with public interest, was opened to private sector and any new generation
This provision is consistent with the priority accorded to domestic and (d) The NPC and PSALM or NIA, as the case may be, shall continue to be
municipal uses of water63 under the Water Code, thus: responsible for the dam structure and all other appurtenant structures
necessary for the safe and reliable operation of the hydropower plants. The
Art. 22. Between two or more appropriators of water from the same NPC and PSALM or NIA, as the case may be, shall enter into an
sources of supply, priority in time of appropriation shall give the better right, operations and maintenance agreement with the private operator of the
except that in times of emergency the use of water for domestic and power plant to cover the dam structure and all other appurtenant facilities.
municipal purposes shall have a better right over all other uses; Provided, (Emphasis supplied.)
That, where water shortage is recurrent and the appropriator for municipal
use has a lower priority in time of appropriation, then it shall be his duty to In accordance with the foregoing implementing regulations, and in
find an alternative source of supply in accordance with conditions furtherance of the Asset Purchase Agreement64(APA), PSALM, NPC and
prescribed by the Board. (Emphasis supplied.) K-Water executed on April 28, 2010 an Operations and Maintenance
Agreement65 (O & M Agreement) for the administration, rehabilitation,
Rule 23, Section 6 of the Implementing Rules and Regulations (IRR) of the operation, preservation and maintenance, by K-Water as the eventual
EPIRA provided for the structure of appropriation of water resources in owner of the AHEPP, of the Non-Power Components meaning the Angat
multi-purpose hydropower plants which will undergo privatization, as Dam, non-power equipment, facilities, installations, and appurtenant
follows: devices and structures, including the water sourced from the Angat
Reservoir.
Section 6. Privatization of Hydroelectric Generation Plants.
It is the position of PSALM that as the new owner only of the hydroelectric
power plant, K-Water will be a mere operator of the Angat Dam. In the
(a) Consistent with Section 47(e) of the Act and Section 4(f) of this Rule,
power generation activity, K-Water will have to utilize the waters already
the Privatization of hydro facilities of NPC shall cover the power
extracted from the river and impounded on the dam. This process of
component including assignable long-term water rights agreements for the
generating electric power from the dam water entering the power plant thus
use of water, which shall be passed onto and respected by the buyers of
the hydroelectric power plants.
Opinion No. 122, s. 1998 It is also significant to note that NPC, a government-owned and controlled
corporation, has the effective control over all elements of the extraction
The crucial issue at hand is the determination of whether the utilization of process, including the amount and timing thereof considering that x xx the
water by the power plant to be owned and operated by a foreign-owned water will flow out of the power tunnel and through the power plant, to be
corporation (SRPC) will violate the provisions of the Water Code. used for the generation of electricity, only when the Downstream Gates are
opened, which occur only upon the specific water release instructions
As proposed, the participation of SRPC to the arrangement commences given by NPC to SRPC. This specific feature of the agreement, taken
upon construction of the power station, consisting of a dam and a power together with the above-stated analysis of the source of water that enters
plant. After the completion of the said station, its ownership and control the plant, support the view that the nationality requirement embodied in
shall be turned over to NPC. However, SRPC shall remain the owner of the Article XII, Section 2 of the present Constitution and in Article 15 of the
power plant and shall operate it for a period of twenty-five (25) years. Water Code, is not violated.69
It appears that the dam, which will be owned and controlled by NPC, will (Emphasis supplied.)
block the natural flow of the river. The power plant, which is situated next
to it, will entirely depend upon the dam for its water supply which will pass The latest executive interpretation is stated in DOJ Opinion No. 52, s. 2005
through an intake gate situated one hundred (100) meters above the which was rendered upon the request of PSALM in connection with the
riverbed. Due to the distance from the riverbed, water could not enter the proposed sale structure for the privatization of hydroelectric and
power plant absent the dam that traps the flow of the river. It appears geothermal generation assets (Gencos) of NPC. PSALM sought a ruling on
further that no water shall enter the power tunnel without specific dispatch the legality of its proposed privatization scheme whereby the non-power
instructions from NPC, and such supplied water shall be used only by components (dam, reservoir and appurtenant structures and watershed
SRPC for power generation and not for any other purpose. When electricity area) shall be owned by the State through government entities like NPC or
is generated therein, the same shall be supplied to NPC for distribution to NIA which shall exercise control over the release of water, while the
the public. These facts x xx viewed in relation to the Water Code, ownership of the power components (power plant and related facilities) is
specifically Article 9 thereof, x xx clearly show that there is no open to both Filipino citizens/corporations and 100% foreign-owned
circumvention of the law. corporations.
This Department has declared that the nationality requirement imposed by Sustaining the position of PSALM, then Secretary Raul M. Gonzalez
the Water Code refers to the privilege "to appropriate and use water" and opined:
has interpreted this phrase to mean the extraction of water directly from its
natural source (Secretary of Justice Opinion No. 14, s. 1995). "Natural" is Premised on the condition that only the power components shall be
defined as that which is produced without aid of stop, valves, slides, or transferred to the foreign bidders while the non-power
other supplementary means (see Websters New International Dictionary, components/structures shall be retained by state agencies concerned, we
Second Edition, p. 1630). The water that is used by the power plant could find that both PSALMs proposal and position are tenable.
not enter the intake gate without the dam, which is a man-made structure.
Such being the case, the source of the water that enters the power plant is x xxx
of artificial character rather than natural. This Department is consistent in
ruling, that once water is removed from its natural source, it ceases to be a x xx as ruled in one case by a U.S. court:
WHEREFORE, the present petition for certiorari and prohibition with prayer G.R. No. 157285 February 16, 2007
for injunctive relief/s is PARTLY GRANTED.
WOODRIDGE SCHOOL, INC., and MIGUELA JIMENEZ-
The following DISPOSITIONS are in ORDER: JAVIER, Petitioners,
vs.
1) The bidding conducted and the Notice of Award issued by ARB CONSTRUCTION CO., INC., Respondent.
PSALM in favor of the winning bidder, KOREA WATER
RESOURCES CORPORATION (K-WATER), are declared VALID DECISION
and LEGAL;
CORONA, J.:
2) PSALM is directed to FURNISH the petitioners with copies of all
documents and records in its files pertaining to K-Water;
Petitioners Woodridge School, Inc. (Woodridge) and Miguela Jimenez-
Javier come to us assailing the decision1dated September 30, 2002 and
3) Section 6 (a), Rule 23, IRR of the EPIRA, is hereby declared as resolution2 dated February 14, 2003 of the Court of Appeals in CA-G.R. CV
merely DIRECTORY, and not an absolute condition in all cases No. 515333 which, in turn, modified the ruling of the Regional Trial Court
where NPC-owned hydropower generation facilities are privatized; (RTC) of Imus, Cavite awarding P500,000 to respondent ARB Construction
Co., Inc. (ARB) as reasonable indemnity for the use of ARB's road lot.3
4) NPC shall CONTINUE to be the HOLDER of Water Permit No.
6512 issued by the National Water Resources Board. NPC shall Woodridge is the usufructuary of a parcel of land covered by Transfer
authorize K-Water to utilize the waters in the Angat Dam for Certificate of Title (TCT) No. T-363902 in the name of spouses Ernesto T.
hydropower generation, subject to the NWRBs rules and Matugas and Filomena U. Matugas. Its co-petitioner, Miguela Jimenez-
regulations governing water right and usage. The Asset Purchase Javier, is the registered owner of the adjacent lot under TCT No. T-330688.
Agreement and Operation & Management Agreement between
NPC/PSALM and K- Water are thus amended accordingly.
On the other hand, ARB is the owner and developer of Soldiers Hills
Subdivision in Bacoor, Cavite, which is composed of four phases. Phase I
Except for the requirement of securing a water permit, K-Water of the subdivision was already accessible from the Marcos Alvarez
remains BOUND by its undertakings and warranties under the APA Avenue. To provide the same accessibility to the residents of Phase II of
and O & M Agreement; the subdivision, ARB constructed the disputed road to link the two phases.
5) NPC shall be a CO-PARTY with K-Water in the Water Protocol As found by the appellate court, petitioners' properties sit right in the
Agreement with MWSS and NIA, and not merely as a conforming middle of several estates: Phase I of Soldiers Hills Subdivision in the north,
authority or agency; and a creek in the east and Green Valley Subdivision the farther east, a road
Initially, petitioners offered to pay ARB P50,000 as indemnity for the use of xxx xxx xxx
the road. Adamant, ARB refused the offer and fenced the perimeter of the
road fronting the properties of petitioners. By doing so, ARB effectively cut SO ORDERED. 5 (citations omitted)
off petitioners' access to and from the public highway.
ARB elevated the case to the Court of Appeals.6 Finding merit in the
After failing to settle the matter amicably, petitioners jointly filed a appeal, the appellate court reversed the decision of the lower court. It
complaint4 in the RTC of Imus, Cavite to enjoin ARB from depriving them of explained that the 1991 case of White Plains Subdivision[7] did not apply
the use of the disputed subdivision road and to seek a compulsory right of to the present case which was decided under a different factual milieu:
way after payment of proper indemnity. On November 24, 1995, the trial
court rendered its decision in favor of petitioners: In the assailed Decision, the Court below relied on the ruling of the
Supreme Court in White Plains Association, Inc. vs. Legaspi (193 SCRA
The reasons why this case is not one for a right of way as an easement are 765). The ruling is not applicable. In the White Plains case, the disputed
not difficult to discern. area was specifically set aside by the Quezon City Government, with the
concurrence of the owner and developer of the White Plains Subdivision in
The questioned road is part and parcel of the road network of Soldiers Hills Quezon City, for the purpose of constructing a major thoroughfare open to
IV, Phase II. This road was constructed pursuant to the approved the general public. The case was filed by the association of homeowners of
subdivision plan of Soldiers Hills IV, Phase II. As such, the road has White Plains in Quezon City when the owner-developer sought to
already been withdrawn from the commerce of men as the ownership of convert the disputed lot to residential lots. The Supreme Court initially held
which was automatically vested in the government without need of any that the disputed lot was not longer within the commerce of men, it having
compensation, although it is still registered in the name of the [ARB], the been segregated for a particular purpose, that of being used as "part of a
moment the subdivision plan was approved. While it is not yet donated to mandatory open space reserved for public use to be improved into the
the government [,] [it] is of no moment for donating this road to the widened Katipunan Road". It was within this context that the Supreme
government is a mere formality. Court held that "ownership was automatically vested in the Quezon City
government and/or the Republic of the Philippines, without need of paying
Differently stated, the government automatically becomes the owner of the any compensation".8
subdivisions' roads the moment the subdivision plan is approved. From
that time on, the roads are withdrawn from the commerce of men even [if] The appellate court went on to rule that a compulsory right of way exists in
the titles are still registered in the name of the subdivision owners and the favor of petitioners as "[t]here is no other existing adequate outlet to and
roads are not yet donated to the government. Thus, the subdivision owner from [petitioners'] properties to the Marcos Alvarez Avenue other than the
can no longer sell or alienate the roads for they are already owned by the subject existing road lot designated as Lot No. 5827-F-1 belonging to
government; thus, even if [petitioners] want to buy this road, and the [ARB] [ARB]."9 In addition, it awarded P500,000 to ARB as reasonable indemnity
wants to sell the same, this transaction cannot materialize for the above- for the use of the road lot.
stated reasons. Accordingly, [ARB] cannot prevent/prohibit plaintiffs from
using the road as the same belongs to the government. Acting on petitioners' motion for reconsideration, the appellate court
justified the monetary award in this manner:
xxx xxx xxx
In [o]ur Decision, [w]e awarded the amount of P500,000.00 merely as
reasonable indemnity for the use of the road lot, not the alienation thereof.
In the case of Abellana, Sr. v. Court of Appeals,13 the Court held that "the To be entitled to a legal easement of right of way, the following requisites
road lots in a private subdivision are private property, hence, the local must concur: (1) the dominant estate is surrounded by other immovables
government should first acquire them by donation, purchase, or and has no adequate outlet to a public highway; (2) payment of proper
expropriation, if they are to be utilized as a public road."14 Otherwise, they indemnity; (3) the isolation was not due to acts of the proprietor of the
remain to be private properties of the owner-developer. dominant estate and (4) the right of way claimed is at the point least
prejudicial to the servient estate.20
Contrary to the position of petitioners, the use of the subdivision roads by
the general public does not strip it of its private character. The road is not The appellate and trial courts found that the properties of petitioners are
converted into public property by mere tolerance of the subdivision owner enclosed by other estates without any adequate access to a public
of the public's passage through it. To repeat, "the local government should highway except the subject road lot which leads to Marcos Alvarez
first acquire them by donation, purchase, or expropriation, if they are to be Avenue.21 Although it was shown that the shortest distance from the
utilized as a public road."15 properties to the highway is toward the east across a creek, this alternative
Should this easement be established in such a manner that its use may be G.R. No. L-21024 July 28, 1969
continuous for all the needs of the dominant estate, establishing a
permanent passage, the indemnity shall consist of the value of the CENON MATEO, petitioner-appellant,
land occupied and the amount of the damage caused to the servient vs.
estate. xxx. (Emphasis supplied) HON. FLORENCIO MORENO, in his capacity as SECRETARY OF
PUBLIC WORKS AND COMMUNICATIONS, defendant-appellee.
On that basis, we further hold that the appellate court erred
in arbitrarily awarding indemnity for the use of the road lot. Antonio M. Albano and C.S. de Guzman for petitioner-appellant.
Office of the Solicitor General for defendant-appellee.
The Civil Code categorically provides for the measure by which the proper
indemnity may be computed: value of the land occupied plus the amount of MAKALINTAL, J.:
the damage caused to the servient estate. Settled is the rule in statutory
construction that "when the law is clear, the function of the courts is simple This case, elevated to the Court of Appeals by the petitioner for review of
application."23 Thus, to award the indemnity using factors different from that the decision of the Court of First Instance of Manila dismissing his petition
given by the law is a complete disregard of these clear statutory provisions for injunction, was subsequently Certified to us under Section 31 of
and is evidently arbitrary. This the Court cannot countenance. The Civil Republic Act No. 296.
Code has clearly laid down the parameters and we cannot depart from
them. Verba legis non est recedendum. Sometime in 1959 a number of residents of Guiguinto, Bulacan, sent a
letter-complaint to the Highway District Engineer of that province asking
that the Sapang Cabay, a public navigable stream, which had been
for catching fish therefrom (Ibid., 122); that in his children days, he
used to see bancas going thru the creek; that although before its
G.R. No. L-28379 March 27, 1929
closure overflooding did not usually occur even after continuous
heavy rains, things have changed now and overflooding occurs
frequently (Ibid., 123-124); that Julian Manicad, 70 years old in
2. The lower court erred in holding that the lots in question formed The claimants-appellees contend that inasmuch as the said lots once
part of the big parcel of land belonging to the spouses Maximo formed a part of a large parcel of land belonging to their predecessors,
Cabangis and Tita Andres, and in holding that these spouses and whom they succeeded, and their immediate predecessor in interest,
their successors in interest have been in continuous, public, Tomas Cabangis, having taken possession thereof as soon as they were
peaceful and uninterrupted possession of said lots up to the time reclaimed, giving his permission to some fishermen to dry their fishing nets
this case came up. and deposit their bancas thereon, said lots belong to them.
3. The lower court erred in holding that said lots existed before, but Article 339, subsection 1, of the Civil Code, reads:
that due to the current of the Pasig River and to the action of the
big waves in Manila Bay during the south-west monsoons, the Article 339. Property of public ownership is
same disappeared.
By virtue whereof, the judgment appealed from is reversed and lots Nos. Sometime in December, 1972, respondent Morato filed a
36, 39 and 40 of cadastral proceeding No. 373 of the City of Manila are Free Patent Application No. III-3-8186-B on a parcel of land
held to be public land belonging to the Government of the United States with an area of 1,265 square meters situated at
under the administration and control of the Government of the Philippine Pinagtalleran, Calauag, Quezon. On January 16, 1974, the
Islands. So ordered. patent was approved and the Register of Deeds of Quezon
at Lucena City issued on February 4, 1974 Original
G.R. No. 100709 November 14, 1997 Certificate of Title No. P-17789. Both the free paten and the
title specifically mandate that the land shall not
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF be alienated nor encumbered within five years from the
LANDS, petitioner, date of the issuance of the patent (Sections 118 and 124 of
vs. CA No. 141, as amended).
COURT OF APPEALS, JOSEFINA L. MORATO, SPOUSES NENITA CO
and ANTONIO QUILATAN AND THE REGISTER OF DEEDS OF Subsequently, the District Land Officer in Lucena City,
QUEZON PROVINCE, respondents. 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
PANGANIBAN, J.:
tide and two (2) feet deep at low tide, and not suitable to
vegetation. Moreover, on October 24, 1974, a portion of the
Will the lease and/or mortgage of a portion of a realty acquired through land was mortgaged by respondent Morato to respondents
free patent constitute sufficient ground for the nullification of such land Nenita Co and Antonio Quilatan for P10,000.00 (pp. 2, 25,
grant? Should such property revert to the State once it is invaded by the Folder of Exhibits). The spouses Quilatan constructed a
sea and thus becomes foreshore land? house on the land. Another portion of the land was leased
to Perfecto Advincula on February 2, 1976 at P100.00 a
The Case month, where a warehouse was constructed.
These are the two questions raised in the petition before us assailing the On November 5, 1978, petitioner filed an amended
Court of Appeals' 1 Decision in CA-G.R. CV No. 02667 promulgated on June complaint against respondents Morato, spouses Nenita Co
13, 1991 which answered the said questions in the negative. 2 Respondent and Antonio Quilatan, and the Register of Deeds of
Court's dismissed 3 petitioner's appeal and affirmed in toto the decision of the Quezon for the cancellation of title and reversion of a
Regional Trial Court 4 of Calauag, Quezon, dated December 28, 1983 in Civil
The Court's Ruling But, as correctly pointed out by the respondent Court of
Appeals, Dr. Aliwalas' title to the property having become
The petition is meritorious. incontrovertible, such may no longer be collaterally
attacked. If indeed there had been any fraud or
First Issue: Indefeasibility of a Free Patent Title misrepresentation in obtaining the title, an action for
Petitioner contends that the grant of Free Patent (IV-3) 275 and the We find for petitioner.
subsequent issuance of Original Certificate of Title No. P-17789 to
Respondent Josefina L. Morato were subject to the conditions provided for Quoted below are relevant sections of Commonwealth Act No. 141,
in Commonwealth Act (CA) No. 141. It alleges that on October 24, 1974, or otherwise known as the Public Land Act:
nine (9) months and eight (8) days after the grant of the patent, mortgaged
a portion of the land" to Respondent Nenita Co, who thereafter constructed Sec. 118. Except in favor of the Government or any of its
a house thereon. Likewise, on February 2, 1976 and "within the five-year branches, units or institutions, or legally constituted
prohibitory period," Respondent Morato "leased a portion of the land to banking corporations, lands acquired under free patent or
Perfecto Advincula at a monthly rent of P100.00 who, shortly thereafter, homestead provisions shall not be subject to encumbrance
constructed a house of concrete materials on the subject land." 9 Further, or alienation from the date of the approval of the application
petitioner argues that the defense of indefeasibility of title is "inaccurate." The and for a term of five years from and after the date of
original certificate of title issued to Respondent Morato "contains the seeds of issuance of the patent or grant nor shall they become liable
its own cancellation": such certificate specifically states on its face that "it is to the satisfaction of any debt contracted prior to the
subject to the provisions of Sections 118, 119, 121, 122, 124 of CA No. 141, expiration of said period; but the improvements or crops on
as amended." 10 the land may be mortgaged or pledged to qualified
persons, associations, or corporations.
Respondent Morato counters by stating that although a "portion of the land
was previously leased," it resulted "from the fact that Perfecto Advincula No alienation, transfer, or conveyance of any homestead
built a warehouse in the subject land without [her] prior consent." The after five years and before twenty-five years after issuance
mortgage executed over the improvement "cannot be considered a of title shall be valid without the approval of the Secretary
violation of the said grant since it can never affect the ownership." 11 She of Agriculture and Natural Resources, which approval shall
states further: not be denied except on constitutional and legal grounds.
(As amended by Com. Act No. 456, approved June 8,
. . . . the appeal of the petitioner was dismissed not 1939.)
because of the principle of indefeasibility of title but mainly
due to failure of the latter to support and prove the alleged xxx xxx xxx
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 Sec. 121. Except with the consent of the grantee and the
prohibitory period of 5 years, a perusal thereof will also approval of the Secretary of Agriculture and Natural
show that what petitioner was able to prove never Resources, and solely for educational, religious, or
constituted a violation of the grant. 12 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
Respondent-Spouses Quilatan, on the other hand, state that the mortgage granted under the free patent, homestead, or individual
contract they entered into with Respondent Morato "can never be sale provisions of this Act or to any permanent
considered as [an] 'alienation' inasmuch as the ownership over the
property remains with the owner." 13 Besides, it is the director of lands and
Even if only part of the property has been sold or alienated within the The prohibition against any alienation or encumbrance of the land grant is
prohibited period of five years from the issuance of the patent, such a proviso attached to the approval of every application. 23 Prior to the
alienation is a sufficient cause for the reversion of the whole estate to the fulfillment of the requirements of law, Respondent Morato had only an inchoate
State. As a condition for the grant of a free patent to an applicant, the law right to the property; such property remained part of the public domain and,
requires that the land should not be encumbered, sold or alienated within therefore, not susceptible to alienation or encumbrance. Conversely, when a
five years from the issuance of "homesteader has complied with all the terms and conditions which entitled
the patent. The sale or the alienation of part of the homestead violates that him to a patent for [a] particular tract of public land, he acquires a vested
condition. 21 interest therein and has to be regarded an equitable owner
thereof." 24However, for Respondent Morato's title of ownership over the
patented land to be perfected, she should have complied with the
The prohibition against the encumbrance lease and mortgage included
requirements of the law, one of which was to keep the property for herself and
of a homestead which, by analogy applies to a free patent, is mandated
her family within the prescribed period of five (5) years. Prior to the fulfillment
by the rationale for the grant, viz.: 22 of all requirements of the law, Respondent Morato's title over the property was
incomplete. Accordingly, if the requirements are not complied with, the State
It is well-known that the homestead laws were designed to as the grantor could petition for the annulment of the patent and the
distribute disposable agricultural lots of the State to land- cancellation of the title.
destitute citizens for their home and cultivation. Pursuant to
such benevolent intention the State prohibits the sale or Respondent Morato cannot use the doctrine of the indefeasibility of her
incumbrance of the homestead (Section 116) within five Torrens title to bar the state from questioning its transfer or encumbrance.
years after the grant of the patent. After that five-year The certificate of title issued to her clearly stipulated that its award was
period the law impliedly permits alienation of the "subject to the conditions provided for in Sections 118, 119, 121, 122 and
homestead; but in line with the primordial purpose to favor 124 of Commonwealth Act (CA) No. 141." Because she violated Section
the homesteader and his family the statute provides that 118, the reversion of the property to the public domain necessarily follows,
such alienation or conveyance (Section 117) shall be pursuant to Section 124.
subject to the right of repurchase by the homesteader, his
widow or heirs within five years. This section 117 is Second Issue: Foreshore Land
undoubtedly a complement of section 116. It aims to Revert to the Public Domain
preserve and keep in the family of the homesteader that
Petitioner correctly contends, however, that Private Respondent Morato Article 339, subsection 1, of the Civil Code, reads:
cannot own foreshore land:
Art. 339. Property of public ownership is
Through the encroachment or erosion by the ebb and flow
of the tide, a portion of the subject land was invaded by the 1. That devoted to public use, such as roads, canals, rivers,
waves and sea advances. During high tide, at least half of torrents, ports and bridges constructed by the State,
the land (632.5 square meters) is 6 feet deep under water riverbanks, shores, roadsteads, and that of a similar
and three (3) feet deep during low tide. The Calauag Bay character.
shore has extended up to a portion of the questioned land.
xxx xxx xxx
While at the time of the grant of free patent to respondent
Morato, the land was not reached by the water, however, Article 1, case 3, of the law of Waters of August 3, 1866,
due to gradual sinking of the land caused by natural provides as follows:
calamities, the sea advances had permanently invaded a
portion of subject land. As disclosed at the trial, through the
Art. 1. The following are part of the national domain open to
testimony of the court-appointed commissioner, Engr.
public use.
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 xxx xxx xxx
kilometer (TSN, July 19, 1979, p. 12). Also, in 1974, after
With relative frequency the opposite phenomenon occurs; FRANCISCO I. CHAVEZ, petitioner,
that is, the sea advances and private properties are vs.
permanently invaded by the waves, and in this case they PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
become part of the shore or breach. The then pass to the DEVELOPMENT CORPORATION, respondents.
public domain, but the owner thus dispossessed does not
retain any right to the natural products resulting from their CARPIO, J.:
new nature; it is a de facto case of eminent domain, and
not subject to indemnity. This is an original Petition for Mandamus with prayer for a writ of
preliminary injunction and a temporary restraining order. The petition seeks
In comparison, Article 420 of the Civil Code provides: to compel the Public Estates Authority ("PEA" for brevity) to disclose all
facts on PEA's then on-going renegotiations with Amari Coastal Bay and
Art. 420. The following things are property of public Development Corporation ("AMARI" for brevity) to reclaim portions of
dominion: Manila Bay. The petition further seeks to enjoin PEA from signing a new
agreement with AMARI involving such reclamation.
