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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-15334 January 31, 1964

were two parallel steel bars attached to the leg means of bolts; the tower proper was attached to the leg three bolts; with two cross metals to prevent mobility; there was no concrete foundation but there was adobe stone underneath; as the bottom of the excavation was covered with water about three inches high, it could not be determined with certainty to whether said adobe stone was placed purposely or not, as the place abounds with this kind of stone; and the tower carried five high voltage wires without cover or any insulating materials. The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by the petitioner approximate more than one kilometer from the first tower. As in the first tower, the ground around one of the four legs was excavate from seven to eight (8) feet deep and one and a half (1-) meters wide. There being very little water at the bottom, it was seen that there was no concrete foundation, but there soft adobe beneath. The leg was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner. Like the first one, the second tower is made up of metal rods joined together by means of bolts, so that by unscrewing the bolts, the tower could be dismantled and reassembled. The third tower examined is located along Kamias Road, Quezon City. As in the first two towers given above, the ground around the two legs of the third tower was excavated to a depth about two or three inches beyond the outside level of the steel bar foundation. It was found that there was no concrete foundation. Like the two previous ones, the bottom arrangement of the legs thereof were found to be resting on soft adobe, which, probably due to high humidity, looks like mud or clay. It was also found that the square metal frame supporting the legs were not attached to any material or foundation. On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's petition to cancel these declarations, an appeal was taken by respondent to the Board of Assessment Appeals of Quezon City, which required respondent to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Respondent paid the amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision on December 29, 1958, ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant petition for review was filed. In upholding the cause of respondents, 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; (2) the steel towers are personal properties and are not subject to real property tax; and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned as errors by the petitioner in the brief. 1

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY, petitioners, vs. MANILA ELECTRIC COMPANY, respondent. Assistant City Attorney Jaime R. Agloro for petitioners. Ross, Selph and Carrascoso for respondent. PAREDES, J.: From the stipulation of facts and evidence adduced during the hearing, the following appear: On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were embodied in Ordinance No. 44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became the transferee and owner of the franchise. Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers were inspected by the lower court and parties and the following were the descriptions given there of by said court: The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The findings were as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet, with an opening of about one (1) meter in diameter, decreased to about a quarter of a meter as it we deeper until it reached the bottom of the post; at the bottom of the post

The tax exemption privilege of the petitioner is quoted hereunder: PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay ... Said percentage shall be due and payable at the time stated in paragraph nineteen of Part One hereof, ... and shall be in lieu of all taxes and assessments of whatsoever nature and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.) The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as typically the stem of a small tree stripped of its branches; also by extension, a similar typically cylindrical piece or object of metal or the like". The term also refers to "an upright standard to the top of which something is affixed or by which something is supported; as a dovecote set on a pole; telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for which exemption is granted, is not determined by their place or location, nor by the character of the electric current it carries, nor the material or form of which it is made, but the use to which they are dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of wood or metal, but includes "upright standards to the top of which something is affixed or by which something is supported. As heretofore described, respondent's steel supports consists 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. The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. Several courts of last resort in the United States have called these steel supports "steel towers", and they denominated these supports or towers, as electric poles. In their decisions the words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction that a transmission tower or pole means the same thing. In a proceeding to condemn land for the use of electric power wires, in which the law provided that wires shall be constructed upon suitable poles, this term was construed to mean either wood or metal poles and in view of the land being subject to overflow, and the necessary carrying of numerous wires and the distance between poles, the statute was interpreted to

