Republic of the Philippines This dispute goes back to November 7, 1961, when the municipal
SUPREME COURT council of San Fernando adopted Resolution No. 218 authorizing
Manila
FIRST DIVISION
G.R. No. L-61311 September 2l, 1987
FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG,
FELINA MIRANDA, RICARDO PUNO, FLORENCIO LAXA, and RENE
OCAMPO, petitioners,
vs.
HON. MARIANO CASTAÑEDA, JR., Presiding Judge of the Court of
First Instance of Pampanga, Branch III, VICENTE A. MACALINO,
Officer-in-Charge, Office of the Mayor, San Fernando,
Pampanga, respondents.
CRUZ, J.:
There is in the vicinity of the public market of San Fernando,
Pampanga, along Mercado Street, a strip of land measuring 12 by 77
meters on which stands a conglomeration of vendors stalls together
forming what is commonly known as a talipapa. This is the subject
of the herein petition. The petitioners claim they have a right to
remain in and conduct business in this area by virtue of a previous
authorization granted to them by the municipal government. The
respondents deny this and justify the demolition of their stalls as
illegal constructions on public property. At the petitioners' behest,
we have issued a temporary restraining order to preserve
the  status quo  between the parties pending our decision. 1 Now we
shall rule on the merits.
some 24 members of the Fernandino United Merchants and Traders
Association to construct permanent stags and sell in the above-
mentioned place. 2 The action was protested on November 10,
1961, in Civil Case No. 2040, where the Court of First Instance of
Pampanga, Branch 2, issued a writ of preliminary injunction that
prevented the defendants from constructing the said stalls until
final resolution of the controversy. 3 On January 18, 1964, while this
case was pending, the municipal council of San Fernando adopted
Resolution G.R. No. 29, which declared the subject area as "the
parking place and as the public plaza of the municipality, 4 thereby
impliedly revoking Resolution No. 218, series of 1961. Four years
later, on November 2, 1968, Judge Andres C. Aguilar decided the
aforesaid case and held that the land occupied by the petitioners,
being public in nature, was beyond the commerce of man and
therefore could not be the subject of private occupancy. 5 The writ
of preliminary injunction was made permanent. 6
The decision was apparently not enforced, for the petitioners were
not evicted from the place; in fact, according to then they and the
128 other persons were in 1971 assigned specific areas or space
allotments therein for which they paid daily fees to the municipal
government. 7 The problem appears to have festered for some more
years under a presumably uneasy truce among the protagonists,
none of whom made any move, for some reason that does not
appear in the record. Then, on January 12, 1982, the Association of
Concerned Citizens and Consumers of San Fernando filed a petition
for the immediate implementation of Resolution No. 29, to restore
the subject property "to its original and customary use as a public
plaza. 8
Acting thereon after an investigation conducted by the municipal
attorney, 9 respondent Vicente A. Macalino, as officer-in-charge of
1
the office of the mayor of San Fernando, issued on June 14, 1982, a
resolution requiring the municipal treasurer and the municipal
engineer to demolish the stalls in the subject place beginning July 1,
1982. 10 The reaction of the petitioners was to file a petition for
prohibition with the Court of First Instance of Pampanga, docketed
as Civil Case No. 6470, on June 26, 1982. The respondent judge
denied the petition on July 19, 1982, 11 and the motion for
reconsideration on August 5, 1982, 12 prompting the petitioners to
come to this Court on certiorari  to challenge his decision. 13
As required, respondent Macalino filed his comment 14 on the
petition, and the petitioners countered with their reply. 15 In
compliance with our resolution of February 2, 1983, the petitioners
submitted their memorandum 16 and respondent Macalino, for his
part, asked that his comment be considered his
memorandum. 17 On July 28, 1986, the new officer-in-charge of the
office of the mayor of San Fernando, Paterno S. Guevarra, was
impleaded in lieu of Virgilio Sanchez, who had himself earlier
replaced the original respondent Macalino. 18
After considering the issues and the arguments raised by the parties
in their respective pleadings, we rule for the respondents. The
petition must be dismissed.
There is no question that the place occupied by the petitioners and
from which they are sought to be evicted is a public plaza, as found
by the trial court in Civil Case No. 2040. This finding was made after
consideration of the antecedent facts as especially established by
the testimony of former San Fernando Mayor Rodolfo Hizon, who
later became governor of Pampanga, that the National Planning
Commission had reserved the area for a public plaza as early as
1951. This intention was reiterated in 1964 through the adoption of
Resolution No. 29. 19
It does not appear that the decision in this case was appealed or has
been reversed. In Civil Case G.R. No. 6740, which is the subject of
this petition, the respondent judge saw no reason to disturb the
finding in Civil Case No. 2040 and indeed used it as a basis for his
own decision sustaining the questioned order. 20
The basic contention of the petitioners is that the disputed area is
under lease to them by virtue of contracts they had entered into
with the municipal government, first in 1961 insofar as the original
occupants were concerned, and later with them and the other
petitioners by virtue of the space allocations made in their favor in
1971 for which they saw they are paying daily fees. 21 The municipal
government has denied making such agreements. In any case, they
argue, since the fees were collected daily, the leases, assuming their
validity, could be terminated at will, or any day, as the claimed
rentals indicated that the period of the leases was from day to
day. 22
The parties belabor this argument needlessly.
A public plaza is beyond the commerce of man and so cannot be the
subject of lease or any other contractual undertaking. This is
elementary. Indeed, this point was settled as early as
in Municipality of Cavite vs. Rojas, 23 decided in 1915, where the
Court declared as null and void the lease of a public plaza of the said
municipality in favor of a private person.
Justice Torres said in that case:
According to article 344 of the Civil Code: "Property
for public use in provinces and in towns comprises
the provincial and town roads, the squares, streets,
fountains, and public waters, the promenades, and
2
public works of general service supported by said
towns or provinces.
The said Plaza Soledad being a promenade for
public use, the municipal council of Cavite could not
in 1907 withdraw or exclude from public use a
portion thereof in order to lease it for the sole
benefit of the defendant Hilaria Rojas. In leasing a
portion of said plaza or public place to the
defendant for private use the plaintiff municipality
exceeded its authority in the exercise of its powers
by executing a contract over a thing of which it
could not dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that
everything which is not outside the commerce of
man may be the object of a contract, and plazas and
streets are outside of this commerce, as was
decided by the supreme court of Spain in its
decision of February 12, 1895, which says:
"communal things that cannot be sold because they
are by their very nature outside of commerce are
those for public use, such as the plazas, streets,
common lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract,
Exhibit C, whereby the municipality of Cavite leased
to Hilaria Rojas a portion of the Plaza Soledad is null
and void and of no force or effect, because it is
contrary to the law and the thing leased cannot be
the object of a was held that the City of contract.
In Muyot vs. de la Fuente, 24 it was held that the City of Manila could
not lease a portion of a public sidewalk on Plaza Sta. Cruz, being
likewise beyond the commerce of man.
Echoing Rojas, the decision said:
Appellants claim that they had obtained permit
from the present of the City of Manila, to connect
booths Nos. 1 and 2, along the premises in question,
and for the use of spaces where the booths were
constructed, they had paid and continued paying
the corresponding rentals. Granting this claim to be
true, one should not entertain any doubt that such
permit was not legal, because the City of Manila
does not have any power or authority at all to lease
a portion of a public sidewalk. The sidewalk in
question, forming part of the public plaza of Sta.
Cruz, could not be a proper subject matter of the
contract, as it was not within the commerce of man
(Article 1347, new Civil Code, and article 1271, old
Civil Code). Any contract entered into by the City of
Manila in connection with the sidewalk, is  ipso
facto null and ultra vires. (Municipality of Cavite vs.
Roxas, et a1, 30 Phil. 603.) The sidewalk in question
was intended for and was used by the public, in
going from one place to another. "The streets and
public places of the city shall be kept free and clear
for the use of the public, and the sidewalks and
crossings for the pedestrians, and the same shall
only be used or occupied for other purpose as
provided by ordinance or regulation; ..." (Sec. 1119,
Revised Ordinances of the City of Manila.) The
booths in question served as fruit stands for their
owners and often, if not always, blocked the fire
3
 passage of pedestrians who had to take the plaza
itself which used to be clogged with vehicular
traffic.
Exactly in point is Espiritu vs. Municipal Council of
Pozorrubio, 25 where the Supreme Court declared:
There is absolutely no question that the town plaza
cannot be used for the construction of market stalls,
specially of residences, and that such structures
constitute a nuisance subject to abatement
according to law. Town plazas are properties of
public dominion, to be devoted to public use and to
be made available to the public in general They are
outside the common of man and cannot be
disposed of or even leased by the municipality to
private parties.
Applying this well-settled doctrine, we rule that the petitioners had
no right in the first place to occupy the disputed premises and
cannot insist in remaining there now on the strength of their alleged
lease contracts. They should have realized and accepted this earlier,
considering that even before Civil Case No. 2040 was decided, the
municipalcouncil of San Fernando had already adopted Resolution
No. 29, series of 1964, declaring the area as the parking place and
public plaza of the municipality.
It is the decision in Civil Case No. 2040 and the said resolution of the
municipal council of San Fernando that respondent Macalino was
seeking to enforce when he ordered the demolition of the stags
constructed in the disputed area. As officer-in-charge of the office of
the mayor, he had the duty to clear the area and restore it to its
intended use as a parking place and public plaza of the municipality
of San Fernando, conformably to the aforementioned orders from
the court and the council. It is, therefore, not correct to say that he
had acted without authority or taken the law into his hands in
issuing his order.
Neither can it be said that he acted whimsically in exercising his
authority for it has been established that he directed the demolition
of the stalls only after, upon his instructions, the municipal attorney
had conducted an investigation, to look into the complaint filed by
the Association of Concerned Citizens and Consumers of San
Fernando. 26 There is evidence that the petitioners were notified of
this hearing, 27which they chose to disregard. Photographs of the
disputed area, 28 which does look congested and ugly, show that the
complaint was valid and that the area really needed to be cleared,
as recommended by the municipal attorney.
The Court observes that even without such investigation and
recommendation, the respondent mayor was justified in ordering
the area cleared on the strength alone of its status as a public plaza
as declared by the judicial and legislative authorities. In calling first
for the investigation (which the petitioner saw fit to boycott), he
was just scrupulously paying deference to the requirements of due
process, to remove an taint of arbitrariness in the action he was
caged upon to take.
Since the occupation of the place in question in 1961 by the original
24 stallholders (whose number later ballooned to almost 200), it has
deteriorated increasingly to the great prejudice of the community in
general. The proliferation of stags therein, most of them makeshift
and of flammable materials, has converted it into a veritable fire
trap, which, added to the fact that it obstructs access to and from
the public market itself, has seriously endangered public safety. The
filthy condition of the talipapa, where fish and other wet items are
sold, has aggravated health and sanitation problems, besides
pervading the place with a foul odor that has spread into the
4
surrounding areas. The entire place is unsightly, to the dismay and
embarrassment of the inhabitants, who want it converted into a
showcase of the town of which they can all be proud. The vendors
in the talipapa have also spilled into the street and obstruct the
flow of traffic, thereby impairing the convenience of motorists and
pedestrians alike. The regular stallholders in the public market, who
pay substantial rentals to the municipality, are deprived of a sizable
volume of business from prospective customers who are
intercepted by the talipapa vendors before they can reach the
market proper. On top of all these, the people are denied the
proper use of the place as a public plaza, where they may spend
their leisure in a relaxed and even beautiful environment and civic
and other communal activities of the town can be held.
The problems caused by the usurpation of the place by the
petitioners are covered by the police power as delegated to the
municipality under the general welfare clause. 29 This authorizes the
municipal council "to enact such ordinances and make such
regulations, not repugnant to law, as may be necessary to carry into
effect and discharge the powers and duties conferred upon it by law
and such as shall seem necessary and proper to provide for the
health and safety, promote the prosperity, improve the morals,
peace, good order, comfort, and convenience of the municipality
and the inhabitants thereof, and for the protection of property
therein." This authority was validly exercised in this casethrough the
adoption of Resolution No. 29, series of 1964, by the municipal
council of San Fernando.
Even assuming a valid lease of the property in dispute, the
resolution could have effectively terminated the agreement for it is
settled that the police power cannot be surrendered or bargained
away through the medium of a contract. 30 In fact, every contract
affecting the public interest suffers a congenital infirmity in that it
contains an implied reservation of the police power as a postulate
of the existing legal order. 31 This power can be activated at any time
to change the provisions of the contract, or even abrogate it
entirely, for the promotion or protection of the general welfare.
Such an act will not militate against the impairment clause, which is
subject to and limited by the paramount police power. 32
We hold that the respondent judge did not commit grave abuse of
discretion in denying the petition for prohibition. On the contrary,
he acted correctly in sustaining the right and responsibility of the
mayor to evict the petitioners from the disputed area and clear it of
an the structures illegally constructed therein.
The Court feels that it would have been far more amiable if the
petitioners themselves, recognizing their own civic duty, had at the
outset desisted from their original stance and withdrawn in good
grace from the disputed area to permit its peaceful restoration as a
public plaza and parking place for the benefit of the whole
municipality. They owned this little sacrifice to the community in
general which has suffered all these many years because of their
intransigence. Regrettably, they have refused to recognize that in
the truly democratic society, the interests of the few should yield to
those of the greater number in deference to the principles that the
welfare of the people is the supreme law and overriding purpose.
We do not see any altruism here. The traditional ties of sharing are
absent here. What we find, sad to say, is a cynical disdaining of the
spirit of "bayanihan," a selfish rejection of the cordial virtues of
"pakikisama " and "pagbibigayan" which are the hallmarks of our
people.
WHEREFORE, the petition is DISMISSED. The decision dated July 19,
1982, and the order-dated August 5, 1982, are AFFIRMED. The
temporary restraining order dated August 9, 1982, is LIFTED. This
decision is immediately executory. Costs against the petitioners. SO
ORDERED.
5
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
 
G.R. No. 108998 August 24, 1994
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
THE COURT OF APPEALS AND SPOUSES MARIO B. LAPIÑA AND
FLOR DE VEGA, respondents.
Byron V. Belarmino and Juan B. Belarmino for private respondents.
BIDIN, J.:
Can a foreign national apply for registration of title over a parcel of
land which he acquired by purchase while still a citizen of the
Philippines, from a vendor who has complied with the requirements
for registration under the Public Land Act (CA 141)?
The Republic would have us rule on the negative and asks this Court
to nullify the decision of the appellate court which affirmed the
judgment of the court  a quo  in granting the application of
respondent spouses for registration over the lots in question.
On June 17, 1978, respondent spouses bought Lots 347 and 348,
Cad. s38-D, as their residence with a total area of 91.77 sq. m.
situated in San Pablo City, from one Cristeta Dazo Belen (Rollo, p.
41). At the time of the purchase, respondent spouses where then
natural-born Filipino citizens.
On February 5, 1987, the spouses filed an application for
registration of title of the two (2) parcels of land before the Regional
Trial Court of San Pablo City, Branch XXXI. This time, however, they
were no longer Filipino citizens and have opted to embrace
Canadian citizenship through naturalization.
An opposition was filed by the Republic and after the parties have
presented their respective evidence, the court a quo  rendered a
decision confirming private respondents' title to the lots in question,
the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, this Court
hereby approves the said application and confirms
the title and possession of herein applicants over
Lots 347 and 348, Ap-04-003755 in the names of
spouses Mario B. Lapiña and Flor de Vega, all of
legal age, Filipino citizens by birth but now Canadian
citizens by naturalization and residing at 14 A.
Mabini Street, San Pablo City and/or 201-1170-124
Street, Edmonton, Alberta T5M-OK9, Canada.
Once this Decision becomes final, let the
corresponding decree of registration be issued. In
the certificate of title to be issued, there shall be
annotated an easement of .265 meters road right-
of-way.
SO ORDERED. (Rollo, p. 25)
On appeal, respondent court affirmed the decision of the trial court
based on the following ratiocination:
6
 In the present case, it is undisputed that both
applicants were still Filipino citizens when they
bought the land in controversy from its former
owner. For this reason, the prohibition against the
acquisition of private lands by aliens could not
apply. In justice and equity, they are the rightful
owners of the subject realty considering also that
they had paid for it quite a large sum of money.
Their purpose in initiating the instant action is
merely to confirm their title over the land, for, as
has been passed upon, they had been the owners of
the same since 1978. It ought to be pointed out that
registration is not a mode of acquiring ownership.
The Torrens System was not established as a means
for the acquisition of title to private land. It is
intended merely to confirm and register the title
which one may already have (Municipality of
Victorias vs. Court of Appeals, G.R. No. L-31189,
March 31, 1987). With particular reference to the
main issue at bar, the High Court has ruled that title
and ownership over lands within the meaning and
for the purposes of the constitutional prohibition
dates back to the time of their purchase, not later.
The fact that the applicants-appellees are not
Filipino citizens now cannot be taken against them
for they were not disqualified from acquiring the
land in question (Bollozos vs. Yu Tieng Su, G.R. No.
L-29442, November 11, 1987). (Rollo, pp. 27-28)
Expectedly, respondent court's disposition did not merit petitioner's
approval, hence this present recourse, which was belatedly filed.
Ordinarily, this petition would have been denied outright for having
been filed out of time had it not been for the constitutional issue
presented therein.
At the outset, petitioner submits that private respondents have not
acquired proprietary rights over the subject properties before they
acquired Canadian citizenship through naturalization to justify the
registration thereof in their favor. It maintains that even privately
owned unregistered lands are presumed to be public lands under
the principle that lands of whatever classification belong to the
State under the Regalian doctrine. Thus, before the issuance of the
certificate of title, the occupant is not in the jurisdical sense the true
owner of the land since it still pertains to the State. Petitioner
further argued that it is only when the court adjudicates the land to
the applicant for confirmation of title would the land become
privately owned land, for in the same proceeding, the court may
declare it public land, depending on the evidence.
As found by the trial court:
The evidence thus presented established that
applicants, by themselves and their predecessors-
in-interest, had been in open, public, peaceful,
continuous, exclusive and notorious possession and
occupation of the two adjacent parcels of land
applied for registration of title under a bona-fide
claim of ownership long before June 12, 1945. Such
being the case, it is conclusively presumed that all
the conditions essential to the confirmation of their
title over the two adjacent parcels of land are
sought to be registered have been complied with
thereby entitling them to the issuance of the
corresponding certificate of title pursuant to the
provisions of Presidential Decree No. 1529,
7
 otherwise known as the Property Registration
Decree. (Rollo, p. 26)
Respondent court echoed the court a quo's observation, thus:
The land sought to be registered has been declared
to be within the alienable and disposable zone
established by the Bureau of Forest Development
(Exhibit "P"). The investigation conducted by the
Bureau of Lands, Natural Resources District (IV-2)
reveals that the disputed realty had been occupied
by the applicants "whose house of strong materials
stands thereon"; that it had been declared for
taxation purposes in the name of applicants-
spouses since 1979; that they acquired the same by
means of a public instrument entitled "Kasulatan ng
Bilihang Tuluyan" duly executed by the vendor,
Cristeta Dazo Belen, on June 17, 1978 (Exhibits "I"
and "J"); and that applicants and their predecessors
in interest had been in possession of the land for
more than 30 years prior to the filing of the
application for registration. But what is of great
significance in the instant case is the circumstance
that at the time the applicants purchased the
subject lot in 1978, both of them were Filipino
citizens such that when they filed their application
for registration in 1987, ownership over the land in
dispute had already passed to them. (Rollo, p., 27)
The Republic disagrees with the appellate court's concept of
possession and argues:
17. The Court of Appeals found that the land was
declared for taxation purposes in the name of
respondent spouses only since 1979. However, tax
declarations or reality tax payments of property are
not conclusive evidence of ownership. (citing cases)
18. Then again, the appellate court found that
"applicants (respondents) and their predecessors-
in-interest had been in possession of the land for
more than 30 years prior to the filing of the
application for registration." This is not, however,
the same as saying that respondents have been in
possession "since June 12, 1945." (PD No. 1073,
amending Sec. 48 [b], CA NO. 141; sec. also Sec. 14,
PD No. 1529). So there is a void in respondents'
possession. They fall short of the required
possession since June 12, 1945 or prior thereto.
And, even if they needed only to prove thirty (30)
years possession prior to the filing of their
application (on February 5, 1987), they would still
be short of the required possession if the starting
point is 1979 when, according to the Court of
Appeals, the land was declared for taxation
purposes in their name. (Rollo, pp. 14-15)
The argument is myopic, to say the least. Following the logic of
petitioner, any transferee is thus foreclosed to apply for registration
of title over a parcel of land notwithstanding the fact that the
transferor, or his predecessor-in-interest has been in open,
notorious and exclusive possession thereof for thirty (30) years or
more. This is not, however, what the law provides.
As petitioner itself argues, Section 48 of the Public Land Act (CA 141)
reads:
8
 Sec. 48. The following-described citizens of the
Philippines, occupying lands of the public domain or
claiming interest therein, but whose titles have not
been perfected or completed, may apply to the
Court of First Instance (now Regional Trial Court) of
the province where the land is located for
confirmation of their claims and the issuance of a
certificate of title therefor under the Land
Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and
occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or
ownership, for at least thirty years  immediately
preceding the filing of the application for
confirmation of title except when prevented by
wars or force majeure. These shall be conclusively
presumed to have performed all the conditions
essential to a Government grant and shall be
entitled to a certificate of title under the provisions
of this chapter. (Emphasis supplied)
As amended by PD 1073:
Sec. 4. The provisions of Section 48(b) and Section
48(c), Chapter VIII, of the Public Land Act are hereby
amended in the sense that these provisions shall
apply only to alienable and disposable lands of the
public domain which have been in open,
continuous, exclusive and notorious possession and
occupation by the applicant himself or thru his
predecessor-in-interest, under a bona fide  claim of
acquisition or ownership, since June 12, 1945.
It must be noted that with respect to possession and occupation of
the alienable and disposable lands of the public domain, the law
employs the terms "by themselves", "the applicant himself or
through his predecessor-in-interest". Thus, it matters not whether
the vendee/applicant has been in possession of the subject property
for only a day so long as the period and/or legal requirements for
confirmation of title has been complied with by his predecessor-in-
interest, the said period is tacked to his possession. In the case at
bar, respondents' predecessors-in-interest have been in open,
continuous, exclusive and notorious possession of the disputed land
not only since June 12, 1945, but even as early as 1937. Petitioner
does not deny this except that respondent spouses, in its
perception, were in possession of the land sought to be registered
only in 1978 and therefore short of the required length of time. As
aforesaid, the disputed parcels of land were acquired by private
respondents through their predecessors-in-interest, who, in turn,
have been in open and continued possession thereof since 1937.
Private respondents stepped into the shoes of their predecessors-
in-interest and by virtue thereof, acquired all the legal rights
necessary to confirm what could otherwise be deemed as an
imperfect title.
At this juncture, petitioner's reliance in Republic v. Villanueva (114
SCRA 875 [1982]) deserves scant consideration. There, it was held
that before the issuance of the certificate of title, the occupant is
not in the juridical sense the true owner of the land since it still
pertains to the State.
Suffice it to state that the ruling in Republic v. Villanueva (supra),
has already been abandoned in the 1986 case of Director of Lands v.
9
Intermediate Appellate Court (146 SCRA 509; and reiterated in
Director of Lands v. Iglesia ni Cristo, 200 SCRA 606 [1991]) where
the Court, through then Associate Justice, now Chief Justice
Narvasa, declared that:
(The weight of authority is) that open, exclusive and
undisputed possession of alienable public land for
the period prescribed by law creates the legal
fiction whereby the land, upon completion of the
requisite period ipso jure and without the need of
judicial or other sanction, ceases to be public land
and becomes private property. . . .
Herico  in particular, appears to be squarely
affirmative:
. . . Secondly, under the provisions
of Republic Act
No. 1942, which the respondent
Court held to be inapplicable to the
petitioner's case, with the latter's
proven occupation and cultivation
for more than 30 years since 1914,
by himself and by his predecessors-
in-interest, title over the land has
vested on petitioner so as to
segregate the land from the mass
of public land. Thereafter, it is no
longer disposable under the Public
Land Act as by free patent . . .
x x x           x x x          x x x
As interpreted in several cases,
when the conditions as specified in
the foregoing provision are
complied with, the possessor is
deemed to have acquired, by
operation of law, a right to a grant,
a government grant, without the
necessity of a certificate of title
being issued. The land, therefore,
ceases to be of the public domain
and beyond the authority of the
Director of Lands to dispose of. The
application for confirmation is mere
formality, the lack of which does
not affect the legal sufficiency of
the title as would be evidenced by
the patent and the Torrens title to
be issued upon the strength of said
patent.
Nothing can more clearly demonstrate the logical
inevitability of considering possession of public land
which is of the character and duration prescribed by
the statute as the equivalent of an express grant
from the State than the dictum of the statute itself
(Section 48 [b]) that the possessor(s) ". . . shall be
conclusively presumed to have performed all the
conditions essential to a Government grant and
shall be entitled to a certificate of title ..." No proof
being admissible to overcome a conclusive
presumption, confirmation proceedings would, in
truth be little more than a formality, at the most
limited to ascertaining whether the possession
claims is of the required character and length of
10
 time; and registration thereunder would not confer
title, but simply recognize a title already vested. The
proceedings would not originally convert the land
from public to private land, but only confirm such a
conversion already affected by operation of law
from the moment the required period of possession
became complete. As was so well put in Cariño, ". . .
(There are indications that registration was
expected from all, but none sufficient to show that,
for want of it, ownership actually gained would be
lost. The effect of the proof, wherever made, was
not to confer title, but simply to establish it, as
already conferred by the decree, if not by earlier
law. (Emphasis supplied)
Subsequent cases have hewed to the above pronouncement such
that open, continuous and exclusive possession for at least 30 years
of alienable public land ipso jure converts the same to private
property (Director of Lands v. IAC, 214 SCRA 604 [1992]; Pineda v.
CA, 183 SCRA 602 [1990]). This means that occupation and
cultivation for more than 30 years by an applicant and his
predecessors-in-interest, vest title on such applicant so as to
segregate the land from the mass of public and (National Power
Corporation v. CA, 218 SCRA 41 [1993]).
The Public Land Act requires that the applicant must prove that (a)
the land is alienable public land and (b) his possession, in the
concept above stated, must be either since time immemorial or for
the period prescribed in the Public Land Act (Director of Lands v.
Buyco, 216 SCRA 78 [1992]). When the conditions set by law are
complied with, the possessor of the land, by operation of law,
acquires a right to a grant, a government grant, without the
necessity of a certificate of title being issued (National Power
Corporation v. CA, supra). As such, the land ceases to be a part of
the public domain and goes beyond the authority of the Director of
Lands to dispose of.
In other words, the Torrens system was not established as a means
for the acquisition of title to private land (Municipality of Victorias v.
CA, 149 SCRA 32 [1987]). It merely confirms, but does not confer
ownership. As could be gleaned from the evidence adduced, private
respondents were able to establish the nature of possession of their
predecessors-in-interest. Evidence was offered to prove that their
predecessors-in-interest had paid taxes on the subject land and
introduced improvements thereon (Exhibits "F" to "F9"). A certified
true copy of the affidavit executed by Cristeta Dazo and her sister
Simplicia was also formally offered to prove that the subject parcels
of land were inherited by vendor Cristeta Dazo from her father
Pedro Dazo with the conformity of her only sister Simplicia (Exhibit
"G"). Likewise, a report from the Bureau of Lands was presented in
evidence together with a letter from the Bureau of Forest
Development, to prove that the questioned lots were part of the
alienable and disposable zone of the government and that no
forestry interest was affected (CA GR No. 28953, Records, p. 33).
In the main, petitioner seeks to defeat respondents' application for
registration of title on the ground of foreign nationality. Accordingly,
the ruling in Director of Lands v. Buyco (supra) supports petitioner's
thesis.
We disagree.
In Buyco, the applicants therein were likewise foreign nationals but
were natural-born Filipino citizens at the time of their supposed
acquisition of the property. But this is where the similarity ends. The
applicants in Buyco sought to register a large tract of land under the
provisions of the Land Registration Act, and in the alternative, under
the provisions of the Public Land Act. The land registration court
11
decided in favor of the applicants and was affirmed by the appellate public domain. An exception to the
court on appeal. The Director of Lands brought the matter before us rule would be any land that should
on review and we reversed. have been in the possession of an
occupant and of his predecessors in
This Court, speaking through Justice Davide, Jr., interest since time immemorial, for
stated: such possession would justify the
presumption that the land had
As could be gleaned from the evidence adduced, never been part of the public
the private respondents do not rely on fee simple domain or that if had been a private
ownership based on a Spanish grant or possessory property even before the Spanish
information title under Section 19 of the Land conquest (Cariño v. Insular
Registration Act; the private respondents did not Government, 41 Phil 935 [1909];
present any proof that they or their predecessors- 212 U.S. 449; 53 Law. Ed., 594) The
in-interest derived title from an old Spanish grant applicant does not come under the
such as (a) the "titulo real" or royal grant (b) the exception, for the earliest
"concession especial" or especial grant; (c) the possession of the lot by his first
"composicion con el estado" title or adjustment predecessor in interest began in
title; (d) the "titulo de compra" or title by purchase; 1880.
and (e) the "informacion posesoria" or possessory
information title, which could become a "titulo . . . alienable public land held by a
gratuito" or a gratuitous title (Director of Forestry v. possessor, personally or through his
Muñoz, 23 SCRA 1183 [1968]). The primary basis of predecessors-in-interest, openly,
their claim is possession, by themselves and their continuously and exclusively for the
predecessors-in-interest, since time immemorial. prescribed statutory period (30
years under the Public Land Act, as
If indeed private respondents and their amended) is converted to private
predecessors have been in possession since time property by the mere lapse or
immemorial, the rulings of both courts could be completion of said period, ipso jure.
upheld for, as this Court stated in Oh Cho v. Director (Director of Lands v. Intermediate
of Lands (75 Phil. 890 [1946]): Appellate Court, supra)