(1) Those intended for public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the State, The Facts
banks, shores, roadsteads, and others of similar character;
disposition, the parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose them to the Requiring a consummated contract will keep the public in the dark until the
public at the start of the disposition process, long before the consummation contract, which may be grossly disadvantageous to the government or
of the contract, because the Government Auditing Code requires public even illegal, becomes a fait accompli. This negates the State policy of full
bidding. If PEA fails to make this disclosure, any citizen can demand from transparency on matters of public concern, a situation which the framers of
PEA this information at any time during the bidding process. the Constitution could not have intended. Such a requirement will prevent
the citizenry from participating in the public discussion of
Information, however, on on-going evaluation or review of bids or any proposed contract, effectively truncating a basic right enshrined in the
proposals being undertaken by the bidding or review committee is not Bill of Rights. We can allow neither an emasculation of a constitutional
immediately accessible under the right to information. While the evaluation right, nor a retreat by the State of its avowed "policy of full disclosure of all
or review is still on-going, there are no "official acts, transactions, or its transactions involving public interest."
decisions" on the bids or proposals. However, once the committee makes
its official recommendation, there arises a "definite proposition" on the The right covers three categories of information which are "matters of
part of the government. From this moment, the public's right to information public concern," namely: (1) official records; (2) documents and papers
attaches, and any citizen can access all the non-proprietary information pertaining to official acts, transactions and decisions; and (3) government
leading to such definite proposition. In Chavez v. PCGG,33 the Court ruled research data used in formulating policies. The first category refers to any
as follows: document that is part of the public records in the custody of government
agencies or officials. The second category refers to documents and papers
"Considering the intent of the framers of the Constitution, we recording, evidencing, establishing, confirming, supporting, justifying or
believe that it is incumbent upon the PCGG and its officers, as well explaining official acts, transactions or decisions of government agencies
as other government representatives, to disclose sufficient public or officials. The third category refers to research data, whether raw,
information on any proposed settlement they have decided to take collated or processed, owned by the government and used in formulating
up with the ostensible owners and holders of ill-gotten wealth. Such government policies.
information, though, must pertain to definite propositions of the
government, not necessarily to intra-agency or inter-agency The information that petitioner may access on the renegotiation of the JVA
recommendations or communications during the stage when includes evaluation reports, recommendations, legal and expert opinions,
common assertions are still in the process of being formulated or minutes of meetings, terms of reference and other documents attached to
are in the "exploratory" stage. There is need, of course, to observe such reports or minutes, all relating to the JVA. However, the right to
the same restrictions on disclosure of information in general, as information does not compel PEA to prepare lists, abstracts, summaries
discussed earlier such as on matters involving national security, and the like relating to the renegotiation of the JVA.34 The right only affords
Sixth issue: whether stipulations in the Amended JVA for the transfer Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets
to AMARI of lands, reclaimed or to be reclaimed, violate the and all waters within the maritime zone of the Spanish territory belonged to
Constitution. the public domain for public use.44 The Spanish Law of Waters of 1866
allowed the reclamation of the sea under Article 5, which provided as
The Regalian Doctrine follows:
Article 339 of the Civil Code of 1889 defined property of public dominion as On May 8, 1907, the Philippine Commission enacted Act No. 1654 which
follows: regulated the lease of reclaimed and foreshore lands. The salient
provisions of this law were as follows:
"Art. 339. Property of public dominion is
"Section 1. The control and disposition of the foreshore as
1. That devoted to public use, such as roads, canals, rivers, defined in existing law, and the title to all Government or public
torrents, ports and bridges constructed by the State, riverbanks, lands made or reclaimed by the Government by dredging or
shores, roadsteads, and that of a similar character; filling or otherwise throughout the Philippine Islands, shall be
retained by the Government without prejudice to vested rights
2. That belonging exclusively to the State which, without being of and without prejudice to rights conceded to the City of Manila in the
general public use, is employed in some public service, or in the Luneta Extension.
development of the national wealth, such as walls, fortresses, and
other works for the defense of the territory, and mines, until granted Section 2. (a) The Secretary of the Interior shall cause all
to private individuals." Government or public lands made or reclaimed by the Government
by dredging or filling or otherwise to be divided into lots or blocks,
Property devoted to public use referred to property open for use by the with the necessary streets and alleyways located thereon, and
public. In contrast, property devoted to public service referred to property shall cause plats and plans of such surveys to be prepared and
used for some specific public service and open only to those authorized to filed with the Bureau of Lands.
use the property.
(b) Upon completion of such plats and plans the Governor-
Property of public dominion referred not only to property devoted to public General shall give notice to the public that such parts of the
use, but also to property not so used but employed to develop the lands so made or reclaimed as are not needed for public
national wealth. This class of property constituted property of public purposes will be leased for commercial and business
dominion although employed for some economic or commercial activity to purposes, x x x.
increase the national wealth.
xxx
Article 341 of the Civil Code of 1889 governed the re-classification of
property of public dominion into private property, to wit: (e) The leases above provided for shall be disposed of to the
highest and best bidder therefore, subject to such regulations
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Sec. 56. The lands disposable under this title shall be
Waters of 1866. Act No. 1654 did not prohibit private parties from classified as follows:
reclaiming parts of the sea under Section 5 of the Spanish Law of Waters.
Lands reclaimed from the sea by private parties with government (a) Lands reclaimed by the Government by dredging,
permission remained private lands. filling, or other means;
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, (c) Marshy lands or lands covered with water bordering
the Public Land Act.46 The salient provisions of Act No. 2874, on reclaimed upon the shores or banks of navigable lakes or rivers;
lands, were as follows:
(d) Lands not included in any of the foregoing classes.
"Sec. 6. The Governor-General, upon the recommendation of
the Secretary of Agriculture and Natural Resources, shall from
x x x.
time to time classify the lands of the public domain into
Sec. 58. The lands comprised in classes (a), (b), and (c) of
(a) Alienable or disposable,
section fifty-six shall be disposed of to private parties by lease
only and not otherwise, as soon as the Governor-General,
(b) Timber, and upon recommendation by the Secretary of Agriculture and
Natural Resources, shall declare that the same are not
(c) Mineral lands, x x x. necessary for the public service and are open to
disposition under this chapter. The lands included in class (d)
Sec. 7. For the purposes of the government and disposition of may be disposed of by sale or lease under the provisions of
alienable or disposable public lands, the Governor-General, upon this Act." (Emphasis supplied)
recommendation by the Secretary of Agriculture and Natural
Resources, shall from time to time declare what lands are Section 6 of Act No. 2874 authorized the Governor-General to "classify
open to disposition or concession under this Act." lands of the public domain into x x x alienable or disposable"47 lands.
x x x. The 1973 Constitution prohibited the alienation of all natural resources with
the exception of "agricultural, industrial or commercial, residential, and
resettlement lands of the public domain." In contrast, the 1935 Constitution
Art. 422. Property of public dominion, when no longer intended for
barred the alienation of all natural resources except "public agricultural
public use or for public service, shall form part of the patrimonial
lands." However, the term "public agricultural lands" in the 1935
property of the State."
Constitution encompassed industrial, commercial, residential and
resettlement lands of the public domain.60 If the land of public domain were
Again, the government must formally declare that the property of public neither timber nor mineral land, it would fall under the classification of
dominion is no longer needed for public use or public service, before the agricultural land of the public domain. Both the 1935 and 1973
same could be classified as patrimonial property of the State.59 In the case Constitutions, therefore, prohibited the alienation of all natural
of government reclaimed and marshy lands of the public domain, the resources except agricultural lands of the public domain.
declaration of their being disposable, as well as the manner of their
disposition, is governed by the applicable provisions of CA No. 141.
The 1973 Constitution, however, limited the alienation of lands of the public
domain to individuals who were citizens of the Philippines. Private
Like the Civil Code of 1889, the Civil Code of 1950 included as property of corporations, even if wholly owned by Philippine citizens, were no longer
public dominion those properties of the State which, without being for allowed to acquire alienable lands of the public domain unlike in the 1935
public use, are intended for public service or the "development of the
national wealth." Thus, government reclaimed and marshy lands of the
"FR. BERNAS: Mr. Vice-President, my questions have reference to If the constitutional intent is to encourage economic family-size farms,
page 3, line 5 which says: placing the land in the name of a corporation would be more effective in
preventing the break-up of farmlands. If the farmland is registered in the
`No private corporation or association may hold alienable lands of name of a corporation, upon the death of the owner, his heirs would inherit
the public domain except by lease, not to exceed one thousand shares in the corporation instead of subdivided parcels of the farmland.
hectares in area.' This would prevent the continuing break-up of farmlands into smaller and
smaller plots from one generation to the next.
If we recall, this provision did not exist under the 1935 Constitution,
but this was introduced in the 1973 Constitution. In effect, it In actual practice, the constitutional ban strengthens the constitutional
prohibits private corporations from acquiring alienable public limitation on individuals from acquiring more than the allowed area of
lands. But it has not been very clear in jurisprudence what the alienable lands of the public domain. Without the constitutional ban,
reason for this is. In some of the cases decided in 1982 and individuals who already acquired the maximum area of alienable lands of
1983, it was indicated that the purpose of this is to prevent the public domain could easily set up corporations to acquire more
large landholdings. Is that the intent of this provision? alienable public lands. An individual could own as many corporations as
his means would allow him. An individual could even hide his ownership of
MR. VILLEGAS: I think that is the spirit of the provision. a corporation by putting his nominees as stockholders of the corporation.
The corporation is a convenient vehicle to circumvent the constitutional
limitation on acquisition by individuals of alienable lands of the public
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo,
domain.
there were instances where the Iglesia ni Cristo was not allowed to
acquire a mere 313-square meter land where a chapel stood
because the Supreme Court said it would be in violation of this." The constitutional intent, under the 1973 and 1987 Constitutions, is to
(Emphasis supplied) transfer ownership of only a limited area of alienable land of the public
domain to a qualified individual. This constitutional intent is safeguarded by
the provision prohibiting corporations from acquiring alienable lands of the
In Ayog v. Cusi,64 the Court explained the rationale behind this
public domain, since the vehicle to circumvent the constitutional intent is
constitutional ban in this way:
removed. The available alienable public lands are gradually decreasing in
the face of an ever-growing population. The most effective way to insure
"Indeed, one purpose of the constitutional prohibition against faithful adherence to this constitutional intent is to grant or sell alienable
purchases of public agricultural lands by private corporations is to lands of the public domain only to individuals. This, it would seem, is the
equitably diffuse land ownership or to encourage 'owner- practical benefit arising from the constitutional ban.
cultivatorship and the economic family-size farm' and to prevent a
recurrence of cases like the instant case. Huge landholdings by
The Amended Joint Venture Agreement
corporations or private persons had spawned social unrest."
The subject matter of the Amended JVA, as stated in its second Whereas
However, if the constitutional intent is to prevent huge landholdings, the
clause, consists of three properties, namely:
Constitution could have simply limited the size of alienable lands of the
public domain that corporations could acquire. The Constitution could have
followed the limitations on individuals, who could acquire not more than 24 1. "[T]hree partially reclaimed and substantially eroded islands
along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas,
2. "[A]nother area of 2,421,559 square meters contiguous to the Indisputably, under the Amended JVA AMARI will acquire and own a
three islands;" and maximum of 367.5 hectares of reclaimed land which will be titled in
its name.
3. "[A]t AMARI's option as approved by PEA, an additional 350
hectares more or less to regularize the configuration of the To implement the Amended JVA, PEA delegated to the unincorporated
reclaimed area."65 PEA-AMARI joint venture PEA's statutory authority, rights and privileges to
reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the
PEA confirms that the Amended JVA involves "the development of the Amended JVA states that
Freedom Islands and further reclamation of about 250 hectares x x x," plus
an option "granted to AMARI to subsequently reclaim another 350 hectares "PEA hereby contributes to the joint venture its rights and privileges
x x x."66 to perform Rawland Reclamation and Horizontal Development as
well as own the Reclamation Area, thereby granting the Joint
In short, the Amended JVA covers a reclamation area of 750 Venture the full and exclusive right, authority and privilege to
hectares. Only 157.84 hectares of the 750-hectare reclamation project undertake the Project in accordance with the Master Development
have been reclaimed, and the rest of the 592.15 hectares are still Plan."
submerged areas forming part of Manila Bay.
The Amended JVA is the product of a renegotiation of the original JVA
Under the Amended JVA, AMARI will reimburse PEA the sum of dated April 25, 1995 and its supplemental agreement dated August 9,
P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the 1995.
Freedom Islands. AMARI will also complete, at its own expense, the
reclamation of the Freedom Islands. AMARI will further shoulder all the The Threshold Issue
reclamation costs of all the other areas, totaling 592.15 hectares, still to be
reclaimed. AMARI and PEA will share, in the proportion of 70 percent and The threshold issue is whether AMARI, a private corporation, can acquire
30 percent, respectively, the total net usable area which is defined in the and own under the Amended JVA 367.5 hectares of reclaimed foreshore
Amended JVA as the total reclaimed area less 30 percent earmarked for and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII
common areas. Title to AMARI's share in the net usable area, totaling of the 1987 Constitution which state that:
367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the
Amended JVA provides that "Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
"x x x, PEA shall have the duty to execute without delay the fisheries, forests or timber, wildlife, flora and fauna, and other
necessary deed of transfer or conveyance of the title pertaining to natural resources are owned by the State. With the exception of
AMARI's Land share based on the Land Allocation Plan. PEA, agricultural lands, all other natural resources shall not be
when requested in writing by AMARI, shall then cause the alienated. x x x.
issuance and delivery of the proper certificates of title
covering AMARI's Land Share in the name of AMARI, x x x; xxx
provided, that if more than seventy percent (70%) of the titled area
at any given time pertains to AMARI, PEA shall deliver to AMARI
Section 3. x x x Alienable lands of the public domain shall be
only seventy percent (70%) of the titles pertaining to AMARI, until
limited to agricultural lands. Private corporations or associations
PD No. 1085, coupled with President Aquino's actual issuance of a Under Article 5 of the Spanish Law of Waters of 1866, private parties could
special patent covering the Freedom Islands, is equivalent to an official reclaim from the sea only with "proper permission" from the State. Private
proclamation classifying the Freedom Islands as alienable or disposable parties could own the reclaimed land only if not "otherwise provided by the
lands of the public domain. PD No. 1085 and President Aquino's issuance terms of the grant of authority." This clearly meant that no one could
of a land patent also constitute a declaration that the Freedom Islands are reclaim from the sea without permission from the State because the sea is
no longer needed for public service. The Freedom Islands are thus property of public dominion. It also meant that the State could grant or
alienable or disposable lands of the public domain, open to withhold ownership of the reclaimed land because any reclaimed land, like
disposition or concession to qualified parties. the sea from which it emerged, belonged to the State. Thus, a private
person reclaiming from the sea without permission from the State could not
At the time then President Aquino issued Special Patent No. 3517, PEA acquire ownership of the reclaimed land which would remain property of
had already reclaimed the Freedom Islands although subsequently there public dominion like the sea it replaced.76 Article 5 of the Spanish Law of
were partial erosions on some areas. The government had also completed Waters of 1866 adopted the time-honored principle of land ownership that
the necessary surveys on these islands. Thus, the Freedom Islands were "all lands that were not acquired from the government, either by purchase
no longer part of Manila Bay but part of the land mass. Section 3, Article or by grant, belong to the public domain."77
XII of the 1987 Constitution classifies lands of the public domain into
"agricultural, forest or timber, mineral lands, and national parks." Being Article 5 of the Spanish Law of Waters must be read together with laws
neither timber, mineral, nor national park lands, the reclaimed Freedom subsequently enacted on the disposition of public lands. In particular, CA
Islands necessarily fall under the classification of agricultural lands of the No. 141 requires that lands of the public domain must first be classified as
public domain. Under the 1987 Constitution, agricultural lands of the public alienable or disposable before the government can alienate them. These
domain are the only natural resources that the State may alienate to lands must not be reserved for public or quasi-public
qualified private parties. All other natural resources, such as the seas or purposes.78 Moreover, the contract between CDCP and the government
bays, are "waters x x x owned by the State" forming part of the public was executed after the effectivity of the 1973 Constitution which barred
domain, and are inalienable pursuant to Section 2, Article XII of the 1987 private corporations from acquiring any kind of alienable land of the public
Constitution. domain. This contract could not have converted the Freedom Islands into
private lands of a private corporation.
AMARI claims that the Freedom Islands are private lands because CDCP,
then a private corporation, reclaimed the islands under a contract dated Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
November 20, 1973 with the Commissioner of Public Highways. AMARI, authorizing the reclamation of areas under water and revested solely in the
citing Article 5 of the Spanish Law of Waters of 1866, argues that "if the National Government the power to reclaim lands. Section 1 of PD No. 3-A
ownership of reclaimed lands may be given to the party constructing the declared that
works, then it cannot be said that reclaimed lands are lands of the public
domain which the State may not alienate."75 Article 5 of the Spanish Law of "The provisions of any law to the contrary notwithstanding, the
Waters reads as follows: reclamation of areas under water, whether foreshore or inland,
shall be limited to the National Government or any person
authorized by it under a proper contract. (Emphasis supplied)
owned by the State," forming part of the public domain and consequently
inalienable. Only when actually reclaimed from the sea can these Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA
submerged areas be classified as public agricultural lands, which under the "shall belong to or be owned by the PEA," could not automatically operate
Constitution are the only natural resources that the State may alienate. to classify inalienable lands into alienable or disposable lands of the public
Once reclaimed and transformed into public agricultural lands, the domain. Otherwise, reclaimed foreshore and submerged lands of the
government may then officially classify these lands as alienable or public domain would automatically become alienable once reclaimed by
disposable lands open to disposition. Thereafter, the government may PEA, whether or not classified as alienable or disposable.
declare these lands no longer needed for public service. Only then can
these reclaimed lands be considered alienable or disposable lands of the The Revised Administrative Code of 1987, a later law than either PD No.
public domain and within the commerce of man. 1084 or EO No. 525, vests in the Department of Environment and Natural
Resources ("DENR" for brevity) the following powers and functions:
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised In consideration of the foregoing transfer and assignment, the
Administrative Code of 1987, which states that Public Estates Authority shall issue in favor of the Republic of the
Philippines the corresponding shares of stock in said entity with an
"Sec. 48. Official Authorized to Convey Real Property. Whenever issued value of said shares of stock (which) shall be deemed fully
real property of the Government is authorized by law to be paid and non-assessable.
conveyed, the deed of conveyance shall be executed in behalf of
the government by the following: x x x." The Secretary of Public Highways and the General Manager of the
Public Estates Authority shall execute such contracts or
Thus, the Court concluded that a law is needed to convey any real property agreements, including appropriate agreements with the
belonging to the Government. The Court declared that - Construction and Development Corporation of the Philippines, as
may be necessary to implement the above.
"It is not for the President to convey real property of the
government on his or her own sole will. Any such conveyance Special land patent/patents shall be issued by the Secretary of
must be authorized and approved by a law enacted by the Natural Resources in favor of the Public Estates Authority
Congress. It requires executive and legislative concurrence." without prejudice to the subsequent transfer to the contractor
(Emphasis supplied) or his assignees of such portion or portions of the land
reclaimed or to be reclaimed as provided for in the above-
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative mentioned contract. On the basis of such patents, the Land
authority allowing PEA to sell its reclaimed lands. PD No. 1085, issued on Registration Commission shall issue the corresponding
February 4, 1977, provides that certificate of title." (Emphasis supplied)
"The land reclaimed in the foreshore and offshore area of On the other hand, Section 3 of EO No. 525, issued on February 14, 1979,
Manila Bay pursuant to the contract for the reclamation and provides that -
construction of the Manila-Cavite Coastal Road Project between
the Republic of the Philippines and the Construction and "Sec. 3. All lands reclaimed by PEA shall belong to or be
Development Corporation of the Philippines dated November 20, owned by the PEA which shall be responsible for its
1973 and/or any other contract or reclamation covering the same administration, development, utilization or disposition in
area is hereby transferred, conveyed and assigned to the accordance with the provisions of Presidential Decree No. 1084.
ownership and administration of the Public Estates Any and all income that the PEA may derive from the sale, lease or
Authority established pursuant to PD No. 1084; Provided, use of reclaimed lands shall be used in accordance with the
however, That the rights and interests of the Construction and provisions of Presidential Decree No. 1084."
Development Corporation of the Philippines pursuant to the
aforesaid contract shall be recognized and respected. There is no express authority under either PD No. 1085 or EO No. 525 for
PEA to sell its reclaimed lands. PD No. 1085 merely transferred
Henceforth, the Public Estates Authority shall exercise the rights "ownership and administration" of lands reclaimed from Manila Bay to
and assume the obligations of the Republic of the Philippines PEA, while EO No. 525 declared that lands reclaimed by PEA "shall
(Department of Public Highways) arising from, or incident to, the belong to or be owned by PEA." EO No. 525 expressly states that PEA
"After the registration and issuance of the certificate and duplicate The first four cases cited involve petitions to cancel the land patents and
certificate of title based on a public land patent, the land covered the corresponding certificates of titles issued to private parties. These
thereby automatically comes under the operation of Republic Act four cases uniformly hold that the Director of Lands has no jurisdiction over
496 subject to all the safeguards provided therein."3. Heirs of private lands or that upon issuance of the certificate of title the land
Gregorio Tengco v. Heirs of Jose Aliwalas,99 where the Court ruled automatically comes under the Torrens System. The fifth case cited
- involves the registration under the Torrens System of a 12.8-hectare public
land granted by the National Government to Mindanao Medical Center, a
government unit under the Department of Health. The National
"While the Director of Lands has the power to review homestead
Government transferred the 12.8-hectare public land to serve as the site
patents, he may do so only so long as the land remains part of the
for the hospital buildings and other facilities of Mindanao Medical Center,
public domain and continues to be under his exclusive control; but
which performed a public service. The Court affirmed the registration of the
once the patent is registered and a certificate of title is issued, the
12.8-hectare public land in the name of Mindanao Medical Center under
land ceases to be part of the public domain and becomes private
Section 122 of Act No. 496. This fifth case is an example of a public land
property over which the Director of Lands has neither control nor
being registered under Act No. 496 without the land losing its character as
jurisdiction."
a property of public dominion.
4. Manalo v. Intermediate Appellate Court,100 where the Court held
In the instant case, the only patent and certificates of title issued are those
in the name of PEA, a wholly government owned corporation performing
"Sec. 122. Whenever public lands in the Philippine Islands (2) For property belonging to the Republic of the Philippines,
belonging to the x x x Government of the Philippine Islands are but titled in the name of any political subdivision or of any
alienated, granted, or conveyed to persons or the public or corporate agency or instrumentality, by the executive head of
private corporations, the same shall be brought forthwith under the agency or instrumentality." (Emphasis supplied)
the operation of this Act and shall become registered lands."
Thus, private property purchased by the National Government for
PD No. 1529 expansion of a public wharf may be titled in the name of a government
corporation regulating port operations in the country. Private property
"Sec. 103. Certificate of Title to Patents. Whenever public land is purchased by the National Government for expansion of an airport may
by the Government alienated, granted or conveyed to any person, also be titled in the name of the government agency tasked to administer
the same shall be brought forthwith under the operation of this the airport. Private property donated to a municipality for use as a town
Decree." (Emphasis supplied) plaza or public school site may likewise be titled in the name of the
municipality.106 All these properties become properties of the public
Based on its legislative history, the phrase "conveyed to any person" in domain, and if already registered under Act No. 496 or PD No. 1529,
Section 103 of PD No. 1529 includes conveyances of public lands to public remain registered land. There is no requirement or provision in any existing
corporations. law for the de-registration of land from the Torrens System.
