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New Property Cases

New Property Cases

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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

76217 September 14, 1989 GERMAN MANAGEMENT & SERVICES, INC., petitioner, vs. HON. COURT OF APPEALS and ERNESTO VILLEZA, respondents. G.R. No. L-76216 September 14, 1989 GERMAN MANAGEMENT & SERVICES, INC., petitioner, vs. HON. COURT OF APPEALS and ORLANDO GERNALE, respondents. Alam, Verano & Associates for petitioner. Francisco D. Lozano for private respondents.

FERNAN, C.J.: Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of Pennsylvania, Philadelphia, USA are the owners of a parcel of land situated in Sitio Inarawan, San Isidro, Antipolo, Rizal, with an area of 232,942 square meters and covered by TCT No. 50023 of the Register of Deeds of the province of Rizal issued on September 11, 1980 which canceled TCT No. 56762/ T-560. The land was originally registered on August 5, 1948 in the Office of the Register of Deeds of Rizal as OCT No. 19, pursuant to a Homestead Patent granted by the President of the Philippines on July 27, 1948, under Act No. 141. On February 26, 1982, the spouses Jose executed a special power of attorney authorizing petitioner German Management Services to develop their property covered by TCT No. 50023 into a residential subdivision. Consequently, petitioner on February 9,1983 obtained Development Permit No. 00424 from the Human Settlements Regulatory Commission for said development. Finding that part of the property was occupied by private respondents and twenty other persons, petitioner advised the occupants to vacate the premises but the latter refused. Nevertheless, petitioner proceeded with the development of the subject property which included the portions occupied and cultivated by private respondents.

Private respondents filed an action for forcible entry against petitioner before the Municipal Trial Court of Antipolo, Rizal, alleging that they are mountainside farmers of Sitio Inarawan, San Isidro, Antipolo, Rizal and members of the Concerned Citizens of Farmer's Association; that they have occupied and tilled their farmholdings some twelve to fifteen years prior to the promulgation of P.D. No. 27; that during the first week of August 1983, petitioner, under a permit from the Office of the Provincial Governor of Rizal, was allowed to improve the Barangay Road at Sitio Inarawan, San Isidro, Antipolo, Rizal at its expense, subject to the condition that it shag secure the needed right of way from the owners of the lot to be affected; that on August 15, 1983 and thereafter, petitioner deprived private respondents of their property without due process of law by: (1) forcibly removing and destroying the barbed wire fence enclosing their farmholdings without notice; (2) bulldozing the rice, corn fruit bearing trees and other crops of private respondents by means of force, violence and intimidation, in violation of P.D. 1038 and (3) trespassing, coercing and threatening to harass, remove and eject private respondents from their respective farmholdings in violation of P.D. Nos. 316, 583, 815, and 1028. 1 On January 7,1985, the Municipal Trial Court dismissed private respondents' complaint for forcible entry. 2 On appeal, the Regional Trial Court of Antipolo, Rizal, Branch LXXI sustained the dismissal by the Municipal Trial Court. 3 Private respondents then filed a petition for review with the Court of Appeals. On July 24,1986, said court gave due course to their petition and reversed the decisions of the Municipal Trial Court and the Regional Trial Court. 4 The Appellate Court held that since private respondents were in actual possession of the property at the time they were forcibly ejected by petitioner, private respondents have a right to commence an action for forcible entry regardless of the legality or illegality of possession. 5 Petitioner moved to reconsider but the same was denied by the Appellate Court in its resolution dated September 26, 1986. 6 Hence, this recourse. The issue in this case is whether or not the Court of Appeals denied due process to petitioner when it reversed the decision of the court a quo without giving petitioner the opportunity to file its answer and whether or not private respondents are entitled to file a forcible entry case against petitioner. 7 We affirm. The Court of Appeals need not require petitioner to file an answer for due process to exist. The comment filed by petitioner on February 26, 1986 has sufficiently addressed the issues presented in the petition for review filed by private respondents before the Court of Appeals. Having heard both parties, the Appellate Court need not await or require any other additional pleading. Moreover, the fact that petitioner was heard by the Court of Appeals on its motion for reconsideration negates any violation of due process.

Notwithstanding petitioner's claim that it was duly authorized by the owners to develop the subject property, private respondents, as actual possessors, can commence a forcible entry case against petitioner because ownership is not in issue. Forcible entry is merely a quieting process and never determines the actual title to an estate. Title is not involved. 8 In the case at bar, it is undisputed that at the time petitioner entered the property, private respondents were already in possession thereof . There is no evidence that the spouses Jose were ever in possession of the subject property. On the contrary, private respondents' peaceable possession was manifested by the fact that they even planted rice, corn and fruit bearing trees twelve to fifteen years prior to petitioner's act of destroying their crops. Although admittedly petitioner may validly claim ownership based on the muniments of title it presented, such evidence does not responsively address the issue of prior actual possession raised in a forcible entry case. It must be stated that regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall not be turned out by a strong hand, violence or terror. 9 Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his prior possession, if he has in his favor priority in time, he has the security that entitles him to remain on the property until he is lawfully ejected by a person having a better right by accion publiciana or accion reivindicatoria . 10 Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioner's drastic action of bulldozing and destroying the crops of private respondents on the basis of the doctrine of self-help enunciated in Article 429 of the New Civil Code. 11 Such justification is unavailing because the doctrine of self-help can only be exercised at the time of actual or threatened dispossession which is absent in the case at bar. When possession has already been lost, the owner must resort to judicial process for the recovery of property. This is clear from Article 536 of the Civil Code which states, "(I)n no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing." WHEREFORE, the Court resolved to DENY the instant petition. The decision of the Court of Appeals dated July 24,1986 is hereby AFFIRMED. Costs against petitioner. SO ORDERED. Bidin and Cortes, JJ., concur. Gutierrez, Jr., J., concurs in the result. Feliciano, J., is on leave.

I think you have something in your pocket which you have not paid for. ESPINO JR. defendants-appellees. pointing to his left front breast . Mr. "At the check-out counter.Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. WHEREFORE. plaintiff Jose J." the dispositive portion of which states. The facts of the case are as stated in the decision of the respondent court to wit: "Upon the evidence. plaintiff-appellant.00) as exemplary damages.R. and his wife and their two daughters went to shop at the defendants' South Supermarket in Makati. Jr. Costs of both instances shall be taxed against the defendant defendants. a civil engineer and an executive of Procter and Gamble Philippines.... versus Grand Union Supermarket. tsn. While talking to this maid. it appears that in the morning of August 22. 1971). carrying two bags of groceries and accompanied by his wife and two daughter. Aug.00. He held it in his hand thinking that it might be lost. JOSE J. Jr. plaintiff picked up that item from one of the shelves. In the course of their shopping. because of its tiny size. 1970. vs. and THE HONORABLE COURT OF APPEALS. J. INC. and Nelia Santos-Fandino. Twenty-Five Thousand Pesos (P25.R.00) as attorney's fee. plaintiff browsed around the other parts of the market. 1979 GRAND UNION SUPERMARKET. if he put it in his wife's grocery cart. 5.000. the appealed judgment is hereby reversed and set aside. plaintiff was approached by a uniformed guard of the supermarket who said: "Excuse me. and from the findings of the lower court. 55186-R entitled " Jose J. Defendants are ordered to pay plaintiff-jointly and severally. GUERRERO. While his wife was shopping at the groceries section. plaintiff and his wife saw the maid of plaintiff's aunt. 13. Inc. and NELIA SANTOS FANDINO. As he was leaving by the exit of the supermarket on his way to his car. the sum of Seventy-Five Thousand Pesos (P75.00) by way of moral damages. plaintiff stuck the file into the front breast pocket of his shirt with a good part of the merchandise exposed. Finding a cylindrical "rat tail" file which he needed in his hobby and had been wanting to buy. Espino.. This is a petition tor certiorari by way of appeal from the decision of the Court of Appeals 1 dated September 26. Inc." (p. 1977 rendered in CA-G. the plaintiff paid for his wife's purchases which amounted to P77. No.000. petitioners. and Five Thousand Pesos (P5. L-48250 December 28. No. but he forgot to pay for the file.000.. respondents. Espino.

A crowd of customers on their way into the supermarket saw the plaintiff being stopped and led by a uniformed guard toward the rear of the supermarket. The guard directed him to a table and gave the file to the man seated at the desk. to a desk beside the first checkout counter.pocket. plaintiff expressed his embarrassment and humiliation thus: " I felt as though I wanted to disappear into a hole on the ground" (p. Mr..00. plaintiff told Fandino that he was paying for the file whose cost was P3. the plaintiff was ushered. plaintiff and his wife walked as fast as they could out of . Ibid). The man at the desk pulled out a sheet of paper and began to ask plaintiff's name. The people who heard the exchange of words between Fandino and plaintiff continued to stare at him. They all intended to pay for the things that are found to them.00 bill from his pocket. Plaintiff gave up the discussion. residence and other personal data. 34. At the trial. But Fandino told them that the money would be given as an incentive to the guards who apprehend pilferers. Id. age. Plaintiff and his wife were directed across the main entrance to the shopping area. "Into a cubicle which was immediately adjacent to the area where deliveries to the supermarket were being made. and on the sheet of paper or "Incident Report" he wrote down the following: "While talking to my aunt's maid with my wife. Plaintiff objected and said that he was a regular customer of the supermarket.00. please come with me. After paying for the file. The time was between 9 and 10 o'clock. Fandino directed him to the nearest check-out counter where he had to fall in line. plaintiff apologized thus: "I am sorry. telling Fandino that he was going to pay for the file because he needed it. "The guard who had accosted plaintiff took him back inside the supermarket in the company of his wife. People were milling around them and staring at the plaintiff. The plaintiff protested but the guard was firm saying: "No.00 bill and took back the file. Defendant Fandino read the report and addressing the guard remarked: "Ano. Another man stood beside the plaintiff. Suddenly reminded of the file. But the guard stopped him and led him instead toward the rear of the supermarket." (p.00 bill from plaintiff with these words: "We are fining you P5. Meanwhile. 23. He and his wife objected vigorously that he was not a common criminal. That is your the fine." and he turned back toward the cashier to pay for the file. Exhibit B.. nakaw na naman ito" (p. It is the procedure of the supermarket to bring people that we apprehend to the back of the supermarket" (p. the people whom we cause not paying for the goods say. 22. and they wanted to get back the P5. the plaintiff's wife joined him and asked what had taken him so long. "Extracting a P5. I put this item in my shirt pocket. Plaintiff explained and narrated the incident that led to the finding of the file in his pocket.). Plaintiff was asked to make a brief statement. I forgot to check it out with my wife's items" (Exhibit A). But this defendant replied: "That is all they say. Plaintiff acquiesced and signaled to his wife and daughters to wait.85. who turned out to be defendant Nelia Santos-Fandino." Plaintiff was shocked. 8. The man at the desk looked at the plaintiff and the latter immediately explained the circumstances that led to the finding of the file in his possession. Id.. Fandino reached over and took the P5. the guard presented the incident report and the file. He drew a P50.). down the line of check-out counters. Id). To the woman seated at the desk.

exemplary damages. B. Rizal. Interposing the appeal to the Court of Appeals.00 fine. C. "Plaintiff was certain during the trial that when he signed the incident report. attorney s fees and 'expenses of litigation. petitioners acted in good faith.the supermarket. II . the latter reversed and set aside the appealed judgment. The proximate cause of respondent Espino's alleged injury or suffering was his own negligence or forgetfulness. After trial. considering that — A. Fandino after paying the item. Ebreo requested Grd. Exhibit A. to wit: I Respondent Court of Appeals erred in awarding moral and exemplary damages to the respondent Espino under Articles 19 and 21 in relation to Article 2219 of the Civil Code. a merchant who acts upon probable cause should not be held liable in damages by the suspected shoplifter. D. aside from his name and personal circumstances. Respondent Espino was guilty of theft. Not satisfied with the decision of the respondent court. petitioners instituted the present petition and submits the following grounds and/or assignment of errors. Petitioners did not exercise their right maliciously. But reason prevailed over passion and he thought that justice should take its due course. He swore that the following were not in the incident report at. Paunil to apprehend subject shoplifter. the Court of First Instance of Pasig. was written thereon. Branch XIX dismissed the complaint. Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd. His first impulse was to go back to the supermarket that night to throw rocks at its glass windows. 1970 is founded on Article 21 in relation to Article 2219 of the New Civil Code and prays for moral damages. and/or E. costs of the suit and the return of the P5. wilfully or in bad faith. Private respondent's complaint filed on October 8. Petitioners legitimately exercised their right of defense of property within the context of Article 429 of the Civil Code negating the application of Articles 19 and 21 of the same Code. Petitioners acted upon probable cause in stopping and investigating respondent Espino for shoplifting and as held in various decisions in the United States on shoplifting. granting and damages as earlier stated. inside the cubicle at the back of the supermarket only his brief statement of the facts (Exhibit A-2). the time he signed it: Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting" Exhibit A-3 which says opposite the stenciled words Action Taken: Released by Mrs.

that private respondent did not . a corporate manager incharge of motoring and warehousing therein. immediately apologized and answered." Thus. his education. he took the item with the intention of buying and paying for it.00 for moral damages and P25. author of articles published in the Manila Sunday Times and Philippines Free Press.000.00 for attorney's fees by the respondent Court of Appeals is unjustified and unwarranted under Article 2199 of the Civil Code." which indicated his sincere apology or regrets. Considering further the personal circumstances of the private respondent." was an instant and contemporaneous explanation of the incident. the award of P75. employed as an executive of Proctor & Gamble Phils.Assuming arguendo that petitioners are hable for moral and exemplary damages. He turned back towards the cashier to pay for the file which proved his honesty sincerity and good faith in buying the item.000.. honorably discharged from the Philippine Army in 1946. as the trial and appellate courts were. III The award of P5. Mr.00 for exemplary damages by the respondent Court of Appeals is not legally justified and/or is grossly excessive in the premises. I forgot to check it out with my wife's item." The totality of the facts and circumstances as found by the Court of Appeals unerringly points to the conclusion that private respondent did not intend to steal the file and that is act of picking up the file from the open shelf was not criminal nor done with malice or criminal intent for on the contrary. Department of Foreign Affairs at the Philippine Embassy Washington.. owed that he was not acting suspiciously or furtively. I put this item in in my shirt pocket. Inc. We agree with the holding of the respondent appellate court that "the evidence sustains the court's finding that the plaintiff had absolutely no intention to steal the file. We are fully convinced. I think you have something in your pocket which you have not paid for.P. and not to shoplift the same. when private respondent was approached by the guard of the Supermarket as he was leaving by the exit to his car who told him. son of the late Jose Maria Espino. and their two daughters at the time negated any criminal intent on his part to steal. His brief statement on the sheet of paper called the Incident Report where private respondent wrote the following: "While talking to my aunt's maid with my wife. This Court needs only to stress the following undisputed facts which strongly and convincingly uphold the conclusion that private respondent was not "shoplifting. Council No. Class 1950. "I am sorry.000. member of the Knights of Columbus.. member of the Philippine veterans Legion.85 had placed it inside his left front breast pocket with a good portion of the item exposed to view and that he did not conceal it in his person or hid it from sight as well as the fact that he paid the purchases of his wife amounting to P77. Caridad Jayme Espino. Moreover. And the circumstance that he was with his family consisting of his wife Mrs. the facts that private respondent after picking the cylindrical "rat-tail" file costing P3. position and character showing that he is a graduate Mechanical Engineer from U. a Philippine government pensionado of the United States for six months.00 at the checkout counter of the Supermarket. retired Minister. "Excuse me." Espino. 3713.

they all intended to pay for the things that are found to them.. Defendants wilfully caused loss or injury to plaintiff in a manner that was contrary to morals. Nothing in the records intimates or hints whatsoever that private respondent has had any police record of any sort much less suspicion of stealing or shoplifting. We do not lay down here any hard-and-fast rule as to what act or combination of acts constitute the crime of shoplifting for it must be stressed that each case must be considered and adjudged on a case-to-case basis and that in the determination of whether a person suspected of shoplifting has in truth and in fact committed the same. ln plain words. Ebreo requested Grd. judgment or thinking of the management of petitioner's supermarket upon private respondent's act of picking up the file.intend to steal the article costing P3. the people whom we caught not paying for the goods say. making them amenable to damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code. nakaw na naman ito". Fandino after paying the item. plaintiff has clearly made the cause of action for damages against the defendants. all the attendant facts and circumstances should be considered in their entirety and not from any single fact or circumstance from which to impute the stigma of shoplifting on any person suspected and apprehended therefor. The testimony of the guard that management instructed them to bring the suspected customers to the public area for the people to see those kind of customers in order that ." established the opinion. The Incident Report (Exhibit A) with the entries thereon under Exhibit A-1 which says opposite the stenciled word SUBJECT: "Shoplifting." Exhibit A-3 which says opposite the stenciled words Action Taken: Relesed by Mrs. as a fine which would be given as an incentive to the guards who apprehend pilferers clearly proved that Fandino branded private respondent as a thief which was not right nor justified." Private respondent objected and said that he was a regular customer of the Supermarket. Paunil to apprehend subject shoplifter.00 bill of private respondent tendered by the latter to pay for the file. The admission of Fandino that she required private respondent to pay a fine of P5." Exhibit A-4 which says opposite the stenciled words Remarks Noted: Grd. remarked the following: "Ano.00 and did in fact take the P5. after reading the incident report. We likewise concur with the Court of Appeals that "(u)pon the facts and under the law.." We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino. Fandino doubted the explanation." 2 That private respondent was falsely accused of shoplifting is evident. good customs or public policy. Such a remark made in the presence of private respondent and with reference to the incident report with its entries. private respondent was regarded and pronounced a shoplifter and had committed "shoplifting.85. When Espino explained that he was going to pay the file but simply forgot to do so. saying: "That is all what they say. was offensive to private respondent's dignity and defamatory to his character and honesty.

