ART 215 01 Luna vs Encarnacion 02 Leung Yee vs Strong Machinery Co.

, 03 Sibal vs Valdez 04 Mindanao Bus vs City Assessor 05 Berkenkotter vs Cu Unjieng e Hiyos 06 Ago vs CA 07 Presbeterio vs Fernandez 08 Board of Assessment vs Meralco 09 Meralco vs Board of Assessment 10 Sawmill Co. vs Castillo 11 Marcelo R. Soriano vs Sps Galit 12 Meralco Securities Industrialvs CBA 13 Fels Inc vs Province of Batangas 14 Benguet Corp vs CBAA ART 416 15 US vs Carlos 16 Luis Marcos Laurel vs Hon. Zeus Abrogar ART 417 17 Strockchecker vs Ramirez ART 420 18 Usero vs CA 19 MIAA vs CA ART 421 20 Dela Cruz vs CA ART 422 21 Cebu Oxygen vs Bercilles ART 423, 424 22 In the Matter of Reversion/Recall of Reconstituted OCT No. 0-116 ART 425 23 Register of Deeds vs CBC 24 Director of Lands vs IAC 25 Halili vs CA 26 Krivenko vs Register of Deeds ART 428 26 Ayala vs Burton 27 Fajardo vs Freedom 26 Tayag vs Lacson 27 Ross vs Sps Ong

2 4 8 15 18 21 25 29 33 36 39 45 50 58

ART 429 28 German Management vs CA 29 Grand Union vs Espino 30 UCPB vs Basco ART 432 31 Tan vs Standard Oil ART 435 32 ATO & MCIAA vs Gapuco 33 RP vs Lim ART 445 34 Philippine Sugar vs Poizat 35 Caltex vs Felias ART 447 36 Pacific Farm vs Esguerra ART 448 37 PNB vs De Jesus 38 Geminiano vs CA 39 Balucanag vs Francisco 49 NHA vs Grace Baptist Church 50 Sps Nuguid vs CA 51 Carrascoso vs CA 52 sps Rasdas vs Estenor 53 Rosales vs Castellfort 54 Bacaling vs Laguna 55 Programme Inc vs Province of Bataan 56 Sulo sa Nayon vs nayong Pilipini 57 Floreza vs Evangelista ART 449 58 Del Rosario vs Sps Manuel 59 Sps Rasdas vs Estenor 60 Lumungo vs Usman ART 453 61 Municipality of Oas vs Roa ART 457 62 Heirs of Emiliano vs IAC ART 458 63 Government of Philippines vs Colegio de San Jose ART 476 64 Anastacia de Alla vs CA 65 Teofisto Ono vs Vicente Lim ART 477 66 Tan vs Valdhueza

225 228 234 245 248 254 263 274 277 279 282 286 290 293 298 316 321 331 335 339 345 349 351 356 360 362 370 374 378 382

ART 486 67 Borbajo vs Hidden View Homeowners 68 Cruz vs Catapang ART 487 69 Resuena vs CA 70 Baloloy vs Hular 71 Adlawan vs Adlawan 72 Iglesia ni Kristo vs Ponferrada ART 488 73 Jalandoni vs Guanzon ART 493 74 Sanchez vs CA 75 Vagilidad vs Vagilidad 76 Santos vs Lumbao 77 Go Ong vs CA 78 Mercado vs Liwanag 79 Acabal vs Acabal 80 Cuizon vs Remoto 81 Pamplona vs Moreto 82 Caro vs CA ART 494 83 Salvador vs CA 84 Tuason vs Tuason 85 Flores vs Cichon ART 499 86 Lopez vs Lustre ART 520 89 Coffee Oartners vs SFCR ART 523 90 Go vs Bacaron 91 Medina vs Valdellon ART 525 92 RP vs CA ART 526 93 Liu vs Loy 94 Calicdan vs Cendana ARTS 565, 601, 606 95 NHA vs CA ART 566 96 Bachrach vs Seifert ART 596 97 BAA Zamboanga vs Samar Mining ART 603 98 City of Manila vs Monte de Piedad ART 607 99 Albar vs Carangdang

387 392 396 401 411 416 425 427 431 439 448 452 455 468 474 480

63 69 76 78 82 131 134 136

485 495 499 504 506 511 517 521 526 536 541 547 549 554 558

141 144 148 152 194 204 207 219

ART 613 100 Dela Cruz vs Ramiscal 101 Private Dev’t Corp vs CA ART 617 102 Velasco vs Cusi 103 Valisno vs Adriano ART 619 104 La Vista Assoc vs CA ART 624 105 Amor vs Florentino ART 631 106 Ongsiaco vs Ongsiaco ART 649 107 Quimen vs CA 108 Jariol vs CA ART 660 109 Lao vs Alburo ART 668 110 Cortez vs Yu-Tibo 111 Fabie vs Lichauco ART 688 112 Trias vs Araneta ART 699 113 Timoner vs People ART 712 114 Acap vs CA ART 725 115 Shopper’s Paradise vs Ruque ART 733 116 CJ Yulo vs CB of San Pablo 117 Sec of Educ vs Dulay 118 Manalo vs De Mesa ART 744 119 Cagaon vs Cagaon ART 749 120 RP vs Silim ART 764 12i Dolar vs Brgy Lublub

563 569 576 579 582 590 604 605 610 614 617 626 632 634 637 642 646 652 657 662 664 670

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LUNA vs ENCARNACION No. L-4637. June 30, 1952 JOSE A. LUNA, petitioner, vs. DEMETRIO B. ENCARNACION, Judge of First Instance of Rizal, TRINIDAD REYES and THE PROVINCIAL SHERIFF OF RIZAL, respondents.
1. REAL ESTATE MORTGAGE; EXTRAJUDICIAL FORECLOSURE; HOUSE REGARDED AS NOT REAL PROPERTY.—Where the undertaking executed by and between mortgagor and mortgagee is a chattel mortgage, and not a real estate mortgage, it is a mistake for the mortgagee to request the sheriff, under Act No. 3135 as amended by Act No. 4118, to sell extrajudicially the house subject of the mortgage in order to secure full satisfaction of the indebtedness owned by the mortgagor, specially when the house is of mixed materials which by its very nature is considered as personal property. Act No. 3135, as amended, covers only real estate mortgages and is intended merely to regulate the extrajudicial sale of the property mortgaged if and when the mortgagee is given a special power or express authority to do so in the deed itself or in a document annexed thereto. 2. CHATTEL MORTGAGE; EXTRAJUDICIAL FORECLOSURE; REQUIREMENTS OF NOTICE AND REGISTRATION.—Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of this Act allows the mortgagee to have the property mortgaged sold at public auction through a public officer in almost the same manner as that allowed by Act No. 3135, as amended by Act No. 4118, provided that the requirements of the law relative to notice and registration are complied with. 3. Id.; Id.; PROCEDURE TO ENFORCE MORTGAGEE'S REMEDY.—In the supposition that the sale of the property by the sheriff has been made in accordance with law, and the question he is confronted with is how to deliver the possession of the property to the purchaser in case of refusal to surrender its possession on the part of the debtor or mortgagor, the remedy of the purchaser, according to the authorities, is to bring an ordinary action for recovery of possession (Continental Gin Co. vs. Pannell, 160 P., 598; 61 Okl., 102; 14 C. J. S., pp. 1027, 1028). The purchaser cannot take possession of the property by force either directly or through the sheriff. The creditor cannot merely file a petition for a writ of possession. Her remedy is to file an ordinary action for recovery of possession in order that the debtor may be given an opportunity to be heard not only regarding possession but also regarding the obligation covered by the mortgage.

On September 25, 1948, a deed designated as chattel mortgage was executed by Jose A. Luna in favor of Trinidad Reyes whereby the former conveyed by way of first mortgage to the latter a certain house of mixed materials situated in barrio San Nicolas, municipality of Pasig, Province of Rizal, to secure the payment of a promissory note in the amount of P1,500, with interest at 12 per cent per annum. The document was registered in the office of the register of deeds for the Province of Rizal. The mortgagor having failed to pay the promissory note when it fell due, sheriff of said province to sell the house at public auction so that with its proceeds the amount indebted may be paid notifying the mortgagor in writing of the time and place of the sale as required by law. The sheriff acceded to the request and sold the property to the mortgagee for the amount covering the whole indebtedness with interest and costs. The certificate of the sale was issued by the sheriff on May 28, 1949. After the period for the redemption of the property had expired without the mortgagor having exercised his right to repurchase, the mortgagee demanded from the mortgagor the surrender of the possession of the property, but the latter refused and so on October 13, 1950, she filed a petition in the Court of First Instance of Rizal praying that the provincial sheriff be authorized to place her in possession of the property invoking in her favor the provisions of Act No, 3135, as amended by Act No. 4118.

ORIGINAL ACTION in the Supreme Court. Certiorari with preliminary injunction. The facts are stated in the opinion of the Court. Jose S. Fineza for petitioner. BAUTISTA ANGELO, J.:

When the petition came up for hearing before the court on October 25, 1950, Jose A. Luna, the mortgagor, opposed the petition on the following grounds: (1) that Act No. 3135 as amended by Act No. 4118 is applicable only to a real estate mortgage; (2) that the mortgage involved herein is a chattel mortgage; and (3) that even if the mortgage executed by the parties herein be considered as real estate mortgage, the extra-judicial sale made by the sheriff of the property in question is invalid because the mortgage does not contain an express stipulation authorizing the extra-judicial sale of the property. After hearing, at which both parties have expressed their views in support of their respective contentions, respondent judge, then presiding the court, overruled the opposition and granted the petition ordering the provincial sheriff of Rizal, or any of his deputies, to immediately place petitioner in possession of the property in question while at the same time directing the mortgagor Jose A, Luna to vacate it and relinquish it in favor of petitioner. It is from this order that Jose A. Luna desires now to obtain relief by filing this petition for certiorari contending that the respondent judge has acted in excess of his jurisdiction.

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The first question which petitioner poses in his petition for certiorari is that which relates to the validity of the extra-judicial sale made by the provincial sheriff of Rizal of the property in question in line with the request of the mortgagee Trinidad Reyes. It is contended that said extra-judicial sale, having been conducted under the provisions of Act No. 3135, as amended by Act No. 4118, is invalid because the mortgage in question is not a real estate mortgage and, besides, it does not contain an express stipulation authorizing the mortgagee to foreclose the mortgage extra-judicially. There is merit in this claim. As may be gleaned from a perusal of the deed signed by the parties (Annex "C"), the understanding executed by them is a chattel mortgage, as the parties have so expressly designated, and not a real estate mortgage, especially when it is considered that the property given as a security is a house of mixed materials which by its very nature is considered as personal property. Such being the case, it is indeed a mistake for the mortgagee to consider this transaction in the light of Act No. 3135, as amended by Act No. 4118, as was so considered by her when she requested the provincial sheriff to sell it extra-judicially in order to secure full satisfaction of the indebtedness still owed her by the mortgagor. It is clear that Act No. 3135, as amended, only covers real estate mortgages and is intended merely to regulate the extra-judicial sale of the property mortgaged if and when the mortgagee is given a special power or express authority to do so in the deed itself, or in a document annexed thereto. These conditions do not here obtain. The mortgage before us is not a real estate mortgage nor does it contain an express authority or power to sell the property extra-judicially. But regardless of what we have heretofore stated, we find that the validity of the sale in question may be maintained, it appearing that the mortgage in question is a chattel mortgage and as such it is covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of this Act allows the mortgagee to have the property mortgaged sold at public auction through a public officer in almost the same manner as that allowed by Act No. 3135, as amended by Act No. 4118, provided that the requirements of the law relative to notice and registration are complied with. We are not prepared to state if these requirements of the law had been complied with in this case for the record before us is not complete and there is no showing to that effect. At any rate, this issue is not now important because the same can be threshed out when the opportunity comes for its determination, nor is it necessary for us to consider it in reaching a decision in the present case. Suffice it to state that for the present we are not expressing any opinion on this matter which concerns the validity of the sale in question for the reason that this opinion will only be

limited to a matter of procedure relative to the step taken by the mortgagee in securing the possession of the property involved. In the supposition that the sale of the property made by the sheriff has been made in accordance with law, and the question he is confronted is how to deliver the possession of the property to the purchaser in case of refusal to surrender its possession on the part of the debtor or mortgagor, the remedy of the purchaser, according to the authorities, is to bring an ordinary action for recovery of possession (Continental Gin Co. vs. Pannell, 160 P., 598; 61 Okl., 102; 14 C. J. S., pp. 1027, 1028). The purchaser cannot take possession of the property by force either directly or through the sheriff. And the reason for this is "that the creditor's right of possession is conditioned upon the fact of default, and the existence of this fact may naturally be the subject of controversy" (Bachrach Motor Co. vs. Summers, 42 Phil., 3, 6). The creditor cannot merely file a petition for a writ of possession as was done by Trinidad Reyes in this case. Her remedy is to file an ordinary action for recovery of possession in order that the debtor may be given an opportunity to be heard not only regarding possession but also regarding the obligation covered by the mortgage. The petition she has filed in the lower court, which was not even docketed, is therefore improper and should be disregarded. Wherefore, the order subject of the present petition for certiorari is hereby set aside, with costs against respondent Trinidad Reyes.

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LEUNG YEE vs STRONG MACHINERY CO. No. 11658. February 15, 1918 LEUNG YEE, plaintiff and appellant, vs. FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants and appellees.

8. ID.; ID.—"Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched but rather a state or condition of mind which can only be judged of by actual or fancied tokens. or signs."

APPEAL from a judgment of the Court of First Instance of Cavite. Revilla, J. The facts are stated in the opinion of the court.

1. CHATTEL MORTGAGE; REGISTRY OF MORTGAGE .COVERING REAL PROPERTY.— The sole purpose and object of the chattel mortgage registry is to provide for the registry of "chattel mortgages," and transfers thereof, that is to say, mortgages of personal property executed in the manner and form prescribed in the statute. Neither the original registry in a chattel mortgage registry of an instrument purporting to be a chattel mortgage of a building and the machinery installed therein, nor the annotation in that registry of the sale of the mortgaged property, had any effect whatever so far as the building is concerned. 2. ID.; ID.—A factory building is real property, and the mere fact that it is mortgaged and sold, separate and apart from the land on which it stands, in no wise changes its character as real property. 3. VENDOR AND PURCHASER; REGISTRY OF TITLE; GOOD FAITH.—The rights secured under the provisions of article 1473 of the Civil Code to that one of two purchasers of the same real estate, who has secured and inscribed his title thereto in the Land Registry,. do not accrue unless such inscription is made in good faith. 4. ID.; SEPARATE PURCHASERS; DETERMINATION OF RIGHTS.—The respective rights of two or more separate purchasers of the same real estate from the same owner in case none of them has secured an inscription of his title in the land registry in good faith, are to be determined in accord with the third, and not the second paragraph of that article. 5. ID.; GOOD FAITH.—One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith, as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. 6. ID.; ID.—A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. 7. ID.; ID.—Good faith, or the lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined.

Booram & Mahoney for appellant. Williams, Ferrier & SyCip for appellees. CARSON, J.: The "Compañía Agrícola Filipina" bought a considerable quantity of ricecleaning machinery from the defendant machinery company, and executed a chattel mortgage thereon to secure payment of the purchase price. It included in the mortgage deed the building of strong materials in which the machinery was installed, without any reference to the land on which it stood. The indebtedness secured by this instrument not having been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the mortgage instrument, and was bought by the machinery company. The mortgage was registered in the chattel mortgage registry, and the sale of the property to the machinery company in satisfaction of the mortgage was annotated in the same registry on December 29, 1913. A few weeks thereafter, on or about the 14th of January, 1914, the "Compañía Agrícola Filipina" executed a deed of sale of the land upon which the building stood to the machinery company, but this deed of sale, although executed in a public document, was not registered. This deed makes no reference to the building erected on the land and would appear to have been executed for the purpose of curing any defects which might be found to exist in the machinery company's title to the building under the sheriff's certificate of sale. The machinery company went into possession of the building at or about the time when this sale took place, that is to say, the month of December, 1913, and it has continued in possession ever since. At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the "Compañía Agrícola Filipina" executed another mortgage to the plaintiff upon the building, separate and apart from the land on which it stood, to secure payment of the balance of its indebtedness to the plaintiff under a contract for the construction of the building. Upon the failure of the mortgagor to pay the amount of the indebtedness secured by the
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mortgage, the plaintiff secured judgment for that amount, levied execution upon the building, bought it in at the sheriff s sale on or about the 18th of December, 1914, and had the sheriff's certificate of sale duly registered in the land registry of the Province of Cavite. At the time when the execution was levied upon the building, the defendant machinery company, which was in possession, filed with the sheriff a sworn statement setting up its claim of title and demanding the release of the property from the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the sum of P12,000, in reliance upon which the sheriff sold the property at public auction to the plaintiff, who was the highest bidder at the sheriff's sale. This action was instituted by the plaintiff to recover possession of the building from the machinery company. The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery company, on the ground that the company had its title to the building registered prior to the date of registry of the plaintiff's certificate. Article 1473 of the Civil Code is as follows: "If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be personal property. "Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry. "Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith." The registry here referred to is of course the registry of real property, and it must be apparent that the annotation or inscription of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect of an inscription in the registry of real property. By its express terms, the Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and the sole purpose and object of the chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property executed in the manner and form prescribed in the statute.

The building of strong materials in which the rice-cleaning machinery was installed by the "Compañía Agrícola Filipina" was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as real property. It follows that neither the original registry in the chattel mortgage registry of the instrument purporting to be a chattel mortgage of the building and the machinery installed therein, nor the annotation in that registry of the sale of the mortgaged property, had any effect whatever so far as the building was concerned. We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts in the court below discloses that neither the purchase of the building by plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made in good faith, and that the machinery company must be held to be the owner of the property under the third paragraph of the above cited article of the code, it appearing that the company first took possession of the property; and further, that the building and the land were sold to the machinery company long prior to the date of the sheriff's sale to the plaintiff. It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in relation to "possession" and "title," but contain no express requirement as to "good faith" in relation to the "inscription" of the property in the registry, it must be presumed that good faith is not an essential requisite of registration in order that it may have the effect contemplated in this article. We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured under this article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this section would open wide the door to fraud and collusion. The public records cannot be converted into instruments of fraud and oppression by one who secures an inscription therein in bad f faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription. Construing the second paragraph of this article of the code, the supreme court of Spain held in its sentencia of the 13th of May, 1908, that:
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"This rule is always to be understood on the basis of the good faith mentioned in the first paragraph; therefore, it having been found that the second purchasers who record their purchase had knowledge of the previous sale, the question is to be decided in accordance with the following paragraph." (Note 2, art. 1473, Civ. Code, Medina and Marañon [1911] edition.) "Although article 1473, in its second paragraph, provides that the title of conveyance of -ownership of the real property that is first recorded in the registry shall have preference, this provision must always be understood on the basis of the good faith mentioned in the first paragraph; the legislator could not have wished to strike it out and to sanction bad faith, just to comply with a mere formality which, in given cases, does not obtain even in real disputes between third persons." (Note 2, art. 1473, Civ. Code, issued by the publishers of the La Revista, de los Tribunales, 13th edition.) The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the sheriff's sale and inscribed his title in the land registry, was duly notified that the machinery company had bought the building from plaintiff's judgment debtor; that it had gone into possession long prior to the sheriff's sale; and that it was in possession at the time when the sheriff executed his levy. The execution of an indemnity bond by the plaintiff in favor of the sheriff, after the machinery company had filed its sworn claim of ownership, leaves no room for doubt in this regard. Having bought in the building at the sheriff's sale with full knowledge that at the time of the levy and sale the building had already been sold to the machinery company by the judgment debtor, the plaintiff cannot be said to have been a purchaser in good f faith; and of course, the subsequent inscription of the sheriff's certificate of title must be held to have been tainted with the same defect. Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale to the plaintiff was not made in good faith, we should not be understood as questioning, in any way, the good faith and genuineness of plaintiff's claim against the "Compañía Agrícola Filipina." The truth is that both the plaintiff and the defendant company appear to have had just and righteous claims against their common debtor. No criticism can properly be made of the exercise of the utmost diligence by the plaintiff in asserting and exercising his right to recover the amount of his claim from the estate of the common debtor. We are strongly inclined to believe that in procuring the levy of execution upon the factory building and in buying it at the sheriff's sale, he conceived that he was doing no more than he had a right to do under all the circumstances, and it is highly possible and even probable that he thought at

that time that he would be able to maintain his position in a contest with the machinery company. There was no collusion on his part with the common debtor, and no thought of the perpetration of a fraud upon the rights of another, in the ordinary sense of the word. He may have hoped, and doubtless he did hope, that the title of the machinery company would not stand the test of an action in a court of law; and if later developments had confirmed his unfounded hopes, no one could question the legality or the propriety of the course he adopted. But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the indemnity bond and bought in the property at the sheriff's sale, and it appearing further that the machinery company's claim of ownership was well founded, he cannot be said to have been an innocent purchaser for value. He took the risk and must Stand by the consequences; and it is in this sense that we find that he was not a purchaser in good faith. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. Good faith, or the lack of it, is in its last analysis a question of intention; but 'in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. So it is that "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry," and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the absence of proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched, but rather a
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state or condition of mind which can only be judged of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas vs. Miller, 108 Cal., 250; Breaux-Renoudet, Cypress Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.) We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in the court below should be affirmed with the costs of this instance against the appellant. So ordered. Arellano, C. J., Johnson, Araullo, Street, and Malcolm, JJ., concur. Torres, Avanceña, and Fisher, JJ., did not take part. Judgment affirmed

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SIBAL vs VALDEZ No. 26278. August 4, 1927 LEON SIBAL, plaintiff and appellant, vs. EMILIANO J. VALDEZ ET AL., defendants. EMILIANO J. VALDEZ, appellee.
ATTACHMENT; GROWING CROPS, REAL OR PERSONAL PROPERTY.—Held: Under the facts of the record, notwithstanding the provisions of paragraph 2 of article 334 of the Civil Code, that growing sugar cane is considered personal property and not real property and is subject to attachment and sale. Act No. 1508, the Chattel Mortgage Law, provides that all personal property shall be subject to mortgage. At common law all annual crops which are raised by yearly manurance and labor and essentially owe their existence to cultivation may be levied on as personal property. Paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508 in the sense that, for the purpose of attachment and execution and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property.

As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez was attempting to harvest the palay planted in four of the seven parcels mentioned in the first cause of action; that he had harvested and taken possession of the palay in one of said seven parcels and in another parcel described in the second cause of action, amounting to 300 cavans; and that all of said palay belonged to the plaintiff. Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez, his attorneys and agents, restraining them (1) from disturbing him in the possession of the parcels of land described in the complaint; (2) from taking possession of, or harvesting the sugar cane in question; and (3) from taking possession, or harvesting the palay in said parcels of land. Plaintiff also prayed that a judgment be rendered in his favor and against the defendants, ordering them to consent to the redemption of the sugar cane in question, and that the defendant Valdez be condemned to pay to the plaintiff the sum of P1,056, the value of palay harvested by him in the two parcels above-mentioned, with interest and costs. On December 27, 1924, the court, after hearing both parties and upon approval of the bond for P6,000 filed by the plaintiff, issued the writ of preliminary injunction prayed for in the complaint. The defendant Emiliano J. Valdez, in his amended answer, denied generally and specifically each and every allegation of the complaint and set up the f ollowing def enses:

APPEAL from a judgment of the Court of First Instance of Tarlac. Lukban, J. The facts are stated in the opinion of the court. J. E. Blanco for appellant. Felix B. Bautista and Santos & Benitez for appellee. JOHNSON, J.: This action was commenced in the Court of First Instance of the Province of Tarlac on the 14th day of December, 1924. The facts are about as conflicting as it is possible for facts to be, in the trial of causes. As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land described in the complaint, in the third paragraph of the first cause of action; that within one year from the date of the attachment and sale the plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price paid by the latter, the interest thereon and any assessments or taxes which he may have paid thereon after the purchase, and the interest corresponding thereto and that Valdez refused to accept the money and to return the sugar cane to the plaintiff.

(a) That the sugar cane in question had the nature of personal property and was not, therefore, subject to redemption; (b) That he was the owner of parcels 1, 2 and 7 described in the first cause of action of the complaint; (c) That he was the owner of the palay in parcels 1, 2 and 7; and (d) That he never attempted to harvest the palay in par-cels 4 and 5. The defendant Emiliano J. Valdez, by way of counterclaim, alleged that by reason of the preliminary injunction he was unable to gather the sugar cane, sugar-cane shoots (puntas de caña dulce) and palay in said parcels of land, representing a loss to him of P8,375.20 and that, in addition thereto, he suffered damages amounting to P3,458.56. He prayed for a judgment (1)
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absolving him from all liability under the complaint; (2) declaring him to be the absolute owner of the sugar cane in question and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of P11,833.76, representing the value of the sugar cane and palay in question, including damages. Upon the issue thus presented by the pleadings the cause was brought on for trial. After hearing the evidence, and on April 28, 1926, the Honorable Cayetano Lukban, judge, rendered a judgment against the plaintiff and in favor of the defendants— (1) Holding that the sugar cane in question was personal property and, as such, was not subject to redemption; (2) Absolving the defendants from all liability under the complaint; and (3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal to jointly and severally pay to the defendant Emiliano J. Valdez the sum of P9,439.08 as follows: (a) P6,757.40, the value of the sugar cane; (b) 1,435.68, the value of the sugar-cane shoots; (c) 646.00, the value of palay harvested by plaintiff; (d) 600.00, the value of 150 cavans of palay which the defendant was not able 9,439.08 to raise by reason of the injunction, at P4 cavan. From that judgment the plaintiff appealed and in his assignments of error contends that the lower court erred: (1) In holding that the sugar cane in question was per-sonal property and, therefore, not subject to redemption; (2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as well as parcels 7 and 8, and that the palay therein was planted by Valdez;

(3) In holding that Valdez, by reason of the preliminary injunction failed to realize P6,757.40 from the sugar cane and P1,435.68 from sugar-cane shoots (puntas de caña, dulce); (4) In holding that, for failure of plaintiff to gather the sugar cane on time, the defendant was unable to raise palay on the land, which would have netted .him the sum of P600; and (5) In condemning the plaintiff and his sureties to pay to the defendant the sum of P9,439.08.

It appears from the record: (1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue of a writ of execution in civil case No. 20203 of the Court of First Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal), levied an attachment on eight parcels of land belonging to said Leon Sibal, situated in the Province of Tarlac, designated in the record of attachment as parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A). (2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of land, at the auction held by the sheriff of the Province of Tarlac, for the sum of P4,273.93, having paid for the said parcels separately as follows (Exhibits C and 2-A): [Sibal 1.° vs. Valdez, 50 Phil. 512(1927)] Parcel 1 2 3 4 5 6 7 with the house thereon 8 P 1.00

2,000.00 120.93 1,000.00 1.00 1.00 150.00 1,000.00 4,273.93
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(3) That within one year from the sale of said parcels of land, and on the 24th day of September, 1923, the judgment debtor, Leon Sibal, paid ?2,000, to Macondray & Co., Inc., for the account of the redemption price of said parcels of land, without specifying the particular parcels to which said amount was to be applied. The redemption price of said eight parcels was reduced, by virtue of said transaction, to P2,579.97, including interest (Exhibits C and 2). The record further shows: (1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution in civil case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1.º—the same parties in the present case), attached the personal property of said Leon Sibal located in Tarlac, among which was included the sugar cane now in question in the seven parcels of land described in the complaint (Exhibit A). (2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said personal properties of Leon Sibal, including the sugar cane in question, to Emiliano J. Valdez, who paid therefor the sum of P1,550, of which P600 was for the sugar cane (Exhibit A). (3) That on April .29, 1924, said deputy sheriff, by virtue of said writ of execution, also attached the real property of said Leon Sibal in Tarlac, including all of his rights, interest and participation therein, which real property consisted of eleven parcels of land and a house and camarin situated in one of said parcels (Exhibit A). (4) That on June 25, 1924, eight of said eleven parcels, including the house and the camarín, were bought by Emiliano J. Valdez at the auction held by the sheriff for the sum of P12,200. Said eight parcels were designated in the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and camarin were situated on parcel 7 (Exhibit A). (5) That the remaining.three parcels, indicated in the certificate of the sheriff as parcels 2, 12 and 13, were released from the attachment by virtue of claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A). (6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed to Emiliano J. Valdez for P2,579.97 all of its rights and interest in the eight parcels of land acquired by it at public auction held by the deputy sheriff of Tarlac in connection with civil case No. 20203 of the Court of First Instance of Manila, as stated above. Said amount represented the unpaid balance of the

redemption price of said eight parcels, after payment by Leon Sibal of P2,000 on September 24, 1923, for the account of the redemption price, as stated above. (Exhibits C and 2.) The foregoing statement of facts shows: (1) That Emiliano J. Valdez bought the sugar cane in question, located in the seven parcels of land described in the first cause of action of the complaint at public auction on May 9 and 10, 1924, for P600. (2) That on July 30, 1923, Macondray & Co. became the owner of eight parcels of land situated in the Province of Tarlac belonging to Leon Sibal and that on September 24, 1923, Leon Sibal paid to Macondray & Co. P2000 for the account of the redemption price of said parcels. (3) That on June 25, 1924, Emiliano J. Valdez acquired from Macondray & Co. all of its rights and interest in the said eight parcels of land. (4) That on the same date (June 25, 1924) Emiliano J. Valdez also acquired all of the rights and interest which Leon Sibal had or might have had on said eight parcels by virtue of the P2,000 paid by the latter to Macondray. (5) That Emiliano J. Valdez became the absolute owner of said eight parcels of land. The first question raised by the appeal is, whether the sugar cane in question is personal or real property. It is contended that sugar cane comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334 enumerates as real property the following: "Trees, plants, and ungathered products, while they are annexed to the land or form an integral part of any immovable property." That article, however, has received in recent years an interpretation by the Tribunal Supremo de España, which holds that, under certain conditions, growing crops may be considered as personal property. (Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Spain.) Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil Code, in view of the recent decisions of the Supreme Court of Spain, admits that growing crops are sometimes considered and treated as personal property. He says: "No creemos, sin embargo, que esto excluya la excepción que muchos autores hacen tocante a la venta de toda cosecha o de parte de ella cuando aún no
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está cogida (cosa frecuente con la uva y la naranja), y a la de leñas, considerando ambas como muebles. El Tribunal Supremo, en sentencia de 18 de marzo de 1904, al entender sobre un contrato de arrendamiento de un predio rústico, resuelve que su terminación por desahucio no extingue los derechos del arrendatario, para recolectar o percibir los frutos correspondientes al año agrícola, dentro del que nacieron aquellos derechos, cuando el arrendador ha percibido a su vez el importe de la renta íntegra correspondiente, aun cuando lo haya sido por precepto legal durante el curso del juicio, fundándose para ello, no solo en que de otra suerte se daría al desahucio un alcance que no tiene, sino en que, y esto es lo interesante a nuestro propósito, la consideración de inmuebles que el artículo 334 del Códiga Civil atribuye a los frutos pendientes, no les priva, del carácter de productos pertenecientes, como tales, a quienes a, ellos tenga, derecho, llegado el momento de su recolección.

before they are cut down, are likewise immovable, and are considered as part of the land to which they are attached." The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases "standing crops" may be considered and dealt with as personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court said: "True, by article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not gathered and trees before they are cut down * * * are considered as part of the land to which they are attached/ but the immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by others than the owners of the property to which the crop is attached. * * * The existence 'of a right on the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired therein. Our jurisprudence recognizes the possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 La. Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.) "It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28 La. An., 761) that "article 465 of the Revised Code says that standing crops are considered .as immovable and as part of the land to which they are attached, and article 466 declares that the fruits of an immovable gathered or produced while it is under seizure are considered as making part thereof, and inure to the benefit of the person making the seizure. But the evident meaning of these articles is, where the crops belong to the owner of the plantation, they form part of the immovable, and where it is seized, the fruits gathered or produced inure to the benefit of the seizing creditor.

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"Mas actualmente y por virtud de la nueva edición de la Ley Hipotecaria, publicada en 16 de diciembre de 1909, con las reformas introducidas por la de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo contrario, y cualquiera que sea la naturaleza y forma de la obligación que garantice, no comprende los frutos cualquiera que sea la situación en que se encuentre." (3 Manresa, 5.a edición, págs. 22, 23.)

From the foregoing it appears (1) that, under Spanish authorities, pending fruits and ungathered products may be sold and transferred as personal property; (2) that the Supreme Court of Spain, in a case of ejectment of a lessee of an agricultural land, held that the lessee was entitled to gather the products corresponding to the agricultural year, because said fruits did not go with the land but belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of 1909, as amended, the mortgage of a piece of land does not include the fruits and products existing thereon, unless the contract expressly provides otherwise. An examination of the decisions of the Supreme Court of Louisiana may give us some light on the question which we are discussing. Article 465 of the Civil Code of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code, provides: "Standing crops and the fruits of trees not gathered, and trees

"A crop raised on leased premises in no sense forms part of the immovable. It belongs to the lessee, .and may be sold by him, whether it be gathered or not, and it may be sold by his judgment creditors. If it necessarily forms part of the leased premises the result would be that it could not be sold under execution separate and apart from the land. If a lessee obtain supplies to make his crop, the factor's lien would not attach to the crop as a separate thing belonging to his debtor, but the land belonging to the lessor would be affected with the recorded -privilege. The law cannot be construed so as to result in such absurd consequences." In the case of Citizens' Bank vs. Wiltz (31 La. Ann., 244) the court said:

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"If the crop quoad the pledge thereof under the act of 1874 was an immovable, it would be destructive of the very objects of the act, it would render the pledge of the crop impossible, for if the crop was an inseparable part of the realty possession of the latter would be necessary to that of the former; but such is not the case. True, by article 465 C. C. it is provided that 'standing crops and the fruits of trees not gathered and trees before they are cut down are likewise immovable and are considered as part of the land to which they are attached;' but the immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by other than the owners of the property to which the crop was attached. The immovability of a growing crop is in the order of things temporary, for the crop passes from the state of a growing to that of a gathered one, from an immovable to a movable. The existence of a right on the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired thereon. The provision of our Code is identical with the Napoleon Code, 520, and we may therefore obtain light by an examination of the jurisprudence of France." The rule above announced, not only by the Tribunal Supremo de España but by the Supreme Court of Louisiana, is followed in practically every state of the Union. From an examination of the reports and codes of the State of California and other states we find that the settled doctrine followed in said states in connection with the attachment of property and execution of judgment is, that growing crops raised by yearly labor and cultivation are considered personal property. (6 Corpus Juris, p. 197; 17 Corpus Juris, p. 879; 23 Corpus Juris, p. 329; Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65 Ga., 644'; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on Execution, vol. 1, p. 438; Drake on Attachment,, sec. 249; Mechem on Sales, secs. 200 and 763.) Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, and then belonging to the vendor, and the title will vest in the buyer the moment the thing comes into existence. (Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a potential existence. A man may sell property of which he is potentially and not actually possessed. He may make a valid sale of the wine

that a vineyard is expected to produce; or the grain a field may grow in a given time; or the milk a cow may yield during the coming year; or the wool that shall thereafter grow upon sheep; or what may be taken at the next cast of a fisherman's net; or fruits to grow; or young animals not yet in existence; or the good will of a trade and the like. The thing sold, however, must be specific and identified. They must be also owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].) It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the property of a judgment debtor which may be subjected to execution. The pertinent portion of said section reads as follows: "All goods, chattels, moneys, and other property, both- real and personal, * * * shall be liable to execution." Said section 450 and most of the other sections of the Code of Civil Procedure relating to the execution of judgments were taken from the Code of Civil Procedure of California. The Supreme Court of California, under section 688 of the Code of Civil Procedure of that state (Pomeroy, p. 424) has held, without variation, that growing crops were personal property and subject to execution. Act No. 1508, the Chattel Mortgage Law, fully recognizes that growing crops are personal property. Section 2 of said Act provides: "All personal property shall be subject to mortgage, agreeably to the provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a chattel mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop while growing '* * *." It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing crops" are personal property. This consideration tends to support the conclusion hereinbefore stated, that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered products" as mentioned in said article of the Civil Code have the nature of personal property. In other words, the phrase "personal property" should be understood to include "ungathered products." "At common law, and generally in the United States, all annual crops which are raised by yearly manurance and labor, and essentially owe their annual existence to cultivation by man, * * * may be levied on as personal property."
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(23 C. J., p. 329.) On this question Freeman, in his treatise on the Law of Executions, says: "Crops, whether growing or standing in the field ready to be harvested, are, when produced by annual cultivation, no part of the realty. They are, therefore, liable to voluntary transfer as chattels. It is equally well settled that they may be seized and sold under execution." (Freeman on Executions, vol. 1, p. 438.) We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purposes of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. The lower court, therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not subject to redemption. All the other assignments of error made by the appellant, as above stated, relate to questions of fact only. Before entering upon a discussion of said assignments of error, we deem it opportune to take special notice of the failure of the plaintiff to appear at the trial during the presentation of evidence by the defendant. His absence from the trial and his failure to cross-examine the defendant have lent considerable weight to the evidence then presented for the defense. Coming now to the ownership of parcels 1 and 2 described in the first cause of action of the complaint, the plaintiff made a futile attempt to show that said two parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was excluded from the attachment and sale of real property of Sibal to Valdez on June 25, 1924, as stated above. A comparison of the description of parcel 2 in the certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will readily show that they are not the same. The description of the parcels in the complaint is as follows: "1. La caña dulce sembrada por los inquilinos del ejecutado León Sibal 1.° en una parcela de terreno de la pertenencia del citado ejecutado, situada en Libutad, Culubasa, Bamban, Tárlac, de unas dos hectáreas poco más o menos de superficie. "2. La caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1.°, llamado Alejandro Policarpio, en una parcela de terreno de la pertenencia del ejecutado, situada en Dalayap, Culubasa, Bamban, Tárlac de unas dos

hectáreas de superficie poco más o menos." The description of parcel 2 given in the certificate of sale (Exhibit A) is as follows: "2.a Terreno palayero situado en Culubasa, Bamban, Tár-lac, de 177,090 metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mañu and others; al S. con Alejandro Dayrit, Isidoro Santos and Melecio Mañu; y al O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, valor amillarado P4,200 pesos." On the other hand the evidence for the defendant purported to show that parcels 1 and 2 of the complaint were included among the parcels bought by Valdez from Macondray on June 25, 1924, and corresponded to parcel 4 in the deed of sale (Exhibits B and 2), and were also included among the parcels bought by Valdez at the auction of the real property of Leon Sibal on June 25, 1924, and corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows: "Parcela No. 4.—Terreno palayero, ubicado en el barrio de Culubasa, Bamban, Tárlac, I. F. de 145,000 metros cuadrados de superficie, lindante al Norte con Road of the barrio of Culubasa that goes to Concepcion; al Este con Juan Dizon; al Sur con Lucio Maño y Canuto Sibal y al Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de P2,990. Tax No. 2856." As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4 (Exhibits 2 and B) and parcel 3 (Exhibit A). But, inasmuch as the plaintiff did not care to appear at the trial when the defendant offered his evidence, we are inclined to give more weight to the evidence adduced by him than to the evidence adduced by the plaintiff, with respect to the ownership of parcels 1 and 2 of the complaint. We, therefore, conclude that parcels 1 and 2 of the complaint belong to the defendant, having acquired the same from Macondray & Co. on June 25, 1924, and from the plaintiff Leon Sibal on the same date. It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190 cavans. There being no evidence of bad faith on his part, he is therefore entitled to one-half of the crop, or 95 cavans. He should therefore be condemned to pay to the defendant for 95 cavans only, at P3.40 a cavan, or the sum of P323, and not for the total of 190 cavans as held by the lower court.

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68 as allowed by the lower court. amounting to 190 cavans. 14 | P r o p e r t y . 900. Juan Sangalang and Marcos Sibal are hereby ordered to pay to the defendant jointly and severally the sum of P8. on the 30th day of July. Rice paid P4. 1923. sold all of the land which they had purchased at public auction on the 30th day of July.000 as computed by the lower court. as owner. The court erred in awarding the whole crop to the defendant. the judgment appealed from is hereby modified. for the sugar cane shoots. In this connection the following facts are worthy of mention: Execution in favor of Macondray & Co. that one-half of that quantity.93.00 8. June 25. for the palay which defendant could have raised. 1924.40 323. April 29. would have netted P6.As to the ownership of parcel 7 of the complaint. The lower court has wisely reduced his share to 150 cavans only.273. (Exhibit A.757. that said area would have yielded an average crop of 1039 picos and 60 cates. the real property of Sibal was attached under the execution in favor of Valdez (Exhibit A). at P3. or P323 instead of P646 as allowed by the lower court. He expected to have raised about 600 cavans of palay. as follows: P 6. with costs. 1924. said real property was sold and purchased by Valdez (Exhibit A). 1924. the judgment appealed from is hereby affirmed. The plaintiff should therefore pay the defendant for 95 cavans only. May 11. described in paragraph 3 of the second cause of action. Said parcels of land were sold to Macondray & Co..170. (See Exhibits B and C.80 for the sugar cane. 300 cavans of which would have corresponded to him as owner. With reference to the parcel of land in Pacalcal.757.00 600. and to parcel 4 in the certificate of sale to Valdez of real property belonging to Sibal.40 from the sugar cane in question. The evidence also shows that the defendant could have taken from the sugar cane 1. Tarlac. June 25. Eight parcels of land were attached under said execution. P2. Macondray & Co. As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint. 1923. the evidence shows that said parcel corresponds to parcel 1 of the deed of sale of Macondray & Co.40 from sugar-cane shoots and not P1.000 sugar-cane shoots (puntas de caña) and not 1. the defendant. Personal property of Sibal was attached. or 519 picos and 80 cates would have corresponded to the defendant.220. 1924. it appears from the testimony of the plaintiff himself that said parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez (Exhibits B and 2) and to parcel 10 in the deed of sale executed by the sheriff in favor of Valdez (Exhibit A).) The said personal property so attached.017. to Valdez. As to the loss of the defendant in sugar cane by reason of the injunction. in favor of Valdez.220. Leon Sibal paid to Macondray & Co. The evidence also shows that the defendant was prevented by the acts of the plaintiff from cultivating about 10 hectares of the land involved in the litigation.40 a cavan. instead of P9. 1923.000 on the redemption of said parcels of land. 8-b and 8-c). So ordered. and the other half to the defendant.08 allowed by the lower court. Valdez is therefore the absolute owner of said parcel. executed by the sheriff as above stated (Exhibit A). the evidence shows that the sugar cane in question covered an area of 22 hectares and 60 ares (Exhibits 8.435. In view of the foregoing. The plaintiff and his sureties Cenon de la Cruz. On September 24. as stated above. 439. The defendant therefore would have netted P1. for the palay harvested by plaintiff in parcels 1 and 2. 1923. having acquired the interest of both Macondray and Sibal in said parcel. 1924. At P4 a cavan.80. Valdez is therefore the absolute owner of said parcel. the palay would have netted him P600. one-half of said quantity should belong to the plaintiff.) Attachment. During the season the shoots were selling at P1. including the sugar cane in question. to Valdez (Exhibits B and 2).40 1. April 29. In all other respects. that during the season the sugar was selling at P13 a pico (Exhibits 5 and 5-A). Therefore. sold at public auction May 9 and 10. as owner.20 a thousand (Exhibits 6 and 7). having acquired the interest of both Macondray and Sibal therein.900.

“3. Zamboanga del Sur. L-17870. Barria & Irabagon for petitioner. PETITION for review of a decision of the Court of the Appeals. the tools and equipments in its repair shop which appear movable are merely incidentals and may not be considered immovables.A. to be immobilized in contemplation of Article 415 of the Civil Code. “1. and “(g) D-Engine Waukesha-M-Fuel. vs. Sabellina for respondents.T. collecting rates approved by the Public Service Commission. Lanao. Bukidnon Province. and.MINDANAO BUS CO vs CITY ASSESSOR No. marked Annex ‘G’. “5. “(d) Black and Decker Grinder. marked Annex ‘B’. its TPU trucks are made.: This is a petition for the review of the decision of the Court of Tax Appeals in C. The Board of Tax Appeals of the City sustained the city assessor. marked Annex ‘F’. appearing in the attached photograph. 710 holding that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and repair equipment hereunder referred to. appearing in the attached photograph. September 29. and with these machineries which are placed therein. “4. marked Annex ‘A’. Immovable Property by Destination. where the business is one of transportation. Vicente E. Davao City and Kibawe.400 petitioner’s above-mentioned equipment. “(e) PEMCO Hydraulic Press. That these machineries are sitting on cement or wooden platforms as may be seen in the attached photographs which form part of this agreed stipulation of facts. Respondent City Assessor of Cagayan de Oro City assessed at P4. and same are repaired in a condition to be serviceable in the TPU land transportation business it operates. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks.—Movable equipments. appearing in the attached photograph. Tools and equipments merely incidental to business not subject to real estate tax. marked Annex ‘E’. In the Court of Tax Appeals the parties submitted the following stipulation of facts: “Petitioner and respondents. not subject to assessment as real estate for purposes of the real estate tax. “2. over its authorized lines in the Island of Mindanao. Property. blacksmith and carpentry shops. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not realty. Two requisites before movables may be deemed to have immobilized. “(b) Storm Boring Machine. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks. marked Annex ‘D’. That petitioner has its main office and shop at Cagayan de Oro City. marked Annex ‘C’. appearing in the attached photograph. respondents. a repair shop. hence. It maintains Branch Offices and/or stations at Iligan City. The facts are stated in the opinion of the Court. Thus. and its rolling equipment is repaired or serviced in a shop belonging to another. petitioner. Case No. thru their respective counsels agreed to the following stipulation of facts: 15 | P r o p e r t y . 1962. which is carried on without a repair or service shop. appearing in the attached photograph. That the machineries sought to be assessed by the respondent as real properties are the following: “(a) Hobart Electric Welder Machine. MINDANAO BUS COMPANY. “(f) Battery charger (Tungar charge machine) appearing in the attached photograph. “(c) Lathe machine with motor. body constructed. Pagadian. J. appearing in the attached photograph. must be the essential and principal elements of an industry or works which are carried on in a building or on a piece of land. Binamira. LABRADOR. THE CITY ASSESSOR &TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City. so petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment.

etc. Cu Unjieng.) Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. to date. equipments or machineries are immovable taxable real properties. typewriters. theaters. by their nature. machineries of breweries used in the manufacture of liquor and soft drinks. 521. though movable in nature. They can be moved around and about in petitioner’s repair shop. tho movable. receptacles. usually found and used in hotels. Airline companies use forklifts. its 16 | P r o p e r t y “(5) Machinery. in lieu of the other of less capacity existing therein.. gives the character of real property to ‘machinery. not essentials. H. etc. but the delivery trucks and adding machines which they usually own and use and are found within their industrial compounds are merely incidentals and retain their movable nature. Similarly. and thus retain their movable nature. liquid containers. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code. the movable equipments are taxable realties. without them. 415. and having denied a motion for reconsideration. Inasmuch as the central is permanent in character. parts and the like offered to the general public indiscriminately for business or commercial purposes for which petitioner has never engaged in.. Thus. pressure pumps. are merely incidentals and are not and should not be considered immobilized by destination. They are merely incidentals—acquired as movables and used only for expediency to facilitate and/or improve its service. Even without such tools and equipments.—The following are immovable properties: x x x x “Article 344 (Now Art. The Honorable Court of Tax Appeals erred in upholding respondents’ contention that the questioned assessments are valid. In the case of B.” Respondents contend that said equipments.” (Italics ours. it cannot be said that their incorporation therewith was not permanent in character because. by reason of their being intended or destined for use in an industry. and holding that pursuant thereto. “3.” The Court of Tax Appeals having sustained the respondent city assessor’s ruling. jeep-wagons. and which tend directly to meet the needs of the said industry or works. are immobilized because they are essential to said industries. The Tax Court erred in denying petitioner’s motion for reconsideration.” We may here distinguish. are immobilized by destination. paragraph (c) of Republic Act No. as essential and principal elements of a sugar central. instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land. The Court of Tax Appeals erred in denying petitioner’s contention that the respondent City Assessor’s power to assess and levy real estate taxes on machineries is further restricted by section 31. On the other hand. in accordance with paragraph 5 of Article 415 of the New Civil Code which provides: “Art. 61 Phil. instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry. If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co. That these machineries have never been or were never used as industrial equipments to produce finished products for sale. 663. the tools and equipments in question in this instant case are. and that said tools.” (Italics ours. etc. the Supreme Court said: . which are incidentals. and “4. cash registers. therefore. restaurants. nor to repair machineries. “2. IBM machines. converted them into real property by reason of their purpose.. for its sugar industry. Berkenkotter vs. not essential and principal elements of petitioner’s business of transporting passengers and cargoes by motor trucks. petitioner brought the case to this Court assigning the following errors: “1. those movables which become immobilized by destination because they are essential and principal elements in the industry from those which may not be so considered immobilized because they are merely incidental. the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent. paragraph (5) of the Civil Code. the sugar central would be unable to function or carry on the industrial purpose for which it was established. Inc. for these businesses can continue or carry on their functions without these equipments.“6.) So that movable equipments to be immobilized in contemplation of the law must first be “essential and principal elements” of an industry or works without which such industry or works would be “unable to function or carry on the industrial purpose for which it was established. 415). not essential and principal.

which is not carried on in a building or permanently on a piece of land. The transportation business could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to another. But in the case at bar the equipments in question are destined only to repair or service the transportation business. Cu Unjieng. as demanded by the law. and instruments or implements” are found in a building constructed on the land. be deemed real property. 415. Resuming what we have set forth above. A sawmill would also be installed in a building on land more or less permanently. without such equipments. 17 | P r o p e r t y .” (Civil Code of the Phil. So ordered. instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land. The law that governs the determination of the question at issue is as follows: “Art. tenement or on a specified land. the “machinery. as petitioner has carried on. and which tend directly to meet the needs of the said industry or works. The following are immovable property: x x x x “(5) Machinery. and petitioner’s business is not carried on in a building. before the war. and the sawing is conducted in the land or building. therefore. WHEREFORE. Without costs. supra.business may be carried on. liquid containers. Thus in the case of Berkenkotter vs. so said equipment may not be considered real estate within the meaning of Article 415(c) of the Civil Code.) Aside from the element of essentiality the above-quoted provision also requires that the industry or works be carried on in a building or on a piece of land. the decision subject of the petition for review is hereby set aside and the equipment in question declared not subject to assessment as real estate for the purposes of the real estate tax. Said equipments may not. we hold that the equipments in question are not absolutely essential to the petitioner’s transportation business. receptacles.

ID.. 41643. BERKENKOTTER. H. now existing or that may in the future exist in said lots. obtained from the defendants. Green.. apparatus. IMPROVEMENT ON THE MORTGAGED PROPERTY. does not vest the creditor with ownership of said machinery and equipment but simply with the right of redemption. after the incorporation thereof with the mortgaged sugar central.. Inc. PERMANENT CHARACTER OF THE IMPROVEMENT. on April 27. B. 1..: This is an appeal taken by the plaintiff. it could produce 250. which will be discussed in the course of this decision.000. together with whatever additional equipment acquired with said loan. Sison.. Araneta. A. on October 9th of the same year. president of the Mabalacat Sugar Co. The facts are stated in the opinion of the court.000 against said corporation for unpaid salary. the Mabalacat Sugar Co. With the loan of P25. with costs. B. CU UNJIENG E HIJOS. H. On June 10. Green.—The fact that the purchaser of the new machinery and equipment has bound himself to the person supplying him the purchase money to hold them as security for the payment of the latter's credit. the appellant assigns six alleged errors as committed by the trial court in its decision in question. B. INCLUDED IN THE MORTGAGE.. J. Having agreed to said proposition made in a letter dated October 5. Green and installed in the sugar central after the execution of the original mortgage deed. Briones & Martinez for appellant. steel railway. Pampanga. Article 1877 of the Civil Code provides as follows. MABALACAT SUGAR COMPANY and THE PROVINCIAL SHERIFF OF PAMPANGA. defendants and appellees. sugarcane mill. promising to reimburse him as soon as he could obtain an additional loan from the mortgagees. 1926.. 1927. In order to carry out this plan. B. a loan secured by a first mortgage constituted on two parcels of land "with all its buildings.BERKENKOTTER vs CU UNJIENG E HIYOS No. to advance the necessary amount for the purchase of said machinery and equipment. the Mabalacat Sugar Co. Civil Code. in lieu of another of less capacity. as improvement incorporated with the central are subject to the mortgage deed executed in favor of the defendants Cu Unjieng e Hijos. plaintiff and appellant.. applied to Cu Unjieng e Hijos for an additional loan of P75. to the person who supplied the money. president of the Mabalacat Sugar Co. decided to increase the capacity of its sugar central by buying additional machinery and equipment. constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon. B.—The sale of the machinery and equipment in question by the purchaser who was supplied the purchase money. as a loan. No appearance for the other appellees.. B. ID. H. which is raised in the first assignment of alleged error. A. improvements. Berkenkotter. . so that instead of milling 150 tons daily. It is admitted by the parties that on April 26. 1935 B. (Article 1877. July 31.000. VILLA-REAL. and to refrain from mortgaging or otherwise encumbering them does not alter the permanent character of the incorporation of said machinery and equipment with the central. The estimated cost of said additional machinery and equipment was approximately P100.710 to B. In support of his appeal. MORTGAGE.. telephone line. ID. J. shortly after said mortgage had been constituted.) 2. Inc.. owner of the sugar central situated in Mabalacat.. Berkenkotter. 3. president of said corporation. the total amount supplied by him to said B. for the purpose of carrying out the industrial functions of the latter and increasing production. dismissing said plaintiff's complaint against Cu Unjieng e Hijos et al. from the judgment of the Court of First Instance of Manila.750. purchased the additional machinery and equipment now in litigation. Berkenkotter had a credit of P22. 1926.750 and said credit of P22. Zaragoza & Araneta for appellees Cu Unjieng e Hijos. H. Cu Unjieng e Hijos. telephone line. H. A. the herein defendants Cu Unjieng e Hijos. delivered the sum of P1.—The installation of a machinery and equipment in a mortgaged sugar central. ID. steel railway. OWNERSHIP OF THE IMPROVEMENT. proposed to the plaintiff. Green. Inc. A. B. vs. utensils and whatever forms part or is a necessary complement of said sugar-cane mill.. The first question to be decided in this appeal. 1926 (Exhibit E).000 offering as security the additional machinery and equipment acquired by said B. is whether or not the lower court erred in declaring that the additional machinery and equipment. Furthermore.. 18 | P r o p e r t y APPEAL from a judgment of the Court of First Instance of Manila. A. Berkenkotter. Inc." On October 5. Green having been P25. 1927.. the Mabalacat Sugar Co. A. Inc. Green failed to obtain said loan. YEK TONG LIN FIRE AND MARINE INSURANCE COMPANY.

could not have offered them to the plaintiff as security for the payment of his credit. 1877. it cannot be said that their incorporation therewith was not permanent in character because. and machinery that existed thereon were also comprehended. Inc. liquidator.. ID. the fact that B. H. Villanueva (18 Phil. 19 | P r o p e r t y . with the declarations. Inc. Inasmuch as the central is permanent in character. and while the mortgage constituted on said sugar central to Cu Unjieng e Hijos remained in force.. in lieu of. when it was stated in the mortgage that the improvements.. A.. as such president. said machinery and equipment would become security therefor. in proposing to him to advance the money for the purchase thereof. A. instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry. Upon acquiring the machinery and equipment in question with money obtained as loan from the plaintiff-appellant by B. only the right of redemption of the vendor Mabalacat Sugar Co. Pomar and Compañía General de Tabacos (12 Phil. all objects permanently attached to a mortgaged building or land.." In the case of Bischoff vs.. amplifications. A mortgage includes all natural accessions. with which the decisions of the courts of the United States are in accord. Supreme Court in the matter of Royal Insurance Co. otherwise B. 690). ETC. Green. whether the estate continues in the possession of the person who mortgaged it or whether it passes into the hands of a third person... R. is not incompatible with the permanent character of the incorporation of said machinery and equipment with the sugar central of the Mabalacat Sugar Co. A. without them the sugar central would be unable to function or carry on the industrial purpose for which it was established. S. growing fruits. vs. as president of the Mabalacat Sugar Co. and rents not collected when the obligation falls due. the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent. in the sugar central with which said machinery and equipment had been incorporated. that in case B. cited with approval in the case of Cea vs. MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND FIXTURES. 199 U. and Amadeo [26 Sup. although they may have been placed there after the mortgage was constituted... subject to the right of the defendants Cu Unjieng e Hijos under the first mortgage. Exhibit E. made it appear in the letter. Inc. Rep. Miller. was not permanent n character inasmuch as B. A. therefore. established by the Civil Code and also by the Mortgage Law. Furthermore. Green from giving them as security at least under a second mortgage. ID. S. improvements..—It is a rule. decision of U. Green bound himself to the plaintiff B. the other of less capacity existing therein. converted them into real property by reason of their purpose." If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co. 46. Inc.. Inc. for its sugar industry."ART.. and the amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain. of the Civil Code gives the character of real property to "machinery. said B. Ct. Green. paragraph 5.. this court laid down the following doctrine: "1. the latter became owner of said machinery and equipment. REALTY. that in a mortgage of real estate. are also included. A. 110 and 111 of the Mortgage Law." The appellant contends that the installation of the mahinery and equipment claimed by him in the sugar central of the Mabalacat Sugar Company. buildings. the improvements on the same are included. and limitations established by law. Green binding himself not to mortgage nor encumber them to anybody until said plaintiff be f ully reimbursed for the corporation's indebtedness to him. Green should fail to obtain an additional loan from the defendants Cu Unjieng e Hijos.—In order that it may be understood that the machinery and other objects placed upon and used in connection with a mortgaged estate are excluded from the mortgage. it is indispensable that the exclusion thereof e stipulated between the contracting parties. INCLUSION OR EXCLUSION OF MACHINERY. as nothing could prevent B. as essential and principal elements of a sugar central. As to the alleged sale of said machinery and equipment to the plaintiff and appellant after they had been permanently incorporated with the sugar central of the Mabalacat Sugar Co. Article 334. A. A. and 1877 of the Civil Code. Green. 538). 353]. was transferred thereby. (Arts. Inc. Berkenkotter to hold said machinery and equipment as security for the payment of the latter's credit and to refrain from mortgaging or otherwise encumbering them until Berkenkotter has been fully reimbursed therefor.) "2.... liquid containers.

constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon (article 1877. and (3) that the sale of the machinery and equipment in question by the purchaser who was supplied the purchase money. Wherefore. Imperial. So ordered. and to refrain from mortgaging or otherwise encumbering them does not alter the permanent character of the incorporation of said machinery and equipment with the central. it is affirmed in all its parts. we are of the opinion and so hold: (1) That the installation of a machinery and equipment in a mortgaged sugar central. concur. finding no error in the appealed judgment. for the purpose of carrying out the industrial functions of the latter and increasing production. to the person who supplied the money. does not vest the creditor with ownership of said machinery and equipment but simply with the right of redemption. with costs to the appellant. Civil Code).For the foregoing considerations. in lieu of another of less capacity.. after the incorporation thereof with the mortgaged sugar central. and Goddard. 20 | P r o p e r t y . JJ. Butte. Malcolm. (2) that the fact that the purchaser of the new machinery and equipment has bound himself to the person supplying him the purchase money to hold them as security for the payment of the latter's credit. as a loan.

did not receive a formal and valid notice of said decision.COURT OF APPEALS. Installation of sawmill machineries in building of sawmill company.” which in part reads: “In this case for certiorari and prohibition with preliminary injunction. the Court of First Instance issued a writ of execution. Martin vs. “Petitioner now contends that the respondent Judge exceeded in his jurisdiction in ordering the execution without valid and formal notice of the decision. Ugarte. Morfe.AGO vs COURT OF APPEALS No. Luison for petitioner. 75 Phil. AGO. because it is the filing with the clerk of court of a signed decision that constitutes the rendition of the judgment. “IT IS SO ORDERED.R. No. THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK ENGINEERING. Notice by party of judgment dictated in open court not valid notice. Before such filing. basing said judgment on a compromise agreement between the parties. Besides. (De los Reyes vs. Same. 1962 PASTOR D. 1948. L-17898. with costs against the petitioner. 21 | P r o p e r t y .HON. for use in the sawing of logs carried on in said building. petitioner Pastor D. Civil Code. Lapena vs. G. The Provincial Fiscal of Surigao for respondent Sheriff of Surigao. G. is not a valid notice of said judgment. that constitutes rendition of a decision by a court of first instance. 1959. ORTIZ. unless a motion is filed on the ground of fraud. 505.000. Judgments.R.—It is the filing of the signed decision with the clerk of court. it appears from the records that the respondent Judge of the Court of First Instance of The facts of the case may be briefly stated as follows: In 1957. Judge of the Court of First Instance of Agusan. What constitutes rendition of judgment in courts of first instance. Martin. 1957) “Petitioner’s claim that he was not notified or served notice of the decision is untenable. which petitioner agreed to pay on installment basis. Ago vs. we believe that the lower court did not exceed nor abuse its jurisdiction in ordering the execution of the judgment. vs. or his counsel.: Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.—By the installation of the sawmill machineries in the building of the sawmill company. 1959) “It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not appealable and is immediately executory. May 22. was given in open court. respondents. This alone is a substantial compliance as to notice.R. The judgment on the compromise agreement rendered by the court below dated January 28. petitioner. “On August 15. and not the pronouncement of the judgment in open court. 81 Phil. 1959 alleges that he. Inc. L-12439.MONTANO A. Rule 27 of the Rules of Court expressly requires that final orders or judgments be served personally or by registered mail. No. Section 7. The facts are stated in the opinion of the Court. which motion for reconsideration was denied by the court below in the order of November 14.R. Inc.. The Provincial Sheriff of Surigao. 26723-R entitled “Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park Engineering. L-1254. Property. executing a chattel mortgage over said machineries and equipments to secure the payment of a balance of the price remaining unpaid of P32.. Quisumbing for respondent Grace Park Engineering. converting the said machineries and equipments into real estate within the meaning of Article 415 (5) of the. Agusan rendered judgment (Annex ‘A’) in open court on January 28. mistake or duress. LABRADOR. 1959. (De los Reyes vs. the decision may still be subject to amendment and change and may not yet be considered effective and binding. upon petition. Norberlo J. 1959. May 21. the same became a necessary and permanent part of the building or real estate on which the same was constructed.—The fact that a party heard the judge dictating the judgment in open court. 1959. (Gonzales vs. No. Gonzales. October 31.INC. July 31. Immovables by destination. “Petitioner’s motion for reconsideration dated October 12. “A compromise agreement is binding between the parties and becomes the law between them. Jose M. 38. J. Ugarte.” APPEAL for review by certiorari of a decision of the Court of Appeals.00. G. supra) “IN VIEW THEREOF. L-10089. THE HON. The petition for certiorari is hereby dismissed and the writ of preliminary injunction heretofore dissolved. No. et al.

as scheduled. but it must also be filed with the clerk of court. thus: “SECTION 1. it must not only be in writing. that the order and writ of execution having been issued by the lower court before counsel for petitioner received a copy of the judgment.” constituted a grave abuse of discretion and was in excess of its jurisdiction. Ortiz. Inc. The mere pronouncement of the judgment in open court with the stenographer taking note thereof does not. namely. then presiding. To enjoin said foreclosure. Inc. which was granted by the court on August 15. Inc. 1959 was a sufficient notice. dated September 23. petitioner alleges. 1959. signed by the judge. and is about to proceed in selling the same without prior publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court. 1959 was served upon counsel for petitioner only on September 25. While it is to be presumed that the judgment that was dictated in open court will be the judgment of the court. Inc. It is the filing of the signed decision with the clerk of court that constitutes rendition. 1959 (a date after the decision of the lower court but before levy by the Sheriff). and filed with the clerk of the court.. and that the respondent Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which have become real properties of the Golden Pacific Sawmill. 1959 until the final decision of the case. On November 9. issued a writ of preliminary injunction against the sheriff but it turned out that the latter had already sold at public auction the machineries in question. therefore. 1959. Montano A. And even if the order or judgment has already been 22 | P r o p e r t y . in order that a judgment may be considered as rendered. These machineries and equipments had been taken to and installed in a sawmill building located in Lianga. How judgment rendered. Ago and the Grace Park Engineering. on December 1. later followed. instituted extra-judicial foreclosure proceedings of the mortgage. 1959). 1959. Petitioner continued to default in his payments as provided in the judgment by compromise. he had sold them on February 16. and signed by him. The parties to the case arrived at a compromise agreement and submitted the same in court in writing. and is the fact that the petitioner herein was present in open court when the judgment was dictated. Inc. constitute a rendition of the judgment. dictated a decision in open court on January 28. Provincial Sheriff of Surigao. Judge of the Court of First Instance of Agusan. The Court of Appeals. the parties may be considered as having been notified of said judgment and this fact constitutes due notice of said judgment. sufficient notice thereof? The provisions of the Rules of Court decree otherwise. Having been advised by the sheriff that the public auction sale was set for December 4. 53 in the Court of First Instance of Agusan. on December 4. to whom. (a) the legality of the public auction sale made by the sheriff.—All judgments determining the merits of cases shall be in writing personally and directly prepared by the judge. 1959. and owned by the Golden Pacific Sawmill. 1959. Inc. The herein respondent.” The court of first instance being a court of record. petitioner. stating clearly and distinctly the facts and the law on which it is based. was the only bidder for P15. signed by Pastor D. in 1958. although the certificate of sale was not yet executed. the court may still modify said order as the same is being put into writing. filed with the lower court a motion for execution. 1959. so Grace Park Engineering. its resultant last order that the “sheriff may now proceed with the sale of the properties levied. and (b) the nature of the machineries in question. The respondent Grace Park Engineering. The Court of Appeals instructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill machineries and equipments sold by him on December 4. A writ of execution. acting upon the writ of execution issued by the lower court. The Court of Appeals held that as a judgment was entered by the court below in open court upon the submission of the compromise agreement.00. The Hon.000. 1960 the Court of Appeals rendered the aforequoted decision.Petitioner Ago defaulted in his payment and so. whether they are movables or immovables. petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of the judgment on compromise in open court on January 29. on December 8. Surigao del Sur.. Section 1 of Rule 35 describes the manner in which judgments shall be rendered. alleging that a copy of the aforementioned judgment given in open court on January 28. and (2) in not resolving the other issues raised before it. 1959. This raises the following legal question: Is the order dictated in open court the judgment of the court. 1959 (writ of execution is dated September 23. filed the petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals. Before this Court. levied upon and ordered the sale of the sawmill machineries and equipments in question. petitioner herein instituted Special Civil Case No. respondent Grace Park Engineering.

If rendition thereof is constituted by the filing with the clerk of court of a signed copy (of the judgment). the same became a necessary and permanent part of the building or real estate on which the same was constructed. therefore. a party is not considered as having been served with the judgment merely because he heard the judge dictating the said judgment in open court. that a party has of a judgment that was being dictated is of no effect because at the time no judgment has as yet been signed by the judge and filed with the clerk. it is necessary that he be served with a copy of the signed judgment that has been filed with the clerk in order that he may legally be considered as having been served with the judgment. it could still be subject to amendment and change and may not. therefore. 415. the signed judgment not having been served upon the petitioner. Besides. instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land. as required in Sec.—Final orders or judgments shall be served either personally or by registered mail. Prior thereto. thus: “ART. Thereafter the sawmill machineries and equipments were installed in a building and permanently attached to the ground..” This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Service of final orders or judgments. No judgment can be notified to the parties unless it has previously been rendered. 415(5) of the Civil Code. 16. Notice of sale of property on execution.00 appear to have been sold without the necessary advertisement of sale by publication in a newspaper. is not sufficient to constitute the service of judgment as required by the above-quoted section 7 of Rule 27. receptacles. the mere fact that a party heard the judge dictating the judgment in open court. personally or by registered mail. By reason of such installment in a building. The following are immovable property: x x x x x x x x (5) Machinery. Section 7 of Rule 27 provides as follows: “SEC. Considering that the machineries and equipments in question valued at more than P15. The notice. 7. The record shows that after petitioner herein Pastor D. notice thereof must be given as follows: x x x x x x x x 23 | P r o p e r t y . said judgment could not be effective upon him (petitioner) who had not received it. It is only when the judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment.” In accordance with this provision. the fact that the petitioner herein heard the trial judge dictating the judgment in open court. it is evident that the fact that a party or an attorney heard the order or judgment being dictated in court cannot be considered as notice of the real judgment. a copy of the decision.-—Before the sale of property on execution. it is still subject to amendment or change by the judge. having been issued before petitioner herein was served. and which tend directly to meet the needs of the said industry or works.. for use in the sawing of logs carried on in said building. 16 of Rule 39 of the Rules of Court. is not a valid notice of said judgment. Inc. concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and equipments at public auction without a notice of the sale having been previously published. which is as follows: “SEC. while it has not yet been delivered to the clerk for filing.put into writing and signed. 683. converting the said machineries and equipments into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the Philippines. Ago had purchased the sawmill machineries and equipments he assigned the same to the Golden Pacific Sawmill. For all the foregoing.000. It follows as a consequence that the issuance of the writ of execution was null and void. Cu Unjieng e Hijos. for use in connection with the industry carried by that company. constitute the real judgment of the court. Inc. Inc. held that the installation of the machinery and equipment in the central of the Mabalacat Sugar Co. 61 Phil. the said sawmill machineries and equipments became real estate properties in accordance with the provision of Art. The second question raised in this appeal. in payment of his subscription to the shares of stock of said corporation. converted the said machinery and equipment into real estate by reason of their purpose. Regarding the notice of judgment. the Rules expressly require that final orders or judgments be served personally or by registered mail. Paraphrasing the language of said decision we hold that by the installation of the sawmill machineries in the building of the Golden Pacific Sawmill. which has not been passed upon by the Court of Appeals.

as well as the sale of the same by the Sheriff of Surigao. then a like publication for a like period shall be made in one newspaper published in the English language. took no part. Concepcion. J. JJ.. Inc. Costs shall be against the respondent Grace Park Engineering.. in some newspaper published or having general circulation in the province. Dizon. concur. Reyes. 6 SCRA 530(1962)] 24 | P r o p e r t y . by publishing a copy of the notice once a week.” the sale made by the sheriff must be declared null and void. Court of Appeals. Ago from the Grace Park Engineering. and in one published in the Spanish language. Padilla. and. Decision set aside. Bengzon. if the assessed value of the property exceeds four hundred pesos. writ of execution declared null and void. C.“(c) In case of real property.J. J. for the same period. Bautista Angelo.. and also where the property is to be sold.B. by posting a similar notice particularly describing the property for twenty days in three public places in the municipality or city where the property is situated. WHEREFORE. Regala and Makalintal.L. [Ago vs.. If there are newspapers published in the province in both the English and Spanish languages. the decision of the Court of Appeals sought to be reviewed is hereby set aside and We declare that the issuance of the writ of execution in this case against the sawmill machineries and equipments purchased by petitioner Pastor D. Inc. are null and void.. Paredes. Barrera. if there be one.

the sheriff levied upon and garnished the sugar quotas allotted to plantation audit Nos. at the rate of P10. 26-239. 1960. respondents. It appears that during the lifetime of Esperidion Presbitero. the issuance of a partial writ of execution for the sum of P12. 1959. 1960. occasionally protracted by postponements. March 30. 20879. Plaintiff Helen Caram Nava (herein respondent) then moved the court. 608 of the . sugar quotas are inseparable therefrom. 1960. plus costs. said counsel asked for.—As an improvement attached to land. 26-240 and 26-241 adhered to the Ma-ao Mill District and “registered in the name of Esperidion Presbitero as the original plantation-owner”. 1959. Bago. Poblador. HELEN CARAM NAVA. J. though not physically so united. the plaintiff again moved on August 25. but without presenting for registration copies thereof to the Register of Deeds. 788 of the cadastral survey of Valladolid. 1960. but the same produced no fruitful result. requiring “the filing with the register of deeds of a copy of the orders together with a description of the property”.” Thereafter. June 10. and after some hearings. in relation with Section 7. of the Rules of Court. plaintiff’s counsel. The facts are stated in the opinion of the Court. THE HON. plaintiff. 26-237. in his capacity as Executor of the Testate Estate of EPERIDION PRESBITERO. to pay to the plaintiff the value of each of the said properties. Hence. 1963. and the Sugar Quota Administration at Bacolod City. On the following day. and to pay to the plaintiff the sum of P1. and to effect the final conveyance of the said portion of Lot 608 and the whole of Lot 788 free from any lien and encumbrance whatsoever. to hear evidence on the market value of the lots. and the court a quo ordered on June 9. which became final.00 per cavan. and there can exist no quota without there being first a corresponding plantation. L-19527. Rule 39. by express provision of law (Section 9. No. FERNANDEZ. judgment was rendered against him by the Court of Appeals on October 14. There cannot be a sugar plantation owner without land to which the quota is attached. vs. in a letter dated December 8. reiterated his previous suggestion for an amicable settlement.” This judgment. upon failure to do so. Africa & Benedicto and Hilado & Hilado for petitioner. Rule 59.B.L. a levy made by the sheriff upon a sugar quota is null and void if not in compliance with the procedure prescribe in Section 14. The defendant is further adjudged to pay to the plaintiff the value of the products received by him from the 5-hectare portion equivalent to 20 cavans of palay per hectare every year. RICARDO PRESBITERO. Ricardo Presbitero. versus Esperidion Presbitero.. J. defendant. Paredes. The fact that the Philippine Trade Act of 1946 (U.00 by way of attorney’s fees. or.: Petition for a writ of certiorari against the Court of First Instance of Negros Occidental. 1960 to declare the market value of the lots in question 25 | P r o p e r t y PETITION for a writ of certiorari against the Court of First Instance of Negros Occidental. Because of Presbitero’s failure to comply with this order within the time set forth by the court. and should be considered as immovable or real property under Article 416 (10) of the Civil Code. Negros Occidental.250. Act 4166). same cadastral survey. or 125 cavans yearly.PRESBITERO vs FERNANDEZ No. said counsel. and another deed of reconveyance of a 7-hectare portion of Lot No. from 1951 until possession of the said 5-hectare portion is finally delivered to the plaintiff with legal interest thereon from the time the complaint was filed. free from all liens and encumbrances. on manifestation of defendant’s willingness to cede the properties in litigation. furnishing copies of the writ of execution and the notice of garnishment to the manager of the Ma-ao Sugar Central Company. on June 22. in another friendly letter. Sugar quotas deemed immovable property. Levy not valid if copy of order and description of property is not filed with Register of Deeds. the trial court. Thereupon. Cruz & Nazareno and Manuel Soriano for respondents. within 30 days from the time this judgment becomes final.00. a deed of reconveyance of Lot No. sought in vain to amicably settle the case through petitioner’s son. entitled “Helen Caram Nava. and the PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL.R. When no response was forthcoming. also free from all liens and encumbrances. on June 21. JOSE F. San Juan. Public Law 371-79th Congress) allows transfers of sugar quotas does not militate against their immo-vability. suspended the proceedings and ordered him to segregate the portion of Lot 608 pertaining to the plaintiff from the mass of properties belonging to the defendant within a period to expire on August 24. REYES. was a modification of a decision of the Court of First Instance of Negros Occidental. 3492.S. as may be determined by the Court a quo upon evidence to be presented by the parties before it. 26-238. in its Civil Case No. in CA-G. “x x x to execute in favor of the plaintiff. Property. just like servitudes and other real rights over an immovable. petitioner. 1960.000.

and opined that sugar quotas can be carried from place to place without injury to the land to which they are attached. ending in the plaintiff’s putting up the highest bid for P34. death overtook the defendant Esperidion Presbitero.500. in Case No. Proceedings for the settlement of his estate were commenced in Special Proceedings No. 1960.000. a writ of execution for P17. thus. 1962.970. the court continued hearings on the motion. plaintiff Nava filed her opposition to Presbitero’s urgent motion of November 4. and on November 4. based on uncontradicted evidence previously adduced. Ricardo Presbitero. then the levy upon them by the sheriff is null and void for lack of compliance with the procedure prescribed in Section 14. they fall under the category of personal properties: “ART. but not the title covering Lot 608 because of an existing encumbrance in favor of the Philippine National Bank. Presbitero instituted the present proceedings for certiorari. 1962. and. On November 10. Defendant again defaulted.00 to the hectare. Rule 39. Wherefore. 1960.500. 43). 1960. 3492. to set aside the writs of execution. being for sums of money. but the auction sale proceeded on the same date. and ordered him to execute a reconveyance of Lot 788 not later than August 31.to be P2. The court granted this motion in its order dated February 3. and on May 8 and 23. In view thereof. acting on a prayer of defendant Presbitero. 1960. 1960 either to pay the value of the 14 hectares at the rate given or to deliver the clean titles of the lots. On October 22. and ultimately denied it on November 18. x x x The following are deemed to be personal property: x 26 | P r o p e r t y . 1960 and March 5. as certified to by the sheriff. and on the day following wrote the sheriff to proceed with the auction sale of the sugar quotas previously scheduled for November 5. therefore. gave the defendant until October 15. 1960. 1961 a supplement to his urgent motion. and are not one of those included in Article 415 of the Civil Code. If they be realty. Helen Caram Nava. 1960. 1960. invoked the test formulated by Manresa (3 Manresa. The petition further seeks the setting aside of the sheriff’s certificate of sale of the sugar quotas made out in favor of Helen Caram Nava. the sheriff sold 21. T-28046 covering Lot 788. granted him twenty (20) days to finalize the survey of Lot 608. in an order dated August 27.00. In contending that sugar quotas are personal property. and that the writs. On October 15. The petitioner denies having been personally served with notice of the garnishment of the sugar quotas. dated February 3. as shown by his motion of November 4. as for real property. 1960. moved the court for payment by the defendant of the sum of P35. and not being thus included. 1961. 1960. 1962. But the court. 1962. in its order dated September 24. The sheriff issued the notice of auction sale on October 20. and that she be directed to file the judgment credit in her favor in Civil Case No. on September 21. Helen Caram Nava moved for. 416. and secured on October 19. and the court. the respondent. are unenforceable since Esperidion Presbitero died on October 22. and to order the sheriff to desist from holding the auction sale on the grounds that the levy on the sugar quotas was invalid because the notice thereof was not registered with the Register of Deeds. and so plaintiff. Rule 59. A motion for reconsideration by Presbitero was denied in a subsequent order under date of March 5. A preliminary restraining writ was thereafter issued by the court against the respondents from implementing the aforesaid orders of the respondent Judge. 1960. of the Rules of Court requiring “the filing with the register of deeds a copy of the orders together with a description of the property x x x”. respectively. 1960.640 piculs of sugar quota to her. the special administrator. could only be enforced as a money claim against his estate. plaintiff Nava also filed an urgent motion to order the Maao Sugar Central to register the sugar quotas in her name and to deliver the rentals of these quotas corresponding to the crop year 1960-61 and succeeding years to her. in relation with Section 7. the defendant finally delivered Certificate of Title No. On January 11. This urgent motion was heard on November 5. 1960. 6th Ed.500. 1960.00 per hectare. and that he had actual knowledge of the garnishment.11. the latter filed on May 4. 1961. but this disclaimer cannot be seriously considered since it appears that he was sent a copy of the notice through the chief of police of Valladolid on June 21. Squarely at issue in this case is whether sugar quotas are real (immovable) or personal properties. 2936 of the Court of First Instance of Negros Occidental.00 for the 14 hectares of land at P2. filed an urgent motion. 1960. 3492 as a money claim in the proceedings to settle the Estate of Esperidion Presbitero. 1960. 1960 to set aside the writs of execution and to order the sheriff to desist from holding the auction sale.

the sale would include the quotas.4. is not necessarily identical to involuntary transfers or levies. in fact. Neither does the fact that the Sugar Quota Office does not require registration of sales of quotas with the Register of Deeds for their validity. though not physically so united. She was sustained by the lower court when it stated that “it is a matter of public knowledge and it is universal practice in this province. and that Ricardo Presbitero had leased sugar quotas independently of the land. Since the levy is invalid for non-compliance with law. under express provisions of law.S. 74 Phil. gauged from the moment of actual levy. In general. participation.S. or diminishing the potentiality of either quota or plantation. all things which can be transported from place to place without impairment of the real property to which they are fixed. The production allowance or quotas corresponding to each piece of land under the provisions of this Act shall be deemed to be an improvement attaching to the land entitled thereto x x x. that these properties are immovable or real. this Court held in the case of Abelarde vs.-Philippine Trade Relations Act. Suffice it to state that. and for this reason Section 3 of Executive Order No. As an improvement attached to land. action (and) rent” which the grantors had or might have in relation to the parcels of land sold.” Thus. Contracts for public works. but the levy on the 27 | P r o p e r t y . and there can exist no quota without there being first a corresponding plantation. in enumerating what are immovable properties. they cannot stand against the positive mandate of the pertinent statute. 873 defines “plantation” as follows: “(a) The term ‘plantation’ means any specific area of land under sole or undivided ownership to which is attached an allotment of centrifugal sugar. The fact that the Philippine Trade Act of 1946 (U. Article 416 of the Civil Code being made to apply only when the thing (res) sought to be classified is not included in Article 415. as amended) provides — “SEC. since the lease or sale of quotas are voluntary transactions. destroying.” And Executive Order No. Act 4166. and there cannot be a sugar plantation owner without land to which the quota is attached. just like servitudes and other real rights over an immovable. the sugar quota allocations are accessories to land. to transfer by sale. Public Law 371-79th Congress) allows transfers of sugar quotas does not militate against their immovability. 4. and can not have independent existence away from a plantation. by express provision of law. that the allotment is deemed an improvement attached to the land. Article 415 of the Civil Code. therefore. sugar quota allocations from one plantation to any other” and that it is “specious to insist that quotas are improvements attaching to one plantation when in truth and in fact they are no longer attached thereto for having been sold or leased away to be used in another plantation”. and. 344. transferred apart from the plantations to which they are attached. and that at the time the contract of sale was signed the land devoted to sugar were practically of no use without the sugar allotment. While respondent’s arguments are thought-provoking. or otherwise. authorizes the lifting of sugar allotments from one land to another by means only of notarized deeds. limiting the production of unrefined sugar in the Philippines did not allocate the quotas for said unrefined sugar among lands planted to sugarcane but among “the sugar producing mills and plantation OWNERS”. in fact. without impairing. lease. The allotment corresponding to each piece of land under the provisions of this Act shall be deemed to be an improvement attaching to the land entitled thereto x x x”. The Sugar Limitation Law (Act 4166. interest. Indeed. 1825 similarly provides — “SEC. The respondent cites further that the U. issued by Governor General Murphy. approved by the United States Congress in 1946.” (Emphasis supplied) It is by law. Lopez. although the latter may vary. 873. and cites that the Sugar Office does not require any registration with the Register of Deeds for the validity of the sale of these quotas. title. it is impertinent to discuss the survival or non-survival of claims after the death of the judgment debtor. and Republic Act No. nor the fact that allocation of unrefined sugar quotas is not made among lands planted to sugarcane but among “the sugar producing mills and plantation OWNERS”. it being provided in Section 9. those here in question were not noted down in the certificate of title of the land to which they pertain. 9. and servitudes and other real rights over immovable property. Respondent would add weight to her argument by invoking the role that sugar quotas play in our modern social and economic life. the writs of execution are not in question. Respondent likewise points to evidence she submitted that sugar quotas are. names — “10. as the case presently stands. the regime of which. the sugar quotas are inseparable therefrom. that even if a contract of sale of haciendas omitted “the right. whose principal industry is sugar.

Vol. Notes. 2) of the new Civil Code. Labrador. Paredes. concur. JJ. a day before the scheduled sale (though unresolved by the court on time). Barrera. Makalintal. the preliminary injunction heretofore granted is hereby made permanent. which classifies as immovable property “plants” while they are attached to the land or form an integral part of an immovable. 28 | P r o p e r t y .—Rights are neither movable nor immovable.quotas. p. J. and the sheriff’s certificate of sale of the sugar quotas in question declared null and void. their classification should naturally follow that of the things or objects over which they are exercised (Capistrano. I. Costs against respondent Nava. it may be stated that the latter’s urgent motion of November 4. Dizon and Regala. and. 1950 ed. because of its invalidity. or desirable. which classified “sugar cane” as personal property.. may now be considered abandoned in view of the explicit provision of Article 415 (No. 339). but did not avail thereof. did ask for desistance from holding the sale. Neither is it necessary. WHEREFORE.J. Padilla. Civil Code Annotated.Valdez. 512. to pass upon the conscionableness or unconscionableness of the amount produced in the auction sale as compared with the actual value of the quotas inasmuch as the sale must necessarily be also illegal. but it being necessary for legal purposes to classify them. 50 Phil. the levy amount to no levy at all. did not take part... The ruling is Sibal v. 1960. C. As to the remedial issue that the respondents have presented: that certiorari does not lie in this case because the petitioner had a remedy in the lower court to “suspend” the auction sale.. Bengzon. Preliminary injunction made permanent.

the ground around the two legs of the third 29 | P r o p e r t y Taxation. and the tower carried five high voltage wires without cover or any insulating materials. Laguna and is transmitted to the City of Manila by means of electric transmission wires. PETITION for review of a decision of the Court of Tax Appeals. like the Meralco. heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. These electric transmission wires which carry high voltage current. on land belonging to it. Like the first one. the Philippine Commission enacted Act No.BOARD OF ASSESSMENT APPEALS vs MERALCO No. Quezon City. Steel towers of Meralco exempt under its franchise. Steel towers of electric company not real property. The third tower examined is located along Kamias Road. Respondent Manila Electric Co. on land owned by the petitioner approximately more than one kilometer from the first tower. marked Annex A. respondent. so that by unscrewing the bolts. and includes a steel tower of an electric power company.—The term "pole" refers to an upright standard to the top of which something is affixed or by which something is supported. As in the first two towers given above. the ground around one of the four legs was excavated from seven to eight (8) feet deep and one and a half (1-1/2) meters wide. with an opening of about one (1) meter in diameter. is held to include its steel towers. but there was soft adobe beneath. The second tower inspected was located in Kamuning Road. the terms and conditions of which were embodied in . L-15334.—The tax exemption privilege of the Meralco on its poles. Same. petitioners.—The steel towers of an electric company do not constitute real property for the purpose of the real property tax. PAREDES. with two cross metals to prevent mobility. are fastened to insulators attached on steel towers constructed by respondent at intervals. Quezon City.: From the stipulation of facts and evidence adduced during the hearing. Quezon City. the following appear: On October 20.—The City Treasurer of Quezon City is held responsible for the refund of real property taxes. There being very little water at the bottom. as granted by its franchise (Act No. Same. Refund. K-F. Selph & Carrascoso for respondent. the tower proper was attached to the leg by three bolts. Real property tax. 44 approved on March 24. became the transferee and owner of the franchise. January 31. Same. Term "pole" includes steel towers. it was seen that there was no concrete foundation. 1964. which was not made a party to the suit. it could not be determined with certainty as to whether said adobe stone was placed purposely or not. maintain and operate an electric street railway and electric light. is the real party in interest. 484 which authorized the Municipal Board of Manila to grant a franchise to construct. decreased to about a quarter of a meter as it went deeper until it reached the bottom of the posts. As in the first tower. Three steel towers were inspected by the lower court and the parties and the following were the descriptions given thereof by said court: "The first steel tower is located in South Tatalon. (Meralco for short). Charles M. at the bottom of the post were two parallel steel bars attached to the leg by means of bolts. actually. running from the province of Laguna to the said City. The leg was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner. not only because this question was not raised in the lower court but also because. ClTY ASSESSOR and ClTY TREASURER OF QUEZON CITY. it was he who had insisted that the taxpayer pay the taxes now to be refunded. Ordinance No. the tower could be dismantled and reassembled. BOARD OF ASSESSMENT APPEALS. factually. Same. The facts are stated in the opinion of the Court. The findings were as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet. Assistant City Attorney Jaime R. 484). City Treasurer held responsible. Swift was awarded the said franchise on March 1903. The respondent Meralco has constructed 40 of these steel towers within Quezon City. Agloro for petitioners. vs. Same. despite his contention that Quezon City. Ross. 1903. Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls. J. 1902. there was no concrete foundation but there was adobe stone underneath. as the place abounds with this kind of stone. MANILA ELECTRIC COMPANY. A photograph of one of these steel towers is attached to the petition for review. España Extension. the second tower is made up of metal rods joined together by means of bolts. Same. as the bottom of the excavation was covered with water about three inches high. from its hydro-electric plant in the province of Laguna to the City of Manila.

which required respondent to pay the amount of P11. Respondent's Franchise. wires." On November 15. 1955. sometimes. Part Two. In a proceeding to condemn land for the use of electric power wires.651. 224. wires." As heretofore described. and filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision on December 29. (2) the steel towers are personal properties and are not subject to real property tax. machinery and personal property as other persons are or may be hereafter required by law to pay. this term was construed to mean either wood or metal poles and in view of the land being subject to overflow. In their decisions the words "towers" and "poles" were used interchangeably. 31992 and 15549. italics supplied. a pole is not restricted to a long cylindrical piece of wood or metal. transformers. The steel supports or 30 | P r o p e r t y . The motion for reconsideration having been denied.. which. The tax exemption privilege of the petitioner is quoted hereunder: "PAR. x x x Said percentage shall be due and payable at the times stated in paragraph nineteen of Part One hereof. (Stemmons v. and poles. 1907. These are assigned as errors by the petitioner in the brief.86 as real property tax on the said steel towers for the years 1952 to 1956. as a dovecote set on a pole. telegraph poles.651. In upholding the cause of respondents. In accordance with the definitions. but the use to which they are dedicated.) The term "poles" was also used to denominate the steel supports or towers used by an association to convey its electric power furnished to subscribers and members. an appeal was taken by respondent to the Board of Assessment Appeals of Quezon City." (Webster's New International Dictionary. After denying respondent's petition to cancel these declarations. comparatively slender usually cylindrical piece of wood or timber. as typically. and poles of the PLDT Co. a similar typically cylindrical piece or object of metal or the like". and insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted.tower was excavated to a depth about two or three inches beyond the outside level of the steel bar foundation. 1958.) Along the streets. above quoted. a vessel's mast. on April 22. 365. Several courts of last resort in the United States have called these steel supports "steel towers". 2nd Ed. x x x and shall be in lieu of all taxes and assessments of whatsoever nature. and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid. in the City of Manila. p. but includes "upright standards to the top of which something is affixed or by which something is supported. Like the two previous ones. The grantee shall be liable to pay the same taxes upon its real estate.86. petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax Declaration Nos. the CTA held that: (1) the steel towers come within the term "poles" which are declared exempt from taxes under part II paragraph 9 of respondent's franchise. looks like mud or clay. is not determined by their place or location. franchise. and insulators). (Tex) 212 S. by extension. p. 9. which are made of two steel bars joined together by an interlacing metal rod. the stem of a small tree stripped of its branches. 1959.) The word "pole" means "a long. the statute was interpreted to include towers or poles. and the necessary carrying of numerous wires and the distance between poles. and it is well understood in that jurisdiction that a transmission tower or pole means the same thing. constructed for the purpose of fastening high voltage and dangerous electric wires alongside public highways. probably due to high humidity. nor by the character of the electric current it carries. plant (not including poles. buildings. also. 484. respondent's steel supports consist of a framework of four steel bars or strips which are bound by steel cross-arms atop of which are cross-arms supporting five high voltage transmission wires (See Annex A) and their sole function is to support or carry such wires. income. transformers. Dallas Power & Light Co. in which the law provided that wires shall be constructed upon suitable poles. It was also found that the square metal frame supporting the legs were not attached to any material or foundation. 32-A Words and Phrases. earnings. the instant petition for review was filed. may be seen cylindrical metal poles. specifically. It must be noted from paragraph 9. They are called "poles" notwithstanding the fact that they are not made of wood. ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11. It was found that there was no concrete foundation.W. the bottom arrangement of the legs thereof were found to be resting on -soft adobe. The term also refers to "an upright standard to the top of which something is affixed or by which something is supported. 9." (Par. a tent pole. nor the material or form orm of which it is made. that the concept of the "poles" for which exemption is granted. The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. cubical concrete poles. Act No. Respondent paid the amount under protest. as electric poles. and by whatsoever authority upon the privileges. and they have denominated these steel supports or towers. 222.

the top of which extends above the surface of the soil in the tower of Oxford. constructed like ladder and loaded with high voltage electricity. It should also be conceded by now that steel towers. and even if they were. roads. 126 Atl. in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. do not come within the objects mentioned in paragraph 1. but was considering the danger from any elevated wire carrying electric current. As per description. given by the lower court. instruments or implements. but Article 415 of the Civil Code does. they are removable and merely attached to a square metal frame by means of bolts. for obvious reasons. They are not constructions analogous to buildings nor adhering to the soil. any continuous series of structures intended and used solely or primarily for the purpose of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. It was held that in defining the word pole. Petitioner is not engaged in an industry or works on the land in which the steel supports or towers are constructed. that the word "poles". 8 P. They can not be included under paragraph 3. and constructions of all kinds adhered to the soil. 383. It is evident. 249-250. 252 P. The poles as contemplated thereon. v. as used in Act No.." xxx xxx xxx The steel towers or supports in question. can better effectuate the purposes for which the respondent's franchise was granted. p. and other equipment capable of carrying wires for the transmission of electric power (Connecticut Light and Power Co. the defendant admitted that the structure on which a certain person met his death was built for the purpose of supporting a transmission wire used for carrying high-tension electric power. but claimed that the steel towers on which it was carried were so large that their wire took its structure out of the definition inition of a pole line. the said two metal pieces being connected with criss-cross iron running from the bottom to the top. buildings. which can be disassembled by unscrewing the bolts and reassembled by screwing the same. instruments or implements intended by the owner of the tenement for an industry or works which may be carried in a building or on a piece of land. xxx xxx xxx (3) Everything attached to an immovable in a fixed manner. receptacles. 1016). 101 Conn. Compton. v. 31 | P r o p e r t y . Bryan. These steel towers are about 15 feet square at the base and extended to a height of about 35 feet to a point. If the respondent would be required to employ "woden poles. arms. for they are not machineries. Oxford. and are embedded in cement foundations sunk in the earth. 484 and incorporated in the petitioner's franchise. as to defeat the very object for which the franchise was granted. they are not intended for industry or works on the land. because they do not constitute buildings or constructions adhered to the soil. should not be given a restrictive and narrow interpretation. (Salt River Valley Users' Ass'n v. These steel towers or supports do not also fall under paragraph 5. then one should admit that the Philippines is one century behind the age of space. they are like the steel towers in question. and to the towers are attached insulators. one should not be governed by the wire or material of the support used.) The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydroelectric power and transmitting the power generated from its plant to the tower of Oxford and City of Waterbury. receptacles. the logical question posited is whether they constitute real properties. 1)." or "rounded poles" as it used to do fifty years back. which when unscrewed could easily be dismantled and moved from place to place.towers were made of iron or other metals consisting of two pieces running from the ground up some thirty feet high. The tax law does not provide for a definition of real property. and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips. Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles. should be understood and taken as a part of the electric power system of the respondent Meralco. joined together by means of bolts. for the conveyance of electric current from the source thereof to its consumers. as they are not attached to an immovable in a fixed manner. being wider at the bottom than at the top. In form and structure. 2nd. like the ones in question. therefore. and that regardless of the size or material wire of its individual members. In a case. and which tends directly to meet the needs of the said industry or works . xxx xxx xxx (5) Machinery. so that they can be subject to a real property tax. by stating the following are immovable property: "(1) Land.

