20. Province of Zamboanga v.

City of Zamboanga, 22 SCRA 1334

Properties belonging to a former province were transferred under a law free of charge in favor of a city.

Facts:

After Zamboanga Province was divided into two (Zamboanga del Norte and Zamboanga del Sur), R.A.
No. 3039 was passed amending C.A. No. 39 which created the City of Zamboanga by providing that “All
buildings, properties and assets belonging to the former province of Zamboanga and located within the
City of Zamboanga are hereby transferred, free of charge in favor of the said City of Zamboanga.’’ Suit
was brought praying that R.A. No. 3039 be declared unconstitutional for depriving plaintiff of personal
property without due process of law and just compensation.

Issue:

Whether the 50 lots and buildings thereon are property for public use or patrimonial property?

Held:

(1) Extent of legislative control over properties of municipal corporations. — “The matter involved here
is the extent of legislative control over the properties of a municipal corporation, of which a province is
one. The principle itself is simple: If the property is owned by the municipality (meaning municipal
corporation) in its public and governmental capacity, the property is public and Congress has absolute
control over it. But if the property is owned in its private or proprietary capacity, then it is patrimonial
and Congress has no absolute control. The municipality cannot be deprived of it without due process
and payment of just compensation.’’

(2) Test as to capacity in which property is held. — “The capacity in which the property is held, however,
is dependent on the use to which it is intended and devoted. Now, which of two norms, i.e., that of the
Civil Code or that obtaining under the law of Municipal Corporations, must be used in classifying the
properties in question? The Civil Code classification is embodied in Articles 423 and 424.

Applying the above articles, all the properties in question, except the two (2) lots used as High School
playgrounds, could be considered as patrimonial properties of the former Zamboanga province. Even
the capitol site, the hospital and leprosarium sites, and the school sites will be considered patrimonial
for they are not for public use. They would fall under the phrase ‘public works for public service’ for it
has been held that under the ejusdem generis rule, such public works must be for free and
indiscriminate use by anyone, just like the preceding enumerated properties in the first paragraph of
Art. 424. The playgrounds, however, would fit into this category. This was the norm applied by the lower
court. And it cannot be said that its actuation was without jurisprudential precedent for in Municipality
of Catbalogan v. Director of Lands (17 Phil. 216.) and in Municipality of Tacloban v. Director of Lands (17
Phil. 426.), it was held that the capitol site and the school sites in municipalities constitute their
patrimonial properties. This result is understandable because, unlike in the classification regarding State
properties, properties for public service in the municipalities are not classified as public. Assuming then
the Civil Code classification to be the chosen norm, the lower court must be affirmed except with regard
to the two (2) lots used as playgrounds. On the other hand, applying the norm obtaining under the
principles constituting the law of Municipal Corporations, all those of the 50 properties in question
which are devoted to public service are deemed public; the rest remain patrimonial. Under this norm, to
be considered public it is enough that the property be held and devoted for governmental purposes like
local administration, public education, public health, etc.

Supporting jurisprudence are found in the following cases:

1) Hinunangan v. Director of Lands (11 Phil. 124.), where it was stated that “x x x where the municipality
has occupied lands distinctly for public purposes, such as for the municipal courthouse, the public
school, the public market, or other necessary municipal building, we will, in the absence of proof to the
contrary, presume a grant from the State in favor of the municipality; but, as indicated by the wording,
that rule may be invoked only as to property which is used distinctly for public purposes. x x x’’

2) Viuda De Tantoco v. Municipal Council of Iloilo (42 Phil. 52.) held that municipal properties necessary
for governmental purposes are public in nature. Thus, the auto trucks used by the municipality for street
sprinkling, the police patrol automobile, police stations and concrete structures with the corresponding
lots used as markets were declared exempt from execution and attachment since they were not
patrimonial properties.