for exemplary damages is unconscionable and excessive. Ibid.00) for moral damages and Twenty-Five Thousand Pesos (P25. imposing upon him a fine. Moreover. It was his forgetfullness in checking out the item and paying for it that started the chain of events which led to his embarassment and humiliation thereby causing him mental anguish. the assessment of such damages. Dec.00. 26. 30. personality. shouting at him. And one must act with justice. . Nonetheless. the false accusation charged against the private respondent after detaining and interrogating him by the uniformed guards and the mode and manner in which he was subjected. While no proof of pecuniary loss is necessary in order that moral. Private respondent is entitled to damages but We hold that the award of Seventy-Five Thousand Pesos (P75. We do not believe that private respondent was intentionally paraded in order to humiliate or embarrass him because petitioner's business depended for its success and patronage the good will of the buying public which can only be preserved and promoted by good public relations. tsn. privacy and peace of mind of his neighbors and other persons (Article 26. nominal. except liquidated ones. embarrass and degrade the dignity of a person. private respondent's act of omission contributed to the occurrence of his injury or loss and such contributory negligence is a factor which may reduce the damages that private respondent may recover (Art.000. Civil Code). 2. there is no question that the whole incident that befell respondent had arisen in such a manner that was created unwittingly by his own act of forgetting to pay for the file. Everyone must respect the dignity. liquidated or exemplary damages may be adjudicated. good customs or public policy. 2. according to the circumstances of each case (Art.they may be embarassed (p. Civil Code). New Civil Code). sufficiently rendered the petitioners liable for damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code.) may indicate the manner or pattern whereby a confirmed or self-confessed shoplifter is treated by the Supermarket management but in the case at bar. We rule that under the facts of the case at bar. 2216. good customs and public policy to humiliate. petitioners wilfully caused loss or injury to private respondent in a manner that was contrary to morals. New Civil Code). is left to the discretion of the court. give everyone his due and observe honesty and good faith (Article 19. temperate. It is against morals. 1971). 2214. Yet. Sept.000. that many people were present and they saw and heard the ensuing interrogation and altercation appears to be simply a matter of coincidence in a supermarket which is a public place and the crowd of onlookers. hearers or bystanders was not deliberately sought or called by management to witness private respondent's predicament. wounded feelings and serious anxiety. In the case at bar. there is no showing that such procedure was taken in the case of the private respondent who denied strongly and vehemently the charge of shoplifting. that the management asked the guards "to bring these customers to different cashiers in order that they will know that they are pilferers" (p. threatening to call the police and in the presence and hearing of many people at the Supermarket which brought and caused him humiliation and embarrassment. tsn. that management wanted "the customers to be embarrassed in public so that they will not repeat the stealing again" (p. 1971). 10.

eliminate the grant of exemplary damages to the private respondent. We hold that the facts and circumstances of the case at bar do not warrant the grant of exemplary damages. he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. within the limits of the possible. vs. in addition to the moral. Justice J. 12 SCRA 598. the owner or lawful possessor of a thing has a right to exclude any person from the enjoyment and disposal thereof and for this purpose. Reyes in his concurring and dissenting opinion in Pangasinan Transportation Company. Moral damages are emphatically not intended to enrich a complainant at the expense of a defendant. by reason of the defendant's culpable action. jointly and severally. both punishment or correction.00). a right which the law accords to them. New Civil Code). the purpose of moral damages is essentially indemnity or reparation. they are awarded only to enable the injured party to obtain means. the judgment of the Court of Appeals is hereby modified.00 fine to private respondent. Exemplary or corrective damages are imposed by way of example or correction for the public good.00) as exemplary damages is unjustified. liquidated or compensatory damages (Art. In the light of the reduction of the damages. moral damages in the amount of Five Thousand Pesos (P5. L. therefore. to private respondent moral damages in the sum of Five Thousand Pesos (P5.000. Under Article 429. And since a person who acts in the fulfillment of a duty or in the lawful exercise of a right or office exempts him from civil or criminal liability. and further.000. Considering that exemplary damages are awarded for wanton acts.000. of the spiritual status quo ante and.000. Legaspi.00) as attorney's fees to Two Thousand Pesos (P2. it must be proportionate to the suffering inflicted. Inc. hence. diversion or amusements that will serve to alleviate the moral suffering he has undergone. New Civil Code. that they are penal in character granted not by way of compensation but as a punishment to the offender and as a warning to others as a sort of deterrent.000. New Civil Code). IN VIEW OF THE FOREGOING. In Our considered estimation and assessment. We agree that petitioners acted upon probable cause in stopping and investigating private respondent for taking the file without paying for it.As succinctly expressed by Mr. In other words. temperate. No costs.00) and the amount of Two Thousand Pesos (P2. to return the P5. the imposition of exemplary damages as a warning to others by way of a deterrent is without legal basis. Exemplary damages cannot be recovered as a matter of right. We.00) as and for attorney's fees. 2223. We hereby likewise reduce the original award of Five Thousand Pesos (P5. Petitioners are hereby ordered to pay. petitioner may not be punished by imposing exemplary damages against him. Petitioners acted in good faith in trying to protect and recover their property. . the court will decide whether or not they could be adjudicated (Art. the award of moral damages is aimed at a restoration.00) is reasonable and just to award to private respondent.000. 2229. B. The grant of Twenty-Five Thousand Pesos (P25. WHEREFORE.

1908 NICOLAS LUNOD. that their plantation were destroyed. J. Esteban Villena. that the defendant is the owner of a fish-pond and a strip of land situated in Paraanan. Nicolas Lunod. defendant-appellant. that from time immemorial. Fernandez. Benito Litao. causing the loss and damages to the extent of about P1. near a small lake named Calalaran. De Castro and Melencio-Herrera. for appellee. 1904. ET AL.. adjoining the said lake on one side. took no part. without any right or reason. Evaristo Rodriguez. Makasiar. alleging that they each owned and possessed farm lands. HIGINO MENESES. situated in the places known as Maytunas and Balot. without prejudice to the issuing of a preliminary injunction. preventing its passage through said land and injuring the rice plantations of the plaintiffs. and that. residents of the town of Bulacan. filed a written complaint against Higino Meneses. which loss and damage will continue if the obstructions to the flow of the water are allowed to remain. there being no outlet except through the land in Paraanan.000. and that in future. and the River Taliptip on the other. T. concur. prevented the free passage of the water through said place into the Taliptip River.. Teehankee (Chairman). 4223 August 19. TORRES. converted the land in Paraanan into a fishpond and by means of a dam and a bamboo net.SO ORDERED. for appellant.R. the defendant. he abstain . and Casimiro Pantanilla. which easement the said plaintiffs enjoyed until the year 1901 and consisted in that the water collected upon their lands and in the Calalaran Lake flow through Paraanan into the Taliptip River. vs. From that year however. Fernando Marcelo. plaintiffs-appellees. R. Icasiano. and consequently for more than twenty years before 1901. Republic of the Philippines SUPREME COURT Manila EN BANC G.: On the 14th of March. province of the same name. there existed and still exists in favor of the rice fields of the plaintiffs a statutory easement permitting the flow of water over the said land in Paraanan. declaring that the said tract of land in Paraanan is subject to a statutory easement permitting the flow of water from the property of the plaintiffs. No. Ventura Hernandez. the defendant be ordered to remove and destroy the obstructions that impede the passage of the waters through Paraanan. JJ. They therefore asked that judgment be entered against the defendant. Juan de la Vega. and forever. Salinas. that in consequence the lands of the plaintiff became flooded and damaged by the stagnant waters.

the area and boundaries of which were stated by him. and which flows toward the small Calalaran Lake at flood time. entered judgment declaring that the plaintiffs were entitled to a decision in their favor. Upon the evidence adduced by both parties to the suit. filed an amended answer. and the costs in the proceedings. thereby impeding the outlet of the waters that flood the fields of Calalaran. therefore. and forever. and to sentence the plaintiffs to pay the costs and corresponding damages. upon judgment being entered. as well as to remove and destroy the obstacles to the free passage of the waters through the strip of land in Paraanan. one of the residents was designated in his turn by the lieutenant or justice of the barrio to open the sluice gate in order to let out the water that flooded the rice fields. 1881. and. constructed by the community for the purpose of preventing the salt waters from the Taliptip River. denying each and everyone of the allegations of the complaint. on the 13th of March. the question was submitted to this court. that since 1901. owned in the sitio of Bambang. that the same had been surveyed by a land surveyor in September. the court. the latter. The defendant excepted to the above judgment and furthermore asked for a new trial which was denied and also excepted to. on the 29th of August. permitting the waters to flow over the fish pond that he. and no ruling was made as to costs. that. together with his brothers. The request that the defendant be sentenced to pay an indemnity was denied. as well as the small adjoining lake. he also denied that he had occupied or converted any land in the barrio of Bambang into a fishpond. and which border on the Taliptip River. 1907. the said injunction be declared to be final and that the defendant be sentenced to pay to the plaintiffs an indemnity of P1. the defendant constructed another dam along the boundary of this fishpond in Paraanan. to abstain in future. from obstructing or closing in any manner the course of the waters through the said strip of land. through the land of Paraanan to the above-mentioned river.000. Apolinara de Leon. it appears to have been clearly proven in this case that the lands owned by the plaintiffs in the aforesaid barrio. are located in places relatively higher than the sitio called Paraanan where the land and fish pond of the defendant are situated. from flooding the land in Calalaran. that they be granted any other and further equitable or proper remedy in accordance with the facts alleged and proven. In view of the demurrer interposed by the plaintiffs to the answer of the defendant. passing through the lowlands of Paraanan. . at high tide. that during the rainy season the rain water which falls on he land of the plaintiffs. upon approval of the bill of exceptions. to the serious detriment of the growing crops. Notwithstanding the defendant's denial in his amended answer. and alleged that no statutory easement existed nor could exist in favor of the lands described in the complaint. 1904. and sentenced the defendant to remove the dam placed on the east of the Paraanan passage on the side of the Taliptip River opposite the old dam in the barrio of Bambang. and which he and his brothers had inherited from their deceased mother. has no outlet to the Taliptip River other than through the low land of Paraanan: that the border line between Calalaran and Paraanan there has existed from time immemorial a dam. named Calalaran. but when rainfall was abundant.from closing in any manner the aforesaid tract of land.

article 111 of which. and conditions of the easements of waters to which this section refers shall be governed by the special law relating thereto in everything not provided for in this code. through his lands and the outlet to the Taliptip River. it is of a statutory nature. an easement is charge imposed upon one estate for the benefit of another estate belonging to a different owner. to the detriment of the easement charged on his estate. he has violated the law which protects and guarantees the respective rights and regulates the duties of the owners of the fields in Calalaran and Paraanan. The lands of Paraanan being the lower are subject to the easement of receiving and giving passage to the waters proceeding from the higher lands and the lake of Calalaran. nor the dam which blocks the passage. as well as the stone or earth which they carry with them. Article 563 of the said code reads also: The establishment. and having done so. nor the one of the higher estate works increasing the burden. the owner of the lower lands can not erect works that will impede or prevent such an easement or charge. .According to article 530 of the Civil Code. the defendant. of the waters which flood the higher lands of the plaintiffs. neither can the latter do anything to increase or extend the easement. The special law cited in the Law of Waters of August 3. Article 552 of the Civil code provides: Lower estates must receive the waters which naturally and without the intervention of man descend from the higher estates. without the work of man. and the realty in favor of which the easement is established is called the dominant estate. this easement was not constituted by agreement between the interested parties. had no right to construct the works. treating of natural easements relating to waters. constituted and imposed by the law upon his estate for the benefit of the higher lands belonging to different owners. and the law had imposed it for the common public utility in view of the difference in the altitude of the lands in the barrio Bambang. provides: Lands situated at a lower level are subject to receive the waters that flow naturally. Meneses. and the one charged with it the servient estate. 1866. extent. Neither may the owner of the lower estates construct works preventing this easement. According to the provisions of law above referred to. form. from the higher lands together with the stone or earth which they carry with them. Hence.

not only the lowlands in Paraanan but also the higher ones of Calalaran and its lake. OMAR G. MAMOD G. No. ELIAS G. but his right is limited by the easement imposed upon his estate. in addition to the old dike between the lake of said place and the low lands in Paraanan. vs. thereby impairing the right of the owners of the dominant estates. BUCAY G. For the above reasons. 2009 NATIONAL POWER CORPORATION. but he was always under the strict and necessary obligation to respect the statutory easement of waters charged upon his property. Willard and Tracey. and had no right to close the passage and outlet of the waters flowing from the lands of the plaintiffs and the lake of Calalaran into the Taliptip River. to have another made by the defendant at the border of Paraanan adjoining the said river. It is perhaps useful and advantageous to the plaintiffs and other owners of high lands in Calalaran. in so far as it agrees with decision. concur. MARUHOM. . and reversed in other respects. the flow of the waters coming from the higher lands. ditches fences or any other device. Petitioner. at high tide.R. JJ. but the defendant could never be permitted to obstruct the flow of the waters through his lands to the Taliptip River during the heavy rains. and he is hereby ordered to remove any obstacle that may obstruct the free passage of the waters whenever there may be either a small or large volume of running water through his lands in the sitio of Paraanan for their discharge into the Taliptip River. with the costs of this instance against the appellants. when the high lands in Calalaran and the lake in said place are flooded. in any manner. for the purpose of preventing the salt waters of the Taliptip River flooding. and accepting the findings of the court below in the judgment appealed from in so far as they agree with the terms of this decision. as the owner of the servient estate. The judgment appealed from is affirmed. Higino Meneses. 183297 December 23. The defendant Meneses might have constructed the works necessary to make and maintain a fish pond within his own land. is obliged to give passage to and allow the flow of the waters descending from the Calalaran Lake and from the land of the plaintiffs through his lands in Paraanan for their discharge into the Taliptip River. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. MARUHOM. since the plaintiffs can not prevent the defendant from protecting his lands against the influx of salt water.. MARUHOM. He could not lawfully injure the owners of the dominant estates by obstructing the outlet to the Taliptip River of the waters flooding the upper lands belonging to the plaintiffs. So ordered. we must and do hereby declare that the defendant. Carson. and in future to abstain from impeding.It is true that article 388 of said code authorizes every owner to enclose his estate by means of walls.

MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, CAIRORONESA M. IBRAHIM, and LUCMAN IBRAHIM, represented by his heirs ADORA B. IBRAHIM, NASSER B. IBRAHIM, JAMALODIN B. IBRAHIM, RAJID NABBEL B. IBRAHIM, AMEER B. IBRAHIM and SARAH AIZAH B. IBRAHIM,* Respondents. DECISION NACHURA, J.: Petitioner National Power Corporation (NPC) filed this Petition for Review on Certiorari, seeking to nullify the May 30, 2008 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 02065-MIN, affirming the Order dated November 13, 2007 issued by Hon. Amer R. Ibrahim, which granted respondents’ motion for issuance of a writ of execution. The antecedents. Lucman G. Ibrahim and his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Cairoronesa M. Ibrahim (respondents) are owners of a 70,000-square meter lot in Saduc, Marawi City. Sometime in 1978, NPC, without respondents’ knowledge and consent, took possession of the subterranean area of the land and constructed therein underground tunnels. The tunnels were used by NPC in siphoning the water of Lake Lanao and in the operation of NPC’s Agus II, III, IV, V, VI, and VII projects located in Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City. Respondents only discovered the existence of the tunnels sometime in July 1992. Thus, on October 7, 1992, respondents demanded that NPC pay damages and vacate the subterranean portion of the land, but the demand was not heeded. Hence, on November 23, 1994, respondents instituted an action for recovery of possession of land and damages against NPC with the Regional Trial Court (RTC) of Lanao del Sur, docketed as Civil Case No. 1298-94. After trial, the RTC rendered a decision,2 the decretal portion of which reads: WHEREFORE, judgment is hereby rendered: 1. Denying [respondents’] prayer for [NPC] to dismantle the underground tunnels constructed beneath the lands of [respondents] in Lots 1, 2, and 3 of Survey Plan FP (VII5) 2278; 2. Ordering [NPC] to pay to [respondents] the fair market value of said 70,000 square meters of land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less

the area of 21,995 square meters at P1,000.00 per square meter or a total of P48,005,000.00 for the remaining unpaid portion of 48,005 square meters; with 6% interest per annum from the filing of this case until paid; 3. Ordering [NPC] to pay [respondents] a reasonable monthly rental of P0.68 per square meter of the total area of 48,005 square meters effective from its occupancy of the foregoing area in 1978 or a total of P7,050,974.40. 4. Ordering [NPC] to pay [respondents] the sum of P200,000.00 as moral damages; and 5. Ordering [NPC] to pay the further sum of P200,000.00 as attorney’s fees and the costs. SO ORDERED.3 Respondents then filed an Urgent Motion for Execution of Judgment Pending Appeal. On the other hand, NPC filed a Notice of Appeal. Thereafter, it filed a vigorous opposition to the motion for execution of judgment pending appeal with a motion for reconsideration of the RTC decision. On August 26, 1996, NPC withdrew its Notice of Appeal to give way to the hearing of its motion for reconsideration. On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying NPC’s motion for reconsideration. The Decision of the RTC was executed pending appeal and the funds of NPC were garnished by respondents. On October 4, 1996, Lucman Ibrahim and respondents Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom filed a Petition for Relief from Judgment,4 asserting as follows: 1. They did not file a motion to reconsider or appeal the decision within the reglementary period of fifteen (15) days from receipt of judgment because they believed in good faith that the decision was for damages and rentals and attorney’s fees only as prayed for in the complaint; 2. It was only on August 26, 1996 that they learned that the amounts awarded to the respondents represented not only rentals, damages and attorney’s fees but the greatest portion of which was payment of just compensation which, in effect, would make the petitioner NPC the owner of the parcels of land involved in the case; 3. When they learned of the nature of the judgment, the period of appeal had already expired; 4. They were prevented by fraud, mistake, accident, or excusable negligence from taking legal steps to protect and preserve their rights over their parcels of land insofar as the part of the decision decreeing just compensation for respondents’ properties;

5. They would never have agreed to the alienation of their property in favor of anybody, considering the fact that the parcels of land involved in this case were among the valuable properties they inherited from their dear father and they would rather see their land crumble to dust than sell it to anybody.5 After due proceedings, the RTC granted the petition and rendered a modified judgment dated September 8, 1997, thus: WHEREFORE, a modified judgment is hereby rendered: 1. Reducing the judgment award of [respondents] for the fair market value of P48,005,000.00 by [P]9,526,000.00 or for a difference [of] P38,479,000.00 and by the further sum of P33,603,500.00 subject of the execution pending appeal leaving a difference of [P]4,878,500.00 which may be the subject of execution upon the finality of this modified judgment with 6% interest per annum from the filing of the case until paid. 2. Awarding the sum of P1,476,911.00 to herein [respondents] Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from the awarded sum of P7,050,974.40 pertaining to [respondents]. 3. Ordering [NPC] embodied in the August 7, 1996 decision to pay [respondents] the sum of P200,000.00 as moral damages; and further sum of P200,000.00 as attorney’s fees and costs. SO ORDERED.6 Lucman Ibrahim and NPC then filed their separate appeals with the CA, docketed as CA-G.R. CV No. 57792. On June 8, 2005, the CA rendered a Decision,7 setting aside the modified judgment and reinstating the original Decision, amending it further by deleting the award of moral damages and reducing the amount of rentals and attorney’s fees, thus: WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the original Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the MODIFICATION that the award of moral damages is DELETED and the amounts of rentals and attorney’s fees are REDUCED to P6,887,757.40 and P50,000.00, respectively. In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into consideration the total amount of damages sought in the complaint vis-à-vis the actual amount of damages awarded by this Court. Such additional filing fee shall constitute as a lien on the judgment. SO ORDERED8

therefore. 02065-MIN. docketed as CA-G. but this Court denied it on August 29. By allowing the payment of just compensation for a parcel of land without the concomitant right of NPC to get title thereto. the petition is DENIED and the Decision of the Court of Appeals in C. No costs. it had been consistently ruled that an easement is compensable by the full value of the property despite the fact that NPC was only after a right-ofway easement.20. the RTC clearly varied the terms of the judgment in G.9 NPC moved for reconsideration of the Decision. ordered NPC to pay its admitted obligation to respondents amounting to P36. NPC then filed a Petition for Certiorari (with Urgent Prayer for the Immediate Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction) with the CA. the RTC granted the motion. 2007. and issued a TRO enjoining the execution of the assailed CA Decision.R.887. On November 29. as modified by the CA.: WHEREFORE. the CA declared that this Court’s Decision in G. Rejecting NPC’s argument. enjoining the implementation of the writ of execution and the notice of garnishment.R. No. 2008. 2007 in G. in a plethora of cases involving lands traversed by NPC’s transmission lines. Subsequently. 2007. It argued that the RTC gravely abused its discretion when it granted the motion for execution without ordering respondents to transfer their title in favor of NPC. According to the CA. the CA rendered the now assailed Decision. and issued the corresponding writ of execution.R. respondents filed with the RTC a motion for execution of its August 7. SP No. CV No. It stresses that this Court’s . NPC also prayed for the issuance of a temporary restraining order (TRO) to enjoin the implementation of the writ of execution and notice of garnishment. It also prayed for a TRO to enjoin respondents and all persons acting under their authority from implementing the May 30. On May 30. To satisfy the judgment. NPC insists that the payment of just compensation for the land carries with it the correlative right to obtain title or ownership of the land taken.11 NPC is now before us faulting the CA for dismissing the former’s petition for certiorari. No. a notice of garnishment was issued upon NPC’s depositary bank. 168732 intended NPC to pay the full value of the property as compensation without ordering the transfer of respondents’ title to the land.A. 168732.R.R.The above decision was affirmed by this Court on June 29. In its July 9. No. justifying the issuance of a writ of certiorari. On November 13.10 dismissing NPC’s petition for certiorari. 2008 Decision of the CA. 57792 dated June 8. SO ORDERED.12 this Court granted NPC’s prayer.-G.219. 2008 Resolution. 1996 decision. 168732. 2005 is AFFIRMED. The CA. In the main. if by such easement it perpetually or indefinitely deprives the land owner of his proprietary rights by imposing restrictions on the use of the property. the CA granted NPC’s prayer and issued a TRO. 2007. viz.

The petition lacks merit. This is so because in this case. No. This is patent from the following language of the High Court as quoted by [NPC] itself: In disregarding this procedure and failing to recognize respondents’ ownership of the sub-terrain portion. but is. or go beyond. as the owners of the property thus expropriated.R. the writ of execution issued by the RTC and affirmed by the CA does not vary. 1996 RTC decision. 168732. As aptly pointed out by the CA in its assailed Decision: [NPC]. including the surface area and not just the subterranean portion. petitioner took a risk and exposed itself to greater liability with the passage of time. A writ of execution may not vary from. Respondents. Notwithstanding the fact that [NPC] only occupies the sub-terrain portion. thereby necessitating a transfer of title and ownership to NPC upon satisfaction of judgment.R. consistent with the final decision in this case. The assailed writ is. . a perusal of the subject Decision yields to this Court the unmistakable sense that the High Court intended [NPC] to pay the full value of the subject property as just compensation without ordering the transfer o[f] respondents’ title to the land.13 Admittedly. as modified by the CA and affirmed by this Court. It must be emphasized that the acquisition of the easement is not without expense. The underground tunnels impose limitations on respondents’ use of the property for an indefinite period and deprive them of its ordinary use. whenever it is possible to make the assessment. the RTC and the CA allowed respondents to retain title to the property even after the payment of full compensation. it is liable to pay not merely an easement but rather the full compensation for land. are entitled to a just compensation which should be neither more nor less. according to NPC. the tenor of the dispositive portion of the August 7. would have Us suppose that the High Court. No.R. When a writ of execution does not conform strictly to a decision’s dispositive portion. No. did not order the transfer of ownership upon payment of the adjudged compensation. and of this Court’s Decision in G. was a clear case of unjust enrichment. respondents are clearly entitled to the payment of just compensation. in fact. it is null and void. 168732. valid. in decreeing that [NPC] pay the full value of the property as just compensation. This. the terms of the judgment it seeks to enforce. NPC added that by granting respondents’ motion for execution. and consequently issuing the writ of execution and notice of garnishment. On the contrary. It is a fundamental legal axiom that a writ of execution must conform strictly to the dispositive portion of the decision sought to be executed. than the money equivalent of said property. therefore. Neither did such condition appear in the text of the RTC decision.14 Clearly. No such inference can be drawn from [the] reading of the entirety of the High Court’s Decision. 168732 is replete with pronouncements that the just compensation awarded to respondents corresponds to compensation for the entire land and not just for an easement or a burden on the property.Decision in G. implied that [NPC] was entitled to the entire land. the nature of the easement practically deprives the owners of its normal beneficial use. by its selective quotations from the Decision in G. Based upon the foregoing.

the limitations on the use of the land for an indefinite period deprives private respondents of its ordinary use. The term just compensation had been defined as the full and fair equivalent of the property taken from its owner by the expropriator. For these reasons. expropriation is not limited to the acquisition of real property with a corresponding transfer of title or possession.15 As we explained in Camarines Norte Electric Cooperative. There is simply no basis for NPC to claim that the payment of fair market value without the concomitant transfer of title constitutes an unjust enrichment. Court of Appeals19 and National Power Corporation v. v. Manubay Agro-Industrial Development Corporation. through expropriation. but the owner's loss.1avvphi1 The acquisition of this easement. is not gratis. of course. Considering the nature and effect of the installation power lines. It can continue doing what it wants to do with the land. except the easement. but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of condemned property. be subjected to an easement of right-of-way. Court of Appeals:16 The acquisition of an easement of a right-of-way falls within the purview of the power of eminent domain. full. a simple right-of-way easement transmits no rights. which must be neither more nor less than the money equivalent of the property. and ample. The word just is used to intensify the meaning of the word compensation and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real. The Supreme Court. PLDT thus held that: "Normally. Such conclusion finds support in easements of right-of-way where the Supreme Court sustained the award of just compensation for private property condemned for public use. Vines Realty is entitled to payment of just compensation. except those that would result in contact with the wires. Inc.18 In Camarines Norte Electric Cooperative. the power of eminent domain results in the taking or appropriation of title to. v. substantial. . without loss of title and possession. It is unquestionable that real property may. The right-of-way easement resulting in a restriction or limitation on property rights over the land traversed by transmission lines also falls within the ambit of the term expropriation. in Republic v.20 this Court sustained the award of just compensation equivalent to the fair and full value of the property even if petitioners only sought the continuation of the exercise of their right-of-way easement and not the ownership over the land. The measure is not the taker's gain." However. therefore. the expropriated property.17 It is. clear that NPC’s acquisition of an easement of right-of-way on the lands of respondents amounted to expropriation of the portions of the latter’s property for which they are entitled to a reasonable and just compensation.Indeed. and possession of. nevertheless. Inc. Vines Realty retains full ownership and it is not totally deprived of the use of the land.

the petition is DENIED. and DR. The temporary restraining order issued by this Court on July 9.R. Litigation must end sometime and somewhere. as where the power is exercised in an arbitrary and capricious manner by reason of passion and hostility. guard against any scheme calculated to bring about that result. 2008 is LIFTED. a clear showing of caprice and arbitrariness in the exercise of discretion is imperative.22 We. SO ORDERED.In fine. write finis to this litigation. despotic.R. Courts must. J. NACHURA. therefore. 164079 CORPORATION. NATIONAL POWERcralawcralawcralawG. -versus-cralawAUSTRIA-MARTINEZ. conveys the notion of willful and unreasoning action. An effective and efficient administration of justice requires that once a judgment has become final.. Petitioner.21 In this case. Chairperson. if left unexecuted. Constituted as they are to put an end to controversies. A judgment. The assailed Decision of the Court of Appeals in CAG. the CA committed no reversible error in dismissing NPC’s petition for certiorari. It is almost trite to say that execution is the fruit and the end of the suit and is the life of the law. Present: cralaw cralawcralawcralawYNARES-SANTIAGO. The word capricious. usually used in tandem with the term arbitrary. 2007 x--------------------------------------------------x DECISION .cralawcralawApril 4. or whimsical exercise of judgment as is equivalent to lack of jurisdiction. 02065-MIN is AFFIRMED. cralawCHICO-NAZARIO. NPC utterly failed to demonstrate caprice or arbitrariness on the part of the RTC in granting respondents’ motion for execution. connotes capricious. The term grave abuse of discretion. would be nothing but an empty victory for the prevailing party. therefore.. Respondents. in its juridical sense. WHEREFORE. the winning party be not deprived of the fruits of the verdict. JJ. ANTERO BONGBONGcralawPromulgated: And ROSARIO BONGBONG. SR. oppressive. Accordingly. SP No. The abuse must be of such degree as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law. when seeking the corrective hand of certiorari. No. courts should frown upon any attempt to prolong them. Thus. cralawcralawcralawcralawCALLEJO. the issuance by the RTC of a writ of execution and the notice of garnishment to satisfy the judgment in favor of respondents could not be considered grave abuse of discretion.

when NPC offered a check for P163.00 which they alleged to be the just and reasonable value for their land and improvements.451-square-meter parcel of land situated at Barangay Sambulawan.00 under protest.: Before the Court is a Petition for Review of the Decision of the Court of Appeals (CA) in CA-G. the spouses Bongbong received the P163. NPC paid the spouses Bongbong the amount of P33.448. . R-2189 of the Register of Deeds of the Province of Leyte. 2003. CV No. The voucher for the payment of easement fee was prepared. PN-0207. NPC occupied a 25. SR. Leyte. On October 28.The refusal of NPC to heed their demands prompted the spouses Bongbong to file a complaint for just compensation before the Regional Trial Court (RTC) of Palompon. and the Resolution dated April 12. Leyte. The property is covered by Original Certificate of Title (OCT) No. Antero refused to accept the amount and demanded that NPC pay the full value of the 25.582. 2004 denying the motion for reconsideration thereof. Villaba..100-sq-m portion it had occupied. Spouses Antero and Rosario Bongbong are the registered owners of a 364. As early as 1996.CALLEJO. 1996. the spouses Bongbong demanded that the NPC pay P8. 1997.150. the National Power Corporation (NPC) negotiated with the spouses Bongbong to use a portion of the property for the construction of a 230 KV LCIP Malitbog-Tabango CETL TWR SITE 1046 for the Leyte-Cebu Interconnection Project. However. J. On April 22. The case against NPC was docketed as Civil Case No. 1997.chanroblesvirtuallawlibrary On October 3. 65913 dated May 23.748.00 (representing 10% of the total market value of the area affected) as payment for the easement fee. When the spouses Bongbong agreed.100-sq-m portion of the property.R.150.00 representing the value of the improvements that were damaged by the construction of the project.

00 per sq m.D. among others. In its Answer. 6395.On August 2. In the said Reappraisal. the amount of P250. 1996. On May 21.582.In the complaint. and that they be paid 10% of the proceeds as attorneys fees.448.00 per sq m.15 for the damaged improvements on April 22. it paid only an easement fee. They prayed. considering that the price of land has increased with the devaluation of the peso.00 per sq m was reasonable.00 per square meter). the trial court directed the spouses Bongbong to submit in writing their proposal on the amount of just .chanroblesvirtuallawlibrary On July 2. 1999.00 on October 28.00 (P250.493. alleging that the payment of just compensation should be based on the market value of the property at the time of its taking in 1997.150. as amended by Presidential Decree (P. the lot was valued at P300. dated February 8. in the amount of P163. 03-99). 938. 1999.00 as litigation expenses. which was issued by the Provincial Appraisal Committee (PAC) of Leyte (Resolution No.A. pursuant to its charter.000. and to recommend that the total amount due and payable to them be at least P7. 1999. 1999. that commissioners be appointed to determine the fair market value of the land as well as the improvements thereon. the trial court issued another Order admitting the PAC Reappraisal. 1997.) No. NPC opposed the motion. but it never did. the spouses Bongbong alleged that NPC was given the authority to enter the property due to its assurances and promises that it would pay just compensation. and P100. the spouses Bongbong filed a Motion to Admit as Supplement to the Amended Complaint the New Reappraisal of Plaintiffs Real Property and Improvements.) No.It pointed out that nearby landowners were paid P300. NPC claimed that its obligation towards the spouses Bongbong had already been extinguished when it paid the amount of P33. and the easement fee pursuant to Republic Act (R.

