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"Compaia Agricola Filipina" was real property, and the mere fact that the parties seem to have

dealt with it separate and apart from the land


G.R. No. L-11658 February 15, 1918 on which it stood in no wise changed its character as real property. It follows that neither the original registry in the chattel mortgage of the
building and the machinery installed therein, not the annotation in that registry of the sale of the mortgaged property, had any effect whatever
LEUNG YEE, plaintiff-appellant, so far as the building was concerned.
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees. 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
Booram and Mahoney for appellant. neither the purchase of the building by the plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made in good faith, and
Williams, Ferrier and SyCip for appellees. 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
CARSON, J.: company long prior to the date of the sheriff's sale to the plaintiff.

The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery company from the defendant machinery company, It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in relation to
and executed a chattel mortgage thereon to secure payment of the purchase price. It included in the mortgage deed the building of strong "possession" and "title," but contain no express requirement as to "good faith" in relation to the "inscription" of the property on the registry, it
materials in which the machinery was installed, without any reference to the land on which it stood. The indebtedness secured by this 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.
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 We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured under this
instrument, and was bought in by the machinery company. The mortgage was registered in the chattel mortgage registry, and the sale of the 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
property to the machinery company in satisfaction of the mortgage was annotated in the same registry on December 29, 1913. 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 faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who
A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia Agricola Filipina" executed a deed of sale of the land upon enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue
which the building stood to the machinery company, but this deed of sale, although executed in a public document, was not registered. This under an inscription "in bad faith," to the benefit of the person who thus makes the inscription.
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 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:
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. 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
At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the "Compaia Agricola following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon [1911] edition.)
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 Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of the real property that is first recorded in
amount of the indebtedness secured by the mortgage, the plaintiff secured judgment for that amount, levied execution upon the building, the registry shall have preference, this provision must always be understood on the basis of the good faith mentioned in the first paragraph;
bought it in at the sheriff's sale on or about the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered in the land 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
registry of the Province of Cavite. 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.)
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 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
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 land registry, was duly notified that the machinery company had bought the building from plaintiff's judgment debtor; that it had gone into
public auction to the plaintiff, who was the highest bidder at the sheriff's sale. 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
This action was instituted by the plaintiff to recover possession of the building from the machinery company. 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 faith; and
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 of course, the subsequent inscription of the sheriff's certificate of title must be held to have been tainted with the same defect.
the company had its title to the building registered prior to the date of registry of the plaintiff's certificate.
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,
Article 1473 of the Civil Code is as follows: we should not be understood as questioning, in any way, the good faith and genuineness of the plaintiff's claim against the "Compaia Agricola
Filipina." The truth is that both the plaintiff and the defendant company appear to have had just and righteous claims against their common
If the same thing should have been sold to different vendees, the ownership shall be transfer to the person who may have the first taken 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
possession thereof in good faith, if it should be personal property. 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 considered that he was doing no more than he had a right to do under all the
Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry. 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
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 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
the person who presents the oldest title, provided there is good faith. 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 of the propriety of the course he adopted.
The registry her 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 But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the indemnity bond and bought
terms, the Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and the sole purpose and object of 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
the chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property executed in the 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
manner and form prescribed in the statute. The building of strong materials in which the rice-cleaning machinery was installed by the that he was not a purchaser in good faith.
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
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 machinery as personal property by executing chattel mortgages in favor of third persons. One of such persons is the appellee by assignment
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 from the original mortgages.
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 Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of
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 afterwards develops 1. Land, buildings, roads and constructions of all kinds adhering to the soil;
that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with
that measure of precaution which may reasonably be acquired of a prudent man in a like situation. Good faith, or lack of it, is in its analysis a xxx xxx xxx
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 5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any
intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade of industry.
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 state or Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the trial judge and
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 Lumber appellees are right in their appreciation of the legal doctrines flowing from the facts.
Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
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
We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in the court below should be property. It must further be pointed out that while not conclusive, the characterization of the property as chattels by the appellant is indicative of
affirmed with costs of this instance against the appellant. So ordered. 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 York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a situation.
Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.
Torres, Avancea and Fisher, JJ., took no part. 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
G.R. No. L-40411 August 7, 1935 building erected on the land by the latter to be returned to the lessee on the expiration or abandonment of the lease.

DAVAO SAW MILL CO., INC., plaintiff-appellant, 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
vs. 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
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees. 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:
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees. 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
MALCOLM, J.: 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
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 is, personal property, because of the destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be immovable
appeal, involves the determination of the nature of the properties described in the complaint. The trial judge found that those properties were either by their own nature or by their destination or the object to which they are applicable." Numerous illustrations are given in the fifth
personal in nature, and as a consequence absolved the defendants from the complaint, with costs against the plaintiff. 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
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 works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534, recapitulating the things which, though in themselves
the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon which the business was conducted movable, may be immobilized.) So far as the subject-matter with which we are dealing machinery placed in the plant it is plain, both
belonged to another person. On the land the sawmill company erected a building which housed the machinery used by it. Some of the under the provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only becomes
implements thus used were clearly personal property, the conflict concerning machines which were placed and mounted on foundations of 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
cement. In the contract of lease between the sawmill company and the owner of the land there appeared the following provision: 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
That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of the second part distinction rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or enjoyment of
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 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
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 immobilization to become the property of another. It follows that abstractly speaking the machinery put by the Altagracia Company in the plant
improvements and buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had expired: belonging to Sanchez did not lose its character of movable property and become immovable by destination. But in the concrete immobilization
Provided, however, That the machineries and accessories are not included in the improvements which will pass to the party of the first part on took place because of the express provisions of the lease under which the Altagracia held, since the lease in substance required the putting in
the expiration or abandonment of the land leased. 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
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a 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,
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 and the immobilization of the machinery which resulted arose in legal effect from the act of the owner in giving by contract a permanent
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 destination to the machinery.
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 xxx xxx xxx
corresponding certificates of sale executed in its favor by the sheriff of Davao.
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia Company, being, as regards xxx xxx xxx
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 (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried
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 on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works. (Emphasis ours.)
the result of his obligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against. (Valdes vs. Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They can be moved around and
Central Altagracia [192], 225 U.S., 58.) about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu Unjieng, 61 Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to "machinery, liquid containers, instruments or
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. 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."
Villa-Real, Imperial, Butte, and Goddard, JJ., concur. If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co., Inc., in lieu of the other of less
capacity existing therein, for its sugar and industry, converted them into real property by reason of their purpose, it cannot be said that their
G.R. No. L-17870 September 29, 1962 incorporation therewith was not permanent in character because, as essential and principle elements of a sugar central, without them the
MINDANAO BUS COMPANY, petitioner, sugar central would be unable to function or carry on the industrial purpose for which it was established . Inasmuch as the central is permanent
vs. in character, the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,respondents. necessarily be permanent. (Emphasis ours.)
Binamira, Barria and Irabagon for petitioner. So that movable equipments to be immobilized in contemplation of the law must first be "essential and principal elements" of an industry or
Vicente E. Sabellina for respondents. works without which such industry or works would be "unable to function or carry on the industrial purpose for which it was established." We
may here distinguish, therefore, those movable which become immobilized by destination because they are essential and principal elements in
the industry for those which may not be so considered immobilized because they are merely incidental, not essential and principal. Thus, cash
registers, typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are merely incidentals and are not and should not be
LABRADOR, J.:
considered immobilized by destination, for these businesses can continue or carry on their functions without these equity comments. Airline
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding that the petitioner Mindanao Bus
companies use forklifts, jeep-wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials, and thus retain their movable
Company is liable to the payment of the realty tax on its maintenance and repair equipment hereunder referred to.
nature. On the other hand, machineries of breweries used in the manufacture of liquor and soft drinks, though movable in nature, are
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned equipment. Petitioner appealed the
immobilized because they are essential to said industries; but the delivery trucks and adding machines which they usually own and use and
assessment to the respondent Board of Tax Appeals on the ground that the same are not realty. The Board of Tax Appeals of the City
are found within their industrial compounds are merely incidental and retain their movable nature.
sustained the city assessor, so petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment.
Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and principle municipal elements of
In the Court of Tax Appeals the parties submitted the following stipulation of facts:
petitioner's business of transporting passengers and cargoes by motor trucks. They are merely incidentals acquired as movables and used
Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:
only for expediency to facilitate and/or improve its service. Even without such tools and equipments, its business may be carried on, as
1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks, over its authorized lines in the
petitioner has carried on, without such equipments, before the war. The transportation business could be carried on without the repair or
Island of Mindanao, collecting rates approved by the Public Service Commission;
service shop if its rolling equipment is repaired or serviced in another shop belonging to another.
2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices and/or stations at Iligan City, Lanao;
The law that governs the determination of the question at issue is as follows:
Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;
Art. 415. The following are immovable property:
3. That the machineries sought to be assessed by the respondent as real properties are the following:
xxx xxx xxx
(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";
on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; (Civil Code of the Phil.)
(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";
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
(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D";
piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the "machinery, liquid containers, and instruments or implements" are
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E";
found in a building constructed on the land. A sawmill would also be installed in a building on land more or less permanently, and the sawing is
(f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked Annex "F"; and
conducted in the land or building.
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".
But in the case at bar the equipments in question are destined only to repair or service the transportation business, which is not carried on in a
4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached photographs which form part of this
building or permanently on a piece of land, as demanded by the law. Said equipments may not, therefore, be deemed real property.
agreed stipulation of facts;
Resuming what we have set forth above, we hold that the equipments in question are not absolutely essential to the petitioner's transportation
5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks; a repair shop; blacksmith and
business, and petitioner's business is not carried on in a building, tenement or on a specified land, so said equipment may not be considered
carpentry shops, and with these machineries which are placed therein, its TPU trucks are made; body constructed; and same are repaired in a
real estate within the meaning of Article 415 (c) of the Civil Code.
condition to be serviceable in the TPU land transportation business it operates;
WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in question declared not subject to
6. That these machineries have never been or were never used as industrial equipments to produce finished products for sale, nor to repair
assessment as real estate for the purposes of the real estate tax. Without costs.
machineries, parts and the like offered to the general public indiscriminately for business or commercial purposes for which petitioner has
So ordered.
never engaged in, to date.1awphl.nt
SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE, INC., respondent .
The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a motion for reconsideration, petitioner
DECISION
brought the case to this Court assigning the following errors:
PANGANIBAN, J .:
1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned assessments are valid; and that said
After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from
tools, equipments or machineries are immovable taxable real properties.
subsequently claiming otherwise. Hence, such property is a proper subject of a writ of replevin obtained by the other contracting party.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and holding that pursuant thereto the movable
The Case
equipments are taxable realties, by reason of their being intended or destined for use in an industry.
Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision [1] of the Court of Appeals (CA)[2] in CA-GR SP No. 47332
3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power to assess and levy real estate
and its February 26, 1999 Resolution[3] denying reconsideration. The decretal portion of the CA Decision reads as follows:
taxes on machineries is further restricted by section 31, paragraph (c) of Republic Act No. 521; and
WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31, 1998 in Civil Case No. Q-
4. The Tax Court erred in denying petitioner's motion for reconsideration.
98-33500 are hereby AFFIRMED.The writ of preliminary injunction issued on June 15, 1998 is hereby LIFTED.[4]
Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance with paragraph 5 of Article 415 of the
In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City (Branch 218) [6] issued a Writ of Seizure.[7] The March 18, 1998
New Civil Code which provides:
Resolution[8] denied petitioners Motion for Special Protective Order, praying that the deputy sheriff be enjoined from seizing immobilized or
Art. 415. The following are immovable properties:
other real properties in (petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized machineries or (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried
equipments he may have removed.[9] on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;
The Facts x x x....................................x x x....................................x x x
The undisputed facts are summarized by the Court of Appeals as follows:[10] In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own
On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the RTC-QC a complaint for [a] sum of land. Indisputably, they were essential and principal elements of their chocolate-making industry. Hence, although each of them was movable
money (Annex E), with an application for a writ of replevin docketed as Civil Case No. Q-98-33500. or personal property on its own, all of them have become immobilized by destination because they are essential and principal elements in the
On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin (Annex B) directing its sheriff to industry.[16] In that sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of
seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. the Civil Code.[17]
On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one machinery with [the] word that he Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure.
[would] return for the other machineries. The Court has held that contracting parties may validly stipulate that a real property be considered as personal.[18] After agreeing to such
On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the power of the court to control the conduct of stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
its officers and amend and control its processes, praying for a directive for the sheriff to defer enforcement of the writ of replevin. precluded from denying the truth of any material fact found therein.
This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still personal and therefore still subject to seizure Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the parties to treat a house as a personal property because it had been
and a writ of replevin. made the subject of a chattel mortgage. The Court ruled:
In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil Code, the x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a
parties agreement to the contrary notwithstanding. They argued that to give effect to the agreement would be prejudicial to innocent third property by way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at least, intended to treat
parties. They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the contracts in which the the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise.
alleged agreement [were] embodied [were] totally sham and farcical. Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills [20] also held that the machinery used in a factory
On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties. He was able to take and essential to the industry, as in the present case, was a proper subject of a writ of replevin because it was treated as personal property in a
two more, but was prevented by the workers from taking the rest. contract. Pertinent portions of the Courts ruling are reproduced hereunder:
On April 7, 1998, they went to [the CA] via an original action for certiorari. x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes
Ruling of the Court of Appeals of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby,
Citing the Agreement of the parties, the appellate court held that the subject machines were personal property, and that they had only been there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may
leased, not owned, by petitioners. It also ruled that the words of the contract are clear and leave no doubt upon the true intention of the not be likewise treated as such. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage.
contracting parties. Observing that Petitioner Goquiolay was an experienced businessman who was not unfamiliar with the ways of the trade, it In the present case, the Lease Agreement clearly provides that the machines in question are to be considered as personal
ruled that he should have realized the import of the document he signed. The CA further held: property. Specifically, Section 12.1 of the Agreement reads as follows:[21]
Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below, since the merits of the whole 12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may
matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or any building
the [RTC] in issuing the assailed Order and Resolution. The issues raised herein are proper subjects of a full-blown trial, necessitating thereon, or attached in any manner to what is permanent.
presentation of evidence by both parties. The contract is being enforced by one, and [its] validity is attacked by the other a matter x x x which Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal property. Under the
respondent court is in the best position to determine. circumstances, they are proper subjects of the Writ of Seizure.
Hence, this Petition.[11] It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to the Lease Agreement is
The Issues good only insofar as the contracting parties are concerned. [22] Hence, while the parties are bound by the Agreement, third persons acting in
In their Memorandum, petitioners submit the following issues for our consideration: good faith are not affected by its stipulation characterizing the subject machinery as personal. [23] In any event, there is no showing that any
A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of immobilization. specific third party would be adversely affected.
B. Whether or not the contract between the parties is a loan or a lease.[12] Validity of the Lease Agreement
In the main, the Court will resolve whether the said machines are personal, not immovable, property which may be a proper subject of a writ of In their Memorandum, petitioners contend that the Agreement is a loan and not a lease. [24] Submitting documents supposedly showing that
replevin. As a preliminary matter, the Court will also address briefly the procedural points raised by respondent. they own the subject machines, petitioners also argue in their Petition that the Agreement suffers from intrinsic ambiguity which places in
The Courts Ruling serious doubt the intention of the parties and the validity of the lease agreement itself. [25] In their Reply to respondents Comment, they further
The Petition is not meritorious. allege that the Agreement is invalid.[26]
Preliminary Matter: Procedural Questions These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil action pending before the RTC. A
Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65 of the Rules of Court. It resolution of these questions, therefore, is effectively a resolution of the merits of the case. Hence, they should be threshed out in the trial, not
further alleges that the Petition erroneously impleaded Judge Hilario Laqui as respondent. in the proceedings involving the issuance of the Writ of Seizure.
There is no question that the present recourse is under Rule 45. This conclusion finds support in the very title of the Petition, which is Petition Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy under Rule 60 was that questions involving title to the subject
for Review on Certiorari.[13] property questions which petitioners are now raising -- should be determined in the trial. In that case, the Court noted that the remedy of
While Judge Laqui should not have been impleaded as a respondent, [14] substantial justice requires that such lapse by itself should not warrant defendants under Rule 60 was either to post a counter-bond or to question the sufficiency of the plaintiffs bond. They were not allowed,
the dismissal of the present Petition. In this light, the Court deems it proper to remove, motu proprio, the name of Judge Laqui from the caption however, to invoke the title to the subject property. The Court ruled:
of the present case. In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) on ground of
Main Issue: Nature of the Subject Machinery insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on preliminary attachment or injunction, and thereby put
Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they were at issue the matter of the title or right of possession over the specific chattel being replevied, the policy apparently being that said matter
in fact real property.Serious policy considerations, they argue, militate against a contrary characterization. should be ventilated and determined only at the trial on the merits.[28]
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.[15] Section 3 thereof reads: Besides, these questions require a determination of facts and a presentation of evidence, both of which have no place in a petition for
SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45. [29]
replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his Reliance on the Lease Agreement
custody. It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on record shows that it has been nullified or
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows: annulled. In fact, petitioners assailed it first only in the RTC proceedings, which had ironically been instituted by respondent. Accordingly, it
ART. 415. The following are immovable property: must be presumed valid and binding as the law between the parties.
x x x....................................x x x....................................x x x
Makati Leasing and Finance Corporation[30] is also instructive on this point. In that case, the Deed of Chattel Mortgage, which characterized the WHEREFORE, from the evidence adduced by the parties, the Board overrules the claim of the [City Assessor of Lucena] and sustain the claim
subject machinery as personal property, was also assailed because respondent had allegedly been required to sign a printed form of chattel of [MERALCO].
mortgage which was in a blank form at the time of signing. The Court rejected the argument and relied on the Deed, ruling as follows:
x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio, but can only be a ground for Further, the Appellant (Meralco) is hereby ordered to render an accounting to the City Treasurer of Lucena and to pay the City Government of
rendering said contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on Lucena the amount corresponding to the Five (5%) per centum of the gross earnings in compliance with paragraph 13 both Resolutions 108
record to show that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. x x x and 2679, respectively, retroactive from November 9, 1957 to date, if said tax has not yet been paid. 17chanrobleslaw
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that if the Court allows these machineries to be seized, then its workers would be out of work and thrown into the streets. The City Assessor of Lucena filed an appeal with the CBAA, which was docketed as CBAA Case No. 248. In its Decision18 dated April 10,
[31]
They also allege that the seizure would nullify all efforts to rehabilitate the corporation. 1991, the CBAA affirmed the assailed LBAA judgment. Apparently, the City Assessor of Lucena no longer appealed said CBAA Decision and it
Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, law and jurisprudence support its propriety. Verily, became final and executory.
the above-mentioned consequences, if they come true, should not be blamed on this Court, but on the petitioners for failing to avail
themselves of the remedy under Section 5 of Rule 60, which allows the filing of a counter-bond. The provision states: Six years later, on October 29, 1997, MERALCO received a letter19 dated October 16, 1997 from the City Treasurer of Lucena, which stated
SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of the surety or sureties thereon, he that the company was being assessed real property tax delinquency on its machineries beginning 1990, in the total amount of P17,925,117.34,
cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the property to the computed as follows:chanRoblesvirtualLawlibrary
applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the value of TAX ASSESSED COVERED TAX DUE PENALTY TOTAL
the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the payment of DEC. # VALUE PERIOD
such sum to him as may be recovered against the adverse party, and by serving a copy bond on the applicant. 019-6500 P65,448,800.00 1990-94 P3,272,440.00 P2,356,156.80 P5,628,596.80
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against petitioners. 019-7394 78,538,560.00 1995 785,385.60 534,062.21 1,319,447.81
SO ORDERED. 1996 785,385.60 345,569.66 1,130,955.26
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur. lst-3rd/1997 589,039.20 117,807.84 706,847.04
FIRST DIVISION 4th 1997 196,346.40 (19,634.64) 176,711.76
G.R. No. 166102, August 05, 2015 BASIC---- P8,962,558.67
MANILA ELECTRIC COMPANY, Petitioner, v. THE CITY ASSESSOR AND CITY TREASURER OF LUCENA CITY, Respondents. SEF---- 8,962,558.67
DECISION TOTAL TAX DELINQUENCY---- P17,925,117.34
LEONARDO-DE CASTRO, J. :
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Manila Electric Company (MERALCO),
seeking the reversal of the Decision 1 dated May 13, 2004 and Resolution2 dated November 18, 2004 of the Court of Appeals in CA-G.R. SP The City Treasurer of Lucena requested that MERALCO settle the payable amount soon to avoid accumulation of penalties. Attached to the
No. 67027. The appellate court affirmed the Decision 3 dated May 3, 2001 of the Central Board of Assessment Appeals (CBAA) in CBAA Case letter were the following documents: (a) Notice of Assessment20 dated October 20, 1997 issued by the City Assessor of Lucena, pertaining to
No. L-20-98, which, in turn, affirmed with modification the Decision 4dated June 17, 19985 of the Local Board of Assessment Appeals (LBAA) of Tax Declaration No. 019-7394, which increased the market value and assessed value of the machinery; (b) Property Record Form; 21 and (c)
Lucena City, Quezon Province, as regards Tax Declaration Nos. 019-6500 and 019-7394, ruling that MERALCO is liable for real property tax Tax Declaration No. 019-6500.22
on its transformers, electric posts (or poles), transmission lines, insulators, and electric meters, beginning 1992.
MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 before the LBAA of Lucena City on December 23, 1997 and posted a
MERALCO is a private corporation organized and existing under Philippine laws to operate as a public utility engaged in electric distribution. surety bond23 dated December 10, 1997 to guarantee payment of its real property tax delinquency. MERALCO asked the LBAA to cancel and
MERALCO has been successively granted franchises to operate in Lucena City beginning 1922 until present time, particularly, by: (1) nullify the Notice of Assessment dated October 20, 1997 and declare the properties covered by Tax Declaration Nos. 019-6500 and 019-7394
Resolution No. 366 dated May 15, 1922 of the Municipal Council of Lucena; (2) Resolution No. 108 7 dated July 1, 1957 of the Municipal exempt from real property tax.
Council of Lucena; (3) Resolution No. 2679 8 dated June 13, 1972 of the Municipal Board of Lucena City; 9 (4) Certificate of Franchise10 dated
October 28, 1993 issued by the National Electrification Commission; and (5) Republic Act No. 9209 11 approved on June 9, 2003 by Congress.12 In its Decision dated June 17, 1998 regarding Tax Declaration Nos. 019-6500 and 019-7394, the LBAA declared that Sections 234 and 534(f)
of the Local Government Code repealed the provisions in the franchise of MERALCO and Presidential Decree No. 551 24 pertaining to the
On February 20, 1989, MERALCO received from the City Assessor of Lucena a copy of Tax Declaration No. 019-6500 13 covering the following exemption of MERALCO from payment of real property tax on its poles, wires, insulators, transformers, and meters. The LBAA refused to
electric facilities, classified as capital investment, of the company: (a) transformer and electric post; (b) transmission line; (c) insulator; and (d) apply as res judicata its earlier judgment in LBAA-89-2, as affirmed by the CBAA, because it involved collection of taxes from 1985 to 1989,
electric meter, located in Quezon Ave. Ext., Brgy. Gulang-Gulang, Lucena City. Under Tax Declaration No. 019-6500, these electric facilities while the present case concerned the collection of taxes from 1989 to 1997; and LBAA is only an administrative body, not a court or quasi-
had a market value of P81,811,000.00 and an assessed value of P65,448,800.00, and were subjected to real property tax as of 1985. judicial body. The LBAA though instructed that the computation of the real property tax for the machineries should be based on the prevailing
1991 Schedule of Market Values, less the depreciation cost allowed by law. The LBAA ultimately disposed:cralawlawlibrary
MERALCO appealed Tax Declaration No. 019-6500 before the LBAA of Lucena City, which was docketed as LBAA-89-2. MERALCO claimed WHEREFORE, in view of the foregoing, it is hereby ordered that:chanRoblesvirtualLawlibrary
that its capital investment consisted only of its substation facilities, the true and correct value of which was only P9,454,400.00; and that
MERALCO was exempted from payment of real property tax on said substation facilities. 1) MERALCO's appeal be dismissed for lack of merit;ChanRoblesVirtualawlibrary

The LBAA rendered a Decision14 in LBAA-89-2 on July 5, 1989, finding that under its franchise, MERALCO was required to pay the City 2) MERALCO be required to pay the realty tax on the questioned properties, because they are not exempt by law, same to be based on the
Government of Lucena a tax equal to 5% of its gross earnings, and "[s]aid tax shall be due and payable quarterly and shall be in lieu of any 1991 level of assessment, less depreciation cost allowed by law.25chanrobleslaw
and all taxes of any kind, nature, or description levied, established, or collected x x x, on its poles, wires, insulators, transformers and
structures, installations, conductors, and accessories, x x x, from which taxes the grantee (MERALCO) is hereby expressly exempted." 15 As MERALCO went before the CBAA on appeal, which was docketed as CBAA Case No. L-20-98. The CBAA, in its Decision dated May 3,
regards the issue of whether or not the poles, wires, insulators, transformers, and electric meters of MERALCO were real properties, the LBAA 2001, agreed with the LBAA that MERALCO could no longer claim exemption from real property tax on its machineries with the enactment of
cited the 1964 case of Board of Assessment Appeals v. Manila Electric Company 16 (1964 MERALCO case) in which the Court held that: (1) the Republic Act No. 7160, otherwise known as the Local Government Code of 1991, thus:cralawlawlibrary
steel towers fell within the term "poles" expressly exempted from taxes under the franchise of MERALCO; and (2) the steel towers were Indeed, the Central Board of Assessment Appeals has had the opportunity of ruling in [MERALCO's] favor in connection with this very same
personal properties under the provisions of the Civil Code and, hence, not subject to real property tax. The LBAA lastly ordered that Tax issue. The matter was settled on April 10, 1991 where this Authority ruled that "wires, insulators, transformers and electric meters which are
Declaration No. 019-6500 would remain and the poles, wires, insulators, transformers, and electric meters of MERALCO would be mounted on poles and can be separated from the poles and moved from place to place without breaking the material or causing [the]
continuously assessed, but the City Assessor would stamp on the said Tax Declaration the word "exempt." The LBAA decreed in the deterioration of the object, are deemed movable or personal property". The same position of MERALCO would have been tenable and that
end:cralawlawlibrary decision may have stood firm prior to the enactment of R.A. 7160 but not anymore in this jurisdiction. The Code provides and now sets a more
stringent yet broadened concept of machinery, x x x:chanRoblesvirtualLawlibrary WHEREFORE, in view of the foregoing, the Decision appealed from is hereby modified. The City Assessor of Lucena City is hereby directed to
make a new assessment on the subject properties to retroact from the year 1992 and the City Treasurer to collect the tax liabilities in
x x x x accordance with the provisions of the cited Section 222 of the Local Government Code. 28chanrobleslaw

The pivotal point where the difference lie between the former and the current case is that by the very wordings of [Section 199(0)], the ground The CBAA denied the Motion for Reconsideration of MERALCO in a Resolution 29 dated August 16, 2001.
being anchored upon by MERALCO concerning the properties in question being personal in nature does not hold anymore for the sole reason
that these come now within the purview and new concept of Machineries. The new law has treated these in an unequivocal manner as Disgruntled, MERALCO sought recourse from the Court of Appeals by filing a Petition for Review under Rule 43 of the Rules of Court, which
machineries in the sense that they are instruments, mechanical contrivances or apparatus though not attached permanently to the real was docketed as CA-G.R. SP No. 67027.
properties of [MERALCO] are actually, directly and exclusively used to meet their business of distributing electricity.
The Court of Appeals rendered a Decision on May 13, 2004 rejecting all arguments proffered by MERALCO. The appellate court found no
x x x x deficiency in the Notice of Assessment issued by the City Assessor of Lucena:cralawlawlibrary
It was not disputed that [MERALCO] failed to provide the [City Assessor and City Treasurer of Lucena] with a sworn statement declaring the
Clearly, [Section 234 of the Local Government Code] lists down the instances of exemption in real property taxation and very apparent is the true value of each of the subject transformer and electric post, transmission line, insulator and electric meter which should have been made
fact that the enumeration is exclusive in character in view of the wordings in the last paragraph. Applying the maxim "Expressio Unius est the basis of the fair and current market value of the aforesaid property and which would enable the assessor to identify the same for
Exclusio Alterius", we can say that "Where the statute enumerates those who can avail of the exemption, it is construed as excluding all others assessment purposes. [MERALCO] merely claims that the assessment made by the [City Assessor and City Treasurer of Lucena] was
not mentioned therein". Therefore, the above-named company [had] lost its previous exemptions under its franchise because of non-inclusion incorrect but did not even mention in their pleading the true and correct assessment of the said properties. Absent any sworn statement given
in the enumeration in Section 234. Furthermore, all tax exemptions being enjoyed by all persons, whether natural or juridical, including all by [MERALCO], [the City Assessor and City Treasurer of Lucena] were constrained to make an assessment based on the materials within
government-owned or controlled corporations are expressly withdrawn, upon effectivity of R.A. 7160. [their reach].30chanrobleslaw

In the given facts, it has been manifested that the Municipal Board of Lucena passed Resolution No. 108 on July 1, 1957 extending the The Court of Appeals further ruled that there was no more basis for the real property tax exemption of MERALCO under the Local Government
franchise of MERALCO to operate in Lucena city an electric light system for thirty-five years, which should have expired on November 9, 1992 Code and that the withdrawal of said exemption did not violate the non-impairment clause of the Constitution, thus:cralawlawlibrary
and under Resolution No. 2679 passed on June 13, 1972 by the City Council of Lucena City awarding [MERALCO] a franchise to operate for Although it could not be denied that [MERALCO] was previously granted a Certificate of Franchise by the National Electrification Commission
twenty years an electric light, heat and power system in Lucena City, also to expire in the year 1992. Under those franchises, they were only on October 28, 1993 x x x, such conferment does not automatically include an exemption from the payment of realty tax, nor does it impliedly
bound to pay franchise taxes and nothing more. give the franchisee the right to continue the privileges granted under its previous franchise considering that Sec. 534(f) of the Local
Government Code of 1991 expressly repealed those provisions which are inconsistent with the Code.
Now, granting arguendo that there is no express revocation of the exemption under the franchise of [MERALCO] since, unquestionably
[MERALCO] is a recipient of another franchise granted this time by the National Electrification Commission as evidenced by a certificate At the outset, the Supreme Court has held that "Section 193 of the LGC prescribes the general rule, viz., tax exemptions or incentives granted
issued on October 28, 1993, such conferment does not automatically include and/or award exemption from taxes, nor does it impliedly give the to or presently enjoyed by natural or juridical persons are withdrawn upon the effectivity of the LGC except with respect to those entities
franchisee the right to continue the privileges like exemption granted under its previous franchise. It is just a plain and simple franchise. In expressly enumerated. In the same vein, We must hold that the express withdrawal upon effectivity of the LGC of all exemptions except only
countless times, the Supreme Court has ruled that exemption must be clear in the language of the law granting such exemption for it is strictly as provided therein, can no longer be invoked by MERALCO to disclaim liability for the local tax." (City Government of San Pablo, Laguna vs.
construed and favored against the person invoking it. In addition, a franchise though in the form of a contract is also a privilege that must yield Reyes, 305 SCRA 353, 362-363)
to the sublime yet inherent powers of the state, one of these is the power of taxation.
In fine, [MERALCO's] invocation of the non-impairment clause of the Constitution is accordingly unavailing. The LGC was enacted in
Looking into the law creating the National Electrification Administration (Commission), P.D. 269 as amended by P.D. 1645, nowhere in those pursuance of the constitutional policy to ensure autonomy to local governments and to enable them to attain fullest development as self-reliant
laws can we find such authority to bestow upon the grantee any tax exemption of whatever nature except those of cooperatives. This we communities. The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be exercised by local legislative bodies, no
believe is basically in consonance with the provisions of the Local Government Code more particularly Section 234. longer merely by virtue of a valid delegation as before, but pursuant to [a] direct authority conferred by Section 5, Article X of the Constitution.
The important legal effect of Section 5 is that henceforth, in interpreting statutory provisions on municipal fiscal powers, doubts will be resolved
Furthermore, Section 534(f) of R.A. 7160 which is taken in relation to Section 234 thereof states that "All general and special laws, acts, city in favor of the municipal corporations. (Ibid. pp. 363-365) 31chanrobleslaw
charters, decrees, executive orders, proclamations and administrative regulations or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly". Anent this unambiguous mandate, P.D. 551 is mandatorily repealed due MERALCO similarly failed to persuade the Court of Appeals that the transformers, transmission lines, insulators, and electric meters mounted
to its contradictory and irreconcilable provisions with R.A. 7160. 26 on the electric posts of MERALCO were not real properties. The appellate court invoked the definition of "machinery" under Section 199(o) of
chanrobleslaw the Local Government Code and then wrote that:cralawlawlibrary
We firmly believe and so hold that the wires, insulators, transformers and electric meters mounted on the poles of [MERALCO] may
Yet, the CBAA modified the ruling of the LBAA by excluding from the real property tax deficiency assessment the years 1990 to 1991, nevertheless be considered as improvements on the land, enhancing its utility and rendering it useful in distributing electricity. The said
considering that:cralawlawlibrary properties are actually, directly and exclusively used to meet the needs of [MERALCO] in the distribution of electricity.
In the years 1990 and 1991, the exemption granted to MERALCO under its franchise which incidentally expired upon the effectivity of the
Local Government Code of 1991 was very much in effect and the decision rendered by the Central Board of Assessment Appeals (CBAA) In addition, "improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty. It is a
classifying its poles, wires, insulators, transformers and electric meters as personal property was still controlling as the law of the case. So, familiar personalty phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered
from 1990 to 1991, it would be inappropriate and illegal to make the necessary assessment on those properties, much more to impose any personal property." (Caltex (Phil) Inc. vs. Central Board of Assessment Appeals, 114 SCRA 296, 301-302) 32chanrobleslaw
penalty for nonpayment of such.
Lastly, the Court of Appeals agreed with the CBAA that the new assessment of the transformers, electric posts, transmission lines, insulators,
But, assessments made beginning 1992 until 1997 by the City Government of Lucena is legal, both procedurally and substantially. When R.A. and electric meters of MERALCO shall retroact to 1992.
7160, which incorporated amended provisions of the Real Property Tax Code, took effect on January 1, 1992, as already discussed, the nature
of the aforecited questioned properties considered formerly as personal metamorphosed to machineries and the exemption being invoked by Hence, the Court of Appeals adjudged:cralawlawlibrary
[MERALCO] was automatically withdrawn pursuant to the letter and spirit of the law. x x x.27chanrobleslaw WHEREFORE, premises considered, the assailed Decision [dated] May 3, 2001 and Resolution dated August 16, 2001 are hereby
AFFIRMED in toto and the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED for lack of merit. 33
Resultantly, the decretal portion of said CBAA Decision reads:cralawlawlibrary chanrobleslaw
compliance with Section 222 of the Local Government Code, and since MERALCO has yet to pay the real property taxes due on said
In a Resolution dated November 18, 2004, the Court of Appeals denied the Motion for Reconsideration of MERALCO. assessment, then it is just right and appropriate that it also be held liable to pay for penalties and interests from 1992 to present time.
Ultimately, the City Assessor and City Treasurer of Lucena seek judgment denying the instant Petition and ordering MERALCO to pay the real
MERALCO is presently before the Court via the instant Petition for Review on Certiorari grounded on the following lone assignment of property taxes due.
error:cralawlawlibrary
THE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN AFFIRMING IN TOTO THE DECISION OF THE CENTRAL The Petition is partly meritorious.
BOARD OF ASSESSMENT APPEALS WHICH HELD THAT THE SUBJECT PROPERTIES ARE REAL PROPERTIES SUBJECT TO REAL
PROPERTY TAX; AND THAT ASSESSMENT ON THE SUBJECT PROPERTIES SHOULD BE MADE TO TAKE EFFECT RETROACTIVELY The Court finds that the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO are no longer exempted
FROM 1992 UNTIL 1997, WITH PENALTIES; THE SAME BEING UNJUST, WHIMSICAL AND NOT IN ACCORD WITH THE LOCAL from real property tax and may qualify as "machinery" subject to real property tax under the Local Government Code. Nevertheless, the Court
GOVERNMENT CODE.34chanrobleslaw declares null and void the appraisal and assessment of said properties of MERALCO by the City Assessor in 1997 for failure to comply with
the requirements of the Local Government Code and, thus, violating the right of MERALCO to due process.
MERALCO argues that its transformers, electric posts, transmission lines, insulators, and electric meters are not subject to real property tax,
given that: (1) the definition of "machinery" under Section 199(o) of the Local Government Code, on which real property tax is imposed, must By posting a surety bond before
still be within the contemplation of real or immovable property under Article 415 of the Civil Code because it is axiomatic that a statute should filing its appeal of the assessment with
be construed to harmonize with other laws on the same subject matter as to form a complete, coherent, and intelligible system; (2) the the LBAA, MERALCO substantially complied
Decision dated April 10, 1991 of the CBAA in CBAA Case No. 248, which affirmed the Decision dated July 5, 1989 of the LBAA in LBAA-89-2, with the requirement of payment under
ruling that the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO are movable or personal protest in Section 252 of the Local
properties, is conclusive and binding; and (3) the electric poles are not exclusively used to meet the needs of MERALCO alone since these are Government Code.
also being utilized by other entities such as cable and telephone companies.
Section 252 of the Local Government Code mandates that "[n]o protest shall be entertained unless the taxpayer first pays the tax." It is settled
MERALCO further asserts that even if it is assumed for the sake of argument that the transformers, electric posts, transmission lines, that the requirement of "payment under protest" is a condition sine qua non before an appeal may be entertained. 38 Section 231 of the same
insulators, and electric meters are real properties, the assessment of said properties by the City Assessor in 1997 is a patent nullity. The Code also dictates that "[a]ppeal on assessments of real property x x x shall, in no case, suspend the collection of the corresponding realty
collection letter dated October 16, 1997 of the City Treasurer of Lucena, Notice of Assessment dated October 20, 1997 of the City Assessor of taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the
Lucena, the Property Record Form dated October 20, 1997, and Tax Declaration No. 019-6500 simply state a lump sum market value for all final outcome of the appeal." Clearly, under the Local Government Code, even when the assessment of the real property is appealed, the real
the transformers, electric posts, transmission lines, insulators, and electric meters covered and did not provide an inventory/list showing the property tax due on the basis thereof should be paid to and/or collected by the local government unit concerned.
actual number of said properties, or a schedule of values presenting the fair market value of each property or type of property, which would
have enabled MERALCO to verify the correctness and reasonableness of the valuation of its properties. MERALCO was not furnished at all In the case at bar, the City Treasurer of Lucena, in his letter dated October 16, 1997, sought to collect from MERALCO the amount of
with a copy of Tax Declaration No. 019-7394, and while it received a copy of Tax Declaration No. 019-6500, said tax declaration did not contain P17,925,l 17.34 as real property taxes on its machineries, plus penalties, for the period of 1990 to 1997, based on Tax Declaration Nos. 019-
the requisite information regarding the date of operation of MERALCO and the original cost, depreciation, and market value for each property 6500 and 019-7394 issued by the City Assessor of Lucena. MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 with the LBAA,
covered. For the foregoing reasons, the assessment of the properties of MERALCO in 1997 was arbitrary, whimsical, and without factual basis but instead of paying the real property taxes and penalties due, it posted a surety bond in the amount of PI 7,925,117.34.
- in patent violation of the right to due process of MERALCO. MERALCO additionally explains that it cannot be expected to make a declaration
of its transformers, electric posts, transmission lines, insulators, and electric meters, because all the while, it was of the impression that the By posting the surety bond, MERALCO may be considered to have substantially complied with Section 252 of the Local Government Code for
said properties were personal properties by virtue of the Decision dated July 5, 1989 of the LBAA in LBAA-89-2 and the Decision dated April the said bond already guarantees the payment to the Office of the City Treasurer of Lucena of the total amount of real property taxes and
10, 1991 of the CBAA in CBAA Case No. 248. penalties due on Tax Declaration Nos. 019-6500 and 019-7394. This is not the first time that the Court allowed a surety bond as an alternative
to cash payment of the real property tax before protest/appeal as required by Section 252 of the Local Government Code. In Camp John Hay
Granting that the assessment of its transformers, electric posts, transmission lines, insulators, and electric meters by the City Assessor of Development Corporation v. Central Board of Assessment Appeals 39 the Court affirmed the ruling of the CBAA and the Court of Tax Appeals en
Lucena in 1997 is valid, MERALCO alternatively contends that: (1) under Sections 221 35 and 22236 of the Local Government Code, the bane applying the "payment under protest" requirement in Section 252 of the Local Government Code and remanding the case to the LBAA for
assessment should take effect only on January 1, 1998 and not retroact to 1992; (2) MERALCO should not be held liable for penalties and "further proceedings subject to a full and up-to-date payment, either in cash or surety, of realty tax on the subject properties x x x."
interests since its nonpayment of real property tax on its properties was in good faith; and (3) if interest may be legally imposed on MERALCO,
it should only begin to run on the date it received the Notice of Assessment on October 29, 1997 and not all the way back to 1992. Accordingly, the LBAA herein correctly took cognizance of and gave due course to the appeal of Tax Declaration Nos. 019-6500 and 019-7394
filed by MERALCO.
At the end of its Petition, MERALCO prays:cralawlawlibrary
WHEREFORE, it is respectfully prayed of this Honorable Court that the appealed Decision dated May 13, 2004 of the Court of Appeals, Beginning January 1, 1992,
together with its Resolution dated November 18, 2004 be reversed and set aside, and judgment be rendered x x x nullifying and cancel[l]ing MERALCO can no longer claim
the Notice of Assessment, dated October 20, 1997, issued by respondent City Assessor, and the collection letter dated October 16, 1997 of exemption from real property tax of
respondent City Treasurer. its transformers, electric posts,
transmission lines, insulators, and
Petitioner also prays for such other relief as may be deemed just and equitable in the premises. 37 electric meters based on its
chanrobleslaw franchise.

The City Assessor and City Treasurer of Lucena counter that: (1) MERALCO was obliged to pay the real property tax due, instead of posting a MERALCO relies heavily on the Decision dated April 10, 1991 of the CBAA in CBAA Case No. 248, which affirmed the Decision dated July 5,
surety bond, while its appeal was pending, because Section 231 of the Local Government Code provides that the appeal of an assessment 1989 of the LBAA in LBAA-89-2. Said decisions of the CBAA and the LBAA, in turn, cited Board of Assessment Appeals v. Manila Electric
shall not suspend the collection of the real property taxes; (2) the cases cited by MERALCO can no longer be applied to the case at bar since Co.,40 which was decided by the Court way back in 1964 ( 1964 MERALCO case). The decisions in CBAA Case No. 248 and the 1964
they had been decided when Presidential Decree No. 464, otherwise known as the Real Property Tax Code, was still in effect; (3) under the MERALCO case recognizing the exemption from real property tax of the transformers, electric posts, transmission lines, insulators, and
now prevailing Local Government Code, which expressly repealed the Real Property Tax Code, the transformers, electric posts, transmission electric meters of MERALCO are no longer applicable because of subsequent developments that changed the factual and legal milieu for
lines, insulators, and electric meters of MERALCO fall within the new definition of "machineries," deemed as real properties subject to real MERALCO in the present case.
property tax; and (4) the Notice of Assessment dated October 20, 1997 covering the transformers, electric posts, transmission lines, insulators,
and electric meters of MERALCO only retroacts to 1992, which is less than 10 years prior to the date of initial assessment, so it is in In the 1964 MERALCO case, the City Assessor of Quezon City considered the steel towers of MERALCO as real property and required
MERALCO to pay real property taxes for the said steel towers for the years 1952 to 1956. MERALCO was operating pursuant to the franchise Section 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real property
granted under Ordinance No. 44 dated March 24, 1903 of the Municipal Board of Manila, which it acquired from the original grantee, Charles tax:chanRoblesvirtualLawlibrary
M. Swift. Under its franchise, MERALCO was expressly granted the following tax exemption privilege:cralawlawlibrary
Par 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and (a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been
insulators), machinery and personal property as other persons are or may be hereafter required by law to pay. x x x Said percentage shall be granted, for consideration or otherwise, to a taxable person;ChanRoblesVirtualawlibrary
due and payable at the times stated in paragraph nineteen of Part One hereof, x x x 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 (b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and all lands,
insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted, x x x.41chanrobleslaw buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational
purposes;ChanRoblesVirtualawlibrary
Given the express exemption from taxes and assessments of the "poles, wires, transformers, and insulators" of MERALCO in the aforequoted
paragraph, the sole issue in the 1964 MERALCO case was whether or not the steel towers of MERALCO qualified as "poles" which were (c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or controlled
exempted from real property tax. The Court ruled in the affirmative, ratiocinating that:cralawlawlibrary corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;ChanRoblesVirtualawlibrary
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 not made of (d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and
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 (e) Machinery and equipment used for pollution control and environmental protection.
they are dedicated. In accordance with the definitions, a 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 Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons,
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 whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this
voltage transmission wires (See Annex A) and their sole function is to support or carry such wires. Code.chanrobleslaw

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 Local Government Code, in addition, contains a general repealing clause under Section 534(f) which states that "[a]ll general and special
the United States have called these steel supports "steel towers", and they have denominated these supports or towers, as electric poles. In laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are
their decisions the words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction that a transmission inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly."
tower or pole means the same thing.
Taking into account the above-mentioned provisions, the evident intent of the Local Government Code is to withdraw/repeal all exemptions
x x x x from local taxes, unless otherwise provided by the Code. The limited and restrictive nature of the tax exemption privileges under the Local
Government Code is consistent with the State policy to ensure autonomy of local governments and the objective of the Local Government
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 Code to grant genuine and meaningful autonomy to enable local government units to attain their fullest development as self-reliant
restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated thereon, communities and make them effective partners in the attainment of national goals. The obvious intention of the law is to broaden the tax base
should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of electric current from of local government units to assure them of substantial sources of revenue. 43
the source thereof to its consumers, x x x.42chanrobleslaw
Section 234 of the Local Government Code particularly identifies the exemptions from payment of real property tax, based on the ownership,
Similarly, it was clear that under the 20-year franchise granted to MERALCO by the Municipal Board of Lucena City through Resolution No. character, and use of the property, viz.:cralawlawlibrary
2679 dated June 13, 1972, the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO were exempt from (a) Ownership Exemptions. Exemptions from real property taxes on the basis of ownership are real properties owned by: (i) the Republic, (ii) a
real property tax. Paragraph 13 of Resolution No. 2679 is quoted in full below:cralawlawlibrary province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi) registered cooperatives.
13. The grantee shall be liable to pay the same taxes upon its real estate, building, machinery, and personal property (not including poles,
wires, transformers, and insulators) as other persons are now or may hereafter be required by law to pay. In consideration of the franchise (b) Character Exemptions. Exempted from real property taxes on the basis of their character are: (i) charitable institutions, (ii) houses and
and rights hereby granted, the grantee shall pay into the City Treasury of Lucena a tax equal to FIVE (5%) PER CENTUM of the gross temples of prayer like churches, parsonages or convents appurtenant thereto, mosques, and (iii) nonprofit or religious cemeteries.
earnings received from electric current sold or supplied under this franchise. Said tax shall be due and payable quarterly and shall be in lieu
of any and all taxes of any kind, nature or description levied, established, or collected by any authority whatsoever, municipal, (c) Usage exemptions. Exempted from real property taxes on the basis of the actual, direct and exclusive use to which they are devoted are:
provincial, or national, now or in the future, on its poles, wires, insulators, switches, transformers and structures, installations, (i) all lands, buildings and improvements which are actually directly and exclusively used for religious, charitable or educational purposes; (ii)
conductors, and accessories, placed in and over and under all the private and/or public property, including public streets and highways, all machineries and equipment actually, directly and exclusively used by local water districts or by government-owned or controlled
provincial roads, bridges, and public squares, and on its franchise rights, privileges, receipts, revenues and profits, from which taxes the corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; and (iii) all machinery and
grantee is hereby expressly exempted. (Emphases supplied.)chanrobleslaw equipment used for pollution control and environmental protection.

In CBAA Case No. 248 (and LBAA-89-2), the City Assessor assessed the transformers, electric posts, transmission lines, insulators, and To help provide a healthy environment in the midst of the modernization of the country, all machinery and equipment for pollution control and
electric meters of MERALCO located in Lucena City beginning 1985 under Tax Declaration No. 019-6500. The CBAA in its Decision dated April environmental protection may not be taxed by local governments.
10, 1991 in CBAA Case No. 248 sustained the exemption of the said properties of MERALCO from real property tax on the basis of paragraph
13 of Resolution No. 2679 and the 1964 MERALCO case. 2. Other Exemptions Withdrawn. All other exemptions previously granted to natural or juridical persons including government-owned or
controlled corporations are withdrawn upon the effectivity of the Code.44chanrobleslaw
Just when the franchise of MERALCO in Lucena City was about to expire, the Local Government Code took effect on January 1, 1992,
Sections 193 and 234 of which provide:cralawlawlibrary The last paragraph of Section 234 had unequivocally withdrawn, upon the effectivity of the Local Government Code, exemptions from payment
Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted to, or of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as provided in the
presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water same section.
districts, cooperatives duly registered under R.A. No. 6938, non-stock and nonprofit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code. MERALCO, a private corporation engaged in electric distribution, and its transformers, electric posts, transmission lines, insulators, and
electric meters used commercially do not qualify under any of the ownership, character, and usage exemptions enumerated in Section 234 of
the Local Government Code. It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence real estate but are actually, directly and essentially
excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius.45 Not being among the recognized exemptions used to meet the needs of the particular industry,
from real property tax in Section 234 of the Local Government Code, then the exemption of the transformers, electric posts, transmission lines, business, or works, which by their very nature and
insulators, and electric meters of MERALCO from real property tax granted under its franchise was among the exemptions withdrawn upon the purpose are designed for, or essential to
effectivity of the Local Government Code on January 1, 1998. manufacturing, commercial, mining, industrial or
agricultural purposes.
It is worthy to note that the subsequent franchises for operation granted to MERALCO, i.e., under the Certificate of Franchise dated October
28, 1993 issued by the National Electrification Commission and Republic Act No. 9209 enacted on June 9, 2003 by Congress, are completely Local Section 232. Power to Levy Real Property Tax. A Section 199. Definitions. - When used in this Title:
silent on the matter of exemption from real property tax of MERALCO or any of its properties. Government province or city or a municipality within the Metropolitan x x x x
Code Manila Area may levy an annual ad valorem tax on real
It is settled that tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law property such as land, building, machinery, and other (o) "Machinery" embraces machines, equipment,
conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved Effectivity: improvement not hereinafter specifically exempted. mechanical contrivances, instruments, appliances or
against the taxpayer.46 MERALCO has failed to present herein any express grant of exemption from real property tax of its transformers, January 1, 1992 apparatuswhich may or may not be attached,
electric posts, transmission lines, insulators, and electric meters that is valid and binding even under the Local Government Code. permanently or temporarily, to the real property . It
includes the physical facilities for production, the
The transformers, electric posts, installations and appurtenant service facilities, those
transmission lines, insulators, and electric which are mobile, self-powered or self- propelled,
meters of MERALCO may qualify as and those not permanently attached to the real
"machinery" under the Local Government property which are actually, directly, and exclusively
Code subject to real property tax. used to meet the needs of the particular industry,
business or activity and which by their very nature and
Through the years, the relevant laws have consistently considered "machinery" as real property subject to real property tax. It is the definition purpose are designed for, or necessary to its
of "machinery" that has been changing and expanding, as the following table will show:chanRoblesvirtualLawlibrary manufacturing, mining, logging, commercial, industrial
or agricultural purposes[.]
Real Property
Incidence of Real Property Tax Definition of Machinery 47
Tax Law
The Assessment Law Section 2. Incidence of real property tax. - Except in Section 3. Property exempt from tax. - The exemptions MERALCO is a public utility engaged in electric distribution, and its transformers, electric posts, transmission lines, insulators, and electric
(Commonwealth Act No. chartered cities, there shall be levied, assessed, and shall be as follows: meters constitute the physical facilities through which MERALCO delivers electricity to its consumers. Each may be considered as one or more
470) collected, an annual ad valorem tax on real property, x x x x of the following: a "machine,"48 "equipment,"49 "contrivance,"50 "instrument,"51 "appliance,"52"apparatus,"53 or "installation."54
including land, buildings, machinery, and other (f) Machinery, which term shall embrace machines,
Effectivity: January 1, improvements not hereinafter specifically exempted. mechanical contrivances, instruments, appliances, and The Court highlights that under Section 199(o) of the Local Government Code, machinery, to be deemed real property subject to real property
1940 apparatus attached to the real estate, used for tax, need no longer be annexed to the land or building as these "may or may not be attached, permanently or temporarily to the real property,"
industrial agricultural or manufacturing purposes, and in fact, such machinery may even be "mobile." 55 The same provision though requires that to be machinery subject to real property tax, the
during the first five years of the operation of the physical facilities for production, installations, and appurtenant service facilities, those which are mobile, self-powered or self-propelled, or not
machinery. permanently attached to the real property (a) must be actually, directly, and exclusively used to meet the needs of the particular industry,
Real Property Section 38. Incidence of Real Property Tax. - There Section 3. Definition of Terms. - business, or activity; and (2) by their very nature and purpose, are designed for, or necessary for manufacturing, mining, logging, commercial,
Tax Code shall be levied, assessed and collected in all provinces, When used in this Code - industrial, or agricultural purposes. Thus, Article 290(o) of the Rules and Regulations Implementing the Local Government Code of 1991
cities and municipalities an annual ad valorem tax on recognizes the following exemption:cralawlawlibrary
Effectivity: June 1, 1974 real property, such as land, buildings, machinery and x x x x Machinery which are of general purpose use including but not limited to office equipment, typewriters, telephone equipment, breakable or
other improvements affixed or attached to real property easily damaged containers (glass or cartons), microcomputers, facsimile machines, telex machines, cash dispensers, furnitures and fixtures,
not hereinafter specifically exempted. (m) Machinery - shall embrace machines, mechanical freezers, refrigerators, display cases or racks, fruit juice or beverage automatic dispensing machines which are not directly and exclusively
contrivances, instruments, appliances and apparatus used to meet the needs of a particular industry, business or activity shall not be considered within the definition of machinery under this Rule.
attached to the real estate. It includes the physical (Emphasis supplied.)chanrobleslaw
facilities available for production, as well as the
installations and appurtenant service facilities, together The 1964 MERALCO case was decided when The Assessment Law was still in effect and Section 3(f) of said law still required that the
with all other equipment designed for or essential to its machinery be attached to the real property. Moreover, as the Court pointed out earlier, the ruling in the 1964 MERALCO case - that the electric
manufacturing, industrial or agricultural purposes. poles (including the steel towers) of MERALCO are not subject to real property tax - was primarily based on the express exemption granted to
MERALCO under its previous franchise. The reference in said case to the Civil Code definition of real property was only an alternative
Real Property Section 38. Incidence of Real Property Tax. - There Section 3. Definition of Terms. argument:cralawlawlibrary
Tax Code, as amended by shall be levied, assessed and collected in all provinces, When used in this Code - Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the
Presidential cities and municipalities an annual ad valorem tax on x x x x logical question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law
Decree No. 1383 real property, such as land, buildings, machinery and does not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the following are immovable
other improvements affixed or attached to real property (m) Machinery - shall embrace machines, equipment, property:cralawlawlibrary
Effectivity: May 25, 1978 not hereinafter specifically exempted. mechanical contrivances, instruments, appliances and (1) Land, buildings, roads, and constructions of all kinds adhered to the soil;ChanRoblesVirtualawlibrary
apparatus attached to the real estate. It shall include
the physical facilities available for production, as well x x x x
as the installations and appurtenant service facilities,
together with all those not permanently attached to the (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;ChanRoblesVirtualawlibrary cases in which the special provisions are not applicable, that specific statute prevails over a general statute and that where two statutes are of
equal theoretical application to a particular case, the one designed therefor specially should prevail." (Citations omitted.)chanrobleslaw
x x x x
The Court also very clearly explicated in Vinzons-Chato v. Fortune Tobacco Corporation61 that:cralawlawlibrary
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried in A general law and a special law on the same subject are statutes in pah materia and should, accordingly, be read together and harmonized, if
a building or on a piece of land, and which tends directly to meet the needs of the said industry or works;ChanRoblesVirtualawlibrary possible, with a view to giving effect to both. The rule is that where there are two acts, one of which is special and particular and the other
general which, if standing alone, would include the same matter and thus conflict with the special act, the special law must prevail since it
xxxx evinces the legislative intent more clearly than that of a general statute and must not be taken as intended to affect the more particular and
The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or specific provisions of the earlier act, unless it is absolutely necessary so to construe it in order to give its words any meaning at all.
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 The circumstance that the special law is passed before or after the general act does not change the principle. Where the special law is later, it
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 will be regarded as an exception to, or a qualification of, the prior general act; and where the general act is later, the special statute will be
manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of construed as remaining an exception to its terms, unless repealed expressly or by necessary implication. (Citations omitted.)chanrobleslaw
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 Furthermore, in Caltex (Philippines), Inc. v. Central Board of Assessment Appeals, 62 the Court acknowledged that "[i]t is a familiar phenomenon
not machineries or receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. to see things classed as real property for purposes of taxation which on general principle might be considered personal property[.]"
Petitioner is not engaged in an industry or works on the land in which the steel supports or towers are constructed. 56 (Emphases
supplied.)chanrobleslaw Therefore, for determining whether machinery is real property subject to real property tax, the definition and requirements under the Local
Government Code are controlling.
The aforequoted conclusions of the Court in the 1964 MERALCO case do not hold true anymore under the Local Government Code.
MERALCO maintains that its electric posts are not machinery subject to real property tax because said posts are not being exclusively used by
While the Local Government Code still does not provide for a specific definition of "real property," Sections 199(o) and 232 of the said Code, MERALCO; these are also being utilized by cable and telephone companies. This, however, is a factual issue which the Court cannot take
respectively, gives an extensive definition of what constitutes "machinery" and unequivocally subjects such machinery to real property tax. The cognizance of in the Petition at bar as it is not a trier of facts. Whether or not the electric posts of MERALCO are actually being used by other
Court reiterates that the machinery subject to real property tax under the Local Government Code "may or may not be attached, permanently companies or industries is best left to the determination of the City Assessor or his deputy, who has been granted the authority to take
or temporarily to the real property;" and the physical facilities for production, installations, and appurtenant service facilities, those which are evidence under Article 304 of the Rules and Regulations Implementing the Local Government Code of 1991.
mobile, self-powered or self-propelled, or are not permanently attached must (a) be actually, directly, and exclusively used to meet the needs
of the particular industry, business, or activity; and (2) by their very nature and purpose, be designed for, or necessary for manufacturing, Nevertheless, the appraisal and
mining, logging, commercial, industrial, or agricultural purposes. assessment of the transformers, electric
posts, transmission lines, insulators, and
Article 415, paragraph (1) of the Civil Code declares as immovables or real properties "[l]and, buildings, roads and constructions of all kinds electric meters of MERALCO as machinery
adhered to the soil." The land, buildings, and roads are immovables by nature "which cannot be moved from place to place," whereas the under Tax Declaration Nos. 019-6500 and
constructions adhered to the soil are immovables by incorporation "which are essentially movables, but are attached to an immovable in such 019-7394 were not in accordance with the
manner as to be an integral part thereof." 57 Article 415, paragraph (3) of the Civil Code, referring to "[ejverything attached to an immovable in a Local Government Code and in violation of
fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object," are likewise the right to due process of MERALCO and,
immovables by incorporation. In contrast, the Local Government Code considers as real property machinery which "may or may not be therefore, null and void.
attached, permanently or temporarily to the real property," and even those which are "mobile."
The Local Government Code defines "appraisal" as the "act or process of determining the value of property as of a specific date for a specific
Article 415, paragraph (5) of the Civil Code considers as immovables or real properties "[machinery, receptacles, instruments or implements purpose." "Assessment" is "the act or process of determining the value of a property, or proportion thereof subject to tax, including the
intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend discovery, listing, classification, and appraisal of the properties[.]" 63 When it comes to machinery, its appraisal and assessment are particularly
directly to meet the needs of the said industry or works." The Civil Code, however, does not define "machinery." governed by Sections 224 and 225 of the Local Government Code, which read:cralawlawlibrary
Section 224. Appraisal and Assessment of Machinery. - (a) The fair market value of a brand-new machinery shall be the acquisition cost. In all
The properties under Article 415, paragraph (5) of the Civil Code are immovables by destination, or "those which are essentially movables, but other cases, the fair market value shall be determined by dividing the remaining economic life of the machinery by its estimated economic life
by the purpose for which they have been placed in an immovable, partake of the nature of the latter because of the added utility derived and multiplied by the replacement or reproduction cost.
therefrom."58These properties, including machinery, become immobilized if the following requisites concur: (a) they are placed in the tenement
by the owner of such tenement; (b) they are destined for use in the industry or work in the tenement; and (c) they tend to directly meet the (b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges, brokerage, arrastre and handling,
needs of said industry or works. 59 The first two requisites are not found anywhere in the Local Government Code. duties and taxes, plus cost of inland transportation, handling, and installation charges at the present site. The cost in foreign currency of
imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by the Central Bank.
MERALCO insists on harmonizing the aforementioned provisions of the Civil Code and the Local Government Code. The Court disagrees,
however, for this would necessarily mean imposing additional requirements for classifying machinery as real property for real property tax Section 225. Depreciation Allowance for Machinery. - For purposes of assessment, a depreciation allowance shall be made for machinery at a
purposes not provided for, or even in direct conflict with, the provisions of the Local Government Code. rate not exceeding five percent (5%) of its original cost or its replacement or reproduction cost, as the case may be, for each year of
use: Provided, however, That the remaining value for all kinds of machinery shall be fixed at not less than twenty percent (20%) of such
As between the Civil Code, a general law governing property and property relations, and the Local Government Code, a special law granting original, replacement, or reproduction cost for so long as the machinery is useful and in operation.chanrobleslaw
local government units the power to impose real property tax, then the latter shall prevail. As the Court pronounced in Disomangcop v. The
Secretary of the Department of Public Works and Highways Simeon A. Datumanong60:cralawlawlibrary It is apparent from these two provisions that every machinery must be individually appraised and assessed depending on its acquisition cost,
It is a finely-imbedded principle in statutory construction that a special provision or law prevails over a general one. Lex specialis derogant remaining economic life, estimated economic life, replacement or reproduction cost, and depreciation.
generali. As this Court expressed in the case of Leveriza v. Intermediate Appellate Court, "another basic principle of statutory construction
mandates that general legislation must give way to special legislation on the same subject, and generally be so interpreted as to embrace only Article 304 of the Rules and Regulations Implementing the Local Government Code of 1991 expressly authorizes the local assessor or his
deputy to receive evidence for the proper appraisal and assessment of the real property:cralawlawlibrary
Article 304. Authority of Local Assessors to Take Evidence. - For the purpose of obtaining information on which to base the market value of transmission lines, insulators, and electric meters of MERALCO.
any real property, the assessor of the province, city, or municipality or his deputy may summon the owners of the properties to be affected or
persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its ownership, amount, The Court of Appeals laid the blame on MERALCO for the lack of information regarding its transformers, electric posts, transmission lines,
nature, and value. insulators, and electric meters for appraisal and assessment purposes because MERALCO failed to file a sworn declaration of said properties
chanrobleslaw as required by Section 202 of the Local Government Code. As MERALCO explained, it cannot be expected to file such a declaration when all
the while it believed that said properties were personal or movable properties not subject to real property tax. More importantly, Section 204 of
The Local Government Code further mandates that the taxpayer be given a notice of the assessment of real property in the following the Local Government Code exactly covers such a situation, thus:cralawlawlibrary
manner:cralawlawlibrary Section 204. Declaration of Real Property by the Assessor. - When any person, natural or juridical, by whom real property is required to be
Section 223. Notification of New or Revised Assessment. - When real property is assessed for the first time or when an existing assessment is declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the provincial, city or
increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such new or revised municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case
assessment to the person in whose name the property is declared. The notice may be delivered personally or by registered mail or through the may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath shall be required of a declaration thus
assistance of the punong barangay to the last known address of the person to served.chanrobleslaw made by the provincial, city or municipal assessor.chanrobleslaw