Padilla. C. which was not made a party to the suit..B. J. the decision appealed from is hereby affirmed. it cannot properly be raised for the first time on appeal. therefore. which respondent paid under protest. IN VIEW HEREOF. concur. J.-651. factually. with costs against the petitioners. took no part. Barrera and Regala.. Decision affirmed. J. Having acted in his official capacity as City Treasurer of Quezon City. Concepcion. Bengzon. Reyes.. despite the fact that Quezon City is not a party to the case.L. Labrador.J. Makalintal.It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of P11. but Quezon City.. for. JJ. 32 | P r o p e r t y . The herein petitioner is indulging in legal technicalities and niceties which do not help him any. it was he (City Treasurer) who had insisted that respondent herein pay the real estate taxes. Bautista Angelo. notwithstanding its capacity to sue and be sued. This question has not been raised in the court below and. under the circumstances. concurs in the result. Dizon.86.. he would surely know what to do. he should not be ordered to effect the refund. It is argued that as the City Treasurer is not the real party in interest.

Note 8).S. 2nd 271.703. The foundation of the tanks is elevated from the remaining area. Oil storage tanks were held to be taxable realty in Standard Oil Co. the term “real property” may include things which should generally be regarded as personal property (84 C. of New York vs. of New Jersey vs. according to the hearing commissioners of the Central Board of Assessment Appeals. The facts are stated in the opinion of the Board. Batangas which it leased in 1968 from Caltex (Phil. to prevent the tank from sliding. they may. it filed a motion for reconsideration which the Board denied in its resolution of November 25. AQUINO. respondents. the foundation itself and the walls. 2 is supported by a concrete foundation with an asphalt lining about an inch thick. Storage tanks although not embedded on land considered as improvements and are subject to realty tax. dikes and steps. steps. Rollo. Atlantic City.* MANILA ELECTRIC COMPANY. They are used for storing fuel oil for Meralco’s power plants.MERALCO vs BOARD OF ASSESSMENT APPEALS No. Rollo). For the five-year period from 1970 to 1974. be considered as improvements on the land. The tanks are within the Caltex refinery compound. petitioner. It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property (Standard Oil Co. the tax and penalties amounted to P431. for taxation purposes. 60-61. 15 Atl. It is undeniable that the two tanks have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by Meralco for its operations. 1977. on the basis of an assessment made by the provincial assessor.: This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila Electric Company on a lot in San Pascual. According to Meralco. Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local Government and Community Development Jose Roño as members) in its decision dated November 5. May 31. nevertheless. a copy of which was received by Meralco on February 28. the area where the two tanks are located is enclosed with earthen dikes with electric steel poles on top thereof and is divided into two parts as the site of each tank.000 barrels. On both sides of the earthen dikes are two separate concrete steps leading to the foundation of each tank. defined. vs. Meralco received a copy of that decision on February 28. 1982. 44 Phil. enhancing its utility and rendering it useful to the oil industry. BOARD OF ASSESSMENT APPEALS OF BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS. are affixed to the land while the pipelines are attached to the tanks. CENTRAL BOARD OF ASSESSMENT APPEALS. The Board required Meralco to pay the tax and penalties as a condition for entertaining its appeal from the adverse decision of the Batangas board of assessment appeals. screws or similar devices. Each empty tank can be floated by flooding its dike-inclosed location with water four feet deep. The bottom of each tank is in contact with the asphalt layer.—For purposes of taxation.J. SPECIAL CIVIL ACTION for certiorari to review the decision and resolution of the Central Board of Assessment Appeals. Rollo. Real property. eighteen inches thick.) In 1970. Same. pipelines and other appurtenances constitute taxable improvements. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer. the municipal treasurer of Bauan. a sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer. Tank No. 29-30. 630. On the fifteenth day. 633). dikes.—We hold that while the two storage tanks are not embedded in the land. Its bottom plate is not attached to any part of the foundation by bolts. Inc. Batangas. Civil Law. required Meralco to pay realty taxes on the two tanks. Property. They have a total capacity of 566. It is not 33 | P r o p e r t y .) On the other hand. Taxation. 27. Same. The steel sides of the tank are directly supported underneath by a circular wall made of concrete. anchored or welded to the concrete circular wall. according to Meralco. The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M. 1977. (pp.). Hence. (pp. 1976 ruled that the tanks together with the foundation. Pipelines were installed on the sides of each tank and are connected to the pipelines of the Manila Enterprises Industrial Corporation whose buildings and pumping station are near Tank No. the tank is not attached to its foundation. L-47943. the storage tanks are made of steel plates welded and assembled on the spot. 1978. 2.96 (p. 171. J. The Board concludes that while the tanks rest or sit on their foundation. Jaramillo. walls. Same. which are integral parts of the tanks. The tank merely sits on its foundation.

Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property enumerated in article 415 of the Civil Code and. be considered as improvements on the land. of New York vs. Notes. and the Real Property Tax Code. machinery. they cannot be categorized as realty by nature. Manila Electric Company. They were removable from their metal frames. This provision is reproduced with some modification in the Real Property Tax Code which provides: “Sec. where the tools and equipment in the repair. Jaramillo. Concepcion Jr. enhancing its utility and rendering it useful to the oil industry.” The Code contains the following definition in its section 3: “k) Improvements—is a valuable addition made to property or an amelioration in its condition. by incorporation. costing labor or capital and intended to enhance its value. carpentry and blacksmith shops of a transportation company were held not subject to realty tax because they were personal property. of New Jersey vs. JJ. The Board’s questioned decision and resolution are affirmed. 464 which took effect on June 1. including land. 328.—Tax exemptions are strictly constituted against the taxpayer and liberally in favor of the taxing authority. 3 SCRA 313. Yuseco. amounting to more than mere repairs or replacement of waste. No costs. 44 Phil. cities and municipalities an annual ad valorem tax on real property. 633). SO ORDERED. the term “real property” may include things which should generally be regarded as personal property (84 C. Meralco filed this special civil action of certiorari to annul the Board’s decision and resolution. such as land. 1978. Incidence of Real Property Tax. It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property (Standard Oil Co. Presidential Decree No. Oil storage tanks were held to be taxable realty in Standard Oil Co. is on leave. Atlantic City. the petition is dismissed. 171. 1974. It is undeniable that the two tanks have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by Meralco for its operations. by destination nor by analogy.On March 15. concur. assessed and collected in all provinces. buildings..) Taxes being the chief source of revenue for the Government to keep it running must be paid immediately and without delay.—They shall be levied. Nor is there any parallelism between this case and Mindanao Bus Co. vs. 119 Phil. wherein Meralco’s steel towers were held not to be subject to realty tax. the steel towers were not attached to any land or building. buildings. and other improvements” not specifically exempted in section 3 thereof. The issue raised by Meralco has to be resolved in the light of the provisions of the Assessment Law. beauty or utility or to adapt it for new or further purposes. Section 2 of the Assessment Law provides that the realty tax is due “on real property. Note 8). Basuego. (City of Baguio vs. they may. Barredo (Chairman). 501. De Castro and Escolin. The case of Board of Assessment Appeals vs. is not in point because in that case the steel towers were regarded as poles and under its franchise Meralco’s poles are exempt from taxation. machinery and other improvements affixed or attached to real property not hereinafter specifically exempted. Guerrero. therefore. J.) 34 | P r o p e r t y . WHEREFORE. Justice Abad Santos did not take part. It contends that the Board acted without jurisdiction and committed a grave error of law in holding that its storage tanks are taxable real property. 116 Phil. Commonwealth Act No. 15 Atl. borderline or penumbral cases on the classification of property where strong divergent opinions are inevitable. Moreover. This is one of those highly controversial. 470.” We hold that while the two storage tanks are not embedded in the land. 2nd 271... For purposes of taxation. Decision and resolution affirmed. 630. 38.. 100 SCRA 116. not on the land owned by Meralco. nevertheless.S. Stress is laid on the fact that the tanks are not attached to the land and that they were placed on leased land. City Assessor. (Collector of Internal Revenue vs.J.

. vs.. attains finality and cannot be the subject of any relief. Inc. it is held that it cannot be extended to authorize the refund of paid taxes. 77 SCRA 469.) Local governments are without power to tax electric power companies already subject to franchise tax. 23 SCRA 276. Collector of Internal Revenue.) Term “AS IS” in public auction of imported goods refers to the physical condition of the merchandise and not the legal situation in which it was at the time of the sale. Court of Tax Appeals. 18 SCRA 703. 9 SCRA 728. Geronimo.) The prohibition against the imposition of percentage taxes (formerly provided for in Sec. (Ilocos Norte Electric Co. 18 SCRA 488. City of Cebu. (Surigao Consolidated Mining Co. vs. vs. 109 SCRA 472. (Philippine Match Co. Inc.) The power of taxation should be exercised with caution to minimize injury to the propriety rights of a taxpayer.. Acting Commissioner of Customs. unless their franchise allows the imposition of an additional tax.) The forfeiture proceeding concluded by the collector in favor of the State. (Esso Standard Eastern.) ——o0o—— 35 | P r o p e r t y . 109 SCRA 388. 1 of C. de Gordon vs. 472) refers to municipalities and municipal districts but not to chartered cities. (Commissioner of Customs vs. 81 SCRA 99. Court of Appeals. Municipality of Laoag.Exceptions from taxation are considered in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.) The term “insulating oil” comes within the meaning of the term “insulator” and qualifies the Manila Electric Company for exemption from the tax due on the importation thereof under the terms of its franchise which expressly exempts its “insulator” from all taxes of whatever kind and nature. vs. 80 SCRA 74. Court of Tax Appeals. (Acting Commissioner of Customs vs. (Roxas vs. Manila Electric Co. after notice to unknown owners is made and when no claim is interposed in the prescribed interim period.) Where the law clearly refers to the condonation of unpaid taxes. (Auyong Hian vs.A.) Alleged lack of personal notice of tax sale to petitioner is negated by averments in her pleading (Vda. Inc.

. J. PROPERTY. MACHINERY AS PERSONAL PROPERTY. CASTILLO and DAVAO LIGHT & POWER Co. ID. J. land upon which the business was conducted belonged to another person. According to the Code. a judgment was rendered in favor of the plaintiff in that action against the def endant in that action. involves the determination of the nature of the properties described in the complaint. plaintiff and appellant.. is in point. def endants and appellees. INC.. Inc. The lessee also treated the machinery as personal property by executing chattel mortgages in f favor of third persons. also. Inc. which was the plaintiff in that action.. and the properties now in question were levied upon as personalty by the sheriff. One of such persons is the appellee by assignment from the original mortgagees. as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties on appeal.: The issue in this case. MALCOLM. The facts are stated in the opinion of the court. it should further be explained that the Davao Saw Mill Co.. barrio of Tigatu. but not when so placed by a tenant. proceeded to take possession of the machinery and other properties described in the corresponding certificates of sale executed in its favor by the sheriff of Davao. in the event the party of the second part should leave or abandon the land leased before the time herein stipulated. was the defendant. That the machineries and accessories are not included in the improvements which will pass to the party of the first part on the expiration or abandonment of the land leased. W. and as a consequence absolved the defendants from the complaint. buildings. APPEAL from a judgment of the Court of First Instance of Davao. a usufructuary. is the holder of a lumber concession from the Government of the Philippine Islands. vs. ID. has on a number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third persons. CIVIL CODE. Arsenio Suazo & Jose L. The trial judge found that those properties were personal in nature. unless such person acted as the agent of the owner. It has operated a sawmill in the sitio of Maa. Palma Gil and Pablo Lorenzo & Delfin Joven for appellant. all the improvements and buildings introduced and erected by the party of the second part shall pass to the exclusive ownership of the party of the first part without any obligation on its part to pay any amount for said improvements and buildings. The Davao Saw Mill Co.. On the land the sawmill company erected a building which housed the machinery used by it. Land.. 2. Ferrier for appellees.DAVAO SAW MILL CO vs CASTILLO No.—Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. roads and constructions of all kinds adhering to the soil. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. with the understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration or abandonment of the land leased.. the improvements and buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had expired: Provided. the conflict concerning machines which were placed' and mounted on f oundations of cement. municipality of Davao. the 36 | P r o p e r t y . Province of Davao. No third party claim was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein. Indeed the bidder. Article 334. PARAGRAPHS 1 and 5. ID.. 1935 DAVAO SAW MILL Co.—A lessee placed machinery in a building erected on land belonging to another. Some of the implements thus used were clearly personal property. Inc. and the defendant herein having consummated the sale. * * * * * * * 1. or any person having only a temporary right. a writ of execution issued thereon... J." In another action. wherein the Davao Light & Power Co. with costs against the plaintiff. As connecting up with the facts. Held: That the machinery must be classified as personal property. 40411. APRONIANO G.. was the plaintiff and the Davao Saw Mill Co. Hilario. real property consists of— "1. of the Civil Code. However. INC. however. August 7. ARTICLE 334. paragraphs 1 and 5... In the contract of lease between the sawmill company and the owner of the land there appeared the following provision: "That on the expiration of the period agreed upon. Inc. CONSTRUED.

No. 9. (Demolombe. and on appeal being taken to the United States Supreme Court.) The distinction rests. 12. 'Things. of New York vs. Tit. therefore. In the opinion written by Chief Justice White.' (See also Code Nap.' Numerous illustrations are given in the fifth subdivision of section 335. 518 et seq. It follows that abstractly speaking the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose its character of movable property and become immovable by destination. that which was placed in the plant by the Altagracia Company. 5. It is. Following the Code Napoleon. upon the fact that one only having a temporary right to the possession or enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing it by an act of immobilization to become the property of another. In this connection the decision of this court in the case of Standard Oil Co. We entertain no doubt that the trial judge and the appellees are right in their appreciation of the legal doctrines flowing from the facts. But in the concrete immobilization took place because of the express provisions of the lease under which the Altagracia held. that is. 2.) So far as the subject-matter with which we are dealing— machinery placed in the plant—it is plain. it follows that they had the right to levy on it under the execution upon the judgment in their favor. which is as follows: 'Machinery. 44 Phil. liquid containers. being. Laurent. it must again be pointed out that the appellant should have registered its protest before or at the time of the sale of this property. it was held that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. Tit. Aubry et Rau. the characterization of the property as chattels by the appellant is indicative of intention and impresses upon the property the character determined by the parties. unless such person acted as the agent of the owner. to and inclusive of article 534. It must further be pointed out that while not conclusive. however. articles 516. deprived the tenant of any right to charge against the lessor the cost of such machinery.' says section 334 of the Porto Rican Code. and the exercise of that 37 | P r o p e r t y . 203.. p. but also attributes immovability in some cases to property of a movable nature. personal property. furnishes the key to such a situation. Under such conditions the tenant in putting in the machinery was acting but as the agent of the owner in compliance with the obligations resting upon him. A similar question arose in Puerto Rico. Tit. whether obiter dicta or not. may be immobilized. and decisions quoted in FuzierHerman ed. but intended by a lessee for use in a building erected on the land by the latter to be returned to the lessee on the expiration or abandonment of the lease. a usufructuary. and appellees the last mentioned paragraph. by the placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right. that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. recapitulating the things which. Section 164. In the first place. movable property. since the lease in substance required the putting in of improved machinery. the Porto Rican Code treats as immovable (real) property. but not when so placed by a tenant. because of the destination to which it is applied. 630). instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry. or any person having only a temporary right.. * * * * * * * "The machinery levied upon by Nevers & Callaghan. No."5. vessels. Such result would not be accomplished. that is. and it was expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner without compensation to the lessee. not necessary to spend overly much time in the resolution of this appeal on side issues. moreover. Jaramillo ([1923]. as regards Nevers & Callaghan. 447. Machinery. it was in part said: "To determine this question involves fixing the nature and character of the property from the point of view of the rights of Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived by them from the execution levied on the machinery placed by the corporation in the plant. machinery not intended by the owner of any building or land for use in connection therewith. both under the provisions of the Porto Rican Law and of the Code Napoleon. 'may be immovable either by their own nature or by their destination or the object to which they are applicable. whose knowledge of the Civil Law is well known. though in themselves movable." Appellant emphasizes the first paragraph. instruments or implements intended by the owner of the tenements for the industry or works that they may carry on in any building or upon any land and which tend directly to meet the needs of the said industry or works. and the immobilization of the machinery which resulted arose in legal effect from the act of the owner in giving by contract a permanent destination to the machinery. not only land and buildings. Code Napoleon under articles 522 et seq. It is machinery which is involved. as pointed out by Demolombe.

S. Villa-Real.right did not in a legal sense conflict with the claim of Valdes. concur." (Valdes vs. Butte. 38 | P r o p e r t y . the judgment appealed from will be affirmed. 58. the costs of this instance to be paid by the appellant. proceed separately against..) Finding no reversible error in the record. and Goddard. 225 U. Central Altagracia [1912].. JJ. since as to him the property was a part of the realty which. Imperial. for the purpose of collecting his debt. as the result of his obligations under the lease. he could not. Judgment affirmed.

Procedural Rules and Technicalities. The object of scrutiny. much more so in this case where the contents of a copy thereof subsequently registered for documentation purposes is being contested. the surreptitiousness of its PETITION for review on certiorari of a decision of the Court of Appeals. those who seek to avail of the procedural remedies provided by the rules must adhere to the requirements thereof. Absent any satisfactory explanation as to why said entry was belatedly inserted. still a building by itself may be mortgaged apart from the land on which it has been built. . while it is true that a mortgage of land necessarily includes. buildings. Evidence. respondents. 1999 involved. Thus.* MARCELO R. vs. much more so where the contents of a copy thereof subsequently registered for documentation purposes is being contested. public documents by themselves may be adequate to establish the presumption of their validity.—There are actually two (2) copies of the Certificate of Sale on Execution of Real Properties issued on February 4. The rules of procedure are not to be applied in a very rigid. the same should be regarded as separate and distinct from the conveyance of the lot on which they stand. however.—The foregoing provision of the Civil Code enumerates land and buildings separately. this is not a guarantee of the validity of its contents? Same. Real Estate Mortgages. It is. petitioner. 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. 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. Actions. No reason has been offered how and why the questioned entry was subsequently intercalated in the copy of the certificate of sale subsequently registered with the Registry of Deeds. however. this is not a guarantee of the validity of its contents. by itself. This can only mean that a building is. The issuance of a Certificate of Sale is an end result of judicial foreclosure where statutory requirements are strictly adhered to. where even the slightest deviations therefrom will invalidate the proceeding and the sale. Same. Thus. However. however. is not the copy of the Certificate of Sale on Execution of Real Properties issued by the deputy sheriff on February 4. it has been held that while a public document like a notarized deed of sale is vested with the presumption of regularity.—It must be pointed out in this regard that the issuance of a Certificate of Sale is an end result of judicial foreclosure where statutory requirements are strictly adhered to. Section 6. hence. While a public document like a notarized deed of sale is vested with the presumption of regularity. in the absence of stipulation of the improvements thereon. No. The explanation that the land on which the properties sold is necessarily included and. it has been held that—. was belatedly typed on the dorsal portion of the copy of the certificate subsequently registered is at best a lame excuse unworthy of belief. .R. Among these requirements is an explicit enumeration and correct description of what properties are to be sold stated in the notice. Certificates of Sale. If a technical and rigid enforcement of the rules is made. failing which the right to do so is lost. technical sense and are used only to help secure substantial justice. Cacho & Chua Law Offices for petitioner. buildings. 156295.—These rules shall be liberally construed in order to promote their objective of securing a just. T-40785. Pleadings and Practice. The facts are stated in the opinion of the Court. The strictness in the observance of accuracy and correctness in the description of the properties renders the enumeration in the certificate exclusive. Public Documents. subsequently including properties which have not been explicitly mentioned therein for registration purposes under suspicious circumstances smacks of fraud. 39 | P r o p e r t y . T40785 not found in the Certificate of Sale of Real Properties on file with the sheriff. it is. inclusion coupled with the furtive manner of its intercalation casts serious doubt on the authenticity of petitioner’s copy of the Certificate of Sale. but the copy thereof subsequently registered by petitioner with the Registry of Deeds on April 23. While it is true that a mortgage of land necessarily includes. still a building by itself may be mortgaged apart from the land on which it has been built. speedy and inexpensive determination of every action and proceeding. 2003. True. equally settled that the Rules of Court seek to eliminate undue reliance on technical rules and to make litigation as inexpensive as practicable and as convenient as can be done. however. Public Auction Sales. which reads: Section 6. SPOUSES RICARDO and ROSALINA GALIT. 1999. which included an entry on the dorsal portion of the first page thereof describing a parcel of land covered by OCT No. Construction.SORIANO vs SPS RICARDO G. They should be liberally construed so that litigants can have ample opportunity to prove their claims and thus prevent a denial of justice due to technicalities. SORIANO. considered immovable. their probative weight must be evaluated not in isolation but in conjunction with other evidence adduced by the parties in the controversy. The certificate of sale is an accurate record of what properties were actually sold to satisfy the debt. Thus. in the absence of stipulation of the improvements thereon. namely: (a) copy which is on file with the deputy sheriff. equally settled that the Rules of Court seek to eliminate undue reliance on technical rules and to make litigation as inexpensive as practicable and as convenient as can be done. While it is a rule that those who seek to avail of the procedural remedies provided by the rules must adhere to the requirements thereof. failing which the right to do so is lost. their aim would be defeated. While it is true that public documents by themselves may be adequate to establish the presumption of their validity. where even the slightest deviations therefrom will invalidate the proceeding and the sale. This is in accordance with the primary purpose of the 1997 Rules of Civil Procedure as provided in Rule 1. September 23. and (b) copy registered with the Registry of Deeds. 1999. which by themselves are real properties of respondents spouses. The Certificate of Sale is an accurate record of what properties were actually sold to satisfy the debt. The stringence in the observance of these requirements is such that an incorrect title number together with a correct technical description of the property to be sold and vice versa is deemed a substantial and fatal error which results in the invalidation of the sale. and the strictness in the observance of accuracy and correctness in the description of the properties renders the enumeration in the certificate exclusive.—Concededly. must be evaluated not in isolation but in conjunction with other evidence adduced by the parties in the controversy. their probative weight. (emphasis and italics supplied) In this case.

3. Orani. roofing situated at Centro I.8 Respondents. as attorney’s fees.00 as attorney’s fees plus legal expenses in the implementation of the writ of execution. more or less x x x (constructed on TCT No.m. On July 7. 6643.000. Accordingly. x x x with a floor area of 42. 65891 2 because it included a parcel of land which was not among those explicitly enumerated in the Certificate of Sale issued by the Deputy Sheriff. upon motion of Marcelo Soriano. T-569 (Homestead Patent No. BENJAMIN T. VIANZON. Cad. judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the latter to pay: 1.I. on February 4. containing an area of THIRTY FIVE THOUSAND SEVEN HUNDRED FIFTY NINE (35. more or less x x x.00.000. the undersigned Deputy Sheriff sold at public auction on December 23. of Tapulac. Robles levied on the following real properties of the Galit spouses: 1. Branch 1.000. Soriano filed a complaint for sum of money against him with the Regional Trial Court of Balanga City. 1998. Branch 1 rendered judgment9 in favor of petitioner Soriano. issued in the above-entitled case by the HON.00. the trial court declared the spouses in default and proceeded to receive evidence for petitioner Soriano ex parte.: Petitioner was issued a writ of possession in Civil Case No. the Spouses Ricardo and Rosalina Galit.R. P20. Bataan. A parcel of land covered by Original Certificate of Title No.6 This loan was secured by a real estate mortgage over a parcel of land covered by Original Certificate of Title No. the Regional Trial Court of Balanga City. BODEGA—constructed on Lot 1103.00. 14692) situated in the Bo. Deputy Sheriff Renato E. T-569 40 | P r o p e r t y .000. petitioner filed the instant petition for review on certiorari. ordering the Provincial Sheriff of Bataan or her authorized Deputy Sheriff to cause to be made (sic) the sum of P350. Bounded on the SW. along line 1-2 by Lot No. the highest and only bidder for the amount of FOUR HUNDRED EIGHTY THREE THOUSAND PESOS (P483.00 plus 12% interest to be computed from the dates of maturity of the promissory notes until the same are fully paid. Ricardo and Rosalina Galit. however. 569. Orani. the plaintiff the amount of P350. x x x containing an area of 30 sq. roofing. Accordingly. but on which stand the immovables covered by the said Certificate. 2. T40785).7 After he failed to pay his obligation. 2. 6643 1 for Sum of Money by the Regional Trial Court of Balanga. Bataan. The writ of possession was. 1996. Orani. and 3. the following real estate properties more particularly described as follows: ORIGINAL CERTIFICATE OF TITLE NO. Hence.YNARES-SANTIAGO. failed to file their answer. which was docketed as Civil Case No.000. 145.” The judgment became final and executory. more or less x x x.12 which reads: CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY TO ALL WHO MAY SEE THESE PRESENTS: GREETINGS: I HEREBY that (sic) by virtue of the writ of execution dated October 16.00. SP No. 1999.3 August 15. 1996. the trial court issued a writ of execution in due course.759) SQUARE METERS. in the total sum of P480. Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano.4 September 4. the plaintiff P20. SO ORDERED. Dissatisfied. situated in Centro I. 1103 made of strong materials G. 1998 the rights and interests of defendants Sps. 1997. nullified by the Court of Appeals in CA-G.11 At the sale of the above-enumerated properties at public auction held on December 23. 1996. Branch 1. Bataan. the dispositive portion of which reads: “WHEREFORE. 19965 and September 14. meters. to the plaintiff Marcelo Soriano.I.00 each dated August 2. J. Bataan. 3. petitioner was the highest and only bidder with a bid price of P483. Petitioner contends that the sale of these immovables necessarily encompasses the land on which they stand. the costs of suit.000.000. STORE/HOUSE—CONSTRUCTED on Lot No. Philippine Currency). made of strong materials. by virtue of which. evidenced by four promissory notes in the amount of P120. G.75 sq.00 plus 12% interest to be computed from the date of maturity of the promissory notes until the same are fully paid. Deputy Sheriff Robles issued a Certificate of Sale of Execution of Real Property. 1998.000.

He also argued that after the lapse of the redemption period.. meters. All points referred to are indicated on the plan. 14692) situated in the Bo.15 On June 4. 41 | P r o p e r t y . under guarantees prescribed by law. 1103 of the Cadastral Survey of Orani). petitioner moved14 for the issuance of a writ of possession. bearing true. Renato E. thus. the sale price of the abovedescribed property which amount was credited to partial/full satisfaction of the judgment embodied in the writ of execution. 86—PROPERTY INDEX No. He averred that the one-year period of redemption had elapsed without the respondents having redeemed the properties sold at public auction. more or less x x (constructed on TCT No. 1. along line 1-2 by Lot No. more or less. x x x with a floor area of 42.00. this court issued an order granting the issuance of the Writ of Possession. x x x. made of strong materials G. not found in the Certificate of Sale on file with Deputy Sheriff Renato E. This Certificate of Sheriff ’s Sale is issued to the highest and lone bidder. Bounded on the SW. Bataan. being the plaintiff did not pay to the Provincial Sheriff of Bataan the amount of P483.759) SQUARE METERS. containing an area of THIRTY FIVE THOUSAND SEVEN HUNDRED FIFTY NINE (35. by Lot No. Orani. The period of redemption of the above described real properties together with all the improvements thereon will expire One (1) year from and after the registration of this Certificate of Sale with the Register of Deeds. February 4. the sale of said properties had already become final.—PROPERTY INDEX NO.I. that the aforesaid highest and lone bidder.16 Subsequently. roofing situated in Centro I. with the improvements thereon.A parcel of land (Homestead Patent No. Robles:13 ORIGINAL CERTIFICATE OF TITLE NO. petitioner caused the registration of the “Certificate of Sale on Execution of Real Property” with the Registry of Deeds. 40785. on July 18.—018-09-001-02 STOREHOUSE—constructed on Lot 1103. Bataan. ten months from the time the Certificate of Sale on Execution was registered with the Registry of Deeds. Bataan covered by TCT. Bataan. NO. WHEREFORE.I. 1999. 40’E.75 sq. 1999. 2001. 2001. On February 23. of Tapulac. 1104. containing an area of ONE HUNDRED THIRTY NINE (139) SQUARE METERS. Orani. in his name and favor. Gomez. Marcelo Soriano. 2001. WHEREAS on June 4. declination 0 deg. m. T-40785 A parcel of land (Lot No. 1103 situated at Centro 1.. on the SE by Calle Washington. more or less x x x TAX DEC. made of strong materials G. granted the motion for issuance of writ of possession. by Calle P. more or less x x x IT IS FURTHER CERTIFIED. the counsel for plaintiff filed Motion for the Issuance of Writ of Possession. 145. February 191-March 1920. date of survey. NO. Robles Deputy Sheriff RTC. STORE HOUSE constructed on Lot No. situated in the Municipality of Orani. On April 23. and on the W. Orani. 018-09-001-02 BODEGA—constructed on Lot 1103. Marcelo Soriano. the titles to the properties should be considered. by Lot 4102. Balanga. 2001. Balanga City Greetings : WHEREAS on February 3.000. 40785) TAX DEC. for all legal intents and purposes. Br. Bounded on the NE. Orani. 3. The said Certificate of Sale registered with the Register of Deeds includes at the dorsal portion thereof the following entry. Bataan x x x containing an area of 30 sq. on the E. Cad. roofing situated at Centro I. the Regional Trial Court of Balanga City. Branch 1. you are hereby commanded to place the herein plaintiff Marcelo Soriano in possession of the property involved in this case situated (sic) more particularly described as: 1. 2001. No. a writ of possession17 was issued in petitioner’s favor which reads: WRIT OF POSSESSION Mr.

) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARAING THE CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY AS NULL AND VOID AND SUBSEQUENTLY THE WRIT OF POSSESSION BECAUSE THE SAME IS A PUBLIC DOCUMENT WHICH ENJOYS THE PRESUMPTION OF REGULARITY AND IT CANNOT BE OVERCOME BY A MERE STRANGE FEELING THAT SOMETHING IS AMISS ON ITS SURFACE SIMPLY BECAUSE THE TYPEWRITTEN WORDS ON THE FRONT PAGE AND AT THE DORSAL PORTION THEREOF IS DIFFERENT OR THAT IT IS UNLIKELY FOR THE SHERIFF TO USE THE DORSAL PORTION OF THE FIRST PAGE BECAUSE THE SECOND PAGE IS MERELY HALF FILLED AND THE NOTATION ON THE DORSAL PORTION COULD STILL BE MADE AT THE SECOND PAGE. 40785 with an area of 134 square meters known as Lot No. Bataan. BODEGA constructed on Lot No. 3. equally settled that the Rules of Court seek to eliminate undue reliance on technical rules and to make litigation as inexpensive as practicable and as convenient as can be done. and private respondent Marcelo Soriano are hereby ordered to cause the redelivery of Transfer Certificate of Title No. Respondents could also have filed an appeal but they. 2. which was docketed as CA-G. ARGONZA OIC Respondents filed a petition for certiorari with the Court of Ap-peals. this 18th day of July 2001. likewise. successors. petitioner prayed for the dismissal of the petition because respondent spouses failed to move for the reconsideration of the assailed order prior to the filing of the petition. assigns and all persons claiming rights and interests adverse to the petitioner and make a return of this writ every thirty (30) days from receipt hereof together with all the proceedings thereon until the same has been fully satisfied. Branch 1. 86 situated at Centro 1. Respondents cannot now avail of the special civil action for certiorari as a substitute for these remedies. petitioner now comes to this Court maintaining that— 1. failing which the right to do so is lost. Accordingly. 2002. assailing the inclusion of the parcel of land covered by Transfer Certificate of Title No. Ricardo and Rosalinda (sic) Galit. at Balanga City. petitioner contends that respondents were not without remedy before the trial court. against the mortgagor/former owners Sps. 65891. Moreover. those who seek to avail of the procedural remedies provided by the rules must adhere to the requirements thereof. In opposition. We disagree. SP No.75 square meters under Tax Declaration No. In the event that the questioned writ of possession has already been implemented. SO ORDERED. He points out that respondents could have filed a motion for reconsideration of the Order dated June 4. respondents could have filed a motion to quash the writ. Again they did not. Original Certificate of Title No. but they did not do so. SPEEDY AND ADEQUATE REMEDY OF THE RESPONDENTS IN ASSAILING THE WRIT OF POSSESSION ISSUED BY THE LOWER COURT BUT THERE WERE STILL OTHER REMEDIES AVAILABLE TO THEM AND WHICH WERE NOT RESORTED TO LIKE THE FILING OF A MOTION FOR RECONSIDERATION OR MOTION TO QUASH OR EVEN APPEAL. 1999. VIANZON. WITNESS THE HONORABLE BENJAMIN T. however. It is.18 Respondents argued that said property was not among those sold on execution by Deputy Sheriff Renato E. (Sgd. Branch 1. Robles as reflected in the Certificate of Sale on Execution of Real Property. did not do so. Orani. the instant petition is hereby GRANTED. T-40785 to the petitioners. the proper remedy against the assailed order of the trial court is an appeal. . When the writ of possession was issued. 1103 of the Cadastral Survey of Orani . Concededly. the Court of Appeals rendered judgment as follows: “WHEREFORE.2. Presiding Judge.20 This is in 42 | P r o p e r t y . the Deputy Sheriff of the Regional Trial Court of Balanga City. on 18 July 2001 is declared NULL and VOID.R. They should suffer the consequences for sleeping on their rights.) THE SPECIAL CIVIL ACTION OF CERTIORARI UNDER RULE 65 IS NOT THE PLAIN. the writ of possession issued by the Regional Trial Court of Balanga City. or a motion to quash the writ of possession. .) GILBERT S. her (sic) heirs. On the first ground. T-40785 among the list of real properties in the writ of possession. 1103 with an area of 42.” Aggrieved. On May 13.

this rule should not be strictly enforced if the petition is genuinely meritorious. No reason has been offered how and why the questioned entry was subsequently intercalated in the copy of the certificate of sale subsequently registered with the Registry of Deeds. their aim would be defeated. however. in China Banking Corporation v.32 but the copy thereof subsequently registered by petitioner with the Registry of Deeds on April 23.31 Eschewing. in sum. speedy and inexpensive determination of every action and proceeding. since rules of procedure are mere tools designed to facilitate the attainment of justice.—These rules shall be liberally construed in order to promote their objective of securing a just. they are required to be followed except when only for the most persuasive of reasons they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. 1999. especially for a lost appeal. or bar the vindication of a legitimate grievance. while certiorari as a remedy may not be used as a substitute for an appeal. The object of scrutiny. Thus. Petitioner. There are actually two (2) copies of the Certificate of Sale on Execution of Real Properties issued on February 4. 1999. 1999 involved. it has been held that while a public document like a notarized deed of sale is vested with the presumption of regularity. the surreptitiousness of its inclusion coupled with the furtive manner of its intercalation casts serious doubt on the authenticity of petitioner’s copy of the Certificate of Sale. the procedural objections raised by petitioner. Section 6. CA. True.24 it was held: .29 (emphasis and italics supplied. which reads: Section 6. and for that reason the case in the lower court was dismissed on a technicality and no definitive pronouncement on the inadequacy of the price paid for the levied properties was ever made. Like all rules. and (b) copy registered with the Registry of Deeds. well-known is the rule that departures from procedure may be forgiven where they do not appear to have impaired the substantial rights of the parties. technical sense and are used only to help secure substantial justice.22 They should be liberally construed so that litigants can have ample opportunity to prove their claims and thus prevent a denial of justice due to technicalities. Construction. this is not a guarantee of the validity of its contents?34 It must be pointed out in this regard that the issuance of a Certificate of Sale is an end result of judicial foreclosure where statutory requirements are strictly 43 | P r o p e r t y . namely: (a) copy which is on file with the deputy sheriff. is not the copy of the Certificate of Sale on Execution of Real Properties issued by the deputy sheriff on February 4. Members of the Board of Trustees of Home Development Mutual Fund.33 which included an entry on the dorsal portion of the first page thereof describing a parcel of land covered by OCT No.23 Thus. the courts are justified in exempting a particular case from the operation of the rules. However. it behooves us to address the issue of whether or not the questioned writ of possession is in fact a nullity considering that it includes real property not expressly mentioned in the Certificate of Sale of Real Property.21 The rules of procedure are not to be applied in a very rigid.) In short. public documents by themselves may be adequate to establish the presumption of their validity. therefore.accordance with the primary purpose of the 1997 Rules of Civil Procedure as provided in Rule 1. their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided.28 where we said that— There is no question that petitioners were remiss in attending with dispatch to the protection of their interests as regards the subject lots.25 It has been said that where the rigid application of the rules would frustrate substantial justice. it bears stressing that procedural rules are not to be belittled or dismissed simply because their non-observance may have resulted in prejudice to a party’s substantive rights as in this case. T-40785 not found in the Certificate of Sale of Real Properties on file with the sheriff.27 Apropos in this regard is Cometa v.26 (Emphasis ours) Indeed. Absent any satisfactory explanation as to why said entry was belatedly inserted. their probative weight must be evaluated not in isolation but in conjunction with other evidence adduced by the parties in the controversy. In this regard. much more so in this case where the contents of a copy thereof subsequently registered for documentation purposes is being contested. . If a technical and rigid enforcement of the rules is made. .30 Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. dwells on the general proposition that since the certificate of sale is a public document. it enjoys the presumption of regularity and all entries therein are presumed to be done in the performance of regular functions. The argument is not persuasive.

though floating. the petition is hereby DENIED for lack of merit. 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. and which tend directly to meet the needs of the said industry or works. in such a way that it cannot be separated therefrom without breaking them material or deterioration of the object. was belatedly typed on the dorsal portion of the copy of the certificate subsequently registered is at best a lame excuse unworthy of belief. in view of all the foregoing. the animals in these places are also included. instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land. beehives. xxx xxx xxx (4) Statues. paintings or other objects for use or ornamentation. (5) Machinery. likewise.40 (emphasis and italics supplied) (3) Everything attached to an immovable in a fixed manner. Thus. reliefs. fish ponds or breeding places of similar nature.36 Among these requirements is an explicit enumeration and correct description of what properties are to be sold stated in the notice. . WHEREFORE. are intended by their nature and object to remain at a fixed place on a river. receptacles. lake or coast. The following are immovable property: (1) Land. The appellate court correctly observed that there was a marked difference in the appearance of the typewritten words appearing on the first page of the copy of the Certificate of Sale registered with the Registry of Deeds38 and those appearing at the dorsal portion thereof. . in case their owner has placed them or preserves them with the intention to have them permanently attached to the land.37 The certificate of sale is an accurate record of what properties were actually sold to satisfy the debt. The argument that the land on which the buildings levied upon in execution is necessarily included is. by itself. placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements. hence. 2002 of the Court of Appeals in CA44 | P r o p e r t y . considered immovable. buildings. Article 415 of the Civil Code provides: ART. which by themselves are real properties of respondents spouses. buildings. in the absence of stipulation of the improvements thereon. xxx xxx xxx (9) Docks and structures which. (6) Animal houses. roads and constructions of all kinds adhered to the soil. This can only mean that a building is.39 Thus. subsequently including properties which have not been explicitly mentioned therein for registration purposes under suspicious circumstances smacks of fraud. In this case. T-40785. 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. where even the slightest deviations therefrom will invalidate the proceeding35 and the sale. it has been held that— . pigeon houses. while it is true that a mortgage of land necessarily includes. xxx xxx xxx The foregoing provision of the Civil Code enumerates land and buildings separately. The strictness in the observance of accuracy and correctness in the description of the properties renders the enumeration in the certificate exclusive. and forming a permanent part of it. still a building by itself may be mortgaged apart from the land on which it has been built. Underscoring the irregularity of the intercalation is the clearly devious attempt to let such an insertion pass unnoticed by typing the same at the back of the first page instead of on the second page which was merely half-filled and could accommodate the entry with room to spare. 415.adhered to. tenuous. the same should be regarded as separate and distinct from the conveyance of the lot on which they stand. The Decision dated May 13. The stringence in the observance of these requirements is such that an incorrect title number together with a correct technical description of the property to be sold and vice versa is deemed a substantial and fatal error which results in the invalidation of the sale. The explanation that the land on which the properties sold is necessarily included and.

Azcuna. Petition denied. J. shares. 65891. may have on the subject property.G. judgment affirmed in toto. SO ORDERED. is AFFIRMED in toto. which declared the writ of possession issued by the Regional Trial Court of Balanga City. concur.—In the interest of substantial justice. procedural rules of the most mandatory character in terms of compliance may be relaxed. in levying on the property of the corporation. stated in the notice of levy as well as in the certificate of sale that what was being levied upon and sold was whatever rights. On leave. Chairman). (Yao vs. Davide.J. null and void. Court of Appeals. on July 18.R. Vitug and Carpio. Notes. Jr. interest and/or participation of the stockholder and president in the corporation. 354 SCRA 279 [2001]) ——o0o—— 45 | P r o p e r t y . 2001. (Booc vs. (C.. Bantuas.. SP No. Branch 1.. 344 SCRA 202 [2000]) The fact that the sheriff. shows that the sheriff ’s conduct was impelled partly by ignorance of the Corporation Law and partly by mere overzealousness to comply with his duties and not by bad faith or blatant disregard of the trial court’s order. JJ.

—Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application. The rule is that as to administrative agencies exercising quasi-judicial power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by the statute (73 C. vs. This argument is untenable because the realty tax has always been imposed by the lawmaking body and later by the President of the Philippines in the exercise of his lawmaking powers. local tax is imposed by municipal or city council by virtue of the Local Tax Code.S. petitioner. Presidential Decree No. including land. J. Taxation. The review is a part of the system of checks and balances which is a limitation on the separation of powers and which forestalls arbitrary and unjust adjudications.—We hold that certiorari was properly availed of in this case. Petroleum Law does not exempt Meralco Securities from payment of realty taxes. Sec.MERALCO SECURITIES INDUSTRIAL CORPORATION vs . Certiorari. 121-122. CENTRAL BOARD OF ASSESSMENT APPEALS. The pipes are embedded in the soil and are firmly and solidly welded together so as to preclude breakage or damage thereto and prevent leakage or seepage of the oil.S.J.D. Meralco Securities Industrial Corporation assails the decision of the Central Board of Assessment Appeals (composed of the Secretary of Finance as chairman and the Secretaries of Justice and Local Government and Community Development as members) dated May 6. Real Property Tax Code. “The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions” (73 C. the pipes were laid beneath the bed thereof. 1976. holding that Meralco Securities’ oil pipeline is subject to realty tax. which took effect on July 1. municipality and barrio where the realty taxed is situated (Sec. 464. L-46245. In contrast.J. 470 and Presidential Decree No. 165). Remedial Law. It is a writ issued by a superior court to an inferior court. Property. the pipes are permanently attached to the land. Nature and purpose of remedy. No. 387. J.: Took no part. The facts are stated in the opinion of the Court. 231. and other improvements” not specifically exempted in section 3 thereof. SPECIAL CIVIL ACTION of certiorari to review the decision of the Central Board of Assessment Appeals. Special Civil Actions. 1982. In points where the pipeline traversed rivers or creeks. respondents. 46 | P r o p e r t y . The portion passing through Laguna is about thirty kilometers long. Petition for certiorari can be availed of to review the decision of the Central Board of Assessment Appeals in the absence of judicial review of the Board’s decision provided for in the Real Property Tax Code.000 barrels daily. P.—Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property within the meaning of article 415. 1973 (69 O. 6197). The valves are welded to the pipes so as to make the pipeline system one single piece of property from end to end.J. This contention is not sustainable under the provisions of the Assessment Law. Hence.S. In order to repair. replace. the pipes have to be cold-cut by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where they are buried.000 barrels daily. Purpose of judicial review. And does not fall within the classes of exempt real property. as shown in sections 342 et seq. Section 2 of the Assessment Law provides that the realty tax is due “on real property. Meralco Securities installed from Batangas to Manila a pipeline system consisting of cylindrical steel pipes joined together and buried not less than one meter below the surface along the shoulder of the public highway. machinery. note 56). city. 14 Am Jur. Realty tax distinguished from local tax. Same. The pipes for white oil products measure fourteen inches in diameter by thirtysix feet with a maximum capacity of 75. Commonwealth Act No. Republic Act No. buildings. Concepcion. 86.* MERALCO SECURITIES INDUSTRIAL CORPORATION. of the Revised Administrative Code. The pipes for fuel and black oil measure sixteen inches by forty-eight feet with a maximum capacity of 100. Same. It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real Property Tax Code. 2nd 777).: In this special civil action of certiorari. Pipeline System of Meralco Securities classified as real property and subject to tax they being machinery or improvements. the Real Property Tax Code and the Civil Code. The record reveals that pursuant to a pipeline concession issued under the Petroleum Act of 1949. 464). 3995.G. a AQUINO. The realty tax is enforced throughout the Philippines and not merely in a particular municipality or city but the proceeds of the tax accrue to the province. CENTRAL BOARD OF ASSESSMENT APPEALS ET AL No. 507. board or officer exercising judicial or quasijudicial functions whereby the record of a particular case is ordered to be elevated for review and correction in matters of law (14 C. remove or transfer segments of the pipeline. 506. Same. May 31. Act No. BOARD OF ASSESSMENT APPEALS OF LAGUNA and PROVINCIAL ASSESSOR OF LAGUNA.

14 Am Jur. a party may ask for the reconsideration of the Board’s decision within fifteen days after receipt. 4. Secretary of Finance Cesar Virata and Secretary Roño (Secretary Abad Santos abstained) denied the motion in a resolution dated December 2. L-39195.S. Section 36 of the Real Property Tax Code. Ope. 1977 (p. fraud or collusion or in case the administrative decision is corrupt. the provincial assessor of Laguna treated the pipeline as real property and issued Tax Declarations Nos. 64 SCRA 56. Meralco Securities filed its motion for reconsideration.J. 6535-6537. 9882-9885. It is a writ issued by a superior court to an inferior court. Prov. 121-122. San Pedro. which took effect on June 1. “The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions” (73 C. We hold that certiorari was properly availed of in this case. Rollo). 2nd 777). note 56). 507. a copy of which was received by appellant’s counsel on May 24. Secretary of Labor. arbitrary or capricious (Mafinco Trading Corporation vs.J. Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local Government and Community Development Jose Roño as members. 165).G. that they do not fall within the category of property 47 | P r o p e r t y . Meralco Securities explains that because the Court of Tax Appeals has no jurisdiction to review the decision of the Central Board of Assessment Appeals and because no judicial review of the Board’s decision is provided for in the Real Property Tax Code. 7473-7478. On June 6. provides that the Board’s decision becomes final and executory after the lapse of fifteen days from the date of receipt of a copy of the decision by the appellant. San Miguel Corporation vs. Mun. reasoned out that the pipes are machinery or improvements. L-37790. Presidential Decree No. On September 7. Sta. 1976 (the eleventh day). The rule is that as to administrative agencies exercising quasi-judicial power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by the statute (73 C. ruled that the pipeline is subject to realty tax (p. 1976. as contemplated in the Assessment Law and the Real Property Tax Code. board or officer exercising judicial or quasijudicial functions whereby the record of a particular case is ordered to be elevated for review and correction in matters of law (14 C. May 16. March 25. Binan and 15806-15810. 1974. 70 SCRA 139. Rollo). Judicial review of the decision of an official or administrative agency exercising quasi-judicial functions is proper in cases of lack of jurisdiction.J.S. Meralco Securities filed the instant petition for certiorari. 268). Commonwealth Act No. As already stated. Rosa. A copy of that decision was served on Meralco Securities’ counsel on August 27. The Solicitor General contends that certiorari is not proper in this case because the Board acted within its jurisdiction and did not gravely abuse its discretion and Meralco Securities was not denied due process of law. 40. Board of Batangas. Council of Lemery vs. The Central Board of Assessment Appeals. Meralco Securities notes that segments of the pipeline can be moved from one place to another as shown in the permit issued by the Secretary of Public Works and Communications which permit provides that the government reserves the right to require the removal or transfer of the pipes by and at the concessionaire’s expense should they be affected by any road repair or improvement. 56 Phil. containing the assessed values of portions of the pipeline. 506. 260. 1975 upheld the assessments (pp. 1976. error of law. Cabuyao. 60. 464. Calamba. Sec. 1976.S. Meralco Securities’ recourse is to file a petition for certiorari. 1977. Rollo). The review is a part of the system of checks and balances which is a limitation on the separation of powers and which forestalls arbitrary and unjust adjudications. 7967-7971. composed of Acting Secretary of Finance Pedro M. That board in its decision of June 18. Meralco Securities brought the case to the Central Board of Assessment Appeals. grave abuse of discretion. Meralco Securities appealed the assessments to the Board of Assessment Appeals of Laguna composed of the register of deeds as chairman and the provincial auditor as member. 10085). 158. 1975. Under Rule III of the amended rules of procedure of the Central Board of Assessment Appeals (70 O. in confirming the ruling of the provincial assessor and the provincial board of assessment appeals that Meralco Securities’ pipeline is subject to realty tax.However. 47-49. Pursuant to the Assessment Law. that Board. 470.

—There shall be levied. nor shall concessionaires under this Act be subject to any provincial municipal or other local taxes or levies. manufactured by the concessionaires and use in the working of his concession. it is in a sense machinery within the meaning of the Real Property Tax Code. special taxes and royalties which are fixed by the provisions of this Act or by the concession for any of the kinds of concessions to which this Act relate. the steel pipes can be regarded as realty because they are constructions adhered to the soil and things attached to the land in a fixed manner and that Meralco Securities is not exempt from realty tax under the Petroleum law (pp. All such concessionaires. machinery. in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. gases or finely divided solids. R. 1 of Lafayette County. such as land.—Work obligations.exempt from realty tax under those laws. and other improvements” not specifically exempted in section 3 thereof. . 19. 2nd 430. carrying with it the right to the use of the soil in which it is placed (Note 21[10]. in addition to taxes and other levies specifically provided in this Act. 54 C. and shall not be increased or decreased during the life of the concession to which they apply. 39. It should be borne in mind that what are being characterized as real property are not the steel pipes but the pipeline system as a whole.. A pipeline for conveying petroleum has been regarded as real property for tax purposes (Miller County Highway. pumps and control devices to maintain the flow of oil. Incidence of Real Property Tax. taxes. 102. Meralco Securities has apparently two pipeline systems. 561). Article 415[1] and [3] provides that real property may consist of constructions of all kinds adhered to the soil and everything attached to an immovable in a fixed manner.J. The other contention of Meralco Securities is that the Petroleum Law exempts it from the payment of realty taxes.”* It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real Property Tax Code. Dist vs.. B. the Real Property Tax Code and the Civil Code Section 2 of the Assessment Law provides that the realty tax is due “on real property. Rollo). This provision is reproduced with some modification in the Real Property Tax Code which provides: “SEC.. It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline. 750. Work obligations. assessed and collected in all provinces. as shown in section 342 et 48 | P r o p e r t y Pipeline means a line of pipe connected to pumps. are considered as inherent on such concessions after they are granted. royalties not to be changed. 50 C. nor shall any other special taxes or levies be applied to such concessions.” Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application. 170 Fed. J. The alleged exemption is predicated on the following provisions of that law which exempt Meralco Securities from local taxes and make it liable for taxes of general application: “ART. 2nd 3. including land. defining real and personal property. however. that even under article 415. valves and control devices for conveying liquids. F. Ark vs. machinery and other improvements affixed or attached to real property not hereinafter specifically exempted. Standard Pipe Line Co. nor shall any sales tax be charged on any petroleum produced from the concession or portion thereof. shall be subject to such taxes as are of general application. Insofar as the pipeline uses valves. The pipeline system in question is indubitably a construction adhering to the soil (Exh. cities and municipalities an annual ad valorem tax on real property. No.S. Board of Directors of Red River Levee Dist. have no application to this case. that articles 415 and 416 of the Civil Code. buildings. buildings. note 86). This contention is not sustainable under the provisions of the Assessment Law. Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property within the meaning of article 415. C. Fed. 36-40). 38. It is a line of pipe running upon or in the earth. p. This argument is untenable because the realty tax has always been imposed by the lawmaking body and later by the President of the Philippines in the exercise of his lawmaking powers. etc.

(Tajonera vs. of the Revised Administrative Code. no part.) P. it issued an order in effect reconsidering and setting aside its erroneous order.) An intestate proceeding cannot be closed and a document regarding legacy and inheritance cannot be registered without proof of payment of estate and inheritance taxes. concur. Bello. (City of Baguio.—The Supreme Court can review or alter findings of fact of the Court of Industrial Relations if such findings are completely devoid of basis and there is a grave abuse of discretion. WHEREFORE. SO ORDERED. did not commit any error of law and acted within its jurisdiction in sustaining the holding of the provincial assessor and the local board of assessment appeals that Meralco Securities’ pipeline system in Laguna is subject to realty tax. 100 SCRA 116.) ——o0o—— Sound discretion should not frustrate the law by defeating its objective.) No abuse of discretion could be attributed to the trial court when. Act No. 464).. Justice Abad Santos did not take part. J.) Where the taxpayer neither pays the tax assessed against him nor contests its validity. Presidential Decree No. 96 SCRA 225..D. Court of Appeals.A. 6197).G. 43 SCRA 664. 231. 464. (Tuason vs. Guerrero.D. A landowner is supposed to know that he has land taxes to pay. (Chief of Staff Armed Forces of the Philippines vs. Court of Industrial Relations. city. JJ. 103 SCRA 487. Notes.seq. Commonwealth Act No. 101 SCRA 633. the only remedy left to the Government.) There is grave abuse of discretion justifying the issuance of the writ of certiorari when there is such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Court of Tax Appeals. Guadiz. 1 SCRA 975. after its attention had been called to its mistake.) Exemption of the GSIS from payment of realty taxes does not cover its property the beneficial use of which is granted to a taxable person.) Every buyer of real property must make a new declaration thereof. 464 although inexistent at the time the taxes were assessed against the purchaser aids in determining the legislative intent in the enactment of C. Decision and resolution affirmed. No. Concepcion. 80 SCRA 74. by judicial action in the ordinary courts of juctice (Republic vs. 37 SCRA 231. 100 SCRA 116. the questioned decision and resolution are affirmed. Busuego. We hold that the Central Board of Assessment Appeals did not act with grave abuse of discretion. 86. De Castro and Escolin. Geronimo. is to enforce its collection. 3995. a local tax is imposed by the municipal or city council by virtue of the Local Tax Code. Dy Chay. Failure to do so shall make the assessment in the name of the previous owner binding. In contrast. which took effect on July 1.) Disregard of available facts by a judge constitutes grave abuse of discretion. Jr.. 186. municipality and barrio where the realty taxed is situated (Sec.) 49 | P r o p e r t y . P. (City of Baguio vs. aside from distraint and levy. 1973 (69 O. Court of Appeals. Jr. (Citizen’s League of Free Workers vs. (Gonzales vs. (Commissioner of Customs vs. Barredo (Chairman). The petition is dismissed. The realty tax is enforced throughout the Philippines and not merely in a particular municipality or city but the proceeds of the tax accrue to the province.. (Police Commission vs. 101 SCRA 827. No costs. 470 and Presidential Decree No.

No. respondents. ANDAYA. 168557. 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. 67490 and CA-G. Same. precluding the taxpayer from questioning the correctness of the assessment. Requisites of Forum Shopping. and the rule that doubts should be resolved in favor of provincial corporations.—It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local government’s deprivation of revenues. An important factor in determining the existence of forum shopping is the vexation caused to the courts and the parties-litigants by the filing of similar cases to claim substantially the same reliefs.—Res judicata pervades every organized system of jurisprudence and is founded upon two grounds embodied in various maxims of common law.R. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. or at least such parties as represent the same interests in both actions.R. Same. Same. Forum Shopping.—We fully agree with the rationalization of the CA in both CA-G. Thus. applying the rule of strict construction of laws granting tax exemptions.—If the taxpayer fails to appeal in due course. vs. Res judicata is founded on two grounds. LAURO C. the last action of the local assessor on a particular assessment shall be the notice of assessment. Assessments. the relief being founded on the same facts. city or municipal assessor in the assessment of the property. 7160. Same. wreaks havoc upon orderly judicial procedure. petitioner. respondents.—Time and again. (b) identity of rights asserted and relief prayed for. No 7160. namely: (1) public policy and necessity. 2007. a remedy not sanctioned by law. Same. Res Judicata. Same.A. 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. executory and demandable.—It must be stressed that an important factor in determining the existence of forum shopping is the vexation caused to the courts and the parties-litigants by the filing of similar cases to claim substantially the same reliefs. THE PROVINCE OF BATANGAS and THE OFFICE OF THE PROVINCIAL ASSESSOR OF BATANGAS.. February 16. SP No. and the PROVINCE OF BATANGAS represented by its Provincial Assessor. The two divisions of the appellate court cited the case of Callanta v. The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial. The power to tax is an incident of sovereignty and is unlimited in its magnitude. SP No. No. 67491. Same. INC. Judgments. February 16. Same.A. vs. Same. thus. the last action of the local assessor on a particular assessment shall be the notice of assessment. executory and demandable. 285 SCRA 648 (1998). A conflicting doctrine would subject the public peace and quiet to the will and dereliction of individuals and prefer the regalement of the litigious disposition on the part of suitors to the preservation of the public tranquility and happiness. it is this last action which gives the owner of the property the right to appeal to the LBAA. G. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. where we ruled that under Section 226 of R. Office of the Ombudsman.R. Real Property Tax Code. we hold that FELS is considered a taxable entity. and adds to the congestion of the heavily burdened dockets of the courts. or from invoking any defense that would reopen the question of its liability on the merits. there is forum shopping when there exist: (a) identity of parties. and (c) the identity of the two preceding particulars is such that any judgment rendered in the pending case.R. Same. the Supreme Court has stated that taxation is the rule and exemption is the exception. Remedial Law. 170628. It also bears stressing that the taxpayer’s failure to question the assessment in the LBAA renders the assessment of the local assessor final. the right of the local government to collect the taxes due with respect to the taxpayer’s property becomes absolute upon the expiration of the period to appeal. Same. Actions.* FELS ENERGY. The procedure likewise does not permit the property owner the remedy of filing a motion for reconsideration before the local assessor. No. 50 | P r o p e r t y . 2007. namely: (1) public policy and necessity. Same. Filing multiple petitions or complaints constitutes abuse of court processes. Taxation is the rule and exemption is the exception. INC vs PROVINCE OF BATANGAS G. Thus. Taxation. and (2) the hardship on the individual of being vexed twice for the same cause—nemo debet bis vexari et eadem causa. Appeals. regardless of which party is successful. city or municipal assessor in the assessment of the property.FELS. 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.* NATIONAL POWER CORPORATION. Under Section 226 of R. The remedy of appeal to the Local Board of Assessment Appeals (LBAA) is available from an adverse ruling or action of the provincial. in his capacity as the Assessor of the Province of Batangas. petitioner. The taxpayer’s failure to question the assessment in the Local Board of Assessment Appeals (LBAA) renders the assessment of the local assessor final. Same. which tends to degrade the administration of justice. LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS. It follows then that the determination made by the respondent Provincial Assessor with regard to the taxability of the subject real properties falls within its power to assess properties for taxation purposes subject to appeal before the LBAA. which makes it to the interest of the State that there should be an end to litigation and (2) the hardship on the individual of being vexed twice for the same cause. which makes it to the interest of the State that there should be an end to litigation—republicae ut sit litium. The rationale against forum shopping is that a party should not be allowed to pursue simultaneous remedies in two different fora. would amount to res judicata in the other. Same. NPC opted to file a motion for reconsideration of the Provincial Assessor’s decision. Same.—Instead of appealing to the Board of Assessment Appeals (as stated in the notice). Same. Same.

FELS is hereby ordered to pay the real estate tax in the amount of P56. 170628. 2004 Decision1 of the Court of Appeals (CA) in CA-G. 1996. Inc. it also prayed that should LBAA find the barges to be taxable. Gonzales. Caluya and Fernandez for FELS Energy.184. and the Provincial Assessor advised NPC to pay the assessment. reminding it of its obligation under the Agreement to pay all real estate taxes. SP No. the Petition is DENIED. Before the case was decided by the LBAA. Emmanuel R. It then gave NPC the full power and authority to represent it in any conference regarding the real property assessment of the Provincial Assessor. for the year 1994.088. In a letter7 dated September 7. Polar Energy.PETITIONS for review on certiorari of the decisions and resolutions of the Court of Appeals.R. 1995. the second. 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. The contract. NAPOCOR shall be responsible for the payment of (a) all taxes. also a petition for review on certiorari.”12 The LBAA ruled that the power plant facilities. 1995. FELS referred the matter to NPC. The NPC initially opposed the assignment of rights. environmental permit fees and other similar fees and charges) and (b) all real estate taxes and assessments. over 3x30 MW diesel engine power barges moored at Balayan Bay in Calaca. Article 10 reads: 10. The first is a petition for review on certiorari assailing the August 25.R. which likewise covered those due for 1994. 67491. respectively. NPC entered into a lease contract with Polar Energy. which were filed by petitioners FELS Energy. the Provincial Assessor averred that the barges were real property for purposes of taxation under Section 199(c) of Republic Act (R. Melchor P. On August 26.) No.184. fees. No. The assessed tax. 2005. Inc. 67490 and its Resolution2 dated June 20.40 per annum.. while they may be classified as movable or personal property. On August 7. challenges the February 9. Bello. SO ORDERED. NPC filed a Manifestation. 1993. FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. amounted to P56. citing paragraph 17. NPC sought reconsideration of the Provincial Assessor’s decision to assess real property taxes on the power barges. Liwanag. informing the LBAA that the Department of Finance (DOF) had rendered an opinion10 dated May 20. 2005 Resolution4 of the CA in CA-G. the Provincial Assessor be directed to make the necessary corrections. the LBAA rendered a Resolution11 denying the petition. (FELS) and National Power Corporation (NPC). where it is clearly stated that power barges are not real property subject to real property assessment. was for a period of five years. rates and other charges in respect of the Power Barges. 7160.9 In its Answer to the petition. 168557 and G. The facts are stated in the opinion of the Court. are nevertheless considered real property for taxation purposes because they are installed at a specific location with a 51 | P r o p e r t y . SP No.40.1 RESPONSIBILITY. Inc.A. 2005 Decision3 and November 23. Inc. import duties. assigned its rights under the Agreement to FELS. J. denominated as an Energy Conversion Agreement5 (Agreement).R. CALLEJO. Ridulme for National Power Corporation. Valdez. No.2 of Article 17 of the Agreement. 1996. the motion was denied on September 22.8 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 nontaxable items. Batangas. SR. The pertinent facts are as follows: On January 18. Matibag for the Province of Batangas and the Assessor’s Office of Batangas.: Before us are two consolidated cases docketed as G. Andaya of Batangas City. 1995. However.”6 Subsequently. Both petitions were dismissed on the ground of prescription.R. Jimenez. The fallo reads: “WHEREFORE.088.

Meanwhile. a private corporation—is the one being taxed. FELS filed a petition for review before the CA docketed as CAG.R. 1998 in the proceedings before the CBAA.R. is dismissed. SO ORDERED. On January 17. 018-00958 from the List of Taxable Properties in the Assessment Roll. since they are actually. In a complete volte face. (b) The petition of FELS. which was opposed by FELS and NPC. The Provincial Assessor filed a motion for reconsideration. SP No.character of permanency. not NPC. This was approved by the CBAA in an Order16 dated September 22. No. the CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R. the Provincial Treasurer of Batangas City issued a Notice of Levy and Warrant by Distraint13 over the power barges. On November 15. The fallo of the resolution reads: “WHEREFORE. 7160. SP No.19 As to the other jurisdictional issue. Aggrieved. directly and exclusively used by it. the NPC filed a Motion for Intervention15 dated August 7. 67490. Finally. 1996. it is the resolution of this Board that: (a) The decision of the Board dated 6 April 2000 is hereby reversed. the CBAA issued an Order14 lifting the levy and distraint on the properties of FELS in order not to preempt and render ineffectual. 1996. the power barges are covered by the exemptions under Section 234(c) of R.R.A. SP No. docketed as CA-G.R. No. 1998. 2001 reversing its earlier decision. The notice and warrant was officially served to FELS on November 8. SP No. premises considered. 67491.91 as of July 31. Meantime. since it is the ponente of the latter petition who should resolve the request for reconsideration. such a privilege can only be granted to NPC and cannot be extended to FELS. which were timely opposed by the Provincial Assessor. (d) The real property tax assessment on FELS by the Provincial Assessor of Batangas is likewise hereby affirmed. (c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby affirmed. On April 6. 1996. 67490 praying for the consolidation of its petition with CA-G. 2002.125. as well as the intervention of NPC. 67491. seeking to collect real property taxes amounting to P232.602.”18 Ruling in favor of FELS and NPC.R. On August 28. The Provincial Treasurer of Batangas is hereby directed to act accordingly. Dissatisfied. It then filed a Motion to Lift Levy dated November 14. The bonds were duly approved by the CBAA.A. the CBAA issued a Resolution20 on July 31. The LBAA also pointed out that the owner of the barges—FELS. 1996.”21 FELS and NPC filed separate motions for reconsideration. NPC filed a Manifestation/Motion for Consolidation in CA-G. praying that the Provincial Assessor be further restrained by the CBAA from enforcing the disputed assessment during the pendency of the appeal. nugatory and illusory any resolution or judgment which the Board would issue. both FELS and NPC filed several motions to admit bond to guarantee the payment of real property taxes assessed by the Provincial Assessor (in the event that the judgment be unfavorable to them). During the pendency of the case. The CBAA denied the said motions in a Resolution22 dated October 19. the appellate court directed NPC to refile its motion for consolidation with CAG. 2002. the Resolution of the Local Board of Assessment Appeals of the Province of Batangas is hereby reversed. FELS appealed the LBAA’s ruling to the Central Board of Assessment Appeals (CBAA). the CBAA reasoned that the power barges belong to NPC. 2000. Respondent-appellee Provincial Assessor of the Province of Batangas is hereby ordered to drop subject property under ARP/Tax Declaration No. 2001. 1996. 7160. SO ORDERED. 67491. SP No. NPC filed a separate petition. the CBAA rendered a Decision17 finding the power barges exempt from real property tax. The dispositive portion reads: “WHEREFORE. 52 | P r o p e r t y . A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not justify the exemption of FELS. the LBAA also ruled that the petition was filed out of time. In a Resolution23 dated February 12.

67490 denying the petition on the ground of prescription. the appellate court dismissed the petition in CA-G.R. The decretal portion of the decision reads: “WHEREFORE. Assuming that the subject power barges are real properties. 2001 of the Central Board of Assessment Appeals are AFFIRMED. not subject to real property tax. On August 3.R.R. The motion for reconsideration filed by FELS in CA-G. Whether the right of the petitioner to question the patently null and void real property tax assessment on the petitioner’s personal properties is imprescriptible. SP No. Thereafter. No.R. docketed as G. Assuming arguendo that the subject power barges are subject to real estate tax. whether they are exempt from real estate tax under Section 234 of the Local Government Code (“LGC”). 2004 before this Court. 2005. raising the following issues: III D. 2005. for NPC’s failure to sufficiently show that the CA committed any reversible error in the challenged decision. SP No. On August 25.”24 On September 20. indicating the following errors committed by the CA: I THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE LBAA WAS FILED OUT OF TIME. C. 2005. 165113. The motion was denied in a Resolution27 dated November 23. 170628). NPC filed a motion for reconsideration. The petition was.R. E. which the Court denied with finality in a Resolution26 dated January 19. Since FELS had lost the right to question the assessment. 2006. 2005. 67491. 53 | P r o p e r t y . whether or not it should be NPC which should be made to pay the same under the law. the right of the Provincial Government to collect the tax was already absolute. seeking reconsideration of the February 5. 2004. 2004. however. denied in this Court’s Resolution25 of November 8.R. NPC filed its own petition for review before this Court (G. FELS filed the petition docketed as G. SO ORDERED. SP No. SP No. Assuming arguendo that the subject power barges are real properties. are personal properties and therefore. 2005. 2004. NPC filed a motion for reconsideration dated March 8. 168557 before this Court. No.R. No. assailing the appellate court’s decision in CA-G. It held that the right to question the assessment of the Provincial Assessor had already prescribed upon the failure of FELS to appeal the disputed assessment to the LBAA within the period prescribed by law. 2005 ruling of the CA in CA-G. which are floating and movable. SP No.29 On January 13. whether or not the same is subject to depreciation just like any other personal properties. NPC filed a petition for review dated October 19. the Twelfth Division of the appellate court rendered judgment in CA-G. FELS timely filed a motion for reconsideration seeking the reversal of the appellate court’s decision in CA-G. II THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER BARGES ARE NOT SUBJECT TO REAL PROPERTY TAXES. SP No.NPC failed to comply with the aforesaid resolution.R. Meantime. Whether power barges. the petition for review is DENIED for lack of merit and the assailed Resolutions dated July 31.R. 67490. 67490 had been earlier denied for lack of merit in a Resolution28 dated June 20. 2001 and October 19. 67491. 67490. B. A.

—Any owner or person having legal interest in the property who is not satisfied with the action of the provincial. the Court was prompted to dispense with the said pleadings.”32 Instead of appealing to the Board of Assessment Appeals (as stated in the notice). and in fact can conveniently take place. and then subsequently reduced upon the request of a property owner. To allow this procedure would indeed invite corruption in the system of appraisal and assessment.30 Considering that the factual antecedents of both cases are similar. within sixty (60) days from the date of receipt hereof. SP No.” We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7. city or municipal assessor in the assessment of the property. Unfortunately.”36 For its part. SP No. the running of the period to file an appeal with the LBAA was tolled.THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT ON THE POWER BARGES WAS NOT MADE IN ACCORDANCE WITH LAW. contained the following statement: “If you are not satisfied with this assessment. SP No. 67491.34 where we ruled that under Section 226 of R.R. together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. allusions of a possible covert. Office of the Ombudsman. with the end view of advancing the interests of justice and avoiding further delay. The Court announces: Henceforth. It follows then that the determination made by the respondent Provincial Assessor with regard to the taxability of the subject real properties falls within its power to assess properties for taxation purposes subject to appeal before the LBAA. the owners chose to bring their requests for a review/readjustment before the city assessor. Almost a year passed but the parties had not submitted their respective memoranda. 67490 and CA-G. 67491: “x x x. Local Board of Assessment Appeals. In the latter instance. the Court had required the parties to submit their respective Memoranda within 30 days from notice.A.R.35 the last action of the local assessor on a particular assessment shall be the notice of assessment. appeal to the Board of Assessment Appeals of the province by filing a petition under oath on the form prescribed for the purpose. NPC posits that the 60-day period for appealing to the LBAA should be reckoned from its receipt of the denial of its motion for reconsideration. despite the advice to this effect contained in their respective notices of assessment. It conveniently courts a graft-prone situation where values of real property may be initially set unreasonably high. 1995. No 7160. you may. The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial. 2006. For its part. whenever the local assessor sends a notice to the owner or lawful possessor of real property of its revised assessed value. it is this last action which gives the owner of the property the right to appeal to the LBAA.A. NPC opted to file a motion for reconsideration of the Provincial Assessor’s decision. appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose. together with copies of ARP/Tax Declaration and such affidavits or documents submitted in support of the appeal. Considering that taxes—the lifeblood of our economy—are involved in the present controversy. 7160. illicit tradeoff cannot be avoided. Petitioners’ contentions are bereft of merit. The two divisions of the appellate court cited the case of Callanta v. FELS and NPC maintain that the appeal before the LBAA was not time-barred. 1995. 2006. Section 226 of R.R. a remedy not sanctioned by law. a remedy not sanctioned by the law. In an earlier Resolution dated February 1. provides: “SECTION 226. The pertinent holding of the Court in Callanta is as follows: “x x x [T]he same Code is equally clear that the aggrieved owners should have brought their appeals before the LBAA. city or municipal assessor in the assessment of his property may.33 We fully agree with the rationalization of the CA in both CA-G. otherwise known as the Local Government Code of 1991. the former shall no longer have any jurisdiction to entertain any request 54 | P r o p e r t y . within sixty (60) days from the date of receipt of the written notice of assessment. In both petitions. Such occasion for mischief must be prevented and excised from our system. the Court ordered the consolidation of the two cases in a Resolution31 dated March 8. No. FELS argues that when NPC moved to have the assessment reconsidered on September 7. The procedure likewise does not permit the property owner the remedy of filing a motion for reconsideration before the local assessor. the appellate court declared in CA-G.

identity of parties. namely: (1) public policy and necessity. There is substantial identity of parties when there is community of interest or privity of interest between a party in the first and a party in the second case even if the first case did not implead the latter. in which FELS was the petitioner. They will not allow the same parties or their privies to litigate anew a question once it has been considered and decided with finality. Court of Appeals:42 “x x x An existing final judgment or decree—rendered upon the merits. and that the filing of the instant petition after an adverse judgment in G. It follows ineluctably that the 60-day period for making the appeal to the LBAA runs without interruption.R. A conflicting doctrine would subject the public peace and quiet to the will and dereliction of individuals and prefer the regalement of the litigious disposition on the part of suitors to the preservation of the public tranquility and happiness. (2) the court which rendered it had jurisdiction over the subject matter and the parties. FELS gave NPC the full power and authority to represent it in any proceeding regarding real property assessment. when petitioner NPC filed its petition for review docketed as G. 67490. the 55 | P r o p e r t y . it did so not only on its behalf but also on behalf of FELS. by a court of competent jurisdiction acting upon a matter within its authority—is conclusive on the rights of the parties and their privies. which makes it to the interest of the State that there should be an end to litigation—republicae ut sit litium. touching on the points or matters in issue in the first suit. 165113. thus. it is asserted that the instant petition is barred by res judicata. 165113. de Roxas v. subject matter and causes of action. We do not agree.R. the prevailing party should not be deprived of the fruits of the verdict by subsequent suits on the same issues filed by the same parties. No. The appropriate forum where the aggrieved party may bring his appeal is the LBAA as provided by law. Moreover. and failure in this regard renders the decision final and executory. executory and demandable. The effective and efficient administration of justice requires that once a judgment has become final. that the final and executory judgment in G. No. (3) the judgment must be on the merits. the LBAA acted correctly when it dismissed the petitioners’ appeal for having been filed out of time. 165113 (where there was a final determination on the issue of prescription). Res judicata pervades every organized system of jurisprudence and is founded upon two grounds embodied in various maxims of common law. Thus. 165113 constitutes forum shopping. without fraud or collusion. and the Supreme Court never acquired jurisdiction over it.for a review or readjustment. effectively precludes the claims herein. SP No. No. Litigations must end and terminate sometime and somewhere. This ruling holds in all other actions or suits. No. or from invoking any defense that would reopen the question of its liability on the merits. Therefore. This is what We held in SP 67490 and reaffirm today in SP 67491.38 It also bears stressing that the taxpayer’s failure to question the assessment in the LBAA renders the assessment of the local assessor final. petitioner claims that no forum shopping could have been committed since the elements of litis pendentia or res judicata are not present.”43 To recall.R.40 In the Comment filed by the Provincial Assessor.”37 To reiterate.39 In fine. and (4) there must be between the first and the second actions. the assailed decision in the earlier petition for review filed in this Court was the decision of the appellate court in CA-G. Elementary is the rule that the perfection of an appeal within the period therefor is both mandatory and jurisdictional. if the taxpayer fails to appeal in due course.R. in the same or any other judicial tribunal of concurrent jurisdiction. xxx Courts will simply refuse to reopen what has been decided. and (2) the hardship on the individual of being vexed twice for the same cause—nemo debet bis vexari et eadem causa. FELS maintains that the argument of the Provincial Assessor is completely misplaced since it was not a party to the erroneous petition which the NPC filed in G. The application of the doctrine of res judicata does not require absolute identity of parties but merely substantial identity of parties. As to the issue of forum shopping. the right of the local government to collect the taxes due with respect to the taxpayer’s property becomes absolute upon the expiration of the period to appeal. It avers that it did not participate in the aforesaid proceeding.41 As we ruled in Heirs of Trinidad De Leon Vda. This is in accordance with the doctrine of res judicata which has the following elements: (1) the former judgment must be final.R. the CBAA and the appellate court were likewise correct in affirming the dismissal. precluding the taxpayer from questioning the correctness of the assessment.

On the issue of forum shopping. it is a sound policy to leave the assessment undisturbed. are generally binding and conclusive upon the Court. or at least such parties as represent the same interests in both actions. No. No. directly and exclusively used by petitioner NPC. are intended by their nature and object to remain at a fixed place on a river. however. On the city’s motion to dismiss. v. Filing multiple petitions or complaints constitutes abuse of court processes. the relief being founded on the same facts.46 Thus. the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power. Nos. Nevertheless. (b) identity of rights asserted and relief prayed for. We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS. In fine. a government-owned and controlled corporation engaged in the supply. which have acquired expertise in their field. Moreover. The City of New York. which tends to degrade the administration of justice. the CBAA and LBAA power barges are real property and are thus subject to real property tax. petitioners went from one court to another trying to get a favorable decision from one of the tribunals which allowed them to pursue their cases.51 Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R. Forum shopping exists when. This is also the inevitable conclusion. It must be stressed that an important factor in determining the existence of forum shopping is the vexation caused to the courts and the parties-litigants by the filing of similar cases to claim substantially the same reliefs.R. factual findings of administrative bodies. as a result of an adverse judgment in one forum. and adds to the congestion of the heavily burdened dockets of the courts. we will not assume to interfere with the sensible exercise of the judgment of men especially trained in appraising property. on the gamble that one or the other court would make a favorable disposition. Inc. Tax assessments by tax examiners are presumed correct and made in good faith. res judicata may be properly applied herein. we shall shed light on the merits of the case. FELS’s argument that it is not bound by the erroneous petition filed by NPC is thus unavailing.50 a power company brought an action to review property tax assessment. regardless of which party is successful.A. wreaks havoc upon orderly judicial procedure. There is also forum shopping when a party institutes two or more actions or proceedings grounded on the same cause. and transmission of electric power.R. considering that G.45 The rationale against forum shopping is that a party should not be allowed to pursue simultaneous remedies in two different fora. lake. being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.R.49 We find no reason to depart from this rule in this case. Article 415 (9) of the New Civil Code provides that “[d]ocks and structures which. or coast” are considered immovable property.11. Where the judicial mind is left in doubt. is the entity being taxed by the local government. a party seeks another and possibly favorable judgment in another forum other than by appeal or special civil action or certiorari. there is forum shopping when there exist: (a) identity of parties. Thus. a discussion of the other issues is no longer necessary. machinery and equipment on the Site used in 56 | P r o p e r t y . Petitioners engaged in forum shopping when they filed G.R. with the taxpayer having the burden of proving otherwise. though floating. for the peace and contentment of petitioners. Indeed. FELS and NPC are substantially “identical parties” as to warrant the application of res judicata.decision in G. et al. and (c) the identity of the two preceding particulars is such that any judgment rendered in the pending case..48 Besides. which in fine. power barges are categorized as immovable property by destination. No. and the accessory equipment mounted on the barges were subject to real property taxation. 165116 is binding on petitioner FELS under the principle of privity of interest. we rule for the Provincial Assessor. the fuel oil barges which supplied fuel oil to the power plant barges.44 Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are not present in the cases at bar. generation. 168557 and 170628 after the petition for review in G.. as already discussed. 165113 was dismissed for failure to sufficiently show any reversible error. fittings.47 Having found that the elements of res judicata and forum shopping are present in the consolidated cases. POLAR shall own the Power Barges and all the fixtures. In Consolidated Edison Company of New York. et al. 165116. As found by the appellate court. 7160 because they are actually. No. Article 2 of the Agreement: OWNERSHIP OF POWER BARGES. As stipulated under Section 2. would amount to res judicata in the other.

POLAR shall operate.54 Time and again.1 of the Agreement. does not justify the exemption. x x x” Indeed. applying the rule of strict construction of laws granting tax exemptions. This consideration is consistent with the State policy to guarantee the autonomy of local governments58 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. and prosperity of the people. it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7. in this case. 7160. taxation is the rule. POLAR undertakes that until the end of the Lease Period. directly and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power.57 The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. petitioner FELS still cannot find solace in this provision because Section 5.—Elsewhere stated. 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. 440 SCRA 235 [2004]) ——o0o—— 57 | P r o p e r t y . subject to the supply of the necessary Fuel pursuant to Article 6 and to the other provisions hereof. we hold that FELS is considered a taxable entity.60 WHEREFORE.5.A. concur. which reads: “SECTION 234. manage and maintain the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity. good customs. Austria-Martinez and Chico-Nazario. 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. SO ORDERED.59 In conclusion. Ynares-Santiago (Chairperson). Article 5 of the Agreement provides: OPERATION. JJ.—The following are exempted from payment of the real property tax: xxx (c) All machineries and equipment that are actually. and the rule that doubts should be resolved in favor of provincial corporations. Not being contrary to law. the Petitions are DENIED and the assailed Decisions and Resolutions AFFIRMED.. Petitions denied. progress. No. Exemptions from Real Property Tax. nevertheless.56 Thus. The privilege granted to petitioner NPC cannot be extended to FELS. Court of Appeals.connection with the Power Barges which have been supplied by it at its own cost. the Province of Batangas. (Paseo Realty & Development Corporation vs.”52 It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R.55 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. The covenant is between FELS and NPC and does not bind a third person not privy thereto. morals. the Supreme Court has stated that taxation is the rule and exemption is the exception. the law states that the machinery must be actually. that it shall be responsible for the payment of all real estate taxes and assessments. assailed decisions and resolutions affirmed. the parties to the contract are bound by its terms and conditions.”53 It is a basic rule that obligations arising from a contract have the force of law between the parties. Note. The power to tax is an incident of sovereignty and is unlimited in its magnitude. exemption therefrom is the exception. It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local government’s deprivation of revenues. The mere undertaking of petitioner NPC under Section 10. directly and exclusively used by the government owned or controlled corporation. public order or public policy.

464). 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. January 29.D. Romulo. PROVINCIAL ASSESSOR OF ZAMBALES. Same.00 per square meter applied by Respondent-Appellee Provincial Assessor is indeed excessive and unconscionable. The Real Property Tax Code does not carry a definition of "real property". Same. BOARD OF ASSESSMENT APPEALS OF ZAMBALES. agreed that "the tailings dam and the lands submerged thereunder (were) subject to realty tax. PROVINCE OF ZAMBALES. provides that the realty tax is due "on the real property. Same. Sayoc & De los Angeles for petitioner.319. Court respects the conclusions of quasi-judicial agencies like the CBAA. otherwise known as the Assessment Law. On August 24. 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 realty tax assessment involved in this case amounts to P1 1. such as lands. No serious attempt was made by PetitionerAppellant Benguet Corporation to impugn its reasonableness.* BENGUET CORPORATION.. CRUZ. 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. Same." For purposes of taxation the dam is considered as real property as it comes within the object mentioned in paragraphs (a) and (b) of Article 415 of the New Civil Code.304.—It has been the long-standing policy of this Court to respect the conclusions of quasijudicial agencies like the CBAA. Moreover. machinery and other improvements affixed or attached to real property. The immovable nature of the dam as an improvement determines its character as real property. 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. CENTRAL BOARD OF ASSESSMENT APPEALS.—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. 1993. PETITION for certiorari to review the decision of the Central Board of Assessment Appeals." The petitioner seasonably elevated the matter to the Central Board of Assessment Appeals. machinery and other improvements" not specifically exempted in Section 3 thereof. Mabanta. Same. 0020260 and 002-0266. Hence.BENGUET CORP vs CBAA G. we apply Article 415 of the Civil Code. Evidence. J. 470. 002-0260 and 002-0266. that the P50. 1990. petitioner. has developed expertise in the resolution of assessment problems. The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said properties as taxable improvements.1 one of the herein respondents. i. The facts are stated in the opinion of the Court.R.A.e. including land. Same. There is no such showing in the case at bar. No. we find no cause to disturb the market value applied by Respondent Appellee Provincial Assessor of Zambales on the properties of PetitionerAppellant Benguet Corporation covered by Tax Declaration Nos.—Section 2 of C. Property. The assessment was appealed to the Board of Assessment Appeals of the Province of Zambales.00. It has been imposed on the petitioner's tailings dam and the land thereunder over its protest. In its decision dated March 22. 58 | P r o p e r t y Civil Law. 106041. covered by Tax Declaration Nos.: . which.A. to be in accordance with the Schedule of Market Values for Zambales which was reviewed and allowed for use by the Ministry (Department) of Finance in the 1981-1982 general revision. hence taxable under Section 38 of the Real Property Tax Code. The only exception to this rule is where it is clearly shown that the administrative body has committed grave abuse of discretion calling for the intervention of this Court in the exercise of its own powers of review. this Board cannot accede to the request for tax exemption in the absence of a law authorizing the same. vs. buildings. A reading of that section shows that the tailings dam of the petitioner does not fall under any of the classes of exempt real property therein enumerated. the Board reversed the dismissal of the appeal but. because of the nature of its functions and its frequent exercise thereof. buildings. 1988. (P. Buenaventura. Same. Taxation. 470. No. The tailings dam of the petitioner does not fall under any of the classes of exempt real properties enumerated under Section 2 of C. Although the dam is partly used as an anti-pollution device. Same." In the absence of such a definition.—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. respondents. Same. and MUNICIPALITY OF SAN MARCELINO. No. xxx We find the appraisal on the land submerged as a result of the construction of the tailings dam. on the merits.

the road in question cannot be considered as an improvement which belongs to appellee. Bislig Bay Lumber Co. by itself it cannot be considered an improvement separately assessable. No. x x x In other words. (b) that it is an integral part of the mine. (2) as regards the valuation of the tailings dam and the submerged lands: (a) that the subject properties have no market value as they cannot be sold independently of the mine. Provincial Government of Surigao (100 Phil 303). (d) that the building of the dam has stripped the property of any commercial value as the property is submerged under water wastes from the mine. 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. it is clear that the same cannot be the subject of assessment within the meaning of Section 2 of C. for x x x appellee cannot prevent the use of portions. Since. of the concession for homesteading purposes. 59 | P r o p e r t y . (e) that the tailings dam is an environmental pollution control device for which petitioner must be commended rather than penalized with a realty tax assessment.A. where this Court considered the dikes and gates constructed by the taxpayer in connection with a fishpond operation as integral parts of the fishpond. the tailings dam will benefit the local community by serving as an irrigation facility. To support its theory. the privilege is not exclusive. although in part is for its benefit. (c) that at the end of the mining operation of the petitioner corporation in the area. Apparently. and (3) as regards the petitioner's liability for penalties for nondeclaration of the tailings dam and the submerged lands for realty tax purposes: (a) that where a tax is not paid in an honest belief that it is not due. the petitioner cites the following cases: 1. where this Court did not impose a realty tax on the road primarily for two reasons: In the first place. (c) that the "residual value formula" used by the Provincial Assessor and adopted by respondent CBAA is arbitrary and erroneous. hence. 963). It insists. no penalty shall be collected in addition to the basic tax. More particularly. Municipality of Cotabato v. the government has practically reserved the rights to use the road to promote its varied activities. however. 2. Santos (105 Phil. The petitioner does not dispute that the tailings dam may be considered realty within the meaning of Article 415. x x x In the second place. (b) that the valuation of the tailings dam should be based on its incidental use by petitioner as a water reservoir and not on the alleged cost of construction of the dam and the annual build-up expense. v. it is claimed— (1) as regards the tailings dam as an "improvement": (a) that the tailings dam has no value separate from and independent of the mine. The principal contention of the petitioner is that the tailings dam is not subject to realty tax because it is not an "improvement" upon the land within the meaning of the Real Property Tax Code. It is also duty bound to allow the free use of forest products within the concession for the personal use of individuals residing in or within the vicinity of the land. while the road was constructed by appellee primarily for its use and benefit. (b) that no other mining companies in the Philippines operating a tailings dam have been made to declare the dam for realty tax purposes. it cannot be disputed that the ownership of the road that was constructed by appellee belongs to the government by right of accession not only because it is inherently incorporated or attached to the timber land x x x but also because upon the expiration of the concession said road would ultimately pass to the national government. 470. (f) that the installation and utilization of the tailings dam as a pollution control device is a requirement imposed by law. the realty tax was not imposed not because the road was an integral part of the lumber concession but because the government had the right to use the road to promote its varied activities. as above shown. involving a road constructed by the timber concessionaire in the area.This petition for certiorari now seeks to reverse the above ruling.

" In the absence of such a definition. an American case. The primary function of the dam is to receive. Ontario Silver Mining Co. retain and hold the water coming from the operations of the mine. buildings and constructions of all kinds adhered to the soil. are taxable improvements and machinery within the meaning of the Assessment Law and the Real Property Tax Code. beauty or utility or to adopt it for new or further purposes. 742) The oil tanks are structures within the statute. enhancing its utility and rendering it useful to the oil industry. v. nevertheless. It is undeniable that the two tanks have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by MERALCO for its operations. Atlantic City. amounting to a more than mere repairs or replacement of waste. This case involved drain tunnels constructed by plaintiff when it expanded its mining operations downward. provides that the realty tax is due "on the real property. (Standard Oil Co. 114 SCRA 296) We hold that while the two storage tanks are not embedded in the land. It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline. v. which is then recycled for use in the plant. of New Jersey v. Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property Tax Code defines improvement as follows: (k) Improvements—is a valuable addition made to property or an amelioration in its condition. (144 Pacific 884). xxx (3) Everything attached to an immovable in a fixed manner. 15 A 2d." 4. tunnel. On the other hand. The following are immovable property. Just as much so as any shaft which descends into the earth or an underground incline. (MERALCO Securities Industrial Corp. CBAA. 114 SCRA 261) The tax upon the dam was properly assessed to the plaintiff as a tax upon real estate. v. CBAA. 60 | P r o p e r t y . City of Lynn. 271) 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. Hixon (164 Pacific 498). we apply Article 415 of the Civil Code. and it also enables the petitioner to impound water. as appurtenances to the gas station building or shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station. the Solicitor General argues that the dam is an assessable improvement because it enhances the value and utility of the mine. including land. Section 2 of C. where it was declared that the reservoir dam went with and formed part of the reservoir and that the dam would be "worthless and useless except in connection with the outlet canal. such as lands. v. resulting in a constantly increasing flow of water in the said mine. that they are designed and used by the owner as permanent improvement of the free hold. also from the United States. (Flax-Pond Water Co. 470. CBAA. for without them the gas station would be useless and which have been attached or affixed permanently to the gas station site or embedded therein. be considered as improvements on the land. Kendrick v. and that for such reasons they were properly assessed by the respondent taxing district as improvements. v. There is also ample jurisprudence to support this view. (Caltex [Phil. machinery and other improvements affixed or attached to real property. otherwise known as the Assessment Law. (Manila Electric Co. machinery and other improvements" not specifically exempted in Section 3 thereof. 16 N. or drift would be which was used in connection with the mine. and the water rights in the reservoir represent and include whatever utility or value there is in the dam and headgates. in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. buildings. buildings. costing labor or capital and intended to enhance its value. It was held that: "Whatever value they have is connected with and in fact is an integral part of the mine itself. 415. they may.] Inc.E. 114 SCRA 273) The pipeline system in question is indubitably a construction adhering to the soil. No. Twin Lakes Reservoir Co.3.A. thus: x x x The said equipment and machinery. A reading of that section shows that the tailings dam of the petitioner does not fall under any of the classes of exempt real properties therein enumerated. (1) Lands. the pertinent portions of which state: ART.