. . . All lands that were not acquired It is obvious from the foregoing rule that the
from the Government, either by applicant must prove that (a) the land is alienable
purchase or by grant, belong to the public land and (b) his possession, in the concept

12
above stated, must be either since time
immemorial, as ruled in both Cariño and Susi, or for
the period prescribed in the Public Land Act. As to
the latter, this Court, in Gutierrez Hermanos v.
Court of Appeals (178 SCRA 37 [1989]), adopted the
rule enunciated by the Court of Appeals, per then
Associate Justice Hugo R. Gutierrez, Jr., . . ., that an
applicant for registration under Section 48 of the
Public Land Act must secure a certification from the
Government that the lands which he claims to have
possessed as owner for more than thirty (30) years
are alienable and disposable. It is the burden of the
applicant to prove its positive averments.
In the instant case, private respondents offered no
evidence at all to prove that the property subject of
the application is an alienable and disposable land.
On the contrary, the entire property . . . was pasture
land (and therefore inalienable under the then 1973
Constitution).
. . . (P)rivate respondents' evidence miserably failed
to establish their imperfect title to the property in
question. Their allegation of possession since time
immemorial, . . ., is patently baseless. . . . When
referring to possession, specifically "immemorial
possession," it means possession of which no man
living has seen the beginning, and the existence of
which he has learned from his elders (Susi v. Razon,
supra). Such possession was never present in the
case of private respondents. . . .
. . ., there does not even exist a reasonable basis for
the finding that the private respondents and their
predecessors-in-interest possessed the land for
more than eighty (80) years, . . .
xxx xxx xxx
To this Court's mind, private respondents failed to
prove that (their predecessor-in-interest) had
possessed the property allegedly covered by Tax
Declaration No. 15853 and made the subject of
both his last will and testament and the project of
partition of his estate among his heirs — in such
manner as to remove the same from the public
domain under the Cariño and Susi doctrines. Thus,
(when the predecessor-in-interest) died on 31 May
1937, he transmitted no right whatsoever, with
respect to the said property, to his heirs. This being
the case, his possession cannot be tacked to that of
the private respondents for the latter's benefit
pursuant to Section 48(b) of the Public Land Act, the
alternative ground relied upon in their application . .
.
xxx xxx xxx
Considering that the private respondents became
American citizens before such filing, it goes without
saying that they had acquired no vested right,
consisting of an imperfect title, over the property
before they lost their Philippine citizenship.
(Emphasis supplied)
Clearly, the application in Buyco  were denied registration of title not
merely because they were American citizens at the time of their
application therefor. Respondents therein failed to prove possession
13
of their predecessor-in-interest since time immemorial or
possession in such a manner that the property has been segregated
from public domain; such that at the time of their application, as
American citizens, they have acquired no vested rights over the
parcel of land.
In the case at bar, private respondents were undoubtedly natural-
born Filipino citizens at the time of the acquisition of the properties
and by virtue thereof, acquired vested rights thereon, tacking in the
process, the possession in the concept of owner and the prescribed
period of time held by their predecessors-in-interest under the
Public Land Act. In addition, private respondents have constructed a
house of strong materials on the contested property, now occupied
by respondent Lapiñas mother.
But what should not be missed in the disposition of this case is the
fact that the Constitution itself allows private respondents to
register the contested parcels of land in their favor. Sections 7 and 8
of Article XII of the Constitution contain the following pertinent
provisions, to wit:
Sec. 7. Save in cases of hereditary succession, no
private lands shall be transferred or conveyed
except to individuals, corporations, or associations
qualified to acquire or hold lands of the public
domain.
Sec. 8. Notwithstanding the provisions of Section 7
of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship
may be a transferee of private lands, subject to
limitations provided by law. (Emphasis supplied)
Section 8, Article XII of the 1987 Constitution above quoted is
similar to Section 15, Article XIV of the then 1973 Constitution which
reads:
Sec. 15. Notwithstanding the provisions of Section
14 of this Article, a natural-born citizen of the
Philippines who has lost his citizenship may be a
transferee of private land, for use by him as his
residence, as the Batasang Pambansa may provide.
Pursuant thereto, Batas Pambansa Blg. 185 was passed into law, the
relevant provision of which provides:
Sec. 2. Any natural-born citizen of the Philippines
who has lost his Philippine citizenship and who has
the legal capacity to enter into a contract under
Philippine laws may be a transferee of a private land
up to a maximum area of one thousand square
meters, in the case of urban land, or one hectare in
the case of rural land, to be used by him as his
residence. In the case of married couples, one of
them may avail of the privilege herein granted;
Provided, That if both shall avail of the same, the
total area acquired shall not exceed the maximum
herein fixed.
In case the transferee already owns urban or rural
lands for residential purposes, he shall still be
entitled to be a transferee of an additional urban or
rural lands for residential purposes which, when
added to those already owned by him, shall not
exceed the maximum areas herein authorized.
14
From the adoption of the 1987 Constitution up to the present, no
other law has been passed by the legislature on the same subject.
Thus, what governs the disposition of private lands in favor of a
natural-born Filipino citizen who has lost his Philippine citizenship
remains to be BP 185.
Even if private respondents were already Canadian citizens at the
time they applied for registration of the properties in question, said
properties as discussed above were already private lands;
consequently, there could be no legal impediment for the
registration thereof by respondents in view of what the Constitution
ordains. The parcels of land sought to be registered no longer form
part of the public domain. They are already private in character
since private respondents' predecessors-in-interest have been in
open, continuous and exclusive possession and occupation thereof
under claim of ownership prior to June 12, 1945 or since 1937. The
law provides that a natural-born citizen of the Philippines who has
lost his Philippine citizenship may be a transferee of a private land
up to a maximum area of 1,000 sq.m., if urban, or one (1) hectare in
case of rural land, to be used by him as his residence (BP 185).
It is undisputed that private respondents, as vendees of a private
land, were natural-born citizens of the Philippines. For the purpose
of transfer and/or acquisition of a parcel of residential land, it is not
significant whether private respondents are no longer Filipino
citizens at the time they purchased or registered the parcels of land
in question. What is important is that private respondents were
formerly natural-born citizens of the Philippines, and as transferees
of a private land, they could apply for registration in accordance
with the mandate of Section 8, Article XII of the Constitution.
Considering that private respondents were able to prove the
requisite period and character of possession of their predecessors-
in-interest over the subject lots, their application for registration of
title must perforce be approved.
The dissenting opinion, however, states that the requirements in BP
185, must also be complied with by private respondents.
Specifically, it refers to Section 6, which provides:
Sec. 6. In addition to the requirements provided for
in other laws for the registration of titles to lands,
no private land shall be transferred under this Act,
unless the transferee shall submit to the register of
deeds of the province or city where the property is
located a sworn statement showing the date and
place of his birth; the names and addresses of his
parents, of his spouse and children, if any; the area,
the location and the mode of acquisition of his
landholdings in the Philippines, if any; his intention
to reside permanently in the Philippines; the date
he lost his Philippine citizenship and the country of
which he is presently a citizen; and such other
information as may be required under Section 8 of
this Act.
The Court is of the view that the requirements in Sec. 6 of BP 185 do
not apply in the instant case since said requirements are primarily
directed to the register of deeds before whom compliance
therewith is to be submitted. Nowhere in the provision is it stated,
much less implied, that the requirements must likewise be
submitted before the land registration court prior to the approval of
an application for registration of title. An application for registration
of title before a land registration court should not be confused with
the issuance of a certificate of title by the register of deeds. It is only
when the judgment of the land registration court approving the
application for registration has become final that a decree of
registration is issued. And that is the time when the requirements of
Sec. 6, BP 185, before the register of deeds should be complied with
by the applicants. This decree of registration is the one that is
15
submitted to the office of the register of deeds for issuance of the
certificate of title in favor of the applicant. Prior to the issuance of
the decree of registration, the register of deeds has no participation
in the approval of the application for registration of title as the
decree of registration is yet to be issued.

WHEREFORE, the petition is DISMISSED and the decision appealed

from is hereby AFFIRMED.

SO ORDERED.