A notice of assessment, which stands as the first instance the taxpayer is officially made aware of the pending tax liability, should be Note that the only difference between the declarations of property made by the taxpayer, on one hand, and the provincial/city/municipal
sufficiently informative to apprise the taxpayer the legal basis of the tax. 64 In Manila Electric Company v. Barlis, 65 the Court described the assessor, on the other, is that the former must be made under oath. After making the declaration of the property himself for the owner, the
contents of a valid notice of assessment of real property and differentiated the same from a notice of collection:cralawlawlibrary provincial/city/municipal assessor is still required to assess the property for taxation in accordance with the provisions of the Local Government
A notice of assessment as provided for in the Real Property Tax Code should effectively inform the taxpayer of the value of a specific property, Code.
or proportion thereof subject to tax, including the discovery, listing, classification, and appraisal of properties. The September 3, 1986 and
October 31, 1989 notices do not contain the essential information that a notice of assessment must specify, namely, the value of a specific It is true that tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving
property or proportion thereof which is being taxed, nor does it state the discovery, listing, classification and appraisal of the property subject to otherwise.66 In this case, MERALCO was able to overcome the presumption because it has clearly shown that the assessment of its properties
taxation. In fact, the tenor of the notices bespeaks an intention to collect unpaid taxes, thus the reminder to the taxpayer that the failure to pay by the City Assessor was baselessly and arbitrarily done, without regard for the requirements of the Local Government Code.
the taxes shall authorize the government to auction off the properties subject to taxes x x x.chanrobleslaw
The exercise of the power of taxation constitutes a deprivation of property under the due process clause, and the taxpayer's right to due
Although the ruling quoted above was rendered under the Real Property Tax Code, the requirement of a notice of assessment has not process is violated when arbitrary or oppressive methods are used in assessing and collecting taxes. 67 The Court applies by analogy its
changed under the Local Government Code. pronouncements in Commissioner of Internal Revenue v. United Salvage and Towage (Phils.), Inc .,68 concerning an assessment that did not
comply with the requirements of the National Internal Revenue
A perusal of the documents received by MERALCO on October 29, 1997 reveals that none of them constitutes a valid notice of assessment of On the strength of the foregoing observations, we ought to reiterate our earlier teachings that "in balancing the scales between the power of
the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO. the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to
due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a citizen's right is amply
The letter dated October 16, 1997 of the City Treasurer of Lucena (which interestingly precedes the purported Notice of Assessment dated protected by the Bill of Rights under the Constitution." Thus, while "taxes are the lifeblood of the government," the power to tax has its limits, in
October 20, 1997 of the City Assessor of Lucena) is a notice of collection, ending with the request for MERALCO to settle the payable amount spite of all its plenitude. Even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that
soon in order to avoid accumulation of penalties. It only presented in table form the tax declarations covering the machinery, assessed values it be exercised reasonably and in accordance with the prescribed procedure. (Citations omitted.)chanrobleslaw
in the tax declarations in lump sums for all the machinery, the periods covered, and the taxes and penalties due again in lump sums for all the
machinery. The appraisal and assessment of the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO under Tax
Declaration Nos. 019-6500 and 019-7394, not being in compliance with the Local Government Code, are attempts at deprivation of property
The Notice of Assessment dated October 20, 1997 issued by the City Assessor gave a summary of the new/revised assessment of the without due process of law and, therefore, null and void.
"machinery" located in "Quezon Avenue Ext., Brgy. Gulang-Gulang, Lucena City," covered by Tax Declaration No. 019-7394, with total market
value of P98,173,200.00 and total assessed value of P78,538,560.00. The Property Record Form basically contained the same information. WHEREFORE, premises considered, the Court PARTLY GRANTS the instant Petition and AFFIRMS with MODIFICATION the Decision
Without specific description or identification of the machinery covered by said tax declaration, said Notice of Assessment and Property Record dated May 13, 2004 of the Court of Appeals in CA-G.R. SP No. 67027, affirming in toto the Decision dated May 3, 2001 of the Central Board of
Form give the false impression that there is only one piece of machinery covered. Assessment Appeals in CBAA Case No. L-20-98. The Court DECLARES that the transformers, electric posts, transmission lines, insulators,
and electric meters of Manila Electric Company are NOT EXEMPTED from real property tax under the Local Government Code. However,
In Tax Declaration No. 019-6500, the City Assessor reported its findings under "Building and Improvements" and not "Machinery." Said tax the Court also DECLARES the appraisal and assessment of the said properties under Tax Declaration Nos. 019-6500 and 019-7394
declaration covered "capital investment-commercial," specifically: (a) Transformer and Electric Post; (b) Transmission Line, (c) Insulator, and as NULLand VOID for not complying with the requirements of the Local Government Code and violating the right to due process of Manila
(d) Electric Meter, with a total market value of P81,811,000.00, assessment level of 80%, and assessed value of 65,448,800.00. Electric Company, and ORDERS the CANCELLATION of the collection letter dated October 16, 1997 of the City Treasurer of Lucena and
Conspicuously, the table for "Machinery" - requiring the description, date of operation, replacement cost, depreciation, and market value of the the Notice of Assessment dated October 20, 1997 of the City Assessor of Lucena, but WITHOUT PREJUDICE to the conduct of a new
machinery - is totally blank. appraisal and assessment of the same properties by the City Assessor of Lucena in accord with the provisions of the Local Government Code
and guidelines issued by the Bureau of Local Government Financing.
MERALCO avers, and the City Assessor and the City Treasurer of Lucena do not refute at all, that MERALCO has not been furnished the
Owner's Copy of Tax Declaration No. 019-7394, in which the total market value of the machinery of MERALCO was increased by SO ORDERED.chanroblesvirtuallawlibrary
PI6,632,200.00, compared to that in Tax Declaration No. 019-6500. G.R. No. 183416, October 05, 2016
PROVINCIAL ASSESSOR OF AGUSAN DEL SUR, Petitioner, v. FILIPINAS PALM OIL PLANTATION, INC., Respondent.
The Court cannot help but attribute the lack of a valid notice of assessment to the apparent lack of a valid appraisal and assessment DECISION
conducted by the City Assessor of Lucena in the first place. It appears that the City Assessor of Lucena simply lumped together all the LEONEN, J. :
transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO located in Lucena City under Tax Declaration The exemption from real property taxes given to cooperatives applies regardless of whether or not the land owned is leased. This exemption
Nos. 019-6500 and 019-7394, contrary to the specificity demanded under Sections 224 and 225 of the Local Government Code for appraisal benefits the cooperative's lessee. The characterization of machinery as real property is governed by the Local Government Code and not the
and assessment of machinery. The City Assessor and the City Treasurer of Lucena did not even provide the most basic information such as Civil Code.
the number of transformers, electric posts, insulators, and electric meters or the length of the transmission lines appraised and assessed
under Tax Declaration Nos. 019-6500 and 019-7394. There is utter lack of factual basis for the assessment of the transformers, electric posts, This Petition1 for review assails the Decision 2 dated September 26, 2007 and the Resolution 3 dated May 26, 2008 of the Court of Appeals in
CA-G.R. SP No. 74060. The Court of Appeals affirmed the Decision of the Central Board of Assessment Appeals (CBAA) exempting Filipinas which reads:
Palm Oil Plantation Inc. from payment of real property taxes. 4chanrobleslaw
chanRoblesvirtualLawlibrary
Filipinas Palm Oil Plantation Inc. (Filipinas) is a private organization engaged in palm oil plantation 5with a total land area of more than 7,000 WHEREFORE, this Board has decided to set aside, as it does hereby set aside, the decision rendered by the Local Board of Assessment
hectares of National Development Company (NDC) lands in Agusan del Sur.6 Harvested fruits from oil palm trees are converted into oil through Appeals of the Province of Agusan del Sur on June 8, 1999 in an unnumbered case entitled "[F]ilipinas Palm Oil Co., Inc. Petitioner, versus the
Filipinas' milling plant in the middle of the plantation area. 7 Within the plantation, there are also three (3) plantation roads and a number of Provincial Assessors Office of Agusan del Sur, Respondent" and hereby orders as follows:
residential homes constructed by Filipinas for its employees. 8chanrobleslaw
chanRoblesvirtualLawlibraryA. The market value for each oil palm tree should be FIFTY- SEVEN & 55/100 PESOS (57.55), effective January
After the Comprehensive Agrarian Reform Law 9 was passed, NDC lands were transferred to Comprehensive Agrarian Reform Law 1, 1991. The assessment for each municipality shall be based on the corresponding number of trees as listed in Petitioner-Appellee's
beneficiaries who formed themselves as the merged NDC-Guthrie Plantations, Inc. - NDC-Guthrie Estates, Inc. (NGPI-NGEI) "Hectarage Statement" discussed hereinabove;
Cooperatives.10 Filipinas entered into a lease contract agreement with NGPI-NGEI. 11chanrobleslaw
B. Petitioner-Appellee should not be made to pay for the real property taxes due on the roads starting from January 1, 1991;
The Provincial-Assessor of Agusan del Sur (Provincial Assessor) is a government agency in charge with the assessment of lands under the
public domain.12 It assessed Filipinas' properties found within the plantation area, 13 which Filipinas assailed before the Local Board of C. Petitioner-Appellee is not liable to the Government for real property taxes on the lands owned by the Multi-purpose Cooperative;
Assessment Appeals (LBAA) on the following grounds:
D. The housing units with a market value of PI75,000.00 or less each shall be subjected to 0% assessment level, starting 1994;
chanRoblesvirtualLawlibrary
(1.) The [petitioner] Provincial Assessors of Agusan del Sur ERRED in finding that the Market Value of a single fruit bearing oil palm tree is E. Road Equipment and haulers are not real properties and, accordingly, Petitioner-Appellee is not liable for real property tax thereon;
P207.00 when it should only be P42.00 pesos per tree;
F. Any real property taxes already paid by Petitioner-Appellee which, by virtue "of this decision, were not due, shall be applied to future taxes
(2.) The [petitioner] ERRED in finding that the total number of standing and fruit bearing oil palm tree is PI 10 [sic] trees per hectare when it rightfully due from Petitioner-Appellee.
should be only 92 trees;
SO ORDERED.27 (Emphasis supplied)
(3.) The [petitioner] ERRED in finding that the Market Value[s] of the plantation roads are:ChanRoblesVirtualawlibrary
A.) P270,000.00 per kilometer for primary roads The CBAA denied the Motion for Reconsideration filed by the Provincial Assessor. 28 The Provincial Assessor filed a Petition for Review before
B.) P135,000.00 for secondary roads the Court of Appeals, which, in turn, sustained the CBAA's Decision. 29chanrobleslaw
C.) P67,567.00 for tertiary roads constructed by the company.
It should only be:ChanRoblesVirtualawlibrary The Court of Appeals held that the land owned by NGPI-NGEI, which Filipinas has been leasing, cannot be subjected to real property tax since
A.) P105,000.00 for primary roads these are owned by cooperatives that are tax-exempt. 30 Section 133(n) of the Local Government Code provides:
B.) P52,300.00 for secondary roads
C.) P26,250.00 for tertiary roads chanRoblesvirtualLawlibrary
Likewise, bridges, culverts, canals and pipes should not be assessed separately from plantation roads, the same being components of the SECTION 133. Common Limitations on the Taxing Powers of Local Government Units . Unless otherwise provided herein, the exercise of
roads thereof; the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
....
(4.) The [petitioner] ERRED in imposing real property taxes against the petitioner for roads, bridges, culverts, pipes and canals as these (n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under R.A. No. 6810 and
belonged to the cooperatives; Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as the "Cooperative Code of the Philippines."
(Emphasis supplied)
([5].) The [petitioner] ERRED in finding that the Market Value of NDC service area is P11,000.00 per hectare when it should only be P6,000.00
per hectare; Section 234(d) of the Local Government Code exempts duly registered cooperatives, like NGPI-NGEI, from payment of real property taxes:

([6].) The [petitioner] ERRED in imposing realty taxes on Residential areas built by [respondent] except for three of them; chanRoblesvirtualLawlibrary
SECTION 234. Exemptions from Real Property Tax. The following are exempted from payment of the real property tax:
([7].) The [petitioner] ERRED when it included haulers and other equipments [sic] which are unmovable as taxable real properties .14 ....
(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938 [.] (Emphasis supplied)
In its Decision15 dated June 8, 1999, the LBAA found that the P207.00 market value declared in the assessment by the Provincial Assessor
was unreasonable.16 It found that the market value should not have been more than P85.00 per oil palm tree. 17 The sudden increase of realty The Court of Appeals held that the pertinent provisions "neither distinguishes nor specifies" that the exemption only applies to real properties
tax assessment level from P42.00 for each oil palm tree in 1993 to P207.00 was confiscatory.18chanrobleslaw used by the cooperatives.31 It ruled that "[t]he clear absence of any restriction or limitation in the provision could only mean that the exemption
applies to wherever the properties are situated and to whoever uses them." 32 Therefore, the exemption privilege extends to Filipinas as the
The LBAA adopted Filipinas' claim that the basis for assessment should only be 98 trees. 19 Although one (1) hectare of land can accommodate cooperatives' lessee.33chanrobleslaw
124 oil palm trees, the mountainous terrain of the plantation should be considered. 20 Because of the terrain, not every meter of land can be
fully planted with trees.21 The LBAA found that roads of any kind, as well as all their improvements, should not be taxed since these roads were On the roads constructed by Filipinas, the Court of Appeals held that although it is undisputed that the roads were built primarily for Filipinas'
intermittently used by the public.22 It resolved that the market valuation should be based on the laws of the Department of Agrarian Reform benefit, the roads should be tax-exempt since these roads were also being used by the cooperatives and the public. 34 It applied, by
since the area is owned by the NDC, a quasi-governmental body of the Philippines.23chanrobleslaw analogy, Bislig Bay Lumber Company, Inc. v. Provincial Government of Surigao:35chanrobleslaw
We are inclined to uphold the theory of appellee. In the first place, it cannot be disputed that the ownership of the road that was constructed by
The LBAA exempted the low-cost housing units from taxation except those with a market value of more than P150,000.00 under the Local appellee belongs to the government by right accession not only because it is inherently incorporated or attached to the timber land leased to
Government Code.24 Finally, the LBAA considered the road equipment and mini haulers as movables that are vital to Filipinas' business. appellee but also because upon the expiration of the concession, said road would ultimately pass to the national government. In the second
place, while the road was constructed by appellee primarily for its use and benefit, the privilege is not exclusive, for, under the lease contract
Filipinas appealed before the CBAA on July 16, 1999. 26 On November 21, 2001, the CBAA rendered a decision, the dispositive portion of entered into by the appellee and the government and by public in by the general. Thus, under said lease contract, appellee cannot prevent the
use of portions, of the concession for homesteading purposes. It is also in 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. . . . In other words, the government has practically (b) Real property shall be classified for assessment purposes on the basis of its actual use[.]
reserved the rights to use the road to promote its varied activities. Since, as above shown, the road in question cannot be considered as an . . . .
improvement which belongs to appellee, although in part is for its benefit, it is clear that the same cannot be the subject of assessment within SECTION 199. Definition of Terms. When used in this Title, the term:
the meaning of section 2 of Commonwealth Act No. 470.36 (Citations omitted) . . . .
(b) "Actual Use" refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof [.]
Furthermore, the Court of Appeals agreed with the CBAA that the roads constructed by Filipinas had become permanent improvements on the . . . .
land owned by NGPI-NGEI. 37 Articles 440 and 445 of the Civil Code provide that these improvements redound to the benefit of the land owner SECTION 205. Listing of Real Property in the Assessment Rolls.
under the right of accession:38chanrobleslaw . . . .
Article 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or (d) Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions, the beneficial use of which has been
attached thereto, either naturally or artificially. granted, for consideration or otherwise, to a taxable person, shall be listed, valued and assessed in the name of the possessor, grantee or of
. . . . the public entity if such property has been acquired or held for resale or lease.
. . . .
Article 445. Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belong to the owner of
the land, subject to the provisions of the following articles. SECTION 217. Actual Use of Real Property as Basis for Assessment. Real property shall be classified, valued and assessed on the basis
of its actual use regardless of where located, whoever owns it, and whoever uses it. (Emphasis supplied)
On the road equipment and mini haulers as real properties subject to tax, the Court of Appeals affirmed the CBAA's Decision that these are
only movables.39 Section 199(o) of the Local Government Code provides a definition of machinery subject to real property taxation: Petitioner claims that Section 199(o) of the Local Government Code specifically covers respondent's road equipment and mini haulers since
these are directly and exclusively used to meet the needs of respondent's industry, business, or activity.48 Article 415(5) of the Civil Code,
chanRoblesvirtualLawlibrary which defines real property, should not be made to control the Local Government Code, 49 a subsequent legislation that specifically defines
SECTION 199. Definition of Terms. When used in this Title, the term: "machinery" for taxation purposes.50chanrobleslaw
....
In the Resolution51 dated October 13, 2008, this Court denied the Petition for Review due to procedural missteps, which included the failure to
(o) "Machinery" embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attach legible duplicate original or certified true copies of the assailed decision and failure to pay proper fees. On November 25, 2008,
attached, permanently or temporarily, to the real property. It includes the physical facilities for production, the installations and appurtenant petitioner moved for reconsideration,52 praying for the reversal of the Petition's denial due to mere technicalities.
service facilities, those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are
actually, directly, and exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and On January 26, 2009, this Court granted Petitioner's Motion for Reconsideration. 53 It directed the reinstatement of the Petition and required
purpose are designed for, or necessary to its manufacturing, mining. respondent to comment.54chanrobleslaw

The Court of Appeals held that Section 19^(o) of the Local Government Code should be construed to include machineries covered by the On November 20, 2009, respondent filed its Comment. 55chanrobleslaw
meaning of real properties provided for under Article 415(5) of the Civil Code: 40chanrobleslaw
Article 415. The following are immovable property: Respondent reiterates the rulings of the CBAA and the Court of Appeals that the exemption of cooperatives from real property taxes extends to
.... it as the lessee.56 It asserts that under its lease agreement with NGPI-NGEI, it pays an Annual Fixed Rental, which includes the payment of
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried taxes.57It claims that in case NGPI-NGEI is liable to the local government for real property tax on the land, the tax should be taken from the
on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works[.] Annual Fixed Rental.58 To make respondent pay real property taxes on the leased land would be equivalent to assessing it twice for the same
property.59chanrobleslaw
The Court of Appeals cited Davao Sawmill Company v. Castillo,41 where it has been held that machinery that is movable by nature becomes
immobilized only when placed by the owner of the tenement, but not so when placed by a tenant or any other person having a temporary right On the road equipment and mini haulers being subjected to real property taxation, respondent maintains that it should be spared from real
unless this person acts as an agent of the owner.42 Thus, the mini haulers and other road equipment retain their nature as property tax since the equipment and mini haulers are movables. 60chanrobleslaw
movables.43chanrobleslaw
The Petition is granted to modify the Court of Appeals Decision, but only with respect to the nature of respondent's road equipment and mini
The Provincial Assessor filed before this Court a Petition for Review raising the following issues: haulers.

chanRoblesvirtualLawlibraryFirst, whether the exemption privilege of NGPI-NGEI from payment of real property tax extends to respondent Under Section 133(n) of the Local Government Code, the taxing power of local government units shall not extend to the levy of taxes, fees, or
Filipinas Palm Oil Plantation Inc. as lessee of the parcel of land owned by cooperatives; and cralawlawlibrary charges on duly registered cooperatives under the Cooperative Code. 61 Section 234(d) of the Local Government Code specifically provides for
real property tax exemption to cooperatives:
Second, whether respondent's road equipment and mini haulers are movable properties and have not been immobilized by destination for real
property taxation. chanRoblesvirtualLawlibrary
SECTION 234. Exemptions from Real Property Tax . The following are exempted from payment of the real property tax:
Petitioner argues that based on Mactan Cebu International Airport Authority v. Ferdinand J. Marcos ,44cooperatives cannot extend its exemption . . . .
from real property tax to taxable persons.45 It argues that Sections 198, 199, 205, and 217 of the Local Government Code provide that real
property taxes are assessed based on actual use. 46 Moreover, the exemption of cooperatives applies only when it is the cooperative that (d) All real property owned by duly registered cooperatives as provided for under [Republic Act] No. 6938[.] (Emphasis supplied)
actually, directly, and exclusively uses and possesses the properties. 47 Sections 198, 199, 205, and 217 of the Local Government Code
provide: NGPI-NGEI, as the owner of the land being leased by respondent, falls within the purview of the law. Section 234 of the Local Government
Code exempts all real property owned by cooperatives without distinction. Nothing in the law suggests that the real property tax exemption
chanRoblesvirtualLawlibrary only applies when the property is used by the cooperative itself. Similarly, the instance that the real property is leased to either an individual or
SECTION 198. Fundamental Principles. The appraisal, assessment, levy and collection of real property tax shall be guided by the following corporation is not a ground for withdrawal of tax exemption. 62chanrobleslaw
fundamental principles:
In arguing the first issue, petitioner hinges its claim on a misplaced reliance in Mactan, which refers to the revocation of tax exemption due to reserved the rights to use the road to promote its varied activities. Since, as above shown, the road in question cannot be considered as an
the effectivity of the Local Government Code. However, Mactan does not refer to the tax exemption extended to cooperatives. The portion that improvement which belongs to appellee, although in part is for its benefit, it is clear that the same cannot be the subject of assessment within
petitioner cited specifically mentions that the exemption granted to cooperatives has not been withdrawn by the effectivity of the Local the meaning of section 2 of Commonwealth Act No. 470.71
Government Code:
This was reiterated in Board of Assessment Appeals ofZamboanga del Sur v. Samar Mining Company, Inc. 72 Samar Mining Company, Inc.
chanRoblesvirtualLawlibrary (Samar Mining) was a domestic corporation engaged in the mining industry.73 Since Samar Mining's mining site and mill were in an inland
[S]ection 232 must be deemed to qualify Section 133. location entailing long distance from its area to the loading point, Samar Mining was constrained to construct a road for its
convenience.74 Initially, Samar Mining filed miscellaneous lease applications for a road right of way covering lands under the jurisdiction of the
Thus, reading together Sections 133, 232, and 234 of the L[ocal] G[overnment] C[ode], we conclude that as a general rule, as laid down in Bureau of Lands and the Bureau of Forestry where the proposed road would pass through. 75 Samar Mining was given a "temporary permit to
Section 133, the taxing powers of local government units cannot extend to the levy of, inter alia, "taxes, fees and charges of any kind on the occupy and use the lands applied for by it"; 76 hence, it was able to build what was eventually known as the Samico Road. Samar Mining was
National Government, its agencies and instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities, and assessed by the Provincial Assessor of Zamboanga del Sur with real property taxes on the road, which prompted it to appeal before the Board
municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of of Assessment Appeals.77Invoking Bislig Bay, Samar Mining claimed that it should not be assessed with real property tax since the road was
the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a constructed on public land. This Court ruled for Samar Mining, thus:
taxable person," as provided in item (a) of the first paragraph of Section 234.
chanRoblesvirtualLawlibrary
As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government-owned and controlled There is no question that the road constructed by respondent Saimar on the public lands leased to it by the government is an improvement.
corporations, Section 193 of the L[ocal] G[overnment] C[ode] prescribes the general rule, viz., they are withdrawn upon the effectivity of the But as to whether the same is taxable under the aforequoted provision of the Assessment Law, this question has already been answered in the
L[ocal] G[overnment] C[ode], except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and negaitive by this Court. In the case of Bislig Bay Lumber Co., Inc. vs. Provincial Government of Surigao, where a similar issue was raised. . ..
non-profit hospitals and educational institutions, and unless otherwise provided in the L[ocal] Gfovernment] C[ode]. The latter proviso could . . . .
refer to Section 234 which enumerates the properties exempt from real property tax. 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; all others . . . What is emphasized in the Bislig case is that the improvement is exempt from taxation because it is an integral part of the public land on
not included in the enumeration lost the privilege upon the effectivity of the L[ocal] G[overnment] C[ode]. Moreover, even as to real property which it is constructed and the improvement is the property of the government by right of accession. Under Section 3(a) of the Assessment
owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the Law, all properties owned by the government, without any distinction, are exempt from taxation.79 (Emphasis supplied, citations omitted)
exemption is withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise.
The roads that respondent constructed became permanent improvements on the land owned by the NGPI-NGEI by right of accession under
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the L[ocal] G[overnment] C[ode], exemptions from the Civil Code, thus:
payment of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as
provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from chanRoblesvirtualLawlibrary
such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if the Article 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or
petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown attached thereto, either naturally or artificially.
above, the said section is qualified by Sections 232 and 234. . . . .
Article 445. Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belong to the owner of
In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing powers of the local government units cannot extend the land[.]
to the levy of:
Despite the land being leased by respondent when the roads were constructed, the ownership of the improvement still belongs to NGPI-NGEI.
chanRoblesvirtualLawlibrary As provided under Article 440 and 445 of the Civil Code, the land is owned by the cooperatives at the time respondent built the roads. Hence,
(o) taxes, fees or charges of any kind on the National Government, its agencies or instrumentalities, and local government units. whatever is incorporated in the land, either naturally or artificially, belongs to the NGPI-NGEI as the landowner.

It must show that the parcels of land in question, which are real property, are any one of those enumerated in Section 234, either by virtue of Although the roads were primarily built for respondent's benefit, the roads were also being used by the members of NGPI and the
ownership, character, or use of the property.63 (Emphasis supplied) public.80 Furthermore, the roads inured to the benefit of NGPI-NGEI as owners of the land not only by right of accession but through the
express provision in the lease agreement:
The roads that respondent constructed within the leased area should not be assessed with real property taxes. Bislig Bay finds application
here. Bislig Bay Lumber Company, Inc. (Bislig Bay) was a timber concessionaire of a portion of public forest in the provinces of Agusan and chanRoblesvirtualLawlibrary
Surigao.64 To aid in developing its concession, Bislig Bay built a road at its expense from a barrio leading towards its area. 65 The Provincial On March 7, 1990 NGPI Multi-Purpose Cooperative, Inc., as Lessor, and NDC-Guthrie Plantations, Inc., as Lessee, entered into a "Lease
Assessor of Surigao assessed Bislig Bay with real property tax on the constructed road, which was paid by the company under protest. 66 It Agreement" . . . covering the agricultural lands transferred by NDC to the DAR, which lands the DAR ultimately distributed undivided to
claimed that even if the road was constructed on public land, it should be subjected to real property tax because it was built by the company qualified workers-beneficiaries. . . .
for its own benefit.67 On the other hand, Bislig Bay asserted that the road should be exempted from real property tax because it belonged to . . . .
national government by right of accession. 68 Moreover, the road constructed already became an inseparable part of the land. 69 The records
also showed that the road was not only built for the benefit of Bislig Bay, but also of the public. 70 This Court ruled for Bislig Bay, thus: Clause No. 6.3 of the same lease agreement provides that "All taxes due on the improvements on the Leased Property except those
improvements on the Area that the LESSOR shall have utilized under Clause 1.2 hereof, shall be for the account of the LESSEE."
chanRoblesvirtualLawlibrary
We are inclined to uphold the theory of appellee. In the first place, it cannot be disputed that the ownership of the road that was constructed by Clause No. 9.4 of the same lease agreement provides that ". . . All fixed and permanent improvements, such as roads and palm trees
appellee belongs to the government by right accession not only because it is inherently incorporated or attached to the timber land leased to introduced on the Leased Property, shall automatically accrue to the LESSOR upon termination of this Lease Agreement without need of
appellee but also because upon the expiration of the concession, said road would ultimately pass to the national government. ... In the second reimbursement."
place, while the road was constructed by appellee primarily for its use and benefit, the privilege is not exclusive, for, under the lease contract
entered into by the appellee and the government and by public in by the general. Thus, under said lease contract, appellee cannot prevent the All the above-cited stipulations in the lease agreement between NGPI Multi-Purpose Cooperative and NDC-Guthrie Plantations, Inc. were
use of portions, of the concession for homesteading purposes. ... It is also in duty bound to allow the free use of forest products within the reconfirmed and reaffirmed in the Addendum to Lease Agreement entered into by and between NGPI Multi-Purpose Cooperative and Filipinas
concession for the personal use of individuals residing in or within the vicinity of the land. ... In other words, the government has practically Palmoil Plantations, Inc. on January 30, 1998. . . . The main subject of the said Addendum was the extension of the term of the lease
agreement up to December 31, 2032, along with economic benefits to the lessor other than rentals.
On the other hand, respondent claims that the road equipment and mini haulers are movables by nature. It asserts that although there may be
There is no dispute that the roads are on the land owned by NGPI Multi-Purpose Cooperative which leased the same to Petitioner-Appellee. a difference between the meaning of "machinery" under the Local Government Code arid that of immovable property under Article 415(5) of
These roads belong to the Multi-Purpose Cooperative, not only by right of accession but also by express provisions of the Contract of the Civil Code, "the controlling interpretation of Section 199(o) of [the Local Government Code] is the interpretation of Article 415(5) of the Civil
Lease[.]81 Code."88chanrobleslaw

Respondent claims that under its lease agreement with NGPI-NGEI, it pays an Annual Fixed Rental, which includes the payment of taxes. 82 If In Manila Electric Company v. City Assessor,89 a similar issue of which definition of "machinery" prevails to warrant the assessment of real
NGPI-NGEI were liable to the local government for real property tax on the land, the tax should be taken from the Annual Fixed Rental: property tax on it was raised.

chanRoblesvirtualLawlibrary Manila Electric Company (MERALCO) insisted on harmonizing the provisions of the Civil Code and the Local Government Code and asserted
"2.1. In consideration of this Lease Agreement, the LESSEE shall pay the LESSOR the following annual rentals:ChanRoblesVirtualawlibrary that "machinery" contemplated under Section 199(o) of the Local Government must still be within the contemplation of immovable property
"1) An annual fixed rental, in the following amount "SIX HUNDRED THIRTY FIVE PESOS" (P635.00) PER HECTARE PER ANNUM which under Article 415 of the Civil Code.90 However, this Court ruled that harmonizing such laws "would necessarily mean imposing additional
would cover the following: requirements for classifying machinery as real property for real property tax purposes not provided for, or even in direct conflict with, the
provisions of the Local Government Code." 91 Thus:
chanRoblesvirtualLawlibrary"(1) All Taxes on the Land
"(2) Administration Charges chanRoblesvirtualLawlibrary
"(3) Amortization charges While the Local Government Code still does not provide for a specific definition of "real property," Sections 199(o) and 232 of the said Code,
respectively, gives an extensive definition of what constitutes "machinery" and unequivocally subjects such machinery to real property tax. The
"It is understood that, if the annual fixed rental of "SIX HUNDRED THIRTY FIVE PESOS" (p 635.00) is insufficient to pay any increase on the Court reiterates that the machinery subject to real property tax under the Local Government Code "may or may not be attached, permanently
land taxes, the Lessee shall pay the difference, provided such increase does not exceed ten percent (10%) of the immediately preceding tax or temporarily to the real property"; and the physical facilities for production, installations, and appurtenant service facilities, those which are
imposed on the land; provided further, that any increase beyond these percentage shall be borne equally by the LESSOR and LESSEE. mobile, self-powered or self-propelled, or are not permanently attached must (a) be actually, directly, and exclusively used to meet the needs
of the particular industry, business, or activity; and (b) by their very nature and purpose, be designed for, or necessary for manufacturing,
"The foregoing notwithstanding, it is understood and agreed that at all times, liability for realty taxes on the Leased Property Primarily and mining, logging, commercial, industrial, or agricultural purposes.
principally lies with the LESSOR and any reference herein to payment by LESSEE of said taxes is only for purposes of earmarking the . . . .
proceeds of the rentals herein agreed upon."
Clause No. 6.3 of the same lease agreement provides that "All taxes due on the improvements on the Leased Property except those Article 415, paragraph (5) of the Civil Code considers as immovables or real properties "[m]achinery, receptacles, instruments or implements
improvements on the Area that the LESSOR shall have utilized under Clause 1.2 hereof, shall be for the account of the LESSEE." 83 (Emphasis intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend
supplied) directly to meet the needs of the said industry or works." The Civil Code, however, does not define "machinery."

Therefore, NGPI-NGEI, as owner of the roads that permanently became part of the land being leased by respondent, shall be liable for real The properties under Article 415, paragraph (5) of the Civil Code are immovables by destination, or "those which are essentially movables, but
property taxes, if any. However, by express provision of the Local Government Code, NGPI-NGEI is exempted from payment of real property by the purpose for which they have been placed in an immovable, partake of the nature of the latter because of the added utility derived
tax.84chanrobleslaw therefrom." These properties, including machinery, become immobilized if the following requisites concur: (a) they are placed in the tenement
II by the owner of such tenement; (b) they are destined for use in the industry or work in the tenement; and (c) they tend to directly meet the
needs of said industry or works.The first two requisites are not found anywhere in the Local Government Code. 92(Emphasis supplied, citations
The road equipment and mini haulers shall be considered as real property, subject to real property tax. omitted)
85
Section 199(o) of the Local Government Code defines "machinery" as real property subject to real property tax, thus: Section 199(o) of the Local Government prevails over Article 415(5) of the Civil Code. In Manila Electric Company:

chanRoblesvirtualLawlibrary chanRoblesvirtualLawlibrary
SECTION 199. Definition of Terms. When used in this Title, the term: As between the Civil Code, a general law governing property and property relations, and the Local Government Code, a special law granting
.... local government units the power to impose real property tax, then the latter shall prevail. As the Court pronounced in Disomangcop v. The
(o) "Machinery" embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be Secretary of the Department of Public Works and Highways Simeon A. Datumanong:ChanRoblesVirtualawlibrary
attached, permanently or temporarily, to the real property. It includes the physical facilities for production, the installations and appurtenant It is a finely-imbedded principle in statutory construction that a special provision or law prevails over a general one. Lex specialis derogant
service facilities, those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are generali. As this Court expressed in the case of Leveriza v. Intermediate Appellate Court, "another basic principle of statutory construction
actually, directly, and exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and mandates that general legislation must give way to special legislation on the same subject, and generally be so interpreted as to embrace only
purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes[.] cases in which the special provisions are not applicable, that specific statute prevails over a general statute and that where two statutes are of
equal theoretical application to a particular case, the one designed therefor specially should prevail ."
Article 415(5) of the New Civil Code defines "machinery" as that which constitutes an immovable property:
The Court also very clearly explicated in Vinzons-Chato v. Fortune Tobacco Corporation that:
chanRoblesvirtualLawlibrary
Article 415. The following are immovable property: chanRoblesvirtualLawlibrary
. . . . A general law and a special law on the same subject are statutes in pari materia and should, accordingly, be read together and harmonized, if
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried possible, with a view to giving effect to both. The rule is that where there are two acts, one of which is special and particular and the other
on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works[.] ( Emphasis supplied) general which, if standing alone, would include the same matter and thus conflict with the special act, the special law must prevail since it
evinces the legislative intent more clearly than that of a general statute and must not be taken as intended to affect the more particular and
Petitioner contends that the second sentence of Section 199(o) includes the road equipment and mini haulers since these are directly and specific provisions of the earlier act, unless it is absolutely necessary so to construe it in order to give its words any meaning at all.
exclusively used by respondent to meet the needs of its operations. 86 It further claims that Article 415(5) of the New Civil Code should not
control the Local Government Code, a subsequent legislation. 87chanrobleslaw The circumstance that the special law is passed before or after the general act does not change the principle. Where the special law is later, it
will be regarded as an exception to, or a qualification of, the prior general act; and where the general act is later, the special statute will be review on certiorari, challenges the February 9, 2005 Decision 3 and November 23, 2005 Resolution4 of the CA in CA-G.R. SP No. 67491. Both
construed as remaining an exception to its terms, unless repealed expressly or by necessary implication. petitions were dismissed on the ground of prescription.
Furthermore, in Caltex (Philippines), Inc. v. Central Board of Assessment Appeals, the Court acknowledged that "[i]t is a familiar phenomenon The pertinent facts are as follows:
to see things classed as real property for purposes of taxation which on general principle might be considered personal property[.]" On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine power barges moored at Balayan
Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement 5 (Agreement), was for a period of five years. Article
Therefore, for determining whether machinery is real property subject to real property tax, the definition and requirements under the Local 10 reads:
Government Code are controlling.93 (Emphasis supplied, citations omitted) 10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import duties, fees, charges and other levies
imposed by the National Government of the Republic of the Philippines or any agency or instrumentality thereof to which POLAR may be or
Respondent is engaged in palm oil plantation. 94 Thus, it harvests fruits from palm trees for oil conversion through its milling plant. 95 By the become subject to or in relation to the performance of their obligations under this agreement (other than (i) taxes imposed or calculated on the
nature of respondent's business, transportation is indispensable for its operations. basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees
and other similar fees and charges) and (b) all real estate taxes and assessments, rates and other charges in respect of the Power Barges. 6
Under the definition provided in Section 199(o) of the Local Government Code, the road equipment and the mini haulers are classified as Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC initially opposed the assignment of rights, citing
machinery, thus: paragraph 17.2 of Article 17 of the Agreement.
On August 7, 1995, FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of
chanRoblesvirtualLawlibrary Batangas City. The assessed tax, which likewise covered those due for 1994, amounted to P56,184,088.40 per annum. FELS referred the
SECTION 199. Definition of Terms. When used in this Title, the terra: matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to
.... represent it in any conference regarding the real property assessment of the Provincial Assessor.
(o) "Machinery" . . . includes the physical facilities for production , the installations and appurtenant service facilities, those which are In a letter7 dated September 7, 1995, NPC sought reconsideration of the Provincial Assessors decision to assess real property taxes on the
mobile , self-powered or self-propelled, and those not permanently attached to the real property which are actually, directly, and power barges. However, the motion was denied on September 22, 1995, and the Provincial Assessor advised NPC to pay the
exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and purpose are assessment.8 This prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for the setting aside of the assessment
designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes [.] ( Emphasis supplied) and the declaration of the barges as non-taxable items; it also prayed that should LBAA find the barges to be taxable, the Provincial Assessor
be directed to make the necessary corrections.9
Petitioner is correct in claiming that the phrase pertaining to physical facilities for production is comprehensive enough to include the road In its Answer to the petition, the Provincial Assessor averred that the barges were real property for purposes of taxation under Section 199(c)
equipment and mini haulers as actually, directly, and exclusively used by respondent to meet the needs of its operations in palm oil of Republic Act (R.A.) No. 7160.
production.96Moreover, "mini-haulers are farm tractors pulling attached trailers used in the hauling of seedlings during planting season and in Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that the Department of Finance (DOF) had rendered
transferring fresh palm fruits from the farm [or] field to the processing plant within the plantation area." 97 The indispensability of the road an opinion10 dated May 20, 1996, where it is clearly stated that power barges are not real property subject to real property assessment.
equipment and mini haulers in transportation makes it actually, directly, and exclusively used in the operation of respondent's business. On August 26, 1996, the LBAA rendered a Resolution11 denying the petition. The fallo reads:
WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the amount of P56,184,088.40, for the year 1994.
In its Comment, respondent claims that the equipment is no longer vital to its operation because it is currently employing equipment outside SO ORDERED.12
the company to do the task.98 However, respondent never raised this contention before the lower courts. Hence, this is a factual issue of which The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real
this Court cannot take cognizance. This Court is not a trier of facts. 99 Only questions of law are entertained in a petition for review assailing a property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed out that
Court of Appeals decision.100chanrobleslaw the owner of the bargesFELS, a private corporationis the one being taxed, not NPC. A mere agreement making NPC responsible for the
payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and
WHEREFORE, the Petition is PARTLY GRANTED. The Decision of the Court of Appeals dated September 26, 2007 and the Resolution cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time.
dated May 26, 2008 in CA-G.R. SP No. 74060 are AFFIRMED with MODIFICATION, in that the road equipment and the mini haulers Aggrieved, FELS appealed the LBAAs ruling to the Central Board of Assessment Appeals (CBAA).
should be assessed with real property taxes. On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of Levy and Warrant by Distraint 13over the power barges,
seeking to collect real property taxes amounting to P232,602,125.91 as of July 31, 1996. The notice and warrant was officially served to FELS
SO ORDERED. on November 8, 1996. It then filed a Motion to Lift Levy dated November 14, 1996, praying that the Provincial Assessor be further restrained
by the CBAA from enforcing the disputed assessment during the pendency of the appeal.
Carpio, (Chairperson), Del Castillo, , and Mendoza, JJ., concur. On November 15, 1996, the CBAA issued an Order 14 lifting the levy and distraint on the properties of FELS in order not to preempt and render
Brion, J., on leave. ineffectual, nugatory and illusory any resolution or judgment which the Board would issue.
Endnotes : Meantime, the NPC filed a Motion for Intervention 15 dated August 7, 1998 in the proceedings before the CBAA. This was approved by the
G.R. No. 168557 February 16, 2007 CBAA in an Order16 dated September 22, 1998.
FELS ENERGY, INC., Petitioner, During the pendency of the case, both FELS and NPC filed several motions to admit bond to guarantee the payment of real property taxes
vs. assessed by the Provincial Assessor (in the event that the judgment be unfavorable to them). The bonds were duly approved by the CBAA.
THE PROVINCE OF BATANGAS and On April 6, 2000, the CBAA rendered a Decision17 finding the power barges exempt from real property tax. The dispositive portion reads:
THE OFFICE OF THE PROVINCIAL ASSESSOR OF BATANGAS, Respondents. WHEREFORE, the Resolution of the Local Board of Assessment Appeals of the Province of Batangas is hereby reversed. Respondent-
x----------------------------------------------------x appellee Provincial Assessor of the Province of Batangas is hereby ordered to drop subject property under ARP/Tax Declaration No. 018-
G.R. No. 170628 February 16, 2007 00958 from the List of Taxable Properties in the Assessment Roll. The Provincial Treasurer of Batangas is hereby directed to act accordingly.
NATIONAL POWER CORPORATION, Petitioner, SO ORDERED.18
vs. Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong to NPC; since they are actually, directly and exclusively
LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS, LAURO C. ANDAYA, in his capacity as the Assessor of the used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. 19 As to the other jurisdictional issue, the
Province of Batangas, and the PROVINCE OF BATANGAS represented by its Provincial Assessor, Respondents. CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R.A. No.
DECISION 7160. The Provincial Assessor filed a motion for reconsideration, which was opposed by FELS and NPC.
CALLEJO, SR., J.: In a complete volte face, the CBAA issued a Resolution20 on July 31, 2001 reversing its earlier decision. The fallo of the resolution reads:
Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No. 170628, which were filed by petitioners FELS Energy, Inc. WHEREFORE, premises considered, it is the resolution of this Board that:
(FELS) and National Power Corporation (NPC), respectively. The first is a petition for review on certiorari assailing the August 25, 2004 (a) The decision of the Board dated 6 April 2000 is hereby reversed.
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 67490 and its Resolution 2 dated June 20, 2005; the second, also a petition for (b) The petition of FELS, as well as the intervention of NPC, is dismissed.
(c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby affirmed, economyare involved in the present controversy, the Court was prompted to dispense with the said pleadings, with the end view of
(d) The real property tax assessment on FELS by the Provincial Assessor of Batangas is likewise hereby affirmed. advancing the interests of justice and avoiding further delay.
SO ORDERED.21 In both petitions, FELS and NPC maintain that the appeal before the LBAA was not time-barred. FELS argues that when NPC moved to have
FELS and NPC filed separate motions for reconsideration, which were timely opposed by the Provincial Assessor. The CBAA denied the said the assessment reconsidered on September 7, 1995, the running of the period to file an appeal with the LBAA was tolled. For its part, NPC
motions in a Resolution22 dated October 19, 2001. 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.
Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP No. 67490. Meanwhile, NPC filed a separate petition, Petitioners contentions are bereft of merit.
docketed as CA-G.R. SP No. 67491. Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides:
On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-G.R. SP No. 67490 praying for the consolidation of its petition SECTION 226. Local Board of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the
with CA-G.R. SP No. 67491. In a Resolution23 dated February 12, 2002, the appellate court directed NPC to re-file its motion for consolidation action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the
with CA-G.R. SP No. 67491, since it is the ponente of the latter petition who should resolve the request for reconsideration. written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form
NPC failed to comply with the aforesaid resolution. On August 25, 2004, the Twelfth Division of the appellate court rendered judgment in CA- prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.
G.R. SP No. 67490 denying the petition on the ground of prescription. The decretal portion of the decision reads: We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7, 1995, contained the following statement:
WHEREFORE, the petition for review is DENIED for lack of merit and the assailed Resolutions dated July 31, 2001 and October 19, 2001 of If you are not satisfied with this assessment, you may, within sixty (60) days from the date of receipt hereof, appeal to the Board of
the Central Board of Assessment Appeals are AFFIRMED. Assessment Appeals of the province by filing a petition under oath on the form prescribed for the purpose, together with copies of ARP/Tax
SO ORDERED.24 Declaration and such affidavits or documents submitted in support of the appeal.32
On September 20, 2004, FELS timely filed a motion for reconsideration seeking the reversal of the appellate courts decision in CA-G.R. SP Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted to file a motion for reconsideration of the
No. 67490. Provincial Assessors decision, a remedy not sanctioned by law.
Thereafter, NPC filed a petition for review dated October 19, 2004 before this Court, docketed as G.R. No. 165113, assailing the appellate The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial, city or municipal assessor in the assessment
courts decision in CA-G.R. SP No. 67490. The petition was, however, denied in this Courts Resolution 25 of November 8, 2004, for NPCs of the property. It follows then that the determination made by the respondent Provincial Assessor with regard to the taxability of the subject
failure to sufficiently show that the CA committed any reversible error in the challenged decision. NPC filed a motion for reconsideration, which real properties falls within its power to assess properties for taxation purposes subject to appeal before the LBAA. 33
the Court denied with finality in a Resolution26 dated January 19, 2005. We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and CA-G.R. SP No. 67491. The two divisions of the appellate
Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It held that the right to question the assessment of the court cited the case of Callanta v. Office of the Ombudsman, 34 where we ruled that under Section 226 of R.A. No 7160, 35 the last action of the
Provincial Assessor had already prescribed upon the failure of FELS to appeal the disputed assessment to the LBAA within the period local assessor on a particular assessment shall be the notice of assessment; it is this last action which gives the owner of the property the right
prescribed by law. Since FELS had lost the right to question the assessment, the right of the Provincial Government to collect the tax was to appeal to the LBAA. The procedure likewise does not permit the property owner the remedy of filing a motion for reconsideration before the
already absolute. local assessor. The pertinent holding of the Court in Callanta is as follows:
NPC filed a motion for reconsideration dated March 8, 2005, seeking reconsideration of the February 5, 2005 ruling of the CA in CA-G.R. SP x x x [T]he same Code is equally clear that the aggrieved owners should have brought their appeals before the LBAA. Unfortunately, despite
No. 67491. The motion was denied in a Resolution27 dated November 23, 2005. the advice to this effect contained in their respective notices of assessment, the owners chose to bring their requests for a review/readjustment
The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been earlier denied for lack of merit in a Resolution 28 dated June before the city assessor, a remedy not sanctioned by the law. To allow this procedure would indeed invite corruption in the system of appraisal
20, 2005. and assessment. It conveniently courts a graft-prone situation where values of real property may be initially set unreasonably high, and then
On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this Court, raising the following issues: subsequently reduced upon the request of a property owner. In the latter instance, allusions of a possible covert, illicit trade-off cannot be
A. avoided, and in fact can conveniently take place. Such occasion for mischief must be prevented and excised from our system.36
Whether power barges, which are floating and movable, are personal properties and therefore, not subject to real property tax. For its part, the appellate court declared in CA-G.R. SP No. 67491:
B. x x x. The Court announces: Henceforth, whenever the local assessor sends a notice to the owner or lawful possessor of real property of its
Assuming that the subject power barges are real properties, whether they are exempt from real estate tax under Section 234 of the Local revised assessed value, the former shall no longer have any jurisdiction to entertain any request for a review or readjustment. The appropriate
Government Code ("LGC"). forum where the aggrieved party may bring his appeal is the LBAA as provided by law. It follows ineluctably that the 60-day period for making
C. the appeal to the LBAA runs without interruption. This is what We held in SP 67490 and reaffirm today in SP 67491. 37
Assuming arguendo that the subject power barges are subject to real estate tax, whether or not it should be NPC which should be made to To reiterate, if the taxpayer fails to appeal in due course, the right of the local government to collect the taxes due with respect to the
pay the same under the law. taxpayers property becomes absolute upon the expiration of the period to appeal. 38 It also bears stressing that the taxpayers failure to
D. question the assessment in the LBAA renders the assessment of the local assessor final, executory and demandable, thus, precluding the
Assuming arguendo that the subject power barges are real properties, whether or not the same is subject to depreciation just like any other taxpayer from questioning the correctness of the assessment, or from invoking any defense that would reopen the question of its liability on
personal properties. the merits.39
E. In fine, the LBAA acted correctly when it dismissed the petitioners appeal for having been filed out of time; the CBAA and the appellate court
Whether the right of the petitioner to question the patently null and void real property tax assessment on the petitioners personal properties is were likewise correct in affirming the dismissal. Elementary is the rule that the perfection of an appeal within the period therefor is both
imprescriptible.29 mandatory and jurisdictional, and failure in this regard renders the decision final and executory.40
On January 13, 2006, NPC filed its own petition for review before this Court (G.R. No. 170628), indicating the following errors committed by In the Comment filed by the Provincial Assessor, it is asserted that the instant petition is barred by res judicata; that the final and executory
the CA: judgment in G.R. No. 165113 (where there was a final determination on the issue of prescription), effectively precludes the claims herein; and
I that the filing of the instant petition after an adverse judgment in G.R. No. 165113 constitutes forum shopping.
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE LBAA WAS FILED OUT OF TIME. FELS maintains that the argument of the Provincial Assessor is completely misplaced since it was not a party to the erroneous petition which
II the NPC filed in G.R. No. 165113. It avers that it did not participate in the aforesaid proceeding, and the Supreme Court never acquired
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER BARGES ARE NOT SUBJECT TO REAL PROPERTY jurisdiction over it. As to the issue of forum shopping, petitioner claims that no forum shopping could have been committed since the elements
TAXES. of litis pendentia or res judicata are not present.
III We do not agree.
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT ON THE POWER BARGES WAS NOT MADE Res judicata pervades every organized system of jurisprudence and is founded upon two grounds embodied in various maxims of common
IN ACCORDANCE WITH LAW.30 law, namely: (1) public policy and necessity, which makes it to the interest of the
Considering that the factual antecedents of both cases are similar, the Court ordered the consolidation of the two cases in a Resolution 31 dated State that there should be an end to litigation republicae ut sit litium; and (2) the hardship on the individual of being vexed twice for the same
March 8, 2006.1awphi1.net cause nemo debet bis vexari et eadem causa. A conflicting doctrine would subject the public peace and quiet to the will and dereliction of
In an earlier Resolution dated February 1, 2006, the Court had required the parties to submit their respective Memoranda within 30 days from individuals and prefer the regalement of the litigious disposition on the part of suitors to the preservation of the public tranquility and
notice. Almost a year passed but the parties had not submitted their respective memoranda. Considering that taxesthe lifeblood of our happiness.41 As we ruled in Heirs of Trinidad De Leon Vda. de Roxas v. Court of Appeals: 42
x x x An existing final judgment or decree rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction acting OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings, machinery and equipment on the Site
upon a matter within its authority is conclusive on the rights of the parties and their privies. This ruling holds in all other actions or suits, in the used in connection with the Power Barges which have been supplied by it at its own cost. POLAR shall operate, manage and maintain the
same or any other judicial tribunal of concurrent jurisdiction, touching on the points or matters in issue in the first suit. Power Barges for the purpose of converting Fuel of NAPOCOR into electricity.52
xxx It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R.A. No. 7160,
Courts will simply refuse to reopen what has been decided. They will not allow the same parties or their privies to litigate anew a question once which reads:
it has been considered and decided with finality. Litigations must end and terminate sometime and somewhere. The effective and efficient SECTION 234. Exemptions from Real Property Tax. The following are exempted from payment of the real property tax:
administration of justice requires that once a judgment has become final, the prevailing party should not be deprived of the fruits of the verdict xxx
by subsequent suits on the same issues filed by the same parties. (c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or controlled
This is in accordance with the doctrine of res judicata which has the following elements: (1) the former judgment must be final; (2) the court corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; x x x
which rendered it had jurisdiction over the subject matter and the parties; (3) the judgment must be on the merits; and (4) there must be Indeed, the law states that the machinery must be actually, directly and exclusively used by the government owned or controlled corporation;
between the first and the second actions, identity of parties, subject matter and causes of action. The application of the doctrine of res judicata nevertheless, petitioner FELS still cannot find solace in this provision because Section 5.5, Article 5 of the Agreement provides:
does not require absolute identity of parties but merely substantial identity of parties. There is substantial identity of parties when there is OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the necessary Fuel pursuant to Article 6 and
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 to the other provisions hereof, it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7. 53
latter.43 It is a basic rule that obligations arising from a contract have the force of law between the parties. Not being contrary to law, morals, good
To recall, FELS gave NPC the full power and authority to represent it in any proceeding regarding real property assessment. Therefore, when customs, public order or public policy, the parties to the contract are bound by its terms and conditions.54
petitioner NPC filed its petition for review docketed as G.R. No. 165113, it did so not only on its behalf but also on behalf of FELS. Moreover, Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. 55 The law does not look with favor on
the assailed decision in the earlier petition for review filed in this Court was the decision of the appellate court in CA-G.R. SP No. 67490, in 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
which FELS was the petitioner. Thus, the decision in G.R. No. 165116 is binding on petitioner FELS under the principle of privity of interest. In misinterpreted.56 Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in
fine, FELS and NPC are substantially "identical parties" as to warrant the application of res judicata. FELSs argument that it is not bound by favor of provincial corporations, we hold that FELS is considered a taxable entity.
the erroneous petition filed by NPC is thus unavailing. The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate
On the issue of forum shopping, we rule for the Provincial Assessor. Forum shopping exists when, as a result of an adverse judgment in one taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant is
forum, a party seeks another and possibly favorable judgment in another forum other than by appeal or special civil action or certiorari. There between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas.
is also forum shopping when a party institutes two or more actions or proceedings grounded on the same cause, on the gamble that one or the It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local governments deprivation of revenues. The
other court would make a favorable disposition.44 power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security
Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are not present in the cases at bar; however, as 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
already discussed, res judicata may be properly applied herein. Petitioners engaged in forum shopping when they filed G.R. Nos. 168557 and it.57 The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent
170628 after the petition for review in G.R. No. 165116. Indeed, petitioners went from one court to another trying to get a favorable decision with the State policy to guarantee the autonomy of local governments 58 and the objective of the Local Government Code that they enjoy
from one of the tribunals which allowed them to pursue their cases. genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them
It must be stressed that an important factor in determining the existence of forum shopping is the vexation caused to the courts and the effective partners in the attainment of national goals.59
parties-litigants by the filing of similar cases to claim substantially the same reliefs. 45 The rationale against forum shopping is that a party In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad
should not be allowed to pursue simultaneous remedies in two different fora. Filing multiple petitions or complaints constitutes abuse of court activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement
processes, which tends to degrade the administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of of peace, progress, and prosperity of the people.60
the heavily burdened dockets of the courts.46 WHEREFORE, the Petitions are DENIED and the assailed Decisions and Resolutions AFFIRMED.
Thus, there is forum shopping when there exist: (a) identity of parties, or at least such parties as represent the same interests in both actions, SO ORDERED.
(b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and (c) the identity of the two preceding ROMEO J. CALLEJO, SR.
particulars is such that any judgment rendered in the pending case, regardless of which party is successful, would amount to res judicata in Associate Justice
the other.47 WE CONCUR:
Having found that the elements of res judicata and forum shopping are present in the consolidated cases, a discussion of the other issues is CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ
no longer necessary. Nevertheless, for the peace and contentment of petitioners, we shall shed light on the merits of the case. Associate Justice Asscociate Justice
As found by the appellate court, the CBAA and LBAA power barges are real property and are thus subject to real property tax. This is also the MINITA V. CHICO-NAZARIO
inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax assessments by Associate Justice
tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving otherwise. 48 Besides, factual ATT E S TATI O N
findings of administrative bodies, which have acquired expertise in their field, are generally binding and conclusive upon the Court; we will not I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion
assume to interfere with the sensible exercise of the judgment of men especially trained in appraising property. Where the judicial mind is left of the Courts Division.
in doubt, it is a sound policy to leave the assessment undisturbed.49 We find no reason to depart from this rule in this case. CONSUELO YNARES-SANTIAGO
In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., 50 a power company brought an action to review Associate Justice
property tax assessment. On the citys motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas Chairperson
turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the A.M. No. 486-MJ September 13, 1977
accessory equipment mounted on the barges were subject to real property taxation. JOSE MARIA ANTONIO FERNANDEZ, complainant,
Moreover, Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which, though floating, are intended by their nature and vs.
object to remain at a fixed place on a river, lake, or coast" are considered immovable property. Thus, power barges are categorized as JUDGE JULIO PRESBITERO, Municipal Judge of Pulupandan, Negros Occidental, respondent.
immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work Noe C. Baja for the complainant.
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. 51 Juan M. Hagad for the respondent.
Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R.A. No. 7160 because they
are actually, directly and exclusively used by petitioner NPC, a government- owned and controlled corporation engaged in the supply, CONCEPCION JR., J.:
generation, and transmission of electric power. Administrative case against a municipal judge for grave misconduct, partiality, and oppression, for having conducted the preliminary
We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS, which in fine, is the entity being taxed examination of a criminal case at night, and at the private residence of a relative of the political opponent of the herein complainant's father,
by the local government. As stipulated under Section 2.11, Article 2 of the Agreement: about three (3) to four (4) kilometers from the town hall; thereafter issuing the warrant for the arrest of the complainant, knowing that the next
and succeeding clays are religious and public holidays when government and other offices are closed, thus precluding the seasonal filing of a At any rate, it "has always been stressed that judges should not only be impartial but should also appear impartial. For 'impartiality is not a
bail bond; and recommending the criminal prosecution of complainant's father who is not a party to the criminal case and had no opportunity to technical conception. It is a state of mind' and, consequently, the `appearance of impartiality is an essential manifestation of its reality.' It must
reexamine the witnesses. be obvious, therefore, that while judges should possess proficiency in law in order that they can competently construe and enforce the law, it is
The case was referred to the Executive Judge of the Court of First Instance of the province, for investigation, report and more important that they should act and behave in such a manner that the parties before them should have confidence in their impartially." 9
recommendation, 1 who, after a proper hearing, found the respondent judge guilty of partiality and recommended the suspension of the Here, the actuations of the respondent judge, in holding the preliminary examination of the criminal case in the residence of a relative of a
respondent judge from office for a period of two (2) months, without pay. 2 political opponent of the father of the accused, about three (3) to four (4) kilometers from the courthouse, at night, cannot but lead to a
The Judicial Consultant, however, recommends the imposition of a lesser penalty of reprimand, for the reason that respondent judge acted in suspicion of partiality. The respondent judge should have exercised due prudence in the discharge of his officials duties.
good faith. 3 WHEREFORE, judgment is hereby rendered ordering the respondent, Judge Julio V. Presbitero of the Municipal Court of Pulupandan Negros
The facts of the case are not disputed. It appears that a stabbing incident, involving herein complainant, Jose Maria Antonio Fernandez, son of Occidental, to pay a fine equivalent to his salary for two (2) months.
the incumbent Municipal Mayor Joaquin O. Fernandez, and one Francisco Bescaser, took place at Veraguth St., Pulupandan, Negros SO ORDERED.
Occidental, at about 9:00 o'clock in the evening of April 16, 1973. The next day, April 17, 1973, agents of the PC Criminal Investigation Service Barredo (Actg. Chairman), Antonio, Aquino and Santos, JJ., concur.
(CIS) investigated herein complainant Fernandez, after which complainant was sent home. Complainant, however, was directed not to leave
his house. LUIS MARCOS P. LAUREL, G.R. No. 155076
On the following day, April 18, 1973, Holy Wednesday, the CIS agents, together with Francisco Bescaser and the latter's witnesses, went to Petitioner,
the Municipal Court of Pulupandan to file a complaint for attempted murder against the herein complainant Fernandez. The respondent, Judge Present:
Julio V. Presbitero of the Municipal Court of Pulupandan Negros Occidental, was not in his office as, according to a clerk in the office of the Puno, C.J.,
Municipal Court, the respondent judge was then hearing a case in the Municipal Court of Murcia, Negros Occidental. At the suggestion of one Quisumbing,
Sgt. Yap, the group proceeded to the house of one Mario Pea, a relative of the political opponent of complainant's father, at Barrio Ubay, Ynares-Santiago,
Pulupandan about three (3) to four (4) kilometers from the town hall of Pulupandan. At about 5:45 o'clock that afternoon, the CIS team sent a Carpio,
man to fetch the respondent judge from his house at Barrio Palaka, Valladolid, Negros Occidental, and take him to the house of Mario Pea at - versus - Austria-Martinez,
Barrio Ubay because they were riling a case with the Municipal Court of Pulupandan. Corona,
The respondent judge arrived at the house of Mario Pea at about 6:30 o'clock that evening, together with his clerk, Miss Elsie P. Java, Carpio Morales,
bringing with him the Criminal Docket and Seal of the Municipal Court of Pulupandan. 4Upon arrival, the respondent judge was presented with Azcuna,
a copy of the criminal complaint and the affidavits of witnesses. Despite the fact that these affidavits 5 have been previously subscribed and Tinga,
sworn to before Asst. Provincial Fiscal Othello Amunategui, the respondent judge, with the help of his clerk, personally took anew the sworn Chico-Nazario,
statements of Francisco Bescaser and his witnesses. 6 The complaint was thereafter entered in the Docket as Crim. Case No. 1046, following Velasco, Jr.,
which the respondent judge issued a warrant for the arrest of the complainant and fixing the bail bond for his temporary release at P15,000.00. Nachura,
By virtue of the warrant, the herein complainant was arrested by CIS agents on April 19, Maundy Thursday of the Holy Week, and detained at Leonardo-De Castro, and
the PC Stockade at Bacolod City. Brion, JJ.
After the preliminary investigation of the case, a motion to dismiss the case was filed, which motion was duly opposed by the prosecution. In HON. ZEUS C. ABROGAR,
his Order, dated July 9, 1973,7 denying the said motion to dismiss the case, the respondent judge, relying upon the testimony of Francisco Presiding Judge of the Regional
Bescaser implicating Mayor Joaquin Fernandez in the killing of one Yanson, strongly recommended the investigation of said killing by Trial Court, Makati City, Branch 150,
investigative agencies of the government, finishing the Chief Justice, the Secretary of National Defense, the Secretary of Justice, and the PEOPLE OF THE PHILIPPINES Promulgated:
Executive Secretary with a copy of said order. & PHILIPPINE LONG DISTANCE
The respondent judge testifies his actions, saying that he wanted to conduct the preliminary examination of the criminal case against TELEPHONE COMPANY,
Fernandez in the courtroom during regular office hours and had told the CIS agents of his desire, but relented when he recalled that there Respondents. January 13, 2009
were no lights in the courtroom, and found soundness in the argument of the CIS agents of the urgency of the need for the warrant of arrest to
be issued that night in order to discontinue the harassment of the witnesses by the Mayor of Pulupandan. x ---------------------------------------------------------------------------------------- x
This contention may be valid if the criminal case was filed against the Mayor of Pulupandan for then the harassment of witnesses may cease
upon his arrest. The criminal case, however, is against the son of the mayor, whose arrest may not prevent the mayor from harassing the RESOLUTION
witnesses.
The respondent's act of vehemently recommending the investigation of the circumstances surrounding the death of one Yanson, contained in YNARES-SANTIAGO, J .:
the order of July 9, 1973, may also be considered an indication of respondent's partiality. His testimony before the Investigator in this regard, is
most revealing. He declared as follows:
BY THE COURT On February 27, 2006, this Courts First Division rendered judgment in this case as follows:
Q. Judge Presbitero, why is it in your order denying the motion to dismiss by accused Jose Maria Antonio Fernandez in Crim. Case No. 1046
issued on July 9, 1973, you have alluded to the municipal mayor of Pulupandan who was not the accused in that Crim. Case No. 1046? IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Orders of the Regional Trial Court and the Decision of the
A. Because in the motion, Your Honor, the integrity of the trying judge, Your Honor, was mentioned. So I have to answer those points, Your Court of Appeals are REVERSED and SET ASIDE. The Regional Trial Court is directed to issue an order granting the motion of the
Honor, in the motion filed by Atty. Benito. petitioner to quash the Amended Information.
Q. Why did you include, that?
A. But, Your Honor, I have to. SO ORDERED.[1]
Q. That shows that you have an axe to gripe against at the mayor?
A. But, Your Honor, precisely in that motion there was an allusion to the presiding judge as being antagonistic. I have to defend myself. By way of brief background, petitioner is one of the accused in Criminal Case No. 99-2425, filed with the Regional Trial Court of Makati City,
Q. But not in the kind of complaint? Branch 150.The Amended Information charged the accused with theft under Article 308 of the Revised Penal Code, committed as follows:
A. I was attacked, Your Honor, by the lawyer in his motion to dismiss. Naturally, I have to defend myself.
Q. Yes, you could have cited that lawyer but not in your order? On or about September 10-19, 1999, or prior thereto in Makati City, and within the jurisdiction of this Honorable Court, the accused, conspiring
A. Because these points were raised. 8 and confederating together and all of them mutually helping and aiding one another, with intent to gain and without the knowledge and consent
of the Philippine Long Distance Telephone (PLDT), did then and there willfully, unlawfully and feloniously take, steal and use the international
long distance calls belonging to PLDT by conducting International Simple Resale (ISR), which is a method of routing and completing subjects of theft. It noted that the cases of United States v. Genato,[3] United States v. Carlos[4] and United States v. Tambunting,[5] which
international long distance calls using lines, cables, antenae, and/or air wave frequency which connect directly to the local or domestic recognized intangible properties like gas and electricity as personal properties, are deemed incorporated in our penal laws. Moreover, the theft
exchange facilities of the country where the call is destined, effectively stealing this business from PLDT while using its facilities in the provision in the Revised Penal Code was deliberately couched in broad terms precisely to be all-encompassing and embracing even such
estimated amount of P20,370,651.92 to the damage and prejudice of PLDT, in the said amount. scenario that could not have been easily anticipated.