3) Municipality of Batangas v. Cantos (91 Phil. 514.) held squarely that a municipal lot which had always
been devoted to school purposes is one dedicated to public use and is not patrimonial property of a
municipality. Following this classification, Republic Act No. 3039 is valid insofar as it affects the lots used
as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school
playground sites — a total of 24 lots — since these were held by the former Zamboanga province in its
governmental capacity and therefore are subject to the absolute control of Congress.’’ (3) Buildings
follow classification of lands on which they are built. — “Regarding the several buildings existing on the
lots abovementioned, the records do not disclose whether they were constructed at the expense of the
former Province of Zamboanga. Considering however the fact that said buildings must have been
erected even before 1936 when Commonwealth Act 39 was enacted and the further fact that provinces
then had no power to authorize construction of buildings such as those in the case at bar at their own
expenses, it can be assumed that said buildings were erected by the National Government, using
national funds. Hence, Congress could very well dispose of said buildings in the same manner that it did
with lots in question. But even assuming that provincial funds were used, still the buildings constitute
mere accessories to the lands, which are public in nature, and so, they follow the nature of said lands,
i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive use and
benefit of city residents for they could be availed of also by the provincial residents. The province then
— and its successors-in-interest — are not really deprived of the benefits thereof.’’

(4) Registration cannot convert public property to private property. — “But Republic Act No. 3039
cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26
remaining lots which are patrimonial properties since they are being utilized for distinctly governmental
purposes. Moreover, the fact that these 26 lots are registered strengthens the proposition that they are
truly private in nature. On the other hand, that the 24 lots used for governmental purposes are also
registered is of no significance since registration cannot convert public property to private.’’
(5) Municipal property used for public service is not in the same category of ordinary private property.
— “We are more inclined to uphold this latter view. The controversy here is more along the domains of
the Law of Municipal Corporations — State v. Province — than along that of Civil Law. Moreover, this
Court is not inclined to hold that municipal property held and devoted to public service is in the same
category as ordinary private property. The consequences are dire. As ordinary private properties, they
can be levied upon and attached. They can even be acquired thru adverse possession — all these to the
detriment of the local community.’’

(6) Civil Code classification is without prejudice to provisions of special laws. — “Lastly, the classification
of properties other than those for public use in the municipalities as patrimonial under Art. 424 of the
Civil Code is x x x without prejudice to the provisions of special laws. ‘For purposes of this article, the
principles obtaining under the Law of Municipal Corporations can be considered as special laws.’ Hence,
the classification of municipal property devoted for distinctly governmental purposes as public should
prevail over the Civil Code classification in this particular case.’’
21 Salas vs Jarencio

22 Cebu Oxygen & Acetylence Co., Inc vs Bercilles

Facts:

The City Council of Cebu enacted an Ordinance concerning a parcel of land in M. Borces St., Mabolo, Cebu
City as an abandoned road, the same not being included in the City Development Plan. The Acting Mayor
sold the land in a public building. Petitioner, being the highest bidder was awarded the lot. Petitioner filed
an application with the CFI to have its title to the land registered.

The Assistant Provincial Fiscal filed a motion to dismiss the application on the ground that the
property sought to be registered being a public road intended to public use is considered part of the public
domain and therefore outside the commerce of man.

Issue:

WON the declaration of the road, as abandoned, make it patrimonial property of the City of Cebu may be
the object of a common contract.

Held:

Yes, since that portion of the city street subject of petitioner’s application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property which
can be the object of an ordinary contract.

Article 422 of the Civil Code expressly provides that “Property of public dominion when no longer
intended for public use or public service, shall form part of the patrimonial property of the State.”

Besides, the Revised Charter of Cebu states that “Property thus withdrawn from public servitude
may be used or conveyed for any purpose for which other real property belonging to the City may be
lawfully used or conveyed.”

Hence, the sale was valid and the subject land can have its title registered in petitioner’s name.
23 Chavez vs PEA and Amari Coastal Bay Development Corporation

G.R. No. 133250. July 9, 2002

Facts:

Public Estates Authority (PEA) is a wholly government-owned and –controlled corporation which is the
primary implementing agency of the National Government to reclaim foreshore and submerged lands of
the public domain. By virtue of a Special Patent issued by President Corazon Aquino, the Register of Deeds
of the Paranaque, in April 1988, issued certificates of title, in the name of PEA, covering three reclaimed
islands known as the Freedom Islands located at the southern portion of the Manila-Cavite Coastal Road,
Paranaque City. The Freedom Islands have a total land area of 157.841 hectares.