include towers or poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.) The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its electric power furnished to subscribers and members, constructed for the purpose of fastening high voltage and dangerous electric wires alongside public highways. The steel supports or towers were made of iron or other metals consisting of two pieces running from the ground up some thirty feet high, being wider at the bottom than at the top, the said two metal pieces being connected with criss-cross iron running from the bottom to the top, constructed like ladders and loaded with high voltage electricity. In form and structure, they are like the steel towers in question. (Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.) The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydro-electric power generated from its plant to the Tower of Oxford and City of Waterbury. These steel towers are about 15 feet square at the base and extended to a height of about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of which extends above the surface of the soil in the tower of Oxford, and to the towers are attached insulators, arms, and other equipment capable of carrying wires for the transmission of electric power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1). In a case, 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 is carried were so large that their wire took their structure out of the definition of a pole line. It was held that in defining the word pole, one should not be governed by the wire or material of the support used, but was considering the danger from any elevated wire carrying electric current, and that regardless of the size or material wire of its individual members, 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. v. Bryan 252 P. 1016). It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated thereon, should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of electric current from the source thereof to its consumers. If the respondent would be required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one should admit that the Philippines is one century behind the age of space. It should also be conceded by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the purpose for which the respondent's franchise was granted. 2

Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the logical question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law does not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the following are immovable property: (1) Land, buildings, roads, and constructions of all kinds adhered to the soil; xxx xxx xxx

cannot be properly raised for the first time on appeal. The herein petitioner is indulging in legal technicalities and niceties which do not help him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay the real estate taxes, which respondent paid under protest. Having acted in his official capacity as City Treasurer of Quezon City, he would surely know what to do, under the circumstances. IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners. Case digest Board of Assessment Appeals v. MERALCO [G.R. No. L-15334. January 31, 1964.] En Banc, Paredes (J): 8 concur, 1 concur in result, 1 took no part. Facts: On 20 October 1902, the Philippine Commission enacted Act 484 which authorized the Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were embodied in Ordinance 44 approved on 24 March 1903. Meralco became the transferee and owner of the franchise. Meralcos electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydroelectric plant in the province of Laguna to the City of Manila. Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it. On 15 November 1955, City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax Declaration 31992 and 15549. After denying Meralcos petition to cancel these declarations an appeal was taken by Meralco to the Board of Assessment Appeals of Quezon City, which required Meralco to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Meralco paid the amount under protest, and filed a petition for review in the Court of Tax Appeals which rendered a decision on 29 December 1958, ordering the cancellation of the said tax declarations and the City Treasurer of Quezon City to refund to Meralco the sum of P11,651.86. The motion for reconsideration having been denied, on 22 April 1959, the petition for review was filed. Issue: Whether or not the steel towers of an electric company constitute real property for the purposes of real property tax. 3

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried in a building or on a piece of land, and which tends directly to meet the needs of the said industry or works; xxx xxx xxx

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not construction analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place. They can not be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are not machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are constructed. It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as the City Treasurer is not the real party in interest, but Quezon City, which was not a party to the suit, notwithstanding its capacity to sue and be sued, he should not be ordered to effect the refund. This question has not been raised in the court below, and, therefore, it

Held: The steel towers of an electric company dont constitute real property for the purposes of real property tax. Steel towers are not immovable property under paragraph 1, 3 and 5 of Article 415. The steel towers or supports do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not constructions analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place. They cannot be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are not machineries or receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not engaged in an industry or works on the land in which the steel supports or towers are constructed. The Supreme Court affirmed the decision appealed from, with costs against the petitioners. SECOND DIVISION HEIRS OF THE LATE SPOUSES PEDRO S. PALANCA AND SOTERRANEA RAFOLS VDA. DE PALANCA namely: IMELDA R. PALANCA, MAMERTA R. PALANCA, OFELIA P. MIGUEL, ESTEFANIA P. PE, CANDELARIA P. PUNZALAN, NICOLAS R. PUNO, J., Chairperson, Present: G.R. No. 151312

PALANCA, CONSTANTINO R. PALANCA, EDMUNDO PALANCA, LEOCADIA R. PALANCA and OLIVERIO R. PALANCA, represented by their attorney-in-fact, OFELIA P. MIGUEL, Petitioners,

SANDOVAL-GUTIERREZ, CORONA,* AZCUNA, and GARCIA, JJ.