Alienable lands of the public domain "granted, donated, or transferred to a Private lands taken by the Government for public use under its power of
province, municipality, or branch or subdivision of the Government," as eminent domain become unquestionably part of the public domain.
provided in Section 60 of CA No. 141, may be registered under the Torrens Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds
System pursuant to Section 103 of PD No. 1529. Such registration, to issue in the name of the National Government new certificates of title
however, is expressly subject to the condition in Section 60 of CA No. 141 covering such expropriated lands. Section 85 of PD No. 1529 states
that the land "shall not be alienated, encumbered or otherwise disposed of
in a manner affecting its title, except when authorized by Congress." "Sec. 85. Land taken by eminent domain. Whenever any registered
This provision refers to government reclaimed, foreshore and marshy lands land, or interest therein, is expropriated or taken by eminent
of the public domain that have been titled but still cannot be alienated or domain, the National Government, province, city or municipality, or
encumbered unless expressly authorized by Congress. The need for any other agency or instrumentality exercising such right shall file
legislative authority prevents the registered land of the public domain from for registration in the proper Registry a certified copy of the
becoming private land that can be disposed of to qualified private parties. judgment which shall state definitely by an adequate description,
the particular property or interest expropriated, the number of the
The Revised Administrative Code of 1987 also recognizes that lands of the certificate of title, and the nature of the public use. A memorandum
public domain may be registered under the Torrens System. Section 48, of the right or interest taken shall be made on each certificate of
Chapter 12, Book I of the Code states title by the Register of Deeds, and where the fee simple is taken, a
new certificate shall be issued in favor of the National
Government, province, city, municipality, or any other agency
"Sec. 48. Official Authorized to Convey Real Property. Whenever
or instrumentality exercising such right for the land so taken. The
real property of the Government is authorized by law to be
Consequently, lands registered under Act No. 496 or PD No. 1529 are not We can now summarize our conclusions as follows:
exclusively private or patrimonial lands. Lands of the public domain may
also be registered pursuant to existing laws. 1. The 157.84 hectares of reclaimed lands comprising the Freedom
Islands, now covered by certificates of title in the name of PEA,
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI are alienable lands of the public domain. PEA may lease these
of the Freedom Islands or of the lands to be reclaimed from submerged lands to private corporations but may not sell or transfer ownership
areas of Manila Bay. In the words of AMARI, the Amended JVA "is not a of these lands to private corporations. PEA may only sell these
sale but a joint venture with a stipulation for reimbursement of the original lands to Philippine citizens, subject to the ownership limitations in
cost incurred by PEA for the earlier reclamation and construction works the 1987 Constitution and existing laws.
performed by the CDCP under its 1973 contract with the Republic."
Whether the Amended JVA is a sale or a joint venture, the fact remains 2. The 592.15 hectares of submerged areas of Manila Bay remain
that the Amended JVA requires PEA to "cause the issuance and delivery inalienable natural resources of the public domain until classified
of the certificates of title conveying AMARI's Land Share in the name of as alienable or disposable lands open to disposition and declared
AMARI."107 no longer needed for public service. The government can make
such classification and declaration only after PEA has reclaimed
This stipulation still contravenes Section 3, Article XII of the 1987 these submerged areas. Only then can these lands qualify as
Constitution which provides that private corporations "shall not hold such agricultural lands of the public domain, which are the only natural
alienable lands of the public domain except by lease." The transfer of title resources the government can alienate. In their present state, the
and ownership to AMARI clearly means that AMARI will "hold" the 592.15 hectares of submerged areas are inalienable and outside
reclaimed lands other than by lease. The transfer of title and ownership is the commerce of man.
a "disposition" of the reclaimed lands, a transaction considered a sale or
alienation under CA No. 141,108 the Government Auditing Code,109 and 3. Since the Amended JVA seeks to transfer to AMARI, a private
Section 3, Article XII of the 1987 Constitution. corporation, ownership of 77.34 hectares110of the Freedom Islands,
such transfer is void for being contrary to Section 3, Article XII of
The Regalian doctrine is deeply implanted in our legal system. Foreshore the 1987 Constitution which prohibits private corporations from
and submerged areas form part of the public domain and are inalienable. acquiring any kind of alienable land of the public domain.
Lands reclaimed from foreshore and submerged areas also form part of
the public domain and are also inalienable, unless converted pursuant to 4. Since the Amended JVA also seeks to transfer to AMARI
law into alienable or disposable lands of the public domain. Historically, ownership of 290.156 hectares111 of still submerged areas of
lands reclaimed by the government are sui generis, not available for sale Manila Bay, such transfer is void for being contrary to Section 2,
to private parties unlike other alienable public lands. Reclaimed lands Article XII of the 1987 Constitution which prohibits the alienation of
retain their inherent potential as areas for public use or public service. natural resources other than agricultural lands of the public
Alienable lands of the public domain, increasingly becoming scarce natural domain. PEA may reclaim these submerged areas. Thereafter, the
resources, are to be distributed equitably among our ever-growing government can classify the reclaimed lands as alienable or
population. To insure such equitable distribution, the 1973 and 1987 disposable, and further declare them no longer needed for public
Constitutions have barred private corporations from acquiring any kind of service. Still, the transfer of such reclaimed alienable lands of the
alienable land of the public domain. Those who attempt to dispose of public domain to AMARI will be void in view of Section 3, Article XII
Seventh issue: whether the Court is the proper forum to raise the to enjoin respondentsparticularly respondent NHAfrom further
issue of whether the Amended JVA is grossly disadvantageous to the implementing and/or enforcing the said project and other agreements
government. related thereto, and from further deriving and/or enjoying any rights,
privileges and interest therefrom x x x; and
Considering that the Amended JVA is null and void ab initio, there is no
necessity to rule on this last issue. Besides, the Court is not a trier of facts, to compel respondents to disclose all documents and information relating
and this last issue involves a determination of factual matters. to the projectincluding, but not limited to, any subsequent agreements
with respect to the different phases of the project, the revisions over the
WHEREFORE, the petition is GRANTED. The Public Estates Authority and original plan, the additional works incurred thereon, the current financial
Amari Coastal Bay Development Corporation are PERMANENTLY condition of respondent R-II Builders, Inc., and the transactions made
ENJOINED from implementing the Amended Joint Venture Agreement respecting the project.1
which is hereby declared NULL and VOID ab initio.
The Facts
SO ORDERED.
On March 1, 1988, then President Corazon C. Aquino issued
G.R. No. 164527 August 15, 2007 Memorandum Order No. (MO) 1612 approving and directing the
implementation of the Comprehensive and Integrated Metropolitan Manila
Waste Management Plan (the Plan). The Metro Manila Commission, in
FRANCISCO I. CHAVEZ, Petitioner,
coordination with various government agencies, was tasked as the lead
vs.
agency to implement the Plan as formulated by the Presidential Task
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II
Force on Waste Management created by Memorandum Circular No. 39. A
HOLDINGS, INC., HARBOUR CENTRE PORT TERMINAL, INC., and
day after, on March 2, 1988, MO 161-A3 was issued, containing the
MR. REGHIS ROMERO II, Respondents.
guidelines which prescribed the functions and responsibilities of fifteen (15)
various government departments and offices tasked to implement the Plan,
DECISION namely: Department of Public Works and Highway (DPWH), Department of
Health (DOH), Department of Environment and Natural Resources
VELASCO, JR., J.: (DENR), Department of Transportation and Communication, Department of
Budget and Management, National Economic and Development Authority
In this Petition for Prohibition and Mandamus with Prayer for Temporary (NEDA), Philippine Constabulary Integrated National Police, Philippine
Restraining Order and/or Writ of Preliminary Injunction under Rule 65, Information Agency and the Local Government Unit (referring to the City of
petitioner, in his capacity as taxpayer, seeks: Manila), Department of Social Welfare and Development, Presidential
1.0 meter only meters of silt after sub-soil investigation.28 2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of
the Manila Bay area directly across Radial Road 10 (R-10) to serve
These material and substantial modifications served as as payment to the DEVELOPER as its asset share for Phase I and
justifications for the increase in the share of RBI from 40 hectares to develop such land into commercial area with port facilities;
to 79 hectares of reclaimed land. provided, that the port plan shall be integrated with the Philippine
Port Authoritys North Harbor plan for the Manila Bay area and
Under the JVA, the specific costs of the Project were not stipulated provided further, that the final reclamation and port plan for said
but under the ARJVA, the stipulated cost for Phase I was pegged reclaimed area shall be submitted for approval by the Public
at six billion six hundred ninety-three million three hundred eighty- Estates Authority and the Philippine Ports Authority, respectively:
seven thousand three hundred sixty-four pesos (PhP provided finally, that subject to par. 2.02 above, actual reclamation
6,693,387,364). work may commence upon approval of the final reclamation plan
by the Public Estates Authority.
In his February 10, 1994 Memorandum, the Chairperson of the
SMDRP EXECOM submitted the ARJVA for approval by the OP. xxxx
After review of said agreement, the OP directed that certain terms
and conditions of the ARJVA be further clarified or amended 9. A new paragraph to be numbered 5.05 shall be added to Article
preparatory to its approval. Pursuant to the Presidents directive, V of the ARJVA, and shall read as follows:
the parties reached an agreement on the clarifications and
amendments required to be made on the ARJVA. 5.05. In the event this Agreement is revoked, cancelled or terminated by
the AUTHORITY through no fault of the DEVELOPER, the AUTHORITY
On August 11, 1994, the NHA and RBI executed an Amendment shall compensate the DEVELOPER for the value of the completed portions
To the Amended and Restated Joint Venture Agreement of, and actual expenditures on the PROJECT plus a reasonable rate of
(AARJVA)29 clarifying certain terms and condition of the ARJVA, return thereon, not exceeding that stated in the Cost Estimates of Items of
which was submitted to President Ramos for approval, to wit: Work previously approved by the SMDRP Executive Committee and the
AUTHORITY and stated in this Agreement, as of the date of such
Phase II shall involve the following: revocation, cancellation, or termination, on a schedule to be agreed upon
by the parties, provided that said completed portions of Phase I are in
accordance with the approved FINAL REPORT.
a. the construction and operation of an incinerator plant
that will conform to the emission standards of the DENR
Afterwards, President Ramos issued Proclamation No. 465 dated August
31, 199431 increasing the proposed area for reclamation across R-10 from
b. the reclamation and development of 119-hectare area
40 hectares to 79 hectares,32 to wit:
contiguous to that to be reclaimed under Phase I to serve
as the enabling component of Phase II, the exact size and
configuration of which shall be approved by the SMDRP NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Committee30 Philippines, by virtue of the powers vested in me by the law, and as
recommended by the SMDRP Executive Committee, do hereby authorize
the increase of the area of foreshore or submerged lands of Manila Bay to
Other substantial amendments are the following:
be reclaimed, as previously authorized under Proclamation No. 39 (s.
On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty Thus, on February 19, 1998, the EXECOM issued a resolution directing
Corporation (HIGC), now known as the Home Guaranty Corporation, and NHA to enter into a supplemental agreement covering said necessary
the Philippine National Bank (PNB)33 executed the Smokey Mountain Asset works.
Pool Formation Trust Agreement (Asset Pool Agreement).34 Thereafter, a
Guaranty Contract was entered into by NHA, RBI, and HIGC. On March 20, 1998, the NHA and RBI entered into a Supplemental
Agreement covering the aforementioned necessary works and submitted it
On June 23, 1994, the Legislature passed the Clean Air Act.35 The Act to the President on March 24, 1998 for approval.
made the establishment of an incinerator illegal and effectively barred the
implementation of the planned incinerator project under Phase II. Thus, the Outgoing President Ramos decided to endorse the consideration of the
off-site disposal of the garbage at the Smokey Mountain became Supplemental Agreement to incoming President Joseph E. Estrada. On
necessary.36 June 30, 1998, Estrada became the 13th Philippine President.
The land reclamation was completed in August 1996.37 However, the approval of the Supplemental Agreement was unacted upon
for five months. As a result, the utilities and the road networks were
Sometime later in 1996, pursuant likewise to Proclamation No. 39, the constructed to cover only the 79-hectare original enabling component
DENR issued Special Patent No. 3598 conveying in favor of NHA an granted under the ARJVA. The 220-hectare extension of the 79-hectare
additional 390,000 square meter area. area was no longer technically feasible. Moreover, the financial crises and
unreliable real estate situation made it difficult to sell the remaining
reclaimed lots. The devaluation of the peso and the increase in interest
During the actual construction and implementation of Phase I of the
cost led to the substantial increase in the cost of reclamation.
SMDRP, the Inter-Agency Technical Committee found and recommended
to the EXECOM on December 17, 1997 that additional works were
necessary for the completion and viability of the Project. The EXECOM On August 1, 1998, the NHA granted RBIs request to suspend work on the
approved the recommendation and so, NHA instructed RBI to implement SMDRP due to "the delay in the approval of the Supplemental Agreement,
the change orders or necessary works.38 the consequent absence of an enabling component to cover the cost of the
necessary works for the project, and the resulting inability to replenish the
The reconstituted EXECOM conducted a review of the project and On August 28, 2001, NHA issued Resolution No. 4436 to pay for "the
recommended the amendment of the March 20, 1998 Supplemental various necessary works/change orders to SMDRP, to effect the
Agreement "to make it more feasible and to identify and provide new corresponding enabling component consisting of the conveyance of the
sources of funds for the project and provide for a new enabling component NHAs Vitas Property and an additional 150-hectare reclamation area" and
to cover the payment for the necessary works that cannot be covered by to authorize the release by NHA of PhP 480 million "as advance to the
the 79-hectare enabling component under the ARJVA."41 project to make the Permanent Housing habitable, subject to
reimbursement from the proceeds of the expanded enabling component."44
The EXECOM passed Resolution Nos. 99-16-01 and 99-16-0242 which
approved the modification of the Supplemental Agreement, to wit: On November 19, 2001, the Amended Supplemental Agreement (ASA)
was signed by the parties, and on February 28, 2002, the Housing and
a) Approval of 150 hectares additional reclamation in order to make Urban Development Coordinating Council (HUDCC) submitted the
the reclamation feasible as part of the enabling component. agreement to the OP for approval.
b) The conveyance of the 15-hectare NHA Vitas property (actually In the July 20, 2002 Cabinet Meeting, HUDCC was directed "to submit the
17 hectares based on surveys) to the SMDRP Asset Pool. works covered by the PhP 480 million [advance to the Project] and the
ASA to public bidding."45 On August 28, 2002, the HUDCC informed RBI of
c) The inclusion in the total development cost of other additional, the decision of the Cabinet.
necessary and indispensable infrastructure works and the revision
of the original cost stated in the Supplemental Agreement dated In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the
March 20, 1998 from PhP 2,953,984,941.40 to PhP decision of the government "to bid out the remaining works under the ASA
2,969,134,053.13. thereby unilaterally terminating the Project with RBI and all the agreements
related thereto." RBI demanded the payment of just compensation "for all
d) Revision in the sharing agreement between the parties. accomplishments and costs incurred in developing the SMDRP plus a
Consequently, the parties negotiated the terms of the termination of the a.1 P250 Million in cash from the escrow account in
JVA and other subsequent agreements. accordance with Section 2 herewith;
On August 27, 2003, the NHA and RBI executed a Memorandum of a.2 Conveyance of a 3 hectare portion of the Vitas
Agreement (MOA) whereby both parties agreed to terminate the JVA and Industrial area immediately after joint determination
other subsequent agreements, thus: of the appraised value of the said property in
accordance with the procedure herein set forth in
1. TERMINATION the last paragraph of Section 5.3. For purposes of
all payments to be made through conveyance of
1.1 In compliance with the Cabinet directive dated 30 July real properties, the parties shall secure from the
2002 to submit the works covered by the P480 Million and NHA Board of Directors all documents necessary
the ASA to public bidding, the following agreements and sufficient to effect the transfer of title over the
executed by and between the NHA and the DEVELOPER properties to be conveyed to RBI, which documents
are hereby terminated, to wit: shall be issued within a reasonable period.
a. Joint Venture Agreement (JVA) dated 19 March 5.2 Any unpaid balance of the DEVELOPERS claims determined
1993 after the validation process referred to in Section 4 hereof, may be
paid in cash, bonds or through the conveyance of properties or any
combination thereof. The manner, terms and conditions of payment
b. Amended and Restated Joint Venture Agreement
of the balance shall be specified and agreed upon later within a
(ARJVA) dated 21 February 1994
period of three months from the time a substantial amount
representing the unpaid balance has been validated pursuant
c. Amendment and Restated Joint Venture hereto including, but not limited to the programming of quarterly
Agreement dated 11 August 1994 cash payments to be sourced by the NHA from its budget for debt
servicing, from its income or from any other sources.
d. Supplemental Agreement dated 24 March 1998
5.3 In any case the unpaid balance is agreed to be paid, either
e. Amended Supplemental Agreement (ASA) dated partially or totally through conveyance of properties, the parties
19 November 2001. shall agree on which properties shall be subject to conveyance.
The NHA and DEVELOPER hereby agree to determine the
xxxx valuation of the properties to be conveyed by getting the average
of the appraisals to be made by two (2) mutually acceptable
5. SETTLEMENT OF CLAIMS independent appraisers.
5.1 Subject to the validation of the DEVELOPERs claims, the NHA Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI)
hereby agrees to initially compensate the Developer for the entered into an agreement with the asset pool for the development and
abovementioned costs as follows: operations of a port in the Smokey Mountain Area which is a major
component of SMDRP to provide a source of livelihood and employment
Secondly, we agree with petitioner that there is no necessity for us to make subsequent amendments were already substantially implemented.
any factual findings since the facts needed to decide the instant petition Subsequently, the Project was terminated through a MOA signed
are well established from the admissions of the parties in their on August 27, 2003. Almost one year later on August 5, 2004, the
pleadings55 and those derived from the documents appended to said Chavez petition was filed;
submissions. Indeed, the core facts which are the subject matter of the
numerous issues raised in this petition are undisputed. (5) In PEA, AMARI was considered to be in bad faith as it signed
the amended JVA after the Chavez petition was filed with the Court
Now we will tackle the issues that prop up the instant petition. and after Senate Committee Report No. 560 was issued finding
that the subject lands are inalienable lands of public domain. In the
Since petitioner has cited our decision in PEA as basis for his postulations instant petition, RBI and other respondents are considered to have
in a number of issues, we first resolve the queryis PEA applicable to the signed the agreements in good faith as the Project was terminated
case at bar? even before the Chavez petition was filed;
A juxtaposition of the facts in the two cases constrains the Court to rule in (6) The PEA-AMARI JVA was executed as a result of direct
the negative. negotiation between the parties and not in accordance with the
Asserting that existing laws did not empower the NHA and RBI to reclaim The aforequoted provision points to three (3) requisites for a legal and valid
lands of public domain, the Public Estates Authority (PEA), petitioner reclamation project, viz:
claims, is "the primary authority for the reclamation of all foreshore and
submerged lands of public domain," and relies on PEA where this Court (1) approval by the President;
held:
(2) favorable recommendation of PEA; and
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall
be primarily responsible for integrating, directing, and coordinating all (3) undertaken by any of the following:
reclamation projects for and on behalf of the National Government." The
same section also states that "[A]ll reclamation projects shall be approved a. by PEA
by the President upon recommendation of the PEA, and shall be
Thus, while PEA under PD 1084 has the power to reclaim land and under 2. The requisite favorable endorsement of the reclamation phase was
EO 525 is primarily responsible for integrating, directing and coordinating impliedly granted by PEA. President Aquino saw to it that there was
reclamation projects, such authority is NOT exclusive and such power to coordination of the project with PEA by designating its general manager as
reclaim may be granted or delegated to another government agency or member of the EXECOM tasked to supervise the project implementation.
entity or may even be undertaken by the National Government itself, PEA The assignment was made in Sec. 2 of MO 415 which provides:
being only an agency and a part of the National Government.
Section 2. An Executive Committee is hereby created to oversee the
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation implementation of the Plan, chaired by the NCR-CORD, with the heads of
phase of SMDRP. After a scrutiny of the facts culled from the records, we the following agencies as members: The National Housing Authority, the
find that the project met all the three (3) requirements, thus: City of Manila, the Department of Public Works and Highways, the Public
Estates Authority, the Philippine Ports Authority, the Department of
1. There was ample approval by the President of the Philippines; as a Environment and Natural Resources and the Development Bank of the
matter of fact, two Philippine Presidents approved the same, namely: Philippines. (Emphasis supplied.)
Presidents Aquino and Ramos. President Aquino sanctioned the
reclamation of both the SMDRP housing and commercial-industrial sites The favorable recommendation by PEA of the JVA and subsequent
through MO 415 (s. 1992) which approved the SMDRP under Sec. 1 and amendments were incorporated as part of the recommendations of the
directed NHA "x x x to implement the Smokey Mountain Development Plan EXECOM created under MO 415. While there was no specific
and Reclamation of the Area across R-10 through a private sector joint recommendation on the SMDRP emanating solely from PEA, we find that
venture scheme at the least cost to government" under Section 3. the approbation of the Project and the land reclamation as an essential
component by the EXECOM of which PEA is a member, and its
3. The third element was also presentthe reclamation was undertaken Section 3. Progress and Objectives. The Authority shall have the following
either by PEA or any person or entity under contract with PEA or by the purposes and objectives:
National Government agency or entity authorized under its charter to
reclaim lands subject to consultation with PEA. It cannot be disputed that xxxx
the reclamation phase was not done by PEA or any person or entity under
contract with PEA. However, the reclamation was implemented by the b) To undertake housing, development, resettlement or other
NHA, a national government agency whose authority to reclaim lands activities as would enhance the provision of housing to every
under consultation with PEA is derived from its charterPD 727 and other Filipino;
pertinent lawsRA 727962 and RA 6957 as amended by RA 7718.
c) To harness and promote private participation in housing
While the authority of NHA to reclaim lands is challenged by petitioner, we ventures in terms of capital expenditures, land, expertise, financing
find that the NHA had more than enough authority to do so under existing and other facilities for the sustained growth of the housing industry.
laws. While PD 757, the charter of NHA, does not explicitly mention (Emphasis supplied.)
"reclamation" in any of the listed powers of the agency, we rule that the
NHA has an implied power to reclaim land as this is vital or incidental to
Land reclamation is an integral part of the development of resources for
effectively, logically, and successfully implement an urban land reform and
some of the housing requirements of the NHA. Private participation in
housing program enunciated in Sec. 9 of Article XIII of the 1987
housing projects may also take the form of land reclamation.
Constitution.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the
Basic in administrative law is the doctrine that a government agency or
Tondo Foreshore Development Authority (TFDA), has the power to
office has express and implied powers based on its charter and other
reclaim, thus:
pertinent statutes. Express powers are those powers granted, allocated,
and delegated to a government agency or office by express provisions of
law. On the other hand, implied powers are those that can be inferred or Section 5. Dissolution of Existing Housing Agencies. The People's
are implicit in the wordings of the law63 or conferred by necessary or fair Homesite and Housing Corporation (PHHC), the Presidential Assistant on
implication in the enabling act.64 In Angara v. Electoral Commission, the Housing Resettlement Agency (PAHRA), the Tondo Foreshore
Court clarified and stressed that when a general grant of power is Development Authority (TFDA), the Central Institute for the Training and
conferred or duty enjoined, every particular power necessary for the Relocation of Urban Squatters (CITRUS), the Presidential Committee for
exercise of the one or the performance of the other is also conferred by Housing and Urban Resettlement (PRECHUR), Sapang Palay
necessary implication.65 It was also explicated that when the statute does Development Committee, Inter-Agency Task Force to Undertake the
not specify the particular method to be followed or used by a government Relocation of Families in Barrio Nabacaan, Villanueva, Misamis Oriental
agency in the exercise of the power vested in it by law, said agency has and all other existing government housing and resettlement agencies, task
the authority to adopt any reasonable method to carry out its functions.66 forces and ad-hoc committees, are hereby dissolved. Their powers and
functions, balance of appropriations, records, assets, rights, and choses in
action, are transferred to, vested in, and assumed by the Authority. x x x
The power to reclaim on the part of the NHA is implicit from PD 757, RA
(Emphasis supplied.)
7279, MO 415, RA 6957, and PD 3-A,67viz:
PD 570 dated October 30, 1974 created the TFDA, which defined its
1. NHAs power to reclaim derived from PD 757 provisions:
objectives, powers, and functions. Sec. 2 provides:
The powers and functions are contained in Sec. 3, to wit: c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which
embrace the authority to reclaim land, thus:
a) To develop and implement comprehensive and integrated urban
renewal programs for the Tondo Foreshore and Dagat-dagatan Sec. 6. Powers and functions of the Authority.The Authority shall have
lagoon and/or any other additional/alternative resettlement site and the following powers and functions to be exercised by the Board in
to formulate and enforce general and specific policies for its accordance with its established national human settlements plan prepared
development which shall ensure reasonable degree of compliance by the Human Settlements Commission:
with environmental standards.
(a) Develop and implement the comprehensive and integrated housing
b) To prescribe guidelines and standards for the reservation, program provided for in Section hereof;
conservation and utilization of public lands covering the Tondo
Foreshore land and its resettlement sites; xxxx
c) To construct, acquire, own, lease, operate and maintain (c) Prescribe guidelines and standards for the reservation, conservation
infrastructure facilities, housing complex, sites and services; and utilization of public lands identified for housing and resettlement;
The power of the NHA to undertake reclamation of land can be inferred WHEREAS, the said Plan requires the coordinated and synchronized
from Secs. 12 and 29 of RA 7279, which provide: efforts of the City of Manila and other government agencies and
instrumentalities to ensure effective and efficient implementation;
Section 12. Disposition of Lands for Socialized Housing.The National
Housing Authority, with respect to lands belonging to the National WHEREAS, the government encourages private sector initiative in the
Government, and the local government units with respect to other lands implementation of its projects. (Emphasis supplied.)
within their respective localities, shall coordinate with each other to
formulate and make available various alternative schemes for the Proceeding from these "whereas" clauses, it is unequivocal that
disposition of lands to the beneficiaries of the Program. These schemes reclamation of land in the Smokey Mountain area is an essential and vital
shall not be limited to those involving transfer of ownership in fee simple power of the NHA to effectively implement its avowed goal of developing
but shall include lease, with option to purchase, usufruct or such other low-cost housing units at the Smokey Mountain dumpsites. The
variations as the local government units or the National Housing Authority interpretation made by no less than the President of the Philippines as
may deem most expedient in carrying out the purposes of this Act.
