PROPERTY CASE DIGESTS

CASE No. 1
Eric Mark E. Opaon
BENGUET CORPORATION, petitioner, vs. CENTRAL BOARD OF ASSESSMENT
APPEALS, BOARD OF ASSESSMENT APPEALS OF ZAMBALES, PROVINCIAL
ASSESSOR OF ZAMBALES, PROVINCE OF ZAMBALES, and MUNICIPALITY OF
SAN MARCELINO, respondents.
[January 29, 1993, G.R. No. 106041]
FACTS:
On 1985, Provincial Assessor of Zambales assessed the said properties in issue as taxable
improvements. The assessment was appealed to the Board of Assessment Appeals of the
Province of Zambales. However, the appeal was dismissed mainly on the ground of the
petitioner's failure to pay the realty taxes that fell due during the pendency of the appeal.
The petitioner elevated the matter to the Central Board of Assessment Appeals, one of the
herein respondents. In its decision dated March 22, 1990, the Board reversed the dismissal of the
appeal but, agreed that the tailings dam and the lands submerged thereunder shall be subject to
realty tax.
For purposes of taxation the dam is considered as real property as it comes within the
object mentioned in Article 415 of the New Civil Code, It is a construction adhered to the soil
which cannot be separated or detached without breaking the material or causing destruction on
the land upon which it is attached. The immovable nature of the dam as an improvement which
determines its character as real property, hence taxable under Section 38 of the Real Property Tax
Code.
ISSUES:
1. Whether or not the tailings dam is subject to realty tax?
2. Whether or not it be considered as immovable property?
HELD:
Yes, it is subject to realty tax and it is considered an immovable property.
The petitioner does not dispute that the tailings dam may be considered realty within the
meaning of Article 415. It insists, however, that the dam cannot be subjected to realty tax as a
separate and independent property because it does not constitute an "assessable improvement" on
the mine although a considerable sum may have been spent in constructing and maintaining it.
The Real Property Tax Code does not carry a definition of "real property" and simply
says that the realty tax is imposed on "real property, such as lands, buildings, machinery and

other improvements affixed or attached to real property." In the absence of such a definition,
applying Article 415 of the Civil Code, which states that the following are considered
immovables: Section No. 1 Lands, buildings and constructions of all kinds adhered to the soil;
Section no. 3 Everything attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deterioration of the object.
Even without the tailings dam, the petitioner's mining operation can still be carried out
because the primary function of the dam is merely to receive and retain the wastes and water
coming from the mine. There is no allegation that the water coming from the dam is the sole
source of water for the mining operation so as to make the dam an integral part of the mine. In
fact, as a result of the construction of the dam, the petitioner can now impound and recycle water
without having to spend for the building of a water reservoir.
And as the petitioner itself points out, even if the petitioner's mine is shut down or ceases
operation, the dam may still be used for irrigation of the surrounding areas.
From the definitions and the cases cited in relation to this case, it would appear that
whether a structure constitutes an improvement so as to partake of the status of realty would
depend upon the degree of permanence intended in its construction and use, The expression
"permanent" as applied to an improvement does not imply that the improvement must be used
perpetually but only until the purpose to which the principal realty is devoted has been
accomplished. It is sufficient that the improvement is intended to remain as long as the land to
which it is annexed is still used for the said purpose.
The Court is convinced that the subject dam falls within the definition of an
"improvement" because it is permanent in character and it enhances both the value and utility of
petitioner's mine. Moreover, the immovable nature of the dam defines its character as real
property under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the
Real Property Tax Code.
Hence, petition was dismissed by the Supreme Court.

CASE No. 2
Eric Mark E. Opaon
MARCELO R. SORIANO, petitioner, vs. SPOUSES RICARDO and ROSALINA GALIT,
respondents.
[September 23, 2003, G.R. No. 156295]
FACTS:
Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano, in the total
sum of P480,000.00. This loan was secured by a real estate mortgage over a parcel of land
covered by Original Certificate of Title No. 569. After he failed to pay his obligation, Soriano
filed a complaint for sum of money against him with the Regional Trial Court of Balanga City.

Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their answer. Hence,
upon motion of Marcelo Soriano, the trial court declared the spouses in default and proceeded to
receive evidence for petitioner Soriano ex parte.
On July 7, 1997, the Regional Trial Court of Balanga City, rendered judgment in favor of
petitioner Soriano, The judgment became final and executory. Accordingly, the trial court issued
a writ of execution in due course, by virtue of which, Deputy Sheriff Renato E. Robles levied on
the following real properties of the Galit spouses:
1. A parcel of land covered by Original Certificate of Title No. T-569 ;
2. STORE/HOUSE CONSTRUCTED on Lot No. 1103 made of strong materials G.I.
roofing situated at Centro I, Orani, Bataan; and
3. BODEGA constructed on Lot 1103, made of strong materials, G.I. roofing, situated
in Centro I, Orani, Bataan.
At the sale of the above-enumerated properties at public auction held on December 23,
1998, petitioner was the highest and only bidder with a bid price of P483,000.00. Accordingly,
on February 4, 1999, Deputy Sheriff Robles issued a Certificate of Sale of Execution of Real
Property.
On April 23, 1999, petitioner caused the registration of the Certificate of Sale on
Execution of Real Property with the Registry of Deeds.
On February 23, 2001, ten months from the time the Certificate of Sale on Execution was
registered with the Registry of Deeds, petitioner moved for the issuance of a writ of possession.
He averred that the one-year period of redemption had elapsed without the respondents having
redeemed the properties sold at public auction; thus, the sale of said properties had already
become final. He also argued that after the lapse of the redemption period, the titles to the
properties should be considered, for all legal intents and purposes, in his name and favor.
On June 4, 2001, the Regional Trial Court of Balanga City, granted the motion for
issuance of writ of possession. Subsequently, on July 18, 2001, a writ of possession was issued in
petitioners favor.
Respondents filed a petition for certiorari with the Court of Appeals, assailing the
inclusion of the parcel of land covered by Transfer Certificate of Title No. T-40785 among the
list of real properties in the writ of possession. Respondents argued that said property was not
among those sold on execution by Deputy Sheriff Renato E. Robles as reflected in the Certificate
of Sale on Execution of Real Property.
A writ of possession was issued in Civil Case No. 6643 for Sum of Money by the
Regional Trial Court of Balanga, Bataan. The writ of possession was, however, nullified by the
Court of Appeals because it included a parcel of land which was not among those explicitly
enumerated in the Certificate of Sale issued by the Deputy Sheriff, but on which stand the
immovables covered by the said Certificate. Petitioner contends that the sale of these
immovables necessarily encompasses the land on which they stand.

On May 13, 2002, the Court of Appeals rendered judgment granting the appeal.
Accordingly, the writ of possession issued by the Regional Trial Court of Balanga City was
declared null and void.
Hence, this instant petition for certiorari.
ISSUE:
Whether or not the Honorable Court gravely erred in declaring the certificate of sale on
execution of real property as null and void.
HELD:
No, there was no error in the judgment rendered by the Court of Appeals regarding the
nullification of the certificate of sale on execution of real property.
The certificate of sale is an accurate record of what properties were actually sold to
satisfy the debt.
Article 415 of the Civil Code provides that the following are immovable property:
Section 1 Land, buildings, roads and constructions of all kinds adhered to the soil; Section 3
Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking them material or deterioration of the object.
The foregoing provision of the Civil Code enumerates land and buildings separately. This
can only mean that a building is, by itself, considered immovable. Thus, it has been held that
while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the
improvements thereon, buildings, still a building by itself may be mortgaged apart from the land
on which it has been built. Such mortgage would be still a real estate mortgage for the building
would still be considered immovable property even if dealt with separately and apart from the
land.
In this case, considering that what was sold by virtue of the writ of execution issued by
the trial court was merely the storehouse and bodega constructed on the parcel of land covered
by Transfer Certificate of Title No. T-40785, which by themselves are real properties of
respondents spouses, the same should be regarded as separate and distinct from the conveyance
of the lot on which they stand.
Hence the petition was denied for lack of merit.

CASE No. 3
Eric Mark E. Opaon
Sergs Products v. PCI Leasing [GR No. 137705, 22 August 2000]
FACTS:
On 13 February 1998, PCI Leasing and Finance, Inc. filed a complaint for sum of money,
with an application for a writ of replevin (Civil Case Q-98-33500). On 6 March 1998, upon an
ex-parte application of PCI Leasing, judge issued a writ of replevin directing its sheriff to seize
and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of
the necessary expenses. On 24 March 1998, the sheriff proceeded to petitioner's factory, seized
one machinery with word that the return for the other machineries. On 25 March 1998,
petitioners filed a motion for special protective order, invoking the power of the court to control
the conduct of its officers and amend and control its processes, praying for a directive for the
sheriff to defer enforcement of the writ of replevin. On 6 April 1998, the sheriff again sought to
enforce the writ of seizure and take possession of the remaining properties. He was able to take
two more, but was prevented by the workers from taking the rest. On 7 April 1998, they went to
the CA via an original action for certiorari.
Citing the Agreement of the parties, the appellate court held that the subject machines
were personal property, and that they had only been leased, not owned, by petitioners; and ruled
that the "words of the contract are clear and leave no doubt upon the true intention of the
contracting parties." It thus affirmed the 18 February 1998 Order, and the 31 March 1998
Resolution of the lower court, and lifted the preliminary injunction issued on 15 June 1998. A
subsequent motion for reconsideration was denied on 26 February 1999. Hence, the petition for
review on certiorari.
ISSUES:
Whether or not the subject machines were personal property.
DECISION:
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals
with costs against petitioners.
Contracting parties may validly stipulate that a real property be considered as personal.
After agreeing to such stipulation, they are consequently estopped from claiming otherwise.
Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the
truth of any material fact found therein. Thus, said machines are proper subjects of the Writ of
Seizure (compare Tumalad v. Vicencio).