16

EN BANC
G.R. No. 133250           July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of
preliminary injunction and a temporary restraining order. The
petition seeks to compel the Public Estates Authority ("PEA" for
brevity) to disclose all facts on PEA's then on-going renegotiations
with Amari Coastal Bay and Development Corporation ("AMARI" for
brevity) to reclaim portions of Manila Bay. The petition further
seeks to enjoin PEA from signing a new agreement with AMARI
involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner
of Public Highways, signed a contract with the Construction and
Development Corporation of the Philippines ("CDCP" for brevity) to
reclaim certain foreshore and offshore areas of Manila Bay. The
contract also included the construction of Phases I and II of the
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the
works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA
"to 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 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 works in MCCRRP x x x shall be funded and owned
by PEA." Accordingly, PEA and CDCP executed a Memorandum of
Agreement dated December 29, 1981, which stated:
"(i) CDCP shall undertake all reclamation, construction, and
such other works in the MCCRRP as may be agreed upon by
the parties, to be 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 and other terms
and conditions provided for in Presidential Decree No. 1594.
All the financing required for such works shall be provided
by PEA.
xxx
(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 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 been sold,
transferred or otherwise disposed of by CDCP as of said
date, which areas consist of approximately Ninety-Nine
Thousand Four Hundred Seventy Three (99,473) square
17
 meters in the Financial Center Area covered by land pledge
No. 5 and approximately Three Million Three Hundred
Eighty Two Thousand Eight Hundred Eighty Eight
(3,382,888) square meters of reclaimed areas at varying
elevations above Mean Low Water Level located outside the
Financial Center Area and the First Neighborhood Unit." 3
On January 19, 1988, then President Corazon C. Aquino issued
Special Patent No. 3517, granting and transferring to PEA "the
parcels of land so reclaimed under the Manila-Cavite Coastal Road
and Reclamation Project (MCCRRP) containing a total area of one
million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters." Subsequently, on April 9, 1988, the
Register of Deeds of the Municipality of Parañaque issued Transfer
Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA,
covering the three reclaimed islands known as the "Freedom
Islands" located at the southern portion of the Manila-Cavite
Coastal Road, Parañaque City. The Freedom Islands have a total land
area of One Million Five Hundred Seventy Eight Thousand Four
Hundred and Forty One (1,578,441) square meters or 157.841
hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement
("JVA" for brevity) 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-MCCRRP. PEA and AMARI
entered into the JVA through 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 June 8, 1995, then
President Fidel V. Ramos, through then Executive Secretary Ruben
Torres, approved the JVA.6
On November 29, 1996, then Senate President Ernesto Maceda
delivered a privilege speech in the Senate and denounced the JVA as
the "grandmother of all scams." As a result, the Senate Committee
on Government Corporations and Public Enterprises, and the
Committee on Accountability of Public Officers and Investigations,
conducted a joint investigation. The Senate Committees reported
the results of their investigation in Senate Committee Report No.
560 dated September 16, 1997.7 Among the conclusions of their
report are: (1) the reclaimed lands PEA seeks to transfer to AMARI
under the JVA are lands of the public domain which the government
has not classified as alienable lands and therefore PEA cannot
alienate these lands; (2) the certificates of title covering the
Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued
Presidential Administrative Order No. 365 creating a Legal Task
Force to 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 Secretary of Justice,8 the Chief Presidential Legal
Counsel,9 and the Government Corporate Counsel. 10 The Legal Task
Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily
Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued by
then President Fidel V. Ramos. According to these reports, PEA
Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy
Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court
a Petition for Prohibition with Application for the Issuance of a
Temporary Restraining Order and Preliminary Injunction docketed as
G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the
18
petition "for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court." 12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for
brevity) as a taxpayer, filed the instant Petition for Mandamus with
Prayer for the Issuance of a Writ of Preliminary Injunction and
Temporary Restraining Order. Petitioner contends the government
stands to lose billions of pesos in the sale by PEA of the reclaimed
lands to AMARI. Petitioner prays that PEA publicly disclose the
terms of any renegotiation of the JVA, 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 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 Constitution prohibiting
the sale of alienable lands of the public domain to private
corporations. Finally, petitioner asserts that he seeks to enjoin the
loss of billions of pesos in properties of the State that are of public
dominion.
After several motions for extension of time, 13 PEA and AMARI filed
their Comments on October 19, 1998 and June 25, 1998,
respectively. Meanwhile, on December 28, 1998, petitioner filed an
Omnibus Motion: (a) to require PEA to submit the terms of the
renegotiated 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 Reiterative Motion for Issuance of a
TRO dated May 26, 1999, which the Court denied in a Resolution
dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to
the petition and required the parties to file their respective
memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint
Venture Agreement ("Amended JVA," for brevity). On May 28, 1999,
the Office of the President under the administration of then
President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the
President, petitioner now prays that on "constitutional and
statutory grounds the renegotiated contract be declared null and
void."14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE
PETITION ARE MOOT AND ACADEMIC BECAUSE OF
SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING
TO OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY
OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-
EXHAUSTION OF ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING
THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO
INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-
GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT
VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF
19
 CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED,
VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR
RAISING THE ISSUE OF WHETHER THE AMENDED JOINT
VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO
THE GOVERNMENT.
The Court's Ruling
First issue: whether the principal reliefs prayed for in the petition
are moot and academic because of subsequent events.
The petition prays that PEA publicly disclose the "terms and
conditions of the on-going negotiations for a new agreement." The
petition also prays that the Court enjoin PEA from "privately
entering into, perfecting and/or executing any new agreement with
AMARI."
PEA and AMARI claim the petition is now moot and academic
because AMARI furnished petitioner on June 21, 1999 a copy of the
signed Amended JVA containing the terms and conditions agreed
upon in the renegotiations. Thus, PEA has satisfied petitioner's
prayer for a public disclosure of the renegotiations. Likewise,
petitioner's prayer to enjoin the signing of the Amended JVA is now
moot because PEA and AMARI have already signed the Amended
JVA on March 30, 1999. Moreover, the Office of the President has
approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the
constitutional issue by simply fast-tracking the signing and approval
of the Amended JVA before the Court could act on the issue.
Presidential approval does not resolve the constitutional issue or
remove it from the ambit of judicial review.
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 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 JVA on constitutional grounds necessarily includes
preventing its implementation if in the meantime PEA and AMARI
have signed one in violation of the Constitution. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation
of Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private
corporations. If the Amended JVA indeed violates the Constitution,
it is the duty of the Court to enjoin its implementation, and if
already implemented, to annul the effects of such unconstitutional
contract.
The Amended JVA is not an ordinary commercial contract but one
which seeks to transfer title and ownership to 367.5 hectares of
reclaimed lands and submerged areas of Manila Bay to a single
private corporation. It now becomes more compelling for the Court
to resolve the issue to insure the government itself does not violate
a provision of the Constitution intended to safeguard the national
patrimony. Supervening events, whether intended or accidental,
cannot prevent the Court from rendering a decision if there is a
grave violation 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 ownership of alienable lands of the
public domain in the name of AMARI. Even in cases where
supervening events had made the cases moot, the Court did not
hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and the
public.17
Also, the instant petition is a case of first impression. All previous
decisions of the Court involving Section 3, Article XII of the 1987
20
Constitution, or its counterpart provision in the 1973
Constitution,18 covered agricultural lands sold to private
corporations which acquired the lands from private parties. The
transferors of the private corporations claimed or could claim the
right to judicial confirmation of their imperfect titles19 under Title
II of Commonwealth Act. 141 ("CA No. 141" for brevity). In the
instant case, AMARI seeks to acquire from PEA, a public corporation,
reclaimed lands and submerged areas for non-agricultural purposes
by purchase under PD No. 1084 (charter of PEA) and Title III of CA
No. 141. Certain undertakings by AMARI under the Amended JVA
constitute the consideration for the purchase. Neither 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
reclaimed. Judicial confirmation of imperfect title requires open,
continuous, exclusive and notorious occupation of agricultural lands
of the public domain for at least thirty years since June 12, 1945 or
earlier. Besides, the deadline for filing applications for judicial
confirmation of imperfect title expired on December 31, 1987. 20
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 to AMARI of title and ownership to portions of the
reclaimed lands. Under the Amended JVA, PEA is obligated to
transfer to AMARI the latter's seventy percent proportionate share
in the reclaimed areas as the reclamation progresses. The Amended
JVA even allows AMARI to mortgage 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 applies generally to cases involving factual questions. As it is
not a trier of facts, the Court cannot entertain cases involving
factual issues. The instant case, however, raises constitutional issues
of transcendental importance to the public. 22 The Court can resolve
this case without determining any factual issue related to the case.
Also, the instant case is a petition for mandamus which falls under
the original jurisdiction of the Court under Section 5, Article VIII of
the Constitution. We resolve to exercise primary jurisdiction over
the instant case.
Third issue: whether the petition merits dismissal for non-
exhaustion of administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling
PEA to disclose publicly certain information without first asking PEA
the needed information. PEA claims petitioner's direct resort to the
Court violates the principle of exhaustion of administrative
remedies. It also violates the rule that mandamus may issue only if
there is no other plain, speedy and adequate remedy in the ordinary
course of law.
PEA distinguishes the instant case from Tañada v. Tuvera 23 where
the Court granted the petition for mandamus even if the petitioners
there did not initially demand from the Office of the President the
publication of the presidential decrees. PEA points out that in
Tañada, the Executive Department had an affirmative
statutory duty under Article 2 of the Civil Code 24 and Section 1 of
Commonwealth Act No. 63825 to publish the presidential decrees.
There was, therefore, no need for the petitioners in Tañada to make
an initial demand from the Office of the President. In the instant
case, PEA claims it has no affirmative statutory duty to disclose
publicly information about its renegotiation of the JVA. Thus, PEA
asserts that the Court must apply the principle of exhaustion of
administrative remedies to the instant case in view of the failure of
21
petitioner here to demand initially from PEA the needed
information.
The original JVA sought to dispose to AMARI public lands held by
PEA, a government corporation. Under Section 79 of the
Government Auditing Code,26 the disposition of government lands
to private parties requires public bidding. PEA was under a positive
legal duty to disclose to the public the terms and conditions for the
sale of its lands. The law obligated PEA to make this public
disclosure even without demand from petitioner or from anyone.
PEA failed to make this public disclosure because the original JVA,
like the Amended JVA, was the result of a negotiated contract, not
of a public bidding. Considering that PEA had an affirmative
statutory duty to make the public disclosure, and was even in
breach of this legal duty, petitioner had the right to seek direct
judicial intervention.
Moreover, and this alone is determinative of this issue, the principle
of exhaustion of administrative remedies does not apply when the
issue 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 PEA in view of the constitutional ban prohibiting the
alienation of lands of the public domain to private corporations. We
rule that the principle of exhaustion of administrative remedies
does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to
institute mandamus proceedings to enforce his constitutional right
to information without a showing that PEA refused to perform an
affirmative duty imposed on PEA by the Constitution. PEA also
claims that petitioner has not shown that he will suffer any concrete
injury because of the signing or implementation of the Amended
JVA. Thus, there is no actual controversy requiring the exercise of
the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the
petition seeks to compel PEA to comply with its constitutional
duties. There are two constitutional issues involved here. First is the
right of citizens to information on matters of public concern. Second
is the application of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among
Filipino citizens. The thrust of the first issue is to compel PEA to
disclose publicly information on the sale of government lands worth
billions of pesos, information which the Constitution and statutory
law mandate PEA to disclose. The thrust of the second issue is to
prevent PEA from alienating hundreds of hectares of alienable lands
of the public domain in violation of the Constitution, compelling PEA
to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance
to the public. In Chavez v. PCGG,28 the Court upheld the right of a
citizen to bring a taxpayer's suit on matters of transcendental
importance to the public, thus -
"Besides, petitioner emphasizes, the matter of recovering
the ill-gotten wealth of the Marcoses is an issue of
'transcendental importance to the public.' He asserts that
ordinary taxpayers have a right to initiate and prosecute
actions questioning the validity of acts or orders of
government agencies or instrumentalities, if the issues
raised are of 'paramount public interest,' and if they
'immediately affect the social, economic and moral well
being of the people.'
Moreover, the mere fact that he is a citizen satisfies the
requirement of personal interest, when the proceeding
22
involves the assertion of a 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 the
subject of the case involved public interest.
xxx
In Tañada v. Tuvera, the Court asserted that when the issue
concerns a public right and the object of mandamus is to
obtain the enforcement of 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 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 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 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
otherwise effectively promulgated. In ruling for the
petitioners' legal standing, the Court declared that the right
they sought to be enforced 'is a public right recognized by
no less than the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating
Tañada, further declared that 'when a mandamus
proceeding involves the assertion of a public right, the
requirement of personal interest is satisfied by the mere
fact that petitioner is a citizen and, therefore, part of the
general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure
of public funds may not have been involved under the
questioned contract for the development, management and
operation of the Manila International Container Terminal,
'public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the
financial consideration involved.' We concluded that, as a
consequence, the disclosure provision in the Constitution
would constitute sufficient authority for upholding the
petitioner's standing.
Similarly, the instant petition is anchored on the right of the
people to information and access to official records,
documents and papers — a right guaranteed under Section
7, Article III of the 1987 Constitution. Petitioner, a former
solicitor general, is a Filipino citizen. Because of the
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 right (2) espoused by a Filipino
citizen, we rule that the petition at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves
the enforcement of constitutional rights - to information and to the
equitable diffusion of natural resources - matters of transcendental
public importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information
includes official information on on-going negotiations before a
final agreement.
Section 7, Article III of the Constitution explains the people's right to
information on matters of public concern in this manner:
"Sec. 7. The right of the people to information on matters of
public concern shall be recognized. Access to official
records, and to documents, and papers pertaining to
23
 official acts, transactions, or decisions, as well as to
government research data used as basis for policy
development, shall be afforded the citizen, subject to such
limitations as may be provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving
public interest reinforces the people's right to information on
matters of public concern. This State policy is expressed in Section
28, Article II of the Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by
law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest."
(Emphasis supplied)
These twin provisions of the Constitution seek to promote
transparency in policy-making and in the operations of the
government, as well as provide the people sufficient information to
exercise effectively other constitutional rights. These twin provisions
are essential to the exercise of freedom of expression. If the
government does not disclose its official acts, transactions and
decisions to citizens, whatever citizens say, even if expressed
without any restraint, will be speculative and amount to nothing.
These twin provisions are also essential to hold public officials "at all
times x x x accountable to the people," 29 for unless citizens have the
proper information, they cannot hold public officials accountable for
anything. Armed with the right information, citizens can participate
in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is
essential to the existence and proper functioning of any democracy.
As explained by the Court in Valmonte v. Belmonte, Jr.30 –
"An essential element of these freedoms is to keep open a
continuing dialogue or process of communication between
the government and the 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 perceive
and be responsive to the people's will. Yet, this open
dialogue can be effective only to the extent that the
citizenry is informed and thus able to formulate its will
intelligently. Only when the participants in the discussion
are aware of the issues and have access to information
relating thereto can such bear fruit."
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 government." PEA maintains the right does not
include access to "intra-agency or inter-agency recommendations or
communications during the stage when common assertions are still
in the process of being formulated or are in the 'exploratory stage'."
Also, AMARI contends that petitioner cannot invoke the right at the
pre-decisional stage or before the closing of the transaction. To
support its contention, AMARI cites the following discussion in the
1986 Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which should
be distinguished from contracts, agreements, or treaties or
whatever, does the Gentleman refer to the steps leading to
the consummation of the contract, or does he refer to the
contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic
and therefore, it can cover both steps leading to a contract
and already a consummated contract, Mr. Presiding
Officer.
24
 Mr. Suarez: This contemplates inclusion of negotiations
leading to the consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on
the national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract before
petitioner can invoke the right. Requiring government officials to
reveal their deliberations at the pre-decisional stage will degrade
the quality of decision-making in government agencies. Government
officials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their
discussions, putting them under all kinds of pressure before they
decide.
We must first distinguish between information the law on public
bidding requires PEA to disclose publicly, and information the
constitutional right to information requires PEA to release to the
public. Before the consummation of the contract, PEA must, on its
own and without demand from anyone, disclose to the public
matters relating to the disposition of its property. These include the
size, location, technical description and nature of the property being
disposed of, the terms and conditions of the disposition, the parties
qualified to bid, the minimum price and similar information. PEA
must prepare all these data and disclose them to the public at the
start of the disposition process, long before the consummation of
the contract, because the Government Auditing Code
requires public bidding. If PEA fails to make this disclosure, any
citizen can demand from PEA this information at any time during
the bidding process.
Information, however, on on-going evaluation or review of bids or
proposals being undertaken by the bidding or review committee is
not immediately accessible under the right to information. While
the evaluation or review is still on-going, there are no "official acts,
transactions, or decisions" on the bids or proposals. However, once
the committee makes its official recommendation, there arises
a "definite proposition" on the part of the government. From this
moment, the public's right to information attaches, and any citizen
can access all the non-proprietary information leading to such
definite proposition. In Chavez v. PCGG,33 the Court ruled as follows:
"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 government representatives, to
disclose sufficient public information on any proposed
settlement they have decided to take up with the ostensible
owners and holders of ill-gotten wealth. Such information,
though, must pertain to definite propositions of the
government, not necessarily to intra-agency or inter-agency
recommendations or communications during the stage
when common assertions are still in the process of being
formulated or are in the "exploratory" stage. There is need,
of course, to observe the same restrictions on disclosure of
information in general, as discussed earlier – such as on
matters involving national security, diplomatic or foreign
relations, intelligence and other classified information."
(Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986
Constitutional Commission understood that the right to
information "contemplates inclusion of negotiations leading to the
consummation of the transaction." Certainly, a consummated
contract is not a requirement for the exercise of the right to
information. Otherwise, the people can never exercise the right if
25
no contract is consummated, and if one is consummated, it may be
too late for the public to expose its defects.1âwphi1.nêt
Requiring a consummated contract will keep the public in the dark
until the contract, which may be grossly disadvantageous to the
government or even illegal, becomes a fait accompli. This negates
the State policy of full transparency on matters of public concern, a
situation which the framers of the Constitution could not have
intended. Such a requirement will prevent the citizenry from
participating in the public discussion of any proposed contract,
effectively truncating a basic right enshrined in the Bill of Rights. We
can allow neither an emasculation of a constitutional right, nor a
retreat by the State of its avowed "policy of full disclosure of all its
transactions involving public interest."
The right covers three categories of information which are "matters
of public concern," namely: (1) official records; (2) documents and
papers pertaining to official acts, transactions and decisions; and (3)
government research data used in formulating policies. The first
category refers to any document that is part of the public records in
the custody of government agencies or officials. The second
category refers to documents and papers recording, evidencing,
establishing, confirming, supporting, justifying or explaining official
acts, transactions or decisions of government agencies or officials.
The third category refers to research data, whether raw, collated or
processed, owned by the government and used in formulating
government policies.
The information that petitioner may access on the renegotiation of
the JVA includes evaluation reports, recommendations, legal and
expert opinions, minutes of meetings, terms of reference and other
documents attached to such reports or minutes, all relating to the
JVA. However, 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 right only affords access to records,
documents and papers, which means the opportunity to inspect and
copy them. One who exercises the right must copy the records,
documents and papers at his expense. The exercise of the right is
also subject to reasonable regulations to protect the integrity of the
public records and to minimize disruption to government
operations, like rules specifying when and how to conduct the
inspection and copying.35
The right to information, however, does not extend to matters
recognized as privileged information under the separation of
powers.36 The right does not also apply to information on military
and diplomatic secrets, information affecting national security, and
information on investigations of crimes by law enforcement
agencies before the prosecution of the accused, which courts have
long recognized as confidential.37 The right may also be subject to
other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by
petitioner is privileged information rooted in the separation of
powers. The information does not cover Presidential conversations,
correspondences, or discussions during closed-door Cabinet
meetings which, like internal deliberations of the Supreme Court
and other collegiate courts, or executive sessions of either house of
Congress,38 are recognized as confidential. This kind of information
cannot be pried open by a co-equal branch of government. A frank
exchange of exploratory ideas and assessments, free from the glare
of publicity and pressure by interested parties, is essential to
protect the independence of decision-making of those tasked to
exercise Presidential, Legislative and Judicial power. 39 This is not the
situation in the instant case.
We rule, therefore, that the constitutional right to information
includes official information on on-going negotiations before a final
26
contract. The information, however, must constitute definite
propositions by the government and should not cover recognized
exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public
order.40 Congress has also prescribed other limitations on the right
to information in several legislations.41
Sixth issue: whether stipulations in the Amended JVA for the
transfer to AMARI of lands, reclaimed or to be reclaimed, violate
the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged
areas is rooted in the Regalian doctrine which holds that the State
owns all lands and waters of the public domain. Upon the Spanish
conquest of the Philippines, ownership of all "lands, territories and
possessions" in the Philippines passed to the Spanish Crown. 42 The
King, as the sovereign ruler and representative of the people,
acquired and owned all lands and territories in the Philippines
except those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian
doctrine substituting, however, the State, in lieu of the King, as the
owner of all lands and waters of the public domain. The Regalian
doctrine is the foundation of the time-honored principle of land
ownership that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public
domain."43 Article 339 of the Civil Code of 1889, which is now Article
420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law
governing the ownership and disposition of reclaimed lands in the
Philippines. On May 18, 1907, the Philippine Commission enacted
Act No. 1654 which provided for the lease, but not the sale, of
reclaimed lands of the government to corporations and
individuals. Later, on November 29, 1919, the Philippine Legislature
approved Act No. 2874, the Public Land Act, which authorized the
lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. On November 7, 1936, the National
Assembly passed Commonwealth Act No. 141, also known as the
Public Land Act, which authorized the lease, but not the sale, of
reclaimed lands of the government to corporations and
individuals. CA No. 141 continues to this day as the general law
governing the classification and disposition of lands of the public
domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves,
inlets and all waters within the maritime zone of the Spanish
territory 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 provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of
works constructed by the State, or by the provinces,
pueblos or private persons, with proper permission, shall
become the property of the party constructing such works,
unless otherwise provided by the terms of the grant of
authority."
Under the Spanish Law of Waters, land reclaimed from the sea
belonged to the party undertaking the reclamation, provided the
27
government issued the necessary permit and did not reserve
ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public
dominion as follows:
"Art. 339. Property of public dominion is –
1. That devoted to public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State,
riverbanks, shores, roadsteads, and that of a similar
character;
2. That belonging exclusively to the State which, without
being of general public use, is employed in some public
service, or in the development of the national wealth, such
as walls, fortresses, and other works for the defense of the
territory, and mines, until granted to private individuals."
Property devoted to public use referred to property open for use by
the public. In contrast, property devoted to public service referred
to property used for some specific public service and open only to
those authorized to use the property.
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 national wealth. This class of property constituted
property of public dominion although employed for some economic
or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of
property of public dominion into private property, to wit:
"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 property of the State."
This provision, however, was not self-executing. The legislature, or
the executive department pursuant to law, must declare the
property no longer needed for public use or territorial defense
before the government could lease or alienate the property to
private parties.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654
which regulated the lease of reclaimed and foreshore lands. The
salient provisions of this law were as follows:
"Section 1. The control and disposition of the foreshore as
defined in existing law, and the title to all Government or
public lands made or reclaimed by the Government by
dredging or filling or otherwise throughout the Philippine
Islands, shall be retained by the Government without
prejudice to vested rights and without prejudice to rights
conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all
Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise to be
divided into lots or blocks, with the necessary streets and
alleyways located thereon, and shall cause plats and plans
of such surveys to be prepared and filed with the Bureau of
Lands.
(b) Upon completion of such plats and plans the Governor-
General shall give notice to the public that such parts of
28
 the lands so made or reclaimed as are not needed for
public purposes will be leased for commercial and business
purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to
the highest and best bidder therefore, subject to such
regulations and safeguards as the Governor-General may by
executive order prescribe." (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to
all lands reclaimed by the government. The Act also vested in the
government control and disposition of foreshore lands. Private
parties could lease lands reclaimed by the government only if these
lands were no longer needed for public purpose. Act No. 1654
mandated public bidding in the lease of government reclaimed
lands. Act No. 1654 made government reclaimed lands sui
generis in that unlike other public lands which the government
could sell to private parties, these reclaimed lands were available
only for lease to private parties.
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 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
On November 29, 1919, the Philippine Legislature enacted Act No.
2874, the Public Land Act.46 The salient provisions of Act No. 2874,
on reclaimed lands, were as follows:
"Sec. 6. The Governor-General, upon the recommendation
of the Secretary of Agriculture and Natural Resources,
shall from time to time classify the lands of the public
domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition
of alienable or disposable public lands, the Governor-
General, upon recommendation by the Secretary of
Agriculture and Natural Resources, shall from time to time
declare what lands are open to disposition or concession
under this Act."
Sec. 8. Only those lands shall be declared open to
disposition or concession which have been officially
delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being
neither timber nor mineral land, shall be classified
as suitable for residential purposes or for commercial,
industrial, or other productive purposes other than
agricultural purposes, and shall be open to disposition or
concession, shall be disposed of under the provisions of this
chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be
classified as follows:
29
 (a) Lands reclaimed by the Government by
dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water
bordering upon the shores or banks of navigable
lakes or rivers;
(d) Lands not included in any of the foregoing
classes.
x x x.
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 and not otherwise, as soon as the Governor-
General, upon recommendation by the Secretary of
Agriculture and Natural Resources, 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 by sale or lease under the
provisions of this Act." (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to