Based on the provisions of the BOT Law and Implementing Rules and On February 14, 1979, EO 525 was issued. It granted PEA primary
Regulations, it is unequivocal that all government infrastructure agencies responsibility for integrating, directing, and coordinating reclamation
like the NHA can undertake infrastructure or development projects using projects for and on behalf of the National Government although other
the contractual arrangements prescribed by the law, and land reclamation national government agencies can be designated by the President to
is one of the projects that can be resorted to in the BOT project reclaim lands in coordination with the PEA. Despite the issuance of EO
implementation under the February 10, 1992 Joint Resolution No. 3 of the 525, PD 3-A remained valid and subsisting. Thus, the National
8th Congress. Government through the President still retained the power and control over
all reclamation projects in the country.
From the foregoing considerations, we find that the NHA has ample implied
authority to undertake reclamation projects. The power of the National Government through the President over
reclamation of areas, that is, underwater whether foreshore or inland, was
Even without an implied power to reclaim lands under NHAs charter, we made clear in EO 54369 which took effect on June 24, 2006. Under EO
rule that the authority granted to NHA, a national government agency, by 543, PEA was renamed the Philippine Reclamation Authority (PRA) and
the President under PD 3-A reinforced by EO 525 is more than sufficient was granted the authority to approve reclamation projects, a power
statutory basis for the reclamation of lands under the SMDRP. previously reposed in the President under EO 525. EO 543 reads:
PD 3-A is a law issued by then President Ferdinand E. Marcos under his Section 1. The power of the President to approve reclamation projects is
martial law powers on September 23, 1972. It provided that "[t]he hereby delegated to the Philippine Reclamation Authority [formerly PEA],
provisions of any law to the contrary notwithstanding, the reclamation of through its governing board, subject to compliance with existing laws and
areas, underwater, whether foreshore or inland, shall be limited to the rules and subject to the condition that reclamation contracts to be executed
National Government or any person authorized by it under the proper with any person or entity go through public bidding.
contract." It repealed, in effect, RA 1899 which previously delegated the
right to reclaim lands to municipalities and chartered cities and revested it Section 2. Nothing in the Order shall be construed as diminishing the
to the National Government.68 Under PD 3-A, "national government" can Presidents authority to modify, amend or nullify PRAs action.
only mean the Executive Branch headed by the President. It cannot refer
to Congress as it was dissolved and abolished at the time of the issuance Section 3. All executive issuances inconsistent with this Executive Order
of PD 3-A on September 23, 1972. Moreover, the Executive Branch is the are hereby repealed or amended accordingly. (Emphasis supplied.)
only implementing arm in the government with the equipment, manpower,
expertise, and capability by the very nature of its assigned powers and Sec. 2 of EO 543 strengthened the power of control and supervision of the
functions to undertake reclamation projects. Thus, under PD 3-A, the President over reclamation of lands as s/he can modify, amend, or nullify
Executive Branch through the President can implement reclamation of the action of PEA (now PRA).
lands through any of its departments, agencies, or offices.
From the foregoing issuances, we conclude that the Presidents delegation
Subsequently, on February 4, 1977, President Marcos issued PD 1084 to NHA, a national government agency, to reclaim lands under the
creating the PEA, which was granted, among others, the power "to reclaim SMDRP, is legal and valid, firmly anchored on PD 3-A buttressed by EO
outside the commerce of man (1) MO 415 issued by President Aquino, of which Sec. 4 states that
"[t]he land covered by the Smokey Mountain Dumpsite is hereby
Petitioner postulates that respondent RBI cannot acquire the reclaimed conveyed to the National Housing Authority as well as the area to
foreshore and submerged areas as these are inalienable public lands be reclaimed across R-10."
beyond the commerce of man based on Art. 1409 of the Civil Code which
provides: The directive to transfer the lands once reclaimed to the NHA
implicitly carries with it the declaration that said lands are alienable
Article 1409. The following contracts are inexistent and void from the and disposable. Otherwise, the NHA cannot effectively use them in
beginning: its housing and resettlement project.
(1) Those whose cause, object or purpose is contrary to law, morals, good (2) Proclamation No. 39 issued by then President Ramos by which
customs, public order or public policy; the reclaimed lands were conveyed to NHA for subdivision and
disposition to qualified beneficiaries and for development into a
mixed land use (commercial/industrial) to provide employment
xxxx
opportunities to on-site families and additional areas for port-
related activities. Said directive carries with it the pronouncement
(7) Those expressly prohibited or declared void by law. that said lands have been transformed to alienable and disposable
lands. Otherwise, there is no legal way to convey it to the
These contracts cannot be ratified. Neither can the right to set up the beneficiaries.
defense of illegality be waived.
(3) Proclamation No. 465 likewise issued by President Ramos
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources enlarged the reclaimed area to 79 hectares to be developed and
are owned by the State and they cannot be alienated except for alienable disposed of in the implementation of the SMDRP. The authority put
agricultural lands of the public domain. One of the States natural into the hands of the NHA to dispose of the reclaimed lands tacitly
resources are lands of public domain which include reclaimed lands. sustains the conversion to alienable and disposable lands.
Petitioner contends that for these reclaimed lands to be alienable, there Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR
must be a law or presidential proclamation officially classifying these anchored on Proclamations Nos. 39 and 465 issued by President Ramos,
reclaimed lands as alienable and disposable and open to disposition or without doubt, classified the reclaimed areas as alienable and disposable.
concession. Absent such law or proclamation, the reclaimed lands cannot
be the enabling component or consideration to be paid to RBI as these are Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465
beyond the commerce of man. are explicit declarations that the lands to be reclaimed are classified as
alienable and disposable. We find however that such conclusion is derived
We are not convinced of petitioners postulation. and implicit from the authority given to the NHA to transfer the reclaimed
lands to qualified beneficiaries.
The reclaimed lands across R-10 were classified alienable and disposable
lands of public domain of the State for the following reasons, viz:
The conduct of the survey, the preparation of the survey plan, the The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga,
computation of the technical description, and the processing and Sr.,79 Heirs of Carlos Alcaraz v. Republic,80 and the more recent case of
preparation of the special patent are matters within the technical area of Doris Chiongbian-Oliva v. Republic of the Philippines.81 Thus, the 79-
expertise of administrative agencies like the DENR and the Land hectare reclaimed land became patrimonial property after the issuance of
Management Bureau and are generally accorded not only respect but at certificates of titles to the NHA based on Special Patents Nos. 3592 and
times even finality.76 Preparation of special patents calls for technical 3598.
examination and a specialized review of calculations and specific details
which the courts are ill-equipped to undertake; hence, the latter defer to the One last point. The ruling in PEA cannot even be applied retroactively to
administrative agency which is trained and knowledgeable on such the lots covered by Special Patents Nos. 3592 (40 hectare reclaimed land)
matters.77 and 3598 (39-hectare reclaimed land). The reclamation of the land under
SMDRP was completed in August 1996 while the PEA decision was
Subsequently, the special patents in the name of the NHA were submitted rendered on July 9, 2002. In the meantime, subdivided lots forming parts of
to the Register of Deeds of the City of Manila for registration, and the reclaimed land were already sold to private corporations for value and
corresponding certificates of titles over the reclaimed lots were issued separate titles issued to the buyers. The Project was terminated through a
based on said special patents. The issuance of certificates of titles in Memorandum of Agreement signed on August 27, 2003. The PEA decision
NHAs name automatically converts the reclaimed lands to patrimonial
reclaimed lands Section 6. Powers and functions of the Authority. The Authority shall have
the following powers and functions to be exercised by the Boards in
Determining Factors in the Disposal of Unserviceable Property Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Property, which can no longer be repaired or reconditioned;
Property whose maintenance costs of repair more than outweigh Petitioner maintains that RBI, being a private corporation, is expressly
the benefits and services that will be derived from its continued prohibited by the 1987 Constitution from acquiring lands of public domain.
use;
Property that has become obsolete or outmoded because of Petitioners proposition has no legal mooring for the following reasons:
changes in technology;
Serviceable property that has been rendered unnecessary due to 1. RA 6957 as amended by RA 7718 explicitly states that a
change in the agencys function or mandate; contractor can be paid "a portion as percentage of the reclaimed
Unused supplies, materials and spare parts that were procured in land" subject to the constitutional requirement that only Filipino
excess of requirements; and citizens or corporations with at least 60% Filipino equity can
Unused supplies and materials that [have] become dangerous to acquire the same. It cannot be denied that RBI is a private
use because of long storage or use of which is determined to be corporation, where Filipino citizens own at least 60% of the stocks.
hazardous.85 Thus, the transfer to RBI is valid and constitutional.
Reclaimed lands cannot be considered unserviceable properties. The 2. When Proclamations Nos. 39 and 465 were issued, inalienable
reclaimed lands in question are very much needed by the NHA for the lands covered by said proclamations were converted to alienable
Smokey Mountain Project because without it, then the projects will not be and disposable lands of public domain. When the titles to the
3. The NHA is an end-user entity such that when alienable lands of The foregoing Resolution makes it clear that the SMDRP was a program
public domain are transferred to said agency, they are adopted by the Government under Republic Act No. 6957 (An Act
automatically classified as patrimonial properties. The NHA is Authorizing the Financing, Construction, Operation and Maintenance of
similarly situated as BCDA which was granted the authority to Infrastructure Projects by the Private Sector, and For Other Purposes), as
dispose of patrimonial lands of the government under RA 7227. amended by RA 7718, which is a special law similar to RA 7227.
The nature of the property holdings conveyed to BCDA is Moreover, since the implementation was assigned to the NHA, an end-user
elucidated and stressed in the May 6, 2003 Resolution in Chavez agency under PD 757 and RA 7279, the reclaimed lands registered under
v. PEA, thus: the NHA are automatically classified as patrimonial lands ready for
disposition to qualified beneficiaries.
BCDA is an entirely different government entity. BCDA is authorized by law
to sell specific government lands that have long been declared by The foregoing reasons likewise apply to the contention of petitioner that
presidential proclamations as military reservations for use by the different HCPTI, being a private corporation, is disqualified from being a transferee
services of the armed forces under the Department of National Defense. of public land. What was transferred to HCPTI is a 10-hectare lot which is
BCDAs mandate is specific and limited in area, while PEAs mandate is already classified as patrimonial property in the hands of the NHA. HCPTI,
general and national. BCDA holds government lands that have been being a qualified corporation under the 1987 Constitution, the transfer of
granted to end-user government entitiesthe military services of the the subject lot to it is valid and constitutional.
armed forces. In contrast, under Executive Order No. 525, PEA holds the
reclaimed public lands, not as an end-user entity, but as the government Eighth Issue: Whether respondents can be compelled to disclose
agency "primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government." all information related to the SMDRP
x x x Well-settled is the doctrine that public land granted to an end-user Petitioner asserts his right to information on all documents such as
government agency for a specific public use may subsequently be contracts, reports, memoranda, and the like relative to SMDRP.
withdrawn by Congress from public use and declared patrimonial property
to be sold to private parties. R.A. No. 7227 creating the BCDA is a law that
Petitioner asserts that matters relative to the SMDRP have not been
declares specific military reservations no longer needed for defense or
disclosed to the public like the current stage of the Project, the present
military purposes and reclassifies such lands as patrimonial property for
financial capacity of RBI, the complete list of investors in the asset pool,
sale to private parties.
the exact amount of investments in the asset pool and other similar
important information regarding the Project.
The other aspect of the peoples right to know apart from the duty to The argument of the Solicitor General is meritorious.
disclose is the duty to allow access to information on matters of public
concern under Sec. 7, Art. III of the Constitution. The gateway to The "operative fact" doctrine is embodied in De Agbayani v. Court of
information opens to the public the following: (1) official records; (2) Appeals, wherein it is stated that a legislative or executive act, prior to its
documents and papers pertaining to official acts, transactions, or being declared as unconstitutional by the courts, is valid and must be
decisions; and (3) government research data used as a basis for policy complied with, thus:
development.
As the new Civil Code puts it: "When the courts declare a law to be
Thus, the duty to disclose information should be differentiated from the inconsistent with the Constitution, the former shall be void and the latter
duty to permit access to information. There is no need to demand from the shall govern. Administrative or executive acts, orders and regulations shall
government agency disclosure of information as this is mandatory under be valid only when they are not contrary to the laws of the Constitution." It
the Constitution; failing that, legal remedies are available. On the other is understandable why it should be so, the Constitution being supreme and
hand, the interested party must first request or even demand that he be paramount. Any legislative or executive act contrary to its terms cannot
allowed access to documents and papers in the particular agency. A survive.
request or demand is required; otherwise, the government office or agency
will not know of the desire of the interested party to gain access to such Such a view has support in logic and possesses the merit of simplicity. It
papers and what papers are needed. The duty to disclose covers only may not however be sufficiently realistic. It does not admit of doubt that
transactions involving public interest, while the duty to allow access has a prior to the declaration of nullity such challenged legislative or executive
broader scope of information which embraces not only transactions act must have been in force and had to be complied with. This is so as until
involving public interest, but any matter contained in official after the judiciary, in an appropriate case, declares its invalidity, it is
communications and public documents of the government agency. entitled to obedience and respect. Parties may have acted under it and
may have changed their positions. What could be more fitting than that in a
We find that although petitioner did not make any demand on the NHA to subsequent litigation regard be had to what has been done while such
allow access to information, we treat the petition as a written request or legislative or executive act was in operation and presumed to be valid in all
demand. We order the NHA to allow petitioner access to its official records, respects. It is now accepted as a doctrine that prior to its being nullified, its
documents, and papers relating to official acts, transactions, and decisions existence as a fact must be reckoned with. This is merely to reflect
that are relevant to the said JVA and subsequent agreements relative to awareness that precisely because the judiciary is the governmental organ
the SMDRP. which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise
Ninth Issue: Whether the operative fact doctrine applies to the instant the power of judicial review that may lead to a declaration of nullity. It
petition would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.
Petitioner postulates that the "operative fact" doctrine is inapplicable to the
present case because it is an equitable doctrine which could not be used to In the language of an American Supreme Court decision: "The actual
countenance an inequitable result that is contrary to its proper office. existence of a statute, prior to such a determination [of unconstitutionality],
is an operative fact and may have consequences which cannot justly be
This doctrine was reiterated in the more recent case of City of Makati v. In the May 6, 2003 Resolution in Chavez v. PEA,93 we ruled that De
Civil Service Commission, wherein we ruled that: Agbayani94 is not applicable to the case considering that the prevailing law
did not authorize private corporations from owning land. The prevailing law
Moreover, we certainly cannot nullify the City Governments order of at the time was the 1935 Constitution as no statute dealt with the same
suspension, as we have no reason to do so, much less retroactively apply issue.
such nullification to deprive private respondent of a compelling and valid
reason for not filing the leave application. For as we have held, a void act In the instant case, RA 6957 was the prevailing law at the time that the
though in law a mere scrap of paper nonetheless confers legitimacy upon joint venture agreement was signed. RA 6957, entitled "An Act Authorizing
past acts or omissions done in reliance thereof. Consequently, the The Financing, Construction, Operation And Maintenance Of Infrastructure
existence of a statute or executive order prior to its being adjudged void is Projects By The Private Sector And For Other Purposes," which was
an operative fact to which legal consequences are attached. It would passed by Congress on July 24, 1989, allows repayment to the private
indeed be ghastly unfair to prevent private respondent from relying upon contractor of reclaimed lands.95 Such law was relied upon by respondents,
the order of suspension in lieu of a formal leave application.92 (Emphasis along with the above-mentioned executive issuances in pushing through
supplied.) with the Project. The existence of such law and issuances is an "operative
fact" to which legal consequences have attached. This Court is constrained
The principle was further explicated in the case of Rieta v. People of the to give legal effect to the acts done in consonance with such executive and
Philippines, thus: legislative acts; to do otherwise would work patent injustice on
respondents.
In similar situations in the past this Court had taken the pragmatic and
realistic course set forth in Chicot County Drainage District vs. Baxter Bank Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in
to wit: certain cases, the transfer of land, although illegal or unconstitutional, will
not be invalidated on considerations of equity and social justice. However,
The courts below have proceeded on the theory that the Act of Congress, in that case, we did not apply the same considering that PEA, respondent
having been found to be unconstitutional, was not a law; that it was in said case, was not entitled to equity principles there being bad faith on
inoperative, conferring no rights and imposing no duties, and hence its part, thus:
affording no basis for the challenged decree. x x x It is quite clear,
however, that such broad statements as to the effect of a determination of There are, moreover, special circumstances that disqualify Amari from
unconstitutionality must be taken with qualifications. The actual existence invoking equity principles. Amari cannot claim good faith because even
of a statute, prior to [the determination of its invalidity], is an operative fact before Amari signed the Amended JVA on March 30, 1999, petitioner had
and may have consequences which cannot justly be ignored. The past already filed the instant case on April 27, 1998 questioning precisely the
cannot always be erased by a new judicial declaration. The effect of the qualification of Amari to acquire the Freedom Islands. Even before the
subsequent ruling as to invalidity may have to be considered in various filing of this petition, two Senate Committees had already approved on
The Courts Dispositions Whatever is left to be done in relation to the August 27, 2003 MOA,
terminating the JVA and other related agreements, certainly does not
Based on the issues raised in this petition, we find that the March 19, 1993 involve ministerial functions of the NHA but instead requires exercise of
JVA between NHA and RBI and the SMDRP embodied in the JVA, the judgment. In fact, Item No. 4 of the MOA terminating the JVAs provides for
subsequent amendments to the JVA and all other agreements signed and validation of the developers (RBIs) claims arising from the termination of
executed in relation to it, including, but not limited to, the September 26, the SMDRP through the various government agencies.98 Such validation
1994 Smokey Mountain Asset Pool Agreement and the agreement on requires the exercise of discretion.
Phase I of the Project as well as all other transactions which emanated
from the Project, have been shown to be valid, legal, and constitutional. In addition, prohibition does not lie against the NHA in view of petitioners
Phase II has been struck down by the Clean Air Act. failure to avail and exhaust all administrative remedies. Clear is the rule
that prohibition is only available when there is no adequate remedy in the
With regard to the prayer for prohibition, enjoining respondents particularly ordinary course of law.
respondent NHA from further implementing and/or enforcing the said
Project and other agreements related to it, and from further deriving and/or More importantly, prohibition does not lie to restrain an act which is already
enjoying any rights, privileges and interest from the Project, we find the a fait accompli. The "operative fact" doctrine protecting vested rights bars
same prayer meritless. the grant of the writ of prohibition to the case at bar. It should be
remembered that petitioner was the Solicitor General at the time SMDRP
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides: was formulated and implemented. He had the opportunity to question the
1. Teofila L. de Ligasan January 14, 1946. All the applications being premature, not one of the applicants can claim to
have a preferential right over another. The priority given in paragraph "d" of
2. Custodio Doromal October 28, 1947 Section 14 is only for those applications filed so close in time to the actual
opening of the swampland for disposition and utilization, within a period of
3. Serafin B. Yngson March 19, 1952 one year, as to be given some kind of administrative preferential treatment.
Whether or not the administrative agencies could validly issue such an
administrative order is not challenged in this case. The validity of
4. Anita V. Gonzales March 19, 1953
paragraph "d" is not in issue because petitioner-appellant Yngson is clearly
not covered by the provision. His application was filed almost two years
5. Jose M. Lopez April 24, 1953 before the release of the area for fishpond purposes. The private
respondents, who filed their applications within the one-year period, do not
The mangrove swampland was released and made available for fishpond object to sharing the area with the petitioner-appellant, in spite of the fact
purposes only on January 14, 1954. It is clear, therefore, that all five that the latter has apparently the least right to the fishpond leases. As a
applications were filed prematurely. There was no land available for lease matter of fact, the respondent Secretary's order states that all three
permits and cnversion into fishponds at the time all five applicants filed applications must be considered as having been filed at the same time on
their applications. the day the area was released to the Bureau of Fisheries and to share the
lease of the 66 hectares among the three of them equally. The private
SO ORDERED.1 The PEA undertook the construction of the Manila Coastal Road. As this
was being planned, Yujuico and Carpio discovered that a verification
survey they commissioned showed that the road directly overlapped their
The Director of Lands and Mercedes Dizon did not appeal from the
property, and that they owned a portion of the land sold by the PEA to the
adverse decision of the Pasig-Rizal CFI. Thus, the order for the issuance
MBDC.
of a decree of registration became final, and Decree No. N-150912 was
issued by the Land Registration Commission (LRC).2 Original Certificate of
Title (OCT) No. 10215 was issued in the name of Fermina Castro by the On July 24, 1996, Yujuico and Carpio filed before the Paraaque City
Register of Deeds for the Province of Rizal on May 29, 1974.3 Regional Trial Court (RTC), a complaint for the Removal of Cloud and
Annulment of Title with Damages docketed as Civil Case No. 96-0317
against the PEA. On May 15, 1998 the parties entered into a compromise
The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was
agreement approved by the trial court in a Resolution dated May 18, 1998.
cancelled. On May 31, 1974,4 Transfer Certificate of Title (TCT) No.
On June 17, 1998, the parties executed a Deed of Exchange of Real
445863 was issued in Yujuicos name, who subdivided the land into two
Property, pursuant to the compromise agreement, where the PEA property
lots. TCT No. 4463865 over Lot 1 was issued in his name, while TCT No.
with an area of 1.4007 hectares would be conveyed to Jesus Yujuico and
S-293616 over Lot 2 was issued in the name of petitioner Augusto Y.
petitioner Carpio in exchange for their property with a combined area of
Carpio.
1.7343 hectares.
On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree In the August 7, 2002 Order of the RTC,13 Civil Case No. 01-0222 was
No. N-150912 and its Derivative Titles, entitled Republic of the Philippines dismissed. The trial court stated that the matter had already been decided
v. Fermina Castro, Jesus S. Yujuico, August Y. Carpio and the Registry of in LRC Case No. N-8239, and that after 28 years without being contested,
Deeds of Paraaque City docketed as Civil Case No. 01-0222, filed with the case had already become final and executory. The trial court also
1wphi1
the Paraaque City RTC, respondent Republic of the Philippines, through found that the OSG had participated in the LRC case, and could have
the OSG, alleged that when the land registered to Castro was surveyed by questioned the validity of the decision but did not. Civil Case No. 01-0222
Engr. H. Obreto on August 3, 1972 and subsequently approved by the LRC was thus found barred by prior judgment.
on April 23, 1973, the land was still a portion of Manila Bay as evidenced
by Namria Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic
9/61: Revised 80-11-2; that Roman Mataverde, the then OIC of the alleged that the trial court erred in disregarding that appellant had evidence
Surveys Division, Bureau of Lands, informed the OIC of the Legal Division to prove that the subject parcel of land used to be foreshore land of the
that "[w]hen projected on Cadastral Maps CM 14 deg. 13 N-120 deg, 59E, Manila Bay and that the trial court erred in dismissing Civil Case No. 01-
Sec.2-A of Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside 0222 on the ground of res judicata.14
Manila Bay, outside Cad. 299"; that then Acting Regional Lands Director
Narciso V. Villapando issued a Report dated November 15, 1973 stating The CA observed that shores are properties of the public domain intended
that plan (LRC) Psu-964 is a portion of Manila Bay; that then Officer-in- for public use and, therefore, not registrable and their inclusion in a
Charge, Assistant Director of Lands, Ernesto C. Mendiola, submitted his certificate of title does not convert the same into properties of private
Comment and Recommendation re: Application for Registration of Title of ownership or confer title upon the registrant.
WHEREFORE, premises considered, the present appeal is hereby C. RESPONDENTS REVERSION CASE SEEKS TO
GRANTED. The appealed Order dated August 7, 2002 of the trial court in RETRY THE VERY SAME FACTUAL ISSUES THAT
Civil Case No. 01-0222 is hereby REVERSED and SET ASIDE. The case HAVE ALREADY BEEN JUDICIALLY DETERMINED
is hereby REMANDED to said court for further proceedings and a full- OVER THIRTY (30) YEARS AGO.
blown trial on the merits with utmost dispatch.15
D. THE JURISPRUDENTIAL BASES APPLIED BY THE
Hence, this petition. COURT OF APPEALS IN ITS QUESTIONED DECISION
ARE MISPLACED, CONSIDERING THAT THEY ARE ALL
The Issues PREDICATED ON THE ERRONEOUS PREMISE THAT IT
IS UNDISPUTED THAT THE SUBJECT LAND IS PART
OF THE PUBLIC DOMAIN.
Petitioners now raise the following issues before this Court:
II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND
LACHES FROM QUESTIONING THE JURISDICTION OF THE LAND
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN
REGISTRATION COURT.
ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE
HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED
AND USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED
THE HONORABLE COURTS EXERCISE OF ITS POWER OF PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA CASE
SUPERVISION CONSIDERING THAT: IS UNWARRANTED AND MISLEADING CONSIDERING THAT THE
MATTER OF WHETHER RES JUDICATA APPLIES WITH RESPECT TO
THE LAND REGISTRATION COURTS DECISION IN 1974 WAS NOT IN
I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL
ISSUE IN SAID CASE.