CONTRARY TO LAW.[2] According to the OSG, prosecution under Republic Act (RA) No. 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. The latter embraces
Petitioner filed a Motion to Quash (with Motion to Defer Arraignment), on the ground that the factual allegations in the Amended Information do unauthorized appropriation or use of PLDTs international calls, service and business, for personal profit or gain, to the prejudice of PLDT as
not constitute the felony of theft. The trial court denied the Motion to Quash the Amended Information, as well petitioners subsequent Motion owner thereof. On the other hand, the special laws punish the surreptitious and advanced technical means employed to illegally obtain the
for Reconsideration. subject service and business. Even assuming that the correct indictment should have been under RA 8484, the quashal of the information
would still not be proper. The charge of theft as alleged in the Information should be taken in relation to RA 8484 because it is the elements,
Petitioners special civil action for certiorari was dismissed by the Court of Appeals. Thus, petitioner filed the instant petition for review with this and not the designation of the crime, that control.
Court.
Considering the gravity and complexity of the novel questions of law involved in this case, the Special First Division resolved to refer the same
In the above-quoted Decision, this Court held that the Amended Information does not contain material allegations charging petitioner with theft to the Banc.
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. We resolve to grant the Motion for Reconsideration but remand the case to the trial court for proper clarification of the Amended Information.

Respondent Philippine Long Distance Telephone Company (PLDT) filed a Motion for Reconsideration with Motion to Refer the Case to the Article 308 of the Revised Penal Code provides:
Supreme Court En Banc. It maintains that the Amended Information charging petitioner with theft is valid and sufficient; that it states the
names of all the accused who were specifically charged with the crime of theft of PLDTs international calls and business of providing Art. 308. Who are liable for theft. Theft is committed by any person who, with intent to gain but without violence against, or intimidation of
telecommunication or telephone service on or about September 10 to 19, 1999 in Makati City by conducting ISR or International Simple persons nor force upon things, shall take personal property of another without the latters consent.
Resale; 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 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. The elements of theft under Article 308 of the Revised Penal Code are as follows: (1) that there be taking of personal property; (2) that said
property belongs to another; (3) that the taking be done with intent to gain; (4) that the taking be done without the consent of the owner; and
PLDT further insists that the Revised Penal Code should be interpreted in the context of the Civil Codes definition of real and personal (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon things.
property. The enumeration of real properties in Article 415 of the Civil Code is exclusive such that all those not included therein are personal
properties. Since Article 308 of the Revised Penal Code used the words personal property without qualification, it follows that all personal Prior to the passage of the Revised Penal Code on December 8, 1930, the definition of the term personal property in the penal code provision
properties as understood in the context of the Civil Code, may be the subject of theft under Article 308 of the Revised Penal Code. PLDT on theft had been established in Philippine jurisprudence. This Court, in United States v. Genato, United States v. Carlos, and United States v.
alleges that the international calls and business of providing telecommunication or telephone service are personal properties capable of Tambunting, consistently ruled that any personal property, tangible or intangible, corporeal or incorporeal, capable of appropriation can be the
appropriation and can be objects of theft. object of theft.

PLDT also argues that taking in relation to theft under the Revised Penal Code does not require asportation, the sole requisite being that the Moreover, since the passage of the Revised Penal Code on December 8, 1930, the term personal property has had a generally accepted
object should be capable of appropriation. The element of taking referred to in Article 308 of the Revised Penal Code means the act of definition in civil law. In Article 335 of the Civil Code of Spain, personal property is defined as anything susceptible of appropriation and not
depriving another of the possession and dominion of a movable coupled with the intention, at the time of the taking, of withholding it with the included in the foregoing chapter (not real property) . Thus, the term personal property in the Revised Penal Code should be interpreted in the
character of permanency. There must be intent to appropriate, which means to deprive the lawful owner of the thing. Thus, the term personal context of the Civil Code provisions in accordance with the rule on statutory construction that where words have been long used in a technical
properties under Article 308 of the Revised Penal Code is not limited to only personal properties which are susceptible of being severed from a sense and have been judicially construed to have a certain meaning, and have been adopted by the legislature as having a certain meaning
mass or larger quantity and of being transported from place to place. prior to a particular statute, in which they are used, the words used in such statute should be construed according to the sense in which they
have been previously used.[6] In fact, this Court used the Civil Code definition of personal property in interpreting the theft provision of the penal
PLDT likewise alleges that as early as the 1930s, international telephone calls were in existence; hence, there is no basis for this Courts code in United States v. Carlos.
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 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
Revised Penal Code. was being revised, still the legislature did not limit or qualify the definition of personal property in the Revised Penal Code. Neither did it
provide a restrictive definition or an exclusive enumeration of personal property in the Revised Penal Code, thereby showing its intent to retain
According to respondent, the international phone calls which are electric currents or sets of electric impulses transmitted through a medium, for the term an extensive and unqualified interpretation.Consequently, any property which is not included in the enumeration of real properties
and carry a pattern representing the human voice to a receiver, are personal properties which may be subject of theft. Article 416(3) of the Civil under the Civil Code and capable of appropriation can be the subject of theft under the Revised Penal Code.
Code deems forces of nature (which includes electricity) which are brought under the control by science, are personal 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. It need not be
In his Comment to PLDTs motion for reconsideration, petitioner Laurel claims that a telephone call is a conversation on the phone or a capable of asportation, which is defined as carrying away.[7] Jurisprudence is settled that to take under the theft provision of the penal code
communication carried out using the telephone. It is not synonymous to electric current or impulses. Hence, it may not be considered as does not require asportation or carrying away.[8]
personal property susceptible of appropriation.Petitioner claims that the analogy between generated electricity and telephone calls is
misplaced. PLDT does not produce or generate telephone calls. It only provides the facilities or services for the transmission and switching of To appropriate means to deprive the lawful owner of the thing.[9] The word take in the Revised Penal Code includes any act intended to transfer
the calls. He also insists that business is not personal property. It is not the business that is protected but the right to carry on a business. This possession which, as held in the assailed Decision, may be committed through the use of the offenders own hands, as well as any mechanical
right is what is considered as property. Since the services of PLDT cannot be considered as property, the same may not be subject of theft. device, such as an access device or card as in the instant case. This includes controlling the destination of the property stolen to deprive the
owner of the property, such as the use of a meter tampering, as held in Natividad v. Court of Appeals,[10] use of a device to fraudulently obtain
The Office of the Solicitor General (OSG) agrees with respondent PLDT that international phone calls and the business or service of providing gas, as held in United States v. Tambunting, and the use of a jumper to divert electricity, as held in the cases of United States v.
international phone calls are subsumed in the enumeration and definition of personal property under the Civil Code hence, may be proper Genato, United States v. Carlos, and United States v. Menagas.[11]
Interest in business was not specifically enumerated as personal property in the Civil Code in force at the time the above decision was
rendered. Yet, interest in business was declared to be personal property since it is capable of appropriation and not included in the
As illustrated in the above cases, appropriation of forces of nature which are brought under control by science such as electrical energy can be enumeration of real properties. Article 414 of the Civil Code provides that all things which are or may be the object of appropriation are
achieved by tampering with any apparatus used for generating or measuring such forces of nature, wrongfully redirecting such forces of nature considered either real property or personal property. Business is likewise not enumerated as personal property under the Civil Code. Just like
from such apparatus, or using any device to fraudulently obtain such forces of nature. In the instant case, petitioner was charged with interest in business, however, it may be appropriated. Following the ruling in Strochecker v. Ramirez, business should also be classified as
engaging in International Simple Resale (ISR) or the unauthorized routing and completing of international long distance calls using lines, personal property. Since it is not included in the exclusive enumeration of real properties under Article 415, it is therefore personal property.[13]
cables, antennae, and/or air wave frequency and connecting these calls directly to the local or domestic exchange facilities of the country
where destined. As can be clearly gleaned from the above disquisitions, petitioners acts constitute theft of respondent PLDTs business and service, committed
by means of the unlawful use of the latters facilities. In this regard, the Amended Information inaccurately describes the offense by making it
As early as 1910, the Court declared in Genato that ownership over electricity (which an international long distance call consists of), as well appear that what petitioner took were the international long distance telephone calls, rather than respondent PLDTs business.
as telephone service, is protected by the provisions on theft of the Penal Code. The pertinent provision of the Revised Ordinance of the City
of Manila, which was involved in the said case, reads as follows: A perusal of the records of this case readily reveals that petitioner and respondent PLDT extensively discussed the issue of ownership of
telephone calls. The prosecution has taken the position that said telephone calls belong to respondent PLDT. This is evident from its Comment
Injury to electric apparatus; Tapping current; Evidence. No person shall destroy, mutilate, deface, or otherwise injure or tamper with any wire, where it defined the issue of this case as whether or not the unauthorized use or appropriation of PLDT international telephone calls, service
meter, or other apparatus installed or used for generating, containing, conducting, or measuring electricity, telegraph or telephone service, nor and facilities, for the purpose of generating personal profit or gain that should have otherwise belonged to PLDT, constitutes theft. [14]
tap or otherwise wrongfully deflect or take any electric current from such wire, meter, or other apparatus.
In discussing the issue of ownership, petitioner and respondent PLDT gave their respective explanations on how a telephone call is generated.
[15]
No person shall, for any purpose whatsoever, use or enjoy the benefits of any device by means of which he may fraudulently obtain any For its part, respondent PLDT explains the process of generating a telephone call as follows:
current of electricity or any telegraph or telephone service; and the existence in any building premises of any such device shall, in the absence
of satisfactory explanation, be deemed sufficient evidence of such use by the persons benefiting thereby. 38. The role of telecommunication companies is not limited to merely providing the medium (i.e. the electric current) through which the human
voice/voice signal of the caller is transmitted. Before the human voice/voice signal can be so transmitted, a telecommunication company, using
its facilities, must first break down or decode the human voice/voice signal into electronic impulses and subject the same to further
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 augmentation and enhancements. Only after such process of conversion will the resulting electronic impulses be transmitted by a
Penal Code then in force, thus: telecommunication company, again, through the use of its facilities. Upon reaching the destination of the call, 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. In other
Even without them (ordinance), the right of the ownership of electric current is secured by articles 517 and 518 of the Penal Code; the words, a telecommunication company both converts/reconverts the human voice/voice signal and provides the medium for transmitting the
application of these articles in cases of subtraction of gas, a fluid used for lighting, and in some respects resembling electricity, is confirmed by same.
the rule laid down in the decisions of the supreme court of Spain of January 20, 1887, and April 1, 1897, construing and enforcing the
provisions of articles 530 and 531 of the Penal Code of that country, articles 517 and 518 of the code in force in these islands. 39. Moreover, in the case of an international telephone call, once the electronic impulses originating from a foreign telecommunication
company country (i.e. Japan) reaches the Philippines through a local telecommunication company (i.e. private respondent PLDT), it is the
The acts of subtraction include: (a) tampering with any wire, meter, or other apparatus installed or used for generating, containing, conducting, latter which decodes, augments and enhances the electronic impulses back to the human voice/voice signal and provides the medium (i.e.
or measuring electricity, telegraph or telephone service; (b) tapping or otherwise wrongfully deflecting or taking any electric current from such electric current) to enable the called party to receive the call. Thus, it is not true that the foreign telecommunication company provides (1) the
wire, meter, or other apparatus; and (c) using or enjoying the benefits of any device by means of which one may fraudulently obtain any 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
current of electricity or any telegraph or telephone service. voice/voice signal.

In the instant case, the act of conducting ISR operations by illegally connecting various equipment or apparatus to private respondent PLDTs 40. Thus, contrary to petitioner Laurels assertion, once the electronic impulses or electric current originating from a foreign telecommunication
telephone system, through which petitioner is able to resell or re-route international long distance calls using respondent PLDTs facilities company (i.e. Japan) reaches private respondent PLDTs network, it is private respondent PLDT which decodes, augments and enhances the
constitutes all three acts of subtraction mentioned above. electronic impulses back to the human voice/voice signal and provides the medium (i.e. electric current) to enable the called party to receive
the call. Without private respondent PLDTs network, the human voice/voice signal of the calling party will never reach the called party.[16]
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. Business may be appropriated under Section 2 of Act No. 3952 (Bulk Sales Law), hence, could be object of
theft: In the assailed Decision, it was conceded that in making the international phone calls, the human voice is converted into electrical impulses or
electric current which are transmitted to the party called. A telephone call, therefore, is electrical energy. It was also held in the assailed
Section 2. Any sale, transfer, mortgage, or assignment of a stock of goods, wares, merchandise, provisions, or materials otherwise than in the Decision that intangible property such as electrical energy is capable of appropriation because it may be taken and carried away. Electricity is
ordinary course of trade and the regular prosecution of the business of the vendor, mortgagor, transferor, or assignor, or any sale, transfer, personal property under Article 416 (3) of the Civil Code, which enumerates forces of nature which are brought under control by science. [17]
mortgage, or assignment of all, or substantially all, of the business or trade theretofore conducted by the vendor, mortgagor, transferor or
assignor, or all, or substantially all, of the fixtures and equipment used in and about the business of the vendor, mortgagor, transferor, or Indeed, while it may be conceded that international long distance calls, the matter alleged to be stolen in the instant case, take the form of
assignor, shall be deemed to be a sale and transfer in bulk, in contemplation of the Act. x x x. electrical energy, 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.PLDT merely encodes, augments, enhances, decodes and transmits said calls using its complex
communications infrastructure and facilities. PLDT not being the owner of said telephone calls, then it could not validly claim that such
In Strochecker v. Ramirez,[12] this Court stated: telephone calls were taken without its consent. It is the use of these communications facilities without the consent of PLDT that constitutes the
crime of theft, which is the unlawful taking of the telephone services and business.
With regard to the nature of the property thus mortgaged which is one-half interest in the business above described, 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, and may be the Therefore, the business of providing telecommunication and the telephone service are personal property under Article 308 of the Revised
subject of mortgage. Penal Code, and the act of engaging in ISR is an act of subtraction penalized under said article. However, the Amended Information describes
the thing taken as, international long distance calls, and only later mentions stealing the business from PLDT as the manner by which the gain
was derived by the accused. In order to correct this inaccuracy of description, this case must be remanded to the trial court and the
prosecution directed to amend the Amended Information, to clearly state that the property subject of the theft are the services and business of
respondent PLDT. Parenthetically, this amendment is not necessitated by a mistake in charging the proper offense, which would have called (a) P6,757.40, the value of the sugar cane;
for the dismissal of the information under Rule 110, Section 14 and Rule 119, Section 19 of the Revised Rules on Criminal Procedure. To be (b) 1,435.68, the value of the sugar-cane shoots;
sure, the crime is properly designated as one of theft. The purpose of the amendment is simply to ensure that the accused is fully and (c) 646.00, the value of palay harvested by plaintiff;
sufficiently apprised of the nature and cause of the charge against him, and thus guaranteed of his rights under the Constitution. (d) 600.00, the value of 150 cavans of palay which the defendant was not able to raise by reason of the injunction, at P4 cavan. 9,439.08 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
ACCORDINGLY, the motion for reconsideration is GRANTED. The assailed Decision dated February 27, 2006 is RECONSIDERED and question was personal property and, therefore, not subject to redemption;
SET ASIDE.The Decision of the Court of Appeals in CA-G.R. SP No. 68841 affirming the Order issued by Judge Zeus C. Abrogar of the (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
Regional Trial Court of Makati City, Branch 150, which denied the Motion to Quash (With Motion to Defer Arraignment) in Criminal Case No. Valdez;
99-2425 for theft, is AFFIRMED. The case is remanded to the trial court and the Public Prosecutor of Makati City is hereby DIRECTED to (3) In holding that Valdez, by reason of the preliminary injunction failed to realized P6,757.40 from the sugar cane and P1,435.68 from sugar-
amend the Amended Information to show that the property subject of the theft were services and business of the private offended party. cane shoots (puntas de cana 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
SO ORDERED. 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:
G.R. No. L-26278 August 4, 1927 (1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue of writ of execution in civil case No. 20203 of the Court of First
LEON SIBAL , plaintiff-appellant, Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an attachment on eight parcels of land belonging to said Leon Sibal, situated
vs. in the Province of Tarlac, designated in the second of attachment as parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
EMILIANO J. VALDEZ ET AL., defendants. (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,
EMILIANO J. VALDEZ, appellee. for the sum to P4,273.93, having paid for the said parcels separately as follows (Exhibit C, and 2-A):
J. E. Blanco for appellant.
Felix B. Bautista and Santos and Benitez for appellee. Parcel
JOHNSON, J.:
The 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 1 ..................................................................... P1.00
conflicting as it is possible for facts to be, in the trial 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 2 ..................................................................... 2,000.00
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 3 ..................................................................... 120.93
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 4 ..................................................................... 1,000.00
the purchase, and the interest corresponding thereto and that Valdez refused to accept the money and to return the sugar cane to the plaintiff.
5 ..................................................................... 1.00
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 6 ..................................................................... 1.00
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 7 with the house thereon .......................... 150.00
them (1) from distributing 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 8 ..................................................................... 1,000.00
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 4,273.93
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 (3) That within one year from the sale of said parcel of land, and on the 24th day of September, 1923, the judgment debtor, Leon Sibal, paid
step up the following defenses: P2,000 to Macondray & Co., Inc., for the account of the redemption price of said parcels of land, without specifying the particular parcels to
(a) That the sugar cane in question had the nature of personal property and was not, therefore, subject to redemption; which said amount was to applied. The redemption price said eight parcels was reduced, by virtue of said transaction, to P2,579.97 including
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause of action of the complaint; interest (Exhibit C and 2).
(c) That he was the owner of the palay in parcels 1, 2 and 7; and The record further shows:
(d) That he never attempted to harvest the palay in parcels 4 and 5. (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
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason of the preliminary injunction he was unable to gather the case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1. the same parties in the present case), attached the
sugar cane, sugar-cane shoots (puntas de cana dulce) palay in said parcels of land, representing a loss to him of P8,375.20 and that, in 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
addition thereto, he suffered damages amounting to P3,458.56. He prayed, for a judgment (1) absolving him from all liability under the described in the complaint (Exhibit A).
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 (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
plaintiff to pay to him the sum of P11,833.76, representing the value of the sugar cane and palay in question, including damages. question to Emilio J. Valdez, who paid therefor the sum of P1,550, of which P600 was for the sugar cane (Exhibit A).
Upon the issues thus presented by the pleadings the cause was brought on for trial. After hearing the evidence, and on April 28, 1926, the (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,
Honorable Cayetano Lukban, judge, rendered a judgment against the plaintiff and in favor of the defendants including all of his rights, interest and participation therein, which real property consisted of eleven parcels of land and a house and camarin
(1) Holding that the sugar cane in question was personal property and, as such, was not subject to redemption; situated in one of said parcels (Exhibit A).
(2) Absolving the defendants from all liability under the complaint; and (4) That on June 25, 1924, eight of said eleven parcels, including the house and the camarin, were bought by Emilio J. Valdez at the auction
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal to jointly and severally pay to the defendant 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.
Emiliano J. Valdez the sum of P9,439.08 as follows: 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 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
virtue of claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A). 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
(6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in 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
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 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
of First Instance of Manila, as stated above. Said amount represented the unpaid balance of the redemption price of said eight parcels, after privilege. The law cannot be construed so as to result in such absurd consequences.
payment by Leon Sibal of P2,000 on September 24, 1923, fro the account of the redemption price, as stated above. (Exhibit C and 2). In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
The foregoing statement of facts shows: 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
(1) The Emilio J. Valdez bought the sugar cane in question, located in the seven parcels of land described in the first cause of action of the render the pledge of the crop objects of the act, it would render the pledge of the crop impossible, for if the crop was an inseparable part of the
complaint at public auction on May 9 and 10, 1924, for P600. 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
(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 "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
Sibal and that on September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 for the account of the redemption price of said parcels. 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
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all of its rights and interest in the said eight parcels of land. 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
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and interest which Leon Sibal had or might have had on said eight 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
parcels by virtue of the P2,000 paid by the latter to Macondray. on the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired
(5) That Emilio J. Valdez became the absolute owner of said eight parcels of land. thereon. The provision of our Code is identical with the Napoleon Code 520, and we may therefore obtain light by an examination of the
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 jurisprudence of France.
comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of The rule above announced, not only by the Tribunal Supremo de Espaa but by the Supreme Court of Louisiana, is followed in practically
article 334 enumerates as real property the following: Trees, plants, and ungathered products, while they are annexed to the land or form an every state of the Union.
integral part of any immovable property." That article, however, has received in recent years an interpretation by the Tribunal Supremo de From an examination of the reports and codes of the State of California and other states we find that the settle doctrine followed in said states
Espaa, which holds that, under certain conditions, growing crops may be considered as personal property. (Decision of March 18, 1904, vol. in connection with the attachment of property and execution of judgment is, that growing crops raised by yearly labor and cultivation are
97, Civil Jurisprudence of Spain.) considered personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254;
Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil Code, in view of the recent decisions of 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;
the supreme Court of Spain, admits that growing crops are sometimes considered and treated as personal property. He says: 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;
No creemos, sin embargo, que esto excluya la excepcionque muchos autores hacen tocante a la venta de toda cosecha o de parte de ella Drake on Attachment, sec. 249; Mechem on Sales, sec. 200 and 763.)
cuando aun no esta cogida (cosa frecuente con la uvay y la naranja), y a la de lenas, considerando ambas como muebles. El Tribunal 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
Supremo, en sentencia de 18 de marzo de 1904, al entender sobre un contrato de arrendamiento de un predio rustico, resuelve que su existence as the natural increment or usual incident of something already in existence, and then belonging to the vendor, and then title will
terminacion por desahucio no extingue los derechos del arrendario, para recolectar o percibir los frutos correspondientes al ao agricola, vest in the buyer the moment the thing comes into existence. (Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers
dentro del que nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el importe de la renta integra correspondiente, aun 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
cuando lo haya sido por precepto legal durante el curso del juicio, fundandose para ello, no solo en que de otra suerte se daria al desahucio and not actually possessed. He may make a valid sale of the wine that a vineyard is expected to produce; or the gain a field may grow in a
un alcance que no tiene, sino en que, y esto es lo interesante a nuestro proposito, la consideracion de inmuebles que el articulo 334 del 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
Codigo Civil atribuge a los frutos pendientes, no les priva del caracter de productos pertenecientes, como tales, a quienes a ellos tenga 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,
derecho, Ilegado el momento de su recoleccion. 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].)
xxx xxx xxx 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
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria, publicada en 16 de diciembre de 1909, con las reformas introducidas Civil Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the property of a judgment debtor which
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 may be subjected to execution. The pertinent portion of said section reads as follows: "All goods, chattels, moneys, and other property, both
obligacion que garantice, no comprende los frutos cualquiera que sea la situacion en que se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.) 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
From the foregoing it appears (1) that, under Spanish authorities, pending fruits and ungathered products may be sold and transferred as the execution of judgment were taken from the Code of Civil Procedure of California. The Supreme Court of California, under section 688 of
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 the Code of Civil Procedure of that state (Pomeroy, p. 424) has held, without variation, that growing crops were personal property and subject
entitled to gather the products corresponding to the agricultural year, because said fruits did not go with the land but belonged separately to to execution.
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 Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property. Section 2 of said Act provides: "All
products existing thereon, unless the contract expressly provides otherwise. personal property shall be subject to mortgage, agreeably to the provisions of this Act, and a mortgage executed in pursuance thereof shall be
An examination of the decisions of the Supreme Court of Louisiana may give us some light on the question which we are discussing. Article termed a chattel mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an agreement stipulating
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 that the mortgagor binds himself properly to tend, care for and protect the crop while growing.
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 It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing crops" are personal property. This
attached." consideration tends to support the conclusion hereinbefore stated, that paragraph 2 of article 334 of the Civil Code has been modified by
The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases "standing crops" may be considered and 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
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 nature of personal property. In other words, the phrase "personal property" should be understood to include "ungathered products."
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 At common law, and generally in the United States, all annual crops which are raised by yearly manurance and labor, and essentially owe their
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 annual existence to cultivation by man, . may be levied on as personal property." (23 C. J., p. 329.) On this question Freeman, in his treatise
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 on the Law of Executions, says: "Crops, whether growing or standing in the field ready to be harvested, are, when produced by annual
growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired therein. 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
Our jurisprudence recognizes the possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 and sold under execution. (Freeman on Executions, vol. p. 438.)
La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.) 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
"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 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,
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 "ungathered products" have the nature of personal property. The lower court, therefore, committed no error in holding that the sugar cane in
an immovable gathered or produced while it is under seizure are considered as making part thereof, and incurred to the benefit of the person question was personal property and, as such, was not subject to redemption.
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 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
immovable, and where it is seized, the fruits gathered or produced inure to the benefit of the seizing creditor. 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 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
evidence then presented for the defense. the litigation. He expected to have raised about 600 cavans of palay, 300 cavans of which would have corresponded to him as owner. The
Coming not 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 lower court has wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would have netted him P600.
show that said two parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was excluded from the attachment and sale of In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and
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 Marcos Sibal are hereby ordered to pay to the defendant jointly and severally the sum of P8,900.80, instead of P9,439.08 allowed by the lower
sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will readily show that they are not the same. court, as follows:
The description of the parcels in the complaint is as follows: P6,757.40 for the sugar cane;
1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. en una parcela de terreno de la pertenencia del citado ejecutado,
situada en Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o menos de superficie. 1,220.40 for the sugar cane shoots;
2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1., Ilamado Alejandro Policarpio, en una parcela de terreno de la
pertenencia del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos hectareas de superficie poco mas o menos." The 323.00 for the palay harvested by plaintiff in parcels 1 and 2;
description of parcel 2 given in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090 metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban 600.00 for the palay which defendant could have raised.
Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mau and others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mau;
y al O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador 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 8,900.80
bought by Valdez from Macondray on June 25, 1924, and corresponded to parcel 4 in the deed of sale (Exhibit 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 all other respects, the judgment appealed from is hereby affirmed, with costs. So ordered.
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:
Street, Malcolm, Villamor, Romualdez and Villa-Real., JJ., concur.
Parcels No. 4. Terreno palayero, ubicado en el barrio de Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados de superficie,
G.R. No. 18520 September 26, 1922
lindante al Norte con Road of the barrio of Culubasa that goes to Concepcion; al Este con Juan Dizon; al Sur con Lucio Mao y Canuto Sibal y
INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, appellee,
al Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de P2,990. Tax No. 2856.
vs.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A).
ILDEFONSO RAMIREZ, creditor and appellant.
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
WILLIAM EDMONDS, assignee.
the evidence adduced by him that to the evidence adduced by the plaintiff, with respect to the ownership of parcels 1 and 2 of the compliant.
Lim & Lim for appellant.
We, therefore, conclude that parcels 1 and 2 of the complaint belong to the defendant, having acquired the same from Macondray & Co. on
Ross & Lawrence and Antonio T. Carrascoso, jr., for the Fidelity & Surety Co.
June 25, 1924, and from the plaintiff Leon Sibal on the same date.
ROMUALDEZ, J.:
It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190 cavans. There being no evidence of bad
The question at issue in this appeal is, which of the two mortgages here in question must be given preference? Is it the one in favor of the
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
Fidelity & Surety Co., or that in favor of Ildefonso Ramirez. The first was declared by the trial court to be entitled to preference.
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.
In the lower court there were three mortgagees each of whom claimed preference. They were the two above mentioned and Concepcion
As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel corresponds to parcel 1 of the deed of sale of Macondray
Ayala. The latter's claim was rejected by the trial court, and from that ruling she did not appeal.
& Co, to Valdez (Exhibit B and 2), and to parcel 4 in the certificate of sale to Valdez of real property belonging to Sibal, executed by the sheriff
There is no question as to the priority in time of the mortgage in favor of the Fidelity & Surety Co. which was executed on March 10, 1919, and
as above stated (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the interest of both Macondray and Sibal in
registered in due time in the registry of property, that in favor of the appellant being dated September 22, 1919, and registered also in the
said parcel.
registry.
With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the second cause of action, it appears from the testimony
The appellant claims preference on these grounds: ( a) That the first mortgage above-mentioned is not valid because the property which is the
of the plaintiff himself that said parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in
subject-matter thereof is not capable of being mortgaged, and the description of said property is not sufficient; and ( b) that the amount due the
the deed of sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired
appellant is a purchase price, citing article 1922 of the Civil Code in support thereof, and that his mortgage is but a modification of the security
the interest of both Macondray and Sibal therein.
given by the debtor on February 15, 1919, that is, prior to the mortgage executed in favor of the Fidelity & Surety Co.
In this connection the following facts are worthy of mention:
As to the first ground, the thing that was mortgaged to this corporation is described in the document as follows:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were attached under said execution. Said parcels of land were
. . . his half interest in the drug business known as Antigua Botica Ramirez (owned by Srta. Dolores del Rosario and the mortgagor herein
sold to Macondray & Co. on the 30th day of July, 1923. Rice paid P4,273.93. On September 24, 1923, Leon Sibal paid to Macondray & Co.
referred to as the partnership), located at Calle Real Nos. 123 and 125, District of Intramuros, Manila, Philippine Islands.
P2,000 on the redemption of said parcels of land. (See Exhibits B and C ).
With regard to the nature of the property thus mortgaged, which is one-half interest in the business above described, such interest is a
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached, including the sugar cane in question. (Exhibit A) The
personal property capable of appropriation and not included in the enumeration of real properties in article 335 of the Civil Code, and may be
said personal property so attached, sold at public auction May 9 and 10, 1924. April 29, 1924, the real property was attached under the
the subject of mortgage. All personal property may be mortgaged. (Sec. 2, Act No. 1508.)
execution in favor of Valdez (Exhibit A). June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).
The description contained in the document is sufficient. The law (sec. 7, Act No. 1508) requires only a description of the following nature:
June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public auction on the 30th day of July, 1923, to Valdez.
The description of the mortgaged property shall be such as to enable the parties to the mortgage, or any other person, after reasonable inquiry
As to the loss of the defendant in sugar cane by reason of the injunction, the evidence shows that the sugar cane in question covered an area
and investigation, to identify the same.
of 22 hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have yielded an average crop of 1039 picos and 60 cates; that one-
Turning to the second error assigned, numbers 1, 2, and 3 of article 1922 of the Civil Code invoked by the appellant are not applicable. Neither
half of the quantity, or 519 picos and 80 cates would have corresponded to the defendant, as owner; that during the season the sugar was
he, as debtor, nor the debtor himself, is in possession of the property mortgaged, which is, and since the registration of the mortgage has
selling at P13 a pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would have netted P 6,757.40 from the sugar cane in question.
been, legally in possession of the Fidelity & Surety Co. (Sec. 4, Act No. 1508; Meyers vs. Thein, 15 Phil., 303.)
The evidence also shows that the defendant could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas de cana) and not
In no way can the mortgage executed in favor of the appellant on September 22, 1919, be given effect as of February 15, 1919, the date of the
1,170,000 as computed by the lower court. During the season the shoots were selling at P1.20 a thousand (Exhibits 6 and 7). The defendant
sale of the drug store in question. On the 15th of February of that year, there was a stipulation about a persons security, but not a mortgage
therefore would have netted P1,220.40 from sugar-cane shoots and not P1,435.68 as allowed by the lower court.
upon any property, and much less upon the property in question.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting to 190 cavans, one-half of said quantity should belong
Moreover, the appellant cannot deny the preferential character of the mortgage in favor of the Fidelity & Surety Co. because in the very
to the plaintiff, as stated above, and the other half to the defendant. The court erred in awarding the whole crop to the defendant. The plaintiff
document executed in his favor it was stated that his mortgage was a second mortgage, subordinate to the one made in favor of the Fidelity &
should therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as allowed by the lower court.
Surety Co.
The judgment appealed from is affirmed with costs against the appellant. So ordered.
Araullo, C.J., Street, Malcolm, Avancea, Villamor, Ostrand and Johns, JJ., concur.
GR. No. 197472 More significantly, at the time that Proc. No. 201 was issued on May 22, 1967, [Rev. Cortez] has not perfected his right over the 50 hectares of
REPUBLIC OF THE PHILIPPINES, represented by Commander Raymond Alpuerto of the Naval Base Camillo Osias, Port San land nor acquired any vested right thereto considering that he only occupied the land as alleged by him in 1962 or barely five (5) years before
Vicente, Sta. Ana, Cagayan, Petitioner, the issuance of the Presidential Proclamation. Proclamation No. 201 had the effect of removing Palaui Island from the alienable or disposable
vs. portion of the public domain and therefore the island, as of the date of [the] issuance [of the proclamation], has ceased to be disposable public
REV. CLAUDIO R. CORTEZ, SR., Respondent. land.
DECISION However, the court is not unmindful that [Rev. Cortez] has lawfully possessed and occupied at least five (5) hectares of land situated at the
DEL CASTILLO, J.: western portion of the Palaui Island identified as Exh "H-4". During the hearing, Cmdr.
An inalienable public land cannot be appropriated and thus may not be the proper object of possession. Hence, injunction cannot be issued in Rogelio Bias admitted that when he was assigned as Commanding Officer in December 1999, he went to Palaui Island and [saw only] two (2)
order to protect ones alleged right of possession over the same. baluga families tilling the land consisting of five (5) hectares. Therefore, it cannot be seriously disputed that [Rev. Cortez] and his baluga
This Petition for Review on Certiorari1 assails the June 29, 2011 Decision2 of the Court of Appeals (CA) in CA-GR. CV No. 89968, which tribesmen cleared five (5) hectares of land for planting and cultivation since 1962 on the western portion identified as Exhibit "H-4". The
dismissed the appeal therewith and affirmed the July 3, 2007 Decision 3 of the Regional Trial Court (RTC) of Aparri, Cagayan, Branch 8 in Spl. Philippine Navy also admitted that they have no objection to settlers of the land prior to the Presidential Proclamation and [Rev. Cortez] had
Civil Action Case No. II-2403. been identified as one of the early settlers of the area before the Presidential Proclamation. The DENR also acknowledged that [Rev. Cortez]
Factual Antecedents has filed an application for patent on the western area and that he must be allowed to pursue his claim.
Respondent Rev. Claudio R. Cortez, Sr. (Rev. Cortez), a missionary by vocation engaged in humanitarian and charitable activities, established Although the court is not persuaded by the argument of [Rev. Cortez] that he has already acquired vested rights over the area claimed by him,
an orphanage and school in Punta Verde, Palaui Island, San Vicente, Sta. Ana, Cagayan. He claimed that since 1962, he has been in peaceful the court must recognize that [Rev. Cortez] may have acquired some propriety rights over the area considering the directive of the DENR to
possession of about 50 hectares of land located in the western portion of Palaui Island in Sitio Siwangag, Sta. Ana, Cagayan which he, with allow [Rev. Cortez] to pursue his application for patent. However, the court wants to make clear that the application for patent by [Rev. Cortez]
the help of Aetas and other people under his care, cleared and developed for agricultural purposes in order to support his charitable, should be limited to an area not to exceed five (5) hectares situated at the western portion of x x x Palaui Island identified in the sketch map as
humanitarian and missionary works.4 Exh. "H-4." This area appears to be the portion where [Rev. Cortez] has clearly established his right or title by reason of his long possession
On May 22, 1967, President Ferdinand E. Marcos issued Proclamation No. 201 reserving for military purposes a parcel of the public domain and occupation of the land.9
situated in Palaui Island. Pursuant thereto, 2,000 hectares of the southern half portion of the Palaui Island were withdrawn from sale or In his Answer,10 Bias countered that: (1) Rev. Cortez has not proven that he has been in exclusive, open, continuous and adverse possession
settlement and reserved for the use of the Philippine Navy, subject, however, to private rights if there be any. of the disputed land in the concept of an owner; (2) Rev. Cortez has not shown the exact boundaries and identification of the entire lot claimed
More than two decades later or on August 16, 1994, President Fidel V. Ramos issued Proclamation No. 447 declaring Palaui Island and the by him; (3) Rev. Cortez has not substantiated his claim of exemption from Proclamation No. 201; (4) under Proclamation No. 447, the entire
surrounding waters situated in the Municipality of Sta. Ana, Cagayan as marine reserve. Again subject to any private rights, the entire Palaui Palaui Island, which includes the land allegedly possessed and occupied by Rev. Cortez, was reserved as a marine protected area; and, (4)
Island consisting of an aggregate area of 7,415.48 hectares was accordingly reserved as a marine protected area. injunction is not a mode to wrest possession of a property from one person by another.
On June 13, 2000, Rev. Cortez filed a Petition for Injunction with Prayer for the Issuance of a Writ of Preliminary Mandatory Injunction 5 against Pre-trial and trial thereafter ensued.
Rogelio C. Bias (Bias) in his capacity as Commanding Officer of the Philippine Naval Command in Port San Vicente, Sta. Ana, On July 3, 2007, the RTC rendered its Decision11 making the injunction final and permanent. In so ruling, the said court made reference to the
Cagayan.1wphi1 According to him, some members of the Philippine Navy, upon orders of Bias, disturbed his peaceful and lawful Indigenous Peoples [Right] Act (IPRA) as follows:
possession of the said 50-hectare portion of Palaui Island when on March 15, 2000, they commanded him and his men, through the use of The Indigenous [Peoples Right] Act should be given effect in this case. The affected community belongs to the group of indigenous people
force and intimidation, to vacate the area. When he sought assistance from the Office of the Philippine Naval Command, he was met with which are protected by the State of their rights to continue in their possession of the lands they have been tilling since time immemorial. No
sarcastic remarks and threatened with drastic military action if they do not vacate. Thus, Rev. Cortez and his men were constrained to leave subsequent passage of law or presidential decrees can alienate them from the land they are tilling.12
the area. In view of these, Rev. Cortez filed the said Petition with the RTC seeking preliminary mandatory injunction ordering Bias to restore Ultimately, the RTC held, thus:
to him possession and to not disturb the same, and further, for the said preliminary writ, if issued, to be made permanent. WHEREFORE, finding the petition to be meritorious, the same is hereby GRANTED.
Proceedings before the Regional Trial Court xxxx
After the conduct of hearing on the application for preliminary mandatory injunction6 and the parties submission of their respective SO DECIDED.13
memoranda,7 the RTC issued an Order8 dated February 21, 2002 granting the application for a writ of preliminary mandatory injunction. Representing Bias, the Office of the Solicitor General (OSG) filed a Notice of Appeal 14 which was given due course by the RTC in an
However, the same pertained to five hectares (subject area) only, not to the whole 50 hectares claimed to have been occupied by Rev. Order15 dated August 6, 2007.
Cortez, viz.: Ruling of the Court of Appeals
It should be noted that the claim of [Rev. Cortez] covers an area of 50 hectares more or less located at the western portion of Palaui Island In its brief,16 the OSG pointed out that Rev. Cortez admitted during trial that he filed the Petition for injunction on behalf of the indigenous
which is within the Naval reservation. [Rev. Cortez] presented what he called as a survey map (Exh. "H") indicating the location of the area cultural communities in Palaui Island and not in his capacity as pastor or missionary of the Church of the Living God. He also claimed that he
claimed by the Church of the Living God and/or Rev. Claudio Cortez with an approximate area of 50 hectares identified as Exh. "H-4". has no interest over the land. Based on these admissions, the OSG argued that the Petition should have been dismissed outright on the
However, the Survey Map allegedly prepared by [a] DENR personnel is only a sketch map[,] not a survey map as claimed by [Rev. Cortez]. grounds that it did not include the name of the indigenous cultural communities that Rev. Cortez is supposedly representing and that the latter
Likewise, the exact boundaries of the area [are] not specifically indicated. The sketch only shows some lines without indicating the exact is not the real party-in-interest. In any case, the OSG averred that Rev. Cortez failed to show that he is entitled to the issuance of the writ of
boundaries of the 50 hectares claimed by [Rev. Cortez]. As such, the identification of the area and its exact boundaries have not been clearly injunction. Moreover, the OSG questioned the RTCs reference to the IPRA and argued that it is not applicable to the present case since Rev.
defined and delineated in the sketch map. Therefore, the area of 50 hectares that [Rev. Cortez] claimed to have peacefully and lawfully Cortez neither alleged in his Petition that he is claiming rights under the said act nor was there any showing that he is a member of the
possessed for the last 38 years cannot reasonably be determined or accurately identified. Indigenous Cultural Communities and/or the Indigenous Peoples as defined under the IPRA.
For this reason, there is merit to the contention of [Bias] that [Rev. Cortez] claim to the 50 hectares of land identified as Exh. ["]H-4" is In its Decision17 dated June 29, 2011, the CA upheld the RTCs issuance of a final injunction based on the following ratiocination:
unclear and ambiguous. It is a settled jurisprudence that mandatory injunction is the strong arm of equity that never ought to be extended The requisites necesary for the issuance of a writ of preliminary injunction are: (1) the existence of a clear and unmistakable right that must be
unless to cases of great injury, where courts of law cannot afford an adequate and commensurate remedy in damages. The right must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage. Here, [Rev. Cortez] has shown the existence of
clear, the injury impending or threatened, so as to be averted only by the protecting preventive process of injunction. The reason for this a clear and unmistakable right that must be protected and an urgent and paramount necessity for the writ to prevent serious damage. Records
doctrine is that before the issue of ownership is determined in the light of the evidence presented, justice and equity demand that the [ status reveal that [Rev. Cortez] has been in peaceful possession and occupation of the western portion of Palaui Island, Sitio Siwangag, San Vicente,
quo be maintained] so that no advantage may be given to one to the prejudice of the other. And so it was ruled that unless there is a clear Sta. Ana[,] Cagayan since 1962 or prior to the issuance of Proclamation Nos. 201 and 447 in 1967 and 1994, respectively. There he built an
pronouncement regarding ownership and possession of the land, or unless the land is covered by the torrens title pointing to one of the parties orphanage and a school for the benefit of the members of the Dumagat Tribe, in furtherance of his missionary and charitable works. There
as the undisputed owner, a writ of preliminary injunction should not issue to take the property out of possession of one party to place it in the exists a clear and unmistakable right in favor [of Rev. Cortez] since he has been in open, continuous and notorious possession of a portion of
hands of another x x x. Palaui island. To deny the issuance of a writ of injunction would cause grave and irreparable injury to [Rev. Cortez] since he will be displaced
Admittedly, the documentary exhibits of [Rev. Cortez] tended only to show that [he] has a pending application of patent with the DENR. Even from the said area which he has occupied since 1962. It must be emphasized that Proclamation Nos. 201 and 447 stated that the same are
so, [Rev. Cortez] failed to present in evidence the application for patent allegedly filed by [him] showing that he applied for patent on the entire subject to private rights, if there be [any]. Though Palaui Island has been declared to be part of the naval reservation and the whole [i]sland as
50 hectares of land which he possessed or occupied for a long period of time. Under the circumstances, therefore, the title of petitioner to the a marine protected area, both recognized the existence of private rights prior to the issuance of the same.
50 hectares of land in Palaui Island remains unclear and doubtful, and [is] seriously disputed by the government.
From the foregoing, we rule that the trial court did not err when it made permanent the writ of preliminary mandatory injunction. Section 9, Rule which the Court finds to be irrelevant and finally, a conclusion that a final and permanent injunction should issue. No discussion whatsoever
58 of the Rules of Court provides that if after the trial of the action it appears that the applicant is entitled to have the act or acts complained of was made with respect to whether Rev. Cortez was able to establish with absolute certainty hisclaimed right over the subject area.
permanently enjoined, the court shall grant a final injunction perpetually restraining the party or person enjoined from the commission or Section 14, Article VIII of the Constitution, as well as Section 1 of Rule 36 and Section 1, Rule 120 of the Rules on Civil Procedure, similarly
continuance of the act or acts or confirming the preliminary mandatory injunction.18 state that a decision, judgment or final order determining the merits of the case shall state, clearly and distinctly, the facts and the law on which
Anent the issue of Rev. Cortez not being a real party-in-interest, the CA noted that this was not raised before the RTC and therefore cannot be it is based. Pertinently, the Court issued on January 28, 1988 Administrative Circular No. 1, which requires judges to make complete findings of
considered by it. Finally, with respect to the RTCs mention of the IPRA, the CA found the same to be a mere obiter dictum. facts in their decision, and scrutinize closely the legal aspects of the case in the light of the evidence presented, and avoid the tendency to
The dispositive portion of the CA Decision reads: generalize and to form conclusion without detailing the facts from which such conclusions are deduced.33
WHEREFORE, premise[s] considered, the instant Appeal is hereby DENIED. The assailed 3 July 2007 Decision of the Regional Trial Court of Clearly, the Decision of the RTC in this case failed to comply with the aforestated guidelines.
Aparri, Cagayan, Branch 8 in Civil Case No. II-2403 is AFFIRMED. In cases such as this, the Court would normally remand the case to the court a quo for compliance with the form and substance of a Decision
SO ORDERED.19 as required by the Constitution. In order, however, to avoid further delay, the Court deems it proper to resolve the case based on the merits. 34
Hence, this Petition brought by the OSG on behalf of the Republic of the Philippines (the Republic). "Two requisites must concur for injunction to issue: (1) there must be a right to be protected and (2) the acts against which the injunction is to
The Issue be directed are violative of said right." 35 Thus, it is necessary that the Court initially determine whether the right asserted by Rev. Cortez indeed
The ultimate issue to be resolved in this case is whether Rev. Cortez is entitled to a final writ of mandatory injunction. exists. As earlier stressed, it is necessary that such right must have been established by him with absolute certainty.
The Parties Arguments Rev. Cortez argues that he is entitled to the injunctive writ based on the right of possession (jus possesionis) by reason of his peaceful and
The bone of contention as the OSG sees it is the injunctive writ since Rev. Cortez failed to prove his clear and positive right over the 5-hectare continuous possession of the subject area since 1962. He avers that as this right is protected by law, he cannot be peremptorily dispossessed
portion of Palaui Island covered by the same. This is considering that by his own admission, Rev. Cortez started to occupy the said area only therefrom, or if already dispossessed, is entitled to be restored in possession. Hence, the mandatory injunctive writ was correctly issued in his
in 1962. Hence, when the property was declared as a military reserve in 1967, he had been in possession of the 5-hectare area only for five favor.
years or short of the 30-year possession requirement for a bona fide claim of ownership under the law. The OSG thus argues that the phrase Jus possessionis or possession in the concept of an owner 36 is one of the two concepts of possession provided under Article 525 37 of the Civil
"subject to private rights" as contained in Proclamation No. 201 and Proclamation No. 447 cannot apply to him since it only pertains to those Code. Also referred to as adverse possession, 38 this kind of possesion is one which can ripen into ownership by prescription. 39 As correctly
who have already complied with the requirements for perfection of title over the land prior to the issuance of the said proclamations. asserted by Rev. Cortez, a possessor in the concept of an owner has in his favor the legal presumption that he possesses with a just title and
Rev. Cortez, for his part, asserts that the arguments of the OSG pertaining to ownership are all immaterial as his Petition for injunction does he cannot be obliged to show or prove it.40 In the same manner, the law endows every possessor with the right to be respected in his
not involve the right to possess based on ownership but on the right of possession which is a right independent from ownership. Rev. Cortez possession.41
avers that since he has been in peaceful and continuous possession of the subject portion of Palaui Island, he has the right of possession over It must be emphasized, however, that only things and rights which are susceptible of being appropriated may be the object of
the same which is protected by law. He asserts that based on this right, the writ of injunction was correctly issued by the RTC in his favor and possession.42 The following cannot be appropriated and hence, cannot be possessed: property of the public dominion, common things (res
aptly affirmed by the CA. On the technical side, Rev. Cortez avers that the Republic has no legal personality to assail the CA Decision through communes) such as sunlight and air, and things specifically prohibited by law.43
the present Petition since it was not a party in the appeal before the CA. Here, the Court notes that while Rev. Cortez relies heavily on his asserted right of possession, he, nevertheless, failed to show that the subject
The Courts Ruling area over which he has a claim is not part of the public domain and therefore can be the proper object of possession.
We grant the Petition. Pursuant to the Regalian Doctrine, all lands of the public domain belong to the State. 44 Hence, "[a]ll lands not appearing to be clearly under
For starters, the Court shall distinguish a preliminary injunction from a final injunction. private ownership are presumed to belong to the State. Also, public lands remain part of the inalienable land of the public domain unless the
"Injunction is a judicial writ, process or proceeding whereby a party is directed either to do a particular act, in which case it is called a State is shown to have reclassified or alienated them to private persons." 45 To prove that a land is alienable, the existence of a positive act of
mandatory injunction, [as in this case,] or to refrain from doing a particular act, in which case it is called a prohibitory injunction." 20 "It may be the government, such as presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands
the main action or merely a provisional remedy for and as an incident in the main action."21 investigators; and a legislative act or a statute declaring the land as alienable and disposable must be established. 46
"The main action for injunction is distinct from the provisional or ancillary remedy of preliminary injunction." 22 A preliminary injunction does not In this case, there is no such proof showing that the subject portion of Palaui Island has been declared alienable and disposable when Rev.
determine the merits of a case or decide controverted facts. 23 Since it is a mere preventive remedy, it only seeks to prevent threatened wrong, Cortez started to occupy the same. Hence, it must be considered as still inalienable public domain. Being such, it cannot be appropriated and
further injury and irreparable harm or injustice until the rights of the parties are settled. 24 "It is usually granted when it is made to appear that therefore not a proper subject of possession under Article 530 of the Civil Code. Viewed in this light, Rev. Cortez claimed right of possession
there is a substantial controversy between the parties and one of them is committing an act or threatening the immediate commission of an act has no leg to stand on. His possession of the subject area, even if the same be in the concept of an owner or no matter how long, cannot
that will cause irreparable injury or destroy the status quo of the controversy before a full hearing can be had on the merits of the case."25 A produce any legal effect in his favor since the property cannot be lawfully possessed in the first place.
preliminary injunction is granted at any stage of an action or proceeding prior to judgment or final order. 26 For its issuance, the applicant is The same goes true even if Proclamation No. 201 and Proclamation No. 447 were made subject to private rights. The Court stated in Republic
required to show, at least tentatively, that he has a right which is not vitiated by any substantial challenge or contradiction. 27 Simply stated, the v. Bacas,47 viz.:
applicant needs only to show that he has the ostensible right to the final relief prayed for in his complaint. 28 On the other hand, the main action Regarding the subject lots, there was a reservation respecting private rights. In Republic v. Estonilo, where the Court earlier declared that Lot
for injunction seeks a judgment that embodies a final injunction. 29 A final injunction is one which perpetually restrains the party or person No. 4319 was part of the Camp Evangelista Military Reservation and, therefore, not registrable, it noted the proviso in Presidential
enjoined from the commission or continuance of an act, or in case of mandatory injunctive writ, one which confirms the preliminary mandatory Proclamation No. 265 requiring the reservation to be subject to private rights as meaning that persons claiming rights over the reserved land
injuction.30 It is issued when the court, after trial on the merits, is convinced that the applicant is entitled to have the act or acts complained of were not precluded from proving their claims. Stated differently, the said proviso did not preclude the LRC from determining whether x x x the
permanently enjoined.31Otherwise stated, it is only after the court has come up with a definite pronouncement respecting an applicants right respondents indeed had registrable rights over the property.
and of the act violative of such right, based on its appreciation of the evidence presented, that a final injunction is issued. To be a basis for a As there has been no showing that the subject parcels of land had been segregated from the military reservation, the
final and permanant injunction, the right and the act violative thereof must be established by the applicant with absolute certainty.32 respondents had to prove that the subject properties were alienable or disposable land of the public domain prior to its
What was before the trial court at the time of the issuance of its July 3, 2007 Decision is whether a final injunction should issue. While the RTC withdrawal from sale and settlement and reservation for military purposes under Presidential Proclamation No. 265. The question
seemed to realize this as it in fact made the injunction permanent, the Court, however, finds the same to be wanting in basis. is primordial importance because it is determinative if the land can in fact be subject to acquisitive prescription and, thus, registrable under the
Indeed, the RTC endeavored to provide a narrow distinction between a preliminary injunction and a final injunction. Despite this, the RTC Torrens system. Without first determining the nature and character of the land, all other requirements such as length and nature
apparently confused itself. For one, what it cited in its Decision were jurisprudence relating to preliminary injunction and/or mandatory of possession and occupation over such land do not come into play. The required length of possession does not operate when
injunction as an ancillary writ and not as a final injunction. At that point, the duty of the RTC was to determine, based on the evidence the land is part of the public domain.
presented during trial, if Rev. Cortez has conclusively established his claimed right (as opposed to preliminary injunction where an applicant In this case, however, the respondents miserably failed to prove that, before the proclamation, the subject lands were already private lands.
only needs to at least tentatively show that he has a right) over the subject area. This is considering that the existence of such right plays an They merely relied on such recognition of possible private rights. In their application, they alleged that at the time of their application, they had
important part in determining whether the preliminary writ of mandatory injunction should be confirmed. been in open, continuous, exclusive and notorious possession of the subject parcels of land for at least thirty (30) years and became its
Surprisingly, however, the said Decision is bereft of the trial courts factual findings on the matter as well as of its analysis of the same vis-a-vis owners by prescription. There was, however, no allegation or showing that the government had earlier declared it open for sale or settlement,
applicable jurisprudence. As it is, the said Decision merely contains a restatement of the parties respective allegations in the Complaint and or that it was already pronounced as inalienable and disposable.48
the Answer, followed by a narration of the ensuing proceedings, an enumeration of the evidence submitted by Rev. Cortez, a recitation of In view of the foregoing, the Court finds that Rev. Cortez failed to conclusively establish his claimed right over the subject portion of Palaui
jurisprudence relating to preliminary injunction and/or specifically, to mandatory injunction as an ancillary writ, a short reference to the IPRA Island as would entitle him to the issuance of a final injunction.
Anent the technical issue raised by Rev. Cortez, i. e, that the Republic has no personality to bring this Petition since it was not a party before
the CA, the Court deems it prudent to set aside this procedural barrier. After all, "a party's standing before [the] Court is a [mere] procedural Barely a month after, or on October 25, 1965, Pres. Macapagal issued Proclamation No. 478 11"reserving for the veterans rehabilitation,
technicality which may, in the exercise of [its] discretion, be set aside in view of the importance of the issue raised."49 medicare and training center site purposes" an area of 537,520 square meters of the land previously declared as AFP Officers' Village under
We note that Rev. Cortez alleged that he sought the injunction so that he could continue his humanitarian works. However, considering that Proclamation No. 461, and placed the reserved area under the administration of the Veterans Federation of the Philippines ( VFP).
inalienable public land was involved, this Court is constrained to rule in accordance with the aforementioned.
WHEREFORE, the Petition is GRANTED. The June 29, 2011 Decision of the Court of Appeals in CA-GR. CV No. 89968 denying the appeal The property is within the 537,520 square-meter parcel of land reserved in VFP's favor.
and affirming the July 3, 2007 Decision of the Regional Trial Court of Aparri, Cagayan-Branch 08 in Spl. Civil Action Case No. II-2403,
is REVERSED and SET ASIDE. Accordingly, the final injunction issued in this case is ordered DISSOLVED and the Petition for Injunction On November 15, 1991, the property was the subject of a Deed of Sale 12between the Republic of the Philippines, through former
in Spl. Civil Action Case No. II-2403, DISMISSED. Land Management Bureau (LMB) Director Abelardo G. Palad, Jr., (Dir. Palad) and petitioner NOVAI. The deed of sale was subsequently
SO ORDERED. registered and from which TCT No. T-15387 was issued in NOVAI's name.
MARIANO C. DEL CASTILLO
Associate Justice The Republic's Complaint for Cancellation of Title
WE CONCUR:
13
ANTONIO T. CARPIO In its complaint filed with the RTC on December 23, 1993, the Republic sought to cancel NOVAFs title based on the following grounds: (a)
Associate Justice the land covered by NOVAFs title is part of a military reservation; (b) the deed of sale conveying the property to NOVAI, which became the
Chairperson basis for the issuance of TCT No. 15387, is fictitious; (c) the LMB has no records of any application made by NOVAI for the purchase of the
ARTURO D. BRION JOSE CATRAL MENDOZA property, and of the NOVAFs alleged payment of P14,250,270.00 for the property; and (d) the presidential proclamation, i.e., Proclamation No.
Associate Justice Associate Justice 2487, claimed to have been issued by then President Corazon C. Aquino in 1991 that authorized the transfer and titling of the property to
MARIVIC M.V.F. LEONEN NOVAI, is fictitious.
Associate Justice
ATT E S TATI O N NOVAI's Answer to the Complaint
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion
of the Court's Division. In its answer (which was later amended) to the Republic's complaint, NOVAI counter-argued that the property was no longer part of the public
ANTONIO T. CARPIO dominion, as the land had long been segregated from the military reservation pursuant to Proclamation No. 461.
Associate Justice
Chairperson NOVAI claimed that, contrary to the Republic's contention that there were no records of the sale, it had actually filed a letter-application for a
C E R TI F I C ATI O N sales patent over the property with the LMB which prepared, verified and approved the property's plan and technical description; and that the
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above LMB delivered to it a copy of the deed of sale, signed and executed by Dir. Palad, after it had paid a portion of the P14,250,270.00 purchase
Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. price, corresponding taxes, and other charges, with the balance to be paid in installments.
MARIA LOURDES P.A. SERENO
Chief Justice Also, NOVAI contended that, since any alleged irregularities that may have attended the sale pertained only to formalities, the proper remedy
SECOND DIVISION for the Republic was to file an action for reformation of instrument, not for cancellation of title. In any event, it added that the Republic's cause
G.R. No. 177168, August 03, 2015 of action had prescribed because its title to the property had already become indefeasible.
NAVY OFFICERS' VILLAGE ASSOCIATION, INC. (NOVAI), Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent. The RTC's decision
DECISION
BRION, J. : The RTC narrowed down the issues to: (a) the character of the property in question, i.e., whether the property in question was part of the
We resolve the present petition for review on certiorari1 assailing the December 28, 2006 decision2and March 28, 2007 resolution3 of the Court FBMR, and hence, inalienable; and (b) the validity of the deed of sale conveying the property to NOVAI, i.e., whether the title over the property
of Appeals (CA) in CA-G.R. CV No. 85179. was acquired by NOVAI through fraud. The RTC resolved both issues in NOVAI's favor.