CASE No. 4
Eric Mark E. Opaon

FEL'S ENERGY, INC. vs. Province of Batangas, et.al

[G.R. No. 68557, Feb. 16, 2007]
FACTS:
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30
MW diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract,
denominated as an Energy Conversion Agreement (Agreement), was for a period of five years.
Article 10 reads:
RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes,
import duties, fees, charges and other levies imposed by the National Government of the
Republic of the Philippines or any agency or instrumentality thereof to which POLAR may be or
become subject to or in relation to the performance of their obligations under this agreement
(other than (i) taxes imposed or calculated on the basis of the net income of POLAR and
Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit
fees and other similar fees and charges) and (b) all real estate taxes and assessments, rates and
other charges in respect of the Power Barges.
Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The
NPC initially opposed the assignment of rights, citing paragraph 17.2 of Article 17 of the
Agreement.
On August 7, 1995, FELS received an assessment of real property taxes on the power
barges from Provincial Assessor Lauro C. Andaya of Batangas City. The assessed tax, which
likewise covered those due for 1994, amounted to P56,184,088.40 per annum. FELS referred the
matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It
then gave NPC the full power and authority to represent it in any conference regarding the real
property assessment of the Provincial Assessor.
In a letter dated September 7, 1995, NPC sought reconsideration of the Provincial
Assessors decision to assess real property taxes on the power barges. However, the motion was
denied on September 22, 1995, and the Provincial Assessor advised NPC to pay the assessment.
This prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for
the setting aside of the assessment and the declaration of the barges as non-taxable items; it also
prayed that should LBAA find the barges to be taxable, the Provincial Assessor be directed to
make the necessary corrections.
In its Answer to the petition, the Provincial Assessor averred that the barges were real
property for purposes of taxation under Section 199(c) of Republic Act (R.A.) No. 7160.

Before the case was decided by the LBAA, NPC filed a Manifestation, informing the
LBAA that the Department of Finance (DOF) had rendered an opinion dated May 20, 1996,
where it is clearly stated that power barges are not real property subject to real property
assessment.
On August 26, 1996, the LBAA rendered a Resolution denying the petition. The fallo
reads:
WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate
tax in the amount of P56,184,088.40, for the year 1994.
ISSUE:
Whether or not FELS can be considered a taxable entity.
HELD:
Time and again, the Supreme Court has stated that taxation is the rule and exemption is
the exception. The law does not look with favor on tax exemptions and the entity that would seek
to be thus privileged must justify it by words too plain to be mistaken and too categorical to be
misinterpreted. Thus, applying the rule of strict construction of laws granting tax exemptions,
and the rule that doubts should be resolved in favor of provincial corporations, we hold that
FELS is considered a taxable entity.
The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it
shall be responsible for the payment of all real estate taxes and assessments, does not justify the
exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant
is between FELS and NPC and does not bind a third person not privy thereto, in this case, the
Province of Batangas.
It must be pointed out that the protracted and circuitous litigation has seriously resulted in
the local governments deprivation of revenues. The power to tax is an incident of sovereignty
and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security
against its abuse is to be found only in the responsibility of the legislature which imposes the tax
on the constituency who are to pay for it. The right of local government units to collect taxes due
must always be upheld to avoid severe tax erosion. This consideration is consistent with the State
policy to guarantee the autonomy of local governments and the objective of the Local
Government Code that they enjoy genuine and meaningful local autonomy to empower them to
achieve their fullest development as self-reliant communities and make them effective partners in
the attainment of national goals.
In conclusion, we reiterate that the power to tax is the most potent instrument to raise the
needed revenues to finance and support myriad activities of the local government units for the
delivery of basic services essential to the promotion of the general welfare and the enhancement
of peace, progress, and prosperity of the people.