Promulgated:

- versus August 30, 2006 REPUBLIC OF THE PHILIPPINES, (represented by the Lands Management Bureau), REGIONAL TRIAL COURT OF PALAWAN (Office of the Executive Judge) and the REGISTER OF DEEDS OF PALAWAN, Respondents. AZCUNA, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the decision[1] dated July 16, 2001, and the resolution[2]dated December 21, 2001, of the Court of Appeals (CA) in CA-G.R. SP No. 62081 entitled Republic of the Philippines (Represented by the Lands Management Bureau) v. Court of First Instance (CFI) of Palawan (now Regional Trial Court), Seventh Judicial District, Branch II presided over by Former District Judge, Jose P. Rodriguez, et al.

The antecedent facts[3] are as follows: On July 19, 1973, the heirs of Pedro S. Palanca, (petitioners herein), filed an application to bring the pieces of land they allegedly owned under the operation of the Land Registration Act. These are: a two hundred thirty-nine thousand nine hundred eighty (239,980) square meter parcel of land situated in Barrio Panlaitan, Municipality of Busuanga, Province of Palawan, as shown on plan Psu-04-000074, and a one hundred seventy-six thousand five hundred eightyeight (176,588) square meter land in Barrio of Panlaitan (Island of Capari), Municipality of New Busuanga, Province of Palawan, as shown on plan Psu-04-000073. They acquired said realties by inheritance from the late Pedro S. Palanca, who had occupied and possessed said land openly and continuously in the concept of an owner since 1934, or 39 years before the filing of said application, and planted on said lands about 1,200 coconut trees on each land, declared the same for taxation purposes and paid the taxes thereof. The first parcel of land is presently occupied by Lopez, Libarra, an encargado of herein (petitioners), while the second is occupied by (petitioner) Candelaria Punzalan. In Civil Case No. 573 entitled Heirs of Pedro Palanca, Plaintiffs, vs. Alfonso Guillamac, Defendant, for Recovery of Possession of a Parcel of Land the Court of First Instance of Palawan rendered a decision on March 4, 1970, declaring (petitioners), the heirs of Pedro S. Palanca, as the rightful possessors of the land at Talampulan Island, Bario of Panlaitan, Municipality of Busuanga, Province of Palawan, covered by Psu-04-000074, including the two (2) hectare portion occupied and claimed by Alfonso Guillamac. It also appears that the jurisdictional requirements as to notices, as prescribed by Section 31, Act No. 496, namely publication in the Official Gazette, were complied with. During the initial hearing of the case, verbal oppositions to the application were made by the Provincial Fiscal of Palawan purportedly for and in behalf of the Bureau of Forest Development, the Bureau of Lands, and the Department of Agrarian Reform, some inhabitants of the subject properties and a businessman by the name of AlfonsoGuillamac. The Provincial Fiscal stated that the lands subject of the application had no clearance from the Bureau of Forestry and that portions thereof may still be part of the timberland block and/or public forest under the administration of the Bureau of Forestry and had not been certified as being alienable and disposable by the Bureau of Lands. He therefore requested that the resolution on the application be stayed pending the examination and issuance of the required clearance by the Bureau of Forest Development.[4] After the lapse of three years from the date of the initial hearing, however, no valid and formal opposition was filed by any of the oppositors in the form and manner required by law.[5]Neither did the Provincial Fiscal present witnesses from the relevant government bureaus and agencies to support his contention that the subject lands had not yet been cleared for public disposition.