In April 1995, PEA entered into a Joint Venture Agreement (JVA) with AMARI, a private corporation, to
develop the Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of
submerged areas surrounding these islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-Manila Cavite Coastal Road Reclamation Project. The JVA was
later amended giving AMARI an option to reclaim an additional 350 hectares of submerged area. Part of
the consideration for AMARI’s work is the conveyance of 70% of the total net usable reclaimed area –
equivalent to 367.5 hectares, title of which will be in AMARI’s name.

Issue:

Whether or not AMARI, a private corporation, can acquire and own under the Amended JVA 367.5
hectares of reclaimed foreshore and submerged areas in Manila Bay

Held:

No. AMARI as a private corporation cannot acquire the reclaimed Freedom Islands, though alienable lands
of the public domain, except by lease, as provided under Section 3, Article XII of the Constitution. The still
submerged areas (i.e., the more or less additional 250 and 350 hectares of submerged areas) in Manila
Bay are inalienable lands of the public domain; as such, they are beyond the commerce of man, as
provided under Section 2, Article XII of the Constitution.

The reclaimed Freedom Islands: The assignment to PEA of the ownership and administration of the
reclaimed areas in Manila Bay, coupled with President Aquino’s actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. They also constitute a declaration that the Freedom
Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable
lands of the public domain, open to disposition or concession to qualified parties.

The submerged areas: The mere reclamation of foreshore and submerged areas by PEA does not convert
these inalienable natural resources of the State into alienable or disposable lands of the public domain.
There must be a law or presidential proclamation officially classifying these reclaimed lands as alienable
or disposable and open to disposition or concession. Moreover, these reclaimed lands cannot be classified
as alienable or disposable if the law has reserved them for some public or quasi-public use.

PEA’s authority to sell: In order for PEA to sell its reclaimed foreshore and submerged alienable lands of
the public domain, there must be legislative authority empowering PEA to sell these lands, in view of the
requirement under CA No. 141. Without such legislative authority, PEA could not sell but only lease its
reclaimed foreshore and submerged alienable lands of the public domain. PEA’s Charter grants it such
express legislative authority to sell its lands, whether patrimonial or alienable lands 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 the constitutional ban on private corporations from acquiring alienable lands
of the public domain. Hence, such legislative authority could only benefit private individuals.

Registration of alienable lands of the public domain: 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 not a mode of
acquiring ownership but is merely evidence of ownership previously conferred by any of the recognized
modes of acquiring ownership. Registration does not give the registrant a better right than what the
registrant had prior to the registration. The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands. Jurisprudence holding that upon the
grant of the patent or issuance of the certificate of title the alienable land of the public domain
automatically becomes private land cannot apply to government units and entities like PEA.

Lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands. Lands
of the public domain may also be registered pursuant to existing laws. Several laws authorize lands of the
public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without losing
their character as public lands. For instance,

- Under the Revised Administrative Code of 1987, private property purchased by the National
Government for expansion of an airport may be titled in the name of the government agency
tasked to administer the airport. Private property donated to a municipality for use as a town
plaza or public school site may likewise be titled in the name of the municipality. All these
properties become properties of the public domain, and if already registered under Act No.
496 or PD No. 1529, remain registered land. There is no requirement or provision in any
existing law for the de-registration of land from the Torrens System.

- Private lands taken by the Government for public use under its power of eminent
domain become unquestionably part of the public domain. Nevertheless, Section 85 of PD
No. 1529 authorizes the Register of Deeds to issue in the name of the National Government
new certificates of title covering such expropriated lands.
24 Laurel vs Garcia

25 Rabuco vs Villegas

FACTS:

Consolidated cases:

Case L-24916 involves petitioners' appeal to the Court of Appeals4 from the decision of the Manila court
of first instance dismissing their petition for injunction and mandamus to enjoin the demolition of their
houses and the ejectment from the public lots in question and to direct respondent administrator of the
Land Authority (now Secretary of Agrarian Reform) to implement the provisions of Republic Act 3120 for
the subdivision and sale on installment basis of the subdivided lots to them as the tenants and bona fide
occupants thereof, and instead ordering their ejectment.

Case L-24915 involves petitioners' independent petition for injunction filed directly with the Court of
Appeals January 29, 19655 to forestall the demolition overnight of their houses pursuant to the order of
demolition set for January 30, 1965 at 8 a.m. issued by respondents city officials pending the elevation
of their appeal. The appellate court gave due course thereto and issued the writ of preliminary
injunction as prayed for.