150.chanroblesvirtuallawlibrary On August 18. ARP No. finding the market value of the subject property to be P7.530. NPCs counsel. . Marianito delos Santos.00.448. finding the value of the subject property consisting of 25.631. and to furnish a copy thereof to Atty. N-2189 over the subject property. Leyte Provincial Assessor. 8.compensation.00.cralawResolution No.100 square meters of land plus P1. 1997.500.218.00 per sq m or the total amount of P8.150.cralawTax Declaration No.cralawReappraisal by the Provincial Appraisal Committee dated February 8. 1999 of Dante Polloso. 00034 covering the subject property.00 at P65.000. to Atty.00 per square meter.00 for coconuts and other damages.218. acknowledging receipt under protest of the payment of P163. who was given ten days to comment thereon. 1999. a total of P10. 5.cralawLetter dated October 3. Among the pertinent documents the spouses Bongbong submitted to the court were the following: 1.cralawList of Affected Improvements for the Province of Leyte affected by the NPC Transmission Lines Project.00 as easement fee.cralawCertification dated October 24. 11-97 of the Provincial Appraisal Committee dated May 2.785. 1999. and declare the value of the improvements to be P1.448.cralawLetter dated January 21.100 square meters to be P1. Rafael Iriarte.00.00 per square meter.00.530. the spouses Bongbong filed a Motion to Resolve the Market Value of Plaintiffs Property and Improvements.003. 1997 of Antero Bongbong to NPC. 2.00 for the 25.000. requesting for the reappraisal of the subject property. 1997.00 at P300.000. demanding payment of P7.cralawDisbursement Voucher for the payment of the easement fee of P163.cralawOriginal Certificate of Title No. 9. 6. 4. Project Manager of NPC. 3. 7.448. praying that the court declare the value of the land at P350.

Kananga.700 square meters for P1.00 at P300. 13.00 at P300.700.00 at P300. Leyte consisting of 4.00 at P350. Leyte consisting of 5.250.426. in behalf of Faustino Larrazabal. over a portion of a parcel of land situated in Tabango. this Court has determined that the value of the plaintiffs property at the time of taking in 1997 is THREE HUNDRED .008 square meters for P18.00 at P300. Tuazon over a portion of a parcel of land situated in Naghalin. and 17. Kananga. 11.300. Tabango. Palanas over a parcel of land situated in Campokpok.700.710. 1997 between NPC and Spouses Felipe and Mercedes Larrazabal over a portion of a parcel of land situated in Naghalin. 1997 between NPC and Merlo Aznar. 1997 between NPC and Florence Tan over a portion of a parcel of land situated in Naghalin.cralawPermission to Enter Property for Construction of Transmission Line Project.cralawDeed of Absolute Sale dated July 8. On November 5. over a portion of a parcel of land situated in Naghalin. 1999.000.027 square meters for P1. Leyte consisting of 2. 1997 between NPC and Melchor Larrazabal.384.075 square meters for P1. as representative of Aznar Enterprises.cralawDeed of Absolute Sale dated January 16.00 per square meter.00 per square meter. 1997 between NPC and Yolinda O. 15. Leyte consisting of 11.10. 1997 between NPC and Trinidad O.302. 16. Leyte consisting of 61.00 at P300.508.cralawDeed of Absolute Sale dated January 16.281 square meters for P3.400.cralawDeed of Absolute Sale dated March 4. Beduya over a portion of a parcel of land situated in Campokpok.00 per square meter.cralawDeed of Absolute Sale dated March 4. thus: WHEREFORE. Leyte consisting of 5.cralawDeed of Absolute Sale dated January 16.cralawDeed of Absolute Sale dated January 16. Kananga. 1997 between NPC and Fedelina L.00 per square meter. 14.00 at P300.109 square meters for P632. 12.00 per square meter. San Isidro. all the foregoing premises considered. the trial court issued an Order fixing the just compensation due to respondent.109 square meters for P632.00 per square meter. Leyte consisting of 2.00 per square meter. Tabango.000. Kananga.

it should pay respondents the same amount. SO ORDERED. Leyte is AFFIRMED in its entirety. Melchor Larrazabal.(P300. represents the true value to be paid as just compensation for the property taken.Considering therefore that NPC had paid P300.00 per square meter to the spouses Felipe and Mercedes Larrazabal. It held that NPC should not discriminate against the spouses Bongbong. Fedelina Tuazon. The CA found no cogent reason to reverse the finding of the trial court.. The appellate court stressed that the value of the property at the time the government took possession of the land. in 1997. not the increased value resulting from the passage of time. NPC consistently paid P300.530. chanroblesvirtuallawlibrary . thus: WHEREFORE.00) PESOS per square meter or the total amount of SEVEN MILLION FIVE HUNDRED THIRTY THOUSAND (P7. cralaw SO ORDERED. Yolinda Beduya. the CA rendered a Decision affirming the RTC decision. 2003. who should thus be paid the same rate. It noted that. and Trinidad Palanas for the properties it acquired for its transmission lines. Aznar Enterprises. Inc. the assailed November 5.000. 1999 Order of the Regional Trial Court of Palompon. On May 23.00) PESOS.00 per square meter for properties belonging to other landowners in the Province of Leyte for the construction of its transmission line. It agreed with the trial court that the spouses Bongbong should not be discriminated against in the determination of just compensation. NPC elevated the case to the CA through a notice of appeal. cralawThe trial court stressed that just compensation should be reckoned from 1997 when the taking took place.

The Court of Appeals seriously and grossly erred in failing to consider: (a) the value of the land (which was P65. chanroblesvirtuallawlibrary NPC.chanroblesvirtuallawlibrary On April 12. and as such are classified and declared as either residential. 1999. Assuming arguendo that full compensation. instead of simple easement fee is proper. as the reasonable and adequate disturbance or compensation fee for the right-of-way easement on agricultural land of respondents traversed by its overhead transmission lines. Rule 67 of the Revised Rules of Civil Procedure on the creation of a board of commissioners does not apply to the present case since it is not an expropriation proceeding.00 per square meter valuation thereof is the post-taking reappraisal value made by the Provincial Appraisal Committee (PAC) on February 8.00 per square meter as of May 2. It asserts that the value of the land and its character at the time it was taken by the government should be the criteria in determining just compensation. filed the instant petition seeking the reversal of the CA decision on the following grounds: 1. .chanroblesvirtuallawlibrary Petitioner further contends that it should only pay an easement fee and not the full value of the property since it acquired only a simple right-of-way easement for the passage of its overhead transmission lines. as amended. 3. instead of full compensation. it should not have been based on the reappraisal made by the PAC on February 8. 1997) and its character (which was and still is agricultural) at the time of its taking by NAPOCOR in early 1997. Petitioner argues that the deeds of sale relied upon by the trial court involve parcels of land 20 to 40 kilometers away from Villaba. industrial or commercial lots.Moreover. and as such is inapplicable and cannot be given retroactive effect. 1999. 2004. hence. the Court of Appeals seriously and grossly erred in not ordering the transfer of the title and ownership over the subject parcel of land in favor of NAPOCOR. respondents property is classified as agricultural. the CA held that Section 5. and (b) that the P300. 2. 6395. as legal basis for the payment of just compensation which should consist of simple right-of-way easement fee of ten [percent] (10%) of the value of the land. The Court of Appeals seriously and grossly erred in ignoring and in not applying NAPOCORs Charter RA No. now petitioner. the CA resolved to deny NPCs motion for reconsideration. Leyte. On the other hand.

it had no basis to insist that just compensation be fixed at the price of the property at the time of the taking (P65. They aver that. since petitioner did not file an expropriation case. Finally. It points out that under Sec. (4) whether the procedure laid down in Rule 67 should be followed in determining just compensation. The present petition has.chanroblesvirtuallawlibrary Finally. indeed. the reappraisal price determined by the PAC of Leyte.chanroblesvirtuallawlibrary The issues in this case are as follows: (1) whether the petition for review should be denied for having been filed out of time. as amended by P. 2004 to file a petition for review or a motion for . 2004. The petition is partially granted.00 per sq m. for their part. and (5) whether the CA erred in not ordering the transfer of the title over the subject property to petitioner after it was ordered to pay its full market value. petitioner had until June 30. in effect.A. No. 2006. The Court. and to pay only an easement fee 10% of the market value of the land. granted no extension of time since petitioner failed to file its motion for extension of time. (3) whether petitioner is obliged to pay the full value of the property taken or easement fee only. that is. fifteen days from its receipt of the notice denying its motion for reconsideration.00 per sq m). chanroblesvirtuallawlibrary Respondents further contend that the court a quo and the CA did not err in fixing the value of the land at P300. they assert that the CA was under no duty to order the transfer of the title and ownership of the land to petitioner since no payment had yet been made. No. (2) whether the trial court.respondents retained the full ownership and right to use the land. 3-A of R.00 per sq m. hence. 2004. Petitioners Motion for Extension to File a Petition for Review should have been filed on or before June 30. 6395. was correct in fixing just compensation at P300.D. petitioner submits that the CA should have ordered the transfer of the title and ownership over the subject portion of the land to petitioner after it had adjudged the latter liable for the full market value of the property. 938. been filed out of time. respondent filed the petition only on July 8. aver that the present petition should be dismissed for having been filed out of time. as affirmed by the CA.chanroblesvirtuallawlibrary Respondents. The records show that petitioners Regional Counsel in CebuCity received the CA Resolution denying the motion for reconsideration on June 15. it is only authorized to acquire a right-of-way easement where a portion of a land will be traversed by transmission lines.

We agree with the contention of petitioner that the trial court erred in the determination of just compensation at P300. As much as possible. We find this explanation adequate to warrant the relaxation of the rules. for persuasive and weighty reasons. While we agree with respondent that the petition has been filed out of time. 2004. While rules of procedure must be faithfully followed. As will be shown later. to relieve a litigant of an injustice commensurate with his failure to comply with the prescribed procedure. chanroblesvirtuallawlibrary Petitioner. the case was indorsed to the Office of the Solicitor General (OSG). and one who desires to sell.00 per sq m based on the fact that it paid a similar rate to the other landowners whose properties were likewise acquired by petitioner. 2004. It was only on July 8. 2004 that the OSG was able to file a motion for extension of time to file a petition for review with the Court. 2004. the Solicitor to whom it was assigned received the records of the case only on July 2. we do not agree with its plea that the petition should be dismissed solely on this ground. appeals should not be dismissed on a mere technicality in order to afford the litigants the maximum opportunity for the adjudication of their cases on the merits. through the OSG. Further. On June 23. a contrary view would cause an injustice to petitioner whose appeal deserves to be heard on the merits. explained that it failed to file the motion for extension of time because it did not participate in the proceedings below and the case had been indorsed to it only on June 23. Just compensation is the fair value of the property as between one who receives.extension of time to file a petition for review with this Court. fixed at the time of the actual . however. they may be relaxed.

In determining just compensation.It must be stressed that although the determination of the amount of just compensation is within the courts discretion. This rule holds true when the property is taken before the filing of an expropriation suit. It simply relied on the fact that petitioner paid P300. residential/commercial. the Deeds of Sale describe the properties as industrial. upon correct legal principles and competent evidence.chanroblesvirtuallawlibrary In addition.chanroblesvirtuallawlibrary In the present case.taking by the government. Leyte or Tabango.00 per sq m to the other landowners whose lands had been taken as a result of the construction of transmission lines. it should not be done arbitrarily or capriciously. It must be based on all established rules. while the subject property is located in Villaba. The nature and character of the land at the time of its taking is the principal criterion for determining how much just compensation should be given to the landowner. its improvements and capabilities. Petitioner consistently pointed out these differences and the trial court should not have ignored them. But a perusal of the Deeds of Sale shows that the properties covered by the transmission lines are located in the municipalities of Kananga. the trial court determined just compensation without considering the differences in the nature and character or condition of the property compared to the other properties in the province which petitioner had purchased. while the tax declaration of the subject property describes it as agricultural. should be considered. Leyte. petitioner insists that commissioners should at least be appointed to determine just compensation in accordance with the procedure . Leyte. and even if it is the property owner who brings the action for compensation. all the facts as to the condition of the property and its surroundings.

however. Court of Appeals. presupposes that NIA exercised its right of eminent domain by filing a complaint for that purpose before the appropriate court. to wit: We have held that the usual procedure in the determination of just compensation is waived when the government itself initially violates procedural requirements. NPC dismissed its own complaint for the second expropriation. NIA never filed expropriation proceedings although it had ample opportunity to do so. The only issues that the . it waives the usual procedure prescribed in Rule 67. Respondent was not given these opportunities.) Like in NPC. the National Irrigation Administration (NIA) contended that it was deprived of due process when the trial court determined just compensation without the assistance of commissioners. the provisions of Rule 67 would not apply.554 square-meter portion subject of the second expropriation. When a government agency itself violates procedural requirements. even though intended for public use. not respondent. a trial before commissioners is not necessary. Respondents complaint is an ordinary civil action for the recovery of possession of the Property or its value. Court of Appeals. thus: In this case. In the said case. Worse. the Court clarified that when there is no action for expropriation and the case involves only a complaint for damages or just compensation. This is clearly expressed in Republic v. The proceedings give the property owner the chance to object to the taking of his property and to present evidence on its value and on the consequential damage to other parts of his property. NIA. as NIA did not observe the procedure in Rule 67. On this point. we do not agree with petitioner.(Emphasis supplied. At no point did NPC institute expropriation proceedings for the lots outside the 5. Judicial determination of the propriety of the exercise of the power of eminent domain and the just compensation for the subject property then follows. The Court held as follows: Rule 67. Court of Appeals. the present case is not an action for expropriation.in Section 5 of Rule 67. is a taking without due process of law and a denial of the equal protection of the laws. Under these circumstances. and damages. In National Power Corporation v. NPC appropriated Pobres Property without resort to expropriation proceedings. NIA refused to pay respondent just compensation. The seizure of ones property without payment. This Court ruled in the recent case of National Power Corporation (NPC) v. NPCs taking of Pobres property without filing the appropriate expropriation proceedings and paying him just compensation is a transgression of procedural due process. transgressed the requirements of due process. Rule 67 need not be followed where the expropriator has violated procedural requirements.

petitioner insists that if any amount should be paid to respondents. Since this case has been reduced to a simple case of recovery of damages. not the full value. was dispensable. A trial before commissioners. since it acquired only a simple right-of-way easement for the passage of its overhead transmission lines. petitioner (also the NPC) likewise sought the expropriation of certain properties which would be traversed by its . This case ceased to be an action for expropriation when NPC dismissed its complaint for expropriation. or executive order can mandate that its own determination shall prevail over the courts findings. we do not agree. It points out that its charter authorizes the acquisition only of a right-of-way easement for its transmission lines and the payment of an easement fee. Again. Further. The Court has consistently held that the determination of just compensation is a judicial function. the provisions of the Rules of Court on the ascertainment of the just compensation to be paid were no longer applicable.chanroblesvirtuallawlibrary In National Power Corporation v. No statute. Manubay Agro-Industrial Development Corporation .trial court had to settle were the amount of just compensation and damages that NPC had to pay Pobre. it should only be an easement fee of 10% the value of the property. for instance. decree.

the CA did not err in not directing the transfer of the title over the subject property to petitioner since no payment has yet been made. the latter is entitled to payment of just compensation. The records in this case show that petitioner has occupied a 25. It is only upon payment of just compensation that title over the property passes to the expropriator. that is. True. nevertheless.chanroblesvirtuallawlibrary . The acquisition of such easement is. concluded that the expropriation would. which must be neither more nor less than the monetary equivalent of the land. and not the full value of the property. and possession of. but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property. not gratis. Republic v. without loss of title and possession. the expropriated property. Finally. As correctly observed by the CA. Similarly. It. and respondent would not be deprived of its beneficial enjoyment. The acquisition of such an easement falls within the purview of the power of eminent domain. through expropriation. in fact. however. PLDT held. the limitations on the use of the land for an indefinite period would deprive respondent of normal use of the property. This was not disputed by respondents. and was later granted. It is unquestionable that real property may. the Court ruled in the Manubay case that: Granting arguendo that what petitioner acquired over respondents property was purely an easement of a right of way. In the said case. an easement of a right of way transmits no rights except the easement itself. still. of course. For this reason. Further. and respondent retains full ownership of the property. that petitioner sought. It posited that respondent should be compensated only for what it would actually lose. we cannot sustain its view that it should pay only an easement fee. considering the nature and the effect of the installation power lines. thus: x x x. not be limited to an easement of a right of way only.100-sq-m area of respondents property. therefore. petitioner similarly argued that only an easement fee should be paid to respondent since the construction of the transmission lines would be a mere encumbrance on the property. The Court noted. the power of eminent domain results in the taking or appropriation of title to. be subjected to an easement of right of way.transmission lines. authority to enter the property and demolish all the improvements thereon. This conclusion finds support in similar cases in which the Supreme Court sustained the award of just compensation for private property condemned for public use. Normally. a portion of the aerial domain above its property. the expropriation by petitioner in the present case does not amount to a mere encumbrance on the property.