The CA reversed and set aside the August 20, 2004 decision 4 of the Regional Trial Court (RTC) Branch 67, Pasig City, that dismissed the In its decision, the RTC ruled that: (a) the property is alienable and disposable in character, as the land falls within the area segregated from
complaint filed by the Republic of the Philippines ( respondent or the Republic) for the cancellation of Transfer Certificate of Title (TCT) No. T- the FBMR pursuant to Proclamation No. 461; (b) the subject deed of sale should be presumed valid on its face, as it was executed with all the
15387 issued in the name of Navy Officers' Village Association, Inc. or NOVAI (petitioner). formalities of a notarial certification; (c) notwithstanding the claims of forgery, the signature of Dir. Palad on the deed of sale appeared genuine
The Factual Antecedents and authentic; and (d) NOVAI's title to the property had attained indefeasibility since the Republic's action for cancellation of title was filed
close to two (2) years from the issuance of the title.
TCT No. T-15387,5 issued in NOVAI's name, covers a 475,009 square-meter parcel of land ( the property)6 situated inside the former Fort The CA's decision
Andres Bonifacio Military Reservation (FBMR) in Taguig, Metro Manila.
The CA reversed and set aside the RTC's decision. It ruled that the property is inalienable land of the public domain; thus, it cannot be
The property previously formed part of a larger 15,812,684 square-meter parcel of land situated at the former Fort William McKinley, Rizal, disposed of or be the subject of a sale. It pointed out that, since NOVAI failed to discharge its burden of proving the existence of Proclamation
which was covered by TCT No. 61524 issued in the name of the Republic of the Philippines. No. 2487 - the positive governmental act that would have removed the property from the public domain the property remained reserved for
veterans rehabilitation purposes under Proclamation No. 478, the latest executive issuance affecting the property.
On July 12, 1957, then President Carlos P. Garcia issued Proclamation No. 423 7 "reserving for military purposes certain parcels of the public
domain situated in the municipalities of Pasig, Taguig, Paraaque, province of Rizal, and Pasay City," which included the 15,812,684 square- Since the property is inalienable, the CA held that the incontestability and indefeasibility generally accorded to a Torrens title cannot apply
meter parcel of land covered by TCT No. 61524. because the property, as in this case, is unregistrable land; that a title issued by reason or on account of any sale, alienation, or transfer of an
inalienable property is void and a patent nullity; and that, consequently, the Republic's action for the cancellation of NOVAI's title cannot be
On September 29, 1965, then Pres. Diosdado Macapagal issued Proclamation No. 461 8 which excluded from Fort McKinley "a certain barred by prescription.
portion of land embraced therein, situated in the municipalities of Taguig and Paraaque, Province of Rizal, and Pasay City," with an area of
2,455,310 square meters, and declared the excluded area as "AFP Officers' Village" to be disposed of under the provisions of Republic Act Also, the CA held that there can be no presumption of regularity in the execution of the subject deed of sale given the questionable
Nos. 2749 and 730.10cralawrednad circumstances that surrounded the alleged sale of the property to NOVAI, 14e.g., NOVAI's failure to go through the regular process in the
Department of Environment and Natural Resources ( DENR) or the LMB Offices in the filing of an application for sales patent and in the motion for leave to file comment-in-intervention and to admit the attached comment-in-intervention. 19cralawrednad
conduct of survey and investigation; the execution of the deed of sale without payment of the full purchase price as required by policy; and the
appearances of forgery and falsification of Dir. Palad's signature on the deed of sale and on the receipts issued to NOVAI for its installment In a resolution dated February 18, 2008, 20 the Court allowed the BCDA's intervention.
payments on the property, among others.
As the Republic has done, the BCDA contends that NOVAI is disqualified from acquiring the property given the constitutional and statutory
Lastly, the CA held that the Court's observations and ruling in Republic of the Philippines v. Southside Homeowners Association, Inc provisions that prohibit the acquisition of lands of the public domain by a corporation or association; that any sale of land in violation of the
(Southside)15 is applicable to the present case. In Southside, the Republic similarly sought the cancellation of title - TCT No. 15084 - issued in Constitution or of the provisions of R.A. Nos. 274 and 730, and the Public Land Act are null and void; and that any title which may have been
favor of Southside Homeowners Association, Inc. ( SHAI) over a 39.99 hectare area of land situated in what was known as the Joint U.S. issued by mistake or error on the part of a public official can be cancelled at any time by the State.
Military Assistance Group (JUSMAG) housing area in Fort Bonifacio. The Court cancelled the certificate of title issued to SHAI, as the latter
failed to prove that the JUSMAG area had been withdrawn from the military reservation and had been declared open for disposition. The Court The BCDA further contends that NOVAI miserably failed to comply with the legal requirements for the release of the property from the military
therein ruled that, since the JUSMAG area was still part of the FBMR, its alleged sale to SHAI is necessarily void and of no effect. reservation. More specifically, (1) the Director of Lands did not cause the property's subdivision, including the determination of the number of
prospective applicants and the area of each subdivision lot which should not exceed one thousand (1,000) square meters for residential
NOVAI sought reconsideration of the CA's decision, which the CA denied in its March 28, 2007 resolution; 16 hence, this petition. purposes; (2) the purchase price for the property was not fixed by the Director of Lands as approved by the DENR Secretary; (3) NOVAI did
The Petition not pay the purchase price or a portion of it to the LMB; and (4) the Deed of Sale was not signed by the President of the Republic of the
Philippines or by the Executive Secretary, but was signed only by the LMB Director.
NOVAI alleges that the CA erred in declaring that: (a) the property is inalienable land of the public domain, (b) the deed of sale and
Proclamation No. 2487 were void and nonexistent, respectively, (c) the Republic's action for cancellation of title was not barred by prescription, Also, the BCDA observed that NOVAI was incorporated only on December 11, 1991, while the deed of sale was purportedly executed on
and (d) the ruling in Southside was applicable to the present case. November 15, 1991, which shows that NOVAI did not yet legally exist at the time of the property's purported sale.
OUR RULING
In support of its petition, NOVAI raises the following arguments:ChanRoblesvirtualLawlibrary
(a The property is no longer part of the public domain because, by virtue of Proclamation No. 461, s. of 1965, the property was excluded from We resolve to DENY NOVAI's petition for review on certiorari as we find no reversible errorcommitted by the CA in issuing its December 28,
) the FBMR and made available for disposition to qualified persons, subject to the provisions of R.A. Nos. 274 and 720 in relation to the 2006 decision and March 28, 2007 resolution.
Public Land Act; I. Procedural Objections
(b The deed of sale was, in all respects, valid and enforceable, as it was shown to have been officially executed by an authorized public officer
) under the provisions of the Public Land Act, and celebrated with all the formalities of a notarial certification; A. In the filing of the present petition before this Court
(c)Proclamation No. 2487 is to be presumed valid until proven otherwise; that the Republic carried the burden of proving that Proclamation No.
2487 was a forgery, and that it failed to discharge this burden; Under Section 1, Rule 45 of the Rules of Court, a party desiring to appeal from a judgment or final order of the CA shall raise only questions of
(d The CA should not have considered as evidence the testimony of Senator Franklin Drilon on the nonexistence of Proclamation No. 2487 law which must be distinctly set forth.
) because such testimony was given by Senator Drilon in another case 17 and was not formally offered in evidence by the Republic during the
trial of the present case before the RTC; A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence on a certain state of
facts.21 The issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of the facts being
(e The action for cancellation of title filed by the Republic is already barred by prescription because it was filed only on December 23, 1993, or
admitted.22 In contrast, a question of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query invites
) close to two (2) years from the issuance of NOVAI's title on January 9, 1992; and
the calibration of the whole evidence considering mainly the credibility of the witnesses; the existence and relevancy of specific surrounding
(f) The case of Southside is not a cognate or companion case to the present case because the two cases involve completely dissimilar factual circumstances, as well as their relation to each other and to the whole; and the probability of the situation. 23cralawrednad
and doctrinal bases; thus, the Court's observations and ruling in Southside should not be applied to the present case.
The rule that only questions of law may be the subject of a Rule 45 Petition before this Court, however, has exceptions. 24 Among these
The Republic's Comment to the Petition exceptions is when there is conflict between the factual findings of the RTC and that of the CA .
Procedurally, the Republic assails the propriety of the issues raised by NOVAI, such as "whether Proclamation No. 2487 and the signature of In this case, the CA totally reversed the RTC on the nature and character of the land, in question, and on the,validity of the deed of sale
LMB Director Palad on the assailed deed of sale are forged or fictitious," and "whether the Republic had presented adequate evidence to between the parties. Due to the conflicting findings of the RTC and the CA on these issues, we are allowed to reexamine the facts and the
establish the spuriousness of the subject proclamation," which are factual in nature and not allowed in a Rule 45 petition. parties' evidence in order to finally resolve the present controversy.
On the petition's substance, the Republic counters that:ChanRoblesvirtualLawlibrary B. On BCD A's Intervention
(a The property is inalienable public land incapable of private appropriation because, while the property formed part of the area segregated
) from the FBMR under Proclamation No. 461, it was subsequently reserved for a specific public use or purpose under Proclamation No. 478; In its reply25cralawred to the BCDA's comment-in-intervention, NOVAI primarily objects to the BCDA's intervention because it was made too
(b Proclamation No. 2487, which purportedly revoked Proclamation No. 478, does not legally exist and thus cannot be presumed valid and late.
) constitutional unless proven otherwise; the presumption of validity and constitutionality of a law applies only where there is no dispute as to
the authenticity and due execution of the law in issue; Intervention is a proceeding in a suit or action by which a third person is permitted by the court to make himself a party, either joining the
(c)The deed of sale executed by NOVAI and by Dir. Palad was undeniably forged, as Dir. Palad categorically denied having signed the deed of plaintiff or defendant, or demanding something adverse to both of them.26 Its purpose is to enable such third party to protect or preserve a right
sale, and a handwriting expert from the National Bureau of Investigation (NBI) confirmed that Dir. Palad's signature was indeed a forgery;18 or interest which may be affected by the proceeding, 27 such interest being actual, material, direct and immediate, not simply contingent and
(d NOVAI, a private corporation, is disqualified from purchasing the property because R.A. Nos. 274 and 730, and the Public Land Act only expectant.28cralawrednad
) allow the sale of alienable and disposable public lands to natural persons, not juridical persons; and
(e The Court's decision in Southside applies to the present case because of the strong factual and evidentiary relationship between the two As a general rule, intervention cannot be made at the appeal stage. Section 2, Rule 19 of the Rules of Court, governing interventions, provides
) cases. that "the motion to intervene may be filed at any time before rendition of judgment by the trial court." This rule notwithstanding, intervention
may be allowed after judgment where it is necessary to protect some interest which cannot otherwise be protected, and may be allowed for the
BCDA's Comment-in-Intervention purpose of preserving the intervenor's right to appeal. 29 "The rule on intervention, like all other rules of procedure, is intended to make the
powers of the Court fully and completely available for justice x x x and aimed to facilitate a comprehensive adjudication of rival claims
On December 28, 2007, and while the case was pending before this Court, the Bases Conversion Development Authority ( BCDA) filed a overriding technicalities on the timeliness of the filing thereof." 30cralawrednad
Thus, in exceptional cases, the Court may allow intervention although the trial court has already rendered judgment. In fact, the Court had As these provisions operate, the President may classify lands of the public domain as alienable and disposable, mineral or timber land, and
allowed intervention in one case even when the petition for review was already submitted for decision before it. 31cralawrednad transfer such lands from one class to another at any time.

In the present case, the BCDA is indisputably the agency specifically created under R.A. No. 7227 32to own, hold and/or administer military Within the class of alienable and disposable lands of the public domain, the President may further classify public domain lands, according to
reservations including, among others, those located inside the FBMR. If we are to affirm the CA's decision, the BCDA stands to benefit as a the use or purpose to which they are destined, as agricultural: residential, commercial, industrial, etc.; educational, charitable, etc.; and
favorable ruling will enable it to pursue its mandate under R.A. No. 7227. On the other hand, if we reverse the CA's decision, it stands to suffer reservations for townsites and for public and quasi-public uses; and, he may transfer such lands from one class to the other at any time.
as the contrary ruling will greatly affect the BCDA's performance of its legal mandate as it will lose the property without the opportunity to
defend its right in court. Thus, the President may, for example, transfer a certain parcel of land from its classification as agricultural (under Section 9 [a]), to residential,
commercial, industrial, or for similar purposes (under Section 9 [b]) and declare it available for disposition under any of the modes of
Indeed, the BCDA has such substantial and material interest both in the outcome of the case and in the disputed property that a final disposition of alienable and disposable public lands available under C.A. No. 141, as amended.
adjudication cannot be made in its absence without affecting such interest. Clearly, the BCDA's intervention is necessary; hence, we allow the
BCDA's intervention although made beyond the period prescribed under Section 2, Rule 19 of the Rules of Court. The modes of disposition of alienable and disposable lands available under C.A. No. 141 include: (1) by homestead settlement (Chapter IV),
II. Substantive Issues by sale (Chapter V), by lease (Chapter VI) and by confirmation of imperfect or incomplete titles (Chapters VII and VIII) for agricultural lands
under Title II of C.A. No. 141 as amended; (2) by sale or by lease for residential, commercial, or industrial lands under Title III of C.A. No. 141,
A. The property is non-disposable land of the public domain reserved for public or quasi-public use or purpose as amended; (3) by donation, sale, lease, exchange or any other form for educational and charitable lands under Title IV of C.A. No. 141, as
amended; and (4) by sale by public auction for townsite reservations under Chapter XI, Title V of C.A. No. 141, as amended.
We agree with the CA that the property remains a part of the public domain that could not have been validly disposed of in NOVAI's favor.
NOVAI failed to discharge its burden of proving that the property was withdrawn from the intended public or quasi-public use or purpose. Once these parcels of lands are actually acquired by private persons, either by sale, grant, or other modes of disposition, they are removed
from the mass of land of the public domain and become, by operation of law, their private property.
While the parties disagree on the character and nature of the property at the time of the questioned sale, they agree, however, that the
property formed part of the FBMR - a military reservation belonging to the public domain. We note that the FBMR has been the subject of With particular regard, however, to parcels of land classified as reservations for public and quasi-public uses (under Section 9 [d]), when the
several presidential proclamations and statues issued subsequent to Proclamation No. 423, which either removed or reserved for specific President transfers them to the class of .alienable and disposable public domain lands destined for residential, commercial, industrial, or for
public or quasi-public use or purpose certain of its portions. similar purposes (under Section 9 [b]), or some other class under Section 9, these reserved public domain lands become available for
disposition under any of the available modes of disposition under C.A. No. 141, as provided above. Once these re-classified lands (to
On the one hand, NOVAI argues that Proclamation No. 461 had already transferred the property from the State's "public domain" to its "private residential purposes from reservation for public and quasi-public uses) are actually acquired by private persons, they become private property.
domain." On the other hand, the respondents argue that Proclamation No. 478, in relation with RA 7227 and EO No. 40, had reverted the
property to the inalienable property of the "public domain." In the meantime, however, and until the parcels of land are actually granted to, acquired, or purchased by private persons, they remain lands
of the public domain which the President, under Section 9 of C.A. No. 141, may classify again as reservations for public and quasi-public uses.
The classification and disposition of lands of the public domain are governed by Commonwealth Act ( C.A.) No. 141 or the Public Land Act, the The President may also, under Section 8 of C.A. No. 141, suspend their concession or disposition.
country's primary law on the matter.
If these parcels of land are re-classified as reservations before they are actually acquired by private persons, or if the President suspends their
Under Section 6 of C.A. No. 141, the President of the Republic of the Philippines, upon the recommendation of the Secretary of Agriculture concession or disposition, they shall not be subject to occupation, entry, sale, lease, or other disposition until again declared open for
and Natural Resources, may, from time to time, classify lands of the public domain into alienable or disposable, timber and mineral lands, disposition by proclamation of the President pursuant to Section 88 in relation with Section 8 of C.A. No. 141.
and transfer these lands from one class to another for purposes of their administration and disposition.
Thus, in a limited sense, parcels of land classified as reservations for public or quasi-public uses under Section 9 (d) of C.A. No. 141 are still
Under Section 7 of C.A. No. 141, the President may, from time to time, upon recommendation of the Secretary of Agriculture and Natural non-alienable and non-disposable, even though they are, by the general classification under Section 6, alienable and disposable lands of the
Resources and for purposes of the administration and disposition of alienable and disposable public lands, declare what lands are open to public domain. By specific declaration under Section 88, in relation with Section 8, these lands classified as reservations are non-alienable and
disposition or concession under the Acts' provisions. 33cralawrednad non-disposable.

Section 8 of C.A. No. 141 sets out the public lands open to disposition or concession and the requirement that they have been officially In short, parcels of land classified as reservations for public or quasi-public uses: (1) are non-alienable and non-disposable in view of Section
delimited and classified, and when practicable, surveyed. Section 8 excludes (by implication) from disposition or concession, public lands 88 (in relation with Section 8) of CA No. 141 specifically declaring them as non-alienable and not subject to disposition; and (2) they remain
which have been reserved for public or quasi-public uses; appropriated by the Government; or in any manner have become private property, public domain lands until they are actually disposed of in favor of private persons.
or those on which a private right authorized and recognized by the Act or any other valid law may be claimed. Further, Section 8 authorizes the
President to suspend the concession or disposition of lands previously declared open to disposition, until again declared open to disposition by Complementing and reinforcing this interpretation - that lands designated as reservations for public and quasi-public uses are non-alienable
his proclamation or by act of Congress. and non-disposable and retain their character as land of the public domain is the Civil Code with its provisions on Property that deal with lands
in general. We find these provisions significant to our discussion and interpretation as lands are property, whether they are public lands or
Lands of the public domain classified as alienable and disposable are further classified, under Section 9 of C.A. No. 141, according to their use private lands.36cralawrednad
or purpose into: (1) agricultural; (2) residential, commercial, industrial, or for similar productive purposes; (3) educational, charitable, or other
similar purposes; and (4) reservations for townsites and for public and quasi-public uses. Section 9 also authorizes the President to make the In this regard, Article 419 of the Civil Code classifies property as either of public dominion or of private ownership. Article 420 37 defines
classifications and, at any time, transfer lands from one class to another. property of the public dominion as those which are intended for public use or, while not intended for public use, belong to the State and are
intended for some public service. Article 421, on the other hand, defines patrimonial property as all other property of the State which is not of
Section 83 of C.A. No. 141 defines public domain lands classified as reservations for public and quasi-public uses as "any tract or the character stated in Article 420. While Article 422 states that public dominion property which is no longer intended for public use or service
tracts of land of the public domain" which the President, by proclamation and upon recommendation of the Secretary of Agriculture and shall form part of the State's patrimonial property.
Natural Resources, may designate "as reservations for the use of the Republic of the Philippines or any of its branches, or of the inhabitants
thereof or "for quasi-public uses or purposes when the public interest requires it." 34 Under Section 88 of the same Act, these "reserved tract Thus, from the perspective of the general Civil Code provisions on Property, lands which are intended for public use or public service such as
or tracts of lands shall be non-alienable and shall not be subject to occupation, entry, sale, lease or other disposition until again reservations for public or quasi-public uses are property of the public dominion and remain to be so as long as they remain reserved.
declared alienable under the provisions of [CA No. 141] or by proclamation of the President." 35cralawrednad
As property of the public dominion, public lands reserved for public or quasi-public uses are outside the commerce of man. 38 They cannot be x x x x. (Emphasis supplied)
subject to sale, disposition or encumbrance; any sale, disposition or encumbrance of such property of the public dominion is void for being Clearly, the legal basis of the property's sale could not have been Proclamation No. 461.
contrary to law and public policy.39cralawrednad
2. Proclamation No. 2487 which purportedly revoked Proclamation No. 478 does not legally exist; hence, it did not withdraw the property from
To be subject to sale, occupation or other disposition, lands of the public domain designated as reservations must first be withdrawn, by act of the reservation or from the public dominion
Congress or by proclamation of the President, from the public or quasi-public use for which it has been reserved or otherwise positively
declared to have been converted to patrimonial property, pursuant to Sections 8 and 88 of C.A. No. 141 and Article 422 of the Civil Neither can Proclamation No. 2487 serve as legal basis for the property's sale in NOVAI's favor. Proclamation No. 2487 purportedly revoked
Code.40 Without such express declaration or positive governmental act, the reserved public domain lands remain to be public dominion Proclamation No. 478 and declared the property open for disposition in favor of NOVAI.
property of the State.41cralawrednad
The Republic and the BCD A (now respondents) argue that Proclamation No. 2487 does not legally exist; it could not have served to release
To summarize our discussion:ChanRoblesvirtualLawlibrary the property from the mass of the non-alienable property of the State.

(1) Lands of the public domain classified as reservations for public or quasi-public uses are non-alienable and shall not be subject to Hence, even if NOVAI relies on Proclamation No. 2487 - on which it did not as it relied on Proclamation No. 4.61 - the sale and NOVAI's title
disposition, although they are, by the general classification under Section 6 of C.A. No. 141, alienable and disposable lands of the public are still void. NOVAI, on the other hand, claims in defense that Proclamation No. 2487 is presumed valid and constitutional, and the burden of
domain, until declared open for disposition by proclamation of the President; and proving otherwise rests on the respondents.

(2) Lands of the public domain classified as reservations are property of the public dominion; they remain to be property of the public dominion In insisting on the presumptive validity of law, NOVAI obviously failed to grasp and appreciate the thrust of the respondents' arguments,
until withdrawn from the public or quasi-public use for which they have been reserved, by act of Congress or by proclamation of the President, including the impact of the evidence which they presented to support the question they raised regarding the authenticity of Proclamation No.
or otherwise positively declared to have been converted to patrimonial property. 2487.

Based on these principles, we now examine the various issuances affecting the property in order to determine the property's character and Rather than the validity or constitutionality of Proclamation No. 2487, what the respondents assailed was its legal existence, not whether it was
nature, i.e., whether the property remains public domain property of the State or has become its private property. constitutional or not. Put differently, they claimed that Proclamation No. 2487 was never issued by former Pres. Aquino; hence, the
presumptive validity and constitutionality of laws cannot apply.
For easier reference, we reiterate the various presidential proclamations and statutes affecting the property:cralawlawlibrary
(1 Proclamation No. 423, series of 1957 - established the FBMR, a military reservation; the property falls within the FBMR; Accordingly, after the respondents presented their evidence, it was NOVAI's turn to present its own evidence sufficient to rebut that of the
) respondents. On this point, we find the Republic's evidence sufficiently convincing to show that Proclamation No. 2487 does not legally exist.
(2 Proclamation No. 461, series of (September) 1965 - segregated, from the FBMR, a portion of Parcel 3, plan Psd-2031, which includes the These pieces of evidence include:ChanRoblesvirtualLawlibrary
) property, for disposition in favor of the AFPOVAI;
(3 Proclamation No. 478, series of (October) 1965 reserved the property in favor of the Veterans Rehabilitation and Medical Training Center First, the October 26, 1993 letter of the Solicitor General to the Office of the President inquiring about the existence of Proclamation No.
) (VRMTC); and 2487.42cralawrednad
(4 RA No. 7227 (1992), as implemented by EO No. 40, series of 1992 - subject to certain specified exemptions, transferred the military camps
) within Metro Manila, among others, to the BCDA. Second, the November 12, 1993 letter-reply of the Office of the President informing the Solicitor General that Proclamation No. 2487 "is not
1. Proclamation No. 461 was not the legal basis for the property's sale in favor of NOVAI among the alleged documents on file with [its] Office." 43cralawrednad

We agree with the respondents that while Proclamation No. 461, issued in September 1965, removed from the FBMR a certain parcel of land Third, the testimony of the Assistant Director of the Records Office in Malacaang confirming that indeed, after verifying their records or of the
that includes the property, Proclamation No. 478, issued in October 1965, in turn segregated the property from the area made available for different implementing agencies, "[t]here is no existing document(s) in [their] possession regarding that alleged Proclamation No. 2487;" 44 and
disposition under Proclamation No. 461, and reserved it for the use of the VRMTC.
Fourth and last, the October 11, 1993 Memorandum of then Department of Justice Secretary Frahklin M. Drilon ( DOJ Secretary Drilon) to the
We find it clear that Proclamation No. 478 was issued after, not before, Proclamation No. 461. Hence, while Proclamation No. 461 withdrew a NBI to investigate, among others, the circumstances surrounding the issuance of Proclamation No. 2487. 45 Notably, this October 11, 1993
certain area or parcel of land from the FBMR and made the covered area available for disposition in favor of the AFPOVAI, Proclamation No. Memorandum of DOJ Secretary Drilon stated that: "Proclamation No. 2487 is null and void x x x. [It] does not exist in the official records of the
478 subsequently withdrew the property from the total disposable portion and reserved it for the use of the VRMTC. With the issuance of Office of the President x x x [and] could riot have been issued by the former President since the last Proclamation issued during her term was
Proclamation No. 478, the property was transferred back to that class of public domain land reserved for public or quasi-public use or purpose proclamation No. 932 dated 19 June 1992." 46cralawrednad
which, consistent with Article 420 of the Civil Code, is property of the public dominion, not patrimonial property of the State.
In this regard, we quote with approval the CA's observations in its December 28, 2006 decision:cralawlawlibrary
Even under the parties' deed of sale, Proclamation No. 2487, not Proclamation No. 461, was used as the authority for the transfer and sale of Cast against this backdrop, it stands to reason enough that the defendant-appellee NOVAI was inevitably duty bound to prove and establish
the property to NOVAI. The subject deed of sale pertinently reads:cralawlawlibrary the very existence, as well as the genuineness or authenticity, of this Presidential Proclamation No. 2487. For certain inexplicable reasons,
"This DEED OF SALE, made and executed in Manila, Philippines, by the Director of Lands, Pursuant to Batas Pambansa Blg. 878 and in however, the defendant-appellee did not do so, but opted to build up and erect its case upon Presidential Proclamation No. 461.
representation of the Republic of the Philippines, hereinafter referred to as the Vendor, in favor of THE NAVY OFFICERS VILLAGE
ASSOCIATION (NOVA) and residing in Fort Bonifacio, Metro Manila, referred to as the Vendee, WITNESSETH:ChanRoblesvirtualLawlibrary To be sure, the existence of Presidential Proclamation No. 2487 could be easily proved, and established, by its publication in the
xxxx Official Gazette. But the defendant-appellee could not, as it did not, submit or present any copy or issue of the Official Gazette
mentioning or referring to this Presidential Proclamation No. 2487 , this even in the face of the Government's determined and
WHEREAS, pursuant to Presidential proclamation No. 478 as amended by proclamation No. 2487 in relation to the provision of Act unrelenting claim that it does not exist at all.47 (Emphasis supplied)
No. 3038 and similar Acts supplemented thereto, the Vendee applied for the purchase of a portion of the above-described Property which A final point, we did not fail to notice the all too obvious and significant difference between the proclamation number of Proclamation No. 2487
portion is identical to Lot 3, Swo-000183 and more particularly described on page two hereof; and the numbers of the proclamations actually issued by then President Corazon C. Aquino on or about that time.
xxxx
We take judicial notice that on September 25, 1991 - the very day when Proclamation No. 2487 was supposedly issued - former Pres. Aquino
WHEREAS, the Vendee has complied with all other conditions required by Act No. 3038 in relation to Commonwealth Act No. 141, as issued Proclamation No. 80048 and Proclamation No. 801.49Previously, on September 20, 1991, Pres. Aquino issued Proclamation No.
amended, and the rules and regulation promulgated thereunder. 799;50 and thereafter, on September 27, 1991, she issued Proclamation No. 802. 51cralawrednad
Other proclamations issued around or close to September 25, 1991, included the following:cralawlawlibrary Since the sale of the property, in this case, is void, the title issued to NOVAI is similarly void ab initio. It is a well-settled doctrine that
1. Proclamation No. 750 issued on July 1, 1991; 52cralawrednad registration under the Torrens System does not, by itself, vest title as it is not a mode of acquiring ownership; 71 that registration under the
Torrens System merely confirms the registrant's already existing title. 72cralawrednad
2. Proclamation No. 760 issued on July 18, 1991; 53cralawrednad
Accordingly, the indefeasibility of a Torrens title does not apply in this case and does not attach to NOVAI's title. The principle of indefeasibility
3. Proclamation No. 770 issued on August 12, 1991; 54cralawrednad does not apply when the sale of the property and the title based thereon are null and void. Hence, the Republic's action to declare the nullity of
NOVAI's void title has not prescribed.
4. Proclamation No. 780 issued on August 26, 1991; 55cralawrednad
NOVAI insists that the deed of sale carries the presumption of regularity in the performance of official duties as it bears all the earmarks of a
5. Proclamation No. 790 issued on September 3, 1991; 56cralawrednad valid deed of sale and is duly notarized.

6. Proclamation No. 792 issued on September 5, 1991; 57cralawrednad While we agree that duly notarized deeds of sale carry the legal presumption of regularity in the performance of official duties, 73 the
presumption of regularity in the performance of official duties, like all other disputable legal presumptions, applies only in the absence of clear
7. Proclamation No. 797 issued on September 11, 1991; 58cralawrednad and convincing evidence establishing the contrary.74cralawrednad

8. Proclamation No. 798 issued on September 12, 1991; 59cralawrednad When, as in this case, the evidence on record shows not only that the property was reserved for public use or purpose, and thus, non-
disposable - a fact that on its own defeats all the evidence which the petitioner may have had to support the validity of the sale - but also
9. Proclamation No. 804 issued on September 30, 1991; 60cralawrednad shows that the sale and the circumstances leading to it are void in form and in substance, the disputable presumption of regularity in the
performance of official duties certainly cannot apply.
10. Proclamation No. 805 issued on September 30, 1991; 61cralawrednad
C. Even assuming that Proclamation No. 2487 legally exists, the sale of the property to NOVAI is illegal.
11. Proclamation No. 806 issued on October 2, 1991; 62cralawrednad
1. Dir. Palad did not have the authority to sell and convey the property.
12. Proclamation No. 810 issued on October 7, 1991;63cralawrednad
The subject deed of sale points to Proclamation No. 2487, purportedly amending Proclamation No. 478, in relation with Act No. 3038,75 as
13. Proclamation No. 820 issued on October 25, 1991; 64cralawrednad legal basis for authorizing the sale.