On the other hand, petitioners submitted the plan and technical description of the land, a survey certificate approved by the Bureau of Lands and also tax declarations showing that they have consistently paid the realty taxes accruing on the property. Petitioners likewise presented six witnesses in support of their application, namely ConstantinoPalanca, Ofelia Palanca-Miguel, Lopez Libarra, Alejandro Cabajar, Alfonso Lucero and Augustin Timbancaya. Both Constantino Palanca and Ofelia Palanca-Miguel testified that: (1) they were heirs of one Pedro S. Palanca; (2) they, together with their other siblings, were applicants for the registration of two parcels of land located in Barrio Panlaitan, Busuanga, Palawan; (3) their father, Pedro S. Palanca, acquired ownership over the subject properties by continuous, public and notorious possession; (4) their father built a house on each parcel of land and planted coconut trees; (5) since their fathers death, they have continued their possession over the lands in the concept of owners and adverse to all claimants; and (6) the properties have been declared for taxation purposes and the corresponding taxes religiously paid for over forty (40) years.[6] Lopez Libarra and Alejandro Cabajar testified that they knew the late Pedro S. Palanca and worked for the latter as an overseer and a capataz respectively in the cultivation of the subject properties. Cabajar, in particular, claimed that he helped clear the lands sometime in the mid-1920s, planted upon such lands coconut trees which are now bearing fruit, and continued working with Pedro S. Palanca until the latters death in 1943. He subsequently went to work for the heirs of Pedro S. Palanca whom he confirms now own and manage the properties.[7] For his part, Libarra testified that he had been the overseer of the two coconut plantations of the late Pedro S. Palanca since 1934. He identified the location of the properties, averring that one plantation is in Talampulan, Panlaitan Island and the other in Talampetan, Capari Island. He further testified that at the time he was employed in 1934, there were already improvements in the form of coconut trees planted in the areas, a number of which were already bearing fruits. His duties included overseeing and cleaning the plantations, making copra and replanting the area when necessary. He also claimed he worked with Pedro S. Palanca until the latters death in 1943 and continues to work for the latters heirs up to the present.[8] Also presented were Alfonso Lucero and Augustin Timbancaya, who testified thus: Alfonso Lucero testified that he is a Forester in the Bureau of Forest Development, formerly the Bureau of Forestry. He was once assigned as the Chief of Land Classification Party No. 55 in Palawan. Presently, he is a member of the Composite Land Classification Team No. 32 in the province with station at Puerto Princessa City. He has been employed with the Bureau of Forest Development for about 30 years, starting as a Forest Guard in 1947. As chief of Land Classification Party No. 55, he covered the territory from Puerto Princesa City northward up 5

to Busuanga, where the land in question is located. His duty was to supervise the team that conducted the limitation, segregation and deviation of agricultural lands within the area. He served in this capacity for twelve (12) years until December 1975. As such, he issued certifications after due classification by his office, of alienable and disposable land for administration by the Bureau of Lands and eventual disposition to interested parties. He had been in Busuanga, Palawan a number of times and is familiar with the lands in question, one of which is in Talampetan, Capari Island and the other in Talampulan, Panlaitan Island. He is aware that the lands in question are claimed and administered by the heirs of Pedro S. Palanca. The improvements on the land are at least 40 years old in his estimation. He recalls having issued a certification of release of this property for disposition to private parties, but could not remember the exact date when he did so. He identified Exhibits JJ and KK to be certifications to the effect that Talampulan in Panlaitan Island andTalampetan, a portion of Capari Island, both in Busuanga (formerly Coron), Palawan, are fully cultivated and mainly planted to coconuts before World War II by herein applicants, the heirs of Pedro S.Palanca. He is fully convinced that the lands in question have already been released before the war for agricultural purposes in favor of Pedro S. Palanca, applicants predecessor-in-interest. Releases of agricultural lands which are done in bulk at present was not in vogue before the last war, for releases at that time were made on a case-to-case basis. Under the pre-war system, an application for a piece of land was individually referred to the then Bureau of Forestry which in turn conducted a classification of the area as to its availability, whether it be for sale, homestead, etc. On the basis of the Bureau of Forestry investigation, a certification was then issued as to its availability for the purpose for which the application was made. The certification was made on the basis of such application, and was called the isolated case release or the caseto-case basis. This procedure was followed in the case of herein applicants and there seemed to be no reason to doubt that the area was in fact released to herein applicants. Therefore, the area is no longer under the jurisdiction of the Bureau of Forest Development. Alfonso Lucero also testified that as Chief of Land Classification Party No. 55, he was the one directly in charge of classification and release of lands of public domain for agricultural purposes. His office is directly under the bureau chief in Manila, although for administrative purposes he is carried with the district forestry office in Puerto Princesa City. The certifications he issue carry much weight in land classification and releases in the province unless revoked by the Manila Office. Augustin O. Timbancaya testified that he is a licensed geodetic engineer, formerly called a land surveyor. His services were engaged by applicant Ofelia P. Miguel, the representative of the other applicants, to conduct and prepare a land plan for two parcels of land subject of the application. He went personally to the lands in question. He executed Exhibit U, the Plan of Land covered by PSU-04-000073, containing an area of one hundred seventy-six thousand, five hundred eighty-eight (176,588) square meters situated at Talampetan, Capari Island, Busuanga,