In sum. and was registered on July 11. 1984. SP No. THE COURT OF APPEALS and ERNESTO AUSTRIA and LORETO Q. Upon expiration of the redemption period on July 12. respondents. docketed as LRC Case No. which affirmed the order of the Regional Trial Court of Makati. The case is REMANDED to the Regional Trial Court of Palompon. Sometime during the late 70’s. the petition is PARTIALLY GRANTED. the Court has no alternative but to remand the case to the trial court for the proper determination of just compensation. petitioner. 3135. S-84843 was cancelled and TCT No. To secure their loan. PNB filed an “Ex-Parte Petition for the Issuance of Writ of Possession” with Branch 60 of the Regional Trial Court of Makati City. as amended. For this reason. M-2635. however. 99480 was issued in PNB’s name. On June 23. Thereafter. QUINTANA. PNB extrajudicially foreclosed the mortgage. 1998. [G. seeking a reversal of the Court of Appeals’ resolution in CA-G. Rizal. 1981. located within the Monte Villa de Monsod Subdivision in Parañaque. the trial court conducted an ex parte hearing. IN LIGHT OF ALL THE FOREGOING. Mr. the spouses Godofredo and Wilma Monsod obtained a loan in the amount of P120. Pursuant to the provisions of Act No. we find that the trial court arbitrarily fixed the amount of just compensation due to respondent at P300. the Monsods mortgaged to PNB a parcel of land covered by TCT No. Due to Monsods’ failure to pay their loan obligation. PNB’s representative testified that the foreclosed property is occupied by one Ernesto Austria. 48660 dated August 25. 1985. On December 21. January 17. ownership of the property was consolidated in PNB. he did not honor the bank’s invitation. PNB was declared the highest bidder. J. 1992. No. for the proper determination of just compensation.R. According to PNB. DECISION YNARES-SANTIAGO. TCT No.000.00 per sq m without considering the differences in the nature. S-84843.R. 135219. . Austria was invited by the bank to a conference to discuss the ownership of the foreclosed lot. M-2635. Leyte. a certificate of sale was issued in favor of PNB. 2002] PHILIPPINE NATIONAL BANK. At the auction sale of the subject real property.00 from petitioner Philippine National Bank (PNB).: Before us is a petition for review under Rule 45 of the Rules of Court. character and condition of the subject property compared to other properties in the province which petitioner had acquired. vs. Branch 60 in LRC Case No.

1995. because the bank’s credit investigators were advised of the same when they inspected the property in the summer of 1976.” and on November 29.” The trial court ruled that the Austrias can no longer be permitted to intervene in the case during said stage of the proceedings and that the remedy of the Austrias was to file an ordinary civil action to assert their claim of ownership over the property. the first alias writ of possession lapsed. a second alias writ was issued. 1992. In the meantime. the sheriff failed to enforce the challenged writ. They claimed that the foreclosed property was enclosed within a concrete fence and formed part of their family compound. 1995. 1994. on motion of PNB. subsequently. Due to the Austrias’ refusal to vacate the premises. PNB then filed an “Urgent Ex-Parte Motion for Issuance of Break Open Order” and. which they purportedly bought from the Monsods as early as 1974. The Austrias filed a “Second Motion for Intervention” seeking to restrain the enforcement of the writ of possession issued on October 26. However. On January 31.On August 28. On September 17. . PNB allegedly knew of this fact even before it granted the loan to the Monsods. 1992. the Austrias maintained that the issuance of the possessory writ ex parte was improper. PNB thus filed an “Ex-Parte Motion for Issuance of Second Alias Writ of Possession. 1992. Meanwhile. the trial court denied the Austrias’ second motion and granted PNB’s “Motion for Issuance of Break Open Order. Unfazed. 1995. Consequently. 1992.” The Austrias alleged that they are the actual occupants of the subject lot. the writ was not implemented. 1995 and to recall the third alias writ. 1993. On December 11. the trial court issued an alias writ of possession. respondents Ernesto and Loreto Quintana Austria filed a “Motion for Intervention and to Recall and/or Stop the Enforcement of the Writ of Possession. 1994. the trial court granted PNB’s petition and a writ of possession was issued on October 26. the Austrias filed an Omnibus Motion on January 25. on December 12. Again. the second alias writ had likewise expired.” which the trial court granted anew in an order dated October 10. since it will deprive them of their property without due process. PNB filed a “Manifestation and Motion for Issuance of Third Alias Writ of Possession. the Austrias again filed a motion to set aside the trial court’s order dated October 10. On July 27. seeking a recall of the second alias writ and a reconsideration of the trial court’s order denying their motion to intervene. the sheriff sought to enforce the first alias writ of possession for the second time. an Opposition to the Austrias’ Second Motion for Intervention. 1993.

” which was granted on March 26. The Austrias failed to establish any legal ground for recalling the writs. until the Court declares otherwise. is declared unenforceable against the MOVANTS ERNESTO AUSTRIA and the HEIRS OF LORETO AUSTRIA. the fourth alias writ was issued by the trial court. which also lapsed. The writ was partially implemented with the posting of PNB security guards within the premises of the foreclosed lot.” PNB filed a motion for reconsideration. 1996. which was denied on May 20. stating: There is no prima facie showing of grave abuse of discretion on the part of respondent Judge in issuing his assailed Order which the Court finds to be in accord with law. SAID FINDINGS ARE UNPROVEN AND UNSUPPORTED BY EVIDENCE. the Court of Appeals dismissed the petition. On October 28. PNB filed the instant petition. In the meantime. 1997. the pertinent rules and jurisprudence cited therein. the Austrias filed before the Regional Trial Court of Parañaque. on the ground that the issuance of a possessory writ for a property sold at public auction pursuant to an extra-judicial foreclosure proceeding was a ministerial duty on its part. contending that: I THE COURT OF APPEALS COMMITTED A SERIOUS ERROR BY SIMPLY ADOPTING THE FINDINGS OF THE TRIAL COURT THAT WRIT OF POSSESSION CANNOT BE ENFORCED AGAINST RESPONDENT AUSTRIA. on February 15.Consequent to the filing of this fourth motion. A petition for certiorari under Rule 65 of the Rules of Court was filed by PNB before the Court of Appeals. On April 17. Hence. for the fifth time. The trial court. 1998. the sheriff again failed to implement the third alias writ. II THE COURT OF APPEALS COMMITTED SERIOUS MISAPPREHENSION OF FACTS IN: . PNB filed another “Motion for Issuance of a Fourth Alias Writ. Thus. issued an order on October 4. 1996. after hearing the Austrias’ fourth motion. 1997. However. the Austrias. even as they claimed a superior right to the subject property. On February 19. an action for cancellation of PNB’s title to the property. docketed as Civil Case No. the trial court denied the Austrias’ fifth motion but ruled that: “any writ of possession that may be issued in this case. 1996. filed a motion to stop the enforcement of the fourth alias writ and to set aside all prior writs issued by the trial court. 97-0184. 1997. denying the same.

6. C) LOSING SIGHT OF THE FACT THAT THE TRIAL COURT BELATEDLY ISSUED THE OCTOBER 28. respondents did not adduce any proof to support their claim of ownership.A) SUPPORTING THE JURISPRUDENCE CITED BY THE TRIAL COURT IN THE OCTOBER 28. We agree with respondents. they can not be ejected from the property by means of an ex-parte writ of possession. can be enforced against a third person who is in actual possession of the foreclosed property and who is not in privity with the debtor/ mortgagor. Since respondents acquired their rights as owners of the property by virtue of a sale made to them by the Monsods prior to the bank’s mortgage lien. Petitioner PNB also submits that since it is the registered owner of the property. Under applicable laws and jurisprudence. 3135. as amended. The bank insists that it could rely on the title of the registered land which does not have any annotation of respondents’ supposed rights. 1997 ORDER DIRECTING THAT THE WRIT OF POSSESSION CANNOT BE ENFORCED AGAINST THE RESPONDENTS. Petitioner PNB likewise avers that the trial court could not now belatedly refuse to enforce the writ of possession against respondents. as amended. it is entitled to a writ of possession as a matter of right. Petitioner PNB maintains that the trial court’s order was based on the unproven allegation that respondents had purchased the property from the Monsods before the latter mortgaged it to PNB. his successors in interest or any person having a lien on the . RESPONDENTS WERE GIVEN THE OPPORTUNITY TO BE HEARD BUT NO EVIDENCE WAS PRESENTED TO SUPPORT THEIR CLAIM. through the simple expedient of an ex-parte possessory writ. which states: Sec. THE RULINGS DO NOT JUSTIFY THE NONENFORCEMENT OF THE WRIT OF POSSESSION AGAINST RESPONDENTS. – In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to. On the other hand. is Section 6. the debtor. respondents can not be dispossessed therefrom without due notice and hearing. According to petitioner PNB. The operative provision under Act No. 3135. B) NOT GIVING DUE CONSIDERATION TO THE FACT THAT PNB HAS THE LEGAL RIGHT TO POSSESS THE PROPERTY AS ITS REGISTERED OWNER. 1997 ORDER. even as they were repeatedly given the opportunity to do so during the hearings on the numerous motions filed by respondents themselves. including respondents herein. The basic issue to be resolved in this case is whether or not an ex-parte writ of possession issued pursuant to Act No. THE TRIAL COURT HAD EARLIER ISSUED FOUR (4) POSSESSORY WRITS ALL OF WHICH WERE DIRECTED AGAINST RESPONDENTS AUSTRIA & QUINTANA. Redemption. The trial court had already issued a total of four possessory writs directing the ouster of all occupants of the lot. respondents assert that the trial court correctly held that the writ of possession can only be implemented against the debtor/mortgagor and his successors-in-interest.

interest and claim of the judgment obligor to the property at the time of levy. Although the factual nuances of this case may slightly differ from the aforecited cases. to wit: Art. The true owner must resort to judicial process for the recovery of the property. inclusive. Even if the same may be considered a judicial proceeding for the enforcement of one’s right of possession as purchaser in a foreclosure sale. 3135 is not. Under the aforequoted provision.” . Section 33. in which the ownership claims of the contending parties may be properly heard and adjudicated. one who claims to be the owner of a property possessed by another must bring the appropriate judicial action for its physical recovery. the availing circumstances are undeniably similar – a party in possession of the foreclosed property is asserting a right adverse to the debtor/mortgagor and is a stranger to the foreclosure proceedings in which the ex-parte writ of possession was applied for. in Barican v. Notably. x x x Upon the expiration of the right of redemption. where we ruled that a writ of possession may be issued in an extrajudicial foreclosure of real estate mortgage. second paragraph. 433. title. which relates to the right of possession of a purchaser of property in an extrajudicial foreclosure sale: Sec. or the prevention or redress of a wrong. Rule 39. strictly speaking. Intermediate Appellate Court.property subsequent to the mortgage or deed of trust under which the property is sold. the purchaser or redemptioner shall be substituted to and acquire all the rights. may redeem the same at any time within the term of one year from and after the date of the sale. (Italics ours) Thus. An ex-parte petition for issuance of a possessory writ under Section 7 of Act No. the Civil Code protects the actual possessor of a property. only if the debtor is in possession and no third party had intervened. by which one party “sues another for the enforcement or protection of a right. a “judicial process” as contemplated above. Actual possession under claim of ownership raises a disputable presumption of ownership. 33. of the Code of Civil Procedure. in so far as these are not inconsistent with the provisions of this Act. we held that the obligation of a court to issue an ex-parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the debtor/mortgagor. (Italics ours) Despite the evolutionary development of our procedural laws throughout the years. The same principle was inversely applied in a more recent case. it is not an ordinary suit filed in court. and such redemption shall be governed by the provisions of section four hundred and sixty-four to four hundred and sixty-six. It should be stressed that the foregoing doctrinal pronouncements are not without support in substantive law. the pertinent rule in the Code of Civil Procedure remains practically unchanged. The term “judicial process” could mean no less than an ejectment suit or reinvindicatory action. Particularly. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor.

It should be emphasized that an ex-parte petition for issuance of a writ of possession is a nonlitigious proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to Act 3135. We cannot sanction this procedural shortcut. but with the office of the sheriff of the province where the sale is to be made.R. As such. To enforce the writ against an unwitting third party possessor. cited above. petitioner PNB must resort to the appropriate judicial process for recovery of the property and cannot simply invoke its title in an ex-parte proceeding to justify the ouster of respondents. who claims a right superior to that of the original mortgagor. it was aware that the subject lot was occupied by the Austrias. it was not a ministerial duty of the trial court under Act No. as earlier stressed. registration of the lot in petitioner PNB’s name does not automatically entitle the latter to possession thereof. Consequently. Besides. requires nothing less than an action for ejectment to be brought even by the true owner. Unlike a judicial foreclosure of real estate mortgage under Rule 68 of the Rules of Court. will have no opportunity to be heard on his claim in a proceeding of this nature. The trial court has no jurisdiction to determine who between the parties is entitled to ownership and possession of the foreclosed lot. as amended. instead of bringing an action in court for the ejectment of respondents. In the same vein. 48660 is AFFIRMED. SP No. Article 433 of the Civil Code. respondents are not obliged to prove their ownership of the foreclosed lot in the ex-parte proceedings conducted below. any property brought within the ambit of the act is foreclosed by the filing of a petition. therefore. since petitioner PNB’s right of possession under said Act could be rightfully recognized only against the Monsods and the latter’s successors-ininterest. After all. since to do so would be tantamount to his summary ejectment. In the case at bar. 3135 to issue a writ of possession for the ouster of respondents from the lot subject of this instant case. Likewise. . not with any court of justice. which must be overcome by the party claiming otherwise. As discussed earlier. but not against respondents who assert a right adverse to the Monsods. the actual possessor of a property enjoys a legal presumption of just title in his favor. a third person in possession of an extrajudicially foreclosed realty. The trial court was without authority to grant the ex-parte writ. It stands to reason. who took no part in the foreclosure proceedings. the instant petition is DENIED and the resolution of the Court of Appeals in CA G. petitioner PNB admitted that as early as 1990. would be tantamount to the taking of real property without the benefit of proper judicial intervention. it chose to simply file an ex-parte petition for a writ of possession pursuant to its alleged right as purchaser in the extra-judicial foreclosure sale. Hence. Its lack of authority to direct issuance of the writs against respondents assured that its earlier orders would never attain finality in the first place. WHEREFORE. that such third person may not be dispossessed on the strength of a mere ex-parte possessory writ. Yet. in violation of the basic tenets of due process. the trial court cannot be precluded from correcting itself by refusing to enforce the writs it had previously issued.

No.. AUSTRIA-MARTINEZ.. C.J. CORONA.R. CARPIO MORALES. YNARES-SANTIAGO. Present: PANGANIBAN. . SANDOVALGUTIERREZ. Petitioner. SR. CALLEJO. QUISUMBING. PUNO.versus CARPIO. .EN BANC MANILA INTERNATIONAL 155650 AIRPORT AUTHORITY. G.

. CITY OF TINGA.. PARAÑAQUE.. COURT OF APPEALS..... JJ........---x D E C I S I ON CARPIO.... and VELASCO............. SANGGUNIANG PANGLUNGSOD NG PARAÑAQUE. CITY MAYOR OF NAZARIO. July 20.. JR. and CITY TREASURER OF PARAÑAQUE. Promulgated: x..AZCUNA.... 2006 CHICOGARCIA.....: The Antecedents . PARAÑAQUE...... Respondents.. CITY ASSESSOR OF PARAÑAQUE.... J.

The OGCC opined that the Local Government Code of 1991 withdrew the exemption from real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus. MIAA then paid some of the real estate tax already due. Subsequently. Executive Order No. otherwise known as the Revised Charter of the Manila International Airport Authority (“MIAA Charter”). improvements and equipment within the NAIA Complex. 903. MIAA negotiated with respondent City of Parañaque to pay the real estate tax imposed by the City. As operator of the international airport. 909 and 298 amended the MIAA Charter. On 21 March 1997. The MIAA Charter transferred to MIAA approximately 600 hectares of land. 061. MIAA’s real estate tax delinquency is broken down as follows: . MIAA administers the land. 903 was issued on 21 July 1983 by then President Ferdinand E. Marcos. MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. including the runways and buildings (“Airport Lands and Buildings”) then under the Bureau of Air Transportation. Executive Order Nos.Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City under Executive Order No. On 28 June 2001. the Office of the Government Corporate Counsel (OGCC) issued Opinion No. The MIAA Charter further provides that no portion of the land transferred to MIAA shall be disposed of through sale or any other mode unless specifically approved by the President of the Philippines.

00 1998-2001 75.028.700.065.058.00 1992-2001 58.40 67.631.49 32.740. The Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency.340.59 1992-2001 20.810.00 #9476103 for P49.900.107.149.50 50.712.480.647.276.637.00 109.371.00 11.201.20 179.95 P232.00 93.65 11.00 29. MIAA thus sought a clarification of OGCC Opinion No.00 for On 17 July 2001.681. issued notices of levy and warrants of levy on the Airport Lands and Buildings.959. the City of Parañaque. The OGCC opined that Section 21 of the MIAA Charter is the proof that MIAA is exempt from real estate tax.944.199.614.207.950. 061.24 178.800.436.00 33.744.42 1992-1997 RPT was paid on Dec.689. 1997 as per O. 24.144.00 5.59 1992-2001 4.858.360.621.560. 147 clarifying OGCC Opinion No.424.20 1992-2001 111.794.00 9.832.694.838.902.444.861.50 1998-2001 34.876.070. 061. the OGCC issued Opinion No.00 624. The OGCC pointed out that Section 206 of the Local Government Code requires persons exempt from real estate tax to show proof of exemption.#9476102 for P4.134.00 2.344.TAX DECLARATION E-016-01370 E-016-01374 E-016-01375 E-016-01376 E-016-01377 E-016-01378 E-016-01379 E-016-01380 *E-016-013-85 *E-016-01387 *E-016-01396 GRAND TOTAL TAXABLE TAX DUE PENALTY YEAR 1992-2001 19.098. On 9 August 2001.00 1998-2001 6.00 1992-2001 18.725.506.028.240.083.789.776.521.47 P TOTAL 30.164.188.59 1992-2001 111.571.R.477. .160.75 #9476101 P28.243.115.360.676.00 12.863.99 6.974.00 12.00 1992-2001 7.904.479.380.00 P392. through its City Treasurer.00 2.558.322.435.803.90 68.00 4.00 35.890.