Case L-24661 for the continuation and maintenance of the writ of preliminary injunction previously
issued by the Court of Appeals for preservation of the status quo was filed by petitioners directly with
this Court on June 21, 1965, pending transmittal of the records of Cases L-24915 and L-24916 to this
Court as certified by the Court of Appeals which declared itself without jurisdiction over the principal
and decisive issue of constitutionality of Republic Act 3120.

The legislatures enacted RA3120 converting certain parcels of land in the City of Manila which are
reserved as communal property into disposable or alienable lands of the state and providing for their
subdivision and sale. It includes a lot located in San Andres, Malate, which was occupied by petitioners
(illegal settlers). The City Mayor of Manila wanted to demolish and eject said occupants. Subsequently, a
large fire gutted the Malate area, which includes said property. City officials then took over the lot and
kept petitioners reconstructing or repairing their burned dwellings. The petitioners insisted that RA 3120
should be implemented to them as the tenants and bona fide occupants thereof.

ISSUE:

WON lands which are reserved as communal property can be converted into disposable or alienable
lands of the State by legislation (RA 3120)
HELD:

Yes.

The Court therein reaffirmed the established general rule that "regardless of the source or classification
of land in the possession of a municipality, excepting those acquired with its own funds in its private or
corporate capacity, such property is held in trust for the State for the benefit of its inhabitants, whether
it be for governmental or proprietary purposes. It holds such lands subject to the paramount power of
the legislature to dispose of the same, for after all it owes its creation to it as an agent for the
performance of a part of its public work, the municipality being but a subdivision or instrumentality
thereof for purposes of local administration.

The Court herein upholds the constitutionality of Republic Act 3120 on the strength of the established
doctrine that the subdivision of communal land of the State (although titled in the name of the
municipal corporation) and conveyance of the resulting subdivision lots by sale on installment basis to
bona fide occupants by Congressional authorization and disposition does not constitute infringements of
the due process clause or the eminent domain provisions of the Constitution but operates simply as a
manifestation of the legislature's right of control and power to deal with State property.
26 MACASIANO VS DIOKNO

FACTS:

Municipality of Parañaque passed on ordinance, which authorized the closure of streets at Baclaran,
Parañaque, Metro Manila and the establishment of a flea market thereon. It authorizes and regulates the
use of certain city and/or municipal streets, roads and open spaces within Metropolitan Manila as sites
for flea market and/or vending areas, under certain terms and conditions. The municipal council of enter
into contract with Palanyag, a service cooperative, for the establishment, operation, maintenance and
management of flea markets and/or vending areas, with the obligation to remit dues to the treasury of
the municipal government of Parañaque. Consequently, market stalls were put up by respondent
Palanyag on the said streets. Petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan
Traffic Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
Baclaran. These stalls were later returned to respondent Palanyag. Brig. General Macasiano wrote a letter
to respondent Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the
market stalls shall be dismantled.

ISSUE:

Whether or not an ordinance or resolution issued by the municipal council of Parañaque authorizing the
lease and use of public streets or thoroughfares as sites for flea markets is valid.

RULING:

No. The streets are local roads used for public service and are therefore considered public properties of
respondent municipality. Properties of the local government which are devoted to public service are
deemed public and are under the absolute control of Congress. Hence, local governments have no
authority whatsoever to control or regulate the use of public properties unless specific authority is vested
upon them by Congress.

Legal provision which gives authority to local government units to close roads and other similar public
places should be read and interpreted in accordance with basic principles already established by law.
These basic principles have the effect of limiting such authority of the province, city or municipality to
close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that
properties of public dominion devoted to public use and made available to the public in general are
outside the commerce of man and cannot be disposed of or leased by the local government unit to private
persons. Aside from the requirement of due process which should be complied with before closing a road,
street or park, the closure should be for the sole purpose of withdrawing the road or other public property
from public use when circumstances show that such property is no longer intended or necessary for public
use or public service. When it is already withdrawn from public use, the property then becomes
patrimonial property of the local government unit concerned. Those roads and streets which are available
to the public in general and ordinarily used for vehicular traffic are still considered public property devoted
to public use. In such case, the local government has no power to use it for another purpose or to dispose
of or lease it to private persons.
27 Republic vs CA

28 Villarico vs Sarmiento

Facts:

Teofilo C. Villarico is the owner of a lot in La Huerta, Parañaque City, Metro Manila with an area of 66
square meters. Villarico’s lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land
belonging to the government. As this highway was elevated by 4 meters and therefore higher than the
adjoining areas, the DPWH constructed stairways at several portions of this strip of public land to enable
the people to have access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband Beth Del
Mundo had a building constructed on a portion of said government land. In November that same year, a
part thereof was occupied by Andok's Litson Corporation and Marites' Carinderia.