"classify lands of the public domain into x x x alienable or
disposable"47 lands. Section 7 of the Act empowered the Governor-
General to "declare what lands are open to disposition or
concession." Section 8 of the Act limited alienable or disposable
lands only to those lands which have been "officially delimited and
classified."
Section 56 of Act No. 2874 stated that lands "disposable under this
title48 shall be classified" as government reclaimed, foreshore and
marshy lands, as well as other lands. All these lands, however, must
be suitable for residential, commercial, industrial or other
productive non-agricultural purposes. These provisions vested upon
the Governor-General the power to classify inalienable lands of the
public domain into disposable lands of the public domain. These
provisions also empowered the Governor-General to classify further
such disposable lands of the public domain into government
reclaimed, foreshore or marshy lands of the public domain, as well
as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable
lands of the public domain classified as government reclaimed,
foreshore and marshy lands "shall be disposed of to private parties
by lease only and not otherwise." The Governor-General, before
allowing the lease of these lands to private parties, must formally
declare that the lands were "not necessary for the public service."
Act No. 2874 reiterated the State policy to lease and not to sell
government reclaimed, foreshore and marshy lands of the public
domain, a policy first enunciated in 1907 in Act No. 1654.
Government reclaimed, foreshore and marshy lands remained sui
generis, as the only alienable or disposable lands of the public
domain that the government could not sell to private parties.
The rationale behind this State policy is obvious. Government
reclaimed, foreshore and marshy public lands for non-agricultural
purposes retain their inherent potential as areas for public service.
This is the reason the government prohibited the sale, and only
allowed the lease, of these lands to private parties. The State always
reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government
reclaimed, foreshore and marshy lands into other non-agricultural
lands under Section 56 (d). Lands falling under Section 56 (d) were
the only lands for non-agricultural purposes the government could
30
sell to private parties. Thus, under Act No. 2874, the government
could not sell government reclaimed, foreshore and marshy lands to
private parties, unless the legislature passed a law allowing their
sale.49
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
1866. Lands reclaimed from the sea by private parties with
government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its
ratification by the Filipino people. The 1935 Constitution, in
adopting the Regalian doctrine, declared in Section 1, Article XIII,
that –
"Section 1. All agricultural, timber, and mineral lands of the
public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy and other natural
resources of the Philippines belong to the State, and their
disposition, exploitation, development, or 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 owned by such citizens, subject to any existing right,
grant, lease, or concession at the time of the inauguration
of the Government established under this
Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no
license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years,
renewable for another twenty-five years, except as to water
rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which
cases beneficial use may be the measure and limit of the
grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources
except public agricultural lands, which were the only natural
resources the State could alienate. Thus, foreshore lands,
considered part of the State's natural resources, became inalienable
by constitutional fiat, available only for lease for 25 years,
renewable for another 25 years. The government could alienate
foreshore lands only after these lands were reclaimed and classified
as alienable agricultural lands of the public domain. Government
reclaimed and marshy lands of the public domain, being neither
timber nor mineral lands, fell under the classification of public
agricultural lands.50 However, government reclaimed and marshy
lands, although subject to classification as disposable public
agricultural lands, could only be leased and not sold to private
parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of
government reclaimed and marshy lands of the public domain was
only a statutory prohibition and the legislature could therefore
remove such prohibition. The 1935 Constitution did not prohibit
individuals and corporations from acquiring government reclaimed
and marshy lands of the public domain that were classified as
agricultural lands under existing public land laws. Section 2, Article
XIII of the 1935 Constitution provided as follows:
"Section 2. No private corporation or association may
acquire, lease, or hold public agricultural lands in excess of
one thousand and twenty four hectares, nor may any
individual acquire such lands by purchase in excess of one
hundred and forty hectares, or by lease in excess of one
thousand and twenty-four hectares, or by homestead in
31
 excess of twenty-four hectares. Lands adapted to grazing,
not exceeding two thousand hectares, may be leased to an
individual, private corporation, or association." (Emphasis
supplied)
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 government reclaimed and marshy lands of the public
domain. On the contrary, the legislature continued the long
established State policy of retaining for the government title and
ownership of government reclaimed and marshy lands of the public
domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved
Commonwealth Act No. 141, also known as the Public Land Act,
which compiled the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to this day the existing
general law governing the classification and disposition of lands of
the public domain other than timber and mineral lands. 51
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 domain, which prior to such classification are inalienable and
outside the commerce of man. Section 7 of CA No. 141 authorizes
the President to "declare what lands are open to disposition or
concession." Section 8 of CA No. 141 states that the government
can declare open for disposition or concession only lands that are
"officially delimited and classified." Sections 6, 7 and 8 of CA No. 141
read as follows:
Thus, before the government could alienate or dispose of lands of
the public domain, the President must first officially classify these
lands as alienable or disposable, and then declare them open to
"Sec. 6. The President, upon the recommendation of the
Secretary of Agriculture and Commerce, shall from time to
time classify the lands of the public domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral 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.
Sec. 7. For the purposes of the administration and
disposition of alienable or disposable public lands, the
President, upon recommendation by the Secretary of
Agriculture and Commerce, shall from time to time declare
what lands are open to disposition or concession  under this
Act.
Sec. 8. Only those lands shall be declared open to
disposition or concession which have been officially
delimited and classified and, when practicable,
surveyed, and which have not been reserved for public or
quasi-public uses, nor appropriated by the Government, nor
in any manner become private property, nor those on which
a private right authorized and recognized by this Act or any
other valid law may be claimed, or which, having been
reserved or appropriated, have ceased to be so. x x x."
32
disposition or concession. There must be no law reserving these
lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed,
foreshore and marshy lands of the public domain, are as follows:
"Sec. 58. Any tract of land of the public domain which,
being neither timber nor mineral land, is intended to be
used for residential purposes or for commercial, industrial,
or other productive purposes other than agricultural, and
is open to disposition or concession, shall be disposed of
under the provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be
classified as follows:
(a) Lands reclaimed by the Government by
dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water
bordering upon the shores or banks of navigable
lakes or rivers;
(d) Lands not included in any of the foregoing
classes.
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 authorized to purchase or lease
public lands for agricultural purposes. x x x.
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 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 by sale or
lease under the provisions of this Act." (Emphasis 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
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 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 government reclaimed,
foreshore and marshy disposable lands of the public domain.
Foreshore lands, however, became inalienable under the 1935
Constitution which only allowed the lease of these lands to qualified
private parties.
Section 58 of CA No. 141 expressly states that disposable lands of
the public domain intended for residential, commercial, industrial or
other productive purposes other than agricultural "shall be
disposed of under the provisions of this chapter and not
otherwise." Under Section 10 of CA No. 141, the term "disposition"
includes lease of the land. Any disposition of government reclaimed,
foreshore and marshy disposable lands for non-agricultural
purposes must comply with Chapter IX, Title III of CA No.
141,54 unless a subsequent law amended or repealed these
provisions.
33
In his concurring opinion in the landmark case of Republic Real
Estate Corporation v. Court of Appeals,55 Justice Reynato S. Puno
summarized succinctly the law on this matter, as follows:
"Foreshore lands are lands of public dominion intended for
public use. So too are lands reclaimed by the government by
dredging, filling, or other means. Act 1654 mandated that
the control and disposition of the foreshore and lands under
water remained in the national government. Said law
allowed only the 'leasing' of reclaimed land. The Public Land
Acts of 1919 and 1936 also declared that the foreshore and
lands reclaimed by the government were to be "disposed of
to private parties by lease only and not otherwise." Before
leasing, however, the Governor-General, upon
recommendation of the Secretary of Agriculture and Natural
Resources, had first to determine that the land reclaimed
was not necessary for the public service. This requisite must
have been met before the land could be disposed of. But
even then, the foreshore and lands under water were not
to be alienated and sold to private parties. The disposition
of the reclaimed land was only by lease. The land
remained property of the State." (Emphasis supplied)
As observed by Justice Puno in his concurring opinion,
"Commonwealth Act No. 141 has remained in effect at present."
The State policy prohibiting the sale to private parties of
government reclaimed, foreshore and marshy alienable lands of the
public domain, first implemented in 1907 was thus reaffirmed in CA
No. 141 after the 1935 Constitution took effect. The prohibition on
the sale of foreshore lands, however, became a constitutional edict
under the 1935 Constitution. Foreshore lands became inalienable as
natural resources of the State, unless reclaimed by the government
and classified as agricultural lands of the public domain, in which
case they would fall under the classification of government
reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed
and marshy disposable lands of the public domain continued to be
only 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 government could not sell to private parties.
Since then and until now, the only way the government can sell to
private parties government reclaimed and marshy disposable lands
of the public domain is for the legislature to pass a law authorizing
such sale. CA No. 141 does not authorize the President to reclassify
government reclaimed and marshy lands into other non-agricultural
lands under Section 59 (d). Lands classified under Section 59 (d) are
the only alienable or disposable lands for non-agricultural purposes
that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires
congressional authority before lands under Section 59 that the
government previously transferred to government units or entities
could be sold to private parties. Section 60 of CA No. 141 declares
that –
"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 reasonably necessary for the
purposes for which such sale or lease is requested, and shall
not exceed one hundred and forty-four hectares: Provided,
however, That this limitation shall not apply to grants,
donations, or transfers made to a province, municipality or
branch or subdivision of the Government for the purposes
deemed by said entities conducive to the public
interest; but the land so granted, donated, or transferred
34
 to a province, municipality or branch or subdivision of the
Government shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title,
except when authorized by Congress: x x x." (Emphasis
supplied)
The congressional authority required in Section 60 of CA No. 141
mirrors the legislative authority required in Section 56 of Act No.
2874.
One reason for the congressional authority is that Section 60 of CA
No. 141 exempted government units and entities from the
maximum area 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 private parties in violation of
constitutional or statutory limitations. Otherwise, the transfer of
lands for non-agricultural purposes to government units and entities
could be used to circumvent constitutional limitations on ownership
of alienable or disposable lands of the public domain. In 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
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
In case of sale or lease of disposable lands of the public domain
falling under Section 59 of CA No. 141, Sections 63 and 67 require a
public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
"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 Secretary of Agriculture and Commerce
(now the Secretary of Natural Resources) for authority to
dispose of the same. Upon receipt of such 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 public land, x x x.
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 supplied)
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
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 still reclaim portions of the sea with government
permission. However, the reclaimed land could become private
land only if classified as alienable agricultural land of the public
domain open to disposition under CA No. 141. The 1935
Constitution prohibited the alienation of all natural resources except
public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of
property of public dominion found in the Civil Code of 1889. Articles
420 and 422 of the Civil Code of 1950 state that –
"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 others of similar character;
35
 (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.
x x x.
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 the State."
Again, the government must formally declare that the property of
public dominion is no longer needed for public use or public service,
before the same could be classified as patrimonial property of the
State.59 In the case of government reclaimed and marshy lands of
the public domain, the declaration of their being disposable, as well
as the manner of their disposition, is governed by the applicable
provisions of CA No. 141.
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 for public use, are intended for public service or the
"development of the national wealth." Thus, government reclaimed
and marshy lands of 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 dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973,
likewise adopted the Regalian doctrine. Section 8, Article XIV of the
1973 Constitution stated that –
"Sec. 8. All lands of the public domain, waters, minerals,
coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, wildlife, and other natural
resources of the Philippines belong to the State. With the
exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain,
natural resources shall not be alienated, and no license,
concession, or lease for the exploration, development,
exploitation, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years,
renewable for not more than twenty-five years, except as to
water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power,
in which cases, beneficial use may be the measure and the
limit of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural
resources with the exception of "agricultural, industrial or
commercial, residential, and resettlement lands of the public
domain." In contrast, the 1935 Constitution barred the alienation of
all natural resources except "public agricultural lands." However,
the term "public agricultural lands" in the 1935 Constitution
encompassed industrial, commercial, residential and resettlement
lands of the public domain.60 If the land of public domain were
neither timber nor mineral land, it would fall under the classification
of agricultural land of the public domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the alienation of all natural
resources except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of
the public domain to individuals who were citizens of the
Philippines. Private corporations, even if wholly owned by Philippine
citizens, were no longer allowed to acquire alienable lands of the
public domain unlike in the 1935 Constitution. Section 11, Article
XIV of the 1973 Constitution declared that –
36
 "Sec. 11. The Batasang Pambansa, taking into account
conservation, ecological, and development requirements of
the natural resources, shall 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,
corporation, or association, and the conditions therefor. No
private corporation or association may hold alienable
lands of the public 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 hundred hectares or
acquire by purchase, homestead or grant, in excess of
twenty-four hectares. No private corporation or association
may hold by lease, concession, license or permit, timber or
forest lands and other timber or forest resources in excess
of one hundred thousand hectares. However, such area may
be increased by the Batasang Pambansa upon
recommendation of the National Economic and
Development Authority." (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold
alienable lands of the public domain only through lease. Only
individuals could now acquire alienable lands of the public domain,
and private corporations became absolutely barred from acquiring
any kind of 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
On February 4, 1977, then President Ferdinand Marcos issued
Presidential Decree No. 1084 creating PEA, a wholly government
owned and controlled corporation with a special charter. Sections 4
and 8 of PD No. 1084, vests PEA with the following purposes and
powers:
"Sec. 4. Purpose. The Authority is hereby created for the
following purposes:
(a) To reclaim land, including foreshore and submerged
areas, by dredging, filling or other means, or to acquire
reclaimed land;
(b) To develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands,
buildings, estates and other forms of real property, owned,
managed, controlled and/or operated by the government;
(c) To provide for, operate or administer such service as
may be necessary for the efficient, economical and
beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority
shall, in carrying out the purposes for which it is created,
have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area
permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or
otherwise, any stream, watercourse, canal, ditch, flume x x
x.
37
 xxx
(o) To perform such acts and exercise such functions as may
be necessary for the attainment of the purposes and
objectives herein specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and
submerged areas of the public domain. Foreshore areas are those
covered and 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. 62 Foreshore and
submerged areas indisputably belong to the public domain 63 and are
inalienable unless reclaimed, classified as alienable lands open to
disposition, and further declared no longer needed for public
service.
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 then, and until today, a fully owned government
corporation. The constitutional ban applied then, as it still applies
now, only to "private corporations and associations." PD No. 1084
expressly empowers PEA "to hold lands of the public domain" even
"in excess of the area 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 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. This legislative
authority is necessary in view of Section 60 of CA No.141, which
states –
"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 be alienated,
encumbered or otherwise disposed of in a manner affecting
its title, except when authorized by Congress; x x x."
(Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease
its reclaimed foreshore and submerged 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.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before
it, has adopted the Regalian doctrine. The 1987 Constitution
declares that all natural resources are "owned by the State," and
except for alienable agricultural lands of the public domain, natural
resources cannot be alienated. Sections 2 and 3, Article XII of the
1987 Constitution state that –
"Section 2. All lands of the public domain, waters, minerals,
coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be
under the full control and supervision of the State. 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 the public domain may be
38
 further classified by law according to the uses which they
may be devoted. Alienable lands of the public domain shall
be limited to agricultural lands. Private corporations or
associations may not hold such alienable lands of the
public domain except by lease, for a period not exceeding
twenty-five years, renewable for not more than twenty-
five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than
five hundred hectares, or acquire not more than twelve
hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation,
ecology, and development, and subject to the requirements
of agrarian reform, the Congress shall determine, by law,
the size of lands of the public domain which may be
acquired, developed, held, or leased and the conditions
therefor." (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973
Constitution banning private corporations from acquiring any kind
of alienable land of the public domain. Like the 1973 Constitution,
the 1987 Constitution allows private corporations to hold alienable
lands of the public domain only through lease. As in the 1935 and
1973 Constitutions, the general law governing the lease to private
corporations of reclaimed, foreshore and marshy alienable lands of
the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from
acquiring, except through lease, alienable lands of the public
domain is not well understood. During the deliberations of the 1986
Constitutional Commission, the commissioners probed the rationale
behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have
reference to page 3, line 5 which says:
`No private corporation or association may hold alienable
lands of the public domain except by lease, not to exceed
one thousand hectares in area.'
If we recall, this provision did not exist under the 1935
Constitution, but this was introduced in the 1973
Constitution. In effect, it prohibits private corporations from
acquiring alienable public lands. But it has not been very
clear in jurisprudence what the reason for this is. In 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 intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni
Cristo, there were instances where the Iglesia ni Cristo was
not allowed to acquire a mere 313-square meter land where
a chapel stood because the Supreme Court said it would be
in violation of this." (Emphasis supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind this
constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition
against purchases of public agricultural lands by private
corporations is to equitably diffuse land ownership or to
encourage 'owner-cultivatorship and the economic family-
size farm' and to prevent a recurrence of cases like the
instant case. Huge landholdings by corporations or private
persons had spawned social unrest."
39
However, if the constitutional intent is to prevent huge
landholdings, the Constitution could have simply limited the size of
alienable lands of the public domain that corporations could
acquire. The Constitution could have followed the limitations on
individuals, who could acquire not more than 24 hectares of
alienable lands of the public domain under the 1973 Constitution,
and not more than 12 hectares under the 1987 Constitution.
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 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 inherit shares in the corporation instead of
subdivided parcels of the farmland. This would prevent the
continuing break-up of farmlands into smaller and smaller plots
from one generation to the next.
In actual practice, the constitutional ban strengthens the
constitutional limitation on individuals from acquiring more than
the allowed area of alienable lands of the public domain. Without
the constitutional ban, individuals who already acquired the
maximum area of alienable lands of the public domain could easily
set up corporations to acquire more alienable public lands. An
individual could own as many corporations as his means would
allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the
corporation. The corporation is a convenient vehicle to circumvent
the constitutional limitation on acquisition by individuals of
alienable lands of the public domain.
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 to a qualified individual. This constitutional intent is
safeguarded by the provision prohibiting corporations from
acquiring alienable lands of the public domain, since the vehicle to
circumvent the constitutional intent is removed. The available
alienable public lands are gradually decreasing in the face of an
ever-growing population. The most effective way to insure faithful
adherence to this constitutional intent is to grant 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 Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second
Whereas clause, consists of three properties, namely:
1. "[T]hree partially reclaimed and substantially eroded
islands along Emilio Aguinaldo Boulevard in Paranaque and
Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to
the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional
350 hectares more or less to regularize the configuration of
the reclaimed area."65
PEA confirms that the Amended JVA involves "the development of
the Freedom Islands and further reclamation of about 250 hectares
x x x," plus an option "granted to AMARI to subsequently reclaim
another 350 hectares x x x."66
In short, the Amended JVA covers a reclamation area of 750
hectares. Only 157.84 hectares of the 750-hectare reclamation
project have been reclaimed, and the rest of the 592.15 hectares
are still submerged areas forming part of Manila Bay.
40
Under the Amended JVA, AMARI will reimburse PEA the sum of
P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the
Freedom Islands. AMARI will also complete, at its own expense, the
reclamation of the Freedom Islands. AMARI will further shoulder all
the reclamation 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 percent, respectively, the total net
usable area which is defined in the Amended JVA as the total
reclaimed area less 30 percent earmarked for common areas. Title
to AMARI's share in the net usable area, totaling 367.5 hectares, will
be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA
provides that –
"x x x, PEA shall have the duty to execute without delay the
necessary deed of transfer or conveyance of the title
pertaining to AMARI's Land share based on the Land
Allocation Plan. PEA, when requested in writing by AMARI,
shall then cause the issuance and delivery of the proper
certificates of title covering AMARI's Land Share in the
name of AMARI, x x x; provided, that if more than seventy
percent (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 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
titled in its name.
To implement the Amended JVA, PEA delegated to the
unincorporated PEA-AMARI joint venture PEA's statutory authority,
rights and privileges to reclaim foreshore and submerged areas in
Manila Bay. Section 3.2.a of the Amended JVA states that –
"PEA hereby contributes to the joint venture its rights and
privileges to perform Rawland Reclamation and Horizontal
Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right,
authority and privilege to undertake the Project in
accordance with the Master Development Plan."
The Amended JVA is the product of a renegotiation of the original
JVA dated April 25, 1995 and its supplemental agreement dated
August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can
acquire and own under the Amended JVA 367.5 hectares of
reclaimed 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. All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other
natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be
limited to agricultural lands. Private corporations or
associations may not hold such alienable lands of the
public domain except by lease, x x x."(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
41
PEA readily concedes that lands reclaimed from foreshore or
submerged areas of Manila Bay are alienable or disposable lands of
the public domain. In its Memorandum, 67 PEA admits that –
"Under the Public Land Act (CA 141, as
amended), reclaimed lands are classified as alienable and
disposable lands of the public domain:
'Sec. 59. The lands disposable under this title shall
be classified as follows:
(a) Lands reclaimed by the government by dredging,
filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 constituted under Presidential
Administrative Order No. 365 admitted in its Report and
Recommendation to then President Fidel V. Ramos, "[R]eclaimed
lands are classified as alienable and disposable lands of the public
domain."69 The Legal Task Force concluded that –
"D. Conclusion
Reclaimed lands are lands of the public domain. However,
by statutory authority, the rights of ownership and
disposition over reclaimed lands have been transferred to
PEA, by virtue of which PEA, as owner, may validly convey
the same to any qualified person without violating the
Constitution or any statute.
The constitutional provision prohibiting private corporations
from holding public land, except by lease (Sec. 3, Art.
XVII,70 1987 Constitution), does not apply to reclaimed lands
whose ownership has passed on to PEA by statutory grant."
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 domain, waters x x x and other natural resources" and
consequently "owned by the State." As such, foreshore and
submerged areas "shall not be alienated," unless they are classified
as "agricultural lands" of the public domain. The mere reclamation
of these 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. 71
Section 8 of CA No. 141 provides that "only those lands shall be
declared open to disposition or concession which have
been officially delimited and classified."72 The President has the
authority to classify inalienable lands of the public domain into
alienable or disposable 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 Roppongi property in Tokyo,
Japan, which was acquired by the Philippine Government for use as
the Chancery of the Philippine Embassy. Although the Chancery had
transferred to another location thirteen years earlier, the Court still
ruled that, under Article 42274 of the Civil Code, a property of public
dominion retains such character until formally declared otherwise.
The Court ruled that –
"The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not automatically
convert it to patrimonial property. Any such conversion
42
 happens only if the property is withdrawn from public use
(Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]. A property continues to be part of the public
domain, not available for private appropriation or
ownership 'until there is a formal declaration on the part
of the government to withdraw it from being such'  (Ignacio
v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis
supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of
special land patents for lands reclaimed by PEA from the foreshore
or submerged areas of Manila Bay. On January 19, 1988 then
President Corazon C. Aquino issued Special Patent No. 3517 in the
name of PEA for the 157.84 hectares comprising the partially
reclaimed Freedom Islands. Subsequently, on April 9, 1999 the
Register of Deeds of the 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 issuance of certificates of title
corresponding to land patents. To this day, these certificates of title
are still in the name of PEA.
PD No. 1085, 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. PD No. 1085 and President
Aquino's issuance of a land patent 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.
At the time then President Aquino issued Special Patent No. 3517,
PEA had already reclaimed the Freedom Islands although
subsequently there were partial erosions on some areas. The
government had also completed the necessary surveys on these
islands. Thus, the Freedom 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 domain into "agricultural,
forest or timber, mineral lands, and national parks." Being neither
timber, mineral, nor national park lands, the reclaimed Freedom
Islands necessarily fall under the classification of agricultural lands
of the public domain. Under the 1987 Constitution, agricultural
lands of the public domain are the only natural resources that the
State may alienate to qualified private parties. All other natural
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 Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because
CDCP, then a private corporation, reclaimed the islands under a
contract dated November 20, 1973 with the Commissioner of Public
Highways. AMARI, citing Article 5 of the Spanish Law of Waters of
1866, argues 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 of the public domain which the State may
not alienate."75 Article 5 of the Spanish Law of Waters reads as
follows:
"Article 5. Lands reclaimed from the sea in consequence of
works constructed by the State, or by the provinces,
pueblos or private persons, with proper permission, shall
become the property of the party constructing such
works, unless otherwise provided by the terms of the grant
of authority." (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private
parties could reclaim from the sea only with "proper permission"
from the State. Private parties could own the reclaimed land only if
43
not "otherwise provided by the terms of the grant of authority."
This clearly meant that 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 State could grant or withhold
ownership of the reclaimed land because any reclaimed land, like
the sea from which it emerged, belonged to the State. Thus, a
private person reclaiming from the sea without permission from the
State could not acquire ownership of the reclaimed land 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-honored principle of land ownership that "all lands that
were not acquired from the government, either by purchase or by
grant, belong to the public domain."77
Article 5 of the Spanish Law of Waters must be read together with
laws subsequently enacted on the disposition of public lands. In
particular, CA No. 141 requires that lands of the public domain must
first be classified as alienable or disposable before the government
can alienate them. These lands must not be reserved for public or
quasi-public purposes.78 Moreover, the contract between CDCP and
the government was executed after the effectivity of the 1973
Constitution which barred private corporations from acquiring any
kind of alienable land of the public domain. This contract could not
have converted the Freedom Islands into private lands of a private
corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all
laws authorizing the reclamation of areas under water and revested
solely in the National Government the power to reclaim lands.
Section 1 of PD No. 3-A declared that –
"The provisions of any law to the contrary