A day before the public auction. SP No. Sto. or on 6 February 2003. at 5:10 p. On 5 October 2001. Niño. and Tambo. Meanwhile.m. The petition was docketed as CA-G.m. in January 2003. the City of Parañaque posted notices of auction sale at the Barangay Halls of Barangays Vitalez. and in the main lobby of the Parañaque City Hall. levying against. in the public market of Barangay La Huerta.On 1 October 2001..R. 66878. the Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day reglementary period. The Court of Appeals also denied on 27 September 2002 MIAA’s motion for reconsideration and supplemental motion for reconsideration. MIAA filed on 5 December 2002 the present petition for review. MIAA filed with the Court of Appeals an original petition for prohibition and injunction. Hence. 10:00 a. a newspaper of general circulation in the Philippines. MIAA filed before this Court an Urgent Ex-Parte and . Parañaque City. at the Legislative Session Hall Building of Parañaque City. The City of Parañaque published the notices in the 3 and 10 January 2003 issues of the Philippine Daily Inquirer. The petition sought to restrain the City of Parañaque from imposing real estate tax on. and auctioning for public sale the Airport Lands and Buildings. The notices announced the public auction sale of the Airport Lands and Buildings to the highest bidder on 7 February 2003. with prayer for preliminary injunction or temporary restraining order..

City Treasurer of Parañaque. However. City Mayor of Parañaque. or three hours after the conclusion of the public auction. On 10 February 2003. MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of MIAA. Respondents received the TRO on the same day that the Court issued it. respondent City of Parañaque. this Court issued a Resolution confirming nunc pro tunc the TRO.m. MIAA. The motion sought to restrain respondents — the City of Parañaque. The Airport Lands and Buildings are thus inalienable and are not subject to real estate tax by local governments. MIAA points out that it cannot claim ownership over these properties since the real owner of the Airport Lands and Buildings is the Republic of the Philippines. In compliance with the directive issued during the hearing. The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings for the benefit of the general public. this Court issued a temporary restraining order (TRO) effective immediately. The Court ordered respondents to cease and desist from selling at public auction the Airport Lands and Buildings. On 7 February 2003. and the Solicitor General subsequently submitted their respective Memoranda.Reiteratory Motion for the Issuance of a Temporary Restraining Order. the Court heard the parties in oral arguments. . and the City Assessor of Parañaque (“respondents”) — from auctioning the Airport Lands and Buildings. On 29 March 2005. Since the Airport Lands and Buildings are devoted to public use and public service. the ownership of these properties remains with the State. Sangguniang Panglungsod ng Parañaque. However. respondents received the TRO only at 1:25 p.

since in such a case the tax debtor is also the tax creditor. Respondents also argue that a basic rule of statutory construction is that the express mention of one person. respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax.MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of real estate tax. it is now estopped from claiming that the Airport Lands and Buildings are exempt from real estate tax. Respondents invoke Section 193 of the Local Government Code. or act excludes all others. Marcos where we held that the Local Government Code has withdrawn the exemption from real estate tax granted to international airports. . MIAA insists that it is also exempt from real estate tax under Section 234 of the Local Government Code because the Airport Lands and Buildings are owned by the Republic. Respondents further argue that since MIAA has already paid some of the real estate tax assessments. An international airport is not among the exceptions mentioned in Section 193 of the Local Government Code. Respondents also cite the ruling of this Court in Mactan International Airport v. MIAA invokes the principle that the government cannot tax itself. which expressly withdrew the tax exemption privileges of “government-owned and-controlled corporations” upon the effectivity of the Local Government Code. Thus. MIAA points out that the reason for tax exemption of public property is that its taxation would not inure to any public advantage. thing. To justify the exemption.

Second. . First. The Court’s Ruling We rule that MIAA’s Airport Lands and Buildings are exempt from real estate tax imposed by local governments.The Issue This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws. and all proceedings taken pursuant to such assessments. are void. the other issues raised in this petition become moot. then the real estate tax assessments issued by the City of Parañaque. In such event. MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax. If so exempt.

Respondents claim that the deletion of the phrase “any government-owned or controlled so exempt by its charter” in Section 234(e) of the Local Government Code withdrew the real estate tax exemption of government-owned or controlled corporations. There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. being a government-owned or controlled corporation.1. MIAA is Not a Government-Owned or Controlled Corporation Respondents argue that MIAA. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines follows: a government-owned or controlled corporation as . MIAA is not a government-owned or controlled corporation. However. The deleted phrase appeared in Section 40(a) of the 1974 Real Property Tax Code enumerating the entities exempt from real estate tax. is not exempt from real estate tax.

and owned by the Government directly or through its instrumentalities either wholly.00) Pesos to Ten Billion (P10. MIAA is not a stock corporation because it has no capital stock divided into shares. — The capital of the Authority to be contributed by the National Government shall be increased from Two and One-half Billion (P2.000.SEC. or. 2. (Emphasis supplied) A government-owned or controlled corporation must be “organized as a stock or non-stock corporation .” MIAA is not organized as a stock or non-stock corporation. – x x x x (13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation .000. MIAA has no stockholders or voting shares. where applicable as in the case of stock corporations. vested with functions relating to public needs whether governmental or proprietary in nature.000.000. Capital.000.500.00) Pesos to consist of: . to the extent of at least fifty-one (51) percent of its capital stock: x x x. of the MIAA Charter provides: Section 10 SECTION 10. General Terms Defined.

(a) The value of fixed assets including airport facilities. Clearly. MIAA is also not a non-stock corporation because it has no members. MIAA has no stockholders or voting shares. 903 as amended. under its Charter. Section 87 of the Corporation Code defines a non-stock corporation as “one where no part of its income is distributable as dividends to its members. trustees or officers. the Government contribution to the capital of the Authority shall be provided in the General Appropriations Act. Even if we assume that the Government is considered as the sole member of . Section 3 of the Corporation Code defines a stock corporation as one whose “capital stock is divided into shares and x x x authorized to distribute to the holders of such shares dividends x x x.] which may be contributed by the National Government or transferred by it from any of its agencies.” A non-stock corporation must have members. runways and equipment and such other properties. Thereafter. O. No. the valuation of which shall be determined jointly with the Department of Budget and Management and the Commission on Audit on the date of such contribution or transfer after making due allowances for depreciation and other deductions taking into account the loans and other liabilities of the Authority at the time of the takeover of the assets and other properties. MIAA is not a stock corporation. Hence.” MIAA has capital but it is not divided into shares of stock. MIAA does not have capital stock that is divided into shares. movable and immovable[. 1986 representing about seventy percentum (70%) of the unremitted share of the National Government from 1983 to 1986 to be remitted to the National Treasury as provided for in Section 11 of E. shall be converted into the equity of the National Government in the Authority. (b) That the amount of P605 million as of December 31.

Since MIAA is neither a stock nor a non-stock corporation. professional. educational. Section 88 of the Corporation Code provides that non-stock corporations are “organized for charitable. religious. Non-stock corporations cannot distribute any part of their income to their members. –– x x x x . social. agriculture and like chambers. MIAA does not qualify as a government-owned or controlled corporation. like trade. scientific. 2. recreational. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to the National Treasury. Section 2(10) of the Introductory Provisions of the Administrative Code defines a government “instrumentality” as follows: SEC. MIAA is like any other government instrumentality.MIAA. literary. General Terms Defined. a public utility. cultural. What then is the legal status of MIAA within the National Government? MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. This prevents MIAA from qualifying as a non-stock corporation. is organized to operate an international and domestic airport for public use. civil service. this will not make MIAA a non-stock corporation. or similar purposes.” MIAA is not organized for any of these purposes. the only difference is that MIAA is vested with corporate powers. industry. fraternal. MIAA.

vested with special functions or jurisdiction by law. administering special funds. and enjoying operational autonomy. the instrumentality does not become a corporation. police authority and the levying of fees and charges. endowed with some if not all corporate powers. when the law makes a government instrumentality operationally autonomous. usually through a charter. At the same time. insofar as these powers are not inconsistent with the provisions of this Executive Order.” Likewise. MIAA exercises “all the powers of a corporation under the Corporation Law. it remains a government instrumentality corporate powers.(10) Instrumentality refers to any agency of the National Government. the instrumentality remains part of the National Government machinery although not integrated with the department framework.” . x x x (Emphasis supplied) When the law vests in a government instrumentality corporate powers. not integrated within the department framework. The MIAA Charter expressly states that transforming MIAA into a “separate and autonomous body” will make its operation more “financially viable. Thus. Unless the government instrumentality is organized exercising not only governmental but also as a stock or non-stock corporation. MIAA exercises the governmental powers of eminent domain.

and barangays shall not extend to the levy of the following: . Common Limitations on the Taxing Powers of Local Government Units. A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code. controlled government-owned corporations in the strict sense as understood under the Administrative Code. the exercise of the taxing powers of provinces. These government instrumentalities are sometimes However. – Unless otherwise provided herein. the Philippine Ports Authority. 133. the University of the government instrumentalities exercise corporate powers but they are not organized as stock or non-stock corporations as required by Section 2(13) loosely they are of the Introductory government Provisions corporate or of the Administrative Code. municipalities. cities. which is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation. Philippines Examples are the Mactan International Airport and Bangko Sentral ng Pilipinas.Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations. called not entities. All these Authority. which is the governing law defining the legal relationship and status of government entities . which states: SEC.

local governments may only exercise such power “subject to such guidelines and limitations as the Congress may provide. While the 1987 Constitution now includes taxation as one of the powers of local governments. Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption. this Court declared in Maceda v. Jr.: .xxxx (o) Taxes. Any doubt whether a person. Macaraig. historically merely delegated to local governments the power to tax. article or activity is taxable is resolved against taxation. This rule applies with greater force when local governments seek to tax national government instrumentalities. its agencies and instrumentalities and local government units.” When local governments invoke the power to tax on national government instrumentalities. (Emphasis and underscoring supplied) Section 133(o) recognizes tax the the basic national principle that local which governments cannot government. Congress grants an exemption to a However. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. when government As national instrumentality from local taxation. such power is construed strictly against local governments. fees or charges of any kind on the National Government. such exemption is construed liberally in favor of the national government instrumentality.

In such case the practical effect of an exemption is merely to reduce the amount of money that has to be handled by government in the course of its operations. no point in national and local governments taxing each other.The reason for the rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. There is also no reason for local governments to tax national government services to instrumentalities inhabitants of for local rendering essential The public only governments. in favor of non taxliability of such agencies. Thus. local governments . There must be express language in the law empowering local governments to tax national government instrumentalities. There is. exception is when the legislature clearly intended to tax government instrumentalities for the delivery of essential public services for sound and compelling policy considerations. provisions granting exemptions to government agencies may be construed liberally. moreover. unless a sound and compelling policy requires such transfer of public funds from one government pocket to another. Any doubt whether such power exists is resolved against local governments. Section 133 of the Local Government Code states that “unless otherwise provided” in the Code. For these reasons.

the instrumentalities of the United States (Johnson v. . Corporation: As this Court held in Basco v. 340 US 42). Maryland. Sanchez.cannot tax national government instrumentalities. p. speaking for the Supreme Court. 4 L Ed. Maryland. burden or in any manner control the operation of constitutional laws enacted by Congress to carry into execution the powers vested in the federal government. “Justice Holmes. 140. Vol.S. supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it. or even to seriously burden it in the accomplishment of them . (MC Culloch v. Modern Constitutional Law. v. mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirable activities or enterprise using the power to tax as “a tool for regulation” (U. emphasis supplied) Otherwise. 254 US 51) and it can be agreed that no state or political subdivision can regulate a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities. 4 Wheat 316. 579) This doctrine emanates from the “supremacy” of the National Government over local governments. The power to tax which was called by Justice Marshall as the “power to destroy” (Mc Culloch v. made reference to the entire absence of power on the part of the States to touch.” (Antieau. 2. in that way (taxation) at least. to retard. Maryland. impede. Philippine Amusements and Gaming The states have no power by taxation or otherwise.

2. Property is either of public dominion or of private ownership. The Civil Code provides: ARTICLE 419. The following things are property of public dominion: . Airport Lands and Buildings are of Public Dominion The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. Airport Lands and Buildings of MIAA are Owned by the Republic a. ARTICLE 420.

rivers.” are owned by the State. ports and bridges constructed by the State. shall form part of the patrimonial property of the State. (2) Those which belong to the State. banks. which is not of the character stated in the preceding article. of the Civil Code. ARTICLE 422. the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. rivers. Property of public dominion. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code. All other property of the State. when no longer intended for public use or for public service. like “ roads. torrents. The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings Under Article 420 constitute a “port” constructed by the State. and are intended for some public service or for the development of the national wealth. (Emphasis supplied) ARTICLE 421. canals. is patrimonial property.(1) Those intended for public use. without being for public use. canals. and others of similar character. ports and bridges constructed by the State. roadsteads. torrents. such as roads. . shores.

Article 420 of the Civil Code defines property of public dominion as one “intended for public use. Someone must pay for the maintenance of the road. constitute the bulk of the income that maintains the operations of MIAA. the speed restrictions and other conditions for the use of the road do not affect the public character of the road. The terminal fees MIAA charges to passengers. The collection of such fees does not change the character of MIAA as an airport .” Even if the government collects toll fees.The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation . The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public roads. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. or only those among the public who actually use the road through the toll fees they pay upon using the road. The charging of fees. the limitation on the kind of vehicles that can use the road. the road is still “intended for public use” if anyone can use the road under the same terms and conditions as the rest of the public. either the public indirectly through the taxes they pay the government. The operation by the government of a tollway does not change the character of the road as one for public use. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. as well as the landing fees MIAA charges to airlines.

the Republic of the Philippines. the Airport Lands and Buildings are outside the commerce of man . which its Charter calls the “principal airport of the Philippines for both international and domestic air traffic. this Court already ruled .for public use. they indisputably belong to the State or b.” are properties of public dominion because they are intended for public use. The Court has ruled repeatedly that properties of public dominion are outside the commerce of man. As early as 1915. Airport Lands and Buildings are Outside the Commerce of Man The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public dominion. A user’s tax is more equitable — a principle of taxation mandated in the 1987 Constitution. As properties of public dominion. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the particular public facility. The Airport Lands and Buildings of MIAA. Such fees are often termed user’s tax. As properties of public dominion.

common lands. The Civil Code. streets. nor is it empowered so to do.” The said Plaza Soledad being a promenade for public use. and public works of general service supported by said towns or provinces. as was decided by the supreme court of Spain in its decision of February 12. the municipal council of Cavite could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or public place to the defendant for private use the plaintiff municipality exceeded its authority in the exercise of its powers by executing a contract over a thing of which it could not dispose. and public waters. and plazas and streets are outside of this commerce. prescribes that everything which is not outside the commerce of man may be the object of a contract. the squares.in Municipality of Cavite v. to be devoted to public use and to be made available to the public in . Municipal Council. such as the plazas. thus: According to article 344 of the Civil Code: “Property for public use in provinces and in towns comprises the provincial and town roads. article 1271. rivers. etc. the promenades. the Court declared that properties of public dominion are outside the commerce of man: xxx Town plazas are properties of public dominion. which says: “Communal things that cannot be sold because they are by their very nature outside of commerce are those for public use. fountains.” (Emphasis supplied) Again in Espiritu v. Rojas that properties devoted to public use are outside the commerce of man. fountains. 1895. streets.