In 1993, by means of a Deed of Exchange of Real Property, Villarico acquired a 74.30 square meter
portion of the same area owned by the government. The property was registered in his name.

In 1995, Villarico filed with the RTC a complaint for accion publiciana against respondents. He
alleged inter alia that respondents' structures on the government land closed his "right of way" to the
Ninoy Aquino Avenue; and encroached on a portion of his lot.

Issue:

WON Villarico can claim easement of right of way in a government owned property.

Ruling:

No, it is not disputed that the lot on which petitioner's alleged "right of way" exists belongs to the state
or property of public dominion. Property of public dominion is defined by Article 420 of the Civil Code as
follows:

"ART. 420. The following things are property of public dominion:

(1) Those intended for public use such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and other of similar character.

(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth."

Public use is "use that is not confined to privileged individuals, but is open to the indefinite
6
public." Records show that the lot on which the stairways were built is for the use of the people as
passageway to the highway. Consequently, it is a property of public dominion.
 Property of public dominion is outside the commerce of man and hence it: (1) cannot be alienated
or leased or otherwise be the subject matter of contracts; (2) cannot be acquired by prescription against
the State; (3) is not subject to attachment and execution; and (4) cannot be burdened by any voluntary
easement.

Considering that the lot on which the stairways were constructed is a property of public dominion,
it can not be burdened by a voluntary easement of right of way in favor of Villarico. In fact, its use by the
public is by mere tolerance of the government through the DPWH. Villarico cannot appropriate it for
himself. Verily, he can not claim any right of possession over it. This is clear from Article 530 of the Civil
Code which provides:

"ART. 530. Only things and rights which are susceptible of being appropriated may be the object
of possession."
29 Heirs of Malabanan v. Republic,

G.R. No. 179987, 3 September 2013

Facts:

Mario Malabanan filed an application for land registration covering the property he purchased from
Eduardo Velazco, claiming that the property formed part of the alienable and disposable land of the public
domain, and that he and his predecessors-in-interest had been in open, continuous, uninterrupted, public
and adverse possession and occupation of the land for more than 30 years, thereby entitling him to the
judicial confirmation of his title.

The application was granted by the RTC. However, the OSG for the Republic appealed the judgment to the
CA, which reversed the RTC Judgment.

Due to Malabanan’s intervening demise during the appeal in the CA, his heirs elevated the said decision
to this Court through a petition for review on certiorari.

The petition was denied.

Petitioners and the Republic filed Motions for Reconsideration.

Issue:

What are the classifications of public lands?

Whether or not petitioners were able to prove that the property was an alienable and disposable land of
the public domain.

Ruling:

1.Classifications of land according to ownership. Land, which is an immovable property, may be classified
as either of public dominion or of private ownership. Land is considered of public dominion if it either:

(a) is intended for public use; or

(b) belongs to the State, without being for public use, and is intended for some public service or for the
development of the national wealth.

Land belonging to the State that is not of such character, or although of such character but no longer
intended for public use or for public service forms part of the patrimonial property of the State. Land that
is other than part of the patrimonial property of the State, provinces, cities and municipalities is of private
ownership if it belongs to a private individual.
Pursuant to the Regalian Doctrine (Jura Regalia), a legal concept first introduced into the country from the
West by Spain through the Laws of the Indies and the Royal Cedulas, all lands of the public domain belong
to the State. This means that the State is the source of any asserted right to ownership of land, and is
charged with the conservation of such patrimony.

All lands not appearing to be clearly under private ownership are presumed to belong to the State. Also,
public lands remain part of the inalienable land of the public domain unless the State is shown to have
reclassified or alienated them to private persons.