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.00 per square meter applied by RespondentAppellee Provincial Assessor is indeed excessive and unconscionable. the dam may still be used for irrigation of the surrounding areas."2 The Court notes that in the Ontario case the plaintiff admitted that the mine involved therein could not be operated without the aid of the drain tunnels. Curiously. 1989) and Schedule of Market Values for Zambales which was reviewed and allowed for use by the Ministry (Department) of Finance in the 1981-1982 general revision. even if the petitioner's mine is shut down or ceases operation. value and utility of petitioner's mine. From the definitions and the cases cited above. which. i. By contrast. just as vigorously contends that at the end of the mining operation the tailings dam will serve the local community as an irrigation facility. we find no cause to disturb the market value applied by Respondent-Appellee Provincial Assessor of Zambales on the properties of Petitioner-Appellant Benguet Corporation covered by Tax Declaration Nos. 002-0260 and 0020266. Even without the tailings dam. It has been the long-standing policy of this Court to respect the conclusions of quasi-judicial agencies like the CBAA. 50% or the other face is unutilized. page 17. 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 61 | P r o p e r t y . There is no such showing in the case at bar. 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. it will then be covered by another dike or stage.The term has also been interpreted as "artificial alterations of the physical condition of the ground that are reasonably permanent in character. the CBAA gave the following justification: We find the appraisal on the land submerged as a result of the construction of the tailings dam. the tailings dam in question is being used exclusively for the benefit of the petitioner. The Court will also reject the contention that the appraisal at P50. And as the petitioner itself points out. Respondent Provincial Assessor explained the use of the "residual value formula" as follows: A 50% residual value is applied in the computation because. which is fifty (50. This is not true in the present case. The only exception to this rule is where it is clearly shown that the administrative body has committed grave abuse of discretion calling for the intervention of this Court in the exercise of its own powers of review. 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. In sustaining this formula. the stage covered is still there and still exists and since only one face of the dike is filled. No serious attempt was made by Petitioner-Appellant Benguet Corporation to impugn its reasonableness. while it is true that when slime fills the dike. the petitioner. while vigorously arguing that the tailings dam has no separate existence. because of the nature of its functions and its frequent exercise thereof. which were indispensable to the successful development and extraction of the minerals therein.00 per square meter made by the Provincial Assessor is excessive and that his use of the "residual value formula" is arbitrary and erroneous. as a result of the construction of the dam. to be in accordance with the Schedule of Market Values for San Marcelino. 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. Zambales. covered by Tax Declaration Nos. 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. the petitioner can now impound and recycle water without having to spend for the building of a water reservoir.e. In fact. the Kendrick case is also not applicable because it involved water reservoir dams used for different purposes and for the benefit of the surrounding areas. 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.00) pesos per square meter for third class industrial land (TSN. Moreover. Hence. thereby implying that it can exist independently of the mine.. 002-0260 and 002-0266. As correctly observed by the CBAA. again unlike in the Ontario case. has developed expertise in the resolution of assessment problems. that the P50. July 5.

It is so ordered. Narvasa (C. It is clear that it has not done so for the purpose of evading or delaying the payment of the questioned tax..—Collection of taxes should be made in accordance with law as any arbitrariness will negate the very reason for government itself (Reyes us. Feliciano. Jr. we hold that the petitioner is not subject to penalty for its nondeclaration of the tailings dam and the submerged lands for realty tax purposes. Gutierrez.. Padilla.). No part. Nocon. Jr. ——o0o—— 62 | P r o p e r t y . J. Almanzor.J. 196 SCRA 322). The CBAA held that this "is an entirely new matter that petitioner can take up with the Provincial Assessor (and) can be the subject of another protest before the Local Board or a negotiation with the local sanggunian x x x. the petition is DISMISSED for failure to show that the questioned decision of respondent Central Board of Assessment Appeals is tainted with grave abuse of discretion except as to the imposition of penalties upon the petitioner which is hereby SET ASIDE.. We have studied the facts and circumstances of this case as above discussed and find that the petitioner has acted in good faith in questioning the assessment on the tailings dam and the land submerged thereunder. Griño-Aquino. JJ. Hence. Bellosillo. concur. Costs against the petitioner. decision set aside. which was raised by the petitioner for the first time only on appeal." There is no need for this time-wasting procedure. Melo and Campos.. The Court may resolve the issue in this petition instead of referring it back to the local authorities.. Petition dismissed. however.We disagree. WHEREFORE. and in case of an adverse decision by either the Local Board or the local sanggunian. Bidin. Romero. (it can) elevate the same to this Board for appropriate action. Jr. with the ruling of respondent CBAA that it cannot take cognizance of the issue of the propriety of the penalties imposed upon it. Davide. Note. Regalado.

546 pesetas Philippine currency. the property of the Manila Electric Railroad and Light Company. 612 of the Philippine Commission. SOUTHWORTH. without the consent of the owner thereof. "2. in the city of Manila. M.) "L. THE UNITED STATES. with intent of gain and without violence or intimidation against the person or force against the thing. 1909. Lobingier. Southworth. by means of a "jumper. magistrate.) "CHARLES S. prosecuting attorney for the city of Manila. "Subscribed and sworn to before me this 4th day of March. and who. or other competent authority has determined from a sworn complaint or evidence adduced that there is probable cause to believe that a crime has been committed. (Sgd. 1910. Southworth. C. having examined the witnesses under oath. vs. "Judge. APPEAL from a judgment of the Court of First Instance of Manila. Philippine Islands. UNLAWFUL USE OF ELECTRIC CURRENT. (Sgd. (Sgd. and the 3rd day of March. by L. (Sgd. plaintiff and appellee. 6295. PER CURIAM: The information filed in this case is as follows: "The undersigned accuses Ignacio Carlos of the crime of theft.1911. or that this defendant has committed any crime. by L. for appellee. All contrary to law. is guilty of larceny. under my direction. A. That the facts charged do not constitute a public offense.273) kilowatts of electric current. as amended by section 2 of Act No. Gibbs. LOBINGIER. D. Acting Attorney-General Harvey. On the 14th of the same month counsel for the defendant demurred to the complaint on the following grounds: "1. a corporation doing business in the Philippine Islands. "Prosecuting Attorney.) "L. First Instance. and between the 13th day of February. LARCENY. in the city of Manila. prosecuting attorney for the city of Manila." uses electricity which does not pass through the meter installed f or the purpose of measuring the current used. thus depriving the company of such electric current. "A preliminary investigation has heretofore been conducted in this case. "Prosecuting Attorney. M. September 1. Jenkins on the 4th of March and placed in the hands of the sheriff. IGNACIO CARLOS. J. 1910. The facts are stated in the opinion of the court. in the city of Manila.) "CHARLES S. take. and carry away two thousand two hundred and seventy-three (2. The sheriff's return shows that the defendant gave bond for his appearance. unlawfully. during. equal to and the equivalent of 4. committed as follows: "That on." 63 | P r o p e r t y . M. Philippine Islands. defendant and appellant. willfully. 183 of the Philippine Commission. Philippine Islands. in accordance with the provisions of section 39 of Act No. to the damage and prejudice of the said Manila Electric Railroad and Light Company in the said sum of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency. That the court has no jurisdiction over the person of the accused nor of the offense charged because the accused has not been accorded a preliminary investigation or examination as required by law and no court. and feloniously. "Judge. for appellant. SOUTHWORTH. "Subscribed and sworn to before me this 4th day of March. steal.—A person to whom an electric light company furnishes electric current for lighting purposes. First Instance" A warrant for the arrest of the defendant was issued by the Honorable J. ELECTRICITY. LOBINGIER. the said Ignacio Carlos. M.US vs CARLOS No. of the value of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency. 1910. did then and there.

vs. installed an additional meter (Exhibit A) on a pole outside of defendant's house. Exhibit A read 218 kilowatt hours." The result of this registration therefore is that while the outside meter (Exhibit A) showed a consumption in defendant's building of 2. and in overruling his demurrer for the same reason. "The court erred in not declaring that the plaintiff consented to the taking of the current. Grant and Kennedy (18 Phil. There is further evidence that the consumption of 223 kilowatt hours. "III. It is undisputed that the current which supplied the house passed through both meters and the city electrician testifies that each meter was tested on the date of the last reading and was "in good condition. was more than ten times as great as that registered by the one inside.26.The demurrer was overruled on the same day and the defendant having refused to plead. Here. In other words the actual consumption. Besides. believing that more light was being used than their meter showed. according to the defendant's testimony." Exactly the same question as that raised in the first assignment of error was. After due consideration of all the proofs presented and the arguments of counsel the trial court f ound the def endant guilty of the crime charged and sentenced him to one year eight months and twenty-one days' presidio correccional. On March 3. "IV. "VI. 122).718 kilowatt hours and Exhibit B. and both it and the meter (Exhibit B) which had been previously installed in the house were read on said date.. in view of the evidence submitted. Obviously this difference could not be due to normal causes. Exhibit B. "The court erred in finding the accused guilty of more than one offense. "The court erred in declaring the accused to be guilty. The city electrician also testifies that the electric current could have been deflected from the inside meter by placing thereon a device known as a 'jumper' connecting the two outside wires. "II. 1910. "The court erred in condemning the accused to pay P865. according to the outside meter. and there is other testimony that there were marks on the insulation of the meter Exhibit B which showed the use of such a device. a plea of not guilty was entered by direction of the court for him and the trial proceeded. to indemnify the offended party. "V. he places the extreme limit of such difference between them at 5 per cent. 968. registered by the inside meter would not be a reasonable amount f or the number of lights installed in defendant's building during the 64 | P r o p e r t y . "The court erred in overruling the objection of the accused to the jurisdiction of the court. The Manila Electric Railroad and Light Company. after a thorough examination and due consideration. as we have seen. the representatives of the company. with thirty electric lights. decided adversely to appellant's contention in the case of U. in the sum of P865. Exhibit A showing 2. because he was not given a preliminary investigation as required by law.500 kilowatt hours of electricity. the inside meter (Exhibit B) showed but 223 kilowatt hours. the outside meter should normally run faster. 745 kilowatt hours. "The court erred in declaring that electrical energy may be stolen. The question raised in the second assignment of error is purely one of fact. From this judgment the defendant appealed and makes the following assignments of error: "I. 1909. while according to the test made in this case the inside meter (Exhibit B) ran the faster. for while the electrician called by the defense (Lanusa) testifies to the possibility of a difference between two such meters.26 to the electric company as damages. each was read again. according to the defendant's electrician. On March 15. to the corresponding subsidiary imprisonment in case of insolvency and to the payment of the costs. No sufficient reason is presented why we should not follow the doctrine enunciated in that case. Rep. Upon this point the trial court said: "For considerably more than a year previous to the filing of this complaint the accused had been a consumer of electricity furnished by the Manila Electric Railroad and Light Company for a building containing the residence of the accused and three other residences. and which was equipped. the difference is more than 900 percent. S.

Genato (15 Phil. This is officer Hartpence. In the case of U.period in question. He appealed to the Court of First Instance. Where the only two witnesses who are supposed to know anything of the matter thus contradict each other this item of testimony by the officer is of more than ordinary significance. approached the cabinet in which the 'jumper' was found. was again tried and sentenced to pay the same fine. to accept the boy's story we must believe that this company or its representatives deliberately conspired not merely to lure the defendant into the commission of a crime but to fasten upon him a crime which he did not commit and thus convict an innocent man by perjured evidence. and also to show that electricity is an unknown force and can not be a subject of larceny. 170) the defendant. has no interest in the matter whatsoever. and the accused f ails to explain why he should have had thirty lights installed if he needed but four or five. something which could be taken in possession and carried away. "Is there any other 'satisfactory explanation' of the 'jumper's' presence? The only one sought to be offered is the statement by the son of the accused. The presence of such an official was neither required nor authorized by law and the very efficacy of a search often depends upon its swiftness." After a careful examination of the entire record we are satisfied beyond peradventure of a doubt that the proofs presented fully support the facts as set forth in the foregoing finding. until the latter was called by the officer. his wife and son. raises the presumption that the accused was the owner of a device whose only use was to deflect the current from the meter. Genato was charged in the municipal court with a violation of a certain ordinance of the city of Manila. He was accompanied at the time by three employees of the Manila Electric Railroad and Light Company. was using a contrivance known as a "jumper" on the electric meter installed by the Manila Electric Railroad and Light Company. There is a sharp conflict between the several spectators on some points but on one there is no dispute. an employee of the Light Company.. and such possession. and perhaps one or two others. We are. Finally. We do not think that the officer's declination to wait until defendant should secure a notary public shows bias. 65 | P r o p e r t y . We can not agree with counsel for the defense that the boy's interest in the outcome of this case is less than that of the witnesses for the prosecution. the officer's attention was called to the defendant's appearance and the former noticed that the latter was becoming nervous. movable. a boy of twelve years. as he says. In the absence of a satisf actory explanation this constituted possession on defendant's part. or at least directed his father's attention to it immediately instead of waiting. vs. would be merely pecuniary. at most. registered one in seventy-seven seconds. "We must also agree with the prosecuting attorney that the attending circumstances do not strengthen the story told by the boy. Rep. under the Code of Civil Procedure. the 'jumper' was placed in the cabinet for the first time by Porter there would be no occasion for any change of demeanor on the part of the accused. accordingly. An appeal was taken from the judgment of the Court of First Instance to the Supreme Court on the ground that the ordinance in question was null and void. thereby reducing the current approximately 95 per cent. unable to consider as satisfactory defendant's explanation of the 'jumper's' presence. that the latter would have been likely to call out at the time he saw the 'jumper' being placed in the drawer. S. instead of making one revolution in every f our seconds. chattels. "The only alternative is the conclusion that the 'jumper' was placed there by the accused or by some one acting for him and that it was the instrument by which the current was deflected from the meter Exhibit B and the Light Company deprived of its lawful compensation. As a result of the use of this "jumper" the meter. and in support of this proposition cites several authorities for the purpose of showing that the only subjects of larceny are tangible. 154 Escolta. Counsel f or the appellant insists that only corporeal property can be the subject of the crime of larceny. and was sentenced to pay a fine of P200. as the accused claims. This is a much more serious charge than that contained in the complaint and should be supported by very strong corroborating circumstances which we do not find here. He testifies that after inspecting other articles and places in the building as he and the other spectators. The boy is the only witness who so testifies and Porter himself squarely denies it. that he saw the 'jumper' placed there by the witness Porter. one witness whom so far as appears. however. Manila. It seems to us that his natural desire to shield his father would far outweigh any interest such an employee like Porter would have and which. although trifling. who executed the search warrant. section 334 (10). "On the strength of this showing a search warrant was issued for the examination of defendant's premises and was duly served by a police officer (Hartpence). All agree that the 'jumper' (Exhibit C) was found in a drawer of a small cabinet in the room of defendant's house where the meter was installed and not more than 20 feet therefrom. and he found there the accused. the owner of the store situated at No. for if. and which had some. including the accused. "There is. intrinsic value.

6 Cox C. still. 1910. and the outside one showed 2. The true test of what is a proper subject of larceny seems to be not whether the subject is corporeal or incorporeal. R. and that the defendant severed a portion of that which was in the pipes of the company by taking it into her house and there consuming it. Firth. A." And article 518 fixes the penalty for larceny in proportion to the value of the personal property stolen. 34 Minn. and in some respects resembling electricity. 11 Cox C. The company had a contract with the defendant to furnish him with current for lighting purposes. said: "Even without them (ordinances). and that it continued to furnish the current. N. but whether it is capable of appropriation by another than the owner. and April 1. the Manila Electric Railroad and Light Company. is a valuable article of merchandise. three. a fluid used for lighting. construing and enforcing the provisions of articles 530 and 531 of the penal code of that country. It is well-settled that illuminating gas may be the subject of larceny. like those of gas. the application of these articles in cases of substraction of gas. the difference in consumption during this time being 2.. Shaw. susceptible of being severed from a mass or larger quantity. 222 111.. regarded by electricians as a fluid.) In the case of Commonwealth vs. shall take another's personal property without the owner's consent.718 kilowatt hours while the one on the inside only showed 968. Rep. after the first month. The outside meter was installed on March 15. that the defendant is criminally responsible for the taking of the whole amount. thereby giving the defendant an opportunity to continue the misappropriation. Queen vs. 12. as claimed by the defendant that he used during the most of this time. that it knew the defendant was misappropriating the current to that extent. and 25 Cyc. It is a valuable article of merchandise. as formerly. It could not stop the misappropriation without cutting off the current entirely. 1887. supra. the right of ownership of electric current is secured by articles 517 and 518 of the Penal Code. at any time the defendant desired to use them. after holding that said ordinance was valid. and read 218 kilowatt hours. 3 C. or five lights. Woods vs." Electricity. Shaw. supra. 213. 520. that it was in their possession by being confined in conduits and tubes which belonged to them. but its manifestations and effects. (Decisions of supreme court of Spain. People. It could not reduce the current so as to just furnish sufficient for the lighting of two. State vs. C. 7 L.. even in the absence of a statute so providing.277 kilowatt hours. we think. White.It is true that the only question directly presented was that of the validity of the city ordinance. It is urged in support of the fourth assignment of error that if it be true that the appellant did appropriate to his own use the electricity as charged he can not be held guilty of larceny for any part of the electricity thus appropriated. W. 221. also (England) Queen vs. 66 | P r o p e r t y . speaking through Chief Justice Bigelow. said: "There is nothing in the nature of gas used for illuminating purposes which renders it incapable of being feloniously taken and carried away. 234. bought and sold like other personal property and is capable of appropriation by another. In the present case it appears that it was the property of the Boston Gas Light Company.. and April 1. On the same day the inside meter was read and showed 745 kilowatt hours. 385. C. R. is confirmed by the rule laid down in the decisions of the supreme court of Spain January 20. C. less twelve days. Assuming that the company read both meters at the end of each month. clearly constitutes the crime of larceny. 1897. Wellman. Both meters were again read on March 3. p..277 kilowatt hours. L.).. the court." Article 517 of the Penal Code above referred to reads as follows: "The following are guilty of larceny: " (1) Those who with intent of gain and without violence or intimidation against the person. The court. knew of this misappropriation and consented thereto. 1909. All this being proved to have been done by her secretly and with intent to deprive the company of their property and to appropriate it to her own use. 293. 1 C. and of being transported from place to place. 363. may be seen and felt.. 1887. It is true that electricity is "no longer. & K. 4 Allen (Mass. 2. Commonwealth vs. 172. for the reason that the complaining party. So no error was committed by the trial court in holding that electricity is a subject of larceny. note 10. or force against things. articles identical with articles 517 and 518 of the code in force in these Islands. 1897. The taking of this current continued over a period of one year. the same as gas. but the current must always be sufficiently strong to furnish current for the thirty lights.. January 20. 308. bought and sold like other personal property.

" But under the facts in the case at bar it is not difficult to reach a conclusion that the acts performed by the plaintiff company did not constitute a consent on its part that the defendant take its property. which drew off the gas from the main without allowing it to pass through the meter. At most there was a mere passive submission on the part of the company that the current should be taken and no indication that it wished it to be taken. the defendant received from one Joaquina Punu the sum of P31. Counsel for the defendant insisted that the complaint charged his client with two different crimes of estafa in violation of section 11 of General Orders. vs. The gas from this pipe was burnt every day. and no mutual understanding between the company and the defendant. he can not again be prosecuted for the stealing of the current at any time within that period. that larceny is not committed when the property is taken with the consent of its owner. In disposing of this question this court said: "The said defect constitutes one of the dilatory pleas indicated by section 21. So the "jumper" was put on and taken off at least monthly. a continuous taking of the gas and not a series of separate 67 | P r o p e r t y . The defendant was moved by one impulse to appropriate to his own use the current. and no measures of inducement of any kind were employed by the company for the purpose of leading the defendant into temptation.50. "A person stole gas for the use of a manufactory by means of a pipe. but instead of delivering the said amount she asked Marcelina for P30 in the name of Joaquina who had in no way authorized her to do so.277 kilowatts of electric current of the value of P909. unlawfully. We have been unable to find a well-considered case holding a contrary opinion under similar facts. the defendant committed not a single offense but a series of offenses. and the means adopted by him for the taking of the current were in the execution of a general fraudulent plan. as a general proposition. No. and carry away 2. The Government had no opportunity to amend or correct this error. It is. The pipe was never closed at its junction with the main.There is no pretense that the accused was solicited by the company or any one else to commit the acts charged. Macaspac (12 Phil. there are numerous cases holding that such acts do not constitute such consent as would relieve the taker of criminal responsibility. in order to avoid detection. that if the pipe always remained full. 1910. and no preconcert whatever between him and the company. Marcelina gave her P30. * * * Inasmuch as in the first instance the accused did not make the corresponding dilatory plea to the irregularity of the complaint. and in the same place. one for each month. 58. No demurrer was presented against this complaint on the ground that more than one crime was charged. but. Then. willfully. in fact. which in any case would only affect the form of the complaint. we are of the opinion that the charge was properly laid. true that the defendant did not allow the "jumper" to remain in place continuously for any number of days as the company inspected monthly the inside meter. because it is merely a defect of form easily remedied. S. The complaint alleged that the defendant did on. steal. and the 3rd of March. If twelve distinct and separate complaints had been filed against the defendant. Had this been done. The fourth assignment of error is. It is true. and between the 13th day of February. the sum total of the penalties imposed might have been very much greater than that imposed by the court in this case. The original design to misappropriate this current was formed by the defendant absolutely independent of any acts on the part of the company or its agents. 26). again. The defendant called upon Marcelina. 1909. and the accused ought to have raised the point before the trial began. Apart from the fact that the defense does not pretend that any of the essential rights of the accused have been injured. and while the "jumper" was off the defendant was not misappropriating the current. in the same manner. It was held. and not prejudicial to the rights of the defendant. It was substantially one continuous act.. It is also contended that since the "jumper" was not used continuously. The electricity was stolen from the same person. therefore. no doubt. not well founded. can not justify a reversal of the judgment appealed from. The prosecuting attorney elected to cover the entire period with one charge and the accused having been convicted for this offense. in law. No. Rep. It may be difficult in some instances to determine whether certain acts constitute. during. according to the provisions of section 10 of General Orders. no doubt. if not daily. and feloniously take. The covering of the entire period by one charge has been beneficial. if anything. it must be understood that she has waived such objection. and consequently always remained full of gas. 58. and turned off at night. and no knowledge by the defendant that the company wished him to take the current. there was. In the case of U. and is not now entitled to raise for the first time any question in reference thereto when submitting to this court her assignment of errors. such "consent. believing that Joaquina had sent for it. the complaint might have been amended -in time. with the request to deliver it to Marcelina Dy-Oco." In the case at bar it is not pointed out wherein any of the essential rights of the defendant have been prejudiced by reason of the fact that the complaint covered the entire period. the allegation of the defect above alluded to. if error at all. although the "jumper" might have been removed and replaced daily or monthly.

" (Regina vs. 234. R. as it was substantially all one transaction. same is hereby affirmed. with costs against the appellant. vol. 10th ed.. or to suffer the corresponding subsidiary imprisonment in case of insolvency. the taking would have been continuous. 1. The judgment being strictly in accordance with the law and the merits of the case. This finding is fully in accordance with the evidence presented.. 172. Cited on p. So no error was committed in sentencing the defendant to indemnify the company in this amount. 68 | P r o p e r t y . L. It was held also that even if the pipe had not been kept full. C. 11 Cox C.takings.26.) The value of the electricity taken by the defendant was found by the trial court to be P865. C. Firth. 1 C. 758 of Wharton's Criminal Law..

the human voice is converted into electrical impulses or electric current which are transmitted to the party called. petitioner. use of a device to fraudulently obtain gas. Telecommunication Industry. Genato. Property. A telephone call. 933 (1922). Property.—The only requirement for a personal property to be the object of theft under the penal code is that it be capable of appropriation. In the instant case. or other apparatus installed or used for generating. Since it is not included in the exclusive enumeration of real properties under Article 415. such as an access device or card as in the instant case. Yet. 3952 (Bulk Sales Law). Business is likewise not enumerated as personal property under the Civil Code.— The business of providing telecommunication and the telephone service are personal property under Article 308 of the Revised Penal Code. The business of providing telecommunication or telephone service is likewise personal property which can be the object of theft under Article 308 of the Revised Penal Code. containing. as held in United States v. To appropriate means to deprive the lawful owner of the thing. it may be appropriated. Same. (2) that said property belongs to another. The word “take” in the Revised Penal Code includes any act intended to transfer possession which. Same. therefore.—Interest in business was not specifically enumerated as personal property in the Civil Code in force at the time the above decision was rendered. Ramirez. It need not be capable of “asportation. HON.—The elements of theft under Article 308 of the Revised Penal Code are as follows: (1) that there be taking of personal property. may be committed through the use of the offenders’ own hands. Tambunting.—While it may be conceded that “international long distance calls. PEOPLE OF THE PHILIPPINES & PHILIPPINE LONG DISTANCE TELEPHONE COMPANY. conducting.—The business of providing telecommunication or telephone service is likewise personal property which can be the object of theft under Article 308 of the Revised Penal Code. United States v. could be object of theft. Same. which enumerates “forces of nature which are brought under control by science. Electricity is personal property under Article 416 (3) of the Civil Code. Presiding Judge of the Regional Trial Court. January 13. as held in Natividad v. (3) that the taking be done with intent to gain. Same. business should also be classified as personal property. and the act of engaging in International Simple Resale (ISR) is an act of “subtraction” penalized under said article. which enumerates “forces of nature which are brought under control by science. . meter.” Same. Elements of theft. hence. as held in the cases of United States v. as well as any mechanical device. Same. It is the use of these telecommunications facilities without the consent of Philippine Long Distance Telephone (PLDT) that constitutes the crime of theft. take the form of electrical energy. This includes controlling the destination of the property stolen to deprive the owner of the property. Electricity. It is the use of these communications facilities without the consent of PLDT that constitutes the crime of theft. LAUREL. Same. Menagas. Court of Appeals. The only requirement for a personal property to be the object of theft under the Penal Code is that it be capable of appropriation. meter. 2d 403 (1937). the act of conducting ISR operations by illegally connecting various equipment or apparatus to private respondent PLDT’s telephone system. PLDT not being the owner of said telephone calls. Same.” which is defined as “carrying away. through which petitioner is able to resell or re-route international long distance calls using respondent PLDT’s facilities constitutes all three acts of subtraction mentioned above. (4) that the taking be done without the consent of the owner. ZEUS C. Same. interest in business was declared to be personal property since it is capable of appropriation and not included in the enumeration of real properties. Same. ABROGAR. Carlos. however. which is the unlawful taking of the telephone services and business. respondents. Civil Law. and (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon things.”—It was conceded that in making the international phone calls. and the use of a jumper to divert electricity. Makati City. and (c) using or enjoying the benefits of any device by means of which one may fraudulently obtain any current of electricity or any telegraph or telephone service. Property. it is therefore personal property. Branch 150. 44 Phil. Same. enhances. and United States v. and the act of engaging in ISR is an act of 69 | P r o p e r t y Criminal Law.LAUREL vs ABROGAR G.E. such as the use of a meter tampering. Theft. as held in the assailed Decision. through which petitioner is able to resell or re-route international long distance calls using respondent Philippine Long Distance Telephone’s (PLDT’s) facilities constitutes all three acts of subtraction mentioned above. It was also held in the assailed Decision that intangible property such as electrical energy is capable of appropriation because it may be taken and carried away. The act of conducting International Simple Resale (ISR) operations by illegally connecting various equipment or apparatus to private respondent Philippine Long Distance Telephone’s (PLDT’s) telephone system. 11 N. 155076. augments. No. Just like interest in business. or measuring electricity.R. 2009. then it could not validly claim that such telephone calls were taken without its consent. which is the unlawful taking of the telephone services and business. is electrical energy. Same. Telecommunication Industry. Article 414 of the Civil Code provides that all things which are or may be the object of appropriation are considered either real property or personal property. telegraph or telephone service. or other apparatus. it cannot be said that such international long distance calls were personal properties belonging to PLDT since the latter could not have acquired ownership over such calls. Business may be appropriated under Section 2 of Act No.* LUIS MARCOS P. Electricity is personal property under Article 416(3) of the Civil Code.” the matter alleged to be stolen in the instant case. vs. Interest in business was declared to be personal property since it is capable of appropriation and not included in the enumeration of real properties. The business of providing telecommunication and the telephone service are personal property under Article 308 of the Revised Penal Code (RPC).—The acts of “subtraction” include: (a) tampering with any wire. Same. PLDT merely encodes. (b) tapping or otherwise wrongfully deflecting or taking any electric current from such wire.” Jurisprudence is settled that to “take” under the theft provision of the penal code does not require asportation or carrying away. decodes and transmits said calls using its complex communications infrastructure and facilities. Following the ruling in Strochecker v. 1 SCRA 380 (1961).

Property. Criminal Law. Regala and Cruz and Kapunan.—The question of whether PLDT creates the phone calls or merely encodes and transmits them is a question of fact that can be answered by science. While electricity is merely the medium through which the telephone calls are carried. 70 | P r o p e r t y . The coursing of long distance calls through International Simple Resale (ISR) is not per se illegal. and thus guaranteed of his rights under the Constitution. there was no authority yet for the practice during the time of the subject incidents. Concurring Opinion: Civil Law. Same. while telephone calls “take the form of electrical energy.. Section 14 and Rule 119. I agree with Justice Consuelo Ynares-Santiago that. To be sure. and (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon things. but I agree with the present Resolution that they are. PLDT merely encodes.—The assailed Decision conceded that when a telephone call was made. While electricity is merely the medium through which the telephone calls are carried.” and only later mentions “stealing the business from PLDT” as the manner by which the gain was derived by the accused. decodes and transmits said calls using its complex infrastructure and facilites.” As the Resolution now correctly points out. Theft. Criminal Law. the crime is properly designated as one of theft. Same. Just because the phone calls are transmitted using the facilities and services of PLDT. From that provision.” TINGA. the Federal Communications Commission of the United States is authorized by statute to approve long-distance calling through ISR for calls made to certain countries. “the human voice [is] converted into electronic impulses or electrical current. J. “international long distance calls. enhances. Villodolid & Associates for respondent PLDT. Separate Opinion: Civil Law. to the intended recipient. France and Japan. it cannot be said that such telephone calls were personal properties belonging to Philippine Long Distance Telephone (PLDT) since the latter could not have acquired ownership over such calls. the Amended Information describes the thing taken as. it is sufficiently analogous to allow the courts to consider such calls as possessing similar physical characteristics as electricity. it merely transmits these calls. (2) that said property belongs to another. it does not follow that PLDT is the owner of such calls. augments. Same. Theft. this amendment is not necessitated by a mistake in charging the proper offense. Salonga. (3) that the taking be done with intent to gain. Parenthetically. For example. telephone calls are not exactly alike as pure electricity.—The legal paradigm that treats PLDT as akin to a common carrier should alert against any notion that it is the owner of the “long distance overseas calls” alleged as having been stolen in the Amended Information. even though it is in custody of the same for the duration of the trip.“subtraction” penalized under said article. Section 19 of the Revised Rules on Criminal Procedure.—The crime of theft is penalized under Article 308 of the RPC. which would have called for the dismissal of the information under Rule 110. To be clear. the transport company does not acquire ownership over such goods or such persons. Hernandez & Mendoza for petitioner. While telephone calls take the form of electrical energy. In order to correct this inaccuracy of description. CORONA. Electricity. (4) that the taking be done without the consent of the owner. The facts are stated in the resolution of the Court. Angara. electricity or electronic energy may be the subject of theft. However. this case must be remanded to the trial court and the prosecution directed to amend the Amended Information. Telecommunication Industry.. to clearly state that the property subject of the theft are the services and business of respondent PLDT. MOTION FOR RECONSIDERATION of a decision of the Supreme Court. Since physically a telephone call is in the form of an electric signal. Telecommunication Industry. Property. our jurisprudence acknowledging that electricity is personal property which may be stolen through theft is applicable. it cannot be said that such [telephone] calls were personal properties belonging to PLDT since the latter could not have acquired ownership over such calls. it does not follow that PLDT is the owner of such calls. owned by another.—Are “international long distance calls” personal property? The assailed Decision did not believe so. However. They are sound waves (created by the human voice) which are carried by electrical currents to the recipient on the other line. Applying the common carrier paradigm. J. The purpose of the amendment is simply to ensure that the accused is fully and sufficiently apprised of the nature and cause of the charge against him. More precisely. it is sufficiently analogous to allow the courts to consider such calls as possessing similar physical characteristics as electricity. our jurisprudence acknowledging that electricity is personal property which may be stolen through theft is applicable. as it is personal property capable of appropriation. Just because the phone calls are transmitted using the facilities and services of Philippine Long Distance Telephone (PLDT). Since physically a telephone call is in the form of an electric signal. as it has done so with nations such as Australia. Abello. Theft. as indicated by the Office of the Solicitor General’s support for the subject prosecution. Tamano. The Court now equates telephone calls to electrical energy. when a public transport system is contracted to transport goods or persons to a destination. Telecommunication Industry. Same. we have long recognized the following as the elements of theft: (1) that there be taking of personal property. Same. The crime of theft is penalized under Article 308 of the Revised Penal Code (RPC).—The coursing of long distance calls through ISR is not per se illegal. Concepcion.

99-2425. .”1 By way of brief background. SO ORDERED. 2006. antenae. the petition is GRANTED.” 71 | P r o p e r t y Petitioner’s special civil action for certiorari was dismissed by the Court of Appeals. The trial court denied the Motion to Quash Amended Information. committed as follows: “On or about September 10-19.RESOLUTION YNARES-SANTIAGO.” on ground that the factual allegations in the Amended Information do constitute the felony of theft. The Amended Information charged the accused with theft under Article 308 of the Revised Penal Code. The Regional Trial Court is directed to issue an order granting the motion of the petitioner to quash the Amended Information. and within the jurisdiction of this Honorable Court.” The element of “taking” referred to in Article 308 of the Revised Penal Code means the act of depriving another of the possession and dominion of a movable coupled with the intention. Branch 150. effectively stealing this business from PLDT while using its facilities in the estimated amount of P20. as well as petitioner’s subsequent Motion Reconsideration. which means to deprive the lawful owner of the thing. the accused.651. cables. filed with the Regional Trial Court of Makati City. this Court’s First Division rendered judgment in this case as follows: “IN LIGHT OF ALL THE FOREGOING. that it states the names of all the accused who were specifically charged with the crime of theft of PLDT’s international calls and business of providing telecommunication or telephone service on or about September 10 to 19. Since Article 308 of the Revised Penal Code used the words “personal property” without qualification. PLDT further insists that the Revised Penal Code should be interpreted in the context of the Civil Code’s definition of real and personal property.370.: On February 27. did then and there willfully. may be the subject of theft under Article 308 of the Revised Penal Code. and that it satisfies the test of sufficiency as it enabled a person of common understanding to know the charge against him and the court to render judgment properly. J. Respondent Philippine Long Distance Telephone Company (PLDT) filed a Motion for Reconsideration with Motion to Refer the Case to the Supreme Court En Banc. Thus.” of withholding it with the character of permanency. 1999 in Makati City by conducting ISR or International Simple Resale. it follows that all “personal properties” as understood in the context of the Civil Code. steal and use the international long distance calls belonging to PLDT by conducting International Simple Resale (ISR). with intent to gain and without the knowledge and consent of the Philippine Long Distance Telephone (PLDT). unlawfully and feloniously take. It maintains that the Amended Information charging petitioner with theft is valid and sufficient. or prior thereto in Makati City.92 to the damage and prejudice of PLDT. PLDT alleges that the international calls and business of providing telecommunication or telephone service are personal properties capable of appropriation and can be objects of theft. Thus. There must be intent to appropriate. that it identifies the international calls and business of providing telecommunication or telephone service of PLDT as the personal properties which were unlawfully taken by the accused. and/or air wave frequency which connect directly to the local or domestic exchange facilities of the country where the call is destined. The enumeration of real properties in Article 415 of the Civil Code is exclusive such that all those not included therein are personal properties. the term “personal properties” under Article 308 of the Revised Penal Code is not limited to only personal properties which are “susceptible of being severed from a mass or larger quantity and of being transported from place to place. in the said amount.” the sole requisite being that the object should be capable of “appropriation. this Court held that the Amended Information does not contain material allegations charging petitioner with theft of personal property since international long distance calls and the business of providing telecommunication or telephone services are not personal properties under Article 308 of the Revised Penal Code. the not the for In the above-quoted Decision. petitioner filed the instant petition for review with this Court. The assailed Orders of the Regional Trial Court and the Decision of the Court of Appeals are REVERSED and SET ASIDE. PLDT also argues that “taking” in relation to theft under the Revised Penal Code does not require “asportation. petitioner is one of the accused in Criminal Case No. 1999. CONTRARY TO LAW. at the time of the “taking. conspiring and confederating together and all of them mutually helping and aiding one another. which is a method of routing and completing international long distance calls using lines.”2 Petitioner filed a “Motion to Quash (with Motion to Defer Arraignment).

Moreover. in United States v. (2) that said property belongs to another. shall take personal property of another without the latter’s consent. According to the OSG.5 which recognized intangible properties like gas and electricity as personal properties. it may not be considered as personal property susceptible of appropriation. the quashal of the information would still not be proper. Considering the gravity and complexity of the novel questions of law involved in this case. Hence. the term “personal property” in the Revised 72 | P r o p e r t y . The charge of theft as alleged in the Information should be taken in relation to RA 8484 because it is the elements. We resolve to grant the Motion for Reconsideration but remand the case to the trial court for proper clarification of the Amended Information. the Special First Division resolved to refer the same to the Banc. It is not synonymous to electric current or impulses.—Theft is committed by any person who. Genato. the definition of the term “personal property” in the penal code provision on theft had been established in Philippine jurisprudence. Tambunting. are deemed incorporated in our penal laws. prosecution under Republic Act (RA) No. with intent to gain but without violence against. In his Comment to PLDT’s motion for reconsideration. to the prejudice of PLDT as owner thereof. Who are liable for theft. and United States v.” are personal properties which may be subject of theft. Petitioner claims that the analogy between generated electricity and telephone calls is misplaced. tangible or intangible. It noted that the cases of United States v. the special laws punish the surreptitious and advanced technical means employed to illegally obtain the subject service and business. that control.” the same may not be subject of theft. and carry a pattern representing the human voice to a receiver. 8484 or the Access Device Regulations Act of 1998 and RA 8792 or the Electronic Commerce Act of 2000 does not preclude prosecution under the Revised Penal Code for the crime of theft. or intimidation of persons nor force upon things. there is no basis for this Court’s finding that the Legislature could not have contemplated the theft of international telephone calls and the unlawful transmission and routing of electronic voice signals or impulses emanating from such calls by unlawfully tampering with the telephone device as within the coverage of the Revised Penal Code. Prior to the passage of the Revised Penal Code on December 8. capable of appropriation can be the object of theft. It only provides the facilities or services for the transmission and switching of the calls. the theft provision in the Revised Penal Code was deliberately couched in broad terms precisely to be all-encompassing and embracing even such scenario that could not have been easily anticipated. Tambunting.” The elements of theft under Article 308 of the Revised Penal Code are as follows: (1) that there be taking of personal property. 308. The latter embraces unauthorized appropriation or use of PLDT’s international calls. The Office of the Solicitor General (OSG) agrees with respondent PLDT that “international phone calls and the business or service of providing international phone calls” are subsumed in the enumeration and definition of personal property under the Civil Code hence. United States v. He also insists that “business” is not personal property. since the passage of the Revised Penal Code on December 8.3 United States v. PLDT does not produce or generate telephone calls. may be proper subjects of theft. On the other hand. Genato.PLDT likewise alleges that as early as the 1930s. “personal property” is defined as “anything susceptible of appropriation and not included in the foregoing chapter (not real property). This Court. Article 416(3) of the Civil Code deems “forces of nature” (which includes electricity) which are brought under the control by science.” Thus. and not the designation of the crime. are personal property. (3) that the taking be done with intent to gain. petitioner Laurel claims that a telephone call is a conversation on the phone or a communication carried out using the telephone. 1930. In Article 335 of the Civil Code of Spain. the “international phone calls” which are “electric currents or sets of electric impulses transmitted through a medium. consistently ruled that any personal property. hence. Article 308 of the Revised Penal Code provides: “Art. international telephone calls were in existence. It is not the “business” that is protected but the “right to carry on a business.” This right is what is considered as property. 1930. for personal profit or gain. Since the services of PLDT cannot be considered as “property. Even assuming that the correct indictment should have been under RA 8484. and (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon things.49 According to respondent. service and business. corporeal or incorporeal. Carlos4 and United States v. Carlos. (4) that the taking be done without the consent of the owner. Moreover. the term “personal property” has had a generally accepted definition in civil law.

any property which is not included in the enumeration of real properties under the Civil Code and capable of appropriation can be the subject of theft under the Revised Penal Code.10 use of a device to fraudulently obtain gas. and United States v. No person shall.”7 Jurisprudence is settled that to “take” under the theft provision of the penal code does not require asportation or carrying away.” which is defined as “carrying away. and April 1. construing and enforcing the provisions of Articles 530 and 531 of the Penal Code of that country. Evidence.Penal Code should be interpreted in the context of the Civil Code provisions in accordance with the rule on statutory construction that where words have been long used in a technical sense and have been judicially construed to have a certain meaning. which was involved in the said case. or other apparatus installed or used for generating. Carlos. or using any device to fraudulently obtain such forces of nature.6 In fact. as held in Natividad v. still the legislature did not limit or qualify the definition of “personal property” in the Revised Penal Code. Carlos.” It was further ruled that even without the above ordinance the acts of subtraction punished therein are covered by the provisions on theft of the Penal Code then in force. It need not be capable of “asportation. be deemed sufficient evidence of such use by the persons benefiting thereby. is confirmed by the rule laid down in the decisions of the supreme court of Spain of January 20. Consequently. as held in the cases of United States v. this Court used the Civil Code definition of “personal property” in interpreting the theft provision of the penal code in United States v. containing. as held in the assailed Decision. meter. meter. petitioner was charged with engaging in International Simple Resale (ISR) or the unauthorized routing and completing of international long distance calls using lines. As early as 1910. meter. in the absence of satisfactory explanation. and the existence in any building premises of any such device shall.11 As illustrated in the above cases. as well as telephone service. 1887. nor tap or otherwise wrongfully deflect or take any electric current from such wire. deface. containing. or measuring electricity. Neither did it provide a restrictive definition or an exclusive enumeration of “personal property” in the Revised Penal Code.—No person shall destroy. Genato. The pertinent provision of the Revised Ordinance of the City of Manila. wrongfully redirecting such forces of nature from such apparatus. the words used in such statute should be construed according to the sense in which they have been previously used. and/or air wave frequency and connecting these calls directly to the local or domestic exchange facilities of the country where destined. as well as any mechanical device. thereby showing its intent to retain for the term an extensive and unqualified interpretation.9 The word “take” in the Revised Penal Code includes any act intended to transfer possession which. such as an access device or card as in the instant case. conducting. and the use of a jumper to divert electricity. Tambunting. telegraph or telephone service. or other apparatus. In the instant case. the right of the ownership of electric current is secured by Articles 517 and 518 of the Penal Code. This includes controlling the destination of the property stolen to deprive the owner of the property. United States v. reads as follows: “Injury to electric apparatus. the Court declared in Genato that ownership over electricity (which an international long distance call consists of). may be committed through the use of the offenders’ own hands. conducting. appropriation of forces of nature which are brought under control by science such as electrical energy can be achieved by tampering with any apparatus used for generating or measuring such forces of . for any purpose whatsoever. Court of Appeals. or 73 | P r o p e r t y The only requirement for a personal property to be the object of theft under the Penal Code is that it be capable of appropriation. 1897. cables. such as the use of a meter tampering. mutilate. is protected by the provisions on theft of the Penal Code. Tapping current. a fluid used for lighting.8 To appropriate means to deprive the lawful owner of the thing. use or enjoy the benefits of any device by means of which he may fraudulently obtain any current of electricity or any telegraph or telephone service. nature. and in some respects resembling electricity. Menagas. and have been adopted by the legislature as having a certain meaning prior to a particular statute.” The acts of “subtraction” include: (a) tampering with any wire. Cognizant of the definition given by jurisprudence and the Civil Code of Spain to the term “personal property” at the time the old Penal Code was being revised. or other apparatus installed or used for generating. antennae. thus: “Even without them (ordinance). or otherwise injure or tamper with any wire. as held in United States v. Articles 517 and 518 of the code in force in these islands. in which they are used. the application of these articles in cases of subtraction of gas.

Since it is not included in the exclusive enumeration of real properties under Article 415. Just like interest in business. could be object of theft: “Section 2. mortgagor. or any sale. In the instant case. mortgagor. the electric current) through which the human voice/voice signal of the caller is transmitted. meter. Yet. mortgage. or substantially all. Business may be appropriated under Section 2 of Act No. and may be the subject of mortgage. In this regard.” In Strochecker v. transfer. the Amended Information inaccurately describes the offense by making it appear that what petitioner took were the international long distance telephone calls. it may be appropriated. however. or other apparatus. mortgage. the telecommunication company will again break down or decode the electronic impulses back to human voice/voice signal before the called party receives the same. through the use of its facilities. A perusal of the records of this case readily reveals that petitioner and respondent PLDT extensively discussed the issue of ownership of telephone calls. such interest is a personal property capable of appropriation and not included in the enumeration of real properties in Article 335 of the Civil Code. (b) tapping or otherwise wrongfully deflecting or taking any electric current from such wire. which is one-half interest in the business above described. Business is likewise not enumerated as personal property under the Civil Code. petitioner’s acts constitute theft of respondent PLDT’s business and service. or assignment of a stock of goods. of the fixtures and equipment used in and about the business of the vendor. a telecommunication company. or all.13 As can be clearly gleaned from the above disquisitions. or assignor. respondent PLDT explains the process of generating a telephone call as follows: “38. in contemplation of the Act. or materials otherwise than in the ordinary course of trade and the regular prosecution of the business of the vendor. or assignment of all. must first break down or decode the human voice/voice signal into electronic impulses and subject the same to further augmentation and enhancements. shall be deemed to be a sale and transfer in bulk. petitioner and respondent PLDT gave their respective explanations on how a telephone call is generated. using its facilities. of the business or trade theretofore conducted by the vendor. wares. committed by means of the unlawful use of the latter’s facilities. or substantially all. service and facilities. hence. Before the human voice/voice signal can be so transmitted. transferor. business should also be classified as personal property.15 For its part. Ramirez. it is therefore personal property. mortgagor. the act of conducting ISR operations by illegally connecting various equipment or apparatus to private respondent PLDT’s telephone system. The role of telecommunication companies is not limited to merely providing the medium (i. 74 | P r o p e r t y . through which petitioner is able to resell or re-route international long distance calls using respondent PLDT’s facilities constitutes all three acts of subtraction mentioned above. transferor. Upon reaching the destination of the call.e.” Interest in business was not specifically enumerated as personal property in the Civil Code in force at the time the above decision was rendered. Article 414 of the Civil Code provides that all things which are or may be the object of appropriation are considered either real property or personal property. 3952 (Bulk Sales Law). x x x. or assignor. This is evident from its Comment where it defined the issue of this case as whether or not “the unauthorized use or appropriation of PLDT international telephone calls. for the purpose of generating personal profit or gain that should have otherwise belonged to PLDT.54 The business of providing telecommunication or telephone service is likewise personal property which can be the object of theft under Article 308 of the Revised Penal Code. telegraph or telephone service. Any sale.”14 In discussing the issue of ownership. Following the ruling in Strochecker v. a telecommunication company both converts/reconverts the human voice/voice signal and provides the medium for transmitting the same. transfer. rather than respondent PLDT’s business. The prosecution has taken the position that said telephone calls belong to respondent PLDT. again. interest in business was declared to be personal property since it is capable of appropriation and not included in the enumeration of real properties. In other words.12 this Court stated: “With regard to the nature of the property thus mortgaged. Only after such process of conversion will the resulting electronic impulses be transmitted by a telecommunication company. Ramirez. merchandise.measuring electricity. and (c) using or enjoying the benefits of any device by means of which one may fraudulently obtain any current of electricity or any telegraph or telephone service. transferor or assignor. provisions. constitutes theft.

. which denied the Motion to Quash (With Motion to Defer Arraignment) in Criminal Case No. the human voice is converted into electrical impulses or electric current which are transmitted to the party called. it is the latter which decodes. augments and enhances the electronic impulses back to the human voice/voice signal and provides the medium (i. To be sure.e. The purpose of the amendment is simply to ensure that the accused is fully and sufficiently apprised of the nature and cause of the charge against him.e. in the case of an international telephone call. augments and enhances the electronic impulses back to the human voice/voice signal and provides the medium (i. A telephone call. it was conceded that in making the international phone calls. which enumerates “forces of nature which are brought under control by science.R. Leonardo-De Castro and Brion.e. which would have called for the dismissal of the information under Rule 110. it is private respondent PLDT which decodes. SO ORDERED. which is the unlawful taking of the telephone services and business. Section 14 and Rule 119. and the act of engaging in ISR is an act of “subtraction” penalized under said article. Therefore.J.” the matter alleged to be stolen in the instant case. Azcuna. 99-2425 for theft. Moreover.). Section 19 of the Revised Rules on Criminal Procedure. “international long distance calls. Corona. is AFFIRMED. concur. Abrogar of the Regional Trial Court of Makati City. Please see Concurring Opinion. See Separate Opinion. then it could not validly claim that such telephone calls were taken without its consent. 2006 is RECONSIDERED and SET ASIDE. electric current) to enable the called party to receive the call. Japan) reaches the Philippines through a local telecommunication company (i. 68841 affirming the Order issued by Judge Zeus C. ——o0o—— 75 | P r o p e r t y 40.”17 Indeed. Thus. electric current) to enable the called party to receive the call. In order to correct this inaccuracy of description. Parenthetically. is electrical energy. once the electronic impulses or electric current originating from a foreign telecommunication company (i. The case is remanded to the trial court and the Public Prosecutor of Makati City is hereby DIRECTED to amend the Amended Information to show that the property subject of the theft were services and business of the private offended party. Austria-Martinez... ACCORDINGLY. it cannot be said that such international long distance calls were personal properties belonging to PLDT since the latter could not have acquired ownership over such calls.e. once the electronic impulses originating from a foreign telecommunication company country (i. Carpio-Morales. Japan) reaches private respondent PLDT’s network. PLDT not being the owner of said telephone calls. it is not true that the foreign telecommunication company provides (1) the electric current which transmits the human voice/voice signal of the caller and (2) the electric current for the called party to receive said human voice/voice signal. Carpio. the motion for reconsideration is GRANTED. The Decision of the Court of Appeals in CA-G.” and only later mentions “stealing the business from PLDT” as the manner by which the gain was derived by the accused. Nachura. Jr. the Amended Information describes the thing taken as. the human voice/voice signal of the calling party will never reach the called party. private respondent PLDT). while it may be conceded that “international long distance calls. decodes and transmits said calls using its complex communications infrastructure and facilities.. contrary to petitioner Laurel’s assertion.39. JJ. SP No. Quisumbing.”16 In the assailed Decision. It is the use of these communications facilities without the consent of . J. and thus guaranteed of his rights under the Constitution. to clearly state that the property subject of the theft are the services and business of respondent PLDT. However. Chico-Nazario. The assailed Decision dated February 27. the business of providing telecommunication and the telephone service are personal property under Article 308 of the Revised Penal Code. Tinga. Velasco. Puno (C. PLDT that constitutes the crime of theft.e. PLDT merely encodes. the crime is properly designated as one of theft. take the form of electrical energy. It was also held in the assailed Decision that intangible property such as electrical energy is capable of appropriation because it may be taken and carried away. therefore. Electricity is personal property under Article 416 (3) of the Civil Code. J. augments. enhances. Thus. this amendment is not necessitated by a mistake in charging the proper offense. Branch 150. Without private respondent PLDT’s network. this case must be remanded to the trial court and the prosecution directed to amend the Amended Information.

which of the two mortgages here in question must be given preference? Is it the one in favor of the Fidelity & Surety Co. District of Intramuros. prior to the mortgage executed in favor of the Fidelity & Surety Co. has no preference over a creditor holding a mortgage on that chattel where the vendor is not in possession of the thing mortgaged. 123 and 125.—The vendor of a chattel. September 26. POSSESSION. and from that ruling she did not appeal. assignee. and not included among the real properties enumerated in article 335 of the Civil Code. Calle Real. the description meets the requirements of the law. 7. The law (sec. The appellant claims preference on these grounds: (a) That the first mortgage above-mentioned is not valid because the property which is the subject-matter thereof is not capable of being mortgaged. J. after reasonable inquiry and investigation. 1508) requires only a description of the following nature: "The description of the mortgaged property shall be such as to enable the parties to the mortgage. Thus. In the lower court there were three mortgagees each of whom claimed pref erence. to identify the same. the description is sufficient.. Manila. 2. The facts are stated in the opinion of the court. The first was declared by the trial court to be entitled to preference. that in favor of the appellant being dated September 22.—Where the description of the chattel mortgaged is such as to enable the . PERSONAL SECURITY. or that in favor of Ildefonso Ramirez. 1922 INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER. There is no question as to the priority in time of the mortgage in favor of the Fidelity & Surety Co. Philippine Islands. 4. Concepcion. the thing that was mortgaged to this corporation is described in the document as follows: " * * * his half interest in the drug business known as Antigua Botica Ramirez (owned by Srta. The latter's claim was rejected by the trial court. citing article 1922 of the Civil Code in support thereof. such interest is a personal property capable of appropriation and not included in the enumeration of real properties in article 335 of the Civil Code. who is a creditor for the purchase price. They were the two above mentioned and Concepcion Ayala. 1. P. and (b) that the amount due the appellant is a purchase price.. RETROACTIVITY. 1919.: The question at issue in this appeal is. that is. 123 and 125.. SUFFICIENCY OF. located at Calle Real Nos. Manila. As to the first ground. DESCRIPTION." With regard to the nature of the property thus mortgaged. and the description of said property is not sufficient. vs. 3. 1919. and registered in due time in the registry of property." 76 | P r o p e r t y APPEAL from a judgment of the Court of First Instance of Manila. 18700.) The description contained in the document is sufficient. ID. Ross & Lawrence and Antonio T. Carrascoso. PREFERENCE. for the Fidelity & Surety Co. INTEREST IN A BUSINESS. Act No. J. ROMUALDEZ. creditor and appellant. (Sec. which was executed on March 10.—A junior mortgage can have no preference over a senior mortgage by the mere fact that prior to said junior mortgage a personal security had been stipulated between the junior mortgagee and the debtor.. 1508. 1919.. ID.INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER vs RAMIREZ No. Dolores del Rosario and the mortgagor herein referred to as the partnership). ID. PURCHASE PRICE. appellee.—An interest in a business may be the subject of mortgage. 2. ID. Lim & Lim f or -appellant. and registered also in the registry.parties to the mortgage or any other person to identify the same after a reasonable investigation or inquiry.. I. and that his mortgage is but a modification of the security given by the debtor on February 15. WILLIAM EDMONDS. Act No. ID. All personal property may be mortgaged... for it is a personal property. CHATTEL MORTGAGE. ILDEFONSO RAMIREZ. and may be the subject of mortgage. . District of Intramuros. or any other person. jr. because the second mortgage cannot be given effect as of the date the personal security was stipulated. if the thing is described as the half interest of the debtor in the drug business known as Antigua Botica Ramirez (owned by a certain person therein named and the mortgagor) located at Nos. being capable of appropriation. which is one-half interest in the business above described.

. 1919. legally in possession of the Fidelity & Surety Co. 44 Phil. nor the debtor himself. be given effect as of February 15. because in the very document executed in his favor it was stated that his mortgage was a second mortgage.Turning to the second error assigned. JJ. Avanceña. Neither he. numbers 1. is in possession of the property mortgaged.. So ordered. 4. and 3 of article 1922 of the Civil Code invoked by the appellant are not applicable. C. 933(1922)] 77 | P r o p e r t y . Act No. and much less upon the property in question. Thein. Judgment affirmed. Malcolm. [Involuntary Insolvency of Strochecker vs. On the 15th of February of that year. there was a stipulation about a personal security. subordinate to the one made in favor of the Fidelity & Surety Co. Moreover. 2. the date of the sale of the drug store in question. but not a mortgage upon any property. the appellant cannot deny the preferential character of the mortgage in favor of the Fidelity & Surety Co. Ramirez. Araullo. 1508. Ostrand.) In no way can the mortgage executed in favor of the appellant on September 22. as debtor. (Sec. J.. Villamor. and since the registration of the mortgage has been. 15 Phil. which is. 303. Street. Meyers vs. 1919. concur. The judgment appealed from is affirmed with costs against the appellant. and Johns.

This is obviously not the case here. Remedial Law. Civil Law. such as roads. The undisputed facts follow. HERMINIGILDO & CECILIA POLINAR. Article 420 of the Civil Code provides: ART. ports and bridges constructed by the State. Apparently. On November 9. every time a storm or heavy rains occur. with a stagnant body of water filled with floating water lilies. while that of petitioner Usero was docketed as Civil Case No. Petitioners Lutgarda R. assails the January 11. 64181.R. The phrase “others of similar character” includes a creek which is a recess or an arm of a river. 5242. 152115. on July 30. the Polinars offered to pay for the land being claimed by petitioners Samela and Usero. 420. 5242. The facts are stated in the opinion of the Court. abutting and perpendicular to the lot of petitioner Samela. the lot of the Polinars and the lowlevel strip of land is the perimeter wall of Pilar Village Subdivision. The jurisdiction of the Court in petitions for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing errors of law. petitioners filed separate complaints for forcible entry against the Polinars at the Metropolitan Trial Court of Las Piñas City. Jurado for petitioner. Appeals. Las Piñas City. rivers.—Property is either of public dominion or of private ownership. private respondent spouses. The case filed by petitioner Samela was docketed as Civil Case No. Samela. 78 | P r o p e r t y . Claiming ownership of the subject strip of land. January 26. The following things are property of public dominion: (1) Those intended for public use. G. Property is either of public dominion or of private ownership. roadsteads. vs. docketed as G. docketed as G. assails the September 19. It is a property belonging to the public domain which is not susceptible to private ownership. Concomitantly. believing the strip to be part of a creek. No. In Civil Case No. The first petition. not of fact. respondents. a creek cannot be registered under the Torrens System in the name of any individual.—The phrase “others of similar character” includes a creek which is a recess or an arm of a river. No. Pedro Delgado Diwa for respondents. Same. shores. Barrio Almanza. plan of consolidation. No. Golden Acres Subdivision. Las Piñas City. Property. 2005. erected a concrete wall on the bank of the low-level strip of land about three meters from their house and riprapped the soil on that portion of the strip of land. for the sake of peace. and others of similar character.R. filed by Lutgarda R. vs. Private respondent spouses Polinar are the registered owners of a parcel of land at no. 18 Anahaw St. Block 5. the tax PETITIONS for review on certiorari of the decisions of the Court of Appeals. However.. HERMINIGILDO & CECILIA POLINAR. Same. Samela and Nimfa Usero are the owners respectively of lots 1 and 2. not of fact. Being public water. 2002 decision2 of the Court of Appeals in CA-GR SP No. petitioners Samela and Usero demanded that the spouses Apolinar stop their construction but the spouses paid no heed. unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on a misapprehension of facts. respondents. 152115. SAMELA. petitioner Samela adduced in evidence a copy of her Transfer Certificate of Title.* NIMFA USERO. the parties failed to settle their differences. petitioner. Situated between the lots of the parties is a low-level strip of land. 2001 decision1 of the Court of Appeals in CA-GR SP No. 5243. Pilar Village.: Before this Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. January 26. Frustrated by their predicament. Public Lands.R. the water in said strip of land rises and the strong current passing through it causes considerable damage to the house of respondent Polinars. Nevertheless. Jurisdictions.* LUTGARDA R. petitioner. torrents. COURT OF APPEALS and SPS. behind the lots of petitioners Samela and Usero. 1998. COURT OF APPEALS and SPS.— The jurisdiction of the Court in petitions for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law. canals. 155055. No. banks. 155055.G. 2005. J. The second petition. subdivision survey.R. Rudolf Philip B. It is property belonging to the public domain which is not susceptible to private ownership. 1998. 64718. filed by Nimfa Usero. CORONA.

Absent a lawful claim by the plaintiff-appellee over the subject portion of that lot.000.00 as reasonable attorney’s fees plus costs of suit. judgment is hereby rendered in favor of the plaintiff and against the defendants ordering them: a) To vacate and remove at their expense the improvement made on the subject lot. on the other hand. premises considered.declaration in her name. 4. Branch 253 which heard the appeals separately. and affidavits of petitioner Usero and a certain Justino Gamela whose property was located beside the perimeter wall of Pilar Village. and pictures of the subject strip of land filled with water lilies. It confirmed the existence of the creek between the northwestern portion of the lot of petitioner Samela and the southwestern portion of the lot of the spouses Polinar: “Finding the existence of a creek between the respective properties of the parties. the Decision rendered by Branch 79 of the Metropolitan Trial Court.”3 In a parallel development. The spouses Polinar. 5242. Las Piñas is REVERSED. 3. they may maintain the said improvements introduced thereon subject to existing laws. defendants-appellants are not duty bound to pay the former compensation for the use of the same.000. Branch LXXIX. Block 5. deciding Civil Case No. the instant complaint is DISMISSED. attached herewith. and to pay plaintiff P10. the trial court rendered a decision in favor of petitioner Samela: “WHEREFORE. she cannot legally stop the defendants-appellants from rip-rapping the bank of the creek to protect the latter’s property from soil erosion thereby avoiding danger to their lives and damage to property. On April 24. in Civil Case No. As a result.4 On August 25. Consequently. c) To pay plaintiff P10. 1999. 2000. was as follows: 1. plaintiff-appellee cannot therefore lay claim of lawful ownership of that portion because the same forms part of public dominion. a licensed geodetic engineer. SO ORDERED. a barangay certification as to the existence of the creek. That this affidavit was made in compliance with Court Order dated February 23. Las Piñas City. Accordingly. 2000 of Metropolitan Trial Court. a certification from the district engineer that the western portion of Pilar Village is bound by a tributary of Talon Creek throughout its entire length. Usero. the Regional Trial Court. conducted a relocation survey of Usero’s property covered by TCT No. b) To pay the plaintiff P1. ordering the defendants to pay the plaintiff P1. presented in evidence their own TCT. 2000. 2000. WHEREFORE. 5243. That I executed a relocation survey of Lot 2. reversed the decision of the trial court and ordered the dismissal of the complaint. T-29545 registered in the name of Nimfa O. issued an order on February 29. rules and regulations and/or ordinances appurtenant thereto. On December 20.00 as reasonable attorney’s fees plus costs of suit. (LRC) PCS-4463 covered by TCT No.000. directing petitioner Usero and the Polinar spouses to commission a professional geodetic engineer to conduct a relocation survey and to submit the report to the trial court. On March 22.000. the Metropolitan Trial Court decided in favor of petitioner Usero: “WHEREFORE. That based on the relocation plan surveyed by the undersigned. That according to my survey. T-29545. the Metropolitan Trial Court. the Court hereby renders judgment ordering the defendants to vacate and remove at their expense the improvements made on the subject lot.”5 The Polinar spouses appealed the decisions of the two Municipal Trial Courts to the Regional Trial Court of Las Piñas. as stated in his affidavit. I found out that there is no existing creek on the boundary of the said lot. 79 | P r o p e r t y . appearing is the encroachment on the above-mentioned lot by Spouses Herminigildo and Cecilia Polinar with an area of FORTY THREE (43) SQUARE METERS. boundary and index map of Pilar Village showing that the village is surrounded by a creek and that the Polinar property is situated at the edge of said creek. The result of the said relocation survey.00 a month as reasonable compensation for the use of the portion encroached from the filing of the complaint until the same is finally vacated. Mariano Flotilde.00 a month as reasonable compensation for the portion encroached from the time of the filing of the complaint until the same is finally vacated. 2. 2000.

roadsteads. WHEREFORE. Thus the instant consolidated petitions. also reversed the finding of the Municipal Trial Court: “From the foregoing. petitioners failed to present proof sufficient to support their claim. The Court of Appeals was correct: the fact that water lilies thrive in that strip of land can only mean that there is a permanent stream of water or creek there. Property is either of public dominion or of private ownership. canals. rivers. T-30088. SO ORDERED. ports and bridges constructed by the State. torrents.7 This is obviously not the case here. Sandoval-Gutierrez. premises considered. A careful scrutiny of the records reveals that the assailed decisions are founded on sufficient evidence. In contrast. petitioners filed their respective petitions for review on certiorari to the Court of Appeals.” From the adverse decisions of the Regional Trial Court. SP 64181 while that of petitioner Usero was docketed as CA-G. the Regional Trial Court. the consolidated petitions are hereby denied. Likewise in TCT No. SP 64718. Article 420 of the Civil Code provides: “ART. Petitioners presented the TCTs of their respective lots to prove that there is no creek between their properties and that of the Polinars. not of fact. allegedly encroached upon by the spouses Polinar. the instant complaint is DISMISSED.. It is property belonging to the public domain which is not susceptible to private ownership. 2001. Consolidated petitions denied. The following things are property of public dominion: (1) Those intended for public use. is the private property of petitioners or part of the creek and therefore part of the public domain. In petitioner Samela’s TCT No. However. unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on a misapprehension of facts. SP 64181 and CA-G. shores. such as roads.10 Accordingly.”6 On March 16. SP 64718 are affirmed in toto. the southeast portion which pertains to the site of the creek has no described boundary. Petitioner Samela’s case was docketed as CA-G. Both petitions failed in the CA. there is no boundary description relative to the northwest portion of the property pertaining to the site of the creek.R.R. rules and regulations and/or ordinances pertaining thereto.R. T-22329-A of the spouses Polinar. All the pieces of evidence taken together. and others of similar character. concur. That the subject strip of land is a creek is evidenced by: (1) a barangay certification that a creek exists in the disputed strip of land. that the western portion of Pilar Village where the subject strip of land is located is bounded by a tributary of Talon Creek and (3) photographs showing the abundance of water lilies in the subject strip of land. a creek cannot be registered under the Torrens System in the name of any individual.SO ORDERED. 5243. (2) a certification from the Second Manila Engineering District. Accordingly. JJ. the Polinar spouses may utilize the rip-rapped portion of the creek to prevent the erosion of their property. Carpio-Morales and Garcia. 80 | P r o p e r t y .9 Being public water. The assailed decisions of the Court of Appeals in CA-G. defendants-appellants may maintain the improvements introduced on the subject portion of the lot subject to existing laws. Consequently. assailed decisions affirmed in toto.” The phrase “others of similar character” includes a creek which is a recess or an arm of a river. 420. The pivotal issue in the case at bar is whether or not the disputed strip of land. no compensation may be awarded in favor of the plaintiff-appellee. Moreover the tax declaration presented by petitioner is devoid of any entry on the “west boundary” vis-à-vis the location of the creek. banks.R. Clearly this an issue which calls for a review of facts already determined by the Court of Appeals. in Civil Case No. the above-mentioned Decision rendered by Branch 79 of the Las Piñas City Metropolitan Trial Court is REVERSED. we can only conclude that the adjoining portion of these boundaries is in fact a creek and belongs to no one but the state. WHEREFORE. NCR-DPWH.8 Concomitantly. an examination of said TCTs reveals that the descriptions thereon are incomplete. Panganiban (Chairman). The jurisdiction of the Court in petitions for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law.

413 SCRA 469 [2003]) Acesite Corporation vs. Court of Appeals. All rights reserved. (Celestial vs. Cachopero. (Ibid. National Labor Relations Commission The abandoned river bed is given to the owner(s) of the land(s) onto which the river changed its course instead of the riparian owner(s).) ——o0o—— © Copyright 2012 Central Book Supply. Inc. 449 SCRA 352(2005)] 81 | P r o p e r t y .Notes. [Usero vs.—A creek is property of the public domain which is not susceptible to private appropriation and acquisitive prescription.

endowed with some if not all corporate powers. However. insofar as these powers are not inconsistent with the provisions of this Executive Order.” 82 | P r o p e r t y . COURT OF APPEALS. which historically merely delegated to local governments the power to tax. the instrumentality remains part of the National Government machinery although not integrated with the department framework. the exercise of the taxing powers of provinces.— Since MIAA is neither a stock nor a non-stock corporation. 2. this will not make MIAA a non-stock corporation.—Likewise. it remains a government instrumentality exercising not only governmental but also corporate powers. CITY MAYOR OF PARAÑAQUE. which states: SEC. Same. vested with special functions or jurisdiction by law. 155650. local governments may only exercise such power “subject to such guidelines and limitations as the Congress may provide. 133. MIAA exercises “all the powers of a corporation under the Corporation Law. 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.—There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. 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. MIAA’s Airport Lands and Buildings are exempt from real estate tax imposed by local governments. and enjoying operational autonomy. Local Government Code. Unless the government instrumentality is organized as a stock or non-stock corporation.” MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation because it has no capital stock divided into shares.—Unless otherwise provided herein. Section 2(10) of the Introductory Provisions of the Administrative Code defines a government “instrumentality” as follows: SEC. Same. Manila International Airport Authority. the instrumentality does not become a corporation. MIAA is like any other government instrumentality. A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code. Same. vs. municipalities. where applicable as in the case of stock corporations.—x x x x (13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation. (Emphasis and italics supplied) Section 133(o) recognizes the basic principle that local governments cannot tax the national government. which provision recognizes the basic principle that local governments cannot tax the national government. when the law makes a government instrumentality operationally autonomous.G. The MIAA Charter expressly states that transforming MIAA into a “separate and autonomous body” will make its operation more “financially viable. x x x (Emphasis supplied) Same. 2. Taxation. Common Limitations on the Taxing Powers of Local Government Units. Taxation. This prevents MIAA from qualifying as a non-stock corporation.—MIAA is also not a non-stock corporation because it has no members. it remains a government instrumentality exercising not only governmental but also corporate powers. usually through a charter. and barangays shall not extend to the levy of the following: x x x x (o) Taxes. Thus. petitioner. MIAA is not a government-owned or controlled corporation.” Same. vested with functions relating to public needs whether governmental or proprietary in nature. At the same time.* MANILA INTERNATIONAL AIRPORT AUTHORITY. MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. Administrative Law. While there is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. and owned by the Government directly or through its instrumentalities either wholly. First. trustees or officers. administering special funds. General Terms Defined. When the law vests in a government instrumentality corporate powers. and CITY TREASURER OF PARAÑAQUE. the instrumentality does not become a corporation—unless the government instrumentality is organized as a stock or non-stock corporation. Manila International Airport Authority (MIAA) is not a non-stock corporation because it has no members. Second.—A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code. fees or charges of any kind on the National Government.” A non-stock corporation must have members. SANGGUNIANG PANGLUNGSOD NG PARAÑAQUE. 2006. General Terms Defined.––x x x x (10) Instrumentality refers to any agency of the National Government. CITY OF PARAÑAQUE. No. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a government-owned or controlled corporation as follows: SEC. While the 1987 Constitution now includes taxation as one of the powers of local governments. or. Non-stock corporations cannot distribute any part of their income to their members. Manila International Airport Authority. the only difference is that MIAA is vested with corporate powers. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to the National Treasury. Section 11 of the MIAA Charter which mandates MIAA to remit 20% of its annual gross operating income to the National Treasury prevents it from qualifying as a non-stock corporation. Even if we assume that the Government is considered as the sole member of MIAA. the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax. MIAA exercises the governmental powers of eminent domain. not integrated within the department framework.R. Same.” of which MIAA is neither. respondents. to the extent of at least fifty-one (51) percent of its capital stock: x x x. CITY ASSESSOR OF PARAÑAQUE. its agencies and instrumentalities and local government units. (Emphasis supplied) A government-owned or controlled corporation must be “organized as a stock or nonstock corporation. MIAA does not qualify as a government-owned or controlled corporation. MIAA is not a stock corporation because it has no capital stock divided into shares. the instrumentality remains part of the National Government machinery although not integrated with the department framework. cities.—We rule that MIAA’s Airport Lands and Buildings are exempt from real estate tax imposed by local governments. July 20. A government-owned or controlled corporation must be “organized as a stock or non-stock corporation. police authority and the levying of fees and charges. Manila International Airport Authority (MIAA) is a government instrumentality vested with corporate powers to perform efficiently its governmental functions.—When the law vests in a government instrumentality corporate powers. When the law makes a government instrumentality operationally autonomous.” Same. MIAA is not a government-owned or controlled corporation.

Property of public dominion. such power is construed strictly against local governments. rivers. as well as the landing fees MIAA charges to airlines. As this Court declared in Maceda v. such power is construed strictly against local governments. are often termed user’s tax. provisions granting exemptions to government agencies may be construed liberally. Taxation.—There is also no reason for local governments to tax national government instrumentalities for rendering essential public services to inhabitants of local governments. The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. Under Article 420 of the Civil Code. such as roads. Same. The following things are property of public dominion: (1) Those intended for public use. However. (2) Those which belong to the State. Same. Same. The term “ports” in Article 420 (1) of the Civil Code includes seaports and airports—the MIAA Airport Lands and Buildings constitute a “port” constructed by the State. unless a sound and compelling policy requires such transfer of public funds from one government pocket to another. shall form part of the patrimonial property of the State. ARTICLE 422. constitute the bulk of the income that maintains the operations of MIAA. like “roads. Same. Taxation. 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. Any doubt whether a person. Words and Phrases. The collection of such fees does not change the character of MIAA as an airport for public use. This rule applies with greater force when local governments seek to tax national government instrumentalities. or only those among the public who actually use the road through the toll fees they pay upon using the road.” When local governments invoke the power to tax on national government instrumentalities. the only exception being when the legislature clearly intended to tax government instrumentalities for the delivery of essential services for sound and compelling policy considerations. Article 420 of the Civil Code defines property of public dominion as one “intended for public use. For these reasons.” Even if the government collects toll fees. rivers. canals. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Jr. The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public roads. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. The term “ports” includes seaports and airports. Local Government Code.—The Airport Lands and Buildings of MIAA are devoted to public use and 83 | P r o p e r t y . Same. ports and bridges constructed by the State. and when Congress grants an exemption to a national government instrumentality from local taxation. article or activity is taxable is resolved against taxation.—The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. and are intended for some public service or for the development of the national wealth. Same. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption. Statutory Construction. There is also no reason for local governments to tax national government instrumentalities for rendering essential public services to inhabitants of local governments.” are owned by the State. Manila International Airport Authority. moreover.—The terminal fees MIAA charges to passengers. The operation by the government of a tollway does not change the character of the road as one for public use. The MIAA Airport Lands and Buildings constitute a “port” constructed by the State. Such fees are often termed user’s tax. Same. as properties of public dominion. ports and bridges constructed by the State. is patrimonial property. Words and Phrases. Macaraig. The Civil Code provides: ARTICLE 419. which historically merely delegated to local governments the power to tax. when no longer intended for public use or for public service. User’s Tax. The Airport Lands and Buildings of the MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. such exemption is construed liberally in favor of the national government instrumentality. The only exception is when the legislature clearly intended to tax government instrumentalities for the delivery of essential public services for sound and compelling policy considerations. Any doubt whether such power exists is resolved against local governments.—Section 133(o) recognizes the basic principle that local governments cannot tax the national government. in favor of non tax-liability of such agencies. 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. (Emphasis supplied) ARTICLE 421.—No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code. and others of similar character. A user’s tax is more equitable—a principle of taxation mandated in the 1987 Constitution. 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. canals. When local governments invoke the power to tax on national government instrumentalities.—The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. ARTICLE 420. There is. 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 passengers. are outside the commerce of man. either the public indirectly through the taxes they pay the government. as well as the landing fees MIAA charges airlines. roadsteads. when Congress grants an exemption to a national government instrumentality from local taxation. local governments may only exercise such power “subject to such guidelines and limitations as the Congress may provide.: The reason for the rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. Property is either of public dominion or of private ownership.Taxation. The Airport Lands and Buildings of MIAA. All other property of the State. which is not of the character stated in the preceding article. without being for public use. There must be express language in the law empowering local governments to tax national government instrumentalities. torrents. no point in national and local governments taxing each other. 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. shores. The charging of fees. While the 1987 Constitution now includes taxation as one of the powers of local governments. Someone must pay for the maintenance of the road. the limitation on the kind of vehicles that can use the road. torrents. A user’s tax is more equitable—a principle of taxation mandated by the 1987 Constitution. banks. such exemption is construed liberally in favor of the national government instrumentality. Local Government Code.

Section 48. MIAA does not own the Airport Lands and Buildings. Any encumbrance. Any encumbrance. encumbrance or disposition through public or private sale. to a taxable person. 234. They are outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties. Sections 83 and 88 of the Public Land Law or Commonwealth Act No. MIAA. While in case of war or during an emergency. foreclosures and auction sale. Under Section 3 of the MIAA Charter. said temporary occupation or use must also cease. x x x. which prohibits local governments from imposing “[t]axes. fountains. levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Chapter 12. and public works of general service supported by said towns or provinces. and public waters. Exemptions from Real Property Tax. being outside the commerce of man. Rojas that properties devoted to public use are outside the commerce of man. 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. town plazas may be occupied temporarily by private individuals.—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. (Emphasis supplied) This exemption should be read in relation with Section 133(o) of the same Code. MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. the promenades. its agencies and instrumentalities x x x. is not a taxable person under Section 133(o) of the Local Government Code. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body. MIAA itself is owned solely by the Republic. their ownership remains with the State or the Republic of the Philippines. Manila International Airport Authority. to be devoted to public use and to be made available to the public in general. Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties owned by the Republic. an arrangement which does not result in the loss of the tax exemption. 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. these properties remain properties of public dominion and are inalienable. thus: According to article 344 of the Civil Code: “Property for public use in provinces and in towns comprises the provincial and town roads. the squares. as a government instrumentality. Local Government Code. Same. the President must first withdraw from public use the Airport Lands and Buildings. Trusts.—MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic.” provide: x x x Thus. Since the Airport Lands and Buildings are inalienable in their present status as properties of public dominion.— The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. when the emergency has ceased. 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 Republic remains the beneficial owner of the Airport Lands and Buildings.”—Section 234(a) of the Local Government Code exempts from real estate tax any “[r]eal property owned by the Republic of the Philippines. 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 tax. As properties of public dominion. This happens when title of the real property is transferred to an agency 84 | P r o p e r t y . Such real properties remain owned by the Republic and continue to be exempt from real estate tax. unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public use. being for public use. Same. No party claims any ownership rights over MIAA’s assets adverse to the Republic.— Before MIAA can encumber the Airport Lands and Buildings. the President can transfer back to the Republic title to the Airport Lands and Buildings without the Republic paying MIAA any consideration. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities of the national government. being outside the commerce of man. the President is the only one who can authorize the sale or disposition of the Airport Lands and Buildings. Unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public use. only the “owner has the right to x x x dispose of a thing. this Court already ruled in Municipality of Cavite v. for consideration or otherwise. Same. Municipal Council.” This only means that the Republic retained the beneficial ownership of the Airport Lands and Buildings because under Article 428 of the Civil Code.” Since MIAA cannot dispose of the Airport Lands and Buildings. Properties of public dominion. 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. cannot be the subject of an auction sale. The Court has ruled repeatedly that properties of public dominion are outside the commerce of man. Essential public services will stop if properties of public dominion are subject to encumbrances. as was done and as was tolerated by the Municipality of Pozorrubio. 141. they are not subject to levy on execution or foreclosure sale. At any time. the Court declared that properties of public dominion are outside the commerce of man: x x x Town plazas are properties of public dominion. cannot be the subject of an auction sale. This only confirms that the Airport Lands and Buildings belong to the Republic.—Again in Espiritu v. Property of public dominion. Section 234(a) of the Local Government Code exempts from real estate tax any “real property owned by the Republic of the Philippines.thus are properties of public dominion. The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. The Republic remains the beneficial owner of the Airport Lands and Buildings. streets.” Same. these properties remain properties of public dominion and are inalienable.—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. As long as the Airport Lands and Buildings are reserved for public use. As early as 1915.” Section 234(a) provides: SEC. levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. are not subject to levy. fees or charges of any kind on the National Government. Local Government Code. the Airport Lands and Buildings are outside the commerce of man.” 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. Public Auctions. (Emphasis supplied) The Court has also ruled that property of public dominion. Taxation.

even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings. On the other hand. Same. Thus. 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. The exception to the exemption applies only to real estate tax and not to any other tax. The saving clause in Section 133 of the Local Government Code refers to the exception to the exemption in Section 234(a) of the Code. its agencies and instrumentalities. there is no conflict between the grant of power and the withholding of power.—Since Section 133 prescribes the “common limitations” on the taxing powers of local governments. By their very meaning and purpose. In Lung Center of the Philippines v.” MIAA. 433 SCRA 119. The justification for the exception to the exemption is that the real property. Taxation. Same. (Emphasis supplied) Under Section 234(a). but whether it is a national government instrumentality under Section 133(o) of the Local Government Code. The grantee of the power simply cannot exercise the power on matters withheld from its power. Unless a statute 85 | P r o p e r t y . its agencies and instrumentalities. The taxing powers of local governments do not extend to the national government. its agencies and instrumentalities are subject to any kind of tax by local governments. The exception to this exemption is when the government gives the beneficial use of the real property to a taxable entity.” Thus. The determinative test whether MIAA is exempt from local taxation is not whether MIAA is a juridical person.—There is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly admits its subordination to other provisions of the Code when Section 193 states “[u]nless otherwise provided in this Code. “[u]nless otherwise provided in this Code” as stated in the saving clause of Section 133. Section 234(a) of the Local Government Code provides: SEC. whether paying or non-paying. as a government instrumentality. 138 (2004). the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax.—The third whereas clause of the Administrative Code states that the Code “incorporates in a unified document the major structural. the portions of the land occupied by the hospital and portions of the hospital used for its patients. 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. with or without juridical personalities. The Administrative Law is the governing law defining the status and relationship of government departments. which makes the national government subject to real estate tax when it gives the beneficial use of its real properties to a taxable entity. local governments cannot impose any kind of tax on national government instrumentalities like the MIAA. Same. By their very meaning and purpose.or instrumentality even as the Republic remains the owner of the real property. MIAA has granted the beneficial use of such land area for a consideration to a taxable person and therefore such land area is subject to real estate tax. Taxation. Taxation. is not devoted to public use or public service but devoted to the private gain of a taxable person. the “common limitations” on the taxing power prevail over the grant or exercise of the taxing power. The exception to the exemption in Section 234(a) is the only instance when the national government. the “common limitations” on the taxing power prevail over the grant or exercise of the taxing power.—Portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. Section 133 logically prevails over Section 193 which grants local governments such taxing powers. to a taxable person. although owned by the Republic. are exempt from real property taxes. The exception to the exemption in Section 234(a) is the only instance when the national government. By express mandate of the Local Government Code. offices. courts should not distinguish. 234.—By express mandate of the Local Government Code. real property owned by the Republic is exempt from real estate tax. Same. In such a case. When a provision of law grants a power but withholds such power on certain matters. Words and Phrases.—The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the Code. agencies and instrumentalities. Same. x x x. offices. is not a taxable person under Section 133(o) of the Local Government Code. Thus.—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 government instrumentalities. such fact does not make these real properties subject to real estate tax. Section 193 admits the superiority of other provisions of the Local Government Code that limit the exercise of the taxing power in Section 193. local governments cannot impose any kind of tax on national government instrumentalities like the MIAA. functional and procedural principles and rules of governance. but whether it is a national government instrumentality under Section 133(o) of the Local Government Code. Section 133(o) applies to all national government instrumentalities. Such arrangement does not result in the loss of the tax exemption. which makes the national government subject to real estate tax when it gives the beneficial use of its real properties to a taxable entity. Portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. Same. for consideration or otherwise. then local governments can impose any kind of tax on the national government. Statutory Construction. Local governments are devoid of power to tax the national government. Section 234(a) of the Local Government Code states that real property owned by the Republic loses its tax exemption only if the “beneficial use thereof has been granted. agencies and instrumentalities. to a taxable person. Section 133(o) does not distinguish between national government instrumentalities with or without juridical personalities. its agencies and instrumentalities. For example. When a provision of law grants a power but withholds such power on certain matters. Where the law does not distinguish. If the taxing power of local governments in Section 193 prevails over the limitations on such taxing power in Section 133. the Court ruled: Accordingly. bureaus. bureaus. for consideration or otherwise. Administrative Law.—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. there is no conflict between the grant of power and the withholding of power. its agencies and instrumentalities are subject to any kind of tax by local governments. the Administrative Code is the governing law defining the status and relationship of government departments. its agencies and instrumentalities—a gross absurdity. Exemptions from Real Property Tax. Quezon City. Section 133(o) is the specific provision of law prohibiting local governments from imposing any kind of tax on the national government.” By its own words. Same. The determinative test whether MIAA is exempt from local taxation is not whether MIAA is a juridical person.