Palawan, approved by the Director of Lands on June 25, 1973. He also identified Exhibit V, the Plan of Land under PSU-04-000074, containing an area of two hundred thirty-nine thousand, nine hundred eighty (239, 980) square meters located at Talampulan, Panlaitan Island, Busuanga, Palawan, which was also approved by the Director of Lands on June 25, 1973. Both lands are in barrio Panlaitan, Busuanga (formerly Coron), Palawan, and have an aggregate total area of four hundred sixteen thousand five hundred sixty-eight (416,568) square meters. All these surveys were properly monumented. He personally prepared the technical description for both lots. He also prepared the Geodetic Engineers Certificates and had the same notarized by Atty. Remigio Raton, the first on January 24, 1972 and the second on March 14, 1972. He believes that both parcels of land have been released for agricultural purposes because if it were otherwise, the survey plans he executed would not have been approved by the Director of Lands. In other words, the approval of the Land Plans by the Director of the Bureau of Lands indicates that the lands in question have been previously released for alienation and disposition. Both parcels of land have been fully developed and the coconuts planted thereon are about 50 years old. He has no doubt that these lands were released for agricultural purposes long ago.[9] After trial, the CFI of Palawan issued a decision on December 15, 1977 declaring petitioners as the owners in fee simple of the two parcels of land in question. Thereafter, Original Certificate of Title (OCT) No. 4295 was issued in the name of petitioners. Subsequently, out of OCT No. 4295, Transfer Certificates of Title Nos. T-7095, T-7096, T-10396, T-10397, T-10398, T-10399, T10418, and T-10884 were issued. On December 6, 2000, or after almost twenty-three years, respondent Republic of the Philippines filed with the CA a petition[10] for annulment of judgment, cancellation of the decree of registration and title, and reversion. Respondent sought to annul the December 15, 1977 decision of the CFI, arguing that the decision was null and void because the two lands in question were unclassified public forest land and, as such, were not capable of private appropriation. In support of this proposition, respondent presented Land Classification Map No. 839, Project 2-A dated December 9, 1929 showing that the subject properties were unclassified lands as of that date as well as a certification dated November 24, 2000 issued by the Community Environment and Natural Resources Office stating that the islands of Talampulan and Capar(i) Island located in the municipality ofBusuanga, Palawan are within the unclassified public forest. Respondent likewise drew attention to Executive Proclamation No. 219 issued on July 2, 1967 which classified theProvince of Palawan as a National Game Refuge and Bird Sanctuary and the small islands off Palawan as national reserves closed to exploitation and settlement under the administration of the Parks and Wildlife Office, subject only to existing private rights.[11] In view of the fact that the properties were never classified as alienable and disposable, respondent argued that the CFI did not have jurisdiction to make a disposition of the same. 6