A positive act of the Government is necessary to enable such reclassification, and the exclusive
prerogative to classify public lands under existing laws is vested in the Executive Department, not in the
courts. If, however, public land will be classified as neither agricultural, forest or timber, mineral or
national park, or when public land is no longer intended for public service or for the development of the
national wealth, thereby effectively removing the land from the ambit of public dominion, a declaration
of such conversion must be made in the form of a law duly enacted by Congress or by a Presidential
proclamation in cases where the President is duly authorized by law to that effect. Thus, until the
Executive Department exercises its prerogative to classify or reclassify lands, or until Congress or the
President declares that the State no longer intends the land to be used for public service or for the
development of national wealth, the Regalian Doctrine is applicable.

2.Petitioners failed to present sufficient evidence to establish that they and their predecessors-in-interest
had been in possession of the land since June 12, 1945. Without satisfying the requisite character and
period of possession – possession and occupation that is open, continuous, exclusive, and notorious since
June 12, 1945, or earlier – the land cannot be considered ipso jure converted to private property even
upon the subsequent declaration of it as alienable and disposable.

Prescription never began to run against the State, such that the land has remained ineligible for
registration under Section 14(1) of the Property Registration Decree. Likewise, the land continues to be
ineligible for land registration under Section 14(2) of the Property Registration Decree unless Congress
enacts a law or the President issues a proclamation declaring the land as no longer intended for public
service or for the development of the national wealth.
30 Republic vs Santos

31 NAVY OFFICERS VILLAGE ASSOCIATION vs REPUBLIC

Facts:

A Transfer Certificate Title (TCT) issued in Navy Officers’ Village Association, Inc (NOVAI)’s name covers a
land situated inside the former Fort Andres Bonifacio Military Reservation in Taguig. This property was
previously a part of a larger parcel of land which TCT’s under the name of the Republic of the Philippines.

The then President Garcia issued a Proclamation No. 423 which reserves for military purposes certain
parcels of the public domain situated in Pasig, Taguig, Paranaque, Rizal and Pasay City. Thereafter, then
President Macapagal issued Proclamation No. 461 which excluded Fort McKinley a certain portion of land
situated in the provinces abovementioned and declared them as AFP Officers’ Village to be disposed of
under the provisions of certain laws. However, this area was subsequently reserved for veterans’
rehabilitation, medicare and training center sites. The property was the subject of deed of sale between
the Republic and NOVAI to which the TCT was registered in favour of the latter.

The Republic then sought to cancel NOVAI’s title on the ground that the property was still part of the
military reservation thus inalienable land of the public domain and cannot be the subject of sale. The RTC
ruled that the property was alienable and disposable in character. The Court of Appeals reversed RTC’s
decision.

Issue:

WON the property covered in TCT (Transfer Certificate of Title) No. T-15387 issued in the name of NOVAI
is alienable land of public domain and can be the subject of sale?

Held:

NO.

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 not intended for public or
quasi-public use or purpose.

We agree with the respondents that while Proclamation No. 461, issued in September 1965, removed
from the FBMR a certain parcel of land that includes the property, Proclamation No. 478, issued in October
1965, in turn segregated the property from the area made available for disposition under Proclamation
No. 461, and reserved it for the use of the VRMTC.

We find it clear that Proclamation No. 478 was issued after, not before, Proclamation No. 461. Hence,
while Proclamation No. 461 withdrew a certain area or parcel of land from the FBMR and made the
covered area available for disposition in favor of the AFPOVAI, Proclamation No. 478 subsequently
withdrew the property from the total disposable portion and reserved it for the use of the VRMTC. With
the issuance of Proclamation No. 478, the property was transferred back to that class of public domain
land reserved for public or quasi-public use or purpose which, consistent with Article 420 of the Civil Code,
is property of the public dominion, not patrimonial property of the State.

As provided in Article 420 of Civil Code, “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”. In this case, the property was classified as military reservation thus, remained to be property of
the public dominion until withdrawn from the public use for which they have been reserved, by act of
Congress or by proclamation of the President. Since there was no positive act from the government, the
property had to retain its inalienable and non-disposable character. It cannot therefore, be subject of sale
otherwise, the sale is void for being contrary to law.

32 CITY OF LAPU-LAPU v. PHILIPPINE ECONOMIC ZONE AUTHORITY

These are consolidated petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan
separately filed against the Philippine Economic Zone Authority (PEZA).