14. Proclamation No. 834 issued on November 13, 1991;65 and Section 176 of Act No. 3038 authorizes the sale or lease only: (i) of land of the private domain, not land of the public domain; and (ii) by the
Secretary of Agriculture and Natural Resources, not by the LMB Director. Section 2 77 of the said Act, in fact, specifically exempts from its
15. Proclamation No. 840 issued on November 26, 1991.66 coverage "land necessary for the public service." As the sale was executed by the LMB Director covering the property that was reserved for
This list shows that the proclamations issued by former Pres. Aquino followed a series or sequential pattern with each succeeding issuance the use of the VRMTC, it, therefore, clearly violated the provisions of Act No. 3038.
bearing a proclamation number one count higher than the proclamation number of the preceding Presidential Proclamation. It also shows that
on or about the time Proclamation No. 2487 was purportedly issued, the proclamation numbers of the proclamations issued by President 2. The area subject of the sale far exceeded the area that the Director of Lands is authorized to convey.
Aquino did not go beyond the hundreds series.
Batas Pambansa (B.P.) Blg. 87878 which, per the Deed of Sale, purportedly authorized the Director of Lands, representing the Republic, to sell
It is highly implausible that Proclamation No. 2487 was issued on September 25, 1991, or on any day close to September 25, 1991, when the the property in favor of NOVAI, limits the authority of the Director of Lands to sign patents or certificates covering lands to ten (10) hectares.
proclamations issued for the same period were sequentially numbered and bore three-digit proclamation numbers.
In this case, the subject deed of sale covers a total area of 475,009 square meters or 47.5009 hectares. Obviously, the area covered by the
As Proclamation No. 2487 does not legally exist and therefore could not have validly revoked Proclamation No. 478, we find, as the CA also deed of sale and which NOVAI purportedly purchased, far exceeds the area that the Director of Lands is authorized to convey under B.P. Blg.
correctly did, that Proclamation No. 478 stands as the most recent manifestation of the State's intention to reserve the property anew for some 878.
public or quasi-public use or purpose. Thus, consistent with Sections 88, in relation with Section 8, of C.A. No. 141 and Article 420 of the Civil
Code, as discussed above, the property which was classified again as reservation for public or quasi-public use or purpose is non-alienable 3. The evidence on record and the highly suspect circumstances surrounding the sale fully supports the conclusion that the property's sale to
and not subject to disposition; it also remains property of the public dominion; hence, non-alienable and non-disposable land of the public NOVAI is fictitious, thus, void.
domain.
We note the following irregularities that attended the sale of the property to NOVAI:
As a consequence, when R.A. No. 7227 took effect in 1992, the property subject of this case, which does not fall among the areas specifically The absence, on file with the LMB, of any request for approval of any survey plan or of an approved survey plan in NOVAI's name covering the
designated as exempt from the law's operation 67 was, by legal fiat, transferred to the BCDA's authority. property.79 The approved survey plan relating to Lot 3, SWO-13-000183 subject of NOVAI's TCT No. 15387 pertains to the AFPOVAI under
Proclamation No. 461;80cralawrednad
B. As the property remains a reserved public domain land, its sale and the title issued pursuant to the sale are void The technical description, which the DENR prepared for the property as covered by TCT No. T-15387, was issued upon NOVAI's request only
for purposes of reference, not for registration of title, and was based on the approved survey plan of the AFPOVAI; 81cralawrednad
As the property remains a reserved public domain land, it is outside the commerce of man. Property which are intended for public or quasi- There is no record of any public land application filed by NOVAI with the LMB or with the DENR Office for the purchase of the property or of
public use or for some public purpose are public dominion property of the State 68 and are outside the commerce of man. NOVAI, therefore, any parcel of land in Metro Manila;82cralawrednad
could not have validly purchased the property in 1991. LMB Dir. Palad categorically denied signing and executing the deed of sale;83cralawrednad
The findings of the NBI handwriting; expert, detailed in the Questioned Documents Report No. 815-1093 dated October 29, 1993, 84 revealed
We reiterate and emphasize that property which has been reserved for public or quasi-public use or purpose are non-alienable and shall not that the, signature of LMB Director Palad as it appeared on the Deed of Sale and his standard/sample signature as they appeared on the
be subject to sale or other disposition until again declared alienable by law or by proclamation of the President. 69 Any sale or disposition of submitted comparison documents "were not written by one and the same person," 85 and concluded that "[t]he questioned signature of
property of the public dominion is void for being contrary to law and public policy.70cralawrednad 'ABELARDG G. PALAD, JR.' xxx is a TRACED FORGERY by carbon process;" 86 and
Lastly, the LMB Cashier's Office did not receive the amount of P14,250,270.00 allegedly paid by NOVAI as consideration for the property. The part, which are hereby declared alienable and disposable pursuant to the provisions of existing laws and regulations governing sales of
receipts87 - O.R. No. 8282851 dated November 28, 1991, for P160,000.00 and O.R. No. 317024 dated December 23, 1992, for P200,000.00 - government properties,"21 specifically to raise capital for the BCDA. Titles to the camps were transferred to the BCDA for this purpose, 22 and
which NOVAI presented as evidence of its alleged payment bore official receipt numbers which were not among the series of official receipts TCT No. 61524 was cancelled on January 3, 1995 by TCT Nos. 23888, 23887, 23886, 22460, 23889, 23890, and 23891, now in the name of
issued by the National Printing Office to the LMB, and in fact, were not among the series used by the LMB on the pertinent dates. 88 the BCDA.23
In sum, we find - based on the facts, the law, and jurisprudence - that the property, at the time of the sale, was a reserved public domain land. Excepted from disposition by the BCDA are: a) approximately 148.80 has. reserved for the National Capital Region (NCR) Security Brigade,
Its sale, therefore, and the corresponding title issued in favor of petitioner NOVAI, is void. Philippine Army officers housing area, and Philippine National Police jails and support services (presently known as Camp Bagong Diwa); b)
approximately 99.91 has. in Villamor Air Base for the Presidential Airlift Wing, one squadron of helicopters for the NCR and respective security
WHEREFORE, we hereby DENY the present petition for review on certiorari. No reversible error attended the decision dated December 28, units; c) twenty one (21) areas segregated by various presidential proclamations; and d) a proposed 30.15 has. as relocation site for families
2006, and the resolution dated March 28, 2007, of the Court of Appeals in CA-G.R. CV No. 85179. to be affected by the construction of Circumferential Road 5 and Radial Road 4, provided that the boundaries and technical description of
these exempt areas shall be determined by an actual ground survey.24
SO ORDERED.chanrobles virtuallawlibrary Now charging the BCDA of wrongfully asserting title to Dream Village and unlawfully subjecting its members to summary demolition, resulting
in unrest and tensions among the residents, 25 on November 22, 1999, the latter filed a letter-complaint with the COSLAP to seek its assistance
Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, in the verification survey of the subject 78,466-sq m property, which they claimed is within Lot 1 of Swo-13-000298 and thus is covered by
G.R. No. 192896 July 24, 2013 Proclamation No. 172. They claim that they have been occupying the area for thirty (30) years "in the concept of owners continuously,
DREAM VILLAGE NEIGHBORHOOD ASSOCIATION, INC., represented by its Incumbent President, GREG SERIEGO, Petitioner, exclusively and notoriously for several years," and have built their houses of sturdy materials thereon and introduced paved roads, drainage
vs. and recreational and religious facilities. Dream Village, thus, asserts that the lot is not among those transferred to the BCDA under R.A. No.
BASES DEVELOPMENT AUTHORITY, Respondent. 7227, and therefore patent applications by the occupants should be processed by the Land Management Bureau (LMB).
DECISION On August 15, 2000, Dream Village formalized its complaint by filing an Amended Petition 26 in the COSLAP. Among the reliefs it sought were:
REYES, J.: d. DECLARING the subject property as alienable and disposable by virtue of applicable laws;
Before us on Petition for Review1 under Rule 45 of the Rules of Court is the Decision2 dated September 10, 2009 and Resolution3 dated July e. Declaring the portion of Lot 1 of subdivision Plan SWO-13-000298, situated in the barrio of Western Bicutan, Taguig, Metro Manila, which is
13, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 85228 nullifying and setting aside for lack of jurisdiction the Resolution 4 dated April presently being occupied by herein petitioner as within the coverage of Proclamation Nos. 2476 and 172 and outside the claim of AFP-RSBS
28, 2004 of the Commission on the Settlement of Land Problems (COSLAP) in COS LAP Case No. 99-500. The fallo of the assailed COS LAP INDUSTRIAL PARK COMPLEX and/or BASES CONVESION DEVELOPMENT AUTHORITY.
Resolution reads, as follows: f. ORDERING the Land Management Bureau to process the application of the ASSOCIATION members for the purchase of their respective
WHEREFORE, premises considered, judgment is hereby rendered as follows: lots under the provisions of Acts Nos. 274 and 730. (Underscoring supplied)
1. Declaring the subject property, covering an area of 78,466 square meters, now being occupied by the members of the Dream Village Respondent BCDA in its Answer 28 dated November 23, 2000 questioned the jurisdiction of the COSLAP to hear Dream Villages complaint,
Neighborhood Association, Inc. to be outside of Swo-00-0001302 BCDA property. while asserting its title to the subject property pursuant to R.A. No. 7227. It argued that under Executive Order (E.O.) No. 561 which created
2. In accordance with the tenets of social justice, members of said association are advised to apply for sales patent on their respective the COSLAP, its task is merely to coordinate the various government offices and agencies involved in the settlement of land problems or
occupied lots with the Land Management Bureau, DENR-NCR, pursuant to R.A. Nos. 274 and 730. disputes, adding that BCDA does not fall in the enumeration in Section 3 of E.O. No. 561, it being neither a pastureland-lease holder, a timber
3. Directing the Land Management Bureau-DENR-NCR to process the sales patent application of complainants pursuant to existing laws and concessionaire, or a government reservation grantee, but the holder of patrimonial government property which cannot be the subject of a
regulation. petition for classification, release or subdivision by the occupants of Dream Village.
4. The peaceful possession of actual occupants be respected by the respondents. In its Resolution29 dated April 28, 2004, the COSLAP narrated that it called a mediation conference on March 22, 2001, during which the
SO ORDERED.5 parties agreed to have a relocation/verification survey conducted of the subject lot. On April 4, 2001, the COSLAP wrote to the Department of
Antecedent Facts Environment and Natural Resources (DENR)-Community Environment and Natural Resources Office-NCR requesting the survey, which would
Petitioner Dream Village Neighborhood Association, Inc. (Dream Village) claims to represent more than 2,000 families who have been also include Swo-00-0001302, covering the adjacent AFP-RSBS Industrial Park established by Proclamation No. 1218 on May 8, 1998 as well
occupying a 78,466-square meter lot in Western Bicutan, Taguig City since 1985 "in the concept of owners continuously, exclusively and as the abandoned Circumferential Road 5 (C-5 Road).30
notoriously."6 The lot used to be part of the Hacienda de Maricaban (Maricaban), owned by Dolores Casal y Ochoa and registered under a On April 1, 2004, the COSLAP received the final report of the verification survey and a blueprint copy of the survey plan from Atty. Rizaldy
Torrens title,7 Original Certificate of Title (OCT) No. 291, issued on October 17, 1906 by the Registry of Deeds of Rizal. 8 Maricaban covered Barcelo, Regional Technical Director for Lands of DENR. Specifically, Item No. 3 of the DENR report states:
several parcels of land with a total area of over 2,544 hectares spread out over Makati, Pasig, Taguig, Pasay, and Paraaque. 9 3. Lot-1, Swo-000298 is inside Proclamation 172. Dream Village Neighborhood Association, Inc. is outside Lot-1, Swo-13-000298 and inside
Following the purchase of Maricaban by the government of the United States of America (USA) early in the American colonial period, to be Lot-10, 11 & Portion of Lot 13, Swo-00-0001302 with an actual area of 78,466 square meters. Likewise, the area actually is outside Swo-00-
converted into the military reservation known as Fort William Mckinley, Transfer Certificate of Title (TCT) No. 192 was issued in the name of 0001302 of BCDA.31 (Emphasis ours and underscoring supplied)
the USA to cancel OCT No. 291. 10 The US government later transferred 30 has. of Maricaban to the Manila Railroad Company, for which TCT COSLAP Ruling
No. 192 was cancelled by TCT Nos. 1218 and 1219, the first in the name of the Manila Railroad Company for 30 has., and the second in the On the basis of the DENRs verification survey report, the COSLAP resolved that Dream Village lies outside of BCDA, and particularly, outside
name of the USA for the rest of the Maricaban property.11 of Swo-00-0001302, and thus directed the LMB of the DENR to process the applications of Dream Villages members for sales patent, noting
On January 29, 1914, TCT No. 1219 was cancelled and replaced by TCT No. 1688, and later that year, on September 15, 1914, TCT No. 1688 that in view of the length of time that they "have been openly, continuously and notoriously occupying the subject property in the concept of an
was cancelled and replaced by TCT No. 2288, both times in the name of the USA. 12 On December 6, 1956, the USA formally ceded Fort owner, x x x they are qualified to apply for sales patent on their respective occupied lots pursuant to R.A. Nos. 274 and 730 in relation to the
William Mckinley to the Republic of the Philippines (Republic), and on September 11, 1958, TCT No. 2288 was cancelled and replaced by TCT provisions of the Public Land Act."32
No. 61524, this time in the name of the Republic.13 On July 12, 1957, President Carlos P. Garcia issued Proclamation No. 423 withdrawing On the question of its jurisdiction over the complaint, the COSLAP cited the likelihood that the summary eviction by the BCDA of more than
from sale or settlement the tracts of land within Fort William Mckinley, now renamed Fort Bonifacio, and reserving them for military purposes. 14 2,000 families in Dream Village could stir up serious social unrest, and maintained that Section 3(2) of E.O. No. 561 authorizes it to "assume
On January 7, 1986, President Ferdinand E. Marcos issued Proclamation No. 2476 declaring certain portions of Fort Bonifacio alienable and jurisdiction and resolve land problems or disputes which are critical and explosive in nature considering, for instance, the large number of
disposable15 in the manner provided under Republic Act (R.A.) Nos. 274 and 730, in relation to the Public Land Act, 16 thus allowing the sale to parties involved, the presence or emergence of social tension or unrest, or other similar critical situations requiring immediate action," even as
the settlers of home lots in Upper Bicutan, Lower Bicutan, Signal Village, and Western Bicutan. 17 Section 3(2)(d) of E.O. No. 561 also allows it to take cognizance of "petitions for classification, release and/or subdivision of lands of the public
On October 16, 1987, President Corazon C. Aquino issued Proclamation No. 172 amending Proclamation No. 2476 by limiting to Lots 1 and 2 domain," exactly the ultimate relief sought by Dream Village. Rationalizing that it was created precisely to provide a more effective mechanism
of the survey Swo-13-000298 the areas in Western Bicutan open for disposition.18 for the expeditious settlement of land problems "in general," the COSLAP invoked as its authority the 1990 case of Baaga v.
On March 13, 1992, R.A. No. 7227 was passed19 creating the Bases Conversion and Development Authority (BCDA) to oversee and COSLAP,33 where this Court said:
accelerate the conversion of Clark and Subic military reservations and their extension camps (John Hay Station, Wallace Air Station, ODonnell It is true that Executive Order No. 561 provides that the COSLAP may take cognizance of cases which are "critical and explosive in nature
Transmitter Station, San Miguel Naval Communications Station and Capas Relay Station) to productive civilian uses. Section 8 20 of the said considering, for instance, the large number of parties involved, the presence or emergence of social tension or unrest, or other similar critical
law provides that the capital of the BCDA will be provided from sales proceeds or transfers of lots in nine (9) military camps in Metro Manila, situations requiring immediate action." However, the use of the word "may" does not mean that the COSLAPs jurisdiction is merely confined to
including 723 has. of Fort Bonifacio. The law, thus, expressly authorized the President of the Philippines "to sell the above lands, in whole or in the above mentioned cases. The provisions of the said Executive Order are clear that the COSLAP was created as a means of providing a
more effective mechanism for the expeditious settlement of land problems in general, which are frequently the source of conflicts among Proclamation Nos. 2476 and 172 as
settlers, landowners and cultural minorities. Besides, the COSLAP merely took over from the abolished PACLAP whose functions, including its alienable and disposable.
jurisdiction, power and authority to act on, decide and resolve land disputes (Sec. 2, P.D. No. 832) were all assumed by it. The said Executive Pursuant to Proclamation No. 2476, the following surveys were conducted by the Bureau of Lands to delimit the boundaries of the areas
Order No. 561 containing said provision, being enacted only on September 21, 1979, cannot affect the exercise of jurisdiction of the PACLAP excluded from the coverage of Proclamation No. 423:
Provincial Committee of Koronadal on September 20, 1978. Neither can it affect the decision of the COSLAP which merely affirmed said Barangay Survey Plan Date Approved
exercise of jurisdiction.34 1. Lower Bicutan SWO-13-000253 October 21, 1986
In its Motion for Reconsideration35 filed on May 20, 2004, the BCDA questioned the validity of the survey results since it was conducted without 2. Signal Village SWO-13-000258 May 13, 1986
its representatives present, at the same time denying that it received a notification of the DENR verification survey. 36 It maintained that there is 3. Upper Bicutan SWO-13-000258 May 13, 1986
no basis for the COSLAPs finding that the members of Dream Village were in open, continuous, and adverse possession in the concept of 4. Western Bicutan SWO-13-000298 January 15, 198753
owner, because not only is the property not among those declared alienable and disposable, but it is a titled patrimonial property of the State. 37 However, the survey plan for Western Bicutan, Swo-13-000298, shows that Lots 3, 4, 5 and 6 thereof are inside the area segregated for the
In the Order38 dated June 17, 2004, the COSLAP denied BCDAs Motion for Reconsideration, insisting that it had due notice of the verification Libingan ng mga Bayani under Proclamation No. 208, which then leaves only Lots 1 and 2 of Swo-13-000298 as available for disposition. For
survey, while also noting that although the BCDA wanted to postpone the verification survey due to its tight schedule, it actually stalled the this reason, it was necessary to amend Proclamation No. 2476. Thus, in Proclamation No. 172 only Lots 1 and 2 of Swo-13-000298 are
survey when it failed to suggest an alternative survey date to ensure its presence. declared alienable and disposable.54
CA Ruling The DENR verification survey report states that Dream Village is not situated in Lot 1 of Swo-13-000298 but actually occupies Lots 10, 11 and
On Petition for Review39 to the CA, the BCDA argued that the dispute is outside the jurisdiction of the COSLAP because of the lands history of part of 13 of Swo-00-0001302: "x x x Dream Village is outside Lot1, SWO-13-000298 and inside Lot 10, 11 & portion of Lot 13, SWO-00-
private ownership and because it is registered under an indefeasible Torrens title 40; that Proclamation No. 172 covers only Lots 1 and 2 of 0001302 with an actual area of 78466 square meters. The area is actually is [sic] outside SWO-00-0001302 of BCDA." 55 Inexplicably and
Swo-13-000298 in Western Bicutan, whereas Dream Village occupies Lots 10, 11 and part of 13 of Swo-00-0001302, which also belongs to gratuitously, the DENR also states that the area is outside of BCDA, completely oblivious that the BCDA holds title over the entire Fort
the BCDA 41; that the COSLAP resolution is based on an erroneous DENR report stating that Dream Village is outside of BCDA, because Lots Bonifacio, even as the BCDA asserts that Lots 10, 11 and 13 of SWO-00-0001302 are part of the abandoned right-of-way of C-5 Road. This
10, 11, and portion of Lot 13 of Swo-00-0001302 are within the DA 42; that the COSLAP was not justified in ignoring BCDAs request to area is described as lying north of Lot 1 of Swo-13-000298 and of Lots 3, 4, 5 and 6 of Swo-13-000298 (Western Bicutan) inside the Libingan
postpone the survey to the succeeding year because the presence of its representatives in such an important verification survey was ng mga Bayani, and the boundary line of Lot 1 mentioned as C-5 Road is really the proposed alignment of C-5 Road, which was abandoned
indispensable for the impartiality of the survey aimed at resolving a highly volatile situation 43; that the COSLAP is a mere coordinating when, as constructed, it was made to traverse northward into the Libingan ng mga Bayani. Dream Village has not disputed this assertion.
administrative agency with limited jurisdiction44; and, that the present case is not among those enumerated in Section 3 of E.O. No. 56145. The mere fact that the original plan for C-5 Road to cross Swo-00-0001302 was abandoned by deviating it northward to traverse the southern
The COSLAP, on the other hand, maintained that Section 3(2)(e) of E.O. No. 561 provides that it may assume jurisdiction and resolve land part of Libingan ng mga Bayani does not signify abandonment by the government of the bypassed lots, nor that these lots would then become
problems or disputes in "other similar land problems of grave urgency and magnitude,"46 and the present case is one such problem. alienable and disposable. They remain under the title of the BCDA, even as it is significant that under Section 8(d) of R.A. No. 7227, a
The CA in its Decision47 dated September 10, 2009 ruled that the COSLAP has no jurisdiction over the complaint because the question of relocation site of 30.5 has. was to be reserved for families affected by the construction of C-5 Road. It is nowhere claimed that Lots 10, 11 and
whether Dream Village is within the areas declared as available for disposition in Proclamation No. 172 is beyond its competence to 13 of Swo-00-0001302 are part of the said relocation site. These lots border C-5 Road in the south, 56making them commercially valuable to
determine, even as the land in dispute has been under a private title since 1906, and presently its title is held by a government agency, the BCDA, a farther argument against a claim that the government has abandoned them to Dream Village.
BCDA, in contrast to the case of Baaga relied upon by Dream Village, where the disputed land was part of the public domain and the While property of the State or any
disputants were applicants for sales patent thereto. of its subdivisions patrimonial in
Dream Villages motion for reconsideration was denied in the appellate courts Order 48 of July 13, 2010. character may be the object of
Petition for Review in the Supreme Court prescription, those "intended for
On petition for review on certiorari to this Court, Dream Village interposes the following issues: some public service or for the
A development of the national
IN ANNULLING THE RESOLUTION OF COSLAP IN COSLAP CASE NO. 99-500, THE HONORABLE CA DECIDED THE CASE IN A wealth" are considered property of
MANNER NOT CONSISTENT WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE COURT; public dominion and therefore not
B susceptible to acquisition by
THE HONORABLE CA ERRED IN RULING THAT COSLAP HAD NO JURISDICTION OVER THE CONTROVERSY BETWEEN THE prescription.
PARTIES HEREIN.49 Article 1113 of the Civil Code provides that "property of the State or any of its subdivisions not patrimonial in character shall not be the object
The Courts Ruling of prescription." Articles 420 and 421 identify what is property of public dominion and what is patrimonial property:
We find no merit in the petition. Art. 420. The following things are property of public dominion:
The BCDA holds title to Fort Bonifacio. (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
That the BCDA has title to Fort Bonifacio has long been decided with finality. In Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA, 50 it was roadsteads, and others of similar character;
categorically ruled as follows: (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the
First, it is unequivocal that the Philippine Government, and now the BCDA, has title and ownership over Fort Bonifacio. The case of Acting national wealth.
Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati is final and conclusive on the ownership of the then Hacienda de Art. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.
Maricaban estate by the Republic of the Philippines. Clearly, the issue on the ownership of the subject lands in Fort Bonifacio is laid to rest. One question laid before us is whether the area occupied by Dream Village is susceptible of acquisition by prescription. In Heirs of Mario
Other than their view that the USA is still the owner of the subject lots, petitioner has not put forward any claim of ownership or interest in Malabanan v. Republic,57 it was pointed out that from the moment R.A. No. 7227 was enacted, the subject military lands in Metro Manila
them.51 became alienable and disposable. However, it was also clarified that the said lands did not thereby become patrimonial, since the BCDA law
The facts in Samahan ng Masang Pilipino sa Makati are essentially not much different from the controversy below. There, 20,000 families were makes the express reservation that they are to be sold in order to raise funds for the conversion of the former American bases in Clark and
long-time residents occupying 98 has. of Fort Bonifacio in Makati City, who vainly sought to avert their eviction and the demolition of their Subic. The Court noted that the purpose of the law can be tied to either "public service" or "the development of national wealth" under Article
houses by the BCDA upon a claim that the land was owned by the USA under TCT No. 2288. The Supreme Court found that TCT No. 2288 420(2) of the Civil Code, such that the lands remain property of the public dominion, albeit their status is now alienable and disposable. The
had in fact been cancelled by TCT No. 61524 in the name of the Republic, which title was in turn cancelled on January 3, 1995 by TCT Nos. Court then explained that it is only upon their sale to a private person or entity as authorized by the BCDA law that they become private
23888, 23887, 23886, 22460, 23889, 23890, and 23891, all in the name of the BCDA. The Court ruled that the BCDAs aforesaid titles over property and cease to be property of the public dominion:58
Fort Bonifacio are valid, indefeasible and beyond question, since TCT No. 61524 was cancelled in favor of BCDA pursuant to an explicit For as long as the property belongs to the State, although already classified as alienable or disposable, it remains property of the public
authority under R.A. No. 7227, the legal basis for BCDAs takeover and management of the subject lots. 52 dominion if when it is "intended for some public service or for the development of the national wealth."59
Dream Village sits on the Thus, under Article 422 of the Civil Code, public domain lands become patrimonial property only if there is a declaration that these are
abandoned C-5 Road, which lies alienable or disposable, together with an express government manifestation that the property is already patrimonial or no longer retained for
outside the area declared in public service or the development of national wealth. Only when the property has become patrimonial can the prescriptive period for the
acquisition of property of the public dominion begin to run. Also under Section 14(2) of Presidential Decree (P.D.) No. 1529, it is provided that streamline administrative proceedings, and, in general, to adopt bold and decisive measures to solve problems involving public lands and
before acquisitive prescription can commence, the property sought to be registered must not only be classified as alienable and disposable, it lands of the public domain."69
must also be expressly declared by the State that it is no longer intended for public service or the development of the national wealth, or that On November 27, 1975, P.D. No. 832 reorganized the PACLAP and enlarged its functions and duties. Section 2 thereof even granted it quasi
the property has been converted into patrimonial. Absent such an express declaration by the State, the land remains to be property of public judicial functions, to wit:
dominion.60 Sec. 2. Functions and duties of the PACLAP. The PACLAP shall have the following functions and duties:
Since the issuance of Proclamation No. 423 in 1957, vast portions of the former Maricaban have been legally disposed to settlers, besides 1. Direct and coordinate the activities, particularly the investigation work, of the various government agencies and agencies involved in land
those segregated for public or government use. Proclamation No. 1217 (1973) established the Maharlika Village in Bicutan, Taguig to serve problems or disputes, and streamline administrative procedures to relieve small settlers and landholders and members of cultural minorities of
the needs of resident Muslims of Metro Manila; Proclamation No. 2476 (1986), as amended by Proclamation No. 172 (1987), declared more the expense and time-consuming delay attendant to the solution of such problems or disputes;
than 400 has. of Maricaban in Upper and Lower Bicutan, Signal Village, and Western Bicutan as alienable and disposable; Proclamation No. 2. Refer for immediate action any land problem or dispute brought to the attention of the PACLAP, to any member agency having jurisdiction
518 (1990) formally exempted from Proclamation No. 423 the Barangays of Cembo, South Cembo, West Rembo, East Rembo, Comembo, thereof: Provided, That when the Executive Committee decides to act on a case, its resolution, order or decision thereon shall have the force
Pembo and Pitogo, comprising 314 has., and declared them open for disposition. and effect of a regular administrative resolution, order or decision, and shall be binding upon the parties therein involved and upon the member
The above proclamations notwithstanding, Fort Bonifacio remains property of public dominion of the State, because although declared agency having jurisdiction thereof;
alienable and disposable, it is reserved for some public service or for the development of the national wealth, in this case, for the conversion of xxxx
military reservations in the country to productive civilian uses. 61 Needless to say, the acquisitive prescription asserted by Dream Village has not 4. Evolve and implement a system of procedure for the speedy investigation and resolution of land disputes or problems at provincial level, if
even begun to run. possible. (Underscoring supplied)
Ownership of a land registered On September 21, 1979, E.O. No. 561 abolished the PACLAP and created the COSLAP to be a more effective administrative body to provide
under a Torrens title cannot be lost a mechanism for the expeditious settlement of land problems among small settlers, landowners and members of the cultural minorities to
by prescription or adverse avoid social unrest.70 Paragraph 2, Section 3 of E.O No. 561 now specifically enumerates the instances when the COSLAP can exercise its
possession. adjudicatory functions:
Dream Village has been unable to dispute BCDAs claim that Lots 10, 11 and part of 13 of Swo-00-0001302 are the abandoned right-of-way of Sec. 3. Powers and Functions. The Commission shall have the following powers and functions:
C-5 Road, which is within the vast titled territory of Fort Bonifacio. We have already established that these lots have not been declared 1. Coordinate the activities, particularly the investigation work, of the various government offices and agencies involved in the settlement of
alienable and disposable under Proclamation Nos. 2476 or 172. land problems or disputes, and streamline administrative procedures to relieve small settlers and landholders and members of cultural
Moreover, it is a settled rule that lands under a Torrens title cannot be acquired by prescription or adverse possession. 62 Section 47 of P.D. No. minorities of the expense and time consuming delay attendant to the solution of such problems or disputes;
1529, the Property Registration Decree, expressly provides that no title to registered land in derogation of the title of the registered owner shall 2. Refer and follow-up for immediate action by the agency having appropriate jurisdiction any land problem or dispute referred to the
be acquired by prescription or adverse possession. And, although the registered landowner may still lose his right to recover the possession of Commission: Provided, That the Commission may, in the following cases, assume jurisdiction and resolve land problems or disputes which are
his registered property by reason of laches, 63 nowhere has Dream Village alleged or proved laches, which has been defined as such neglect or critical and explosive in nature considering, for instance, the large number of the parties involved, the presence or emergence of social tension
omission to assert a right, taken in conjunction with lapse of time and other circumstances causing prejudice to an adverse party, as will or unrest, or other similar critical situations requiring immediate action:
operate as a bar in equity. Put any way, it is a delay in the assertion of a right which works disadvantage to another because of the inequity (a) Between occupants/squatters and pasture lease agreement holders or timber concessionaires;
founded on some change in the condition or relations of the property or parties. It is based on public policy which, for the peace of society, (b) Between occupants/squatters and government reservation grantees;
ordains that relief will be denied to a stale demand which otherwise could be a valid claim.64 (c) Between occupants/squatters and public land claimants or applicants;
The subject property having been (d) Petitions for classification, release and/or subdivision of lands of the public domain; and
expressly reserved for a specific (e) Other similar land problems of grave urgency and magnitude.
public purpose, the COSLAP xxxx
cannot exercise jurisdiction over the Citing the constant threat of summary eviction and demolition by the BCDA and the seriousness and urgency of the reliefs sought in its
complaint of the Dream Village Amended Petition, Dream Village insists that the COSLAP was justified in assuming jurisdiction of COSLAP Case No. 99-500. But in Longino
settlers. v. Atty. General,71 it was held that as an administrative agency, COSLAPs jurisdiction is limited to cases specifically mentioned in its enabling
BCDA has repeatedly asserted that the COSLAP has no jurisdiction to hear Dream Villages complaint. Concurring, the CA has ruled that statute, E.O. No. 561. The Supreme Court said:
questions as to the physical identity of Dream Village and whether it lies in Lots 10, 11 and 13 of Swo-00-0001302, or whether Proclamation Administrative agencies, like the COSLAP, are tribunals of limited jurisdiction and, as such, could wield only such as are specifically granted to
No. 172 has released the disputed area for disposition are issues which are "manifestly beyond the scope of the COSLAPs jurisdiction vis-- them by the enabling statutes. x x x.
vis Paragraph 2, Section 3 of E.O. No. 561," 65 rendering its Resolution a patent nullity and its pronouncements void. Thus, the CA said, under xxxx
Section 3 of E.O. No. 561, the COSLAPs duty would have been to refer the conflict to another tribunal or agency of government in view of the Under the law, E.O. No. 561, the COSLAP has two options in acting on a land dispute or problem lodged before it, namely, (a) refer the matter
serious ramifications of the disputed claims: to the agency having appropriate jurisdiction for settlement/resolution; or (b) assume jurisdiction if the matter is one of those enumerated in
In fine, it is apparent that the COSLAP acted outside its jurisdiction in taking cognizance of the case. It would have been more prudent if the paragraph 2(a) to (e) of the law, if such case is critical and explosive in nature, taking into account the large number of the parties involved, the
COSLAP has [sic] just referred the controversy to the proper forum in order to fully thresh out the ramifications of the dispute at bar. As it is, the presence or emergence of social tension or unrest, or other similar critical situations requiring immediate action. In resolving whether to
impugned Resolution is a patent nullity since the tribunal which rendered it lacks jurisdiction. Thus, the pronouncements contained therein are assume jurisdiction over a case or to refer the same to the particular agency concerned, the COSLAP has to consider the nature or
void. "We have consistently ruled that a judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right or the classification of the land involved, the parties to the case, the nature of the questions raised, and the need for immediate and urgent action
creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect." 66 (Citation omitted) thereon to prevent injuries to persons and damage or destruction to property. The law does not vest jurisdiction on the COSLAP over any land
We add that Fort Bonifacio has been reserved for a declared specific public purpose under R.A. No. 7227, which unfortunately for Dream dispute or problem.72(Citation omitted)
Village does not encompass the present demands of its members. Indeed, this purpose was the very reason why title to Fort Bonifacio has The Longino ruling has been consistently cited in subsequent COSLAP cases, among them Davao New Town Development Corp. v.
been transferred to the BCDA, and it is this very purpose which takes the dispute out of the direct jurisdiction of the COSLAP. A review of the COSLAP,73 Barranco v. COSLAP,74 NHA v. COSLAP,75 Cayabyab v. de Aquino,76 Ga, Jr. v. Tubungan,77 Machado v. Gatdula,78 and Vda. de
history of the COSLAP will readily clarify that its jurisdiction is limited to disputes over public lands not reserved or declared for a public use or Herrera v. Bernardo.79
purpose. Thus, in Machado, it was held that the COSLAP cannot invoke Section 3(2)(e) of E.O. No. 561 to assume jurisdiction over "other similar land
On July 31, 1970, President Marcos issued E.O. No. 251 creating the Presidential Action Committee on Land Problems (PACLAP) to expedite problems of grave urgency," since the statutory construction principle of ejusdem generis prescribes that where general words follow an
and coordinate the investigation and resolution of all kinds of land disputes between settlers, streamline and shorten administrative enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest
procedures, adopt bold and decisive measures to solve land problems, or recommend other solutions. 67 E.O. No. 305, issued on March 19, extent but are to be held as applying only to persons or things of the same kind as those specifically mentioned. 80 Following this rule,
1971, reconstituted the PACLAP and gave it exclusive jurisdiction over all cases involving public lands and other lands of the public COSLAPs jurisdiction is limited to disputes involving lands in which the government has a proprietary or regulatory interest, 81 or public lands
domain,68 as well as adjudicatory powers phrased in broad terms: "To investigate, coordinate, and resolve expeditiously land disputes, covered with a specific license from the government such as a pasture lease agreements, a timber concessions, or a reservation grants, 82 and
where moreover, the dispute is between occupants/squatters and pasture lease agreement holders or timber concessionaires; between BIENVENIDO L. REYES
occupants/squatters and government reservation grantees; and between occupants/squatters and public land claimants or applicants. Associate Justice
In Longino, the parties competed to lease a property of the Philippine National Railways. The high court rejected COSLAPs jurisdiction, noting WE CONCUR:
that the disputed lot is not public land, and neither party was a squatter, patent lease agreement holder, government reservation grantee, G.R. No. L-15829 December 4, 1967
public land claimant or occupant, or a member of any cultural minority, nor was the dispute critical and explosive in nature so as to generate ROMAN R. SANTOS, petitioner-appellee,
social tension or unrest, or a critical situation which required immediate action. 83 vs.
In Davao New Town Development Corp., it was held that the COSLAP has no concurrent jurisdiction with the Department of Agrarian Reform HON. FLORENCIO MORENO, as Secretary of Public Works and Communications and JULIAN C. CARGULLO, respondents-
(DAR) in respect of disputes concerning the implementation of agrarian reform laws, since "the grant of exclusive and primary jurisdiction over appellants.
agrarian reform matters on the DAR implies that no other court, tribunal, or agency is authorized to resolve disputes properly cognizable by the Gil R. Carlos and Associates for petitioner-appellee.
DAR."84 Thus, instead of hearing and resolving the case, COSLAP should have simply referred private respondents complaint to the DAR or Office of the Solicitor General for respondents-appellants.
DARAB. According to the Court: BENGZON, J.P., J.:
The abovementioned proviso Section (3)(2) of E.O. No. 561, which vests COSLAP the power to resolve land disputes, does not confer upon THE APPEAL
COSLAP blanket authority to assume every matter referred to it. Its jurisdiction is confined only to disputes over lands in which the government The Honorable Secretary of Public Works & Communications appeals from the decision of the Court of First Instance of Manila declaring of
has proprietary or regulatory interest. Moreover, the land dispute in Baaga involved parties with conflicting free patent applications which was private ownership certain creeks situated in barrio San Esteban, Macabebe, Pampanga.
within the authority of PACLAP to resolve, unlike that of the instant case which is exclusively cognizable by the DAR. 85 THE BACKGROUND
In Barranco, COSLAP issued a writ to demolish structures encroaching into private property.1wphi1 The Supreme court ruled that COSLAP The Zobel family of Spain formerly owned vast track of marshland in the municipality of Macabebe, Pampanga province. Called Hacienda San
may resolve only land disputes "involving public lands or lands of the public domain or those covered with a specific license from the Esteban, it was administered and managed by the Ayala y Cia. From the year 1860 to about the year 1924 Ayala y Cia., devoted the hacienda
government such as a pasture lease agreement, a timber concession, or a reservation grant." 86 to the planting and cultivation of nipa palms from which it gathered nipa sap or "tuba." It operated a distillery plant in barrio San Esteban to turn
In NHA, it was held that COSLAP has no jurisdiction over a boundary dispute between two local government units, that its decision is an utter nipa tuba into potable alcohol which was in turn manufactured into liquor.
nullity correctible by certiorari, that it can never become final and any writ of execution based on it is void, and all acts performed pursuant to it Accessibility through the nipa palms deep into the hacienda posed as a problem. Ayala y Cia., therefore dug canals leading towards the
and all claims emanating from it have no legal effect.87 hacienda's interior where most of them interlinked with each other. The canals facilitated the gathering of tuba and the guarding and patrolling
In Cayabyab, it was held that "the jurisdiction of COSLAP does not extend to disputes involving the ownership of private lands, or those of the hacienda by security guards called "arundines." By the gradual process of erosion these canals acquired the characteristics and
already covered by a certificate of title, as these fall exactly within the jurisdiction of the courts and other administrative agencies." 88 dimensions of rivers.
In Ga, Jr., it was reiterated that the COSLAP has no jurisdiction over controversies relating to ownership and possession of private lands, and In 1924 Ayala y Cia shifted from the business of alcohol production to bangus culture. It converted Hacienda San Esteban from a forest of nipa
thus, the failure of respondents to properly appeal from the COSLAP decision before the appropriate court was held not fatal to the petition for groves to a web of fishponds. To do so, it cut down the nipa palm, constructed dikes and closed the canals criss-crossing the hacienda.
certiorari that they eventually filed with the CA. The latter remedy remained available despite the lapse of the period to appeal from the void Sometime in 1925 or 1926 Ayala y Cia., sold a portion of Hacienda San Esteban to Roman Santos who also transformed the swamp land into
COSLAP decision.89 a fishpond. In so doing, he closed and built dikes across Sapang Malauling Maragul, Quiorang Silab, Pepangebunan, Bulacus, Nigui and
In Machado, the high court ruled that COSLAP has no jurisdiction in disputes over private lands between private parties, reiterating the Nasi.
essential rules contained in Section 3 of E.O. No. 561 governing the exercise by COSLAP of its jurisdiction, to wit: The closing of the man-made canals in Hacienda San Esteban drew complaints from residents of the surrounding communities. Claiming that
Under these terms, the COSLAP has two different rules in acting on a land dispute or problem lodged before it, e.g., COSLAP can assume the closing of the canals caused floods during the rainy season, and that it deprived them of their means of transportation and fishing grounds,
jurisdiction only if the matter is one of those enumerated in paragraph 2(a) to (e) of the law. Otherwise, it should refer the case to the agency said residents demanded re-opening of those canals. Subsequently, Mayor Lazaro Yambao of Macabebe, accompanied by policemen and
having appropriate jurisdiction for settlement or resolution. In resolving whether to assume jurisdiction over a case or to refer it to the particular some residents went to Hacienda San Esteban and opened the closure dikes at Sapang Malauling Maragul Nigui and Quiorang Silab.
agency concerned, the COSLAP considers: (a) the nature or classification of the land involved; (b) the parties to the case; (c) the nature of the Whereupon, Roman Santos filed Civil Case No. 4488 in the Court of First Instance of Pampanga which preliminarily enjoined Mayor Yambao
questions raised; and (d) the need for immediate and urgent action thereon to prevent injury to persons and damage or destruction to property. and others from demolishing the dikes across the canals. The municipal officials of Macabebe countered by filing a complaint (docketed as
The terms of the law clearly do not vest on the COSLAP the general power to assume jurisdiction over any land dispute or problem. Thus, Civil Case No. 4527) in the same court. The Pampanga Court of First Instance rendered judgment in both cases against Roman Santos who
under EO 561, the instances when the COSLAP may resolve land disputes are limited only to those involving public lands or those covered by immediately elevated the case to the Supreme Court.
a specific license from the government, such as pasture lease agreements, timber concessions, or reservation grants. 90 (Citations omitted) In the meantime, the Secretary of Commerce and Communications 1 conducted his own investigation and found that the aforementioned six
In Vda. de Herrera, the COSLAP assumed jurisdiction over a complaint for "interference, disturbance, unlawful claim, harassment and streams closed by Roman Santos were natural, floatable and navigable and were utilized by the public for transportation since time
trespassing" over a private parcel of land. The CA ruled that the parties were estopped to question COSLAPs jurisdiction since they immemorial. He consequently ordered Roman Santos on November 3, 1930 to demolish the dikes across said six streams. However, on May
participated actively in the proceedings. The Supreme Court, noting from the complaint that the case actually involved a claim of title and 8, 1931 the said official revoked his decision of November 3, 1930 and declared the streams in question privately owned because they were
possession of private land, ruled that the RTC or the MTC has jurisdiction since the dispute did not fall under Section 3, paragraph 2 (a) to (e) artificially constructed. Subsequently, upon authority granted under Act 3982 the Secretary of Commerce and Communications entered into a
of E.O. No. 561, was not critical and explosive in nature, did not involve a large number of parties, nor was there social tension or unrest contract with Roman Santos whereby the former recognized the private ownership of Sapang Malauling Maragul, Quiorang Silab,
present or emergent.91 Pepangebunan, Bulacus, Nigui and Nasi and the latter turned over for public use two artificial canals and bound himself to maintain them in
In the case at bar, COSLAP has invoked Baaga to assert its jurisdiction. There, Guillermo Baaga had filed a free patent application with the navigable state. The Provincial Board of Pampanga and the municipal councils of Macabebe and Masantol objected to the contract. However,
Bureau of Lands over a public land with an area of 30 has. Gregorio Daproza (Daproza) also filed a patent application for the same property. the Secretary of Justice, in his opinion dated March 6, 1934, upheld its legality. Roman Santos withdraw his appeals in the Supreme Court.
The opposing claims and protests of the claimants remained unresolved by the Bureau of Lands, and neither did it conduct an investigation. With respect to the portion of Hacienda San Esteban still owned by the Zobel family, the municipal authorities of Macabebe filed in 1930 an
Daproza wrote to the COSLAP, which then opted to exercise jurisdiction over the controversy. The high court sustained COSLAP, declaring administrative complaint, in the Bureau of Public Works praying for the opening of the dikes and dams across certain streams in Hacienda San
that its jurisdiction is not confined to the cases mentioned in paragraph 2(a) to (e) of E.O. No. 561, but includes land problems in general, Esteban. Whereupon, the district engineer of Pampanga and a representative of the Bureau of Public Works conducted investigations. In the
which are frequently the source of conflicts among settlers, landowners and cultural minorities. meantime, the Attorney General, upon a query from the Secretary of Commerce and Communications, rendered an opinion dated October 11,
But as the Court has since clarified in Longino and in the other cases aforecited, the land dispute in Baaga was between private individuals 1930 sustaining the latter's power to declare streams as publicly owned under Sec. 4 of Act 2152, as amended by Act 3208.
who were free patent applicants over unregistered public lands. In contrast, the present petition involves land titled to and managed by a On September 29, 1930 the investigator of the Bureau of Public Works, Eliseo Panopio, submitted his report recommending the removal of the
government agency which has been expressly reserved by law for a specific public purpose other than for settlement. Thus, as we have dikes and dams in question. And on the basis of said report, the Secretary of Commerce and Communications rendered his decision on
advised in Longino, the law does not vest jurisdiction on the COSLAP over any land dispute or problem, but it has to consider the nature or November 3, 1930 ordering Ayala y Cia., to demolish the dikes and dams across the streams named therein situated in Hacienda San
classification of the land involved, the parties to the case, the nature of the questions raised, and the need for immediate and urgent action Esteban. Ayala y Cia., moved for reconsideration, questioning the power of the Secretary of Commerce and Communications to order the
thereon to prevent injuries to persons and damage or destruction to property. demolition of said dikes.
WHEREFORE, premises considered, the petition is DENIED. Days before the Secretary of Commerce and Communications rendered his aforementioned decision, Ayala y Cia., thru counsel, made
SO ORDERED. representations with the Director of Public Works for a compromise agreement. In its letter dated October 11, 1930, Ayala y Cia., offered to
admit public ownership of the following creeks:
Antipolo, Batasan Teracan, Biuas or Batasan, Capiz, Carbon, Cutut, Dalayap, Enrique, Iba, Inaun, Margarita, Malauli or Budbud, Matalaba preliminary injunction. The Solicitor General opposed the motion alleging that the decisions in question had long been issued when the petition
Palapat, Palipit Maisao, Panlovenas, Panquitan, Quinapati, Quiorang, Bubong or Malauli Malati, Salop, Sinubli and Vitas. for injunction was filed, that they were received after preliminary injunction issued because they were transmitted through the District Engineer
provided the rest of the streams were declared private. Acting on said offer, the Director of Public Works instructed the surveyor in his office, of Pampanga to Roman Santos; that their issuance was for Roman Santos' information and guidance; and, that the motion did not allege that
Eliseo Panopio, to proceed to Pampanga and conduct another investigation. respondents took steps to enforce the decision. Acting upon said motion, on July 17, 1959, the trial court considered unsatisfactory the
On January 23, 1931 Panopio submitted his report to the Director of Public Works recommending that some streams enumerated therein be explanation of the Solicitor General but ruled that Secretary Florencio Moreno, Undersecretary M.D. Bautista and Julian Cargullo acted in
declared public and some private on the ground that they were originally dug by the hacienda owners. The private streams were: good faith. Hence, they were merely "admonished to desist from any and further action in this case, observe the preliminary injunction issued
Agape, Atlong, Cruz, Balanga, Batasan, Batasan Matlaue, Balibago, Baliti, Bato, Buengco Malati, Bungalin, Bungo Malati, Bungo Maragui, by this Court, with the stern warning, however, that a repetition of the acts complained of shall be dealt with severely."
Buta-buta, Camastiles, Catlu, Cauayan or Biabas, Cela, Dampalit, Danlimpu, Dilinquente, Fabian, Laguzan, Lalap Maburac, Mabutol, On July 18, 1959 the trial court declared all the streams under litigation private, and rendered the following judgment:
Macabacle, Maragul or Macanduli, Macabacle or Mababo, Maisac, Malande, Malati, Magasawa, Maniup, Manulit, Mapanlao, Maisac, Maragul The Writ of preliminary injunction restraining the respondent Secretary of Public Works & Communications from enforcing the decisions of
Mariablus Malate, Masamaral, Mitulid, Nasi, Nigui or Bulacus, Palipit, Maragul, Pangebonan, Paumbong, Pasco or Culali, Pilapil, Pinac Malati, March 2 And 4, 1959 and all other similar decisions is hereby made permanent.
Pinac, Maragul or Macabacle, Quiorang Silab or Malauli Maragul, Raymundo, Salamin, Salop Maisac, Salop Maragul, Sermon and Sinca or The Secretary of Public Works and Communication and Julian Cargullo appealed to this Court from the order of July 17, 1959 issued in
Mabulog. connection with Roman Santos' motion for contempt and from the decision of the lower court on the merits of the case.
He therefore recommended revocation of the decision already mentioned above, dated November 3, 1930 of the Secretary of Commerce and ISSUES
Communications ordering the demolition of the dikes closing Malauling Maragul, Quiorang, Silab, Pepangebonan, Nigui, Bulacus, Nasi, and The issues are: (1) Did Roman Santos exhaust administrative remedies? (2) Was venue properly laid? (3) Did the lower court err in conducting
Pinac. On February 13, 1931 the Director of Public Works concurred in Panopio's report and forwarded the same the Secretary of Commerce a trial de novo of the case and in admitting evidence not presented during the administrative proceeding? (4) Do the streams involved in this
and Communications. case belong to the public domain or to the owner of Hacienda San Esteban according to law and the evidence submitted to the Department of
On February 25, 1935 the municipality of Macabebe and the Zobel family executed an agreement whereby they recognized the nature of the Public Works and Communications?
streams mentioned in Panopio's report as public or private, depending on the findings in said report. This agreement was approved by the DISCUSSION OF THE ISSUES
Secretary of Public Works and Communications on February 27, 1935 and confirmed the next day by the municipal council of Macabebe 1. Respondents maintain that Roman Santos resorted to the courts without first exhausting administrative remedies available to him, namely,
under Resolution No. 36. (a) motion for reconsideration of the decisions of the Secretary of Public Works and Communications; and, (b) appeal to the President of the
A few months later, that is, on June 12, 1935, the then Secretary of Justice issued an opinion holding that the contract executed by the Zobel Philippines.
family and the municipality of Macabebe has no validity for two reasons, namely, (1) the streams although originally dug by Ayala y Cia., lost Whether a litigant, in exhausting available administrative remedies, need move for the reconsideration of an administrative decision before he
their private nature by prescription inasmuch as the public was allowed to use them for navigation and fishing, citing Mercado vs. Municipality can turn to the courts for relief, would largely depend upon the pertinent law,4the rules of procedure and the usual practice followed in a
of Macabebe, 59 Phil. 592; and (2) at the time the Secretary of Commerce and Communications approved the said contract, he had no more particular office.5
power so to do, because such power under Sec. 2 of Act 2152 was revoked by the amending Act 4175 which took effect on December 7, Republic Act No. 2056 does not require the filing of a motion for reconsideration as a condition precedent to judicial relief. From the context of
1934. the law, the intention of the legislators to forego a motion for reconsideration manifests itself clearly.1awphil.net Republic Act No. 2056
Despite the above ruling of the Secretary of Justice, the streams in question remained closed. underscores the urgency and summary nature of the proceedings authorized thereunder. Thus in Section 2 thereof the Secretary of Public
In 1939 administrative investigations were again conducted by various agencies of the Executive branch of our government culminating in an Works and Communications under pain of criminal liability is duty bound to terminate the proceedings and render his decision within a period
order of President Manuel Quezon immediately before the national elections in 1941 requiring the opening of Sapang Macanduling, Maragul not exceeding 90 days from the filing of the complaint. Under the same section, the party respondent concerned is given not than 30 days
Macabacle, Balbaro and Cansusu. Said streams were again closed in 1942 allegedly upon order of President Quezon. within which to comply with the decision of the Secretary of Public Works and Communications, otherwise the removal of the dams would be
THE CASE done by the Government at the expense of said party. Congress has precisely provided for a speedy and a most expeditious proceeding for
Roman Santos acquired in 1940 from the Zobel family a larger portion of Hacienda San Esteban wherein are located 25 streams which were the removal of illegal obstructions to rivers and on the basis of such a provision it would be preposterous to conclude that it had in mind to
closed by Ayala y Cia., and are now the subject matter in the instant controversy. require a party to file a motion for reconsideration an additional proceeding which would certainly lengthen the time towards the final
Eighteen years later, that is in 1958, Congress enacted Republic Act No. 2056 2 following a congressional inquiry which was kindled by a settlement of existing controversies. The logical conclusion is that Congress intended the decision of the Secretary of Public Works and
speech delivered by Senator Rogelio de la Rosa in the Senate. On August 15, 1958 Senator de la Rosa requested in writing the Secretary of Communications to be final and executory subject to a timely review by the courts without going through formal and time consuming
Public Works and communications to proceed in pursuance of Republic Act No. 2056 against fishpond owners in the province of Pampanga preliminaries.
who have closed rivers and appropriated them as fishponds without color of title. On the same day, Benigno Musni and other residents in the Moreover, the issues raised during the administrative proceedings of this case are the same ones submitted to court for resolution. No new
vicinity of Hacienda San Esteban petitioned the Secretary of Public Works and Communications to open the following streams: matter was introduced during the proceeding in the court below which the Secretary of Public Works and Communications had no opportunity
Balbaro, Batasan Matua, Bunga, Cansusu, Macabacle, Macanduling, Maragul, Mariablus, Malate, Matalabang, Maisac, Nigui, Quiorang to correct under his authority.
Silab, Sapang Maragul and Sepung Bato. Furthermore, Roman Santos assailed the constitutionality of Republic Act No. 2056 and the jurisdiction of the Secretary of Public Works and
Thereupon, the Secretary of Public Works and Communications instructed Julian C. Cargullo to conduct an investigation on the above named Communications to order the demolition of dams across rivers or streams. Those questions are not within the competence of said Secretary to
streams. decide upon a motion for reconsideration. itc-alf They are purely legal questions, not administrative in nature, and should properly be aired
On October 20, 1958 Musni and his co-petitioners amended their petition to include other streams. The amended petition therefore covered before a competent court as was rightly done by petitioner Roman Santos .
the following streams: At any rate, there is no showing in the records of this case that the Secretary of Public Works and Communications adopted rule of procedure
Balbaro, Balili, Banawa, Batasan Matua Bato, Bengco, Bunga, Buta-buta, Camastiles, Cansusu, Cela, Don Timpo, Mabalanga, Mabutol, in investigations authorized under Republic Act No. 2056 which require a party litigant to file a motion for the reconsideration of the Secretary's
Macabacle, Macabacle qng. Iba, Macanduling, Maragul, Malauli, Magasawa, Mariablus Malate Masamaral, Matalabang Maisa, decision before he can appeal to the courts. Roman Santos however stated in his brief that the practice is not to entertain motions for
Mariablus,3 Nigui, Pita, Quiorang, Silab, Sapang Maragul, Sepung Bato, Sinag and Tumbong. reconsideration for the reason that Republic Act No. 2056 does not expressly or impliedly allow the Secretary to grant the same. Roman
On March 2, 4, 10, 30 and 31, and April 1, 1959, the Secretary of Public Works and Communications rendered his decisions ordering the Santos' statement is supported by Opinion No. 61, Series of 1959, dated April 14, 1959 of the Secretary of Justice.
opening and restoration of the channel of all the streams in controversy except Sapang Malauling, Maragul, Quiorang, Silab, Nigui As to the failure of Roman Santos to appeal from the decision of the Secretary of Public Works and Communications to the President of the
Pepangebonan, Nasi and Bulacus, within 30 days on the ground that said streams belong to the public domain. Philippines, suffice it to state that such appeal could be dispensed with because said Secretary is the alter ego of the President. itc-alf The
On April 29, 1959, that is, after receipt of the Secretary's decision dated March 4, 1959, Roman Santos filed a motion with the Court of First actions of the former are presumed to have the implied sanction of the latter.6
Instance of Man for junction against the Secretary of Public Works and Communications and Julian C. Cargullo. As prayed for preliminary 2. It is contended that if this case were considered as an ordinary civil action, venue was improperly laid when the same was instituted in the
injunction was granted on May 8, 1959. The Secretary of Public Work and Communications answered and alleged as defense that venue was Court of First Instance of Manila for the reason that the case affects the title of a real property. In fine, the proposition is that since the
improperly laid; that Roman Santos failed to exhaust administrative remedies; that the contract between Ayala y Cia., and the Municipality of controversy dwells on the ownership of or title to the streams located in Hacienda San Esteban, the case is real action which, pursuant to Sec.
Macabebe is null and void; and, that Section 39 of Act 496 excludes public streams from the operation of the Torrens System. 3 of Rule 5 of the Rules of Court should have been filed in the Court of First Instance of Pampanga.
On April 29 and June 12, 1969, Roman Santos received the decision of the Secretary of Public Works and Communications dated March 10 The mere fact that the resolution of the controversy in this case would wholly rest on the ownership of the streams involved herein would not
and March 30, March 31, and April 1, 1959. Consequently, on June 24, 1959 he asked the court to cite in contempt Secretary Florendo necessarily classify it as a real action. The purpose of this suit is to review the decision of the Secretary of Public Works and Communications
Moreno, Undersecretary M.D. Bautista and Julian Cargullo for issuing and serving upon him the said decisions despite the existence of the to enjoin him from enforcing them and to prevent him from making and issuing similar decisions concerning the stream in Hacienda San
Esteban. The acts of the Secretary of Public Works and Communications are the object of the litigation, that is, petitioner Roman Santos seeks (6) The Panopio Report, which found the streams in question of private ownership was nullified by the Secretary of Justice in his opinion dated
to control them, hence, the suit ought to be filed in the Court of First Instance whose territorial jurisdiction encompasses the place where the June 12, 1935.1awphil.net And, the contract between Ayala y Cia., and the Secretary of Commerce and Communications agreeing on the
respondent Secretary is found or is holding office. For the rule is that outside its territorial limits, the court has no power to enforce its order.7 ownership of the streams in question is ultra vires.
Section 3 of Rule 5 of the Rules of Court does not apply to determine venue of this action. Applicable is Sec. 1 the same rule, which states: The doctrine in Montano vs. Insular Government, supra, that a marshland which is inundated by the rise of the tides belongs to the State and
Sec. 1. General rule. Civil actions in Courts of First Instance may be commenced and tried where the defendant any of the defendants is not susceptible to appropriation by occupation has no application here inasmuch as in said case the land subject matter of the litigation
residents or may be found or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. was not yet titled and precisely Isabelo Montano sought title thereon on the strength of ten years' occupation pursuant to paragraph 6, section
Accordingly, the Petition for injunction who correctly filed in the Court of First Instance of Manila. Respondents Secretary of Public Works and 54 of Act 926 of the Philippine Commission. Whereas, the subject matter in this case Hacienda San Esteban is titled land and private
Communications and Julian Cargullo are found and hold office in the City of Manila. ownership thereof by Ayala y Cia., has been recognized by the King of Spain and later by the Philippine Government when the same was
3. The lower court tried this case de novo. Against this procedure respondents objected and maintained that the action, although captioned as registered under Act 496.
an injunction is really a petition for certiorari to review the decision of the Secretary of Public Works and Communications. Therefore they now Respondents further cite Bautista vs. Alarcon, 23 Phil. 631, where the plaintiff sought injunction against the defendants who allegedly
contend that the court should have confined itself to reviewing the decisions of the respondent Secretary of Public Works and Communications constructed a dam across a public canal which conveyed water from the Obando River to fishponds belonging to several persons. The canal
only on the basis of the evidence presented in the administrative proceedings. On the other hand, Roman Santos now, submits that the action was situated within a public land. In sustaining the injunction granted by the Court of First Instance, this Court said:
is a proceeding independent and distinct from the administrative investigation; that, accordingly, the lower court correctly acted in trying the No private persons has right to usurp possession of a watercourse, branch of a river, or lake of the public domain and use, unless it shall have
case anew and rendering judgment upon evidence adduced during the trial. been proved that he constructed the same within in property of his exclusive ownership , and such usurpation constitutes a violation of the legal
Whether the action instituted in the Court of First Instance be for mandamus, injunction or certiorari is not very material. In reviewing the provisions which explicity exclude such waterways from the exclusive use or possession of a private party. (Emphasis supplied)
decision of the Secretary of Public Works and Communications, the Court of First Instance shall confine its inquiry to the evidence presented As indicated in the above-cited case, a private person may take possession of a watercourse if he constructed the same within his property. itc-
during, the administrative proceedings. Evidence not presented therein shall not be admitted, and considered by the trial court. As aptly by this alf This puts Us into inquiry whether the streams in question are natural or artificial. In so doing, We shall examine only the evidence
Court speaking through Mr. Justice J.B.L. Reyes, in a similar case: presented before the Department of Public Works and Communications and disregard that which was presented for the first time before the
The findings of the Secretary can not be enervated by new evidence not laid before him, for that would be tantamount to holding a new lower court, following our ruling in Lovina vs. Moreno, supra.
investigation, and to substitute for the discretion and judgment of the Secretary the discretion and judgment of the court, to whom the statute (1) Sapang Macanduling Maragul or Macanduli is presently enclosed in Fishpond No. 12 of Roman Santos. Its banks cannot anymore be seen
had not entrusted the case. It is immaterial that the present action should be one for prohibition or injunction and not one for certiorari; in either but some traces of them could be noted by a row of isolated nipa palms. Its water is subject to the rise and fall of the tides coming from
event the case must be resolved upon the evidence submitted to the Secretary, since a judicial review of executive decisions does not import a Guagua and Antipolo Rivers and it is navigable by light watercrafts. Its inlet is Antipolo River; another dike at its outlet along the Palapat
trial de novo, but only an ascertainment of whether the "executive findings are not in violation of the Constitution or of the laws, and are free River.9 It is closed by four dikes: One dike at its inlet along the Antipolo River; another dike at its cutlet along the Palatpat River; and, two dikes
from fraud or imposition, and whether they find reasonable support in the evidence. . . . 8 in between. Then exist channel at the Palapat River where the fishpond gate lies has been filled up with dredge spoils from the Pampanga
The case at bar, no matter what the parties call it, is in reality a review of several administrative decisions of the Secretary of Public Works and River Control Project.
Communications. Being so, it was error for the lower court to conduct a trial de novo. Accordingly, for purposes of this review, only the (2) Sapang Macabacle is found in Fishpond No. 13. Its banks are still evident. This stream is about 30 meters wide, two meters deep and one
evidence presented and admitted in the administrative investigation will be considered in our determination of whether on the basis thereof the and one-half to two kilometers long. Its source is Rio Cansusu. Like Macanduli, its channel is obstructed by four dikes. One of them was
decisions of the Secretary of Public Works and Communications were correct. constructed by the engineers of the Pampanga River Control Project.
4. We come to the question whether the streams involved in this case belong to the public domain or to the owner of Hacienda San Esteban. If (3) Sapang Balbaro which is found in Fishpond No. 13, runs from Canal Enrique near Rio Cansusu to Sapang Macabacle, a distance of about
said streams are public, then Republic Act 2056 applies, if private, then the Secretary of Public Works and Communications cannot order one-half kilometer. It is passable by banca. The closures of this stream consist of two dikes located at each ends on Canal Enrique and
demolition of the dikes and dams across them pursuant to his authority granted by said law. Sapang Macabacle.
First, we come to the question of the constitutionality of Republic Act No. 2056. The lower court held Republic Act No. 2056 constitutional but (4) Sapang Cansusu is a continuation of the Cansusu River. The Cansusu River opens at the Guagua River and allegedly ends at the Palanas
ruled that it was applied by respondents unconstitutionally. That is, it held that Roman Santos was being deprived of his property without due River in front of Barrio San Esteban. At a point near the mouth of Sapang Balbaro, the owners of Hacienda San Esteban built a canal leading
process of law, for the dikes of his fishponds were ordered demolished through an administrative, instead of a judicial, proceeding. This straight to one end of Barrio San Esteban. They called this canal "Canal Enrique." And at the point where Canal Enrique joins Cansusu they
conclusion and rationalization of the lower court amount in effect to declaring the law unconstitutional, stated inversely. Note that the law built a dike across Cansusu, thus closing this very portion of the river which extends up to Palanas River where they built another closure dike.
provides for an expeditious administrative process to determine whether or not a dam or dike should be declare a public nuisance and ordered This closed portion, called "Sapang Cansusu," is now part of Fishpond No. 1.
demolished. And to say that such an administrative process, when put to operation, is unconstitutional is tantamount to saying that the law Sapang Cansusu is half a kilometer long and navigable by banca.
itself violates the Constitution. In Lovina vs. Moreno, supra, We held said law constitutional. We see no reason here to hold otherwise. Appellant's witnesses, Beligno Musni, 41, Macario Quiambao, 96, Roman Manansala, 55 and Castor Quiambao, 76, all residents of Barrio San
Discussing now the applicability of Republic Act 2056, the same applies to two types of bodies of water, namely (1) public navigable rivers, Esteban, testified that prior to their closure, Sapang Macaduli, Macabacle, Balbaro and Cansusu were used as passageway and as fishing
streams, coastal waters, or waterways and (b) areas declared as communal fishing grounds, as provided for in Section 1 thereof: grounds; that people transported through them tuba, 10wood and sasa,11 and that the tuba was brought to the distillery in Barrio San Esteban.
Sec. 1. . . . the construction or building of dams, dikes or any other works which encroaches into any public navigable river, stream, coastal Macario Quiambao testified also that said four streams "were created by God for the town people"; and that if any digging was done it was
waters and any other navigable public waters or waterways as well as the construction or building of dams, dikes or any other works in areas only to deepen the shallow parts to make passage easier. According to witness Anastacio Quiambao said streams were navigable, even
declared as communal fishing grounds, shall be ordered removed as public nuisances or as prohibited constructions as herein provided: . . . Yangco's ship "Cababayan" could pass through. Simplicio Quiambao, 36, and Marcelino Ocampo, 55, stated on direct examination that before
We are not concerned with communal fishing grounds because the streams here involved have not been so declared, but with public closure of the above named four streams, people from the surrounding towns of Guagua, Bacolor, Macabebe, Masantol and Sexmoan fished
navigable streams. The question therefore is: Are the streams in Hacienda San Esteban which are mentioned in the petition of Benigno Musni and navigated in them.
and others, public and navigable? Against the aforementioned, testimonial evidence Roman Santos presented the testimony of Nicanor Donarber, 80, Mariano Guinto, 71, and
Respondents contend that said streams are public on the following grounds: his own. Donarber, who started working as an arundin12 testified that Ayala y Cia., dug Sapang Macanduli, Balbaro and Macabacle; that he
(1) Hacienda San Esteban was formerly a marshland and being so, it is not susceptible to appropriation. It therefore belongs to the State. worked also in the construction together with other workers; and, that as an overseer he inspected their work. Mariano Guinto testified that he
Respondents rely on Montano vs. Insular Government, 12 Phil. 572. worked for Ayala y Cia., as a tuba gatherer; that in order to reach remote nipa groves by banca, they made canals; and, that he was one of the
(2) The streams in question are natural streams. They are tributaries of public streams. Cited are the cases of Samson vs. Dionisio, et al., 11 who worked in the construction of those canals. Roman Santos also testified that Sapang Macanduli, Macabacle, Balbaro and Cansusu are
Phil. 538 and Bautista vs. Alarcon, 23 Phil. 636. artificial canals excavated as far back as 1850 and due to erosion coupled with the spongy nature of the land, they acquired the proportion of
(3) The streams have for their source public rivers, therefore they cannot be classified as canals. rivers; that he joined Sapang Balbaro to Sapang Macabacle because the former was a dying canal; and that Cansusu River is different from
(4) Assuming the streams were artificially made by Ayala y Cia., said titleholder lost ownership over them by prescription when it allowed the Sapang Cansusu Witness Domingo Yumang likewise testified that Sapang Balbaro man-made.
public to use them for navigation for a long time. Respondents cite Mercado vs. Municipal President of Macabebe, 59 Phil. 592. We observe that witnesses positively stated that Sapang Macanduli, Macabacle and Balbaro were made by the owners of Hacienda San
(5) Assuming the streams in question are not mentioned as public in the certificates of title held by Ayala y Cia., over Hacienda San Esteban, Esteban. With respect to Sapang Cansusu none, except Roman Santos himself, testified that Sapang Cansusu is an artificial canal. It is not
still they cannot be considered as privately owned for Section 39 of Act 496 expressly excepts public streams from private ownership. one of the streams found and recommended to be declared private in the Panopio Report. Sapang Cansusu follows a winding course different
and, distinct from that of a canal such as that of Canal Enrique which is straight. Moreover, Sapang Cansusu is a part of Cansusu River,
admittedly a public stream.
(5) Sapang Maragul, Mabalanga and Don Timpo are all part of Fishpond No. 1. Maragul is 600 meters long and 30 to 35 meters wide. (22) Sapang Bengco is found within Fishpond No. 14. 1awphil.net Two hundred meters long, five meters wide, and one meter deep at low tide
Mabalanga is 250 meters in length and 50 meters in width. Don Timpo is 220 meters long and 20 meters wide. All of them are navigable by and 1.50 meters deep at high tide it gets water from Sapang Biabas and connects with Baliling Maisac.19
banca. Maragul and Mabalanga open at Guagua River and join each other inside the hacienda to form one single stream, Sapang Don Timpo, According to Marcos Guinto, a witness for Roman Santos, Sapang Sinag, Balili, Pita Tumbong and Bengco were excavated a long time ago by
which leads to the Matalaba River. Maragul, Mabalanga and Don Timpo, formerly ended inside the hacienda but later Mabalanga was Ayala y Cia.; and that they have a winding course because when they were made the workers followed the location of the nipa palms. 20 On the
connected to Don Timpo. Maragul was connected to Mabalanga and Sapang Cela was extended to join Maragul. other hand, Marcelo Quiambao, testified that Sapang Tumbong is a natural stream and that the reason he said so is because the stream was
Witnesses Nicanor Donarber, Mariano Ocampo and Mariano Guinto testified that Maragul, Mabalanga and Don Timpo are artificial canals dug already there as far back as 1910 when he reached the age of ten. No other oral evidence was presented to contradict the testimony of
by Ayala y Cia., and that they (Donarber and Mariano Guinto) worked in said excavations. 13 Witness Mariano Guinto clarified that Don Timpo Marcos Guinto that the said five streams were artificially made by Ayala y Cia.
was originally dug but Mabalanga and Maragul were formerly small non-navigable streams which were deepened into artificial navigable To show that the streams involved in this case were used exclusively by the hacienda personnel and occasionally by members of their
canals by Ayala y Cia.14 families, Roman Santos introduced the testimony of Eliseo Panopio, Nicanor Donarber, Blas Gaddi, Mariano Ocampo, Mariano Guinto,
Exhibit F, which is a map showing the streams and rivers in Hacienda San Esteban, shows that Maragul, Mabalanga and Don Timpo are more Alejandro Manansala and himself. The witnesses categorically testified that the public was prohibited from using the streams as a means of
or less straight. From the big rivers (Guagua and Matalaba Rivers) they lead deep into the interior of the hacienda, thus confirming the navigation and that the prohibition was enforced by guards called arundines.
testimony that they were built precisely as a means of reaching the interior of the estate by banca. The weight of evidence, therefore, indicate One and all, the evidence, oral and documentary, presented by Roman Santos in the administrative proceedings supports the conclusion of
that said streams are manmade. the lower court that the streams involved in this case were originally man-made canals constructed by the former owners of Hacienda San
(6) Sapang Bunga, now part of Bunga fishpond, gets its water from Sapanga Iba and empties at Sta. Cruz River. It is about 300-400 meters Esteban and that said streams were not held open for public use. This same conclusion was reached 27 years earlier by an investigator of the
long, 5-6 meters wide and 1-1.60 meters deep. Bureau of Public Works whose report and recommendations were approved by the Director of Public Works and submitted to the Secretary of
(7) Sapang Batu is found in Capiz Fishpond. About 300-400 meters long, 4-5 meters wide and 1.50-2.20 meters deep, it starts at Capiz River Commerce and Communications.
and ends at Malauling Maragul. From Capiz River until it intersects Sapang Nigui the stream is called Sapang Batu Commencing from Sapang As stated, pursuant to Act 2152, as amended by Act 3208, the Bureau of Public Works and the Department of Commerce and
Nigui and up to its end at Sapang Malauling Maragul, the stream is called Sapang Batu. Commencing from Sapang Nigui and up to its end at Communications locked into and settled the question of whether or not the streams situated within Hacienda San Esteban are publicly or
Sapang Malauling Maragul, the stream is called Sepong Batu. Sepong Batu is not among those streams declared in the Panopio Report as privately owned. We refer to the so-called Panopio Report which contains the findings and recommendations of Eliseo Panopio, a surveyor in
private. the Bureau of Public Works, who was designated to conduct formal hearings and investigation. Said report found the following streams, among
(8) Sapang Banawa has one end at Palanas River and the other at Sapang Macabacle. It is about 300 meters long, 3-4 meters wide and 1.30- others, of private ownership:
1.40 meters deep. Its whole length is within Fishpond No. 13 of Roman Santos. Camastiles, Cela Balanga, Bato, Batasan, Bengco, Buta-buta, Don Timpo, Mabutol, Macabacle, Macanduli, Malande Malate (Bunga),
(9) Sapang Mabutol is a dead-end stream, that is, it ends inside the hacienda. It opens along Guagua river. Since its closure, it has become Magasawa, Masamaral, Maragul, Mariablus Malate, Matalaba Malate, Nasi, Nigui, Pangebonan and Quiorang Silab
part of Fishpond No. 1. on the ground that
(10) Sapang Buta-buta, like Mabutol, dies inside the hacienda. It connects with Cansusu River and is about 100 meters long, 3-4 meters wide The preponderance of the probatory facts, . . ., shows that the rivers, creeks, esteros and canals listed in (1) have originally been constructed,
and 1.2-1.5 meters deep. It is now a part of Fishpond No. 13. deepened, widened, and lengthened by the owners of the Hacienda San Esteban. That they have been used as means of communication
(11) Sapang Masamaral, another stream which opens at Cansusu River And ends inside the hacienda., is 100-200 meters long, 3-4 meters from one place to another and to the inner most of the nipales, exclusively for the employees, colonos and laborers of the said Hacienda San
wide and 1.50-2 meters deep. It now forms part of Fishpond No. 13. Esteban. That they have never been used by the public for navigation without the express consent of the owners of the said Hacienda. 21
The uncontradicted testimony of Marcos Guinto is that Sapang Bunga, Batu, Sepong Batu, Banawa, Mabutol, Buta-Buta and Masamaral were Bases for the above-quoted conclusion were "the reliable informations gathered from old residents of the locality, from outsiders, the sworn
constructed by Ayala y Cia., to gain access to the nipa the, interior of the hacienda. This testimony tallies with the findings in the Panopio statements obtained from different persons not interested in this case and the comparison of the three plans prepared in 1880, 1906 and
Report which will be discussed herein later. The evidence adduced in the administrative proceeding conducted before a representative of the 1930.22 The persons referred to are Martin Isip, Hilarion Lobo, Emigdio Ignacio, Castor Quiambao, Matias Sunga facio Cruz, Inocencio Dayrit,
Secretary of Public Works and Communications supports the contention that said streams are merely canals built by Ayala y Cia., for easy Gabriel Manansala, Lope Quiambao, Marcelino Bustos and Juan Lara .
passage into the hinterland of its hacienda. On February 13, 1931 the Director of Public Works transmitted the Panopio Report to the Secretary of Commerce and Communications
(12) Sapang Magasawa consists of two streams running parallel to each other commencing from Matalaba River and terminating at Mariablus recommending approval thereof. Later, on February 27, 1935, Secretary of Public Works and Communications De las Alas approved the
Rivers. About 600-700 meters long, 4-5 meters wide and 1.5-2 meters deep, these two streams are navigable by banca. They are enclosed agreement of Ayala y Cia., and the Municipality of Macabebe, concerning the ownership of the streams in Hacienda San Esteban, for being in
within Fishpond No. 1. conformity with said Panopio Report.
(13) Sapang Mariablus Malate, about 3-4 meters wide and 250 meters long, is another stream that ends inside the hacienda and gets its water This agreement of Ayala y Cia and the Municipality of Macabebe which was approved by the Secretary of Public Works and Communications
from Guagua River. It is no part of Fishpond No. 1. only on February 27, 1935, could not however bind the Government because the power of the Secretary of Public Works and Communication
(14) Sapang Matalabang Malate or Maisac opens at Guagua River and ends at Sapang Cela and Matalabang Maragul. This stream, which is to enter thereto had been suppressed by the Philppine Legislature when it enacted Act 4175 which effect on December 7, 1934.
about 800 meters long and 18 meters wide, forms part of Fishpond No. 1 of Roman Santos. Nullity of the aforesaid contract would not of course affect the findings of fact contained in the Panopio Report.
(15) Sapang Batasan Matua about 600 meters long, three meters wide and .80 meters deep at low tide and 1.90 meters deep at high tide In weighing the evidence presented before the administrative investigation which culminated in this appeal, respondent Secretary seemed to
crosses the hacienda from Mariablus River to Cansusu River. It is at present a part of Fishpond No. 1-A. have ignored the Panopio Report and other documentary evidence as well as the testimony of witnesses presented by petitioner but instead
(16) Sapang Camastiles, a dead end stream of about 200 to 300 meters in length, gets its water from Biuas River. It is within Fishpond No. 1. gave credence only to the witnesses of Benigno Musni, et al. Upon review, however, the lower court, taking into account all the evidence
(17) Sapang Cela is within Fishpond No. 1. Its whole length situated inside the hacienda, it opens at Sapang Matalabang Malate or Maisac adduced in the administrative hearing, including the Panopio Report, as well as those presented for the first time before it, sustained
and ends at Sapang Malungkot. Latter Cela was extended to connect with Sapang Maragul. It is about 200 meters long and four meters wide. petitioner's averment that the streams in question were artificially made, hence of private ownership. As stated, this conclusion of the lower
Mariano Guinto, 71, testified without contradiction that Sapang Mariablus Malate and Matalabang Malate were formerly small and non- court which is in accord with the findings of Panopio as contained in his report, finds ample support from the evidence presented and admitted
navigable streams which were dug by Ayala y Cia., 15 while Batasan Matua Camastiles, Magasawa and Cela are original canals made by Ayala in the administrative investigation. Accordingly, we see no merit in disturbing the lower court's findings fact.
y Cia.,16 that he was one of those who worked in the construction of said canals; and that it took years to construct them. All these streams We next consider the issue of whether under pertinent laws, the streams in question are public or private.
were recommended in the Panopio Report for declaration as private streams. We quote Articles 339, 407 and 408 of the Spanish Civil Code of 1889:
(18) Sapang Sinag, 200 meters long, four to five meters wide, one meter and one and one-half meters deep at low and high tides, respectively, Art. 339. Property of public ownerships is
gets its water from Cutod River and leads inside the hacienda to connect with Sapang Atlong Cruz, a stream declared private in the Panopio 1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, river banks, shores,
Report. It is now inside Fishpond No. 14. roadsteads, and that of a similar character;
(19) Sapang Balili, also found inside Fishpond No. 14, is about 200 meters long, three to four meters wide and one meter deep at low tide. Art. 407. The following are of public ownership:
From its mouth at Cutod River it drifts into the interior of the hacienda and joins Sapang Bengco.17 1. Rivers and their natural channels;
(20) Sapang Pita is within Fishpond Capiz. It takes water from Capiz River but dies 250 meters inside the hacienda. It is about four to five 2. Continuous or intermittent waters from springs or brooks running in their natural channels and the channels themselves.
meters wide, and one meter deep at low tide and 1.50 meters deep at high tide. 3. Waters rising continuously or intermittently on lands of public ownership;
(21) Sapang Tumbong, situated inside Capiz Fishpond, derives its water from Sapang Quiorang Silab, a stream declared private by the 4. Lakes and ponds formed by nature, on public lands, and their beds;
Secretary of Public Works and Communications, and ends inside the hacienda. 18 5. Rain waters running through ravines or sand beds, the channels of which are of public ownership;
6. Subterranean waters on public lands; The petition for the opening of Sapang Malauling Maragul, Quiorang Silab, Nigui, Pepangebunan, Nasi and Bulacus was dismissed by the
7. Waters found within the zone of operation of public works, even though constructed under contract; Secretary of Public Works and Communications and the case considered closed. The said administrative decision has not been questioned in
8. Waters which flow continuously or intermittently from lands belonging to private persons, to the State, to provinces, or to towns, from the this appeal by either party. Hence, they are deemed excluded herein.
moment they leave such lands; All the other streams, being artificial and devoted exclusively for the use of the hacienda owner and his personnel, are declared of private
9. The waste waters of fountains, sewers, and public institutions. ownership. Hence, the dams across them should not he ordered demolished as public nuisances.
Art. 408. The following are of private ownership: With respect to the issue of contempt of court on the part of the Secretary of Public Works and Communications and Julian Cargullo for the
1. Waters, either continuous or intermittent rising on private etates, while they run through them; alleged issuance of a administrative decisions ordering demolition of dikes involved in this case after the writ of injunction was granted and
2. Lakes and ponds and their beds when formed by nature on such estates; served, suffice it to state that the lower court made no finding of contempt of court. Necessarily, there is no conviction for contempt reviewable
3. Subterranean waters found therein; by this Court and any discussion on the matter would be academic.
4. Rain water falling thereon as long as their bounderies. WHEREFORE, the decision appealed from is affirmed, except as to Sapang Cansusu which is hereby declared public and as to which the
5. The channels of flowing streams, continuous or intermittent, formed by rain water, and those of brooks crossing estates which are not of judgment of the lower court is reversed. No costs. So ordered.
public ownership. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal. Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
The water, bed, banks, and floodgates of a ditch or aqueduct are deemed to be an integral part of the estate or building for which the waters
are intended. The owners of estates through or along the boundaries of which the aqueduct passes can assert no ownership over it, nor any
right to make use. of it beds or banks, unless they base their claims on title deed which specify the right or the ownership claimed.
Footnotes
Articles 71 and 72 of the Spanish Law of Waters of August 3, 1866 state:
G.R. No. 163767 March 10, 2014
Art. 71. The water-beds of all creeks belong to the owners of the estates or lands over which they flow.
REPUBLIC OF THE PHILIPPINES, represented by THE DIRECTOR OF LANDS, Petitioner,
Art. 72. The water-beds on public land, of creeks through which spring waters run, are a part of the public domain.
vs.
The natural water-beds or channels of rivers are also part of the public domain.
ROSARIO DE GUZMAN VDA. DE JOSON, Respondent.
Pursuant to Article 71 of the Spanish Law of Waters of August 3, 1866, and Article 408(5) of the Spanish Civil Code, channels of creeks and
DECISION
brooks belong to the owners of estates over which they flow. The channels, therefore, of the streams in question which may be classified
BERSAMIN, J.:
creeks, belong to the owners of Hacienda San Esteban.
This case concerns the discharge of the burden of proof by the applicant in proceedings for the registration of land under Section 14 (1) and
The said streams, considered as canals, of which they originally were, are of private ownership in contemplation of Article 339(l) of the
(2) of Presidential Decree No. 1529 (Property Registration Decree).
Spanish Civil Code. Under Article 339, canals constructed by the State and devoted to public use are of public ownership. Conversely, canals
The Republic appeals the adverse decision promulgated on January 30, 2004, 1 whereby the Court of Appeals (CA) affirmed the judgment
constructed by private persons within private lands and devoted exclusively for private use must be of private ownership.
rendered on August 10, 1981 by the erstwhile Court of First Instance (CFI) of Bulacan (now the Regional Trial Court) in Registration Case No.
Our attention has been called to the case of Mercado v. Municipal President of Macabebe, 59 Phil. 592. There the creek (Batasan-Limasan)
3446-M granting the application of the respondent for the registration of her title covering a parcel of land situated in San Isidro, Paombong,
involved was originally dug by the estate's owner who, subsequently allowed said creek to be used by the public for navigation and fishing
Bulacan.2
purposes for a period of 22 years. Said this Court through Mr. Justice Diaz:
The respondent filed her application for land registration in the CFI in Bulacan. 3 The jurisdictional requirements were met when the notice of
And even granting that the Batasan-Limasan creek acquired the proportions which it had, before it was closed, as a result of excavations
initial hearing was published in the Official Gazette for two successive weeks, 4 as evidenced by a certification of publication. 5 The notice of
made by laborers of the appellant's predecesor in interest, it being a fact that, since the time it was opened as a water route between the Nasi
initial hearing was also posted by the Provincial Sheriff of Bulacan in a conspicuous place in the municipal building of Paombong, Bulacan as
River and Limasan creek, the owners thereof as well as strangers, that is, both the residents of the hacienda and those of other nearby barrios
well as on the property itself.6On June 2, 1977, at the initial hearing of the application, Fiscal Liberato L. Reyes interposed an opposition in
and municipalities, had been using it not only for their bancas to pass through but also for fishing purposes, and it being also a fact that such
behalf of the Director of Lands and the Bureau of Public Works. Upon motion by the respondent and without objection from Fiscal Reyes, the
was the condition of the creek at least since 1906 until it was closed in 1928, if the appellant and her predecessors in interest had acquired
CFI commissioned the Acting Deputy Clerk of Court to receive evidence in the presence of Fiscal Reyes.7
any right to the creek in question by virtue of excavations which they had made thereon, they had such right through prescription, inasmuch as
The records show that the land subject of the application was a riceland with an area of 12,342 square meters known as Lot 2633, Cad-297,
they failed to obtain, and in fact they have not obtained, the necessary authorization to devote it to their own use to the exclusion of all others.
Paombong, Bulacan, and covered by plan Ap-03-001603; 8 that the riceland had been originally owned and possessed by one Mamerto
The use and enjoyment of a creek, as any other property simceptible of appropriation, may be acquired or lost through prescription, and the
Dionisio since 1907;9 that on May 13, 1926, Dionisio, by way of a deed of sale, 10 had sold the land to Romualda Jacinto; that upon the death of
appellant and her predecessors in interest certainly lost such right through the said cause, and they cannot now claim it exclusively for
Romualda Jacinto, her sister Maria Jacinto (mother of the respondent) had inherited the land; that upon the death of Maria Jacinto in 1963, the
themselves after the general public had been openly using the same from 1906 to 1928. . . .
respondent had herself inherited the land, owning and possessing it openly, publicly, uninterruptedly, adversely against the whole world, and in
In the cited case, the creek could have been of private ownership had not its builder lost it by prescription. Applying the principle therein
the concept of owner since then; that the land had been declared in her name for taxation purposes; and that the taxes due thereon had been
enunciated to the case at bar, the conclusion would be inevitably in favor of private ownership, considering that the owners of Hacienda San
paid, as shown in Official Receipt No. H-7100234.11
Esteban held them for their exclusive use and prohibited the public from using them.
In their opposition filed by Fiscal Reyes, 12 the Director of Lands and the Director of Forest Development averred that whatever legal and
It may be noted that in the opinion, mentioned earlier, issued on June 12, 1935, the Secretary of Justice answered in the negative the query of
possessory rights the respondent had acquired by reason of any Spanish government grants had been lost, abandoned or forfeited for failure
the Secretary of Public Works and Communications whether the latter can declare of private ownership those streams which "were dug up
to occupy and possess the land for at least 30 years immediately preceding the filing of the application; 13 and that the land applied for, being
artificially", because it was assumed that the streams were used "by the public as fishing ground and in transporting their commerce in bancas
actually a portion of the Labangan Channel operated by the Pampanga River Control System, could not be subject of appropriation or land
or in small crafts without the objection of the parties who dug" them. Precisely, Mercado v. Municipality of Macabebe was given application
registration.14
therein. However, the facts, as then found by the Bureau of Public Works, do not support the factual premise that the streams in question were
The Office of the Solicitor General (OSG) also filed in behalf of the Government an opposition to the application, 15insisting that the land was
used by the public "without the objection of the parties who dug" them. We cannot therefore take as controlling in determining the merits of this
within the unclassified region of Paombong, Bulacan, as indicated in BF Map LC No. 637 dated March 1, 1927; that areas within the
the factual premises and the legal conclusion contained in said opinion.
unclassified region were denominated as forest lands and thus fell under the exclusive jurisdiction, control and authority of the Bureau of
The case at bar should be differentiated from those cases where We held illegal the closing and/or appropriation of rivers or streams by
Forest Development (BFD);16 and that the CFI did not acquire jurisdiction over the application considering that: (1) the land was beyond the
owners of estates through which they flow for purposes of converting them into fishponds or other works. 23 In those cases, the watercourses
commerce of man; (2) the payment of taxes vested no title or ownership in the declarant or taxpayer.17
which were dammed were natural navigable streams and used habitually by the public for a long time as a means of navigation . Consequently,
Ruling ofthe CFI
they belong to the public domain either as rivers pursuant to Article 407 (1) of the Spanish Civil Code of 1889 or as property devoted to public
On August 10, 1981, the CFI rendered its decision, 18 ordering the registration of the land in favor of the respondent on the ground that she had
use under Article 339 of the same code. Whereas, the streams involved in this case were artificially made and devoted to the exclusive use of
sufficiently established her open, public, continuous, and adverse possession in the concept of an owner for more than 30 years, to wit:
the hacienda owner.
Since it has been established that the applicants and her predecessors-in-interest have been in the open, public, continuous, and adverse
Finally, Sapang Cansusu, being a natural stream and a continuation of the Cansusu River, admittedly a public stream, belongs to the public
possession of the said parcel of land in the concept of an owner for more than thirty (30) years, that it, since 1926 up to the present time,
domain. Its closure therefore by the predecessors of Roman Santos was illegal.
applicant therefore is entitled to the registration thereof under the provisions od Act No. 496, in relation to Commonwealth Act No. 141 as
amended by Republic Act No. 6236 and other existing laws.
WHEREFORE, confirming the order of general default issued in this case, the Court hereby orders the registration of this parcel of land Lot As the law now stands, a mere showing of possession and occupation for 30 years or more is not sufficient. Therefore, since the effectivity of
2633, Cad 297. Case 5, Paombong Cadastre[)] described in plan Ap-03-001603 (Exhibit D, page 7 of records) and in the technical description PD 1073 on 25 January 1977, it must now be shown that possession and occupation of the piece of land by the applicant, by himself or
(Exhibit F, page 5 of records) in favor of Rosario de Guzman Vda de Joson, of legal age, Filipino, widow and resident of Malolos, Bulacan. through his predecessors-in-interest, started on 12 June 1945 or earlier. This provision is in total conformity with Section 14(1) of PD 1529. 26
After the decision shall have become final, let the corresponding decree be issued, Under Section 14(1), therefore, the respondent had to prove that: (1) the land formed part of the alienable and disposable land of the public
SO ORDERED19. domain; and (2) she, by herself or through her predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession
The Republic, through the OSG, appealed to the CA, contending that the trial court had erred in granting the application for registration despite and occupation of the subject land under a bona fide claim of ownership from June 12, 1945, or earlier. 27 It is the applicant who carries the
the land not being the subject of land registration due to its being part of the unclassified region denominated as forest land of Paombong, burden of proving that the two requisites have been met. Failure to do so warrants the dismissal of the application.
Bulacan.20 The respondent unquestionably complied with the second requisite by virtue of her having been in open, continuous, exclusive and notorious
Judgment of the CA possession and occupation of the land since June 12, 1945, or earlier. She testified on how the land had been passed on to her from her
On January 30, 2004, the CA promulgated its assailed judgment,21 affirming the decision of the trial court upon the following ratiocination: predecessors-in-interest; and tendered documentary evidence like: (1) the Deed of Sale evidencing the transfer of the property from Mamerto
The foregoing documentary and testimonial evidence stood unrebutted and uncontroverted by the oppositor-appellant and they should serve Dionisio to Romualda Jacinto in 1926; 28 (2) Tax Declaration No. 4547 showing that she had declared the property for taxation purposes in
as proof of the paucity of the claim of the applicant-appellee over the subject property. 1976;29 and (3) Official Receipt No. H-7100234 indicating that she had been paying taxes on the land since 1977. 30 The CFI found her
Upon the other hand, oppositor-appellant, in a lackluster fashion, advanced pro forma theories and arguments in its Opposition which naturally possession of the land and that of her predecessors-in-interest to have been open, public, continuous, and adverse in the concept of an owner
failed to merit any consideration from the court a quo and also from this Court. The indorsement from the Bureau of Forest Development, San since 1926 until the present time, or for more than 30 years, entitling her to the registration under the provisions of Act No. 496, in relation to
Fernando, Pampanga to the effect that the subject area is within the unclassified region of Paombong, Bulacan does not warrant any Commonwealth Act No. 141, as amended by Republic Act No. 6236 and other existing laws. 31 On its part, the CA ruled that the documentary
evidentiary weight since the same had never been formally offered as evidence by the oppositor-appellant. All the other allegations in the and testimonial evidence stood unrebutted and uncontroverted by the Republic.32
Opposition field (sic) by the oppositor-appellant failed to persuade this Court as to the veracity thereof considering that no evidence was ever Nonetheless, what is left wanting is the fact that the respondent did not discharge her burden to prove the classification of the land as
presented to prove the said allegations. demanded by the first requisite. She did not present evidence of the land, albeit public, having been declared alienable and disposable by the
Such being the case, this Court is not inclined to have the positive proofs of her registrable rights over the subject property adduced by the State. During trial, she testified that the land was not within any military or naval reservation, and Frisco Domingo, her other witness,
applicant-appellee be defeated by the bare and unsubstantiated allegations of the oppositor-appellant. corroborated her. Although the Republic countered that the verification made by the Bureau of Forest Development showed that the land was
WHEREFORE, PREMISES CONSIDERED, the assailed Decision is hereby AFFIRMED IN TOTO. within the unclassified region of Paombong, Bulacan as per BF Map LC No. 637 dated March 1, 1927, 33 such showing was based on the 1st
SO ORDERED.22 Indorsement dated July 22, 1977 issued by the Bureau of Forest Development, 34 which the CA did not accord any evidentiary weight to for
Hence, the Republic appeals by petition for review on certiorari. failure of the Republic to formally offer it in evidence. Still, Fiscal Reyes, in the opposition he filed in behalf of the Government, argued that the
Issue land was a portion of the Labangan Channel operated by the Pampanga River Control System, and could not be the subject of appropriation
(1) WHETHER OR NOT THE LAND SUBJECT OF THE APPLICATION FOR REGISTRATION IS SUSCEPTIBLE OF PRIVATE ACQUISITION; or land registration. Thus, the respondent as the applicant remained burdened with proving her compliance with the first requisite.
and Belatedly realizing her failure to prove the alienable and disposable classification of the land, the petitioner attached as Annex A to her
(2) WHETHER OR NOT THE TRIAL COURT, AS WELL AS THE COURT OF APPEALS, ERRED IN GRANTING THE APPLICATION FOR appellees brief35 the certification dated March 8, 2000 issued by the Department of Environment and Natural ResourcesCommunity
REGISTRATION.23 Environment and Natural Resources Office (DENR-CENRO),36viz:
Ruling THIS IS TO CERTIFY that the parcel of land described on lot 2633 located at San Isidro, Paombong, Bulacan as shown in the sketch plan
The appeal is impressed with merit. surveyed by Geodetic Engineer Carlos G. Reyes falls within the Alienable or Disposable Land Project No. 19 of Paombong, Bulacan per Land
Section 14 (1) and (2) of the Property Registration Decree state: Classification Map No. 2934 certified on October 15, 1980.
Section 14. Who may apply. The following persons may file in the proper [Regional Trial Court] an application for registration of title to land, However, in its resolution of July 31, 2000, 37 the CA denied her motion to admit the appellees brief, and expunged the appellees brief from the
whether personally or through their duly authorized representatives: records. Seeing another opportunity to make the certification a part of the records, she attached it as Annex A of her comment here. 38 Yet, that
(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession attempt to insert would not do her any good because only evidence that was offered at the trial could be considered by the Court.
and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. Even had the respondents effort to insert the certification been successful, the same would nonetheless be vain and ineffectual. In Menguito v.
(2) Those who have acquired ownership of private lands by prescription under the provision of existing laws. Republic,39 the Court pronounced that a survey conducted by a geodetic engineer that included a certification on the classification of the land
xxxx as alienable and disposable was not sufficient to overcome the presumption that the land still formed part of the inalienable public domain, to
Section 14(1) deals with possession and occupation in the concept of an owner while Section 14(2) involves prescription as a mode of wit:
acquiring ownership. In Heirs of Mario Malabanan v. Republic, 24 the Court set the guidelines concerning land registration proceedings brought To prove that the land in question formed part of the alienable and disposable lands of the public domain, petitioners relied on the printed
under these provisions of the Property Registration Decree in order provide clarity to the application and scope of said provisions. words which read: "This survey plan is inside Alienable and Disposable Land Area, Project No. 27-B as per L.C. Map No. 2623, certified by the
The respondent sought to have the land registered in her name by alleging that she and her predecessors-in-interest had been in open, Bureau of Forestry on January 3, 1968," appearing on Exhibit "E" (Survey Plan No. Swo-13-000227).
peaceful, continuous, uninterrupted and adverse possession of the land in the concept of owner since time immemorial. However, the Republic This proof is not sufficient. Section 2, Article XII of the 1987 Constitution, provides: "All lands of the public domain, waters, minerals, coal,
counters that the land was public land; and that it could not be acquired by prescription. The determination of the issue hinges on whether or petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
not the land was public; if so, whether the respondent satisfactorily proved that the land had already been declared as alienable and resources are owned by the State. x x x." (Emphasis supplied.)
disposable land of the public domain; and that she and her predecessors-in-interest had been in open, peaceful, continuous, uninterrupted and For the original registration of title, the applicant (petitioners in this case) must overcome the presumption that the land sought to be registered
adverse possession of the land in the concept of owner since June 12, 1945, or earlier. forms part of the public domain. Unless public land is shown to have been reclassified or alienated to a private person by the State, it remains
In Republic vs. Tsai,25 the Court summarizes the amendments that have shaped the current phraseology of Section 14(1), to wit: part of the inalienable public domain. Indeed, "occupation thereof in the concept of owner, no matter how long, cannot ripen into ownership
Through the years, Section 48(b) of the CA 141 has been amended several times. The Court of Appeals failed to consider the amendment and be registered as a title." To overcome such presumption, incontrovertible evidence must be shown by the applicant. Absent such evidence,
introduced by PD 1073. In Republic v. Doldol, the Court provided a summary of these amendments: the land sought to be registered remains inalienable.
The original Section 48(b) of C.A. No.141 provided for possession and occupation of lands of the public domain since July 26, 1894. This was In the present case, petitioners cite a surveyor-geodetic engineers notation in Exhibit "E" indicating that the survey was inside alienable and
superseded by R.A. No. 1942, which provided for a simple thirty-year prescriptive period of occupation by an applicant for judicial confirmation disposable land. Such notation does not constitute a positive government act validly changing the classification of the land in question. Verily,
of imperfect title. The same, however, has already been amended by Presidential Decree No. 1073, approved on January 25, 1977. As a mere surveyor has no authority to reclassify lands of the public domain. By relying solely on the said surveyors assertion, petitioners have
amended, Section 48(b) now reads: not sufficiently proven that the land in question has been declared alienable.40
(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession We reiterate the standing doctrine that land of the public domain, to be the subject of appropriation, must be declared alienable and disposable
and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier, either by the President or the Secretary of the DENR. In Republic v. T.A.N. Properties, Inc., 41 we explicitly ruled:
immediately preceding the filing of the application for confirmation of title, except when prevented by war or force majeure. These shall be The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the
conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per
the provisions of this chapter. (Emphasis supplied) verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be object of the commerce of man; Article 1113 provides that all things within the commerce of man are susceptible to prescription; and the same
established to prove that the land is alienable and disposable.42 provision further provides that patrimonial property of the State may be acquired by prescription.
This doctrine unavoidably means that the mere certification issued by the CENRO or PENRO did not suffice to support the application for Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public dominion, when no longer intended for public use or for public
registration, because the applicant must also submit a copy of the original classification of the land as alienable and disposable as approved service, shall form part of the patrimonial property of the State." It is this provision that controls how public dominion property may be
by the DENR Secretary and certified as a true copy by the legal custodian of the official records. As the Court said in Republic v. Bantigue converted into patrimonial property susceptible to acquisition by prescription. After all, Article 420 (2) makes clear that those property "which
Point Development Corporation:43 belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth" are
The Regalian doctrine dictates that all lands of the public domain belong to the State. The applicant for land registration has the burden of public dominion property. For as long as the property belongs to the State, although already classified as alienable or disposable, it remains
overcoming the presumption of State ownership by establishing through incontrovertible evidence that the land sought to be registered is property of the public dominion if when it is "intended for some public service or for the development of the national wealth". 1wphi1
alienable or disposable based on a positive act of the government. We held in Republic v. T.A.N. Properties, Inc. that a CENRO certification is Accordingly, there must be an express declaration by the State that the public dominion property is no longer intended for public service or the
insufficient to prove the alienable and disposable character of the land sought to be registered. The applicant must also show sufficient proof development of the national wealth or that the property has been converted into patrimonial. Without such express declaration, the property,
that the DENR Secretary has approved the land classification and released the land in question as alienable and disposable. even if classified as alienable or disposable, remains property of the public dominion, pursuant to Article 420(2), and thus incapable of
Thus, the present rule is that an application for original registration must be accompanied by (1) a CENRO or PENRO Certification; and (2) a acquisition by prescription. It is only when such alienable and disposable lands are expressly declared by the State to be no longer intended
copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. for public service or for the development of the national wealth that the period of acquisitive prescription can begin to run. Such declaration
Here, respondent Corporation only presented a CENRO certification in support of its application. Clearly, this falls short of the requirements for shall be in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is duly authorized by law.
original registration.44 It is comprehensible with ease that this reading of Section 14(2) of the Property Registration Decree limits its scope and reach and thus affects
Yet, even assuming that the DENR-CENRO certification alone would have sufficed, the respondents application would still be denied the registrability even of lands already declared alienable and disposable to the detriment of the bona fide possessors or occupants claiming
considering that the reclassification of the land as alienable or disposable came only after the filing of the application in court in 1976. The title to the lands. Yet this interpretation is in accord with the Regalian doctrine and its concomitant assumption that all lands owned by the
certification itself indicated that the land was reclassified as alienable or disposable only on October 15, 1980. The consequence of this is State, although declared alienable or disposable, remain as such and ought to be used only by the Government.
fittingly discussed in Heirs of Mario Malabanan v. Republic, to wit: Recourse does not lie with this Court in the matter. 1wphi1 The duty of the Court is to apply the Constitution and the laws in accordance with
We noted in Naguit that it should be distinguished from Bracewell v. Court of Appeals since in the latter, the application for registration had their language and intent. The remedy is to change the law, which is the province of the legislative branch. Congress can very well be
been filed before the land was declared alienable or disposable. The dissent though pronounces Bracewell as the better rule between the two. entreated to amend Section 14(2) of the Property Registration Decree and pertinent provisions of the Civil Code to liberalize the requirements
Yet two years after Bracewell, its ponente, the esteemed Justice Consuelo Ynares-Santiago, penned the ruling in Republic v. Ceniza, which for judicial confirmation of imperfect or incomplete titles.46
involved a claim of possession that extended back to 1927 over a public domain land that was declared alienable and disposable only in 1980. The period of possession prior to the reclassification of the land as alienable and disposable land of the public domain is not considered in
Ceniza cited Bracewell, quoted extensively from it, and following the mindset of the dissent, the attempt at registration in Ceniza should have reckoning the prescriptive period in favor of the possessor. As pointedly clarified also in Heirs of Mario Malabanan v. Republic: 47
failed. Not so. Should public domain lands become patrimonial because they are declared as such in a duly enacted law or duly promulgated proclamation
To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the that they are no longer intended for public service or for the development of the national wealth, would the period of possession prior to the
government such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands conversion of such public dominion into patrimonial be reckoned in counting the prescriptive period in favor of the possessors? We rule in the
investigators; and a legislative act or a statute. negative.
In this case, private respondents presented a certification dated November 25, 1994, issued by Eduardo M. Inting, the Community The limitation imposed by Article 1113 dissuades us from ruling that the period of possession before the public domain land becomes
Environment and Natural Resources Officer in the Department of Environment and Natural Resources Office in Cebu City, stating that the lots patrimonial may be counted for the purpose of completing the prescriptive period. Possession of public dominion property before it becomes
involved were "found to be within the alienable and disposable (sic) Block-I, Land Classification Project No. 32-A, per map 2962 4-I555 dated patrimonial cannot be the object of prescription according to the Civil Code. As the application for registration under Section 14(2) falls wholly
December 9, 1980." This is sufficient evidence to show the real character of the land subject of private respondents application. Further, the within the framework of prescription under the Civil Code, there is no way that possession during the time that the land was still classified as
certification enjoys a presumption of regularity in the absence of contradictory evidence, which is true in this case. Worth noting also was the public dominion property can be counted to meet the requisites of acquisitive prescription and justify registration. 48
observation of the Court of Appeals stating that: In other words, the period of possession prior to the reclassification of the land, no matter how long, was irrelevant because prescription did
[n]o opposition was filed by the Bureaus of Lands and Forestry to contest the application of appellees on the ground that the property still not operate against the State before then.
forms part of the public domain. Nor is there any showing that the lots in question are forestal land...." WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals promulgated on January 30, 2004; DISMISSES
Thus, while the Court of Appeals erred in ruling that mere possession of public land for the period required by law would entitle its occupant to the application for land registration of respondent Rosario de Guzman Vda. De Joson respecting Lot 2633, Cad-297 with a total area of 12,342
a confirmation of imperfect title, it did not err in ruling in favor of private respondents as far as the first requirement in Section 48(b) of the square meters, more or less, situated in San Isidro, Paombong, Bulacan; and DIRECTS the respondent to pay the costs of suit.
Public Land Act is concerned, for they were able to overcome the burden of proving the alienability of the land subject of their application. SO ORDERED.
As correctly found by the Court of Appeals, private respondents were able to prove their open, continuous, exclusive and notorious possession LUCAS P. BERSAMIN
of the subject land even before the year 1927. As a rule, we are bound by the factual findings of the Court of Appeals. Although there are Associate Justice
exceptions, petitioner did not show that this is one of them." ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES, TEODORO and MYRNA, all surnamed
Why did the Court in Ceniza, through the same eminent member who authored Bracewell, sanction the registration under Section 48(b) of MANECLANG, petitioners,
public domain lands declared alienable or disposable thirty-five (35) years and 180 days after 12 June 1945? The telling difference is that in vs.
Ceniza, the application for registration was filed nearly six (6) years after the land had been declared alienable or disposable, while in THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO CASTRO, SALOME RODRIGUEZ, EDUCARDO
Bracewell, the application was filed nine (9) years before the land was declared alienable or disposable. That crucial difference was also CUISON, FERNANDO ZARCILLA, MARIANO GABRIEL, NICOMEDES CORDERO, CLETO PEDROZO, FELIX SALARY and
stressed in Naguit to contradistinguish it from Bracewell, a difference which the dissent seeks to belittle. 45 (citations omitted) JOSE PANLILIO, respondents.
On the other hand, under Section 14(2), ownership of private lands acquired through prescription may be registered in the owners name. Did Loreto Novisteros for petitioners.
the respondent then acquire the land through prescription considering that her possession and occupation of the land by her and her Corleto R. Castro for respondents.
predecessors-in-interest could be traced back to as early as in 1926, and that the nature of their possession and occupation was that of a
bona fide claim of ownership for over 30 years? FERNAN, J.:
Clearly, the respondent did not. Again, Heirs of Mario Malabanan v. Republic is enlightening, to wit: Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of Pangasinan, Branch XI a complaint for quieting of title
It is clear that property of public dominion, which generally includes property belonging to the State, cannot be the object of prescription or, over a certain fishpond located within the four [41 parcels of land belonging to them situated in Barrio Salomague, Bugallon, Pangasinan, and
indeed, be subject of the commerce of man. Lands of the public domain, whether declared alienable and disposable or not, are property of the annulment of Resolutions Nos. 38 and 95 of the Municipal Council of Bugallon Pangasinan. The trial court dismissed the complaint in a
public dominion and thus insusceptible to acquisition by prescription. decision dated August 15, 1975 upon a finding that the body of water traversing the titled properties of petitioners is a creek constituting a
Let us now explore the effects under the Civil Code of a declaration by the President or any duly authorized government officer of alienability tributary of the Agno River; therefore public in nature and not subject to private appropriation. The lower court likewise held that Resolution No.
and disposability of lands of the public domain. Would such lands so declared alienable and disposable be converted, under the Civil Code, 38, ordering an ocular inspection of the Cayangan Creek situated between Barrios Salomague Sur and Salomague Norte, and Resolution No.
from property of the public dominion into patrimonial property? After all, by connotative definition, alienable and disposable lands may be the
95 authorizing public bidding for the lease of all municipal ferries and fisheries, including the fishpond under consideration, were passed by In Civil Case No. 5242, petitioner Samela adduced in evidence a copy of her Transfer Certificate of Title, plan of consolidation, subdivision
respondents herein as members of the Municipal Council of Bugallon, Pangasinan in the exercise of their legislative powers. survey, the tax declaration in her name, and affidavits of petitioner Usero and a certain Justino Gamela whose property was located beside the
Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed the same on April 29, 1983. Hence, this petition for perimeter wall of Pilar Village.
review on certiorari. The spouses Polinar, on the other hand, presented in evidence their own TCT; a barangay certification as to the existence of the creek; a
Acting on the petition, the Court required the respondents to comment thereon. However, before respondents could do so, petitioners certification from the district engineer that the western portion of Pilar Village is bound by a tributary of Talon Creek throughout its entire length;
manifested that for lack of interest on the part of respondent Alfredo Maza, the awardee in the public bidding of the fishpond, the parties desire 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
to amicably settle the case by submitting to the Court a Compromise Agreement praying that judgment be rendered recognizing the ownership of said creek; and pictures of the subject strip of land filled with water lilies.
of petitioners over the land the body of water found within their titled properties, stating therein, among other things, that "to pursue the case, On March 22, 1999, the trial court rendered a decision in favor of petitioner Samela:
the same will not amount to any benefit of the parties, on the other hand it is to the advantage and benefit of the municipality if the ownership WHEREFORE, the Court hereby renders judgment ordering the defendants to vacate and remove at their expense the improvements made
of the land and the water found therein belonging to petitioners be recognized in their favor as it is now clear that after the National Irrigation on the subject lot; ordering the defendants to pay the plaintiff P1,000.00 a month as reasonable compensation for the use of the portion
Administration [NIA] had built the dike around the land, no water gets in or out of the land. 1 encroached from the filing of the complaint until the same is finally vacated; and to pay plaintiff P10,000.00 as reasonable attorneys fees plus
The stipulations contained in the Compromise Agreement partake of the nature of an adjudication of ownership in favor of herein petitioners of costs of suit.[3]
the fishpond in dispute, which, as clearly found by the lower and appellate courts, was originally a creek forming a tributary of the Agno River. In a parallel development, the Metropolitan Trial Court, in Civil Case No. 5243, issued an order on February 29, 2000, directing petitioner
Considering that as held in the case of Mercado vs. Municipal President of Macabebe, 59 Phil. 592 [1934], a creek, defined as a recess or arm Usero and the Polinar spouses to commission a professional geodetic engineer to conduct a relocation survey and to submit the report to the
extending from a river and participating in the ebb and flow of the sea, is a property belonging to the public domain which is not susceptible to trial court.
private appropriation and acquisitive prescription, and as a public water, it cannot be registered under the Torrens System in the name of any On April 24, 2000, Mariano Flotilde, a licensed geodetic engineer, conducted a relocation survey of Useros property covered by TCT No. T-
individual [Diego v. Court of Appeals, 102 Phil. 494; Mangaldan v. Manaoag, 38 Phil. 4551; and considering further that neither the mere 29545. The result of the said relocation survey, as stated in his affidavit, was as follows:
construction of irrigation dikes by the National Irrigation Administration which prevented the water from flowing in and out of the subject 1. That I executed a relocation survey of Lot 2, Block 5, (LRC) PCS-4463 covered by TCT No. T-29545 registered in the name of Nimfa O.
fishpond, nor its conversion into a fishpond, alter or change the nature of the creek as a property of the public domain, the Court finds the Usero;
Compromise Agreement null and void and of no legal effect, the same being contrary to law and public policy. 2. That according to my survey, I found out that there is no existing creek on the boundary of the said lot;
The finding that the subject body of water is a creek belonging to the public domain is a factual determination binding upon this Court. The 3. That based on the relocation plan surveyed by the undersigned, attached herewith, appearing is the encroachment on the above-mentioned
Municipality of Bugallon, acting thru its duly-constituted municipal council is clothed with authority to pass, as it did the two resolutions dealing lot by Spouses Herminigildo and Cecilia Polinar with an area of FORTY THREE (43) SQUARE METERS;
with its municipal waters, and it cannot be said that petitioners were deprived of their right to due process as mere publication of the notice of 4. That this affidavit was made in compliance with Court Order dated February 23, 2000 of Metropolitan Trial Court, Las Pias City, Branch
the public bidding suffices as a constructive notice to the whole world. LXXIX.[4]
IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise Agreement and declare the same null and void for being On August 25, 2000, the Metropolitan Trial Court decided in favor of petitioner Usero:
contrary to law and public policy. The Court further resolved to DISMISS the instant petition for lack of merit. WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering them:
SO ORDERED. a) To vacate and remove at their expense the improvement made on the subject lot;
THIRD DIVISION b) To pay the plaintiff P1,000.00 a month as reasonable compensation for the portion encroached from the time of the filing of the complaint
[G.R. No. 152115. January 26, 2005] until the same is finally vacated;
NIMFA USERO, petitioner , vs. COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR, respondents . c) To pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of suit.
[G.R. No. 155055. January 26, 2005] SO ORDERED.[5]
LUTGARDA R. SAMELA, petitioner , vs. COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR, respondents . The Polinar spouses appealed the decisions of the two Municipal Trial Courts to the Regional Trial Court of Las Pias, Branch 253 which heard
DECISION the appeals separately.
CORONA, J .: On December 20, 2000, the Regional Trial Court, deciding Civil Case No. 5242, reversed the decision of the trial court and ordered the
Before this Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. The first petition, docketed as dismissal of the complaint. It confirmed the existence of the creek between the northwestern portion of the lot of petitioner Samela and the
G.R. No. 152115, filed by Nimfa Usero, assails the September 19, 2001 decision [1] of the Court of Appeals in CA-GR SP No. 64718. The southwestern portion of the lot of the spouses Polinar:
second petition, docketed as G.R. No. 155055, filed by Lutgarda R. Samela, assails the January 11, 2002 decision [2] of the Court of Appeals in Finding the existence of a creek between the respective properties of the parties, plaintiff-appellee cannot therefore lay claim of lawful
CA-GR SP NO. 64181. ownership of that portion because the same forms part of public dominion. Consequently, she cannot legally stop the defendants-appellants
The undisputed facts follow. from rip-rapping the bank of the creek to protect the latters property from soil erosion thereby avoiding danger to their lives and damage to
Petitioners Lutgarda R. Samela and Nimfa Usero are the owners respectively of lots 1 and 2, Block 5, Golden Acres Subdivision, Barrio property.
Almanza, Las Pias City. Absent a lawful claim by the plaintiff-appellee over the subject portion of that lot, defendants-appellants are not duty bound to pay the former
Private respondent spouses Polinar are the registered owners of a parcel of land at no. 18 Anahaw St., Pilar Village, Las Pias City, behind the compensation for the use of the same. As a result, they may maintain the said improvements introduced thereon subject to existing laws, rules
lots of petitioners Samela and Usero. and regulations and/or ordinances appurtenant thereto.
Situated between the lots of the parties is a low-level strip of land, with a stagnant body of water filled with floating water lilies; abutting and WHEREFORE, premises considered, the Decision rendered by Branch 79 of the Metropolitan Trial Court, Las Pias is REVERSED.
perpendicular to the lot of petitioner Samela, the lot of the Polinars and the low-level strip of land is the perimeter wall of Pilar Village Accordingly, the instant complaint is DISMISSED.
Subdivision. SO ORDERED.[6]
Apparently, every time a storm or heavy rains occur, the water in said strip of land rises and the strong current passing through it causes On March 16, 2001, the Regional Trial Court, in Civil Case No. 5243, also reversed the finding of the Municipal Trial Court:
considerable damage to the house of respondent Polinars. Frustrated by their predicament, private respondent spouses, on July 30, 1998, From the foregoing, defendants-appellants may maintain the improvements introduced on the subject portion of the lot subject to existing laws,
erected a concrete wall on the bank of the low-level strip of land about three meters from their house and rip-rapped the soil on that portion of rules and regulations and/or ordinances pertaining thereto. Consequently, no compensation may be awarded in favor of the plaintiff-appellee.
the strip of land. WHEREFORE, premises considered, the above-mentioned Decision rendered by Branch 79 of the Las Pias City Metropolitan Trial Court is
Claiming ownership of the subject strip of land, petitioners Samela and Usero demanded that the spouses Apolinar stop their construction but REVERSED. Accordingly, the instant complaint is DISMISSED.
the spouses paid no heed, believing the strip to be part of a creek. Nevertheless, for the sake of peace, the Polinars offered to pay for the land From the adverse decisions of the Regional Trial Court, petitioners filed their respective petitions for review on certiorari to the Court of
being claimed by petitioners Samela and Usero. However, the parties failed to settle their differences. Appeals. Petitioner Samelas case was docketed as CA-G.R. SP 64181 while that of petitioner Usero was docketed as CA-G.R. SP 64718.
On November 9, 1998, petitioners filed separate complaints for forcible entry against the Polinars at the Metropolitan Trial Court of Las Pias Both petitions failed in the CA. Thus the instant consolidated petitions.
City. The case filed by petitioner Samela was docketed as Civil Case No. 5242, while that of petitioner Usero was docketed as Civil Case No. The pivotal issue in the case at bar is whether or not the disputed strip of land, allegedly encroached upon by the spouses Polinar, is the
5243. private property of petitioners or part of the creek and therefore part of the public domain. Clearly this an issue which calls for a review of facts
already determined by the Court of Appeals.
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, not
of fact, unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on a Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the January 31, 2007
misapprehension of facts.[7] This is obviously not the case here. Decision[1] and June 8, 2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 91350 allegedly for being contrary to law and
A careful scrutiny of the records reveals that the assailed decisions are founded on sufficient evidence. That the subject strip of land is a creek jurisprudence. The CA had reversed the Order [3] of the Regional Trial Court (RTC) of Paraaque City, Branch 196, issued on April 29, 2005 in
is evidenced by: (1) a barangay certification that a creek exists in the disputed strip of land; (2) a certification from the Second Manila Civil Case No. 05-0155.
Engineering District, NCR-DPWH, that the western portion of Pilar Village where the subject strip of land is located is bounded by a tributary of Below are the facts.
Talon Creek and (3) photographs showing the abundance of water lilies in the subject strip of land. The Court of Appeals was correct: the fact Respondents claim that they are the absolute owners of a parcel of land consisting of 406 square meters, more or less, located at 9781 Vitalez
that water lilies thrive in that strip of land can only mean that there is a permanent stream of water or creek there. Compound in Barangay Vitalez, Paraaque City and covered by Tax Declaration Nos. 01027 and 01472 in the name of respondent Mario D.
In contrast, petitioners failed to present proof sufficient to support their claim. Petitioners presented the TCTs of their respective lots to prove Ebio. Said land was an accretion of Cut-cut creek. Respondents assert that the original occupant and possessor of the said parcel of land was
that there is no creek between their properties and that of the Polinars. However, an examination of said TCTs reveals that the descriptions their great grandfather, Jose Vitalez. Sometime in 1930, Jose gave the land to his son, Pedro Vitalez. From then on, Pedro continuously and
thereon are incomplete. In petitioner Samelas TCT No. T-30088, there is no boundary description relative to the northwest portion of the exclusively occupied and possessed the said lot. In 1966, after executing an affidavit declaring possession and occupancy, [4] Pedro was able
property pertaining to the site of the creek. Likewise in TCT No. T-22329-A of the spouses Polinar, the southeast portion which pertains to the to obtain a tax declaration over the said property in his name. [5] Since then, respondents have been religiously paying real property taxes for
site of the creek has no described boundary. Moreover the tax declaration presented by petitioner is devoid of any entry on the west boundary the said property.[6]
vis-a-vis the location of the creek. All the pieces of evidence taken together, we can only conclude that the adjoining portion of these Meanwhile, in 1961, respondent Mario Ebio married Pedros daughter, Zenaida. Upon Pedros advice, the couple established their home on the
boundaries is in fact a creek and belongs to no one but the state. said lot. In April 1964 and in October 1971, Mario Ebio secured building permits from the Paraaque municipal office for the construction of their
Property is either of public dominion or of private ownership.[8] Concomitantly, Article 420 of the Civil Code provides: house within the said compound.[7] On April 21, 1987, Pedro executed a notarized Transfer of Rights [8] ceding his claim over the entire parcel
ART. 420. The following things are property of public dominion: of land in favor of Mario Ebio. Subsequently, the tax declarations under Pedros name were cancelled and new ones were issued in Mario
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, Ebios name.[9]
roadsteads, and others of similar character; On March 30, 1999, the Office of the Sangguniang Barangay of Vitalez passed Resolution No. 08, series of 1999 [10] seeking assistance from
The phrase others of similar character includes a creek which is a recess or an arm of a river. It is property belonging to the public domain the City Government of Paraaque for the construction of an access road along Cut-cut Creek located in the said barangay. The proposed road,
which is not susceptible to private ownership. [9] Being public water, a creek cannot be registered under the Torrens System in the name of any projected to be eight (8) meters wide and sixty (60) meters long, will run from Urma Drive to the main road of Vitalez Compound[11] traversing
individual[10]. the lot occupied by the respondents. When the city government advised all the affected residents to vacate the said area, respondents
Accordingly, the Polinar spouses may utilize the rip-rapped portion of the creek to prevent the erosion of their property. immediately registered their opposition thereto. As a result, the road project was temporarily suspended.[12]
WHEREFORE, the consolidated petitions are hereby denied. The assailed decisions of the Court of Appeals in CA-G.R. SP 64181 and CA- In January 2003, however, respondents were surprised when several officials from the barangay and the city planning office proceeded to cut
G.R. SP 64718 are affirmed in toto. eight (8) coconut trees planted on the said lot. Respondents filed letter-complaints before the Regional Director of the Bureau of Lands, the
SO ORDERED. Department of Interior and Local Government and the Office of the Vice Mayor.[13] On June 29, 2003, the Sangguniang Barangay of Vitalez
Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur. held a meeting to discuss the construction of the proposed road. In the said meeting, respondents asserted their opposition to the proposed
THIRD DIVISION project and their claim of ownership over the affected property. [14] On November 14, 2003, respondents attended another meeting with officials
from the city government, but no definite agreement was reached by and among the parties.[15]
OFFICE OF THE CITY MAYOR OF PARAAQUE CITY, G.R. No. 178411 On March 28, 2005, City Administrator Noli Aldip sent a letter to the respondents ordering them to vacate the area within the next thirty (30)
OFFICE OF THE CITY ADMINISTRATOR OF PARAAQUE days, or be physically evicted from the said property.[16] Respondents sent a letter to the Office of the City Administrator asserting, in sum, their
CITY, OFFICE OF THE CITY ENGINEER OF PARAAQUE claim over the subject property and expressing intent for a further dialogue.[17] The request remained unheeded.
CITY, OFFICE OF THE CITY PLANNING AND Present: Threatened of being evicted, respondents went to the RTC of Paraaque City on April 21, 2005 and applied for a writ of preliminary injunction
DEVELOPMENT COORDINATOR, OFFICE OF THE against petitioners.[18]In the course of the proceedings, respondents admitted before the trial court that they have a pending application for the
BARANGAY CAPTAIN AND SANGGUNIANG issuance of a sales patent before the Department of Environment and Natural Resources (DENR).[19]
PAMBARANGAY OF BARANGAY VITALEZ, PARAAQUE CARPIO MORALES, J., On April 29, 2005, the RTC issued an Order [20] denying the petition for lack of merit. The trial court reasoned that respondents were not able to
CITY, TERESITA A. GATCHALIAN, ENRICO R. ESGUERRA, Chairperson, prove successfully that they have an established right to the property since they have not instituted an action for confirmation of title and their
ERNESTO T. PRACALE, JR., MANUEL M. ARGOTE, BRION, application for sales patent has not yet been granted. Additionally, they failed to implead the Republic of the Philippines, which is an
CONRADO M. CANLAS, JOSEPHINE S. DAUIGOY, ALLAN BERSAMIN, indispensable party.
L. GONZALES, ESTER C. ASEHAN, MANUEL A. FUENTES, ABAD,* and Respondents moved for reconsideration, but the same was denied.[21]
and MYRNA P. ROSALES, VILLARAMA, JR., JJ. Aggrieved, respondents elevated the matter to the Court of Appeals. On January 31, 2007, the Court of Appeals issued its Decision in favor of
Petitioners, the respondents. According to the Court of Appeals--
The issue ultimately boils down to the question of ownership of the lands adjoining Cutcut Creek particularly Road Lot No. 8 (hereinafter RL 8)
and the accreted portion beside RL 8.
- versus - The evidentiary records of the instant case, shows that RL 8 containing an area of 291 square meters is owned by Guaranteed Homes, Inc.
covered by TCT No. S-62176. The same RL 8 appears to have been donated by the Guaranteed Homes to the City Government of Paraaque
on 22 March 1966 and which was accepted by the then Mayor FLORENCIO BERNABE on 5 April 1966. There is no evidence however, when
MARIO D. EBIO AND HIS CHILDREN/HEIRS namely, Promulgated: RL 8 has been intended as a road lot.
ARTURO V. EBIO, EDUARDO V. EBIO, RENATO V. EBIO, On the other hand, the evidentiary records reveal that PEDRO VITALEZ possessed the accreted property since 1930 per his Affidavit dated 21
LOURDES E. MAGTANGOB, MILA V. EBIO, and ARNEL V. June 23, 2010 March 1966 for the purpose of declaring the said property for taxation purposes. The property then became the subject of Tax Declaration No.
EBIO, 20134 beginning the year 1967 and the real property taxes therefor had been paid for the years 1966, 1967, 1968, 1969, 1970, 1972, 1973,
Respondents. 1974, 1978, 1980, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, and 2004. Sometime in 1964 and 1971, construction permits were
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x issued in favor of Appellant MARIO EBIO for the subject property. On 21 April 1987, PEDRO VITALEZ transferred his rights in the accreted
property to MARIO EBIO and his successors-in-interest.
Applying [Article 457 of the Civil Code considering] the foregoing documentary evidence, it could be concluded that Guaranteed Homes is the
owner of the accreted property considering its ownership of the adjoining RL 8 to which the accretion attached. However, this is without the
DECISION
application of the provisions of the Civil Code on acquisitive prescription which is likewise applicable in the instant case.
xxxx
VILLARAMA, JR., J .:
The subject of acquisitive prescription in the instant case is the accreted portion which [was] duly proven by the Appellants. It is clear that Moreover, an indispensable party is one whose interest in the controversy is such that a final decree would necessarily affect his/her right, so
since 1930, Appellants together with their predecessor-in-interest, PEDRO VITALEZ[,] have been in exclusive possession of the subject that the court cannot proceed without their presence.[32] In contrast, a necessary party is one whose presence in the proceedings is necessary
property and starting 1964 had introduced improvements thereon as evidenced by their construction permits. Thus, even by extraordinary to adjudicate the whole controversy but whose interest is separable such that a final decree can be made in their absence without affecting
acquisitive prescription[,] Appellants have acquired ownership of the property in question since 1930 even if the adjoining RL 8 was them.[33]
subsequently registered in the name of Guaranteed Homes. x x x. In the instant case, the action for prohibition seeks to enjoin the city government of Paraaque from proceeding with its implementation of the
xxxx road construction project. The State is neither a necessary nor an indispensable party to an action where no positive act shall be required from
Further, it was only in 1978 that Guaranteed Homes was able to have RL 8 registered in its name, which is almost fifty years from the time it or where no obligation shall be imposed upon it, such as in the case at bar. Neither would it be an indispensable party if none of its
PEDRO VITALEZ occupied the adjoining accreted property in 1930. x x x. properties shall be divested nor any of its rights infringed.
xxxx We also find that the character of possession and ownership by the respondents over the contested land entitles them to the avails of the
We likewise note the continuous payment of real property taxes of Appellants which bolster their right over the subject property. x x x. action.
xxxx A right in esse means a clear and unmistakable right.[34] A party seeking to avail of an injunctive relief must prove that he or she possesses a
In sum, We are fully convinced and so hold that the Appellants [have] amply proven their right over the property in question. right in esse or one that is actual or existing.[35] It should not be contingent, abstract, or future rights, or one which may never arise.[36]
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The challenged Order of the court a quo In the case at bar, respondents assert that their predecessor-in-interest, Pedro Vitalez, had occupied and possessed the subject lot as early as
is REVERSED and SET ASIDE. 1930. In 1964, respondent Mario Ebio secured a permit from the local government of Paraaque for the construction of their family dwelling on
SO ORDERED.[22] the said lot. In 1966, Pedro executed an affidavit of possession and occupancy allowing him to declare the property in his name for taxation
On June 8, 2007, the appellate court denied petitioners motion for reconsideration. Hence, this petition raising the following assignment of purposes. Curiously, it was also in 1966 when Guaranteed Homes, Inc., the registered owner of Road Lot No. 8 (RL 8) which adjoins the land
errors: occupied by the respondents, donated RL 8 to the local government of Paraaque.
I. WHETHER OR NOT THE DECISION AND RESOLUTION OF THE HONORABLE COURT OF APPEALS THAT RESPONDENTS HAVE From these findings of fact by both the trial court and the Court of Appeals, only one conclusion can be made: that for more than thirty (30)
A RIGHT IN ESSE IS IN ACCORD WITH THE LAW AND ESTABLISHED JURISPRUDENCE[;] years, neither Guaranteed Homes, Inc. nor the local government of Paraaque in its corporate or private capacity sought to register the
accreted portion. Undoubtedly, respondents are deemed to have acquired ownership over the subject property through prescription.
II. WHETHER OR NOT THE DECISION AND RESOLUTION OF THE HONORABLE COURT OF APPEALS THAT THE SUBJECT LOT IS Respondents can assert such right despite the fact that they have yet to register their title over the said lot. It must be remembered that the
AVAILABLE FOR ACQUISITIVE PRESCRIPTION IS IN ACCORD WITH THE LAW AND ESTABLISHED JURISPRUDENCE[;] AND purpose of land registration is not the acquisition of lands, but only the registration of title which the applicant already possessed over the land.
Registration was never intended as a means of acquiring ownership. [37] A decree of registration merely confirms, but does not confer,
III. WHETHER OR NOT THE STATE IS AN INDISPENSABLE PARTY TO THE COMPLAINT FILED BY RESPONDENTS IN THE LOWER ownership.[38]
COURT.[23] Did the filing of a sales patent application by the respondents, which remains pending before the DENR, estop them from filing an injunction
The issues may be narrowed down into two (2): procedurally, whether the State is an indispensable party to respondents action for prohibitory suit?
injunction; and substantively, whether the character of respondents possession and occupation of the subject property entitles them to avail of We answer in the negative.
the relief of prohibitory injunction. Confirmation of an imperfect title over a parcel of land may be done either through judicial proceedings or through administrative process. In
The petition is without merit. the instant case, respondents admitted that they opted to confirm their title over the property administratively by filing an application for sales
An action for injunction is brought specifically to restrain or command the performance of an act. [24] It is distinct from the ancillary remedy of patent.
preliminary injunction, which cannot exist except only as part or as an incident to an independent action or proceeding. Moreover, in an action Respondents application for sales patent, however, should not be used to prejudice or derogate what may be deemed as their vested right
for injunction, the auxiliary remedy of a preliminary prohibitory or mandatory injunction may issue.[25] over the subject property. The sales patent application should instead be considered as a mere superfluity particularly since ownership over
In the case at bar, respondents filed an action for injunction to prevent the local government of Paraaque City from proceeding with the the land, which they seek to buy from the State, is already vested upon them by virtue of acquisitive prescription. Moreover, the State does not
construction of an access road that will traverse through a parcel of land which they claim is owned by them by virtue of acquisitive have any authority to convey a property through the issuance of a grant or a patent if the land is no longer a public land.[39]
prescription. Nemo dat quod dat non habet. No one can give what he does not have. Such principle is equally applicable even against a sovereign entity
Petitioners, however, argue that since the creek, being a tributary of the river, is classified as part of the public domain, any land that may have that is the State.
formed along its banks through time should also be considered as part of the public domain. And respondents should have included the State WHEREFORE, the petition is DENIED for lack of merit. The January 31, 2007 Decision, as well as the July 8, 2007 Resolution, of the Court
as it is an indispensable party to the action. of Appeals in CA-G.R. SP No. 91350 are hereby AFFIRMED.
We do not agree. With costs against petitioners.
It is an uncontested fact that the subject land was formed from the alluvial deposits that have gradually settled along the banks of Cut-cut SO ORDERED.
creek. This being the case, the law that governs ownership over the accreted portion is Article 84 of the Spanish Law of Waters of 1866, which [G.R. No. 133250. July 9, 2002]
remains in effect,[26] in relation to Article 457 of the Civil Code. FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
Article 84 of the Spanish Law of Waters of 1866 specifically covers ownership over alluvial deposits along the banks of a creek. It reads: CORPORATION, respondents .
ART. 84. Accretions deposited gradually upon lands contiguous to creeks, streams, rivers, and lakes, by accessions or sediments from the DECISION
waters thereof, belong to the owners of such lands.[27] CARPIO, J .:
Interestingly, Article 457 of the Civil Code states: This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining order. The petition seeks to
Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current compel the Public Estates Authority (PEA for brevity) to disclose all facts on PEAs then on-going renegotiations with Amari Coastal Bay and
of the waters. Development Corporation (AMARI for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new
It is therefore explicit from the foregoing provisions that alluvial deposits along the banks of a creek do not form part of the public domain as agreement with AMARI involving such reclamation.
the alluvial property automatically belongs to the owner of the estate to which it may have been added. The only restriction provided for by law The Facts
is that the owner of the adjoining property must register the same under the Torrens system; otherwise, the alluvial property may be subject to On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the Construction and
acquisition through prescription by third persons.[28] Development Corporation of the Philippines (CDCP for brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract
In contrast, properties of public dominion cannot be acquired by prescription. No matter how long the possession of the properties has been, also included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
there can be no prescription against the State regarding property of public domain. [29] Even a city or municipality cannot acquire them by consideration of fifty percent of the total reclaimed land.
prescription as against the State.[30] On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA to
Hence, while it is true that a creek is a property of public dominion, [31] the land which is formed by the gradual and imperceptible accumulation reclaim land, including foreshore and submerged areas, and to develop, improve, acquire, x x x lease and sell any and all kinds of lands. [1] On
of sediments along its banks does not form part of the public domain by clear provision of law. the same date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA the lands reclaimed in the foreshore and
offshore of the Manila Bay[2] under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with CDCP, so that [A]ll future Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on constitutional and statutory grounds the
works in MCCRRP x x x shall be funded and owned by PEA. Accordingly, PEA and CDCP executed a Memorandum of Agreement dated renegotiated contract be declared null and void.[14]