COURTS APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN
THE INSTANT CASE IS BASED ON ITS ERRONEOUS ASSUMPTION
THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY PART A. THE INSTANT REVERSION CASE IS NOT THE
OF MANILA BAY. PROPER RECOURSE.
A perusal of the facts of the Firestone case and those of the case at bar Clearly from the above, Firestone is a precedent case. The Public Estates
reveals that the facts in the two (2) cases are parallel. First, in Firestone Authority had become final and thus the validity of OCT No. 10215 issued
and in this case, the claimants filed land registration applications with the to Castro could no longer be questioned.
CFI; both claimants obtained decrees for registration of lots applied for and
were issued OCTs. Second, in Firestone, the Republic filed a reversion While we said in Public Estates Authority that the court does not foreclose
case alleging that the land covered by the OCT was still inalienable forest the right of the Republic from pursuing the proper recourse in a separate
land at the time of the application and hence the Land Registration Court proceedings as it may deem warranted, the statement was obiter dictum
The Paraaque City RTC Order dismissing the case for res judicata must "Under these circumstances, the certificate of title may be ordered
be upheld. cancelled (Republic vs. Animas, et al., supra), and the cancellation maybe
pursued through an ordinary action therefore. This action cannot be barred
The CA, in rejecting the dismissal of the reversion case by the Paraaque by the prior judgment of the land registration court, since the said court had
RTC, relied on two cases, namely: Municipality of Antipolo v. no jurisdiction over the subject matter. And if there was no such
Zapanta36 and Republic v. Vda. De Castillo.37 jurisdiction, then the principle of res judicata does not apply. [x x x]
Certainly, one of the essential requisites, i.e., jurisdiction over the subject
In Municipality of Antipolo, we held that the land registration court had no matter, is absent in this case." (Italics supplied).38
jurisdiction to entertain any land registration application if the land was
public property, thus: The plain import of Municipality of Antipolo is that a land registration court,
the RTC at present, has no jurisdiction over the subject matter of the
Since the Land Registration Court had no jurisdiction to entertain the application which respondent Republic claims is public land. This ruling
application for registration of public property of ANTIPOLO, its Decision needs elucidation.
adjudicating the DISPUTED PROPERTY as of private ownership is null
and void. It never attained finality, and can be attacked at any time. It was Firmly entrenched is the principle that jurisdiction over the subject matter is
not a bar to the action brought by ANTIPOLO for its annulment by reason conferred by law.39 Consequently, the proper CFI (now the RTC) under
of res judicata. Section 14 of PD 152940 (Property Registration Decree) has jurisdiction
over applications for registration of title to land.
In compliance with the Order of this Court February 11, 1974, the Director The burden of proving these averments falls to the shoulders of
of Lands, thru Special Attorney Saturnino A. Pacubas, submitted a report respondent Republic. The difficulty is locating the witnesses of the
to this Court dated April 25, 1974, stating among other things, that upon government. Roman Mataverde, then OIC of the Surveys Division retired
Even the counsel of respondent Republic, the OSG, arrived at the More so, respondent Government, through its counsel, admits that the land
conclusion that there is no sufficient legal basis for said respondent to applied by Fermina Castro in 1973 was solid and dry land, negating the
institute action to annul the titles of petitioners, thus: nebulous allegation that said land is underwater. The only conclusion that
Before Us is a petition for review on certiorari under Rule 45 filed by Subsequently, Du spouses' TCT No. T-45587 was cancelled and was
petitioner Land Bank of the Philippines (LBP) appealing the: (1) replaced by TCT No. T-57348 registered in the name of Lourdes Farms,
Decision4 of the Court of Appeals (CA), dated August 23, 2001, in CA-G.R. Inc. subject of this case.13 Lourdes Farms, Inc. mortgaged this property to
CV No. 64121 entitled "Republic of the Philippines, represented by the petitioner LBP on April 14, 1980.14
Director of Lands v. Angelito Bugayong, et al."; and (2) Resolution5of the
same Court, dated November 12, 2001, denying LBP's motion for The validity of OCT No. P-2823, as well as its derivative TCTs, remained
reconsideration. undisturbed until some residents of the land it covered, particularly those
along Bolton Diversion Road, filed a formal petition before the Bureau of
The CA affirmed the Decision6 of the Regional Trial Court (RTC), dated Lands on July 15, 1981.15
July 9, 1996, declaring null and void Original Certificate of Title (OCT) No.
P-2823, as well as other titles originating from it, on the ground that at the Investigation and ocular inspection were conducted by the Bureau of
time it was issued, the land covered was still within the forest zone.7 Lands to check the legitimacy of OCT No. P-2823. They found out that: (1)
at the time Sales Patent No. 4576 was issued to Bugayong, the land it
The Facts covered was still within the forest zone, classified under Project No. 1, LC-
47 dated August 6, 1923; it was released as alienable and disposable land
OCT No. P-2823 was issued on September 26, 1969 in favor of one only on March 25, 1981, pursuant to BFD Administrative Order No. 4-1585
Angelito C. Bugayong. Said mother title emanated from Sales Patent No. and to the provisions of Section 13, Presidential Decree (P.D.) No.
4576 issued in Bugayong's name on September 22, 1969.8 It covered a 705;16 (2) the land was marshy and covered by sea water during high tide;
parcel of land located in Bocana, Kabacan, Davao City, with an area of and (3) Bugayong was never in actual possession of the land.17
41,276 square meters. It was originally identified and surveyed as Lot No.
4159 under Plan SI-(VIII-1), 328-D. Marshy and under water during high In view of the foregoing findings, the Bureau of Lands resolved that the
tide, it used to be a portion of a dry river bed near the mouth of Davao sales patent in favor of Bugayong was improperly and illegally issued and
River.9 that the Director of Lands had no jurisdiction to dispose of the subject
land.18
The land was initially subdivided into four lots, viz.: Lot Nos. 4159-A, 4159-
B, 4159-C and 4159-D under Subdivision Plan (LRC) Psd-139511 Upon recommendation of the Bureau of Lands, the Republic of the
approved by the Commissioner of Land Registration on April 23, Philippines represented by the Director of Lands, through the Office of the
In its answer with cross-claim,21 LBP claimed that it is a mortgagee in good B. TCT No. 84749 in the name of defendants Johnny and
faith and for value. It prayed that should TCT No. T-57348 of Lourdes Catherine Du mortgaged to defendant Development Bank
Farms, Inc. be annulled by the court, Lourdes Farms, Inc. should be of the Philippines.
ordered to pay its outstanding obligations to LBP or to provide a new
collateral security.22 C. TCT No. 37386 in the name of defendants spouses
Pahamotang mortgaged to defendant Lourdes Du
RTC Judgment mortgaged with defendant Allied Bank.
Eventually, the RTC rendered its judgment23 on July 9, 1996 determining E. TCT Nos. 68154 and 32768 in the names of
that: defendants/spouses Maglana Santamaria.
x x x The mistakes and the flaws in the granting of the title were 2. All private defendants shall give to the Davao City
made by the Bureau of Lands personnel more particularly the Register of Deeds their titles, who shall cancel the Transfer
Director of Lands who is the Officer charged with the following the Certificate of Titles mentioned in paragraph number one.
provisions of the Public Land Law. x x x.
3. Lot No. 4159, Plan SI (VIII-1) 328-D covered by O.C.T.
It is clear that the mother Title, OCTP-2823 in the name of P-2823 is hereby REVERTED to the mass of public
defendant Bugayong was issued at a time when the area was not domain.
yet released by the Bureau of Forestry to the Bureau of Lands.
SO ORDERED.27 (Underscoring supplied)
The area covered by OCT No. P. 2823 was not yet declared by the
Bureau of Lands alienable and disposable when the said OCT was Disagreeing with the RTC judgment, LBP appealed to the CA on October
issued. The subdivision of the lot covered by OCT P-2823 into 4 31, 1996. It asserted in its appellant's brief28 that it validly acquired
lots covered by TCT Nos. T-32768, 32769, 32756 and 32771 did mortgage interest or lien over the subject property because it was an
not cure the defect. x x x.24 innocent mortgagee for value and in good faith.29 It also emphasized that it
is a government financial institution.
The RTC explained that titles issued to private parties by the Bureau of
Lands are void ab initio if the land covered by it is a forest land.25 It went CA Disposition
further by stating that if the mother title is void, all titles arising from the
mother title are also void.26 It thus ruled in favor of the Republic with
In a Decision30 dated August 23, 2001, the CA ruled against the
a fallo reading:
appellants,31 disposing thus:
IN VIEW WHEREOF, judgment is hereby rendered declaring
Original Certificate of Title No. P-2823 issued in the name of
The inclusion of forest land in a title, "whether title be issued during LBP seeks the reversal of the CA disposition on the following grounds
the Spanish regime or under the Torrens system, nullifies the title."
It is, of course, a well-recognized principle that the Director of A.
Lands (now Land Management Bureau) is bereft of any jurisdiction
over public forest or any lands not capable of registration. It is the
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
Bureau of Forestry that has jurisdiction and authority over the
PETITIONER LAND BANK OF THE PHILIPPINES' MORTGAGE
demarcation, protection, management, reproduction, occupancy
RIGHT AND INTEREST AS AN INNOCENT
and use of all public forests and forest reservations and over the
PURCHASER (MORTGAGEE) FOR VALUE AND IN GOOD
granting of licenses for the taking of products therefrom. And where
FAITH OVER THE SUBJECT LAND COVERED BY TCT NO. T-
the land applied for is part of the public forest, the land registration
57348 IS VALID AND SUBSISTING IN ACCORDANCE WITH THE
court acquires no jurisdiction over the land, which is not yet
LAW AND EXISTING JURISPRUDENCE IN OUR COUNTRY.
alienable and disposable.
B.
Thus, notwithstanding the issuance of a sales patent over the
subject parcel of land, the State may still take action to have the
It was further ascertained by the courts below that at the time OCT No. P- (1) That they be constituted to secure the fulfillment of a principal
2823 was issued to Bugayong on September 26, 1969, the land it covered obligation;
was still within the forest zone. It was declared as alienable and disposable
only on March 25, 1981.40 (2) That the pledgor or mortgagor be the absolute owner of the
thing pledged or mortgaged;
Despite these established facts, LBP argues that its alleged interest as
mortgagee of the subject land covered by TCT No. T-57348 must be (3) That the persons constituting the pledge or mortgage have the
respected. It avers that TCT No. T-57348 is a Torrens title which has no free disposal of their property, and in the absence thereof, that they
written indications of defect or vice affecting the ownership of Lourdes be legally authorized for the purpose. (Emphasis ours)
Farms, Inc. Hence, it posits that it was not and could not have been
required to explore or go beyond what the title indicates or to search for
defects not indicated in it.
(Republic v. Court of Appeals, 148 SCRA 480 (1987)). In this case, Public land fraudulently included in patents or
petitioner does not dispute that its predecessor-in-interest, Angelito certificates of title may be recovered or reverted to
C. Bugayong, had the subject property registered in his name the State in accordance with Section 101 of the
when it was forest land. Indeed, even if the subject property had Public Land Act. Prescription does not lie against
been eventually segregated from the forest zone, neither petitioner the State in such cases for the Statute of
nor its predecessors-in-interest could have possessed the same Limitations does not run against the State. The right
under claim of ownership for the requisite period of thirty (30) years of reversion or reconveyance to the State is not
because it was released as alienable and disposable only on barred by prescription. (Emphasis ours)
March 25, 1981.
There is no impairment of contract but a valid
Second. Petitioner's contention that respondent's action for exercise of police power of the State.
reversion is barred by prescription for having been filed nearly two
decades after the issuance of Bugayong's sales patent is likewise The constitutional guarantee of non-impairment of contracts may not
without merit. Prescription does not lie against the State for likewise be used by LBP to validate its interest over the land as mortgagee.
reversion of property which is part of the public forest or of a forest The State's restraint upon the right to have an interest or ownership over
reservation registered in favor of any party. Public land registered forest lands does not violate the constitutional guarantee of non-
under the Land Registration Act may be recovered by the State at impairment of contracts. Said restraint is a valid exercise of the police
any time (Republic v. Court of Appeals, 258 SCRA 223 (1996)).48 power of the State. As explained by the Court in Director of Forestry v.
Muoz:51
Contrary to the argument of LBP, since the title is void, it could not have
become incontrovertible. Even prescription may not be used as a defense The view this Court takes of the cases at bar is but in adherence to
against the Republic. On this aspect, the Court in Reyes v. Court of public policy that should be followed with respect to forest lands.
Appeals,49 citing Republic v. Court of Appeals,50 held: Many have written much, and many more have spoken, and quite
often, about the pressing need for forest preservation,
Petitioners' contention that the government is now estopped from conservation, protection, development and reforestation. Not
questioning the validity of OCT No. 727 issued to them, without justification. For, forests constitute a vital segment of any
considering that it took the government 45 years to assail the country's natural resources. It is of common knowledge by now that
same, is erroneous. We have ruled in a host of cases that absence of the necessary green cover on our lands produces a
prescription does not run against the government. In point is the number of adverse or ill effects of serious proportions. Without the
case of Republic v. Court of Appeals, wherein we declared: trees, watersheds dry up; rivers and lakes which they supply are
emptied of their contents. The fish disappear. Denuded areas
And in so far as the timeliness of the action of the become dust bowls. As waterfalls cease to function, so will
Government is concerned, it is basic that prescription does hydroelectric plants. With the rains, the fertile topsoil is washed
not run against the State x x x. The case law has also away; geological erosion results. With erosion come the dreaded
been: floods that wreak havoc and destruction to property crops,
livestock, houses and highways not to mention precious human
In Edu v. Ericta,52 the Court defined police power as the authority of the We rule in the negative. It may be true that Lourdes Farms, Inc. still has an
state to enact legislation that may interfere with personal liberty or property obligation to LBP but We cannot make a ruling regarding the same for lack
in order to promote the general welfare. It is the power to prescribe of factual basis. There is no evidence-taking on the cross-claim. No
regulations to promote the health, morals, peace, education, good order or evidence was adduced before the RTC or the CA regarding it. No factual
safety, and general welfare of the people. It is that inherent and plenary finding or ruling was made by the RTC or the CA about it.
power of the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society.53 It extends to all the great public It bears stressing that in a petition for review on certiorari, the scope of this
needs and is described as the most pervasive, the least limitable and the Court's judicial review of decisions of the CA is generally confined only to
most demanding of the three inherent powers of the State, far outpacing errors of law. Questions of fact are not entertained.59
taxation and eminent domain.54 It is a ubiquitous and often unwelcome
As held in De Liano v. Court of Appeals,61 appellant has to specify in what WHEREFORE, the appealed Decision of the Court of Appeals is
aspect of the law or the facts the trial court erred. The conclusion, hereby AFFIRMED with the MODIFICATION that the cross-claim of
therefore, is that appellant must carefully formulate his assignment of petitioner Land Bank of the Philippines against Lourdes Farms, Inc.
errors. Its importance cannot be underestimated, as Section 8, Rule 51 of is REMANDED to the Regional Trial Court, Branch 15, Davao City, for
the Rules of Court will attest: further proceedings.
Questions that may be decided. No error which does not affect SO ORDERED.
the jurisdiction over the subject matter or the validity of the
judgment appealed from or the proceedings therein will be G.R. No. 179987 September 3, 2013
considered unless stated in the assignment of errors, or closely
related to or dependent on an assigned error and properly argued HEIRS OF MARIO MALABANAN, (Represented by Sally A.
in the brief, save as the court may pass upon plain errors and Malabanan), Petitioners,
clerical errors. vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
Apparently, the cross-claim was taken for granted not only by the RTC but
also by LBP. The cross-claim was not included as a subject or issue in the RESOLUTION
pre-trial order and instead of asking that the same be heard, LBP filed a
motion62 to submit the main case for resolution. The main case was thus
BERSAMIN, J.:
resolved by the RTC without touching on the merits of the cross-claim.
For our consideration and resolution are the motions for reconsideration of
On the other hand, while the CA did not make a categorical ruling on LBP's
the parties who both assail the decision promulgated on April 29, 2009,
cross-claim, it pointed out that: (1) as found by the RTC, there is a
whereby we upheld the ruling of the Court of Appeals (CA) denying the
mortgage contract between LBP and Lourdes Farms, Inc., with LBP as
application of the petitioners for the registration of a parcel of land situated
mortgagee and Lourdes Farms, Inc. as mortgagor; and (2) LBP's proper
in Barangay Tibig, Silang, Cavite on the ground that they had not
recourse is to pursue its claim against Lourdes Farms, Inc.63
established by sufficient evidence their right to the registration in
accordance with either Section 14(1) or Section 14(2) of Presidential
The CA thus impliedly ruled that LBP's cross-claim should not be included Decree No. 1529 (Property Registration Decree).
in this case. Instead of making a ruling on the same, it recommended that
LBP pursue its claim against Lourdes Farms, Inc.
Antecedents
All told, although the relationship between LBP and Lourdes Farms, Inc. as
The property subject of the application for registration is a parcel of land
mortgagee and mortgagor was established, the cross-claim of LBP against
situated in Barangay Tibig, Silang Cavite, more particularly identified as Lot
Lourdes Farms, Inc. was left unresolved.
9864-A, Cad-452-D, with an area of 71,324-square meters. On February
20, 1998, applicant Mario Malabanan, who had purchased the property
The Court is not in a position to resolve the cross-claim based on the from Eduardo Velazco, filed an application for land registration covering
records. In order for the cross-claim to be equitably decided, the Court, not the property in the Regional Trial Court (RTC) in Tagaytay City, Cavite,
being a trier of facts, is constrained to remand the case to the RTC for claiming that the property formed part of the alienable and disposable land
After trial, on December 3, 2002, the RTC rendered judgment granting The petitioners assert that the ruling in Republic v. Court of Appeals and
Malabanans application for land registration, disposing thusly: Corazon Naguit5 (Naguit) remains the controlling doctrine especially if the
property involved is agricultural land. In this regard, Naguit ruled that any
WHEREFORE, this Court hereby approves this application for registration possession of agricultural land prior to its declaration as alienable and
and thus places under the operation of Act 141, Act 496 and/or P.D. 1529, disposable could be counted in the reckoning of the period of possession
otherwise known as Property Registration Law, the lands described in Plan to perfect title under the Public Land Act (Commonwealth Act No. 141) and
Csd-04-0173123-D, Lot 9864-A and containing an area of Seventy One the Property Registration Decree. They point out that the ruling in Herbieto,
Thousand Three Hundred Twenty Four (71,324) Square Meters, as to the effect that the declaration of the land subject of the application for
supported by its technical description now forming part of the record of this registration as alienable and disposable should also date back to June 12,
case, in addition to other proofs adduced in the name of MARIO 1945 or earlier, was a mere obiter dictum considering that the land
MALABANAN, who is of legal age, Filipino, widower, and with residence at registration proceedings therein were in fact found and declared void ab
Munting Ilog, Silang, Cavite. initio for lack of publication of the notice of initial hearing.
Once this Decision becomes final and executory, the corresponding decree The petitioners also rely on the ruling in Republic v. T.A.N. Properties,
of registration shall forthwith issue. Inc.6 to support their argument that the property had been ipso jure
converted into private property by reason of the open, continuous,
SO ORDERED.3 exclusive and notorious possession by their predecessors-in-interest of an
alienable land of the public domain for more than 30 years. According to
them, what was essential was that the property had been "converted" into
The Office of the Solicitor General (OSG) appealed the judgment to the
private property through prescription at the time of the application without
CA, arguing that Malabanan had failed to prove that the property belonged
regard to whether the property sought to be registered was previously
to the alienable and disposable land of the public domain, and that the
classified as agricultural land of the public domain.
RTC erred in finding that he had been in possession of the property in the
The Republics Motion for Partial Reconsideration All lands not appearing to be clearly under private ownership are presumed
to belong to the State. Also, public lands remain part of the inalienable land
The Republic seeks the partial reconsideration in order to obtain a of the public domain unless the State is shown to have reclassified or
clarification with reference to the application of the rulings in Naguit and alienated them to private persons.17
Herbieto.
Classifications of public lands
Chiefly citing the dissents, the Republic contends that the decision has according to alienability
enlarged, by implication, the interpretation of Section 14(1) of the Property
Registration Decree through judicial legislation. It reiterates its view that an
Whether or not land of the public domain is alienable and disposable
applicant is entitled to registration only when the land subject of the
primarily rests on the classification of public lands made under the
application had been declared alienable and disposable since June 12,
Constitution. Under the 1935 Constitution,18 lands of the public domain
1945 or earlier.
were classified into three, namely, agricultural, timber and
mineral.19 Section 10, Article XIV of the 1973 Constitution classified lands
Ruling of the public domain into seven, specifically, agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest, and grazing
We deny the motions for reconsideration. land, with the reservation that the law might provide other classifications.
The 1987 Constitution adopted the classification under the 1935
Based on the foregoing, the Constitution places a limit on the type of public (4) By confirmation of imperfect or incomplete titles;
land that may be alienated. Under Section 2, Article XII of the 1987
Constitution, only agricultural lands of the public domain may be alienated;
(a) By judicial legalization; or
all other natural resources may not be.
(b) By administrative legalization (free patent).
Alienable and disposable lands of the State fall into two categories, to wit:
(a) patrimonial lands of the State, or those classified as lands of private
ownership under Article 425 of the Civil Code,23 without limitation; and (b) The core of the controversy herein lies in the proper interpretation of
lands of the public domain, or the public lands as provided by the Section 11(4), in relation to Section 48(b) of the Public Land Act, which
Constitution, but with the limitation that the lands must only be agricultural. expressly requires possession by a Filipino citizen of the land since June
Consequently, lands classified as forest or timber, mineral, or national 12, 1945, or earlier, viz:
parks are not susceptible of alienation or disposition unless they are
reclassified as agricultural.24 A positive act of the Government is necessary Section 48. The following-described citizens of the Philippines, occupying
to enable such reclassification,25 and the exclusive prerogative to classify lands of the public domain or claiming to own any such lands or an interest
public lands under existing laws is vested in the Executive Department, not therein, but whose titles have not been perfected or completed, may apply
in the courts.26 If, however, public land will be classified as neither to the Court of First Instance of the province where the land is located for
agricultural, forest or timber, mineral or national park, or when public land confirmation of their claims and the issuance of a certificate of title
is no longer intended for public service or for the development of the thereafter, under the Land Registration Act, to wit:
national wealth, thereby effectively removing the land from the ambit of
public dominion, a declaration of such conversion must be made in the xxxx
form of a law duly enacted by Congress or by a Presidential proclamation
in cases where the President is duly authorized by law to that (b) Those who by themselves or through their predecessors-in-interest
effect.27 Thus, until the Executive Department exercises its prerogative to have been in open, continuous, exclusive, and notorious possession and
classify or reclassify lands, or until Congress or the President declares that occupation of alienable and disposable lands of the public domain, under a
the State no longer intends the land to be used for public service or for the bona fide claim of acquisition of ownership, since June 12, 1945, or earlier,
development of national wealth, the Regalian Doctrine is applicable. immediately preceding the filing of the applications for confirmation of title,
except when prevented by war or force majeure. These shall be
Disposition of alienable public lands conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the
Section 11 of the Public Land Act (CA No. 141) provides the manner by provisions of this chapter. (Bold emphasis supplied)
which alienable and disposable lands of the public domain, i.e., agricultural
lands, can be disposed of, to wit: Note that Section 48(b) of the Public Land Act used the words "lands of the
public domain" or "alienable and disposable lands of the public domain" to
Section 11. Public lands suitable for agricultural purposes can be disposed clearly signify that lands otherwise classified, i.e., mineral, forest or timber,
of only as follows, and not otherwise: or national parks, and lands of patrimonial or private ownership, are
To sum up, we now observe the following rules relative to the disposition of To reiterate, then, the petitioners failed to present sufficient evidence to
public land or lands of the public domain, namely: establish that they and their predecessors-in-interest had been in
possession of the land since June 12, 1945. Without satisfying the
(1) As a general rule and pursuant to the Regalian Doctrine, all requisite character and period of possession - possession and occupation
lands of the public domain belong to the State and are inalienable. that is open, continuous, exclusive, and notorious since June 12, 1945, or
Lands that are not clearly under private ownership are also earlier - the land cannot be considered ipso jure converted to private
presumed to belong to the State and, therefore, may not be property even upon the subsequent declaration of it as alienable and
alienated or disposed; disposable. Prescription never began to run against the State, such that
the land has remained ineligible for registration under Section 14(1) of the
Property Registration Decree. Likewise, the land continues to be ineligible
(2) The following are excepted from the general rule, to wit:
for land registration under Section 14(2) of the Property Registration
WHEREFORE, the Court DENIES the petitioners' Motion for AT stake in these consolidated cases is the right of the present occupants
Reconsideration and the respondent's Partial Motion for Reconsideration of Boracay Island to secure titles over their occupied lands.
for their lack of merit.