notwithstanding, the reclamation of areas under water,
whether foreshore or inland, shall be limited to the
National Government or any person authorized by it under
a proper contract. (Emphasis supplied)
x x x."
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 by the National Government or by a person contracted by the
National Government. Private parties may reclaim from the sea only
under a 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.
Executive Order No. 525, issued on February 14, 1979, designated
PEA as the National Government's implementing arm to undertake
"all reclamation projects of the government," which "shall be
undertaken by the PEA or through a proper contract executed by it
with any person or entity." Under such contract, a private party
receives compensation for reclamation services rendered to PEA.
Payment to 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 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 as alienable or disposable land
open to disposition, and then declared no longer needed for public
service.
The Amended JVA covers not only the Freedom Islands, but also an
additional 592.15 hectares which are still submerged and forming
part of Manila Bay. There is no legislative or Presidential act
classifying these submerged areas as alienable or disposable lands
of the public domain open to disposition. These submerged areas
are not covered by any patent or certificate of title. There can be no
dispute that these submerged areas form part of the public domain,
44
and in their present state are inalienable and outside the
commerce of 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 public domain and consequently
inalienable. Only when actually reclaimed from the sea can these
submerged areas be classified as public agricultural lands, which
under the Constitution are the only natural resources that the State
may alienate. Once reclaimed and transformed into public
agricultural lands, the government may then officially classify these
lands as alienable or disposable lands open to disposition.
Thereafter, the government may declare these lands no longer
needed for public service. Only then can these reclaimed lands be
considered alienable or disposable lands of the public domain and
within the commerce of man.
The classification of PEA's 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 construct, maintain and operate such
systems of sanitary sewers as may be necessary; [T]o construct,
maintain and operate such storm drains as may be necessary." PEA
is empowered to issue "rules and regulations as may be necessary
for the proper use by private parties 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 use." Thus, part of the reclaimed
foreshore and submerged lands held by the PEA would actually be
needed for public use or service since many of the functions
imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA
"shall be primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the
National Government." The same section also states that "[A]ll
reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it 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 agency of the
National Government to reclaim foreshore and submerged lands of
the public domain. EO No. 525 recognized PEA as the government
entity "to undertake the reclamation of lands and ensure their
maximum utilization in promoting public welfare and
interests."79 Since large portions of these reclaimed lands would
obviously be needed for public service, there must be a formal
declaration segregating reclaimed lands no longer needed for public
service from those still needed for public service.1âwphi1.nêt
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 to classify inalienable lands into alienable or disposable
lands of the public domain. Otherwise, reclaimed foreshore and
submerged lands of the public domain would automatically become
alienable once reclaimed by PEA, whether or not classified as
alienable or disposable.
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 Natural Resources ("DENR" for brevity) the following powers
and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
45
 (4) Exercise supervision and control over forest
lands, alienable and disposable public lands, mineral
resources and, in the process of exercising such control,
impose appropriate taxes, fees, charges, rentals and any
such form of levy and collect such revenues for the
exploration, development, utilization or gathering of such
resources;
xxx
(14) Promulgate rules, regulations and guidelines on the
issuance of licenses, permits, concessions, lease
agreements and such other privileges concerning the
development, exploration and utilization of the country's
marine, freshwater, and brackish water and over all
aquatic resources of the country and shall continue to
oversee, supervise and police our natural resources; cancel
or cause to cancel such privileges upon failure, non-
compliance or violations of any regulation, order, and for all
other causes which are in furtherance of the conservation of
natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and
disposition of all lands of the public domain and serve as
the sole agency responsible for classification, sub-
classification, surveying and titling of lands in consultation
with appropriate agencies."80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of
the State, DENR exercises "supervision and control over alienable
and disposable public lands." DENR also exercises "exclusive
jurisdiction on the management and disposition of all lands of the
public domain." Thus, DENR decides whether areas under water,
like foreshore or submerged areas of Manila Bay, should be
reclaimed or not. This means that PEA needs authorization from
DENR before PEA can undertake reclamation projects in Manila Bay,
or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all
lands of the public domain. Hence, DENR decides whether reclaimed
lands of PEA should be classified as alienable under Sections 6 81 and
782 of CA No. 141. Once DENR decides that the reclaimed lands
should be so classified, it then recommends to the President the
issuance of a proclamation classifying the lands as alienable or
disposable lands of the public domain open to disposition. We note
that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned
Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
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 the physical reclamation of areas under water,
whether directly or through private contractors. DENR is also
empowered to classify lands of 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 or lease the reclaimed
alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or
submerged areas does not make the reclaimed lands alienable or
disposable lands of the public domain, much less patrimonial lands
of PEA. Likewise, the mere transfer by the National Government of
lands of the public domain to PEA does not make the lands alienable
or disposable lands of the public domain, much less patrimonial
lands of PEA.
Absent two official acts – a classification that these lands are
alienable or disposable and open to disposition and a declaration
46
that these lands are not needed for public service, lands reclaimed
by PEA remain inalienable lands of the public domain. Only such an
official classification and formal declaration can convert reclaimed
lands into alienable or disposable lands of the public domain, open
to disposition under the Constitution, Title I and Title III 83 of CA No.
141 and other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
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 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 subdivision of the government "shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its
title, except when authorized by Congress: x x x."85 (Emphasis by
PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised
Administrative Code of 1987, which states that –
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is authorized
by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x
x."
Thus, the Court concluded that a law is needed to convey any real
property belonging to the Government. The Court declared that -
"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 and approved by a law
enacted by the Congress. It requires executive and
legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the
legislative authority allowing PEA to sell its reclaimed lands. PD No.
1085, issued on February 4, 1977, provides that –
"The land reclaimed in the foreshore and offshore area of
Manila Bay pursuant to the contract for the reclamation
and construction of the Manila-Cavite Coastal Road Project
between the Republic of the Philippines and the
Construction and Development Corporation of the
Philippines dated November 20, 1973 and/or any other
contract or reclamation covering the same area is hereby
transferred, conveyed and assigned to the ownership and
administration of the Public Estates Authority established
pursuant to PD No. 1084; Provided, however, That the rights
and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the
rights and assume the obligations of the Republic of the
Philippines (Department of Public Highways) arising from, or
incident to, the aforesaid contract between the Republic of
the Philippines and the Construction and Development
Corporation of the Philippines.
In consideration of the foregoing transfer and assignment,
the Public Estates Authority shall issue in favor of the
Republic of the Philippines the corresponding shares of
stock in said entity with an issued value of said shares of
stock (which) shall be deemed fully paid and non-
assessable.
47
 The Secretary of Public Highways and the General Manager
of the Public Estates Authority shall execute such contracts
or agreements, including appropriate agreements with the
Construction and Development Corporation of the
Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the
Secretary of Natural Resources in favor of the Public
Estates Authority without prejudice to the subsequent
transfer to the contractor or his assignees of such portion
or portions of the land reclaimed or to be reclaimed as
provided for in the above-mentioned contract. On the
basis of such patents, the Land Registration Commission
shall issue the corresponding certificate of title." (Emphasis
supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14,
1979, provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to or be
owned by the PEA which shall be responsible for its
administration, development, utilization or disposition in
accordance with the provisions of Presidential Decree No.
1084. Any and all income that the PEA may derive from the
sale, lease or use of reclaimed lands shall be used in
accordance with the provisions of Presidential Decree No.
1084."
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 "ownership and administration" of lands reclaimed from
Manila Bay to PEA, while EO No. 525 declared that lands reclaimed
by PEA "shall 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 of Presidential Decree No. 1084," the charter of
PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve,
acquire, administer, deal in, subdivide, dispose, lease and sell any
and all kinds of lands x x x owned, managed, controlled and/or
operated by the government."87 (Emphasis supplied) There is,
therefore, legislative authority granted to PEA to sell its lands,
whether patrimonial or alienable lands of the public domain. PEA
may sell to private parties its patrimonial properties in accordance
with the PEA charter free from constitutional limitations. The
constitutional ban on private corporations from acquiring alienable
lands of the public domain does not apply to the sale of PEA's
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public
domain to private individuals since, with the legislative authority,
there is no longer any statutory prohibition against such sales and
the constitutional ban does not apply to individuals. PEA, however,
cannot sell any of its alienable or disposable lands of the public
domain to private corporations since Section 3, Article XII of the
1987 Constitution expressly prohibits such sales. The legislative
authority benefits only individuals. Private corporations remain
barred from acquiring any kind of alienable land of the public
domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed
lands could be transferred by PEA to the "contractor or his
assignees" (Emphasis supplied) would not apply to private
corporations but only to individuals because of the constitutional
ban. Otherwise, the provisions of PD No. 1085 would violate both
the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
48
Assuming the reclaimed lands of PEA are classified as alienable or
disposable lands open to disposition, and further declared no longer
needed for public service, PEA would have to conduct a public
bidding in selling or leasing these lands. PEA must observe the
provisions of 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 Patent No. 3517 expressly states that the
patent is issued by authority of the Constitution and PD No. 1084,
"supplemented by Commonwealth 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 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 authorizes
PEA to decide the mode of payment, whether in kind and in
installment, but does not authorize PEA to dispense with public
auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as
the Government Auditing Code, the government is required to sell
valuable government property through public bidding. Section 79 of
PD No. 1445 mandates that –
"Section 79. When government property has become
unserviceable for any cause, or is no longer needed, it shall,
upon application of the officer accountable therefor, be
inspected by the head of the agency or his duly authorized
representative in the presence of the auditor 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 public auction to the highest bidder under the
supervision of the proper committee on award or similar
body in the presence of the auditor concerned or other
authorized representative of the Commission, after
advertising by printed notice in the Official Gazette, or for
not less than three consecutive days in any newspaper of
general circulation, or where the value of the property does
not warrant the 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 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 committee
or body concerned and approved by the Commission."
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.90 The Commission on Audit implements Section 79 of
the Government Auditing Code through Circular No. 89-296 91 dated
January 27, 1989. This circular emphasizes that government assets
must be disposed of only through public auction, and a negotiated
sale can be resorted to only in case of "failure of public auction."
At the public auction sale, only Philippine citizens are qualified to
bid for PEA's reclaimed foreshore and submerged alienable lands of
the public domain. Private corporations are barred from bidding at
the auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on
December 10, 1991. PEA imposed a condition that the winning
bidder should reclaim another 250 hectares of submerged areas to
regularize the shape of the Freedom Islands, under a 60-40 sharing
of the additional reclaimed areas in favor of the winning
bidder.92 No one, however, submitted a bid. On December 23, 1994,
the Government Corporate Counsel advised PEA it could sell the
Freedom Islands through negotiation, without need of another
public bidding, because of the failure of the public bidding on
December 10, 1991.93
49
However, the original JVA dated April 25, 1995 covered not only the
Freedom Islands and the additional 250 hectares still to be
reclaimed, it also granted an option to AMARI to reclaim another
350 hectares. The original JVA, a negotiated contract, enlarged the
reclamation area 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 negotiated sale of 750 hectares, almost double the
area publicly auctioned. Besides, the failure of public bidding
happened on December 10, 1991, more than three years before the
signing of the original JVA on April 25, 1995. The economic situation
in the country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987
Constitution is absolute and clear: "Private corporations or
associations may 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 and AMARI as legislative authority to sell
reclaimed lands to private parties, recognizes the constitutional ban.
Section 6 of RA No. 6957 states –
"Sec. 6. Repayment Scheme. - For the financing,
construction, operation and maintenance of any
infrastructure projects undertaken through 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 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 of a portion or
percentage of the reclaimed land, subject to the
constitutional requirements with respect to the ownership
of the land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical
reclamation of a government BOT project, cannot acquire reclaimed
alienable lands of the public domain in view of the constitutional
ban.
Section 302 of the Local Government Code, also mentioned by PEA
and AMARI, authorizes local governments in land reclamation
projects to pay the contractor or developer in kind consisting of a
percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance,
Operation, and Management of Infrastructure Projects by
the Private Sector. x x x
xxx
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 reclaimed land or the industrial
estate constructed."
Although Section 302 of the Local Government Code does not
contain a proviso similar to that of the BOT Law, the constitutional
restrictions on land ownership automatically apply even though not
expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the
contractor or developer, if a corporate entity, can only be paid with
leaseholds on portions of the reclaimed land. If the contractor or
developer is an individual, portions of the reclaimed land, not
exceeding 12 hectares96 of non-agricultural lands, may be conveyed
to him in ownership in view of the legislative authority allowing such
conveyance. This is the only way these provisions of the BOT Law
50
and the Local Government Code can avoid a direct collision with
Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of
the reclaimed lands to public respondent PEA transformed such
lands of the public domain to private lands." This theory is echoed
by AMARI which maintains that the "issuance of the special patent
leading to the eventual issuance of title takes the subject land away
from the land of public domain and converts the property into
patrimonial or private property." In short, PEA and AMARI contend
that with the issuance of Special Patent No. 3517 and the
corresponding certificates of titles, the 157.84 hectares comprising
the Freedom Islands have become private lands of PEA. In support
of their theory, PEA and AMARI cite the following rulings of the
Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the Court held
–
"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 private property over which
the Director of Lands has neither control nor jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared -
"After the registration and issuance of the certificate and
duplicate certificate of title based on a public land patent,
the land covered thereby automatically comes under the
operation of Republic Act 496 subject to all the safeguards
provided therein."3. Heirs of Gregorio Tengco v. Heirs of
Jose Aliwalas,99 where the Court ruled -
"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 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 be part of the public domain and becomes private
property over which the Director of Lands has neither
control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,100 where the
Court held –
"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 respondents, the said lots
ceased to be part of the public domain and, therefore, the
Director of Lands lost jurisdiction over the same."
5.Republic v. Court of Appeals,101 where the Court stated –
"Proclamation No. 350, dated October 9, 1956, of President
Magsaysay legally effected a land grant to the Mindanao
Medical Center, Bureau of Medical Services, Department of
Health, of the whole lot, validly sufficient for initial
registration under the Land Registration Act. Such land
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 governs the registration of grants or
patents involving public lands, provides that 'Whenever
public lands in the Philippine Islands belonging to the
Government of the United States or to the Government of
the Philippines are alienated, granted or conveyed to
persons or to public or private corporations, the same shall
be brought forthwith under the operation of this Act (Land
51
 Registration Act, Act 496) and shall become registered
lands.'"
The first four cases cited involve petitions to cancel the land patents
and the corresponding certificates of titles issued to private parties.
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 the land automatically comes under the Torrens
System. The fifth case cited involves the registration under the
Torrens System of a 12.8-hectare public land granted by the
National Government to Mindanao Medical Center, a government
unit under the Department of Health. The National Government
transferred the 12.8-hectare public land to serve as the site for the
hospital buildings and other facilities of Mindanao Medical Center,
which performed a public service. The Court affirmed the
registration of the 12.8-hectare public land in the name of
Mindanao 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 land losing its character as a property of public
dominion.
In the instant case, the only patent and certificates of title issued are
those in the name of PEA, a wholly government owned corporation
performing public as well as proprietary functions. No patent or
certificate of title has been issued to any private party. No one is
asking the Director of Lands to cancel PEA's patent or certificates of
title. In fact, the thrust of the instant petition is that PEA's
certificates of title should remain with PEA, and the land covered by
these certificates, being alienable lands of the public domain, should
not be sold to a private corporation.
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.102 The registration of lands of the public domain
under the Torrens system, by itself, cannot convert public lands into
private lands.103
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. The transfer of the Freedom Islands to
PEA was made subject to the provisions of CA No. 141 as expressly
stated in Special Patent No. 3517 issued by then President Aquino,
to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the
Constitution of the Philippines and in conformity with the
provisions of Presidential Decree No. 1084, supplemented
by Commonwealth Act No. 141, as amended, there are
hereby granted and conveyed unto the Public Estates
Authority the aforesaid tracts of land containing a total area
of one million nine hundred fifteen thousand eight hundred
ninety four (1,915,894) square meters; the technical
description of which are hereto attached and made an
integral part hereof." (Emphasis supplied)
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, "except when authorized by Congress," the sale of
alienable lands of the public domain that are transferred to
government units or 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 annotated on the certificate of
title.104 Alienable lands of the public domain held by government
52
entities under Section 60 of CA No. 141 remain public lands because
they cannot be alienated or encumbered unless Congress passes a
law authorizing their disposition. Congress, however, cannot
authorize the sale to private corporations of reclaimed alienable
lands of the public domain because of the constitutional ban. Only
individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance
with Section 60 of CA No. 141 does not automatically convert
alienable lands of the public domain into private or patrimonial
lands. The alienable lands of the public domain must be transferred
to qualified private 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 in the hands of a government agency tasked to
dispose of public lands. This will allow private corporations to
acquire directly from government agencies limitless areas of lands
which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of
the National Government to reclaim foreshore and submerged
areas of the public domain. Thus, EO No. 525 declares that –
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency
Primarily Responsible for all Reclamation Projects
Whereas, there are several reclamation projects which are
ongoing or being proposed to be undertaken in various
parts of the country which need to be evaluated for
consistency with national programs;
Whereas, there is a need to give further institutional
support to the Government's declared policy to provide for
a coordinated, economical and efficient reclamation of
lands;
Whereas, Presidential Decree No. 3-A requires that all
reclamation of areas shall be limited to the National
Government or any person authorized by it under proper
contract;
Whereas, a central authority is needed to act on behalf of
the National Government which shall ensure a coordinated
and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public
Estates Authority as a government corporation to
undertake reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the
President with continuing authority to reorganize the
national government including the transfer, abolition, or
merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of
the Philippines, by virtue of the powers vested in me by the
Constitution and pursuant to Presidential Decree No. 1416,
do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be
primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of
the National Government. All reclamation projects shall be
approved by the President upon recommendation of the
53
 PEA, and shall be undertaken by the PEA or through a
proper contract executed by it with any person or entity;
Provided, that, reclamation projects of any national
government agency or entity authorized under its charter
shall be undertaken in consultation with the PEA upon
approval of the President.
x x x ."
As the central implementing agency tasked to undertake
reclamation projects nationwide, with authority to sell reclaimed
lands, PEA took the place of DENR as the government agency
charged with leasing or selling reclaimed lands of the public domain.
The reclaimed lands being 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 private lands but alienable
lands of the public domain. Only when qualified private parties
acquire these lands will the lands become private lands. In the
hands of the government agency tasked and authorized to dispose
of alienable of disposable lands of the public domain, these lands
are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold
lands of the public domain" as well as "any and all kinds of lands."
PEA can 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 are transferred to PEA and issued land patents
or certificates of title in PEA's name does not automatically make
such lands private.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of
the constitutional ban on private corporations from acquiring any
kind of alienable land of the public domain. PEA will simply turn
around, as PEA has now done under the Amended JVA, and transfer
several hundreds of hectares of these reclaimed and still to be
reclaimed lands to a single private corporation in only one
transaction. This scheme will effectively nullify the constitutional
ban in Section 3, Article XII of the 1987 Constitution which was
intended to diffuse equitably the ownership of alienable lands of
the public domain among Filipinos, now numbering over 80 million
strong.
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 of lands." This will open the floodgates to
corporations and even individuals acquiring hundreds of hectares of
alienable lands of the public domain under the guise that in the
hands of PEA these lands are private lands. This will result in
corporations amassing huge landholdings never before seen in this
country - creating the very evil that the constitutional ban was
designed to prevent. This will completely reverse the clear direction
of constitutional development in this country. The 1935 Constitution
allowed private corporations to acquire not more than 1,024
hectares of public lands.105 The 1973 Constitution prohibited private
corporations from acquiring any kind of public land, and the 1987
Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered
under Act No. 496 or PD No. 1529, automatically become private
lands is 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 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 follows:
Act No. 496
54
 "Sec. 122. Whenever public lands in the Philippine Islands
belonging to the x x x Government of the Philippine Islands
are alienated, granted, or conveyed to persons or the public
or private corporations, the same shall be brought
forthwith under the operation of this Act and shall become
registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public
land is by the Government alienated, granted or conveyed
to any person, the same shall be brought forthwith under
the operation of this Decree." (Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person"
in Section 103 of PD No. 1529 includes conveyances of public lands
to public corporations.
Alienable lands of the public domain "granted, donated, or
transferred to a province, municipality, or branch or subdivision of
the Government," 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 registration, however, is expressly subject to the
condition in Section 60 of CA No. 141 that the land "shall not be
alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress." This
provision refers to government reclaimed, foreshore and marshy
lands of the public domain that have been titled but still cannot be
alienated or encumbered unless expressly authorized by Congress.
The need for legislative authority prevents the registered land of the
public domain from becoming private land that can be disposed of
to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands
of the public domain may be registered under the Torrens System.
Section 48, Chapter 12, Book I of the Code states –
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is authorized by
law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the
Philippines, but titled in the name of any political
subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality."
(Emphasis supplied)
Thus, private property purchased by the National Government for
expansion of a public wharf may be titled in the name of a
government corporation regulating port operations in the country.
Private property purchased by the National Government for
expansion of an airport may 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 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
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
55
Government new certificates of title covering such expropriated
lands. Section 85 of PD No. 1529 states –
"Sec. 85. Land taken by eminent domain. Whenever any
registered land, or interest therein, is expropriated or taken
by eminent domain, the National Government, province,
city or municipality, or any other agency or instrumentality
exercising such right shall file for registration in the proper
Registry a certified copy of the judgment which shall state
definitely by an adequate description, the particular
property or interest 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
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 National Government, province, city,
municipality, or any other agency or instrumentality
exercising such right for the land so taken. The legal
expenses incident to the memorandum of registration or
issuance of a new certificate of title shall be for the account
of the authority taking the land or interest therein."
(Emphasis supplied)
Consequently, 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.
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
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 of the original cost incurred by PEA for the earlier
reclamation and construction works performed by the CDCP under
its 1973 contract with the 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 and delivery of the certificates
of title conveying AMARI's Land Share in the name of AMARI." 107
This stipulation still contravenes Section 3, Article XII of the 1987
Constitution which provides that private corporations "shall not
hold such alienable lands of the public domain except by lease." The
transfer of title and ownership to AMARI clearly means that AMARI
will "hold" the reclaimed lands other than by lease. The transfer of
title and ownership is a "disposition" of the reclaimed lands, a
transaction considered a sale or alienation under CA No. 141, 108 the
Government Auditing Code,109 and Section 3, Article XII of the 1987
Constitution.
The Regalian doctrine is deeply implanted in our legal system.
Foreshore and submerged areas form part of the public domain and
are inalienable. Lands reclaimed from foreshore and submerged
areas also form part of the public domain and are also inalienable,
unless converted pursuant to law into alienable or disposable lands
of the public domain. Historically, lands reclaimed by the
government are sui generis, not available for sale to private parties
unlike other alienable public lands. Reclaimed lands retain their
inherent potential as areas for public use or public service. Alienable
lands of the public domain, increasingly becoming scarce natural
resources, are to be distributed equitably among our ever-growing
population. To insure such equitable distribution, the 1973 and
1987 Constitutions have barred private corporations from acquiring
any kind of alienable land of the public domain. Those who attempt
to dispose of inalienable natural resources of 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 risk.
We can now summarize our conclusions as follows:
56
1. The 157.84 hectares of reclaimed lands comprising the
Freedom Islands, now covered by certificates of title in the
name of PEA, 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
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay
remain inalienable natural resources of the public domain
until classified as alienable or disposable lands open to
disposition and declared no longer needed for public
service. The government can make such classification and
declaration only after PEA has reclaimed these submerged
areas. Only then can these lands qualify as agricultural lands
of the public domain, which are the only natural resources
the government can alienate. In their present state, the
592.15 hectares of submerged areas are inalienable and
outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a
private corporation, ownership of 77.34 hectares 110 of the
Freedom Islands, such transfer is void for being contrary to
Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of
alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI
ownership of 290.156 hectares111 of still submerged areas of
Manila Bay, such transfer is void for being contrary to
Section 2, Article XII of the 1987 Constitution which
prohibits the alienation of natural resources other than
agricultural lands of the public domain. PEA may reclaim
these submerged areas. Thereafter, the government can
classify the reclaimed lands as alienable or disposable, and
further declare them no longer needed for public service.
Still, the transfer of such reclaimed alienable lands 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 acquiring any kind of alienable land of
the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article
XII of the 1987 Constitution. Under Article 1409 112 of the Civil Code,
contracts whose "object or purpose is contrary to law," or whose
"object is outside the commerce of men," are "inexistent and void
from the beginning." The Court must perform its duty to defend and
uphold the Constitution, and therefore declares the Amended JVA
null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the
issue of whether the Amended JVA is grossly disadvantageous to
the government.
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 facts, and this last issue involves a determination of factual
matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority
and Amari Coastal Bay Development Corporation
are PERMANENTLY ENJOINED from implementing the Amended
Joint Venture Agreement which is hereby
declared NULL and VOID ab initio.
SO ORDERED
57
 approximately 600 hectares of land, 3 including the runways and
buildings ("Airport Lands and Buildings") then under the Bureau of
Air