December 29, 1981, which stated: The Issues
(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may be agreed upon by the parties, to be The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
paid according to progress of works on a unit price/lump sum basis for items of work to be agreed upon, subject to price escalation, retention I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT
and other terms and conditions provided for in Presidential Decree No. 1594.All the financing required for such works shall be provided by EVENTS;
PEA. II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF
xxx COURTS;
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of PEA, all of the rights, title, interest III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES;
and participation of CDCP in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
been sold, transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine Thousand Four V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS
Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by land pledge No. 5 and approximately Three Million BEFORE A FINAL AGREEMENT;
Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying elevations above VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN
Mean Low Water Level located outside the Financial Center Area and the First Neighborhood Unit.[3] LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and transferring to PEA the parcels of land VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE AMENDED JOINT VENTURE
so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total area of one million nine hundred AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.
fifteen thousand eight hundred ninety four (1,915,894) square meters. Subsequently, on April 9, 1988, the Register of Deeds of the The Courts Ruling
Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three reclaimed First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent events.
islands known as the Freedom Islands located at the southern portion of the Manila-Cavite Coastal Road, Paraaque City. The Freedom The petition prays that PEA publicly disclose the terms and conditions of the on-going negotiations for a new agreement. The petition also
Islands have a total land area of One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters prays that the Court enjoin PEA from privately entering into, perfecting and/or executing any new agreement with AMARI.
or 157.841 hectares. PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21, 1999 a copy of the signed
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity) with AMARI, a private corporation, to develop the Freedom Amended JVA containing the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioners prayer for a public
Islands. The JVA also required the reclamation of an additional 250 hectares of submerged areas surrounding these islands to complete the disclosure of the renegotiations. Likewise, petitioners prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI
configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through have already signed the Amended JVA on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May 28,
negotiation without public bidding.[4] On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA. [5] On 1999.
June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the JVA.[6] Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the signing and approval of the Amended
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as the JVA before the Court could act on the issue. Presidential approval does not resolve the constitutional issue or remove it from the ambit of
grandmother of all scams. As a result, the Senate Committee on Government Corporations and Public Enterprises, and the Committee on judicial review.
Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate Committees reported the results of their We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot operate to moot the petition and
investigation in Senate Committee Report No. 560 dated September 16, 1997. [7] Among the conclusions of their report are: (1) the reclaimed divest the Court of its jurisdiction.PEA and AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended
lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the government has not classified as alienable JVA on constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have signed one in
lands and therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA violation of the Constitution. Petitioners principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the
itself is illegal. Constitution, which prohibits the government from alienating lands of the public domain to private corporations. If the Amended JVA indeed
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to violates the Constitution, it is the duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such
conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the unconstitutional contract.
Secretary of Justice,[8] the Chief Presidential Legal Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force upheld the The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367.5 hectares of
legality of the JVA, contrary to the conclusions reached by the Senate Committees. [11] reclaimed lands and submerged areas of Manila Bay to a single private corporation . It now becomes more compelling for the Court to
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA and resolve the issue to insure the government itself does not violate a provision of the Constitution intended to safeguard the national
AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman patrimony. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation
Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel of PEA. of the Constitution. In the instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a Temporary ownership of alienable lands of the public domain in the name of AMARI. Even in cases where supervening events had made the cases moot,
Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition for the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar, and the
unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the case before the proper court. [12] public.[17]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer, filed the instant Petition for Mandamus with Prayer for the Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of the 1987
Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order . Petitioner contends the government stands to lose billions of Constitution, or its counterpart provision in the 1973 Constitution, [18] covered agricultural lands sold to private corporations which acquired
pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the the lands from private parties. The transferors of the private corporations claimed or could claim the right to judicial confirmation of their
JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on matters of imperfect titles [19] under Title II of Commonwealth Act. 141 (CA No. 141 for brevity). In the instant case, AMARI seeks to acquire from PEA, a
public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987 public corporation, reclaimed lands and submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA)
Constitution prohibiting the sale of alienable lands of the public domain to private corporations. Finally, petitioner asserts that he seeks to and Title III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the consideration for the purchase. Neither
enjoin the loss of billions of pesos in properties of the State that are of public dominion. AMARI nor PEA can claim judicial confirmation of their titles because the lands covered by the Amended JVA are newly reclaimed or still to be
After several motions for extension of time, [13] PEA and AMARI filed their Comments on October 19, 1998 and June 25, 1998, reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and notorious occupation of agricultural lands of the
respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated public domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing applications for judicial confirmation of
PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a imperfect title expired on December 31, 1987.[20]
Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated June 22, 1999. Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the possible transfer at any time by PEA
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file their respective memoranda. to AMARI of title and ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latters
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement (Amended JVA, for brevity). On May 28, 1999, the Office seventy percent proportionate share in the reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI to mortgage
of the President under the administration of then President Joseph E. Estrada approved the Amended JVA. at any time the entire reclaimed area to raise financing for the reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle of hierarchy of courts Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved under the questioned contract for the
applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The development, management and operation of the Manila International Container Terminal, public interest [was] definitely involved considering
instant case, however, raises constitutional issues of transcendental importance to the public. [22] The Court can resolve this case without the important role [of the subject contract] . . . in the economic development of the country and the magnitude of the financial consideration
determining any factual issue related to the case. Also, the instant case is a petition for mandamus which falls under the original jurisdiction of involved. We concluded that, as a consequence, the disclosure provision in the Constitution would constitute sufficient authority for upholding
the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant case. the petitioner's standing.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies. Similarly, the instant petition is anchored on the right of the people to information and access to official records, documents and papers a right
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information without first asking PEA the guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the
needed information. PEA claims petitioners direct resort to the Court violates the principle of exhaustion of administrative remedies. It also satisfaction of the two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public
violates the rule that mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary course of law. right (2) espoused by a Filipino citizen, we rule that the petition at bar should be allowed.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court granted the petition for mandamus even if the petitioners there did We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to information and to the
not initially demand from the Office of the President the publication of the presidential decrees. PEA points out that in Taada, the Executive equitable diffusion of natural resources -matters of transcendental public importance, the petitioner has the requisite locus standi.
Department had an affirmative statutory duty under Article 2 of the Civil Code [24] and Section 1 of Commonwealth Act No. 638 [25] to publish Fifth issue: whether the constitutional right to information includes official information on on-going negotiations before a final
the presidential decrees. There was, therefore, no need for the petitioners in Taada to make an initial demand from the Office of the agreement.
President. In the instant case, PEA claims it has no affirmative statutory duty to disclose publicly information about its renegotiation of the Section 7, Article III of the Constitution explains the peoples right to information on matters of public concern in this manner:
JVA. Thus, PEA asserts that the Court must apply the principle of exhaustion of administrative remedies to the instant case in view of the Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to
failure of petitioner here to demand initially from PEA the needed information. documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis
The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under Section 79 of the Government for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law. (Emphasis supplied)
Auditing Code,[26]2 the disposition of government lands to private parties requires public bidding. PEA was under a positive legal duty to The State policy of full transparency in all transactions involving public interest reinforces the peoples right to information on matters of public
disclose to the public the terms and conditions for the sale of its lands .The law obligated PEA to make this public disclosure even concern. This State policy is expressed in Section 28, Article II of the Constitution, thus:
without demand from petitioner or from anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its
was the result of a negotiated contract , not of a public bidding. Considering that PEA had an affirmative statutory duty to make the public transactions involving public interest . (Emphasis supplied)
disclosure, and was even in breach of this legal duty, petitioner had the right to seek direct judicial intervention. These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the government, as well as
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does not apply when the issue provide the people sufficient information to exercise effectively other constitutional rights. These twin provisions are essential to the exercise of
involved is a purely legal or constitutional question. [27] The principal issue in the instant case is the capacity of AMARI to acquire lands held by freedom of expression. If the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens say, even
PEA in view of the constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We rule that the principle if expressed without any restraint, will be speculative and amount to nothing. These twin provisions are also essential to hold public officials at
of exhaustion of administrative remedies does not apply in the instant case. all times x x x accountable to the people, [29] for unless citizens have the proper information, they cannot hold public officials accountable for
Fourth issue: whether petitioner has locus standi to bring this suit anything. Armed with the right information, citizens can participate in public discussions leading to the formulation of government policies and
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right to information without a their effective implementation. An informed citizenry is essential to the existence and proper functioning of any democracy. As explained by the
showing that PEA refused to perform an affirmative duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown Court in Valmonte v. Belmonte, Jr . [30]
that he will suffer any concrete injury because of the signing or implementation of the Amended JVA. Thus, there is no actual controversy An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the
requiring the exercise of the power of judicial review. people. It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may
The petitioner has standing to bring this taxpayers suit because the petition seeks to compel PEA to comply with its constitutional duties. There perceive and be responsive to the peoples will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and
are two constitutional issues involved here. First is the right of citizens to information on matters of public concern. Second is the application of thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to information
a constitutional provision intended to insure the equitable distribution of alienable lands of the public domain among Filipino citizens. The thrust relating thereto can such bear fruit.
of the first issue is to compel PEA to disclose publicly information on the sale of government lands worth billions of pesos, information which PEA asserts, citing Chavez v. PCGG ,[31] that in cases of on-going negotiations the right to information is limited to definite propositions of the
the Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent PEA from alienating hundreds of government. PEA maintains the right does not include access to intra-agency or inter-agency recommendations or communications during the
hectares of alienable lands of the public domain in violation of the Constitution, compelling PEA to comply with a constitutional duty to the stage when common assertions are still in the process of being formulated or are in the exploratory stage.
nation. Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing of the transaction. To support its
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG ,[28] the Court upheld the right of a citizen contention, AMARI cites the following discussion in the 1986 Constitutional Commission:
to bring a taxpayers suit on matters of transcendental importance to the public, thus - Mr. Suarez. And when we say transactions which should be distinguished from contracts, agreements, or treaties or whatever, does the
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue of transcendental importance to the Gentleman refer to the steps leading to the consummation of the contract, or does he refer to the contract itself?
public. He asserts that ordinary taxpayers have a right to initiate and prosecute actions questioning the validity of acts or orders of government Mr. Ople: The transactions used here, I suppose is generic and therefore, it can cover both steps leading to a contract and
agencies or instrumentalities, if the issues raised are of paramount public interest, and if they immediately affect the social, economic and already a consummated contract, Mr. Presiding Officer .
moral well being of the people. Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the transaction .
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the proceeding involves the assertion of a Mr. Ople: Yes, subject only to reasonable safeguards on the national interest .
public right, such as in this case. He invokes several decisions of this Court which have set aside the procedural matter of locus standi, when Mr. Suarez: Thank you.[32] (Emphasis supplied)
the subject of the case involved public interest. AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring government officials to reveal their
xxx deliberations at the pre-decisional stage will degrade the quality of decision-making in government agencies. Government officials will hesitate
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of mandamus is to obtain the enforcement of to express their real sentiments during deliberations if there is immediate public dissemination of their discussions, putting them under all kinds
a public duty, the people are regarded as the real parties in interest; and because it is sufficient that petitioner is a citizen and as such is of pressure before they decide.
interested in the execution of the laws, he need not show that he has any legal or special interest in the result of the action. In the aforesaid We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and information the constitutional
case, the petitioners sought to enforce their right to be informed on matters of public concern, a right then recognized in Section 6, Article IV of right to information requires PEA to release to the public. Before the consummation of the contract, PEA must, on its own and without demand
the 1973 Constitution, in connection with the rule that laws in order to be valid and enforceable must be published in the Official Gazette or from anyone, disclose to the public matters relating to the disposition of its property. These include the size, location, technical description and
otherwise effectively promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they sought to be enforced is a nature of the property being disposed of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price and similar
public right recognized by no less than the fundamental law of the land. information. PEA must prepare all these data and disclose them to the public at the start of the disposition process, long before the
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that when a mandamus proceeding involves the assertion of a consummation of the contract, because the Government Auditing Code requires public bidding . If PEA fails to make this disclosure, any
public right, the requirement of personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the general citizen can demand from PEA this information at any time during the bidding process.
'public' which possesses the right.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding or review committee is not that were not acquired from the Government, either by purchase or by grant, belong to the public domain. [43] Article 339 of the Civil Code of
immediately accessible under the right to information. While the evaluation or review is still on-going, there are no official acts, transactions, or 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.
decisions on the bids or proposals. However, once the committee makes its official recommendation , there arises a definite proposition on Ownership and Disposition of Reclaimed Lands
the part of the government. From this moment, the publics right to information attaches, and any citizen can access all the non-proprietary The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of reclaimed lands in the
information leading to such definite proposition. In Chavez v. PCGG ,[33] the Court ruled as follows: Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which provided for the lease, but not the sale, of
Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the PCGG and its officers, as well as other reclaimed lands of the government to corporations and individuals . Later, on November 29, 1919, the Philippine Legislature approved
government representatives, to disclose sufficient public information on any proposed settlement they have decided to take up with the Act No. 2874, the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations
ostensible owners and holders of ill-gotten wealth. Such information, though, must pertain to definite propositions of the government , not and individuals . On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known as the Public Land Act,
necessarily to intra-agency or inter-agency recommendations or communications during the stage when common assertions are still in the which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. CA No. 141
process of being formulated or are in the exploratory stage. There is need, of course, to observe the same restrictions on disclosure of continues to this day as the general law governing the classification and disposition of lands of the public domain.
information in general, as discussed earlier such as on matters involving national security, diplomatic or foreign relations, intelligence and other The Spanish Law of Waters of 1866 and the Civil Code of 1889
classified information. (Emphasis supplied) Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime zone of the Spanish territory
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional Commission understood that the right to belonged to the public domain for public use.[44] The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which
information contemplates inclusion of negotiations leading to the consummation of the transaction . Certainly, a consummated provided as follows:
contract is not a requirement for the exercise of the right to information. Otherwise, the people can never exercise the right if no contract is Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons,
consummated, and if one is consummated, it may be too late for the public to expose its defects. with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of
Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly disadvantageous to the government authority.
or even illegal, becomes a fait accompli. This negates the State policy of full transparency on matters of public concern, a situation which the Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the reclamation, provided the government
framers of the Constitution could not have intended. Such a requirement will prevent the citizenry from participating in the public discussion of issued the necessary permit and did not reserve ownership of the reclaimed land to the State.
any proposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
constitutional right, nor a retreat by the State of its avowed policy of full disclosure of all its transactions involving public interest. Art. 339. Property of public dominion is
The right covers three categories of information which are matters of public concern, namely: (1) official records; (2) documents and papers 1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores,
pertaining to official acts, transactions and decisions; and (3) government research data used in formulating policies. The first category refers roadsteads, and that of a similar character;
to any document that is part of the public records in the custody of government agencies or officials. The second category refers to documents 2. That belonging exclusively to the State which, without being of general public use, is employed in some public service, or in the
and papers recording, evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of development of the national wealth, such as walls, fortresses, and other works for the defense of the territory, and mines, until granted to
government agencies or officials. The third category refers to research data, whether raw, collated or processed, owned by the government private individuals.
and used in formulating government policies. Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public service referred to
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations, legal and expert property used for some specific public service and open only to those authorized to use the property.
opinions, minutes of meetings, terms of reference and other documents attached to such reports or minutes, all relating to the JVA. However, Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop the
the right to information does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA. [34] The national wealth . This class of property constituted property of public dominion although employed for some economic or commercial activity
right only affords access to records, documents and papers, which means the opportunity to inspect and copy them. One who exercises the to increase the national wealth.
right must copy the records, documents and papers at his expense. The exercise of the right is also subject to reasonable regulations to Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property, to wit:
protect the integrity of the public records and to minimize disruption to government operations, like rules specifying when and how to conduct Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory, shall become a part of the private
the inspection and copying.[35] property of the State.
The right to information, however, does not extend to matters recognized as privileged information under the separation of powers. [36] The right This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must declare the property no
does not also apply to information on military and diplomatic secrets, information affecting national security, and information on investigations longer needed for public use or territorial defense before the government could lease or alienate the property to private parties. [45]
of crimes by law enforcement agencies before the prosecution of the accused, which courts have long recognized as confidential. [37] The right Act No. 1654 of the Philippine Commission
may also be subject to other limitations that Congress may impose by law. On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and foreshore lands. The salient
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The provisions of this law were as follows:
information does not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all Government or public lands
internal deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house of Congress, [38] are recognized made or reclaimed by the Governmentby dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the
as confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and Government without prejudice to vested rights and without prejudice to rights conceded to the City of Manila in the Luneta Extension.
assessments, free from the glare of publicity and pressure by interested parties, is essential to protect the independence of decision-making of Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed by the Government by dredging or
those tasked to exercise Presidential, Legislative and Judicial power.[39] This is not the situation in the instant case. filling or otherwise to be divided into lots or blocks, with the necessary streets and alleyways located thereon, and shall cause plats and plans
We rule, therefore, that the constitutional right to information includes official information on on-going negotiations before a final of such surveys to be prepared and filed with the Bureau of Lands.
contract. The information, however, must constitute definite propositions by the government and should not cover recognized exceptions like (b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such parts of the lands so
privileged information, military and diplomatic secrets and similar matters affecting national security and public order. [40] Congress has also made or reclaimed as are not needed for public purposes will be leased for commercial and business purposes , x x x.
prescribed other limitations on the right to information in several legislations. [41] xxx
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate (e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject to such regulations and
the Constitution. safeguards as the Governor-General may by executive order prescribe. (Emphasis supplied)
The Regalian Doctrine Act No. 1654 mandated that the government should retain title to all lands reclaimed by the government. The Act also vested in the
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds that the State owns all government control and disposition of foreshore lands. Private parties could lease lands reclaimed by the government only if these lands were
lands and waters of the public domain. Upon the Spanish conquest of the Philippines, ownership of all lands, territories and possessions in the no longer needed for public purpose. Act No. 1654 mandated public bidding in the lease of government reclaimed lands. Act No. 1654 made
Philippines passed to the Spanish Crown.[42] The King, as the sovereign ruler and representative of the people, acquired and owned all lands government reclaimed lands sui generis in that unlike other public lands which the government could sell to private parties, these reclaimed
and territories in the Philippines except those he disposed of by grant or sale to private individuals. lands were available only for lease to private parties.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner of all Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not prohibit private parties from
lands and waters of the public domain. The Regalian doctrine is the foundation of the time-honored principle of land ownership that all lands reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private parties with government
permission remained private lands.
Act No. 2874 of the Philippine Legislature concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act. [46] The salient provisions of Act No. 2874, on twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses
reclaimed lands, were as follows: other than the development of water power, in which cases beneficial use may be the measure and limit of the grant. (Emphasis supplied)
Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and Natural Resources, shall from time The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were the only natural resources the
to time classify the lands of the public domain into State could alienate. Thus, foreshore lands, considered part of the States natural resources, became inalienable by constitutional fiat,
(a) Alienable or disposable , available only for lease for 25 years, renewable for another 25 years. The government could alienate foreshore lands only after these lands
(b) Timber, and were reclaimed and classified as alienable agricultural lands of the public domain. Government reclaimed and marshy lands of the public
(c) Mineral lands, x x x. domain, being neither timber nor mineral lands, fell under the classification of public agricultural lands. [50] However, government reclaimed and
Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the Governor-General , upon marshy lands, although subject to classification as disposable public agricultural lands, could only be leased and not sold to private parties
recommendation by the Secretary of Agriculture and Natural Resources, shall from time to time declare what lands are open to because of Act No. 2874.
disposition or concession under this Act . The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the public domain was only a
Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited or classified x x statutory prohibition and the legislature could therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and
x. corporations from acquiring government reclaimed and marshy lands of the public domain that were classified as agricultural lands under
xxx existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified as suitable for residential Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in excess of one thousand
purposes or for commercial, industrial, or other productive purposes other than agricultural purposes, and shall be open to and twenty four hectares, nor may any individual acquire such lands by purchase in excess of one hundred and forty hectares ,
disposition or concession, shall be disposed of under the provisions of this chapter, and not otherwise. or by lease in excess of one thousand and twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to
Sec. 56. The lands disposable under this title shall be classified as follows: grazing, not exceeding two thousand hectares, may be leased to an individual, private corporation, or association.(Emphasis supplied)
(a) Lands reclaimed by the Government by dredging, filling, or other means; Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale to private parties
(b) Foreshore ; government reclaimed and marshy lands of the public domain. On the contrary, the legislature continued the long established State policy of
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers; retaining for the government title and ownership of government reclaimed and marshy lands of the public domain.
(d) Lands not included in any of the foregoing classes. Commonwealth Act No. 141 of the Philippine National Assembly
x x x. On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public Land Act, which compiled the
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to private parties by lease only then existing laws on lands of the public domain. CA No. 141, as amended, remains to this day the existing general law governing the
and not otherwise , as soon as the Governor-General, upon recommendation by the Secretary of Agriculture and Natural classification and disposition of lands of the public domain other than timber and mineral lands. [51]
Resources, shall declare that the same are not necessary for the public service and are open to disposition under this Section 6 of CA No. 141 empowers the President to classify lands of the public domain into alienable or disposable [52] lands of the public
chapter. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act . (Emphasis supplied) domain, which prior to such classification are inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the public domain into x x x alienable or to declare what lands are open to disposition or concession. Section 8 of CA No. 141 states that the government can declare open for
disposable[47] lands. Section 7 of the Act empowered the Governor-General to declare what lands are open to disposition or concession. disposition or concession only lands that are officially delimited and classified. Sections 6, 7 and 8 of CA No. 141 read as follows:
Section 8 of the Act limited alienable or disposable lands only to those lands which have been officially delimited and classified. Sec. 6. The President , upon the recommendation of the Secretary of Agriculture and Commerce , shall from time to time classify
Section 56 of Act No. 2874 stated that lands disposable under this title [48] shall be classified as government reclaimed, foreshore and marshy the lands of the public domain into
lands, as well as other lands. All these lands, however, must be suitable for residential, commercial, industrial or other productive non- (a) Alienable or disposable,
agricultural purposes. These provisions vested upon the Governor-General the power to classify inalienable lands of the public domain into (b) Timber, and
disposable lands of the public domain. These provisions also empowered the Governor-General to classify further such disposable lands of (c) Mineral lands,
the public domain into government reclaimed, foreshore or marshy lands of the public domain, as well as other non-agricultural lands. and may at any time and in like manner transfer such lands from one class to another,[53] for the purpose of their administration and disposition.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as government reclaimed, foreshore Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon
and marshy lands shall be disposed of to private parties by lease only and not otherwise. The Governor-General, before allowing the recommendation by the Secretary of Agriculture and Commerce , shall from time to time declare what lands are open to
lease of these lands to private parties, must formally declare that the lands were not necessary for the public service. Act No. 2874 reiterated disposition or concession under this Act.
the State policy to lease and not to sell government reclaimed, foreshore and marshy lands of the public domain, a policy first enunciated in Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited and
1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands remained sui generis , as the only alienable or disposable lands of classified and, when practicable, surveyed, and which have not been reserved for public or quasi-public uses , nor appropriated by the
the public domain that the government could not sell to private parties. Government, nor in any manner become private property, nor those on which a private right authorized and recognized by this Act or any other
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-agricultural purposes valid law may be claimed, or which, having been reserved or appropriated, have ceased to be so. x x x.
retain their inherent potential as areas for public service. This is the reason the government prohibited the sale, and only allowed the lease, of Thus, before the government could alienate or dispose of lands of the public domain, the President must first officially classify these lands as
these lands to private parties. The State always reserved these lands for some future public service. alienable or disposable, and then declare them open to disposition or concession. There must be no law reserving these lands for public or
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into other non-agricultural lands quasi-public uses.
under Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to private The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public domain, are as follows:
parties. Thus, under Act No. 2874, the government could not sell government reclaimed, foreshore and marshy lands to private Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended to be used for residential
parties, unless the legislature passed a law allowing their sale .[49] purposes or for commercial, industrial, or other productive purposes other than agricultural, and is open to disposition or
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of Waters of concession, shall be disposed of under the provisions of this chapter and not otherwise .
1866. Lands reclaimed from the sea by private parties with government permission remained private lands. Sec. 59. The lands disposable under this title shall be classified as follows:
Dispositions under the 1935 Constitution (a) Lands reclaimed by the Government by dredging, filling, or other means;
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935 Constitution, in adopting the Regalian (b) Foreshore ;
doctrine, declared in Section 1, Article XIII, that (c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;
Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of (d) Lands not included in any of the foregoing classes.
potential energy and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person, corporation, or association
utilization shall be limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is authorized to purchase or lease public lands for agricultural purposes. x x x.
owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private parties by lease only
under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated , and no license, and not otherwise , as soon as the President , upon recommendation by the Secretary of Agriculture, shall declare that the same are not
necessary for the public service and are open to disposition under this chapter. The lands included in class (d) may be disposed of Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest bidder . x x x. (Emphasis
by sale or lease under the provisions of this Act . (Emphasis supplied) supplied)
Section 61 of CA No. 141 readopted , after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874 prohibiting the sale of Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable lands of the public domain.
[58]
government reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are intended for residential, commercial,
industrial or other non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The government Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of Waters of 1866. Private parties could
could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not classified as still reclaim portions of the sea with government permission. However, the reclaimed land could become private land only if classified
government reclaimed, foreshore and marshy disposable lands of the public domain. Foreshore lands, however, became inalienable under the as alienable agricultural land of the public domain open to disposition under CA No. 141. The 1935 Constitution prohibited the alienation
1935 Constitution which only allowed the lease of these lands to qualified private parties. of all natural resources except public agricultural lands.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential, commercial, industrial or other The Civil Code of 1950
productive purposes other than agricultural shall be disposed of under the provisions of this chapter and not otherwise . Under Section The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil Code of 1889. Articles 420 and
10 of CA No. 141, the term disposition includes lease of the land. Any disposition of government reclaimed, foreshore and marshy disposable 422 of the Civil Code of 1950 state that
lands for non-agricultural purposes must comply with Chapter IX, Title III of CA No. 141, [54] unless a subsequent law amended or repealed Art. 420. The following things are property of public dominion:
these provisions. (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of Appeals , [55] Justice Reynato S. Puno roadsteads, and others of similar character;
summarized succinctly the law on this matter, as follows: (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the
Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the government by dredging, filling, or national wealth.
other means. Act 1654 mandated that the control and disposition of the foreshore and lands under water remained in the national x x x.
government. Said law allowed only the leasing of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of
lands reclaimed by the government were to be disposed of to private parties by lease only and not otherwise. Before leasing, however, the the State.
Governor-General, upon recommendation of the Secretary of Agriculture and Natural Resources, had first to determine that the land reclaimed Again, the government must formally declare that the property of public dominion is no longer needed for public use or public service, before
was not necessary for the public service. This requisite must have been met before the land could be disposed of. But even then, the the same could be classified as patrimonial property of the State. [59] In the case of government reclaimed and marshy lands of the public
foreshore and lands under water were not to be alienated and sold to private parties. The disposition of the reclaimed land was domain, the declaration of their being disposable, as well as the manner of their disposition, is governed by the applicable provisions of CA No.
only by lease. The land remained property of the State. (Emphasis supplied) 141.
As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141 has remained in effect at present. Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of the State which, without being
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable lands of the public domain, for public use, are intended for public service or the development of the national wealth . Thus, government reclaimed and marshy lands of
first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of foreshore the State, even if not employed for public use or public service, if developed to enhance the national wealth, are classified as property of public
lands, however, became a constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural resources of the dominion.
State, unless reclaimed by the government and classified as agricultural lands of the public domain, in which case they would fall under the Dispositions under the 1973 Constitution
classification of government reclaimed lands. The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section 8, Article XIV of the 1973
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain continued to be only Constitution stated that
leased and not sold to private parties.[56] These lands remained sui generis , as the only alienable or disposable lands of the public domain the Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife,
government could not sell to private parties. and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial,
Since then and until now, the only way the government can sell to private parties government reclaimed and marshy disposable lands of the residential, and resettlement lands of the public domain, natural resources shall not be alienated , and no license, concession, or
public domain is for the legislature to pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify government lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding
reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial
or disposable lands for non-agricultural purposes that the government could sell to private parties. uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant. (Emphasis
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that the government previously supplied)
transferred to government units or entities could be sold to private parties. Section 60 of CA No. 141 declares that The 1973 Constitution prohibited the alienation of all natural resources with the exception of agricultural, industrial or commercial, residential,
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be and resettlement lands of the public domain. In contrast, the 1935 Constitution barred the alienation of all natural resources except public
reasonably necessary for the purposes for which such sale or lease is requested, and shall not exceed one hundred and forty-four hectares: agricultural lands. However, the term public agricultural lands in the 1935 Constitution encompassed industrial, commercial, residential and
Provided, however, That this limitation shall not apply to grants, donations, or transfers made to a province, municipality or branch or resettlement lands of the public domain.[60] If the land of public domain were neither timber nor mineral land, it would fall under the
subdivision of the Government for the purposes deemed by said entities conducive to the public interest; but the land so granted, donated, classification of agricultural land of the public domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all
or transferred to a province, municipality or branch or subdivision of the Government shall not be alienated, encumbered, or natural resources except agricultural lands of the public domain .
otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x. (Emphasis supplied) The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. Private
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section 56 of Act No. 2874. corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alienable lands of the public domain unlike in the
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from the maximum area 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that
of public lands that could be acquired from the State. These government units and entities should not just turn around and sell these lands to Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements of the natural resources, shall
private parties in violation of constitutional or statutory limitations.Otherwise, the transfer of lands for non-agricultural purposes to government determine by law the size of land of the public domain which may be developed, held or acquired by, or leased to, any qualified individual,
units and entities could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In corporation, or association, and the conditions therefor. No private corporation or association may hold alienable lands of the public
the same manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and domain except by lease not to exceed one thousand hectares in area nor may any citizen hold such lands by lease in excess of five
marshy lands of the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these lands.[57] hundred hectares or acquire by purchase, homestead or grant, in excess of twenty-four hectares. No private corporation or association may
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141, Sections 63 and 67 require a public hold by lease, concession, license or permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand
bidding. Sections 63 and 67 of CA No. 141 provide as follows: hectares. However, such area may be increased by the Batasang Pambansa upon recommendation of the National Economic and
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the Director of Lands shall ask the Development Authority. (Emphasis supplied)
Secretary of Agriculture and Commerce (now the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of such Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only through lease. Only individuals
authority, the Director of Lands shall give notice by public advertisement in the same manner as in the case of leases or sales of agricultural could now acquire alienable lands of the public domain, and private corporations became absolutely barred from acquiring any kind of
public land, x x x. alienable land of the public domain . The constitutional ban extended to all kinds of alienable lands of the public domain, while the statutory
ban under CA No. 141 applied only to government reclaimed, foreshore and marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable lands of the public domain is not
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a wholly government owned and well understood. During the deliberations of the 1986 Constitutional Commission, the commissioners probed the rationale behind this ban,
controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers: thus:
Sec. 4. Purpose. The Authority is hereby created for the following purposes: FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
(a) To reclaim land, including foreshore and submerged areas , by dredging, filling or other means, or to acquire reclaimed land; `No private corporation or association may hold alienable lands of the public domain except by lease, not to exceed one thousand hectares in
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands , buildings, estates and area.
other forms of real property, owned, managed, controlled and/or operated by the government; If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973 Constitution. In effect, it prohibits
(c) To provide for, operate or administer such service as may be necessary for the efficient, economical and beneficial utilization of the above private corporations from acquiring alienable public lands. But it has not been very clear in jurisprudence what the reason for this is . In
properties. some of the cases decided in 1982 and 1983, it was indicated that the purpose of this is to prevent large landholdings . Is that the
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following intent of this provision?
powers and functions: MR. VILLEGAS: I think that is the spirit of the provision.
(a)To prescribe its by-laws. FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni Cristo was not allowed to acquire a
xxx mere 313-square meter land where a chapel stood because the Supreme Court said it would be in violation of this. (Emphasis supplied)
(i) To hold lands of the public domain in excess of the area permitted to private corporations by statute. In Ayog v. Cusi ,[64] the Court explained the rationale behind this constitutional ban in this way:
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal, ditch, flume x x x. Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by private corporations is to equitably
xxx diffuse land ownership or to encourage owner-cultivatorship and the economic family-size farm and to prevent a recurrence of cases like the
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the purposes and objectives herein specified. instant case. Huge landholdings by corporations or private persons had spawned social unrest.
(Emphasis supplied) However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of alienable lands of the
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore areas are those covered and public domain that corporations could acquire. The Constitution could have followed the limitations on individuals, who could acquire not more
uncovered by the ebb and flow of the tide.[61] Submerged areas are those permanently under water regardless of the ebb and flow of the tide. than 24 hectares of alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under the 1987
[62]
Foreshore and submerged areas indisputably belong to the public domain [63] and are inalienable unless reclaimed, classified as alienable Constitution.
lands open to disposition, and further declared no longer needed for public service. If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation would be more effective in
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain did not apply to PEA since it was preventing the break-up of farmlands. If the farmland is registered in the name of a corporation, upon the death of the owner, his heirs would
then, and until today, a fully owned government corporation. The constitutional ban applied then, as it still applies now, only to private inherit shares in the corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-up of farmlands into
corporations and associations. PD No. 1084 expressly empowers PEA tohold lands of the public domain even in excess of the area smaller and smaller plots from one generation to the next.
permitted to private corporations by statute. Thus, PEA can hold title to private lands, as well as title to lands of the public domain . In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area of
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must be legislative authority alienable lands of the public domain.Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of
empowering PEA to sell these lands.This legislative authority is necessary in view of Section 60 of CA No.141, which states the public domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his
Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or subdivision of the Government shall not means would allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the
be alienated, encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress ; x x x. (Emphasis corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of
supplied) the public domain.
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged alienable lands of the public The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of alienable land of the public
domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of the public domain would be subject to domain to a qualified individual.This constitutional intent is safeguarded by the provision prohibiting corporations from acquiring alienable lands
the constitutional ban on private corporations from acquiring alienable lands of the public domain. Hence, such legislative authority could only of the public domain, since the vehicle to circumvent the constitutional intent is removed. The available alienable public lands are gradually
benefit private individuals. decreasing in the face of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant
Dispositions under the 1987 Constitution or sell alienable lands of the public domain only to individuals. This, it would seem, is the practical benefit arising from the constitutional ban.
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The 1987 Constitution declares that The Amended Joint Venture Agreement
all natural resources are owned by the State , and except for alienable agricultural lands of the public domain, natural resources cannot be The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties, namely:
alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that 1. [T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila,
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, with a combined titled area of 1,578,441 square meters;
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State . With the exception of agricultural lands, 2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the 3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more or less to regularize the configuration of the reclaimed area. [65]
full control and supervision of the State. x x x. PEA confirms that the Amended JVA involves the development of the Freedom Islands and further reclamation of about 250 hectares x x x,
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of plus an option granted to AMARI to subsequently reclaim another 350 hectares x x x.[66]
the public domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public domain In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750-hectare reclamation project
shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public have been reclaimed, and the rest of the 592.15 hectares are still submerged areas forming part of Manila Bay .
domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEAs actual cost in partially reclaiming the Freedom
exceed one thousand hectares in area . Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more Islands. AMARI will also complete, at its own expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation
than twelve hectares thereof by purchase, homestead, or grant. costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30
Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the percent, respectively, the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for
Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions common areas. Title to AMARIs share in the net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of
therefor. (Emphasis supplied) the Amended JVA provides that
The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from acquiring any kind of alienable x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the title pertaining to AMARIs Land
land of the public domain . Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public share based on the Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and delivery of
domain only through lease . As in the 1935 and 1973 Constitutions, the general law governing the lease to private corporations of reclaimed, the proper certificates of title covering AMARIs Land Share in the name of AMARI, x x x; provided, that if more than seventy percent
foreshore and marshy alienable lands of the public domain is still CA No. 141. (70%) of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to
The Rationale behind the Constitutional Ban AMARI, until such time when a corresponding proportionate area of additional land pertaining to PEA has been titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares of reclaimed land which will be PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the Freedom Islands, is equivalent to an official
titled in its name. proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085 and President Aquinos
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEAs statutory authority, rights and privileges issuance of a land patent also constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom
to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that Islands are thus alienable or disposable lands of the public domain, open to disposition or concession to qualified parties.
PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and Horizontal Development as well as At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom Islands although subsequently
own the Reclamation Area, thereby granting the Joint Venture the full and exclusive right, authority and privilege to undertake the Project in there were partial erosions on some areas. The government had also completed the necessary surveys on these islands. Thus, the Freedom
accordance with the Master Development Plan. Islands were no longer part of Manila Bay but part of the land mass.Section 3, Article XII of the 1987 Constitution classifies lands of the public
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental agreement dated August 9, domain into agricultural, forest or timber, mineral lands, and national parks. Being neither timber, mineral, nor national park lands, the
1995. reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the public domain. Under the 1987 Constitution,
The Threshold Issue agricultural lands of the public domain are the only natural resources that the State may alienate to qualified private parties. All other natural
The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA 367.5 hectares of reclaimed resources, such as the seas or bays, are waters x x x owned by the State forming part of the public domain, and are inalienable pursuant to
foreshore and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution which state that: Section 2, Article XII of the 1987 Constitution.
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed the islands under a contract
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all dated November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866, argues
other natural resources shall not be alienated . x x x. that if the ownership of reclaimed lands may be given to the party constructing the works, then it cannot be said that reclaimed lands are lands
xxx of the public domain which the State may not alienate.[75] Article 5 of the Spanish Law of Waters reads as follows:
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private
hold such alienable lands of the public domain except by lease , x x x.(Emphasis supplied) persons, with proper permission , shall become the property of the party constructing such works, unless otherwise provided by the
Classification of Reclaimed Foreshore and Submerged Areas terms of the grant of authority . (Emphasis supplied)
PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or disposable lands of the public Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with proper permission from the
domain. In its Memorandum,[67]PEA admits that State. Private parties could own the reclaimed land only if not otherwise provided by the terms of the grant of authority. This clearly meant that
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and disposable lands of the public no one could reclaim from the sea without permission from the State because the sea is property of public dominion. It also meant that the
domain: State could grant or withhold ownership of the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the
Sec. 59. The lands disposable under this title shall be classified as follows: State. Thus, a private person reclaiming from the sea without permission from the State could not acquire ownership of the reclaimed land
(a) Lands reclaimed by the government by dredging, filling, or other means; which would remain property of public dominion like the sea it replaced. [76] Article 5 of the Spanish Law of Waters of 1866 adopted the time-
x x x. (Emphasis supplied) honored principle of land ownership that all lands that were not acquired from the government, either by purchase or by grant, belong to the
Likewise, the Legal Task Force [68] constituted under Presidential Administrative Order No. 365 admitted in its Report and Recommendation to public domain.[77]
then President Fidel V. Ramos, [R]eclaimed lands are classified as alienable and disposable lands of the public domain .[69] The Legal Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of public lands. In particular,
Task Force concluded that CA No. 141 requires that lands of the public domain must first be classified as alienable or disposable before the government can alienate
D. Conclusion them. These lands must not be reserved for public or quasi-public purposes. [78] Moreover, the contract between CDCP and the government
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership and disposition over reclaimed lands was executed after the effectivity of the 1973 Constitution which barred private corporations from acquiring any kind of alienable land of the
have been transferred to PEA, by virtue of which PEA, as owner, may validly convey the same to any qualified person without violating the public domain. This contract could not have converted the Freedom Islands into private lands of a private corporation.
Constitution or any statute. Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas under water and revested
The constitutional provision prohibiting private corporations from holding public land, except by lease (Sec. 3, Art. XVII, [70] 1987 Constitution), solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-A declared that
does not apply to reclaimed lands whose ownership has passed on to PEA by statutory grant. The provisions of any law to the contrary notwithstanding , the reclamation of areas under water, whether foreshore or inland, shall
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the lands of the public be limited to the National Government or any person authorized by it under a proper contract . (Emphasis supplied)
domain, waters x x x and other natural resources and consequently owned by the State. As such, foreshore and submerged areas shall not be x x x.
alienated, unless they are classified as agricultural lands of the public domain. The mere reclamation of these areas by PEA does not convert PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water could now be undertaken only
these inalienable natural resources of the State into alienable or disposable lands of the public domain.There must be a law or presidential by the National Government or by a person contracted by the National Government. Private parties may reclaim from the sea only under a
proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or concession. Moreover, these contract with the National Government, and no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866.
reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some public or quasi-public use. [71] Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Governments implementing arm to undertake all
Section 8 of CA No. 141 provides that only those lands shall be declared open to disposition or concession which have been officially reclamation projects of the government, which shall be undertaken by the PEA or through a proper contract executed by it with any
delimited and classified .[72] The President has the authority to classify inalienable lands of the public domain into alienable or disposable person or entity . Under such contract, a private party receives compensation for reclamation services rendered to PEA. Payment to the
lands of the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia ,[73] the Executive Department attempted to sell the contractor may be in cash, or in kind consisting of portions of the reclaimed land, subject to the constitutional ban on private corporations from
Roppongi property in Tokyo, Japan, which was acquired by the Philippine Government for use as the Chancery of the Philippine acquiring alienable lands of the public domain. The reclaimed land can be used as payment in kind only if the reclaimed land is first classified
Embassy. Although the Chancery had transferred to another location thirteen years earlier, the Court still ruled that, under Article 422 [74] of the as alienable or disposable land open to disposition, and then declared no longer needed for public service.
Civil Code, a property of public dominion retains such character until formally declared otherwise. The Court ruled that The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still submerged and forming part of
The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial Manila Bay. There is no legislative or Presidential act classifying these submerged areas as alienable or disposable lands of the
property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 public domain open to disposition . These submerged areas are not covered by any patent or certificate of title. There can be no dispute
SCRA 481 [1975]. A property continues to be part of the public domain, not available for private appropriation or ownership until that these submerged areas form part of the public domain, and in their present state are inalienableand outside the commerce of
there is a formal declaration on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 man . Until reclaimed from the sea, these submerged areas are, under the Constitution, waters x x x owned by the State, forming part of the
[1960]. (Emphasis supplied) public domain and consequently inalienable. Only when actually reclaimed from the sea can these submerged areas be classified as public
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed by PEA from the foreshore or agricultural lands, which under the Constitution are the only natural resources that the State may alienate. Once reclaimed and transformed
submerged areas of Manila Bay.On January 19, 1988 then President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA into public agricultural lands, the government may then officially classify these lands as alienable or disposable lands open to
for the 157.84 hectares comprising the partially reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds of the disposition. Thereafter, the government may declare these lands no longer needed for public service. Only then can these reclaimed lands be
Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the considered alienable or disposable lands of the public domain and within the commerce of man.
issuance of certificates of title corresponding to land patents. To this day, these certificates of title are still in the name of PEA. The classification of PEAs reclaimed foreshore and submerged lands into alienable or disposable lands open to disposition is necessary
because PEA is tasked under its charter to undertake public services that require the use of lands of the public domain. Under Section 5 of PD
No. 1084, the functions of PEA include the following: [T]o own or operate railroads, tramways and other kinds of land transportation, x x x; [T]o subdivision of the government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when
construct, maintain and operate such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm authorized by Congress : x x x.[85] (Emphasis by PEA)
drains as may be necessary. PEA is empowered to issue rules and regulations as may be necessary for the proper use by private parties In Laurel vs. Garcia, [86] the Court cited Section 48 of the Revised Administrative Code of 1987, which states that
of any or all of the highways, roads, utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed , the
use. Thus, part of the reclaimed foreshore and submerged lands held by the PEA would actually be needed for public use or service since deed of conveyance shall be executed in behalf of the government by the following: x x x.
many of the functions imposed on PEA by its charter constitute essential public services. Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The Court declared that -
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be primarily responsible for integrating, directing, and coordinating all It is not for the President to convey real property of the government on his or her own sole will. Any such conveyance must be authorized
reclamation projects for and on behalf of the National Government. The same section also states that [A]ll reclamation projects shall be and approved by a law enacted by the Congress . It requires executive and legislative concurrence. (Emphasis supplied)
approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its reclaimed lands. PD No. 1085,
with any person or entity; x x x. Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary implementing issued on February 4, 1977, provides that
agency of the National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the reclamation and construction of
government entity to undertake the reclamation of lands and ensure their maximum utilization in promoting public welfare and interests . the Manila-Cavite Coastal Road Project between the Republic of the Philippines and the Construction and Development Corporation of the
[79]
Since large portions of these reclaimed lands would obviously be needed for public service, there must be a formal declaration segregating Philippines dated November 20, 1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed
reclaimed lands no longer needed for public service from those still needed for public service. and assigned to the ownership and administration of the Public Estates Authority established pursuant to PD No. 1084; Provided,
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to or be owned by the PEA, could not automatically operate however, That the rights and interests of the Construction and Development Corporation of the Philippines pursuant to the aforesaid contract
to classify inalienable lands into alienable or disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of shall be recognized and respected.
the public domain would automatically become alienable once reclaimed by PEA, whether or not classified as alienable or disposable. Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of the Philippines (Department of
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the Department of Environment and Public Highways) arising from, or incident to, the aforesaid contract between the Republic of the Philippines and the Construction and
Natural Resources (DENR for brevity) the following powers and functions: Development Corporation of the Philippines.
Sec. 4. Powers and Functions. The Department shall: In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of the Republic of the Philippines the
(1) x x x corresponding shares of stock in said entity with an issued value of said shares of stock (which) shall be deemed fully paid and non-
xxx assessable.
(4) Exercise supervision and control over forest lands, alienable and disposable public lands , mineral resources and, in the process of The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such contracts or agreements,
exercising such control, impose appropriate taxes, fees, charges, rentals and any such form of levy and collect such revenues for the including appropriate agreements with the Construction and Development Corporation of the Philippines, as may be necessary to implement
exploration, development, utilization or gathering of such resources; the above.
xxx Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public Estates Authority
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions, lease agreements and such without prejudice to the subsequent transfer to the contractor or his assignees of such portion or portions of the land reclaimed
other privileges concerning the development, exploration and utilization of the countrys marine, freshwater, and brackish water or to be reclaimed as provided for in the above-mentioned contract. On the basis of such patents, the Land Registration
and over all aquatic resources of the country and shall continue to oversee, supervise and police our natural resources ; cancel or Commission shall issue the corresponding certificate of title . (Emphasis supplied)
cause to cancel such privileges upon failure, non-compliance or violations of any regulation, order, and for all other causes which are in On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
furtherance of the conservation of natural resources and supportive of the national interest; Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for its administration,
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole development, utilization or disposition in accordance with the provisions of Presidential Decree No. 1084. Any and all income that the PEA
agency responsible for classification , sub-classification, surveying and titling of lands in consultation with appropriate agencies. may derive from the sale, lease or use of reclaimed lands shall be used in accordance with the provisions of Presidential Decree No. 1084.
[80]
(Emphasis supplied) There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085 merely transferred
As manager, conservator and overseer of the natural resources of the State, DENR exercises supervision and control over alienable and ownership and administration of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA shall
disposable public lands. DENR also exercises exclusive jurisdiction on the management and disposition of all lands of the public belong to or be owned by PEA. EO No. 525 expressly states that PEA should dispose of its reclaimed lands in accordance with the provisions
domain. Thus, DENR decides whether areas under water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This of Presidential Decree No. 1084, the charter of PEA.
means that PEA needs authorization from DENR before PEA can undertake reclamation projects in Manila Bay, or in any part of the country. PEAs charter, however, expressly tasks PEA to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR decides whether reclaimed kinds of lands x x x owned, managed, controlled and/or operated by the government. [87] (Emphasis supplied) There is, therefore,
lands of PEA should be classified as alienable under Sections 6 [81] and 7[82] of CA No. 141. Once DENR decides that the reclaimed lands legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public domain . PEA may sell to
should be so classified, it then recommends to the President the issuance of a proclamation classifying the lands as alienable or disposable private parties its patrimonial properties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on
lands of the public domain open to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent private corporations from acquiring alienable lands of the public domain does not apply to the sale of PEAs patrimonial lands.
No. 3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141. PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the legislative authority, there is
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake no longer any statutory prohibition against such sales and the constitutional ban does not apply to individuals. PEA, however, cannot
the physical reclamation of areas under water, whether directly or through private contractors. DENR is also empowered to classify lands of sell any of its alienable or disposable lands of the public domain to private corporations since Section 3, Article XII of the 1987 Constitution
the public domain into alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell expressly prohibits such sales. The legislative authority benefits only individuals. Private corporations remain barred from acquiring any kind of
or lease the reclaimed alienable lands of the public domain. alienable land of the public domain, including government reclaimed lands.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands alienable or The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the contractor or his assignees
disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands (Emphasis supplied) would not apply to private corporations but only to individuals because of the constitutional ban. Otherwise, the provisions
of the public domain to PEA does not make the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. of PD No. 1085 would violate both the 1973 and 1987 Constitutions.
Absent two official acts a classification that these lands are alienable or disposable and open to disposition and a declaration that these lands The requirement of public auction in the sale of reclaimed lands
are not needed for public service, lands reclaimed by PEA remain inalienable lands of the public domain. Only such an official classification Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and further declared no longer
and formal declaration can convert reclaimed lands into alienable or disposable lands of the public domain, open to disposition under the needed for public service, PEA would have to conduct a public bidding in selling or leasing these lands. PEA must observe the provisions of
Constitution, Title I and Title III[83] of CA No. 141 and other applicable laws.[84] Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a law exempting PEA from holding a public auction. [88] Special
PEAs Authority to Sell Reclaimed Lands Patent No. 3517 expressly states that the patent is issued by authority of the Constitution and PD No. 1084, supplemented by Commonwealth
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed lands shall be disposed of in Act No. 141, as amended. This is an acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of
accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or the public domain unless otherwise provided by law. Executive Order No. 654,[89] which authorizes PEA to determine the kind and manner of
payment for the transfer of its assets and properties, does not exempt PEA from the requirement of public auction. EO No. 654 merely short, PEA and AMARI contend that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles, the 157.84
authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not authorize PEA to dispense with public auction. hectares comprising the Freedom Islands have become private lands of PEA. In support of their theory, PEA and AMARI cite the following
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is required to sell valuable rulings of the Court:
government property through public bidding. Section 79 of PD No. 1445 mandates that 1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Section 79. When government property has become unserviceable for any cause, or is no longer needed , it shall, upon application of the Once the patent was granted and the corresponding certificate of title was issued, the land ceased to be part of the public domain and became
officer accountable therefor, be inspected by the head of the agency or his duly authorized representative in the presence of the auditor private property over which the Director of Lands has neither control nor jurisdiction.
concerned and, if found to be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at 2. Lee Hong Hok v. David,[98] where the Court declared -
public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence of the auditor After the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land covered thereby
concerned or other authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or for not automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein.
less than three consecutive days in any newspaper of general circulation , or where the value of the property does not warrant the 3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled -
expense of publication, by notices posted for a like period in at least three public places in the locality where the property is to be sold. In the While the Director of Lands has the power to review homestead patents, he may do so only so long as the land remains part of the public
event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by the same domain and continues to be under his exclusive control; but once the patent is registered and a certificate of title is issued, the land ceases to
committee or body concerned and approved by the Commission . be part of the public domain and becomes private property over which the Director of Lands has neither control nor jurisdiction.
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit must approve the selling price. 4. Manalo v. Intermediate Appellate Court,[100] where the Court held
[90]
The Commission on Audit implements Section 79 of the Government Auditing Code through Circular No. 89-296 [91] dated January 27, When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued covering the same in favor of the private
1989. This circular emphasizes that government assets must be disposed of only through public auction, and a negotiated sale can be respondents, the said lots ceased to be part of the public domain and, therefore, the Director of Lands lost jurisdiction over the same.
resorted to only in case of failure of public auction. 5.Republic v. Court of Appeals,[101] where the Court stated
At the public auction sale, only Philippine citizens are qualified to bid for PEAs reclaimed foreshore and submerged alienable lands of the Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to the Mindanao Medical Center, Bureau
public domain. Private corporations are barred from bidding at the auction sale of any kind of alienable land of the public domain. of Medical Services, Department of Health, of the whole lot, validly sufficient for initial registration under the Land Registration Act. Such land
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a condition that the winning bidder grant is constitutive of a fee simple title or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122 of the Act, which
should reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the governs the registration of grants or patents involving public lands, provides that Whenever public lands in the Philippine Islands belonging to
additional reclaimed areas in favor of the winning bidder.[92] No one, however, submitted a bid. On December 23, 1994, the Government the Government of the United States or to the Government of the Philippines are alienated, granted or conveyed to persons or to public or
Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation, without need of another public bidding, because of the private corporations, the same shall be brought forthwith under the operation of this Act (Land Registration Act, Act 496) and shall become
failure of the public bidding on December 10, 1991.[93] registered lands.
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250 hectares still to be reclaimed, it The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titles issued to private parties .
also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area These four cases uniformly hold that the Director of Lands has no jurisdiction over private lands or that upon issuance of the certificate of title
to 750 hectares .[94] The failure of public bidding on December 10, 1991, involving only 407.84 hectares, [95] is not a valid justification for a the land automatically comes under the Torrens System. The fifth case cited involves the registration under the Torrens System of a 12.8-
negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides, the failure of public bidding happened on December 10, hectare public land granted by the National Government to Mindanao Medical Center, a government unit under the Department of Health. The
1991, more than three years before the signing of the original JVA on April 25, 1995. The economic situation in the country had greatly National Government transferred the 12.8-hectare public land to serve as the site for the hospital buildings and other facilities of Mindanao
improved during the intervening period. Medical Center, which performed a public service. The Court affirmed the registration of the 12.8-hectare public land in the name of Mindanao
Reclamation under the BOT Law and the Local Government Code Medical Center under Section 122 of Act No. 496. This fifth case is an example of a public land being registered under Act No. 496 without the
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: Private corporations or associations may land losing its character as a property of public dominion.
not hold such alienable lands of the public domain except by lease, x x x. Even Republic Act No. 6957 (BOT Law, for brevity), cited by PEA In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government owned corporation
and AMARI as legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957 states performing public as well as proprietary functions. No patent or certificate of title has been issued to any private party. No one is asking the
Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any infrastructure projects undertaken through Director of Lands to cancel PEAs patent or certificates of title. In fact, the thrust of the instant petition is that PEAs certificates of title should
the build-operate-and-transfer arrangement or any of its variations pursuant to the provisions of this Act, the project proponent x x x may remain with PEA, and the land covered by these certificates, being alienable lands of the public domain, should not be sold to a private
likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to, the grant corporation.
of a portion or percentage of the reclaimed land, subject to the constitutional requirements with respect to the ownership of the land : Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public ownership of the land. Registration is
x x x. (Emphasis supplied) not a mode of acquiring ownership but is merely evidence of ownership previously conferred by any of the recognized modes of acquiring
A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire reclaimed alienable ownership. Registration does not give the registrant a better right than what the registrant had prior to the registration. [102] The registration of
lands of the public domain in view of the constitutional ban. lands of the public domain under the Torrens system, by itself, cannot convert public lands into private lands.[103]
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local governments in land reclamation projects to Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the public domain
pay the contractor or developer in kind consisting of a percentage of the reclaimed land, to wit: automatically becomes private land cannot apply to government units and entities like PEA. The transfer of the Freedom Islands to PEA was
Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by the Private Sector. x x x made subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then President Aquino, to wit:
xxx NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity with the provisions of Presidential
In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a portion or percentage of the Decree No. 1084, supplemented by Commonwealth Act No. 141, as amended , there are hereby granted and conveyed unto the Public
reclaimed land or the industrial estate constructed. Estates Authority the aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight hundred ninety four
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law, the constitutional restrictions (1,915,894) square meters; the technical description of which are hereto attached and made an integral part hereof.(Emphasis supplied)
on land ownership automatically apply even though not expressly mentioned in the Local Government Code. Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section 60 of CA No. 141 prohibits,
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with except when authorized by Congress, the sale of alienable lands of the public domain that are transferred to government units or
leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions of the reclaimed land, not exceeding 12 entities. Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a statutory lien affecting title of the registered land even if not
hectares[96] of non-agricultural lands, may be conveyed to him in ownership in view of the legislative authority allowing such conveyance. This annotated on the certificate of title.[104] Alienable lands of the public domain held by government entities under Section 60 of CA No. 141 remain
is the only way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the public lands because they cannot be alienated or encumbered unless Congress passes a law authorizing their disposition. Congress,
1987 Constitution. however, cannot authorize the sale to private corporations of reclaimed alienable lands of the public domain because of the constitutional
Registration of lands of the public domain ban. Only individuals can benefit from such law.
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands to public respondent PEA transformed such lands of the The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not automatically convert alienable
public domain to private lands. This theory is echoed by AMARI which maintains that the issuance of the special patent leading to the eventual lands of the public domain into private or patrimonial lands. The alienable lands of the public domain must be transferred to qualified private
issuance of title takes the subject land away from the land of public domain and converts the property into patrimonial or private property. In parties, or to government entities not tasked to dispose of public lands, before these lands can become private or patrimonial
lands. Otherwise, the constitutional ban will become illusory if Congress can declare lands of the public domain as private or patrimonial lands Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or conveyed to any person , the same
in the hands of a government agency tasked to dispose of public lands. This will allow private corporations to acquire directly from government shall be brought forthwith under the operation of this Decree. (Emphasis supplied)
agencies limitless areas of lands which, prior to such law, are concededly public lands. Based on its legislative history, the phrase conveyed to any person in Section 103 of PD No. 1529 includes conveyances of public lands to
Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim foreshore and submerged areas public corporations.
of the public domain. Thus, EO No. 525 declares that Alienable lands of the public domain granted, donated, or transferred to a province, municipality, or branch or subdivision of the Government,
EXECUTIVE ORDER NO. 525 as provided in Section 60 of CA No. 141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such
Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation Projects registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the land shall not be alienated, encumbered or
Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken in various parts of the country which otherwise disposed of in a manner affecting its title , except when authorized by Congress . This provision refers to government
need to be evaluated for consistency with national programs; reclaimed, foreshore and marshy lands of the public domain that have been titled but still cannot be alienated or encumbered unless
Whereas, there is a need to give further institutional support to the Governments declared policy to provide for a coordinated, economical and expressly authorized by Congress. The need for legislative authority prevents the registered land of the public domain from becoming private
efficient reclamation of lands; land that can be disposed of to qualified private parties.
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the National Government or any person The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under the Torrens
authorized by it under proper contract; System. Section 48, Chapter 12, Book I of the Code states
Whereas, a central authority is needed to act on behalf of the National Government which shall ensure a coordinated and Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the
integrated approach in the reclamation of lands ; deed of conveyance shall be executed in behalf of the government by the following:
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government corporation to undertake (1) x x x
reclamation of lands and ensure their maximum utilization in promoting public welfare and interests ; and (2) For property belonging to the Republic of the Philippines, but titled in the name of any political subdivision or of any
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the national government including the corporate agency or instrumentality , by the executive head of the agency or instrumentality. (Emphasis supplied)
transfer, abolition, or merger of functions and offices. Thus, private property purchased by the National Government for expansion of a public wharf may be titled in the name of a government
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution and corporation regulating port operations in the country. Private property purchased by the National Government for expansion of an airport may
pursuant to Presidential Decree No. 1416, do hereby order and direct the following: also be titled in the name of the government agency tasked to administer the airport. Private property donated to a municipality for use as a
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and coordinating all town plaza or public school site may likewise be titled in the name of the municipality. [106] All these properties become properties of the public
reclamation projects for and on behalf of the National Government. All reclamation projects shall be approved by the President upon domain, and if already registered under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in any
recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity; existing law for the de-registration of land from the Torrens System.
Provided, that, reclamation projects of any national government agency or entity authorized under its charter shall be undertaken in Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of the public
consultation with the PEA upon approval of the President. domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National Government new
xxx. certificates of title covering such expropriated lands. Section 85 of PD No. 1529 states
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed lands, PEA took the Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated or taken by eminent domain, the
place of DENR as the government agency charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being National Government, province, city or municipality, or any other agency or instrumentality exercising such right shall file for registration in the
leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes of other alienable lands, does not dispose of proper Registry a certified copy of the judgment which shall state definitely by an adequate description, the particular property or interest
private lands but alienable lands of the public domain. Only when qualified private parties acquire these lands will the lands become private expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of the right or interest taken shall be made
lands. In the hands of the government agency tasked and authorized to dispose of alienable of disposable lands of the public on each certificate of title by the Register of Deeds, and where the fee simple is taken, a new certificate shall be issued in favor of the
domain, these lands are still public, not private lands . National Government, province, city, municipality , or any other agency or instrumentality exercising such right for the land so taken. The
Furthermore, PEAs charter expressly states that PEA shall hold lands of the public domain as well as any and all kinds of lands. PEA can legal expenses incident to the memorandum of registration or issuance of a new certificate of title shall be for the account of the authority
hold both lands of the public domain and private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom Islands taking the land or interest therein. (Emphasis supplied)
are transferred to PEA and issued land patents or certificates of title in PEAs name does not automatically make such lands private. Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands. Lands of the public domain
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a gross violation of the may also be registered pursuant to existing laws.
constitutional ban on private corporations from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the lands to be reclaimed from
has now done under the Amended JVA , and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a submerged areas of Manila Bay. In the words of AMARI, the Amended JVA is not a sale but a joint venture with a stipulation for reimbursement
single private corporation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 of the original cost incurred by PEA for the earlier reclamation and construction works performed by the CDCP under its 1973 contract with the
Constitution which was intended to diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now numbering Republic. Whether the Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to cause the issuance
over 80 million strong. and delivery of the certificates of title conveying AMARIs Land Share in the name of AMARI. [107]
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can acquire x x x any and all kinds This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private corporations shall not hold such
of lands. This will open the floodgates to corporations and even individuals acquiring hundreds of hectares of alienable lands of the public alienable lands of the public domain except by lease. The transfer of title and ownership to AMARI clearly means that AMARI will hold the
domain under the guise that in the hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings reclaimed lands other than by lease. The transfer of title and ownership is a disposition of the reclaimed lands, a transaction considered a sale
never before seen in this country - creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the or alienation under CA No. 141,[108] the Government Auditing Code,[109] and Section 3, Article XII of the 1987 Constitution.
clear direction of constitutional development in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the public domain and are
hectares of public lands.[105] The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and the 1987 inalienable. Lands reclaimed from foreshore and submerged areas also form part of the public domain and are also inalienable, unless
Constitution has unequivocally reiterated this prohibition. converted pursuant to law into alienable or disposable lands of the public domain. Historically, lands reclaimed by the government are sui
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529, automatically become private lands is generis , not available for sale to private parties unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for
contrary to existing laws.Several laws authorize lands of the public domain to be registered under the Torrens System or Act No. 496, now PD public use or public service. Alienable lands of the public domain, increasingly becoming scarce natural resources, are to be distributed
No. 1529, without losing their character as public lands.Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide as equitably among our ever-growing population. To insure such equitable distribution, the 1973 and 1987 Constitutions have barred private
follows: corporations from acquiring any kind of alienable land of the public domain. Those who attempt to dispose of inalienable natural resources of
Act No. 496 the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to private corporations, do so at their own
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the Philippine Islands are alienated, granted, risk.
or conveyed to persons or the public or private corporations , the same shall be brought forthwith under the operation of this Act and shall We can now summarize our conclusions as follows:
become registered lands. 1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA,
PD No. 1529 are alienable lands of the public domain . PEA may lease these lands to private corporations but may not sell or transfer ownership of
these lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to the ownership limitations in the 1987 On December 19, 1961, the Republic of the Philippines (Republic) filed a Complaint[3] for Recovery of Possession and Damages with Writ of
Constitution and existing laws. Preliminary Preventive Injunction and Mandatory Injunction, docketed as Civil Case No. 2229-P before the former Court of First Instance of
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until classified as Rizal, (Branch 7, Pasay City).
alienable or disposable lands open to disposition and declared no longer needed for public service. The government can make such On March 5, 1962, the Republic of the Philippines filed an Amended Complaint [4] questioning subject Agreement between Pasay City and
classification and declaration only after PEA has reclaimed these submerged areas.Only then can these lands qualify as agricultural lands of RREC (Exhibit P) on the grounds that the subject-matter of such Agreement is outside the commerce of man, that its terms and conditions are
the public domain, which are the only natural resources the government can alienate. In their present state, the 592.15 hectares of submerged violative of RA 1899, and that the said Agreement was executed without any public bidding.
areas are inalienable and outside the commerce of man . The Answers[5] of RREC and Pasay City, dated March 10 and March 14, 1962, respectively, averred that the subject-matter of said Agreement
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares [110] of the Freedom Islands, such is within the commerce of man, that the phrase foreshore lands within the contemplation of RA 1899 has a broader meaning than the cited
transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind definition of the term in the Words and Phrases and in the Websters Third New International Dictionary and the plans and specifications of the
of alienable land of the public domain. reclamation involved were approved by the authorities concerned.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares [111] of still submerged areas of Manila Bay, such On April 26,1962, Judge Angel H. Mojica, (now deceased) of the former Court of First Instance of Rizal (Branch 7, Pasay City) issued an
transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural resources other than Order[6] the dispositive portion of which was to the following effect:
agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands WHEREFORE, the court hereby orders the defendants, their agents, and all persons claiming under them, to refrain from further reclaiming or
as alienable or disposable, and further declare them no longer needed for public service. Still, the transfer of such reclaimed alienable lands of committing acts of dispossession or dispoilation over any area within the Manila Bay or the Manila Bay Beach Resort, until further orders of
the public domain to AMARI will be void in view of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from the court.
acquiring any kind of alienable land of the public domain. On the following day, the same trial court issued a writ of preliminary injunction [7] which enjoined the defendants, RREC and Pasay City, their
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409[112] of the Civil Code, agents, and all persons claiming under them from further reclaiming or committing acts of dispossession.
contracts whose object or purpose is contrary to law, or whose object is outside the commerce of men, are inexistent and void from the Thereafter, a Motion to Intervene[8], dated June 27, 1962, was filed by Jose L. Bautista, Emiliano Custodio, Renato Custodio, Roger de la
beginning. The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab Rosa, Belen Gonzales, Norma Martinez, Emilia E. Paez, Ambrosio R. Parreno, Antolin M. Oreta, Sixto L. Orosa, Pablo S. Sarmiento, Jesus
initio. Yujuico, Zamora Enterprises, Inc., Industrial and Commercial Factors, Inc., Metropolitan Distributors of the Philippines, and Bayview Hotel, Inc.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly stating inter alia that they were buyers of lots in the Manila Bay area being reclaimed by RREC, whose rights would be affected by whatever
disadvantageous to the government. decision to be rendered in the case.The Motion was granted by the trial court and the Answer attached thereto admitted.[9]
Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue. Besides, the Court is not a trier of The defendants and the intervenors then moved to dismiss [10] the Complaint of the Republic, placing reliance on Section 3 of Republic Act No.
facts, and this last issue involves a determination of factual matters. 5187, which reads:
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation are Sec. 3. Miscellaneous Projects
PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declared NULL and VOID ab initio. xxx
SO ORDERED. m. For the construction of seawall and limited access highway from the south boundary of the City of Manila to Cavite City, to the south, and
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria- from the north boundary of the City of Manila to the municipality of Mariveles, province of Bataan, to the north, including the reclamation of the
Martinez, and Corona, JJ., concur. foreshore and submerged areas: Provided, That priority in the construction of such seawalls, highway and attendant reclamation works shall
be given to any corporation and/or corporations that may offer to undertake at its own expense such projects, in which case the President of
the Philippines may, after competitive bidding, award contracts for the construction of such projects, with the winning bidder shouldering all
costs thereof, the same to be paid in terms of percentage fee of the contractor which shall not exceed fifty percent of the area reclaimed by the
[G.R. No. 103882. November 25, 1998]
contractor and shall represent full compensation for the purpose, the provisions of the Public Land Law concerning disposition of reclaimed
REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS AND REPUBLIC REAL ESTATE
and foreshore lands to the contrary notwithstanding: Provided, finally, that the foregoing provisions and those of other laws, executive orders,
CORPORATION, respondents. CULTURAL CENTER OF THE PHILIPPINES, intervenor.
rules and regulations to the contrary notwithstanding, existing rights, projects and/or contracts of city or municipal governments for the
[G.R. No. 105276. November 25, 1998]
reclamation of foreshore and submerged lands shall be respected. x x x. (underscoring ours)
PASAY CITY AND REPUBLIC REAL ESTATE CORPORATION, petitioners, vs . COURT OF APPEALS and REPUBLIC OF THE
Since the aforecited law provides that existing contracts shall be respected, movants contended that the issues raised by the pleadings have
PHILIPPINES, respondents.
become moot, academic and of no further validity or effect.
DECISION
Meanwhile, the Pasay Law and Conscience Union, Inc. (PLCU) moved to intervene[11], alleging as legal interest in the matter in litigation the
PURISIMA, J .:
avowed purpose of the organization for the promotion of good government in Pasay City. In its Order of June 10, 1969, the lower court of
At bar are two consolidated petitions for review on certiorari under Rule 45 of the Revised Rules of Court. Here, the Court is confronted with a
origin allowed the said intervention[12].
case commenced before the then Court of FirstInstance (now Regional Trial Court) of Rizal in Pasay City, in 1961, more than 3 decades back,
On March 24, 1972, the trial court of origin came out with a Decision, disposing, thus:
that has spanned six administrations of the Republic and outlasted the tenure of ten (10) Chief Justices of the Supreme Court.
WHEREFORE, after carefully considering (1) the original complaint, (2) the first Amended Complaint, (3) the Answer of Defendant Republic
In G.R. No. 103882, the Republic of the Philippines, as petitioner, assails the Decision, dated January 29, 1992 and Amended Decision, dated
Real Estate Corporation to the first Amended Complaint, (4) the Answer of Defendant Pasay City to the first Amended Complaint, (5) the
April 28, 1992, of the Court of Appeals [1], which affirmed with modification the Decision of the former Court of First Instance of Rizal (Branch 7,
Second Amended Complaint, (6) the Answer of Defendant Republic Real Estate Corporation to the Second Amended Complaint, (7) the
Pasay City) in Civil Case No. 2229-P, entitled Republic of the Philippines versus Pasay City and Republic Real Estate Corporation.
Answer of Defendant Pasay City to the Second Amended Complaint, (8) the Memorandum in Support of Preliminary Injunction of Plaintiff, (9)
The facts that matter are, as follows:
the Memorandum In Support of the Opposition to the Issuance of Preliminary Injunction of Defendant Pasay City and Defendant Republic
Republic Act No. 1899 (RA 1899), which was approved on June 22, 1957, authorized the reclamation of foreshore lands by chartered cities
Real Estate Corporation, (10) the Answer in Intervention of Intervenors Bautista, et. al., (11) Plaintiffs Opposition to Motion to Intervene, (12)
and municipalities. Section I of said law, reads:
the Reply to Opposition to Motion to Intervene of Intervenors Bautista, et. al. , (13) the Stipulation of Facts by all the parties, (14) the Motion
SECTION 1. Authority is hereby granted to all municipalities and chartered cities to undertake and carry out at their own expense the
for Leave to Intervene of Intervenor Pasay Law and Conscience Union, Inc., (15) the Opposition to Motion For Leave to Intervene of
reclamation by dredging, filling, or other means, of any foreshore lands bordering them, and to establish, provide, construct, maintain and
Intervenors Bautista, et. al., (16) the Reply of Intervenor Pasay Law and Conscience Union, Inc., (17) the Supplement to Opposition to Motion
repair proper and adequate docking and harbor facilities as such municipalities and chartered cities may determine in consultation with the
to Intervene of Defendant Pasay City and Republic Real Estate Corporation, (18) the Complaint in Intervention of Intervenor Pasay Law and
Secretary of Finance and the Secretary of Public Works and Communications.
Conscience Union, Inc., (19) the Answer of Defendant Republic Real Estate Corporation, (20) the Answer of Intervenor Jose L. Bautista, et.
On May 6, 1958, invoking the aforecited provision of RA 1899, the Pasay City Council passed Ordinance No. 121, for the reclamation of Three
al., to Complaint in Intervention, (21) the Motion to Dismiss of Defendant Republic Real Estate Corporation, and Intervenors Bautista, et. al.,
Hundred (300) hectares of foreshore lands in Pasay City, empowering the City Mayor to award and enter into reclamation contracts, and
(22) the Opposition of Plaintiff to said Motion to Dismiss, (23) the Opposition of Intervenor Pasay Law and Conscience Union, Inc., (24) the
prescribing terms and conditions therefor. The said Ordinance was amended on April 21, 1959 by Ordinance No. 158, which authorized the
Memorandum of the Defendant Republic Real Estate Corporation, (25) the Memorandum for the Intervenor Pasay Law and Conscience
Republic Real Estate Corporation (RREC) to reclaim foreshore lands of Pasay City under certain terms and conditions.
Union, Inc., (26) the Manifestation of Plaintiff filed by the Office of the Solicitor General, and all the documentary evidence by the parties to wit:
On April 24, 1959, Pasay City and RREC entered into an Agreement[2] for the reclamation of the foreshore lands in Pasay City.
(a) Plaintiffs Exhibits A to YYY-4, (b) Defendant Republic Real Estate Corporations Exhibits 1-RREC to 40-a and (c) Intervenor Pasay Law and From the Decision and Amended Decision of the Court of Appeals aforementioned, the Republic of the Philippines, as well as Pasay City and
Conscience Union, Incs., Exhibits A-PLACU to C-PLACU, the Court hereby: RREC, have come to this Court to seek relief, albeit with different prayers.
(1) Denies the Motion to Dismiss filed on January 10, 1968, by Defendant Republic Real Estate Corporation and Intervenors Bautista, et. al., On September 10, 1997, the Court commissioned the former thirteenth Division of Court of Appeals to hear and receive evidence on the
as it is the finding of this Court that Republic Act No. 5187 was not passed by Congress to cure any defect in the ordinance and agreement in controversy. The corresponding Commissioners Report, dated November 25, 1997, was submitted and now forms part of the records.
question and that the passage of said Republic Act No. 5187 did not make the legal issues raised in the pleadings moot, academic and of no On October 11, 1997, the Cultural Center of the Philippines (CCP) filed a Petition in Intervention, theorizing that it has a direct interest in the
further validity or effect; and case being the owner of subject nine (9) lots titled in its (CCP) name, which the respondent Court of Appeals ordered to be turned over to
(2) Renders judgment: Pasay City. The CCP, as such intervenor, was allowed to present its evidence, as it did, before the Court of Appeals, which evidence has been
(a) dismissing the Plaintiffs Complaint; considered in the formulation of this disposition.
(b) Dismissing the Complaint in Intervention of Intervenor Pasay Law and Conscience Union, Inc., In G.R. No. 103882, the Republic of the Philippines theorizes, by way of assignment of errors, that:
(c)Enjoining Defendant Republic Real Estate Corporation and Defendant Pasay City to have all the plans and specifications in the reclamation I
approved by the Director of Public Works and to have all the contracts and sub-contracts for said reclamation awarded by means of, and only THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF PASAY CITY ORDINANCE NO. 158 DATED APRIL 21, 1959 AND
after, public bidding; and THE RECLAMATION CONTRACT ENTERED INTO BETWEEN PASAY CITY AND RREC;
(d) Lifting the preliminary Injunction issued by the Court on April 26, 1962, as soon as Defendant Republic Real Estate Corporation and II
Defendant Pasay City shall have submitted the corresponding plans and specifications to the Director of Public Works, and shall have THE COURT OF APPEALS ERRED IN FINDING THAT RREC HAD RECLAIMED 55 HECTARES AND IN ORDERING THE TURN-OVER TO
obtained approval thereof, and as soon as the corresponding public bidding for the award to the contractor and sub-contractor that will PASAY CITY OF THE OWNERSHIP AND POSSESSION OF NINE (9) LOTS TITLED IN THE NAME OF CCP.
undertake the reclamation project shall have been effected. In G.R. No. 105276, the petitioners, Pasay City and RREC, contend, that::
No pronouncement as to costs. I
SO ORDERED. (See Court of Appeals Decision dated January 28, 1992; pp. 6-8) THE COURT OF APPEALS ERRED IN NOT DECLARING PRESIDENTIAL DECREE NO. 3-A UNCONSTITUTIONAL;
Dissatisfied with the said judgment, the Republic appealed therefrom to the Court of Appeals. However, on January 11, 1973, before the II
appeal could be resolved, Presidential Decree No. 3-A issued, amending Presidential Decree No. 3, thus: THE COURT OF APPEALS ERRED IN NOT AWARDING DAMAGES IN FAVOR OF PASAY CITY AND RREC.
SECTION 1. Section 7 of Presidential Decree No. 3, dated September 26, 1972, is hereby amended by the addition of the following Let us first tackle the issues posed in G.R. No. 103882.
paragraphs: On the first question regarding the validity of Pasay City Ordinance No. 158 dated April 21, 1959 and the Agreement dated April 24, 1959
The provisions of any law to the contrary notwithstanding, the reclamation of areas under water, whether foreshore or inland, shall be limited between Pasay City and RREC, we rule in the negative.
to the National Government or any person authorized by it under a proper contract. Section 1 of RA 1899, reads:
All reclamations made in violation of this provision shall be forfeited to the State without need of judicial action. SECTION 1. Authority is hereby granted to all municipalities and chartered cities to undertake and carry out at their own expense the
Contracts for reclamation still legally existing or whose validity has been accepted by the National Government shall be taken over by the reclamation by dredging, filling, or other means, of any foreshore lands bordering them, and to establish, provide, construct, maintain and
National Government on the basis of quantum meruit, for proper prosecution of the project involved by administration. repair proper and adequate docking and harbor facilities as such municipalities and chartered cities may determine in consultation with the
On November 20, 1973, the Republic and the Construction Development Corporation of the Philippines (CDCP) signed a Contract[13] for the Secretary of Finance and the Secretary of Public Works and Communications.
Manila-Cavite Coastal Road Project (Phases I and II)which contract included the reclamation and development of areas covered by the It is the submission of the petitioner, Republic of the Philippines, that there are no foreshore lands along the seaside of Pasay City [15]; that what
Agreement between Pasay City and RREC. Then, there was issued Presidential Decree No. 1085 which transferred to the Public Estate Pasay City has are submerged or offshore areas outside the commerce of man which could not be a proper subject matter of the Agreement
Authority (PEA) the rights and obligations of the Republic of the Philippines under the contract between the Republic and CDCP. between Pasay City and RREC in question as the area affected is within the National Park, known as Manila Bay Beach Resort, established
Attempts to settle amicably the dispute between representatives of the Republic, on the one hand, and those of Pasay City and RREC, on the under Proclamation No. 41, dated July 5, 1954, pursuant to Act No. 3915, of which area it (Republic) has been in open, continuous and
other, did not work out. The parties involved failed to hammer out a compromise. peaceful possession since time immemorial.
On January 28, 1992, the Court of Appeals came out with a Decision[14] dismissing the appeal of the Republic and holding, thus: Petitioner faults the respondent court for unduly expanding what may be considered foreshore land through the following disquisition:
WHEREFORE, the decision appealed from is hereby AFFIRMED with the following modifications: The former Secretary of Justice Alejo Mabanag, in response to a request for an opinion from the then Secretary of Public Works and
1. The requirement by the trial court on public bidding and the submission of RRECs plans and specification to the Department of Public Communications as to whether the term foreshore areas as used in Section I of the immediately aforequoted law is that defined in Websters
Works and Highways in order that RREC may continue the implementation of the reclamation work is deleted for being moot and academic; Dictionary and the Law of Waters so as to make any dredging or filling beyond its prescribed limit illegal, opined:
2. Ordering the plaintiff-appellant to turn over to Pasay City the ownership and possession over all vacant spaces in the twenty-one hectare According to the basic letter of the Director of Public Works, the law of Waters speaks of shore and defines it thus: that space movement of
area already reclaimed by Pasay City and RREC at the time it took over the same. Areas thereat over which permanent structures has (sic) the tide. Its interior or terrestrial limit in the line reached by highest equinoctial tides.
been introduced shall, including the structures, remain in the possession of the present possessor, subject to any negotiation between Pasay Websters definition of foreshore reads as follows:
City and the said present possessor, as regards the continued possession and ownership of the latter area. That part of the shore between high water and low-water marks usually fixed at the line to which the ordinary means tide flows: also, by
3. Sustaining RRECs irrevocable option to purchase sixty (60%) percent of the Twenty-One (21) hectares of land already reclaimed by it, to be extension, the beach, the shore near the waters edge.
exercised within one (1) year from the finality of this decision, at the same terms and condition embodied in the Pasay City-RREC reclamation If we were to be strictly literal the term foreshore or foreshore lands should be confined to but a portion of the shore, in itself a very limited
contract, and enjoining appellee Pasay City to respect RRECs option. area. (p. 6, Intervenors-appellees brief).
SO ORDERED. Bearing in mind the (Websters and Law of Waters) definitions of shore and of foreshore lands, one is struck with the apparent inconsistency
On February 14, 1992, Pasay City and RREC presented a Motion for Reconsideration of such Decision of the Court of Appeals, contending, between the areas thus described and the purpose to which that area, when reclaimed under the provision of Republic Act No. 1899, shall be
among others, that RREC had actually reclaimed Fifty-Five (55) hectares, and not only Twenty-one (21) hectares, and the respondent Court of devoted. Section I (of said Law) authorizes the construction thereat of adequate docking and harbor facilities. This purpose is repeated in
Appeals erred in not awarding damages to them, movants. Sections 3 and 4 of the Act.
On April 28, 1992, the Court of Appeals acted favorably on the said Motion for Reconsideration, by amending the dispositive portion of its And yet, it is well known fact that foreshore lands normally extend only from 10 to 20 meters along the coast. Not very much more if at all. In
judgment of January 28, 1992, to read as follows: fact, certain parts in Manila bordering on Manila Bay, has no foreshore to speak of since the sea washes the sea wall.
WHEREFORE, the dispositive portion of our Decision dated January 28, 1992 is hereby AMENDED to read as follows: It does not seem logical, then, that Congress had in mind. Websters limited concept of foreshore when it enacted Republic Act No. 1899,
1. The requirement by the trial court on public bidding and the submission of the RRECs plans and specification to the Department of Public unless it intends that the wharves, piers, docks, etc. should be constructed parallel to the shore, which is impractical.
Works and Highways in order that RREC may continue the implementation of the reclamation work is deleted for being moot and academic. Since it is to be presumed that Congress could not have intended to enact an ineffectual measure not one that would lead to absurd
2. Ordering plaintiff-appellant to turn over to Pasay City the ownership and possession of the above enumerated lots (1 to 9). consequences, it would seem that it used foreshore in a sense wider in scope that that defined by Webster. xxx
3. Sustaining RRECs irrevocable option to purchase sixty (60%) percent of the land referred to in No. 2 of this dispositive portion, to be To said opinion on the interpretation of the R.A. 1899, plaintiff-appellant could not offer any refutation or contrary opinion. Neither can we. In
exercised within one (1) year from the finality of this Decision, at the same terms and condition embodied in the Pasay City-RREC reclamation fact, the above construction is consistent with the rule on context in statutory construction which provides that in construing a statute, the
contract, and enjoining Pasay City to respect RRECs irrevocable option. same must be construed as a whole. The particular words, clauses and phrases should not be studied as detached and isolated expressions,
SO ORDERED. but the whole and every part of the statute must be considered in fixing the meaning of any of its parts in order to produce a harmonious whole
(see Araneta vs. Concepcion, 99 Phil. 709). There are two reasons for this. Firstly, the force and significance of particular expressions will the city of Manila to Cavite City, to the South, and from the North boundary of the city of Manila to the municipality of Mariveles, province of
largely depend upon the connection in which they are found and their relation to the general subject-matter of the law. The legislature must be Bataan, to the North (including the reclamation of foreshore and submerged areas ... provided ... that ... existing projects and/or contracts of
understood to have expressed its whole mind on the special object to which the legislative act is directed but the vehicle for the expressions of city or municipal governments for the reclamation of foreshore and submerged lands shall be respected... This is a clear manifestation that
that meaning is the statute, considered as one entire and continuous act, and not as an agglomeration of unrelated clauses . Each clause or Congress in enacting RA 1899, did not intend to limit the interpretation of the term foreshore land to its dictionary meaning.
provision will be illuminated by those which are cognate to it and by the general tenor of the whole statute and thus obscurities and It is presumed that the legislature was acquainted with and had in mind the judicial construction given to a former statute on the subject, and
ambiguities may often be cleared up by the most direct and natural means. Secondly, effect must be given, if it is possible, to every word and that the statute on the subject, and that the statute was enacted having in mind the judicial construction that the prior enactment had received ,
clause of the statute, so that nothing shall be left devoid of meaning or destitute of force. To this end, each provision of the statute should be or in the light of such existing judicial decisions as have direct bearing upon it (see 50 Am. Jur., Sec. 321, pp. 312-313). But notwithstanding
read in the light of the whole. For the general meaning of the legislature, as gathered from the entire act, may often prevail over the said interpretation by the Supreme Court of RA 1899 in the Ponce cases, Congress enacted a law covering the same areas previously
construction which would appear to be the most natural and obvious on the face of a particular clause. It is by this means that contradiction embraced in a RA 1899 (as mentioned earlier, cities without foreshore lands which were sought to be excluded from the operation of RA 1899
and repugnance between the different parts of the statute may be avoided. (See Black, Interpretation of Laws, 2nd Ed., pp. 317-319). were not excluded), providing that respect be given the reclamation of not only foreshore lands but also of submerged lands signifying its non-
Resorting to extrinsic aids, the Explanatory Note to House Bill No. 3630, which was subsequently enacted as Republic Act No. 1899, reads: conformity to the judicial construction given to RA 1899. If Congress was in accord with the interpretation and construction made by the
In order to develop and expand the Maritime Commerce of the Philippines, it is necessary that harbor facilities be correspondingly improved, Supreme Court on RA 1899, it would have mentioned reclamation of foreshore lands only in RA 5187, but Congress included submerged
and, where necessary, expanded and developed. The national government is not in a financial position to handle all this work. On the other lands in order to clarify the intention on the grant of authority to cities and municipalities in the reclamation of lands bordering them as provided
hand, with a greater autonomy, many chartered cities and provinces are financially able to have credit position which will allow them to in RA 1899. It is, therefore, our opinion that it is actually the intention of Congress in RA 1899 not to limit the authority granted to cities and
undertake these projects. Some cities, such as the City of Bacolod under R.A. 161, has been authorized to reclaim foreshore lands bordering municipalities to reclaim foreshore lands in its strict dictionary meaning but rather in its wider scope as to include submerged lands.
it. The Petition is impressed with merit.
Other cities and provinces have continuously been requesting for authority to reclaim foreshore lands on the basis of the Bacolod City pattern, To begin with, erroneous and unsustainable is the opinion of respondent court that under RA 1899, the term foreshore lands includes
and to undertake work to establish, construct on the reclaimed area and maintain such port facilities as may be necessary. In order not to submerged areas. As can be gleaned from its disquisition and rationalization aforequoted, the respondent court unduly stretched and
unduly delay the undertaking of these projects, and inorder to obviate the passage of individual pieces of legislation for every chartered city broadened the meaning of foreshore lands, beyond the intentment of the law, and against the recognized legal connotation of foreshore
and province, it is hereby recommended that the accompanying bill be approved. It covers Authority for All chartered cities and provinces to lands. Well entrenched, to the point of being elementary, is the rule that when the law speaks in clear and categorical language, there is no
undertake this work. x x x (underscoring supplied) reason for interpretation or construction, but only for application. [16] So also, resort to extrinsic aids, like the records of the constitutional
Utilizing the above explanatory note in interpreting and construing the provisions of R.A. 1899, then Secretary of Justice Mabanag opined: convention, is unwarranted, the language of the law being plain and unambiguous. [17] Then, too, opinions of the Secretary of Justice are
It is clear that the Bacolod City pattern was the basis of the enactment of the aforementioned bill of general application. This so-called Bacolod unavailing to supplant or rectify any mistake or omission in the law.[18] To repeat, the term foreshore lands refers to:
City pattern appears to be composed of 3 parts, namely: Republic Act No. 161, which grants authority to Bacolod City to undertake or carry The strip of land that lies between the high and low water marks and that is alternately wet and dry according to the flow of the tide. (Words
out ... the reclamation ... of any [sic] carry out the reclamation project conformably with Republic Act No. 161; and Republic Act No. 1132 and Phrases, Foreshore)
authorizing Bacolod City to contract indebtedness or to issue bonds in the amount not exceeding six million pesos to finance the reclamation A strip of land margining a body of water (as a lake or stream); the part of a seashore between the low-water line usually at the seaward
of land in said city. margin of a low-tide terrace and the upper limit of wave wash at high tide usually marked by a beach scarp or berm. (Websters Third New
Republic Act No. 161 did not in itself specify the precise space therein referred to as foreshore lands, but it provided that docking and harbor International Dictionary)
facilities should be erected on the reclaimed portions thereof, while not conclusive would indicate that Congress used the word foreshore in its The duty of the court is to interpret the enabling Act, RA 1899. In so doing, we cannot broaden its meaning, much less widen the coverage
broadest sense. Significantly, the plan of reclamation of foreshore drawn up by the Bureau of Public Works maps out an area of approximately thereof. If the intention of Congress were to include submerged areas, it should have provided expressly. That Congress did not so provide
1,600,000 square meters, the boundaries of which clearly extend way beyond Websters limited concept of the term foreshore. As a could only signify the exclusion of submerged areas from the term foreshore lands.
contemporaneous construction by that branch of the Government empowered to oversee at least, the conduct of the work, such an Neither is there any valid ground to disregard the Resolution of this Court dated February 3, 1965 in Ponce v. Gomez (L-21870) and Ponce v.
interpretation deserves great weight. Finally, Congress in enacting Republic Act No. 1132 (supplement to RA 161), tacitly confirmed and City of Cebu (L-22669) despite the enactment of Republic Act No. 5187 (RA 5187), the relevant portion of which, reads:
approved the Bureaus interpretationof the term foreshore when instead of taking the occasion to correct the Bureau of over extending its plan, Sec. 3. Miscellaneous Projects
it authorized the city of Bacolod to raise the full estimated cost of reclaiming the total area covered by the plan. The explanatory note to House xxx
Bill No. 1249 which became Republic Act No. 1132 states among the things: m. For the construction of seawall and limited access highway from the south boundary of the City of Manila to Cavite City, to the south, and
The Bureau of Public Works already prepared a plan for the reclamation of about 1,600,000 square meters of land at an estimated costs of from the north boundary of the City of Manila to the municipality of Mariveles, province of Bataan, to the north, including the reclamation of the
about P6,000,000.00. The project is self-supporting because the proceeds from the sales or leases of lands so reclaimed will be more than foreshore and submerged areas: Provided, That priority in the construction of such seawalls, highway and attendant reclamation works shall
sufficient to cover the cost of the project. be given to any corporation and/or corporations that may offer to undertake at its own expense such projects, in which case the President of
Consequently, when Congress passed Republic Act No. 1899 in order to facilitate the reclamation by local governments of foreshore lands on the Philippines may, after competitive bidding, award contracts for the construction of such projects, with the winning bidder shouldering all
the basis of the Bacolod City pattern and in order to obviate the passage of individual pieces of legislation for every chartered city and costs thereof, the same to be paid in terms of percentage fee of the contractor which shall not exceed fifty percent of the area reclaimed by the
provinces requesting authority to undertake such projects, the lawmaking body could not have had in mind the limited area described by contractor and shall represent full compensation for the purpose, the provisions of the Public Land Law concerning disposition of reclaimed
Webster as foreshore lands. x x x. and foreshore lands to the contrary notwithstanding: Provided, finally, that the foregoing provisions and those of other laws, executive orders,
If it was really the intention of Congress to limit the area to the strict literal meaning of foreshore lands which may be reclaimed by chartered rules and regulations to the contrary notwithstanding, existing rights, projects and/or contracts of city or municipal governments for the
cities and municipalities, Congress would have excluded the cities of Manila, Iloilo, Cebu, Zamboanga and Davao from the operation of RA reclamation of foreshore and submerged lands shall be respected. x x x.
1899 as suggested by Senator Cuenco during the deliberation of the bill considering that these cities do not have foreshore lands in the strict There is nothing in the foregoing provision of RA 5187 which can be interpreted to broaden the scope of foreshore lands. The said law is not
meaning of the term. Yet, Congress did not approve the proposed amendment of Senator Cuenco, implying therefore, that Congress intended amendatory to RA 1899. It is an Appropriations Act, entitled AN ACT APPROPRIATING FUNDS FOR PUBLIC WORKS, SYNCHRONIZING
not to limit the area that may be reclaimed to the strict definition of foreshore lands. THE SAME WITH PREVIOUS PUBLIC WORKS APPROPRIATIONS.
The opinion of the then Secretary of Justice Mabanag, who was at that time the chief law officer and legal adviser of the government and All things viewed in proper perspective, we reiterate what was said in Ponce v. Gomez (L-21870) and Ponce v. City of Cebu (L-22669) that the
whose office is required by law to issue opinions for the guidance of the various departments of the government, there being then no judicial term foreshore refers to that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary flow of the tides. As
interpretation to the contrary, is entitled to respect (see Bengzon vs. Secretary of Justice and Insular Auditor, 68 Phil. 912). opined by this Court in said cases:
We are not unmindful of the Supreme Court Resolution dated February 3, 1965 in Ponce vs. Gomez (L-21870) and Ponce vs. City of Cebu (L- WHEREAS, six (6) members of the Court (Justices Bautista Angelo, Concepcion, Reyes, Barrera, Dizon and Jose P. Bengzon) opine that said
2266 , by a unanimous vote of six (6) justices (the other five (5) members deemed it unnecessary to express their view because in their city ordinance and contracts are ultra vires and hence, null and void, insofar as the remaining 60% of the area aforementioned, because the
opinion the questions raised were not properly brought before the court), which in essence applied the strict dictionary meaning of foreshore term foreshore lands as used in Republic Act No. 1899 should be understood in the sense attached thereto by common
lands as used in RA 1899 in the case of the city of Cebu. But this was promulgated long after the then Secretary of Justice Mabanag rendered parlance; (underscoring ours)
the above opinion on November 16, 1959 and long after RREC has started the subject reclamation project. The aforesaid ruling was applied by then Secretary of Justice Claudio Teehankee, in his opinion dated December 22, 1966, in a case with
Furthermore, as held by the lower court, Congress, after the Supreme Court issued the aforementioned Resolution, enacted RA 5187. In Sec. analogous facts as the present one, to wit:
3 (m) of said law, Congress appropriated money for the construction of the seawall and limited access highway from the South boundary of December 22, 1966
The Secretary of Agriculture Engineer concerned that portions of the reclamation project not less than 50 hectares in area shall have been accomplished or completed
and Natural Resources obtained and presented by RREC.
Diliman, Quezon City As a matter of fact, no witness ever testified on any reclamation work done by RREC, and extent thereof, as of April 26, 1962. Not a single
Sir: contractor, sub-contractor, engineer, surveyor, or any other witness involved in the alleged reclamation work of RREC testified on the 55
xxx hectares supposedly reclaimed by RREC. What work was done, who did the work, where was it commenced, and when was it completed, was
I. Facts - never brought to light by any witness before the court. Certainly, onus probandi was on RREC and Pasay City to show and point out the as yet
1. On January 19, 1961, pursuant to the provisions of Republic Act No. 1899, the Municipality of Navotas enacted Ordinance No. 1 authorizing unidentified 55 hectares they allegedly reclaimed. But this burden of proof RREC and Pasay City miserably failed to discharge.
the Municipal Mayor to enter into a reclamation contract with Mr. Chuanico. So also, in the decision of the Pasay Court of First Instance dismissing the complaint of plaintiff-appellant, now petitioner Republic of the
2. On March 15, 1961, a reclamation contract was concluded between the Municipality of Navotas, represented by the Municipal Mayor, and Philippines, the lifting of the writ of Preliminary Injunction issued on April 26, 1962 would become effective only as soon as Defendant Republic
Mr. Chuanico in accordance with the above ordinance. Thereunder, Mr. Chuanico shall be the attorney-in-fact of the Municipality in Real Estate Corporation and Defendant Pasay City shall have submitted the corresponding plans and specifications to the Director of Public
prosecuting the reclamation project and shall advance the money needed therefor; that the actual expenses incurred shall be deemed a loan Works, and shall have obtained approval thereof, and as soon as corresponding public bidding for the award to the contractor and sub-
to the Municipality; that Mr. Chuanico shall have the irrevocable option to buy 70% of the reclaimed area at P7.00 per square meter; that he contractor that will undertake the reclamation project shall have been effected. (Rollo, pp. 127-129, G.R. No. 103882)
shall have the full and irrevocable powers to do any and all things necessary and proper in and about the premises, including the power to hire From the records on hand, it is abundantly clear that RREC and Pasay City never complied with such prerequisites for the lifting of the writ of
necessary personnel for the prosecution of the work, purchase materials and supplies, and purchase or lease construction machineries and Preliminary Injunction. Consequently, RREC had no authority to resume its reclamation work which was stopped by said writ of preliminary
equipment, but any and all contracts to be concluded by him in behalf of the Municipality shall be submitted to public bidding. injunction issued on April 26, 1962.
xxx From the Contract for Dredging Work, dated November 26, 1960, marked Exhibit 21-A for RREC before the lower court, and Exhibit EE for
3. On March 16, 1961, the Municipal Council of Navotas passed Resolution No. 22 approving and ratifying the contract. CCP before the Court of Appeals, it can be deduced that only on November 26, 1960 did RREC contract out the dredging work to C and A
xxx Construction Company, Inc., for the reclamation of the 55 hectares initially programmed to be reclaimed by it. But, as stated by RREC itself in
III. Comments - the position paper filed with this Court on July 15, 1997, with reference to CDCPs reclamation work, mobilization of the reclamation team
1. The above reclamation contract was concluded on the basis of Navotas Ordinance No. 1 which, in turn, had been enacted avowedly would take one year before a reclamation work could actually begin. Therefore, the reclamation work undertaken by RREC could not have
pursuant to Republic Act No. 1899. This being so, the contract, in order to be valid, must conform to the provisions of the said law. started before November 26, 1961.
By authorizing local governments to execute by administration any reclamation work, (Republic Act No. 1899 impliedly forbids the execution of Considering that on April 26, 1962 RREC was enjoined from proceeding any further with its reclamation work, it had barely five (5) months,
said project by contract. Thus, in the case of Ponce et al. vs. Gomez (February 3, 1966), five justices of the Supreme Court voted to annul the from November, 1961 to April, 1962, to work on subject reclamation project. It was thus physically impossible for RREC to reclaim 55 hectares,
contract between Cebu Development Corporation and Cebu City for the reclamation of foreshore lands because the provisions of said ... with the stipulated specifications and elevation, in such a brief span of time. In the report of RREC (Exhibit DD for CCP), it was conceded that
contract are not ... in accordance with the provisions of Republic Act No. 1899, as against one Justice who opined that the contract due to the writ of preliminary injunction issued on April 26, 1962, C and A Construction Co., Inc. had suspended its dredging operation since
substantially complied with the provisions of the said law. (Five Justices expressed no opinion on this point.) May, 1962.
Inasmuch as the Navotas reclamation contract is substantially similar to the Cebu reclamation contract, it is believed that the former is likewise The graphical report on the Pasay Reclamation project, as of April 30, 1962, attached to the Progress Report marked Exhibit DD, is a
fatally defective. schematic representation of the work accomplishment referred to in such Progress Report, indicating the various elevations of the land surface
2. The Navotas reclamation project envisages the construction of a channel along the Manila Bay periphery of that town and the reclamation it embraced, ranging from 0.00 meters to the highest elevation of 2.5 meters above MLLW. Such portrayal of work accomplished is crucial in
of approximately 650 hectares of land from said channel to a seaward distance of one kilometer. In the basic letter it is stated that practically, our determination of whether or not RREC had actually reclaimed any land as under its Contract for Dredging Work with C and A Construction
all the 650 hectares of lands proposed to be reclaimed under the agreement do not constitute foreshore lands and that the greater portion of Company (Exhibit EE), the required final elevation for a completely reclaimed land was 3.5 meters above MLLW, as explicitly provided in said
the area . . . is in fact navigable and presently being used as a fishing harbor by deep-sea fishing operators as well as a fishing ground of Contract for Dredging Work. So, the irresistible conclusion is - when the work on subject RREC-Pasay City reclamation project stopped in
sustenance fisherman. Assuming the correctness of these averments, the Navotas reclamation contract evidently transcends the authority April, 1962 in compliance with the writ of preliminary injunction issued by the trial court of origin, no portion of the reclamation project worked
granted under Republic Act No. 1899, which empowers the local governments to reclaim nothing more than foreshore lands, i.e., that part of on by RREC had reached the stipulated elevation of 3.5 meters above MLLW. The entire area it worked on was only at sea level or 0.00 meter
the land adjacent to the sea which is alternately covered and left dry by the ordinary flow of the tides. (26 C.J. 890.) It was for this reason that above MLLW. In short, RREC had not yet reclaimed any area when the writ of preliminary injunction issued in April 1962.
in the cited case Ponce case, the Supreme Court, by a vote of 6-0 with five Justices abstaining, declared ultra vires and void the contractual On this point, the testimonies of Architect Ruben M. Protacio, Architect and Managing partner of Leandro V. Locsin and partners, Architect and
stipulation for the reclamation of submerged lands off Cebu City, and permanently enjoined its execution under Republic Act No. 1899. City Planner Manuel T. Maoza, Jr. of Planning Resources and Operation System, Inc., Rose D. Cruz, Executive Assistant, Office of the
xxx President, from 1966 to 1970, and Dr. Lucrecia Kasilag, National Artist and member of CCP Advisory Committee, come to the fore. These
In accordance with the foregoing, I have the honor to submit the view that the Navotas reclamation contract is not binding and should be credible, impartial and knowledgeable witnesses recounted on the witness stand that when the construction of the Main Building of the Cultural
disregarded for non-compliance with law. Center of the Philippines (CCP)began in 1966, the only surface land available was the site for the said building (TSN, Sept. 29, 1997, pages 8,
Very truly yours, 14 and 50), what could be seen in front of and behind it was all water (TSN, Sept. 29, 1997, pages 127-128). When the CCP Main Building
(SGD) CLAUDIO TEEHANKEE was being constructed, from 1966 to 1969, the land above sea level thereat was only where the CCP Main Building was erected and the rest
Secretary of Justice of the surroundings were all under water, particularly the back portion fronting the bay. (TSN, Sept. 13, 1997, pp. 181, 182, 185, 186, 188). Dr.
The said opinion of Justice Secretary Teehankee who became Associate Justice, and later Chief Justice, of this Court, did, in our considered Lucrecia R. Kasilag stressed that on April 16, 1966, during the ground breaking for the CCP Main Building, it was water all around (TSN, Sept.
view, supersede the earlier opinion of former Justice Secretary Alejo Mabanag, aforestated, as the cases, in connection with which subject 30, 1997, pp. 320, 324, 325).
opinions were sought, were with similar facts. The said Teehankee opinion accords with RA 1899. There was indeed no legal and factual basis for the Court of Appeals to order and declare that the requirement by the trial court on public
It bears stressing that the subject matter of Pasay City Ordinance No. 121, as amended by Ordinance No. 158, and the Agreement under bidding and the submission of RRECs plans and specification to the Department of Public Works and Highways in order that RREC may
attack, have been found to be outside the intendment and scope of RA 1899, and therefore ultra vires and null and void. continue the implementation of the reclamation work is deleted for being moot and academic. Said requirement has never become moot and
What is worse, the same Agreement was vitiated by the glaring absence of a public bidding. academic. It has remained indispensable, as ever, and non-compliance therewith restrained RREC from lawfully resuming the reclamation
Obviously, there is a complete dearth of evidence to prove that RREC had really reclaimed 55 hectares. The letter of Minister Baltazar Aquino work under controversy, notwithstanding the rendition below of the decision in its favor.
relied upon by RREC is no proof at all that RREC had reclaimed 55 hectares. Said letter was just referring to a tentative schedule of work to Verily, contrary to what the Court of Appeals found, RREC had not reclaimed any area with the prescribed elevation of 3.5 meters above
be done by RREC, even as it required RREC to submit the pertinent papers to show its supposed accomplishment, to secure approval by the MLLW, so much so that in 1978, it (RREC) opted to file with the former Ministry of Public Highways, a claim for compensation
Ministry of Public Works and Highways to the reclamation plan, and to submit to a public bidding all contracts and sub-contracts for subject of P30,396,878.20, for reclamation work allegedly done before the CDCP started working on the reclamation of the CCP grounds. On
reclamation project but RREC never complied with such requirements and conditions sine qua non. September 7, 1979, RREC asked the Solicitor General to settle its subject claim for compensation at the same amount of P30,396,878.20. But
No contracts or sub-contracts or agreements, plans, designs, and/or specifications of the reclamation project were presented to reflect any on June 10, 1981, guided by the cost data, work volume accomplished and other relevant information gathered by the former Ministry of Public
accomplishment. Not even any statement or itemization of works accomplished by contractors or subcontractors or vouchers and other Highways, the Solicitor General informed RREC that the value of what it had accomplished, based on 1962 price levels, was
relevant papers were introduced to describe the extent of RRECs accomplishment. Neither was the requisite certification from the City only P8,344,741.29, and the expenses for mobilization of equipment amounted to P2,581,330.00. The aforesaid evaluation made by the
government, through the then Minister of Public Highways, is factual and realistic, so much so that on June 25, 1981, RREC, in its reply letter Under the aforecited provision of law in point, a notice of lis pendens is necessary when the action is for recovery of possession or ownership
to the Solicitor General, stated: of a parcel of land. In the present litigation, RREC and Pasay City, as defendants in the main case, did not counterclaim for the turnover to
We regret that we are not agreeable to the amount of P10,926,071.29, based on 1962 cost data, etc., as compensation based on quantum Pasay City of the titled lots aforementioned.
meruit. The least we would consider is the amount of P10.926,071.29 plus interest at the rate of 6% per annum from 1962 to the time of What is more, a torrens title cannot be collaterally attacked. The issue of validity of a torrens title, whether fraudulently issued or not, may be
payment. We feel that 6% is very much less than the accepted rate of inflation that has supervened since 1962 to the present, and even less posed only in an action brought to impugn or annul it.(Halili vs. National Labor Relations Commission, 257 SCRA 174; Cimafranca vs.
than the present legal rate of 12% per annum.[19] Intermediate Appellate Court, 147 SCRA 611.) Unmistakable, and cannot be ignored, is the germane provision of Section 48 of P.D. 1529, that
Undoubtedly, what RREC claimed for was payment for what it had done, and for the dredge fill of 1,558,395 cubic meters it used, on subject a certificate of title can never be the subject of a collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding
reclamation project. instituted in accordance with law.
Respondent Court likewise erred in ordering the turn-over to Pasay City of the following titled lots, to wit: Although Pasay City and RREC did not succeed in their undertaking to reclaim any area within subject reclamation project, it appearing that
LOT NO. BUILDING AREA OCT/TCT something compensable was accomplished by them, following the applicable provision of law and hearkening to the dictates of equity, that no
42 Gloria Maris 9,516 sq.m. OCT 159 in the Restaurant name of GSIS one, not even the government, shall unjustly enrich oneself/itself at the expense of another [20], we believe; and so hold, that Pasay City and
RREC should be paid for the said actual work done and dredge-fill poured in, worth P10,926,071.29, as verified by the former Ministry of
3 Asean Garden 76,299 sq.m. OCT 10251 in the Public Highways, and as claimed by RREC itself in its aforequoted letter dated June 25, 1981.
name of CCP It is fervently hoped that long after the end of our sojourn in this valley of tears, the court, for its herein historic disposition, will be exalted by
the future generations of Filipinos, for the preservation of the national patrimony and promotion of our cultural heritage. As writer Channing
12 Folk Arts Theater 1.7503 sq.m. TCT 18627 in the rightly puts it: Whatever expands the affections, or enlarges the sphere of our sympathies - Whatever makes us feel our relation to the
and PICC parking name of CCP universe and all that it inherits in time and in eternity, and to the great and beneficent cause of all, must unquestionably refine our nature, and
space elevate us in the scale of being.
WHEREFORE:
22 landscaped with 132,924 sq.m. TCT 75676 in the In G.R. No. 103882, the Petition is GRANTED; the Decision, dated January 28, 1992, and Amended Decision, dated April 28, 1992, of the
sculpture of Asean name of CCP Court of Appeals, are both SET ASIDE; and Pasay City Ordinance No. 121, dated May 6, 1958, and Ordinance No. 158, dated April 21, 1959,
Artists-site of as well as the Reclamation Agreements entered into by Pasay City and Republic Real Estate Corporation (RREC)as authorized by said city
Boom na Boom ordinances, are declared NULL and VOID for being ultra vires, and contrary to Rep. Act 1899.
The writ of preliminary injunction issued on April 26, 1962 by the trial court a quo in Civil Case No. 2229-P is made permanent, and the notice
23 open space, back 34,346 sq.m. TCT 75677 in the of lis pendens issued by the Court of Appeals in CA G.R. CV No. 51349 ordered CANCELLED. The Register of Deeds of Pasay City is
of Philcite name of CCP directed to take note of and annotate on the certificates of title involved, the cancellation of subject notice of lis pendens.
The petitioner, Republic of the Philippines, is hereby ordered to pay Pasay City and Republic Real Estate Corporation the sum of TEN
24 Parking space for 10,352 sq.m. TCT 75678 in the MILLION NINE HUNDRED TWENTY-SIX THOUSAND SEVENTY-ONE AND TWENTY-NINE CENTAVOS (P10,926,071.29) PESOS, plus
Star City, CCP, name of CCP interest thereon of six (6%) percent per annum from May 1, 1962 until full payment, which amount shall be divided by Pasay City and RREC,
Philcite share and share alike.
In G.R. No. 105276, the Petition is hereby DENIED for lack of merit.
25 open space, 11,323 sq.m. TCT 75679 in the No pronouncement as to costs.
occupied by Star name of CCP SO ORDERED.
City SECOND DIVISION
G.R. No. 184203, November 26, 2014
28 open space, 27,689 sq.m. TCT 75684 in the CITY OF LAPU-LAPU, Petitioner, v. PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
beside PICC name of CCP
G.R. NO. 187583
29 open space, 106,067 sq.m. TCT 75681 in the PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND EMERLINDA S. TALENTO, IN HER
leased by El name of CCP CAPACITY AS PROVINCIAL TREASURER OF BATAAN, Petitioners, v. PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
Shaddai DECISION
We discern no factual basis nor any legal justification therefor. In the first place, in their answer to the Complaint and Amended Complaint LEONEN, J. :
below, RREC and Pasay City never prayed for the transfer to Pasay City of subject lots, title to which had long become indefeasible in favor of The Philippine Economic Zone Authority is exempt from payment of real property taxes.
the rightful title holders, CCP and GSIS, respectively.
The annotation of a notice of lis pendens on the certificates of title covering the said lots is of no moment. It did not vest in Pasay City and These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan separately filed against the
RREC any real right superior to the absolute ownership thereover of CCP and GSIS. Besides, the nature of the action did not really warrant Philippine Economic Zone Authority (PEZA).
the issuance of a notice of lis pendens.
Section 14 of Rule 13, Revised Rules of Civil Procedure, reads: In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision 2 dated January 11, 2008 and resolution3 dated
Sec. 14. Notice of lis pendens. - In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when August 6, 2008, dismissing the Citys appeal for being the wrong mode of appeal. The City appealed the Regional Trial Court, Branch 111,
affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a Pasay Citys decision finding the PEZA exempt from payment of real property taxes.
notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a
description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals decision 4dated August 27, 2008 and resolution5 dated
encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency April 16, 2009, granting the PEZAs petition for certiorari. The Court of Appeals ruled that the Regional Trial Court, Branch 115, Pasay City
against the parties designated by their real names. gravely abused its discretion in finding the PEZA liable for real property taxes to the Province of Bataan.
The notice of lis pendens herein above mentioned may be cancelled only upon order of the court, after proper showing that the notice is for
the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded. Facts common to the consolidated petitions