There are two consolidated petitions. The first is G.R. No. 167707, a
SO ORDERED. petition for review on certiorari of the Decision1of the Court of Appeals (CA)
affirming that2 of the Regional Trial Court (RTC) in Kalibo, Aklan, which
G.R. No. 167707 October 8, 2008 granted the petition for declaratory relief filed by respondents-claimants
Mayor Jose Yap, et al. and ordered the survey of Boracay for titling
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND purposes. The second is G.R. No. 173775, a petition for prohibition,
NATURAL RESOURCES, THE REGIONAL EXECUTIVE DIRECTOR, mandamus, and nullification of Proclamation No. 10645">[3] issued by
DENR-REGION VI, REGIONAL TECHNICAL DIRECTOR FOR LANDS, President Gloria Macapagal-Arroyo classifying Boracay into reserved
LANDS MANAGEMENT BUREAU, REGION VI PROVINCIAL forest and agricultural land.
ENVIRONMENT AND NATURAL RESOURCES OFFICER OF KALIBO,
AKLAN, REGISTER OF DEEDS, DIRECTOR OF LAND REGISTRATION The Antecedents
AUTHORITY, DEPARTMENT OF TOURISM SECRETARY, DIRECTOR
OF PHILIPPINE TOURISM AUTHORITY, petitioners, G.R. No. 167707
vs.
MAYOR JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, and Boracay Island in the Municipality of Malay, Aklan, with its powdery white
ANICETO YAP, in their behalf and in behalf of all those similarly sand beaches and warm crystalline waters, is reputedly a premier
situated, respondents. Philippine tourist destination. The island is also home to 12,003
inhabitants4 who live in the bone-shaped islands three barangays.5
x--------------------------------------------------x On April 14, 1976, the Department of Environment and Natural Resources
(DENR) approved the National Reservation Survey of Boracay
G.R. No. G.R. No. 173775 October 8, 2008 Island,6 which identified several lots as being occupied or claimed by
named persons.7
DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE
LANDOWNERS OF BORACAY SIMILARLY SITUATED NAMED IN A On November 10, 1978, then President Ferdinand Marcos issued
LIST, ANNEX "A" OF THIS PETITION, petitioners, Proclamation No. 18018 declaring Boracay Island, among other islands,
vs. caves and peninsulas in the Philippines, as tourist zones and marine
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND reserves under the administration of the Philippine Tourism Authority
NATURAL RESOURCES, THE REGIONAL TECHNICAL DIRECTOR (PTA). President Marcos later approved the issuance of PTA Circular 3-
FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI, 829 dated September 3, 1982, to implement Proclamation No. 1801.
PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER,
KALIBO, AKLAN, respondents.
On December 9, 2004, the appellate court affirmed in toto the RTC Opposing the petition, the OSG argued that petitioners-claimants do not
decision, disposing as follows: have a vested right over their occupied portions in the island. Boracay is an
unclassified public forest land pursuant to Section 3(a) of PD No. 705.
WHEREFORE, in view of the foregoing premises, judgment is hereby Being public forest, the claimed portions of the island are inalienable and
rendered by us DENYING the appeal filed in this case and AFFIRMING the cannot be the subject of judicial confirmation of imperfect title. It is only the
decision of the lower court.24 executive department, not the courts, which has authority to reclassify
lands of the public domain into alienable and disposable lands. There is a
The CA held that respondents-claimants could not be prejudiced by a need for a positive government act in order to release the lots for
declaration that the lands they occupied since time immemorial were part disposition.
of a forest reserve.
On November 21, 2006, this Court ordered the consolidation of the two
Again, the OSG sought reconsideration but it was similarly petitions as they principally involve the same issues on the land
denied.25 Hence, the present petition under Rule 45. classification of Boracay Island.33
On May 22, 2006, during the pendency of G.R. No. 167707, President G.R. No. 167707
Gloria Macapagal-Arroyo issued Proclamation No. 106426 classifying
Boracay Island into four hundred (400) hectares of reserved forest land The OSG raises the lone issue of whether Proclamation No. 1801 and PTA
(protection purposes) and six hundred twenty-eight and 96/100 (628.96) Circular No. 3-82 pose any legal obstacle for respondents, and all those
hectares of agricultural land (alienable and disposable). The Proclamation similarly situated, to acquire title to their occupied lands in Boracay
likewise provided for a fifteen-meter buffer zone on each side of the Island.34
centerline of roads and trails, reserved for right-of-way and which shall
form part of the area reserved for forest land protection purposes. G.R. No. 173775
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,27 Wilfredo Petitioners-claimants hoist five (5) issues, namely:
Gelito,28 and other landowners29 in Boracay filed with this Court an original
petition for prohibition, mandamus, and nullification of Proclamation No. I.
1064.30 They allege that the Proclamation infringed on their "prior vested
rights" over portions of Boracay. They have been in continued possession AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS
of their respective lots in Boracay since time immemorial. They have also IN CONCEPT OF OWNER OVER THEIR RESPECTIVE AREAS IN
invested billions of pesos in developing their lands and building BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST SINCE 30
internationally renowned first class resorts on their lots.31 YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY
RELIEF ON NOV. 19, 1997, WERE THE AREAS OCCUPIED BY THEM
Petitioners-claimants contended that there is no need for a proclamation PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON
reclassifying Boracay into agricultural land. Being classified as neither JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC
mineral nor timber land, the island is deemed agricultural pursuant to the FOREST AS DEFINED BY SEC. 3a, PD 705?
Philippine Bill of 1902 and Act No. 926, known as the first Public Land
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT Private claimants rely on three (3) laws and executive acts in their bid for
OF PRIVATE OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF judicial confirmation of imperfect title, namely: (a) Philippine Bill of 190236 in
BORACAY LAND, DESPITE THE FACT THAT THEY HAVE NOT relation to Act No. 926, later amended and/or superseded by Act No. 2874
APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE? and CA No. 141;37 (b) Proclamation No. 180138 issued by then President
Marcos; and (c) Proclamation No. 106439issued by President Gloria
III. Macapagal-Arroyo. We shall proceed to determine their rights to apply for
judicial confirmation of imperfect title under these laws and executive acts.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE
AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE- But first, a peek at the Regalian principle and the power of the executive to
REQUISITE FOR PETITIONERS TO OBTAIN TITLE UNDER THE reclassify lands of the public domain.
TORRENS SYSTEM?
The 1935 Constitution classified lands of the public domain into
IV. agricultural, forest or timber.40 Meanwhile, the 1973 Constitution provided
the following divisions: agricultural, industrial or commercial, residential,
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, resettlement, mineral, timber or forest and grazing lands, and such other
VIOLATIVE OF THE PRIOR VESTED RIGHTS TO PRIVATE classes as may be provided by law,41 giving the government great leeway
OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY, for classification.42 Then the 1987 Constitution reverted to the 1935
PROTECTED BY THE DUE PROCESS CLAUSE OF THE Constitution classification with one addition: national parks.43 Of
CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, these, only agricultural lands may be alienated.44 Prior to Proclamation No.
CA 141, OR SEC. 4(a) OF RA 6657. 1064 of May 22, 2006, Boracay Island had never been expressly and
administratively classified under any of these grand divisions. Boracay was
an unclassified land of the public domain.
V.
The Regalian Doctrine dictates that all lands of the public domain belong to
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW
the State, that the State is the source of any asserted right to ownership of
THE SURVEY AND TO APPROVE THE SURVEY PLANS FOR
land and charged with the conservation of such patrimony.45 The doctrine
PURPOSES OF THE APPLICATION FOR TITLING OF THE LANDS OF
has been consistently adopted under the 1935, 1973, and 1987
PETITIONERS IN BORACAY?35 (Underscoring supplied)
Constitutions.46
In capsule, the main issue is whether private claimants (respondents-
All lands not otherwise appearing to be clearly within private ownership are
claimants in G.R. No. 167707 and petitioners-claimants in G.R. No.
presumed to belong to the State.47Thus, all lands that have not been
173775) have a right to secure titles over their occupied portions in
acquired from the government, either by purchase or by grant, belong to
Boracay. The twin petitions pertain to their right, if any, to judicial
the State as part of the inalienable public domain.48 Necessarily, it is up to
confirmation of imperfect title under CA No. 141, as amended. They do not
the State to determine if lands of the public domain will be disposed of for
involve their right to secure title under other pertinent laws.
private ownership. The government, as the agent of the state, is
possessed of the plenary power as the persona in law to determine who
Our Ruling shall be the favored recipients of public lands, as well as under what terms
they may be granted such privilege, not excluding the placing of obstacles
Regalian Doctrine and power of the executive
Our present land law traces its roots to the Regalian Doctrine. Upon the x x x In other words, that the phrase "agricultural land" as used in Act
Spanish conquest of the Philippines, ownership of all lands, territories and No. 926 means those public lands acquired from Spain which are not
possessions in the Philippines passed to the Spanish Crown.50 The timber or mineral lands. x x x65 (Emphasis Ours)
Regalian doctrine was first introduced in the Philippines through the Laws
of the Indies and the Royal Cedulas, which laid the foundation that "all On February 1, 1903, the Philippine Legislature passed Act
lands that were not acquired from the Government, either by purchase or No. 496, otherwise known as the Land Registration Act. The act
by grant, belong to the public domain."51 established a system of registration by which recorded title becomes
absolute, indefeasible, and imprescriptible. This is known as the Torrens
The Laws of the Indies was followed by the Ley Hipotecaria or the system.66
Mortgage Law of 1893. The Spanish Mortgage Law provided for the
systematic registration of titles and deeds as well as possessory claims.52 Concurrently, on October 7, 1903, the Philippine Commission passed Act
No. 926, which was the first Public Land Act. The Act introduced the
The Royal Decree of 1894 or the Maura Law53 partly amended the Spanish homestead system and made provisions for judicial and administrative
Mortgage Law and the Laws of the Indies. It established possessory confirmation of imperfect titles and for the sale or lease of public lands. It
information as the method of legalizing possession of vacant Crown land, permitted corporations regardless of the nationality of persons owning the
under certain conditions which were set forth in said decree.54 Under controlling stock to lease or purchase lands of the public domain.67 Under
Section 393 of the Maura Law, an informacion posesoria or possessory the Act, open, continuous, exclusive, and notorious possession and
information title,55 when duly inscribed in the Registry of Property, is occupation of agricultural lands for the next ten (10) years preceding July
converted into a title of ownership only after the lapse of twenty (20) years 26, 1904 was sufficient for judicial confirmation of imperfect title.68
of uninterrupted possession which must be actual, public, and
adverse,56 from the date of its inscription.57 However, possessory On November 29, 1919, Act No. 926 was superseded by Act
information title had to be perfected one year after the promulgation of the No. 2874, otherwise known as the second Public Land Act. This new, more
Maura Law, or until April 17, 1895. Otherwise, the lands would revert to the comprehensive law limited the exploitation of agricultural lands to Filipinos
State.58 and Americans and citizens of other countries which gave Filipinos the
same privileges. For judicial confirmation of title, possession and
In sum, private ownership of land under the Spanish regime could only be occupation en concepto dueo since time immemorial, or since July 26,
founded on royal concessions which took various forms, namely: (1) titulo 1894, was required.69
real or royal grant; (2) concesion especial or special grant; (3) composicion
con el estado or adjustment title; (4) titulo de compra or title by purchase; After the passage of the 1935 Constitution, CA No. 141 amended Act No.
and (5) informacion posesoria or possessory information title.59> 2874 on December 1, 1936. To this day, CA No. 141, as
amended, remains as the existing general law governing the classification
The first law governing the disposition of public lands in the Philippines and disposition of lands of the public domain other than timber and mineral
under American rule was embodied in the Philippine Bill of 1902.60 By this lands,70 and privately owned lands which reverted to the State.71
law, lands of the public domain in the Philippine Islands were classified into
three (3) grand divisions, to wit: agricultural, mineral, and timber or forest Section 48(b) of CA No. 141 retained the requirement under Act No. 2874
lands.61 The act provided for, among others, the disposal of mineral lands of possession and occupation of lands of the public domain since time
by means of absolute grant (freehold system) and by lease (leasehold immemorial or since July 26, 1894. However, this provision was
system).62 It also provided the definition by exclusion of "agricultural public superseded by Republic Act (RA) No. 1942,72 which provided for a simple
On June 11, 1978, Act No. 496 was amended and updated by PD No. Ankron and De Aldecoa did not make the whole of Boracay Island, or
1529, known as the Property Registration Decree. It was enacted to codify portions of it, agricultural lands. Private claimants posit that Boracay
the various laws relative to registration of property.78 It governs registration was already an agricultural land pursuant to the old cases Ankron v.
of lands under the Torrens system as well as unregistered lands, including Government of the Philippine Islands (1919)88 and De Aldecoa v. The
chattel mortgages.79 Insular Government (1909).89 These cases were decided under the
provisions of the Philippine Bill of 1902 and Act No. 926. There is a
A positive act declaring land as alienable and disposable is statement in these old cases that "in the absence of evidence to the
required. In keeping with the presumption of State ownership, the Court contrary, that in each case the lands are agricultural lands until the
has time and again emphasized that there must be a positive act of the contrary is shown."90
government, such as an official proclamation,80 declassifying inalienable
public land into disposable land for agricultural or other purposes.81 In fact, Private claimants reliance on Ankron and De Aldecoa is misplaced. These
Section 8 of CA No. 141 limits alienable or disposable lands only to those cases did not have the effect of converting the whole of Boracay Island or
lands which have been "officially delimited and classified."82 portions of it into agricultural lands. It should be stressed that the Philippine
Bill of 1902 and Act No. 926 merely provided the manner through which
The burden of proof in overcoming the presumption of State ownership of land registration courts would classify lands of the public domain. Whether
the lands of the public domain is on the person applying for registration (or the land would be classified as timber, mineral, or agricultural depended on
claiming ownership), who must prove that the land subject of the proof presented in each case.
application is alienable or disposable.83 To overcome this presumption,
incontrovertible evidence must be established that the land subject of the Ankron and De Aldecoa were decided at a time when the President of the
application (or claim) is alienable or disposable.84 There must still be a Philippines had no power to classify lands of the public domain into
positive act declaring land of the public domain as alienable and mineral, timber, and agricultural. At that time, the courts were free to make
disposable. To prove that the land subject of an application for registration corresponding classifications in justiciable cases, or were vested with
is alienable, the applicant must establish the existence of a positive act of implicit power to do so, depending upon the preponderance of the
the government such as a presidential proclamation or an executive order; evidence.91 This was the Courts ruling in Heirs of the Late Spouses Pedro
an administrative action; investigation reports of Bureau of Lands S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,92 in which
investigators; and a legislative act or a statute.85 The applicant may also it stated, through Justice Adolfo Azcuna, viz.:
secure a certification from the government that the land claimed to have
xxxx In any case, the assumption in Ankron and De Aldecoa was not absolute.
Land classification was, in the end, dependent on proof. If there was proof
Petitioners reliance upon Ramos v. Director of Lands and Ankron v. that the land was better suited for non-agricultural uses, the courts could
Government is misplaced. These cases were decided under the Philippine adjudge it as a mineral or timber land despite the presumption.
Bill of 1902 and the first Public Land Act No. 926 enacted by the Philippine In Ankron, this Court stated:
Commission on October 7, 1926, under which there was no legal provision
vesting in the Chief Executive or President of the Philippines the power to In the case of Jocson vs. Director of Forestry (supra), the Attorney-General
classify lands of the public domain into mineral, timber and agricultural so admitted in effect that whether the particular land in question belongs to
that the courts then were free to make corresponding classifications in one class or another is a question of fact. The mere fact that a tract of land
justiciable cases, or were vested with implicit power to do so, depending has trees upon it or has mineral within it is not of itself sufficient to declare
upon the preponderance of the evidence.93 that one is forestry land and the other, mineral land. There must be some
proof of the extent and present or future value of the forestry and of the
To aid the courts in resolving land registration cases under Act No. 926, it minerals. While, as we have just said, many definitions have been given for
was then necessary to devise a presumption on land classification. Thus "agriculture," "forestry," and "mineral" lands, and that in each case it is a
evolved the dictum in Ankron that "the courts have a right to presume, in question of fact, we think it is safe to say that in order to be forestry or
the absence of evidence to the contrary, that in each case the lands are mineral land the proof must show that it is more valuable for the forestry or
agricultural lands until the contrary is shown."94 the mineral which it contains than it is for agricultural purposes. (Sec. 7,
Act No. 1148.) It is not sufficient to show that there exists some trees upon
But We cannot unduly expand the presumption in Ankron and De the land or that it bears some mineral. Land may be classified as forestry
Aldecoa to an argument that all lands of the public domain had been or mineral today, and, by reason of the exhaustion of the timber or mineral,
automatically reclassified as disposable and alienable agricultural lands. be classified as agricultural land tomorrow. And vice-versa, by reason of
By no stretch of imagination did the presumption convert all lands of the the rapid growth of timber or the discovery of valuable minerals, lands
public domain into agricultural lands. classified as agricultural today may be differently classified
tomorrow. Each case must be decided upon the proof in that particular
case, having regard for its present or future value for one or the other
If We accept the position of private claimants, the Philippine Bill of 1902
purposes. We believe, however, considering the fact that it is a matter of
and Act No. 926 would have automatically made all lands in the
public knowledge that a majority of the lands in the Philippine Islands are
Philippines, except those already classified as timber or mineral land,
agricultural lands that the courts have a right to presume, in the absence of
alienable and disposable lands. That would take these lands out of State
evidence to the contrary, that in each case the lands are agricultural lands
ownership and worse, would be utterly inconsistent with and totally
until the contrary is shown. Whatever the land involved in a particular
repugnant to the long-entrenched Regalian doctrine.
land registration case is forestry or mineral land must, therefore, be a
matter of proof. Its superior value for one purpose or the other is a
The presumption in Ankron and De Aldecoa attaches only to land question of fact to be settled by the proof in each particular case. The
registration cases brought under the provisions of Act No. 926, or more fact that the land is a manglar [mangrove swamp] is not sufficient for the
specifically those cases dealing with judicial and administrative courts to decide whether it is agricultural, forestry, or mineral land. It may
confirmation of imperfect titles. The presumption applies to an applicant for perchance belong to one or the other of said classes of land. The
judicial or administrative conformation of imperfect title under Act No. 926. Government, in the first instance, under the provisions of Act No. 1148,
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued A similar argument was squarely rejected by the Court in Collado v. Court
their title in 1933,98 did not present a justiciable case for determination by of Appeals.107 Collado, citing the separate opinion of now Chief Justice
the land registration court of the propertys land classification. Simply put, Reynato S. Puno in Cruz v. Secretary of Environment and Natural
there was no opportunity for the courts then to resolve if the land the Resources,107-a ruled:
Boracay occupants are now claiming were agricultural lands. When Act
No. 926 was supplanted by Act No. 2874 in 1919, without an application "Act No. 926, the first Public Land Act, was passed in pursuance of the
for judicial confirmation having been filed by private claimants or their provisions of the Philippine Bill of 1902. The law governed the disposition
predecessors-in-interest, the courts were no longer authorized to of lands of the public domain. It prescribed rules and regulations for the
determine the propertys land classification. Hence, private claimants homesteading, selling and leasing of portions of the public domain of the
cannot bank on Act No. 926. Philippine Islands, and prescribed the terms and conditions to enable
persons to perfect their titles to public lands in the Islands. It also provided
We note that the RTC decision99 in G.R. No. 167707 mentioned Krivenko for the "issuance of patents to certain native settlers upon public lands," for
v. Register of Deeds of Manila,100 which was decided in 1947 when CA No. the establishment of town sites and sale of lots therein, for the completion
141, vesting the Executive with the sole power to classify lands of the of imperfect titles, and for the cancellation or confirmation of Spanish
public domain was already in effect. Krivenko cited the old cases Mapa v. concessions and grants in the Islands." In short, the Public Land Act
Insular Government,101 De Aldecoa v. The Insular operated on the assumption that title to public lands in the Philippine
Government,102 and Ankron v. Government of the Philippine Islands.103 Islands remained in the government; and that the governments title to
public land sprung from the Treaty of Paris and other subsequent treaties
Krivenko, however, is not controlling here because it involved a totally between Spain and the United States. The term "public land" referred to all
different issue. The pertinent issue in Krivenko was whether residential lots lands of the public domain whose title still remained in the government and
were included in the general classification of agricultural lands; and if so, are thrown open to private appropriation and settlement, and excluded the
whether an alien could acquire a residential lot. This Court ruled that as an patrimonial property of the government and the friar lands."
While it is true that the land classification map does not categorically As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation
state that the islands are public forests, the fact that they were No. 1801 did not convert portions of Boracay Island into an agricultural
unclassified lands leads to the same result. In the absence of the land. The island remained an unclassified land of the public domain and,
classification as mineral or timber land, the land remains unclassified land applying the Regalian doctrine, is considered State property.
until released and rendered open to disposition.125 (Emphasis supplied)
Private claimants bid for judicial confirmation of imperfect title, relying on
Moreover, the prohibition under the CARL applies only to a the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801, must
"reclassification" of land. If the land had never been previously classified, fail because of the absence of the second element of alienable and
as in the case of Boracay, there can be no prohibited reclassification under disposable land. Their entitlement to a government grant under our present
the agrarian law. We agree with the opinion of the Department of Public Land Act presupposes that the land possessed and applied for is
Justice126 on this point: already alienable and disposable. This is clear from the wording of the law
itself.129Where the land is not alienable and disposable, possession of the
land, no matter how long, cannot confer ownership or possessory rights.130
Indeed, the key word to the correct application of the prohibition in Section
4(a) is the word "reclassification." Where there has been no previous
classification of public forest [referring, we repeat, to the mass of the public Neither may private claimants apply for judicial confirmation of imperfect
domain which has not been the subject of the present system of title under Proclamation No. 1064, with respect to those lands which were
classification for purposes of determining which are needed for forest classified as agricultural lands. Private claimants failed to prove the first
purposes and which are not] into permanent forest or forest reserves or element of open, continuous, exclusive, and notorious possession of their
some other forest uses under the Revised Forestry Code, there can be no lands in Boracay since June 12, 1945.
"reclassification of forest lands" to speak of within the meaning of Section
4(a). We cannot sustain the CA and RTC conclusion in the petition for
declaratory relief that private claimants complied with the requisite period
of possession.
On February 28, 2003, respondent Emmanuel C. Cortez (Cortez) filed with As soon as this Decision shall have become final and after payment of the
the RTC an application4 for judicial confirmation of title over a parcel of land required fees, let the corresponding Decrees be issued in the name of the
located at Barangay (Poblacion) Aguho, P. Herrera Street, Pateros, Metro applicant, Emmanuel C. Cortez.
Manila. The said parcel of land has an area of 110 square meters and
more particularly described as Lot No. 2697-B of the Pateros Cadastre. In Let copies of this Decision be furnished the Office of the Solicitor General,
support of his application, Cortez submitted, inter alia, the following Land Registration Authority, Land Management Bureau, and the Registry
documents: (1) tax declarations for various years from 1966 until 2005; (2) of Deeds of Rizal.
survey plan of the property, with the annotation that the property is
From the foregoing, the Court finds that there is sufficient basis to grant the It has been settled that properties classified as alienable and disposable
relief prayed for. It having been established by competent evidence that land may be converted into private property by reason of open, continuous
the possession of the land being applied for by the applicant and his and exclusive possession of at least 30 years. Such property now falls
predecessor-in-interest have been in open, actual, uninterrupted, and within the contemplation of "private lands" under Section 14(2) of PD 1529,
adverse possession, under claim of title and in the concept of owners, all over which title by prescription can be acquired. Thus, under the second
within the time prescribed by law, the title of the applicant should be and paragraph of Section 14 of PD 1529, those who are in possession of
must be AFFIRMED and CONFIRMED.7 alienable and disposable land, and whose possession has been
characterized as open, continuous and exclusive for 30 years or more,
The Republic of the Philippines (petitioner), represented by the Office of may have the right to register their title to such land despite the fact that
the Solicitor General, appealed to the CA, alleging that the RTC erred in their possession of the land commenced only after 12 June 1945. x x x
granting the application for registration despite the failure of Cortez to
comply with the requirements for original registration of title. The petitioner xxxx
pointed out that, although Cortez declared that he and his predecessors-in-
interest were in possession of the subject parcel of land since time While it is significant to note that applicant-appellees possession of the
immemorial, no document was ever presented that would establish his subject property can be traced from his mothers possession of the same,
predecessors-in-interests possession of the same during the period the records, indeed, show that his possession of the subject property,
required by law. That petitioner claimed that Cortez assertion that he and following Section 14(2) [of PD 1529], is to be reckoned from January 3,
his predecessors-in-interest had been in open, adverse, and continuous 1968, when the subject property was declared alienable and disposable
possession of the subject property for more than thirty (30) years does not and not way back in 1946, the year when he inherited the same from his
constitute well-neigh incontrovertible evidence required in land registration mother. At any rate, at the time the application for registration was filed in
cases; that it is a mere claim, which should not have been given weight by 2003, there was already sufficient compliance with the requirement of
the RTC. possession. His possession of the subject property has been characterized
as open, continuous, exclusive and notorious possession and occupation
Further, the petitioner alleged that there was no certification from any in the concept of an owner.10 (Citations omitted)
government agency that the subject property had already been declared
alienable and disposable. As such, the petitioner claims, Cortez Hence, the instant petition.
possession of the subject property, no matter how long, cannot confer
ownership or possessory rights. The Issue
On February 17, 2009, the CA, by way of the assailed Decision,8 dismissed The sole issue to be resolved by the Court is whether the CA erred in
the petitioners appeal and affirmed the RTC Decision dated February 7, affirming the RTC Decision dated February 7, 2006, which granted the
2006. The CA ruled that Cortez was able to prove that the subject property application for registration filed by Cortez.
was indeed alienable and disposable, as evidenced by the
declaration/notation from the BFD. The Courts Ruling
surveyed. Respondents failed to submit a certification from the proper evidence to prove that he and his predecessors-in-interest have been in
government agency to prove that the lands subject for registration are open, continuous, exclusive, and notorious possession and occupation of
indeed alienable and disposable.16 (Citations omitted and emphasis ours) the subject property since June 12, 1945, or earlier. Cortez was only able
to present oral and documentary evidence of his and his mothers
Similarly, in Republic v. Roche,17 the Court declared that: ownership and possession of the subject property since 1946, the year in
which his mother supposedly inherited the same.