The first condition is that the government-owned or controlled corporation must be established for the common good. Decisions of the Supreme Court are expected to provide clarity to the parties and to students of jurisprudence. Same. Congress has no power to 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. as to what the law of the case is. Same. 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. Only children should be permitted to subscribe to the theory that something bad will go away if you pretend hard enough that it does not exist. Administrative Law. What is the reason offered by the majority for overturning or modifying all these precedents and doctrines? None is given. The majority would overturn sub silencio. 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—government instrumentalities vested with corporate powers and performing governmental or public functions need not meet the test of economic viability. in the majority’s resolve to spare the Manila International Airport Authority (MIAA) from liability for real estate taxes. and previous distinctions between the exercise of governmental and proprietary functions (a distinction laid down by this Court as far back as 1916). as to what the law of the case is. Words and Phrases. or regulation of private corporations. Decisions of the Supreme Court are expected to provide clarity to the parties and to students of jurisprudence. Article XII of the Constitution. With all due respect. Manila International Airport Authority. truly deserves to be discarded as precedent. MIAA does not compete in the market place because there is no competing international airport operated by the private sector. 392 (1996). The government-owned or controlled corporations created through special charters are those that meet the two conditions prescribed in Section 16. TINGA. especially when the doctrines of long standing are modified or clarified. Article XII of the Constitution. In contrast. Marcos. Same.. 16. These instrumentalities need not be economically viable since the government may even subsidize their entire operations. no clear-cut rule emerges on the important question of the power of local government units (LGUs) to tax government corporations. Same. instead of pretending that Mactan never existed at all. Same. Section 16. services that every modern State must provide its citizens. These instrumentalities perform essential public services for the common good. More egregious. so wrong on many levels. Same. Judgments. Judgments. The MIAA need not meet the test of economic viability because the legislature did not create MIAA to compete in the market place. The Congress shall not. organization. Only children should be permitted to subscribe to the theory that something bad will go away if you pretend hard enough that it does not exist. the decision in this case is plainly so. Same. DISSENTING OPINION: Courts. it deserves a more honorable end than death by amnesia or ignominous disregard—the majority could have devoted its discussion in explaining why it thinks Mactan is wrong. 330 Phil. at least one dozen precedents. 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. If Mactan-Cebu International Airport v. J. among others.—The government-owned or controlled corporations created through special charters are those that meet the two conditions prescribed in Section 16. MIAA derives its revenues principally from the mandatory fees and charges MIAA imposes on passengers and airlines.—There are certainly many other precedents affected.—Before I dwell upon the 86 | P r o p e r t y . MIAA performs an essential public service as the primary domestic and international airport of the Philippines. The second condition is that the government-owned or controlled corporation must meet the test of economic viability. the provisions of the Administrative Code prevail.expressly provides for a different status and relationship for a specific government unit or entity.—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. Article XII of the 1987 Constitution. The terminal fees that MIAA charges every passenger are regulatory or administrative fees and not income from commercial transactions. Article XII of the 1987 Constitution provides: SEC. perhaps all previous jurisprudence regarding local government taxation vis-a-vis government entities. These instrumentalities are not the “government-owned or controlled corporations” referred to in Section 16. for the majority takes comfort instead in the pretense that these precedents never existed. In other words. government instrumentalities vested with corporate powers and performing governmental or public functions need not meet the test of economic viability. as well as any previous definitions of GOCCs. except by general law. The terminal fees that MIAA charges every passenger are regulatory or administrative fees and not income from commercial transactions. regarding their creation in the interest of common good and their being subject to the test of economic viability. especially when the doctrines of long standing are modified or clarified. Supreme Court. provide for the formation.— The MIAA need not meet the test of economic viability because the legislature did not create MIAA to compete in the market place. instrumentalities or agencies.—The icing on this inedible cake is the strained and purposely vague rationale used to justify the majority opinion.—MIAA performs an essential public service that every modern State must provide its citizens.

but not surprising that the majority is not willing to consider or even discuss the general rule. then the MIAA charter showcases the remarkable absurdity of an entity transferring property to itself. since based on the majority’s premise of Section 133 as the key provision. Mactan will be deemed as giving way to this new ruling. then the MIAA charter showcases the remarkable absurdity of an entity transferring property to itself. and other improvements not hereafter specifically exempted. Same. Section 232 comes sequentially after Section 133(o). Nothing in the Civil Code or the Constitution prohibits the State from transferring ownership over property of public dominion to an entity that it similarly owns. as the majority does. an agency. If the majority believes that Mactan may still stand despite this ruling. Thus. Section 232 would fall under the qualifying phrase of Section 133.” It is sad. why bother citing what the law does say. the entire discussion of the majority on the definition of a GOCC. if the majority is dead set in ruling for MIAA no matter what the law says. For in fact. enriching the study of law and the intellectual dynamic of this Court. building. but only the exemptions under Section 133 and Section 234 of the Local Government Code—after all. LGUs and the national government. it is the corporation that is deemed to own those properties. it remains silent as to the viable distinctions between these two cases. but not surprising that the majority is not willing to consider or even discuss the general rule.—The majority abjectly refuses to engage Section 232 of the Local Government Code although it provides the indubitable general rule that LGUs “may levy an annual ad valorem tax on real property such as land.—It is the MIAA. The majority’s silence on Mactan is baffling. The family exercises effective control over the administration and disposition of these properties. the State. the majority does not even engage Mactan in any meaningful way. The very provisions of the Administrative Code provide that a GOCC can be either an instrumentality or an agency. However. perhaps unforeseen by the majority. There was an express transfer of ownership between the MIAA and the national government. Administrative Law. but only the exemptions under Section 133 and Section 234. A similar situation obtains with MIAA. yet the majority refuses to explain why this reasoning of the Court in Mactan is erroneous. The majority could have devoted its discussion in explaining why it thinks Mactan is wrong. as the majority does. the material question is whether MIAA is either an instrumentality. The interpretation in Mactan of the relevant provisions of the Local Government Code is elegant and rational. the Republic of the Philippines or the national government that asserts legal title over the Airport Lands and Buildings. If the distinction is to be blurred. A more meaningful debate on the matter would have been possible. deserves emphatic refutation. but at least it would provide some degree of intellectual clarity for the parties. The majority is obviously inconsistent with Mactan and there is no way these two rulings can stand together. the majority effectively declassifies many entities created and recognized as GOCCs and would give primacy to the Administrative Code of 1987 rather than their respective charters as to the definition of these entities. it deserves a more honorable end than death by amnesia or ignonominous disregard. between the State/Republic/Government and a body corporate such as the MIAA. Taxation. so why even bother to extensively discuss whether or not MIAA is a GOCC? Same. a GOCC may be an instrumentality or an agency of the National Government. “Unless otherwise provided herein. The majority effectively declassifies many entities created and recognized as GOCCs and would give primacy to the Administrative Code of 1987 rather than their respective charters as to the definition of these entities. Perhaps the majority does not simply know how to dispense with the ruling in Mactan. such as taxation. 87 | P r o p e r t y .numerous flaws of the majority. a brief comment is necessitated on the majority’s studied murkiness vis-à-vis the Mactan precedent. The views of the majority on this matter are very dangerous.—Based on the Administrative Code. between the State/Republic/Government and a body corporate such as the MIAA. However. and would lead to absurdities. students of jurisprudence and practitioners. considering how different this new ruling is with the ostensible precedent. It is just like a family transferring ownership over the properties its members own into a family corporation. a GOCC may be an instrumentality or an agency of the National Government. Manila International Airport Authority. and even if the sequencing is irrelevant. If Mactan truly deserves to be discarded as precedent. there actually is no point in the majority’s assertion that MIAA is not a GOCC. if the majority is dead set in ruling for MIAA no matter what the law says. and not either the State. instead of pretending that Mactan never existed at all. and the Airport Lands and Buildings. Yet for several purposes under the law. After all.” The specific exemptions are provided by Section 234. Based on the Administrative Code. or the National Government itself. obiter as it may ultimately be. It is sad. machinery. the majority does not bother to explain why Mactan is wrong. In fact.—The inconsequential verbiage stewing in judicial opinions deserve little rebuttal. If the distinction is to be blurred. Following basic principles in statutory construction. why bother citing what the law does say. Manila International Airport Authority. Such an approach might not have won the votes of the minority.

at least. Same. Local Governent Code. In fact.—There are several other reasons this statutory limitation should be upheld and applied to this 88 | P r o p e r t y . Public Utilities. subjecting on one hand the MIAA to local taxes but on the other hand shielding its properties from any form of sale or disposition. for one. There really is no prohibition against the government taxing itself. The operation of an airport facility by the State may be imbued with public interest. While the Local Government Code withdrew all previous local tax exemptions of the MIAA and other natural and juridical persons. If the determinative point in distinguishing between sovereign functions and proprietary functions is the vitality of the public service being performed.—The simple truth is that. MIAA performs proprietary functions. While the Local Government Code withdrew all previous local tax exemptions of the MIAA and other natural and juridical persons. Section 3 of the MIAA charter states that “[a]ny portion [of the [lands transferred. International airlines take into account the quality and conditions of various international airports in determining the number of flights it would assign to a particular airport. MIAA. Same. Same. then it should be noted that there is no more important public service performed than that engaged in by public utilities. the resulting legal effect. Moreover. then it should be noted that there is no more important public service performed than that engaged in by public utilities. it did not similarly withdraw any previously enacted prohibitions on properties owned by GOCCs. shouldn’t it follow that the exercise of these tasks remain within the exclusive preserve of the State? Same. On the other hand. thus paving the way for a mutually acceptable negotiated solution. On a local scale. based on these accepted doctrinal tests. it would be an even more noxious proposition that the government or the instrumentalities that it owns are above the law and may refuse to pay a validly imposed tax. and nothing obscene with allowing government entities exercising proprietary functions to be taxed for the purpose of raising the coffers of LGUs. onerous as its effect may be on the LGU. or any similar entity engaged in the exercise of proprietary. Same.— Despite the fact that the City of Parañaque ineluctably has the power to impose real property taxes over the MIAA. Same. But notably. there is an equally relevant statutory limitation on this power that must be fully upheld. is not contradictory or paradoxical. and nothing obscene with allowing government entities exercising proprietary functions to be taxed for the purpose of raising the coffers of LGUs. can be deemed as repealing this prohibition under Section 3. such as Davao International Airport and MCIAA. International airlines take into account the quality and conditions of various international airports in determining the number of flights it would assign to a particular airport. This premise is false. conveyed and assigned to the ownership and administration of the MIAA] shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines. it did not similarly withdraw any previously enacted prohibitions on properties owned by GOCCs. or even in choosing a hub through which destinations necessitating connecting flights would pass through. agencies or instrumentalities. the Constitution itself authorizes private persons to exercise these functions as it allows them to operate public utilities in this country. even with its wide grant of powers to LGUs. but it is by no means indispensable or obligatory on the national government. Taxation. and not sovereign functions. Same.—The majority tries to becloud this issue by pointing out that the MIAA does not compete in the marketplace as there is no competing international airport operated by the private sector.Same.” Nothing in the Local Government Code. More pertinently. it makes a lot of economic sense to leave the operation of airports to the private sector. but it is by no means indispensable or obligatory on the national government. or even in choosing a hub through which destinations necessitating connecting flights would pass through.—If the determinative point in distinguishing between sovereign functions and proprietary functions is the vitality of the public service being performed. Administrative Law. MIAA competes with other international airports situated in the Philippines. as demonstrated in other countries. agencies or instrumentalities. If indeed such functions are actually sovereign and belonging properly to the government. even if it effectively forecloses one possible remedy of the LGU in the collection of delinquent real property taxes.—There really is no prohibition against the government taxing itself. The operation of an airport facility by the State may be imbued with public interest. The prohibition in Section 3 of the MIAA Charter against the sale or disposition of MIAA properties without the consent of the President prevents the peremptory closure of the MIAA or the hampering of its operations on account of the demands of its creditors—the airport is important enough to be sheltered by legislation from ordinary legal processes. cannot avoid the adverseeffects of tax evasion simply on the claim that it is imbued with some of the attributes of government. and that MIAA performs an essential public service as the primary domestic and international airport of the Philippines. MIAA also competes with other international airports in Asia. It simply means that the LGU has to find another way to collect the taxes due from MIAA.

and certainly. Unfortunately. not only to the City of Parañaque. The same effect would obtain if ownership and administration of the airport were to be transferred to an LGU or some other entity which were not specifically chartered or tasked to perform such vital function.case. Courts. but precisely the majority. However the PITAHC has no capital stock and no members. The parties would then be compelled to try harder at working out a compromise. and the faulty reasoning it utilizes. The prohibition prevents the peremptory closure of the MIAA or the hampering of its operations on account of the demands of its creditors. effective and cost effective. The facts are stated in the opinion of the Court. a task. both the Local Government Code and the MIAA charter would have been upheld. opens itself up to all sorts of mischief. Through such action. there is no impediment for the PITAHC to purchase land and construct thereupon a massage parlor that would provide a cheaper alternative to the opulent spas that have proliferated around the metropolis. Same. the majority will cause precisely the opposite result of unremitting hostility. Savedia. The state policy that guides PITAHC is the development of traditional and alternative health care. including the power to purchase or acquire real properties. I suspect that the parties would feel little distress—unfortunately. which if the majority is to be believed. which does not fall under the exceptions under Section 234 of the Local Government Code.— The New Central Bank Act was promulgated after the Local Government Code if the BSP is already preternaturally exempt from local taxation owing to its personality as an “government instrumentality. Hence. Gil V. but for taxes as well. Roderick B. Given these premises. the majority will cause precisely the opposite result of unremitting hostility. Had this petition been denied instead with Mactan as basis. The closure of the airport. It is at this juncture that the importance of the Manila Airport to our national life and commerce may be accorded proper consideration. certainly a decision of the Supreme Court cannot be construed to promote an absurdity. and its objectives include the promotion and advocacy of alternative. The airport is important enough to be sheltered by legislation from ordinary legal processes. does not this provision evince a clear intent that after the lapse of five (5) years. Bangko Sentral ng Pilipinas. massage. they are all too willing to engage in. but with the caveat that the MIAA properties could not be subject of execution sale without the consent of the President.—Had this petition been denied instead with Mactan as basis. Judgments. Such activity is in line with the purpose of the PITAHC and with state policy. is actually a redundancy. PETITION for review on certiorari of the resolutions of the Court of Appeals. is actually a redundancy. it is not a GOCC. even by reason of MIAA’s legal omission to pay its taxes. and it is Congress. But precisely the majority.” why then the need to make a new grant of exemption. but with the caveat that the MIAA properties could not be subject of execution sale without the consent of the President.” why then the need to make a new grant of exemption. that the Bangko Sentral will be liable for provincial. thus following the majority. but to the thousands of LGUs in the country. municipal and city taxes? This is the clear congressional intent.—Consider further the example of the Philippine Institute of Traditional and Alternative Health Care (PITAHC). opens itself up to all sorts of mischief. 8243 in 1997. Taxation. certainly a decision of the Supreme Court cannot be construed to promote an absurdity. and the faulty reasoning it utilizes. not only to the City of Parañaque. occasionally non-indigenous or imported healing methods” which include. But even more tellingly. will have an injurious effect to our national economy. but to the thousands of LGUs in the country. Morales and Gary Villanueva for respondents. a tax-exempt massage parlor is one of the lesser evils that could arise from the majority ruling. One might say. It is for this reason that the MIAA charter specifically forbids the sale or disposition of MIAA properties without the consent of the President. preventive and curative health care modalities that have been proven safe. it is. Is such massage parlor exempt from realty taxes? For the majority. not this Court which dictates which entities are subject to taxation and which are exempt. which if the majority is to be believed. It has similar characteristics as MIAA in that it is established as a body corporate. would have been preserved. for PITAHC is an instrumentality or agency exempt from local government taxation. and certainly. Ridiculous? One might say. 89 | P r o p e r t y . The prerogatives of LGUs in real property taxation. created by Republic Act No. this massage parlor would not just be a shelter for frazzled nerves. yet the concerns about the ruinous effects of having to close the Manila International Airport would have been averted. Supreme Court. which is ever reliant on air travel and traffic. If the BSP is already preternaturally exempt from local taxation owing to its personality as a “government instrumentality. acupressure” and chiropractics. Local Government Code. a tax-exempt massage parlor is one of the lesser evils that could arise from the majority ruling. “Alternative health care modalities” include “other forms of non-allophatic. as guaranteed by the Local Government Code. and empowered with the attributes of a corporation. if I might add. among others “reflexology. acupuncture. This is indeed a very strange and very wrong decision. Same. I suspect that the parties would feel little distress.

065.42 1992-1997 RPT was paid on Dec. MIAA thus sought a clarification of OGCC Opinion No.5 On 21 March 1997.00 35.838.40 67.863. 903 was issued on 21 July 1983 by then President Ferdinand E.371.959. On 1 October 2001.00 1992-2001 *E-016-013-85 6.00 1998-2001 *E-016-01396 75.700.744.322.681. Marcos.344. MIAA administers the land.083.00 12.99 1992-2001 E-016-01379 4.59 12.00 6.20 179.75 #9476101 for P28. levying against. otherwise known as the Revised Charter of the Manila International Airport Authority (“MIAA Charter”).360. the Office of the Government Corporate Counsel (OGCC) issued Opinion No. the Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day reglementary period.725. On 9 August 2001.810.7 90 | P r o p e r t y .800.149. MIAA filed on 5 December 2002 the present petition for review.904.00 33.R.107. 9091 and 2982 amended the MIAA Charter.776.360.950. The petition was docketed as CA-G.560.558.00 4. The MIAA Charter transferred to MIAA approximately 600 hectares of land. On 5 October 2001.006 On 17 July 2001.614. 24.00 E-016-01377 18.00 1992-2001 E-016-01380 7.3 including the runways and buildings (“Airport Lands and Buildings”) then under the Bureau of Air Transportation.00 2.506. 903.571.00 5. 147 clarifying OGCC Opinion No. 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.058.902.276.479.621.676.712.00 58.794.00 TOTAL 30. The OGCC opined that Section 21 of the MIAA Charter is the proof that MIAA is exempt from real estate tax. Hence.207.49 32.CARPIO.637.134. 061. 061.47 P624.521.20 68. MIAA then paid some of the real estate tax already due.199.: The Antecedents Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City under Executive Order No. the OGCC issued Opinion No.631.028.890.00 2.689. The OGCC pointed out that Section 206 of the Local Government Code requires persons exempt from real estate tax to show proof of exemption.115.00 109.789.4 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.144.R. Subsequently. improvements and equipment within the NAIA Complex.435.#9476102 for P4. As operator of the international airport.00 1998-2001 GRAND TOTAL P392. MIAA negotiated with respondent City of Parañaque to pay the real estate tax imposed by the City.59 178.00 PENALTY 11. Thus. Executive Order Nos.00 93.694.028. and auctioning for public sale the Airport Lands and Buildings.240.098.243.876.50 9.477. MIAA’s real estate tax delinquency is broken down as follows: TAX DECLARATION TAXABLEYEAR 1992-2001 E-016-01370 E-016-01374 1992-2001 E-016-01375 1992-2001 E-016-01376 1992-2001 TAX DUE 19.90 20.24 1992-2001 E-016-01378 111. 061.070.832.900.436.380. On 28 June 2001.740. MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001.944.803.861. issued notices of levy and warrants of levy on the Airport Lands and Buildings.00 #9476103 for P49.974.201. J. Executive Order No.188.858. MIAA filed with the Court of Appeals an original petition for prohibition and injunction. 66878. SP No.480.647.444. The Court of Appeals also denied on 27 September 2002 MIAA’s motion for reconsideration and supplemental motion for reconsideration.160. 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.164.340.59 29.00 111.50 1998-2001 *E-016-01387 34.00 50.424. 1997 as per O. with prayer for preliminary injunction or temporary restraining order. through its City Treasurer.65 11. the City of Parañaque.95 P232. The petition sought to restrain the City of Parañaque from imposing real estate tax on.

are void.m. The Court’s Ruling We rule that MIAA’s Airport Lands and Buildings are exempt from real estate tax imposed by local governments. In compliance with the directive issued during the hearing. 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. The City of Parañaque published the notices in the 3 and 10 January 2003 issues of the Philippine Daily Inquirer. respondents received the TRO only at 1:25 p. Niño. The motion sought to restrain respondents—the City of Parañaque. this Court issued a Resolution confirming nunc pro tunc the TRO. MIAA invokes the principle that the government cannot tax itself. On 10 February 2003. 91 | P r o p e r t y . it is now estopped from claiming that the Airport Lands and Buildings are exempt from real estate tax. MIAA filed before this Court an Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining Order. If so exempt. Respondents also cite the ruling of this Court in Mactan International Airport v. thing. To justify the exemption. Respondents received the TRO on the same day that the Court issued it. the Court heard the parties in oral arguments.. Sto. City Mayor of Parañaque. 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. Marcos8 where we held that the Local Government Code has withdrawn the exemption from real estate tax granted to international airports. Respondents also argue that a basic rule of statutory construction is that the express mention of one person. On 29 March 2005. MIAA points out that the reason for tax exemption of public property is that its taxation would not inure to any public advantage. A day before the public auction. However. and in the main lobby of the Parañaque City Hall. in January 2003. However. which expressly withdrew the tax exemption privileges of “govern-ment-owned andcontrolled corporations” upon the effectivity of the Local Government Code. 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. MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of MIAA. the ownership of these properties remains with the State. the other issues raised in this petition become moot. at 5:10 p. and the Solicitor General subsequently submitted their respective Memoranda. Respondents invoke Section 193 of the Local Government Code. then the real estate tax assessments issued by the City of Parañaque.. In such event. the City of Parañaque posted notices of auction sale at the Barangay Halls of Barangays Vitalez. in the public market of Barangay La Huerta. 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.Meanwhile.m. and all proceedings taken pursuant to such assessments. or three hours after the conclusion of the public auction. MIAA. 10:00 a. Since the Airport Lands and Buildings are devoted to public use and public service. Thus. City Treasurer of Parañaque. respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax. Respondents further argue that since MIAA has already paid some of the real estate tax assessments. On 7 February 2003. Parañaque City. MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of real estate tax. The Airport Lands and Buildings are thus inalienable and are not subject to real estate tax by local governments. respondent City of Parañaque. or on 6 February 2003. The notices announced the public auction sale of the Airport Lands and Buildings to the highest bidder on 7 February 2003. a newspaper of general circulation in the Philippines. at the Legislative Session Hall Building of Parañaque City. since in such a case the tax debtor is also the tax creditor.m. and the City Assessor of Parañaque (“respondents”)—from auctioning the Airport Lands and Buildings. and Tambo. An international airport is not among the exceptions mentioned in Section 193 of the Local Government Code. or act excludes all others. Sangguniang Panglungsod ng Parañaque. The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings for the benefit of the general public.

or similar purposes. scientific. civil service. There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. 1986 representing about seventy per centum (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. MIAA has no stockholders or voting shares. or.11 This prevents MIAA from qualifying as a non-stock corporation. like trade. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a government-owned or controlled corporation as follows: SEC. MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. Even if we assume that the Government is considered as the sole member of MIAA. Non-stock corporations cannot distribute any part of their income to their members. is not exempt from real estate tax.00) Pesos to consist of: (a) The value of fixed assets including airport facilities.—x x x x (13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation.” MIAA is not 92 | P r o p e r t y . shall be converted into the equity of the National Government in the Authority.” MIAA has capital but it is not divided into shares of stock. this will not make MIAA a non-stock corporation. The deleted phrase appeared in Section 40(a) of the 1974 Real Property Tax Code enumerating the entities exempt from real estate tax. vested with functions relating to public needs whether governmental or proprietary in nature. professional. Section 3 of the Corporation Code10 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.” A non-stock corporation must have members.First. 2. where applicable as in the case of stock corporations. (Emphasis supplied) A government-owned or controlled corporation must be “organized as a stock or non-stock corporation. Thereafter. However. Clearly.500. agriculture and like chambers. MIAA is not a stock corporation. fraternal. 1. 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. social.] which may be contributed by the National Government or transferred by it from any of its agencies. Hence. MIAA is not a government-owned or controlled corporation. Capital. Second. 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.MIAA is Not a Government-Owned or Controlled Corporation Respondents argue that MIAA. MIAA is also not a non-stock corporation because it has no members. under its Charter. being a government-owned or controlled corporation.” MIAA is not organized as a stock or non-stock corporation. literary. trustees or officers. cultural. movable and immovable[. to the extent of at least fifty-one (51) percent of its capital stock: x x x. 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.000.000.000. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to the National Treasury. O.00) Pesos to Ten Billion (P10. General Terms Defined. recreational. No. MIAA is not a stock corporation because it has no capital stock divided into shares.000. industry. runways and equipment and such other properties. 903 as amended.—The capital of the Authority to be contributed by the National Government shall be increased from Two and One-half Billion (P2. the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax. MIAA does not have capital stock that is divided into shares. educational. Section 10 of the MIAA Charter9 provides: SECTION 10. Section 88 of the Corporation Code provides that non-stock corporations are “organized for charitable. the Government contribution to the capital of the Authority shall be provided in the General Appropriations Act. and owned by the Government directly or through its instrumentalities either wholly. religious.000. (b) That the amount of P605 million as of December 31. MIAA has no stockholders or voting shares.

Thus. a public utility. fees or charges of any kind on the National Government. is organized to operate an international and domestic airport for public use. the Philippine Ports Authority. when Congress grants an exemption to a national government instrumentality from local taxation. These government instrumentalities are sometimes loosely called government corporate entities.12 police authority13 and the levying of fees and charges.”15 Likewise. such exemption is construed liberally in favor of the national government instrumentality. and barangays shall not extend to the levy of the following: xxxx (o) Taxes.14 At the same time. While the 1987 Constitution now includes taxation as one of the powers of local governments. which states: SEC. (Emphasis and italics supplied) Section 133(o) recognizes the basic principle that local governments cannot tax the national government. article or activity is taxable is resolved against taxation. the instrumentality does not become a corporation. Common Limitations on the Taxing Powers of Local Government Units. This rule applies with greater force when local governments seek to tax national government instrumentalities. MIAA. when the law makes a government instrumentality operationally autonomous. MIAA exercises the governmental powers of eminent domain.: 93 | P r o p e r t y . the University of the Philippines and Bangko Sentral ng Pilipinas. As this Court declared in Maceda v. Jr. MIAA exercises “all the powers of a corporation under the Corporation Law. it remains a government instrumentality exercising not only governmental but also corporate powers. General Terms Defined. However. insofar as these powers are not inconsistent with the provisions of this Executive Order. vested with special functions or jurisdiction by law. municipalities. its agencies and instrumentalities and local government units. Macaraig.organized for any of these purposes. which is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. 133. A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code. local governments may only exercise such power “subject to such guidelines and limitations as the Congress may provide. Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption. Examples are the Mactan International Airport Authority. which historically merely delegated to local governments the power to tax. MIAA is like any other government instrumentality. administering special funds. usually through a charter. the exercise of the taxing powers of provinces. the only difference is that MIAA is vested with corporate powers.”17 Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations. Any doubt whether a person. which is the governing law defining the legal relationship and status of government entities. However. and enjoying operational autonomy. cities. the instrumentality remains part of the National Government machinery although not integrated with the department framework. Since MIAA is neither a stock nor a non-stock corporation. Unless the government instrumentality is organized as a stock or non-stock corporation. endowed with some if not all corporate powers. 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. 2.”18 When local governments invoke the power to tax on national government instrumentalities. not integrated within the department framework. The MIAA Charter expressly states that transforming MIAA into a “separate and autonomous body”16 will make its operation more “financially viable. All these government instrumentalities exercise corporate powers but they are not organized as stock or non-stock corporations as required by Section 2(13) of the Introductory Provisions of the Administrative Code. they are not government-owned or controlled corporations in the strict sense as understood under the Administrative Code. Section 2(10) of the Introductory Provisions of the Administrative Code defines a government “instrumentality” as follows: SEC. x x x (Emphasis supplied) When the law vests in a government instrumentality corporate powers.—Unless otherwise provided herein. such power is construed strictly against local governments. MIAA does not qualify as a government-owned or controlled corporation.––x x x x (10) Instrumentality refers to any agency of the National Government.

Property is either of public dominion or of private ownership. 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. provisions granting exemptions to government agencies may be construed liberally. 4 L Ed.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. The term “ports” includes seaports and airports. Vol. 94 | P r o p e r t y . All other property of the State. like “roads. Thus. The power to tax which was called by Justice Marshall as the “power to destroy” (Mc Culloch v. ports and bridges constructed by the State.The reason for the rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. The MIAA Airport Lands and Buildings constitute a “port” constructed by the State. “Justice Holmes. 4 Wheat 316. and others of similar character. ARTICLE 420. or even to seriously burden it in the accomplishment of them. 140.” are owned by the State.20 2. impede. which is not of the character stated in the preceding article. The only exception is when the legislature clearly intended to tax government instrumentalities for the delivery of essential public services for sound and compelling policy considerations. Maryland. Any doubt whether such power exists is resolved against local governments. Modern Constitutional Law. Maryland. 579) This doctrine emanates from the “supremacy” of the National Government over local governments. the instrumentalities of the United States (Johnson v. Philippine Amusements and Gaming Corporation: The states have no power by taxation or otherwise. rivers. (Mc Culloch v. ports and bridges constructed by the State.S. There is also no reason for local governments to tax national government instrumentalities for rendering essential public services to inhabitants of local governments. Maryland. in that way (taxation) at least. canals. supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it. As this Court held in Basco v. For these reasons. 340 US 42). v. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code. Section 133 of the Local Government Code states that “unless otherwise provided” in the Code. torrents. shall form part of the patrimonial property of the State. rivers. 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. made reference to the entire absence of power on the part of the States to touch.” (Antieau. canals. banks. in favor of non tax-liability of such agencies. the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines.Airport Lands and Buildings of MIAA are Owned by the Republic a.19 There is. torrents. without being for public use. 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. local governments cannot tax national government instrumentalities. (Emphasis supplied) ARTICLE 421. emphasis supplied) Otherwise. The Civil Code provides: ARTICLE 419. unless a sound and compelling policy requires such transfer of public funds from one government pocket to another. ARTICLE 422. and are intended for some public service or for the development of the national wealth. 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. no point in national and local governments taxing each other. The following things are property of public dominion: (1)Those intended for public use. is patrimonial property. roadsteads. when no longer intended for public use or for public service. p. Property of public dominion. Sanchez. speaking for the Supreme Court. such as roads. moreover. to retard. There must be express language in the law empowering local governments to tax national government instrumentalities. shores. (2) Those which belong to the State. 2. Under Article 420 of the Civil Code.

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. and plazas and streets are outside of this commerce. As early as 1915. While in case of war or during an emergency. as well as the landing fees MIAA charges to airlines.21 The Airport Lands and Buildings of MIAA. the limitation on the kind of vehicles that can use the road. fountains. as was decided by the supreme court of Spain in its decision of February 12. prescribes that everything which is not outside the commerce of man may be the object of a contract. common lands. fountains. 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. Someone must pay for the maintenance of the road.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. nor is it empowered so to do. the speed restrictions and other conditions for the use of the road do not affect the public character of the road. The Civil Code. they indisputably belong to the State or the Republic of the Philippines. town plazas may be occupied temporarily by private individuals. being outside the commerce of man. the squares. As properties of public dominion. the promenades. to be devoted to public use and to be made available to the public in general. 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.” (Emphasis supplied) 23 Again in Espiritu v. Article 420 of the Civil Code defines property of public dominion as one “intended for public use. article 1271. thus: “According to article 344 of the Civil Code: “Property for public use in provinces and in towns comprises the provincial and town roads. this Court already ruled in Municipality of Cavite v. or only those among the public who actually use the road through the toll fees they pay upon using the road. The operation by the government of a tollway does not change the character of the road as one for public use. the Airport Lands and Buildings are outside the commerce of man. A user’s tax is more equitable—a principle of taxation mandated in the 1987 Constitution. when the emergency has ceased. They are outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties. streets. constitute the bulk of the income that maintains the operations of MIAA.25 95 | P r o p e r t y .”24 (Emphasis supplied) The Court has also ruled that property of public dominion. and public waters. either the public indirectly through the taxes they pay the government. As properties of public dominion. 1895. 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. such as the plazas. The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public roads. Such fees are often termed user’s tax. The terminal fees MIAA charges to passengers. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. streets. rivers. Rojas that properties devoted to public use are outside the commerce of man.” Even if the government collects toll fees. which its Charter calls the “principal airport of the Philippines for both international and domestic air traffic. and public works of general service supported by said towns or provinces. said temporary occupation or use must also cease. The Court has ruled repeatedly that properties of public dominion are outside the commerce of man. the Court declared that properties of public dominion are outside the commerce of man: “x x x Town plazas are properties of public dominion. Municipal Council. The collection of such fees does not change the character of MIAA as an airport for public use.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 said Plaza Soledad being a promenade for public use. b. 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. as was done and as was tolerated by the Municipality of Pozorrubio. The charging of fees. etc. cannot be the subject of an auction sale. 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. which says: “Communal things that cannot be sold because they are by their very nature outside of commerce are those for public use.”22 are properties of public dominion because they are intended for public use.

including reservations for highways. levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. unless the authority therefor is expressly vested by law in another officer. communal pastures or lequas communales. irrigation systems. (Emphasis supplied) In MIAA’s case. entry.”27 provide: SECTION 83. Since the Airport Lands and Buildings are inalienable in their present status as properties of public dominion. Before MIAA can encumber26 the Airport Lands and Buildings. sale. 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. The authority of the President to reserve lands of the public domain for public use. is reiterated in Section 14. public quarries. public fishponds. (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. and for specific public purposes. Section 48. and to withdraw such public use. Chapter 4. As long as the Airport Lands and Buildings are reserved for public use. by the executive head of the agency or instrumentality. Essential public services will stop if properties of public dominion are subject to encumbrances. Title I. Chapter 12. they are not subject to levy on execution or foreclosure sale.MIAA is a Mere Trustee of the Republic MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. or for quasi-public uses or purposes when the public interest requires it. Book III of the Administrative Code of 1987. Any encumbrance. Upon the recommendation of the Secretary of Agriculture and Natural Resources. thus: SEC. owned by the Republic and outside the commerce of man. SECTION 88. Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties owned by the Republic. 14. (Emphasis supplied) There is no question.Properties of public dominion. they are properties of public dominion. c.—(1) The President shall have the power to reserve for settlement or public use. their ownership remains with the State or the Republic of the Philippines. 141. the use of which is not otherwise directed by law.Transfer to MIAA was Meant to Implement a Reorganization 96 | P r o p e r t y . Only the President of the Republic can sign such deed of conveyance. Official Authorized to Convey Real Property. are not subject to levy. Power to Reserve Lands of the Public and Private Domain of the Government. public parks. encumbrance or disposition through public or private sale.—Whenever real property of the Government is authorized by law to be conveyed. or of the inhabitants thereof. unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public use. lease.28 d. foreclosures and auction sale. any of the lands of the public domain. x x x x. The reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise provided by law or proclamation. being for public use. which states: SEC. (Emphasis and italics supplied) Thus. by the President. Sections 83 and 88 of the Public Land Law or Commonwealth Act No. rights of way for railroads. 48. in accordance with regulations prescribed for this purposes. hydraulic power sites. 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 tax. that unless the Airport Lands and Buildings are withdrawn by law or presidential proclamation from public use. 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. therefore. these properties remain properties of public dominion and are inalienable. 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. the President must first withdraw from public use the Airport Lands and Buildings. or other disposition until again declared alienable under the provisions of this Act or by proclamation of the President. working men’s village and other improvements for the public benefit. 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. 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.

WHEREAS. No party claims any ownership rights over MIAA’s assets adverse to the Republic. WHEREAS. subject to existing rights. The MIAA Charter provides: SECTION 3. runways. powers. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body. 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. This only confirms that the Airport Lands and Buildings belong to the Republic. Abolition of the Manila International Airport as a Division in the Bureau of Air Transportation and Transitory Provisions.—x x x x The land where the Airport is presently located as well as the surrounding land area of approximately six hundred hectares. agencies and instrumentalities of the Government[. and WHEREAS. rights. have to be upgraded to meet the current and future air traffic and other demands of aviation in Metro Manila. lands. thus: WHEREAS. MIAA itself is owned solely by the Republic. 1416. belonging to the Airport. (Emphasis supplied) SECTION 25. will best be achieved by a separate and autonomous body.The MIAA Charter. which authority includes the creation of new entities. (Emphasis supplied) SECTION 22. under Presidential Decree No. are hereby transferred.—The Manila International Airport including the Manila Domestic Airport as a division under the Bureau of Air Transportation is hereby abolished. are hereby transferred to the Authority. the President can transfer back to the Republic title to the Airport Lands and Buildings without the Republic paying MIAA any consideration. interests and privileges belonging to the Bureau of Air Transportation relating to airport works or air operations. if any. domestic and other terminals. buildings and other property. x x x x.] (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. Creation of the Manila International Airport Author-ity. Any portion thereof shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines. transferred to MIAA the title to the Airport Lands and Buildings from the Bureau of Air Transportation of the Department of Transportation and Communications. The Republic remains the beneficial owner of the Airport Lands and Buildings.—All existing public airport facilities. promissory notes or even stock since MIAA is not a stock corporation. e. the President is the only one who can authorize the sale or disposition of the Airport Lands and Buildings.” Since MIAA cannot dispose of the Airport Lands and Buildings.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.” Section 234(a) provides: 97 | P r o p e r t y . Under Section 3 of the MIAA Charter. conveyed and assigned to the ownership and administration of the Authority. movable or immovable. At any time. 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. the Manila International Airport as the principal airport of the Philippines for both international and domestic air traffic. including all equipment which are necessary for the operation of crash fire and rescue facilities. as amended by Presidential Decree No.” This only means that the Republic retained the beneficial ownership of the Airport Lands and Buildings because under Article 428 of the Civil Code. and all assets. is required to provide standards of airport accommodation and service comparable with the best airports in the world. Transfer of Existing Facilities and Intangible Assets. MIAA does not own the Airport Lands and Buildings. only the “owner has the right to x x x dispose of a thing. The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands and Buildings to MIAA. general aviation and other facilities. 1772. 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 President of the Philippines is given continuing authority to reorganize the National Government. The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic receiving cash. which is a law.

the determinative test is not just whether MIAA is a GOCC. The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. For example. Such real properties remain owned by the Republic and continue to be exempt from real estate tax. then MIAA is not exempt from real estate tax. to a taxable person. This happens when title of the real property is transferred to an agency or instrumentality even as the Republic remains the owner of the real property. Section 234(a) of the Local Government Code states that real property owned by the Republic loses its tax exemption only if the “beneficial use thereof has been granted. are exempt from real property taxes. the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax. The reference to or the inclusion of GOCCs is only clarificatory or illustrative of the explicit provision. but all persons. Such arrangement does not result in the loss of the tax exemption. whether natural or juridical. to a taxable person. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities of the national government. even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings. MIAA has granted the beneficial use of such land area for a consideration to a taxable person and therefore such land area is subject to real estate tax. Quezon City.”29 3. natural and juridical persons. the provisions lay down the explicit proposition that the withdrawal of realty tax exemption applies to all persons. The minority also insists that “Sections 193 and 234 may be examined in isolation from Section 133(o) to ascertain MIAA’s claim of exemption.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. non-stock and non-profit hospitals and educational institutions are hereby withdrawn upon effectivity of this Code. Thus. Obviously. On the other hand. as a government instrumentality. whether paying or non-paying. (Emphasis supplied) The minority states that MIAA is indisputably a juridical person. Exemptions from Real Property Tax. such fact does not make these real properties subject to real estate tax. 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. In such a case. except local water districts. 234. x x x. 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. cooperatives duly registered under R. To repeat. The term “All persons” encompasses the two classes of persons recognized under our laws. its agencies and instrumentalities x x x. 193.” 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. Thus. No. portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax.A.” MIAA.—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. MIAA is not a natural person. (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. for consideration or otherwise. Section 193 of the Local Government Code expressly withdrew the tax exemption of all juridical persons 98 | P r o p e r t y . whether natural or juridical” upon the effectivity of the Code. (Emphasis supplied) This exemption should be read in relation with Section 133(o) of the same Code. fees or charges of any kind on the National Government. is not a taxable person under Section 133(o) of the Local Government Code. Thus. Withdrawal of Tax Exemption Privileges. The minority argues that since the Local Government Code withdrew the tax exemption of all juridical persons.—Unless otherwise provided in this Code.SEC. for consideration or otherwise. Section 193 provides: SEC. but whether MIAA is a juridical person at all. In Lung Center of the Philippines v. the portions of the land occupied by the hospital and portions of the hospital used for its patients. or presently enjoyed by all persons. which prohibits local governments from imposing “[t]axes. 6938. tax exemptions or incentives granted to. the Court ruled: "Accordingly.” The argument of the minority is fatally flawed. including governmentowned or controlled corporations. However.

” Now. (b) cooperatives duly registered under Republic Act No. 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. local governments have no power to tax the national government. It would be belaboring the obvious why the MIAA does not fall within any of the exempt entities under Section 193. the exemption is limited to (a) local water districts. which itself is a juridical person.32 Fisheries Development Authority. and not only real estate tax. Under the minority’s theory. Common Limitations on the Taxing Powers of Local Government Units. fees or charges of any kinds on the National Government. Clearly. and not only real estate tax. many national government instrumentalities with juridical personalities will also be subject to any kind of local tax. with or without juridical personalities. Some of the national government instrumentalities vested by law with juridical personalities are: Bangko Sentral ng Pilipinas.34 Philippine Ports Authority. local governments cannot impose any kind of tax on national government instrumentalities like the MIAA. Local governments are devoid of power to tax the national government. municipalities. Thus. Section 133(o) states: SEC. but whether it is a national government instrumentality under Section 133(o) of the Local Government Code. As an exception to this rule. 6938. the minority states: x x x Under Section 193. its agencies and instrumentalities.38 and Philippine National Railways. its agencies and instrumentalities. specifically prohibiting local governments from imposing any kind of tax on national government instrumentalities. and (c) non-stock and non-profit hospitals and educational institutions. The determinative test whether MIAA is exempt from local taxation is not whether MIAA is a juridical person. courts should not distinguish. Section 133(o) of the Local Government Code expressly provides otherwise. “[u]nless otherwise provided in this Code” as stated in the saving clause of Section 133.31 Laguna Lake Development Authority.—Unless otherwise provided herein. The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the Code. Under this theory.—The following are exempted from payment of the real property tax: 99 | P r o p e r t y . 234. (Emphasis supplied) The minority’s theory directly contradicts and completely negates Section 133(o) of the Local Government Code. Thus. however.35 Cagayan de Oro Port Authority. The minority insists that the juridical persons exempt from local taxation are limited to the three classes of entities specifically enumerated as exempt in Section 193. This theory will result in gross absurdities. on the national government. its agencies and instrumentalities. The taxing powers of local governments do not extend to the national government. Exemptions from Real Property Tax.39 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 government instrumentalities. Section 133(o) is the specific provision of law prohibiting local governments from imposing any kind of tax on the national government. its agencies and instrumentalities. Section 133 of the Local Government Code starts with the saving clause “[u]nless otherwise provided in this Code. Section 234(a) of the Local Government Code provides: SEC. its agencies and instrumentalities only if the Local Government Code expressly so provides.“[u]nless otherwise provided in this Code.37 Cebu Port Authority. its agencies and instrumentalities. subject to tax by local governments since the national government is not included in the enumeration of exempt entities in Section 193. the rule is local governments have no power to tax the national government.30 Philippine Rice Research Institute.36 San Fernando Port Authority. local governments can impose any kind of local tax. all juridical persons are subject to tax by local governments. theorizes that unless exempted in Section 193 itself. Section 133(o) does not distinguish between national government instrumentalities with or without juridical personalities. (Emphasis and italics supplied) By express mandate of the Local Government Code. local governments may tax the national government. cities. and barangays shall not extend to the levy of the following: xxxx (o) Taxes. Section 133(o) applies to all national government instrumentalities. 133. which makes the national government subject to real estate tax when it gives the beneficial use of its real properties to a taxable entity. The minority.” This means that unless the Local Government Code grants an express authorization.33 Bases Conversion Development Authority. its agencies and instrumentalities. It will make the national government. the exercise of the taxing powers of provinces. and local government units. Where the law does not distinguish.

the later provisions prevail over Section 133.” Section 133 limits the grant to local governments of the power to tax. The exception to this exemption is when the government gives the beneficial use of the real property to a taxable entity. MIAA. Section 133 logically prevails over Section 193 which grants local governments such taxing powers. 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. Following an accepted rule of construction. its agencies and instrumentalities are subject to any kind of tax by local governments. There is no clearer limitation on the taxing power than this. sequentially Section 133 antecedes Section 193 and 234. x x x.” (Emphasis supplied) The minority assumes that there is an irreconcilable conflict between Section 133 on one hand. If the taxing power of local governments in Section 193 prevails over the limitations on such taxing power in Section 133. Therefore. shall require a different meaning: xxxx 100 | P r o p e r t y . its agencies and instrumentalities. The minority’s assumption of an irreconcilable conflict in the statutory provisions is an egregious error for two reasons. the “common limitations” on the taxing power prevail over the grant or exercise of the taxing power. General Terms Defined. to a taxable person. By their very meaning and purpose.(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 real estate tax if the beneficial use of such property is given to a taxable entity. The justification for the exception to the exemption is that the real property. When a provision of law grants a power but withholds such power on certain matters. Second. Local governments have no power to tax the national government. the minority asserts: “x x x Moreover. First. The exception to the exemption in Section 234(a) subjects real property owned by the Republic. The grantee of the power simply cannot exercise the power on matters withheld from its power. The minority also argues that since Section 133 precedes Sections 193 and 234 of the Local Government Code. is subject to real property taxes. its agencies and instrumentalities. there is no conflict between the grant of power and the withholding of power. Since Section 133 prescribes the “common limitations” on the taxing powers of local governments. its agencies or instrumentalities. and Sections 193 and 234 on the other. 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. real property owned by the Republic is exempt from real estate tax. then local governments can impose any kind of tax on the national government.” 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. Section 133 is entitled “Common Limitations on the Taxing Powers of Local Government Units. whether titled in the name of the national government. there is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly admits its subordination to other provisions of the Code when Section 193 states “[u]nless otherwise provided in this Code. 2.—Unless the specific words of the text. as a juridical person. is not devoted to public use or public service but devoted to the private gain of a taxable person. or a particular statute. although owned by the Republic.” By its own words. No one has urged that there is such a conflict. its agencies and instrumentalities—a gross absurdity. Section 193 admits the superiority of other provisions of the Local Government Code that limit the exercise of the taxing power in Section 193. The exception to the exemption in Section 234(a) is the only instance when the national government. 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. and not merely the exercise of a delegated power to tax. The minority also claims that the definition in the Administrative Code of the phrase “government-owned or controlled corporation” is not controlling. 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. or the context as a whole. Thus. for consideration or otherwise. (Emphasis supplied) Under Section 234(a). much less has any one presented a persuasive argument that there is such a conflict. in case of conflict the subsequent provisions should prevail. The exception to the exemption applies only to real estate tax and not to any other tax.

” The minority’s argument is a non sequitur. unless there is specific language in the Local Government Code defining the phrase “government-owned or controlled corporation” differently from the definition in the Administrative Code. Authorized Capital Stock—Par value. 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. Congress has created through special charters several governmentowned corporations organized as stock corporations. Section 2 of the Administrative Code recognizes that a statute may require a different meaning than that defined in the Administrative Code. In short.” The Administrative Code. However. functional and procedural principles and rules of governance. however. Capital. which shall be issued in accordance with the provisions of Sections seventy-seven and eighty-three of this Code.—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. the provisions of the Administrative Code prevail.” The contention of the minority is seriously flawed. there is none. Section 2 of the Administrative Code clearly states that “unless the specific words x x x of a particular statute shall require a different meaning. These shares are available for subscription by the National Government. The minority also contends that the phrase “government-owned or controlled corporation” should apply only to corporations organized under the Corporation Code. The minority sees no reason why government corporations with special charters should have a capital stock. offices. Where the law does not distinguish. Upon the effectivity of this Charter. bureaus. 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 101 | P r o p e r t y . divided into seven hundred and eighty million common shares with a par value of ten pesos each. the general incorporation law. the special charter41 of the Development Bank of the Philippines provides: SECTION 7. 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 inescapable conclusion is that the Administrative Code definition of the phrase “government-owned or controlled corporation” applies to the Local Government Code. expressly defines the phrase “government-owned or controlled corporation. Thus. The third whereas clause of the Administrative Code states that the Code “incorporates in a unified document the major structural. It is not in accord with the Constitution and existing legislations. True.—The authorized capital stock of the Bank shall be nine billion pesos. and not to corporations created by special charters. It will also result in gross absurdities. First. agencies and instrumentalities. but formed and organized under the Corporation Code through registration with the Securities and Exchange Commission.The minority then concludes that reliance on the Administrative Code definition is “flawed. Thus. the definition in the Administrative Code prevails. Prime examples are the Land Bank of the Philippines and the Development Bank of the Philippines. The Local Government Code is silent on the definition of the phrase “government-owned or controlled corporation. this does not automatically mean that the definition in the Administrative Code does not apply to the Local Government Code. Such GOCCs are not empowered to declare dividends or alienate their capital shares. The special charter40 of the Land Bank of the Philippines provides: SECTION 81. and one hundred and twenty million preferred shares with a par value of ten pesos each. these are GOCCs without original charters. which shall be fully subscribed by the Government. 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. courts should not distinguish.” Thus. 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. Indeed. Second. (Emphasis supplied) Likewise.” the definition in Section 2 of the Administrative Code shall apply. the Administrative Code is the governing law defining the status and relationship of government departments. Unless a statute expressly provides for a different status and relationship for a specific government unit or entity.

about P28 billion of this will go into equity infusions to support a few government financial institutions. All these government-owned corporations organized under special charters as stock corporations are subject to real estate tax on real properties owned by them. 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. The second condition is that the government-owned or controlled corporation must meet the test of economic viability. provide for the formation. The Congress shall not. However. In contrast. Third. These instrumentalities perform essential public services for the common good. Section 16. (Emphasis supplied) Other government-owned corporations organized as stock corporations under their special charters are the Philippine Crop Insurance Corporation. Governmentowned 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. as follows: MR. when the legislature creates through special charters corporations that perform economic or commercial activities. organization. such entities— known as “government-owned or controlled corporations”—must meet the test of economic viability because they compete in the market place. Commissioner Blas F. We know what happened in the past. OPLE: Madam President. the government-owned or controlled corporations created through special charters are those that meet the two conditions prescribed in Section 16. which derive their income to meet operating expenses solely from commercial transactions in competition with the private sector.42 Philippine International Trading Corporation. That is the reason why this year. thus exempting them from real estate tax. out of a budget of P115 billion for the entire government. Congress has plenary authority to create government instrumentalities vested with corporate powers provided these instrumentalities perform essential government functions or public services. the Constitution imposes no limitation when the legislature creates government instrumentalities vested with corporate powers but performing essential governmental or public functions. (Emphasis and italics supplied) The Constitution expressly authorizes the legislature to create “governmentowned or controlled corporations” through special charters only if these entities are required to meet the twin conditions of common good and economic viability. there is a sense in which this corporation becomes exempt from the test of economic performance. Ople. If a government corporation loses. proponent of the test of economic viability. government instrumentalities vested with corporate powers and performing governmental or public functions need not meet the test of economic viability. Congress has no power to 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. These instrumentalities are not the “government-owned or controlled corporations” referred to in Section 16. The first condition is that the governmentowned or controlled corporation must be established for the common good. services that every modern State must provide its citizens. Thus. the reason for this concern is really that when the government creates a corporation. Article XII of the Constitution. 16. Article XII of the 1987 Constitution. To rule that they are not government-owned or controlled corporations because they are not registered with the Securities and Exchange Commission would remove them from the reach of Section 234 of the Local Government Code. or regulation of private corporations. In other words. These instrumentalities need not be economically viable since the government may even subsidize their entire operations. Article XII of the 1987 Constitution provides: SEC.43 and the Philippine National Bank44 before it was reorganized as a stock corporation under the Corporation Code. except by general law. to social services like health and 102 | P r o p e r t y .Government with the net asset values of the Bank remaining after the transfer of assets and liabilities as provided in Section 30 hereof. 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. 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. explained to the Constitutional Commission the purpose of this test. Being essentially economic vehicles of the State for the common good—meaning for economic development purposes—these governmentowned or controlled corporations with special charters are usually organized as stock corporations just like ordinary private corporations. And this is all taxpayers’ money which could have been relocated to agrarian reform. 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.

2. I reiterate. Moreover. and to manage the airport operations. These are the government-owned or controlled corporations. 4. The Air Traffic Office of the Department of Transportation and Communications. however. to authorize aircraft to enter or leave Philippine airspace. MIAA performs an essential public service as the primary domestic and international airport of the Philippines. The State is obligated to render essential public services regardless of the economic viability of providing such service. economic viability is more than financial viability but also includes capability to make profit and generate benefits not quantifiable in financial terms. the insertion of the standard of “ECONOMIC VIABILITY OR THE ECONOMIC TEST. government-owned or controlled corporations with special charters. The MIAA. And yet this is all going down the drain. Bernas. The Bureau of Customs.” together with the common good. to document the arrival and departure of passengers. must meet the test of economic viability. 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. The MIAA need not meet the test of economic viability because the legislature did not create MIAA to compete in the market place. The non-economic viability of rendering such essential public service does not excuse the State from withholding such essential services from the public. 6. 3. The quarantine office of the Department of Health. The operation of an international airport requires the presence of personnel from the following government agencies: 1. 103 | P r o p e r t y . And so. All these agencies of government perform government functions essential to the operation of an international airport. to augment the salaries of grossly underpaid public employees. to enforce health measures against the spread of infectious diseases into the country. the airport. is the phrase “in the interest of the common good and subject to the test of economic viability. passengers. to enforce measures against the spread of plant and animal diseases into the country. The terminal fees that MIAA charges every passenger are regulatory or administrative fees47 and not income from commercial transactions. for the committee’s consideration and I am glad that I am joined in this proposal by Commissioner Foz. The Department of Agriculture. Therefore. a leading member of the Constitutional Commission. as well as to secure the airport premises from terrorist attack or seizure.” 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. These are the government-owned or controlled corporations that are usually organized under their special charters as stock corporations. or those with hold departure orders. The Bureau of Immigration and Deportation. 5. as well as to land on. organized essentially for economic or commercial objectives. like the Land Bank of the Philippines and the Development Bank of the Philippines. However. when we insert the phrase “ECONOMIC VIABILITY” together with the “common good. and 7. or take off from. Madam President. to provide the proper premises—such as runway and buildings— for the government personnel. MIAA does not compete in the market place because there is no competing international airport operated by the private sector. and airlines. The Aviation Security Command of the Philippine National Police. to collect import duties or enforce the ban on prohibited importations. MIAA performs an essential public service that every modern State must provide its citizens. to prevent the entry of terrorists and the escape of criminals.45 Father Joaquin G. MIAA derives its revenues principally from the mandatory fees and charges MIAA imposes on passengers and airlines. that fall under the definition of “governmentowned or controlled corporations” in Section 2(10) of the Administrative Code.46 (Emphasis supplied) Clearly. the test of economic viability does not apply to government entities vested with corporate powers and performing essential public services. The significant addition. along with government-owned or controlled corporations organized under the Corporation Code.education. screening out those without visas or travel documents.

administering special funds. in which case the specific real property leased becomes subject to real estate tax. Article 420 specifically mentions “ports x x x constructed by the 104 | P r o p e r t y . being devoted to public use. which governs the legal relation and status of government units. vested with special functions or jurisdiction by law. shores. rivers. MIAA is not subject to any kind of tax by local governments under Section 133(o) of the Local Government Code. Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. 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. As properties of public dominion. MIAA remains a government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code. The Airport Lands and Buildings of MIAA are intended for public use. The 1987 Constitution prescribes explicit conditions for the creation of “government-owned or controlled corporations. ports and bridges constructed by the State. usually through a charter. General Terms Defined. agencies and offices within the entire government machinery. the Airport Lands and Buildings are properties of public dominion. MIAA as a government instrumentality is not a taxable person because it is not subject to “[t]axes.” The Administrative Code defines what constitutes a “government-owned or controlled corporation. Thus. Finally. 2. MIAA is outside the scope of the phrase “governmentowned or controlled corporations” under Section 16. The minority belittles the use in the Local Government Code of the phrase “government-owned or controlled corporation” as merely “clarificatory or illustrative. 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. MIAA is a government instrumentality and not a government-owned or controlled corporation. Such exception applies only if the beneficial use of real property owned by the Republic is given to a taxable entity. To summarize. (2) Those which belong to the State.” To belittle this phrase as “clarificatory or illustrative” is grave error. and enjoying operational autonomy. Under Article 420 of the Civil Code. and are intended for some public service or for the development of the national wealth.MIAA falls under the definition of a government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative Code. More importantly. the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion. roadsteads. The following things are property of public dominion: (1) Those intended for public use. (Emphasis supplied) The term “ports x x x constructed by the State” includes airports and seaports. Conclusion Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code. torrents. without being for public use. Properties of public dominion are owned by the State or the Republic. 4. Article 420 of the Civil Code provides: Art. Without a change in its capital structure. banks. canals. and at the very least intended for public service. fees or charges of any kind” by local governments. Whether intended for public use or public service. 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. the Airport Lands and Buildings of MIAA. it need not comply with the test of economic viability. the Airport Lands and Buildings are owned by the Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code. 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. 420. are properties of public dominion and thus owned by the State or the Republic of the Philippines. which provides: SEC. Article XII of the 1987 Constitution. not integrated within the department framework. Neither is MIAA a government-owned or controlled corporation under Section 16. Under Section 133(o) of the Local Government Code. Thus. as long as MIAA renders essential public services. endowed with some if not all corporate powers. 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. such as roads. and others of similar character.—x x x x (10) Instrumentality refers to any agency of the National Government. 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.” This is fatal. As a government instrumentality.

.. Make no mistake. Quisumbing. Tinga. at least one dozen precedents enumerated below: 1) Mactan-Cebu International Airport Authority v. unenforceable as it is through the sale or disposition of MIAA properties.. that was local autonomy. of the Airport Lands and Buildings of the Manila International Airport Authority. J. SO ORDERED. WHEREFORE. As properties of public dominion owned by the Republic. We declare VOID all the real estate tax assessments. except for the portions that the Manila International Airport Authority has leased to private parties. Corona.2 the leading case penned in 1997 by recently retired Chief Justice Davide. Azcuna.J. issued by the City of Parañaque on the Airport Lands and Buildings of the Manila International Airport Authority. 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. as to what the law of the case is. it also leaves the room for negotiation for a mutually acceptable resolution between the City of Parañaque and MIAA. no clear-cut rule emerges on the important question of the power of local government units (LGUs) to tax government corporations. Marcos. SandovalGutierrez. the majority has virtually declared war on the seventy nine (79) provinces. in the majority’s resolve to spare the Manila International Airport Authority (MIAA) from liability for real estate taxes.: . Jr. 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.. J. Tin-ga. Carpio-Morales. but at the same time. as properties of public dominion and owned by the Republic. In the end.). The majority invokes the ruling in 105 | P r o p e r t y DISSENTING OPINION TINGA.. SP No. Garcia and Velasco. While the MIAA is left unscathed. duly enacted into law. I concur with the separate opinion of J. J. all that the City of Parañaque would hold over the MIAA is a limited lien. concur. Puno. and all its effects. which held that the express withdrawal by the Local Government Code of previously granted exemptions from realty taxes applied to instrumentalities and governmentowned or controlled corporations (GOCCs) such as the Mactan-Cebu International Airport Authority (MCIAA). the majority today veers wildly offcourse. Decisions of the Supreme Court are expected to provide clarity to the parties and to students of jurisprudence. so wrong on many levels. Hon.500) municipalities of the Philippines.1 The icing on this inedible cake is the strained and purposely vague rationale used to justify the majority opinion.. Sr. No costs. instrumentalities or agencies. Tinga. Chico-Nazario. Instead. Ynares-Santiago. J. 66878. the decision in this case is plainly so. and one thousand five hundred (1. More egregious.R. Panganiban (C. J. especially when the doctrines of long standing are modified or clarified. one hundred seventeen (117) cities. among others. On Leave. Austria-Martinez. With all due respect. it is surrounded by the wreckage that once was the constitutional policy. Not only is this the legal effect of all the relevant constitutional and statutory provisions applied to this case. Callejo. upholding a statutory limitation that prevents the City of Parañaque from seizing and conducting an execution sale over the real properties of MIAA. This Court has also repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale. I agree with the separate opinion of J. with blind but measured rage.. The majority would overturn sub silencio. shattering statutes and judicial precedents left and right in order to protect the precious Ming vase that is the Manila International Airport Authority (MIAA). The legally correct resolution of this petition would have had the added benefit of an utterly fair and equitable result—a recognition of the constitutional and statutory power of the City of Parañaque to impose real property taxes on the Manila International Airport Authority (MIAA). including the final notices of real estate tax delinquencies. JJ. we GRANT the petition.State. Please see dissenting opinion. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5 October 2001 and 27 September 2002 in CA-G. We also declare VOID the assailed auction sale.” which includes public airports and seaports.

Quezon City.” Yet the majority now rules that the exceptions in the LGC no longer hold. was required to secure the services of the Office of the Government Corporate Counsel for legal representation. GOCCs are also considered as instrumentalities.18 wherein the Court held that the predecessor agency of the MIAA. 8) The cases of Teodoro v. Central Board of Assessment. Pagcor. City of Iloilo. the Social Security System is not a GOCC. Phividec would not be a GOCC. LGUs cannot impose taxes. “no longer” a GOCC. LRTA is not a GOCC. a GOCC. and succeeding cases that have relied on it such as Batangas Power Corp.e. 6) The 1963 precedent of Social Security System Employees Association v.15 The characterization therein of the Light Rail Transit Authority (LRTA) as a “service-oriented commercial endeavor” whose patrimonial property is subject to local taxation is now rendered inconsequential. i. fees or charges on the aforementioned entities.9 wherein a unanimous en banc Court held that the Lung Center of the Philippines may be liable for real property taxes. Moreover. and its rationale for holding governmental entities like the PPA liable for local government taxation is mooted by the majority. and a vanguard of a doctrine so noxious to the concept of local government rule that the Local Government Code was drafted precisely to counter such philosophy. 10) Two decisions promulgated by the Court just last month (June 2006). stating “[l]ocal governments are devoid of power to tax the national government. National Airports Corporation17 and Civil Aeronautics Administration v. a GOCC.. the Lung Center would be properly classified as an instrumentality which the majority now holds as exempt from all forms of local taxation. Reyes5 is now put in question. such as PHILRECA v.19 wherein the Court held that the Phividec Industrial Authority. through Justice Puno. Based on the reasoning of the majority. Using the majority’s reasoning.16 irrespective of the functions it performs. National Power Corporation v. using the definition employed by the majority.20 Based on the reasoning of the majority. DILG Secretary. Court of Appeals. 3) Lung Center of the Philippines v. City Assessor of Iloilo City. its agencies and instrumen-talities. based on the majority’s criteria. as provided by Section 2(d) of the Administrative Code. Light Rail Transit Authority v. was engaged in the exercise of proprietary. its previous exemption having been withdrawn by the enactment of the Local Government Code. Or perhaps more accurately. the Court pronounced that “[a]lthough as a general rule. v. the PPA cannot be considered a GOCC. 7) The decision penned by Justice (now Chief Justice) Panganiban. would be directly though silently overruled by the majority. is liable for franchise taxes under the Local Government Code. 9) My own majority in Phividec Industrial Authority v. notwithstanding the fact that it is a GOCC. which expressly relied on Mactan.”8 Unfortunately. as opposed to sovereign functions.10 4) City of Davao v. this rule admits of an exception. when specific provisions of the LGC authorize the LGUs to impose taxes.3 a precedent discredited in Mactan. and the mandate of the Office of the Government Corporate Counsel extends only to GOCCs. Soriano. The majority would hold otherwise that the property maintained by MIAA is actually patrimonial. its agencies and instrumentalities. Batangas City7 The majority now states that deems instrumentalities as defined under the Administrative Code of 1987 as purportedly beyond the reach of any form of taxation by LGUs.14 which declared the Social Security Commission (SSC) as a GOCC performing proprietary functions. its agencies 106 | P r o p e r t y .13 cases penned by Justices Callejo and Azcuna respectively.11 where the Court held that the Government Service Insurance System (GSIS) was liable for real property taxes for the years 1992 to 1994.12 This decision. Based on the rationale employed by the majority. which was similarly engaged in the operation. fees. or charges of any kind on the National Government. The reliance of these cases on Mactan. Capitol Steel.4 City Government of San Pablo v. 2) The rulings in National Power Corporation v. owing to the majority’s thinking that an entity such as the LRTA is itself exempt from local government taxation. RTC.Basco v. Province of Isabela21 and GSIS v. thus leading to the astounding conclusion that GOCCs may not be taxed by LGUs under the Local Government Code. Hon. thus implying that MIAA is actually engaged in sovereign functions. since “local governments are devoid of power to tax the national government. declared that the National Power Corporation. 5) The common essence of the Court’s rulings in the two Philippine Ports Authority v. The efficacy of several rulings that expressly rely on Mactan. administration and management of the Manila International Agency.22 In the former.6 wherein the Court. which relied in part on Mactan in holding the Philippine Ports Authority (PPA) liable for realty taxes. City of Cabanatuan.

What is the reason offered by the majority for overturning or modifying all these precedents and doctrines? None is given. Republic Act No.—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. and (e) Machinery and equipment used for pollution control and environmental protection.and instrumentalities. whether natural or juridical. No.25 Particularly. has already been decided by this Court in the Mactan case. The Mactan-Cebu International Airport Authority (MCIAA) claimed that it was exempt from payment of real property taxes to the City of Cebu. and should have been resolved by simply applying precedent. building.—Unless otherwise provided herein. (emphasis and italics supplied) However. for consideration or otherwise. the exercise of the taxing powers of provinces. 6958.26 SECTION 232.—Unless otherwise provided in this Code.A. I. non-stock and non-profit hospitals and educational institutions. MCIAA invoked Section 133 of the Local Government Code. Power to Levy Real Property Tax. including government-owned and controlled corporations.” It then considered the other relevant provisions of the Local Government Code. its agencies and instrumentalities and local government units. Section 133 reads: Sec. No. Withdrawal of Tax Exemption Privileges. There are certainly many other precedents affected. (c) All machineries and equipment that are actually. precisely the same provision utilized by the majority as the basis for MIAA’s exemption.A. cities. to a taxable person: (b) Charitable institutions.”23 The ruling in the latter case. perhaps all previous jurisprudence regarding local government taxation vis-a-vis government entities. and its status as an instrumentality of the government performing governmental functions. as well as any previous definitions of GOCCs. 133. whether the MIAA is liable to the City of Parañaque for real property taxes under the Local Government Code. except local water districts. directly. (d) All real property owned by duly registered cooperatives as provided for under R. and previous distinctions between the exercise of governmental and proprietary functions (a distinction laid down by this Court as far back as 191624). non-profit or religious cemeteries and all lands. cooperatives duly registered under R. for the majority takes comfort instead in the pretense that these precedents never existed.—A province or city or a municipality within the Metropolitan Manila area may levy an annual ad valorem tax on real property such as land. machinery. are hereby withdrawn upon the effectivity of this Code. 107 | P r o p e r t y . 6938. fees or charges of any kind on the National Government. churches. 6938. Mactan Explained A brief recall of the Mactan case is in order. 193. invoking the specific exemption granted in Section 14 of its charter. Case Should Have Been Decided Following Mactan Precedent The core issue in this case. buildings. and improvements actually. particularly the following: SEC. tax exemption or incentives granted to. is now put in jeopardy by the majority’s ruling. and other improvements not hereafter specifically exempted. its agencies and instrumentalities from local taxation with the phrase “unless otherwise provided herein. Exemptions from Real Property Tax. which held the GSIS as liable for real property taxes. and barangays shall not extend to the levy of the following: xxx (o) Taxes. parsonages or convents appurtenant thereto.27 SECTION 234. directly and exclusively used by local water districts and government-owned and controlled corporations engaged in the distribution of water and/or generation and transmission of electric power. Common Limitations on the Taxing Powers of Local Government Units. mosques. the Court in Mactan noted that Section 133 qualified the exemption of the National Government. Only children should be permitted to subscribe to the theory that something bad will go away if you pretend hard enough that it does not exist. or enjoyed by all persons. and exclusively used for religious charitable or educational purposes. municipalities.

there are exceptions which can be found only in other parts of the LGC. 6958. These clauses would be obviously unnecessary or mere surplusages if the opening clause of the section were “Unless otherwise provided in this Code” instead of “Unless otherwise provided herein. since under Section 232 local government units have the power to levy real property tax. Instead of the clause “unless otherwise provided herein.” as provided in item (a) of the first paragraph of Section 234. even as to real property owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234. all persons. as laid down in Section 133. Note. as shown by the following clauses: (1) “unless otherwise provided herein” in the opening paragraph of Section 133. it necessarily follows that its exemption from such tax granted it in Section 14 of its Charter. except those granted to local water districts. cities. “except as otherwise provided herein” as in items (c) and (i). to a taxable person. where exceptions were intended. (3) “not hereafter specifically exempted” in Section 232. and municipalities in the Metropolitan Manila Area may impose the real property tax except on.A. (2) “Unless otherwise provided in this Code” in Section 193. cooperatives duly registered under R.” The former results in absurdity since the section itself enumerates what are beyond the taxing powers of local government units and. No. and (b) the rule on tax exemptions and the exceptions thereto. but the section interchangeably uses therein the clause. and (4) “Except as provided herein” in the last paragraph of Section 234 initially hampers a ready understanding of the sections. including government-owned and controlled corporations. reading together Sections 133. 232. and local government units”. Any claim to the contrary can only be justified if the 108 | P r o p e r t y . Since the last paragraph of Section 234 unequivocally withdrew. all others not included in the enumeration lost the privilege upon the effectivity of the LGC. as evidenced by these cited provisions which “otherwise provided. its agencies and instrumentalities.” It may also be observed that within the body itself of the section. Moreover.” But what was the extent of the limitation under Section 133? This is how the Court. 6938. exemptions from payment of real property taxes granted to natural or juridical persons. non-stock and non-profit hospitals and educational institutions. the exceptions are explicitly indicated in the next. pursuant to Section 232. inter alia. or the clause “except as provided in this Code” in item (j). provinces. and item (1) which excepts taxes. then Section 232 must be deemed to qualify Section 133. that the aforementioned clause in Section 133 seems to be inaccurately worded. But the last paragraph of Section 234 further qualifies the retention of the exemption insofar as real property taxes are concerned by limiting the retention only to those enumerated therein. in item (a) which excepts income taxes “when levied on banks and other financial institutions”. the section. the exemption is withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise. whether natural or juridical. the taxing powers of local government units cannot extend to the levy of. No. including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. except as provided in the said section. correctly to my mind. “real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted. The use of exceptions or provisos in these sections. fees and charges of any kind on the National Government. Thus. and unless otherwise provided in the LGC. including government-owned or controlled corporations. undoubtedly. fees and charges for the registration and issuance of licenses or permits for the driving of “tricycles. and the petitioner is. even if the latter is used. inter alia. we conclude that as a general rule.” with the “herein” to mean. The latter proviso could refer to Section 234 which enumerates the properties exempt from real property tax. Section 133 was not intended to be so absolute a prohibition on the power of LGUs to tax the National Government.. of course. its agencies and instrumentalities.28 Clearly. upon the effectivity of the LGC. R. “taxes.A. it should have used the clause “unless otherwise provided in this Code. they are withdrawn upon the effectivity of the LGC. As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons. Section 193 of the LGC prescribes the general rule. and 234 of the LGC. too. a governmentowned corporation. viz. for consideration or otherwise. For instance. has been withdrawn.Except as provided herein.” In any event. item (d) which excepts “wharfage on wharves constructed and maintained by the local government unit concerned”. or presently enjoyed by. defined the parameters in Mactan: The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations. except those exempted therefrom under Section 234. any exemption from payment of real property tax previously granted to. however.

fairness. or even to seriously burden it in the accomplishment of them. Also consider the following citation from Maceda v. Vol. The Court in Basco declared the PAGCOR as exempt from local taxes. is to minimize differential treatment and foster impartiality. 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. 579) This doctrine emanates from the “supremacy” of the National Government over local governments. the imposition of real property taxes under Section 232 is in turn qualified by the phrase “not hereinafter specifically exempted.30 Mactan Overturned the Precedents Now Relied Upon by the Majority But the petitioners in Mactan also raised the Court’s ruling in Basco v. Title II. Clearly. as shown above. unless otherwise provided in the Code. which specifically states that only real properties owned “by the Republic of the Philippines or any of its political subdivisions” are exempted from the payment of the tax. At the same time. made reference to the entire absence of power on the part of the States to touch. All of its shares of stocks are owned by the National Government. p.29 The Court in Mactan acknowledged that under Section 133. supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it. “Justice Holmes.31 decided before the enactment of the Local Government Code. PAGCOR is a government owned or controlled corporation with an original charter. emphasis supplied) Otherwise. as it now asserts. Maryland. but not under Section 133. Sanchez. 140. mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirable activates or enterprise using the power to tax as “a tool for regulation. On the other hand. In addition to its corporate powers (Sec. The reason for the rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. impeded or subjected to control by a mere Local government. its operation might be burdened. it is a recognized principle that the rule on strict interpretation does not apply in the case of exemptions in favor of a government political subdivision or instrumentality.” (U. For these reasons. v.S. 2. “Moreover. Marland.”32 Basco is as strident a reiteration of the old guard view that frowned on the principle of local autonomy. and equality of treatment among tax payers. 3. irrespective of who owned the property. justifying the exemption in this wise: “Local governments have no power to tax instrumentalities of the National Government. especially as it interfered with the prerogatives and privileges of the national government. Modern Constitutional Law.” (Antieau. 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. to retard impede.” The exemptions from real property taxes are enumerated in Section 234. Otherwise. the said section is qualified by Sections 232 and 234. which places it in the category of an agency or instrumentality of the Government. PAGCOR. to operate and to regulate gambling casinos. Section 232 “otherwise provided” insofar as it allowed LGUs to levy an ad valorem real property tax. instrumentalities or GOCCs do not fall within the exceptions under Section 234. “The states have no power by taxation or otherwise. 340 US 42) The power to tax which was called by Justice Marshall as the “power to destroy” (McCulloch v. Macaraig. even more obvious than with reference to the affirmative or levying provisions of tax statutes.33 decided the same year as Basco. speaking for the Supreme Court. in that way (taxation) at least. instrumentalities were generally exempt from all forms of local government taxation. 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. Maryland. Being an instrumentality of the Government. the instrumentalities of the United States (Johnson v.” (McCulloch v. 4 Wheat 316. PAGCOR should be and actually is exempt from local taxes. The basis for applying the rule of strict construction to statutory provisions granting tax exemptions or deductions. the sentiments are of a similar vein. The latter role is governmental. Discussing the rule of construction of tax exemptions on government instrumentalities. 4 L Ed. since. PD 1869. PD 1869) it also exercises regulatory powers x x x PAGCOR has a dual role.petitioner can seek refuge under any of the exceptions provided in Section 234. 109 | P r o p e r t y .

In the case of property owned by the state or a city or other public corporations. xxx The Court in Mactan recognized that a new day had dawned with the enactment of the 1987 Constitution and the Local Government Code of 1991. City of Cabanatuan. Declaration of Principles and State Policies xxx Sec. Section 3. it expressly rejected the contention of the MCIAA that Basco was applicable to them. the Court has been emphatic in declaring the Basco doctrine as dead.”35 (emphasis supplied) The Court Has Repeatedly Reaffirmed Mactan Over the Precedents Now Relied Upon By the Majority Since then and until today. salaries. Reliance on Basco v. Local Government xxx Sec. the Local Government Code of 1991 ushered in a new ethos on how the art of governance should be practiced in the Philippines. The State shall ensure the autonomy of local governments. Besides.provisions granting exemptions to government agencies may be construed liberally. and charges subject to such guidelines and limitations as the Congress may provide. fees. The majority might have private qualms about the wisdom of the policy of local autonomy. the language of the Court was dramatic. nothing can prevent Congress from decreeing that even instrumentalities or agencies of the Government performing governmental functions may be subject to tax. the majority cites these two very cases and the stodgy rationale provided therein. and referendum. Where it is done precisely to fulfill a constitutional mandate and national policy. and all other matters relating to the organization and operation of the local units. and charges shall accrue exclusively to the local governments. election. NPC or Napocor. 2. It is admittedly a viewpoint once shared by this Court. Philippine Amusement and Gaming Corporation is unavailing since it was decided before the effectivity of the [Local Government Code]. since as to such property “exemption is the rule and taxation the exception. . conceding greater powers once held in the private reserve of the national government to LGUs. In doing so. the position taken by the [MCIAA] is untenable. in favor of non tax-liability of such agencies. and provide for the qualifications. consistent with the basic policy of local autonomy. Such taxes. term. the express exemption should not be construed with the same degree of strictness that applies to exemptions contrary to the policy of the state. and en vogue prior to the enactment of the Local Government Code of 1991. 25. fees. allocate among the different local government units their powers. initiative.”34 Strikingly. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall. powers and functions and duties of local officials. Each local government unit shall have the power to create its own sources of revenues and to levy taxes. no one can doubt its wisdom. Thus. invoking its continued exemption from payment of franchise taxes to the City of 110 | P r o p e r t y Article II. Article X.36 which was penned by Justice Puno. responsibilities. especially when the 1987 Constitution itself promotes the principle of local autonomy. if only to emphasize how monumental the shift in philosophy was with the enactment of the Local Government Code: “Accordingly. appointment and removal. This evinces the perspective from which the majority is coming from. and resources. xxx Section 5. The territorial and political subdivisions shall enjoy local autonomy. The notion that instrumentalities may be subjected to local taxation by LGUs was again affirmed in National Power Corporation v. However. but the members of the Court are not expected to substitute their personal biases for the legislative will.

1869 remains an “operative” law until “amended. nothing prevents Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax. Basco was cited by NPC.38 the Court.Cabanatuan. Sr. the doctrine laid down in the Basco case is no longer true. Marcos. The Court again reiterated that “it was the intention of Congress to withdraw the tax exemptions granted to or presently enjoyed by all persons. was subject to real property tax. through Justice Corona in Government Service Insurance System v.43 The Court in the second Public Ports Authority case likewise cited Mactan as providing the “raison d’etre for the withdrawal of the exemption. as “the legislature cannot bind a future legislature to a particular mode of repeal. Congress empowered the LGUs to impose certain taxes even on instrumentalities of the National Government. Dade48 ruled that such proscription on future legislation was itself prohibited. the Court again cited Mactan to refute PPA’s invocation of Basco as the basis of its exemption. repealed or revoked”. no one can doubt its wisdom.37 In the 2003 case of Philippine Ports Authority v.”41 The taxability of the PPA recently came to fore in Philippine Ports Authority v. Where it is done precisely to fulfill a constitutional mandate and national policy. the Court. The Court had this to say about Basco. City of Iloilo. . this Court held that MCIAA. It further explained that in enacting the LGC. Held the Court. Although the taxes were assessed under the old Real Property Tax Code and not the Local Government Code. Marcos.. wherein the Court affirmed the sale of PPA’s properties at public auction for failure to pay realty taxes.: “Thus. RTC. .”47 The Court.” The fact that tax exemptions of government-owned or controlled corporations have been expressly withdrawn by the present Local Government Code clearly attests against petitioner’s claim of absolute exemption of government instrumentalities from local taxation. However. in City of Davao v. in the more recent case of Mactan Cebu International Airport Authority v. upon the effectivity” of the Code.39 Just last month. Furthermore. when no law empowering the local government units to tax instrumentalities of the National Government was in effect.” namely. . To that end. where the Basco case was similarly invoked for tax exemption. the Basco case was decided prior to the effectivity of the LGC. City Assessor of Iloilo50 111 | P r o p e r t y . citing established doctrines in statutory construction and Duarte v. the Court. when no law empowering the local government units to tax instrumentalities of the National Government was in effect. Province of Isabela40 again rejected Basco in emphatic terms. we stated: “[N]othing can prevent Congress from decreeing that even instrumentalities or agencies of the Government performing governmental functions may be subject to tax. although an instrumentality of the national government. affirmed the levy of realty taxes on the PPA.”49 And most recently. Since P. just less than one month ago. In enacting the LGC. Congress exercised its prerogative to tax instrumentalities and agencies of government as it sees fit. its “exemption clause” remains an exemption to the exercise of the power of local governments to impose taxes and fees. “and a provision is enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund. in the able ponencia of Justice Azcuna. Thus. To emphasize. The removal of the tax exemption stood even though the then GSIS law46 prohibited the removal of GSIS’ tax exemptions unless the exemption was specifically repealed. [Basco] did not absolutely prohibit local governments from taxing government instrumentalities. the Court in National Power Corporation v. Mactan was relied upon as the governing precedent. Philippine Amusement and Gaming Corporation relied upon by the petitioner to support its claim no longer applies. the Court noted primarily that the Basco case was decided prior to the effectivity of the LGC. alleged that it was an instrumentality of the National Government which could not be taxed by a city government. including government-owned or controlled corporations. through Justice Callejo.D. Sr. City of Iloilo42 case. x x x [T]he doctrine in Basco vs. . Again. In the Cabanatuan case. . after reviewing the specific provisions of the LGC. as this Court ruled in the case of Mactan Cebu International Airport Authority (MCIAA) vs. a decision also penned by Justice Callejo.45 affirmed that the legislated exemption from real property taxes of the Government Service Insurance System (GSIS) was removed under the Local Government Code. “the State policy to ensure autonomy to local governments and the objective of the [Local Government Code] that they enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities. In fact we stated therein: The power of local government to “impose taxes and fees” is always subject to “limitations” which Congress may provide by law.”44 Last year.

Instrumentalities.51 Clearly then. yet the majority refuses to explain why this reasoning of the Court in Mactan is erroneous. Again Mactan was cited as having “expressly withdrawn the [tax] exemption of the [GOCC]. Basco. As Sections 193 and 234 both state. the parties in Mactan and in this case are similarly situated. A more meaningful debate on the matter would have been possible. The MCIAA and the MIAA are similarly situated. Mactan will be deemed as giving way to this new ruling. And the fact that the majority cites doctrines contrapuntal to the Local Government Code as in Basco and Maceda evinces an intent to go against the Court’s jurisprudential trend adopting the philosophy of expanded local government rule under the Local Government Code. They are the owners of airport properties they respectively maintain and hold title over these properties in their name. students of jurisprudence and practitioners. II. including 112 | P r o p e r t y . Before I dwell upon the numerous flaws of the majority. The majority provides for a wildly different interpretation of Section 133. If the majority believes that Mactan may still stand despite this ruling. the ineluctable conclusion is that the majority rejects the rationale and ruling in Mactan. its agencies and instrumentalities under Section 133 is qualified by Section 232 and Section 234. Perhaps the majority does not simply know how to dispense with the ruling in Mactan. it remains silent as to the viable distinctions between these two cases. enriching the study of law and the intellectual dynamic of this Court. the doctrine therein consistent with the Local Government Code.54 Both of them are not empowered to obtain loans or encumber their properties without prior approval the prior approval of the President. There is no way the majority can be justified unless Mactan is overturned. Such an approach might not have won the votes of the minority. The majority’s silence on Mactan is baffling. A bulwark of my position lies with Mactan. The majority could have devoted its discussion in explaining why it thinks Mactan is wrong. the withdrawal applies to “all persons. considering how different this new ruling is with the ostensible precedent. but at least it would provide some degree of intellectual clarity for the parties. Mactan held that the prohibition on taxing the national government. Corollarily.again affirmed that the Local Government Code removed the previous exemption from real property taxes of the GSIS. instead of pretending that Mactan never existed at all. LGUs and the national government. and accordingly.53 These entities are both owned by the State. It does not cite Mactan. as will be demonstrated. 193 and 234 of the Local Government Code than that employed by the Court in Mactan. other than an incidental reference that it is relied upon by the respondents. They are both. Moreover.55 III. Mactan is not a stray or unique precedent. a brief comment is necessitated on the majority’s studied murkiness vis-à-vis the Mactan precedent. If Mactan truly deserves to be discarded as precedent. but the basis of a jurisprudential rule employed by the Court since its adoption. GOCCs. the only relevant exemption now applicable to these bodies is as provided under Section 234(o).52 However.” It should be noted that the express withdrawal of previously granted exemptions by the Local Government Code do not even make any distinction as to whether the exempt person is a governmental entity or not. the majority does not bother to explain why Mactan is wrong. to a taxable person. Agencies And GOCCs Generally Liable for Real Property Tax I shall now proceed to demonstrate the errors in reasoning of the majority. for consideration or otherwise. Majority. The interpretation in Mactan of the relevant provisions of the Local Government Code is elegant and rational. or on “real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted. it deserves a more honorable end than death by amnesia or ignonominous disregard. in Effectively Overturning Mactan. and denied by their respective charters the absolute right to dispose of their properties without prior approval elsewhere. In fact. the polar opposite of Mactan has been emphatically rejected and declared inconsistent with the Local Government Code. which will further demonstrate why the majority has found it inconvenient to even grapple with the precedent that is Mactan in the first place. as can be obviously deducted from the fact that both petitioners are airport authorities operating under similarly worded charters. The majority is obviously inconsistent with Mactan and there is no way these two rulings can stand together. commonly engaged in the business of operating an airport. the majority does not even engage Mactan in any meaningful way. Following basic principles in statutory construction. However. Refuses to Say Why Mactan Is Wrong The majority cites Basco in support.

the majority all but ignores the disquisition in Mactan and asserts that government instrumentalities are not taxable persons unless they lease their properties to a taxable person. so why even bother to extensively discuss whether or not MIAA is a GOCC? Indeed as far back as the 1927 case of Government of the Philippine Islands v. since it required the enactment of an express exemption from such taxes in its charter. deserves emphatic refutation. This term includes regulatory agencies. The majority gives the impression that a government instrumentality is a distinct concept from a government corporation. obiter as it may ultimately be. If an entity was previously granted an express exemption from realproperty taxes in the first place. based on the Administrative Code. natural persons56 and juridical persons. Majority’s Flawed Definition of GOCCs. This fact militates against the claim that MIAA is preternaturally exempt from realty taxes. and enjoying operational autonomy. usually through a charter. there actually is no point in the majority’s assertion that MIAA is not a GOCC. administering special funds.” Section 2(4) is also worth citing in full: (4) Agency of the Government refers to any of the various units of the Government. Amazingly. Springer. as follows: Instrumentality refers to any agency of the National Government not integrated within the department framework. chartered institutions and government-owned or controlled corporations. However. several leaps in reasoning are committed. the material question is whether MIAA is either an instrumentality. and enjoying operational autonomy. the supposed foundation of this assertion is an adulteration. administering special funds. The very provisions of the Administrative Code provide that a GOCC can be either an instrumentality or an agency. For in fact. In arriving at this conclusion. x x x59 (emphasis omitted) However.57 The fact that the Local Government Code mandates the withdrawal of previously granted exemptions evinces certain key points. or a local government or a distinct unit therein. vested with special functions or jurisdiction by law. However. since based on the majority’s premise of Section 133 as the key provision. The majority takes pains to assert that the MIAA is not a GOCC.[GOCCs]. (emphasis supplied)61 Clearly then. a GOCC may be an instrumentality or an agency of the National Government.62 the Supreme Court already noted that a corporation of which the government is the majority stockholder “remains an agency or instrumentality of government. perhaps unforeseen by the majority. the obvious conclusion would be that such entity would ordinarily be l iable for such taxes without the exemption. the inconsequential verbiage stewing in judicial opinions deserve little rebuttal. an agency.58 Most tellingly. when read in full. The views of the majority on this matter are very dangerous. office. and quite grievously. Majority Ignores the Power of Congress to Legislate and Define Chartered Corporations 113 | P r o p e r t y . endowed with some if not all corporate powers.” thus encompassing the two classes of persons recognized under our laws. including a department. The portions omitted by the majority are highlighted below: (10) Instrumentality refers to any agency of the National Government not integrated within the department framework. or government-owned or controlled corporation. bureau. and would lead to absurdities.60 Since Section 2(10) makes reference to “agency of the National Government. instrumentality. If such entities were already deemed exempt due to some overarching principle of law. but rather an instrumentality. Section 2(10) of the Administrative Code. vested with special functions or jurisdiction by law. then it would be a redundancy or surplusage to grant an exemption to an already exempt entity. the entire discussion of the majority on the definition of a GOCC.”63 Ordinarily. or the National Government itself. the majority selectively cites a portion of Section 2(10) of the Administrative Code of 1987. The general rule laid down in Section 232 is given short shrift. usually through a charter. makes an important clarification which the majority does not show. the majority effectively declassifies many entities created and recognized as GOCCs and would give primacy to the Administrative Code of 1987 rather than their respective charters as to the definition of these entities. endowed with some if not all corporate powers. Thus.

these laws are by no means sacrosanct. as defined under the Corporation Code. Congress can choose to disregard either the Corporation Code or the Administrative Code in defining the corporate structure of a GOCC. and hence. which is provided with authorized capital stock wholly subscribed and paid for by the Government of the Philippines. insofar as they are applicable. utilizing the same extent of legislative powers similarly vesting it the putative ability to amend or abolish the Corporation Code or the Administrative Code.” which qualifies: Sec. negotiating. on one hand. Effectively Classifies Duly Established GOCCs. and it is not bound by any traditional format. Even if there is a definition of what a corporation is under the Corporation Code or the Administrative Code. General Terms Defined. on the other. according to the NPC charter. there are GOCCs established in such a manner. pledging. the National Government. This formulation of course ignores Section 4 of the Corporation Code. which again provides that corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter. supplemented by the provisions of this Code. Indeed. Clearly.”66 Can the holder of the shares of NPC. divided into shares but at the same time. the NPC is not a stock corporation.—Corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter creating them or applicable to them. based on the Corporation Code definition relied upon by the majority. If the legislative enactment defines an entity as a corporation. These principles are actually recognized by both the Administrative Code and the Corporation Code. Majority. It explains that the MIAA is not a stock corporation because it does not have any capital stock divided into shares.”65 On the other hand. agencies and instrumentalities under the Administrative Code are laid down in the section entitled “General Terms Defined. In case of conflict between the legislative charter of a government corporation. It should be remembered that these two statutes fall within the same level of hierarchy as a congressional charter. Such GOCCs are not empowered to declare dividends or alienate their capital shares. the majority declares that. following Section 3 of the Corporation Code. That the MIAA cannot be considered a stock corporation if only because it does not have a stock structure is hardly a plausible proposition. Corporations created by special laws or charters. There is no constitutional prohibition on Congress as to what structure these chartered corporations should take on. Admittedly. is prohibited from transferring. or the context as a whole. 2. receive its surplus profits on the basis of its shares held? It cannot. for expansion. and has been doing so throughout legislative history. 4. the clear doctrine emerges—the law that governs the definition of a corporation or entity created by Congress is its legislative charter. Certainly. Congress has the prerogative to create a corporation in whatever form it chooses. the majority claims that MIAA does not qualify either as a stock or non-stock corporation.First. 114 | P r o p e r t y . mortgaging or otherwise giving these shares as security for payment of any obligation. Section 13 of the NPC’s charter states that “the Corporation shall be non-profit and shall devote all its returns from its capital investment. then it is a corporation. To insist on this as an absolute rule fails on bare theory. trustees or officers. if the majority is to be believed. even the NPC cannot be considered as a stock corporation. such as the National Power Corporation (NPC). (emphasis supplied) Thus. Congress has the undeniable power to create a corporation by legislative charter. Neither can it be considered as a non-stock corporation because it has no members. Under Section 3 of the Corporation Code. and under Section 87. a GOCC must be “organized as a stock or non-stock corporation. there is no point in requiring a capital stock structure for GOCCs whose full ownership is limited by its charter to the State or Republic.64 However. shall require a different meaning: (emphasis supplied) xxx Similar in vein is Section 6 of the Corporation Code which provides: SEC. since they all are legislative enactments. the former always prevails.—Unless the specific words of the text. citing Section 2(13) of the Administrative Code. The definition of GOCCs. no matter if the Corporation Code or the Administrative Code seemingly provides otherwise. and not the Corporation Code. and the Corporate Code and the Administrative Code. a non-stock corporation is one where no part of itsincome is distributable as dividends to its members. stock corporations are defined as being “authorized to distribute to the holders of its shares dividends or allotments of the surplus profits on the basis of the shares held. With Disastrous and Far Reaching Legal Consequences Second.” as defined under the Corporation Code. in Ignoring the Legislative Charters. as well as excess revenues from its operation. or a particular statute.

7656: 1)Philippine Ports Authority73—has no capital stock.89 Thus. is expressly empowered “to collect. and the majority’s illogic is pursued. which are eventually remitted back to its members. WHEREAS. Section 1 of Republic Act No. 7656 provides that: “Section 1.The majority likewise claims that corporations without members cannot be deemed non-stock corporations. which under its revised charter. administer and disburse” the National Health Insurance Fund. but has capital comprised of contributions by its members.75 2)Bases Conversion Development Authority76—has no capital stock. Does this disqualify the SSS from classification as a GOCC. which like MIAA. Ramos disagreed. 483. is denominated as a “corporate body.84 6)National Power Corporation85—has capital stock but is prohibited from “distributing to the holders of its shares dividends or allotments of the surplus profits on the basis of the shares held. Moreover. Apparently.72 But according to the majority. 7875. for the majority. trustees or officers. and obliged to apply the balance of its income or revenue at the end of each year in a general reserve. the Secretary of Finance recommended the adjustment on the percentage of annual net earnings that 115 | P r o p e r t y . President Fidel V. Republic Act No. 4)Light Rail Transit Authority80—no capital stock. 7656. Act No. In fact. deposit. here are but a few entities which are not obliged to remit fifty (50%) of its annual net earnings to the National Government as they are excluded from the scope of Republic Act No. created with the “status of a tax-exempt government corporation attached to the Department of Health” under Rep. among many others.77 no members. Republic Act No. enacted in 1993. to support the viability and mandate of government-owned and/or controlled corporations [GOCCs].81 no members. stock or property dividends to the National Government. 7656. as it would contravene the Administrative Code of 1987 and the Corporation Code.79 no members. non-stock corporations are prohibited from declaring any part of its income as dividends. the MIAA. But using the criteria of the majority. be explained? The issuance provides: WHEREAS.”69 The SSS has no capital stock structure. required to remit fifty percent (50%) of its net profits to the National Treasury. 7)Manila International Airport Authority—no capital stock. How about the Philippine Health Insurance Corporation. signed in 1998 by President Ramos.83 no members. non-stock corporations cannot distribute any part of its income as dividends to its members. shall share a substantial amount of their net earnings to the National Government. requires that all GOCCs. the liquidity. 3)Philippine Economic Zone Authority78—no capital stock. passed in 1993. as it is commonly known.87 no members. has no ostensible members. cannot be considered as within the coverage of Republic Act No. government-owned and/or controlled corporations. The majority faults MIAA for remitting 20% of its gross operating income to the national government.” WHEREAS. without impairing their viability and the purposes for which they have been established. retained earnings position and medium-term plans and programs of these GOCCs were considered in the determination of the reasonable dividend rates of such corporations on their 1997 net earnings. 7656 requires even non-stock corporations to declare dividends from income.67 It too cannot be considered as a stock corporation because it has no capital stock structure. 7656. invest. But if Republic Act No. the ruinous effects of the majority’s hypothesis on the nature of GOCCs can be illustrated by Republic Act No. should it not follow that the prohibition against declaration of dividends by non-stock corporations under the Corporation Code does not apply to government-owned or controlled corporations? For if not. 7656. 8282. 5)Bangko Sentral ng Pilipinas82—no capital stock. Declaration of Policy.74 no members. 7656.—It is hereby declared the policy of the State that in order for the National Government to realize additional revenues. since the PHIC or Philhealth.71 declare and remit at least fifty percent (50%) of their annual net earnings as cash. would be fatally flawed. This would seemingly exclude entities such as the NPC. whether stock or non-stock. How else then could Executive Order No. Following the majority’s definition of a GOCC and in accordance with Republic Act No.88 mandated to remit twenty percent (20%) of its annual gross operating income to the National Treasury. Soriano?70 In fact. notwithstanding this Court’s previous pronouncement in Social Security System Employees Association v. it is doubtful if it would pass muster as a non-stock corporation.68 Or how about the Social Security System.”86 no members. pursuant to Section 5 of RA 7656. Republic Act No.

and resultantly holds that MIAA is not obliged to remit even the reduced rate of thirty five percent (35%) of its net earnings to the national government. To adopt the view of the majority would be. it was the opinion of President Ramos and the Secretary of Finance that MIAA is a GOCC. it is clear that contrary to the majority. THEREFORE. These include the Mindanao Development Authority. President of the Philippines. Obviously. I find it illogical that chartered corporations are compelled to comply with the templates of the Corporation Code. The point. 7656. and towards such end. since it cannot be covered by Republic Act No. by virtue of the powers vested in me by law. and not the Administrative Code. namely: GOCCs which are stock corporations and GOCCs which are no stock corporations (as distinguished from non-stock corporation). Verily. NOW. and are obliged to return the unexpended balances of their appropriations and earnings to a revolving fund in the National Treasury. Section 87 of the Corporation Code. these corporations do not have capital stock nor members. GOCCs which 116 | P r o p e r t y . in effect. As I stated earlier. these charters “hereby created a body corporate. RAMOS. is that entity created by legislative enactment is a corporation if the legislature says so. especially when the Corporation Code itself states that these corporations are to be governed by their own charters. I see no real impediment why the MIAA and similarly situated corporations such as the PHIC.shall be declared by the Manila International Airport Authority [MIAA] and Phividec Industrial Authority [PIA] in the interest of national economy and general welfare. a law applicable only to GOCCs? But. After all. the charters commonly provide that “it is recognized that a government corporation should be created for the purpose.92 the Southeastern Samar Development Au-thority93 and the Mountain Province Development Authority. I. This is especially true considering that the very provision cited by the majority. Obviously these definitions are different from the definitions of the terms in the Corporation Code. I mention these entities not to bring an element of obscurantism into the fray.”95 However. expressly says that the definition provided therein is laid down “for the purposes of this [Corporation] Code. 7656. the majority apparently disagrees.91 the Ilocos Sur Development Authority. this could not have been the intent of the crafters of the Administrative Code when they drafted the “Definition of Terms” incorporated therein. I cite them as examples to emphasize my fundamental point—that it is the legislative charters of these entities.” and accordingly. MIAA is not disqualified from classification as a non-stock corporation by reason of Section 87. Manila International Airport Authority—35% [cash] 2. do hereby order: SECTION 1. A GOCC Following the charters of government corporations. stripped to bare simplicity.” Read in conjunction with Section 4 of the Corporation Code which mandates that corporations created by charter be governed by the law creating them. In fact. there are two kinds of GOCCs. Phividec Industrial Authority—25% [cash] SECTION 2. FIDEL V. The majority effectively declassifies these entities as GOCCs. All this mischief because the majority would declare the Administrative Code of 1987 and the Corporation Code as the sole sources of law defining what a government corporation is. for how else could it have come under the coverage of Republic Act No. which define the class of personality of these entities created by Congress. The percentage of net earnings to be declared and remitted by the MIAA and PIA as dividends to the National Government as provided for under Section 3 of Republic Act No. The adjusted dividend rates provided for under Section 1 are only applicable on 1997 net earnings of the concerned governmentowned and/or controlled corporations. the provision not being applicable to corporations created by special laws or charters. the SSS. MIAA Is Without Doubt.90 the Northern Samar Development Authority. the Philippine Deposit Insurance Commission. 7656 is adjusted from at least fifty percent [50%] to the rates specified hereunder: 1. never mind the fact that their very charters declare them to be GOCCs. be deemed as no stock corporations (as differentiated from nonstock corporations). or maybe even the NPC could at the very least. to sanction an implied repeal of numerous congressional charters for the purpose of declassifying GOCCs. it is the legislature that dictates what a corporation is in the first place.94 An examination of the first section of the statutes creating these entities reveal that they were established “to foster accelerated and balanced growth” of their respective regions. Certainly. This is better illustrated by another set of entities created before martial law. Stock GOCCs are simply those which have capital stock while no stock GOCCs are those which have no capital stock.