In addition, respondent asserted that the participants in the proceedings committed perfidious acts amounting to extrinsic fraud which is one of the grounds for the annulment of a judgment. Respondent maintained that a culture of collusion existed between and among the petitioners, the Provincial Fiscal and the ranking officer of the District Forestry Office, Alfonso Lucero, such that the State was deprived of the opportunity to fairly present its case to the court. On July 16, 2001, the CA rendered the assailed decision, the dispositive portion of which reads: WHEREFORE, the instant petition is GRANTED. The decision of the then Court of First Instance of Palawan, Branch II, dated December 15, 1977, in Land Registration Case No. N-21, LRC Record No. N-44308 is hereby declared NULL and VOID. Accordingly, Decree No. N-172081 and the corresponding Original Certificate of Title No. 4295 issued in the name of the Heirs of Pedro S.Palanca, as well as the subsequent Transfer Certificates of Title Nos. T-7095, T-7096, T-10396, T-10397, T-10398, T-10399, T-10410 and T-10884 and all subsequent TCTs issued thereafter are also declared NULL and VOID. Private respondents Heirs of Pedro S. Palanca are DIRECTED to surrender said transfer certificates of title to public respondent Register of Deeds of Palawan; and the latter is also DIRECTED to cause the cancellation thereof.

Respondent, on the other hand, denies the allegations of the petition in its comment[16] dated August 6, 2002 and contends that (a) the claim that the subject parcels of land are public agricultural lands by virtue of a legislative grant is unfounded and baseless; (b) the land registration court of Puerto Princesa, Palawan, was devoid of jurisdictional competence to order titling of a portion of forest land; (c) the CA is correct in declaring that there must be a prior release of the subject lands for agricultural purposes; (d) the rules on res judicata and the incontestability of Torrens titles do not find proper applications in the exercise of the power of reversion by the State; and (e) estoppel and laches will not operate against the State. Respondent also reiterates its contention that collusion existed between the parties in the proceedings below which prevented a fair submission of the controversy, to the damage and prejudice of the Republic. At the outset, it must be emphasized that an action for reversion filed by the State to recover property registered in favor of any party which is part of the public forest or of a forest reservation never prescribes. Verily, non-disposable public lands registered under the Land Registration Act may be recovered by the State at any time[17] and the defense of res judicata would not apply as courts have no jurisdiction to dispose of such lands of the public domain.[18] That being said, it must likewise be kept in mind that in an action to annul a judgment, the burden of proving the judgments nullity rests upon the petitioner. The petitioner has to establish by clear and convincing evidence that the judgment being challenged is fatally defective.[19] Under the facts and circumstances of this case, the Court finds that respondent met the required burden of proof. Consequently, the CA did not err in granting respondents petition to annul the decision of the land registration court. This petition for review, therefore, lacks merit. Section 48(b) of the Public Land Act upon which petitioners anchor their claim states: Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit: xxx (b) Those who, by themselves or through their predecessors-in-interest, have been in continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title, except when prevented by war orforce majeure. Those shall be conclusively presumed to have performed all 7

SO ORDERED.[12] Petitioners motion for reconsideration was likewise denied by the CA in a resolution[13] dated December 21, 2001. Hence, this petition. Petitioners contend that the CA disregarded settled jurisprudence and applicable land laws when it ruled that the subject properties covered by their application for registration were forest lands and that, consequently, the land registration court did not have jurisdiction to award the same to them. They opine that it is not necessary for them to prove that the government had expressly given a grant of the subject properties to Pedro S. Palanca, their predecessor-in-interest, separate of the legislative grant given to them purportedly under Commonwealth Act No. 141 (Public Land Act). Petitioners furthermore insist that a particular land need not be formally released by an act of the Executive before it can be deemed open to private ownership, citing the cases of Ramos v. Director of Lands[14] and Ankron v. Government of the Philippine Islands.[15] They likewise argue that the CA erred in relying upon Executive Proclamation No. 219 and upon Land Classification Map No. 839, Project 2-A to nullify petitioners mother title. According to petitioners, the reversal of the CFIs decision violated the principle of res judicata as well as the rule on incontrovertibility of land titles under Act No. 496.