Respecting the third requirement, the applicant bears the burden of proving
the status of the land. In this connection, the Court has held that he must Other than his bare claim that his family possessed the subject property
present a certificate of land classification status issued by the Community since time immemorial, Cortez failed to present any evidence to show that
Environment and Natural Resources Office (CENRO) or the Provincial he and his predecessors-in-interest indeed possessed the subject property
Environment and Natural Resources Office (PENRO) of the DENR. He prior to 1946; it is a mere claim and not factual proof of possession. "It is a
must also prove that the DENR Secretary had approved the land rule that general statements that are mere conclusions of law and not
classification and released the land as alienable and disposable, and that it factual proof of possession are unavailing and cannot suffice. An applicant
is within the approved area per verification through survey by the CENRO in a land registration case cannot just harp on mere conclusions of law to
or PENRO. Further, the applicant must present a copy of the original embellish the application but must impress thereto the facts and
classification approved by the DENR Secretary and certified as true copy circumstances evidencing the alleged ownership and possession of the
by the legal custodian of the official records. These facts must be land."19
established by the applicant to prove that the land is alienable and
disposable. Further, the earliest tax declaration presented by Cortez was only in 1966.
Cortez failed to explain why, despite his claim that he and his
Here, Roche did not present evidence that the land she applied for has predecessors-in-interest have been in possession of the subject property
been classified as alienable or disposable land of the public domain. She since time immemorial, it was only in 1966 that his predecessors-in-interest
submitted only the survey map and technical description of the land which started to declare the same for purposes of taxation.
bears no information regarding the lands classification. She did not bother
to establish the status of the land by any certification from the appropriate That Cortez and his predecessors-in-interest have been in possession of
government agency. Thus, it cannot be said that she complied with all the subject property for fifty-seven (57) years at the time he filed his
requisites for registration of title under Section 14(1) of P.D. application for registration in 2003 would likewise not entitle him to
1529.18 (Citations omitted and emphasis ours) registration thereof under Section 14(2) of P.D. No. 1529.
The annotation in the survey plan presented by Cortez is not the kind of Section 14(2) of P.D. No. 1529 sanctions the original registration of lands
evidence required by law as proof that the subject property forms part of acquired by prescription under the provisions of existing laws. "As Section
the alienable and disposable land of the public domain. Cortez failed to 14(2) [of P.D. No. 1529] categorically provides, only private properties may
present a certification from the proper government agency as to the be acquired thru prescription and under Articles 420 and 421 of the Civil
classification of the subject property. Cortez likewise failed to present any Code, only those properties, which are not for public use, public service or
evidence showing that the DENR Secretary had indeed classified the intended for the development of national wealth, are considered private."20
Section 14. Who may apply. The following persons may file in the The original Section 48(b) of C.A. No.141 provided for possession and
proper [Regional Trial Court] an application for registration of title to land, occupation of lands of the public domain since July 26, 1894. This was
whether personally or through their duly authorized representatives: superseded by R.A. No. 1942, which provided for a simple thirty-year
prescriptive period of occupation by an applicant for judicial confirmation of
(1) Those who by themselves or through their predecessors-in- imperfect title. The same, however, has already been amended by
interest have been in open, continuous, exclusive and notorious Presidential Decree No. 1073, approved on January 25, 1977. As
possession and occupation of alienable and disposable lands of amended, Section 48(b) now reads:
the public domain under a bona fide claim of ownership since June
12, 1945, or earlier. (b) Those who by themselves or through their predecessors in interest
have been in open, continuous, exclusive, and notorious possession and
(2) Those who have acquired ownership of private lands by occupation of agricultural lands of the public domain, under a bona fide
prescription under the provision of existing laws. claim of acquisition of ownership, since June 12, 1945, or earlier,
We noted in Naguit that it should be distinguished from Bracewell v. Court As correctly found by the Court of Appeals, private respondents were able
of Appeals since in the latter, the application for registration had been filed to prove their open, continuous, exclusive and notorious possession of the
before the land was declared alienable or disposable. The dissent though subject land even before the year 1927. As a rule, we are bound by the
pronounces Bracewell as the better rule between the two. Yet two years factual findings of the Court of Appeals. Although there are exceptions,
after Bracewell, its ponente, the esteemed Justice Consuelo Ynares- petitioner did not show that this is one of them."
Santiago, penned the ruling in Republic v. Ceniza, which involved a claim
of possession that extended back to 1927 over a public domain land that Why did the Court in Ceniza, through the same eminent member who
was declared alienable and disposable only in 1980. Ceniza cited authored Bracewell, sanction the registration under Section 48(b) of public
Bracewell, quoted extensively from it, and following the mindset of the domain lands declared alienable or disposable thirty-five (35) years and
dissent, the attempt at registration in Ceniza should have failed. Not so. 180 days after 12 June 1945? The telling difference is that in Ceniza, the
application for registration was filed nearly six (6) years after the land had
To prove that the land subject of an application for registration is alienable, been declared alienable or disposable, while in Bracewell, the application
an applicant must establish the existence of a positive act of the was filed nine (9) years before the land was declared alienable or
government such as a presidential proclamation or an executive order; an disposable. That crucial difference was also stressed in Naguit to
administrative action; investigation reports of Bureau of Lands contradistinguish it from Bracewell, a difference which the dissent seeks to
investigators; and a legislative act or a statute. belittle.45 (citations omitted)
In this case, private respondents presented a certification dated November On the other hand, under Section 14(2), ownership of private lands
25, 1994, issued by Eduardo M. Inting, the Community Environment and acquired through prescription may be registered in the owners name. Did
Natural Resources Officer in the Department of Environment and Natural the respondent then acquire the land through prescription considering that
Resources Office in Cebu City, stating that the lots involved were "found to her possession and occupation of the land by her and her predecessors-in-
be within the alienable and disposable (sic) Block-I, Land Classification interest could be traced back to as early as in 1926, and that the nature of
Project No. 32-A, per map 2962 4-I555 dated December 9, 1980." This is their possession and occupation was that of a bona fide claim of ownership
sufficient evidence to show the real character of the land subject of private for over 30 years?
respondents application. Further, the certification enjoys a presumption of
regularity in the absence of contradictory evidence, which is true in this Clearly, the respondent did not. Again, Heirs of Mario Malabanan v.
case. Worth noting also was the observation of the Court of Appeals Republic is enlightening, to wit:
stating that:
It is clear that property of public dominion, which generally includes
[n]o opposition was filed by the Bureaus of Lands and Forestry to contest property belonging to the State, cannot be the object of prescription or,
the application of appellees on the ground that the property still forms part indeed, be subject of the commerce of man. Lands of the public domain,
of the public domain. Nor is there any showing that the lots in question are whether declared alienable and disposable or not, are property of public
forestal land...." dominion and thus insusceptible to acquisition by prescription.
Thus, while the Court of Appeals erred in ruling that mere possession of Let us now explore the effects under the Civil Code of a declaration by the
public land for the period required by law would entitle its occupant to a President or any duly authorized government officer of alienability and
commerce of man; Article 1113 provides that all things within the is to apply the Constitution and the laws in accordance with their language
commerce of man are susceptible to prescription; and the same provision and intent. The remedy is to change the law, which is the province of the
further provides that patrimonial property of the State may be acquired by legislative branch. Congress can very well be entreated to amend Section
prescription. 14(2) of the Property Registration Decree and pertinent provisions of the
Civil Code to liberalize the requirements for judicial confirmation of
Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public imperfect or incomplete titles.46
dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State." It is this provision The period of possession prior to the reclassification of the land as
that controls how public dominion property may be converted into alienable and disposable land of the public domain is not considered in
patrimonial property susceptible to acquisition by prescription. After all, reckoning the prescriptive period in favor of the possessor. As pointedly
Article 420 (2) makes clear that those property "which belong to the State, clarified also in Heirs of Mario Malabanan v. Republic:47
without being for public use, and are intended for some public service or
for the development of the national wealth" are public dominion property. Should public domain lands become patrimonial because they are
For as long as the property belongs to the State, although already declared as such in a duly enacted law or duly promulgated proclamation
classified as alienable or disposable, it remains property of the public that they are no longer intended for public service or for the development
dominion if when it is "intended for some public service or for the of the national wealth, would the period of possession prior to the
development of the national wealth". 1w phi 1
It is comprehensible with ease that this reading of Section 14(2) of the In other words, the period of possession prior to the reclassification of the
Property Registration Decree limits its scope and reach and thus affects land, no matter how long, was irrelevant because prescription did not
the registrability even of lands already declared alienable and disposable operate against the State before then.
to the detriment of the bona fide possessors or occupants claiming title to
the lands. Yet this interpretation is in accord with the Regalian doctrine and
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of
its concomitant assumption that all lands owned by the State, although
the Court of Appeals promulgated on January 30, 2004; DISMISSES the
SO ORDERED. From this order the plaintiff has appealed by bill of exceptions. The
fundamental question raised by appellant in her four assignments of error
G.R. No. L-24950 March 25, 1926 is whether or not the property levied upon is exempt from execution.
VIUDA DE TAN TOCO, plaintiff-appellant, The municipal law, section 2165 of the Administrative Code, provides that:
vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee. Municipalities are political bodies corporate, and as such are
endowed with the faculties of municipal corporations, to be
Arroyo & Evangelista for appellant. exercised by and through their respective municipal government in
Provincial Fiscal Borromeo Veloso for appelle. conformity with law.
VILLAMOR, J.: It shall be competent for them, in their proper corporate name, to
sue and be sued, to contract and be contracted with, to acquire
It appears from the record that the widow of Tan Toco had sued the and hold real and personal property for municipal purposes, and
municipal council of Iloilo for the amount of P42,966.40, being the generally to exercise the powers hereinafter specified or otherwise
purchase price of two strips of land, one on Calle J. M. Basa consisting of conferred upon them by law.
592 square meters, and the other on Calle Aldiguer consisting of 59 square
meters, which the municipality of Iloilo had appropriated for widening said For the purposes of the matter here in question, the Administrative Code
street. The Court of First Instance of Iloilo sentenced the said municipality does not specify the kind of property that a municipality may acquire.
to pay the plaintiff the amount so claimed, plus the interest, and the said However, article 343 of the Civil Code divides the property of provinces
judgment was on appeal affirmed by this court.1 and towns (municipalities) into property for public use and patrimonial
property. According to article 344 of the same Code, provincial roads and
On account of lack of funds the municipality of Iloilo was unable to pay the foot-path, squares, streets, fountains and public waters, drives and public
said judgment, wherefore plaintiff had a writ of execution issue against the improvements of general benefit built at the expense of the said towns or
property of the said municipality, by virtue of which the sheriff attached two provinces, are property for public use.
auto trucks used for street sprinkling, one police patrol automobile, the
police stations on Mabini street, and in Molo and Mandurriao and the All other property possessed by the said towns and provinces is
concrete structures, with the corresponding lots, used as markets by Iloilo, patrimonial and shall be subject to the provisions of the Civil Code except
Molo, and Mandurriao. as provided by special laws.
After notice of the sale of said property had been made, and a few days Commenting upon article 344, Mr. Manresa says that "In accordance with
before the sale, the provincial fiscal of Iloilo filed a motion which the Court administrative legislation" (Spanish) we must distinguish, as to the
of First Instance praying that the attachment on the said property be patrimonial property of the towns, "between that a common benefit and
dissolved, that the said attachment be declared null and void as being that which is private property of the town. The first differs from property for
illegal and violative of the rights of the defendant municipality. public use in that generally its enjoyment is less, as it is limited to
neighbors or to a group or class thereof; and, furthermore, such use, more
In the case of City of New Orleans vs. Louisiana Construction Co., In the case of Tufexis vs. Olaguera and Municipal Council of
Ltd. (140 U. S., 654; 35 Law. ed., 556), it was held that a wharf for Guinobatan (32 Phil., 654), the question raised was whether for the
unloading sugar and molasses, open to the public, was property for the payment of a debt to a third person by the concessionaire of a public
public use of the City of New Orleans and was not subject to attachment market, the said public market could be attached and sold at public
for the payment of the debts of the said city. auction. The Supreme Court held that:
In that case it was proven that the said wharf was a parcel of land adjacent Even though a creditor is unquestionably entitled to recover out of
to the Mississippi River where all shipments of sugar and molasses taken his debtor's property, yet when among such property there is
to New Orleans were unloaded. included the special right granted by the Government of usufruct in
a building intended for a public service, and when this privilege is
That city leased the said wharf to the Louisiana Construction Company, closely related to a service of a public character, such right of the
Ltd., in order that it might erect warehouses so that the merchandise upon creditor to the collection of a debt owed him by the debtor who
discharge might not be spoiled by the elements. The said company was enjoys the said special privilege of usufruct in a public market is not
given the privilege of charging certain fees for storing merchandise in the absolute and may be exercised only through the action of court of
said warehouses and the public in general had the right to unload sugar justice with respect to the profits or revenue obtained under the
and molasses there by paying the required fees, 10 per cent of which was special right of usufruct enjoyed by debtor.
turned over to the city treasury.
The special concession of the right of usufruct in a public market
The United States Supreme Court on an appeal held that the wharf was cannot be attached like any ordinary right, because that would be
public property, that it never ceased to be such in order to become private to permit a person who has contracted with the state or with the
property of the city; wherefore the company could not levy execution upon administrative officials thereof to conduct and manage a service of
the wharf in order to collect the amount of the judgment rendered in favor a public character, to be substituted, without the knowledge and
thereof. consent of the administrative authorities, by one who took no part
in the contract, thus giving rise to the possibility of the regular
In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., course of a public service being disturbed by the more or less legal
430), the Supreme Court of the United States that a public wharf on the action of a grantee, to the prejudice of the state and the public
banks of the Mississippi River was public property and not subject to interests.
execution for the payment of a debt of the City of New Orleans where said
wharf was located. The privilege or franchise granted to a private person to enjoy the
usufruct of a public market cannot lawfully be attached and sold,
and a creditor of such person can recover his debt only out of the
Notwithstanding demands for payment thereof, the petitioner-appellants B. That immediately upon final approval
failed to remit the aforesaid amount of P613,096.00 to the respondent- hereof by this Honorable Court, the plaintiff
appellee. contractor will submit and file in favor of
Pasay City Government a new performance
On May 16, 1968, respondent appellee filed an action for specific bond in the amount required by pertinent
performance with damages against herein petitioners-appellants before the law, rules and regulations, in proportion to
respondent Court. the remaining value or cost of the
unfinished work of the construction as per
On May 23, 1968, the appellants filed a motion for the amendment of the approved plans and specification
complaint and for bin of particulars (p. 9, Appellant's Brief; p. 159, rec.).
This was denied by the respondent Court. The appellants later filed a xxx xxx xxx
motion for reconsideration. This was likewise denied. On August 10, 1968,
the appellants filed their answer. D. That if and when warranted by the
finances and income of the Pasay City
The parties arrived at a draft of amicable agreement which was submitted Government and subject to the pertinent
to the Municipal Board of Pasay City for its consideration. Protracted pre- and applicable government auditing and
trial hearings and conferences were held where the respondent Court accounting rules and procedure, the plaintiff
suggested and advised that "under the principle of quantum meruit, the contractor shall without delay finish and
plaintiff is forthwith entitled to at least that which is due to him for complete the construction as per attached
defendants under the contract and that public interest must perforce plans and specifications ... within a period
require the continuity of construction of a public work project, instead of of one (1) year from the date of final
delaying its immediate completion by litigating upon technical grounds approval of this compromise agreement by
which would undoubtedly redound to public detriment (p. 40, rec.). this Honorable Court, provided, however
that in any case or event the construction
On February 25, 1969, the Municipal Board of Pasay enacted Ordinance herein contemplated shall not extend
No. 1012 which approved the Compromise Agreement and also authorized beyond one and a half (1 1/2) years from
and empowered the incumbent City Mayor Jovito Claudio to represent the the date of the final approval hereof by this
appellant Pasay City Government, subject to the final approval of the Honorable Court;
respondent Court herein.
xxx xxx xxx
5. That any willful, gross, deliberate and wanton violation On July 22, 1969, the appellants filed a motion for reconsideration on three
and/or avoidance of the terms and conditions of this grounds, to wit:
Compromise Agreement by either of the parties herein
shall, with due notice, forthwith entitle the aggrieved party 1. That the same is not supported by the facts and
to an immediate execution hereof and to the necessary and pertinent law, rule and regulation on the matter;
corresponding reliefs and remedies therefor (pp. 43-46,
rec.).
2. That the funds of the defendant Pasay City Government
which were garnished by the City Sheriff are by law exempt
On April 10, 1969, the appellants filed an urgent motion seeking a from execution and/or garnishment; and
declaration of legality of the original contract and agreement dated August
4, 1964 from the respondent Court. On May 10, 1969, the respondent
3. That plaintiff's claim may not as yet be enforceable by
Court issued an order declaring that the original contract is legal and valid
ex- execution" (pp. 68-71, rec.).
(p. 59, rec.).
On July 22, 1969, the respondent Court denied and rejected the
appellants' motion for reconsideration. The respondent Court ordered the
Moreover, supplemental pleadings are meant to supply deficiencies in aid 2. That the work shall be done in stages to be determined
of original pleading, not to entirely substitute the latter (British Traders' by the City Engineer considering structural and functional
Insurance Co., Ltd. vs. Commissioner of Internal Revenue, L-20501, 13 criteria and consistent with funds immediately available for
SCRA 719, 728 [April 30, 1965]). Here, the respondent-appellee originally the purpose;
asked for specific performance which was later settled through a
compromise agreement. After this, the respondent-appellee asked for 3. That the Contractor shall advance the necessary amount
rescission of both the contract and agreement and the compromise needed for each stage of work; Provided that the
agreement using a supplemental complaint. It is clear that the Contractor shalt before starting each stage of work, inform
supplemental complaint We have before Us is not only to "supply the First Party in writing as to the amount necessary to be
deficiencies in aid of original pleading but is also meant as an entirely new advanced by the former; ...
"substitute" to the latter. A supplemental complaint must be consistent with
and in aid of, the cause of action set forth in the original complaint and a 4. That the Party of the First Part shall reimburse the
new and independent cause of action cannot be set up by such complaint Contractor the cost of the work completed as estimated by
(Bishop vs. Taylor, 210 App. Div. 1, 205 NVS 653), especially where the City Engineer for each stage of work before the
judgment has already been obtained by him in the original action Contractor proceed to the next stage; (pp. 33-34, rec.).
(Anadarko First National Bank vs. Anadarko First National Bank, 39 0kl.
225, 134 Phil. 866).
And sub-paragraph H of paragraph 1 and paragraph 2 of the compromise
agreement also reiterated the stage by stage construction and payment as
WE find no error in the order of the respondent Court dated July 23, 1969. follows:
From the reading of the premises and provisions of the contract and
agreement which was "formally confirmed and officially approved by the
H. That detailed, separate reports on the progress of the
parties" in the compromise agreement later entered into by the same
construction work during each stage shall regularly be
parties, subject only to the enumerated changes and/or modifications, it is
submitted to the City Enginer and the City Mayor;
obvious that the contracting parties envisioned a stage by stage
construction (on the part of the respondent-appellee) and payment (on the
part of the defendant-appellant). This is manifested in the contract and xxx xxx xxx
agreement, to quote:
2. That within a reasonable period ,at least ninety(90) days
xxx xxx xxx from the final approval of this Compromise Agreement by
this Honorable Court, the defendant Pasay City
Government shall pay and remit the amount of SIX
And, We note that in the Contract and Agreement, the respondent-appellee 3. That within a similar period the defendant Pasay City
was allowed to file a performance bond of P222,250.00 which is but 5% of Government shall pay and remit to plaintiff contractor an
the total bid of P4,914,500.80. A security bond was likewise filed with an amount equivalent to three (3%) percent of the above
amount of P97,290.00. The sum total of bond then filed was P320,540.00 mentioned amount of SIX HUNDRED THIRTEEN NINETY
which is just 6.5% of the total Ibid. It is rather curious why all of a sudden SIX PESOS (P613,096.00), for and as adverse attorney's
the petitioners-appellants are insisting on a 20% performance bond of the fees in this case; ... (p. 45, rec.).
entire unfinished work when they were quite content with a bond just 5% of
the entire work. For Us to allow the petitioners-appellants to adamantly WE hereby grant the amount of P 18,392.78 which is 3% of P613,096.00
stick to the 20% performance bond would be tantamount to allowing them as attorney's fees in favor of the respondent-appellee.
to evade their obligation in the compromise agreement. This cannot be
allowed. The bond of a contractor for a public work should not be extended
Pursuant thereto, the Auditor General, on January 11, 1955, This constrained plaintiff-appellee Zamboanga del Norte to file on
apportioned the assets and obligations of the defunct Province of March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary
Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Mandatory Injunction" in the Court of First Instance of Zamboanga del
Zamboanga del Sur. Zamboanga del Norte therefore became entitled to Norte against defendants-appellants Zamboanga City, the Secretary of
54.39% of P1,294,244.00, the total value of the lots and buildings in Finance and the Commissioner of Internal Revenue. It was prayed that: (a)
question, or P704,220.05 payable by Zamboanga City. Republic Act 3039 be declared unconstitutional for depriving plaintiff
province of property without due process and just compensation; (b)
On March 17, 1959, the Executive Secretary, by order of the Plaintiff's rights and obligations under said law be declared; (c) The
President, issued a ruling 4 holding that Zamboanga del Norte had a vested Secretary of Finance and the Internal Revenue Commissioner be enjoined
right as owner (should be co-owner pro-indiviso) of the properties from reimbursing the sum of P57,373.46 to defendant City; and (d) The
mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price latter be ordered to continue paying the balance of P704,220.05 in
thereof, payable by Zamboanga City. This ruling revoked the previous quarterly installments of 25% of its internal revenue allotments.
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 On June 4, 1962, the lower court ordered the issuance of preliminary
the provincial capital of the then Zamboanga Province was transferred to injunction as prayed for. After defendants filed their respective answers,
Dipolog. trial was held. On August 12, 1963, judgment was rendered, the dispositive
portion of which reads:
The Secretary of Finance then authorized the Commissioner of
Internal Revenue to deduct an amount equal to 25% of the regular internal
................................... ...................................
5558 175 Vacant
We noticed that the eight Burleigh lots above described are adjoining ... ...
each other and in turn are between the two lots wherein the Burleigh ................................... ...................................
5559 188 "
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 5560 183 "
... ...
the nature of the same.
................................... ...................................
5561 186 "
... ...
Regarding the several buildings existing on the lots above-
................................... ...................................
mentioned, the records do not disclose whether they were constructed at 5563 191 "
... ...
the expense of the former Province of Zamboanga. Considering however
the fact that said buildings must have been erected even before 1936 ................................... ...................................
5566 176 "
when Commonwealth Act 39 was enacted and the further fact that ... ...
provinces then had no power to authorize construction of buildings such as ................................... ...................................