In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential Decree No. 66 in 1972, declaring as government
policy the establishment of export processing zones in strategic locations in the Philippines. Presidential Decree No. 66 aimed to encourage exemptions, including real property tax exemptions, previously granted to all persons.
and promote foreign commerce as a means of making the Philippines a center of international trade, of strengthening our export trade and
foreign exchange position, of hastening industrialization, of reducing domestic unemployment, and of accelerating the development of the A reply28 was filed by the PEZA to which the City filed a rejoinder. 29chanRoblesvirtualLawlibrary
country.7chanRoblesvirtualLawlibrary
Pursuant to Rule 63, Section 3 of Rules of Court, 30 the Office of the Solicitor General filed a comment 31 on the PEZAs petition for declaratory
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate, administer, and manage the export processing relief. It agreed that the PEZA is exempt from payment of real property taxes, citing Sections 24 and 51 of the Special Economic Zone Act of
zones established in the Port of Mariveles, Bataan 8and such other export processing zones that may be created by virtue of the 1995.
decree.9chanRoblesvirtualLawlibrary
The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995 provides:chanroblesvirtuallawlibrary
The decree declared the EPZA non-profit in character 10 with all its revenues devoted to its development, improvement, and maintenance. 11 To SEC. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no taxes, local and
maintain this non-profit character, the EPZA was declared exempt from all taxes that may be due to the Republic of the Philippines, its national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income
provinces, cities, municipalities, and other government agencies and instrumentalities. 12 Specifically, Section 21 of Presidential Decree No. 66 earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:
declared the EPZA exempt from payment of real property taxes:chanroblesvirtuallawlibrary
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall devote and use all its a. Three percent (3%) to the National Government;
returns from its capital investment, as well as excess revenues from its operations, for the development, improvement and maintenance and
other related expenditures of the Authority to pay its indebtedness and obligations and in furtherance and effective implementation of the policy b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office of the municipality or city where
enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared exempt:ChanRoblesVirtualawlibrary the enterprise is located.
. . . .
Section 51 of the law, on the other hand, provides:chanroblesvirtuallawlibrary
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National Government, its SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or exemptions granted to special economic zones under Republic Act No.
provinces, cities, municipalities and other government agencies and instrumentalities[.] 7227, shall ipso-facto be accorded to special economic zones already created or to be created under this Act. The free port status shall not be
vested upon new special economic zones.
In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export Processing Zone. Certain parcels of land of the
public domain located in the City of Lapu-Lapu in Mactan, Cebu were reserved to serve as site of the Mactan Export Processing Zone. Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions granted to special economic zones created
under the Bases Conversion and Development Act of 1992 apply to special economic zones created under the Special Economic Zone Act of
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or the Special Economic Zone Act of 1995 13 to operate, administer, 1995. Since these benefits include exemption from payment of national or local taxes, these benefits apply to special economic zones owned
manage, and develop economic zones in the country.14 The PEZA was granted the power to register, regulate, and supervise the enterprises by the PEZA.
located in the economic zones. 15 By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic
Zone16 and the Mactan Export Processing Zone the Mactan Economic Zone. 17chanRoblesvirtualLawlibrary According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special Economic Zone Act of 1995. It ruled that
Section 24, which taxes real property owned by developers of economic zones, only applies to private developers of economic zones, not to
As for the EPZA, the law required it to evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order public developers like the PEZA. The PEZA, therefore, is not liable for real property taxes on the land it owns.
issued for [the] purpose.18chanRoblesvirtualLawlibrary
Characterizing the PEZA as an agency of the National Government, the trial court ruled that the City had no authority to tax the PEZA under
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to assume and exercise all of the EPZAs Sections 133(o) and 234(a) of the Local Government Code of 1991.
powers, functions, and responsibilities as provided in Presidential Decree No. 66, as amended, insofar as they are not inconsistent with the
powers, functions, and responsibilities of the PEZA, as mandated under [the Special Economic Zone Act of 1995]. 19 All of EPZAs properties, In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for declaratory relief and declared it exempt from payment of
equipment, and assets, among others, were ordered transferred to the PEZA. 20chanRoblesvirtualLawlibrary real property taxes.