the conditions essential to a government grant and shall be entitled to a certificate of title under the provisions of this chapter. The above provision clearly requires the concurrence of two things: (1) that the land sought to be registered is public agricultural land, and (2) that the applicant seeking registration must have possessed and occupied the same for at least thirty years prior to the filing of the application. That the petitioners, through Pedro S. Palanca, have been in possession of the properties since 1934 is not disputed. What is in doubt is the compliance with the first requisite. To reiterate, the validity of the CFI decision was impugned on the basis of the courts lack of jurisdiction. If the properties were alienable public lands, then the CFI, acting as a land registration court, had jurisdiction over them and could validly confirm petitioners imperfect title. Otherwise, if the properties were indeed public forests, then the CA was correct in declaring that the land registration court never acquired jurisdiction over the subject matter of the case and, as a result, its decision decreeing the registration of the properties in favor of petitioners would be null and void. The reason for this is the fact that public forests are inalienable public lands. The possession of public forests on the part of the claimant, however long, cannot convert the same into private property.[20] Possession in such an event, even if spanning decades or centuries, could never ripen into ownership.[21] It bears stressing that unless and until the land classified as forest is released in an official proclamation to that effect so that it may form part of the disposable lands of the public domain, the rules on confirmation of imperfect title do not apply.[22] In the present case, Land Classification Map No. 839, Project 2-A[23] indicated that the Talampulan and Capari Islands on which the properties were located were unclassified public lands as of December 9, 1929. It was by virtue of Executive Proclamation No. 219 issued on July 2, 1967 that these islands were subsequently classified as national reserves. Based on these, it becomes evident that the subject properties have never been released for public disposition. Obviously, from the time that petitioners and their predecessor-in-interest were occupying the properties in 1934 until the time that an application for registration was filed in 1973, these properties remained as inalienable public lands. While it is true that the land classification map does not categorically state that the islands are public forests, the fact that they were unclassified lands leads to the same result. In the absence of the classification as mineral or timber land, the land remains unclassified land until released and rendered open to disposition.[24] When the property is still unclassified, whatever possession applicants may have had, and however long, still cannot ripen into private ownership.[25] This is because, pursuant to Constitutional precepts, all lands of the public domain belong to the State, and the State is the source of any asserted right to ownership in

such lands and is charged with the conservation of such patrimony.[26] Thus, the Court has emphasized the need to show in registration proceedings that the government, through a positive act, has declassified inalienable public land into disposable land for agricultural or other purposes.[27] Petitioners reliance upon Ramos v. Director of Lands[28] and Ankron v. Government[29] is misplaced. These cases were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926 enacted by the Philippine Commission on October 7, 1926, under which there was no legal provision vesting in the Chief Executive or President of the Philippines the power to classify lands of the public domain into mineral, timber and agricultural so that the courts then were free to make corresponding classifications in justiciable cases, or were vested with implicit power to do so, depending upon the preponderance of the evidence. As petitioners themselves admit, registration of the properties is sought under Commonwealth Act No. 141. Sections 6 and 7 of the Act provide as follows: Section 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public domain into (a) (b) (c) Alienable or disposable, Timber, and Mineral lands,

and may at any time and in a like manner transfer such lands from one class to another, for the purposes of their administration and disposition. Section 7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time declare what lands are open to disposition or concession under this Act. Based on the foregoing, the classification or reclassification of public lands into alienable or disposable, mineral or forest lands is the exclusive prerogative of the Executive Department of the government. Clearly, the courts no longer have the authority, whether express or implied, to determine the classification of lands of the public domain.[30] To the Courts mind, petitioners have failed to present incontrovertible proof that the lands they claimed had previously been classified as alienable. The bare allegation of Alfonso Lucero that a certification had been issued releasing the properties for agricultural purposes is not sufficient to prove this fact. The best evidence would be the document itself which, 8