Any encumbrance. said temporary occupation or use must also cease. and the town officials should see to it that the town plazas should ever be kept open to the public and free from encumbrances or illegal private constructions. (Emphasis supplied) The Court has also ruled that property of public dominion. levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. While in case of war or during an emergency.” provide: . which “remains to this day the existing general law governing the classification and disposition of lands of the public domain other than timber and mineral lands. encumbrance or disposition through public or private sale. Sections 83 and 88 of the Public Land Law or Commonwealth Act No. tax. being outside the commerce of man. when the emergency has ceased. Essential public services will stop if properties of public dominion are subject to encumbrances. They are outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties. cannot be the subject of an auction sale. This will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate Before MIAA can encumber the Airport Lands and Buildings.general. 141. as was done and as was tolerated by the Municipality of Pozorrubio. are not subject to levy. town plazas may be occupied temporarily by private individuals. being for public use. Properties of public dominion. foreclosures and auction sale. the President must first withdraw from public use the Airport Lands and Buildings.

rights of way for railroads. or of the inhabitants thereof. SECTION 88. The tract or tracts of land reserved under the provisions of Section eighty-three shall be non-alienable and shall not be subject to occupation. their ownership remains with the State or the Republic of the Philippines. these properties remain properties of public dominion and are inalienable. Since the Airport Lands and Buildings are inalienable in their present status as properties of public dominion. sale. the President may designate by proclamation any tract or tracts of land of the public domain as reservations for the use of the Republic of the Philippines or of any of its branches. in accordance with regulations prescribed for this purposes. or for quasi-public uses or purposes when the public interest requires it. public quarries. communal pastures or lequas communales. Upon the recommendation of the Secretary of Agriculture and Natural Resources. or other disposition until again declared alienable under the provisions of this Act or by proclamation of the President . public fishponds. (Emphasis and underscoring supplied) Thus. irrigation systems. hydraulic power sites. lease. they are not subject to levy on execution or foreclosure sale. unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public use. public parks. working men’s village and other improvements for the public benefit. As long as the Airport Lands and Buildings are reserved for public use.SECTION 83. including reservations for highways. entry. .

the use of which is not otherwise directed by law. and to withdraw such public use.The authority of the President to reserve lands of the public domain for public use. therefore. Book I of the Administrative Code allows instrumentalities like . Chapter 4. 14. which states: SEC. Book III of the Administrative Code of 1987. MIAA is a Mere Trustee of the Republic MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. and for specific public purposes. The reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise provided by law or proclamation . c. is reiterated in Section 14. x x x x. they are properties of public dominion. Title I. Chapter 12. — (1) The President shall have the power to reserve for settlement or public use. owned by the Republic and outside the commerce of man. Section 48. (Emphasis supplied) There is no question. Power to Reserve Lands of the Public and Private Domain of the Government. any of the lands of the public domain. that unless the Airport Lands and Buildings are withdrawn by law or presidential proclamation from public use.

MIAA to hold title to real properties owned by the Republic. (2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality . by the President. . by the executive head of the agency or instrumentality. 48. Official Authorized to Convey Real Property . Only the President of the Republic can sign such deed of conveyance. (Emphasis supplied) In MIAA’s case. thus: SEC. the deed of conveyance shall be executed in behalf of the government by the following: (1) For property belonging to and titled in the name of the Republic of the Philippines. — Whenever real property of the Government is authorized by law to be conveyed. its status as a mere trustee of the Airport Lands and Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the Republic. unless the authority therefor is expressly vested by law in another officer.

are hereby transferred to the Authority. transferred to MIAA the title to the Airport Lands and Buildings from the Bureau of Air Transportation of the Department of Transportation and Communications. and all assets. Creation of the Manila International Airport Authority. powers. rights. runways. belonging to the Airport. movable or immovable. lands. The MIAA Charter provides: SECTION 3. subject to existing rights. if any. (Emphasis supplied) . Transfer to MIAA was Meant to Implement a Reorganization The MIAA Charter. interests and privileges belonging to the Bureau of Air Transportation relating to airport works or air operations. conveyed and assigned to the ownership and administration of the Authority. — x x x x The land where the Airport is presently located as well as the surrounding land area of approximately six hundred hectares. which is a law. — All existing public airport facilities. are hereby transferred.d. including all equipment which are necessary for the operation of crash fire and rescue facilities. The Bureau of Lands and other appropriate government agencies shall undertake an actual survey of the area transferred within one year from the promulgation of this Executive Order and the corresponding title to be issued in the name of the Authority. (Emphasis supplied) SECTION 22. Any portion thereof shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines. Transfer of Existing Facilities and Intangible Assets . buildings and other property.

the Manila International Airport as the principal airport of the Philippines for both international and domestic air traffic. domestic and other terminals. have to be upgraded to meet the current and future air traffic and other demands of aviation in Metro Manila. general aviation and other facilities. a management and organization study has indicated that the objectives of providing high standards of accommodation and service within the context of a financially viable operation. The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands and Buildings to MIAA. promissory notes or even stock since MIAA is not a stock corporation. will best be achieved by a separate and autonomous body. The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic receiving cash. is required to provide standards of airport accommodation and service comparable with the best airports in the world.SECTION 25. x x x x. thus: WHEREAS. and . — The Manila International Airport including the Manila Domestic Airport as a division under the Bureau of Air Transportation is hereby abolished. WHEREAS. Abolition of the Manila International Airport as a Division in the Bureau of Air Transportation and Transitory Provisions . WHEREAS.

as amended by Presidential Decree No. the President of the Philippines is given continuing authority to reorganize the National Government. Since MIAA cannot dispose of the Airport Lands and Buildings. The Republic remains the beneficial owner of the Airport Lands and Buildings. The MIAA Charter expressly provides that the Airport Lands and Buildings “shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines . MIAA does not .WHEREAS. only the “owner has the right to x x x dispose of a thing. 1772. No party claims any ownership rights over MIAA’s assets adverse to the Republic.” This only means that the Republic retained the beneficial ownership of the Airport Lands and Buildings because under Article 428 of the Civil Code.] (Emphasis supplied) The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body. agencies and instrumentalities of the Government[. which authority includes the creation of new entities.” own the Airport Lands and Buildings. 1416. MIAA itself is owned solely by the Republic. under Presidential Decree No.

” The real properties owned by the Republic are titled either in the name of the Republic itself or in the name of agencies or instrumentalities of the National Government. Real Property Owned by the Republic is Not Taxable Section 234(a) of the Local Government Code exempts from real estate tax any “[r]eal property owned by the Republic of the Philippines. which prohibits local governments from imposing “[t]axes. This only confirms that the e. 234. x x x. Airport Lands and Buildings belong to the Republic. — The following are exempted from payment of the real property tax : (a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted. for consideration or otherwise.At any time. fees or charges of any kind on the National Government. the President is the only one who can authorize the sale or disposition of the Airport Lands and Buildings. its agencies and instrumentalities x x x.” Section 234(a) provides: SEC. Under Section 3 of the MIAA Charter. Exemptions from Real Property Tax. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities of the national . (Emphasis supplied) This exemption should be read in relation with Section 133(o) of the same Code. to a taxable person. the President can transfer back to the Republic title to the Airport Lands and Buildings without the Republic paying MIAA any consideration.

” MIAA. is not a taxable person under Section 133(o) of the Local Government Code. Thus. portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. In such a case. even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings.government. MIAA has granted the beneficial use of such land area for a consideration to a taxable person and therefore such . Such real properties remain owned by the Republic and continue to be exempt from real estate tax. such fact does not make these real properties subject to real estate tax. not result in the loss of the tax exemption. The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. However. This happens when title of the real property is Such arrangement does Section 234(a) of the transferred to an agency or instrumentality even as the Republic remains the owner of the real property. to a taxable person. For example. as a government instrumentality. Local Government Code states that real property owned by the Republic loses its tax exemption only if the “beneficial use thereof has been granted. for consideration or otherwise. the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax.

the Court ruled: Accordingly. Withdrawal of Tax Exemption Privileges – Unless otherwise provided in this Code . Quezon City. whether paying or non-paying. . Refutation of Arguments of Minority The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the Local Government Code of 1991 withdrew the tax exemption of “all persons.land area is subject to real estate tax. 193 provides: Section SEC. whether natural or juridical” upon the effectivity of the Code. including government-owned or controlled corporations. are exempt from real property taxes. 3. the portions of the land occupied by the hospital and portions of the hospital used for its patients. or presently enjoyed by all persons. whether natural or juridical. 193. In Lung Center of the Philippines v. On the other hand. we hold that the portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are not exempt from such taxes. tax exemptions or incentives granted to.

the determinative test is not just whether MIAA is a GOCC.A. Thus. The minority argues that since the Local Government Code withdrew the tax exemption of all juridical persons. the provisions lay down the explicit proposition that the withdrawal of realty tax exemption applies to all persons. MIAA is not a natural person. The reference to or the inclusion of GOCCs is only clarificatory or illustrative of the explicit provision. (Emphasis supplied) The minority states that MIAA is indisputably a juridical person. 6938. The minority also insists that . but all persons.except local water districts. but whether MIAA is a juridical person at all . natural and juridical persons. No. Thus. The term “All persons” encompasses the two classes of persons recognized under our laws. To repeat. Obviously. the minority declares: It is evident from the quoted provisions of the Local Government Code that the withdrawn exemptions from realty tax cover not just GOCCs. cooperatives duly registered under R. then MIAA is not exempt from real estate tax. non-stock and non-profit hospitals and educational institutions are hereby withdrawn upon effectivity of this Code. (Emphasis and underscoring in the original) The minority posits that the “ determinative test” whether MIAA is exempt from local taxation is its status — whether MIAA is a juridical person or not.

local governments cannot impose any kind of tax on national government instrumentalities like the MIAA. and barangays shall not extend to the levy of the following: xxxx (o) Taxes.“Sections 193 and 234 may be examined in isolation from Section 133(o) to ascertain MIAA’s claim of exemption. Section 133(o) of the Local Government Code expressly provides otherwise. Common Limitations on the Taxing Powers of Local Government Units. municipalities. fees or charges of any kinds on the National Government. (Emphasis and underscoring supplied) By express mandate of the Local Government Code. Section 193 of the Local Government Code expressly withdrew the tax exemption of all juridical persons “[u]nless otherwise provided in this Code. Section 133(o) states: SEC.” The argument of the minority is fatally flawed. the exercise of the taxing powers of provinces.” Now. specifically prohibiting local governments from imposing any kind of tax on national government instrumentalities. – Unless otherwise provided herein. Local . and local government units. 133. cities. its agencies and instrumentalities.

its agencies and instrumentalities . (Emphasis supplied) The minority’s theory directly contradicts and completely negates Section 133(o) of the Local Government Code. Section 133. the exemption is limited to (a) local water districts. all juridical persons are subject to tax by local governments. Thus. This . its agencies and instrumentalities. three classes of The minority insists that the juridical entities specifically enumerated as persons exempt from local taxation are limited to the exempt in Section 193. the minority states: x x x Under Section 193. The taxing powers of local governments do not extend to the national “[u]nless otherwise provided in this Code” as stated in the saving clause of The saving clause refers to Section 234(a) on the exception to the exemption from real estate tax of real property owned by the Republic. government. (b) cooperatives duly registered under Republic Act No. The minority.governments are devoid of power to tax the national government. 6938. and (c) non-stock and non-profit hospitals and educational institutions. however. It would be belaboring the obvious why the MIAA does not fall within any of the exempt entities under Section 193. theorizes that unless exempted in Section 193 itself.

San Fernando Port Authority. Cebu Port Authority. which itself is a juridical person.theory will result in gross absurdities. Section 133(o) does between national government instrumentalities with or . local governments can impose any kind of local tax. on the national government. Philippine Rice Research Institute. and not only real estate tax. Laguna Lake Development Authority. Under the minority’s theory. many national government instrumentalities with juridical personalities will also be subject to any kind of local tax. Cagayan de Oro Port Authority. subject to tax by local governments since the national government is not included in the enumeration of exempt entities in Section 193. Under this theory. The minority’s theory violates Section 133(o) of the Local Government Code which expressly prohibits local governments from imposing any kind of tax on national not government distinguish instrumentalities. and Philippine National Railways. and not only real estate tax. Fisheries Development Authority. Philippine Ports Authority. It will make the national government. Some of the national government instrumentalities vested by law with juridical personalities are: Bangko Sentral ng Pilipinas. Bases Conversion Development Authority.

its agencies and instrumentalities only if the Local Government Code expressly so provides. Thus. courts should not distinguish. local governments may tax the national government.without juridical personalities . local governments have no power to tax the national government. The determinative test whether MIAA is exempt from local taxation is not whether MIAA is a juridical person. Section 133 of the Local Government Code starts with the saving clause “[u]nless otherwise provided in this Code. The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the Code. the rule is local governments have no power to tax the national government. its agencies and instrumentalities. its agencies and instrumentalities. but whether it is a national government instrumentality under Section 133(o) of the Local Government Code.” This means that unless the Local Government Code grants an express authorization. Clearly. with or without juridical personalities. As an exception to this rule. which makes the national government subject to real estate tax when it gives . Where the law does not distinguish. its agencies and instrumentalities. Section 133(o) applies to all national government instrumentalities. Section 133(o) is the specific provision of law prohibiting local governments from imposing any kind of tax on the national government.

is not devoted to . x x x. The justification for the exception to the exemption is that the real property. Exemptions from Real Property Tax – The following are exempted from payment of the real property tax: (a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted. to a taxable person. for consideration or otherwise. The exception to this exemption is when the government gives the beneficial use of the real property to a taxable entity.the beneficial use of its real properties to a taxable entity. real property owned by the Republic is exempt from real estate tax. (Emphasis supplied) Under Section 234(a). 234. although owned by the Republic. Section 234(a) of the Local Government Code provides: SEC. The exception to the exemption in Section 234(a) is the only instance when the national government. The exception to the exemption applies only to real estate tax and not to any other tax. its agencies and instrumentalities are subject to any kind of tax by local governments.

is subject to real property taxes. The minority also argues that since Section 133 precedes Section 193 and 234 of the Local Government Code. sequentially Section 133 antecedes Section 193 and 234.public use or public service but devoted to the private gain of a taxable person. Therefore. error for two reasons. as a juridical person. there is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly admits its . the later provisions prevail over Section 133. much a persuasive argument that The minority’s assumption of an less has any one presented there is such a conflict. Following an accepted rule of construction. irreconcilable conflict in the statutory provisions is an egregious First. (Emphasis supplied) The minority assumes that there is an irreconcilable conflict between Section 133 on one hand. the general exemptions attaching to instrumentalities under Section 133(o) of the Local Government Code being qualified by Sections 193 and 234 of the same law. in case of conflict the subsequent provisions should prevail . No one has urged that there is such a conflict. the minority asserts: x x x Moreover. MIAA. and Sections 193 and 234 on the other. Thus.

There is no Since Section 133 prescribes the “common limitations” on the taxing powers of local governments. . Second. When a provision of law grants a power but withholds such power on certain matters. there is no conflict between the grant of power and the withholding of power. Section 133 is entitled “Common Limitations on the Taxing Powers of Local Government Units. its agencies and instrumentalities. clearer limitation on the taxing power than this. the If the taxing “common limitations” on the taxing power prevail over the grant or exercise of the taxing power .” Section 133 limits the grant to local governments of the power to tax. Section 133 logically prevails over Section 193 which grants local governments such taxing powers. Section 133 states that the taxing powers of local governments “ shall not extend to the levy” of any kind of tax on the national government. and not merely the exercise of a delegated power to tax. The grantee of the power simply cannot exercise the power on matters withheld from its power. ” By its own words.subordination to other provisions of the Code when Section 193 states “[u]nless otherwise provided in this Code. By their very meaning and purpose. Section 193 admits the superiority of other provisions of the Local Government Code that limit the exercise of the taxing power in Section 193.

— a gross Local governments have no power to tax the national government.power of local governments in Section 193 prevails over the limitations on such taxing power in Section 133. its agencies and instrumentalities absurdity. — Unless the specific words of the text. shall require a different meaning: xxxx The minority then concludes that reliance on the Administrative Code definition is “flawed. 2. or the context as a whole. then local governments can impose any kind of tax on the national government. its agencies or instrumentalities.” This exception — which is an exception to the exemption of the Republic from real estate tax imposed by local governments — refers to Section 234(a) of the Code. General Terms Defined. The minority also claims that the definition in the Administrative Code of the phrase “government-owned or controlled corporation” is not controlling.” . whether titled in the name of the national government. to real estate tax if the beneficial use of such property is given to a taxable entity. The minority points out that Section 2 of the Introductory Provisions of the Administrative Code admits that its definitions are not controlling when it provides: SEC. its agencies and instrumentalities. or a particular statute. except as otherwise provided in the Local Government Code pursuant to the saving clause in Section 133 stating “[u]nless otherwise provided in this Code. The exception to the exemption in Section 234(a) subjects real property owned by the Republic.

True. “government-owned Indeed. expressly defines the phrase “government-owned or controlled corporation. or controlled The Local The Government Code is silent on the definition of the phrase corporation.” the definition in Section 2 of the Administrative Code shall apply.The minority’s argument is a non sequitur.” The inescapable conclusion is that the Administrative Code definition of the phrase . Section 2 of the Administrative Code recognizes that a statute may require a different meaning than that defined in the Administrative Code. However. however. The minority does not point to any provision in the Local Government Code defining the phrase “government-owned or controlled corporation” differently from the definition in the Administrative Code. the definition in the Administrative Code prevails. there is none.” Administrative Code. the phrase “government-owned or controlled Thus. states that “unless the specific words x x x of a particular statute shall require a different meaning. this does not automatically mean that the Section 2 of the Administrative Code clearly definition in the Administrative Code does not apply to the Local Government Code. unless corporation” there is specific language in the Local Government Code defining differently from the definition in the Administrative Code.