Transportation.4 The MIAA Charter further provides that no portion

EN BANC of the land transferred to MIAA shall be disposed of through sale or
any other mode unless specifically approved by the President of the
G.R. No. 155650             July 20, 2006 Philippines.5

MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, On 21 March 1997, the Office of the Government Corporate Counsel
vs. (OGCC) issued Opinion No. 061. The OGCC opined that the Local
COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF Government Code of 1991 withdrew the exemption from real estate
PARAÑAQUE, SANGGUNIANG PANGLUNGSOD NG
PARAÑAQUE, CITY ASSESSOR OF PARAÑAQUE, and CITY TAX TAXABLE
TAX DUE PENALTY TOTAL
TREASURER OF PARAÑAQUE, respondents. DECLARATION YEAR
E-016-01370 1992- 19,558,160.00 11,201,083.20 30,789,243.20
DECISION 2001
E-016-01374 1992- 111,689,424.90 68,149,479.59 179,838,904.49
CARPIO, J.: 2001
E-016-01375 1992- 20,276,058.00 12,371,832.00 32,647,890.00
The Antecedents 2001
E-016-01376 1992- 58,144,028.00 35,477,712.00 93,621,740.00
Petitioner Manila International Airport Authority (MIAA) 2001
operates the Ninoy Aquino International Airport (NAIA)
E-016-01377 1992- 18,134,614.65 11,065,188.59 29,199,803.24
Complex in Parañaque City under Executive Order No. 903,
2001
otherwise known as the Revised Charter of the Manila
International Airport Authority ("MIAA Charter"). Executive E-016-01378 1992- 111,107,950.40 67,794,681.59 178,902,631.99
Order No. 903 was issued on 21 July 1983 by then President 2001
Ferdinand E. Marcos. Subsequently, Executive Order Nos. E-016-01379 1992- 4,322,340.00 2,637,360.00 6,959,700.00
9091 and 2982 amended the MIAA Charter. 2001
E-016-01380 1992- 7,776,436.00 4,744,944.00 12,521,380.00
As operator of the international airport, MIAA administers 2001
the land, improvements and equipment within the NAIA *E-016-013-85 1998- 6,444,810.00 2,900,164.50 9,344,974.50
Complex. The MIAA Charter transferred to MIAA 2001
*E-016-01387 1998- 34,876,800.00 5,694,560.00 50,571,360.00
2001 58
*E-016-01396 1998- 75,240.00 33,858.00 109,098.00
2001
GRAND TOTAL P392,435,861.95 P232,070,863.47 P 624,506,725.42
tax granted to MIAA under Section 21 of the MIAA Charter. Thus,
MIAA negotiated with respondent City of Parañaque to pay the real
estate tax imposed by the City. MIAA then paid some of the real
estate tax already due.
On 28 June 2001, MIAA received Final Notices of Real Estate Tax
Delinquency from the City of Parañaque for the taxable years 1992
to 2001. MIAA's real estate tax delinquency is broken down as
follows:
1992-1997 RPT was paid on Dec. 24, 1997 as per
O.R.#9476102 for P4,207,028.75
#9476101 for P28,676,480.00
#9476103 for P49,115.006
On 17 July 2001, the City of Parañaque, through its City Treasurer,
issued notices of levy and warrants of levy on the Airport Lands and
Buildings. The Mayor of the City of Parañaque threatened to sell at
public auction the Airport Lands and Buildings should MIAA fail to
pay the real estate tax delinquency. MIAA thus sought a clarification
of OGCC Opinion No. 061.
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC
Opinion No. 061. The OGCC pointed out that Section 206 of the
Local Government Code requires persons exempt from real estate
tax to show proof of exemption. The OGCC opined that Section 21
of the MIAA Charter is the proof that MIAA is exempt from real
estate tax.
On 1 October 2001, MIAA filed with the Court of Appeals an original
petition for prohibition and injunction, with prayer for preliminary
injunction or temporary restraining order. The petition sought to
restrain the City of Parañaque from imposing real estate tax on,
levying against, and auctioning for public sale the Airport Lands and
Buildings. The petition was docketed as CA-G.R. SP No. 66878.
On 5 October 2001, the Court of Appeals dismissed the petition
because MIAA filed it beyond the 60-day reglementary period. The
Court of Appeals also denied on 27 September 2002 MIAA's motion
for reconsideration and supplemental motion for reconsideration.
Hence, MIAA filed on 5 December 2002 the present petition for
review.7
Meanwhile, in January 2003, the City of Parañaque posted notices
of auction sale at the Barangay Halls of Barangays Vitalez, Sto. Niño,
and Tambo, Parañaque City; in the public market of Barangay La
Huerta; and in the main lobby of the Parañaque City Hall. The City of
Parañaque published the notices in the 3 and 10 January 2003
issues of the Philippine Daily Inquirer, a newspaper of general
circulation in the Philippines. The notices announced the public
auction sale of the Airport Lands and Buildings to the highest bidder
on 7 February 2003, 10:00 a.m., at the Legislative Session Hall
Building of Parañaque City.
A day before the public auction, or on 6 February 2003, at 5:10 p.m.,
MIAA filed before this Court an Urgent Ex-Parte and Reiteratory
Motion for the Issuance of a Temporary Restraining Order. The
motion sought to restrain respondents — the City of Parañaque,
City Mayor of Parañaque, Sangguniang Panglungsod ng Parañaque,
City Treasurer of Parañaque, and the City Assessor of Parañaque
("respondents") — from auctioning the Airport Lands and Buildings.
On 7 February 2003, this Court issued a temporary restraining order
(TRO) effective immediately. The Court ordered respondents to
cease and desist from selling at public auction the Airport Lands and
Buildings. Respondents received the TRO on the same day that the
59
Court issued it. However, respondents received the TRO only at 1:25
p.m. or three hours after the conclusion of the public auction.
On 10 February 2003, this Court issued a Resolution
confirming nunc pro tunc the TRO.
On 29 March 2005, the Court heard the parties in oral arguments. In
compliance with the directive issued during the hearing, MIAA,
respondent City of Parañaque, and the Solicitor General
subsequently submitted their respective Memoranda.
MIAA admits that the MIAA Charter has placed the title to the
Airport Lands and Buildings in the name of MIAA. However, MIAA
points out that it cannot claim ownership over these properties
since the real owner of the Airport Lands and Buildings is the
Republic of the Philippines. The MIAA Charter mandates MIAA to
devote the Airport Lands and Buildings for the benefit of the general
public. Since the Airport Lands and Buildings are devoted to public
use and public service, the ownership of these properties remains
with the State. The Airport Lands and Buildings are thus inalienable
and are not subject to real estate tax by local governments.
MIAA also points out that Section 21 of the MIAA Charter
specifically exempts MIAA from the payment of real estate tax.
MIAA insists that it is also exempt from real estate tax under Section
234 of the Local Government Code because the Airport Lands and
Buildings are owned by the Republic. To justify the exemption,
MIAA invokes the principle that the government cannot tax itself.
MIAA points out that the reason for tax exemption of public
property is that its taxation would not inure to any public
advantage, since in such a case the tax debtor is also the tax
creditor.
Respondents invoke Section 193 of the Local Government Code,
which expressly withdrew the tax exemption privileges of
"government-owned and-controlled corporations" upon the
effectivity of the Local Government Code. Respondents also argue
that a basic rule of statutory construction is that the express
mention of one person, thing, or act excludes all others. An
international airport is not among the exceptions mentioned in
Section 193 of the Local Government Code. Thus, respondents
assert that MIAA cannot claim that the Airport Lands and Buildings
are exempt from real estate tax.
Respondents also cite the ruling of this Court in Mactan
International Airport v. Marcos8 where we held that the Local
Government Code has withdrawn the exemption from real estate
tax granted to international airports. Respondents further argue
that since MIAA has already paid some of the real estate tax
assessments, it is now estopped from claiming that the Airport
Lands and Buildings are exempt from real estate tax.
The Issue
This petition raises the threshold issue of whether the Airport Lands
and Buildings of MIAA are exempt from real estate tax under
existing laws. If so exempt, then the real estate tax assessments
issued by the City of Parañaque, and all proceedings taken pursuant
to such assessments, are void. In such event, the other issues raised
in this petition become moot.
The Court's Ruling
We rule that MIAA's Airport Lands and Buildings are exempt from
real estate tax imposed by local governments.
60
First, MIAA is not a government-owned or controlled corporation
but an instrumentality of the National Government and thus
exempt from local taxation. Second, the real properties of MIAA
are owned by the Republic of the Philippines and thus exempt from
real estate tax.
1. MIAA is Not a Government-Owned or Controlled Corporation
Respondents argue that MIAA, being a government-owned or
controlled corporation, is not exempt from real estate tax.
Respondents claim that the deletion of the phrase "any
government-owned or controlled so exempt by its charter" in
Section 234(e) of the Local Government Code withdrew the real
estate tax exemption of government-owned or controlled
corporations. The deleted phrase appeared in Section 40(a) of the
1974 Real Property Tax Code enumerating the entities exempt from
real estate tax.
There is no dispute that a government-owned or controlled
corporation is not exempt from real estate tax. However, MIAA is
not a government-owned or controlled corporation. Section 2(13) of
the Introductory Provisions of the Administrative Code of 1987
defines a government-owned or controlled corporation as follows:
SEC. 2. General Terms Defined. – x x x x
(13) Government-owned or controlled corporation refers to
any agency organized as a stock or non-stock corporation,
vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the
Government directly or through its instrumentalities either
wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent
of its capital stock: x x x. (Emphasis supplied)
A government-owned or controlled corporation must be "organized
as a stock or non-stock corporation." MIAA is not organized as a
stock or non-stock corporation. MIAA is not a stock corporation
because it has no capital stock divided into shares. MIAA has no
stockholders or voting shares. Section 10 of the MIAA
Charter9 provides:
SECTION 10. Capital. — The capital of the Authority to be
contributed by the National Government shall be increased
from Two and One-half Billion (P2,500,000,000.00) Pesos to
Ten Billion (P10,000,000,000.00) Pesos to consist of:
(a) The value of fixed assets including airport facilities,
runways and equipment and such other properties,
movable and immovable[,] which may be contributed by the
National Government or transferred by it from any of its
agencies, the valuation of which shall be determined jointly
with the Department of Budget and Management and the
Commission on Audit on the date of such contribution or
transfer after making due allowances for depreciation and
other deductions taking into account the loans and other
liabilities of the Authority at the time of the takeover of the
assets and other properties;
(b) That the amount of P605 million as of December 31,
1986 representing about seventy percentum (70%) of the
unremitted share of the National Government from 1983 to
1986 to be remitted to the National Treasury as provided
for in Section 11 of E. O. No. 903 as amended, shall be
converted into the equity of the National Government in
the Authority. Thereafter, the Government contribution to
the capital of the Authority shall be provided in the General
Appropriations Act.
61
Clearly, under its Charter, MIAA does not have capital stock that is
divided into shares.
Section 3 of the Corporation Code10 defines a stock corporation as
one whose "capital stock is divided into shares and x x x authorized
to distribute to the holders of such shares dividends x x x." MIAA
has capital but it is not divided into shares of stock. MIAA has no
stockholders or voting shares. Hence, MIAA is not a stock
corporation.
MIAA is also not a non-stock corporation because it has no
members. Section 87 of the Corporation Code defines a non-stock
corporation as "one where no part of its income is distributable as
dividends to its members, trustees or officers." A non-stock
corporation must have members. Even if we assume that the
Government is considered as the sole member of MIAA, this will not
make MIAA a non-stock corporation. Non-stock corporations cannot
distribute any part of their income to their members. Section 11 of
the MIAA Charter mandates MIAA to remit 20% of its annual gross
operating income to the National Treasury.11 This prevents MIAA
from qualifying as a non-stock corporation.
Section 88 of the Corporation Code provides that non-stock
corporations are "organized for charitable, religious, educational,
professional, cultural, recreational, fraternal, literary, scientific,
social, civil service, or similar purposes, like trade, industry,
agriculture and like chambers." MIAA is not organized for any of
these purposes. MIAA, a public utility, is organized to operate an
international and domestic airport for public use.
Since MIAA is neither a stock nor a non-stock corporation, MIAA
does not qualify as a government-owned or controlled corporation.
What then is the legal status of MIAA within the National
Government?
MIAA is a government instrumentality vested with corporate
powers to perform efficiently its governmental functions. MIAA is
like any other government instrumentality, the only difference is
that MIAA is vested with corporate powers. Section 2(10) of the
Introductory Provisions of the Administrative Code defines a
government "instrumentality" as follows:
SEC. 2. General Terms Defined. –– x x x x
(10) Instrumentality refers to 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. x x x (Emphasis
supplied)
When the law vests in a government instrumentality corporate
powers, the instrumentality does not become a corporation. Unless
the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not
only governmental but also corporate powers. Thus, MIAA exercises
the governmental powers of eminent domain,12 police
authority13 and the levying of fees and charges.14 At the same time,
MIAA exercises "all the powers of a corporation under the
Corporation Law, insofar as these powers are not inconsistent with
the provisions of this Executive Order." 15
Likewise, when the law makes a government
instrumentality operationally autonomous, the instrumentality
remains part of the National Government machinery although not
integrated with the department framework. The MIAA Charter
expressly states that transforming MIAA into a "separate and
62
autonomous body"16 will make its operation more "financially
viable."17
Many government instrumentalities are vested with corporate
powers but they do not become stock or non-stock corporations,
which is a necessary condition before an agency or instrumentality
is deemed a government-owned or controlled corporation.
Examples are the Mactan International Airport Authority, the
Philippine Ports Authority, the University of the Philippines
and Bangko Sentral ng Pilipinas. All these government
instrumentalities exercise corporate powers but they are not
organized as stock or non-stock corporations as required by Section
2(13) of the Introductory Provisions of the Administrative Code.
These government instrumentalities are sometimes loosely called
government corporate entities. However, they are not government-
owned or controlled corporations in the strict sense as understood
under the Administrative Code, which is the governing law defining
the legal relationship and status of government entities.
A government instrumentality like MIAA falls under Section 133(o)
of the Local Government Code, which states:
SEC. 133. Common Limitations on the Taxing Powers of
Local Government Units. – Unless otherwise provided
herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to
the levy of the following:
xxxx
(o) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities and local
government units.(Emphasis and underscoring supplied)
Section 133(o) recognizes the basic principle that local governments
cannot tax the national government, which historically merely
delegated to local governments the power to tax. While the 1987
Constitution now includes taxation as one of the powers of local
governments, local governments may only exercise such power
"subject to such guidelines and limitations as the Congress may
provide."18
When local governments invoke the power to tax on national
government instrumentalities, such power is construed strictly
against local governments. The rule is that a tax is never presumed
and there must be clear language in the law imposing the tax. Any
doubt whether a person, article or activity is taxable is resolved
against taxation. This rule applies with greater force when local
governments seek to tax national government instrumentalities.
Another rule is that a tax exemption is strictly construed against the
taxpayer claiming the exemption. However, when Congress grants
an exemption to a national government instrumentality from local
taxation, such exemption is construed liberally in favor of the
national government instrumentality. As this Court declared
in Maceda v. Macaraig, Jr.:
The reason for the rule does not apply in the case of
exemptions running to the benefit of the government itself
or its agencies. In such case the practical effect of an
exemption is merely to reduce the amount of money that
has to be handled by government in the course of its
operations. For these reasons, provisions granting
exemptions to government agencies may be construed
liberally, in favor of non tax-liability of such agencies. 19
There is, moreover, no point in national and local governments
taxing each other, unless a sound and compelling policy requires
63
such transfer of public funds from one government pocket to
another.
There is also no reason for local governments to tax national
government instrumentalities for rendering essential public services
to inhabitants of local governments. The only exception is when the
legislature clearly intended to tax government instrumentalities
for the delivery of essential public services for sound and
compelling policy considerations. 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.
Thus, Section 133 of the Local Government Code states that "unless
otherwise provided" in the Code, local governments cannot tax
national government instrumentalities. As this Court held in Basco
v. Philippine Amusements and Gaming Corporation:
The states have no power by taxation or otherwise,
to retard, impede, burden or in any manner control
the operation of constitutional laws enacted by
Congress to carry into execution the powers vested
in the federal government. (MC Culloch v.
Maryland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the
National Government over local governments.
"Justice Holmes, speaking for the Supreme Court,
made reference to the entire absence of power on
the part of the States to touch, in that way
(taxation) at least, the instrumentalities of the
United States (Johnson v. Maryland, 254 US 51) and
it can be agreed that no state or political subdivision
can regulate a federal instrumentality in such a way
as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the
accomplishment of them." (Antieau, Modern
Constitutional Law, Vol. 2, p. 140, emphasis
supplied)
Otherwise, mere creatures of the State can defeat National
policies thru extermination of what local authorities may
perceive to be undesirable activities or enterprise using the
power to tax as "a tool for regulation" (U.S. v. Sanchez, 340
US 42).
The power to tax which was called by Justice Marshall as the
"power to destroy" (Mc Culloch v. Maryland, supra) cannot
be allowed to defeat an instrumentality or creation of the
very entity which has the inherent power to wield it. 20
2. Airport Lands and Buildings of MIAA are Owned by the Republic
a. Airport Lands and Buildings are of Public Dominion
The Airport Lands and Buildings of MIAA are property of public
dominion and therefore owned by the State or the Republic of the
Philippines. The Civil Code provides:
ARTICLE 419. Property is either of public dominion or of
private ownership.
ARTICLE 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
64
 State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for
public use, and are intended for some public service or for
the development of the national wealth. (Emphasis
supplied)
ARTICLE 421. All other property of the State, which is not of
the character stated in the preceding article, is patrimonial
property.
ARTICLE 422. Property of public dominion, when no longer
intended for public use or for public service, shall form part
of the patrimonial property of the State.
No one can dispute that properties of public dominion mentioned in
Article 420 of the Civil Code, like "roads, canals, rivers, torrents,
ports and bridges constructed by the State," are owned by the
State. The term "ports" includes seaports and airports. The MIAA
Airport Lands and Buildings constitute a "port" constructed by the
State. Under Article 420 of the Civil Code, the MIAA Airport Lands
and Buildings are properties of public dominion and thus owned by
the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use because
they are used by the public for international and domestic travel
and transportation. The fact that the MIAA collects terminal fees
and other charges from the public does not remove the character of
the Airport Lands and Buildings as properties for public use. The
operation by the government of a tollway does not change the
character of the road as one for public use. Someone must pay for
the maintenance of the road, either the public indirectly through
the taxes they pay the government, or only those among the public
who actually use the road through the toll fees they pay upon using
the road. The tollway system is even a more efficient and equitable
manner of taxing the public for the maintenance of public roads.
The charging of fees to the public does not determine the character
of the property whether it is of public dominion or not. Article 420
of the Civil Code defines property of public dominion as one
"intended for public use." Even if the government collects toll fees,
the road is still "intended for public use" if anyone can use the road
under the same terms and conditions as the rest of the public. The
charging of fees, the limitation on the kind of vehicles that can use
the road, the speed restrictions and other conditions for the use of
the road do not affect the public character of the road.
The terminal fees MIAA charges to passengers, as well as the
landing fees MIAA charges to airlines, constitute the bulk of the
income that maintains the operations of MIAA. The collection of
such fees does not change the character of MIAA as an airport for
public use. Such fees are often termed user's tax. This means taxing
those among the public who actually use a public facility instead of
taxing all the public including those who never use the particular
public facility. A user's tax is more equitable — a principle of
taxation mandated in the 1987 Constitution. 21
The Airport Lands and Buildings of MIAA, which its Charter calls the
"principal airport of the Philippines for both international and
domestic air traffic,"22 are properties of public dominion because
they are intended for public use. As properties of public dominion,
they indisputably belong to the State or the Republic of the
Philippines.
b. Airport Lands and Buildings are Outside the Commerce of Man
65
The Airport Lands and Buildings of MIAA are devoted to public use
and thus are properties of public dominion. As properties of public
dominion, the Airport Lands and Buildings are outside the
commerce of man. The Court has ruled repeatedly that properties
of public dominion are outside the commerce of man. As early as
1915, this Court already ruled in Municipality of Cavite v. Rojas that
properties devoted to public use are outside the commerce of man,
thus:
According to article 344 of the Civil Code: "Property for
public use in provinces and in towns comprises the
provincial and town roads, the squares, streets, fountains,
and public waters, the promenades, and public works of
general service supported by said towns or provinces."
The said Plaza Soledad being a promenade for public use,
the municipal council of Cavite could not in 1907 withdraw
or exclude from public use a portion thereof in order to
lease it for the sole benefit of the defendant Hilaria Rojas. In
leasing a portion of said plaza or public place to the
defendant for private use the plaintiff municipality
exceeded its authority in the exercise of its powers by
executing a contract over a thing of which it could not
dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that everything
which is not outside the commerce of man may be the
object of a contract, and plazas and streets are outside of
this commerce, as was decided by the supreme court of
Spain in its decision of February 12, 1895, which says:
"Communal things that cannot be sold because they are by
their very nature outside of commerce are those for public
use, such as the plazas, streets, common lands, rivers,
fountains, etc." (Emphasis supplied) 23
Again in Espiritu v. Municipal Council, the Court declared that
properties of public dominion are outside the commerce of man:
xxx Town plazas are properties of public dominion, to be
devoted to public use and to be made available to the
public in general. They are outside the commerce of
man and cannot be disposed of or even leased by the
municipality to private parties. While in case of war or
during an emergency, town plazas may be occupied
temporarily by private individuals, as was done and as was
tolerated by the Municipality of Pozorrubio, when the
emergency has ceased, said temporary occupation or use
must also cease, and the town officials should see to it that
the town plazas should ever be kept open to the public and
free from encumbrances or illegal private
constructions.24 (Emphasis supplied)
The Court has also ruled that property of public dominion, being
outside the commerce of man, cannot be the subject of an auction
sale.25
Properties of public dominion, being for public use, are not subject
to levy, encumbrance or disposition through public or private sale.
Any encumbrance, levy on execution or auction sale of any property
of public dominion is void for being contrary to public policy.
Essential public services will stop if properties of public dominion
are subject to encumbrances, foreclosures and auction sale. This will
happen if the City of Parañaque can foreclose and compel the
auction sale of the 600-hectare runway of the MIAA for non-
payment of real estate tax.
Before MIAA can encumber26 the Airport Lands and Buildings, the
President must first withdraw from public use the Airport Lands
and Buildings. Sections 83 and 88 of the Public Land Law or
66
Commonwealth Act No. 141, which "remains to this day the existing
general law governing the classification and disposition of lands of
the public domain other than timber and mineral lands," 27 provide:
SECTION 83. Upon the recommendation of the Secretary of
Agriculture and Natural Resources, the President may
designate by proclamation any tract or tracts of land of the
public domain as reservations for the use of the Republic of
the Philippines or of any of its branches, or of the
inhabitants thereof, in accordance with regulations
prescribed for this purposes, or for quasi-public uses or
purposes when the public interest requires it, including
reservations for highways, rights of way for railroads,
hydraulic power sites, irrigation systems, communal
pastures or lequas communales, public parks, public
quarries, public fishponds, working men's village and other
improvements for the public benefit.
SECTION 88. The tract or tracts of land reserved under the
provisions of Section eighty-three shall be non-
alienable and shall not be subject to occupation, entry,
sale, lease, or other disposition until again declared
alienable under the provisions of this Act or by
proclamation of the President. (Emphasis and underscoring
supplied)
Thus, unless the President issues a proclamation withdrawing the
Airport Lands and Buildings from public use, these properties
remain properties of public dominion and are inalienable. Since the
Airport Lands and Buildings are inalienable in their present status as
properties of public dominion, they are not subject to levy on
execution or foreclosure sale. As long as the Airport Lands and
Buildings are reserved for public use, their ownership remains with
the State or the Republic of the Philippines.
The authority of the President to reserve lands of the public domain
for public use, and to withdraw such public use, is reiterated in
Section 14, Chapter 4, Title I, Book III of the Administrative Code of
1987, which states:
SEC. 14. Power to Reserve Lands of the Public and Private
Domain of the Government. — (1) The President shall have
the power to reserve for settlement or public use, and for
specific public purposes, any of the lands of the public
domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the
specific public purpose indicated until otherwise provided
by law or proclamation;
x x x x. (Emphasis supplied)
There is no question, therefore, that unless the Airport Lands and
Buildings are withdrawn by law or presidential proclamation from
public use, they are properties of public dominion, owned by the
Republic and outside the commerce of man.
c. MIAA is a Mere Trustee of the Republic
MIAA is merely holding title to the Airport Lands and Buildings in
trust for the Republic. Section 48, Chapter 12, Book I of the
Administrative Code allows instrumentalities like MIAA to hold
title to real properties owned by the Republic, thus:
SEC. 48. Official Authorized to Convey Real Property. —
Whenever real property of the Government is authorized by
law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
67
 (1) For property belonging to and titled in the name of the
Republic of the Philippines, by the President, unless the
authority therefor is expressly vested by law in another
officer.
(2) For property belonging to the Republic of the
Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality.
(Emphasis supplied)
In MIAA's case, its status as a mere trustee of the Airport Lands and
Buildings is clearer because even its executive head cannot sign the
deed of conveyance on behalf of the Republic. Only the President of
the Republic can sign such deed of conveyance. 28
d. Transfer to MIAA was Meant to Implement a Reorganization
The MIAA Charter, which is a law, transferred to MIAA the title to
the Airport Lands and Buildings from the Bureau of Air
Transportation of the Department of Transportation and
Communications. The MIAA Charter provides:
SECTION 3. Creation of the Manila International Airport
Authority. — x x x x
The land where the Airport is presently located as well as
the surrounding land area of approximately six hundred
hectares, are hereby transferred, conveyed and assigned
to the ownership and administration of the Authority,
subject to existing rights, if any. The Bureau of Lands and
other appropriate government agencies shall undertake an
actual survey of the area transferred within one year from
the promulgation of this Executive Order and the
corresponding title to be issued in the name of the
Authority. Any portion thereof shall not be disposed
through sale or through any other mode unless specifically
approved by the President of the Philippines. (Emphasis
supplied)
SECTION 22. Transfer of Existing Facilities and Intangible
Assets. — All existing public airport facilities, runways,
lands, buildings and other property, movable or
immovable, belonging to the Airport, and all assets, powers,
rights, interests and privileges belonging to the Bureau of
Air Transportation relating to airport works or air
operations, including all equipment which are necessary for
the operation of crash fire and rescue facilities, are hereby
transferred to the Authority. (Emphasis supplied)
SECTION 25. Abolition of the Manila International Airport as
a Division in the Bureau of Air Transportation and Transitory
Provisions. — The Manila International Airport including the
Manila Domestic Airport as a division under the Bureau of
Air Transportation is hereby abolished.
x x x x.
The MIAA Charter transferred the Airport Lands and Buildings to
MIAA without the Republic receiving cash, promissory notes or even
stock since MIAA is not a stock corporation.
The whereas clauses of the MIAA Charter explain the rationale for
the transfer of the Airport Lands and Buildings to MIAA, thus:
WHEREAS, the Manila International Airport as the principal
airport of the Philippines for both international and
domestic air traffic, is required to provide standards of
68
 airport accommodation and service comparable with the
best airports in the world;
WHEREAS, domestic and other terminals, general aviation
and other facilities, have to be upgraded to meet the
current and future air traffic and other demands of aviation
in Metro Manila;
WHEREAS, a management and organization study has
indicated that the objectives of providing high standards of
accommodation and service within the context of a
financially viable operation, will best be achieved by a
separate and autonomous body; and
WHEREAS, under Presidential Decree No. 1416, as amended
by Presidential Decree No. 1772, the President of the
Philippines is given continuing authority to reorganize the
National Government, which authority includes the
creation of new entities, agencies and instrumentalities of
the Government[.] (Emphasis supplied)
The transfer of the Airport Lands and Buildings from the Bureau of
Air Transportation to MIAA was not meant to transfer beneficial
ownership of these assets from the Republic to MIAA. The purpose
was merely to reorganize a division in the Bureau of Air
Transportation into a separate and autonomous body. The
Republic remains the beneficial owner of the Airport Lands and
Buildings. MIAA itself is owned solely by the Republic. No party
claims any ownership rights over MIAA's assets adverse to the
Republic.