CASE No. 5
Eric Mark E. Opaon
SIMPLICIO BINALAY vs. GUILLERMO MANALO
[G.R. No. 92161, March 18, 1991]
FACTS:
The late Judge Taccad owned a parcel of land on the west, bordering on the
Cagayan River, on the east, the national road. The western portion would occasionally go under
the waters and reappear during the dry season. Manalo purchased the land. A relocation
survey was conducted during the rainy season, so the survey didn't cover the submerged land.
The sketch would show that the river branches through the west and east, leaving a strip of land.
The land was then surveyed into two 2 lots. One of these is being claimed by Manalo through
accretion.
ISSUE:
Whether or not Manalo has a right over the land by virtue of accretion.
HELD:
The subject land couldnt have been sold to Manalo, being part of the public domain.
Article 70 of the Law of Waters of 3 August 1866 is the law applicable to the case at bar:
Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters
during the highest floods.
Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire
private ownership of the bed of the eastern branch of the river even if it was included in the
deeds of absolute sale executed by Gregorio Taguba and Faustina Taccad in his favor. These
vendors could not have validly sold land that constituted property of public dominion.
Article 420 of the Civil Code states:
The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.

CASE No. 6
Eric Mark E. Opaon
REPUBLIC OF THE PHILIPPINES vs. COURT OF APPEALS
G.R. No. 100709 November 14, 1997
FACTS:
Respondent Morato filed a Free Patent Application on a parcel of land which was
approved. Both the free patent and the title specifically mandate that the land shall not be
alienated nor encumbered within five years from the date of the issuance of the patent.
Thereafter, it was established that the subject land was not suitable to vegetation. Moreover, a
portion of the land was mortgaged by respondent Morato
ISSUES:
I. Respondent court erred in holding that the patent granted and certificate of title issued
to Respondent Morato cannot be cancelled and annulled since the certificate of title becomes
indefeasible after one year from the issuance of the title.
II. Respondent Court erred in holding that the questioned land is part of a disposable
public land and not a foreshore land.
HELD:
The Commonwealth Act No. 141, otherwise known as the Public Land Act clearly
proscribe the encumbrance of a parcel of land acquired under a free patent or homestead within
five years from the grant of such patent. Furthermore, such encumbrance results in the
cancellation of the grant and the reversion of the land to the public domain.
Encumbrance has been defined as "[a]nything that impairs the use or transfer of property;
anything which constitutes a burden on the title; a burden or charge upon property; a claim or
lien upon property." It may be a "legal claim on an estate for the discharge of which the estate is
liable; and embarrassment of the estate or property so that it cannot be disposed of without being
subject to it; an estate, interest, or right in lands, diminishing their value to the general owner; a
liability resting upon an estate."
It is indisputable, however, that Respondent Morato cannot fully use or enjoy the land
during the duration of the lease contract. This restriction on the enjoyment of her property
sufficiently meets the definition of an encumbrance under Section 118 of the Public Land Act,
because such contract "impairs the use of the property" by the grantee. In a contract of lease
which is consensual, bilateral, onerous and commutative, the owner temporarily grants the use of
his or her property to another who undertakes to pay rent therefor. During the term of the lease,
the grantee of the patent cannot enjoy the beneficial use of the land leased. As already observed,
the Public Land Act does not permit a grantee of a free patent from encumbering any portion of
such land. Such encumbrance is a ground for the nullification of the award.
It is well-known that the homestead laws were designed to distribute disposable

agricultural lots of the State to land-destitute citizens for their home and cultivation. Pursuant to
such benevolent intention the State prohibits the sale or incumbrance of the homestead (Section
116) within five years after the grant of the patent. After that five-year period the law impliedly
permits alienation of the homestead; but in line with the primordial purpose to favor the
homesteader and his family the statute provides that such alienation or conveyance (Section 117)
shall be subject to the right of repurchase by the homesteader, his widow or heirs within five
years. This section 117 is undoubtedly a complement of section 116. It aims to preserve and keep
in the family of the homesteader that portion of public land which the State had gratuitously
given to him. It would, therefore, be in keeping with this fundamental idea to hold, as we hold,
that the right to repurchase exists not only when the original homesteader makes the conveyance,
but also when it is made by his widow or heirs. This construction is clearly deducible from the
terms of the statute.
Conversely, when a "homesteader has complied with all the terms and conditions which
entitled him to a patent for [a] particular tract of public land, he acquires a vested interest therein
and has to be regarded an equitable owner thereof." 24 However, for Respondent Morato's title
of ownership over the patented land to be perfected, she should have complied with the
requirements of the law, one of which was to keep the property for herself and her family within
the prescribed period of five (5) years. Prior to the fulfillment of all requirements of the law,
Respondent Morato's title over the property was incomplete. Accordingly, if the requirements are
not complied with, the State as the grantor could petition for the annulment of the patent and the
cancellation of the title.
Respondent Morato cannot use the doctrine of the indefeasibility of her Torrens title to
bar the state from questioning its transfer or encumbrance. The certificate of title issued to her
clearly stipulated that its award was "subject to the conditions provided for in Sections 118, 119,
121, 122 and 124 of Commonwealth Act (CA) No. 141." Because she violated Section 118, the
reversion of the property to the public domain necessarily follows, pursuant to Section 124.
When the sea moved towards the estate and the tide invaded it, the invaded property
became foreshore land and passed to the realm of the public domain. In fact, the Court in
Government vs. Cabangis annulled the registration of land subject of cadastral proceedings when
the parcel subsequently became foreshore land. In another case, the Court voided the registration
decree of a trial court and held that said court had no jurisdiction to award foreshore land to any
private person or entity. The subject land in this case, being foreshore land, should therefore be
returned to the public domain.