Provided. For the MIAA’s part. (j) To exercise the power of eminent domain in the pursuit of its purposes and objectives. building. or any interest therein. either from local or international sources.—There is hereby established a body corporate to be known as the Manila International Airport Authority which shall be attached to the Ministry of Transportation and Communications. All loans contracted by the Authority under this Section. (g) To adopt its by-laws.are not incorporated with the Securities and Exchange Commission are not governed by the Corporation Code but by their respective charters. mortgages and other voluntary liens or encumbrances on any of its assets or properties. xxx The President or his duly authorized representative after consultation with the Minister of Finance may guarantee. subject to existing rights. in the name and on behalf of the Republic of the Philippines. Except as expressly authorized by the President of the Philippines the total outstanding indebtedness of the Authority in the principal amount. own. administer. raise funds. but shall have priority over any other claim or charge on the revenue and assets of the Authority: Provided. The principal office of the Authority shall be located at the New Manila International Airport. branches. shall constitute a charge upon all the revenues and assets of the Authority and shall rank equally with one another.—The Authority shall have the following functions. and other voluntary liens or encumbrances on any assets or property of the Authority. as recommended by the Minister of Transportation and Communications. shall not at any time exceed the net worth of the Authority at any given time. That any subsidiary that may be organized shall have the prior approval of the President. xxx SECTION 5. 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. are hereby transferred. 117 | P r o p e r t y . conveyed and assigned to the ownership and administration of the Authority. by way of loans. after consultation with the Minister of Finance and with the approval of the President of the Philippines. sell or otherwise dispose of any land. airport facility. lease. and Duties. (f) To succeed by its corporate name. or property of whatever kind and nature. Borrowing Power. together with all interests and other sums payable in respect thereof.—The Authority may. Functions. and other borrowing instruments. credits or securities. Powers. Observe the following provisions from MIAA’s charter: SECTION 3. if any. mortgages. with the power to create pledges. Creation of the Manila International Airport Authority. The Authority may establish such offices. xxx SECTION 16. The land where the Airport is presently located as well as the surrounding land area of approximately six hundred hectares. powers and duties: xxx (d) To sue and be sued in its corporate name. That this provision shall not be construed as a prohibition or restriction on the power of the Authority to create pledges. agencies or subsidiaries as it may deem proper and necessary. (i) To acquire. insofar as these powers are not inconsistent with the provisions of this Executive Order. mortgage. whether movable or immovable. the payment of the loans or other indebtedness of the Authority up to the amount herein authorized. (h) To execute or enter into contracts of any kind or nature. and to amend or repeal the same from time to time. xxx (o)To exercise all the powers of a corporation under the Corporation Law. its charter is replete with provisions that indubitably classify it as a GOCC. in local and foreign currency. (e) To adopt and use a corporate seal. Any portion thereof shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines. purchase.

On the other hand. Article XII of the 1987 Constitution. No such test was imposed in previous Constitutions. In fact.98 There is also the matter of Executive Order No. One last point on this matter on whether MIAA is a GOCC. and bring civil or criminal actions. as conceded by the Corporation Code and even the Administrative Code. then argues that MIAA is an instrumentality. similarly calls MIAA an agency. such as a corporate name. A more convincing view offered during deliberations. 483. the majority again evades Mactan and somehow concludes that Section 133 is the general rule. the provision of Section 2(10) of the Administrative Code. except realty taxes if the beneficial use of the property owned has been granted for consideration to a taxable entity or person. and to acquire title to real or personal property. which evinces the belief of the then-president of the Philippines that MIAA is a GOCC. the test of economic viability does not apply to government entities vested with corporate powers and performing essential public services. that distinction is ultimately irrelevant. argued that MIAA is not an instrumentality but an agency. And the majority’s ultimate conclusion? “By express mandate of the Local Government Code. its agencies and instrumentalities. But the very definition relied upon by the majority of an instrumentality under the Administrative Code clearly states that a GOCC is likewise an instrumentality or an agency. considering the fact that under the Administrative Code. including the 1973 Constitution which was the fundamental law in force when the MIAA was created.96 MIAA under its charter may acquire and possess property.These cited provisions establish the fitness of MIAA to be the subject of legal relations. 341. Section 133 likewise assures that government instrumentalities such as GOCCs may not be arbitrarily taxed by 118 | P r o p e r t y . It likewise may exercise a panoply of corporate powers and possesses all the trappings of corporate personality. as earlier stated. And the Court before had similarly characterized MIAA as a government-owned and controlled corporation in the earlier Why then the hesitance to declare MIAA a GOCC? As the majority repeatedly asserts.97 So does. Sections 133 and 234(a) ensure that the Republic of the Philippines or its political subdivisions shall not be subjected to any form of local government taxation. Local governments are devoid of power to tax the national government. having bludgeoned its way into asserting that MIAA is not a GOCC. Executive Order No.101 so the fact that MIAA is an agency does not exclude it from classification as a GOCC. local governments cannot impose any kind of tax on national government instrumentalities like the MIAA. All these are contained in MIAA’s charter which. But this test of “economic viability” is new to the constitutional framework. apparently. but the effect of the majority’s disquisition on that matter may even be more destructive than the ruling that MIAA is exempt from realty taxes. is the primary law that governs the definition and organization of the MIAA. which similarly situates “agencies and instrumentalities” as generally exempt from the taxation powers of LGUs.” For the majority. the Administrative Code considers GOCCs as agencies. On the other hand. The majority triumphantly points to Section 16. It cites incompletely.” that view concluded that MIAA cannot be deemed an instrumentality. the majority justifies MIAA’s purported exemption on Section 133 of the Local Government Code. but which was not adopted by the ponencia. as stated earlier. it is because MIAA is actually an instrumentality. How then could the MIAA. which classifies MIAA as a “government owned & controlled corporation” on its internet website. It said so itself in the very first paragraph of the present petition before this Court. It has the power to contract in its own name. notwithstanding Sections 232 and 234(a) of the Local Government Code. enacted by President Arroyo in 2004. And on this point. MIAA itself believes that it is a GOCC represents itself as such.100 Interestingly. Is the majority ready to live up to the momentous consequences of its flawed reasoning? Novel Proviso in 1987 Constitution Prescribing Standards in the Creation of GOCCs Necessarily Applies only to GOCCs Created After 1987. the Department of Budget and Management. incur obligations. a corporate seal and by-laws. The question of whether MIAA is a GOCC might not even be determinative of this Petition. Since instrumentalities are expressly defined as “an agency not integrated within the department framework. or any GOCC created before 1987 be expected to meet this new precondition to the creation of a GOCC? Does the dissent seriously suggest that GOCCs created before 1987 may be declassified on account of their failure to meet this “economic viability test”? Instrumentalities and Agencies Also Generally Liable for Real Property Taxes Next.”102 The Court’s interpretation of the Local Government Code in Mactan renders the law integrally harmonious and gives due accord to the respective prerogatives of the national government and LGUs. the MIAA is attached within the department framework of the Department of Transportation and Communications. Still. the majority. Of course. which mandates that the creation of GOCCs through special charters be “in the interest of the common good and subject to the test of economic viability.

consistent with the basic policy of local autonomy. Section 232 would fall under the qualifying phrase of Section 133. as the Court acknowledged in Mactan. but only the exemptions under Section 133 and Section 234.” To repeat: Article II. which asserts that the power of local governments to tax national government instrumentalities be construed strictly against local governments. After all. is cited. Sec. unless a sound and compelling policy requires such transfer of public funds from one government pocket to another. One such proviso is Section 137. and in case of doubt. or that the fundamentals of local autonomy are of limited effect in our country.104 and even if the sequencing is irrelevant. fees. Section 232 provides another exception on the taxability of instrumentalities. and other improvements not hereafter specifically exempted. purposely omitted by the majority provides for a different rule of interpretation than that asserted: Section 50. incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it. x x x Yet the majority insists that “there is no point in national and local governments taxing each other. Rules of Interpretation. as is Basco. Or how about the Local Government Code. that veritable source of all statutes: SEC. Each local government unit shall have the power to create its own sources of revenues and to levy taxes.”105 I wonder whether the Constitution satisfies the majority’s desire for “a sound and compelling policy. why bother citing what the law does say. Power to Create Sources of Revenue. and charges subject to such guidelines and limitations as the Congress may provide. which as the Court found in National Power Corporation. Local Government xxx This blithe disregard of precedents.—Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes. and charges shall accrue exclusively to the local governments. Such taxes. xxx Section 5. Such taxes. 119 | P r o p e r t y . Constitution. fees. and liberally in favor of the taxpayer. This section of the majority employs deliberate pretense that the Code never existed. any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. Any tax exemption.” It is sad. The Maceda case. 2.LGUs. Laws and Jurisprudence Have Long Explained the Rationale Behind the Local Taxation of GOCCs. if the majority is dead set in ruling for MIAA no matter what the law says. The State shall ensure the autonomy of local governments. 129. almost all of them unanimously decided.” The specific exemptions are provided by Section 234. since they could be subjected to local taxation if there is a specific proviso thereon in the Code. decided before the Local Government Code. (b) In case of doubt. any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it. and charges shall accrue exclusively to the local government units. machinery. The majority abjectly refuses to engage Section 232 of the Local Government Code although it provides the indubitable general rule that LGUs “may levy an annual ad valorem tax on real property such as land. “Unless otherwise provided herein. is nowhere more evident than in the succeeding discussion of the majority. but not surprising that the majority is not willing to consider or even discuss the general rule. presumably an expression of sound and compelling policy considering that it was enacted by the legislature. Section 232 comes sequentially after Section 133(o). Why is it that the Local Government Code is barely mentioned in this section of the majority? Because Section 5 of the Code. and charges subject to the provisions herein. consistent with the basic policy of local autonomy.—In the interpretation of the provisions of this Code. The territorial and political subdivisions shall enjoy local autonomy. even if it be a GOCC such as NPC. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned. Declaration of Principles and State Policies xxx Sec. fees. the following rules shall apply: (a) Any provision on a power of a local government unit shall be liberally interpreted in its favor. building. fees. And. 25.103 permits the imposition of a franchise tax on businesses enjoying a franchise. Article X.

allocate among the different local government units their powers. section 5 of the 1987 Constitution. viz. the shackles of dependence on the national government remained. and provide for the qualifications.” 35 The only way to shatter this culture of dependence is to give the LGUs a wider role in the delivery of basic services. and all other matters relating to the organization and operation of the local units. term. consistent with the basic policy of local autonomy. Despite these initiatives. fees and charges subject to such guidelines and limitations as the Congress may provide.: “Section 5. It has also “dampened the spirit of initiative. Act No. forest concessionaires. appointment and removal. economic progress and the protection of local industries as well as public welfare and similar objectives. and taxation has become a tool to realize social justice and the equitable distribution of wealth.” This paradigm shift results from the realization that genuine development can be achieved only by strengthening local autonomy and promoting decentralization of governance. various measures have been enacted to promote local autonomy. These include the Barrio Charter of 1959. As this Court observed in the Mactan case. “the original reasons for the withdrawal of tax exemption privileges granted to government-owned or controlled corporations and all other units of government were that such privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises. mineral products.: “Section 3. innovation and imaginative resilience in matters of local development on the part of local government leaders. fees and charges shall accrue exclusively to the Local Governments. 7160. Doubtless. To achieve this goal. (b) lack of fiscal control over external sources of income. and referendum. salaries. by paying taxes or other charges due from them. consistent with the basic policy of local autonomy.Justice Puno. local legislative bodies are now given direct authority to levy taxes. responsibilities. Thenceforth. powers and functions and duties of local officials. It widens the tax base of LGUs to include taxes which were prohibited by previous laws such as the imposition of taxes on forest products. Local government units were faced with the same problems that hamper their capabilities to participate effectively in the national development efforts. set the guidelines and limitations to this grant of taxing powers. It does not prescribe graduated fixed rates but merely specifies the minimum and maximum tax rates and leaves the determination of the actual rates to the respective sanggunian. and (e) limited supervisory control over personnel of national line agencies. it is even more imperative for government entities to share in the requirements of development. mining operations.107 I dare not improve on Justice Puno’s exhaustive disquisition on the statutory and jurisprudential shift brought about the acceptance of the principles of local autonomy: “In recent years. and resources. fiscal or otherwise. (c) limited authority to prioritize and approve development projects. the country’s highly centralized government structure has bred a culture of dependence among local government leaders upon the national leadership. For a long time. the power to tax is no longer vested exclusively on Congress. (d) heavy dependence on external sources of income. initiative. and the like. among which are: (a) inadequate tax base. in National Power Corporation v. Each Local Government unit shall have the power to create its own sources of revenue. fees and other charges pursuant to Article X. The LGC likewise provides enough flexibility to impose tax rates in accordance with their needs and capabilities. the Local Autonomy Act of 1959. the Decentralization Act of 1967 and the Local Government Code of 1983. section 3 of Article X of the 1987 Constitution mandates Congress to enact a local government code that will. Considered as the most revolutionary piece of legislation on local autonomy. the LGC effectively deals with the fiscal constraints faced by LGUs. also known as the Local Government Code of 1991 (LGC). the increasing social challenges of the times expanded the scope of state activity. however. prior to the enactment of the Rep. progress.108 120 | P r o p e r t y . City of Cabanatuan.” With the added burden of devolution. election. to levy taxes. Such taxes.106 provides a more “sound and compelling policy considerations” that would warrant sustaining the taxability of governmentowned entities by local government units under the Local Government Code. Taxation assumes even greater significance with the ratification of the 1987 Constitution. and prosperity of the people. the power to tax is the most effective instrument to raise 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. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall.” To recall. viz. and confer them sufficient powers to generate their own sources for the purpose.

as a general rule. 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. v. Pursuant to its charter. I have never advanced any theory of the sort imputed in the majority. With Section 193 mandating the withdrawal of tax exemptions granted to all persons upon the effectivity of the LGC. form part and parcel of the financing apparatus of the Government in development and nationbuilding. Thus. the Lung Center was organized as a trust administered by an eponymous GOCC organized with the SEC. whether natural or juridical. xxx xxx xxx subject to tax by local governments since the national government is not included in the enumeration of exempt entities in Section 193. it is also considered as an agency. by paying the taxes and other charges due from them. the term encompassing even GOCCs. Presiding Judge. Finally. .”110 How does the majority counter these seemingly valid rationales which establish the soundness of a policy consideration subjecting national instrumentalities to local taxation? Again. by simply ignoring that these doctrines exist. And Section 193 which ordains the withdrawal of tax exemptions is obviously irrelevant to them. XXV. Mischaracterization of My Views on the Tax Exemption Enjoyed by the National Government Instead. Section 193 is in point for the disposition of this case as it forecloses dependence for the grant of tax exemption to MIAA on Section 21 of its charter. after all. which itself is a juridical person. Real property taxes. we reiterate that in taxing government-owned or controlled corporations.”111 Nothing is farther from the truth. are not subjected to tax in the first place. mischaracterizing my views on that provision as if I had been interpreting the provision as making “the national government. Since the provision speaks of withdrawal of tax exemptions of persons. as and by way of real property taxes. My main thesis on the matter merely echoes the explicit provision of Section 193 that unless otherwise provided in the Local Government Code (LGC) all tax exemptions enjoyed by all persons. and expressly discusses why Basco was right and Mactan was wrong. On the other hand. the national government and its political subdivisions do not need tax exemptions. the grant of tax exemption or the withdrawal thereof assumes that the person or entity involved is subject to tax. particularly in the local government level. In no measure can the government be said to have lost anything. including GOCCs. especially those not attached to a line department such as the Lung Center. for MIAA to continue enjoying exemption from realty tax. In fine. which for the 121 | P r o p e r t y To all intents and purposes. then this entire endeavor of the Court would be more intellectually satisfying. Section 193 does not apply to entities which were never given any tax exemption. it will have to rely on a basis other than Section 21 of its charter. real property taxes are funds taken by the State with one hand and given to the other. it follows that the exemptions theretofore enjoyed by MIAA which is definitely a person are deemed withdrawn upon the advent of the Code. as Section 193 withdraws the tax exemptions previously enjoyed by all juridical persons. even by the majority’s reckoning. were withdrawn upon the effectivity of the Code.114 There is no doubt it is a GOCC. Lung Center of the Philippines v. it also follows that the Lung Center is an instrumentality. Yet since the Administrative Code definition of “instrumentalities” encompasses agencies. Of course. the State ultimately suffers no loss. RTC.112 Corollarily.109 provides especially clear and emphatic rationale: “In closing.And the Court’s ruling through Justice Azcuna in Philippine Ports Authority v. and relies instead on discredited precedents. the provision does not address the question of who are beyond the reach of the taxing power of LGUs. City of Iloilo. Even the majority should concede that the charter section is now ineffectual. hence resulting in the need for these entities to share in the requirements of development. the majority engages in an extended attack pertaining to Section 193. Applying the Administrative Code. fiscal or otherwise. In National Power Corp. Quezon City113 provides another illustrative example of the jurisprudential havoc wrought about by the majority. 38 we elucidated: Actually. if the majority faces the issues squarely. Br. It is unfortunate if the majority deems these cases or the principles of devolution and local autonomy as simply too inconvenient. This would include the national government and its political subdivisions which. the State has no reason to decry the taxation of NPC’s properties. this is not a game the majority wants to play. But.

Another key point. can never be subjected to real property taxation under the Code. including all GOCCs. the court should adopt such reasonable and beneficial construction which will render the provision thereof operative and effective.majority is exempt from all local government taxes. Ut magis valeat quam pereat. The last paragraph of Section 234 specifically asserts that any previous exemptions from realty taxes granted to or enjoyed by all persons. certainly “hereafter. thus placing them under the exemption under Section 234. Yet just in 2004. citing Maceda and Basco. as “hereafter specifically exempted. such property is “owned by the general public and cannot be declared to be owned by a public corporation. Moreover. for consideration or otherwise. The majority is similarly silent on the general rule under Section 232 on real property taxation or Section 5 on the rules of construction of the Local Government Code. This is the favorite bugaboo of the opponents of local autonomy—the fallacy that autonomy equates to independence. the taxation of national instrumentalities and agencies by LGUs should be strictly construed against the LGUs.” Section 234. Creation of the Manila International Airport Authority. V. MIAA as a government instrumentality is beyond the reach of local taxation because it is not subject to taxes. x x x Any portion thereof shall not be disposed through 122 | P r o p e r t y . if any. If that is so. especially real estate taxes. conveyed and assigned to the ownership and administration of the Authority. subject to existing rights. But as pointed out by Justice Azcuna in the first PPA case. as evidently seen by the continued reliance on Basco or Maceda. including GOCCs when juridical persons such as MIAA are anyway. Thus. and therefore owned by the State or the Republic of the Philippines. such as [the PPA].” provides indubitable basis for exempting entities from real property taxation. are thereby withdrawn. No mention is made of the subsequent rejection of these cases in jurisprudence following the Local Government Code.115 But. to a taxable person: The majority asserts that the properties owned by MIAA are owned by the Republic of the Philippines. already exempt from such taxes under Section 133? The majority’s interpretation would effectively render the express and emphatic withdrawal of previous exemptions to GOCCs inutile. where a statute is susceptible of more than one interpretation. as well as harmonious with each other.” Relevant on this point are the following provisions of the MIAA charter: Section 3. since it does not have much use anyway for the Code’s general philosophy of fiscal autonomy. Hence. The majority’s interpretation of Sections 133 and 234(a) however necessarily implies that all instrumentalities. MIAA Property Is Patrimonial And Not Part of Public Dominion The majority claims that the Airport Lands and Buildings are property of public dominion as defined by the Civil Code. MIAA. fees or charges of any kind.— xxx The land where the Airport is presently located as well as the surrounding land area of approximately six hundred hectares. including GOCCs. Exemptions from Real Property Tax. and no attempt is made to demonstrate otherwise. the conclusion of the majority is that under Section 133(o). to his view. To repeat: SECTION 234. Local government rule has never been a grant of emancipation from the national government. including Mactan. the majority seems content rendering as absurd the Local Government Code. if indeed a property is considered part of the public dominion.—The following are exempted from payment of the real property tax: xxx (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. are hereby transferred. the majority employs four main arguments. and not the National Government Is the Owner of the Subject Taxable Properties Section 232 of the Local Government Code explicitly provides that there are exceptions to the general rule on rule property taxation. To arrive at this conclusion. the Court unanimously held that the Lung Center was not exempt from real property taxes. what then is the sense of the last paragraph specifically withdrawing previous tax exemptions to all persons. It provides the most viable legal support for any claim that an governmental entity such as the MIAA is exempt from real property taxes. Can the majority and Lung Center be reconciled? I do not see how.

x x x Clearly then. its carriageways and terminal stations are patrimonial property subject to tax. not for public use. belonging to the Airport. vest ownership. whose decision was penned by Justice (now Chief Justice) Panganiban. are in a sense. including all equipment which are necessary for the operation of crash fire and rescue facilities. penned by Justice Callejo. by itself. This view did not persuade the Court. between the State/Republic/Government and a body corporate such as the MIAA. it is the MIAA. powers rights. as the majority does. with corporate status and corporate powers in the furtherance of its proprietary interests x x x The petitioner is even empowered to invest its funds in such government securities approved by the Board of Directors. Section 22. “provides valuable transportation facilities to the paying public. No. and all assets. for public use. such as taxation.”119 It claimed that its carriage-ways and terminal stations are immovably attached to governmentowned national roads. 857. are hereby transferred to the Authority. likewise lays down useful doctrines in this regard. There was an express transfer of ownership between the MIAA and the national government. it is merely an evidence of title over properties. The Court even went as far as saying that the fact that the PPA “had not been issued any Torrens title over the port and port facilities and appurtenances is of no legal consequence. as with the PPA. notwithstanding its claim of being a government-owned or controlled corporation. lands. It was noted: “Though the creation of the LRTA was impelled by public service—to provide mass transportation to alleviate the traffic and transportation situation in Metro Manila—its operation undeniably partakes of ordinary business. The petitioner is clothed. and to impose real property taxes thereupon would be to impose taxes on public roads. it operates much like any private corporation engaged in the mass transport industry. interests and privileges belonging to the Bureau of Air Transportation relating to airport works or air operations. The Court refuted the claim that the properties of the PPA were owned by the Republic of the Philippines.sale or through any other mode unless specifically approved by the President of the Philippines. Clearly.”117 There is no doubt that the properties of the MIAA. appliances or equipment. then the MIAA charter showcases the remarkable absurdity of an entity transferring property to itself. xxx Petitioner argues that it merely operates and maintains the LRT system. under P. movable or immovable. Yet for several purposes under the law. Central Board of Assessment. If the distinction is to be blurred. buildings and other property. It must be stressed that the said port facilities and appurtenances are the petitioner’s corporate patrimonial properties. A similar situation obtains with MIAA. charges or fees for the use by vessels of the port premises. The Light Rail Transit Authority (LRTA). 118 which was cited in Philippine Ports Authority and deserves renewed emphasis. noting that PPA’s charter expressly transferred ownership over these properties to the PPA. runways. the State. it is the corporation that is deemed to own those properties. Transfer of Existing Facilities and Intangible Assets. It is just like a family transferring ownership over the properties its members own into a family corporation. a situation which similarly obtains with MIAA. Petitioner is clothed with corporate status and corporate powers in the furtherance of its proprietary objectives. the Republic of the Philippines or the national government that asserts legal title over the Airport Lands and Buildings. Nothing in the Civil Code or the Constitution prohibits the State from transferring ownership over property of public dominion to an entity that it similarly owns. Given that it is engaged in a serviceoriented commercial endeavor. and the Airport Lands and Buildings. A similar argument was propounded by the Light Rail Transit Authority in Light Rail Transit Authority v. The family exercises effective control over the administration and disposition of these properties. The second Public Ports Authority case.—All existing public airport facilities. A Torrens title does not. and that the actual users of the carriageways and terminal stations are the commuting public. and not either the State. and derives its income from rates. and that the operation of the port and its facilities and the administration of its buildings are in the nature of ordinary business. the petitioner is a profit-earning corporation. its patrimonial properties are subject to tax. hence. 123 | P r o p e r t y . x x x It has never been recognized as a mode of acquiring ownership over real properties. It adds that the public use character of the LRT is not negated by the fact that revenue is obtained from the latter's operations. Indeed.”116 The Court further added: “x x x The bare fact that the port and its facilities and appurtenances are accessible to the general public does not exempt it from the payment of real property taxes.D. a body corporate.

or by the charter. and only those situations enumerated under the Civil Code would constitute an implied trust.. . The reason is that the corporation is a legal entity or artificial person. Clave. 6213) The entirely separate identity of the rights and remedies of a corporation itself and its individual stockholders have been given definite recognition for a long time. and the MIAA. not an inconsequential sum assuming that the beneficial owner of MIAA’s properties is actually the Republic. then there is no difference between the State’s ownership rights over MIAA properties than those of a majority stockholder over the properties of a corporation. then the exemption does not lie. are outside the commerce of man. distinct from the members who compose it. and when it contracts a debt. and neither is there a provision in MIAA’s charter expressly stating that these properties are being held in trust.” In the context of Section 234(a). 124 SCRA 638) It was likewise declared in a similar case that a bonafide corporation should alone be liable for corporate acts duly authorized by its 124 | P r o p e r t y . v. The majority further asserts that MIAA’s properties. MIAA is obligated to retain up to eighty percent (80%) of its gross operating income. . stockholders are not personally liable for debts of the corporation either at law or equity. (13A Fletcher Cyc. Also. Unlike public roads which are open for use by everyone. Section 234(a) of the Local Government Code provides among those exempted from paying real property taxes are “[r]eal property owned by the [Republic]. and that the LRT carriageways and terminal stations are not exclusively for public use. Sec. MIAA does not fall within this enumeration. (Palay. it is nonetheless profit-earning. A provision of the Administrative Code is cited. the identity of the beneficial owner over the properties is not determinative as to whether the exemption avails. Trusts are either express or implied. assuming that indeed these are beyond the commerce of man? No Trust has been Created Over MIAA Properties For the Benefit of the Republic The majority posits that while MIAA might be holding title over the Airport Lands and Buildings. it is holding it in trust for the Republic. the personality of the stockholder remains separately distinct from that of the corporation.”121 There is no substantial distinction between the properties held by the PPA. It is the identity of the beneficial user of the property owned by the Republic or its political subdivisions that is crucial. Inc. Corp. being part of the public dominion. Although petitioner is a public utility. a taxable entity. et al.122 If so. it is the debt of the legal entity or artificial person—the corporation—and not the debt of the individual members. but said provision does not expressly provide that the property is held in trust. under its charter. Applying said principle.We do not agree. or by special agreement of the stockholders. the LRTA. I fear the majority confuses the notion of what might be construed as “beneficial ownership” of the Republic over the properties of MIAA as nothing more than what arises as a consequence of the fact that the capital of MIAA is contributed by the National Government. It is thus apparent that petitioner does not exist solely for public service. But if this is so. to a taxable person. the claim that beneficial ownership over the MIAA remains with the government and not MIAA is ultimately irrelevant. or vice versa. the LRT is accessible only to those who pay the required fare. in their individual capacity. the exemption would not apply because their beneficial use has been granted to petitioner. It actually uses those carriageways and terminal stations in its public utility business and earns money therefrom. and not the MIAA. for consideration or otherwise. for if said beneficial user is a taxable person. These three entities are in the business of operating facilities that promote public transportation. except when the beneficial use thereof has been granted. the Supreme Court declared that a corporation may not be made to answer for acts or liabilities of its stockholders or those of legal entities to which it may be connected. Even if such shareholder effectively owns the corporation and controls the disposition of its assets. then why does Section 3 of MIAA’s charter authorize the President of the Philippines to approve the sale of any of these properties? In fact. why does MIAA’s charter in the first place authorize the transfer of these airport properties.120 xxx Even granting that the national government indeed owns the carriageways and terminal stations. A brief recall of the entrenched rule in corporate law is in order: “The first consequence of the doctrine of legal entity regarding the separate identity of the corporation and its stockholders insofar as their obligations and liabilities are concerned. In fact. is spelled out in this general rule deeply entrenched in American jurisprudence: Unless the liability is expressly imposed by constitutional or statutory provisions.

) The most important of the ministrant functions are: public works. it is inherently noxious and selfdefeatist for local taxation to interfere with the sovereign exercise of functions. The majority claims that the transfer the assets of MIAA was meant merely to effect a reorganization. Court of Appeals. the exercise of proprietary functions is a different matter altogether.” I think the key to understanding the scope of “the Republic” is the phrase “political subdivisions.” Clearly then. The principles determining whether or not a government shall exercise certain of these optional functions are: (1) that a government should do for the public welfare those things which private capital would not naturally undertake and (2) that a government should do these things which by its very nature it is better equipped to administer for the public welfare than is 125 | P r o p e r t y . p. ‘(6) The administration of justice in civil cases. The same could be said generally of the national government. ‘(8) Dealings of the state with foreign powers: the preservation of the state from external danger or encroachment and the advancement of its international interests. executive. Section 234(f) exempts properties owned by the Republic of the Philippines or its political subdivisions from realty taxation. VI MIAA Performs Proprietary Functions Nonetheless. transmission. Yet such transfer cannot be deemed consequence free merely because it was the State which contributed the operating capital of this body corporate. v. et al. After all. political subdivisions are defined as “the provinces.126 An exhaustive discussion on the matter was provided by the Court in Bacani v. 372)”123 It bears repeating that MIAA under its charter. including the right to corporate succession. with a distinct legal personality from that of the State or Republic? The stated aims of the MIAA could have very well been accomplished by creating an agency without independent juridical personality. if it was intended that the transfer should be free of consequence.’ ” (Malcolm. (Caram. p. through which the powers and functions of government are exercised. The obvious question is what comprises “the Republic of the Philippines. ‘(7) The determination of the political duties. has reference to what our Constitution has established composed of three great departments.. these political subdivisions are engaged in the exercise of sovereign functions and are accordingly exempt. and the judicial. and the right to sue and be sued in its corporate name. privileges. the legislative.”125 In correlation. health and safety regulations. while ministrant or proprietary functions are those undertaken by way of advancing the general interests of society and are merely optional. and the determination of its liabilities for debt or for crime. the latter are those that are undertaken only by way of advancing the general interests of society. public education. The imputed rationale for such transfer does not serve to militate against the legal consequences of such assignment. then why was it effected to a body corporate. and interchange of property. when referring to the national government. NACOCO:127 “x x x This institution. and are merely optional.” Under the Constitution. cities. Certainly.officers and directors. Sovereign and Proprietary Functions Distinguished Sovereign or constituent functions are those which constitute the very bonds of society and are compulsory in nature. municipalities and barangays. ‘(5) The definition and punishment of crime. 151 SCRA. 19. is expressly conferred the right to exercise all the powers of a corporation under the Corporation Law. However. Jr. even with the principle of local autonomy. ‘(3) The regulation of the holding. ‘(4) The determination of contract rights between individuals. public charity. and relations of citizens. The Government of the Philippine Islands. ‘(2) The fixing of the legal relations between man and wife and between parents and children. and regulations of trade and industry. President Wilson enumerates the constituent functions as follows: ‘(1) The keeping of order and providing for the protection of persons and property from violence and robbery. the Administrative Code of 1987 defines “local government” as referring to “the political subdivisions established by or in accordance with the Constitution. These functions are twofold: constituent and ministrant. which would be similarly exempt. The former are those which constitute the very bonds of society and are compulsory in nature.124 The national government made a particular choice to divest ownership and operation of the Manila International Airport and transfer the same to such an empowered entity due to perceived advantages.

518). It may sue and be sued in the same manner as any other private corporations. Yet the National Coal Company remains an agency or instrumentality of government.” (Malcolm. 138 SCRA p. While it was organized with the purpose of “adjusting the coconut industry to a position independent of trade preferences in the United States” and of providing “Facilities for the better curing of copra products and the proper utilization of coconut by-products. or make the government the real party in interest. (Amtorg Trading Corp.” a function which our government has chosen to exercise to promote the coconut industry. for one. it makes a lot of economic sense to leave the operation of airports to the private sector. Union de Maquinistas Fogonero y Motormen. it divests itself pro hoc vice of its sovereign character so as to subject itself to the rules governing private corporations. (PNB v. when the government becomes a stockholder in a corporation. Pabolan. “The mere fact that the Government happens to be a majority stockholder does not make it a public corporation” (National Coal Co. 82 SCRA 595) and is to be treated like any other corporation. and is subject to taxation. 126 | P r o p e r t y . The operation of an airport facility by the State may be imbued with public interest. it was given a corporate power separate and distinct from our government. 63) It is settled that when the government engages in a particular business through the instrumentality of a corporation. . The majority tries to becloud this issue by pointing out that the MIAA does not compete in the marketplace as there is no competing international airport operated by the private sector. This premise is false. 71 F2d 524. such as Davao International Airport and MCIAA. but it is by no means indispensable or obligatory on the national government. MIAA competes with other international airports situated in the Philippines. PNR. The Government of the Philippine Islands. As this Court has aptly said. it does not exercise sovereignty as such. It acts merely as a corporator and exercises no other power in the management of the affairs of the corporation than are expressly given by the incorporating act.) From the above we may infer that. and that MIAA performs an essential public service as the primary domestic and international airport of the Philippines. 586-587). US. strictly speaking. (Malong v. the corporation may be sued without its consent. (PNR v. In fact. International airlines take into account the quality and conditions of various international airports in determining the number of flights it would assign to a particular airport.. as demonstrated in other countries.” (Government of the Philippine Islands vs. Collector of Internal Revenue. Springer.128 The Court in Bacani rejected the proposition that the National Coconut Corporation exercised sovereign functions: Does the fact that these corporations perform certain functions of government make them a part of the Government of the Philippines? The answer is simple: they do not acquire that status for the simple reason that they do not come under the classification of municipal or public corporation. and in this sense it is an entity different from our government. 288) The following restatement of the entrenched rule by former SEC Chairperson Rosario Lopez bears noting: “The fact that government corporations are instrumentalities of the State does not divest them with immunity from suit. progress and prosperity of the people. . however. and those which it may exercise to promote merely the welfare. . vs. These are what we call government-owned or controlled corporations which may take on the form of a private enterprise or one organized with powers and formal characteristics of a private corporations under the Corporation Law. To this latter class belongs the organization of those corporations owned or controlled by the government to promote certain aspects of the economic life of our people such as the National Coconut Corporation.any private individual or group of individuals. 46 Phil. On a local scale. based on these accepted doctrinal tests. Commonwealth Act No. 19-20. pp. Take for instance the National Coconut Corporation. v. More pertinently. MIAA also competes with other international airports in Asia. 528)”129 MIAA Performs Proprietary Functions No Matter How Vital to the Public Interest The simple truth is that. the Government divested itself of its sovereign character so far as respects the transactions of the corporation. or even in choosing a hub through which destinations necessitating connecting flights would pass through. at least. MIAA performs proprietary functions. for it was made subject to the provisions of our Corporation Law in so far as its corporate existence and the powers that it may exercise are concerned (sections 2 and 4. “By becoming a stockholder in the National Coal Company. Unlike the Government. 50 Phil. there are functions which our government is required to exercise to promote its objectives as expressed in our Constitution and which are exercised by it as an attribute of sovereignty. 84 SCRA 223) In the same vein. Nor does the fact that the government may own all or a majority of the capital stock take from the corporation its character as such.

having acquired all the properties.133 xxx Eventually. conveyed and assigned to the ownership and administration of the MIAA] shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines. and to grant concession rights.”134 Notwithstanding this expansion. cannot avoid the adverse-effects of tax evasion simply on the claim that it is imbued with some of the attributes of government. accessories and supplies. MIAA. like the National Airports Corporation. Although not a body corporate it was created. The Court noted: Among the general powers of the Civil Aeronautics Administration are. The Civil Aeronautics Administration comes under the category of a private entity. Section 3 of the MIAA charter states that “[a]ny portion [of the [lands transferred. control. Is the PNR engaged in sovereign functions? The Court. to charge landing fees. The following observation from the Teodoro case very well applies to MIAA. the example of the Philippine National Railways should be taken into account.131 Even more relevant to this particular case is Teodoro v. and it among its expanded functions was “[t]o administer. but to run what is essentially a business. manage. and performs an essential public service as the operator of the railway system in the Philippines. it would be an even more noxious proposition that the government or the instrumentalities that it owns are above the law and may refuse to pay a validly imposed tax. The power to sue and be sued is implied from the power to transact private business. These are more precedents ignored by the majority. or any similar entity engaged in the exercise of proprietary. not to maintain a necessary function of government. The CAA claimed that as an unincorporated agency of the Republic of the Philippines. shouldn’t it follow that the exercise of these tasks remain within the exclusive preserve of the State? There really is no prohibition against the government taxing itself. in Malong v. It is engaged in an enterprise which. To deny the National Airports Corporation's creditors access to the courts of justice against the Civil Aeronautics Administration is to say that the government could impair the obligation of its corporations by the simple expedient of converting them into unincorporated agencies. which had succeeded the defunction National Airports Corporation. the Court had already ruled that the predecessor agency of MIAA. the Civil Aeronautics Administration with greater reason should have the power to prosecute and defend suits for and against the National Airports Corporation. to purchase property.137 If the determinative point in distinguishing between sovereign functions and proprietary functions is the vitality of the public service being performed. But notably.138 If indeed such functions are actually sovereign and belonging properly to the government. and not sovereign functions.132 concerning the proper appreciation of the functions performed by the Civil Aeronautics Administration (CAA).Even if it could be conceded that MIAA does not compete in the market place. Court of Appeals135 the Court reaffirmed the ruling that the CAA was engaged in “private or non-governmental functions. and under Section 4. Philippine National Railways.130held that it was not. in our opinion. the charter of the CAA was revised. and rentals for the use of any property under its management. MIAA Property Not Subject to Execution Sale Without Consent of the President. to execute contracts of any kind. then it should be noted that there is no more important public service performed than that engaged in by public utilities. National Airports Corporation. more than the construction of public roads. VII. even if revenues be not its prime objective but rather the promotion of travel and the convenience of the traveling public. On the other hand. funds and choses in action and assumed all the liabilities of the latter. there is an equally relevant statutory limitation on this power that must be fully upheld.”136 Thus.”140 127 | P r o p e r t y . And if it has the power to sue and be sued on its behalf. These provisions confer upon the Civil Aeronautics Administration. the Constitution itself authorizes private persons to exercise these functions as it allows them to operate public utilities in this country. The PNR does not compete in the marketplace. maintain and develop the Manila International Airport. in the 1988 case of CAA v. may. it was incapable of suing and being sued.139 and nothing obscene with allowing government entities exercising proprietary functions to be taxed for the purpose of raising the coffers of LGUs. be undertaken by private concerns. royalties on sales to aircraft of aviation gasoline. operate. far from being the exclusive prerogative of state. the CAA was engaged in private or non-governmental functions. the power to sue and be sued. under Section 3. Despite the fact that the City of Parañaque ineluctably has the power to impose real property taxes over the MIAA.

the resulting legal effect. MIAA.141 There are several other reasons this statutory limitation should be upheld and applied to this case. the City of Parañaque is prohibited from seizing or selling these properties by public auction in order to satisfy MIAA’s tax liability. MIAA is encumbered only by a limited lien possessed by the City of Parañaque. subjecting on one hand the MIAA to local taxes but on the other hand shielding its properties from any form of sale or disposition. While the Local Government Code withdrew all previous local tax exemptions of the MIAA and other natural and juridical persons. Section 3 of the MIAA charter may also be appreciated as within the proper exercise of executive control by the President over the MIAA. The prerogatives of LGUs in real property taxation. The same effect would obtain if ownership and administration of the airport were to be transferred to an LGU or some other entity which were not specifically chartered or tasked to perform such vital function. In the end. even by reason of MIAA’s legal omission to pay its taxes. even with its wide grant of powers to LGUs. As a result. The prohibition prevents the peremptory closure of the MIAA or the hampering of its operations on account of the demands of its creditors. which include real property owned by the Republic of the Philippines or any of its political subdivisions.142 In this case. instrumentalities and agencies. all natural and juridical persons. instrumentalities. but with the caveat that the MIAA properties could not be subject of execution sale without the consent of the President. Through such action. or those enacted through subsequent legislation. The only exemptions therefrom under the same Code are provided in Section 234. the majority will cause precisely the opposite result of unremitting hostility. they are all too willing to engage in. if I might add. VIII. enacted pursuant to the constitutional mandate of local autonomy. will have an injurious effect to our national economy. a GOCC.Nothing in the Local Government Code. even if it effectively forecloses one possible remedy of the LGU in the collection of delinquent real property taxes. both the Local Government Code and the MIAA charter would have been upheld. a GOCC which despite its separate legal personality. thus paving the way for a mutually acceptable negotiated solution. which is ever reliant on air travel and traffic.143 Unfortunately. would have been preserved. agencies and GOCCs are generally liable for real property taxes. as it does not fall within the exemptions under Section 234 of the Local Government Code. are no longer exempt from local taxes even if previously granted an exemption. Had this petition been denied instead with Mactan as basis. I suspect that the parties would feel little distress. and it should be upheld even if it comes at the expense of limiting the power of local government units to collect real property taxes. agencies or instrumentalities. is not contradictory or paradoxical. The only exemptions from local taxes are those specifically provided under the Local Government Code itself. 2) Under the Local Government Code. the President having the corollary duty to faithfully execute the Constitution and the laws of the land. 3) The subject properties are owned by MIAA. It is at this juncture that the importance of the Manila Airport to our national life and commerce may be accorded proper consideration. The closure of the airport. it did not similarly withdraw any previously enacted prohibitions on properties owned by GOCCs. onerous as its effect may be on the LGU. The power of executive control by the President should be upheld so long as such exercise does not contravene the Constitution or the law. It is for this reason that the MIAA charter specifically forbids the sale or disposition of MIAA properties without the consent of the President. a separate legal entity from the Republic of the Philippines. is still subsumed within the executive branch of government. The airport is important enough to be sheltered by legislation from ordinary legal processes. a task. On the other hand. not only to the City of Parañaque. 4) The MIAA charter expressly bars the sale or disposition of MIAA properties. can be deemed as repealing this prohibition under Section 3. yet the concerns about the ruinous effects of having to close the Manila International Airport would have been averted. Summary of Points My points may be summarized as follows: 1)Mactan and a long line of succeeding cases have already settled the rule that under the Local Government Code. even those GOCCs. The parties would then be compelled to try harder at working out a compromise. the exercise of executive control is precisely recognized and authorized by the legislature. particularly Section 232. as guaranteed by the Local Government Code. holding title in its own name. the majority’s flaws are summarized as follows: 128 | P r o p e r t y . It simply means that the LGU has to find another way to collect the taxes due from MIAA. Moreover. is the legal owner of the properties. but to the thousands of LGUs in the country. and is thus liable for real property taxes.

1) The majority deliberately ignores all precedents which run counter to its hypothesis. adopts an extremely strained exaltation of the Administrative Code above and beyond the Corporation Code and the various legislative charters. 2) The majority deliberately ignores the policy and philosophy of local fiscal autonomy. to catastrophic legal consequences. In line with this policy. as affirmed by jurisprudence. in order to impose a wholly absurd definition of GOCCs that effectively declassifies innumerable existing GOCCs. as mandated by the Constitution. Epilogue If my previous discussion still fails to convince on how wrong the majority is. all national government agencies and instrumentalities are exempt from any form of local taxation. Instead. in a manner that is not sanctioned by the practices and traditions of this Court. provincial. states: SECTION 125. the clear legislative intent was to create a government corporation known as the Bangko Sentral ng Pilipinas. 3) The majority. which if the majority is to be believed. The New Central Bank Act.” How could such an entity like the Bangko Sentral. 7653. the Local Government Code. which after all. the Bangko ng Sentral is exempt from all forms of local taxation by LGUs by virtue of the Local Government Code. the central monetary authority established under this Act. then the following points are well-worth considering. the majority attempts to overturn all these ruling sub silencio and without legal justification. Tax Exemptions.—The Bangko Sentral shall be exempt for a period of five (5) years from the approval of this Act from all national. The legal distinction between sovereign and proprietary functions. The New Central Bank Act was promulgated after the Local Government Code if the BSP is already preternaturally exempt from local taxation owing to its personality as a “government instrumentality. Declaration of Policy. or perhaps “loosely. shall enjoy fiscal and administrative autonomy. Its like saying that 129 | P r o p e r t y . is actually a redundancy. the sort that is evident from the text of the provision and not the one that needs to be unearthed from the bowels of the archival offices of the House and the Senate. Correspondingly for the majority.—The State shall maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money. fees. that the Bangko Sentral will be liable for provincial. By imposing a different result than that warranted by the precedents without explaining why Mactan or the other precedents are wrong. and affirmed by precedents. which is not even a government owned corporation. as it contravenes the Administrative Code of 1987. in contravention of several precedents to the contrary and the proviso under Section 133. but a government instrumentality. is for naught to the majority. and precedents. and considering its unique functions and responsibilities. Apparently. including Mactan. despite the blunt existence of such rationales in the Constitution. banking and credit. municipal and city taxes. IX. Section 125 of Rep. because the Bangko Sentral is not even a government owned corporation.” why then the need to make a new grant of exemption. while being a government-owned corporation. be subjected to local taxation like any mere mortal? But then. Perhaps this notion will offend the majority. likewise preclude the classification of MIAA properties as patrimonial. and that such properties are patrimonial in character. not this Court which dictates which entities are subject to taxation and which are exempt. municipal and city taxes? This is the clear congressional intent. But even more tellingly. But this legislative intent. does not this provision evince a clear intent that after the lapse of five (5) years. it relies and directly cites those doctrines and precedents which were overturned by Mactan. “unless otherwise provided herein [the Local Government Code]. and it is Congress. Act No. 4) The majority asserts that by virtue of Section 133(o) of the Local Government Code. is “the governing law defining the status and relationship of government agencies and instrumentalities” and thus superior to the legislative charter in determining the personality of a chartered entity. No express or implied trust has been created to benefit the national government.” 5) The majority erroneously argues that MIAA holds its properties in trust for the Republic of the Philippines. in a needless effort to justify itself.” a “government corporate entity. The majority cites the Bangko Sentral ng Pilipinas (Bangko Sentral) as a government instrumentality that exercises corporate powers but not organized as a stock or non-stock corporation. charges and assessments. enacted under the Local Government Code. Instead. see Section 1 of the New Central Bank Act: SECTION 1. the majority asserts that there is no sound rationale for local governments to tax national government instrumentalities.

—A local government unit (LGU). massage. acupressure” and chiropractics. acupuncture. Petition granted. [Manila International Airport Authority vs. pertaining to their interest in their share in the national taxes or the Internal Revenue Allotment (IRA). but for taxes as well. Inc.the architect who designed a school building is better equipped to teach than the professor because at least the architect is familiar with the geometry of the classroom. 8243 in 1997. it is. for PITAHC is an instrumentality or agency exempt from local government taxation. 429 SCRA 736 [2004]) ——o0o—— © Copyright 2012 Central Book Supply.145 including the power to purchase or acquire real properties.149 Given these premises. created by Republic Act No. seeking relief in order to protect or vindicate an interest of its own. which does not fall under the exceptions under Section 234 of the Local Government Code. and the faulty reasoning it utilizes.144 and empowered with the attributes of a corporation. and of the other LGUs. Romulo. thus following the majority. This is indeed a very strange and very wrong decision. It has similar characteristics as MIAA in that it is established as a body corporate. this massage parlor would not just be a shelter for frazzled nerves. (Province of Batangas vs. among others “reflexology. All rights reserved.146 However the PITAHC has no capital stock and no members.147 and its objectives include the promotion and advocacy of alternative. has the requisite standing to bring suit. Hence. Such activity is in line with the purpose of the PITAHC and with state policy. Is such massage parlor exempt from realty taxes? For the majority. Court of Appeals. certainly a decision of the Supreme Court cannot be construed to promote an absurdity. The state policy that guides PITAHC is the development of traditional and alternative health care. and certainly. I dissent. opens itself up to all sorts of mischief. Consider further the example of the Philippine Institute of Traditional and Alternative Health Care (PITAHC). effective and cost effective. it is not a GOCC. But precisely the majority. there is no impediment for the PITAHC to purchase land and construct thereupon a massage parlor that would provide a cheaper alternative to the opulent spas that have proliferated around the metropolis. occasionally non-indigenous or imported healing methods” which include. 495 SCRA 591(2006)] 130 | P r o p e r t y . Note.148 “Alternative health care modalities” include “other forms of non-allophatic. preventive and curative health care modalities that have been proven safe. Ridiculous? One might say. assailed resolutions set aside. a taxexempt massage parlor is one of the lesser evils that could arise from the majority ruling.

to its rightful and legal owner. Same. This was the auspicious situation of petitioner in the abovecited case.— Here. 1998. Same. ROMERO. publicly. Same. In an action for reconveyance. Same. Petitioner Eugenio De la Cruz claims to be the owner and actual possessor of the lot. Land Titles.—Unfortunately for him. This Court is constrained to abide by the latin maxim “(d)ura lex. 120652. Petitioner therein was not deprived of his possessory rights by the subsequent classification of the land. F. 131 | P r o p e r t y . and to convert it into alienable or disposable land for other purposes. 3 was certified by the Director of Lands on December 22. is inapplicable in the present case. vs. Possession of the residential lot by petitioner. Rogelio and Augusto.R. and does not have to be descriptive of what the land actually looks like. Bulacan. Same.” Land Classification Project No. Same. As succinctly stated by this Court in Director of Lands vs. which he could not have acquired by prescription. cannot convert them into private property.: The oft-debated issue of ownership based on acquisitive prescription submits itself before the Court anew. and does not have to be descriptive of what the land actually looks like.” Same. who claim to be successors-in-interest of a previous possessor of the same. is descriptive of its legal nature or status. and possession thereof. Same. and CRISTINA MADLANGSAKAY VILLANUEVA. Same. PETITION for review on certiorari of a decision of the Court of Appeals. to its rightful and legal owner. however long. As held in Heirs of Jose Amunategui vs. for more than thirty years. having possessed and occupied it openly. 1924. Bulacan. cannot convert them into private property. Same. Director of Forestry. whereas the possession thereof commenced as early as 1909. Court of Appeals. Although the classification of lands is a government prerogative which it may opt to exercise to the detriment of another. Same. Same. A positive act of the Government is needed to declassify land which is classified as forest. still. and to convert it into alienable or disposable land or for other purposes. private interests regarding the same are not prejudiced and the possessor in good faith is respected in his right not to be disturbed. Same. Antonio for petitioner. Same. as it remained part of the patrimonial property of the State. Prescription. Same. private interests regarding the same are not prejudiced and the possessor in good faith is respected in his right not to be disturbed. J. et al.—Further. COURT OF APPEALS. the classification of forest land.1 at the commencement of this controversy on September 28. It is an iron-clad dictum that prescription can never lie against the Government. whether spanning decades or centuries. which property.G. what is sought is the transfer of the property which has been wrongfully or erroneously registered in another person’s name. Private respondent Cristina Madlangsakay Villanueva is a purchaser of the same lot from the Ramos brothers. Court of Appeals and Miguel Marcelo.—The several decades when petitioner possessed and occupied the land in question may not be considered in his favor after all. Absent the fact of declassification prior to the possession and cultivation in good faith by petitioner. Sixto T. sed lex. or to one with a better right. Actions. is inalienable and indisposable. is immaterial.C. Until such lands have been properly declared to be available for other purposes. The Court stated that “the primary right of a private individual who possessed and cultivated the land in good faith much prior to such classification must be recognized and should not be prejudiced by after-events which could not have been anticipated. The lengthy occupation of the disputed land by petitioner cannot be counted in his favor. jurisprudence is replete with cases which iterate that forest lands or forest reserves are not capable of private appropriation. Although the classification of lands is a government prerogative which it may opt to exercise to the detriment of another.. the land remained part of the forest reserve until such time that it was reclassified into alienable or disposable land at the behest of the Ramoses. the disputed land was classified after the possession and cultivation in good faith of the applicant.* EUGENIO DE LA CRUZ. as stated earlier.—Neither may the rewards of prescription be successfully invoked by petitioner. Natural Resources. however long. or to one with a better right. namely. or any land for that matter. the property occupied by him remained classified as forest or timberland.—The fact that the disputed land was used for a dual private purpose. and in the concept of an owner. Burgos Law Office for private respondent. “In an action for reconveyance. or any land for that matter. Same. Reconveyance. Forest lands or forest reserves are not capable of private appropriation. The facts are stated in the opinion of the Court. In fact. involving a four hundred and seven (407) square meter residential lot located at Barangay San Jose. Same. Republic vs. 1987. Same. In said case. petitioner possessed and occupied the land after it had been declared by the Government as part of the forest zone. notoriously. as it is an iron-clad dictum that prescription can never lie against the Government. there is no disposable land to speak of. adversely against the whole world. The classification of forest land. This (sic) is what reconveyance is all about. is descriptive of its legal nature or status. No. could never ripen into ownership. February 11. still. a positive act of the Government is needed to declassify land which is classified as forest. as a residential lot and as part of the ricemill business of private respondent’s parents. petitioner. what is sought is the transfer of the property which has been wrongfully or erroneously registered in another person’s name. Jr.” Same. and possession thereof. respondents.

1924.000. after trial. Shortly thereafter. alleging that. As succinctly stated by this Court in Director of Lands vs. A motion for reconsideration. being successors-in-interest of a previous possessor of the land. 496)2 by the Ramos brothers. On appeal. or to one with a better right. Here. Oblivious of the Ramoses’ success in claiming the land. We answer in the negative.000. plus one thousand pesos (P1. not having been reclassified for other purposes. The Court stated that “the primary right of a private individual who possessed and cultivated the land in good faith much prior to such classification must be recognized and should not be prejudiced by after-events which could not have been anticipated. still. private respondent and her parents thereby tacitly acknowledged him as the true and lawful owner of the mortgaged property. It was after this occurrence that private respondent came to purchase the disputed land from the Ramoses. Petitioner. under said Act. must be recognized and should not be prejudiced by after-events which could not have been anticipated.12 a positive act of the Government is needed to declassify land which is classified as forest. defendant therein.00).”10 Land Classification Project No. entitled “Eugenio De la Cruz versus Cristina Madlangsakay Villanueva.” filed a complaint on September 28. did not prosper. and attorney’s fees of twenty thousand pesos (P20.7 This petition cannot be given due course. Court of Appeals and Miguel Marcelo. Court of Appeals and Miguel Marcelo.11 Petitioner therein was not deprived of his possessory rights by the subsequent classification of the land. The complaint was dismissed. The several decades when petitioner possessed and occupied the land in question may not be considered in his favor after all. As such. petitioner contracted a loan from the parents of private respondent. the land became the subject of an application for registration under the Land Registration Act (Act No.000. what is sought is the transfer of the property which has been wrongfully or erroneously registered in another person’s name. whereas the possession thereof commenced as early as 1909. and to 132 | P r o p e r t y .4 He sought a reversal of the decision of the lower court. private interests regarding the same are not prejudiced and the possessor in good faith is respected in his right not to be disturbed. exemplary damages of like amount. they are estopped from claiming for themselves the disputed land. to its rightful and legal owner. Republic vs. the land remained part of the forest reserve until such time that it was reclassified into alienable or disposable land at the behest of the Ramoses. after having purchased it from a Cecilio Espiritu in 1930. 3 was certified by the Director of Lands on December 22. Petitioner seasonably opposed the application which.”8 The crucial point for resolution is this: Is petitioner vested with a better right over the residential lot to which he devoted an abundance of time. Sometime in 1973.000. Court of Appeals. Anastacio Sakay and Lourdes Manuel.6 He relies on the equitable principle of estoppel.00). the disputed land was classified after the possession and cultivation in good faith of the applicant. remained part of the forest reserve. moral damages in the amount of ten thousand pesos (P10. hence. praying for a reconveyance of the land in his favor. et al.9 is inapplicable in the present case. 1987 for reconveyance with damages against private respondent. as plaintiff in Civil Case No. for lack of merit. in the amount of one thousand pesos (P1. The appealed decision was affirmed in toto by the appellate court. petitioner was later surprised to learn that its ownership had been bestowed upon them. In fact. mortgaging the disputed land as security. the opposition was dismissed. Although the classification of lands is a government prerogative which it may opt to exercise to the detriment of another. petitioner possessed and occupied the land after it had been declared by the Government as part of the forest zone. The persistent petitioner. and that it was subsequently sold to private respondent. In said case. They insisted that.00) per court appearance and the costs of the suit. the brothers successfully pursued the reclassification of the land and were granted ownership of the same. He prays for the reconveyance of the lot in his favor. they had a better claim than petitioner.3 Consequently. inalienable. This (sic) is what reconveyance is all about. et al. 520-M-87. plaintiff-appellant elucidated that an uncle of his had given the land to his mother.In October 1959. effort and resources in fencing and cultivating the same? It is sad that even the magnanimous compassion of this Court cannot offer him any spark of consolation for his assiduous preservation and enhancement of the property. filing this petition for review. This was the auspicious situation of petitioner in the abovecited case.00). by virtue of the contract of mortgage. “In an action for reconveyance. was denied on the ground that the land. opined that the questioned decision of the trial court was incompatible with the ruling in Republic vs. much prior to its classification.5 where this Court held that the primary right of a private individual who possessed and cultivated the land in good faith.. Unfortunately for him.

In fact. is inalienable and indisposable. as stated earlier. (Republic vs. The lengthy occupation of the disputed land by petitioner cannot be counted in his favor. 251 SCRA 42 [1995]) Where the land applied for is part of the public forest. Reviewed decision affirmed in toto. Kapunan. SO ORDERED. Court of Appeals. All rights reserved. as a residential lot and as part of the rice-mill business of private respondent’s parents. and trees is more important than protecting him and keeping his family alive. (Laguna Lake Development Authority vs. While it is true that the mortgagees. having entered into a contract with petitioner as mortgagor. Court of Appeals. [De la Cruz vs. which he could not have acquired by prescription.J. in the case at bar is futile. Property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription. the effort to apply Republic vs.. scavenging on the garbage dump or fishing in the murky waters of the Pasig River and the Laguna Lake or making a clearing in the forest to understand why protecting birds. Assuming.17 the classification of forest land. there is no disposable land to speak of. which property. Jr. still. are estopped from questioning the latter’s ownership of the mortgaged property and his concomitant capacity to alienate or encumber the same. concur. the property occupied by him remained classified as forest or timberland.. Director of Forestry. in the first place. Narvasa (C. Petitioner invokes this principle in light of the contract of mortgage between him and the parents of private respondent.” (Italics supplied).15 Possession of the residential lot by petitioner. without admitting.. petitioner did not possess such capacity to encumber the land at the time for the stark reason that it had been classified as a forest land and remained a part of the patrimonial property of the State. Notes. This Court is constrained to abide by the latin maxim “(d)ura lex. 258 SCRA 223 [1996]) ——o0o—— © Copyright 2012 Central Book Supply. No pronouncement as to costs. No similarity of facts or events exist which would merit its application to the case presented by petitioner. whether spanning decades or centuries. Chairman). even if the mortgagees continued to acknowledge petitioner as the owner of the disputed land.18 it must be considered that. As held in Heirs of Jose Amunategui vs. Further. could never ripen into ownership. unless otherwise provided. that the mortgagees cannot subsequently question the fact of ownership of petitioner after having dealt with him in that capacity.”16 The fact that the disputed land was used for a dual private purpose. as it remained part of the patrimonial property of the State. Francisco and Purisima. the land registration court acquires no jurisdiction over the land. however long. Neither may the rewards of prescription be successfully invoked by petitioner.—An attorney who discovers the futility of his client’s application for land registration because the land applied for is forest land must inform his client that he has withdrawn the application. Panganiban. fish. Recourse to the principle of estoppel must likewise fail. Under Article 1113 of the Civil Code: “All things which are within the commerce of men are susceptible of prescription. petitioner was never vested with the proprietary power to encumber the property. Inc. Until such lands have been properly declared to be available for other purposes. considering the foregoing. et al. and does not have to be descriptive of what the land actually looks like.14 Clearly. in the eyes of the law. and possession thereof. is immaterial. 120 SCRA 799 [1983]) It is difficult for a man. WHEREFORE.13 Absent the fact of declassification prior to the possession and cultivation in good faith by petitioner. the latter can never be presumed to be owner. 286 SCRA 230(1998)] 133 | P r o p e r t y . sed lex. which is not yet alienable and disposable. JJ. namely. or any land for that matter.convert it into alienable or disposable land for other purposes. jurisprudence is replete with cases which iterate that forest lands or forest reserves are not capable of private appropriation. (Santos vs. is descriptive of its legal nature or status. Court of Appeals. Court of Appeals and Miguel Marcelo. as it is an iron-clad dictum that prescription can never lie against the Government. we are bound by the findings of the appellate court and are constrained to AFFIRM the same in toto. cannot convert them into private property.

Property of public dominion withdrawn from public use becomes patrimonial property.No. Jr. 1968. declared the terminal portion of M. Same.4 On June 26. 1969. BERCILLES. the petitioner filed an application with the Court of First Instance of Cebu to have its title to the land registered. in very clear and unequivocal terms. The facts are stated in the opinion of the Court. Bercilles. L-40474. Assistant Provincial Fiscal. Presiding Judge.. 1968.—Article 422 of the Civil Code expressly provides that “Property of public dominion. 1975.: . Gutierrez. Any provision of law and executive order to the contrary notwithstanding. shall form part of the patrimonial property of the State. Jose Antonio B. when no longer intended for public use or for public service. ESPELETA. on December 19.3 By virtue of the aforesaid deed of absolute sale. HON.2 Pursuant thereto. the City of Cebu. Faithfulness to the public trust will be presumed. through Resolution No. the City Council of Cebu. representing the Solicitor General’s Office and the Bureau of Lands. the instant petition for review. the lot was awarded to the herein petitioner being the highest bidder and on March 3. 3857) under Section 31. Branch XV. Borces Street. Mabolo.1 Subsequently. J. INC.* CEBU OXYGEN & ACETYLENE CO. 2755. Legislative Powers. as abandoned. paragraph 34. the same not being included in the City Development Plan. authorizing the Acting City Mayor to sell the land through a public bidding. absent a plain case of abuse or fraud or collusion. make it the patrimonial property of the City of Cebu which may be the object of a common contract? (1) The pertinent portions of the Revised Charter of Cebu City provides: “Section 31. executed a deed of absolute sale to the herein petitioner for a total consideration of P10. petitioner. Borces Street. Assistant Solicitor General Octavio R.” Same. Conde for petitioner. the Revised Charter of the City of Cebu heretofore quoted.5 After hearing the parties. August 29. 1968. it cannot be subject to registration by any private individual. respondents. Authority of city council to close city streets and to vacate or withdraw the same from public use discretionary. Municipal corporations.—The city council is the authority competent to determine whether or not a certain property is still necessary for public use. Cebu City. So the fact that some private interests may be served incidentally will not invalidate the vacation ordinance. Such power to vacate a street or alley is discretionary. through the Acting City Mayor. For the resolution of this case. 14th Judicial District. J. and JOSE L.800. states that: “Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the City may be lawfully used or conveyed. Patrimonial property can be the object of an ordinary contract.. the City Council of Cebu passed Resolution No. as an abandoned road. CONCEPCION. Consequently. This is a petition for the review of the order of the Court of First Instance of Cebu dismissing petitioner’s application for registration of title over a parcel of land situated in the City of Cebu. vs.00. And the discretion will not ordinarily be controlled or interfered with by the courts.—Since that portion of the city street subject of petitioner’s application for registration of title was withdrawn from public use. 1974..6 Hence. On September 23. Hilario for respondents. Property. 2193. Cebu City. 1974 the trial court issued an order dismissing the petitioner’s application for registration of title. the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the application on the ground that the property sought to be registered being a public road intended for public use is considered part of the public domain and therefore outside the commerce of man. The parcel of land sought to be registered was originally a portion of M. Mabolo. PASCUAL A. the City Council shall have the following legislative powers: 134 | P r o p e r t y PETITION for review of an order of the Court of First Instance of Cebu. give the City of Cebu the valid right to declare a road as abandoned? and (2) Does the declaration of the road. Acting Solicitor General Hugo E. the petitioner poses the following questions: (1) Does the City Charter of Cebu City (Republic Act No. approved on October 3. Jr. on October 11.” Besides.. Province of Cebu. it follows that such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract. Ramirez and Trial Attorney David R.

March 28.” From the foregoing. And the discretion will not ordinarily be controlled or interfered with by the courts. But if the property is owned in its private or proprietary capacity.” Besides. ——o0o—— © Copyright 2012 Central Book Supply. to close any city road.7 where the power of the city Council of Baguio City to close city streets and to vacate or withdraw the same from public use was similarly assailed. concur. and whether the closing of the street would cut off any property owners from access to a street. Inc. park or square. it would seem to us. City of Baguio. Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the City may be lawfully used or conveyed. the width of the street.” Notes. LRC Rec. it is undoubtedly clear that the City of Cebu is empowered to close a city road or street.. (34) x x x. Inc. 1974. avenue. [Cebu Oxygen & Acetylene Co. the inconvenience of those visiting the subdivision. WHEREFORE. Fernando. the Revised Charter of the City of Cebu heretofore quoted. City of Baguio. Case No. No. So the fact that some private interests may be served incidentally will not invalidate the vacation ordinance. The city council. (Province of Zamboanga del Norte vs. boulevard. that appellant may not challenge the city council’s act of withdrawing a strip of Lapu-Lapu Street at its dead end from public use and converting the remainder thereof into an alley.—a) Extent of legislative control over properties of municipal corporations. City of Zamboanga. Hence. 1969). vs. 1968). Bercilles. the petitioner has a registerable title over the lot in question.” (Favis vs. Faithfulness to the public trust will be presumed. “Such power to vacate a street or alley is discretionary. In the case of Favis vs. L-24440. the withdrawal of the property in question from public use and its subsequent sale to the petitioner is valid.J. states that: “Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the City may be lawfully used or conveyed. then it is patrimonial and Congress has no absolute control. Makalintal. N-44531 is hereby set aside. Order set aside. C. the relationship of the street in the road system throughout the subdivision. The municipal cannot be deprived of it without due process and payment of just compensation. N-948.xxx xxx xxx xxx Accordingly.—The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity. rendered by the respondent court in Land Reg. So it is. April 25. in very clear and unequivocal terms. These are acts well within the ambit of the power to close a city street. the property is public and Congress has absolute control over it. when no longer intended for public use or for public service.. JJ. absent a plain case of abuse or fraud or collusion. L-29910. shall form part of the patrimonial property of the State. the cost of rebuilding and maintaining the street as contrasted to its ultimate value to all of the property in the vicinity. SO ORDERED. b) Material factors to consider in vacating a street. Barredo and Aquino. it follows that such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract. this court said: “5.—Deemed as material factors which a municipality must consider in deliberating upon the advisability of closing a street are: “the topography of the property surrounding the street in the light of ingress and egress to other streets. Article 422 of the Civil Code expressly provides that “Property of public dominion. All rights reserved. the order dated October 11. and the respondent court is hereby ordered to proceed with the hearing of the petitioner’s application for registration of title.. 66 SCRA 481(1975)] 135 | P r o p e r t y .” (2) Since that portion of the city street subject of petitioner’s application for registration of title was withdrawn from public use. street or alley. the problem posed by the ‘dead end’ of the street. is the authority competent to determine whether or not a certain property is still necessary for public use.

67 PANIQUI. R0-532 (O-116) and No. much less prove. petitioners. 260900. The facts are stated in the opinion of the Court. and a cemetery on an untitled parcel of land. of the Rules of Court provides explicitly that every action must be prosecuted and defended in the name of the real party-in-interest. in turn. built a school. directed against the 29 October 1993 Decision3 of the Regional Trial Court (RTC) of Tarlac. Rule 47 of the 1997 Rules of Civil Procedure provides that the annulment of a judgment may be based only on the grounds of extrinsic fraud and lack of jurisdiction. Petitioners’ claim was that municipal officials ordered their alleged ascendants to vacate the subject property way back in 1910 to build a school.G. TARLAC. No. represented by Mayor Cesar E. 388 were issued on 17 February 1911 and 7 June 1915. No.—We likewise affirm the finding of the Court of Appeals that the claim of petitioners had already been barred by laches. either extrinsic fraud or lack of jurisdiction by the RTC in Land Case No. 2007. WIFE OF RAMON PARAGAS. Parties. IN THE TARLAC REGISTRY OF DEEDS—HEIRS OF THE LATE SPS. It is apparent that what petitioners are actually challenging are the cadastral proceedings in which the OCTs over the subject property were issued in the name of the Municipality of Paniqui.—This brings us to the final reason for the denial of the present petition.” A perusal of the records of the case reveals that petitioners did not allege. Civil Law. No. A real party-in-interest is one who stands to be benefited or injured by the judgment in the suit. directed against the Decision of the RTC 78 years later decreeing reconstitution of said OCTs. J. in Land Case No. or the party entitled to the avails of the suit. 259970. OCT NO. as distinguished from a mere expectancy. TIMOTEA L. Thereafter. GLORIFICADOR D. MENDOZA and DANILO M. The records of the case are bereft of any proof on the part of petitioners that they are indeed the successors-in-interest of the supposed former owners of the subject property.R. REGISTRY OF DEEDS—TARLAC CITY. the RTC issued a Decision resolving that OCTs No. On 29 October 1993. Cuchapin. R0-532 (O-116) and No. as they are not the real parties-in-interest as provided in Section 2. OCTs No. representing in this act as Attorneys-in-Fact. warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it. The factual and procedural antecedents of the case are as follows: Sometime in 1910. CHICO-NAZARIO.—Section 2. ET AL. MARCELO. Petitioners are not the real parties-in-interest as provided in Section 2.* IN THE MATTER OF REVERSION/RECALL OF RECONSTITUTED OCT NO. the case at bar cannot be prosecuted in their name. PALAGANAS. headed by Maximo Parazo. vs. Section 2. 0-116 DECREE NO. which dismissed petitioners’ Petition for Annulment of Judgment and (2) the 5 August 2005 Resolution2 of the appellate court which denied petitioners’ Motion for Reconsideration. 388. 388 covered the property being claimed by petitioners. respondents. by exercising due diligence. It is negligence or omission to assert a right within a reasonable time. Laches is the negligence or omission to assert a right within a reasonable time.R. Rule 47 of the 1997 Rules of Civil Procedure provides that the annulment of a judgment may “be based only on the grounds of extrinsic fraud and lack of jurisdiction. As petitioners failed to establish that they are the descendants of the supposed former owners of the subject property. 274-P’93. Section 2. a public market. OCTs No. By real interest is meant a present substantial interest. Annulment of Judgments. could or should have been done earlier. RTC-BR. Branch 67.. pursuant to a Verified Petition for Reconstitution filed by the Municipality of Paniqui. 136 | P r o p e r t y . 274-P’93. which ordered the reconstitution of the Original Certificates of Title (OCTs) in the name of the Municipality of Paniqui. contingent. SP UDK No. in the name of the Municipal Government of Paniqui. 59327. PETITION for review on certiorari of the resolutions of the Court of Appeals. Bearing the same surnames as the individuals indicated in the technical descriptions of the OCTs being reconstituted is woefully inadequate to prove their relationship. and MUNICIPALITY OF PANIQUI TARLAC. or a future. officials of the Municipal Government of Paniqui. Laches is defined as failure or neglect for an unreasonable and unexplained length of time to do that which.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of (1) the 29 April 2005 Resolution1 of the Court of Appeals in CA-G. ROSELYN E. respectively. DECREE NO. 388 were indeed lost. 171304. October 10. Their Petition was. Laches. by virtue of the judicial confirmation of its title to the subject property. R0-532 (O-116) and No. Petitioners allege that their ascendants were defrauded when they were not given a chance or opportunity to appear or answer and present their side at the cadastral proceedings involving the subject property. however. subordinate. Rule 3 of the Rules of Court. 5314. Civil Procedure. 259969. a public market and a cemetery thereon. and that the municipality was subsequently issued OCTs after a judicial confirmation of its title in 1911 and 1915. No. Petitioners’ failure to prove such real interest constrained the Court of Appeals to dismiss the petition. The Petition for Annulment of Judgment filed by the petitioners with the Court of Appeals was. Rule 3 of the Rules of Court. and ordering the cancellation and the reconstitution of the same as Transfer Certificates of Title (TCTs) No. Tarlac over the subject property. or consequential interest. warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it. PALAGANAS. Rule 3. 3999 OF LOT 4239.

In 1910. On 29 April 2005. Labutong. Petitioners failed to allege fraud in connection with the proceedings in Land Case No. Although petitioners discovered their supposed right to the disputed property only 137 | P r o p e r t y . headed by Maximo Parazo.6 3. the Petition would still be dismissed for lack of substantial merit. Rule 47 of the Rules of Court. Around this time. 3. contrary to Section 4. attaching thereto the following: 1. appointing and constituting Paciano P. Marcelo as their Attorneys-in-Fact. and 4. 260902. there was no allegation of how the alleged original inhabitants and the petitioners were related nor was any proof thereof presented. and No. wherein it dismissed the Petition for An-nulment of Judgment on the following grounds: 1. contrary to Section 3. The corresponding Special Powers of Attorney of the alleged Attorneys-inFact were not attached. Roselynne E. Petitioners filed a Motion for Reconsideration of the dismissal of their Petition. Petitioners failed to indicate the material dates pertinent to the filing of the Petition. for the following reasons: 1. Special Power of Attorney of petitioners Conrado Rivera and Perseveranda Domingo. 2. On 28 March 2005. and 3. noting that the attached copy of the assailed RTC Decision is still only a photocopy of a certified xerox copy.260901. 388. Special Power of Attorney of petitioners Jose Velasquez. The Petition was not verified. R0-532 (0-116) and OCT No. 274-P’93 which culminated in the rendition of the assailed Decision dated 29 October 1993 by the RTC. their ascendants were not given a chance or opportunity to appear or answer and present their side at the cadastral proceedings involving the subject properties. a public market. a copy of page 7 of the Petition containing the Verification of the same. Palaganas.5 2. 7 June 1915 and 20 September 1917. Rule 47 of the Rules of Court. The fraud averred by the petitioners was allegedly committed in the cadastral proceedings for the judicial confirmation of title to the subject property conducted on 17 February 1911.7 and 4. registered in the name of the Municipality of Paniqui. praying for the cancellation of the TCTs and for the reconveyance in their favor of the title to the parcels of land. a former Board Member of the municipality inadvertently showed a close friend of the petitioners the cancelled OCTs No. and Danilo M. and a cemetery. and not in the rendition of the judgment dated 29 October 1993 by the RTC in Land Case No. The Petition did not establish that the petitioners are truly the successors-in-interest of the individuals indicated in the technical descriptions of OCT No. petitioners filed the Petition for An-nulment of Judgment4 with the Court of Appeals. also contrary to Section 4. Demetria de Vera and Luz P. failing to prove that the same was brought within four years from the discovery of the extrinsic fraud alleged in the assailed 29 October 1993 Decision. The said OCTs allegedly named the petitioners’ ascendants as the former owners of the subject property. 336772 of the Registry of Deeds of Tarlac City.8 The Court of Appeals. 2. RO-532 (O-116) and No. 338 covering the lot where the public market is located. from which resulted the issuance of the OCTs in the name of the Municipality of Paniqui. Rule 47 of the Rules of Court. ordered the occupants of the land to vacate their property so that the municipality could build thereon a school. however. hence. Men-doza. a photocopy of the assailed 29 October 1993 RTC Decision. held that even if the technicalities were brushed aside. Petitioners failed to show that they are the real parties-in-interest authorized to institute the Petition for Annulment of Judgment. the Municipality of Paniqui demolished its old Public Market in order to build a new one. 260903. Although the surnames appearing in the technical descriptions are the same as those of some of the petitioners. Petitioners based their petition on the claim that their alleged ascendants were the original pioneers/settlers/occupants of the land in question since 1843 as its indigenous inhabitants. the Court of Appeals issued the first assailed Resolution. The claim of petitioners had already been barred by laches. 274-P’93 which petitioners seek to annul. According to petitioners. appointing and constituting Glorificador D. Manuel as their Attorneys-in-Fact. officials of the Municipal Government of Paniqui. Paragas and Benedicto P. The attached copy of the assailed RTC Decision is a mere photocopy and not a certified true copy. No. On 3 February 2005. No.

Even if we consider that the petition for annulment was. as by keeping him away from court.” xxxx The question remains as to whether the municipality is entitled to have the land upon which the Kiosko Café stands registered in its name.14 The same is still true under the 1950 Civil Code which governs us today.”9 A perusal of the records of the case reveals that petitioners did not allege. upon which this Kiosko Café stands. even with respect to the 1911 and 1915 Decrees. directed against the Decision of the RTC 78 years later decreeing reconstitution of said OCTs. and public works of general service supported by the said towns or provinces. Likewise. fountains. and public waters. Their Petition was. the promenades. 274-P’93. and shall be governed by the provisions of this code. much less prove. Section 2. the grounds for a petition for annulment of judgment. Public streets are not bienes patrimoniales of the municipality so long as they are destined to public use. being kept in ignorance by the acts of the plaintiff. their alleged ascendants should have instituted an action against the Municipal Government of Paniqui. and that the municipality was subsequently issued OCTs after a judicial confirmation of its title in 1911 and 1915. The petitioners make no allegation as to any action taken by the alleged ascendants to recover the subject property. in effect. Petitioners failed to prove either extrinsic fraud or lack of jurisdiction. Citing the 1906 case.10 Petitioners presented no proof to substantiate their allegation that their ascendants were not given a chance or opportunity to appear or answer and present their side at the cadastral proceedings involving the subject property. Petitioners allege that their ascendants were defrauded when they were not given a chance or opportunity to appear or answer and present their side at the cadastral proceedings involving the subject property. their petition must still be dismissed. the squares. and the court below so found. There is extrinsic fraud when the unsuccessful party had been prevented from exhibiting fully his case. that at the time the Kiosko Cafe and the theater were built. either extrinsic fraud or lack of jurisdiction by the RTC in Land Case No. Article 344 of the Civil Code is as follows: “Property for public use in provinces and in towns comprises the provincial and town roads. The principle has remained 138 | P r o p e r t y . they were built upon a public street or square known as the “Paseo ó Plaza de la Soledad. however. Jose. Article 25 of the regulations for the execution of the Mortgage Law prohibits the inscription of public streets in the old registry. The Motion for Reconsideration thus having been denied for lack of merit.12 In Nicolas. we do not think it is subject to inscription by the municipality. held that: The evidence shows. It is apparent that what petitioners are actually challenging are the cadastral proceedings in which the OCTs over the subject property were issued in the name of the Municipality of Paniqui. petitioners filed the present Petition for Review on Certiorari. by fraud or deception practiced on him by his opponent. this Court. applying a provision in the Spanish Civil Code.recently. a public market and a cemetery thereon. Tarlac.”13 Properties of local government units under the Spanish Civil Code were limited to properties for public use and patrimonial property. unless otherwise prescribed in special laws.11 petitioners claim that extrinsic fraud and lack of jurisdiction are shown by the mere fact that a municipality had a real property devoted to public use registered in its name. being dedicated to public use. as petitioners imply in their Memorandum. Petitioners’ claim was that municipal officials ordered their alleged ascendants to vacate the subject property way back in 1910 to build a school. petitioners relied on an erroneous interpretation of a very old case. “All other property possessed by either is patrimonial. streets.” The land in question. Finding that the property in question is a public square. Nicolas v. or against Maximo Parazo for the purportedly unlawful taking of the property way back in the 1920s. Rule 47 of the 1997 Rules of Civil Procedure provides that the annulment of a judgment may “be based only on the grounds of extrinsic fraud and lack of jurisdiction. In order to cover up for the lack of evidence to prove the grounds for an annulment of judgment. the then Municipality of Cavite sought to be inscribed as the owner of a certain track of land situated within said municipality. filed against the 1911 and 1915 judicial decrees confirming the title of the Municipality of Paniqui over the subject property. or where the defendant never had knowledge of the suit. petitioners presented neither any evidence nor any legal argument in support of their claim of lack of jurisdiction of the court which took cognizance of the cadastral proceedings in which the OCTs over the subject property were issued in the name of the Municipality of Paniqui.

cities and municipalities.”17 While this Court in Province of Zamboanga del Norte ended up using the Municipal Corporation Law classification instead of that of the Civil Code classification. Unlike a public square as that in Nicolas or a playground as that in the Province of Zamboanga del Norte. 424. even by strangers or aliens. just like the preceeding enumerated properties in the first paragraph of Art. could or should have been done earlier. The period of the omission of peti-tioners’ purported predecessors-in-interest since the taking of the property in 1910 up to the filing of the petition is certainly an unreasonable time. or put up stalls in the public market. A real party-in-interest is one who stands to be benefited or injured by the judgment in the suit. consists of the provincial roads. They would not fall under the phrase “public works for public service” for it has been held that under the ejusdem generis rule. Property for public use.15 As aptly held by this court in The Province of Zamboanga del Norte v. The determination of the persons allowed to study in such schools. without prejudice to the provisions of special laws.18 Nicolas has settled the application of the Civil Code classification with respect to the provision of the then-in-effect regulations for the execution of the Mortgage Law. contingent. a public market. patrimonial property. promenades. in accordance with its nature.” “ART.20 This brings us to the final reason for the denial of the present petition. as they are not the real parties-in-interest as provided in Section 2. municipal streets. Laches is defined as failure or neglect for an unreasonable and unexplained length of time to do that which. or the party entitled to the avails of the suit. except the two (2) lots used as High School playgrounds. Even the capitol site. petitioners’ alleged ascendants should have instituted an action against the Municipal Government of Paniqui or against Maximo Parazo for the allegedly unlawful taking of the property way back in the 1920s. As neither extrinsic fraud nor lack of jurisdiction had been proven by petitioners.” Applying the above cited norm. or bury their dead in public cemeteries are regulated by the government. public waters. but nobody can exercise over it the rights of a private owner. and a cemetery were built upon the subject property. public markets and cemeteries are not for the free and indiscriminate use of everyone. as distinguished from a mere expectancy. The records of the case are bereft of any proof on the part of petitioners that they are indeed the successors-in-interest of the supposed former owners of the subject property. Being the purported successors-in-interest of the former owners of the subject property. the case at bar cannot be prosecuted in their name. the squares. however.21 139 | P r o p e r t y . by exercising due diligence. schools. As such. such public works must be for free and indiscriminate use by anyone. We likewise affirm the finding of the Court of Appeals that the claim of petitioners had already been barred by laches. subordinate. Rule 3 of the Rules of Court. The playgrounds. 424. or a future. or consequential inter-est. in the provinces. would fit into this category. the hospital and leprosarium sites. As asserted by petitioners themselves. In the case at bar. city streets. cities. is divided into property for public use and patrimonial property. could be considered as patrimonial properties of the former Zamboanga province. 423 and 424 which provide: “ART. It is negligence or omission to assert a right within a reasonable time. “All other property possessed by any of them is patrimonial and shall be governed by this Code. the subject property is. cities. all the properties in question. and the Municipality may have the same registered in its name. and public works for public service paid for by said provinces. As petitioners failed to establish that they are the descendants of the supposed former owners of the subject property. a school. we hold that the Court of Appeals was correct in dismissing petitioners’ Petition for Annulment of Judgment. or municipalities.19 The recent discovery by petitioners of their supposed right to the disputed property notwithstanding. Bearing the same surnames as the individuals indicated in the technical descriptions of the OCTs being reconstituted is woefully inadequate to prove their relationship. and are bound by their actions and inactions. The property of provinces. 423. By real interest is meant a present substantial interest. the Municipality of Paniqui had openly taken over the property and exercised rights over the same.constant: property for public use can be used by everybody. petitioners merely stepped into the shoes of their predecessors-in-interest. warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it. City of Zamboanga:16 “The Civil Code classification is embodied in its Arts. fountains. and the school sites will be considered patrimonial for they are not for public use. and municipalities. under the Civil Code classification.

the Petition is DENIED. SO ORDERED. JJ. (To-lentino vs.. of the Rules of Court provides explicitly that every action must be prosecuted and defended in the name of the real party-in-interest. WHEREFORE. All rights reserved. Registry of Deeds. Car-pio-Morales and Reyes. concur.—The overriding consideration when extrinsic fraud is alleged. Austria-Martinez. Leviste. Petitioners’ failure to prove such real interest constrained the Court of Appeals to dismiss the petition. Section 2. resolutions affirmed. Inc. 5314 and the 5 August 2005 Resolution of the same court denying petitioners’ Motion for Reconsideration are AFFIRMED. 0-116. vs. 443 SCRA 274 [2004]) ——o0o—— © Copyright 2012 Central Book Supply. SP UDK No. The 29 April 2005 Resolution of the Court of Appeals dismissing petitioners’ Petition for Annulment of Judgment in CA-G. 535 SCRA 476(2007)] 140 | P r o p e r t y . Petition denied.Rule 3. Tarlac City. et al. Ynares-Santiago (Chairperson). is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.R. [In the Matter of Reversion/Recall of Reconstituted OCT No. Note.

subject of the present Consulta. barred from acquiring lands in the Philippines. respondent-appellant. (c) under the provisions of Section 25 of Republic Act No. the argument supporting the appealed resolution is that the privilege of acquiring real estate granted to commercial banks under the provisions of Section 25 of Republic Act No. is absolute in terms and has for its purpose the preservation of the patrimony of the nation. in accordance with the provisions of Section 5.: charged with qualified theft. 337 was not intended as an amendment.—The prohibition contained in Section 5. After granting the parties concerned ample opportunity to submit their views upon the issue. such holding or acquisition "was not within the contemplation of the framers of the Constitution". Ana. It cannot be limited to the permanent acquisition of real estate by aliens—whether natural or juridical persons. Republic Act 337. no private agricultural land shall be transferred or assigned except to individuals. 1953 in the Court of First Instance of Manila (Criminal Case No. is unregisterable for being in contravention of the Constitution of the Philippines". 1956. Article XIII of the Constitution of the Philippines. said officer submitted the matter of its registration to the Land Registration Commission for resolution. (b) by judicial as well as by executive-administrative and legislative construction. Section 25 of Republic Act 337 allows a commercial bank to purchase and hold such real estate as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. hence. On October 24.00. J. The facts are stated in the opinion of the Court. Acquisition of private agricultural land by aliens. appellant argues that: (a) the temporary holding of land by an alien-owned commercial bank under a public instrument such as the deed of transfer in question "bears no reasonable connection with the constitutional purpose" underlying the provisions of Section 5. much less as a nullification of the constitutional prohibition against alien acquisition of lands in the Philippines. he ceded and transferred to the latter. APPEAL from a resolution of the Land Registration Commission. which provides that "Save in cases of hereditary succession. the China Banking Corporation. Luna & Associates for respondent-appellant. Pangilinan and his wife. On September 18. Belen Sta. Maintaining the affirmative. the question before Us is whether appellant—an alien-owned bank—can acquire ownership of the residential lot covered by Transfer Certificate of Title No. a parcel of land located in the City of Manila. vs. Title XIII of the Constitution absolute terms. 1962. Article XIII of the Constitution of the Philippines. April 28. in relation to the offense aforesaid. REGISTER OF DEEDS OF MANILA. Solicitor General for petitioner-appellee.000.—Paragraph (c). after admitting his civil liability in favor of his employer. L-11964. DIZON. The "debts" referred to in this provision are only those resulting from previous loans and other similar transactions made or entered into by a commercial bank in the ordinary course of its business as such. In an information filed on June 16. 1956 the deed was presented for registration to the Register of Deeds of the City of Manila. corporations or associations qualified to acquire or hold lands of the public domain in the Philippines". 32230 by virtue of the deed of transfer mentioned heretofore (Vide pages 1-6 of the Record on Appeal). Section 4. Ana. Alfonso Ponce Enrile as Amicus Curiae. the constitutional prohibition against alien landholding does not preclude enjoyment by aliens of temporary rights and land. petitioner-appellee. 337 (General Banking Act) an alien or an alien-owned commercial bank may acquire land in the Philippines subject to the obligation of disposing of it within 4 . registered in the name of "Belen Sta. Title XIII of the Constitution. in satisfaction thereof. the same being merely an 141 | P r o p e r t y Appeal from a resolution of the Land Registration Commission holding "that the deed of transfer in favor of an alien bank. Sycip. Meaning of "debts" in Section 25. Upon the other hand. yea rs f rom the da te of quisition. married to Alfonso Pangilinan" (Transfer Certificate of Title No. Constitutional law. Plainly stated. CHINA BANKING CORPORATION. executed a public instrument entitled DEED OF TRANSFER whereby. as such.No. 32230).Salazar. but because the transferee—the China Banking Corporation—was alien-owned and. the Commission issued the resolution appealed from. 22908) Alfonso Pangilinan and one Guillermo Chua were . the money involved amounting to P275. Acquisition of real estate in satisfaction of debts. Banks.

We can not give assent to this contention. We have so held in Ong Sui Si Temple vs. In the same manner it cannot be said that the real property in question was purchased by appellant "to secure debts due to it". was not a debt resulting from a loan or a similar transaction had between the two parties in the ordinary course of banking business. Section 25 of Republic Act 337 which read as follows: "SEC. May 21. of the Constitution. on the one hand. may purchase and hold real estate for the specific purposes and in the particular cases enumerated in Section 25 thereof.exception to the general rule. decrees. that in connection with the particular constitutional prohibition involved herein. whether alien-owned or controlled or not. prom. Alfonso Pangilinan. of course. 1955) where we said. that banks and corporations can engage only in the particular business for which they were specifically created. In providing that 'Save in cases of hereditary succession no private agricultural land shall be transferred or assigned except to individuals. as we do uphold. yea rs f rom date of its acquisition. "(d) Such as it shall purchase at sales under judgments. This. we find that the case before Us does not fall under anyone of them. that a mere statute. and on the other. mortgage. R. corporations or associations qualified to acquire or hold lands of the public domain in the Philippines'. it is the character and nature of the possession—whether in strict ownership or otherwise—and not the length of possessi on that is material. as stated heretofore. considering that. Any commercial bank may purchase. in view of the fact that the constitutional prohibition in question is absolute in terms. Quasha and Associates. No. The Register of Deeds of Manila (G. whatever "civil liability"—arising from the criminal offense of qualified theft—was admitted in favor of appellant bank by its former employee. That the constitutional prohibition under consideration has for its purpose the preservation of the patrimony of the nation can not be denied. Paragraph (c). Neither do the provisions of paragraph (d) of the same section apply to the present case because the deed of transfer in question can in no sense be considered as a sale made by virtue of a judgment. but appellant and the amici curiae claim that it should be liberally construed so that the prohibition be limited to the permanent acquisition of real estate by aliens— whether natural or juridical persons. Obviously. the term debt employed in the pertinent legal provision can logically refer only to such debts as may become payable to appellant bank as a result of a banking transaction. for a longer period than five years." Assuming. the Constitution makes no exception in favor of religious associations. or trust deed held by appellant bank. would make legal the ownership acquired by appellant bank by virtue of the deed of transfer mentioned heretofore. mortgages. we are inclined to uphold. the appealed resolution. hold. restri cti ng the acqu is ition of pu cultural lands and other natural resources to 142 | P r o p e r t y "(c) Such shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. decree. arguendo. an alien may not legally do so even for a single day. as amici curiae. We deem it quite clear . the provisions of Act 271 of the old Philippine Commission must be deemed repealed since the Constitution was enacted. the following: "We are of the opinion that the Court below has correctly held that in view of the absolute terms of section 5. "But no such bank shall hold the possession of any real estate under mortgage or trust deed. in so far as incompatible therewith. subject to its obligation to dispose of it in accordance with law. Neither is there any such saving found in Sections 1 and 2 ) of Arti cle X III. jointly with those expounded in the briefs submitted by Alfonso Ponce Enrile and William H. To support its view appellant relies particularly upon paragraphs (c) and (d). Title XIII. inter alia. L-6776. those relied upon in the brief submitted by the Office of the Solicitor General on behalf of the Commission. if real property is to be held in ownership. 25. or the title and possession of any real estate purchased to secure any debt due to it. and convey real estate for the following purposes: "x x x xxx and free from doubt that the "debts" referred to in this provision are only those resulting from previous loans and other similar transactions made or entered into by a commercial bank in the ordinary course of its business as such. Section 25 of Republic Act 337 allows a commercial bank to purchase and hold such real estate as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. like the republic act relied upon by appellant. under existing banking and corporation laws. that under the provisions of the aforesaid Act any commercial bank. within 4 . the result being that. After considering the arguments adduced by appellant in its brief. cannot amend the Constitution. or trust deeds held by it and such as it shall purchase to secure debts due to it.