5568 179 "
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 5574 ................................... 196 ................................... "
Moreover, the fact that these 26 lots are registered strengthens the Plaintiff's share, however, cannot be paid in lump sum, except as to
proposition that they are truly private in nature. On the other hand, that the the P43,030.11 already returned to defendant City. The return of said
24 lots used for governmental purposes are also registered is of no amount to defendant was without legal basis. Republic Act 3039 took effect
significance since registration cannot convert public property to private. 16 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
WHEREFORE, the decision appealed from is hereby set aside and This is a petition for review of the decision of the Court of First Instance of
another judgment is hereby entered as follows:. Manila, Branch XXIII, in Civil Case No. 67946, dated September 23, 1968,
the dispositive portion of which is 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 WHEREFORE, the Court renders judgment declaring
former took back from the latter out of the sum of P57,373.46 previously Republic Act No. 4118 unconstitutional and invalid in that it
paid to the latter; and deprived the City of Manila of its property without due
process and payment of just compensation. Respondent
Executive Secretary and Governor of the Land Authority
(2) Defendants are hereby ordered to effect payments in favor of
are hereby restrained and enjoined from implementing the
plaintiff of whatever balance remains of plaintiff's 54.39% share in the 26
provisions of said law. Respondent Register of Deeds of
patrimonial properties, after deducting therefrom the sum of P57,373.46,
the City of Manila is ordered to cancel Transfer Certificate
on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal
of Title No. 80876 which he had issued in the name of the
Committee formed by the Auditor General, by way of quarterly payments
Land Tenure Administration and reinstate Transfer
from the allotments of defendant City, in the manner originally adopted by
Certificate of Title No. 22547 in the name of the City of
the Secretary of Finance and the Commissioner of Internal Revenue. No
Manila which he cancelled, if that is feasible, or issue a
costs. So ordered.
new certificate of title for the same parcel of land in the
name of the City of Manila. 1
G.R. No. L-29788 August 30, 1972
The facts necessary for a clear understanding of this case are as follows:
RAFAEL S. SALAS, in his capacity as Executive Secretary;
CONRADO F. ESTRELLA, in his capacity as Governor of the Land
On February 24, 1919, the 4th Branch of the Court of First Instance of
Authority; and LORENZO GELLA, in his capacity as Register of
Manila, acting as a land registration court, rendered judgment in Case No.
Deeds of Manila, petitioners-appellants,
18, G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee
vs.
simple of a parcel of land known as Lot No. 1, Block 557 of the Cadastral
HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII,
Survey of the City of Mani1a, containing an area of 9,689.8 square meters,
Court of First Instance of Manila; ANTONIO J. VILLEGAS, in his
more or less. Pursuant to said judgment the Register of Deeds of Manila
on August 21, 1920, issued in favor of the City of Manila, Original
In the particular case of the property subject of this bill, the Approval of this bill will implement the policy of the
City of Manila does not seem to have use thereof as a Administration of land for the landless and the Fifth
public communal property. As a matter of fact, a resolution Declaration of Principles of the Constitution, which states
was adopted by the Municipal Board of Manila at its regular that the promotion of Social Justice to insure the well-being
session held on September 21, 1960, to request the and economic security of all people should be the concern
feasibility of declaring the city property bounded by Florida, of the State. We are ready and willing to enact legislation
San Andres and Nebraska Streets as a patrimonial promoting the social and economic well-being of the people
property of the City of Manila for the purpose of reselling
SENATOR FERNANDEZ: Mr. President, in view of that Sec. 2. Upon approval of this Act no ejectment proceedings
manifestation and considering that Mayor Villegas and against any tenant or bona fide occupant of the above lots
Congressman Albert of the Fourth District of Manila are in shall be instituted and any ejectment proceedings pending
favor of the bill. I would not want to pretend to know more in court against any such tenant or bona fide occupant shall
what is good for the City of Manila. be dismissed upon motion of the defendant: Provided, That
any demolition order directed against any tenant or bona
SENATOR TOLENTINO: Mr. President, there being no fide occupant shall be lifted.
objection, I move that we approve this bill on second
reading. Sec. 3. Upon approval of this Act, if the tenant or bona
fide occupant is in arrears in the payment of any rentals,
PRESIDENT PRO-TEMPORE: The biII is approved on the amount legally due shall be liquidated and shall be
second reading after several Senetors said aye and payable in twenty-four equal monthly installments from the
nobody said nay. date of liquidation.
The bill was passed by the Senate, approved by the President on June 20, Sec. 4. No property acquired by virtue of this Act shall be
1964, and became Republic Act No. 4118. It reads as follows: transferred, sold, mortgaged, or otherwise disposed of
within a period of five years from the date full ownership
True it is that the legislative control over a municipal corporation is not The Congress has dealt with the land involved as one reserved for
absolute even when it comes to its property devoted to public use, for such communal use (terreno comunal). The act of classifying State property
control must not be exercised to the extent of depriving persons of their calls for the exercise of wide discretionary legislative power and it should
property or rights without due process of law, or in a manner impairing the not be interfered with by the courts.
obligations of contracts. Nevertheless, when it comes to property of the
municipality which it did not acquire in its private or corporate capacity with This brings Us to the second question as regards the validity of Republic
its own funds, the legislature can transfer its administration and disposition Act No. 4118, viewed in the light of Article III, Sections 1, subsection (1)
to an agency of the National Government to be disposed of according to its and (2) of the Constitution which ordain that no person shall be deprived of
discretion. Here it did so in obedience to the constitutional mandate of
b) On the second cause of action, ordering the defendant City of Manila to After due trial the court a quo rendered on July 14, 1972 its decision finding
pay the plaintiff TDC damages in the sum of note less than one hundred the subject land to be part of the "public park or plaza" and, therefore, part
thousand pesos (P100,000.00); of the public domain. The court consequently declared that the sale of the
subject land by the City of Manila to Manila Lodge No. 761, BPOE, was
c) On the third cause of action, reserving to the plaintiff TDC the right to null and void; that plaintiff TDC was a purchaser thereof in g faith and for
recover from the defendant BPOE the amounts mentioned in par. XVI of value from BPOE and can enforce its rights against the latter; and that
the complaint in accordance with Art. 1555 of the Civil Code, in the remote BPOE is entitled to recover from the City of Manila whatever consideration
event that the final judgment in this case should be that the parcel of land it had 'paid the latter. 'The dispositive part of the decision reads:
+.w ph!1
Hence, the present petitions for review on certiorari. In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there
appears to be some logic in the conclusion" of the Court of Appeals that
G.R. No. L-41001 "neither Act No. 1360 nor Act No. 1657 could have meant to supply the
City of Manila the authority to sell the subject property which is located at
The Manila Lodge No. 761, BPOE, contends, in its petition for review on the south end not the north of the reclaimed area." 16 It argues, however,
certiorari docketed as G.R. No. L-41001, that the Court of Appeals erred in that when Act No. 1360, as amended, authorized the City of Manila to
(1) disregarding the very enabling acts and/or statutes according to which undertake the construction of the Luneta extension by reclaimed land from the
the subject property was, and still is, patrimonial property of the City of Manila Bay, and declared that the reclaimed land shall be the "property of the
Manila and could therefore be sold and/or disposed of like any other City of Manila," the State expressly granted the ownership thereof to the City
private property; and (2) in departing from the accepted and usual course of Manila which. consequently. could enter into transactions involving it; that
upon the issuance of O.C.T. No. 1909, there could he no doubt that the
of judicial proceedings when it simply made a general affirmance of the
reclaimed area owned by the City was its patrimonial property;" that the south
court a quo's findings and conclusions without bothering to discuss or
end of the reclaimed area could not be for public use for. as argued by TDC a
resolve several vital points stressed by the BPOE in its assigned errrors. 14
street, park or promenade can be property for public use pursuant to Article
344 of the Spanish Civil Code only when it has already been so constructed or
G.R. No. L-41012 laid out, and the subject land, at the time it was sold to the Elk's Club, was
neither actually constructed as a street, park or promenade nor laid out as a
street, park or promenade;" that even assuming that the subject property was
at the beginning property of public dominion, it was subsequently converted
into patrimonial property pursuant to Art. 422 of the Civil Code, inasmuch as it
Fifthly, Article 344 of the Civil Code of Spain provides that to property of We have demonstrated ad satietatem that the Luneta extension as
public use, in provinces and in towns, comprises the provincial and town intended to be property of the City of Manila for public use. But, could not
roads, the squares streets fountains, and public waters the promenades, said property-later on be converted, as the petitioners contend, to
patrimonial property? It could be. But this Court has already said,
Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935,
development" dated May 14, 1949, were prepared by the National Urban covering the lot where now stands the American Embassy [Chancery]. It
Planning Commission of the Office of the President. It cannot be states that the property is "bounded ... on the Northwest by properties of
reasonably expected that this plan for development of the Luneta should Army and Navy Club (Block No.321) and Elks Club (Block No. 321)."
show that the subject property occupied by the ElksClub is a public park, Inasmuch as the said bounderies delineated by the Philippine Legislature
for it was made 38 years after the sale to the Elks, and after T.C.T. No. in Act No. 4269, the petitioners contend that the Legislature recognized
2195 had been issued to Elks. It is to be assumed that the Office of the and conceded the existence of the Elks Club property as a primate
President was cognizant of the Torrens title of BPOE. That the subject property (the property in question) and not as a public park or plaza. This
property was not included as a part of the Luneta only indicated that the argument is non sequitur plain and simple Said Original Certificate of Title
National Urban Planning Commission that made the plan knew that the cannot be considered as an incontrovertible declaration that the Elks Club
subject property was occupied by Elks and that Elks had a Torrens title was in truth and in fact the owner of such boundary lot. Such mention as
thereto. But this in no way proves that the subject property was originally
Paredes, Poblador, Nazareno, Abada and Tomacruz for respondent Judge In 1958, however, the estate of N.T. Hashim, deceased, through its
Lourdes P. San Diego. Judicial Administrator, Tomas N. Hashim, filed a money claim with the
Quezon City Engineer's Office in the sum of P522,620.00, alleging said
Jesus B. Santos for respondent Testate estate of N. T. Hashim. amount to be the fair market value of the property in question, now already
converted and used as a public highway. Nothing having come out of its
claim, respondent estate filed on August 6, 1963, with the Court of First
Jose A. Buendia for respondent Manuela C. Florendo.
Instance of Rizal, Quezon City Branch, assigned to Branch IX, presided by
respondent judge,2 a complaint for the recovery of the fair market price of the
Emata, Magkawas and Associates for respondent legal heir Jose H. said property in the sum of P672,030.00 against the Bureau of Public
Hashim. Highways, which complaint was amended on August 26, 1963, to include as
additional defendants, the Auditor General and the City Engineer of Quezon
Alberto O. Villaraza for respondents Estate of N.T. Hashim and Tomas N. City.3
Hashim.
The issues were joined in the case with the filing by then Solicitor General
Conrado E. Medina for respondent Philippine National Bank. Arturo A. Alafriz of the State's answer, stating that the Hashim estate was
entitled only to the sum of P3,203.00 as the fair market value of the
Benjamin V. Corua for and in his own behalf. property at the time that the State took possession thereof on November
25, 1940, with legal interest thereon at 6% per annum, and that said
amount had been available and tendered by petitioner Bureau since 1958.
The parties thereafter worked out a compromise agreement, respondent
estate having proposed on April 28, 1966, a payment of P14.00 per sq. m.
TEEHANKEE, J.:
for its 14,934 sq.m.-parcel of land or the total amount of P209,076.00,
equivalent to the land's total assessed value,4 which was confirmed, ratified
In this special civil action for certiorari and prohibition, the Court declares and approved in November, 1966 by the Commissioner of Public Highways
null and void the two questioned orders of respondent Court levying upon and the Secretary of Public Works and Communications. On November 7,
funds of petitioner Bureau of Public Highways on deposit with the 1966, the Compromise Agreement subscribed by counsel for respondent
Strangely enough, as appears now from respondent bank's memorandum On the principal issue, the Court holds that respondent Court's two
in lieu of oral argument,7 what respondent bank did, acting through questioned orders (1) for execution of the judgment, in pursuance whereof
respondent Corua as its counsel, was not to ask respondent estate respondent deputy clerk issued the corresponding writ of execution and
to reimburse it in turn in the same amount, but to file with the probate court respondent special sheriff issued the notice of garnishment, and (2) for
with jurisdiction over respondent estate,8 a motion for the estate to deposit the delivery of the garnished amount of P209,076.00 to respondent estate as
said amount with it, purportedly in compliance with the writ. Respondent estate judgment creditor through respondent special sheriff, are null and void on
thereupon deposited with respondent bank as a savings account the sum of the fundamental ground that government funds are not subject to
P125,446.00, on which the bank presumably would pay the usual interest, execution or garnishment.
besides. As to the balance of P83,630.00, this sum had been in the interval
paid as attorney's fees to Atty. Jesus B. Santos, counsel for the estate, by the
administrator, allegedly without authority of the probate court. 9 Accordingly,
1. As early as 1919, the Court has pointed out that although the
respondent estate has not reimbursed the respondent bank either as to this Government, as plaintiff in expropriation proceedings, submits itself to the
last amount, and the bank has complacently not taken any steps in the lower jurisdiction of the Court and thereby waives its immunity from suit, the
court to require such reimbursement. judgment that is thus rendered requiring its payment of the award
determined as just compensation for the condemned property as a
The ancillary questions now belatedly raised by the State may readily be condition precedent to the transfer to the title thereto in its favor, cannot be
disposed of. Petitioners may not invoke the State's immunity from suit, realized upon execution. 12The Court there added that it is incumbent upon
the legislature to appropriate any additional amount, over and above the
since the case below was but a continuation in effect of the pre-war
provisional deposit, that may be necessary to pay the award determined in the
expropriation proceedings instituted by the State itself. The expropriation of
judgment, since the Government cannot keep the land and dishonor the
the property, which now forms part of Epifanio, de los Santos Avenue, is judgment.
a fait accompli and is not questioned by the respondent state. The only
question at issue was the amount of the just compensation due to
In another early case, where the government by an act of the Philippine
respondent estate in payment of the expropriated property, which properly
Legislature, expressly consented to be sued by the plaintiff in an action for
pertained to the jurisdiction of the lower court. 10 It is elementary that in
expropriation proceedings, the State precisely submits to the Court's
damages and waived its immunity from suit, the Court adjudged the
jurisdiction and asks the Court to affirm its lawful right to take the property Government as not being legally liable on the complaint, since the State
sought to be expropriated for the public use or purpose described in its under our laws would be liable only for torts caused by its special agents,
complaint and to determine the amount of just compensation to be paid specially commissioned to carry out the acts complained of outside of such
therefor. agents' regular duties. We held that the plaintiff would have to look to the
legislature for another legislative enactment and appropriation of sufficient
Neither may the State impugn the validity of the compromise agreement funds, if the Government intended itself to be legally liable only for the
executed by the Solicitor General on behalf of the State with the approval damages sustained by plaintiff as a result of the negligent act of one of its
of the proper government officials, on the ground that it was executed only employees. 13
by the lawyer of respondent estate, without any showing of having been
specially authorized to bind the estate thereby, because such alleged lack The universal rule that where the State gives its consent to be sued by
of authority may be questioned only by the principal or client, and private parties either by general or special law, it may limit claimant's
respondent estate as such principal has on the contrary confirmed and action "only up to the completion of proceedings anterior to the stage of
ratified the compromise agreement. 11 As a matter of fact, the Solicitor execution" and that the power of the Courts ends when the judgment is
General, in representation of the State, makes in the petition no prayer for the rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is based on
Since they have gone into the records of the expropriation case, then it It thus appears that all this time, respondent bank has not been reimbursed
should be noted that they should have considered the vital fact that at the by respondent estate as the party primarily liable for the whole amount of
time that the compromise agreement therein was executed in November, P209,076.00 wrongfully and illegally garnished and received by respondent
1966, respondent estate was well aware of the fact that the funds for the estate. This grave breach of trust and dereliction of duty on the part of
payment of the property in the amount of P209,076.00 still had to be respondent bank's officials should be brought to the attention of
released by the Budget Commissioner and that at the time of the respondent bank's Board of Directors and management for the appropriate
garnishment, respondent estate was still making the necessary administrative action and other remedial action for the bank to recover the
representations for the corresponding release of such amount, pursuant to damages it has been made to incur thereby.
the Budget Commissioner's favorable
recommendation.19 And with regard to the merits of the case, they should 6. The Solicitor General has likewise questioned the legality of respondent
have likewise considered that respondent estate could have no complaint Court's Order of October 14, 1968, appointing respondent Garcia as
against the fair attitude of the authorities in not having insisted on their original "special sheriff" for the purpose of effecting service of the writ of execution,
stand in their answer that respondent estate was entitled only to the sum of
simply on respondent estate's representation that it was desirable "for a
P3,203.00 as the fair market value of the property at the time the State took
speedy enforcement of the writ."
possession thereof on November 25, 1940, with legal interests thereon, but
rather agreed to pay therefor the greatly revised and increased amount of
P209,076.00 at P14.00 per square meter, not to mention the consequential The Court finds this general practice of the lower courts of appointing
benefits derived by said respondent from the construction of the public "special sheriffs" for the service of writs of execution to be unauthorized by
highway with the resultant enhanced value of its remaining properties in the law. The duty of executing all processes" of the courts in civil cases,
area. particularly, writs of execution, devolves upon the sheriff or his deputies,
under Section 183 of the Revised Administrative Code and Rule 39,
section 8 of the Rules of Court. Unlike the service of summons which may
be made, aside from the sheriff or other proper court officers, "for special
None of the above contingencies having been shown to be present, We resolve the petition filed by Professional Video, Inc. (PROVI)1 to annul
respondent Court's order appointing respondent Garcia as "special sheriff" and set aside the Decision2 of the Court of Appeals (CA) in CA-G.R. SP
to serve the writ of execution was devoid of authority. No. 67599, and its subsequent Order denying PROVIs motion for
reconsideration.3The assailed CA decision nullified:
7. No civil liability attaches, however, to respondents special sheriff and
deputy clerk, since they acted strictly pursuant to orders issued by a. the Order4 dated July 16, 2001 of the Regional Trial Court (RTC), Pasig
respondent judge in the discharge of her judicial functions as presiding City, in Civil Case No. 68527, directing the attachment/garnishment of the
judge of the lower court, and respondent judge's immunity from civil properties of respondent Technical Education and Skills Development
responsibility covers them, although the said orders are herein declared Authority (TESDA) amounting to Thirty Five Million Pesos
null and void. 20 (P35,000,000.00); and
ACCORDINGLY, the writs of certiorari and prohibition are granted. The b. the RTCs August 24, 2001 Order5 denying respondent TESDAs motion
respondent court's questioned Orders of October 14, and 18, 1968, are to discharge/quash writ of attachment.
declared null and void, and all further proceedings in Civil Case No. Q-
7441 of the Court of First Instance of Rizal, Quezon City, Branch IX are THE FACTUAL BACKGROUND
abated. The writ of preliminary mandatory injunction heretofore issued is
made permanent, except as to respondent judge who is excluded
therefrom, without prejudice to any cause of action that private
TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two 07 June 2000 330,000 pre-printed cards 18,810,000.00
(2) public biddings on June 25, 1999 and July 22, 1999 for the printing and 07 August
encoding of PVC cards. A failure of bidding resulted in both instances 121,500 pre-printed cards 6,925,500.00
2000
since only two (2) bidders PROVI and Sirex Phils. Corp. submitted
proposals. 100,000 scannable answer
26 April 2000 600,000.00
sheets
Due to the failed bidding, the PBAC recommended that TESDA enter into a 06 June 2000 5 Micro-Poise customized die 375,000.00
negotiated contract with PROVI. On December 29, 1999, TESDA and
PROVI signed and executed their "Contract Agreement Project: PVC ID 13 June 2000 35 boxes @ 15,000 imp/box 10,000,000.00
Card Issuance" (the Contract Agreement) for the provision of goods and Custom hologram Foil
services in the printing and encoding of PVC cards.7 Under this Contract
Total P 39,475,000.00
Agreement, PROVI was to provide TESDA with the system and equipment
compliant with the specifications defined in the Technical Proposal. In
return, TESDA would pay PROVI the amount of Thirty-Nine Million Four PROVI further alleged that out of TESDAs liability of P39,475,000.00,
Hundred and Seventy-Five Thousand Pesos (P39,475,000) within fifteen TESDA paid PROVI only P3,739,500.00, leaving an outstanding balance
(15) days after TESDAs acceptance of the contracted goods and services. of P35,735,500.00, as evidenced by PROVIs Statement of
Account.9 Despite the two demand letters dated March 8 and April 27,
On August 24, 2000, TESDA and PROVI executed an "Addendum to the 2001 that PROVI sent TESDA,10 the outstanding balance remained unpaid.
Contract Agreement Project: PVC ID Card Issuance" (Addendum),8 whose
terms bound PROVI to deliver one hundred percent (100%) of the On July 11, 2001, PROVI filed with the RTC a complaint for sum of money
enumerated supplies to TESDA consisting of five hundred thousand with damages against TESDA. PROVI additionally prayed for the issuance
(500,000) pieces of security foil; five (5) pieces of security die with TESDA of a writ of preliminary attachment/garnishment against TESDA. The case
seal; five hundred thousand (500,000) pieces of pre-printed and was docketed as Civil Case No. 68527. In an Order dated July 16, 2001,
customized identification cards; one hundred thousand (100,000) pieces of the RTC granted PROVIs prayer and issued a writ of preliminary
scannable answer sheets; and five hundred thousand (500,000) attachment against the properties of TESDA not exempt from execution in
customized TESDA holographic laminate. In addition, PROVI would install the amount of P35,000,000.00.11
and maintain the following equipment: one (1) unit of Micropoise, two (2)
units of card printer, three (3) units of flatbed scanner, one (1) unit of OMR TESDA responded on July 24, 2001 by filing a Motion to Discharge/Quash
scanner, one (1) unit of Server, and seven (7) units of personal computer. the Writ of Attachment, arguing mainly that public funds cannot be the
TESDAs response to this position is to point out that it is not engaged in Even assuming that TESDA entered into a proprietary contract with PROVI
business, and there is nothing in the records to show that its purchase of and thereby gave its implied consent to be sued, TESDAs funds are still
the PVC cards from PROVI is for a business purpose. While TESDA public in nature and, thus, cannot be the valid subject of a writ of
admits that it will charge the trainees with a fee for the PVC cards, it claims garnishment or attachment. Under Section 33 of the TESDA Act, the
that this fee is only to recover their costs and is not intended for profit. TESDA budget for the implementation of the Act shall be included in the
annual General Appropriation Act; hence, TESDA funds, being sourced
We agree with TESDA. As the appellate court found, the PVC cards from the Treasury, are moneys belonging to the government, or any of its
purchased by TESDA from PROVI are meant to properly identify the departments, in the hands of public officials.37 We specifically spoke of the
trainees who passed TESDAs National Skills Certification Program the limits in dealing with this fund in Republic v. Villasor38 when we said:
program that immediately serves TESDAs mandated function of
developing and establishing a national system of skills standardization, This fundamental postulate underlying the 1935 Constitution is now made
testing, and certification in the country.32 Aside from the express mention of explicit in the revised charter. It is therein expressly provided, The State
this function in R.A. No. 7796, the details of this function are provided may not be sued without its consent. A corollary, both dictated by logic
under DOLE Administrative Order No. 157, S. 1992, as supplemented by and sound sense, from such a basic concept, is that public funds cannot
Department Order Nos. 3 thru 3-F, S. 1994 and Department Order No. 13, be the object of garnishment proceedings even if the consent to be sued
S. 1994.33 had been previously granted and the state liability adjudged. Thus in the
recent case of Commissioner of Public Highways vs. San Diego, such a
Admittedly, the certification and classification of trainees may be well-settled doctrine was restated in the opinion of Justice Teehankee:
undertaken in ways other than the issuance of identification cards, as the
RTC stated in its assailed Order.34 How the mandated certification is to be The universal rule that where the State gives its consent to be sued by
done, however, lies within the discretion of TESDA as an incident of its private parties either by general or special law, it may limit claimant's
mandated function, and is a properly delegated authority that this Court action 'only up to the completion of proceedings anterior to the stage of
cannot inquire into, unless its exercise is attended by grave abuse of execution' and that the power of the Courts ends when the judgment is
discretion. rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is based on
That TESDA sells the PVC cards to its trainees for a fee does not obvious considerations of public policy. Disbursements of public funds
characterize the transaction as industrial or business; the sale, expressly must be covered by the corresponding appropriation as required by law.
authorized by the TESDA Act,35 cannot be considered separately from The functions and public services rendered by the State cannot be allowed
TESDAs general governmental functions, as they are undertaken in the to be paralyzed or disrupted by the diversion of public funds from their
discharge of these functions. Along this line of reasoning, we held in Mobil legitimate and specific objects, as appropriated by law. [Emphasis
Philippines v. Customs Arrastre Services:36 supplied.]
Now, the fact that a non-corporate government entity performs a function We reiterated this doctrine in Traders Royal Bank v. Intermediate Appellate
proprietary in nature does not necessarily result in its being suable. If said Court,39 where we said:
Section 1 (d), Rule 57 of the Rules of Court applies where a party is guilty
of fraud in contracting a debt or incurring an obligation, or in concealing or
disposing of the property for the taking, detention or conversion of which
the action is brought. In Wee v. Tankiansee,43 we held that for a writ of
attachment to issue under this Rule, the applicant must sufficiently show
the factual circumstances of the alleged fraud because fraudulent intent
cannot be inferred from the debtors mere non-payment of the debt or
failure to comply with his obligation. The affidavit, being the foundation of
the writ, must contain particulars showing how the imputed fraud was
committed for the court to decide whether or not to issue the writ. To
reiterate, a writ of attachment can only be granted on concrete and specific
grounds and not on general averments merely quoting the words of the
rules.44
The affidavit filed by PROVI through Elmer Ramiro, its President and Chief
Executive Officer, only contained a general allegation that TESDA had
fraudulent misapplied or converted the amount of P10,975,000.00 that was
allotted to it. Clearly, we cannot infer any finding of fraud from PROVIs
vague assertion, and the CA correctly ruled that the lower court acted with