The MIAA Charter expressly provides that the Airport Lands and
Buildings "shall not be disposed through sale or through any other
mode unless specifically approved by the President of the
Philippines." This only means that the Republic retained the
beneficial ownership of the Airport Lands and Buildings because
under Article 428 of the Civil Code, only the "owner has the right to
x x x dispose of a thing." Since MIAA cannot dispose of the Airport
Lands and Buildings, MIAA does not own the Airport Lands and
Buildings.
At any time, the President can transfer back to the Republic title to
the Airport Lands and Buildings without the Republic paying MIAA
any consideration. Under Section 3 of the MIAA Charter, the
President is the only one who can authorize the sale or disposition
of the Airport Lands and Buildings. This only confirms that the
Airport Lands and Buildings belong to the Republic.
e. Real Property Owned by the Republic is Not Taxable
Section 234(a) of the Local Government Code exempts from real
estate tax any "[r]eal property owned by the Republic of the
Philippines." Section 234(a) provides:
SEC. 234. Exemptions from Real Property Tax. — The
following are exempted from payment of the real property
tax:
(a) Real property owned by the Republic of the Philippines
or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person;
x x x. (Emphasis supplied)
This exemption should be read in relation with Section 133(o) of the
same Code, which prohibits local governments from imposing
"[t]axes, fees or charges of any kind on the National Government, its
69
agencies and instrumentalities x x x." The real properties owned by
the Republic are titled either in the name of the Republic itself or in
the name of agencies or instrumentalities of the National
Government. The Administrative Code allows real property owned
by the Republic to be titled in the name of agencies or
instrumentalities of the national government. Such real properties
remain owned by the Republic and continue to be exempt from real
estate tax.
The Republic may grant the beneficial use of its real property to an
agency or instrumentality of the national government. This happens
when title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real
property. Such arrangement does not result in the loss of the tax
exemption. Section 234(a) of the Local Government Code states that
real property owned by the Republic loses its tax exemption only if
the "beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person." MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the
Local Government Code. Thus, even if we assume that the Republic
has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to
real estate tax.
However, portions of the Airport Lands and Buildings that MIAA
leases to private entities are not exempt from real estate tax. For
example, the land area occupied by hangars that MIAA leases to
private corporations is subject to real estate tax. In such a case,
MIAA has granted the beneficial use of such land area for a
consideration to a taxable person and therefore such land area is
subject to real estate tax. In Lung Center of the Philippines v.
Quezon City, the Court ruled:
Accordingly, we hold that the portions of the land leased to
private entities as well as those parts of the hospital leased
to private individuals are not exempt from such taxes. On
the other hand, the portions of the land occupied by the
hospital and portions of the hospital used for its patients,
whether paying or non-paying, are exempt from real
property taxes.29
3. Refutation of Arguments of Minority
The minority asserts that the MIAA is not exempt from real estate
tax because Section 193 of the Local Government Code of 1991
withdrew the tax exemption of "all persons, whether natural or
juridical" upon the effectivity of the Code. Section 193 provides:
SEC. 193. Withdrawal of Tax Exemption Privileges – Unless
otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons,
whether natural or juridical, including government-owned
or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock
and non-profit hospitals and educational institutions are
hereby withdrawn upon effectivity of this Code. (Emphasis
supplied)
The minority states that MIAA is indisputably a juridical person. The
minority argues that since the Local Government Code withdrew the
tax exemption of all juridical persons, then MIAA is not exempt
from real estate tax. Thus, the minority declares:
It is evident from the quoted provisions of the Local
Government Code that the withdrawn exemptions from
realty tax cover not just GOCCs, but all persons. To repeat,
the provisions lay down the explicit proposition that the
70
 withdrawal of realty tax exemption applies to all persons.
The reference to or the inclusion of GOCCs is only
clarificatory or illustrative of the explicit provision.
The term "All persons" encompasses the two classes of
persons recognized under our laws, natural and juridical
persons. Obviously, MIAA is not a natural person. Thus,
the determinative test is not just whether MIAA is a GOCC,
but whether MIAA is a juridical person at all. (Emphasis
and underscoring in the original)
The minority posits that the "determinative test" whether MIAA is
exempt from local taxation is its status — whether MIAA is a
juridical person or not. The minority also insists that "Sections 193
and 234 may be examined in isolation from Section 133(o) to
ascertain MIAA's claim of exemption."
The argument of the minority is fatally flawed. Section 193 of the
Local Government Code expressly withdrew the tax exemption of all
juridical persons "[u]nless otherwise provided in this Code." Now,
Section 133(o) of the Local Government Code expressly provides
otherwise, specifically prohibiting local governments from imposing
any kind of tax on national government instrumentalities. Section
133(o) states:
SEC. 133. Common Limitations on the Taxing Powers of
Local Government Units. – Unless otherwise provided
herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to the
levy of the following:
xxxx
(o) Taxes, fees or charges of any kinds on the National
Government, its agencies and instrumentalities, and local
government units. (Emphasis and underscoring supplied)
By express mandate of the Local Government Code, local
governments cannot impose any kind of tax on national government
instrumentalities like the MIAA. Local governments are devoid of
power to tax the national government, its agencies and
instrumentalities. The taxing powers of local governments do not
extend to the national government, its agencies and
instrumentalities, "[u]nless otherwise provided in this Code" as
stated in the saving clause of Section 133. The saving clause refers
to Section 234(a) on the exception to the exemption from real
estate tax of real property owned by the Republic.
The minority, however, theorizes that unless exempted in Section
193 itself, all juridical persons are subject to tax by local
governments. The minority insists that the juridical persons exempt
from local taxation are limited to the three classes of entities
specifically enumerated as exempt in Section 193. Thus, the
minority states:
x x x Under Section 193, the exemption is limited to (a) local
water districts; (b) cooperatives duly registered under
Republic Act No. 6938; and (c) non-stock and non-profit
hospitals and educational institutions. It would be
belaboring the obvious why the MIAA does not fall within
any of the exempt entities under Section 193. (Emphasis
supplied)
The minority's theory directly contradicts and completely negates
Section 133(o) of the Local Government Code. This theory will result
in gross absurdities. It will make the national government, which
itself is a juridical person, subject to tax by local governments since
71
the national government is not included in the enumeration of
exempt entities in Section 193. Under this theory, local
governments can impose any kind of local tax, and not only real
estate tax, on the national government.
Under the minority's theory, many national government
instrumentalities with juridical personalities will also be subject to
any kind of local tax, and not only real estate tax. Some of the
national government instrumentalities vested by law with juridical
personalities are: Bangko Sentral ng Pilipinas, 30 Philippine Rice
Research Institute,31 Laguna Lake
32 33
Development Authority,  Fisheries Development Authority,  Bases
Conversion Development Authority,34 Philippine Ports
Authority,35 Cagayan de Oro Port Authority,36 San Fernando Port
Authority,37 Cebu Port Authority,38 and Philippine National
Railways.39
The minority's theory violates Section 133(o) of the Local
Government Code which expressly prohibits local governments
from imposing any kind of tax on national government
instrumentalities. Section 133(o) does not distinguish between
national government instrumentalities with or without juridical
personalities. Where the law does not distinguish, courts should not
distinguish. Thus, Section 133(o) applies to all national government
instrumentalities, with or without juridical personalities. The
determinative test whether MIAA is exempt from local taxation is
not whether MIAA is a juridical person, but whether it is a national
government instrumentality under Section 133(o) of the Local
Government Code. Section 133(o) is the specific provision of law
prohibiting local governments from imposing any kind of tax on the
national government, its agencies and instrumentalities.
Section 133 of the Local Government Code starts with the saving
clause "[u]nless otherwise provided in this Code." This means that
unless the Local Government Code grants an express authorization,
local governments have no power to tax the national government,
its agencies and instrumentalities. Clearly, the rule is local
governments have no power to tax the national government, its
agencies and instrumentalities. As an exception to this rule, local
governments may tax the national government, its agencies and
instrumentalities only if the Local Government Code expressly so
provides.
The saving clause in Section 133 refers to the exception to the
exemption in Section 234(a) of the Code, which makes the national
government subject to real estate tax when it gives the beneficial
use of its real properties to a taxable entity. Section 234(a) of the
Local Government Code provides:
SEC. 234. Exemptions from Real Property Tax – The
following are exempted from payment of the real property
tax:
(a) Real property owned by the Republic of the Philippines
or any of its political subdivisions except when the beneficial
use thereof has been granted, for consideration or
otherwise, to a taxable person.
x x x. (Emphasis supplied)
Under Section 234(a), real property owned by the Republic is
exempt from real estate tax. The exception to this exemption is
when the government gives the beneficial use of the real property
to a taxable entity.
72
The exception to the exemption in Section 234(a) is the only
instance when the national government, its agencies and
instrumentalities are subject to any kind of tax by local
governments. The exception to the exemption applies only to real
estate tax and not to any other tax. The justification for the
exception to the exemption is that the real property, although
owned by the Republic, is not devoted to public use or public
service but devoted to the private gain of a taxable person.
The minority also argues that since Section 133 precedes Section
193 and 234 of the Local Government Code, the later provisions
prevail over Section 133. Thus, the minority asserts:
x x x Moreover, sequentially Section 133 antecedes Section
193 and 234. Following an accepted rule of construction, in
case of conflict the subsequent provisions should prevail.
Therefore, MIAA, as a juridical person, is subject to real
property taxes, the general exemptions attaching to
instrumentalities under Section 133(o) of the Local
Government Code being qualified by Sections 193 and 234
of the same law. (Emphasis supplied)
The minority assumes that there is an irreconcilable conflict
between Section 133 on one hand, and Sections 193 and 234 on the
other. No one has urged that there is such a conflict, much less has
any one presenteda persuasive argument that there is such a
conflict. The minority's assumption of an irreconcilable conflict in
the statutory provisions is an egregious error for two reasons.
First, there is no conflict whatsoever between Sections 133 and 193
because Section 193 expressly admits its subordination to other
provisions of the Code when Section 193 states "[u]nless otherwise
provided in this Code." By its own words, Section 193 admits the
superiority of other provisions of the Local Government Code that
limit the exercise of the taxing power in Section 193. When a
provision of law grants a power but withholds such power on
certain matters, there is no conflict between the grant of power and
the withholding of power. The grantee of the power simply cannot
exercise the power on matters withheld from its power.
Second, Section 133 is entitled "Common Limitations on the Taxing
Powers of Local Government Units." Section 133 limits the grant to
local governments of the power to tax, and not merely the exercise
of a delegated power to tax. Section 133 states that the taxing
powers of local governments "shall not extend to the levy" of any
kind of tax on the national government, its agencies and
instrumentalities. There is no clearer limitation on the taxing power
than this.
Since Section 133 prescribes the "common limitations" on the taxing
powers of local governments, Section 133 logically prevails over
Section 193 which grants local governments such taxing powers. By
their very meaning and purpose, the "common limitations" on the
taxing power prevail over the grant or exercise of the taxing power.
If the taxing power of local governments in Section 193 prevails over
the limitations on such taxing power in Section 133, then local
governments can impose any kind of tax on the national
government, its agencies and instrumentalities — a gross absurdity.
Local governments have no power to tax the national government,
its agencies and instrumentalities, except as otherwise provided in
the Local Government Code pursuant to the saving clause in Section
133 stating "[u]nless otherwise provided in this Code." This
exception — which is an exception to the exemption of the Republic
from real estate tax imposed by local governments — refers to
Section 234(a) of the Code. The exception to the exemption in
Section 234(a) subjects real property owned by the Republic,
whether titled in the name of the national government, its agencies
73
or instrumentalities, to real estate tax if the beneficial use of such
property is given to a taxable entity.
The minority also claims that the definition in the Administrative
Code of the phrase "government-owned or controlled corporation"
is not controlling. The minority points out that Section 2 of the
Introductory Provisions of the Administrative Code admits that its
definitions are not controlling when it provides:
SEC. 2. General Terms Defined. — Unless the specific words
of the text, or the context as a whole, or a particular statute,
shall require a different meaning:
xxxx
The minority then concludes that reliance on the Administrative
Code definition is "flawed."
The minority's argument is a non sequitur. True, Section 2 of the
Administrative Code recognizes that a statute may require a
different meaning than that defined in the Administrative Code.
However, this does not automatically mean that the definition in
the Administrative Code does not apply to the Local Government
Code. Section 2 of the Administrative Code clearly states that
"unless the specific words x x x of a particular statute shall require a
different meaning," the definition in Section 2 of the Administrative
Code shall apply. Thus, unless there is specific language in the Local
Government Code defining the phrase "government-owned or
controlled corporation" differently from the definition in the
Administrative Code, the definition in the Administrative Code
prevails.
The minority does not point to any provision in the Local
Government Code defining the phrase "government-owned or
controlled corporation" differently from the definition in the
Administrative Code. Indeed, there is none. The Local Government
Code is silent on the definition of the phrase "government-owned or
controlled corporation." The Administrative Code, however,
expressly defines the phrase "government-owned or controlled
corporation." The inescapable conclusion is that the Administrative
Code definition of the phrase "government-owned or controlled
corporation" applies to the Local Government Code.
The third whereas clause of the Administrative Code states that the
Code "incorporates in a unified document the major structural,
functional and procedural principles and rules of governance." Thus,
the Administrative Code is the governing law defining the status and
relationship of government departments, bureaus, offices, agencies
and instrumentalities. Unless a statute expressly provides for a
different status and relationship for a specific government unit or
entity, the provisions of the Administrative Code prevail.
The minority also contends that the phrase "government-owned or
controlled corporation" should apply only to corporations organized
under the Corporation Code, the general incorporation law, and not
to corporations created by special charters. The minority sees no
reason why government corporations with special charters should
have a capital stock. Thus, the minority declares:
I submit that the definition of "government-owned or
controlled corporations" under the Administrative Code
refer to those corporations owned by the government or its
instrumentalities which are created not by legislative
enactment, but formed and organized under the
Corporation Code through registration with the Securities
and Exchange Commission. In short, these are GOCCs
without original charters.
74
 xxxx
It might as well be worth pointing out that there is no point
in requiring a capital structure for GOCCs whose full
ownership is limited by its charter to the State or Republic.
Such GOCCs are not empowered to declare dividends or
alienate their capital shares.
The contention of the minority is seriously flawed. It is not in accord
with the Constitution and existing legislations. It will also result in
gross absurdities.
First, the Administrative Code definition of the phrase "government-
owned or controlled corporation" does not distinguish between one
incorporated under the Corporation Code or under a special
charter. Where the law does not distinguish, courts should not
distinguish.
Second, Congress has created through special charters several
government-owned corporations organized as stock corporations.
Prime examples are the Land Bank of the Philippines and the
Development Bank of the Philippines. The special charter 40 of the
Land Bank of the Philippines provides:
SECTION 81. Capital. — The authorized capital stock of the
Bank shall be nine billion pesos, divided into seven hundred
and eighty million common shares with a par value of ten
pesos each, which shall be fully subscribed by the
Government, and one hundred and twenty million
preferred shares with a par value of ten pesos each, which
shall be issued in accordance with the provisions of Sections
seventy-seven and eighty-three of this Code. (Emphasis
supplied)
Likewise, the special charter41 of the Development Bank of the
Philippines provides:
SECTION 7. Authorized Capital Stock – Par value. — The
capital stock of the Bank shall be Five Billion Pesos to be
divided into Fifty Million common shares with par value of
P100 per share. These shares are available for subscription
by the National Government. Upon the effectivity of this
Charter, the National Government shall subscribe to
Twenty-Five Million common shares of stock worth Two
Billion Five Hundred Million which shall be deemed paid for
by the Government with the net asset values of the Bank
remaining after the transfer of assets and liabilities as
provided in Section 30 hereof. (Emphasis supplied)
Other government-owned corporations organized as stock
corporations under their special charters are the Philippine Crop
Insurance Corporation,42 Philippine International Trading
Corporation,43 and the Philippine National Bank44 before it was
reorganized as a stock corporation under the Corporation Code. All
these government-owned corporations organized under special
charters as stock corporations are subject to real estate tax on real
properties owned by them. To rule that they are not government-
owned or controlled corporations because they are not registered
with the Securities and Exchange Commission would remove them
from the reach of Section 234 of the Local Government Code, thus
exempting them from real estate tax.
Third, the government-owned or controlled corporations created
through special charters are those that meet the two conditions
prescribed in Section 16, Article XII of the Constitution. The first
condition is that the government-owned or controlled corporation
must be established for the common good. The second condition is
that the government-owned or controlled corporation must meet
75
the test of economic viability. Section 16, Article XII of the 1987
Constitution provides:
SEC. 16. The Congress shall not, except by general law,
provide for the formation, organization, or regulation of
private corporations. Government-owned or controlled
corporations may be created or established by special
charters in the interest of the common good and subject to
the test of economic viability. (Emphasis and underscoring
supplied)
The Constitution expressly authorizes the legislature to create
"government-owned or controlled corporations" through special
charters only if these entities are required to meet the twin
conditions of common good and economic viability. In other words,
Congress has no power to create government-owned or controlled
corporations with special charters unless they are made to comply
with the two conditions of common good and economic viability.
The test of economic viability applies only to government-owned or
controlled corporations that perform economic or commercial
activities and need to compete in the market place. Being essentially
economic vehicles of the State for the common good — meaning for
economic development purposes — these government-owned or
controlled corporations with special charters are usually organized
as stock corporations just like ordinary private corporations.
In contrast, government instrumentalities vested with corporate
powers and performing governmental or public functions need not
meet the test of economic viability. These instrumentalities perform
essential public services for the common good, services that every
modern State must provide its citizens. These instrumentalities
need not be economically viable since the government may even
subsidize their entire operations. These instrumentalities are not
the "government-owned or controlled corporations" referred to in
Section 16, Article XII of the 1987 Constitution.
Thus, the Constitution imposes no limitation when the legislature
creates government instrumentalities vested with corporate powers
but performing essential governmental or public functions.
Congress has plenary authority to create government
instrumentalities vested with corporate powers provided these
instrumentalities perform essential government functions or public
services. However, when the legislature creates through special
charters corporations that perform economic or commercial
activities, such entities — known as "government-owned or
controlled corporations" — must meet the test of economic viability
because they compete in the market place.
This is the situation of the Land Bank of the Philippines and the
Development Bank of the Philippines and similar government-
owned or controlled corporations, which derive their income to
meet operating expenses solely from commercial transactions in
competition with the private sector. The intent of the Constitution is
to prevent the creation of government-owned or controlled
corporations that cannot survive on their own in the market place
and thus merely drain the public coffers.
Commissioner Blas F. Ople, proponent of the test of economic
viability, explained to the Constitutional Commission the purpose of
this test, as follows:
MR. OPLE: Madam President, the reason for this concern is
really that when the government creates a corporation,
there is a sense in which this corporation becomes exempt
from the test of economic performance. We know what
happened in the past. If a government corporation loses,
then it makes its claim upon the taxpayers' money through
76
 new equity infusions from the government and what is
always invoked is the common good. That is the reason why
this year, out of a budget of P115 billion for the entire
government, about P28 billion of this will go into equity
infusions to support a few government financial institutions.
And this is all taxpayers' money which could have been
relocated to agrarian reform, to social services like health
and education, to augment the salaries of grossly underpaid
public employees. And yet this is all going down the drain.
Therefore, when we insert the phrase "ECONOMIC
VIABILITY" together with the "common good," this becomes
a restraint on future enthusiasts for state capitalism to
excuse themselves from the responsibility of meeting the
market test so that they become viable. And so, Madam
President, I reiterate, for the committee's consideration and
I am glad that I am joined in this proposal by Commissioner
Foz, the insertion of the standard of "ECONOMIC VIABILITY
OR THE ECONOMIC TEST," together with the common
good.45
Father Joaquin G. Bernas, a leading member of the Constitutional
Commission, explains in his textbook The 1987 Constitution of the
Republic of the Philippines: A Commentary:
The second sentence was added by the 1986 Constitutional
Commission. The significant addition, however, is the
phrase "in the interest of the common good and subject to
the test of economic viability." The addition includes the
ideas that they must show capacity to function efficiently in
business and that they should not go into activities which
the private sector can do better. Moreover, economic
viability is more than financial viability but also includes
capability to make profit and generate benefits not
quantifiable in financial terms.46 (Emphasis supplied)
Clearly, the test of economic viability does not apply to government
entities vested with corporate powers and performing essential
public services. The State is obligated to render essential public
services regardless of the economic viability of providing such
service. The non-economic viability of rendering such essential
public service does not excuse the State from withholding such
essential services from the public.
However, government-owned or controlled corporations with
special charters, organized essentially for economic or commercial
objectives, must meet the test of economic viability. These are the
government-owned or controlled corporations that are usually
organized under their special charters as stock corporations, like the
Land Bank of the Philippines and the Development Bank of the
Philippines. These are the government-owned or controlled
corporations, along with government-owned or controlled
corporations organized under the Corporation Code, that fall under
the definition of "government-owned or controlled corporations" in
Section 2(10) of the Administrative Code.
The MIAA need not meet the test of economic viability because the
legislature did not create MIAA to compete in the market place.
MIAA does not compete in the market place because there is no
competing international airport operated by the private sector.
MIAA performs an essential public service as the primary domestic
and international airport of the Philippines. The operation of an
international airport requires the presence of personnel from the
following government agencies:
1. The Bureau of Immigration and Deportation, to document
the arrival and departure of passengers, screening out those
77
 without visas or travel documents, or those with hold
departure orders;
2. The Bureau of Customs, to collect import duties or
enforce the ban on prohibited importations;
3. The quarantine office of the Department of Health, to
enforce health measures against the spread of infectious
diseases into the country;
4. The Department of Agriculture, to enforce measures
against the spread of plant and animal diseases into the
country;
5. The Aviation Security Command of the Philippine National
Police, to prevent the entry of terrorists and the escape of
criminals, as well as to secure the airport premises from
terrorist attack or seizure;
6. The Air Traffic Office of the Department of Transportation
and Communications, to authorize aircraft to enter or leave
Philippine airspace, as well as to land on, or take off from,
the airport; and
7. The MIAA, to provide the proper premises — such as
runway and buildings — for the government personnel,
passengers, and airlines, and to manage the airport
operations.
All these agencies of government perform government functions
essential to the operation of an international airport.
MIAA performs an essential public service that every modern State
must provide its citizens. MIAA derives its revenues principally from
the mandatory fees and charges MIAA imposes on passengers and
airlines. The terminal fees that MIAA charges every passenger are
regulatory or administrative fees47 and not income from commercial
transactions.
MIAA falls under the definition of a government instrumentality
under Section 2(10) of the Introductory Provisions of the
Administrative Code, which provides:
SEC. 2. General Terms Defined. – x x x x
(10) Instrumentality refers to 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. x x x (Emphasis
supplied)
The fact alone that MIAA is endowed with corporate powers does
not make MIAA a government-owned or controlled corporation.
Without a change in its capital structure, MIAA remains a
government instrumentality under Section 2(10) of the Introductory
Provisions of the Administrative Code. More importantly, as long as
MIAA renders essential public services, it need not comply with the
test of economic viability. Thus, MIAA is outside the scope of the
phrase "government-owned or controlled corporations" under
Section 16, Article XII of the 1987 Constitution.
The minority belittles the use in the Local Government Code of the
phrase "government-owned or controlled corporation" as merely
"clarificatory or illustrative." This is fatal. The 1987 Constitution
prescribes explicit conditions for the creation of "government-
owned or controlled corporations." The Administrative Code defines
78
what constitutes a "government-owned or controlled corporation."
To belittle this phrase as "clarificatory or illustrative" is grave error.
To summarize, MIAA is not a government-owned or controlled
corporation under Section 2(13) of the Introductory Provisions of
the Administrative Code because it is not organized as a stock or
non-stock corporation. Neither is MIAA a government-owned or
controlled corporation under Section 16, Article XII of the 1987
Constitution because MIAA is not required to meet the test of
economic viability. MIAA is a government instrumentality vested
with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the
Administrative Code. As a government instrumentality, MIAA is not
subject to any kind of tax by local governments under Section
133(o) of the Local Government Code. The exception to the
exemption in Section 234(a) does not apply to MIAA because MIAA
is not a taxable entity under the Local Government Code. Such
exception applies only if the beneficial use of real property owned
by the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties
devoted to public use and thus are properties of public dominion.
Properties of public dominion are owned by the State or the
Republic. Article 420 of the Civil Code provides:
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 others of similar character;
(2) Those which belong to the State, without being for
public use, and are intended for some public service or for
the development of the national wealth. (Emphasis
supplied)
The term "ports x x x constructed by the State" includes airports and
seaports. The Airport Lands and Buildings of MIAA are intended for
public use, and at the very least intended for public service.
Whether intended for public use or public service, the Airport Lands
and Buildings are properties of public dominion. As properties of
public dominion, the Airport Lands and Buildings are owned by the
Republic and thus exempt from real estate tax under Section 234(a)
of the Local Government Code.
4. Conclusion
Under Section 2(10) and (13) of the Introductory Provisions of the
Administrative Code, which governs the legal relation and status of
government units, agencies and offices within the entire
government machinery, MIAA is a government instrumentality and
not a government-owned or controlled corporation. Under Section
133(o) of the Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is not subject to
"[t]axes, fees or charges of any kind" by local governments. The only
exception is when MIAA leases its real property to a "taxable
person" as provided in Section 234(a) of the Local Government
Code, in which case the specific real property leased becomes
subject to real estate tax. Thus, only portions of the Airport Lands
and Buildings leased to taxable persons like private parties are
subject to real estate tax by the City of Parañaque.
Under Article 420 of the Civil Code, the Airport Lands and Buildings
of MIAA, being devoted to public use, are properties of public
dominion and thus owned by the State or the Republic of the
Philippines. Article 420 specifically mentions "ports x x x constructed
by the State," which includes public airports and seaports, as
79
properties of public dominion and owned by the Republic. As
properties of public dominion owned by the Republic, there is no
doubt whatsoever that the Airport Lands and Buildings are expressly
exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that
properties of public dominion are not subject to execution or
foreclosure sale.