CASE No. 7
Eric Mark E. Opaon
FRANCISCO I. CHAVEZ vs. PUBLIC ESTATES AUTHORITY
FACTS:
The government signed a contract with the Construction and Development Corporation
of the Philippines ("CDCP") to reclaim certain foreshore and offshore areas of Manila Bay. The
contract also included the construction of Phases I and II of the Manila-Cavite Coastal Road.
Then President Marcos created PEA which was tasked to reclaim land, including foreshore and
submerged areas, and to develop, improve, acquire, lease and sell any and all kinds of lands. On
the same date, then President Marcos transferred to PEA the lands reclaimed in the foreshore and
offshore of the Manila Bay under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP). Then President Marcos issued a memorandum directing PEA to amend its contract
with CDCP, so that all future works in MCCRRP shall be funded and owned by PEA. Then
President Aquino issued a special patent granting and transferring to PEA the parcels of land so
reclaimed under the MCCRRP. Subsequently, the Register of Deeds issued Transfer Certificates
of Title in the name of PEA, covering the three reclaimed islands known as the "Freedom
Islands."
Later on, PEA entered into a Joint Venture Agreement ("JVA") with AMARI, a private
corporation, to develop the Freedom Islands, without public bidding. Then Senate President
Maceda delivered a privilege speech in the Senate and denounced the JVA as the "grandmother
of all scams." As a result, a joint investigation was conducted. Among the conclusions of their
report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of
the public domain which the government has not classified as alienable lands and therefore PEA
cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus
void, and (3) the JVA itself is illegal. Then President Ramos created a Legal Task Force to
conduct a study on the legality of the JVA which upheld the legality of the JVA, contrary to the
conclusions reached by the Senate Committees.
Petitioner Frank I. Chavez ("Petitioner") as a taxpayer, filed the instant Petition for
Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary
Restraining Order contending that the government stands to lose billions of pesos in the sale by
PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of
any renegotiation of the JVA asserting the right of the people to information on matters of public
concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation
of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private
corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in
properties of the State that are of public dominion.
However, PEA and AMARI later on signed the Amended JVA which the then President
Estrada approved. Petitioner now prays that on constitutional and statutory grounds, the
renegotiated contract be declared null and void.

ISSUE:
WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE
AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED
AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION.
HELD:
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the
Regalian doctrine which holds that the State owns all lands and waters of the public domain. The
Regalian doctrine is the foundation of the time-honored principle of land ownership that "all
lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain. Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.
On November 7, 1936, the National Assembly passed Commonwealth Act No. 141,
known as the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals, which is the general law governing the
classification and disposition of lands of the public domain. Section 6 of CA No. 141 empowers
the President to classify lands of the public domain into "alienable or disposable" lands of the
public domain, which prior to such classification are inalienable and outside the commerce of
man. Section 7 authorizes the President to "declare what lands are open to disposition or
concession." Section 8 states that the government can declare open for disposition or concession
only lands that are "officially delimited and classified." Thus, before the government could
alienate or dispose of lands of the public domain, the President must first officially classify these
lands as alienable or disposable, and then declare them open to disposition or concession. There
must be no law reserving these lands for public or quasi-public uses.
Since then and until now, the only way the government can sell to private parties
government reclaimed and marshy disposable lands of the public domain is for the legislature to
pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify
government reclaimed and marshy lands into other non-agricultural lands under Section 59 (d).
Lands classified under Section 59 (d) are the only alienable or disposable lands for nonagricultural purposes that the government could sell to private parties. Moreover, Section 60 of
CA No. 141 expressly requires congressional authority before lands under Section 59 that the
government previously transferred to government units or entities could be sold to private
parties. In case of sale or lease of disposable lands of the public domain falling under Section 59
of CA No. 141, Sections 63 and 67 require a public bidding. Thus, CA No. 141 mandates the
Government to put to public auction all leases or sales of alienable or disposable lands of the
public domain.
Private parties could still reclaim portions of the sea with government permission.
However, the reclaimed land could become private land only if classified as alienable
agricultural land of the public domain open to disposition under CA No. 141. Clearly, the mere
physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed
lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Likewise, the mere transfer by the National Government of lands of the public domain to PEA
does not make the lands alienable or disposable lands of the public domain, much less