Facts of G.R. No. 184203 The City filed a motion for reconsideration,33 which the trial court denied in its resolution34 dated September 26, 2006.

In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer, demanded from the PEZA ?32,912,350.08 in The City then appealed35 to the Court of Appeals.
real property taxes for the period from 1992 to 1998 on the PEZAs properties located in the Mactan Economic Zone.
The Court of Appeals noted the following issues the City raised in its appellants brief: (1) whether the trial court had jurisdiction over the
The City reiterated its demand in the letter 22 dated May 21, 1998. It cited Sections 193 and 234 of the Local Government Code of 1991 that PEZAs petition for declaratory relief; (2) whether the PEZA is a government agency performing governmental functions; and (3) whether the
withdrew the real property tax exemptions previously granted to or presently enjoyed by all persons. The City pointed out that no provision in PEZA is exempt from payment of real property taxes.
the Special Economic Zone Act of 1995 specifically exempted the PEZA from payment of real property taxes, unlike Section 21 of Presidential
Decree No. 66 that explicitly provided for EPZAs exemption. Since no legal provision explicitly exempted the PEZA from payment of real The issues presented by the City, according to the Court of Appeals, are pure questions of law which should have been raised in a petition for
property taxes, the City argued that it can tax the PEZA. review on certiorari directly filed before this court. Since the City availed itself of the wrong mode of appeal, the Court of Appeals dismissed the
Citys appeal in the decision36 dated January 11, 2008.
The City made subsequent demands23 on the PEZA. In its last reminder24 dated May 13, 2002, the City assessed the PEZA ?86,843,503.48
as real property taxes for the period from 1992 to 2002. The City filed a motion for extension of time to file a motion for reconsideration, 37 which the Court of Appeals denied in the resolution 38 dated
April 11, 2008.
On September 11, 2002, the PEZA filed a petition for declaratory relief 25 with the Regional Trial Court of Pasay City, praying that the trial court
declare it exempt from payment of real property taxes. The case was raffled to Branch 111. Despite the denial of its motion for extension, the City filed a motion for reconsideration. 39 In the resolution40 dated August 6, 2008, the Court
of Appeals denied that motion.
The City answered26 the petition, maintaining that the PEZA is liable for real property taxes. To support its argument, the City cited a legal
opinion dated September 6, 1999 issued by the Department of Justice, 27 which stated that the PEZA is not exempt from payment of real In its petition for review on certiorari with this court,41 the City argues that the Court of Appeals hid under the skirts of technical rules 42 in
property taxes. The Department of Justice based its opinion on Sections 193 and 234 of the Local Government Code that withdrew the tax resolving its appeal. The City maintains that its appeal involved mixed questions of fact and law. According to the City, whether the PEZA
performed governmental functions cannot completely be addressed by law but [by] the factual and actual activities [the PEZA is] carrying t