Register of Deeds of Davao (50 O. took no part. All rights reserved. the clear implication from this being that transfer of ownership over land.. Bautista Angelo. Concepcion.. 4 SCRA 1146(1962)] 143 | P r o p e r t y . Bengzon. rather. . the reason we gave for such ruling was that a lease—unlike a sale—does not involve the transfer of dominion over the land. J. to that extent his acquisition jeopardizes the purpose of the Constitution.. WHEREFORE. Inasmuch as when an alien buys land he acquires and will naturally exercise ownership over the same. G. JJ. Barrera and Paredes. Reyes. either permanently or temporarily... concur. China Banking Corp. 5239) where a lease of a parcel of land for a total period of 50 years in favor of an alien corporation was held to be registerable. vs. It is. JJ. [Register of Deeds of Manila vs. to this we answer that it is not our privilege to determine the wisdom or lack of wisdom of this constitutional mandate. The reason for this is manifestly the desire and purpose of the Constitution to place and keep in the hands of the people the ownership over private lands in order not to endanger the integrity of the nation." (Italics ours) Even in the case of Smith Bell & Co.B. Inc. with costs. _____________ © Copyright 2012 Central Book Supply. C.'corporations or associations at least sixty per centum of the capital of which is owned by such citizens' (of the Philippines). Resolution affirmed.L. even for a limited period of time. is not permissible in view of the constitutional prohibition.J. Our sworn duty to enforce it free from qualifications and distinctions that tend to render futile the constitutional intent. Padilla and Labrador. Some may say that this construction is too narrow and unwise. the resolution appealed from is hereby affirmed.

neither the Land Registration Act. In the absence of such classification. Same. Same.—In the former case. Same. We are inclined to agree with petitioners that the amendment of the application from the name of Pacific Farms. Our Constitution whether the 1973 or 1987 prohibits private corporations or associations from holding alienable lands of the public domain except by lease. 73246. Failure to object to such requirement cannot be waived either expressly or impliedly. Antonio Araneta v. a positive act of the government is needed to declassify a forest land into alienable or disposable land for agricultural or other purposes. Jimenez.. all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. vs.—As to the second assignment of error. Constitutional Law.—This is in consonance with the Regalian doctrine that all lands of the public domain belong to the State. Under the Regalian Doctrine. whatever possession the applicant may have had and however long. Republication is required if the amendment is due to substantial change in the boundaries or increase in the area of the land applied for. Tax declaration and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by evidence. The facts are stated in the opinion of the Court. NOCON. Same. Leynes & Associates for private respondent. entitled The Director of Lands v.—In effect what the courts a quo have done is to release the subject property from the unclassified category. respondents. Public Lands. J. The Solicitor General for petitioners. The fact that the disputed property may have been declared for taxation purposes in the names of the applicants or of their predecessors-in-interest way back in 1921 does not necessarily prove ownership. Same.R. which is beyond their competence and jurisdiction. Under the Regalian Doctrine.—In any case tax declarations and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by evidence. all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. petitioners. No. Court cannot go along with petitioners' position that the absence of republication of an amended application for registration is a jurisdictional flaw. Same.G. What is required is the original tracing cloth plan of the land applied for and objection to such requirement cannot be waived either expressly or impliedly. The conversion of subject property does not automatically render the property as alienable and disposable. Apparently realizing such prohibition. Same. nor Presidential Decree No. We should distinguish. prohibits private corporations or associations from holding alienable lands of the public domain except by lease. cannot ripen into private ownership. Same. Same. Same. Same. Antonio Araneta. We asserted that failure to submit in evidence the original tracing cloth plan is fatal it being a statutory requirement of mandatory character. The subject property being unclassified whatever possession the applicant may have had and however long cannot ripen into private ownership. On the other hand. The Director of Lands and 144 | P r o p e r t y . Civil Law. as amended. Inc. Same. Failure to submit it in evidence is fatal. Same. as applicant. Same. 1529.—However.—Since the subject property is still unclassified. Reyes. requires republication and registration may be allowed by the court at any stage of the proceeding upon just and reasonable terms. Same. INTERMEDIATE APPELLATE COURT AND J. They are merely indicia of a claim of ownership. The Honorable Intermediate Appellate Court and Lino Anit. the land remains unclassified until released therefrom and rendered open to disposition. March 2. ANTONIO ARANETA. We cannot go along with petitioners' position that the absence of republication of an amended application for registration is a jurisdictional flaw. The classification of public lands is an exclusive prerogative of the Executive Department of the Government and not of the courts.—In a very recent decision of this Court. Burden of proof in overcoming the presumption of state ownership is on the person applying for registration. Our Constitution.: For review before Us is the decision of the Court of Appeals in the land registration case entitled J. Amendments to the application may be due to change in parties or substantial change in the boundaries or increase in the area of the land applied for. Same. We have ruled that the submission of the tracing cloth plan is a mandatory requirement for registration. to the name of J. whether the 1973 or 1987. Property. Land Registration. The submission of the tracing cloth plan is a mandatory requirement for registration. and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony.* DIRECTOR OF LANDS AND DIRECTOR OF FOREST DEVELOPMENT. 1993. otherwise known as the Property Registration Decree. republication is required if the amendment is due to substantial change in the boundaries or increase in the area of the land applied for. PETITION for review of the decision of the then Intermediate Appellate Court. Same. Same. Hence.—It is of no import that petitioner failed to object to the presentation of the certified copy of the said plan. We reiterate that the classification of public lands is an exclusive prerogative of the Executive Department of the Government and not of the Courts. Same.—The burden of proof in overcoming the presumption of state ownership of the lands of the public domain is on the person applying for registration that the land subject of the application is alienable or disposable. Same. Same. respondent amended its application to conform with the mandates of the law. Reiterating Our ruling in Director of Lands v. was a mere attempt to evade disqualification.

III. and later on the whole island was bought by Atty. Inc. AC-G.Director of Forest Development. Applicant. who said that he has known the disputed land since he attained the age of reason for some forty (40) years now. Antonio Araneta. Inc. J. Article 14. II. CV No. that when he first came to know the property it was then owned by and in the possession of Paulino Castelo. under the provisions of the Land Registration Act.. Petitioners raised the following errors: I. Garcia4 who in turn assigned his rights and interest in the same property to Johnny A. Inc. and survey of property.288 square meters. the decision of the lower court was affirmed on December 12.R. despite absence of any specific invocation of this law in the original and amended application. The lower court erred in adjudicating the lands subject of registration to applicant-appellee despite his failure to present the original tracing cloth plan the submission of which is a statutory requirement of mandatory character. respondent filed an Omnibus Motion for Substitution of private respondents. We can right away glean the merit of the petition. inalienable. tax declarations and receipts. filed a manifestation-motion to change the applicant from Pacific Farms. the area consists of 187. The lower court erred in not denying registration in favor of J.1 affirming the lower court's approval of the application for registration of a parcel of land in favor of applicant therein. By mere consideration of the first assignment of error. The lower court erred in adjudicating the land to the applicant under the provisions of Presidential Decree No. Juan Ambrosio and Julio Castelo. Inc. The lower court erred in not declaring the land known as the "Tambac Island" not subject of registration it being an island formed on the seas. Inc. thru the Director of Lands opposed the application alleging that the applicant. Situated in the Municipality of Bani. as amended. more or less. Vicente Castelo who in turn sold it to J. While this case is pending here in Court. The lower court erred in not granting the government's motion for reconsideration at least to enable it to present proof of the status of the land as within the unclassified public forest. Pacific Farms. however. to J. Despite the supposed amendment. On October 4. there was no republication. On appeal to the then Intermediate Appellate Court. Antonio Araneta since the amendment of the application was simply an attempt to avoid the application of the constitutional provision disqualifying a private corporation—the Pacific Farms. Other private parties also filed their oppositions. Evidence presented by the applicant include the testimony of Placido Orlando.2 The Director of Forest Development also entered its opposition alleging that the land is within the unclassified public land and. The lower court erred in not declaring that the applicant has failed to overthrow the presumption that the land is a portion of the public domain belonging to the Republic of the Philippines. 1985. fishery guard of Pacific Farms. From the foregoing it appears that the more important issues are: 1) whether the presentation of the tracing cloth plan is necessary. Antonio Araneta had assigned his rights to and interest in Tambac Island to Amancio R. 145 | P r o p e r t y . 496. in this case—from acquiring lands of public domain. does not possess a fee simple title to the land nor did its predecessors possess the land for at least thirty (30) years immediately preceding the filing of application. hence. 1979. Pangasinan. together with documents of sale. Inc. V. The opposition likewise specifically alleged that the applicant is a private corporation disqualified under the (1973) new Philippine Constitution from acquiring alienable lands of the public domain citing Section 11. Antonio Araneta.3 Apparently. failed to present the tracing cloth plan and instead submitted to the court certified copies thereof. 00636. Act No. Pacific Farms. The Republic of the Philippines. IV. Antonio Araneta. otherwise known as the Property Registration Decree. VI. Deposition by oral examination of Araneta was also presented. and 2) whether the land known as "Tambac Island" can be subject to registration. and hence beyond the court's jurisdiction to adjudicate as private property. Evidence show that the land involved is actually an island known as Tambac Island in Lingayen Gulf. the trial court rendered a decision adjudicating the subject property to J. 1529. The initial application for registration was filed for Pacific Farms. In an amended application. but were subsequently withdrawn. Khonghun whose nationality was not alleged in the pleadings. Antonio Araneta.

Reyes. upon the recommendation of the proper department head. Reiterating Our ruling in Director of Lands v. whether the 19739 or 1987. We should distinguish.5 Respondent further argues that failure of the petitioners to object to the presentation of the certified copy of the tracing cloth plan was the basis of the trial court's denial of petitioner's motion for reconsideration.D. Amendments to the application may be due to change in parties or substantial change in the boundaries or increase in the area of the land applied for. otherwise known as the Property Registration Decree. 496. Land Inspector Perfecto Daroy and Supervising Land Examiner Teodoro P. 1529 was enacted to codify the various laws relative to registration of property.11 On the other hand. The Honorable Intermediate Appellate Court and Lino Anit. nor Presidential Decree No. not forest land..10 prohibits private corporations or associations from holding alienable lands of the public domain except by lease. 1529. respondent amended its application to conform with the mandates of the law. This claim is rather misleading. a positive act of the government is needed to declassify a forest land into alienable or disposable land for agricultural or other purposes. It is of no import that petitioner failed to object to the presentation of the certified copy of the said plan. Respondent asserts that contrary to the allegation of petitioners. Nieva show that the subject property is an unclassified public land. 1529. in adjudicating the land to the then applicant. as applicant.14 Under the Commonwealth Constitution. Forest and Disposable or Alienable Lands. Mineral and Timber or forest lands are not subject to private ownership unless they are first reclassified as agricultural lands and so released for alienation.17 146 | P r o p e r t y . Hence. it being an essential requirement for registration. 6-7). instead of Act No. What is required is the original tracing cloth plan of the land applied for and objection to such requirement cannot be waived either expressly or impliedly. the reports of the District Land Officer of Dagupan City.12 The third. However. Antonio Araneta. In a very recent decision of this Court. Lands of the public domain are classified under three main categories. In the former case. Inc.16 This is in consonance with the Regalian doctrine that all lands of the public domain belong to the State.8 This case is no different from the case of Director of Lands v. assuming that the land involved is registrable. timber and mineral lands. who has the authority to classify the lands of the public domain into alienable or disposable. was a mere attempt to evade disqualification. 141 (Secs. Under the Regalian Doctrine. republication is required if the amendment is due to substantial change in the boundaries or increase in the area of the land applied for. As to the fourth assignment of error. and the only evidence that can be presented to that fact is the request for the issuance of a certified copy thereof and the certified copy issued pursuant to the request. in order to facilitate effective implementation of said laws. Courts have no authority to do so. Reyes.13 This was based on the reports of Land Inspector Daroy and District Land Officer Feliciano Liggayu. only agricultural lands were allowed to be alienated. P. namely: Mineral. As to the second assignment of error.15 In the absence of such classification. Both laws are existing and can stand together. there is no reason why the applicant cannot easily retrieve the same and submit it in evidence. entitled The Director of Lands v. We are inclined to agree with petitioners that the amendment of the application from the name of Pacific Farms. requires republication and registration may be allowed by the court at any stage of the proceeding upon just and reasonable terms. as amended. Their disposition was provided for under Commonwealth Act No. Apparently realizing such prohibition. supra wherein We said that if the original tracing cloth plan was indeed with the Land Registration Commission. the land remains as unclassified land until released therefrom and rendered open to disposition. We cannot go along with petitioners' position that the absence of republication of an amended application for registration is a jurisdictional flaw.Respondent claims that the tracing cloth plan is with the files of the Land Registration Commission. neither the Land Registration Act. Our Constitution. all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.7 We asserted that failure to submit in evidence the original tracing cloth plan is fatal it being a statutory requirement of mandatory character. to the name of J. fifth and sixth assignment of errors are likewise meritorious and shall be discussed forthwith together. The report of Supervising Land Examiner Nieva specifically states that the "land is within the unclassified forest land" under the administrative jurisdiction of the then Bureau of Forest Development. We do not see any relevant dispute in the lower court's application of Presidential Decree No. and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony.6 We have ruled that the submission of the tracing cloth plan is a mandatory requirement for registration. which states that it is only the President.

in that span of time there had been no attempt to register the same either under Act 496 or under the Spanish Mortgage Law. In effect what the courts a quo have done is to release the subject property from the unclassified category. 681.J.19 In this particular case. constitute evidence of great weight (Rojas vs. if accompanied by open. Nevertheless. Note. It is also rather intriguing that Vicente Castelo who acquired almost 90% of the property from Alejo Ambrosio. the petition is hereby GRANTED and the decisions of the courts a quo are REVERSED.21 Respondent's contention that the BFD. In any case tax declarations and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by evidence. the subject property has been declared for tax purposes with receipts attached. on June 18. cannot ripen into private ownership. that it cannot be conclusively relied upon and was not even presented in evidence.. concur.The burden of proof in overcoming the presumption of state ownership of the lands of the public domain is on the person applying for registration that the land subject of the application is alienable or disposable. JJ. whatever possession the applicant may have had and however long. We reiterate that the classification of public lands is an exclusive prerogative of the Executive Department of the Government and not of the Courts. the property must be held to be part of the public domain. 1927 which was the basis of the report and recommendation of the Land Examiner.20 The fact that the disputed property may have been declared for taxation purposes in the names of the applicants or of their predecessors-in-interest way back in 1921 does not necessarily prove ownership. 1958 and from Julio Castelo on June 19. respondent presented proof that as early as 1921." Respondent even admitted that Tambac Island is still an unclassified public land as of 1927 and remains to be unclassified. LC Map No. if omission there was. All rights reserved. ——o0o—— © Copyright 2012 Central Book Supply. CA:22 "And the fact that BF Map LC No. Narvasa (C. According to the report of Land Investigator Daroy. Court of Appeals.23 The conversion of subject property does not automatically render the property as alienable and disposable. which is beyond their competence and jurisdiction. The applicant must present evidence and persuasive proof to substantiate his claim. or any other means for the proper acquisition of public lands. Antonio Araneta on 3 July 1958. [Director of Lands vs. in the names of respondent's predecessors-in-interest. Chairman). They are merely indicia of a claim of ownership.25 WHEREFORE.24 In fairness to respondent. is too antiquated. et al. the petitioners should seriously consider the matter of the reclassification of the land in question. in fact. is not well taken. Petition granted. Regalado and Campos.. Since the subject property is still unclassified. Inc. The attempt of people to have disposable lands they have been tilling for generations titled in their name should not only be viewed with understanding attitude. 1927 showing subject property to be within unclassified region was not presented in evidence will not operate against the State considering the stipulation between the parties and under the well-settled rule that the State cannot be estopped by the omission.—Tax receipts although not incontrovertible evidence of ownership. the land was declared for taxation purposes in the name of Vicente Castelo only in 1958 and the purported old tax declarations are not on file with the Provincial Assessor's Office. Jr. mistake or error of its officials or agents. In the absence of such classification. As We have said in the case of Director of Lands v. Padilla. certified on August 8.. SO ORDERED. Intermediate Appellate Court. 1958 immediately sold the same to applicant J.18 Unless the applicant succeeds in showing by convincing evidence that the property involved was acquired by him or his ancestors either by composition title from the Spanish Government or by possessory information title. 219 SCRA 339(1993)] 147 | P r o p e r t y . 192 SCRA 709). adverse and continous possession in the concept of owners. but as a matter of policy encouraged. the land remains unclassified until released therefrom and rendered open to disposition. 673 dated March 1.

when an inference made by the appellate court from its factual findings is manifestly mistaken. the dispositive portion of which states:3 “WHEREFORE. an American citizen. Jurisprudence is consistent that “if land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen. PANGANIBAN. Among the said parcels of land is that now in litigation. TCT No. surmises or conjectures. Constitutional Law. respondents. 113539. T-130721(M) was issued in the latter’s name. T120259 was issued in the name of appellee David Rey Guzman. Basic and long-settled is the doctrine that findings of fact of a trial judge. may no longer be reviewed and reversed by this Court in a petition for review under Rule 45 of the Rules of Court. vs. when the findings of fact are conclusions without mention of the specific evidence on which they are based. The facts are stated in the opinion of the Court. the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. defendant appellee [herein private respondent] Helen Meyers Guzman. Helen executed a deed of quitclaim (Annex A-Complaint). David Rey Guzman sold said parcel of land to defendant-appellee [also herein private respondent] Emiliano Cataniag. defendant appellee [also herein private respondent] David Rey Guzman. 37829 promulgated on September 14. On August 9. Anecio R. is not reviewable by this Court. The Case These familiar and long-settled doctrines are applied by this Court in denying this petition under Rule 45 to set aside the Decision1 of the Court of Appeals2 in CA-GR CV No. are premised on the absence of evidence or are contradicted by evidence on record. Leyretana. are binding upon the Supreme Court.” The Facts The factual antecedents. when affirmed by the Court of Appeals are binding upon the Supreme Court. Dy. Remedial Law.695 square meters. Maria. titles and interests in and over six parcels of land which the two of them inherited from Simeon.* CELSO R. as follows: Simeon de Guzman. COURT OF APPEALS. 1989. died sometime in 1968. No. will justify a different conclusion. and upon all the foregoing. when affirmed by the Court of Appeals. T-120259 was cancelled and TCT No. 1992 dismissing the complaint for lack of merit is AFFIRMED without pronouncement as to costs. This admits of only a few exceptions. run contrary to the admissions of the parties to the case or fail to notice certain relevant facts which. 1991. upon which TCT No.] transferring and conveying to David Rey all her rights. 1998. containing an area of 6. Guades for petitioners. HELEN MEYERS GUZMAN. HALILI and ARTHUR R.”4 148 | P r o p e r t y PETITION for review on certiorari of a decision of the Court of Appeals. the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. J. both of whom are also American citizens. Basic and long-settled is the doctrine that findings of fact of a trial judge. and his son.R. Bulacan. March 12. covered by Transfer Certificate of Title No. the Decision of the court below dated March 10. when affirmed by the Court of Appeals. T170514 of the Registry of Deeds of Bulacan. We reproduce them in part. leaving real properties in the Philippines. when the findings of the appellate court go beyond the issues of the case. Property. x x x situated in Bagbaguin. Macababbad & Agravante Law Offices for private respondents. except only by way of legal succession. as a rule. The transfer of an interest in a piece of land to an alien may no longer be assailed on constitutional grounds after the entire parcel has been sold to a qualified citizen. DAVID REY GUZMAN and EMILIANO CATANIAG. Exceptions.: . His forced heirs were his widow. Appeals. such as when the findings are grounded entirely on speculation. Jurisprudence is consistent that “if land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen. On February 5.” The factual findings of a trial court.G. 1993. absurd or impossible. Sta. nonFilipinos cannot acquire or hold title to private lands or to lands of the public domain. when there is a misappreciation of facts. assigning[. if properly considered. HALILI. T-170514 was cancelled and TCT No. petitioners. are not disputed by the parties. when there is grave abuse of discretion in the appreciation of facts. as narrated by Respondent Court. The quitclaim having been registered.—Whether the land in dispute is rural or urban is a factual question which. But what is the effect of a subsequent sale by the disqualified alien vendee to a qualified Filipino citizen? This is not a novel question.”—In fine.

Bulacan. Having considered the conveyance from Helen Meyers Guzman to her son David Rey Guzman illegal. when there is grave abuse of discretion in the appreciation of facts. run contrary to the admissions of the parties to the case or fail to notice certain relevant facts which. will justify a different conclusion. feeds supply and spare parts. Zamacoma8 and Yap vs. surmises or conjectures.]”11 The Court’s Ruling The petition has no merit. denied their appeal. Grageda. Located therein likewise were the Pepsi-Cola Warehouse. Maria. There is no doubt. although the transfer of the land to David Rey may have been invalid for being contrary to the Constitution. Bulacan.7 the trial court dismissed the complaint. since it has passed on to and was thus already owned by a qualified person. as a rule. the conclusion of the trial court—that the subject property is urban land—is based on clear and convincing evidence. No Right of Redemption The first two errors assigned by petitioners being interrelated—the determination of the first being a prerequisite to the resolution of the second— shall be discussed together. when there is a misappreciation of facts. It is to be noted that in the Tax Declaration in the name of Helen Meyers Guzman[. Hence. filed a complaint before the Regional Trial Court of Malolos. since the purpose of the waiver was simply to authorize David Rey Guzman to dispose of their properties in accordance with the Constitution and the laws of the Philippines. as shown in its decision which disposed thus: “x x x As observed by the court. the Cruz Hospital. erred in not declaring the same null and void[. This admits of only a few exceptions. questioning the constitutionality and validity of the two conveyances—between Helen Guzman and David Rey Guzman. Erred in denying petitioners’ right of redemption under Art. absurd or impossible. when an inference made by the appellate court from its factual findings is manifestly mistaken. Only a short portion of said road [is] vacant. Respondent Court affirmed the factual finding of the trial court that the subject land was urban. Thus. 1621 of the Civil Code. In its decision6 dated March 10.] while in the letter addressed to defendant Emiliano Cataniag. Erred in affirming the conclusion of the trial court that the land in question is urban. however. apartment buildings for commercial purposes and construction firms.9 it further held that. It ruled that Helen Guzman’s waiver of her inheritance in favor of her son was not contrary to the constitutional prohibition against the sale of land to an alien.13 The instant case does not fall within any of the aforecited exceptions. In fact.] the subject land is termed agricultural[. woodcrafts [sic] and garments. such as when the findings are grounded entirely on speculation. when the findings of fact are conclusions without mention of the specific evidence on which they are based. and between the latter and Emiliano Cataniag—and claiming ownership thereto based on their right of legal redemption under Art. Citing Tejido vs. almost all the roadsides along the national ghighway [sic] of Bagbaguin.10 Issues The petition submits the following assignment of errors: “x x x the Honorable Court of Appeals— 1. Subject Land Is Urban Whether the land in dispute is rural or urban is a factual question which. when affirmed by the Court of Appeals. that the community is a commercial area thriving in business activities. three gasoline stations. it held that the subject land was urban. The Halilis sought a reversal from the Court of Appeals which. if properly considered. 1991. 1621 of the Civil Code 3. 1992. there was no more point in allowing herein petitioners to recover the property.Petitioners. who are owners of the adjoining lot. hence. is not reviewable by this Court. this petition. upholstery materials. therefore. commercial or industrial establishments. First Issue: The Land Is Urban. and not to subvert them. petitioners had no reason to invoke their right of redemption under Art. 16215 of the Civil Code.12 Basic and long-settled is the doctrine that findings of fact of a trial judge. the Land Regulatory Board attested 149 | P r o p e r t y . are binding upon the Supreme Court. On the second issue. when the findings of the appellate court go beyond the issues of the case. are lined up with residential. are premised on the absence of evidence or are contradicted by evidence on record. not rural 2. Lined up along the Bagbaguin Road are factories of feeds. dated October 3. Sta. commercial stores for tires.

If one or both are urban. Plainly. development and utilization’ of all ‘lands of the public domain and 150 | P r o p e r t y Under this article. this purpose would not be served if petitioners are granted the right of redemption under Art. 7] is intended to insure the policy of nationalization contained in section 1 [now Sec. and it reads as follows: ‘Sec.”14 No Ground to Invoke Right of Redemption In view of the finding that the subject land is urban in character. The 1935 Constitution reserved the right to participate in the ‘disposition.” . Register of Deeds17 settled the issue as to who are qualified (and disqualified) to own public as well as private lands in the Philippines. the right cannot be invoked. XII] of the Constitution. namely. The provision is clearly worded and admits of no ambiguity in construction: “ART. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if. transferred and conveyed to David Rey all her rights. Art. Save in cases of hereditary succession.19 which involves a sale of land to a Chinese citizen. is alienated. corporations or associations qualified to acquire or hold lands of the public domain in the Philippines. corporations. section 5 [now Sec. not agricultural. Undoubtedly. petitioners have indeed no right to invoke Art. 2] are disqualified ‘to acquire or hold lands of the public domain in the Philippines. 2]. Section 7 of which provides: “SEC. both lands—that sought to be redeemed and the adjacent lot belonging to the person exercising the right of redemption—must be rural.’ and with respect to public agricultural lands. Article XIII of the 1935 Constitution. 1621 of the Civil Code. x x x”18 The Krivenko rule was recently reiterated in Ong Ching Po vs. the Constitution of the Philippines 439-440 [1988 ed. as above indicated.’ And the subject matter of both sections is the same.16 The subject land not being rural and. therefore. The Board’s classification is based on the present condition of the property and the community thereat. 7. unless the grantee does not own any rural land. with the exception of public agricultural land. include residential. commercial and industrial lands. the non transferability of ‘agricultural land’ to aliens. shall not be alienated. or associations qualified to acquire or hold lands of the public domain. their alienation is limited to Filipino citizens. under the circumstances. It is partly to prevent this result that section 5 is included in Article XIII. is to favor agricultural development. But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens. 1621. no private agricultural land will be transferred or assigned except to individuals.]). It must be noticed that the persons against whom the prohibition is directed in section 5 [now Sec.’ This constitutional provision closes the only remaining avenue through which agricultural resources may leak into aliens’ hands. the area of which does not exceed one hectare. no private lands shall be transferred or conveyed except to individuals. which presupposes that the land sought to be redeemed is rural. they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens.15 The purpose of this provision. Article XII. 1621. Second Issue: Sale to Cataniag Valid Neither do we find any reversible error in the appellate court’s holding that the sale of the subject land to Private Respondent Cataniag renders moot any question on the constitutionality of the prior transfer made by Helen Guzman to her son David Rey. exploitation. Save in cases of hereditary succession. be read together for they have the same purpose and the same subject matter. which is limited in scope to rural lands not exceeding one hectare. the Court then stated: “Under section 1 of Article XIII [now Sec. The Court said: “The capacity to acquire private lands is made dependent upon the capacity to acquire or hold lands of the public domain.that the subject property is commercial and the trend of development along the road is commercial. Following a long discourse maintaining that the “public agricultural lands” mentioned in Section 1. Both sections must. Court of Appeals. 2. Said classification is far more later [sic] than the tax declaration. after all. The owners of adjoining lands shall also have the right of redemption when a piece of rural land. they cannot invoke it. True. 7] are the very same persons who under section 1 [now Sec. Helen Guzman’s deed of quitclaim—in which she assigned. therefore. 5. Private land may be transferred or conveyed only to individuals or entities ‘qualified to acquire lands of the public domain’ (II Bernas. ‘natural resources. titles and interests over the property she had inherited from her husband—collided with the Constitution. xxx xxx x x x” The landmark case of Krivenko vs.

the petition is hereby DENIED.25 Godinez vs. However. Upon his death.. non-Filipinos cannot acquire or hold title to private lands or to lands of the public domain. The Court did not allow the original vendor to have the sale annulled and to recover the property. a residential lot was sold to a Chinese. that aim or purpose would not be thwarted but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization.”20 In fine. All rights reserved. the Court again applied the rule that the subsequent sale can no longer be impugned on the basis of the invalidity of the initial transfer. is to preserve the nation’s lands for future generations of Filipinos. have been disqualified from acquiring public lands. The objective of the constitutional provision—to keep our land in Filipino hands—has been served. Costs against petitioner. the Court ruled that the defect in the will was “rectified by the subsequent transfer of the property.23 in which an alien resident who owned properties in the Philippines devised to an American non-stock corporation part of his shares of stock in a Filipino corporation that owned a tract of land in Davao del Norte. hence. The challenged Decision is AFFIRMED. (Chairman). Tan. whereby said lot was allotted to one of his sons who became a naturalized Filipino. they have also been disqualified from acquiring private lands.. (People vs. Challenged decision affirmed. the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. Ltd. for the reason that the land has since become the property of a naturalized Filipino citizen who is constitutionally qualified to own land.” The present case is similar to De Castro vs. Luy Kim Guan.other natural resources of the Philippines’ for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Sebastian. JJ. Jurisprudence is consistent that “if land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen. Likewise. SO ORDERED. since the disputed land is now owned by Private Respondent Cataniag. Pak Luen. 287 SCRA 465(1998)] 151 | P r o p e r t y . NLRC (4th Division) Accordingly. WHEREFORE. Court of Appeals. 263 SCRA 691 [1996]) ——o0o—— © Copyright 2012 Central Book Supply. except only by way of legal succession.21 But what is the effect of a subsequent sale by the disqualified alien vendee to a qualified Filipino citizen? This is not a novel question. Inc. Cuenco.28 which similarly involved the sale of land to an alien who thereafter sold the same to a Filipino citizen.24 In that case. whether individuals or corporations. as construed by this Court in the Krivenko case. The rationale of this principle was explained in Vasquez vs. Vitug and Quisumbing. Jr. concur. upon proof that ownership of the American corporation has passed on to a 100 percent Filipino corporation.26 Vasquez vs. Li Seng Giap27 and Herrera vs. in the cases of Sarsosa vs. Bellosillo. in United Church Board of World Ministries vs. Aliens. [Halili vs. Li Seng Giap thus: “x x x [I]f the ban on aliens from acquiring not only agricultural but also urban lands.”29 Insular Life Assurance Co.—Conclusions and findings of the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and valid reasons. the prior invalid transfer can no longer be assailed. vs. a Filipino citizen. Davide.”22 Thus. his widow and children executed an extrajudicial settlement. Note. Deopante. the Court sustained the invalidity of such legacy. Petition denied.

The legislative interpretation is also in harmony with the interpretation given by the Executive Department of the Government. but not sold. that was the basic classification existing in the public laws and judicial decision in the Philippines. 59 and 60 thereof permit the sale of residential lots to Filipino citizens or to associations or corporations controlled by such citizens. after all. that what the members of the Constitutional Convention had in mind when they drafted the Constitution was this well-known classification and its technical meaning then prevailing. their alienation is limited to Filipino citizens. makes mention of only agricultural. such land may only be leased. no private agricultural land shall be transferred or assigned except to individuals. the only issue is a constitutional question which is unavoidable if the case is to be decided upon the merits. together with the circumstance that probably a similar question may never come up again before this Court. corporations. does not mean that to avoid a constitutional question. it undoubtedly means that all lands of the public domain are classified into said three groups. And. and as including residential lands. but after the Constitution and under section 23 of Commonwealth Act No. prior to the Constitution. L-630. 1947] ALEXANDER A. the National Assembly revised the Public Land Law and passed Commonwealth Act No. granted. November 15. timber and mineral.ID." and with respect to public agricultural lands. which reads: "Save in cases of hereditary succession. It must be noticed that the persons against whom the prohibition is directed in section 5 are the very same persons who under section 1 are disqualified to acquire or hold lands of the public domain in the Philippines. may or may not be granted in the discretion of the court. APPEAL. 141.. 141. shall not be alienated. with reference to lands of the public domain. prior to the Constitution. namely.—Under section 1 of Article XIII of the Constitution. the same technical meaning should be attached to "agricultural land" under section 5. 3. as above indicated. JUDICIAL POLICY. And the court cannot avoid. The exclusion of sale in the new Act is undoubtedly in pursuance of the constitutional limitation. respondent and appellee. Both sections must. There seems to be no question among members of this Court that the phrase "public agricultural lands" appearing in section 1 of Article XIII of the Constitution includes residential lands. the nontransferability of agricultural land to aliens. It may safely be presumed. rendering its decision simply because it has to avoid the constitutional question. In the instant case. The only 152 | P r o p e r t y . And this is in conformity with a legislative interpretation given after the adoption of the Constitution. such a revision is to be regarded as a legislative construction that the statute so revised conf forms to the Constitution. the effect of the withdrawal would be offensive to the opinion reached by a majority of the members of the Court after long and exhaustive deliberations on the constitutional question. and the term "public agricultural lands" under said classification has always been construed as referring to those lands that were neither timber nor mineral. Undoubtedly. And this classification finds corroboration in the circumstance that at the time of the adoption of the Constitution. be read together for they have the same purpose and the same subject matter. vs. Secretary of Justice Jose Abad Santos rendered an opinion holding that under the Constitution. Since "agricultural land" under section 1 includes residential lots. Way back in 1939. CITY OF MANILA. Furthermore. under the Constitution. 1." This constitutional provision closes the only remaining avenue through which agricultural resources may leak into aliens' hands. withdrawal was denied because under the circumstances.— When section 1. they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. with the exception of public agricultural land. but after the Constitution and under section 60 of Commonwealth Act No. Well known is the rule that "where the Legislature has revised a statute after a Constitution has been adopted.CLASSIFICATION OF LANDS or THE PUBLIC DOMAIN UNDER THE CONSTITUTION. aliens could acquire public agricultural lands used for industrial or residential purposes. to aliens. "natural resources. particularly the circular of the Department of Justice issued while this case was pending before this Court and ordering all registers of deeds to accept for registration all transfers of residential lots to aliens. of the Constitution. 141. 2874. THE REGISTER OF DEEDS.PRIVATE AGRICULTURAL LANDS UNDER THE CONSTITUTION. timber and mineral lands. 2874. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if. therefore. unless a different intention appears. section 5 is intended to insure the policy of nationalization contained in section 1. again. agricultural.—Withdrawal of appeal after briefs are presented.[No. But this constitutional purpose of conserving agricultural resources in the hands of Filipino citizens may easily be def eated by the Filipino citizens themselves who may transfer their agricultural lands in favor of aliens." Soon after the Constitution was adopted. under section 57 of Public Land Act No. 4. land of the public domain suitable for residence or industrial purposes could be sold or leased to aliens. for instance. therefore. Whether that motion should be. or associations qualified to acquire or hold lands of the public domain in the Philippines. the right of aliens to acquire such kind of lands is completely stricken out. is a question involving different considerations. the phrase "public agricultural lands" includes residential lands. It is a rule of statutory construction that a word or phrase repeated in a statute will bear the same meaning throughout the statute. petitioner and appellant.CONSTITUTIONAL LAW. under section 24 of Public Land Act No. according to the rules. and this again is another legislative construction that the term "public agricultural land" includes land for residence purposes. and the lease granted shall only be valid while the land is used for the purposes referred to. WITHDRAWAL OF APPEAL DISCRETIONARY UPON THE COURT AFTER BRIEFS ARE PRESENTED. It is partly to prevent this result that section 5 is included in Article XIII. only agricultural lands may be alienated. the court may decline to decide the case upon the merits. grant appellant's motion withdrawing his appeal only because the constitutional issue should be avoided. offense which may be permanent. In the instant case. or should not be. namely. Article XIII.—The rule that a court should not pass upon a constitutional question if its decision may be made to rest upon other grounds. which is equivalent to a solemn declaration that residential lots are considered as agricultural lands. 2. It cannot. and sections 58. KRIVENKO. To allow the withdrawal under such circumstances is equivalent to tolerating an offense to the constitution. CONSTITUTIONAL QUESTION SHOULD BE AVOIDED IF POSSIBLE. undoubtedly in pursuance of the constitutional limitation. And the subject matter of both sections is the same. for.

private.—If the term "private agricultural lands" is to be construed as not including residential lots or lands not strictly agricultural. There is absolutely no difference in nature. hatcheries. It is said that the decision of the case on the merits is unnecessary. Chuidian & Quasha for petitioner-appellant.: Alexander A. Inc. is that the former is public and the latter. At the time the motion for withdrawal was filed in this case. and that court rendered judgment sustaining the refusal of the register of deeds. We are referring again to Commonwealth Act No. 141. there Were in the Public Land Act No. the registration of which was interrupted by the war. being an alien. a conf fusion of ideas in this reasoning. and. It cannot be denied that the constitutional question is unavoidable if we choose to decide this case upon the merits. from which Krivenko appealed to this Court. for time will come when. Gibbs. In May. 2874 provisions contained in sections 120 and 121 thereof which granted to aliens the right to acquire private agricultural lands only by way of reciprocity. Indeed. in prohibiting the alienation of private agricultural lands to aliens. The facts are stated in the opinion of the court. 141 was passed containing sections 122 and 123 which strike out completely the right of reciprocity granted to aliens. in December of 1941. If. Krivenko then brought the case to the fourth branch of the Court of First Instance of Manila by means of a consulta.difference between "agricultural land" under section 1 and "agricultural land" under section 5. what is important is the nature or class of the property regardless of whether it is owned by the State or by its citizens. and a host of other uses and purposes that are not. Marcelino Lontok appeared as amicus curiæ. According to Rule 52. is to conform to the absolute policy contained in section 5 of Article XIII of the Constitution. and the Solicitor General was agreeable to it. playgrounds.. The constitutional intent is made more patent and is strongly implemented by an Act of the National Assembly passed soon after the Constitution was approved. if not all. First Assistant Solicitor General Reyes and Solicitor Carreon for respondentappellee. of the Rules of Court. but the case had already been voted and the majority decision was being prepared. 153 | P r o p e r t y APPEAL from a judgment of the Court of First Instance of Manila. grant the motion withdrawing the appeal only because we wish to evade the constitutional issue. The lands are the same in both sections. character. came the new circular of the Department of Justice. in apellant's words. While the motion was pending in this Court. J. the prohibition as to private residential lands will eventually become more important. it is discretionary upon this Court to grant a withdrawal of appeal after the briefs have been presented. section 4. fisheries. The motion for withdrawal stated no reason whatsoever. MORAN. De la Rosa. This. We cannot. health and vacation resorts. for the conservation of the national patrimony. or should not be. as conceded by all the members of this Court. There is. Gibbs. grants them no right of reciprocity. for instance. C. Our judgment cannot to be made to rest upon other grounds if we have to render any judgment at all. Then came the Constitution. granted. undoubtedly. as indicated above. and whole towns and cities. alien. he sought to accomplish said registration but was denied by. there can be no reason why residential lands of private ownership should not deserve the same consideration and protection. and Commonwealth Act No. Specially is this so where. bought a residential lot from the Magdalena Estate. Whether the motion should be. and that they may validly buy and hold in their names lands of any area for building homes. the register of deeds of Manila on the ground that. both should equally be considered as agricultural lands to be protected as part of the national patrimony. markets. is a question involving different considerations now to be stated. and. schools. industrial plants. in view of the constant disposition of public lands in favor of private individuals. value or importance. we believe. J. he cannot acquire land in this jurisdiction. There is no dispute as to these facts. strictly agricultural. almost all. the prohibition as to the alienation of public residential lots may become superfluous if the same prohibition is not equally applied to private residential lots. Krivenko. That this is obnoxious to the conservative spirit of the Constitution is beyond question. Prior to the Constitution. airfields. But such difference refers to ownership and not to the class of land. And we cannot avoid our judgment simply because we have to avoid a constitutional question. The real point in issue is whether or not an alien under our Constitution may acquire residential land. to the nation between a residential land of the public domain and a residential land of private ownership. 1945. 5. golf courses. therefore.EFFECT UPON THE SPIRIT OF THE CONSTITUTION OF NOT CONSIDERING RESIDENTIAL LANDS AS AGRICULTURAL LANDS. residential lands of the public domain should be considered as agricultural lands to be protected as part of the national patrimony. there being a motion to withdraw the appeal which should have been granted outright. not only had the briefs been presented. . which. and reference is made to the ruling laid down by this Court in another case to the effect that a court should not pass upon a constitutional question if its judgment may be made to rest upon other grounds. the residential lands of the public domain shall have become private residential lands. factories. the result would be that aliens may freely acquire and possess not only residential lots and houses for themselves but entire subdivisions.

Krivenko wins his case. As early as 1908. in the case of Mapa vs. Natural resources. and mineral lands of the public domain. this Court said: 154 | P r o p e r t y . Jocson vs. or utilization shall be limited to citizens of the Philippines.. with reference to lands of the public domain. Ramos vs. 175. In Ibañez de Aldecoa vs. "SECTION 1. If we grant the withdrawal. its purpose being to establish a permanent and fundamental policy for the conservation and utilization of all natural resources of the Nation." The scope of this constitutional provision. or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens. subject to any existing right. therefore. and other mineral oils. Santiago vs. Director of Lands. 572. means "those public lands acquired from Spain which are neither mineral nor timber lands. renewable for another twenty-five years. 39 Phil. For it is but natural that the new circular be taken full advantage of by many. or lease for the exploitation. timber and mineral. 159. 163). Director of Forestry. with our duty to decide the case upon the merits. the constitutional question becomes unavoidable. with the result that our indifference of today might signify a permanent offense to the Constitution. We are thus confronted. shall not be alienated. 560.. the possibility for this court to voice its conviction in a future case may be remote. section 1. we may still allow our conviction to be silenced. concession. this Court said that the phrase "agricultural public lands" as defined in the Act of Congress of July 1. and whether or not after having held long deliberations and after having reached a clear and positive conviction as to what the constitutional mandate is. because both vendors and the vendees will have no interest but to uphold the validity of their transactions. embraces all lands of any kind of the public domain. not by a decision of this Court. Insular Government. which phrase is also to be found in several sections of the Public Land Act (No. timber.instructing all register of deeds to accept for registration all transfers of residential lots to aliens. at this stage of the proceedings.. Insular Government. with all the harmful consequences that might be brought upon the national patrimony. with the circumstance that perhaps the constitutional question may never come up again before this court. it has been held that since they are neither mineral nor timber lands. lease. Insular Government (10 Phil. And this classification finds corroboration in the circumstance that at the time of the adoption of the Constitution. Thus. All agricultural. water supply. Insular Government. but by the decision or circular of the Department of Justice. 159. that was the basic classification existing in the public laws and judicial decisions in the Philippines. of necessity they must be classified as agricultural. namely. 12 Phil. When. Government of the Philippines. and no license. Article XIII. makes mention of only agricultural. or industrial uses other than the development of water 'power' in which cases beneficial use may be the measure and the limit of the grant. development. The herein respondent-appellee was naturally one of the registers of deeds to obey the new circular. and very unlikely will the register of deeds venture to disobey the orders of their superior. or concession at the time of the inauguration of the Government established under this Constitution. 13 Phil. 12 Phil. except as to water rights for irrigation. is whether or not we should allow interference with the regular and complete exercise by this Court of its constitutional functions. all forces of potential energy. timber and mineral lands. minerals. 1902. grant. 926). All these circumstances were thoroughly considered and weighed by this Court for a number of days and the legal result of the last vote was a denial of the motion withdrawing the appeal. and their disposition. Ibañez de Aldecoa vs. or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years. 40 Phil. 10. coal. Whether or not this is the reason why appellant seeks the withdrawal of his appeal and why the Solicitor General readily agrees to that withdrawal." This definition has been followed in a long line of decisions of this Court. 593. of the Constitution is as follows: "Article XIII. and the term "public agricultural lands" under said classification had then acquired a technical meaning that was well-known to the members of the Constitutional Convention who were mostly members of the legal profession.. agricultural. with the exception of public agricultural land. and by so doing. the result would be that petitioner-appellant Alexander A. development. waters. Insular Government (13 Phil. We shall then proceed to decide that question.. according to its heading and its language. 39 Phil. petroleum. What is material and indeed very important. 182). it means that all lands of the public domain are classified into said three groups. 175.—Conservation and utilization of natural resources. and other natural resources of the Philippines belong to the State. and the constitutional mandate to be ignored or misconceived. this provision. Ankron vs.) And with respect to residential lands. as against his own stand in this case which had been maintained by the trial court and firmly defended in this Court by the Solicitor General. is now immaterial. exploitation.. issued while this case was pending before this Court. (See Montano vs. fisheries.

" (11 Am. p. that what the members of the Constitutional Convention had in mind when they drafted the Constitution was this well-known classification and its technical meaning then prevailing. under section 24 of Public Land Act No. 1918E. 648. the Court ruled that in determining whether a parcel of land is agricultural. in favor of Filipino citizens. sec. in construing constitutions. "Certain expressions which appear in Constitutions.. under section 57 of Public Land Act No. 2874. And. all kinds of vegetation. undoubtedly in pursuance of the constitutional limitation. If a word has acquired a fixed. and this is in conformity with a legislative interpretation given after the adoption of the Constitution. and have been adopted by the legislature as having a certain meaning prior to a particular statute in which they are used." (McKinney vs. and may be converted into a field. 203 S. but also its susceptibility to cultivation for agricultural purposes." (59 C. again. it is presumed that its framers and the people who ratified it have used such expressions in accordance with their technical meaning. but after the Constitution 155 | P r o p e r t y . 1102. mineral. the test is not only whether it is actually agricultural. 88 Wash. it must necessarily be included within the classification of agricultural land. Jur. 141 which classifies "public agricultural lands" for purposes of alienation or disposition. therefore. technical meaning in legal and constitutional history. Bronson vs. 141. 758. 264. into lands that are strictly agricultural or actually devoted to cultivation for agricultural purposes. 141. * * * are obviously technical. for. lands that are residential. industrial. R. A. This simply means that the term "public agricultural lands" has both a broad and a particular meaning. 688." (II Sutherland. 66. as used in the Constitution. land of the public domain suitable for residence or industrial purposes could be sold or leased to aliens. for this reason. 59 and 60 thereof permit the sale of residential lots to Filipino citizens or to associations or corporations controlled by such citizens. any parcel of land or building lot is susceptible of cultivation. the right of aliens to acquire such kind of lands is completely stricken out. such a revision is to be regarded as a legislative construction that the statute 80 revised conforms to the Constitution.. which is equivalent to a solemn declaration that residential lots are considered as agricultural lands. S. 386. "alienable or disposable public lands" which are the same "public agricultural lands" under the Constitution. 526.]. The fact that these lands are made alienable or disposable under Commonwealth Act No.been in use prior to the adoption of a Constitution. the rule of construction requires that the words used in such statute should be construed according to the sense in which they have been so previously used. It may safely be presumed. and makes no special provision with respect to building lots or urban lands that have ceased to be agricultural land. the Act of Congress contains only three classifications.. J. Barker. it embraces all lands that are neither timber nor mineral. ed. commercial.. W. but after the Constitution and under section 23 of Commonwealth Act No. 3 Dall. Statutory Construction. and sections 58. only agricultural lands may be alienated. in this connection. It must be observed. Bull.. residential. 1039. under the Constitution. not because it is actually used for the purposes of agriculture.) "It is a fundamental rule that. are classified into agricultural. 1 Law. aliens could acquire public agricultural lands used for industrial or residential purposes. the fact remains that at the time the Constitution was adopted. at the time of the framing and adoption of the instrument. But whatever the test might be. the National Assembly revised the Public Land Law and passed Commonwealth Act No. and that the term "public agricultural lands" was construed as referring to those lands that were not timber or mineral.. Syverson. 581. 303. is a conclusive indication of their character as public agricultural lands under said statute and under the Constitution. besides.) Soon after the Constitution was adopted." In other words. although the sense may vary from the strict literal meaning of the words. "Under its broad or general meaning. 180 Ky. that prior to the Constitution.') Also Calder vs. the phrase "public agricultural lands" appearing in section 1 of Article XIII of the Constitution must be construed as including residential lands.. it will be presumed to have been employed in that sense in a written Constitution. Well known is the rule that "where the Legislature has revised a statute after a Constitution has been adopted. 141. and timber.) Therefore."Hence. 141. commercial. where land is not mining or f forestal in its nature. industrial and for other purposes. and where such words have. and which they possessed. prior to the Constitution. and planted with. This broad meaning is particularized in section 9 of Commonwealth Act No. 152 P. or lands for other purposes. It is true that in section 9 of said Commonwealth Act No.) "Where words have been long used in a technical sense and have been judicially construed to have a certain meaning. p. but because it was originally agricultural and may again become so under other circumstances. lands of the public domain were classified in our laws and jurisprudence into agricultural. and as including residential lands. L. terms employed therein shall be given the meaning which had been put upon them.. 2874. [U.

W. 5. to aliens. It is thus clear that the three great departments of the Government—judicial. 190 p.. It must be noticed that the persons against whom the prohibition is directed in section 5 are the very same persons who under section 1 are disqualified "to acquire or hold lands of the public domain in the Philippines. Save in cases of hereditary succession. and that agricultural lands include residential lots. It is a rule of statutory construction that "a word or phrase repeated in a statute will bear the same 156 | P r o p e r t y . commercial. Under section 1 of Article XIII of the Constitution. be read together for they have the same purpose and the same subject matter. 524. 598. p. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if. the same technical meaning should be attached to "agricultural land" under section 5. In other words. their alienation is limited to Filipino citizens. and it was firmly maintained in this Court by the Solicitor General of both administrations. the character of the land is the test (Odell vs. Clearly. This definition has been followed by our Supreme Court in many subsequent cases. Insular Government. Article XII (now XIII) of the Constitution classifies lands of the public domain in the Philippines into agricultural. The Supreme Court of the Philippines in the leading case of Mapa vs. such land may only be leased. therefore. Missoula Brick & Tile Co." and with respect to public agricultural lands. it is the susceptibility of the land to cultivation for agricultural purposes by ordinary farming methods which determines whether it is agricultural or not (State vs. Secretary of Justice Jose Abad Santos. "Viewed from another angle. the non transferability of "agricultural land" to aliens. no reason is seen why a piece of land. At the time of the adoption of the Constitution of the Philippines. they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. no private agricultural land will be transferred or assigned except to individuals. acquired a technical meaning in our public laws.. sharp and crystal-clear opinion: "Section 1.. 25). after all. 175. therefore. Durant. Undoubtedly. "natural resources. or industrial lots forming part of the public domain must have to be included in one or more of these classes.) And the opinion of the Quezon administration was reiterated by the Secretary of Justice under the Osmeña administration. it has been held that in determining whether lands are agricultural or not. Such legislative interpretation is also in harmony with the interpretation given by the Executive Department of the Government. "Furthermore. known as the Philippine Bill. 10 Phil. * * "Residential. as said by the Director of Lands. But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens. as above indicated. but also because it was rendered by a member of the cabinet of the late President Quezon who actively participated in the drafting of the constitutional provision under consideration. 123 p. in answer to a query as to "whether or not the phrase 'public agricultural lands' in section 1 of Article XII (now XIII) of the Constitution may be interpreted to include residential. but not sold. and the lease granted shall only be valid while the land is used for the purposes referred to." This constitutional provision closes the only remaining avenue through which agricultural resources may leak into aliens' hands. It is partly to prevent this result that section 5 is included in Article XIII. Lorch vs. and this again is another legislative construction that the term "public agricultural land" includes land for residence purposes. corporations.and under section 60 of Commonwealth Act No. they are neither timber nor mineral. with the exception of public agricultural land. which may be sold to a person if he is to devote it to agricultural. or associations qualified to acquire or hold lands of the public domain in the Philippines. therefore. cannot be sold to him if he intends to use it as a site for his home. namely. (2 Aruego. The exclusion of sale in the new Act is undoubtedly in pursuance of the constitutional limitation. legislative and executive—have always maintained that lands of the public domain are classified into agricultural. mineral and timber. and industrial lands for purposes of their disposition." And the subject matter of both sections is the same." rendered the following short. and it reads as follows: "Sec. the term 'agricultural public lands' and. 1902." This opinion is important not alone because it comes from a Secretary of Justice who later became the Chief Justice of this Court. they must be classified as agricultural. timber and mineral. shall not be alienated. Since "agricultural land" under section 1 includes residential lots. Way back in 1939. of necessity. 62 N. held that the phrase 'agricultural public lands' means those public lands acquired from Spain which are neither timber nor mineral lands. This is the basic classification adopted since the enactment of the Act of Congress of July 1. commercial. Stewart. 129). Both sections must. section 5 is intended to insure the policy of nationalization contained in section 1. Framing of the Philippine Constitution. 141.

1941. golf courses. then Secretary of Justice.) Delegate Ledesma. the words "no land of private ownership" were used and later changed into "no agricultural land of private ownership. particularly having in mind that the purpose of the constitutional provision is the conservation of the national patrimony. No reason whatsoever is given in the opinion for such a distinction. is "that lands. If the term "private agricultural lands" is to be construed as not including residential lots or lands not strictly agricultural. * * * If we do not completely nationalize these two of our most important belongings. in view of the constant disposition of public lands in favor of private individuals." (II Sutherland. to the effect that residential lands of the public domain may be considered as agricultural lands. Upon the other hand. Reference is made to an opinion rendered on September 19. be preserved for those under the sovereign authority of that nation and for their posterity. and since under section 1. as indicated above.) And. 6." (Italics ours. by the Hon. schools. and whole towns and cities. p." (2 Aruego. and no valid reason can be adduced for such a discriminatory view. playgrounds. Inasmuch as under section 1. hatcheries. and the only lands that may become private are agricultural lands. strictly agricultural. and "agricultural land" under section 5." may be mistaken to include timber and mineral lands. industrial plants." And thus the change in the final draft is merely one of words in order to make its subject matter more specific with a view to avoiding the possible confusion of ideas that could have arisen from the first draft. and a host of other uses and purposes that are not. The lands are the same in both sections. One of the fundamental principles underlying the provision of Article XIII of the Constitution and which was embodied in the report of the Committee 011 Nationalization and Preservation of Lands and other Natural Resources of the Constitutional Convention. The words "no land" of the first draft. Specially is this so where. the result would be that "aliens may freely acquire and possess not only residential lots and houses for themselves but entire subdivisions. in a speech delivered in connection with the national policy on agricultural lands. Chairman of the Committee on Agricultural Development of the Constitutional Convention. the words "no land of private ownership" of the first draft can have no other meaning than "private agricultural land. whereas residential lands of private ownership cannot be so considered. unqualified by the word "agricultural. Our independence will be just a mockery. in appellant's words. fisheries. markets. airfields. forests. 758. for what kind of independence are we going to have if a part of our country is not in our hands but in those of foreigners?" (Italics ours.meaning throughout the statute. p. as above indicated. the lack of possession of which may cause instant death or the shortening of life. The implication is not accurate. and other natural resources constitute the exclusive heritage of the Filipino nation. 595. timber and mineral lands can never be private. I am afraid that the time will come when we shall be sorry for the time we were born. The wording of the first draft was amended for no other purpose than to clarify concepts and avoid uncertainties. But such difference refers to ownership and not to the class of land.) That this is obnoxious to the conservative spirit of the Constitution is beyond question. almost all. factories.) The only difference between "agricultural land" under section 1. unless a different intention appears. what is important is the nature or class of the property regardless of whether it is owned by the State or by its citizens. Teofilo Sison." and that "they may validly buy and hold in their names lands of any area for building homes. Statutory Construction. Framing of the Filipino Constitution. the prohibition as to the alienable of public residential lots would become superfluous if the same prohibition is not equally applied to private residential lots. if not all. the prohibition as to private residential lands will eventually become more important. health and vacation resorts. and private residential lands are as much an integral part of the national patrimony as the residential lands of the public domain. minerals. It is maintained that in the first draft of section 5.) Professor Aruego says that since the opening days of the Constitutional Convention one of its fixed and dominating objectives was the conservation 157 | P r o p e r t y . this kind of lands can never be private." and lastly into "no private agricultural land" and from these changes it is argued that the word "agricultural" introduced in the second and final drafts was intended to limit the meaning of the word "land" to land actually used for agricultural purposes. the prohibition to transfer the same would be superfluous. said: "The exclusion of aliens from the privilege of acquiring public agricultural lands and of owning real estate is a necessary part of the Public Land Laws of the Philippines to keep pace with the idea of preserving the Philippines for the Filipinos. and. for time will come when. p. Lands and natural resources are immovables and as such can be compared to the vital organs of a person's body. for the conservation of the national patrimony. the residential lands of the public domain shall have become private residential lands. Indeed. is that the former is public and the latter private. of the same tenor was the speech of Delegate Montilla who said: "With the complete nationalization of our lands and natural resources it is to be understood that our God-given birthright should be one hundred per cent in Filipino hands * * *. therefore." (Solicitor General's Brief. They should. section 5 had to be drafted in harmony with section 1 to which it is supplementary.

encumber. No land originally acquired in any manner under the provisions of the former Public Land Act or of any other Act. or associations who may acquire land of the public domain under this Act. 122." In other words. shall be encumbered. in effect. 141. or any interest therein. nor to lands and improvements acquired or held for industrial or residence purposes. We are referring again to Commonwealth Act No. lease. and while the same are in force. lease. or partnerships who may acquire lands of the public domain under this Act or to corporations organized in the Philippines authorized therefor by their charters. to corporations organized in the Philippine Islands authorized therefor by their charters. or alienate land. "SEC. 121. No land originally acquired in any manner under the provisions of this Act. whether strictly agricultural. royal order. aliens were granted the right to acquire private land merely by way of reciprocity. That this prohibition shall not be applicable to the conveyance or acquisition by 158 | P r o p e r t y . residential or otherwise. hold. dispose of. or alienate land. hold. And. or any other provision of law formerly in force in the Philippines with regard to public lands." (Public Land Act. or by royal grant or in any other form. shall be encumbered. the prohibition contained in these two provisions was. terrenos baldíos y realengos. or associations shall be obliged to alienate said lands or improvements to others so capacitated within the precise period 'of five years. or alienate land or permanent improvements thereon or any interest therein. an alien may not even operate a small jitney for hire. royal decree. ordinance. section 8. encumber. to citizens of the countries the laws of which grant to citizens of the Philippine Islands the same right to acquire. and while the same are in force. terrenos baldios y realengos. No land originally acquired in any manner under the provisions of any previous Act. indeed. ordinance. Justice Hontiveros. That in the event of the ownership of the lands and improvements mentioned in this section and in the last preceding section being transferred by judicial decree to persons. however. of the Constitution. to citizens of countries the laws of which grant to citizens of the Philippine Islands the same right to acquire. No. "SEC. That this prohibition shall not be applicable to the conveyance or acquisition by reason of hereditary succession duly acknowledged and legalized by competent courts. 2874. and. alienated. under the penalty of such property reverting to the Government in the contrary case. royal order. This constitutional intent is made more patent and is strongly implemented by an act of the National Assembly passed soon after the Constitution was approved. or partnerships who may acquire lands of the public domain under this Act. as to their own citizens.and nationalization of the natural resources of the country. there being practically no private land which had not been acquired by any of the means provided in said two sections.) This is ratified by the members of the Constitutional Convention who are now members of this Court. nor any permanent improvement on such land. nor any permanent improvement on such land. 2874 sections 120 and 121 which granted aliens the right to acquire private lands only by way of reciprocity. upon express authorization by the Philippine Legislature. except to persons. Mr. to corporate bodies organized in the Philippine Islands whose charters may authorize them to do so. corporations or associations not legally capacitated to acquire the same under the provisions of this Act. upon express authorization by the Philippine Legislature. hold. Then came the Constitution and Commonwealth Act No. however. and. 120. corporations. or conveyed. encumber. royal decree. (2 Aruego. or lands of any other denomination that were actually or presumptively of the public domain. Framing of the Philippine Constitution. shall be encumbered. nor any permanent improvement on such land. or lands of any other denomination that were actually or presumptively of the public domain. Justice Briones. dispose of. to citizens of countries the laws of which grant to citizens of the Philippine Islands the same right to acquire. corporations or associations who may acquire land of the public domain under this Act or to corporate bodies organized in the Philippines whose charters authorize them to do so: Provided. alienated. only in the manner and to the extent specified in such laws. or permanent improvements thereon. shall be encumbered. or conveyed. it is certainly not hard to understand that neither is he allowed to own a piece of land. that no private land could be transferred to aliens except "upon express authorization by the Philippine Legislature. lease. such persons. but not thereafter. p. namely. while used for such purposes: Provided. or transferred.) It is to be observed that the phrase "no land" used in these section refers to all private lands. corporations. alienated. and only in the manner and to the extent specified in such laws. corporations. there were in the Public Land Act No. associations. or any other provision of law formerly in force in the Philippine Islands with regard to public lands. Therefore. Mr. further. nor any permanent improvement on such land. corporations. 592. 141 was passed. Justice Perfecto. Prior to the Constitution. alienated. No land originally acquired in any manner under the provisions of this Act. dispose of. or transferred. if under Article XIV. or by royal grant or in any other form. but not thereafter: Provided. 123. and Mr. except to persons. associations. as to their own citizens. except to persons. Said section reads as follows: "SEC. except to persons. sections 122 and 123 of which read as follows: "SEC.

141. Had the Congress been of opinion that private residential lands may be sold to aliens under the Constitution.reason of hereditary succession duly acknowledged and legalized by competent courts: Provided. Perhaps the effect of our construction is to preclude aliens. and.. The failure of the highest tribunal of the land to do its duty in this case would have amounted to a national disaster. is to conform to the absolute policy contained in section 5 of Article XIII of the Constitution which. We would have preferred heroic defeat to inglorious desertion. 011 June 14. the Congress approved Republic Act No. corporations or associations not legally capacitated to acquire the same under the provisions of this Act. But if this is the solemn mandate of the Constitution. finally. Rather 159 | P r o p e r t y ." These two sections are almost literally the same as sections 120 and 121 of Act No. the only difference being that in the new provisions. 2874. however. further. and Briones. It is said that the lot in question does not come within the purview of sections 122 and 123 of Commonwealth Act No. such persons. and who expect to leave long and ramifying dendriform lines of descendants. without costs. which is the day set for the promulgation of this Court's decision. we will not attempt to compromise it even in the name of amity or equity. grants them no right of reciprocity. We would have refused to share the responsibility of causing it by. however. For all the foregoing. deciding the instant case under the provisions of the Public Land Act. which have to refer to lands that had been formerly of the public domain.. 133 which allows mortgage of "private real property" of any kind in favor of aliens but with a qualification consisting of expressly prohibiting aliens to bid or take part in any sale of such real property as a consequence of the mortgage. for prominent members of the National Assembly who approved the new Act had been members of the Constitutional Convention. Should they desire to remain here forever and share our fortunes and misfortunes. It is well to note at this juncture that in the present case we have no choice. we faltered. And. Pablo. such property shall revert to the Government. accordingly. allowing ourselves to act as tools in a conspiracy to sabotage the most important safeguard of the age-long patrimony of our people. We are construing the Constitution as it is and not as we may desire it to be. Perfecto. 1947. JJ. there being no proof that the same had been acquired by one of the means provided in said provisions. We are not. undoubtedly. otherwise. we hold that under the Constitution aliens may not acquire private or public agricultural lands. But clearly it was the opinion of the Congress that such sale is forbidden by the Constitution and it was such opinion that prompted the legislative measure intended to clarify that mortgage is not within the constitutional prohibition. could not bear the thought of the curse they may fling at us should the day arrive when our people will be foreigners in their fatherland. This prohibition makes no distinction between private lands that are strictly agricultural and private lands that are residential or commercial. corporations. J. We are deciding the instant case under section 5 of Article XIII of the Constitution which is more comprehensive and more absolute in the sense that it prohibits the transfer to aliens of any private agricultural land including residential land whatever its origin might have been. Feria. with pride. judgment is affirmed. with gratitude. This legislative construction carries exceptional weight. PERFECTO. Filipino citizenship is not impossible to acquire. admitted freely into the Philippines from owning sites where they may build their homes. This. because in the crucial moment of our history. wittingly or unwittingly. concurring: Today. in prohibiting the alienation of private agricultural lands to aliens. We who have children and grandchildren. We are satisfied. when the vision of judicial statemanship demanded on us the resolution and boldness to affirm and withhold the letter and spirit of the Constitution. or associations shall be obliged to alienate said lands or improvements to others so capacitated within the precise period of five years. they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Hilado. concur. which is again a clear implementation and a legislative interpretation of the constitutional prohibition. The prohibition embraces the sale of private lands of any kind in favor of aliens. no legislative measure would have been found necessary to authorize mortgage which would have been deemed also permissible under the Constitution. including residential lands. might be remembered by future generations always with joy. the right to reciprocity granted to aliens is completely stricken out. Since their residence in the Philippines is temporary. That in the event of the ownership of the lands and improvements mentioned in this section and in the last preceding section being transferred by judicial decree to persons. that aliens are not completely excluded by the Constitution from the use of lands for residential purposes. otherwise their constitutionality may be doubtf ful. the land which destiny or Providence has set aside to be the permanent abode of our race for unending generations.

it took the Supreme Court many days to deliberate on the case. On February 24. 1946. The next case came when the present one was submitted to us for decision on February 3. This surprising assent was given without expressing any ground at all. is not qualified to acquire public or private agricultural lands under the provisions of the Constitution. a majority resolved to ignore the question. But when the decision was promulgated on August 31." The brief was accompanied. Assurance was. the case was submitted for final vote. 1946. was submitted for our decision. 1947. but also in the briefs of the several amid curiæ allowed by the Supreme Court to appear in the case. not only in the brief f or the appellee. acquire private urban lands. under the Constitution. 1947. The case was for the second time submitted for decision on July 3. Director of Lands. by the opinion of Secretary of Justice Jose A." On August 15. for justice. The majority was also overwhelming. As a matter of fact. We are happy to record that this Supreme Court turned an impending failure to a glorious success. 1941. After the last submission. appellant made only two assignments of error. after being reconstituted. Magsalin rendered decision granting the application. The Director of Lands appealed. 1940. the case be submitted for final adjudication. the case of Oh Cho vs. 1945. pressing and far-reaching. appellant Krivenko filed a motion for withdrawal of his appeal.1946. 1946. more than twothirds of the Supreme Court. On July 3. Judge P. it was found that the case was among those which were destroyed in February. After the Supreme Court was reorganized in the middle of 1945. The case had to be reconstituted upon motion of the office of the Solicitor General. one of the main grounds being that "the applicant. nevertheless. a citizen of China. especially on the legal question as to whether an alien may. There were eight of us. decided once and f or all. during the battle for the liberation of Manila. The Director of Lands opposed the application. 1947? 160 | P r o p e r t y . Gaz. according to his own voluntary admission is a citizen of the Chinese Republic. Santos—who.. the case has been submitted for final decision of the Supreme Court since July of 1941. The same legal question raised by appellant is discussed. Appellant chose to keep silent as to his reason for filing the motion. while Chief Justice of the Supreme Court. supporting the same theory as the one advanced by the Director of Lands. we would have been ready to fall enveloped in the folds of the banner of our convictions for truth. Would the Supreme Court permit itself to be cheated of its decision voted since February 24. The Solicitor General's office gave its conformity to the withdrawal of the appeal. we deliberated on the constitutional question for several days. notwithstanding our efforts to have the question. The case was initiated in the Court of First Instance of Tayabas on January 17. Tayabas. On July 10. notwithstanding the fact that it was the main and only legal question upon which appellant Director of Lands relied in his appeal. and the result was that the constitutional question was decided against petitioner. filed with this Court on January 14.than abandon the sacred cause. In the brief filed by Solicitor General Roman Ozaeta. Oh Cho. although both raised but one question. six years ago. Again. which is vital. 1947. in which it was also prayed that. While the decision was being drafted. as Appendix A. and the question has been almost exhaustively argued in four printed briefs filed by the parties and the amici curiæ. which would settle once and for all the allimportant constitutional question as to whether aliens may acquire urban lots in the Philippines. (43 Off. that is. 1939. being a Chinese. afterwards Associate Justice of the Supreme Court and now Secretary of Justice. applied for title and registration of a parcel of land located in the residential district of Guinayangan. The constitutional question was by-passed by the majority because they were of opinion that it was not necessary to be decided. It remained undecided when the Pacific War broke out in December. 866). suffered heroic martyrdom at the hands of the Japanese—addressed to the Secretary of Agriculture and Commerce on July 15. Only three Justices dissented. 1940. the legal one stated in the first assignment of error as follows: "The lower court erred in decreeing the registration of the land in question in favor of the applicant who. for racial survival. with a house thereon. somehow. given that in the next case in which the same constitutional question is raised. the majority shall make known their stand on the question. saving our people from a looming catastrophe. for the evident purpose of preventing the rendering of the majority decision. It has been our lot to be alone in expressing in unmistakable terms our opinion and decision on the main legal question raised by appellant. to dispel definitely the uncertainty gnawing the conscience of the people. An overwhelming majority answered no. the way the majority had voted must have leaked out. and Assistant Solicitor General Rafael Amparo. when an alien.

Justice Tuason voted to grant the motion for withdrawal. on the occasion of the registration by the register of deeds of Manila of land purchases of two aliens. in 6 votes for the denial against 5 for granting. is transferred. or a right. Seven votes were cast for granting the motion and only four were cast for its denial. 128 of the Secretary of Justice which reads as follows: "To ALL REGISTER OF DEEDS : "Paragraph 5 of Circular No. Deeds or documents by which private residential. the same has failed to form a definite opinion. 1946. is hereby amended so as to read as follows: " '5 (a). in pursuance of the so-called Parity Amendment to the Constitution. assigned or encumbered to an alien. Article XIII (formerly Article XII) of the Constitution of the Philippines. as must be expected.' " "ROMAN OZAETA "Secretary of Justice" Paragraph. Justice Briones was then absent. But the final result was different. Justice Pablo. Such classes of land are not deemed included within the purview of the prohibition contained in section 5. 133. that is. whether of private ownership or pertaining to the public domain. citizens of the United States and corporations or associations owned or controlled by such citizens are deemed to have the same rights as citizens of the Philippines and corporations or associations owned or controlled by citizens of the Philippines in the acquisition of all classes of lands in the Philippines. amended by the above is as follows: "Deeds or other documents by which a real property. During the effectivity of the Executive Agreement entered into between the Republic of the Philippines and the Government of the United States on July 4. Justice Hontiveros. 5 of Circular No. Justice Bengzon. but. Mr. a new vote was taken. who is not an enemy national. so that he could avail himself of the right to appeal therefrom. 1935. when all the members of the Court were already present. followed by controversial speeches. of the Secretary of Justice and with the practice consistently followed for nearly ten years since the Constitution took effect on November 15. 1947. Mr." And we proposed that the rule be complied with. or any right. After a two-day deliberation. corporation." 161 | P r o p e r t y . may be entered in the primary entry book. a heated public polemic flared up in one section of the press. under the provisions of section 200 of the Revised Administrative Code. although we insisted that it was unnecessary. renewable for another five years. dated August 25. and culminating in the issuance on August 12. 615. the petition or motion shall be denied. title or interest therein is transferred. Justice Padilla and Mr. as Mr. 1945. Instruments by which private real property is mortgaged in favor of any individual. "'(c). broadcast by radio. may be accepted for registration. But then. Justice Parás. and sections 122 and 123 of Commonwealth Act No.) "'(b).Discussion immediately ensued as to whether the motion should be granted or denied. Justice Briones voted for the denial of the motion. Justice Hilado and Mr. 14. This is in conformity with Opinion No. 1947. (Section 1. the Chief Justice. Those who voted to deny the motion were Mr. Mr. the registration of said deeds or other documents shall be denied—unless and/or until otherwise specifically directed by a final decision or order of a competent court—and the party in interest shall be advised of such denial. 5-5. Justice Feria. the former as amended by Commonwealth Act No. or title thereto. and his vote would have resulted. or association for a period not exceeding five years. whether this Court should abstain from promulgating the decision in accordance with the result of the vote taken on February 24. of Circular No. our brethren resolved to give him the opportunity of casting his vote on the question. who is not an enemy national. Republic Act No. The deadlock resulting from the tie should have the effect of denying the motion. Mr. 1945. may be registered. Notwithstanding this. commercial. Mr. as if. industrial or other classes of urban lands. Mr. The vote thus resulted in a tie. 141. Article XIII of the Constitution against the acquisition or holding of "private agricultural land" by those who are not qualified to hold or acquire lands of the public domain. after more than six years during which the question has been submitted for the decision of the highest tribunal of the land. dated August 25. The denial of registration shall be predicated upon the prohibition contained in section 5. series of 1941. assigned or encumbered to an alien. Days later. by providential design or simply by a happy stroke of luck or fate. 284. ourselves. and the denial be promulgated. or an interest therein. as provided by section 2 of Rule 56 to the effect that "where the Court in banc is equally divided in opinion * * * on all incidental matters. 14.

the votes on the motion stood 7 to 4. Justice Briones voted to deny it. Register of Deeds. He has voted once on the motion to withdraw the appeal. If the processes had in this case had been given the publicity suggested by us for all the official actuations of this Supreme Court. Mr. who was ill but might have been able to attend if advised of the necessity of his presence. Said first vote took place many days before the one alluded to by Mr. Mr. the Court by a vote of seven to three did not approve the proposition. submitted to us in a pending litigation. the motion to withdraw is considered denied. Justice Hontiveros' vote would have changed its result unless he changed his mind. Justice Hontiveros.The polemic f found echo even in the Olympic serenity of a cloistered Supreme Court and the final result of long and tense deliberation which ensued is concisely recorded in the following resolution adopted on August 29. that opportunity should not have been denied on grounds of pure technicality never invoked before. without any previous notice the matter was brought up again and re-voted upon. while the Chief Justice. Justice Pablo. the result was 5 to 5. Therefore. 128. "Mr. that is. a case already submitted for decision. After full discussion of the matter specially in relation to the Court's discretion (Rule 52. Mr. Mr. Before these dissents were filed. Justice Feria. City of Manila. with the same result. it should have been known by the whole world that since July. Justice Briones was absent and it was decided to wait for him. but in view of the latter's absence due to illness and petition for retirement. Thereupon Mr. according to the rules. be counted in favor of the vote for the allowance of the motion to withdraw. had the effect of trying to take away f from the Supreme Court the decision of an important constitutional question. when all the members were present. more than a year ago. Last month. the petition should have been considered denied. that when the petition to withdraw the appeal was submitted for resolution of this Court two days after the petition was filed. As the voting thus stood. Justice Hontiveros be asked to sit and break the tie. Mr. Justice Perfecto and Mr. Justice Bengzon. for purposes of completeness of the narration of facts. The voting stood 7 for allowing the dismissal of the appeal and 4 against. Justice Briones expressed the intention to put in writing their dissents. Appellant Krivenko moved for the reconsideration of the denial of his withdrawal of appeal. on which occasion all the 11 justices were present. Above all. Section 2 of Rule 56 requires that all efforts be exerted to break a deadlock in the votes. I deplore the inability of the majority to agree to my proposition that Mr. A redeliberation was consequently had. section 4. Justice Padilla. Justice Parás states: Justice Hontiveros is aware of and conversant with the controversy. a fact of which no one is aware. the opinion of the members of this Court had already been crystallized to the effect that under the Constitution. I counted that the proceeding. Mr. and Rule 58). Justice Padilla and Mr. Justice Hilado. and expressed the opinion that since then. if he was not to be given an opportunity to recast his vote. He is still a member of the Court and. this Justice's vote in the penultimate voting should. Justice Perfecto stated. "Mr. Justice Hontiveros had every reason to believe that the matter was over as f ar as he was concerned. on reconsideration. wittingly or unwittingly. My opinion is that since there was no formal motion for reconsideration nor a previous notice that this matter would be taken up once more. Justice Tuazon voted to grant. about one month afterwards. was arbitrary and illegal. Justice Parás. "Mr. the same subject was deliberated upon and a new voting was had." The resolution does not recite all the reasons why Mr. alleging that it became moot in view of the ruling made by the Secretary of Justice in circular No. under Rule 56. Justice Parás proposed that Mr. Justice Perfecto and Mr. Mr. Mr. We denied the motion for reconsideration. another changed his vote resulting in a tie. Mr. Now. Justice Padilla states that in his opinion the tie could not have the effect of overruling the previous vote of seven against four in favor of the motion to withdraw. Justice Hontiveros be asked to participate in the resolution of the motion for withdrawal. five justices voted to grant and five others voted to deny. can be present at any session of the Court. "Mr. and since Mr. Justice Tuason states: The motion to withdraw the appeal was first voted upon with the result that 5 were granting and 5 for denial Mr. We did not want to entertain any obstruction to the promulgation of our decision. 1946. aliens are forbidden from acquiring urban lands in 162 | P r o p e r t y . I hold it to be fundamental and necessary that the votes of all the members be taken in cases like this. Mr. section 2. the appellant filed a motion to withdraw his appeal with the conformity of the adverse party. thus giving us a hint that the latter. Justice Hontiveros did not participate in that last two votings and why it became unnecessary to wait f or him any f further to attend the sessions of the Court and to cast his vote on the question. 1947: "In Krivenko vs. was absent. in the absence of one member. on a moment's notice. Some time later. L-630.

thermistors and other long range detection devices to stave off far-away enemy attacks in war. The oracle of Delphus must speak so that the people may know for their guidance what destiny has in store for them. Article XIII has been inserted so as to avoid all doubt that all the natural resources of the country are reserved to Filipino citizens. under the moral leadership of the hero. irrigated by the waters of the Tigris and Euphrates. and it must have known that in this case a great majority had voted in that sense on February 24. as the ultimate guardians of the Constitution. Thus big religious landed estates were formed. any kind of land.the Philippines. First came the Spanish encomenderos and other gratuitous concessioners who were granted by the Spanish. in order to conquer the eternal bliss of heaven. without excluding this Supreme Court. This Supreme Tribunal. One of the fundamental purposes of the government established by our Constitution is. they should decide to renounce that age-long patrimony. they were able to obtain by donation or by will the lands of many simple and credulous Catholics who. Profiting from the lessons of history. Save by hereditary succession—the only exception allowed by the Constitution—no foreigner may by any means acquire any land. In the same way that scientists and technicians resorted to radars. with his life at the hands of Lapulapu's men in the battle of Mactan. Immediately came the friars and other religious corporations who. The great question as to whether the land bequeathed to us by our f oref athers should remain as one of the most cherished treasures of our people and transmitted by inheritance to unending generations of our race. the wisdom of which cannot be disputed in a world divided into nations and nationalities. resignation. and the formation of the Spanish. for his daring enterprises. is not a new one. which. leaving in destitute their descendants and relatives. it is our inescapable devoir. sonars. The constitutional question involved in this case cannot be left undecided without jeopardizing public interest. conquests. 1947. Dutch. While the doubt among the people as to what is the correct answer to the question remains to be dissipated. almost four centuries ago. those guarantees might not be needed and our people may eliminate them. and credulity of a people who. had many of its iron links forged in our soil since Magellan. after conversion to Catholicism. But in the meantime. the foreign religious orders set aside all compunction to acquire by foul means many large estates. Portuguese. The case of the family of Rizal is just an index of a situation. on one side. the achievements of Cecil Rhodes. and should not withhold and keep it f or itself with the same zealousness with which the ancient families of the Eumolpides and Keryces were keeping the Eleusinian mysteries. our people have continuously been engaged in an unrelentless struggle to defend the national patrimony against the aggressive onslaughts of foreigners bent on grabbing our lands. many under the guise of chaplaincies or other apparently religious purposes. Taking advantage of the uncontrollable religious leadership. undermining public morale and leading to evils of unpredictable extent. the Delegates to our Constitutional Convention felt it their duty to insert in the fundamental law effective guarantees for conserving the national patrimony. Our land is the most important of our natural resources. by constitutional amendment. When the ideal of one world should have been translated into reality. notwithstanding their sacred vow of poverty. and colonial imperialism recorded in the darkest and bloodiest pages of history from the bellicose enterprises of the Hittites in the plains of old Assyria. finally drove our people into a national revolution not only against the Spanish sovereignty under which the social cancer had grown to unlimited proportions. felt their greed whetted by the bountiful opportunities for easy and unscrupulous enrichment. up to the conquests of Hernan Cortes and Pizarro. crown immense areas of land. To make more specific the mandate. embraced with tacit faith all its tenets and practiced them with the loyalty and fidelity of persons still immune from the disappointments and bitterness caused by the vices of modern civilization. renounced all their property in f avor of religious orders and priests. Through the practice of confession and other means of moral intimidation. by overwhelming majority. That land should be kept in the hands of our people until. that it "shall conserve and develop the patrimony of the nation. The long chain of land-grabbing invasions. and of the Christian virtues of obedience. depredations. never to neglect the enforcement of its provisions whenever our action is called upon in a case. there will be uneasiness. and under the system unbearable iniquities were committed. already knows what the correct answer is. the greatest navigator of all history. said Delegates set the guarantees to ward off open inroads or devious incursions into the national patrimony as a means of insuring racial safety and survival. like the one now before us. The uncertainty in the public mind should be dispelled without further delay. and the invasion of Egypt by the Hyksos." That mandate is addressed to all departments and branches of our government. French and German colonial empires. mostly based on the eternal tortures of hell. in its very words. humility. in the 163 | P r o p e r t y . had set foot at Limasawa and paid. Since then.

had bought fifteen thousand acres from John Peck of Boston. in 1810. the lands had fallen into American hands and although the scandal was of gigantic proportions. The 1795 legislature of Georgia sold its western lands. J. But in the case of Georgia. under the circumstances. section 4.' That may be. "But could they not get a decision from the Supreme Court? Robert Fletcher of Anhirst. a situation may be created in which it will be hard to nullify the transfers and the nullification may create complications and problems highly distasteful to solve. section 2. Under the principle that where the 164 | P r o p e r t y . Jr. Yet Marshall decided it. A weaker man than John Marshall. being null and void ab initio." We see from the above how millions of acres of land were stolen from the people of Georgia and due to legal technicalities the people were unable to recover the stolen property. therefore. should spare no efforts so that any and all violations which may have taken place should be corrected. all those who. that was the overpowering desire of the great majority of the Delegates. but it was the act of a stateman. How could they clear their title? Alexander Hamilton gave an opinion. aliens are not allowed to acquire the ownership of urban or residential lands in the Philippines and. just as Hamilton said it was. He told Cranch that the Court was reluctant to decide the case 'as it appeared manifestly made up for the purpose of getting the Court's judgment. no national disaster ensued. that. If we should decide this question after many urban lots have been transferred to and registered in the name of alien purchasers. We decide. That was the overwhelming sentiment prevailing in the Constitutional Convention. the motion was denied. I ultimately voted to grant the motion after the matter was finally deliberated and voted upon. and that was what was solemnly ratified in the plebiscite by our people. which we affirm. As all public officials have sworn. Eleven million of the acres had been bought for eleven cents an acre by leading citizens of Boston. and one less wise and courageous. and he held the repeal void. From pages 22 and 23 of the book of Charless P. and are duty bound. more and more people had bought. to obey and defend the Constitution. Peck. when appellee's brief has been filed. The resolution to deny was adopted in the exercise of the court's discretion under Rule 52. But the votes of the ten Justices participating were evenly divided. The Court has always been able to overcome its judicial diffidence on state occasions." we quote the following: "It is of interest that it seems to have happened chiefly in important cases.' says Beveridge. We conclude that. the sale made in his favor by the Magdalena Estate. By that time. Fletcher vs. are in charge of enforcing the prohibition as laid down and interpreted in the decision in this case. under the provisions of the Constitution. all possible intendments in favor of another department. Krivenko. and that the lower court acted correctly in rendering the appealed decision. The purchase price was only half a million dollars. appellant Alexander A. upon the above premises.. Plainly it was a friendly suit. and their title was in issue. HILADO. that was the dominating thought that was intended to be expressed in the great document. Perhaps it was the greatest real estate steal in our history. as a consequence. although there may not be any scandal at all. in relation with Rule 56. could not acquire by purchase the urban or residential lot here in question. In our case if our lands should fall into foreign hands. entitled "Lions Under the Throne. and increasingly soon afterwards.Philippines. 'is one of the finest proofs of 'his greatness. The next legislature repealed the statute for fraud. concurring: Upon appellant's motion to withdraw his appeal herein with the conformity of the Solicitor General in behalf of appellee. New Hampshire. Inc. and he won. It involved a national scandal. indulging. would have dismissed the appeal. That was the first case in which the Court held a state statute void. at the time. the catastrophe sought to be avoided by the Delegates to our Constitutional Convention will surely be in no remote offing. by their f functions. not of a judge. Fletcher appealed. to speculators. He sued Peck. The urgency of settling once and forever the constitutional question raised in this case cannot be overemphasized. Marshall was nobody's fool. 'The fact that Marshall rendered an opinion. and under Rule 52. by virtue of which it has discretion to deny the withdrawal of the appeal even though both appellant and appellee agree upon the withdrawal. the bribery of legislator. not being a Filipino citizen.' John Quincy Adams so reports in his diary. all acquisitions made in contravention of the prohibitions since the fundamental law became effective are null and void per se and ab initio. but not before the land companies had completed the deal and unloaded. who then were rankling by the sore spot of illegally Japanized Davao. is the stock example. that the repeal of the grant was void under the Constitution as an impairment of the obligation of a contract. The Georgia case is an objective lesson upon which we can mirror ourselves. Curtiss. section 4. that was what the Committee on Style— the drafter of the final text—has written in the Constitution. most of Alabama and Mississippi.

ownership or lease of a house or building thereon. tal es su acabada y compacta elaboración. to the effect that private residential. "whether or not an alien under our Constitution may acquire residential land." (Opinion. of the Constitution". of the Secretary of Justice. The very doctrine that the three coordinate. pero bien considerados los hechos se verá que no ha habido demora en el presente caso. mucho menos una demora desusada. p. máxime tratándose. En algunos comentarios adelantados por cierta parte de la prensa— impaciencia que sólo puede hallar explicación en un nervioso y excesivo celo en la vigilancia de los intereses públicos.) Leases of residential lands. 14. bajo las circunstancias." As a necessary consequence. none of us—the other governmental departments included—would desire such a situation to ensue. made at a time when the self-same question was pending decision of this Court. Public respect f or and confidence in each department must be striven for and kept.necessary number have concurred in an opinion or resolution. dated August 12. was issued in good faith. the decision or determination rendered is the decision or determination of the court (2 C. for example. S. Me refiero a la moción que el 10 de Julio presentaron los abogados del apelante pidiendo permiso para retirar su apelación. or acquisition. to decide a question of such a momentous transcendence. Perfecto. conforme: Estoy conforme en un todo con la ponencia. después de laboriosas deliberaciones este asunto se puso finalmente a votación el 24 de Febrero de este año. are not covered by the decision. After all. I have signed said decision. given in advance of its own decision. en que las cuestiones planteadas y discutidas no tenían la densidad constitucional y jurídica de las que se discuten en el presente caso.° de Abril en que comenzaron las vacaciones judiciales. I. 128. This will naturally detract in no small degree f from public respect and confidence towards the highest Court of the land. namely. I think that under the circumstances it is well for all concerned that the Court should go ahead and decide the constitutional question presented. that declaration in sub-paragraph (b) of paragraph 5 of Circular No. En realidad. I have distincly noticed that the decision of the majority is confined to the constitutional question here presented. Of course. industrial or other classes of urban lands "are not deemed included within the purview of the prohibition contained in section 5. como se trata. for any lowering of the respect and diminution of that confidence will in the same measure take away from the very usefulness of the respective department to the people. peculiarly its own. particularmente sobre ciertas fases extraordinarias de este asunto harto singular y extraordinario.. co-equal and independent departments should be maintained supreme in their respective legitimate spheres. J. no habían transcurrido más que 34 días. the resolution denying the motion to withdraw the appeal was the resolution of the court. y cuando se reanudaron formalmente las sesiones de esta Corte en Julio se suscitó un incidente de lo más extraordinario—incidente que prácticamente vino a impedir. Escribo. BRIONES. the people may see in such an attitude an abandonment by this Court of a bounden duty. commercial. a paralizar la pronta promulgación de la sentencia. a consistent advocate and defender of the principle of separation of powers in a government like ours that I have always been. in view of an opinion. la pregunta tiene justrficación. de la conservación del patrimonio nacional—se ha hecho la pregunta de por que se ha demorado la promulgación de la sentencia. Hay que tener en cuenta que desde el 24 de Febrero en que se votó finalmente el asunto hasta el 1. M. A simple vista. Pursuant to Rule 56. where the court in banc is equally divided in opinion. With these preliminary remarks and the statement of my concurrence in the opinion ably written by the Chief Justice. Conforme se relata en la concurrencia del Magistrado Sr. which was already amended. by an officer of another department. the court as to decide the case upon the merits. confirmándose la sentencia apelada por una buena mayoría. hubo más lentitud en casos no tan díficiles ni tan complicados como el que nos ocupa. que autorice y justifique una crítica contra los métodos de trabajo de esta corte. For this reason. I am one of those who presume that Circular No. section 2. Lo sorprendente de esta moción es que 165 | P r o p e r t y . no ya en esta Corte ahora. gives rise to the serious danger that should this Court refrain from deciding said question and giving its own interpretation of the constitutional mandate. 2. Article XIII. such a motion "shall be denied. El curso seguido por el asunto ha sido normal. habiéndose votado el asunto todavía desde casi comienzos del año. alarmante. sino aún en el pasado. esta opinion separada nada mas que para unas observaciones. makes it at once the right and the duty of each to defend and uphold its own peculiar powers and authority. antes de la guerra. a la cual no se puede añadir ni quitar nada. I believe that we should avert and avoid any tendency in this direction with respect to this Court. 1947. sin embargo. 296).. But at the same time.

También informó el Procurador General verbalmente ante esta Corte. Pero lo más sorprendente todavía es la conformidad dada por el Procurador General. también escueta e inceremoniosamente. el Secretario de Justicia. tanto interés y tanto celo por la parte apelante como este que nos ocupa. creían que la Constitución prohibe a los extranjeros la adquisición a título dominical de todo género de propiedad inmueble. 128 del Secretario de Justicia expedida el 12 de Agosto próximo pasado. que el meollo del asunto. por su parte. comerciales. todos los ángulos de la formidable cuestión constitutional objeto de este asunto. en medio de la Corte: me refiero a la circular núm. o cualquier derecho. se transfieren. entablando fuerte lid con los abogados del apelante Con la moción de retirada de la apelación se hubo de retardar necesariamente la promulgación de la sentencia pues trabajosas deliberaciones fueron necesarias para resolver la cuestión. el asunto estaba votado y no faltaba más que la firma y promulgación de la decision juntamente con las disidencias. de 31 páginas. sin excluir los solares residenciales. esto es. por medio de esta circular. 32 días después de presentada la moción de retirada de la apelación. la circular reforma el párrafo 5 de la circular núm. es decir. de\ Reglamento de los Tribunales teníamos absoluta discreción para conceder o denegar la moción. la lis mota era eso—la interdicción constitucional—. que si una mayoría de esta Corte estaba convencida. 14—prohibición que. 1945. Digo que es sorprendente la retirada de la apelación porque pocos casos he visto que hayan sido argüidos con tanta energía. siempre que no se tratase de terrenos públicos o de "terrenos privados agrícolas. siempre que los terrenos objeto de la escritura fuesen "residenciales. Así estaban las deliberaciones cuando ocurre otro incidente mucho más extraordinario y sorprendente todavía que la retirada no explicada de la apelación con la insólita conformidad del Procurador General. nuestro claro deber era apresurarnos a dar pleno y positivo cumplimiento a la Constitución al presentarse la primera oportunidad. ceden o gravan a un extranjero que no es nacional enemigo. es precisamente el objeto del presente asunto—venía prácticamente a escamotear la cuestión discutida. El Procurador General. industriales u otras clases de terrenos urbanos. abandono de un deber jurado. Esa circular. la cuestión sub júdice sustrayéndola de la jurisdicción de los tribunales. por tanto. en que se discuten acabadamente. sin explicar el por que de la retirada. toda vez que los alegatos estaban sometidos desde hacia tiempo. ha presentado un alegato igualmente denso.viene redactada escuetamente. el Departamento de Justicia venía a arrebatar el asunto de nuestras manos. Perfecto: así que me creo excusado de transcribirla in toto. sino que cuando se llamó a vista el asunto informaron verbalmente ante esta Corte argumentando vigorosa y extensamente sobre el caso. título o interés en ellos. anticipándose a resolverlo por si mismo y dando efectividad y vigor inmediatos a su resolución mediante la correspondiente autorización a los Registradores de Títulos. como queda dicho." es decir." En otras palabras. 14 del mismo Departamento de Justicia de fecha 25 de Agosto. sin nubes. cayera de pronto un bólido en medio de nosotros. de las manos de esta Corte. Los abogados del apelante no sólo presentaron un alegato concienzudo de 34 páginas. dividiéndose casi por igual los miembros de la Corte sobre si debía o no permitirse la retirada Había unanimidad en que bajo \a regla 52. ni expresar ningún fundamento. sección 4. no había otra manera de decidirlo más que aplicando la Constitución. y levanta la prohibición o interdicción sobre el registro e inscripción en el registro de la propiedad de las "escrituras o documentos en virtud de los cuales terrenos privados residenciales. 166 | P r o p e r t y . comerciales e industriales.) Pero otros Magistrados opinaban que en el estado tan avanzado en que se hallaba el asunto los dictados del interés público y de la sana discreción requerían imperiosamente que la cuestión se atacase y decidiese frontalmente. al derogar la prohibición decretada en el párrafo 5 de la circular núm. hipoteca o cualquier otro gravamen a favor de extranjeros. obrar de otra manera sería deserción. comerciales e industriales. de que existía esa interdicción constitucional contra la facultad adquisitiva de los extranjeros. Dicho crudamente. algo así como si de un cielo sereno." La comparación de esa circular con un bólido caído súbitamente en medio de la Corte no es un simple tropo. como al parecer lo estaba. 14 del mismo Departamento—la prohibición que precisamente ataca el apelante Krivenko en el asunto que tenemos ante Nos—y authorizaba y ordenaba a todos los Registradores de Títulos en Filipinas para que inscribiesen las escrituras o documentos de venta. En breves términos. algunos Magistrados opinaban que la discreción debía ejercitarse en favor de la retirada en virtud de la práctica de evitar la aplicación de la Constitución a la solución de un litigio siempre que se puede sentenciarlo de otra manera. Sin embargo. no es una mera imagen retórica: refleja una verdadera realidad. hasta el punto máximo de saturación y agotamiento. dejaba sin efecto la prohibición contenida en la circular núm. Esa circular se cita comprensivamente en la ponencia y su texto se copia íntegramente en la concurrencia del Magistrado Sr. (Entre los Magistrados que pensaban de esta manera se incluían algunos que en el fundo del asunto estaban a favor de la confirmación de la sentencia apelada.