patrimonial lands of PEA. Absent two official acts a classification that these lands are alienable
or disposable and open to disposition and a declaration that these lands are not needed for public
service, lands reclaimed by PEA remain inalienable lands of the public domain. Only such an
official classification and formal declaration can convert reclaimed lands into alienable or
disposable lands of the public domain, open to disposition.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409 of the Civil Code, contracts whose "object or purpose is
contrary to law," or whose "object is outside the commerce of men," are "inexistent and void
from the beginning." The Court must perform its duty to defend and uphold the Constitution, and
therefore declares the Amended JVA null and void ab initio.

CASE No. 8
Eric Mark E. Opaon
PHILIPPINE PORTS AUTHORITY vs. CITY OF ILOILO
FACTS:
This is an action for the recovery of sum of money filed by respondent City of Iloilo, a
public corporation organized under the laws of the Philippines, against petitioner Philippine
Ports Authority (PPA), a government corporation created by P.D. 857.
Respondent seeks to collect from petitioner real property taxes as well as business taxes
alleging that petitioner is engaged in the business of arrastre and stevedoring services and the
leasing of real estate for which it should be obligated to pay business taxes. It further alleges that
petitioner is the declared and registered owner of a warehouse which is used in the operation of
its business and is also thereby subject to real property taxes.
ISSUE:
Whether or not Philippine Ports Authority is exempt from the payment of real property
tax and business tax.
HELD:
Originally, petitioner was exempt from real property taxes on the basis of the Real
Property Tax Code then governing. Petitioners charter, P.D. 857, further specifically exempted it
from real property taxes. However, P.D. 1931 effectively withdrew all tax exemption privileges
granted to government-owned or controlled corporations. Subsequently, Executive Order (E.O.)
No. 93 was enacted restoring tax exemptions provided under certain laws, one of which is the
Real Property Tax Code.
The abovecited laws, therefore, indicate that petitioners tax exemption from real
property taxes was withdrawn by P.D. 1931 effective June 11, 1984, but was subsequently
restored by virtue of E.O. 93, starting December 17, 1986. Hence, petitioner is liable for real

property taxes on its warehouse, computed from the last quarter of 1984 up to December 1986.
Petitioner, however, seeks to be excused from liability for taxes by invoking the
pronouncement in Basco v. PAGCOR (Basco). Petitioner points out that its exercise of regulatory
functions places it within the category of an "agency or instrumentality of the government,"
which, according to Basco, is beyond the reach of local taxation. Reliance in the abovecited case
is unavailing considering that P.D. 1931 was never raised therein, and given that the issue in said
case focused on the constitutionality of P.D. 1869, the charter of PAGCOR. The said decision did
not absolutely prohibit local governments from taxing government instrumentalities.
We affirm the finding of the lower court on petitioners liability for business taxes for the
lease of its building to private corporations. During the trial, petitioner did not present any
evidence to refute respondents proof of petitioners income from the lease of its property.
Neither did it present any proof of exemption from business taxes. Instead, it emphasized its
charter provisions defining its functions as governmental in nature. It averred that it allowed port
users to occupy certain premises within the port area only to ensure order and convenience in
discharging its governmental functions. It hence claimed that it is not engaged in business, as the
act of leasing out its property was not motivated by profit, but by its duty to manage and control
port operations. The argument is unconvincing. As admitted by petitioner, it leases out its
premises to private persons for "convenience" and not necessarily as part of its governmental
function of administering port operations. In fact, its charter classifies such act of leasing out port
facilities as one of petitioners corporate powers. Any income or profit generated by an entity,
even of a corporation organized without any intention of realizing profit in the conduct of its
activities, is subject to tax. What matters is the established fact that it leased out its building to
ten private entities from which it regularly earned substantial income. Thus, in the absence of any
proof of exemption therefrom, petitioner is liable for the assessed business taxes.
In closing, we reiterate that in taxing government-owned or controlled corporations, the
State ultimately suffers no loss. Finally, we find it appropriate to restate that the primary reason
for the withdrawal of tax exemption privileges granted to government-owned and controlled
corporations and all other units of government was that such privilege resulted in serious tax
base erosion and distortions in the tax treatment of similarly situated enterprises, hence resulting
in the need for these entities to share in the requirements of development, fiscal or otherwise, by
paying the taxes and other charges due from them.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