In short. The minority also contends that the phrase “government-owned or controlled corporation” should apply only to corporations organized under the Corporation Code. the general incorporation law. the minority declares: I submit that the definition of “government-owned or controlled corporations” under the Administrative Code refer to those corporations owned by the government or its instrumentalities which are created not by legislative enactment. and not to corporations created by special charters. .” law Thus. bureaus. defining the the Administrative status and offices. The third whereas clause of the Administrative Code states that the Code “incorporates in a unified document the major structural. The minority sees no reason why government corporations with special charters should have a capital stock.“government-owned or controlled corporation” applies to the Local Government Code. the provisions of the Administrative Code prevail. Thus. instrumentalities. Unless a statute expressly provides for a different status and relationship for a specific government unit or entity. but formed and organized under the Corporation Code through registration with the Securities and Exchange Commission. functional and procedural principles and rules of governance. these are GOCCs without original charters. Code is the of and governing government relationship agencies departments.

courts should not distinguish. Second. Where the law does not distinguish. It is not in accord with the Constitution and existing legislations. divided into seven hundred and eighty million common shares with a par value of ten . Capital. special charter of the Land Bank of the Philippines provides: SECTION 81. Such GOCCs are not empowered to declare dividends or alienate their capital shares. The contention of the minority is seriously flawed. It will also result in gross absurdities. the Administrative Code definition of the phrase “government-owned or controlled corporation” does not distinguish between one incorporated under the Corporation Code or under a special charter.xxxx It might as well be worth pointing out that there is no point in requiring a capital structure for GOCCs whose full ownership is limited by its charter to the State or Republic. — The authorized capital stock of the Bank shall be nine billion pesos. Congress has created through special charters several government-owned corporations organized as stock corporations. Prime examples are the Land Bank of the The Philippines and the Development Bank of the Philippines. First.

Philippine International Trading Corporation. the special charter of the Development Bank of the Philippines provides: SECTION 7. (Emphasis supplied) Likewise. To rule that they are not government-owned or controlled corporations because they are . All these government-owned corporations organized under special charters as stock corporations are subject to real estate tax on real properties owned by them. Authorized Capital Stock – Par value.pesos each. — The capital stock of the Bank shall be Five Billion Pesos to be divided into Fifty Million common shares with par value of P100 per share. and the Philippine National Bank before it was reorganized as a stock corporation under the Corporation Code. Upon the effectivity of this Charter. These shares are available for subscription by the National Government. the National Government shall subscribe to Twenty-Five Million common shares of stock worth Two Billion Five Hundred Million which shall be deemed paid for by the Government with the net asset values of the Bank remaining after the transfer of assets and liabilities as provided in Section 30 hereof. and one hundred and twenty million preferred shares with a par value of ten pesos each. (Emphasis supplied) Other government-owned corporations organized as stock corporations under their special charters are the Philippine Crop Insurance Corporation. which shall be issued in accordance with the provisions of Sections seventy-seven and eighty-three of this Code. which shall be fully subscribed by the Government.

not registered with the Securities and Exchange Commission would remove them from the reach of Section 234 of the Local Government Code, thus exempting them from real estate tax.

Third, the government-owned or controlled corporations created through special charters are those that meet the two conditions prescribed in Section 16, Article XII of the Constitution. The first condition is that the government-owned or controlled corporation must be established for the common good. second viability. provides: condition is that the government-owned The or

controlled corporation must meet the test of economic Section 16, Article XII of the 1987 Constitution

SEC. 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability . (Emphasis and underscoring supplied)

The Constitution expressly authorizes the legislature to create “government-owned or controlled corporations” through special charters only if these entities are required to meet the twin conditions of common good and economic viability. other words, Congress has no power to In create

government-owned or controlled corporations with special charters unless they are made to comply with the two conditions of common good and economic viability . The test of economic viability applies only to government-owned or controlled corporations that perform economic or commercial activities and need to compete in the market place. Being essentially economic vehicles of the State for the common good — meaning for economic development purposes — these government-owned or controlled corporations with special charters are usually organized as stock corporations just like ordinary private corporations.

In contrast, government instrumentalities vested with corporate powers and performing governmental or public functions need not meet the test of economic viability. These instrumentalities perform essential public services for the common good, services that every modern State must provide its citizens. These instrumentalities need not be economically viable since the government may even subsidize their entire operations. These instrumentalities are not the “government-owned or controlled corporations” referred to in Section 16, Article XII of the 1987 Constitution.

Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities vested with corporate powers but performing essential governmental or public functions. Congress has plenary authority with to create government instrumentalities vested corporate

powers provided these instrumentalities perform essential government functions or public services. However, when the legislature creates through special charters corporations that

perform economic or commercial activities, such entities — known as “government-owned or controlled corporations” — must meet the test of economic viability because they compete in the market place.

This is the situation of the Land Bank of the Philippines and the Development Bank of the Philippines and similar government-owned or controlled corporations, which derive their income to meet operating expenses solely from commercial transactions in competition with the private sector. The intent of the Constitution is to prevent the creation of government-owned or controlled corporations that cannot survive on their own in the market place and thus merely drain the public coffers.

Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional Commission the purpose of this test, as follows:

MR. OPLE: Madam President, the reason for this concern is really that when the government creates a corporation, there is a sense in which this corporation becomes exempt from the test of economic performance. We know what happened in the past. If a government corporation loses, then it makes its claim upon the taxpayers’ money through new equity infusions from the government and what is always invoked is the common good. That is the reason why this year, out of a budget of P115 billion for the entire government, about P28 billion of this will go into equity infusions to support a few government financial institutions. And this is all taxpayers’ money which could have been relocated to agrarian reform, to social services like health and education, to augment the salaries of grossly underpaid public employees. And yet this is all going down the drain.

is the phrase “ in the interest of the common good and subject to the test of economic viability.Therefore. government-owned or controlled corporations with special charters. explains in his textbook The 1987 Constitution of the Republic of the Philippines: A Commentary: The second sentence was added by the 1986 Constitutional Commission.” this becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test so that they become viable. I reiterate. The noneconomic viability of rendering such essential public service does not excuse the State from withholding such essential services from the public. the test of economic viability does not apply to government entities vested with corporate powers and performing essential public services. The State is obligated to render essential public services regardless of the economic viability of providing such service.” together with the common good. organized essentially for economic or commercial objectives. the insertion of the standard of “ECONOMIC VIABILITY OR THE ECONOMIC TEST. . however. economic viability is more than financial viability but also includes capability to make profit and generate benefits not quantifiable in financial terms. Bernas. when we insert the phrase “ECONOMIC VIABILITY” together with the “common good. (Emphasis supplied) Clearly. Madam President. The significant addition. Moreover. must meet the test of economic viability. And so. However. for the committee’s consideration and I am glad that I am joined in this proposal by Commissioner Foz. Father Joaquin G. a leading member of the Constitutional Commission.” The addition includes the ideas that they must show capacity to function efficiently in business and that they should not go into activities which the private sector can do better.

MIAA performs an essential public service as the primary domestic and international airport of the Philippines. to prevent the entry of terrorists and the escape of criminals. and 7. 3. passengers. along with government-owned or controlled corporations organized under the Corporation Code. that fall under the definition of “government-owned or controlled corporations” in Section 2(10) of the Administrative Code. 4. The MIAA. like the Land Bank of the Philippines and the Development Bank of the Philippines. The Aviation Security Command of the Philippine National Police. to authorize aircraft to enter or leave Philippine airspace. as well as to land on. and to manage the airport operations. screening out those without visas or travel documents. These are the government-owned or controlled corporations. The quarantine office of the Department of Health. and airlines. 2. to provide the proper premises — such as runway and buildings — for the government personnel. . All these agencies of government perform government functions essential to the operation of an international airport. to enforce health measures against the spread of infectious diseases into the country. The MIAA need not meet the test of economic viability because the legislature did not create MIAA to compete in the market place. The operation of an international airport requires the presence of personnel from the following government agencies: 1. or take off from. as well as to secure the airport premises from terrorist attack or seizure. to document the arrival and departure of passengers.These are the government-owned or controlled corporations that are usually organized under their special charters as stock corporations. The Department of Agriculture. 5. 6. The Bureau of Customs. The Air Traffic Office of the Department of Transportation and Communications. or those with hold departure orders. to enforce measures against the spread of plant and animal diseases into the country. the airport. MIAA does not compete in the market place because there is no competing international airport operated by the private sector. The Bureau of Immigration and Deportation. to collect import duties or enforce the ban on prohibited importations.

The terminal fees that MIAA charges every passenger are regulatory or administrative fees and not income from commercial transactions. More importantly. vested with special functions or jurisdiction by law.MIAA performs an essential public service that every modern State must provide its citizens. usually through a charter. x x x (Emphasis supplied) The fact alone that MIAA is endowed with corporate powers does not make MIAA a government-owned or controlled corporation. not integrated within the department framework. administering special funds. endowed with some if not all corporate powers. Without a change in its capital structure. 2. MIAA is outside the scope of the phrase “government-owned or controlled corporations” under Section 16. – x x x x (10) Instrumentality refers to any agency of the National Government. Article XII of the 1987 Constitution. and enjoying operational autonomy. it need not comply with the test of economic viability. Thus. as long as MIAA renders essential public services. MIAA falls under under the definition 2(10) of of a the government Introductory instrumentality Section Provisions of the Administrative Code. . which provides: SEC. MIAA derives its revenues principally from the mandatory fees and charges MIAA imposes on passengers and airlines. MIAA remains a government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code. General Terms Defined.

the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion.The minority belittles the use in the Local Government Code of the phrase “government-owned or controlled corporation” as merely “clarificatory or illustrative. The 1987 Constitution prescribes explicit conditions for the creation of “government-owned or controlled corporations.” This is fatal. Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. As a government instrumentality. Properties of public dominion are owned by the Article 420 of the Civil Code provides: State or the Republic. MIAA is not subject to any kind of tax by local governments under Section 133(o) of the Local Government Code. Such exception applies only if the beneficial use of real property owned by the Republic is given to a taxable entity. dominion: The following things are property of public . To summarize. MIAA is a government instrumentality vested with corporate powers and performing essential public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. Art.” The Administrative Code defines what constitutes a “governmentowned or controlled corporation. 420. Finally. MIAA is not a government-owned or controlled corporation under Section 2(13) of the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16. The exception to the exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local Government Code.” To belittle this phrase as “clarificatory or illustrative” is grave error.

agencies and offices within the entire . and at the very least intended for public service. which governs the legal relation and status of government units. ports and bridges constructed by the State. Whether intended for public use or public service. 4.(1) Those intended for public use. Conclusion Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code. from real estate As properties of public dominion. roadsteads. (Emphasis supplied) The term “ports x x x constructed by the State” includes airports and seaports. shores. and are intended for some public service or for the development of the national wealth. canals. the Airport Lands and Buildings are properties of public dominion. banks. without being for public use. torrents. the Airport tax under Section 234(a) of the Local Lands and Buildings are owned by the Republic and thus exempt Government Code. The Airport Lands and Buildings of MIAA are intended for public use. and others of similar character. such as roads. rivers. (2) Those which belong to the State.

in which case the specific real property leased becomes subject to real estate tax. Under Article 420 of the Civil Code. the Airport Lands and Buildings of MIAA. As properties of public dominion owned by the Republic. fees or charges of any kind” by local governments. subject to execution or foreclosure sale. are properties of public dominion and thus owned by the State or the Republic of the Philippines. Under Section 133(o) of the Local Government Code. Article 420 specifically mentions “ports x x x constructed by the State. MIAA is a government instrumentality and not a government-owned or controlled corporation. being devoted to public use. This Court has also repeatedly ruled that properties of public dominion are not . as properties of public dominion and owned by the Republic.government machinery. MIAA as a government instrumentality is not a taxable person because it is not subject to “[t]axes.” which includes public airports and seaports. The only exception is when MIAA leases its real property to a “taxable person” as provided in Section 234(a) of the Local Government Code. only portions of the Airport Lands and Buildings leased to taxable persons like private parties are subject to real estate tax by the City of Parañaque. Thus. there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the Local Government Code.

We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001 and 27 September 2002 in CA-G. SO ORDERED. of the Airport Lands and Buildings of the Manila International Airport Authority. we GRANT the petition. and all its effects. 66878.WHEREFORE. SP No. issued by the City of Parañaque on the Airport Lands and Buildings of the Manila International Airport Authority. We also declare VOID the assailed auction sale. including the final notices of real estate tax delinquencies. ANTONIO T. CARPIO Associate Justice . No costs. We declare VOID all the real estate tax assessments. except for the portions that the Manila International Airport Authority has leased to private parties.R. We DECLARE the Airport Lands and Buildings of the Manila International Airport Authority EXEMPT from the real estate tax imposed by the City of Parañaque.

PUNO LEONARDO A. PANGANIBAN Chief Justice REYNATO S.WE CONCUR: ARTEMIO V. QUISUMBING Associate Justice Associate Justice CONSUELO YNARESSANTIAGO Associate Justice ANGELINA SANDOVALGUTIERREZ Associate Justice .

ALICIA AUSTRIAMARTINEZ Associate Justice RENATO C. SR. CHICO-NAZARIO CANCIO C. AZCUNA Associate Justice DANTE O. CALLEJO.MA. TINGA Associate Justice MINITA V. CORONA Associate Justice CONCHITA CARPIO MORALES Associate Justice ROMEO J. Associate Justice ADOLFO S. GARCIA .

I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court. Associate Justice CERTIFICATION Pursuant to Section 13.Associate Justice Associate Justice PRESBITERO J. VELASCO. PANGANIBAN Chief Justice . ARTEMIO V. JR. Article VIII of the Constitution.

. MIAA Charter. 392 (1996). Dated 26 July 1987. MIAA Charter. MIAA Charter. Rollo. Section 22. Under Rule 45 of the 1997 Rules of Civil Procedure.Dated 16 September 1983. Section 3. pp. Section 3. 330 Phil. 22-23.

339-340 (1991). CONSTITUTION. X. Section 11 of the MIAA Charter provides: Contribution to the General Fund for the Maintenance and Operation of other Airports. 1060. 274 Phil. Id. MIAA Charter.MIAA Charter as amended by Executive Order No. . Batas Pambansa Blg. excluding payments for utilities of tenants and concessionaires and terminal fee collections. MIAA Charter. MIAA Charter. Third Whereas Clause. Section 6. 298. 323. Adjustments in the amount paid by the Authority to the National Treasury under this Section shall be made at the end of each year based on the audited financial statements of the Authority. Art. See note 2. Section 5(j). – Within thirty (30) days after the close of each quarter. 68. 3 STATUTES and STATUTORY CONSTRUCTION 207. MIAA Charter. Section 5(o). Dallas Sands. 5. twenty percentum (20%) of the gross operating income. MIAA Charter. 274 Phil. Section 5(k). 1100 (1991) quoting C. Sec. shall be remitted to the General Fund in the National Treasury to be used for the maintenance and operation of other international and domestic airports in the country.

5 November 1985. 138. 5.16. 28(1). MIAA Charter. Republic Act No. 7653. 102 Phil. 606-607 (1915). 3. 11 August 1976. 433 SCRA 119. 29 June 2004. 3(p). MIAA Charter. Sec. 130 Phil.CONSTITUTION. Executive Order No. Art. Section 3. Section 4(j). Sec. 155 Phil. Chavez v. MIAA Charter. 4850. Republic Act No. See also Martinez v. 866. Republic Act No. 1061. 506 (2002). 30 Phil. CA. . Presidential Decree No. 7227. No. 14 June 1993. Puruganan. 857. VI.R. 498 (1968). Sec. 5. PNB v. 23 December 1975. Sec. 869-870 (1958). 6(b)(xvi). 18 July 1966. 591 (1974). 602. Public Estates Authority. 13 March 1992. Presidential Decree No. 144104. 977. Sec. 433 Phil. Sec. G. Sec. First Whereas Clause.

81.R. 7621. Airspan Corporation. 3 December 1986. 20 June 1964. as amended by Republic Act No. 25 November 1985. 26 June 1992. Republic Act No. 80. as amended by Presidential Decree No. 7907. 445 SCRA 471. Republic Act No. CONSTITUTIONAL COMMISSION 63 (22 August 1986). 3844. 23 February 1995. 4567. Executive Order No. 1 December 2004. Presidential Decree No. 7(m). 21 July 1973. III RECORDS. Sec. Republic Act No. 157581. Executive Order No.Republic Act No.. . Section 4(b). 25 January 1977 and Executive Order No. 4663. 7(m). 1067. 2003 ed. 8175. G. Republic Act No. Sec. No. 8 August 1963. 252. Sec. Republic Act No. 3 December 1986. 1181. 4156. 29 December 1995. 1071. 18 June 1966. Manila International Airport Authority v. 7(m). 19 June 1965.

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