A la luz de esa circular queda perfectamente explicada la moción de retirada de la apelación consentida insólitamente por el Procurador General. fuera de esas fronteras el campo ya es pura y exclusivamente judicial. bajo la carta orgánica y las leyes. the question shall be referred to the judge of the fourth branch of the Court of First Instance of the Ninth Judicial District either on the certificate of the register of deeds stating the question upon which he is in doubt or upon the suggestion in writing of the party in interest. excepto cuando venían llamados a hacerlo. ya de carácter puramente administrativo. and thereupon said judge. upon consideration of the matter as shown by the record certified to him. es de esta última naturaleza: en ella se instruye y ordena a los registradores de títulos que no registren ni inscriban ventas de propiedad inmueble a extranjeros. Esto se hizo bajo la Ley Cooper. y esto se hizo bajo la Ley Tydings- McDuffie. ora por fundamentos constitucionales. 14 by expressly authorizing the registration of the sale of urban lands to aliens. libres de toda ingerencia extraña. Y cuando una parte no estuviere conforme con la decision de la Sala Cuarta. La ley no confiere ninguna facultad al Departamento de Justicia para enjuiciar y decidir el caso. mortgage. la inhibición era tradicionalmente absoluta. así sean terrenos residenciales.° de Septiembre. en los anales de la administración de justicia en Filipinas en cerca de medio siglo que llevamos de existencia bajo un gobierno constitucional y sustancialmente republicano. For this reason the court no longer has jurisdiction to act on the case. vgr. 128 of the Department of Justice. He aquí las propias palabras de la moción del apelante Krivenko: "ln view of Circular No. a los registradores acerca de cómo deben desempeñar sus funciones. que yo sepa. dated August 12. Creo que el pueblo filipino tiene derecho a que eso mismo se haga bajo el gobierno de la República.—When the register of deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed. or other instrument presented for registration or where any party in interest does not agree with the register of deeds with reference to any such matter. ya de carácter semijudicial. en su moción de 1. Según este artículo. cuando la soberanía americana era más propensa a manejar el bastón grueso y afirmar vigorosamente los fueros de su poder y autoridad. esto se hizo bajo la Ley Jones. Tampoco se niega la facultad que tiene dicho Departamento para expedir circulares. Pero la facultad llega sólo hasta allí. la ley orgánica del Commonwealth. el inhibirse de expresar alguna opinion sobre un asunto ya sometido a los tribunales. en representación del gobierno. there is no longer a controversy between the parties and the question is now moot. que es de su propia hechura. pidiendo la reconsideración de nuestro auto denegando la retirada de la apelación. Fuera de estos casos. mucho menos al Departamento de Justicia o a alguna de sus dependencias entrometerse en el ejercicio ordenado por los tribunales de su jurisdicción y competencia. and in 167 | P r o p e r t y . which amends Circular No. No faltaba más que los hombres de su propia raza le nieguen lo que no le negaron gobernantes de otra raza! No se niega la facultad de supervision que tiene el Departamento de Justicia sobre las oficinas y dependencias que caen bajo su jurisdicción. en los trámites de un litigio. He aquí el texto íntegro del artículo 200 del Código Administrativo: "SEC. Cuando una determinada circular del Departamento a los registradores es combatida o puesta en tela de juicio ante los tribunales. comerciales o industriales a extranjeros? Por eso no es extraño que los abogados del apelante Krivenko. 200. Y la razón era muy sencilla: jamás se quería estorbar ni entorpecer la función de los tribunales de justicia.. 1945. ya no es el Departamento el que tiene que determinar o resolver la disputa. De hecho la circular núm. dijeran por primera vez como fundamento que la cuestión ya era simplemente académica ("question is now moot") en vista de esa circular y de la conformidad del Procurador General con la retirada de la apelación. el asunto o disputa debe elevarse en forma de consulta a la Sala Cuarta del Juzgado de Primera Instancia de Manila. los cuales. civil o criminal. que es suyo. es que ello no tiene precedentes. Era una tradición firmemente establecida en las esfersas del Poder Ejecutivo—tradición inviolada e inviolable—máxime en el Departamento de Justicia y en la Fiscalía General."1 Lo menos que se puede decir de esa acción del Departamentro de Justicia atravesándose en el camino de los tribunales mientras un asunto está sub júdice. ¿Para que esperar la decision de la Corte Suprema que acaso podría ser adversa? ¿No estaba ya esa circular bajo la cual podían registrarse ahora las ventas de terrenos residenciales. 1947. ora por razones meramente legales. comerciales o industriales. 14 de 25 de Agosto. propiamente planteado ante dichos tribunales. Reference of doubtful matter to judge of fourth branch of Court of First Instance at Manila. and in view of the fact that the Solicitor General has joined in the motion for withdrawal of the appeal. Así lo dispone terminantemente el artículo 200 del Código Administrativo. se vió jamás a un departamento ejecutivo del gobierno. ella puede alzarse de la sentencia para ante la Corte Suprema. sino que eso compete en absoluto a los tribunales de justicia. observada con la devoción y la escrupulosidad de un rito. dando instrucciones. tenían absoluto derecho a actuar con máximo desembarazo. 1947. Ni aún en los llamados días del Imperio. entre ellas las varias oficinas de registro de la propiedad en Manila y en las provincias.

puede imaginarse la situación tremendamente embarazosa. Krivenko trajo a esta Corte la apelación que estamos considerando. 14. y reafirmar con todo vigor. prefirió adoptar una actitud de elegante inhibición. por tanto. shall enter an order prescribing the step to be taken or memorandum to be made.case of registered lands. parte.) Como se ve. la única. vitalísima del patrimonio nacional que nuestro pueblo ha colocado bajo la salvaguardia de la Constitución. 1945. el cual. pues. es—usando un anglicismo-coigual y coordinado con el poder judicial. He aquí la fraseología pertinente de dicha circular núm. sino que es de interés público. Krivenko presentó su escritura de compraventa al Registrador de la Propiedad de Manila.1 Pero se preguntará naturalmente: ¿son aplicables estas disposiciones cuando la intromisión procede de un ramo del poder ejecutivo. lleva consigo una salvedad o cualificación y es que el litigio se pueda resolver de otra manera. como el caso presente en que el Procurador General ha transigido no sobre un asunto suyo personal o de un cliente particular. sección 4. máxime si esa intromisión se ha realizado so capa de un acto oficial? Cualquiera. de "manos fuera" (hands-off). con toda firmeza su independencia. so that he could avail himself of the right to appeal therefrom. Tan elemental es esto que en la misma circular núm.— unless and/or until otherwise specifically directed by a final decision or order of a competent court—and the party in interest shall be advised of such denial. nuestra discreción es absoluta: no está condicionada por la conformidad o disconformidad de una de las partes. y cuando esta Sala decidió el asunto confirmando la acción del Registrador. Registrador de Títulos de la Ciudad de Manila. por dos razones: (a) porque el Procurador General estaba conforme con dicha retirada.2 Tenemos. le queda el único recurso decente. en virtud de la práctica. 1289. que reza como sigue: "Rule 52." * * * (Las cursivas son nuestras. (b) para evitar la resolución del punto constitucional envuelto. SEC. exponiéndose a chocar con otro poder del Estado. Respecto del segundo fundamento. si bien hay que hacer constar que con la fuerte disidencia de algunos Magistrados. de soslayar toda cuestión constitucional siempre que se pueda. contra el Registrador de Títulos ante la Sala Cuarta del Juzgado de Primera Instancia de Manila. esta Corte. Se arguye con tenaz persitencia que debíamos de haber concedido la moción de retirada de la apelación. por lo menos." Tal es lo que ha ocurrido en el presente caso. estimando dudosa su posición constitucional. pero es evidente que su acción no ata ni obliga a esta Corte en el ejercicio de la discreción que le confiere la regla 52. after notice to the parties and hearing. Para decidir si al recurrido apelado. ¿Qué hizo Krivenko entonces? Elevó acaso el asunto al Departamento de Justicia? No. ordenado: registrar su excepción sin ambages ni eufemismos contra la intromisión. 14: " * * * the registration of said deeds or other documents shall be denied. es la misma constitucionalidad de la compraventa de que se trata. del Reglamento de los Tribunales. Lo que hicieron sus abogados entonces fué presentar una demanda el 23 de Noviembre. dudosa la facultad de esta Corte para imponer una sanción por desacato de acuerdo con el Reglamento de los Tribunales. 4—An appeal may be withdrawn as of right at any time before the filing of appellee's brief. que no sea la constitucionalidad o inconstitucionalidad de la venta del inmueble al apelante Krivenko. ¿Podemos soslayar el punto constitucional discutido en el pleito que nos ocupa? ¿Podemos decidirlo bajo otra ratio decidendi. 14 se dice que la prohibición queda decretada hasta que los tribunales resuelvan lo contrario. inclusive angustiosa en que esta Corte ha quedado colocada con motivo de esa intromisión departamental. según se dice. esto es. En casos recientes en que estaban envueltos otros poderes. o sea que debíamos permitir la retirada de la apelación para no tener que resolver la cuestión constitucional disputada." La posición de la Corte Suprema ante este caso claro y positivo de intromisión (interference) en sus funciones es de lo más peculiar. entre ellos el opinante. After that brief is filed the withdrawal may be allowed by the court in its discretion. Tenemos en el Reglamento de los Tribunales algunas disposiciones que proveen sanción por desacato para ciertos actos de intromisión en el ejercicio de las funciones judiciales. bastará decir que la práctica. como se sabe. principio o doctrina que se invoca. sino de un cliente de mucha mayor monta y significación—el pueblo filipino—y siendo materia del litigio la propiedad del suelo. numerándose dicha demanda como consulta núm. under the provisions of section 200 of the Revised Administrative Code. Élste denegó la inscripción solicitada en virtud de la prohibición contenida en la circular núm. Y la incondicionalidad de esa discreción es más absoluta e imperativa allí donde el litigio versa sobre una materia que no afecta sólo a un interés privado. un caso de verdadera intromisión en que siendo. en virtud de su condición de extranjero? Indudablemente que no: la lis mota. en la mecánica de los poderes del Estado. Respecto de la primera razón será suficiente decir que el Procurador General es libre de entrar en cualquiera transacción sobre un asunto en que interviene. le asiste o no razón para denegar la inscripción solicitada 168 | P r o p e r t y .

como uno de los tres poderes del Estado. pretenda tener "un monopolio de la virtud de sostener y poner en vigor. Pero esta Corte. al país para la tranquilidad y conveniencia de todos—del pueblo filipino y de los extranjeros residentes o que tuvieren voluntad de residir o negociar en estas Islas. excesivo celo. la única disposición legal que se puede aplicar es el artículo XIII. lentitud. en realidad. Por tanto. Así cada cual podría hacer su composición de lugar. 866). Es verdad que allí se planteó también la cuestión constitucional de que se trata. por lo menos. No hay tal cosa. en primer lugar. en que los alegatos de ambas partes ya están sometidos y se halla ahora pendiente de decision. Este artículo confiere jurisdicción exclusiva a los tribunales de justicia para decidir las cuestiones 169 | P r o p e r t y . o de suplir una deficiencia en la Constitución. pues no tengo noticia de que ninguno de la mayoría haya cambiado de opinion sobre el fondo de la cuestión. En el presente caso no ha habido ninguna prisa. Of. sino que. sino que sería un subterfugio impropio. sobre todo. pág." o que se crea más hábil y patriota que los otros departamentos del gobierno. Por el contrario. sección 5. Tuvimos esa mayoría cuando se votó por primera vez este asunto en Febrero de este año (8 contra 3) . indebido. porque cuando se le somete un caso para deliberación y decision esta Corte no tiene el deber de ir averiguando en su Escribanía si hay casos de igual naturaleza. 2874 sobre terrenos de dominio público los extranjeros están excluídos de dichos terrenos. con ésto. 2874 o a cualquier otra ley? Indudablemente que no porque ningún Magistrado de esta Corte. Krivenko. Tanto nacionales como extranjeros sabrían donde invertir su dinero. rápido pronunciamiento de nuestro veredicto sobre la formidable cuestión constitucional debatida. y la Corte Suprema naturalmente no ha de permitir que se le pueda proferir el cargo de que ha abandonado su puesto privilegiado de vigía. Toda evasiva sería negligencia. si ha habido algo. ¿Había justificación para demorar el pronto. imperioso. de centinela avanzado de la Constitución. que se cita en una de las disidencias. 4345). EI caso de Oh Cho contra el Director de Terrenos 43 Gac. ilegal. como se insinúa en una de las disidencias. de la Constitución de Filipinas. 3. mucho menos los disidentes. Todo lo que necesitábamos era tener dentro de esta Corte una mayoría firmemente convencida de que la Constitución provee la interdicción de que se trata. tan pronto como fuese posible? ¿Había alguna razón de interés público para justificar una evasiva? Absolutamente ninguna.por el recurrente y apelante.. es decir. corresponde la facultad exclusiva de disponer de los asuntos judiciales. Con respecto a los asuntos de registro particularmente esa facultad exclusiva no sólo se infiere del principio de la supremacía judicial. consideran el terreno reclamado por Krivenko como terreno público. la tenemos ahora naturalmente. Luego el segundo fundamento alegado para cubrir la evasiva también debe descartarse totalmente. El curso. y en segundo lugar. optó por soslayar el punto constitucional denegando el registro solicitado por Oh Cho. sino que es una parte vital de nuestras instituciones. como se insinúa. Es más: sería abandono de un deber jurado. No. Luego todos los caminosestán bloqueados para nosotros. La salvedad o cualificación de la doctrina o práctica que se invoca no dice: "hay que soslayar la cuestión constitucional siempre que se pueda resolver de otra manera. con la disidencia de algunos Magistrados. ha sido un poco de parsimonia. nuestro deber ineludible. es completamente diferente. Lo debíamos a nuestras conciencias. por el fundamento de que bajo la Ley No. desde luego no mayor prisa que en otros asuntos. una condición peculiarísima de nuestro sistema de gobierno en que a la judicatura. era formular y promulgar inmediatamente ese veredicto. Se insinúa que no debíamos darnos prisa en resolver constitucionalmente el presente asunto. se halla específicamente estatuída en el artículo 200 del Código Administrativo transcrito arriba. No es que la Corte Suprema. De otro modo no sería un simple soslayo legal. desidia. ¿Podemos hacer la misma evasion en el presente caso. que el terreno solicitado se consideró como terreno público.. puesto que pueden presentarse otros de igual naturaleza en tiempo no remoto. la tuvimos cuando después de laboriosas deliberaciones quedó denegada la moción de retirada de la apelación. por cierto que el que lo planteaba -en nombre del Gobierno era el actual Secretario de Justicia que entonces era Procurador General. menos el camino constitucional. Gaz. porque cada caso debe decidirse por sus propios méritos y conforme a la ley pertinente. nada hace falta ya para que se de la señal de "luz verde" a la promulgación de la sentencia. 14. 14 como fundamento de la prohibición o interdicción contra el registro de las ventas de terreno a extranjeros. podría orientarse sin zozobras ni miedo a la incertidumbre. sino que los casos se someten por orden de prelación y prioridad de tiempo a medida que estén preparados para deliberación y decision. y en efecto se cita el caso de Rellosa contra Gaw Chee Hun (49 Off. la salvedad es dentro del mismo caso. el ritmo de los trámites ha sido normal. El principio de la supremacía judicial no es una pretension ni mucho menos un ademán de inmodestia o arrogancia. No hay otra ley para el caso. y lo planteaba en un sentido absolutamente concorde con la circular núm. como ya se ha dicho en otra parte de esta concurrencia. reservando dicha cuestión constitucional para otro caso. acogiéndonos a la ley No. Es evidente que esto tampoco arguye en f avor de la evasiva. como digo en otra parte de esta concurrencia. invocado por el Registrador como defensa e inserto en el párrafo 5 de la circular núm. lo debíamos.

Es injustificada la insinuación de que. Hontiveros al someterse la moción. Hontiveros. a hacer unas cuantas observaciones. Ningún Magistrado pidió que se le esperase o llamase al Sr. a tenor de la regla 56. sustrayéndolo de nuestra jurisdicción. El Magistrado Hontiveros no estaba presente en la sesión por estar enfermo. La explicación es sencilla: nuestra aquiescencia a la retirada hubiera podido interpretarse entonces como que aprobábamos el escamoteo del asunto. Es todavía más injustificada la insinuación de que la denegación de la retirada de la apelación equivale "a asumir que el solicitante-apelante y el Procurador General se han confabulado con el Departamento de Justicia no sólo para ingerirse en las funciones de esta Corte. la mayoría denegó la retirada de la apelación no tanto para resolver el asunto en su fondo o por sus méritos. Tampoco hay tal cosa. corporations. En efecto. se hace la votación y resulta un empate. no private agricultural land shall be transferred or assigned except to individuals. sin embargo. ¿Dónde está. Hontiveros. Todos se conformaron con que se efectuase la votación.—Save in cases of hereditary succession. Toda la cuestión. No queda casi nada por decir sobre el fondo de la cuestión. Ya repetidas veces se ha dicho que el presente asunto se había votado mucho antes de que se expidiese esa circular. 170 | P r o p e r t y . por tanto. y otras sobre historia nacional contemporánea. el apelante. hacer constar que sobre el fondo de la cuestión el Sr. Es más: hubiera podido interpretarse como una abyecta rendición en la pugna por sostener los fueros de cada ramo coigual y coordinado del gobierno. II. al parecer. or associations qualified to acquire or hold lands of the public domain in the Philippines. dónde la "arbitrariedad"? Algunos días después se presentó una moción de reconsideración. Hontiveros. los disidentes dicen que no. como para enervar los efectos de la circular núm. sino pasando por la puerta trasera abierta por esa circular. después de la expedición esas razones quedaron centuplicadas. Tampoco estaba presente el Sr. y esto lo ha reconocido el mismo Departamento de Justicia en su circular núm. unas sobre hermenéutica legal. Hontiveros era uno de los 8 que habían votado en favor de la confirmación de la sentencia apelada. a mi juicio. pero estaban presentes 10 Magistrados. es decir. de la Constitución. sección 2. 128 del Departamento de Justicia. sino para enajenar el patrimonio nacional a los extranjeros. es decir. A la votación precedieron muy laboriosas y vivas deliberaciones." ¿lncluye la palabra "agricultural" aquí empleada los terrenos residenciales. estimo que debe rectificarse la aserción de que el Magistrado Hontiveros fué excluído de la votación que culminó en un empate y que determinó el rechazamiento de la retirada de la apelación. siempre que hubiese quorum. no obstante la ausencia del Sr. 14 al referir tales cuestiones a la determinación o arbitrio judicial en casos de duda o litigio. La rueda de la justicia en la Corte Suprema jamás ha dejado de rodar por la ausencia de uno o dos miembros. más que el número necesario para formar quorum y para despachar los asuntos. 5 contra 5. quedaba naturalmente denegada la moción de retirada. Todos los ángulos y fases de la misma están acabadamente tratados y discutidos en la ponencia. la misma en que ya se alegaba como f fundamento el hecho de que la cuestión ya era simplemente académica (moot question) por la conformidad del Procurador General con la retirada y por la circular núm. Lo que más correctamente podría decirse es que si antes de la expedición de esa desafortunada circular poderosas razones de interés público aconsejaban que se denegase la retirada de la apelación y se diese fin al asunto mediante una sentencia en el fondo. Reglamento de los Tribunales. 128 del Departamento de Justicia. pues. Se ha denegado la retirada de la apelación por razones puramente jurídicas y objetivas.sobre registro. es decir. la cual fué de nuevo denegada. 5. Hontiveros no pudiera estar presente por estar enfermo? ¿lba a detenerse la rueda de la justicia por eso? Conviene. Ningún Magistrado llamó la atención de la Corte hacia la ausencia del Sr. de acuerdo con los dictados de su conciencia. sección 5. La Corte presume que todos han obrado de buena fe. habría ganado entonces su pleito no en virtud de una sentencia judicial. Me limitaré." Esto es inconcebible. sin consideración a los motivos de nadie. se reduce a determinar e interpretar la palabra "agrícola" (agricultural) usada en el artículo XIII. en favor del veredicto de que la Constitución excluye a los extranjeros de la propiedad de bienes raíces en Filipinas. Por último. Pregunto otra vez: ¿dónde está la "arbitrariedad" ? Qué culpa tenía la Corte de que el Sr. De acuerdo con la regla 56. He aquí el texto completo de la sección: "SEC. pues Krivenko. comerciales e industriales? Tal es la cuestión: la mayoría de esta Corte dice que si. aprovechando en este último respecto mis reminiscencias y mi experiencia como humilde miembro que f fuí de la Asamblea Constituyente que redactó y aprobó la Constitución de Filipinas. la "ilegalidad".

un vocablo tenga dos o más significados distintos. Claro M. Recto. Y ¿por que lo admiten? Será porque en la Constitución se define la palabra "agricultural". allí estaba el propio Presidente de la Asamblea Constituyente Hon. considerado como una de las primeras autoridades en derecho constitucional y político en nuestro país. con los prestigios de su reconocida cultura jurídica y humanista. embebida en nuestra jurisprudencia de cerca de medio siglo. Vicente Singson Encarnación. aplicar la definición de la jurisprudencia a ambos tipos de terreno—el público y el privado. industriales y cualquier otra clase de terrenos. sino en virtud del vocablo "public" o "private". subject to rights existing prior to the enactment of such law" 1 . simétrico. También me cupo el honor de pertenecer al llamado Comité de Siete—el comité encargado finalmente de redactar la ponencia de la Constitución. Es absurdo pensar o suponer que en el texto de una ley. tradicional. comerciales. insultante. En el Comité de Siete o de Ponencia figuraban el actual Presidente de Filipinas Hon. que se aplica a la actual Constitución de Filipinas una interpretación clásica. que se refiere a los terrenos agrícolas privados o particulares. pertenece a tales ciudadanos. no ha de tener el mismo significado? ¿Da acaso la Constitución una definición de la palabra "agricultural" cuando se refiere a terreno privado? ¿Dónde está esa definición? ¿O es que se pretende que la diferenciación opera no en virtud de la palabra "agricultural". En otras palabras. Lo admiten porque en esta jurisdicción tenemos una serie consistente de sentencias de esta Corte Suprema en que es jurisprudencia firmemente establecida la doctrina de que la palabra "agricultural" usada en la Ley del Congreso de los Estados Unidos de 1902 (Ley Cooper) y en nuestras leyes de terrenos públicos comprende y abarca solares residenciales. Filemon Sotto. que trata de los terrenos agrícolas de dominio público. pero indudablemente no era inferior a ninguna otra de su tipo en cualquiera otra parte del mundo. La primera parte se compone de las secciones 1 y 2 que vinculan la propiedad de los terrenos públicos en el Estado y disponen que sólo se pueden enajenar a favor de ciudadanos filipinos. esto es. Tuve el honor de pertenecer a aquella Asamblea como uno de los Delegados por Cebú. Rafael Palma. los vocablos allí empleados deben interpretarse en el sentido de que tienen un mismo significado. allí estaba también el Dr. porque en ninguna parte de la Constitución se da tal definición. ex-Senador y ex-Secretario de Gabinete. or associations may acquire and hold. en el sentido de incluir solares residenciales. como se admite. Norberto Romualdez. En ambas secciones se emplea literalmente la frase "private agricultural land. según que se trate de terreno público o privado? Si la intención de la Asamblea Constituyente fuera el dar a la palabra "agricultural" aplicada a terreno privado un significado distinto de cuando se refiere a terreno público. podría equivaler a decir que aquella Asamblea estaba compuesta de miembros ignorantes. corporations. lo hubiese hecho constar así expresamente en el mismo texto de la Constitución Si.2Es decir. pregunto: si la palabra "agricultural" empleada en la primera parte del artículo XIII tiene tal significado—y lo tiene porque la Constitución no da otro diferente—¿por que esa misma palabra empleada en la segunda parte. Manuel Roxas. a menos que la misma ley así lo diga expresamente. líder de la minoría en la primera Asamblea Filipina. o de corporaciones o asociaciones en que el 60 por ciento del capital." La segunda parte la componen las secciones 3 y 5: Ia sección 3 preceptúa que "the Congress may determine by law the size of private agricultural land which individuals. Ahora bien: el artículo XIII consta de dos partes—la primera. lo admiten los mismos abogados del apelante y los Sres. y la sección 5 es la que queda transcrita más arriba y es objeto del presente litigio.Es indudable que por razones sanas de hermenéutica legal el artículo XIII de que se trata debe interpretarse como un todo homogéneo. La presunción es que el legislador sigue y se atiene a las reglas literarias elementales. comerciales e industriales? Indudablemente que no. Magistrados disidentes. sobre todo dentro del estrecho marco de un artículo. Allí había un plantel de buenos abogados. No digo que aquella Asamblea estaba compuesta de sabios. el ex-Magistrado de la Corte Suprema Hon. ex-miembro de la Comisión de Filipinas. comerciales e industriales. el actual Secretario de Hacienda 171 | P r o p e r t y . Allí estaba el Presidente de la Universidad de Filipinas Dr. Pensar de otra manera podría ser ofensivo. por lo menos. Ahora bien." No hay ninguna cuestión de que la frase "public agricultural land" empleada en la primera parte comprende terrenos residenciales. aplicada a terrenos públicos. es lógico inferir que tuvo la misma intención. En ambas secciones se emplea literalmente la frase "public agricultural land. excepto forestales y minerales. y la segunda. cuando la misma Asamblea tampoco definió la palabra con relación a terreno privado. desconocedores de las reglas elementales en la técnica de redacción legislativa. Jose P. la Asamblea optó por no definir la palabra "agricultural" aplicada a terreno póblico porque contaba para ello con la definición clásica establecida en la jurisprudencia. el Hon. unas cuantas líneas más adelante. algunos versados y especialistas en derecho constitucional. el exSenador de Cebú Hon. Laurel.

concretas y definitivas de diferenciación podrían establecerse? ¿Podrían trazarse fronteras inconfundibles entre lo que es agrícola y lo que es residencial. Construction. todavía ofrece dudas a veces ¿cómo no el léxico vulgar. although that sense may vary from the strict literal meaning of the words. aplicada a terrenos privados. * * * Where words have been long used in a technical sense and have been judicially construed to have a certain meaning. commercial or educational. Menos se concibe que. Parás no da ninguna definición. No se puede concebir cómo bajo la inspiración y guía de estas personas pudiera redactarse el texto de un artículo en que un vocablo—el vocablo "agricultural"—tuviera dos acepciones diferentes: una.) Pero acaso se diga que la Asamblea Constituyente ha dejado sin definir la palabra "agricultural" referente a terreno particular. Si hubiéramos de hacer depender la definición de lo que es un terreno agrícola del concepto popular y de los diccionarios. Miguel Cuaderno. o a residencia. y otra. con definiciones específicas y casuísticas. sobre todo. Stat. say residential. ¿Por que en un caso se entrega la definición a la jurisprudencia. Conrado Benitez. Uno de los disidentes el Magistrado Sr. and have been adopted by the legislature as having a certain meaning prior to a particular statute in which they are used. comerciales. como que todavía se ven allí los pilápiles y ciertas partes están cultivadas. aplicada a terrenos privados. ofrecen apoyo seguro para una fiel y autorizada interpretación. o al comercio. así sean los mejores y más cientificamente elaborados ¿qué normas claras. wages. con su infinita variedad de matices e idiotismos? Ahora mismo ¿no estamos presenciando una confusion. "A word or phrase repeated in a statute will bear the same meaning' throughout the statute. as. to the raising of agricultural products. De hecho esos terrenos son agrícolas." (II Sutherland. es decir. pero en virtud de su mayor valor para residencia. diferenciadora. lo más lógico pensar es que al no definir la palabra "agricultural" y al no diferenciar su aplicación entre terrenos públicos y privados. comercial e industrial todo lo que está dentro de una urbe. Pero 172 | P r o p e r t y . al parecer. the agricultural class. El patron más usual de diferenciación es la naturaleza urbana o rural del terreno. Ni los diccionarios. comercial e industrial? ¿Podría hacerse una clasificación que no fuese arbitraria? Indudablemente que no. ni mucho menos el lenguaje popular. según que se dedique al cultivo. unless a different intention appears. Hon. p. Si el texto mismo de la ley. que evitase caos y confusion en la mente de los abogados y del público. agricultural implements. pero que se han convertido en subdivisiones multiplicándose su valor en mil por ciento si no más. el criterio no puede ser más elástico y convencional. * * * The criterion is not mere susceptibility of conversion into a f arm but its greater value when devoted to one or the other purpose".Hon. y denota cuán incierta y cuán confusa es la situación a que da lugar la tesis del apelante y de los que le sostienen. o al habla popular? Aparte de que los miembros y dirigentes de la Asamblea Constituyente sabían muy bien que esto causaría una tremenda confusion. En verdad. comercio e industria se les quiere colocar fuera de la prohibición constitucional. Según ellos. dando a entender con su silencio que endosaba la definición al diccionario o a la usanza popular." También hace referencia el mismo Magistrado al concepto popular. una perplejidad? ¿Hay acaso uniformidad en la definición de lo que es un terreno privado agrícola? No. ciudad o población. Otro disidente el Magistrado Sr. según esta definición. según el concepto popular. o a la industria. y el ex-Decano del Colegio de Artes Liberales de la Universidad de Filipinas." El Magistrado Sr. Los autores de esta definición indudablemente tienen en cuenta el hecho de que en las af ueras de las ciudades existen terrenos inmensos que desde tiempo inmemorial se han dedicado a la agricultura. the rule of construction requires that the words used in such statute should be construed according to the sense in which they have been so previously used. con la manifiesta intención de dejar enteramente la interpretación de la palabra a la luz de una sola común definición—la establecida en la jurisprudencia del asunto típico de Mapa contra Gobierno Insular y otros similares (supra). Padilla dice que "the term private agricultural land means lands privately owned devoted to cultivation. Pero. 758. da por definida la palabra "agricultural". los abogados del apelante definen el vocablo de una manera distinta. tillage. Tuason toma su definición de la palabra "agricultural" del Diccionario Internacional de Webster que dice * * * "of or pertaining to agricultural connected with. si f uese esta la intención. lo que determina la calidad del terreno es su valor relativo. cada cual lo define a su manera. La suposición es igualmente insostenible. e industriales. que la palabra "agricultural". De modo que. "land spoken of as 'agricultural' naturally refers to land not only susceptible of agricultural or cultivation but more valuable for such than for another purpose. se incurriese en una omisión imperdonable: la omisión de una definición especifica. etc. y por que en otro al diccionario. incluye también solares residenciales. esto es. or engaged in. se considera como residencial. Teniendo en cuenta la innegable competencia de los Delegados a la Asamblea Constituyente y de sus liders. aplicada a terrenos públicos. lo hicieron deliberadamente.

en derredor de la famosa cascada de Maria Cristina en Lanao existen grandes extensiones de terreno agrícola. (supra. una granja experimental. a saber: "* * * Tales terrenos (agrícolas. Es más lógico pensar que el criterio que ellos tenían en la mente era el criterio establecido en la jurisprudencia sentada en el asunto clásico de Mapa contra Gobierno Insular y otros asuntos concomitantes citados—criterio más firme. Gobierno Insular. quiere decir) se pueden encontrar dentro de los límites de cualquier ciudad. Se hace hincapié en el argumento de que en el proceso de tamización del artículo XIII durante las deliberaciones de la Asamblea Constituyente y de los Comités de Ponencia y de Estilo al principio no figuraba el adjetivo "agrícola" en la sección 5. redondeándose entonces la frase "terreno privado agrícola—"private agricultural land". En este respecto es preciso tener en cuenta que un terreno industrial no tiene que ser necesariamente urbano. diciéndose sólo "terreno privado". Hay dentro de la ciudad de Manila. 185). Willard. La Luneta por el Sur. ya sean corporaciones o asociaciones. comerciales e industriales. parafraseando otra vez al Magistrado Sr. sino que ni siquiera hace mención de ello. no habría límite a las adquisiciones y posesiones en lo tocante a terrenos residenciales. en su alegato presentado en este asunto. Verbigracia. comerciales e industriales. No cabe decir que la adición de la palabra "agricultural" en este caso equivale a excluir los terrenos residenciales. destinada a sports. Como dijo muy bien el Magistrado Sr. En cambio. La deducción es incorrecta y sin fundamento. comerciales e industriales. Ésta es por su naturaleza agrícola. "que ofrece menos inconvenientes". comercial e industrial. dispone que "el Congreso puede determinar por ley la extension superficial del terreno privado agrícola que los individuos. científico. artículo XIII de la Constitución. algunas de propiedad particular. Y luego el Sr. comerciales e industriales. Otro serio inconveniente. Willard en el asunto clásico de Mapa contra. "uno de los inconvenientes de la adopción de este criterio es que es tan vago e indeterminado. hay una gran extension de terreno denominado Camp Wallace. comercial e industrial. comerciales e industriales. 10 Jur. en realidad. pero sería obligada consecuencia de la tesis sustentada por el apelante. y el paseo de Bagumbayan por el Sur y Este contiene muchas hectáreas de extension y es de naturaleza agrícola. ¿Qué terrenos son agrícolas por naturaleza? El mismo Fiscal General. y en la parte densamente poblada de la misma. más seguro. Se admite por todo el mundo que la palabra tiene tal significación en el artículo XIII. p. que sería muy difícil aplicarlo en la práctica. limitándose el precepto a los propia o estrictamente agrícolas. corporaciones o asociaciones pueden adquirir y poseer. ya hemos visto que la palabra "agricultural" tiene una significación tradicionalmente bien establecida en nuestra jurisprudencia y en nuestro vocabulario jurídico: incluye no sólo terrenos cultivados o susceptibles de cultivo. dice: 'La montaña más pedregosa y el suelo más pobre son susceptibles de cultivo mediante la mano del hombre'" (Mapa contra Gobierno Insular. y éste no podía ser más que el de que se quiso excluir los terrenos residenciales. sino también residenciales. Esto parece absurdo. so pretexto de ser industriales? Resulta evidente de lo expuesto que los redactores de nuestra Constitución no pudieron haber tenido la idea de que el artículo XIII fuera interpretado a la luz de ese criterio vago e indeterminado que llama el Sr.. y que sólo más tarde se añadió la palabra calificativa "agrícola". no arbitrario? Tampoco. entonces estas últimas clases de terreno quedarían excluídas de la facultad reguladora concedida por la Constitución al Congreso mediante dicha sección 3. Fil. El terreno que circunda los muros de la ciudad de Manila. 183). situado entre éstos y el paseo del Malecón por el Oeste. sujeto a los derechos existentes antes de la aprobación de dicha ley." Si se interpretase que la frase "private agricultural land" no incluye terrenos residenciales. La Luneta misma podría en cualquier tiempo destinarse al cultivo" La dificultad es mayor tratándose de diferenciar un terreno agrícola de un terreno industrial. En ninguna parte de la Constitución se emplean las palabras residencial. Willard añade las siguientes observaciones sumamente pertinentes e ilustrativas para una correcta resolución del asunto que nos ocupa. De ésto se quiere inferir que la adición de la palabra "agricultural" debió de ser por algún motivo. ya sean individuos. por la sencilla razón de que la Constitución no sólo no define lo que es residencial. la tendencia moderna es a situar las industrias fuera de las ciudades en vastas zonas rurales.¿resolvería esto Ia dificultad? Proporcionaría un patron exacto. menos expuesto a confusion y arbitrariedad. Porque dentro de una ciudad o población puede haber y hay terrenos agrícolas. en la misma ciudad. Willard. y sobre todo. Entonces un individuo o una corporación podrían ser dueños de todos los terrenos de una ciudad. La sección 3. Contigua a la Luneta. Cuando se industrialice aquella formidable fuerza hidráulica bajo el llamado Plan Beyster ¿qué normas seguras se podrían establecer para poner en vigor la prohibición constitucional de que se trata? No habría peligro de que la Constitución fuese burlada enajenándose tierras agrícolas de propiedad privada a favor de extranjeros. sección 173 | P r o p e r t y .

en la misma literatura el vulgo juega su papel. el Delegado Montilla. the aid will be valuable and satisfactory. y se ha hecho siempre. III. or the purpose sought to be accomplished by a particular provision. Este género de inquisición es perfectamente propio y permisible en hermenéutica constitucional. al título dominical—en que el uno es del Estado y el otro es de un particular. Muestras típicas y representativas de este tono peculiar y dominante de la ideología constituyente son ciertas manifestaciones que constan en el diario de sesiones. o sea. Tanto dentro como fuera de la Asamblea Constituyente era evidente. Where the proceedings clearly point out the purpose of the provision. de la Constitución. ¿qué diferencia hay. creo que la diferencia es más bien psicológica. en general sobre el problema capitalísimo de los terrenos naturales? ¿Cuál era la tendencia predominante entre los Delegados? Y ¿cómo era también el giro de la opinion. tal como está. Cooley.5. 142. bien por su significación personal. Esto no es exagerar la importancia de la técnica. Tierras y recursos naturales son inmuebles y como 174 | P r o p e r t y . subjetiva—en que vulgarmente hablando parece que los conceptos de "agrícola" y "residencial" se repelen. Por tanto. sin cualificación.) ¿Qué atmósfera prevalecía en la Asamblea sobre el problema de la tierra. conspicuo representante del agro. absolutamente ninguna. tradicional en esta jurisdicción. la hermenéutica legal. bien por el papel particular que desempeñaban en las tareas constituyentes. por Negros Occidental. La única diferencia se refiere a la propiedad. en su autorizado tratado sobre Limitaciones Constitucionales (Contitutional Limitations) dice a este efecto lo siguiente: "When the inquiry is directed to ascertaining the mischief designed to be remedied. Pero es indudable que ciertas cosas están por encima del concepto vulgar—una de éstas la interpretación de las leyes. Eso es todo: lo demás creo que es puro bizantinismo. hechas en el curso de los debates o en el proceso de la redacción del proyecto constitucional por Delegados de palabra autorizada. sino que propugnamos una cosa harto elemental por lo sabida. no importa que ello repugne al concepto vulgar a simple vista. Algunos dirán que fué por razón de simetría para hacer "pendant" con la frase "public agricultural land" puesta más arriba. usando del privilegio de media hora parlamentaria dijo en parte lo siguiente: "* * * Con la completa nacionalización de nuestras tierras y recursos naturales debe entenderse que nuestro patrimonio nacional debe estar vinculado 100 por 100 en manos filipinas. que dijo un gran abogado español? 1 Así que cuando decimos que el precepto constitucional en cuestión debe interpretarse técnicamente. Pero esto no tiene ninguna importancia. para depurar el alma de la toga. it may be proper to examine the proceedings of the convention which framed the instrument. Y patrimonio nacional tenía. en cuanto se refiere a terreno público.]. un significado categórico e indubitable: significaba no sólo bosques. Creo que una examen de los documentos y debates de la Asamblea Constituyente para ver de inquirir la motivación y finalidad del precepto constitucional que nos ocupa puede ayudar grandemente y arrojar no poca luz en la interpretación de la letra y espíritu de dicho precepto. después de todo. En realidad. No se debe menospreciar la influencia del vulgo en algunas cosas. sino que es simplemente colocar las cosas en su verdadero lugar. it will be difficult to derive from this source much reliable assistance in interpretation. del cual la Asamblea. sino que significaba asimismo la tierra. acusado. sin distinción de si es de dominio público o privado. el afán unánime y decidido de conservar el patrimonio nacional no sólo para las presentes generaciones filipinas. no es necesario especular o devanarse los sesos tratando de inquirir por que en la tamización del precepto se añadió el adjetivo "agricultural" a las palabras "private land" en vez de dejarlas solas. El tono predominante en todos ellos era un fuerte. no ponemos. y para que los exámenes. p. en la mente de todos. Si no fuera así ¿para que los abogados? ¿Y para que las escuelas de derecho. es decir. profundo nacionalismo. en realidad. de la palabra "agricultural" empleada en dicho texto. minas y otros recursos naturales. sin otro dato en el texto constitucional. el suelo. a la luz de la jurisprudencia. no ha tenido el efecto de cambiar el significado jurídico. después de todo. entre un terreno público agrícola y un terreno privado agrícola? En cuanto a la naturaleza. según las mejores autoridades sobre la materia. no era más que órgano e intérprete? Varios discursos sobre el particular se pronunciaron en la Asamblea Constituyente. por eso que ha sido siempre función de minoría—los abogados. cada vez más rígidos. but where the question is one of abstract meaning. Ahora bien. Por ejemplo. a la calidad de agrícola. diga si no la formación popular del romancero. La interpretación de la ley es una f unción técnica por excelencia. por ser ello el método más seguro para hallar la verdad judicial. Lo importante es saber que la añadidura. cómo era el pulso del pueblo mismo. sino también para la posteridad. ninguna pica en Flandes. Uno no es más o menos agrícola que el otro. del sentimiento público." (1 Cooley on Constitutional Limitations [8th ed.

and secure to themselves and their posterity the blessings of independence under a regime of justice. instituyendo allí una especie de Japón en miniatura. fué más explícito diciendo inequívocamente que los extranjeros no podían ser dueños de propiedad inmueble (real estate). del cual— parodiando al Delegado Montilla—la tierra y los recursos naturales son como órganos vitales." (Libro de Aruego. Deben. para ello. Como que Davao ya se llamaba popular y sarcásticamente Davaoko. sin cualificación de pública o privada. ser conservados para aquellos que se hallan bajo la autoridad soberana de esa nación y para su posteridad. supra. China. Nos dábamos perfecta cuenta de nuestra posición geográfica. en trágica rima con Manchuko. He aquí sus mismas palabras: "La exclusion de los extranjeros del privilegio de adquirir terrenos públicos agrícolas y de poder ser dueños de propiedades inmuebles (real estate) es una parte necesaria de las leyes de terrenos públicos de Filipinas para mantener firme la idea de conservar Filipinas para los filipinos" (Diario de Sesiones. Se trataba. 595. Japón—Japón. in order to establish a government that shall embody their ideals. Queríamos.. Estábamos escribiendo una Constitución no sólo para el Commonwealth. Como se ve. donde.tales pueden compararse con los órganos vitales del cuerpo de una persona: la falta de posesión de los mismos puede causar la muerte instantánea o el abreviamiento de la vida" (Diario de Sesiones. ávidas de desbordarse por todas partes. otro conspicuo representante del agro. Dice el Comité: "Que la tierra. Estábamos rodeados de enormes masas humanas—centenares de millones—económica y biológicamente agresivas. inédita. los Delegados a la Constituyente se hacían cargo también de la vitalísima necesidad de. 592. los bosques y otros recursos naturales constituyen la herencia exclusiva de la nación filipina. También nos obsesionaban otras lecciones dolorosas de historia contemporánea. por Iloilo. sino también para la república que advendría después de 10 años. por lo menos. Cada frase. el pavoroso problema de Davao. do ordain and promulgate this Constitution. así como también de nuestras limitaciones demográficas. id. el esmero de orfebrería con que se trabajó el preámbulo de la Constitución. Texas. supra. de esa labor benedictina una de las gemas resultantes es la parte pertinente a la conservación y fomento del patrimonio nacional. vincular el patrimonio nacional. Krivenko vs. Asamblea Constituyente. Teníamos apuntado al mismo corazón. pág. por errores iniciales del Gobierno. como espada rutilante de Samurai. asegurar firmemente las bases de nuestra nacionalidad. cuya pérdida puede causar la muerte instantánea o el abreviamiento de la vida? Para apreciar el pulso de la nación en aquel momento histórico es preciso tener en cuenta las circunstancias. presidente del comité de agricultura de la Asamblea Constituyente. Register of Deeds of Manila en busca de espacios vitales.) Es harto significativo que en el informe del Comité de Nacionalización y Conservación de Recursos Naturales de la Asamblea Constituyente la palabra tierra (land) se usa genéricamente. promote the general welfare. es decir sin diferenciar entre propiedad pública y privada. el Delegado Montilla habla de tierras sin adjetivación. de una conciencia agudamente atormentadora y alarmante. que estaba entonces en el apogeo de su delirio de engrandecimiento económico y militarista. por tanto. "Framing of the Constitution. conserve and develop the patrimony of the nation. Con el comercio y la industria principalmente en manos no-filipinas. el error de sus gobernantes al permitir la enajenación del suelo a extranjeros. imploring the aid of Divine Providence. cada concepto se sometió a un rígido proceso de selección y depuración. pág. Cuba y otros países del Mar Caribe y de la América Latina que todavia expiaban. por cierto. He aquí el preámbulo: "The Filipino people.) La conservación y fomento del patrimonio nacional fué una verdadera obsesión en la Asamblea Constituyente. en manos de los filipinos. Pues bien. and democracy. Libro de Aruego. entre otras cosas la tierra. sobre todo. liberty. Sus miembros que todavía viven recordarán la infinita paciencia. 593. con todas las amenazas y peligros que ello implicaba para la integridad de nuestra existencia nacional. El Delegado Ledesma." El espíritu fuertemente nacionalista que saturaba la Asamblea Constituyente con respecto a la tierra y recursos naturales es de fácil explicación. por las areas del Pacífico particularmente. los minerales. Japón tenía el control de la tierra." tít. pág. pues. Méjico. Libro del Profesor Aruego). como una terrible maldición. que blindar por los cuatro costados el cuerpo de la nación. 2°. ¿Qué cosa mejor. 175 | P r o p e r t y .

la propiedad de la tierra y de los recursos naturales en manos filipinas como la mejor manera de mantener el equilibrio de un sistema económico dominado principalmente por extranjeros en virtud de su técnica (know-how) superior y de su abundancia de capitales. PARÁS. corporations. por lo menos. ¿Por que se iba a temer. Se confirma la sentencia. era triple: (a) conservar el patrimonio nacional para las presentes y futuras generaciones filipinas. and the letter will. Construction." There is no doubt that under section 1 of Article XIII of the Constitution. y el pueblo tiene la última palabra que se expresará en una elección o plebiscito convocado al efecto." (II Sutherland. Esta es una cuestión constitucional por excelencia. dissenting: Section 5 of Article XIII of the Constitution provides that "save in cases of hereditary succession. Si no se escatiman gastos para celebrar elecciones ordinarias periódicamente ¿cómo ha de escatimarse para averiguar la verdadera voluntad del pueblo en un asunto tan vital como es la disposición del patrimonio nacional. While the intention of the legislature must be ascertained from the words used to express it. y evitar a la república conflictos y complicaciones internacionales. also. if possible. Era tan vigoroso el sentimiento nacionalista en la Asamblea Constituyente que. that public lands suitable or actually used for residential purposes. (b) vincular. por lo menos. pp. Solamente el pueblo puede disponer del patrimonio nacional. Sería una economía mal entendida. "The mere literal construction of a section in a statute ought not to prevail if it is opposed to the intention of the legislature apparent by the statute.—Se insinúa que no debiéramos declarar que la Constitución excluye a los extranjeros de la propiedad sobre terrenos residenciales. Ni el Congreso. The intent prevails over the letter. timber. sujeto a cultivo. comerciales e industriales. 722. Stat. quoted in the majority opinion. There can be no doubt. or mineral. El argumento de que esto costaría dinero es insostenible. porque ello imposibilitaría toda acción legislativa en sentido contrario para el caso de que el Congreso llegase alguna vez a pensar que semejante interdicción debía levantarse." The important question that arises is whether private residential land is included in the terms "private agricultural land. No se concibe que los Delegados tuvieran la intención de excluir del precepto los terrenos residenciales. (c) prevenir peligros que pudieran comprometer la defensa y la integridad de la nación.) IV. Cometeríamos un grave error si esto hiciéramos. no private agricultural land shall be transferred or assigned except to individuals. pueden disponer de ese patrimonio. pues sabían muy bien que los fines que se trataban de conseguir y los peligros que se trataban de evitar con la política de nacionalización y conservación rezaban tanto para una clase de terrenos como para otra. e interpretarse en la forma como lo interpretamos en nuestra decision. lands of the public domain are classified into agricultural. pues. ni mucho menos los tribunales. Lo más que puede hacer el Congreso es proponer una reforma constitucional mediante los votos de tres cuartas (¾) de sus miembros. el dominio extranjero sobre un terreno estrictamente agrícola. be so read as to conform to the spirit of the act. 176 | P r o p e r t y .Qué de extraño había. and if the words are sufficiently flexible to admit of some other construction it is to be adopted to effectuate that intention.. comerciales e industriales. must of necessity come under any of the three classes. verbigracia. 721. J. como ya se ha dicho. a éstos no se les concedió ningún privilegio en relación con la tierra y demás recursos naturales. base de su misma existencia? Esto en el supuesto de que hubiera un serio movimiento para reformar la Constitución. Se dice que es mejor y más conveniente dejar esta cuestión en manos del Congreso para que haya más elasticidad en las soluciones de los diferentes problemas sobre la tierra. Como que ha habido necesidad de una reforma constitucional—la llamada reforma sobre la paridad—para equipararlos a los filipinos. y no sobre el terreno en que estuviera instalada una formidable industria o fábrica? Otro detalle significativo. or associations qualified to acquire or hold lands of the public domain in the Philippines. no obstante el natural sentimiento de gratitud que nos obligaba a favor de los americanos. En el entretanto el artículo XIII de la Constitución debe quedar tal como es. apoyado por tres cuartas (¾) del Congreso. sino que se les colocó en el mismo plano que a los otros extranjeros. que en semejante atmósfera y tales circunstancias se aprobase un artículo rígida-mente nacionalista como es el Artículo XIII? La motivación y finalidad. the manifest reason and the obvious purpose of the law should not be sacrificed to a literal interpretation of such words.

"SEC. no legislation can ever be enacted with a view to permitting limited areas of land for residential. The latter section clearly negatives the idea that private lands can only be agricultural. why did the framers of the Constitution bother about speaking of "private agricultural land" in sections 3 and 5 of Article XIII. 43 Off. private lands are not contemplated or controlled by the classification of public lands. and under section 4 it may authorize. for such possession justifies the presumption that said lands had never been part of the public domain or that they had been private properties even before the Spanish conquest. uses "lands" without any qualification. On the other hand. and although. We have held. The Congress may determine by law the size of private agricultural land which individuals. corporations. 4. Director of Lands. would be superfluous. or ownership by. upon payment of just compensation. upon payment of just compensation." In answer. In my opinion. "the prohibition to transfer the same. corporations. 866. Save in cases of hereditary succession. there would be neither sense nor justification in authorizing the Congress to determine the size of private agricultural land only. there may be private timber and mineral lands. This constitutional provision." and limiting the alienation of natural resources only to public agricultural land. The power of expropriation is. it does not follow that timber or mineral lands theretofore already of private ownership also became part of the public domain. that lands in the possession of occupants and their predecessors in interest since time immemorial do not belong to the Government. commercial. In other words." Under section 3. 594). However. namely. (Oh Cho vs.) This gives effect to the pronouncement in Cariño vs.. If the Constitution prohibits the alienation to foreigners of private lands of any kind. timber and mineral lands can never be private. far from stating that all timber and mineral lands existing at the time of its approval belong to the State. a handy safeguard against undesirable effects of unrestricted alienation to.. as under section 1. It is. aliens of urban properties. if there are absolutely no private timber or mineral lands. unhampered by any inconveniences or difficulties in amending the Constitution. or industrial use. 3. ed. the expropriation of lands to be subdivided into small lots and conveyed at cost to individuals. "lands" in section 4 necessarily implies that what 177 | P r o p e r t y . Following the line of reasoning of the majority. Insular Government (212 U. If the exclusive classification of public lands contained in section 1 is held applicable to private lands. furthermore. was amended in the same that the adjective "agricultural" was inserted in order merely "to clarify concepts and avoid uncertainties" and because.But may it be reasonably supposed that lands already of private ownership at the time of the approval of the Constitution. and in not extending the prohibition of section 5 to timber and mineral lands. or associations may acquire and hold.. no public timber or mineral land may be alienated. subject to rights existing prior to the enactment of such law. the expropriation of lands to be subdivided into small lots and conveyed at cost to individuals. the Congress may determine by law the size of private agricultural land which individuals. It is noteworthy that the original draft referred merely to "private land. it may be stated that section 4 of Article XIII. The majority argue that the original draft in which the more general terms "private land" was used. a law may be passed to remedy the situation. The contention is obviously untenable. Gaz. 53 Law. The Congress may authorize. referring to the right of expropriation. and said prohibition may readily affect any effort towards the attainment of rapid progress in Philippine economy. merely proclaims ownership by the Government of all such lands as are then of the public domain. after the approval of the Constitution. contended that timber and mineral lands can never be private. and it is logical to believe that the use was made knowingly in contradistinction with the limited term "private agricultural land" in sections 3 and 5. however." This certainty would have been comprehensive enough to include any kind of land. S. that it could not be supposed that "every native who had not a paper title is a trespasser. or associations qualified to acquire or hold lands of the public domain in the Philippines. 446. as we have shown. corporations. quite recently. subject to rights existing prior to the enactment of such law. should any danger arise from the absence of such constitutional prohibition. 5. thereby enabling the Government to adopt such elastic policy as may from time to time be necessary. residential or urban lots are not embraced within the inhibition established in said provision. and merely of "lands" in section 4? "SEC. no private agricultural land shall be transferred or assigned except to individuals. The insertion of the adjective "agricultural" is therefore significant. and. and the term "agricultural" appearing in section 5 was used as it is commonly understood. timber and mineral lands of the public domain * * * belong to the State. have the same classifications? An affirmative answer will lead to the conclusion—which is at once absurd and anomalous—that private timber and mineral lands may be transferred or assigned to aliens by a mode other than hereditary succession. or associations may acquire and hold. and reliance is placed on section 1. as denoting lands devoted to agriculture." It is easy to imagine that some of such lands may be timber or mineral. Article XIII. "SEC. of the Constitution providing that "all agricultural.

tan loca que inmediatamente disponga por ley que aquella porción excedente del terreno que ha de recibir un hijo de su padre no podrá poseerlo. es posible que por desenvolvimientos económicos del país. Es posible que ahora un número determinado de hectáreas sea excesivo. No vamos contra esas propiedades. el ejemplo repetidas veces presentado ayer y hoy en cuanto al heredero y al causahabiente no es completamente exacto. and such explanation is somewhat confirmed by the statement of another member of the Convention (Delegate Sevilla) to the effect that said section "is discriminatory and unjust with regard to the agriculturists. todos son argumentos muy buenos a posteriori. prefiriendo dejar a la sabiduría. He prestado atención. Es por esto porque el Comité precisamente no ha querido fijar desde ahora el número de hectáreas. fijará la proporción de acuerdo con las circunstancias del tiempo entonces en que vivamos. la Asamblea Nacional va a ser tan imprudente. hay tal eslabón en una u otra parte que es imposible. la región que necesitamos si queremos vivir por cuenta propia. a la prudencia. Permítame la Convención que lo discuta en globo las dos partes del artículo 9. esa región merece todos los cuidados del gobierno. yo me limito a invitar la atención de la Convención al hecho de que el precepto no hace otra cosa más que autorizar a la Asamblea Nacional a que tome las medidas necesarias en tiempo oportuno. es cuando entonces la Legislatura puede acordar la expropiación de los latifundios. Chairman of the Sponsorship Committee of the Constitutional Convention. Parece que es un punto que ha pasado desapercibido. Hay tal engranaje en los dos mandatos que tiene dicho precepto. al patriotismo y a la justicia de la Asamblea Nacional el fijar ese número. sino de propiedades agrícolas. Bien. in supporting section 3 of Article XIII. En el presente. puedan dormir tranquilos. la region menos explotada por nuestro pueblo. La Asamblea Nacional sabe que no puede dictar leyes o medidas imposibles de cumplir. Está. SOTTO (F. Ciertos grandes solares de nuestras ciudades que con pretexto de tener ciertos edificios. as well. No se trata aquí ahora de propiedades urbanas. a salvo completamente la cuestión de las propiedades urbanas. "Voy a pasar ahora a la relación que tiene la segunda parte de la enmienda con la primera. voy a admitir para los propósitos del argumento que hoy no existen latifundios. señores. Donde está el mal que los opositores a este precepto pretenden ver inútilmente ? Prever es gobernar. creen los opositores al precepto que la Legislatura. Una vez demostrado ante la Legislatura. no podrá tenerlo o recibirlo el heredero. Fijará el plazo. of course. en las zones rústicas es donde el latifundismo se extiende con facilidad. "Esa es una materia para la Asamblea Nacional. La primera parte autoriza a la Legislatura para fijar el límite máximo de propiedad agrícola que los ciudadanos particulares pueden tener. y es por la razón de que con mucha especialidad en las regiones agrícolas. cuando el problema del latifundismo se haya presentado con carácteres tales que el bienestar." "Sr. and not to urban properties. entonces. tomen con gran interés una moción para reconsiderar lo acordado ayer? Voy a ser frío. pues.) Señor Presidente: "Qué hay caballeros de la Convención en el fondo de esta cuestión al parecer inocente y ordinaria para que tanto revuelo haya metido tanto en la sesión de ayer como en la de hoy? Qué hay de misterioso en el fondo de este problema. Por una causa o por otra el pasado nos ha legado ese lastre doloroso. y desde allí los tentáculos de las caciques van al cuello de los pobres y de los pequeños propietarios precisamente para ahogarles y para inutilizarles. para que políticos del volumen del caballero por Iloilo y del caballero por Batangas. This of course tears apart the majority's contention that there cannot be any private timber or mineral land. explained that the same refers to agricultural land. la región que es el mayor incentivo no sólo para los grandes capitalistas de fuera sino también para los grandes capitalistas interiores. Any doubt in the matter will be removed when it is borne in mind that no less than Honorable Filemon Sotto. Este es un postulado que todos conocen. como siempre suelo hacer a todos los argumentos aducidos aquí en contra del precepto contenido en el draft y a f avor ahora de la' reconsideración y siento decir lo siguiente. y si los opositores al precepto quieren más vamos a convenir en que no existirán en el futuro.may be expropriated is not only private agricultural land but also private timber and mineral lands. ese número de hectáreas pueda ser elevado o reducido. as private residential lands. Cuando la Asamblea Nacional se haya reunido. que en realidad no necesitan de tales extensos solares para su existencia ni para su mantenimiento. superior o exedente a lo que fija la ley. Creen los Caballeros. Pero la region agrícola. será la ocasión de ver si procede o no expropiar terrenos o latifundios existentes ahora o existentes después. dónde está el temor de que el hijo de tal no pueda recibir la herencia de cual? Por lo demás. una vez convencida la Asamblea Nacional de que existe un latifundismo y que este latifundismo puede producir males o está produciendo daños a la comunidad. interés y orden público lo requieran. Vamos a suponer que efectivamente un padre de familia posee un número tal de hectáreas de terreno. 178 | P r o p e r t y . Pues. que es difícil que quitáramos deslindes si nos limitásemos a considerar una sola parte. Parece que es mejor tratar estas cuestiones con calma y no con apasionamiento.

y ha de venir. President. y por algo se ha dicho que en los comienzos de la vida humana debió haber sido fusilado. porque Dios nos la dió. el electorado. "Visto. que una cuestión de importancia tan nacional como ésta. 179 | P r o p e r t y . Mr. voy a dar fin a mi discurso agradeciendo a la Convención. "Pero voy a molestaros por un minuto más. aquel que ha trazado y puesto los primeros pilares. el aire. dinero. y sintiendo que mi tiempo está para terminar. de que la existencia de ese latifundio es amenazante para el bienestar público. sin embargo. segundo. We should not be concluded by the remarks. (2) Delegate Ledesma must have in mind purely "agricultural" land. fijar los límites." because (1) the remarks of Delegate Ledesma expressly mentions "public agricultural lands" and the term "real estate" must undoubtedly carry the same meaning as the preceding words "public agricultural lands" under the principle of "ejusdem generis". a aquel primero que puso un cerco a un pedazo de tierra reclamando ser suya a propiedad. on the observation that section 3 of Article XIII does not embrace private urban lands. al ver que no es una Asamblea Constituyente comunista la que ha puesto esta disposición. y. o aquel que viene de gorra al final de la obra para decir: 'Aquí estoy para poner el tejado?' "Es sensible. no ha de venir porque prohibamos los latifundios mediante expropiación forzosa. Mr. extend this provision also to those who are engaged in commerce and industries? Both elements amass wealth. ¿Quién está en disposición de terminar mejor una obra. Why not."Lo mismo digo de la expropiación. creo yo. I see no reason for the discrimination against the agriculturist. since he was the Chairman of the Committee on Agricultural Development and his speech was made in connection with the national policy on agricultural lands. se habla de que no podrá revender las propiedades. con la libertad. Mr. porque el mundo está evolucionando y se va a convencer de que la vida no es solamente para unos cuantos sino para todos." and of the statement of Delegate Montilla regarding "the complete nationalization of our lands and natural resources. private agricultural lands * * * is discriminatory and unjust with regard to the agriculturists." (Speech of Delegate Sotto. Neither are we bound to give greater force to the view (apparently based on mere mental recollections) of the Justices who were members of the Constitutional Convention than to the specific recorded manifestation of Delegate Sotto. Se habla de que el gobierno no tendrá. cited in the majority opinion. I do not want to speak further and I submit this amendment because many reasons have been given already yesterday and this morning. that this precept by limiting private individuals to holding and acquiring lands. primero. Caballeros de la Convención. There is of course every reason to believe that the sense in which the terms "private agricultural lands" were employed in section 3 must be the same as that in section 5. cuando la Asamblea Nacional esté convencida de que el gobierno está en disposición para disponer la expropiación. matado. si la Legislatura. caballeros opositores del precepto. "Por estas razones. la luz. El comunismo no ha de venir porque nosotros fijemos los límites de terreno. podrán los comunistas pedir los votos del electorado para ser ellos los que dicten las leyes fijando el límite del terreno y ordenen la expropiación? ¿Qué argumento más bonito si tuviera base! Lo más natural. si la Asamblea Nacional estuviera convencida de que el gobierno no puede hacer una expropiación. la tierra para vivir (Grandes Aplausos). President. otorgue sus votos a esta misma Asamblea Nacional. made by Delegate Ledesma to the effect that "the exclusion of aliens from the privilege of acquiring public agricultural lands and of owning real estate is a necessary part of the Public Land Laws. señor Presidente. President. no. ha de venir precisamente por causa de los grandes propietarios de terreno. Mr. querámoslo o no." (Speech of Delegate Sevilla. much less contradicted. In view of these reasons. Pero. Se ha mentado aquí con algún éxito esta mañana—y digo con éxito porque he oído algunos aplausos—se ha mentado la posibilidad de que los comunistas hagan un issue de esta disposición que existe en el draft. desde este punto el asunto.) "I would further add. o a esos candidatos no comunistas. President.) Delegate Sotto was not interpellated. va a hacerlo? La Asamblea Nacional dictará una ley autorizando la expropiación de tal o cual latifundio cuando esté convencida. cannot control the more specific clarification of Delegate Sotto that agricultural lands in section S do not include urban properties. is to distribute the wealth in such a manner that it will not breed discontent. pretendamos ligarla a los votos de los comunistas. es que el pueblo. ni mucho menos es malo autorizar a la Legislatura para dictar leyes de expropiación. If the purpose of the Committee. (3) the general nature of the explanations of both Delegate Ledesma and Delegate Montilla. pues. no es malo autorizar. if consistency is to be attributed to the framers of the Constitution.

Insular Government (10 Phil. 926 means those public lands acquired from Spain which are not timber or mineral lands. But it is not correct to consider said Act as a legislation on. The majority is also mistaken in arguing that "prior to the Constitution. under section 57 of the Public Land Act No. which of course do not include lands not originally of the public domain." Indeed. Section 13 says that the Government shall 'make rules and regulations for the lease. in that case it was expressly held that the phrase "agricultural land" as used in Act No. royal order. 175). which includes public residential or industrial land) to Filipino citizens. or a limitation against. 1902. because. that the phrase 'agricultural land' as used in Act No. 182. and the lease granted shall only be valid while the land is used for the purpose referred to. the opinion that residential lots are not agricultural lands is applicable/' 180 | P r o p e r t y . invoked by the majority. terrenos baldíos y realengos. but after the Constitution and under section 23 of Commonwealth Act No. first. In the case before us.' and after a careful consideration of the question we are satisfied that the only definition which exists in said act is the definition adopted by the court below."—the definition held to be found in section 13 of the Act of Congress of July 1. Commonwealth Act No." Section 1 of Article XIII of the Constitution speaks of "public agricultural lands" and." (Mapa vs. royal decree. In other words.. in support of their construction. It is only in this sense." and that "prior to the Constitution. Legislative and Executive—have always maintained that lands of the public domain are classified into agricultural. 1939. 141. commercial or industrial lots forming part of the public domain * * * must be classified as agricultural. or lands of any other denomination that were actually or presumptively of the public domain. While the construction mistakenly invoked by the majority refers exclusively to lands of the public domain. the right of aliens to acquire such kind of lands is completely stricken out.. the right of aliens to acquire residential land that was already of private ownership prior to the approval of the Constitution.) The majority. only held that agricultural public lands are those public lands acquired from Spain which are neither timber nor mineral lands. 2874. and that agricultural lands include residential lots. quite logically. which prohibits the alienation to foreigners of "land originally acquired in any manner under the provisions of this Act. supra. invoke Commonwealth Act No. sale." is rather misleading and not inconsistent with our position. 10 Phil. or other disposition of the public lands other than timber or mineral lands. 141 seeks to carry out and implement the constitutional objective. but not sold. under section 24 of the Public Land Act No. that Act No. undoubtedly in pursuance of the Constitutional limitation." The majority have evidently overlooked the f act that the prohibition contained in said sections refer to lands originally acquired under said Act or other legal provisions formerly in force in the Philippines with regard to public lands.) They hold that the constitutional intent "is made more patent and is strongly implemented by Said Act. even if they become private. aliens could acquire public agricultural lands used for industrial or residential purposes. 926 "means those public lands acquired from Spain which are not timber or mineral lands. the limited scope of said opinion is clearly pointed out in the following subsequent opinion of the Secretary of Justice dated September 25. land of the public domain suitable for residence or industrial purposes could be sold or leased to aliens. 141 necessarily have to be public agricultural lands. The opinion of the Secretary of Justice dated July 15. enacted after the approval of the Constitution. there is no pretense that the land bought by the appellant was originally acquired under said Act or other legal provisions contemplated therein. "We hold that there is to be found in the act of Congress a definition of the phrase 'agricultural public lands. secondly. I think. We have already pointed out that the leading case of Mapa vs. Insular Government. or any other provision of law formerly in force in the Philippines with regard to public lands.The decision in the case of Mapa vs. The sweeping assertion of the majority that "the three great departments of the Government—Judicial. mineral and timber. ordinance." To our minds that is the only definition that can be said to be given to agricultural lands. but after the Constitution and under section 60 of Commonwealth Act No. limited itself in affirming that "residential. expressly holding that "in cases involving the prohibition in section 5 of Article XIII (formerly Article XII) regarding transfer or assignment of private agricultural lands to foreigners. quoted in the majority opinion. 1941. is surely not controlling. since they are the only kinds that are subject to alienation or disposition under the Constitution. Hence. said lands retained their original agricultural character and may not therefore be alienated to foreigners. Let us particularize in somewhat chronological order. our view is that private residential lands are not embraced within the terms "private agricultural land" in section 5 of Article XIII. enacted after the approval of the Constitution. however. 141. it dealt with "agricultural public lands" and. 141. to aliens. The lands that may be acquired under Act No. 141. 2874. such land may only be leased." (Section 123. has to limit the alienation of its subject matter (public agricultural land." (section 122) or "land originally acquired in any manner under the provisions of any previous Act. Insular Government.

dated July 15. had filed a motion for the withdrawal of the appeal and the same should have been granted outright. if the record also presents some other ground upon which the court may rest its judgment. that course of action was not only possible but absolutely imperative. except by legal succession of proper cases. speaks of public agricultural lands while section 5 of the same article treats of private agricultural lands. because the appellant. In the present case. Very recently. "There is no conflict between the two opinions. There should really have been. 141. (CA-G. 1941. 1944. the opinion that residential. commercial or industrial lots for purposes of their disposition. passed after the approval of the Constitution. p. numerous transactions involving transfers of private residential lots to aliens had been allowed to be registered without any opposition on the part of the Government. unless authorized by the President of the Republic of the Philippines. and the then National Assembly passed an Act providing that "no natural or juridical person who is not a Filipino citizen shall acquire directly or indirectly any title to private lands (which are not agricultural lands) including buildings and other improvements thereon or leasehold rights on said lands. No. since the approval of the Constitution. 1939. with the conformity of the appellee. our Government has constantly adopted the view that private residential lands do not fall under the limitation contained in section 5 of Article XIII of the Constitution. includes residential.) During the Japanese occupation." Commonwealth Act No. February. holding among others. therefore. I. R. In cases involving the prohibition in section 5 of Article XIII (formerly Article XII) regarding transfer or assignment of private agricultural lands to foreigners. Article XIII (formerly Article XII) of the Constitution of the Philippines does not apply.) It is true that the Secretary of Justice in 1945 appears to have rendered an opinion on the matter. contrary to what the majority believe. ante). if possible. dated May 13. Gaz.. In Co Chiong vs." (Off. and exploitation." In other words. as long as we have faith in our independence and in our power to supply any deficiency in the Constitution either by its amendment or by Congressional action. no occasion for writing this dissent. In cases involving the prohibition in section 1 of Article XIII (formerly Article XII) regarding disposition in favor of. a court will always avoid a constitutional question. Vol. commercial or industrial lots forming part of the public domain are included within the phrase 'public agricultural land' found in section 1. 29. but I will not permit myself to be blinded by any sentimental feelings or conjectural considerations to such a degree as to attribute to any of its provisions a construction not justified by or beyond what the plain written words purport to convey. 130. of this Department quoted in its Circular No. 1943. 122. the Secretary of Justice issued a circular adopting in effect the opinion of his Department rendered in 1941. decided only a few days ago. commercial or industrial lots forming part of the public domain are included within the phrase 'public agricultural land' found in said section 1 of Article XIII (formerly Article XII) governs. Article XIII (formerly Article XII) of the Constitution of the Philippines. limited its restriction against transfers in favor of aliens to public agricultural lands or to lands originally acquired under said Act or other legal provisions formerly in force in the Philippines with regard to public lands. the Constitution of the then Republic of the Philippines contained an almost verbatim reproduction of said section 5 of Article XIII. development or utilization by. We need not express any unnecessary concern over the possibility that entire towns and cities may come to the hands of aliens. amends or supersedes a decision or order of the fourth branch of the Court of First Instance of the City of Manila rendered pursuant to section 200 of the Administrative Code which holds that a residential lot is not an agricultural land. If appellant's motion for withdrawal had 181 | P r o p e r t y . therefore. foreigners of public agricultural lands. that the phrase 'public agricultural land' in section 1. the opinion that residential lots are not agricultural lands is applicable. It will thus be seen that. 497. Last but not least. A holding. forwarding the request of the Register of Deeds of Oriental Misamis for an opinion as to whether Opinion No. Article XIII (formerly article XII of the Constitution of the Philippines. but it cannot have any persuasive force because it merely suspended the effect of the previous opinion of his Department pending judicial determination of the question. the Court of Appeals rendered a decision affirming that of the Court of First Instance of Tarlac in a case in which it was held that private residential lots are not included in the prohibition in section 5 of Article XIII. and. Article XIII (formerly article XII) of the Constitution of the Philippines. the prohibition in section 5. that a residential lot is not private agricultural land within the meaning of that phrase as found in section 5 of Article XIII (formerly Article XII) does not conflict with an opinion that residential. that course will be adopted and the constitutional question will be left for consideration until a case arises in which a decision upon such question will be unavoidable."This is with reference to your first indorsement dated July 30. On November 29. I do not question or doubt the nationalistic spirit permeating the Constitution. 28. "Section 1. Dinglasan (p. we reiterated the well-settled rule that "a court should not pass upon a constitutional question and decide a law to be unconstitutional or invalid unless such question is raised by the parties. and that when it is raised. which necessarily have to be public agricultural lands. 1941.

and the corollary right of the appellant to take advantage thereof. the Court of Appeals in another case (CA-G. the will of the parties litigant. needless to say. there will be those who will dispute their sales of residential lots in favor of aliens and invoke the constitutional prohibition. there might be some reasons for its denial. In this connection. I am sure that. The denial of course is another way of assuming that the petitionerappellant and the Solicitor General had connived with the Department of Justice in a scheme not only to interfere with the functions of this Court but to dispose of the national patrimony in favor of aliens. Justice Tuason) that led to the denial of the motion for withdrawal. wherein. This result was officially released and the motion. let us describe the proceedings (called "arbitrary and illegal" by Mr. dissenting: It is unnecessary to deliver at this time any opinion about the extent of the constitutional prohibition. In other words. failing to consider said opinion as an "interference. the fallacy of the implication is made glaring when Senator Francisco lost no time in introducing a bill that would clarify the constitutional provision in question in the sense desired by the majority. Justice Hontiveros. we should recognize the right of the Department of Justice to issue any circular it may deem legal and proper on any subject. 866). previously voted for the granting of the motion. but by the decision or circular of the Department of Justice issued while this case was pending before this Court. Gaz. Subsequently. 56. in view of the recent newspaper discussion which naturally reached the length and breadth of the country. Indeed. Krivenko wins his case. In the absence of any injunction from this Court.. that question is again squarely presented. this discretion should always be exercised in favor of a withdrawal where a constitutional question will thereby be avoided. not by a decision of this Court. who was still a member of the Court and could have attended the later deliberation. Both parties having agreed to write finis to the litigation. cannot be as patriotic and able as this Court in defending the Constitution.. the majority should not worry about the remoteness of the opportunity that will enable this Court to pass upon this constitutional question. Gaz. not involved in this case. the matter was again submitted to a vote. During the deliberation in which all the eleven members were present. if notified and requested. but to annul the circular of the Department of Justice which is. Justice Hontiveros. as hereinbefore stated. No." The zealousness thus shown in denying the motion for withdrawal is open to question. 4345)." At any rate. or supplying any deficiency in. And yet this Court. the majority did not allow the withdrawal of the present appeal not so much as to dispose of it on the merits.been opposed by the appellee. Upon the other hand. in view of section 4 of Rule 52 which provides that after the filing of appellee's brief. in which the parties have already submitted their briefs. the result is that petitioner-appellant Alexander A. the same can be said of the opinion of the Secretary of Justice in 1945 in effect prohibiting the registration of transfers of private residential lots in favor of aliens. and one Justice (who previously was in favor of the withdrawal) reversed his stand. so to say. there is no obligation to hold forth on the issue. seven voted to allow and four to deny. If the circular in question is objectionable. and for the reversal of the vote of one Justice who originally was in favor of the withdrawal is found in the confession made in the majority opinion to the effect that the circular of the Department of Justice instructing all registers of deeds to accept for registration transfers of residential lots to aliens. Justice Hontiveros was absent. I cannot accept the shallow excuse of the majority that the denial of the motion f or withdrawal was prompted by the fear that "our indifference of today might signify a permanent offense to the Constitution. according to the appellant. What is most regrettable is the implication that the Department of Justice. denied under the technicality provided in Rule of Court No. It is very interesting to observe that Mr. 29) had rendered in 1943 a decision holding that private residential lots are not included in the prohibition in section 5 of Article XIII of the Constitution." chose to evade the only issue raised by the appellant and squarely met by the appellee in the Oh Cho case which already required a decision on the constitutional question resolved in the case at bar against." because it carries the rather immodest implication that this Court has a monopoly of the virtue of upholding and enforcing. The real explanation for excluding Mr. "the withdrawal may be allowed by the court in its discretion. the only question raised was whether or not "an alien can acquire a residential lot and register it in his name. Gaw Chee Hun (49 Off. BENGZON. without any previous notice and when Mr." and that "if we grant the withdrawal. R. with the result that the votes were five to five. It is not our mission to give advice to other persons who might be interested to know the validity or 182 | P r o p e r t y . J. against my objection. section 2. But even disregarding said case.. because we can take advance notice of the fact that in Rellosa vs. as a part of the Executive Department. Director of Lands (43 Off. the Constitution." and notwithstanding the f act that in said case the appealed decision was in favor of the alien applicant and that. was an "interference with the regular and complete exercise by this Court of its constitutional functions. notwithstanding the pendency in this Court of the case of Oh Cho vs.

and vice-versa. (Cooley. Justice Padilla and Mr. of the Constitution provides: Save in cases of hereditary succession. after the Japanese authorities had shown distaste for such transfers. Mr. to make sure that in a motion for reconsideration. J. may be remedied by legislation amplifying it. The Court should have. in a truly contested case. However. whereas a liberal and wide application. and reflect upon the conflictting politico-economic philosophies of those who advocate national isolation against international cooperation. 8th ed. with the assumption that such transfers are obviously barred by the Organic Law. I am convinced that the organic law bans the sales of agricultural lands as they are popularly understood—not including residential. might amount to begging the issue. during the existence of the Commonwealth Government? The foregoing views and doubts induced me to vote for dismissal of the appeal as requested by the parties. 101. Justice Tuason. I am particularly moved by the consideration that a restricted interpretation of the prohibition. and upon our treaty-making negotiations with other nations of the world. Section 5. if erroneous or contrary to the people's desire. It is not enough that briefs—as in this case—have been filed. Justice Parás. corporations. p. and for withholding of any ruling on the constitutional prohibition. Constitutional Limitations.1 (b) What consequences would a ruling adverse to aliens have upon our position and commitments in the United Nations Organization. if erroneous. And yet sales to foreigners of residential lots have taken place since our Constitution was approved in 1935. industrial or urban lots. and (c) When in 1941 Krivenko acquired this land he was a Russian citizen. We could also delve into several aspects necessarily involved.. Justice Padilla explains regarding any eagerness to solve the constitutional problem. invoking the constitutional inhibition. I cannot agree to the suggestion that the way the incumbent Secretary of Justice has interpreted the fundamental law.. commercial. nor is it expected to play the role of an overseer to supervise the other Government departments. Article XIII. or associations qualified to acquire or hold lands of the public domain in the Philippines. PADILLA. would need the cumbersome and highly expensive process of a constitutional amendment. did our Constitution have the effect of modifying such treaty. (2) parties legally affected—like heirs or creditors of the seller—may wish to avoid the conveyance to aliens. with opposing litigants actively arguing their sides we shall be in a position to do full justice.) This Tribunal was not established. The majority holds that a parcel of land of private ownership suitable or intended or used for residence is included in the term "private agricultural land" 183 | P r o p e r t y . This belief is founded on the reasons ably expounded by Mr. or whether it merely affected the rights of those who should become landowners after the approval of the Constitution . It must be remembered that the other departments of the Government are not prevented from passing on constitutional questions arising in the exercise of their official powers. ample time to discuss this all-important point. That is the work of lawyers and jurisconsults. Those sales will be subject to the final decision we shall reach in a properly submitted litigation.invalidity of their sales or purchases. It is easy to perceive several probabilities: (1) a new secretary may entertain opposite views. Under the treaties between the United States and Russia. no private agricultural land shall be transferred or assigned except to individuals. were Russian nationals allowed to acquire residential lots in places under the jurisdiction of the United States? If so. or in a re-hearing in case of tie. because the registers of deeds under his command. and no one questioned their validity in Court until nine years later in 1945. to wit: (a) Whether the prohibition in the Constitution operated to curtail the freedom to dispose of landowners at the time of its adoption. To spell necessity out of the existence of such conveyances. There is much to what Mr. I submit. dissenting: The question submitted for decision is whether a parcel of land of private ownership suitable or intended for residence may be alienated or sold to an alien. no case will ever arise before the courts. with the obligation to seize any opportunity to correct what we may believe to be erroneous application of the constitutional mandate. No matter. Then. I am now ready to cast my vote. our attention shall be invited to points inadequately touched or improperly considered. will transfer on their books all sales to aliens. it is desirable. perhaps essential. It is stated that sales to aliens of residential lots are currently being effected.

At the time of the adoption of the Constitution (8 February 1935). which holds that urban lands of the public domain are included in the term "public agricultural land. or partnerships were qualified under the last preceding section. That this prohibition shall not be applicable to the conveyance or acquisition by reason of hereditary succession duly acknowledged and legalized by competent Courts. or association authorized to purchase or lease public lands for agricultural purposes. but they shall not encumber. really or presumptively. and yet the same come under the classification of public agricultural land. or conveyed. convey. royal decree. The fact. not used for industrial or residence purposes. That any person. at the date upon which this Act shall take effect.. In said Act. of the public domain. is not a safe guide or index of what the framers of the Constitution intended to mean by the term "private agricultural land. nor any permanent improvement on such land. The susceptibility of a residential lot of the public domain of being cultivated is not the real reason for the inclusion of such lot in the classification of public agricultural land. (Italics supplied. or associations who may acquire land of the public domain under this Act. and citizens of countries the laws of which grant to citizens of the Philippine Islands the same right to acquire public land as to their own citizens. or partnership disqualified from purchasing public land for agricultural purposes under the provisions of this Act. hold agricultural public lands or land of any other denomination not used for industrial or residence purposes. 2874. or partnerships which.. corporations. ordinance.. Under this Act. The only alienable or disposable lands of the public domain were those belonging to the first class. therefore. (Italics supplied. corporations. association or partnership other than those mentioned in the last preceding section may acquire or own agricultural public land or land of any other denomination or classification. Act No. or permanent improvements on such lands. having acquired the same under the laws and regulations in force at the date of such acquisition. corporation. corporations. duly legalized and acknowledged by competent Courts. for there are lands.) Section 121 of the Act provides: "No land originally acquired in any manner under the provisions of the former Public Land Act or of any other Act. * * * Provided. corporation. shall be encumbered. associations or partnerships not included in section twenty-three of this Act. or alienate the same to persons. which would hardly be susceptible of cultivation (Ibañez de Aldecoa vs. or other productive purposes other than agricultural.902. however. or any other provision of law formerly in force in the Philippine Islands with regard to public lands. 13 Phil. Insular Government. but the title or lease granted shall only be valid while such land is used for the purposes referred to. dealing with lands of the public domain suitable for residential. only citizens of the Philippine Islands or of the United States and corporations or associations described in section 23 thereof. Hence a parcel of land of the public domain suitable for residence. commonly known as the Philippine Bill. This was the general rule. nor to lands and 184 | P r o p e r t y . that belonged originally. association. There was an exception. to any person. alienated. which was neither timber nor mineral. the majority invokes the decision of this Court in Mapa vs.." But the opinion of the majority overlooks the fact that the inclusion by this Court of public lands suitable for residence in the term "public agricultural land" was due to the classification made by the Congress of the United States in the Act of 1 July 1. as the case may be. could acquire by purchase agricultural land of the public domain (section 23. or lands of any other denomination that were actually or presumptively of the public domain. the Public Land Act in force was Act No. terrenos baldíos y realengos. however. lands of the public domain were classified into agricultural. may purchase or lease land included under this title suitable for industrial or residence purposes. associations. Insular Government (10 Phil. timber and mineral. industrial. or any real right on such land and improvement: Provided. shall be authorized to continue holding the same as if such persons. 159. really or presumptively. Section 24 of the Act provides: No person. In support of the opinion that lands of private ownership suitable for residence are included in the term "private agricultural land" and cannot be alienated or sold to aliens. 167-168). or by royal grant or in any other form. could not be disposed of or alienated unless classified as public agricultural land. or a real right upon such lands and improvements.) Section 57 of the Act. that parcels of land of the public domain suitable for residence are included in the clasification of public agricultural land. provides: Any tract of land comprised under this title may be leased or sold. corporation. royal order. 175).and comes within the prohibition of the Constitution. or any permanent improvement thereon. * * * Provided further. that is at the time or was originally. That persons. except to persons. such as foreshore lands. corporations." It is contrary to the rules of statutory construction to attach technical meaning to terms or phrases that have a common or ordinary meaning as understood by the average citizen. except by reason of hereditary succession. associations. 2874). to the public domain. commercial.

alienated. while used for such purposes." Even under the provisions of Act No. 2874. there is every reason for believing that the framers of the Constitution. Act No. If under the law in force at the time of the adoption of the Constitution. 2874). 926. If it is the latter. The repeal by sections 23. held for industrial or residence purposes. the first Public Land Act. It adopted the policy of excluding aliens from acquiring agricultural lands of the public domain not "suitable for residential. 43 Off. how can it be presumed that the framers of the Constitution intended to exclude such aliens from acquiring by purchase private lands suitable for industrial or residence purposes? If pursuant to the law in force at the time of the adoption of the Constitution." which. the Constitution. 141. nor any permanent improvement on such land. of the Constitution to lands of private ownership suitable or intended or used for residence. Timber and mineral lands are not. the deed of sale of which is sought to be recorded by the appellant—whether it is one of those described in section 123 of Commonwealth Act No. to the raising of agricultural products. terrenos baldíos y realengos. section 123 of Commonwealth Act No.improvements acquired or held for industrial or residence purposes. because these lands could not and can never become private lands. royal decree. there was no need of implementing a self-executory prohibition found in the Constitution. If it is the former. constitute the mainstay of the nation. commercial. as above stated. Act No. The delegates to the Constituent Assembly were familiar with the provisions of the Public Land Act referred to. 866). 2874. lands of the public domain and improvements thereon acquired or held for industrial or residence purposes were not Included in the prohibition found in section 121 of Act No. The use of the adjective "agricultural" has the effect of excluding all other private lands that are not agricultural. there being 110thing recorded in the journals of proceedings of the Constituent Assembly regarding the matter which. held for industrial or residence purposes. the Philippine Bill. 60. or a private land that had never been a part of the public domain (Cariño vs. or conveyed. The prohibition to alienate such lands found in section 123 of Commonwealth Act No. the prohibition of section 123 of Commonwealth Act No. while used for such purposes: * * * (Italics supplied. timber and mineral lands have always been excluded from alienation. Insular Government. 141 of the exception provided for in sections 24.. included among the excluded. ordinance. 2874. as held by the majority. 141. the Jones Law. industrial. 449. 57. Oh Cho vs. corporations or associations did not apply to "lands and improvements acquired or held for industrial or residence purposes. or lands of any other denomination that were actually or presumptively of the public domain. 141 does not apply." as intended by the framers of the Constitution and understood by the people that adopted it. 212 U. shall be encumbered. Article XIII. 2874. aliens could acquire by purchase or lease lands of the public domain. lands of the public domain. 141. and Commonwealth Act No. 121. who were familiar with the law then in force. 121 of Act No. The term "private agricultural land" means privately owned lands devoted to cultivation. except to persons. pursuant to section 47 of the said Act. 2874 was in force for nearly sixteen years—from 1919 to 1935. 926. There is nothing recorded in the journals of proceedings of the Constituent Assembly regarding the matter which would have justified a departure from the policy theretofore adopted. There is no evidence to show the kind of land. 141 is a clear indication and proof that section 5. that were neither timber nor mineral.) Under and pursuant to the above quoted provisions of Act No. The next question is whether the court below was justified under the law in confirming the refusal of the Register of Deeds of Manila to record the sale of the private land for residence purposes to the appellant who is an alien. of the Constitution does not apply to lands of private ownership suitable or intended or used for residence. S. Act No. lots for townsites could be acquired by any person irrespective of citizenship. mineral and private agricultural lands. however. would have justified a departure from the policy then existing.. Article XIII. The prohibition to alienate public agricultural lands to disqualified persons. From the land grants known as caballerías and peonias under the Laws of Indies down to those under the Royal Decrees of 25 June 1880 and 18 February 1894. 123 of Commonwealth Act No. did not have the intention of applying the prohibition contained in section 5. corporations or associations who may acquire 185 | P r o p e r t y . Act No. In spite of the nationalistic spirit that pervades all the provisions of Act No. that were neither timber nor mineral. 2874. royal order. or any other provision of law formerly in force in the Philippines with regard to public lands. which provides that— No land originally acquired in any manner under the provisions of any previous Act. and does not include urban lands of private ownership suitable for industrial or residence purposes. did not change the meaning of the term "private agricultural land. 57. If the term "private agricultural land" comprehends lands of private ownership suitable or intended or used for residence. Gaz. the Philippine Legislature did not deem it necessary to exclude aliens from acquiring and owning lands of the public domain suitable for industrial or residence purposes. could be acquired by aliens disqualified from acquiring by purchase or lease public agricultural lands (sections 24. or other productive purposes. or by royal grant or in any other form. together with timber. Director of Lands.

following the rule laid down in the aforecited case. If. but in so doing. 883). Article XIII. for it violates section 3 of the Act of Congress of 29 August 1916. Before closing. 2874. Of course.our humble understanding is the plain intent of the Constitution and groped out of its way in search of' the idea! result. If discretion was to be exercised. 122. These are not of the exclusive possession of the members of this Court. They. for the reasons hereinbefore set forth. dissenting: The decision concludes with the assertion that there is no choice. in the course of time. ante). of the Constitution reads: 186 | P r o p e r t y . if the Court had granted the motion for the withdrawal of the appeal. such opinion should turn out to be erroneous and against the welfare of the country. despite the withdrawal of the appeal by the appellant. p. it must avoid offending against the constitutional provision referred to above.. for it violates section 21 (1). J. It would let the other coordinate branches of the Government act according to their wisdom. As we see it. Board of Public Utility Commissioners. the final say on what is the correct interpretation of a constitutional provision must come from and be made by this Court in an appropriate action submitted to it for decision. we perceive things the other way around. If this is the solemn mandate of the Constitution. And although such interpretation is only persuasive and not binding upon the courts. we cannot compromise it even in the name of equity. of the Constitution. too. the interpretation of the provisions of the Constitution is no exclusive of the courts." We wish deep in our heart that we were given the light to see as the majority do and could share their opinion. must also be declared unconstitutional. Section 123 of Commonwealth Act No. 36 Phil. Section 5. that eagerness becomes recklessness. 141. This Court held the last mentioned section unconstitutional. an amendment to the Constitution—a costly process—would have to be proposed and adopted. But. The denial by this Court of the motion to withdraw the appeal to which the Solicitor General -gave his conformity collides with the professed sorrow that the decision cannot be helped. this Court did not exercise it wisely. 40 Phil. Co Chiong vs. I cannot help but comment on the action taken by the Court in considering the merits of the case. The other coordinate branches of the government may interpret such provisions acting on matters coming within their jurisdiction. 116. I am constrained to record my opinion that. TUASON. Courts of last resort do not express their opinion on a constitutional question except when it is the very lis mota (Yangco vs. 120. possess those qualities and virtues. It seems as if it were afraid to be deprived by the other coordinate branches of the government of its prerogative to pass upon the constitutional question herein involved. Courts of last resort generally avoid passing upon constitutional questions if the case where such questions are raised may be decided on other grounds. As it is. its amendment or repeal would not be as costly a process as a constitutional amendment In view of the denial by this Court of the motion to dismiss the appeal. "the Constitution as we see it and not as we may wish it to be. consented to by the appellee. The end sought to be accomplished by the decision of this Court may be carried out by the enactment of a law. the judgment under review should be reversed. notwithstanding the withdrawal of the appeal. the decision by-passed what according to . Article VI. 2874. which is exactly the same as the one infringed upon by section 121 of Act No. that eagerness might be justified. The interpretation thus placed by the majority of the Court upon the constitutional provision referred to will be binding upon the other coordinate branches of the government. it would not have to express its opinion upon the constitutional provision in question. Dinglasan. This Court is only an interpreter of the instrument which embodies what its framers had in mind and especially what the people understood it to be when they adopted it The eagerness of this Court to express its opinion on the constitutional provision involved in this case. The correct interpretation of a constitutional provision is that which gives effect to the intent of its framers and primarily to the understanding of such provision by the people that adopted it. as prayed for by the appellant and consented to by the appellee.. but when some members of the Court do not agree to the interpretation placed upon such provision. This does not mean that a law may not be passed by Congress to prohibit alienation to foreigners of urban lands of private ownership. Moreover. foresight and patriotism. "We are construing" it says. commonly known as the Jones Law (Central Capiz vs.. nevertheless they cannot be deprived of such power. is unusual for a Court of last resort. Ramirez. And if the law should turn out to be against the wellbeing of the people. If all the members of the Court were unanimous in the interpretation of the constitutional provision under scrutiny.land of the public domain under this Act or to corporate bodies organized in the Philippines whose charters authorize them to do so: * * * is similar in nature to section 121 of Act No.