CASE No. 9

Eric Mark E. Opaon

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI
COASTAL BAY DEVELOPMENT CORPORATION, respondents.
[G.R. No. 133250, November 11, 2003]
FACTS:
PEA, under the JVA, obligated itself to convey title and possession over the Property,
consisting of approximately One Million Five Hundred Seventy Eight Thousand Four Hundred
Forty One (1,578,441) Square Meters for a total consideration of One Billion Eight Hundred
Ninety Four Million One Hundred Twenty Nine Thousand Two Hundred (P1,894,129,200.00)
Pesos, or a price of One Thousand Two Hundred (P1,200.00) Pesos per square meter.According
to the zonal valuation of the Bureau of Internal Revenue, the value of the Property is Seven
Thousand Eight Hundred Pesos (P7,800.00) per square meter. The Municipal Assessor of
Paraaque, Metro Manila, where the Property is located, pegs the market value of the Property at
Six Thousand Pesos (P6,000.00) per square meter. Based on these alone, the price at which PEA
agreed to convey the property is a pittance. And PEA cannot claim ignorance of these valuations,
at least not those of the Municipal Assessors office, since it has been trying to convince the
Office of the Municipal Assessor of Paraaque to reduce the valuation of various reclaimed
properties thereat in order for PEA to save on accrued real property taxes. The credibility of the
foregoing appraisals, however, are greatly impaired by a subsequent appraisal report of AACI
stating that the property is worth P4,500.00 per square meter as of 26 March 1996. Such
discrepancies in the appraised value as appearing in two different reports by the same appraisal
company submitted within a span of one year render all such appraisal reports unworthy of even
the slightest consideration. Furthermore, the appraisal report submitted by the Commission on
Audit estimates the value of the Property to be approximately P33,673,000,000.00, or
P21,333.07 per square meter.
There were also other offers made for the property from other parties which indicate that
the Property has been undervalued by PEA. For instance, on 06 March 1995, Mr. Young D. See,
President of Saeil Heavy Industries Co., Ltd., (South Korea), offered to buy the property at
P1,400.00 and expressed its willingness to issue a stand-by letter of credit worth $10 million.
PEA did not consider this offer and instead finalized the JVA with AMARI. Other offers were
made on various dates by Aspac Management and Development Group Inc. (for P1,600 per
square meter), Universal Dragon Corporation (for P1,600 per square meter), Cleene Far East
Manila Incorporated and Hyosan Prime Construction Co. Ltd. which had prepared an Irrevocable
Clean Letter of Credit for P100,000,000. Whether based on the official appraisal of the BIR, the
Municipal Assessor or the Commission on Audit, the P1,200 per square meter purchase price, or
a total of P1.894 billion for the 157.84 hectares of government lands, is grossly and
unconscionably undervalued. The authoritative appraisal, of course, is that of the Commission on
Audit which valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673
billion. Thus, based on the official appraisal of the Commission on Audit, the independent
constitutional body that safeguards government assets, the actual loss to the Filipino people is a
shocking P31.779 billion.

Despite these revolting anomalies unearthed by the Senate Committees, the fatal flaw of
this contract is that it glaringly violates provisions of the Constitution expressly prohibiting the
alienation of lands of the public domain.
ISSUE:
Whether or not PEA is allowed to validly convey to a private corporation the subject
land.
HELD:
The Supreme Court ruled in the negative. Section 2, Article XII of the 1987 Constitution
provides that all lands of the public domain, waters, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. Submerged lands, like the waters (sea or bay) above
them, are part of the States inalienable natural resources. Submerged lands are property of
public dominion, absolutely inalienable and outside the commerce of man. This is also true with
respect to foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the
Constitution.
The bulk of the lands subject of the Amended JVA are still submerged lands even to this
very day, and therefore inalienable and outside the commerce of man. Of the 750 hectares
subject of the Amended JVA, 592.15 hectares or 78% of the total area are still submerged,
permanently under the waters of Manila Bay. Under the Amended JVA, the PEA conveyed to
Amari the submerged lands even before their actual reclamation, although the documentation of
the deed of transfer and issuance of the certificates of title would be made only after actual
reclamation.
PEA is not an end user agency with respect to the reclaimed lands under the Amended
JVA. PEA is the central implementing agency tasked to undertake reclamation projects
nationwide. PEA took the place of the Department of Environment and Natural Resources as the
government agency charged with leasing or selling all reclaimed lands of the public domain. In
the hands of PEA, which took over the leasing and selling functions of DENR, reclaimed
foreshore (or submerged lands) lands are public lands in the same manner that these same lands
would have been public lands in the hands of DENR. To allow vast areas of reclaimed lands of
the public domain to be transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of alienable land of the public
domain. PEA will simply turn around, as PEA has now done under the Amended JVA, and
transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single
private corporation in only one transaction. This scheme will effectively nullify the constitutional
ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably
the ownership of alienable lands of the public domain among Filipinos, now numbering over 80
million strong.
The only patent and certificates of title issued are those in the name of PEA, a wholly
government owned corporation performing public as well as proprietary functions. No patent or
certificate of title has been issued to any private party. No one is asking the Director of Lands to

cancel PEAs patent or certificates of title. In fact, the thrust of the instant petition is that PEAs
certificates of title should remain with PEA, and the land covered by these certificates, being
alienable lands of the public domain, should not be sold to a private corporation.