FACTS:

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. In 1995, the PEZA was created by virtue
of Republic Act No. 7916 or “the Special Economic Zone Act of 1995” to operate, administer, manage,
and develop economic zones in the country. The PEZA was granted the power to register, regulate, and
supervise the enterprises located in the economic zones. 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.

The City of Lapu-Lapu, through the Office of the Treasurer, demanded from the PEZA 32,912,350.08 in
real property taxes for the period from 1992 to 1998 on the PEZA’s properties located in the Mactan
Economic Zone. It cited Sections 193 and 234 of the Local Government Code of 1991 that withdrew the
real property tax exemptions previously granted to or presently enjoyed by all persons. The City pointed
out that no provision in the Special Economic Zone Act of 1995 specifically exempted the PEZA from
payment of real property taxes. The City made subsequent demands on the PEZA. PEZA filed a petition
for declaratory relief with the Regional Trial Court of Pasay City, praying that the trial court declare it
exempt from payment of real property taxes.

On the merits, the PEZA argues that it is an agency and instrumentality of the National Government. It is
therefore exempt from payment of real property taxes under Sections 133(o) and 234(a) of the Local
Government Code. It adds that the tax privileges under Sections 24 and 51 of the Special Economic Zone
Act of 1995 applied to it.
Considering that the site of the Mactan Economic Zone is a reserved land under Proclamation No. 1811,
the PEZA claims that the properties sought to be taxed are lands of public dominion exempt from real
property taxes.

After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the Province of
Bataan followed suit.

ISSUE:

Whether the PEZA is exempt from payment of real property taxes

RULING:

Yes. The PEZA is exempt from payment of real property taxes.

Under Section 133(o), local government units have no power to levy taxes of any kind on the national
government, its agencies and instrumentalities and local government units.

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise
provided herein, the exercise of taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:

(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and
local government units.

Thus, no real property taxes may be levied on real property such as: (1) lands and buildings actually,
directly, and exclusively used for religious, charitable or educational purpose; (2) machineries and
equipment actually, directly and exclusively used by local water districts or by government-owned or
controlled corporations engaged in the supply and distribution of water and/or generation and
transmission of electric power; and (3) machinery and equipment used for pollution control and
environmental protection.

A. The PEZA is an instrumentality of the national government

An instrumentality is “any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter.” These entities are not integrated within the department framework but are nevertheless vested
with special functions to carry out a declared policy of the national government. Being an instrumentality
of the national government, the PEZA cannot be taxed by local government units.

B. The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA

The PEZA’s predecessor, the EPZA, was declared non-profit in character with all its revenues
devoted for its development, improvement, and maintenance. Consistent with this non-profit character,
the EPZA was explicitly declared exempt from real property taxes under its charter. Nevertheless, we rule
that the PEZA is exempt from real property taxes by virtue of its charter. A provision in the Special
Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The PEZA assumed the real
property exemption of the EPZA under Presidential Decree No. 66.

At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer or
operator of special economic zones. The PEZA is an instrumentality of the national government exempt
from payment of real property taxes under Section 133(o) of the Local Government Code. As this court
said in Manila International Airport Authority, “there must be express language in the law empowering
local governments to tax national government instrumentalities. Any doubt whether such power exists is
resolved against local governments.”

C. Real properties under the PEZA’s title are owned by the Republic of the Philippines

Under Section 234(a) of the Local Government Code, real properties owned by the Republic of
the Philippines are exempt from real property taxes

SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of real
property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person[.]

Properties of public dominion are outside the commerce of man. These properties are exempt from “levy,
encumbrance or disposition through public or private sale.”

In this case, the properties sought to be taxed are located in publicly owned economic zones. These
economic zones are property of public dominion.

As for the Bataan Economic Zone, the law consistently characterized the property as a port. Under
Republic Act No. 5490, Congress declared Mariveles, Bataan “a principal port of entry” to serve as site of
a foreign trade zone where foreign and domestic merchandise may be brought in without being subject
to customs and internal revenue laws and regulations of the Philippines. Section 4 of Republic Act No.
5490 provided that the foreign trade zone in Mariveles, Bataan “shall at all times remain to be owned by
the Government.

All told, the PEZA is an instrumentality of the national government. Furthermore, the lands owned by
the PEZA are real properties owned by the Republic of the Philippines. The City of Lapu-Lapu and the
Province of Bataan cannot collect real property taxes from the PEZA.