9 Wheat. unless the context furnishes some ground to control. communities are divided into residential. expediency. Constitutions are not designed for metaphysical or logical subtleties."5. that lands of private ownership are known as agricultural. Let us then ascertain the meaning of the word "agricultural" so that by process of elimination we can see what lands do not fall within the purview of the constitutional inhibition. It would be extremely out of the ordinary. The courts are not at liberty to declare an act void because they deem it opposed to the spirit of the Constitution. The people make them. 702-703. except in cases where the assumption would lead to absurdity.. sec." According to this definition and according to the popular conception of the word. and the people who adopted it. or contradiction. or justice of constitutional provisions afford no basis for construction where the intent to adopt such provisions is expressed in clear and unmistakable terms. 20. the people must be supposed to read them with the help of common sense. Save in cases of hereditary succession. . "It is a cardinal rule in the interpretation of constitutions that the instrument must be as construed so to give effect to the intention of the people who adopted it This intention is to be sought in the constitution itself. J.) "Every word employed in the constitution is to be expounded in its plain. himself a member of the Constitutional Convention. wages. J. Ch. Const. not to say ridiculous. says: supposed to underline and pervade the instrument and to render it consonant to the genius of the institutions of the state. commercial. or for the exercise of philosophical acuteness or judicial research. the agricultural class." (Gibbons vs. and fitted for common understandings. by necessary implication. 6 Law." The sole and simple question at issue is. authorizes the alienation of other kinds of private property. and the apparent meaning of the words employed is to be taken as expressing it. in spite of the fiction that all lands proceed from the sovereign. or enlarge it. agricultural implements. p.. is another truth which no one can successfully dispute. lands in cities and towns intended or used for buildings or other kinds of structure are never understood to mean agricultural lands. for elaborate shades of meaning. for niceties of expression. what is the meaning of the term "agricultural land" as used in this section? Before answering the question.) There is no obscurity or ambiguity in the section of the Constitution above quoted. The express mention of one thing excludes all others of the same kind. commercial and industrial sections. In all city plannings. Dean Aruego." (12 C. residential. 23) "Questions as to the wisdom. ambiguity. obvious. as. corporations. to imagine that the Constitutional Convention considered a lot on the Escolta with its improvement as agricultural land. Ogdon. or associations qualified to acquire or hold lands of the public domain in the Philippines..) Marshall. and to have intended what they have said. no private agricultural land shall be transferred or assigned except to individuals. In prohibiting the alienation of private agricultural land to aliens. and cannot be presumed to admit in them any recondite meaning or any extraordinary gloss. designed for common use.. the phrase has no technical meaning." (1 Story. 451. the people adopt them. for critical propriety. 188. a reference to the history of the constitutional provision under consideration will dispel all doubts that urban lands were in the minds of the framers of the Constitution as properties that may be assigned to foreigners. nor does a literal interpretation of the words "agricultural land" lead to any un. and common sense. is authority for the statement that the committee on nationalization and preservation of lands and other natural resources in its report recommended the incorporation into the Constitution of the following provision: 187 | P r o p e r t y "The framers of the Constitution. 'must be understood to have employed words in their natural sense. ed. etc. or engaged in. They are either residential. tillage. Webster's New International Dictionary defines this word as "of or pertaining to agriculture connected with. and the same could not have been used in any sense other than that in which it is understood by the men in the street. 1. Nor can construction read into the provisions of a constitution some unexpressed general policy or spirit. If extrinsic evidence is needed. it is convenient to refresh our memory of the pertinent rule in the interpretation of constitutions as expounded in decisions of courts of last resort and by law authors. They are instruments of a practical nature founded on the common business of human life adapted to common wants. And. qualify. commercial and industrial. 2d ed. the Constitution." Black on Interpretation of Laws. or industrial lands.the majority opinion. That there are lands of private ownership will not be denied.

or by sound principles of construction. or associations qualified to acquire or hold lands of the public domain in the Philippine Islands. or associations not qualified under the provisions of this Constitution to acquire or hold lands in the Philippine Islands. whose intention require no concealment." the insertion of the word "agricultural" before the word "land" produced the exact opposite of the result which the change was expected to accomplish—as witness the present sharp and bitter controversy which would not have arisen had they let well enough alone. that body could not have devised a better way of messing up and obscuring the meaning of the provision than what it did. It will thus be seen that two committees in their reports and the sub-committee of seven in its first draft of the Constitution all proposed to prescribe the transfer to non-Filipino citizens of any land of private ownership without regard to its nature or use. or associations qualified to acquire or hold lands." (1 Cooley's Constitutional Limitations. but that the last mentioned sub-committee later amended that proposal by putting the word "agricultural" before the word "land." (2 The Framing of the Philippine Constitution. did not understand the force of language. To brush aside the introduction of the word "agricultural" into the final draft as "merely one of words" is utterly unsupported by evidence. The Constitution will be scanned in vain for any reasonable indication that its authors made the change with intention that it should not operate according to the rules of grammar and the ordinary process of drawing logical inferences. The insertion of the word "agricultural" was studied and deliberated. If the purpose was "to clarify concepts and avoid uncertainties. There is absolutely no warrant for the statement that the Constitutional Convention. that the framers of a constitution "have expressed themselves in careful and measured terms. which was guided by wise men. the insertion of the word "agricultural" was not intended to change the scope of the provision. 4. used the term after mature deliberation and reflection and after consultation with the President. "We are not at liberty to presume that the framers of the Constitution. 16. or the people who adopted it. industry. Y. and nationalization of public utilities. no land of private ownership shall be transferred or assigned by the owner thereof except to individuals. 1935. based on human experience. In the following paragraphs we shall. thereby eliminating any possibility that its implication was not comprehended. According to the decision. S. and the Government shall regulate the transfer or assignment of land now owned by persons." In Article XIII. generally employ the words which most directly and aptly express the ideas they intend to convey. which revised draft had been prepared by the committee in consultation with President Quezon. 129. the enlightened patriots who framed 188 | P r o p e r t y . entitled "General Provisions.hold lands of the public domain in the Philippines.. The theory is against the presumption. Rathbone. no land of private ownership shall be transferred or assigned by the owner thereof except to individuals.) "As men. allowing the ownership by foreigners of private lands that do not partake of agricultural character. 108. corresponding with the immense importance of the powers delegated."SEC. Aruego. and of the committee or the nationalization and preservation of lands and other natural resources: "SEC. Save in cases of hereditary succession. men of ability and experience in different fields of endeavor. the sub-committee of seven submitted to the Convention a revised draft of the article on General Provisions of the first draft." If this was the intention of the Constitutional Assembly. without intending to give it its natural signification and connotation. of the public domain in the Philippine Islands. 128." of the first draft of the Constitution. Save in cases of hereditary succession. by the text of the Constitution. corporations. The revised draft as it touches private lands provides as follows: "Save in cases of hereditary succession. It says that "the wording of the first draft was amended for no other purpose than to clarify concepts and avoid uncertainties. But the assumption is untenable. corporations.)." But on January 22.) The last-quoted proposal became section 5 of Article XIII of the Constitution in its final form with slight alteration in the phraseology. 32 N. 595-599. corporations. no agricultural land of private ownership shall be transferred or assigned by the owner thereof except to individuals." (People vs. or corporations. or associations qualified to acquire 01. attempt to show that the conclusions in this Court's decision are erroneous either because the premises are wrong or because the conclusions do not follow the premises. the sub-committee of seven embodied the following provision which had been recommended in the reports of the committee on agricultural development. leaving as little as possible to implication. national defense." What are we to conclude from this modification? Its self-evident purpose was to confine the prohibition to agricultural lands.. in our inadequate way. 8th ed.

1902. for the purpose principally of segregating lands that may be sold from lands that should be conserved. Public lands are divided into three classes to the end that natural resources may be used without waste. 189 | P r o p e r t y . In the first place. what lands are they? Timber land or mineral land.) When instead of prohibiting the acquisition of private land of any kind by foreigners. as originally proposed. Little reflection on the background of this Court's decisions and the nature of the question presented in relation to the peculiar provisions of the enactments which came up for construction. the Constitution intended that private residential. The United States Congress evinced very little if any concern with private lands. Classification of public lands was and is made for purposes of administration. commercial or industrial than if he devotes it to the cultivation of crops is a matter that has to be decided according to the value of the property. mineral and agricultural) and its technical meaning then prevailing. In the second place. It was enacted by a Congress whose members were not closely familiar with local conditions affecting lands. industrial or other lands that are not agricultural. the members of the Constitutional Assembly were familiar. The elementary rules of speech with which men of average intelligence and. there is no factual or legal basis for this assumption. Under the circumstances. and the people who adopted it. The Court says that "what the members of the Constitutional Convention had in mind when they drafted the Constitution was this well-known classification (timber.our constitution. and admitted as agreeable to natural reason. the average man's faculty of reasoning tells him that other lands may be acquired. of the United States Congress designated what lands of the public domain might be alienated and what should be kept by the State. will bring into relief the error of applying to private lands the classification of public lands. These are important parts of the country's natural resources. Ogden." As far as private lands are concerned. or both? As the decision itself says these lands are not susceptible of private ownership. Whether a property is more suitable and profitable to the owner as residential. above all. it was natural that the Congress employed "words in a comprehensive sense as expressive of general ideas rather than of finer shades of thought or of narrow distinctions. a familiar rule of interpretation often quoted. The classification of public lands was used for one purpose not contemplated in the classification of private lands. agricultural lands may be disposed of by the Government. The majority themselves will not admit that the Constitution which forbids the alienation of private agricultural lands allows the conveyance of private forests and mines. It should also be distinctly kept in mind that the Act of Congress of the United States above mentioned was an organic law and dealt with vast tracts of untouched public lands. we cannot classify private lands in the same manner as public lands for the very simple and manifest reason that only lands pertaining to one of the three groups of public lands—agricultural—can find their way into the hands of private persons. leaving the details to be worked out by the local authorities and courts entrusted with the enforcement and interpretation of the law. Subject to some exceptions and limitation. The main burden of this Court's argument is that. it would be pointless to suppose that such properties are the ones which section 5 of Article XIII of the Constitution wants to distinguish from private agricultural lands as lienable. its size." (Gibbons vs. it should be distinctly made clear that it was his Court's previous decisions and not an act of Congress which declared that public lands which were not forest or mineral were agricultural lands. the prohibition was changed to private agricutural lands. the answer can only be residential. The Act of July 1. commercial or industrial lands should be considered also agricultural lands. ante. and other attending circumstances. inform us that the object of a descriptive adjective is to specify a thing as distinct from another. that there are here and there forest lands and mineral lands to which private persons have obtained patents or titles. At the outset. as lands of the public domain which are suitable for home building are considered agricultural land. Natural resources are defined in Webster's Standard Dictionary as materials supplied or produced by nature. public lands are classified under special conditions and with a different object in view." The United States Congress was content with laying down a broad outline governing the administration. It was as a result of this broad classification that questions crept for a definition of the status of scattered small parcels of public lands that were neither forest. must be understood to have employed words in their natural sense and to have intended what they have said. Granting what is possible. exploitation and disposition of the public wealth. Preservation of forest and mineral lands was and is a dominant preoccupation. Forest lands and mineral lands are preserved by the State for itself and for posterity. If then a foreigner may acquire private lands that are not agricultural. commercial. Private non-agricultural land does not come within the category of natural resources. It is from this process of reasoning that the maxim expressio unius est exclusio alterius stems.

therefore the same sense is to be adopted in every other connection in which it occurs. we have to have different standards of comparison and have to look of the intent of this constitutional provision from a different angle and perspective.) As to the proposition that the words "agricultural lands" have been given a technical meaning and that the Constitution has employed them in that sense. and extending it when it seemed too short. This Court is not. and not whole clauses and objects. commercial or industrial lands should be brought under the class of agricultural lands. When a private nonagricultural land demands to know where it stands. It would profit us to take notice of the admonition of two of the most revered writers on constitutional law. and this Court merely filled that void. Stripped of the special considerations which dictated the classification of public lands into three general groups. It merely said that for the purpose of judging their alienability. the meaning of the phrase having become definite in the history of constitutional law. often inevitable in a law or constitution. Since there are no private timber or mineral lands. "When the constitution speaks of an ex post facto law. forest or agricultural ? We only ask. who seek for symmetry and harmony in language. and it must readily give way to a different intent appearing in the instrument. it is very manifest the same word is employed in different meanings. in the national Constitution. great caution must be observed in applying an arbitrary rule. mines and agricultural lands. is it mineral. in regard to private lands. The last question in turn resolves itself into what is understood by agricultural land. and thus regarded. Its meaning is that agricultural land is specified in section 5 of Article XIII to differentiate it from lands that are used or are more suitable for purposes other than agriculture. it imports a distinct connotation which involves no absurdity and no contradiction between different parts of the organic law. Justice Story and Professor Cooley: "As a general thing. on the bed of Procrustes. Men of ingenious and subtle minds. the rule is limited to the "well-understood meaning" "which the people must be supposed to have had in view in adopting them. that because a word is found in one connection in the Constitution with a definite sense. we do not inquire. is it agricultural ? to ascertain whether it is within the inhibition of section 5 of Article XIII. This would be to suppose that the framers weighed only the force of single words. as philologists or critics. such as faced it when the question of determining the character of public residential land came up for decision. the Court's task is not to compare it with forests. while the rule may be sound as one of presumption merely. it can not be extended to private lands if we are not to be led to an absurdity and if we are to avoid the charge that we are resorting to subtle and ingenious refinement to force from the Constitution a meaning which its framers never held. forced by the nature of its duty to decide legal controversies. the Congress had not bothered itself to mention separately or specifically. having found in the Constitution a word used in some sense which falls in with their favorite theory of interpreting it.' And he gives many instances where. section 5 of Article XIII of the Constitution treats of private lands with a different aim. When it comes to determining the character of private non-agricultural lands. This Court. Justice Story has well observed: 'lt does not follow.. this is 190 | P r o p e r t y . This Court is not called to rule whether a private residential land is forest. and with which. as statesmen and practical reasoners. and crippled where they have sought only to adjust its proportions according to their own opinions. to see which of these bears the closest resembrance to the land in question. lopping off its meaning when it seemed too large for their purposes. and being so familiar to the people that it is: not necessary to employ language of a more popular character to designate it. it is to be supposed that the same word is used in the same sense wherever it occurs in a constitution. and if there were. its force is but slight.mineral. compelled by the limited field of its choice for a name to call public residential lands. In other words. however.. agricultural lands. nor agricultural. 135. and since the object of section 5 of Article XIII of the Constitution is radically at variance with that of? the laws covering public lands. mineral or agricultural.." In reality. have made that the standard by which to measure its use in every other part of the instrument. In the position where it found itself with reference to public lands. They have thus stretched it. public swamps and other public lands that were neither forest nor mineral. While in the construction of a constitution words must be given the technical meaning which they have acquired. it can only be accepted in reference to public lands. If a technical import has been affixed to the term." (1 Cooley's Constitutional Limitations. This Court is not now confronted with any problem for which there is no specific provision. 8th ed. And yet nothing has been more common than to subject the Constitution to this narrow and mischievous criticism. as it were. they could not be transferred to foreigners. Here again. there was an apparent void. it means a law technically known by that designation. either logically or grammatically. ruled that public lands that were fit for residential purposes. residential. for. there is no alternative but to take the term "agricultural land" in its natural and popular signification. So that." To give an example. On the other hand. were to be regarded as agricultural lands. as Mr. It should be noted that this Court did not say that agricultural lands and residential lands are the same or alike in their character and use. They have thus distorted it to the most unnatural shapes.

It is to be noted that Act No. This is specially true when the Instrument is a constitution. In that opinion the question propounded was whether a piece of public land which was more profitable as a homesite 191 | P r o p e r t y . along with reasons of foreign policy. into lands that are strictly agricultural or actually devoted to cultivation for agricultural purposes. The inference should rather be the exact reverse. industrial or commercial lands. economics and politics." It is an expression that "lies but does not deceive." If I am not mistaken in my understanding of the line of reasoning in the foregoing passage. which is entitled "Conservation and Utilization of Natural Resources. The fact that these lands are made alienable or disposable under Commonwealth Act No. 141. 141. Under its broad or general meaning. unequivocal and unqualified language. my humble opinion is that there is no logical connection between the premise and the conclusion. Even as applied to public lands. as used in the Constitution. If anything. and even among lawyers and judges. and industrial lands. commercial. commercial. whether public or private. 8th ed.. always carefully drawn. Firm and resolute convictions are expressed in a document in strong. 141 which classifies 'public agricultural lands' for purposes of alienation or disposition. the change in section 5 of Article XIII wrought in the face of a strong advocacy for complete and absolute nationalization of all lands. in favor of Filipino citizens. offers itself as the best proof that to the framers of the Constitution the change was not "merely one of words" but represented something real and substantial. industrial. "agricultural land" does not possess the quality of a technical term. the majority can not derive any comfort unless we cling to the specious argument that as public lands go so go private lands. This simply means that the term 'public agricultural lands' has both a broad and a particular meaning. minerals. or lands for other purposes. and every one knows we don't. because that is the sense fixed upon the words in legal and constitutional history where they have been employed for the protection of popular rights. alienable or disposable public lands' which are the same as 'public agricultural lands' under the Constitution." When we say men must fight we do not mean all men. actually pulls down its case which. it has built upon the foundation of parallel classification of public and private lands into forest. like the first drafts of section 5 of Article XIII. those sentiments were relaxed and not given full sway for reasons on which we need not speculate. without exception. The decision says. "a figure of speech in which the statement expresses more than the truth" but "is accepted as a legal form of expression. it embraces all lands that are neither timber nor mineral. how many are familiar with the decisions of this Court which hold that public swamps and public lands more appropriate for buildings and other structures than for agriculture are agricultural lands? The same can be truthfully said of members of the Constitutional Assembly. are classified into agricultural. "the most solemn and deliberate of human writings. classifies disposable lands into agricultural. 141. What to me seems clearly to emerge from it is that Commonwealth Act No. The sentiments expressed in those speeches. may have reflected the sentiments of the Convention in the first stages of the deliberation or down to its close. This is nothing to be enthusiastic over. If they were. The fact that the provisions regarding alienation of private lands happens to be included in Article XIII. are not natural resources either in the sense these words convey to the popular mind or as defined in the dictionary. It is hyperbole. industrial and for other purposes. section 9. "for the technical sense in these cases is the sense popularly understood. residential. is a conclusive indication of their character as public agricultural lands under said statute and under the Constitution.: "It is true that in section 9 of said Commonwealth Act No. and the inexistence of such things as residential. commercial. lands that are residential. 132-133. and calculated for permanent endurance." (1 Cooley's Constitutional Limitations. so far from sustaining the Court's theory. This fact may have been one factor which prompted the elimination of private non-agricultural lands from the range of the prohibition. Agricultural lands. industrial. Santos in 1939. commercial. residential.) Viewed from this angle.not a departure from the general rule that the language used is to be taken in the sense it conveys to the popular mind. The speeches of delegates Montilla and Ledesma cannot serve as a means of interpretation. This broad meaning is particularized in section 9 of Commonwealth Act No. mineral and agricultural lands. forests and other natural resources constitute the exclusive heritage of the Filipino Nation." The decision quotes from the Framing of the Constitution by Dean Aruego a sentence which says that one of the principles underlying the provision of Article XIII of the Constitution is "that lands. 141." is no ground for treating public lands and private lands on the same footing. And these are lands of the public domain. But residential. Speeches in support of a project can be a valuable criterion for judging the intention of a law or constitution only if no changes were afterward effected." In underlying the word lands the Court wants to insinuate that all lands without exceptions are included. From the opinion of Secretary of Justice Jose A. as we have seen. etc. are natural resources.

" There is no similitude between owning a lot for a home or a factory or a store and operating a jeepney for hire. strictly agricultural. The importance of using a jeepney for hire cannot be sneered at or minimized just as a vote for public office by a single foreign citizen can not be looked at with a shrug of the shoulder on the theory that it would not cause a ripple in the political complexion or scene of the nation. The fear would not materialize under our theory. golf-courses. they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. ordinance. Granting the possibility or probability of the consequences which this Court and the Solicitor General dread. The Court fears that "this constitutional purpose of conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens. This Court quotes with approval from the Solicitor General's brief this passage: "If the term 'private agricultural lands' is to be construed as not including residential lots or lands of similar nature. as the majority say but which 1 doubt. that only lands which are not agricultural may be owned by persons other than Filipino citizens. for his private use or that of his friends and relatives. The use of a jeepney for hire may be insignificant in itself but it falls within a class of industry that performs a vital function in the country's economic life." Sections 122 and 123 of Act No. industrial plants." It reasons that "it would certainly be futile to prohibit the alienation of public agricultural lands to aliens if. 141. Prohibiting the acquisition by foreigners of any lands originally acquired in any manner under its provisions or under the provisions of any previous law. royal decree. These sections. markets. be they public or private. in appellant's words. this Court. as representing the true intent of the instrument. health and vacation resorts. of the Constitution. schools. playgrounds. should adopt Secretary Ozaeta's view. Act No. For if the Constitution already barred the alienation of lands of any kind in favor of aliens. the fear would be well-founded if we adopt the majority's theory. But the classification of private lands was not directly or indirectly involved. It is not the ownership of a jeepney that is forbidden. which we precisely reject. by the way. and that they may validly buy and hold in their names lands of any area for building homes. etc. supplies the best argument against the majority's interpretation of section 5 of Article XIII. hatcheries. The courts are not at liberty to disregard a provision that is clear and certain simply because its enforcement would work inconvenience or hardship or lead to what they believe pernicious results. If the Solicitor General's attitude as interested counsel for the government in a judicial action is—as the decision also suggests but which." Arguments like this have no place where there is no ambiguity in the constitution or law. Courts have nothing to do with inconvenience or consequences. airfields and a host of other uses and purposes that are not. It is the opinion of the present Secretary of Justice that is to the point. we should not overlook the fact that there is the Congress standing guard to curtail or stop such excesses or abuses if and 192 | P r o p e r t y . the Constitution did not carry such prohibition. fisheries. after all. is still more incorrect both in theory and' in practice—then this Court should have given heed to the motion for withdrawal of the present appeal. Without this law. it is the use of it for public service that is not allowed. The illustrious Secretary answered yes. If the construction placed by the law-officer of the government on a constitutional provision may properly be invoked. if it is to be consistent. I think. which had been concurred in by the Solicitor General in line presumably with the opinion of the head of his department.might not be sold and considered as agricultural. steamships or airplanes in any number. which was correct. an alien may not even operate a small jeepney for hire. royal order. This rôle is founded on sound principles of constitutional government and is so well known as to make citations of authorities presumptuous. quoted and relied upon in the majority opinion. the result will be that aliens may freely acquire and possess not only residential lots and houses for themselves but entire subdivisions and whole towns and cities. it is a mute and eloquent testimony that in the minds of the legislature. 141 would have been superfluous. and the operation of a jeepney happens to be within this policy. whose interpretation the majority correctly say should be looked to as authoritative. closely associated with its advancing civilization. supplying needs so fundamental for communal living and for the development of the country's economy. the provisions of sections 122 and 123 of Commonwealth Act No. 141 should banish this fear. He can not use a jeepney for hire because the operation of public utilities is reserved to Filipino nationals. A foreigner is not barred from owning the costliest motor cars. that the government finds need of subjecting them to some measure of control and the Constitution deems it necessary to limit their operation by Filipino citizens. that agricultural and residential lands are synonymous. prevent private lands that have been acquired under any of the public land laws from falling into alien possession in fee simple. factories. or any other law formerly enforced in the Philippines with regard to public lands.. The decision says that "if under Article XIV section 8. it is certainly not hard to understand that neither is he allowed to own a piece of land.

All of which is an infallible sign that the Constitution does not carry such prohibition. and the Legislative Assembly during the Japanese occupation extended the prohibition to all private lands. the alteration. J. in order to prevent aliens from conducting fisheries. ____________ © Copyright 2012 Central Book Supply. changing and ever-changing conditions demand. The Commonwealth Legislature did that with respect to lands that were originally public lands. vacation resorts. In the present Congress. was a leading. Inc. the decision lays special emphasis on the fact that "many members of the National Assembly who approved the new Act (No. both as a matter of policy. to define the size of private lands a foreigner may possess in fee simple. markets.when the menace should show its head. The Congress could. in the Senate. or to specify the uses for which lands may be dedicated. (12 C. go so far as to exclude foreigners from entering the country or settling here. 141) had been members of the Constitutional Convention. in the opinion of three legislatures. as Mr. Justice Parás has pointed out. Register of Deeds of Manila. hatcheries. as we contend. in the original draft of section 5 of Article XIII may have been prompted precisely by the thought that it is the better policy to leave to the political departments of the Government the regulation or absolute prohibition of all land ownership by foreigners.) In truth. The fact that the Constitution has not prohibited. if it wants. 714.. 79 Phil. active and influential member of the Constitutional Convention? Judgment affirmed. who is the author of one of the bills I have referred to. we entirely agree with the majority. at least two bills have been introduced proposing Congressional legislation in the same direction. through Commonwealth Act No. [Krivenko vs. If I may be permitted to guess. the transfer of private non-agricultural lands to aliens does not prevent the Congress from passing legislation to regulate or prohibit such transfer. should be given serious consideration by the courts (if indeed there were any doubt). 141. All rights reserved. an opinion which. golf-courses. 461(1947)] 193 | P r o p e r t y ." May I add that Senator Francisco. as the changed. and also because it may be presumed to represent the true intent of the instrument. cemeteries.

Same. Same. Edwin Ngo’s testimony proves that RBDC was not an unwary party in the subject transaction. shipper. there was even no attempt on the part of RBDC to prove that. Effect of judgments. ignorance. Same. 126699.” Same. indigence. Same. Edwin Ngo has portrayed RBDC as a knowledgeable realty firm experienced in real estate business. we find no admission. On the contrary.—The clear mandate of the above-quoted rule is that a final judgment or order of a court is conclusive and binding only upon the parties to a case and their successors in interest. Decision in CA-G. et al. 29157 is not binding on the parties as RBDC is not a party in that case. a businessman for 30 years. SP No. respondent. Reyes. wherein we further declared through Justice Florenz Regalado that “not even an allegation of ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the provisions of a contract of carriage (a contract of adhesion) devolves not on the carrier but on the owner.. the courts must be vigilant for his protection. property or other relations. it was a weaker or a disadvantaged party on account of its moral dependence. A party may not go back on his own acts and representations to the prejudice of the other party who relied upon them. Section 49. monopolies. The effect of a judgment or final order rendered by a court or judge of the Philippines.—The validity and/or enforceability of a contract of adhesion will have to be determined by the peculiar circumstances obtaining in each case and the situation of the parties concerned. Remedial Law. mental weakness. 49. conclusive between the parties and their successors in interest by title subsequent to the commencement of action or special proceeding. No. Same. (b) In other cases the judgment or order is. Rule 39 of the 1997 Rules of Civil Procedure) provides in part: Sec. A final judgment or order of a court is conclusive and binding only upon the parties to a case and their successors in interest.. and prevent their becoming traps for the unwary. Inc. tender age or other handicap. mental weakness.* AYALA CORPORATION. the Rosa-Diana decision cannot have binding effect against either party to the instant case. The one who adheres to the contract is in reality free to reject it entirely.. if he adheres he gives his consent. 1998. Civil Law. and that he. Court of Appeals. manage to impose upon parties dealing with them cunningly prepared ‘agreements’ that the weaker party may not change one whit. that “contracts of adhesion wherein one party imposes a ready-made form of contract on the other x x x are contracts not entirely prohibited.R. vs. RAY BURTON DEVELOPMENT CORPORATION. In all contractual. Contract of Adhesion. Judgments.R. with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto. Law Union and Rock Insurance Co. or consignee as the case may be.” (Emphasis supplied) Same. RBDC is not a party in that case. We have emphatically ruled in the case of Ong Yiu vs. vs. in the execution of the Deed of Sale on the subject lot.—The stringent treatment towards contracts of adhesion which the courts are enjoined to observe is in pursuance of the mandate in Article 24 of the New Civil Code that “(i)n all contractual. the courts must be vigilant for his protection. August 7.. mental weakness or other handicap.—Decision in CA-G. 194 | P r o p e r t y . an admission or representation is rendered conclusive upon the person making it. Same. Both the present case and the Rosa-Diana case. President of RBDC.” Here. involve different parties who are not litigating “for the same thing” nor “under the same title and in the same capacity. 29157 is not binding on the parties herein. PETITION for review on certiorari of a decision of the Court of Appeals. cartels and concentration of capital. endowed with overwhelming economic power.—Contracts of adhesion. as testified to by Edwin Ngo. (emphasis supplied) Same. indigence. Estoppel. Inc. Contracts of adhesion are accorded inordinate vigilance and scrutiny by the courts in order to shield the unwary from deceptive schemes contained in ready-made covenants. Effect of Judgments. Contracts.B. speaking through Justice J. when one of the parties is at a disadvantage on account of his moral dependence. ignorance. Such contracts (of which policies of insurance and international bill of lading are prime examples) obviously call for greater strictness and vigilance on the part of the courts of justice with a view to protecting the weaker party from abuses and imposition. however. Instead. et al. Same. 47. As stated by this Court. when one of the parties is at a disadvantage on account of his moral dependence. litigating for the same thing and under the same title and in the same capacity.L. may be as follows: (a) x x x. Same. stand out from other contracts (which are bilaterally drafted by the parties) in that the former is accorded inordinate vigilance and scrutiny by the courts in order to shield the unwary from deceptive schemes contained in readymade covenants.R. ignorance. SP No. his participation in the ‘agreement’ being reduced to the alternative to ‘take it or leave it’ labeled since Raymond Saleilles ‘contracts by adherence’ (contracts d’ adhesion) in contrast to those entered into by parties bargaining on an equal footing.—A contract of adhesion in itself is not an invalid agreement. and cannot be denied or disproved as against the person relying thereon.” Hence. Contracts of adhesion wherein one party imposes a ready-made form of contract on the other x x x are contracts not entirely prohibited. property or other relations. Ltd. simply because.G. however. tender age or other handicap. the latter is a realty firm and has been engaged in realty business. The one who adheres to the contract is in reality free to reject it entirely. petitioner. Sweet Lines. In the instant case. Same. represented RBDC in the negotiations and in the eventual purchase of the subject lot from PALMCREST. in Qua Chee Gan vs. except for AYALA. the stipulations in the Deed Restrictions and Special Conditions are plain and unambiguous which leave no room for interpretation. false representation or concealment that can be attributed to AYALA relied upon by RBDC. Validity and enforceability of the contract of adhesion will have to be determined by the peculiar circumstances obtaining in each case and the situation of the parties concerned.” Same. An admission or representation is rendered conclusive upon the person making it. Moreover.: “The courts cannot ignore that nowadays. having jurisdiction to pronounce the judgment or order.” This ruling was reiterated in Philippine American General Insurance Co. Rule 39 of the Revised Rules of Court (now Sec.—“Under the doctrine of estoppel. and cannot be denied or disproved as against the person relying thereon. This type of contract is as binding as a mutually executed transaction.

188) SQUARE METERS. and b) The sewage disposal must be by means of connection into the sewerage system servicing the area. on the SW. located at what is now known as H. of the subdivision plan [LRC] Psd-6086. (KARAMFIL) bought from AYALA a piece of land identified as Lot 26. AYALA’s conformity was annotated on the deed of sale. Special Conditions:3 Petitioner Ayala Corporation (AYALA) is the owner of the Ayala estate located in Makati City.8 The Deed of Absolute Sale9 executed on the said date was also presented to AYALA for approval since no building had yet been constructed on the lot at the time of the sale. As a result of the sale. 1988. Karamfil Import-Export Company Ltd. b) The lot shall not be sold without the building having been completed. On the NW. Makati City. 17. subject to 195 | P r o p e r t y . MARTINEZ. on the SE. points 2 to 3 by Lot 31.” The transaction was documented in a Deed of Sale1 of even date. with the agreement that AYALA retains possession of the Owner’s Duplicate copy of the title until a building is erected on said parcel of land in accordance with the requirements and/or restrictions of AYALA. Block 2. Block 2 of the Subdivision plan. containing an area of ONE THOUSAND ONE HUNDRED EIGHTY EIGHT (1. described as plan [LRC] Psd-5812 LRC [GLRO] Rec. wide (Block C[LRC] Psd-5812). on April 11. 2432/T-131086. commercial and industrial purposes. Bounded on the N.. The development of the estate consisted of road and building construction and installation of a central sewerage treatment plant and drainage system which services the whole Ayala Commercial Area. points 5 to 1 by Street Lot 2 (17. 1320864 was issued in the name of KARAMFIL. a Transfer Certificate of Title No. points 3 to 4 by Lot 27. Salcedo Village. J.E. of Luzon.: a) The total height of the building to be constructed on the lot shall not be more than forty-two (42) meters. Bautista & Reyes for petitioner. No.V. 1988.188 square meters. x x x beginning. AYALA gave its written conformity to the sale but reflecting in its approval the same special conditions/restrictions as in the previous sale. being a portion of Block D. nor shall it have a total gross floor area of more than five (5) times the lot area. among others. 1984. Block 2 of the subdivision plan.00 m.6 PALMCREST did not object to the stipulated conditions and restrictions. now respondent. Is.The facts are stated in the opinion of the Court. Anthony Jay B. As in the KARAMFILPALMCREST transaction. wide) of the subdivision plan. wide) of the subdivision plan. This deed was submitted to AYALA for approval in order to obtain the latter’s waiver of the special condition prohibiting the resale of the lot until after KARAMFIL shall have constructed a building thereon. points 4 to 5. among which are— Deed Restrictions:2 a) The vendee must obtain final approval from AYALA of the building plans and specifications of the proposed structures that shall be constructed on the land.7 PALMCREST in turn sold the lot to Ray Burton Development Corporation (RBDC).00 m.00 m. and c) Any breach of the stipulations and restrictions entitles AYALA to rescission of the contract. On February 18. The said special conditions and restrictions were attached as an annex to the deed of sale and incorporated in the “Memorandum of Encumbrances” at the reverse side of the title of the lot as Entry No. which provides. Province of Rizal. KARAMFIL sold the lot to Palmcrest Development and Realty Corporation (PALMCREST) under a Deed of Absolute Sale5 of even date. The said land. AYALA gave its conformity to the sale. by proposed Road. On March 20.. which is now the subject of this case. Block 2 (Creek 6. de la Costa Street. Block 2 consisting of 1. 2029) situated in the Municipality of Makati. points 1 to 2 by Lot 25. that the vendee would comply with certain special conditions and restrictions on the use or occupancy of the land. Poblador. is more particularly described as follows: “A parcel of land (Lot 26. The said estate was originally a raw land which was subdivided for sale into different lots devoted for residential. Consunji for private respondent.

After having obtained the necessary building permits from the City Engineer’s Office. (b) have been superseded by Presidential Decree No. On July 11. REM-A-0818. 81-01. While the appeal was pending before the Office of the President. the September 21.188 sq. and (c) dismissing HLRB Case No.”10 The conditions and restrictions of the sale were likewise entered as encumbrances at the reverse side of the Transfer Certificate of Title No. Thus. the majority of the lot owners in the Makati City area. RBDC submitted to AYALA for approval a set of architectural plans for the construction of a 5-storey office building on the subject lot. 1. 1990. m.P. including the Salcedo and Legaspi Village areas. Page No. on the grounds.989. Makati City. with a total gross floor area of 28.402 square meters. thereby depriving the vendees of the full enjoyment of the lots they bought. REM-A-0818 (OAALAREM-111489-4240). Series of 1984 of the Notary Public Silverio Aquino. 1096 (the National Building Code) and Metro Manila Commission Zoning Ordinance No. AYALA approved the architectural plans. the HLRB En Banc rendered a decision18 (a) upholding the Deed Restrictions. docketed as HLRB Case No. RBDC was not also averse to the aforesaid conditions and restrictions. Early in June of 1990. 140. this time to the Building Official of the Makati City Engineer’s Office.600 square meters. which appeal was docketed as O. (MACEA). 1990. since the restrictions are imposed without regard to reasonable standards or classifications. Book No. AYALA was further charged with unsound business practice. through counsel. 4476. (MADAI). In these plans. the building was to be 26-storey high. inter alia.065 square meters of floor area on the basis of a FARs of 8:1. “Trafalgar Plaza” could be built with a maximum gross floor area of only 9. of which RBDC is a member. (b) absolving AYALA from the charge of unsound business practice. In the meantime. subject to the compliance by the Vendees of the Special Conditions of Sale on the reverse side of the Deed of Sale dated March 20. (c) violate the constitutional provision on equal protection of the laws.11 Like PALMCREST. under the Revised Deed Restrictions. 1984 per Doc. Trafalgar would still exceed 19. it continued to be bound by the original Deed Restrictions. RBDC made another set of building plans for “Trafalgar Plaza” and submitted the same for approval. on August 22. and other lot owners. 155384 which was later issued in the name of RBDC.13 The building was to be known as “Trafalgar Tower” but later renamed “Trafalgar Plaza. Inc. on November 28. In the case of buildings devoted solely to office use in Salcedo Village—such as the “Trafalgar Plaza”—the same could have a maximum gross floor area of only eight (8) times the lot area. 29.12 Sometime in June of 1989. RBDC. Even under the Revised Deed Restrictions. in a general assembly of the Makati Commercial Estate Association. then sent a letter20 to RBDC demanding the latter to cease the construction of the building which dimensions do not conform to the previous 196 | P r o p e r t y . Upon written request14 made by RBDC. approved the revision of the Deed Restrictions.60 meters. filed a complaint against AYALA before the Housing and Land Use Regulatory Board (HLRB). which revision was embodied in the “Consolidated and Revised Deed Restrictions”17 (Revised Deed Restrictions) wherein direct height restrictions were abolished in favor of floor area limits computed on the basis of “floor area ratios” (FARs). AYALA likewise agreed to release the owner’s copy of the title covering the subject lot to the China Banking Corporation as guarantee of the loan granted to RBDC for the construction of the 5-storey building. 1990 issue of the Business World magazine19 featured the “Trafalgar Plaza” as a modern 27storey structure which will soon rise in Salcedo Village. Meanwhile.” Since the building was well within the 42-meter height restriction.504 square meters (1. Case No.—the size of the subject lot—multiplied by 8). No. The complaint also alleged that AYALA is in estoppel from enforcing the restrictions in question when it allowed the construction of other high-rise buildings in Makati City beyond the height and floor area limits.85 meters and a total gross floor area of 4. with a height of 25. Inc. thus: “With our conformity. Stunned by this information. RBDC did not vote for the approval of the Revised Deed Restrictions and. together with the Makati Developers Association. therefore. that said restrictions purportedly: (a) place unreasonable control over the lots sold by AYALA.RBDC’s compliance with the special conditions/restrictions which were annotated in the deed of sale. in violation of Article 428 of the Civil Code. or a height of 98. The complaint sought the nullification of the very same Deed Restrictions incorporated in the deeds of sale of the lots purchased by the complainants from AYALA and annotated on their certificates of title. MADAI and RBDC separately appealed the decision to the Office of the President.16 not to AYALA. 1989. and (d) are contracts of adhesion15 since AYALA would not sell the lots unless the buyers agree to the deed restrictions. AYALA. RBDC began to construct “Trafalgar Plaza” in accordance with these new plans.

to the extent that it absolved AYALA from the charge of unsound business practice.plans it earlier approved. Block 2 of Salcedo Village. public order or public policy. 1994 in favor of RBDC. 1993. ii) Ordering the cancellation of Transfer Certificate of Title No. is affirmed. Clarifying this matter. the Office of the President issued a Resolution dated April 21.00. 91220. 1992 Order. AYALA sought a reconsideration or clarification. the dispositive portion of which reads: “WHEREFORE. it does not expressly state that RBDC is bound by the Revised Deed Restrictions. in the event specific performance becomes impossible: i) Ordering the cancellation and rescission of the Deed of Sale dated March 20. c. Ordering defendant to pay plaintiff attorney’s fees in the amount of P500. exemplary damages in the amount of P5. AYALA suggested. inter alia. amount to res judicata on the issue of the validity and enforceability of the Deed Restrictions involved in the said civil case. therefore. 199427 was issued denying with finality RBDC’s second motion for reconsideration. RBDC alleged in essence that even if said deed restrictions exist. 1992 also “set aside” the appealed HLRB decision. 44761 was considered resolved when it entered into a compromise agreement with AYALA wherein the latter adopted and acknowledged as binding the Revised Deed Restrictions of July 11. the same are not economically viable and should not be enforced because they constitute unreasonable restrictions on its property rights and are. RBDC was sued on January 25. judgment is hereby rendered in favor of the defendant and against the plaintiff. 197 | P r o p e r t y . docketed as Civil Case No. which rulings.000.23 On the other hand. RBDC. and (2) that the “HLRB decision dated 22 August 1990. Alternatively. noting. 1991 before the Regional Trial Court of Makati City (Branch 148). Case No. “insofar as the disposition of the appealed (HLRB) decision is concerned. including any other portion of the building constructed not in accordance with the building plans and specifications submitted to and approved by plaintiff. RBDC’s appeal was dismissed in an Order dated February 13. but it has the option to accept and be bound by the Revised Deed Restrictions in lieu of the former. contrary to law. and d. For failing to heed AYALA’s bidding. good customs. AYALA’s complaint for Specific Performance of Rescission.” This time RBDC moved for a reconsideration of the April 21. RBDC denied having “actual or constructive notice of the Deed Restrictions” imposed by AYALA on the subject lot.26 Another Resolution of March 21. premises considered. ruling: (1) that RBDC is bound by the original Deed Restrictions. 91-220. From this order. 1992.25 modifying the February 13.P. through counsel. the trial court rendered a Decision on April 28. for the reason that. prayed inter alia that judgment be rendered— “x x x xxx xxx b. 155384 (in the name of defendant) and directing the Makati Register of Deeds to issue a new title over the Lot in the name of plaintiff. 1992 order. subject of the basic complaint. 1992. The instant case is hereby dismissed. 1984 (Annex ‘A’ hereof) and ordering defendant to return to plaintiff Lot 26. but the motion was denied in a Resolution dated October 15.000. The motion/application for the annotation of the lis pendens is hereby DENIED. morals. AYALA then filed a Manifestation28 in Civil Case No. Ordering the defendant to comply with its contractual obligations and to remove or demolish the portions or areas of the Trafalgar Tower/Plaza Building constructed beyond or in excess of the approved height as shown by building plans approved by the plaintiff. After trial on the merits. replied with a series of letters21 requesting for time to assess the merits of AYALA’s demand. RBDC claimed that the enforcement of the deed restrictions has also been arbitrary or discriminatory since AYALA has not made any action against a number of violators of the deed restrictions. Moreover. aside from dismissing RBDC’s appeal.00 and the costs of the instant suit. 2.”24 Accordingly. Meantime. the Order of February 13. the appeal of MADAI in O. that while the said order has ruled that AYALA can no longer enforce the Deed Restrictions against RBDC. informing the trial court of the pertinent rulings/resolutions in the proceedings before the HLRB and the Office of the President. 1990. there is virtually no more actual controversy on the subject of the ‘Deed Restrictions’ because the same has been overridden by the ‘Revised (Deed) Restrictions’ which the appellee Ayala Corporation has in fact acknowledged as binding and in full force and effect x x x. and as a consequence: 1.”22 In its answer (with counterclaim) to the complaint.

The erroneous annotation of the 23-meter height restriction in RBDC’s title was explained by Jose Cuaresma. Dissatisfied. AYALA’s motion for reconsideration was likewise denied in the Resolution31 of October 7. AYALA’s Assistant Manager for Marketing and Sales. was not applicable to RBDC. according to AYALA’s own witness.D. As a rule. Plaintiff is hereby ordered to pay the defendant P30. would justify a different conclusion from the one reached in the assailed decision. “With costs against plaintiff. the Deed Restrictions may not be allowed by RBDC.34 The present petition has shown that certain relevant facts were overlooked by the Court of Appeals. he said. 1096 (The National Building Code). the reexamination of the evidence proffered by the contending parties during the trial of the case is not a function that this Court normally undertakes inasmuch as the findings of fact of the Court of Appeals are generally binding and conclusive on the Supreme Court. Cuaresma testified that when the deed of sale between PALMCREST and RBDC was submitted to the Register of Deeds of Makati and the corresponding title was issued in the name of RBDC. citing several errors in the decision of the Court of Appeals.000. No damages is awarded to any of the parties.38 Jose Cuaresma further clarified that the correct height restriction imposed by AYALA on RBDC was 42 meters.”36 The above finding and conclusion of the Court of Appeals.39 This height ceiling. but he emphasized that the incorrect annotation does not apply to RBDC.R.00 for and as attorney’s fees and litigation expenses. AYALA now interposes the present petition for review on certiorari. which facts.32 The jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law. 1996 in CA-G. 4. CV No. RBDC “has the right to enjoy the subject property as if no restrictions and conditions were imposed thereon. and (5) the rulings of the HLRB and the Office of the President do not have binding effect in the instant case. (3) the Deed Restrictions partake of the nature of a contract of adhesion. 46488. 2432 on the said title. is based on the deed of restrictions attached as annex to the deed of sale.40 and the same has been uniformly imposed on the transferees beginning from the original deed of sale between AYALA and KARAMFIL. since what was annotated on its (RBDC’s) title is the erroneous 23-meter height limit which. The principal error raised here by petitioner AYALA pertains to the Court of Appeals’ finding that RBDC did not have actual or constructive notice of the 42meter height restriction. AYALA appealed to the Court of Appeals which affirmed the judgment of the trial court in a Decision30 dated February 27. the Register of Deeds annotated the wrong height limit in Entry No. or when the assailed judgment is based on misapprehension of facts. AYALA is estopped from enforcing the same against RBDC by reason of the former’s failure to enforce said restrictions against other violators in the same area. (4) since the Trafalgar Plaza building is in accord with the minimum requirements of P. “SO ORDERED. Jose Cuaresma. It must be stressed that Cuaresma’s testimony is bolstered by documentary evidence and 198 | P r o p e r t y . are based on “surmises and conjectures” which are “contrary to the evidence on record and (RBDC’s) own admissions.3. AYALA submits. No. some of which involve questions of fact.”37 There is merit in AYALA’s submission.33 A reevaluation of factual issues by this Court is justified when the findings of fact complained of are devoid of support by the evidence on record.” on the mistaken premise that RBDC was unaware of the correct 42-meter height limit.35 Thus. the Court of Appeals concluded. if properly appreciated. (2) even if the Deed Restrictions did exist.41 This clarificatory statement of Jose Cuaresma should have cautioned the Court of Appeals from making the unfounded and sweeping conclusion that RBDC can do anything it wants on the subject property “as if no restrictions and conditions were imposed thereon. The motion/application to hold defendant in continuing contempt is hereby also DENIED. The resolution of factual issues raised in the petition would certainly call for a review of the Court of Appeals’ findings of fact. 5.”29 The trial court’s decision is based on its findings that: (1) RBDC had neither actual nor constructive notice of the 42meter height limitation of the building to be constructed on the subject lot. 1996.

that the building to be constructed on the lot must have a total height of not more than 42 meters. In support of its finding that estoppel operates against AYALA. with the condition that the approval was “subject to the compliance by the vendee of the special conditions of sale on the reverse side of the deed of sale dated March 20. No. pursuant to the special conditions/restrictions of the sale.R. therefore. We. 32): 199 | P r o p e r t y . 1984. 29. in the same manner that RBDC did not seek AYALA’s approval when it later made another set of building plans for the 26storey “Trafalgar Plaza. must comply with the special deed restrictions appended to the AYALA-KARAMFIL deed of sale of March 20.85 meters. it even agreed to the sale of the lot by Sy Ka Kieng in favor of the petitioner realty in 1989. per Doc. Under the terms of the deed of sale. Moreover. it submitted to AYALA. Some examples of existing buildings in Salcedo Village that greatly exceeded the gross floor area (5 times lot area) and height (42 meters) limitations are (Rollo. xxx xxx xxx “Even assuming that petitioner RDR violated the floor area and height restrictions. the vendee Sy Ka Kieng assumed faithful compliance with the special conditions of sale and with the Salcedo Village deed of restrictions. Ayala did nothing to enforce the terms of the contract. The fact that RBDC was later issued a building permit from the Makati City Engineer’s Office for the construction of the “Trafalgar Plaza” is not a valid justification to disregard the stipulated contractual restriction of 42 meters. The deed restrictions were incorporated in the memorandum of encumbrances at the reverse side of the title of the lot as Entry No. inter alia. and that any building plans and specifications of the proposed structures must have the approval of AYALA. see no justifiable reason for Ayala to attempt to enforce the terms of the conditions of the sale against the petitioner. Land Registration Authority and Ayala Corporation. This is shown by the fact that. Ayala is barred from enforcing the deed of restrictions in question. in CA-G. It should now be estopped from enforcing the said conditions through any means. to which AYALA’s approval was also annotated therein (Exhibit “C-1”). 2432. Book No. Page No. but with the same explicit inscription that RBDC. The record reveals that the subject Lot 26 was first sold by AYALA to KARAMFIL under a deed of sale (Exhibit “A”) dated March 20. 1984. In fact.” knowing that the same would be disapproved for exceeding the 42-meter height restriction. considering that AYALA’s required conformity to the transfer. AYALA argues that such finding is baseless and is contrary to the Civil Code provisions on estoppel and applicable jurisprudence. 1. were duly registered with the Register of Deeds. the deed of sale (Exhibit “B”) on this transaction bears an annotation of AYALA’s conformity to the transfer. Certainly. Another error which AYALA claims to have been committed by the Court of Appeals is the latter’s finding that AYALA. it is markedly significant that Ayala disregarded the fact that it had previously allowed and tolerated similar and repeated violations of the same restrictive covenants by property owners which it now seeks to enforce against the herein petitioner.circumstances of the case which would show that RBDC was put on notice about the 42-meter height restriction. under the principle of estoppel. which provides. as a matter of contractual obligation. RBDC was fully aware that it was bound by the 42-meter height limit. Series of 1984 of Notary Public Silverio F. p. as vendee. When the lot was sold by KARAMFIL to PALMCREST. and reiterated its findings therein. 140. We agree with the petitioner. to wit: “Also. is now barred from enforcing the deed restrictions because it had supposedly failed to act against other violators of the said restrictions. All these three (3) deeds of sale and the accompanying special deed restrictions imposing a 42meter height limit. or thirteen (13) years later. SP No. Consequently. building plans for a 5-storey structure with a height of 25. Respondents. the deed restrictions are integral parts of the PALMCREST-RBDC deed of sale. the Court of Appeals merely cited its decision dated November 17. was conditioned upon RBDC’s compliance of the deed restrictions. 29157. RBDC is bound to observe the deed restrictions which impose a building height of not more than 42 meters. Verily. 1993. pursuant to the doctrines of waiver and estoppel. Aquino” (Exhibit “B-1”). RBDC cannot profess ignorance of the 42-meter height restriction and other special conditions of the sale. for approval. PALMCREST later resold the lot to RBDC by virtue of a deed of sale (Exhibit “C”). entitled RosaDiana Realty and Development Corporation. Petitioner vs. One of the conditions was that a building would be constructed within one year. Thus. as annotated therein. Attached to the deed of sale is an appendix of special conditions/restrictions (deed restrictions). RBDC would not have submitted such plans had it truly believed that it was restricted by a lower 23-meter height ceiling. 1984 and duly notarized by Notary Public Silverio Aquino.

“Under the doctrine of estoppel.(1) Pacific Star (Nauru Center Building—29 stories and 112.46 200 | P r o p e r t y . Such ruling was immaterial to the resolution of the issue of the propriety of the annotation of the lis pendens. proceeded against.”42 An examination of the decision in the said Rosa Diana case reveals that the sole issue raised before the appellate court was the propriety of the lis pendens annotation. and cannot be denied or disproved as against the person relying thereon. that there are other violations of the restrictions but these are of a minor nature which do not detract from substantial compliance by the lot owners of the deed restrictions. The finding of estoppel was thus improper and made in excess of jurisdiction.” (20 Am. at 836. AYALA submits that minor violations are insufficient to warrant judicial action. Section 49. Both the present case and the Rosa-Diana case. However. Jur. or are being. the appellate court went beyond the sole issue and made factual findings bereft of any basis in the record to inappropriately rule that AYALA is in estoppel and has waived its right to enforce the subject restrictions. is that RBDC was the party guilty of misrepresentation and/or concealment when it resorted to the fraudulent scheme of submitting two (2) sets of building plans. 271. litigating for the same thing and under the same title and in the same capacity.”43 AYALA admits. may be as follows: (a) x x x. one (1) set conformed to the Deed Restrictions. A party may not go back on his own acts and representations to the prejudice of the other party who relied upon them. an admission or representation is rendered conclusive upon the person making it. which was submitted to and approved by AYALA. the Rosa-Diana decision cannot have binding effect against either party to the instant case. thus: “As a rule. In any case.” (id. false representation or concealment that can be attributed to AYALA relied upon by RBDC.. What is clear from the record.R. How AYALA could be considered in estoppel as found by both the trial court and the Court of Appeals. Rule 39 of the Revised Rules of Court (now Sec. except for AYALA. having jurisdiction to pronounce the judgment or order. non-objection to trivial breaches of a restrictive covenant does not result in loss of the right to enforce the covenant by injunction. Moreover.5 meters high) (2) Sagittarius Building—16 stories (3) Shell House Building—14 stories (4) Eurovilla Building—15 stories (5) LPL Plaza Building—18 stories (6) LPL Tower Building—24 stories. was not duly established. we find no admission. 49. simply because. 47. Sec. 29157 is not binding on the parties herein.”45 Here. 2d. conclusive between the parties and their successors in interest by title subsequent to the commencement of action or special proceeding. “Occasional and temporary violations by lot owners of a covenant forbidding the use of property for mercantile purposes are not sufficient as a matter of law to warrant a finding of a waiver or abandonment of the right to enforce the restriction.44 It is the sole prerogative and discretion of AYALA to initiate any action against violators of the deed restrictions. however. involve different parties who are not litigating “for the same thing” nor “under the same title and in the same capacity.” The clear mandate of the above-quoted rule is that a final judgment or order of a court is conclusive and binding only upon the parties to a case and their successors in interest. italics provided).—The effect of a judgment or final order rendered by a court or judge of the Philippines. and acquiescence in violations of a restrictive covenant which are immaterial and do not affect or injure one will not preclude him from restraining violations thereof which would so operate as to cause him to be damaged. (b) In other cases the judgment or order is. with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto. (emphasis supplied) (c) x x x. RBDC is not a party in that case. AYALA asserts that a few gross violators of the deed restrictions “have been.” Hence. p. though. italics provided). A waiver in favor of one person and for a limited purpose is not a waiver as to all persons generally. Rule 39 of the 1997 Rules of Civil Procedure) provides in part: Sec. Effect of judgments. however. the decision in CA-G. SP No. 835. This Court cannot interfere with the exercise of such prerogative/discretion.

the courts must be vigilant for his protection. endowed with overwhelming economic power.55 represented RBDC in the negotiations and in the eventual purchase of the subject lot from PALMCREST.56 Edwin Ngo’s testimony proves that RBDC was not an unwary party in the subject transaction.50 that “contracts of adhesion wherein one party imposes a ready-made form of contract on the other x x x are contracts not entirely prohibited. there is more than ample evidence on record pinpointing RBDC’s violation of the applicable FAR restrictions in the Consolidated and Revised Deed Restrictions (CRDRs) when it constructed the 27-storey Trafalgar Plaza. stand out from other contracts (which are bilaterally drafted by the parties) in that the former is accorded inordinate vigilance and scrutiny by the courts in order to shield the unwary from deceptive schemes contained in ready-made covenants..”49 The respondent court erred in ruling that the Deed Restrictions is a contract of adhesion. Ltd. This type of contract is as binding as a mutually executed transaction. The prayer of petitioner is that judgment be rendered as follows: 201 | P r o p e r t y . cartels and concentration of capital. The one who adheres to the contract is in reality free to reject it entirely. We have emphatically ruled in the case of Ong Yiu vs. On the contrary. Court of Appeals. tender age or other handicap. ignorance. President of RBDC. in the execution of the Deed of Sale on the subject lot. obviously for the purpose of securing the release of the title of the subject lot to obtain bank funding. In sum.. however.”53 (Emphasis supplied) The stringent treatment towards contracts of adhesion which the courts are enjoined to observe is in pursuance of the mandate in Article 24 of the New Civil Code that “(i)n all contractual. manage to impose upon parties dealing with them cunningly prepared ‘agreements’ that the weaker party may not change one whit.B. if he adheres he gives his consent. shipper. speaking through Justice J. his participation in the ‘agreement’ being reduced to the alternative to ‘take it or leave it’ labeled since Raymond Saleilles ‘contracts by adherence’ (contracts d’ adhesion) in contrast to those entered into by parties bargaining on an equal footing.” This ruling was reiterated in Philippine American General Insurance Co.47 It is noteworthy that after the submission of the second set of building plans to the Building Official. mental weakness or other handicap. in Qua Chee Gan vs. Such contracts (of which policies of insurance and international bill of lading are prime examples) obviously call for greater strictness and vigilance on the part of the courts of justice with a view to protecting the weaker party from abuses and imposition. monopolies. the stipulations in the Deed Restrictions and Special Conditions are plain and unambiguous which leave no room for interpretation.”48 The only basis for such finding is that the Deed Restrictions and Special Conditions were “pre-printed” and “prepared” by AYALA.. A contract of adhesion in itself is not an invalid agreement. Edwin Ngo has portrayed RBDC as a knowledgeable realty firm experienced in real estate business. and that RBDC’s participation thereof was “only to sign the Deed of Sale with the said restrictions and conditions. Hence.51 wherein we further declared through Justice Florenz Regalado that “not even an allegation of ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the provisions of a contract of carriage (a contract of adhesion) devolves not on the carrier but on the owner.:52 “The courts cannot ignore that nowadays.while another set violated the said restrictions.L. Sweet Lines.54 and that he. et al. property or other relations.” Contracts of adhesion. as testified to by Edwin Ngo. there was even no attempt on the part of RBDC to prove that. it was a weaker or a disadvantaged party on account of its moral dependence. Moreover. mental weakness. Reyes. Instead. “the subject Deed Restrictions annotated therein appeared to be one.. et al. In the instant case. AYALA further assigns as error the finding of the respondent court that. ignorance. and prevent their becoming traps for the unwary. and which it presented to the Makati City Building Official in order to secure from the latter the necessary building permit.” however. or consignee as the case may be. the validity and/or enforceability of a contract of adhesion will have to be determined by the peculiar circumstances obtaining in each case and the situation of the parties concerned. Law Union and Rock Insurance Co. Inc. a businessman for 30 years. when one of the parties is at a disadvantage on account of his moral dependence. RBDC continued to make representations to AYALA that it would build the five-storey building in accordance with the first set of plans approved by AYALA. the latter is a realty firm and has been engaged in realty business. Inc. vs. As stated by this Court. AYALA relied on RBDC’s false representations and released the said title. RBDC was in bad faith. indigence.” Thus. “while the Deed of Sale to Ray Burton (RBDC) did not appear to be a contract of adhesion.

prior to the start of construction of any new building 202 | P r o p e r t y . b. and we assume. i. are no longer feasible. As discussed above.1 to C-2.500. 1990. Ordering Ray Burton to comply with its contractual obligations in the construction of ‘Trafalgar Plaza’ by removing or demolishing the portions of areas thereof constructed beyond or in excess of the approved height. The alternative prayers of petitioner under the CRDRs. Thus.D) where: A—is equal to the Area Assessment which shall be set at Five Hundred Pesos (P500. we note that the CRDRs impose development charges on constructions which exceed the estimated Gross Limits permitted under the original Deed Restrictions but which are within the limits of the CRDRs. This trust fund shall be used to improve facilities and utilities in the Makati Central Business District. DEVELOPMENT CHARGE For any building construction within the Gross Floor Area limits defined under Paragraphs C-2. 1996. and a certificate of completion thereof was issued by the Makati City Engineer’s Office per ocular inspection on November 7. Ayala. we hold that the said development charges are a fair measure of compensatory damages which RBDC has caused in terms of creating a disproportionate additional burden on the facilities of the Makati Central Business District. to wit: “3.00. and thus by way of example and correction. and while it prays for the amount of However. should be held liable to pay AYALA exemplary damages in the sum of P2. the demolition of excessively built space or to permanently restrict the use thereof. provided that.00) until December 31. and approved by. we find the complaint to be well-grounded. In this regard. we perforce instead rule that RBDC may only be held alternatively liable for substitute performance of its obligations—the payment of damages. including any other portion of the building constructed not in accordance with the said building plans. beginning 1995 and at the end of every successive five-year period thereafter. Lot 2 of Salcedo Village. the record reveals that construction of Trafalgar Plaza began in 1990. C—is equal to the estimated Gross Floor Area permitted under the original deed restrictions. derived by multiplying the lot area by the effective original FAR shown below for each location:”59 Accordingly.1-C below. in the event specific performance becomes impossible: (1) ordering the cancellation and rescission of the March 20. the increase in the Area Assessment shall be reviewed and adjusted by the VENDOR to correspond to the accumulated increase in the construction cost index during the immediately preceding five years as based on the weighted average of wholesale price and wage indices of the National Census and Statistics Office and the Bureau of Labor Statistics.000.. the OWNER shall pay MACEA. B—is equal to the total Gross Floor Area of the completed or expanded building in square meters. but which will result in a Gross Floor Area exceeding certain standards defined in Paragraphs C-3. Alternatively.“a. thus it is AYALA which is entitled to an award of attorney’s fees. a DEVELOPMENT CHARGE as a contribution to a trust fund to be administered by MACEA. such amount shall increase by ten percent (10%) over the Area Assessment charged in the immediately preceding year. is now fully tenanted. Each January 1st thereafter. as shown by the building plans submitted to. 155384 (in the name of defendant) and directing the Office of the Register of Deeds of Makati to issue a new title over the lot in the name of Ayala. we quote hereunder pertinent portions of The Revised Deed Restrictions. In this regard.4 above. in accordance with the unique. 1984 ‘Deed of Sale’ and all subsequent ‘Deeds of Sale’ executed in favor of the original vendee’s successors-ininterest and ordering Ray Burton to return to Ayala Lot 26.e. (2) ordering the cancellation of Transfer Certificate of Title No. and xxx xxx x x x.”57 or any expansion of an existing building. 3. Finally. peculiar circumstance of the case at hand.C .1 The amount of the development charge that shall be due from the OWNER shall be computed as follows: DEVELOPMENT CHARGE = A x (B . Ray Burton Development Corporation acted in bad faith in constructing Trafalgar Plaza in excess of the applicable restrictions upon a double submission of plans and exercising deceit upon both AYALA and the Makati Engineer’s Office.58 Apparently Trafalgar Plaza has been fully built.

1996. bound by the same.00. 255 SCRA 299 [1996]) ——o0o—— 203 | P r o p e r t y © Copyright 2012 Central Book Supply. (4) Ray Burton Development Corporation is further ordered to pay AYALA exemplary damages in the amount of P2. CV No. and in lieu thereof. 46488. Judgment reversed and set aside. Inc.500. JJ.. and the costs of suit. which the other party may accept or reject. (Philippine Airlines. premises considered. Court of Appeals.R. 1996 are hereby REVERSED and SET ASIDE. The Supreme Court has construed obscurities and ambiguities in the restrictive provisions of contracts of adhesion strictly albeit not unreasonably against the drafter thereof when justified in light of the operative facts and surrounding circumstances. RBDC is hereby ordered to pay development charges as computed under the provisions of the Consolidated and Revised Deed Restrictions currently in force.. [Ayala Corporation vs.000.00 which we find to be reasonable under the circumstances. SO ORDERED. Ray Burton Development Corp.000. All rights reserved. attorney’s fees in the amount of P250. WHEREFORE. concur. RBDC should be.000. Melo. (Philippine Commercial International Bank vs. in CA-G.000. Regalado (Chairman). Inc. judgment is hereby rendered finding that: (1) The Deed Restrictions are valid and petitioner AYALA is not estopped from enforcing them against lot owners who have not yet adopted the Consolidated and Revised Deed Restrictions. we award the amount of P250. 255 SCRA 48 [1996]) A contract of adhesion is defined as one in which one of the parties imposes a ready-made form of contract. (2) Having admitted that the Consolidated and Revised Deed Restrictions are the applicable Deed Restrictions to Ray Burton Development Corporation’s Trafalgar Plaza. and is.00. but which the latter cannot modify.P500.00. Court of Appeals. and its Resolution dated October 7. 294 SCRA 48(1998)] . vs. Puno and Mendoza. (3) Considering that Ray Burton Development Corporation’s Trafalgar Plaza exceeds the floor area limits of the Deed Restrictions. the assailed Decision of the Court of Appeals dated February 27.

Marikina. Benjamin S.R. In general. and MARISSA FAJARDO.* ELISEO FAJARDO. While it may be correct to state that restrictive covenants on the use of land or the location or character of buildings or other structures thereon may broadly be said to create easements or rights. unit. the 2nd floor expansion. August 1. Thus. sustained them where the covenants are reasonable. an owner-developer and seller of low-cost housing. Subject to these limitations. Jr. But the second storey expansion must be placed above the back portion of the house and should not extend forward beyond the apex of the original building. Branch 261.”2 The above restrictions were also contained in Transfer Certificate of Title No. A second storey is not prohibited. Fajardo are hereby directed to immediately demolish and remove the extension of their expanded housing unit that exceeds the limitations imposed by the Restrictive Covenant. A developer of a subdivision can enforce restrictions. bodega. an action to demolish the unauthorized structures. Incorporated. Restrictive covenants are not.—Restrictive covenants are not. nevertheless. to wit:1 ‘Easements. having relinquished ownership of the subdivision to the homeowners.G. which. confirmed by its board of directors. “x x x xxx xxx “Upward expansion. is 6 meters back from the front property line and 4 meters back from the front wall of the house. or to law. petitioners. Benito & Associates for private respondent. It is not thus normally enforceable by one who has no right nor interest in the land for the benefit of which the restriction has been imposed. otherwise the Branch Sheriff of this Court shall execute this decision at the expense of the defendants. but a case of servitudes (burden). INC. strictly speaking. N-115384 covering the lot issued in the name of petitioner-spouses. 33. xxx xxx xxx “Front expansion: 2nd Storey: No unit may be extended in the front beyond the line as designed and implemented by the developer in the 60 sq. VITUG.. it can also be contended that such covenants. In general frontline restrictions on constructions have been held to be valid stipulations. Metro Manila.—Courts which generally view restrictive covenants with disfavor for being a restriction on the use of one’s property. No structure of any kind (store..: Freedom To Build. garage. Broadly speaking. “WHEREFORE. Paglinawan for petitioner. Fajardo. he would be entitled to do. Same. a developer of a subdivision can enforce restrictions. Contracts. Same. contained a Restrictive Covenant providing certain prohibitions. Same. synonymous with easements. of the De la Costa Homes in Barangka. respondent. For the good of the entire community. only if he retains part of the land. extended the roof of their house to the property line and expanded the second floor of their house to a point directly above the original front wall. JR. National Capital Judicial Region. in front. premises considered. Civil Law. even as against remote grantees of lots. J. sold to petitioner-spouses. a house and lot designated Lot No. defendant spouses Eliseo B. if no easement existed. allowed respondent to enforce the provisions of the restrictive covenant. After trial. vs. judgment was rendered against petitioners. Same. and Marissa F. Arturo L. strictly speaking synonymous with easements. thus: PETITION for review on certiorari of a decision of the Court of Appeals. The Contract to Sell executed between the parties. units. In other words. do not result in true easements. the homeowner must observe a two-meter easement in front. 134692. m. being limitations on the manner in which one may use his own property.3 Respondent filed before the Regional Trial Court. have. Pasig City. frontline restrictions on constructions have been held to be valid stipulations. There would have been merit in the argument of petitioners—that respondent. m.) may be built on the front easement. FREEDOM TO BUILD. only if he retains part of the land. No. Block 14. sometimes characterized to be negative easements or reciprocal negative easements.. despite repeated warnings from respondent. a suit for equitable enforcement of a restrictive covenant can only be made by one for whose benefit it is intended. The facts are stated in the opinion of the Court. Negative easement is the most common easement created by covenant or agreement whose effect is to preclude the owner of the land from doing an act. 204 | P r o p e r t y . courts enforce restrictions to the same extent that will lend judicial sanction to any other valid contractual relationship. and not in restraint of trade. even as against remote grantees of lots. just as provided in the 60 sq.—Petitioners raise the issue of the personality of respondent to enforce the provisions of the covenant. etc. not contrary to public policy. 2000. The controversy arose when petitioners. is precluded from claiming any right or interest on the same property—had not the homeowners’ association.

”4 On appeal to it. it is of public knowledge that owners-developers are constrained to build as many number of houses on a limited land area precisely to accommodate marginalized lot buyers. Moreover.14 In general.. he would be entitled to do. respondent states in arguing for the validity of the restrictive covenant that the— x x x restrictions are not without specific purpose. and of all the persons who may now. living quarters with petitioners. right or interest over the subdivision upon the execution of the Deed of Absolute Sale in favor of the individual homeowners. among other things. the spouses contest the judgment of the courts below. Petitioners maintain that it is incumbent upon the homeowners’ association. the Court deems it proper not to award any. a certain level of privacy shall be observed. sustained them9 where the covenants are reasonable.16 but may also be aimed as a check on the subsequent uses of the building17 conformably with what the developer originally might have intended the stipulations to be.6 do not result in true easements. and privacy or to prevent overcrowding. it appearing from the records of this case that no evidence to sustain the same was adduced by either of the parties. to wit: subsequent duly approved sale and assignments of housing units shall be made only to low income families.”5 Restrictive covenants are not. nor as a restriction as to the type of construction. to ensure.10 not contrary to public policy. a community spirit shall be fostered. strictly speaking. health.7 but a case of servitudes (burden). the intents and purposes for which the project was designed shall be upheld.13 Subject to these limitations. and have even expressed interest in undertaking a similar expansion in their respective residences. i. have. Such project has been designed to accommodate at least 100 families per hectare. providing as much as possible the safety. Per the contract between Freedom to Build Incorporated and the De la Costa Low Income Project Homeowners’ Association (hereinafter homeowners’ association).e. generally of light and view. In a low cost-socialized housing. sometimes characterized to be negative easements or reciprocal negative easements. that the structures built on De la Costa Homes Subdivision would prevent overcrowding and promote privacy among subdivision dwellers. petitioners aver. or hereafter become owners of any part of the project. these restrictions are promulgated in order that. Viewed accordingly. and as part of the consideration for the conveyance of the housing unit. courts enforce restrictions to the same extent that will lend judicial sanction to any other valid contractual relationship.”18 There appears to be no cogent reasons for not upholding restrictive covenants aimed to promote aesthetics.12 and not in restraint of trade. to enforce compliance with the provisions of the covenant. being limitations on the manner in which one may use his own property.11 or to law.8 Courts which generally view restrictive covenants with disfavor for being a restriction on the use of one’s property. the Court of Appeals affirmed the decision of the trial court. aesthetic and decent living condition by controlling overcrowding. with their families. Negative easement is the most common easement created by covenant or agreement whose effect is to preclude the owner of the land from doing an act. might soon get married and then share. A perusal of the provisions of the covenant would show that the restrictions therein imposed were intended— “For the protection and benefit of the De La Costa Low Income Housing Project. frontline restrictions on constructions have been held to be valid stipulations. nevertheless. a son and a daughter. In their petition for review to this Court. synonymous with easements. the enforcement of the prohibitions contained in the “Restrictive Covenant” originally residing on respondent is now lodged in the homeowners’ association. the subject restrictive covenant not being intended for the benefit of adjacent owners but to prescribe the uses of the building.15 The provisions in a restrictive covenant prescribing the type of the building to be erected are crafted not solely for the purpose of creating easements. Nor can petitioners claim 205 | P r o p e r t y . In its Memorandum. which. While it may be correct to state that restrictive covenants on the use of land or the location or character of buildings or other structures thereon may broadly be said to create easements or rights. Adjacent owners reportedly have no objection to the construction. the couple’s two children.“As to damages and attorney’s fees. the statement of petitioners that their immediate neighbors have not opposed the construction is unavailing to their cause. and an undisturbed possession and occupancy at the homeowners shall be maintained. it can also be contended that such covenants. if no easement existed. The argument then of petitioners that expansion is necessary in order to accommodate the individual families of their two children must fail for like reason. not on respondent. “SO ORDERED. The latter also assail the personality of private respondent to question the construction which have effectively relinquished its ownership.

petitioner-spouses can be required to demolish the structure to the extent that it exceeds the prescribed floor area limits.good faith. is AFFIRMED. allowed respondent to enforce the provisions of the restrictive covenant. SO ORDERED. of the Court of Appeals in CA-G. Inc. the assailed decision. confirmed by its board of directors.” This Court is not unaware of its ruling in Ayala Corporation vs. This argument has no merit.21 There would have been merit in the argument of petitioners—that respondent.R. 50085. the elaborate mathematical formula for the determination of compensatory damages which takes into account the current construction cost index during the immediately preceding 5 years based on the weighted average of wholesale price and wage indices of the National Census and Statistics Office and the Bureau of Labor Statistics is explicitly provided for in the Deed of Restrictions entered into by the parties. Broadly speaking. No costs. sustaining that of the court a quo. is precluded from claiming any right or interest on the same property—had not the homeowners’ association. All rights reserved. JJ. a suit for equitable enforcement of a restrictive covenant can only be made by one for whose benefit it is intended. however. In sum. vs. the Court holds that— (1) The provisions of the Restrictive Covenant are valid. the restrictive covenants are explicitly written in the Contract To Sell and annotated at the back of the Transfer Certificate of Title. vs. Court of Appeals. petitioners argue that for lack of a specific provision.22 which has merely adjudged the payment of damages in lieu of demolition.. Article 1168 of the New Civil Code states: “When the obligation consists in not doing and the obligor does what has been forbidden him. and (3) Since the extension constructed exceeds the floor area limits of the Restrictive Covenant. WHEREFORE.20 Thus.. (2) Petitioners must be held to be bound thereby. CV No. even as against remote grantees of lots. In the aforementioned case. Purisima and Gonzaga-Reyes. Petitioners raise the issue of the personality of respondent to enforce the provisions of the covenant. Panganiban. dated 13 July 1998. Jr. [Fajardo. prescribing the penalty of demolition in the “Restrictive Covenant” in the event of a breach thereof. is not extant in the case at bar. 278 SCRA 498 [1997]) ——o0o—— © Copyright 2012 Central Book Supply. a developer of a subdivision can enforce restrictions. Melo (Chairman).19 It is not thus normally enforceable by one who has no right nor interest in the land for the benefit of which the restriction has been imposed. 337 SCRA 115(2000)] 206 | P r o p e r t y . (La Vista Association Inc. Inc. This unique and peculiar circumstance. Note. only if he retains part of the land. among other strong justifications therein mentioned. concur. it shall be undone at his expense.—A voluntary easement is constituted simply by will or agreement of the parties. Finally. Ray Burton Development Corporation. Freedom to Build. having relinquished ownership of the subdivision to the homeowners. the prayer of respondent to demolish the structure should fail. Judgment affirmed.

Meliton Allanigue. Tolentino. Ceferino de Leon.—In So Ping Bun v. 1314 of the Civil Code may apply. An option is a contract by which the owner of the property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. were the registered owners of three parcels of land located in Mabalacat. Augusto Tolentino. TEODOSIA LACSONESPINOSA and THE COURT OF APPEALS. Rodolfo Quiambao. ROSENDO LACSON. Ricardo Hernandez. Orlando Flores. Words and Phrases. Alfonso Flores. covered by Transfer Certificates of Title (TCT) Nos. Sixto Hernandez. AMANCIA LACSON. Damages. Alfredo Sosa. properly speaking. Same. petitioner. Rafael De Claro for private respondents.—We do not agree with the contention of the petitioner that the deeds of assignment executed by the defendants-tenants are perfected option contracts. (3) that there is an urgent and permanent act and urgent necessity for the writ to prevent serious damage. Same. aside from the consideration for the offer. Remedial Law. in the absence of a clear legal right. CALLEJO. Court of Appeals.. Jose Gozun. Jose Sosa. we held that for the said law to apply. An option contract is a separate and distinct contract from which the parties may enter into upon the conjunction of the option. namely. PETITION for review on certiorari of a decision of the Court of Appeals. Emiliano Laxamana. ANTONIO LACSON. a group of original farmers/tillers. namely. Norma Quiambao. 1996. extreme caution must be observed in the exercise of such discretion. all surnamed Lacson. It is not designed to protect contingent or future rights. (2) knowledge by the third person of the existence of the contract. until the merits of the case can be heard. the pleader is burdened to prove the following: (1) the existence of a valid contract. Ernesto L. de Lacson. The Case for the Petitioner Respondents Angelica Tiotuyco Vda. but the right to call for and receive lands if he elects. Felino G. 35923-R. Alex Quiambao. An option is a contract by which the owner of the property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. 134971. Rosita Tolentino. treated as a contract. Sr. SP No. Rica Gozun. Eddie San Luis. Jose Tiamson. or which gives to the owner of the property the right to sell or demand a sale. Pampanga. J. Nicenciana Miranda. not lands. SR. Alberto Hernandez. Julio Tiamson. or under. Options. The facts are stated in the opinion of the Court. On March 17. Pineda for petitioner. Injunction is a preservative remedy aimed at protecting substantial rights and interests. vs. and Teodosia. 44883. Antonio. Civil Law. or in compliance with certain terms and conditions. Pampanga.—A preliminary injunction is an extraordinary event calculated to preserve or maintain the status quo of things ante litem and is generally availed of to prevent actual or threatened acts. Francisco Tolentino. It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time. and Aurelio Flores.R. Contracts. Ruben Torres. and another group. While generally the grant of a writ of preliminary injunction rests on the sound discretion of the trial court taking cognizance of the case. not an agreement that he shall have the lands. While generally the grant of a writ of preliminary injunction rests on the sound discretion of the trial court taking cognizance of the case. Requisites before Art. (2) a violation of that right. 2004. Isidro Tolentino. No. The possibility of irreparable damage without proof of adequate existing rights is not a ground for injunction. Same. The second party gets in praesenti. the issuance of the injunctive writ constitutes a grave abuse of discretion.3 and her children Amancia. registered in the Register of Deeds of San Fernando. extreme caution must be observed in the exercise of such discretion. It imposes no binding obligation on the person holding the option. Until accepted. Where the complainant’s right is doubtful or disputed.. The possibility of irreparable damage without proof of adequate existing rights is not a ground for injunction. the petitioner was burdened to establish the following: (1) a right in esse or a clear and unmistakable right to be protected.R. Injunction is accepted as the strong arm of equity or a transcendent remedy. Roman Laxamana. Rosita Hernandez. injunction is not proper. it is not. Same. respondents.5 individually executed in favor of the petitioner separate Deeds of Assignment6 in which the assignees assigned to the petitioner their 207 | P r o p e r t y . March 25. Emiliano Ramos. and 35925-R.* HERMINIO TAYAG. Dominga Laxamana. Juan. Bienvenido Tongol. Perla Gozun. 35922-R. JUAN LACSON. Injunction. which were tenanted agricultural lands.— For the court to issue a writ of preliminary injunction. An option contract is a separate and distinct contract from which the parties may enter into upon the conjunction of the option. Requisites for the issuance of a writ of preliminary injunction. Renato Gozun. Thus. and (3) interference by the third person in the contractual relation without legal justification. Benigno Tolentino.4 were administered by Renato Espinosa for the owner. Felicencia de Leon.: Before us is a petition for review on certiorari of the Decision1 and the Resolution2 of respondent Court of Appeals in CA-G.G. The properties.

the petitioner filed a complaint with the Regional Trial Court of San Fernando. In his complaint. Alfredo Gozun. Roman Laxamana. Emiliano Laxamana. Felicencia de Leon. 10910. Renato Gozun. Branch 44. hindi tumanggap ng ibang buyer o ahente. Isidro Tolentino. Sixto Hernandez.. Rodolfo Quiambao. On July 24. 5. agreed to sell the property.7 However. pero sinira ninyo ang aming pagtitiwala sa pamamagitan ng demanda ninyo at pagbibigay ng problema sa amin na hindi naman nagbenta ng lupa. Kaya kami ay nagpulong at nagpasya na ibenta na lang ang aming karapatan o ang aming lupang sinasaka sa landowner o sa mga pamilyang Lacson.” The petitioner was also granted the exclusive right to buy the property if and when the respondents. Kaya kung ang sasabihin ninyong ito’y katangahan. Alfonso Flores.10 The case was docketed as Civil Case No..8 Explaining their reasons for their collective decision. Emiliano Ramos are original farmers or direct tillers of landholdings over parcels of lands covered by TransferCertificate of Title Nos.respective rights as tenants/tillers of the landholdings possessed and tilled by them for and in consideration of P50. Perla Gozun. 1996. the following: 4. with the concurrence of the defendants-tenants. Dominga Laxamana. the petitioner alleged. Eddie San Luis. 1996.9 On August 19. Benigno Tolentino. on August 8. 1996. as well as the respondents. the petitioner gave varied sums of money to the tenants as partial payments. the defendants-tenants. 1996). The petitioner also prayed for a writ of preliminary injunction against the defendants and the respondents therein. Jose Tiamson. Rica Gozun. Ruben Torres. and the latter issued receipts for the said amounts. 35923-R and 35925-R which are registered in the names of defendants LACSONS. Alberto Hernandez. Subsequent payments were also received: 208 | P r o p e r t y . The said amount was made payable “when the legal impediments to the sale of the property to the petitioner no longer existed. inter alia. Sr. Tolentino. That on March 17. naging tapat at nanindigan sa lahat ng ating napagkasunduan. Rosita Tolentino. the defendants received from the plaintiff partial payments in the amounts corresponding to their names. Norma Quiambao. Bienvenido Tongol. against the defendantstenants. and Aurelio Flores are sub-tenants over the same parcel of land. as provided for in the Deeds of Assignment. over the landholding to the respondents. Augusto Tolentino. kaya pasensya na lang Mister Tayag. Dahil sinira ninyo ang aming pagtitiwala at katapatan. they wrote as follows: Kami ay nagtiwala sa inyo. wrote the petitioner stating that they were not attending the meeting and instead gave notice of their collective decision to sell all their rights and interests. dahil ayaw naming magkaroon ng problema. Ceferino de Leon. In the interim.00 per square meter to the defendants. through Joven Mariano. as tenants/lessees. Jose Sosa. entered into Deeds of Assignment with the plaintiff by which the defendants assigned all their rights and interests on their landholdings to the plaintiff and that on the same date (March 17. 35922-R. Meliton Allanigue. 1996 the defendants TIAMSON. Alex Quiambao. the petitioner called a meeting of the defendants-tenants to work out the implementation of the terms of their separate agreements. Rosita Hernandez. for the court to fix a period within which to pay the agreed purchase price of P50. lalo sigurong magiging katangahan kung ibebenta pa namin sa inyo ang aming lupang sinasaka. while defendants Felino G.00 per square meter. Pampanga. Francisco Tolentino. That defendants Julio Tiamson. et al.

Benigno Tolentino 20. 1996. also alleged the following in his complaint: 11. That the defendants TIAMSON.861.465.000 10. 209 | P r o p e r t y .000 10.000 5.000 10.10 22. Rica Gozun 18. Pampanga. the LACSONS should be restrained from encumbering/alienating the subject properties covered by TCT No. Tolentino 17.621.944.000 P5. it is essential that a Writ of Preliminary Injunction be issued enjoining and restraining the defendants TIAMSON. That the plaintiff is willing and able to put up a reasonable bond to answer for the damages which the defendants would suffer should the injunction prayed for and granted be found without basis. That to prevent irreparable damages and prejudice to the plaintiff..648. et al. That to maintain the status quo.237.62 -------P33. from rescinding their contracts with the plaintiff and from selling/alienating their properties to the LACSONS or other persons.000 10. Alex Quiambao 31..54 106.000 10. Sixto Hernandez 30. and instead they gave notice to the plaintiff that they will sell all their rights and interests to the registered owners (defendants LACSONS). Renato Gozun [son of Felix Gozun (deceased)] 3. have no right to deal with the defendants LACSON or with any third persons while their contracts with the plaintiff are subsisting.000 10.587. 9..11 In support of his plea for injunctive relief.31 12. Registry of Deeds of San Fernando.000 P10.000. through Joven Mariano. mental torture and serious anxiety which in the sum of P500. 8. Jose Sosa 9. Emiliano Ramos 16.374.24 24. Emiliano Laxamana 11. 35922-R. Dominga Laxamana 14.70 ---------------------- CHECK NO.000 P30. efforts and time in the said transactions. 7. et al.648.00 for which defendants should be held liable jointly and severally. inviting them for a meeting regarding the negotiations/implementations of the terms of their Deeds of Assignment.00 A copy of the letter is hereto attached as Annex “A” etc. That on July 24. the defendants TIAMSON.62 -------P43.. Rosita Tolentino 8.000 P10. Ceferino de Leon 33.000 5.000. Meliton Allanigue 13. the plaintiff wrote the defendants TIAM-SON. 12.621.126. Jose Gozun 26.000 6. Sr.40 51.000 P10..000 P10. That the plaintiff is entitled to the reliefs being demanded in the complaint..10 32. 10. defendants LACSONS are inducing or have induced the defendants TIAMSON. Alberto Hernandez 34. as plaintiff. Rodolfo Quiambao 21. Roman Laxamana 22. should be restrained from rescinding their contracts with the plaintiff.000 P10.000 10.465.12 231274 231285 231271 231279 231284 231291 231283 --------------231269 231275 -------231280 ---------------------------------------------------------------------------------------------------------231270 ---------------------- P19.. Augusto Tolentino 29. Isidro Tolentino 32.54 96.869. 14.587. replied that they are no longer willing to pursue with the negotiations.374.000 P10. et al.60 ------------------------------------------------------------------------------------------------------------------------------10.861.02 -------18. Orlando Florez 35.000 10.000 5.77 27. threaten to rescind their contracts with the plaintiff and are also bent on selling/alienating their rights and interests over the subject properties to their co-defendants (LACSONS) or any other persons to the damage and prejudice of the plaintiff who already invested much money.08 24.269. 35923-R and TCT No.000 1st PAYMENT P20. et al. That the defendants TIAMSON. et al.869. to violate their contracts with the plaintiff.000 14..31 24. 13. as the latter has no speedy and adequate remedy under the ordinary course of law. Bienvenido Tongol [son of Abundio Tongol (deceased)] 5.000 10. in whatever form.944. 1996.000 10.000 10.40 41. That on August 8.378.000 5. Julio Tiamson 2.24 14. Francisco Tolentino.31 P22.000 -------- 2nd PAYMENT P10.269. et al.. Aurelio Flores 10.000 P10.237. and the defendants LACSONS should also be restrained from accepting any offer of sale or alienation with the defendants TIAMSON.08 14.000 10. Nicenciana Miranda 25.77 22. Perla Gozun 19. Rosita Hernandez 4. Alfonso Flores 6. Felicencia de Leon 15. That by reason of the malicious acts of all the defendants.000 10. 231281 TOTAL P30. Felino G.000 P10. the petitioner.90 56. Norma Quiambao 7.000 P5.000 ---------10. Jose Tiamson 28. the defendants TIAMSON. Eddie San Luis 23.000 10. Alfredo Sosa 27.501.60 ---------------------------------------------------------------------------------------------------------11.126.31 34. further. Ricardo Hernandez 24. the latter’s rights and interests in the properties mentioned in paragraph 4 hereof. 35925-R. 15. plaintiff suffered moral damages in the forms of mental anguish. et al.000 P10. Ruben Torres [son of Mariano Torres (deceased)] 12.501.90 26.1.02 -------23. et al.

Rosita Hernandez. the landholdings belong to their co-defendants.) from rescinding their contracts with the plaintiff and from alienating the subject properties to the defendants LACSONS or any third persons. Pending the hearing. et al. Bienvenido Tongol. Augusto Tolentino. the defendants-tenants had no right to enter into any transactions involving their properties without their knowledge and consent. that the money each of them received from the petitioner were in the form of loans. 210 | P r o p e r t y . the Comprehensive Agrarian Reform Program (CARP)..D. c) That the Deeds of Assignment were signed through the employment of fraud. Fixing the period within which plaintiff shall pay the balance of the purchase price to the defendants TIAMSON.. the respondents as defendants asserted that (a) the defendant Angelica Vda. enjoining and restraining defendants Julio Tiamson.. Roman Laxamana. Alberto Hernandez. That if this is so. defendants were not provided a copy thereof. Ricardo Hernandez. et al. Ordering the defendants to pay the plaintiff attorney’s fees in the sum of P100. et al. Norma Quiambao.00. 4. 6657. e) That as completed.00 as moral damages. 35922-R. deceit and false pretenses of plaintiff and made the defendants believe that what they sign[ed] was a mere receipt for amounts received by way of loans. Meliton Allanigue. Jose Tiamson. Emiliano Ramos. and. Jose Gozun. What they knew was that they were made to sign a document that will serve as a receipt for the loan granted [to] them by the plaintiff. 1993. Jose Sosa. Francisco Tolentino. 2. 35922-R. and therefore. Alfredo Sosa.) No. Pampanga. signed the documents and their completion and accomplishment was done in the absence of said defendants and.000. Perla Gozun. et al. et al. de Lacson had died on April 24. Plaintiff prays for such other relief as may be just and equitable under the premises. Rodolfo Quiambao. Renato Gozun. The defendants-tenants Tiamson. after the lapse of legal impediment. judgment be rendered as follows: 1. Sr. did assign all their rights and interests in the properties or landholdings they were tilling in favor of the plaintiff.The petitioner prayed. (c) they never induced the defendants Tiamson to violate their contracts with the petitioner. and 35925-R of the Registry of Deeds of San Fernando. Ordering the defendants to pay the plaintiff the sum of P500.. but the tenancy status of the rest of the defendants was uncertain.00 plus litigation expenses of P50. 27 and Republic Act No. 35923-R. et al.13 In their answer to the complaint. Eddie San Luis..000.000. it is prayed that a restraining order be issued restraining the aforementioned defendants (TIAMSON. Pampanga. Tolentino. Felino G. Emiliano Laxamana. Nicenciana Miranda. 6. They also averred that the transfers or assignments of leasehold rights made by the defendants-tenants to the petitioner is contrary to Presidential Decree (P. 5. and Aurelio Flores from rescinding their contracts with the plaintiff and from alienating their rights and interest over the aforementioned properties in favor of defendants LACSONS or any other third persons.. a Writ of Preliminary Injunction be issued prohibiting.. Rica Gozun. Making the Writ of Preliminary Injunction permanent. Alfonso Flores. restraining and enjoining the defendants LACSONS from encumbering/selling the properties covered by TCT Nos. (d) being merely tenants-tillers. further. Lacson. b) That the defendants Tiamson. et al. the contract is null and void. assuming arguendo that the documents were voluntarily executed. Benigno Tolentino. 35923-R and 35925-R of the Registry of Deeds of San Fernando. the defendants Tiamson. that after the proceedings. d) That the documents signed in blank were filled up and completed after the defendants Tiamson. do not have any right to transfer their interest in the landholdings they are tilling as they have no right whatsoever in the landholdings. 3. Dominga Laxamana. and that they were deceived into signing the deeds of assignment: a) That all the foregoing allegations in the Answer are hereby repleaded and incorporated in so far as they are material and relevant herein. in so far as the Deeds of Assignment are concern[ed] never knew that what they did sign is a Deed of Assignment. (b) twelve of the defendants were tenants/lessees of respondents. the Deeds of Assignment reflected that the defendants Tiamson. Ruben Torres. Orlando Flores. worst of all. And pending the hearing of the Prayer for a Writ of Preliminary Injunction. et al.14 The respondents interposed counterclaims for damages against the petitioner as plaintiff. alleged in their answer with counterclaim for damages. if any. Ceferino de Leon.. Felicencia de Leon. Rosita Tolentino. and prohibiting the defendants LACSONS from encumbering/alienating TCT Nos.

received sums of money from plaintiffs.20 The respondents asserted that the Deeds of Assignment executed by the assignees in favor of the petitioner were contrary to paragraph 13 of P. contending that it was premature for the trial court to resolve his plea for injunctive relief. filed a petition for certiorari in the Court of Appeals for the nullification of the February 13.. An order be issued directing the respondent court to issue an order denying the application of respondent Herminio Tayag for the issuance of a Writ of Preliminary Injunction and/or restraining order. the petitioner would not acquire any right to enforce the deeds by injunctive relief. filed a Comment/Motion to dismiss/deny the petitioner’s plea for injunctive relief on the following grounds: (a) the Deeds of Assignment executed by the defendants-tenants were contrary to public policy and P. An order be issued declaring the orders of respondent court dated February 13.. That this exclusive and absolute right given to the assignee shall be exercised only when no legal impediments exist to the lot to effect the smooth transfer of lawful ownership of the lot/property in the name of the ASSIGNEE. No. .D. 1997 Orders of the trial court. No. 1997 as null and void. The respondents also claimed that the enforcement of the deeds of assignment was subject to a supervening condition: 3. the court issued an Order19 denying the motion of the respondents for being premature. 6657. The petitioner opposed the motion. 6657. (d) the respondents had the absolute right to sell and dispose of their property and to encumber the same and cannot be enjoined from doing so by the trial court. 27 and the second paragraph of Section 70 of Rep. assumed that the deeds were valid. a Writ of Preliminary Injunction be issued against the respondent court. could not be enforced by the petitioner for being null and void. According to the 211 | P r o p e r t y . Such other orders as may be deemed just & equitable under the premises also prayed for. and not as part consideration of the alleged Deeds of Assignment. 1997 and April 16. et al.D. there was need for a hearing to enable the respondents and the defendants-tenants to adduce evidence to controvert that of the petitioner. Furthermore. (b) the petitioner failed to prove that the respondents induced the defendants-tenants to renege on their obligations under the “Deeds of Assignment. . 44883. Act No. Act No. 2. as such.15 At the hearing of the petitioner’s plea for a writ of preliminary injunction. prohibiting it from issuing its own writ of injunction against Petitioners. The respondents. thereafter. In support of his plea for a writ of preliminary injunction. The trial court ruled that on the face of the averments of the complaint. and that they were not bound to adduce any evidence in opposition to the petitioner’s plea for a writ of preliminary injunction. and thereafter making said injunction to be issued by this Court permanent. On Febru