CASE No. 10
Eric Mark E. Opaon
SALVADOR H. LAUREL, petitioner, vs. RAMON GARCIA, as head of the Asset
Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign Affairs, and
CATALINO MACARAIG, as Executive Secretary, respondents.
[G.R. No. 92047 July 25, 1990]
DIONISIO S. OJEDA, petitioner, vs. EXECUTIVE SECRETARY MACARAIG, JR.,
ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T. GARCIA, AMBASSADOR
RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING
COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE
GOVERNMENT PROPERTIES IN JAPAN, respondents.
FACTS:
The subject property in this case is one of the four properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on May 9,
1956. The properties and the capital goods and services procured from the Japanese government
for national development projects are part of the indemnification to the Filipino people for their
losses in life and property and their suffering during World War II. The Reparations Agreement
provides that reparations valued at $550 million would be payable in twenty years in accordance
with annual schedules of procurements to be fixed by the Philippine and Japanese governments
(Article 2, Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the
national policy on procurement and utilization of reparations and development loans. The
procurements are divided into those for use by the government sector and those for private
parties in projects as the then National Economic Council shall determine. Those intended for the
private sector shall be made available by sale to Filipino citizens or to one hundred percent
Filipino-owned entities in national development projects.
Amidst opposition by various sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225
million. The first bidding was a failure since only one bidder qualified. The second one, after
postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was
restrained by the Court. Later, the rules on bidding were changed such that the $225 million floor
price became merely a suggested floor price.
The petitioner in G.R. No. 92013 objects to the alienation of the Roppongi property to

anyone while the petitioner in G.R. No. 92047 adds as a principal objection the alleged
unjustified bias of the Philippine government in favor of selling the property to non-Filipino
citizens and entities. These petitions have been consolidated and are resolved at the same time
for the objective is the same - to stop the sale of the Roppongi property.
ISSUE:
Whether or not the Roppongi property and others of its kind can be alienated by the
Philippine Government.
HELD:
The Supreme Court ruled in the negative. ART. 420 of the New Civil Code provides that
the following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks shores roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.
ART. 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the
Civil Code as property belonging to the State and intended for some public service. The fact that
the Roppongi site has not been used for a long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such conversion happens only if the
property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA
481 [1975]). A property continues to be part of the public domain, not available for private
appropriation or ownership until there is a formal declaration on the part of the government to
withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]). A mere transfer
of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi
property's original purpose. Even the failure by the government to repair the building in
Roppongi is not abandonment since as earlier stated, there simply was a shortage of government
funds. The recent Administrative Orders authorizing a study of the status and conditions of
government properties in Japan were merely directives for investigation but did not in any way
signify a clear intention to dispose of the properties.
Having declared a need for a law or formal declaration to withdraw the Roppongi
property from public domain to make it alienable and a need for legislative authority to allow the
sale of the property, we see no compelling reason to tackle the constitutional issues. The
Roppongi property is not just like any piece of property. It was given to the Filipino people in
reparation for the lives and blood of Filipinos who died and suffered during the Japanese military
occupation, for the suffering of widows and orphans who lost their loved ones and kindred, for
the homes and other properties lost by countless Filipinos during the war. The Tokyo properties
are a monument to the bravery and sacrifice of the Filipino people in the face of an invader; like
the monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic or

financial benefits from them. But who would think of selling these monuments? Filipino honor
and national dignity dictate that we keep our properties in Japan as memorials to the countless
Filipinos who died and suffered. Even if we should become paupers we should not think of
selling them. For it would be as if we sold the lives and blood and tears of our countrymen.
Roppongi is no ordinary property. It is one ceded by the Japanese government in
atonement for its past belligerence for the valiant sacrifice of life and limb and for deaths,
physical dislocation and economic devastation the whole Filipino people endured in World War
II. It is for what it stands for, and for what it could never bring back to life, that its significance
today remains undimmed, inspire of the lapse of 45 years since the war ended, inspire of the
passage of 32 years since the property passed on to the Philippine government. It is indeed true
that the Roppongi property is valuable not so much because of the inflated prices fetched by real
property in Tokyo but more so because of its symbolic value to all Filipinos veterans and
civilians alike. Whether or not the Roppongi and related properties will eventually be sold is a
policy determination where both the President and Congress must concur. Considering the
properties' importance and value, the laws on conversion and disposition of property of public
dominion must be faithfully followed.