however, was not produced in this case. It was error for the land registration court to have taken Mr. Luceros testimony at face value, absent any other evidence to conclusively prove that the land had been released for public disposition. Furthermore, it must be pointed out that petitioners contention that the State has the burden to prove that the land which it avers to be of public domain is really of such nature applies only in instances where the applicant has been in possession of the property since time immemorial. When referring to this type of possession, it means possession of which no person living has seen the beginning and the existence of which such person has learned from the latters elders.[31] Immemorial possession justifies the presumption that the land had never been part of the public domain or that it had been private property even before the Spanish conquest.[32] The possession of petitioners in this case does not fall under the above-named exception as their possession, by their own admission, only commenced sometime in 1934. To reiterate, where there is a showing that lots sought to be registered are part of the public domain, the applicant for land registration under Section 48 of Commonwealth Act No. 141 must secure a certification from the government that the lands claimed to have been possessed by the applicant as owner for more than 30 years are alienable and disposable.[33] Petitioners failure to do so in this case, when taken with the evidence adduced by respondent showing that the lands in question indeed remain part of the public domain and form part of the national reserves, confirms that the CFI never acquired jurisdiction to order the registration of such lands in favor of petitioners, and certainly justifies their reversion to the State. WHEREFORE, the petition is DENIED for lack of merit. No costs. SO ORDERED. EN BANC G.R. No. L-40411 August 7, 1935

of the properties described in the complaint. The trial judge found that those properties were personal in nature, and as a consequence absolved the defendants from the complaint, with costs against the plaintiff. The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon which the business was conducted belonged to another person. On the land the sawmill company erected a building which housed the machinery used by it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were placed and mounted on foundations of cement. 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, 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; also, in the event the party of the second part should leave or abandon the land leased before the time herein stipulated, 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, however, 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. In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant in that action; a writ of execution issued thereon, and the properties now in question were levied upon as personalty by the sheriff. 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, which was the plaintiff in that action, and the defendant herein having consummated the sale, 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. As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third persons. One of such persons is the appellee by assignment from the original mortgages. Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of 9

DAVAO SAW MILL CO., INC., plaintiff-appellant, vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees. Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant. J.W. Ferrier for appellees. MALCOLM, J.: The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties on appeal, involves the determination of the nature

1. Land, buildings, roads and constructions of all kinds adhering to the soil; xxx xxx xxx

5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade of industry. Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts. In the first place, 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 must further be pointed out that while not conclusive, 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. In this connection the decision of this court in the case of Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a situation. It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is machinery which is involved; moreover, machinery not intended by the owner of any building or land for use in connection therewith, 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 similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, 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, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well known, 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. Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not only land and buildings, but also attributes immovability in some cases to property of a movable nature, that is, personal property, because of the destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be immovable either by their own nature or by

their destination or the object to which they are applicable." Numerous illustrations are given in the fifth subdivision of section 335, which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the tenements for the industrial 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." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534, recapitulating the things which, though in themselves movable, may be immobilized.) So far as the subject-matter with which we are dealing machinery placed in the plant it is plain, both under the provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. Such result would not be accomplished, therefore, by the placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests, as pointed out by Demolombe, 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. 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. But in the concrete immobilization took place because of the express provisions of the lease under which the Altagracia held, since the lease in substance required the putting in of improved machinery, deprived the tenant of any right to charge against the lessor the cost such machinery, 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. 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, 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. xxx xxx xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable property, it follows that they had the right to levy on it under the execution upon the judgment in their favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes, since as to him the property was a part of the realty which, as the result of his obligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.) Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance to be paid by the appellant. 10