WHEREFORE, we GRANT the petition. We SET ASIDE the assailed

Resolutions of the Court of Appeals of 5 October 2001 and 27
September 2002 in CA-G.R. SP No. 66878. We DECLARE the Airport
Lands and Buildings of the Manila International Airport
Authority EXEMPT from the real estate tax imposed by the City of
Parañaque. We declare VOID all the real estate tax assessments,
including the final notices of real estate tax delinquencies, issued by
the City of Parañaque on the Airport Lands and Buildings of the
Manila International Airport Authority, except for the portions that
the Manila International Airport Authority has leased to private
parties. We also declare VOID the assailed auction sale, and all its
effects, of the Airport Lands and Buildings of the Manila
International Airport Authority.

No costs.

SO ORDERED.

FIRST DIVISION

G.R. No. L-31934 July 29, 1977

80
 RAMON LANZAR, petitioner
vs.
DIRECTOR OF LANDS and CITY OF ILOILO, Respondents.
Ramon A. Gonzales for petitioner.chanrobles virtual law library
Solicitor General Felix Q. Antonio, Assistant Solicitor General
Bernardo P. Pardo and Solicitor Jose A. Janolo for respondents.
FERNANDEZ, J.:chanrobles virtual law library
This is a petition to review on certiorari the decision of the Court of
Appeals in CA-G. R. No. 34333-R entitled "Ramon Lanzar, Applicant-
Appellee, versus The Director of Lands and The City of
Iloilo, Oppositors-Appellants", declaring the property sought to be
registered as the property of the public domain devoted to public
use not susceptible of private
appropriation.chanroblesvirtualawlibrarychanrobles virtual law
library
In May 1960, the petitioner, Ramon Lanzar, filed an application for
registration of title to a parcel of land located in the District of Molo,
Iloilo City in the Court of First Instance of Iloilo alleging that he is the
owner in fee simple of the land in question and asking that the title
thereto be registered in his
name.chanroblesvirtualawlibrarychanrobles virtual law library
In August 1961, the Director of Lands and the City of Iloilo filed an
opposition to the application on the ground that the land in
question a foreshore land which forms part of the public domain
and is needed by the City of Iloilo as a road right of way of the Molo
Arevalo Boulevard, and that the applicant had not possessed the
property in such a manner as to warrant an implied grant entitled
him to confirmation of his title
thereto.chanroblesvirtualawlibrarychanrobles virtual law library
After trial, the Court of First Instance of Iloilo rendered a decision in
March 1963 holding that the property in question, having been
possessed by the applicant and his predecessors-in-interest,
publicly, continuously and adversely for more than 30 years, the
same was adjudicated to the petitioner, it appearing that no proof
had been adduced that the said land is necessary for public utility or
establishment of special industries (Record on Appeal, pp. 30-
37).chanroblesvirtualawlibrarychanrobles virtual law library
The Director of Lands and the City of Iloilo appealed to the Court of
Appeals which on March 24, 1970 reversed the decision of the Court
of First Instance of Iloilo and held that the land in question, being an
accretion formed by the action of the sea, is property of the public
domain and not susceptible of private
appropriation.chanroblesvirtualawlibrarychanrobles virtual law
library
Hence, the applicant-appellee, Ramon Lanzar, filed this petition for
certiorari to review the aforesaid decision of the Court of Appeals.
The petitioner assigns the following errors:
Ichanrobles virtual law library
THE COURT OF APPEALS ERRED IN HOLDING THAT LANDS FORMED
BY ACTION OF THE SEA AS ACCRETION TO THE SHORES ARE
PROPERTY OF PUBLIC DOMINION, ON THE AUTHORITY OF ART. 4,
LAW OF WATERS, KER & CO. VS GAUDEN AND GOVERNMENT VS.
ALDECOA.chanroblesvirtualawlibrarychanrobles virtual law library
IIchanrobles virtual law library
81
THE COURT OF APPEALS ERRED IN RELYING ON MONTEVERDE VS.
DIRECTOR OF LANDS, 93 PHIL. 134 HOLDING THAT ONLY THE
EXECUTIVE OR LEGISLATURE CAN DECLARE THE LAND AS NO
LONGER INTENDED FOR PUBLIC USE AND SO SHALL BELONG TO THE
ADJACENT OWNER.chanroblesvirtualawlibrarychanrobles virtual law
library
IIIchanrobles virtual law library
THE COURT OF APPEALS ERRED IN HOLDING THAT SINCE ART. 422
OF THE NEW CIVIL CODE PROVIDES THAT PROPERTY OF PUBLIC
DOMAIN WHEN NO LONGER INTENDED FOR PUBLIC USE, SUCH
INTENTION CAN ONLY BE SPELLED OUT BY THE EXECUTIVE OR
LEGISLATURE, NOT BY THE
COURTS.chanroblesvirtualawlibrarychanrobles virtual law library
IVchanrobles virtual law library
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER
HAS ACQUIRED THE PROPERTY THRU ACQUISITIVE
PRESCRIPTION.chanroblesvirtualawlibrarychanrobles virtual law
library
(Petitioner's Brief, pp. 1-2)
The pertinent facts are not
disputed.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioner has applied for the registration of his title to a parcel
of land which is admittedly an accretion of Lot No. 1899 of the
Cadastral Survey of Iloilo, it having been formed by the gradual
action of the sea before 1,922. Ignacio Arroyo, the registered owner
of Lot 1899, leased in 19M the property to Maximo Tonogbanua
who possessed the whole of Lot 1899 and its accretion. In 1927,
Ignacio Arroyo donated Lot 1899 of the Cadastral Survey of Iloilo,
together with its accretion, to Beaterio de Santissimo Rosario de
Molo, which in turn the property to the applicant, Ramon Lanzar.
The lessee planted coconuts and bananas on the land and a portion
thereof was devoted to palay. A verification of Lot 1899 by the
Bureau of Lands disclosed that the portion of land applied for and
described in the plan, Exhibit A, and in its technical description, is
outside of Lot 1899, the same being an accretion thereto formed by
the action of the sea. Beaterio de Santissimo Rosario de Molo and
the applicant entered into an agreement, Exhibit 1, on August
13,1959, under which Beaterio de Santissimo Rosario de Molo
assigned all its rights to the accretion, the title to which is sought to
be registered by the applicant. Beaterio de Santissimo Rosario de
Molo had possessed Lot 1899 and its accretion through its lessee,
openly, publicly, uninterruptedly and adversely to all claimants and
under claim of ownership. The Beaterio had declared Lot 1899 for
taxation and when it assigned the rights to the applicant, he caused
the tax declaration to be transferred to his name in May 1960,
Exhibit J.chanroblesvirtualawlibrarychanrobles virtual law library
During the Cadastral Survey of 1911-1912, the lot in question was
non-existent (Exhibit 2, Director of Lands). Hence, said land as an
accretion to Lot 1899 must have gradually developed from 1912 to
1922 and thereafter. It is now separated by the Arevalo-Molo
Boulevard from the sea.chanroblesvirtualawlibrarychanrobles
virtual law library
The only issue to be resolved is whether or not the title to the land
in question which was formed by action of the sea as an accretion to
Lot 1899 may be registered in the name of the applicant on the
basis of adverse possession for over 30
years.chanroblesvirtualawlibrarychanrobles virtual law library
Article 4 of the Law of Waters provides:
82
ART. 4. Lands added to the shores by accretions and alluvium
deposits caused by the action of the sea, form part of the public
domain. When they are no longer washed by the waters of the sea,
and are not necessary for the purposes of public utility, or for the
establishment of special industries, or for the coastguard service,
the Government shall declare them to be the property of the
owners of the estates adjacent thereto and as an increment thereof.
In Ker & Co. vs. Cauden, 6 Phil. 732, this Court said:
This case is directly covered by the first part of said article 4. There
is therein an express declaration that land formed in the way this
land was formed is public property. Nothing could be more explicit
and the effect of this declaration is not in any way limited by the
subsequent provisions of the same article. The claim of the
appellants that these subsequent provisions indicate that the
ownership of such land is in the private persons who own the
adjoining property, and that the declaration which is spoken of is
simply proof of that ownership, can not be sustained. It is in direct
conflict with the statement made in the first part of the article. The
true construction of the article is that when these lands which
belong to the State are not needed for the purposes mentioned
therein, then the State shall grant them to the adjoining owners. No
attempt was made by the appellants to prove any such grant or
concession in this case and, in fact, it is apparent from the evidence
that the conditions upon which the adjoining owners would be
entitled to such a grant have never existed because for a long time
the property was by the Spanish navy and it is now occupied by the
present government as a naval station, and works costing more than
$500,000, money of the United States, have been erected thereon.
(Idem. p. 736)
It is contended by the petitioner that:
As found by the Court of Appeals, the accretion began before 1922,
but after 1912, as shown by the undisputed evidence, hence, during
the regime of the Spanish Civil Code, which became effective on
December 8, 1889, and consequently, its nature shall be determined
by the said code. Now, the said code provides:
ARTICLE 399. The following are property of public
domain: chanrobles virtual law library
l. Those things intended for public use, as roads, canals, rivers,
torrents, ports and bridges constructed by the State, riverbanks,
shores, roadsteads and others of a like nature.
(Brief for Petitioner-Appellant, pp. 10-11)
However, in Insular Government vs. Aldecoa and Company, 19 Phil.
505, this Court held:
The Civil Code, which went into effect in these Islands on December
7, 1889, the twentieth day of its publication in the Gaceta de Manila
of the 17th of November of the same year, confirms the provisions
of the said Law of Waters, since, in its article 339, it prescribes
that: chanrobles virtual law library
Property of public ownership is -chanrobles virtual law library
l. That destined to the public use, such as roads, canals, rivers,
torrents, ports, and bridges constructed by the State, and banks,
shores, roadsteads, and that of a similar
character.chanroblesvirtualawlibrarychanrobles virtual law library
Article 341 of the same code provides: chanrobles virtual law library
83
Property of public ownership, when no longer devoted to general
uses or to the requirements of the defense of the territory, shall
become a part of the State
property.chanroblesvirtualawlibrarychanrobles virtual law library
The shores and the lands reclaimed from the sea, while they
continue to be devoted to public uses and no grant whatever has
been made of any portion of them to private persons, remain a part
of the public domain and are for public uses, and, until they are
converted into patrimonial property of the State, such lands, thrown
up by the action of the sea, and the shores adjacent thereto, are not
susceptible of prescription, inasmuch as, being dedicated to the
public uses, they are not subject of commerce among men, in
accordance with the provision of article 1936 of the Civil
Code.chanroblesvirtualawlibrarychanrobles virtual law library
The occupation or material possession of any land formed upon the
shore by accretions and alluvium deposits occasioned by the sea,
where the occupant or possessor is a private person and holds
without previous permission or authorization from the Government,
granted in due form, although he may have had the intention to
hold it for the purpose of making it his own, is illegal possession on
his part and amounts to nothing more than a mere detainer of the
land, which is out of the sphere of the commerce of men, as
belonging to the public domain and being alloted to public uses and
for the use of all persons who live at the place where it is situated.
(Idem, pp. 514-515)
It is thus seen that the petitioner could not acquire the land in
question by prescription.chanroblesvirtualawlibrarychanrobles
virtual law library
The contention of the petitioner-appellant that by "thus expanding
the meaning of shores to include inland property formed by the
action of the sea, Government vs. Aldecoa is guilty of judicial
legislation ..." (Brief of Petitioner-Appellant, p. 15) has no
merit.chanroblesvirtualawlibrarychanrobles virtual law library
Articles 339 and 340 of the Spanish Civil Code are not repugnant to
Article 4 of the Spanish Law of Waters of 1866. The said provisions
of the said Spanish Code did not provide that lands added to the
shores by action of the sea form part of the patrimonial property of
the State.chanroblesvirtualawlibrarychanrobles virtual law library
As stated by this Court in Insular Government vs. Aldecoa, supra, p.
541, the Civil Code of Spain confirms the provisions of Article 4 of
the Law of Waters, citing Article 339 of said code. This Court has
been consistent in ruling that lands formed by the action of the sea
belong to the public domain. Thus in Monteverde vs. Director of
Lands, 93 Phil. 134, it was held:
Lots Nos. 1 and 2 were admittedly formed and added to the shores
by the natural. action of the sea, and the petitioners herein have
claimed title thereto as accretion to their adjoining lots, in
accordance with article 4 of the Law of Waters of August 3, 1966,
which provides as follows:
'Lands added to the shores by accretion and alluvial deposits caused
by action of the sea, form part of the public domain. When they are
no longer washed by the water of the sea and are not necessary for
purposes of public utility, or for the establishment of special
industries, or for coast-guard service, the Government shall declare
them to be property of the owners of the estates adjacent thereto
and as increment thereof.'
(Idem. pp. 135-136)
84
In view of the foregoing, the Court of Appeals did not err in
declaring the property sought to be registered as part of the public
domain devoted to public use not susceptible of private
appropriation. The land in question is needed by the City of Iloilo for
the expansion of the Arevalo-Molo
Boulevard.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the petition for review is hereby dismissed and the

decision of the Court of Appeals sought to be reviewed is affirmed,
without pronouncement as to
costs.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

85
 Republic of the Philippines from the spouses, Segundo Villarico (Teofilo's father) and Mercedes
SUPREME COURT Cardenas, that they and their predecessors-in-interest have been in
Manila actual, open, adverse and continuous possession thereof for more
than thirty (30) years, that they are not aware of any mortgage or
THIRD DIVISION encumbrance thereon nor of any person having an estate or
interest therein, and that the land involved is not within the forest
  zone or government reservation.

G.R. No. 105912 June 28, 1999 The application for land registration Marcos Camargo, who claims to
be the real owner thereof. 2 The Government interposed its
SPOUSES TEOFILO C. VILLARICO and MAXIMA A. opposition, through the Director of Forestry (now Director of Forest
FAUSTINO, petitioners, Management), averring that the land in question is part of the
vs. public domain, within the unclassified area in Meycauayan, Bulacan
HONORABLE COURT OF APPEALS, REPUBLIC OF THE PHILIPPINES per LC Map No. 637 dated March 1, 1927 of the Bureau of Forest
and MARCOS CAMARGO, respondents. Management and consequently, not available for private
appropriation.
 
On May 23, 1989, the trial court of origin dismissed the case,
PURISIMA, J.: ratiocinating thus:

This is a petition for review on certiorari of the decision of the Court It is well settled in this jurisdiction
of Appeals 1 in CA-G.R. CV No. 22608, affirming the decision of that a certificate of title is void
Branch 22 of the Regional Trial Court, Malolos, Bulacan, which when it covers property of the
dismissed the application for confirmation of title in LRC Case No. public domain classified as forest or
604-V-77. timber and mineral lands. Any title
thus issued on non-disposable lots,
The facts that matter are as follows: even in the hands of an innocent
purchaser for value, should be
On May 31, 1977, an application for confirmation of title was filed canceled (Lepanto Consolidated
by the spouses, Teofilo Villarico and Maxima Villarico, over a 1,834 Mining vs. Dumyang, L-31666, April
square meter parcel of land in Ubihan, Meycauayan, Bulacan, 30, 1979). There being no concrete
docketed as LRC Case No. 604-V-77 before the then Court of First evidence presented in this case that
Instance of Bulacan. Among others, applicants alleged that they are the property in question was ever
the absolute owners of subject property, having bought the same acquired by the applicants or by the

86
private oppositor (as attested to by
the proceedings of B.L. Claim No. 38
(N) before the Bureau of Lands) or
by their respective predecessors-in-
interest either by composition of
title or by any other means for the
acquisition of public lands, the
property in question must be held
to be part of the public domain,
especially so that the private parties
had not presented any Certification
from the Bureau of Forestry
attesting to the fact that the subject
property is no longer within the
unclassified region of Meycauayan,
Bulacan. Thus, if the land in
question still forms part of the
public forest, then, possession
thereof, however long, cannot
convert it into private property as it
is within the exclusive jurisdiction of
the Bureau of Forestry and beyond
the power and jurisdiction of the
cadastral court to register under the
Torrens System (Republic vs. Court
of Appeals, 89 SCRA 648).
WHEREFORE, premises considered,
let this case be, as it is hereby
DISMISSED.
No pronouncement as to costs.
SO ORDERED. 3
Therefrom, petitioners appealed to the Court of Appeals, which
came out with a judgment of affirmance on June 26, 1992.
Respondent court affirmed the findings of facts below, holding that
subject parcel of land is within the public domain not available for
private appropriation.
Undaunted, petitioners found their way to this court via the present
petition for review on certiorari; placing reliance on the assignment
of errors, that:
I
THE HONORABLE COURT OF APPEALS ERRED IN
SUSTAINING THE FINDING OF THE TRIAL COURT
THAT BEFORE 1948 THERE WAS NO
DOCUMENTATION IN FAVOR OF EITHER PARTIES.
II
THE HONORABLE COURT OF APPEALS ERRED IN
SUSTAINING THE FINDING OF THE TRIAL COURT
THAT BUENAVENTURA VILLARICO APPARENTLY
DIED PRIOR TO 1914.
III
THE HONORABLE COURT OF APPEALS ERRED IN
SUSTAINING THE FINDING OF THE TRIAL COURT
THAT TAX DECLARATION NO. 3912 IN THE NAME OF
BUENAVENTURA VILLARICO COULD HAVE BEEN
CONTRIVED SENSING THAT A CONFLICT OVER THE
PROPERTY IN THE NEAR FUTURE WAS INEVITABLE.
IV
87
 THE HONORABLE COURT OF APPEALS ERRED IN As aptly observed by the respondent court, the primordial issue
SUSTAINING THE FINDING OF THE TRIAL COURT here is the character or classification of the property applied for
THAT THERE IS NO CONCRETE EVIDENCE registration — whether or not the same still forms part of the public
PRESENTED TO THE EFFECT THAT THE PROPERTY IN domain. On this crucial question, the trial court a quo and the Court
QUESTION WAS EVER ACQUIRED BY THE APPLICANT of Appeals correctly adjudged the area at stake as within the
OR BY THE PRIVATE OPPOSITOR OR BY THEIR unclassified forest zone incapable of private appropriation.
RESPECTIVE PREDECESSORS-IN-INTEREST THROUGH Accordingly, the Court of Appeals held:
LAWFUL MEANS FOR THE ACQUISITION OF PUBLIC
LANDS. . . . In the case at bar, as found by
the court a quo, there has been no
V showing that a declassification has
been made by the Director of
THE HONORABLE COURT OF APPEALS AND THE Forestry declaring the land in
TRIAL COURT ERRED IN DISMISSING THE CASE AT question as disposable or alienable.
BAR. And the record indeed discloses
that applicants have not introduced
The appeal is without merit and cannot prosper. any evidence which would have led
the court a quo to find or rule
It bears stressing that the first, second, and third assigned errors otherwise. . . .
relate to factual and evidentiary matters which the Supreme Court
does not inquire into in an appeal on certiorari. 4 It is well-settled And so, considering the foregoing,
that in a petition for review on certiorari as a mode of appeal under possession of the land in question
Rule 45 of the Rules of Court, only questions of law may be by the applicants and/or their
raised. 5 The Supreme Court is not a trier of facts. 6 Findings of fact predecessors-in-interest even for
by the trial court and the Court of Appeals are binding on the more than 30 years, as they allege,
Supreme Court. 7 cannot convert the land into private
property capable of private
In the case under consideration, the Court discerns no compelling appropriation. (Court of Appeals'
reason to reverse such findings arrived at by the trial court and Decision, pp. 4-5)
affirmed by the respondent court, absent any showing of any error,
mistake, or misappreciation of facts. Records on hand indicate that Indeed, forest lands cannot be owned by private
the decisions under attack accord with the law and the evidence. persons. 8 Possession thereof, no matter how long, does not ripen
into a registrable title. The adverse possession which may be the

88
basis of a grant of title or confirmation of an imperfect title refers
only to alienable or disposable portions of the public domain. 9

WHEREFORE, the petition is DENIED and the Decision of the Court of

Appeals in CA-G.R. CV No. 22608 AFFIRMED in toto. No
pronouncements as to costs.1âwphi1.nêt

SO ORDERED.

89
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-12958             May 30, 1960
FAUSTINO IGNACIO, applicant-appellant,
vs.
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositors-
appellees.
Acting Assistant Solicitor General Pacifico P. de Castro and Solicitor
Crispin V. Bautista for appellee Director of Lands.
Benjamin H. Aquino for appellee Laureano Veleriano.
MONTEMAYOR, J.:
Faustino Ignacio is appealing the decision of the Court of First
Instance of Rizal, dismissing his application for the registration of a
parcel of land.
On January 25, 1950, Ignacio filed an application for the registration
of a parcel of land (mangrove), situated in barrio Gasac, Navotas,
Rizal, with an area of 37,877 square meters. Later, he amended his
application by alleging among others that he owned the parcel
applied for by right of accretion. To the application, the Director of
Lands, Laureano Valeriano and Domingo Gutierrez filed oppositions.
Gutierrez later withdrew his opposition. The Director of Lands
claimed the parcel applied for as a portion of the public domain, for
the reason that neither the applicant nor his predecessor-in-interest
possessed sufficient title thereto, not having acquired it either by
composition title from the Spanish government or by possessory
information title under the Royal Decree of February 13, 1894, and
that he had not possessed the same openly, continuously and
adversely under a bona fide  claim of ownership since July 26, 1894.
In his turn, Valeriano alleged he was holding the land by virtue of a
permit granted him by the Bureau of Fisheries, issued on January
13, 1947, and approved by the President.
It is not disputed that the land applied for adjoins a parcel owned by
the applicant which he had acquired from the Government by virtue
of a free patent title in 1936. It has also been established that the
parcel in question was formed by accretion and alluvial deposits
caused by the action of the Manila Bay which boarders it on the
southwest. Applicant Ignacio claims that he had occupied the land
since 1935, planting it with api-api trees, and that his possession
thereof had been continuous, adverse and public for a period of
twenty years until said possession was distributed by oppositor
Valeriano.
On the other hand, the Director of Lands sought to prove that the
parcel is foreshore land, covered by the ebb and flow of the tide
and, therefore, formed part of the public domain.
After hearing, the trial court dismissed the application, holding that
the parcel formed part of the public domain. In his appeal, Ignacio
assigns the following errors:
I. The lower court erred in holding that the land in question,
altho an accretion to the land of the applicant-appellant,
does not belong to him but forms part of the public domain.
II. Granting that the land in question forms part of the
public domain, the lower court nevertheless erred in not
declaring the same to be the necessary for any public use or
90
 purpose and in not ordering in the present registration
proceedings.
III. The lower court erred in not holding that the land in
question now belongs to the applicant-appellant by virtue
of acquisitive prescription, the said land having ceased to be
of the public domain and became the private or patrimonial
property of the State.
IV. The lower court erred in not holding that the oppositor
Director of Lands is now in estoppel from claiming the land
in question as a land of the public domain.
Appellant contends that the parcel belongs to him by the law of
accretion, having been formed by gradual deposit by action of the
Manila Bay, and he cites Article 457 of the New Civil Code (Article
366, Old Civil Code), which provides that:
To the owners of lands adjoining the banks of rivers belong
the accretion which they gradually receive from the effects
of the current of the waters.
The article cited is clearly inapplicable because it refers to accretion
or deposits on the banks of rivers, while the accretion in the present
case was caused by action of the Manila Bay.
Appellant next contends that Articles 1, 4 and 5 of the Law of
Waters are not applicable because they refer to accretions formed
by the sea, and that Manila Bay cannot be considered as a sea. We
find said contention untenable. A bay is a part of the sea, being a
mere indentation of the same:
Bay. — An opening into the land where the water is shut in
on all sides except at the entrance; an inlet of the sea; an
arm of the sea, distinct from a river, a bending or curbing of
the shore of the sea or of a lake. 7 C.J. 1013-1014 (Cited in
Francisco, Philippine Law of Waters and Water Rights p. 6)
Moreover, this Tribunal has some cases applied the Law of Waters
on Lands bordering Manila Bay. (See the cases of Ker & Co. vs.
Cauden, 6 Phil., 732, involving a parcel of land bounded on the sides
by Manila Bay, where it was held that such land formed by the
action of the sea is property of the State; Francisco vs. Government
of the P.I., 28 Phil., 505, involving a land claimed by a private person
and subject to the ebb and flow of the tides of the Manila Bay).
Then the applicant argues that granting that the land in question
formed part of the public domain, having been gained from the sea,
the trial court should have declared the same no longer necessary
for any public use or purpose, and therefore, became disposable
and available for private ownership. Article 4 of the Law of Waters
of 1866 reads thus:
ART. 4. Lands added to the shores by accretions and alluvial
deposits caused by the action of the sea, form part of the
public domain. When they are no longer washed by the
waters of the sea and are not necessary for purposes of
public utility, or for the establishment of special industries,
or for the coastguard service, the Government shall declare
them to be the property of the owners of the estates
adjacent thereto and as increment thereof.
Interpreting Article 4 of the Law of Waters of 1866, in the case
of  Natividad vs. Director of Lands, (CA) 37 Off. Gaz., 2905, it was
there held that:
Article 4 of the Law of Waters of 1866 provides that when a
portion of the shore is no longer washed by the waters of
91
 the sea and is not necessary for purposes of public utility, or
for the establishment of special industries, or for coastguard
service, the government shall declare it to be the property
of the owners of the estates adjacent thereto and as an
increment thereof. We believe that only the executive and
possibly the legislative departments have the authority and
the power to make the declaration that any land so gained
by the sea, is not necessary for purposes of public utility, or
for the establishment of special industries, on for coast-
guard service. If no such declaration has been made by said
departments, the lot in question forms part of the public
domain. (Natividad vs. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the
case of  Vicente Joven y Monteverde vs. Director of Lands, 93 Phil.,
134, (cited in Velayo's Digest, VI. I, p. 52).
The occupation or material possession of any land formed
upon the shore by accretion, without previous permission
from the proper authorities, although the occupant may
have held the same as owner for seventeen years and
constructed a wharf on the land, is illegal and is a mere
detainer, inasmuch as such land is outside of the sphere of
commerce; it pertains to the national domain; it is intended
for public uses and for the benefit of those who live nearby.
We deem it unnecessary to discuss the other points raised in the
appeal.
In view of the foregoing, the appealed decision is hereby affirmed,
with costs.

. . . is undoubtedly that the courts are neither primarily

called upon, nor indeed in a position to determine whether
any public land are to be used for the purposes specified in
Article 4 of the Law of Waters.

Consequently, until a formal declaration on the part of the

Government, through the executive department or the Legislature,
to the effect that the land in question is no longer needed for coast
guard service, for public use or for special industries, they continue
to be part of the public domain, not available for private
appropriation or ownership.

Appellant next contends that he had acquired the parcel in question

through acquisitive prescription, having possessed the same for
over ten years. In answer, suffice it to say that land of the public
domain is not subject to ordinary prescription. In the case of Insular
Government vs. Aldecoa & Co., 19 Phil., 505 this Court said:

92
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
 
G.R. No. 93654 May 6, 1992
FRANCISCO U. DACANAY, petitioner,
vs.
MAYOR MACARIO ASISTIO, JR., CITY ENGR. LUCIANO SARNE, JR. of
Kalookan City, Metro Manila, MILA PASTRANA AND/OR RODOLFO
TEOFE, STALLHOLDERS AND REPRESENTING CO-
STALLHOLDERS, respondents.
David D. Advincula, Jr. for petitioner.
Juan P. Banaga for private respondents.
GRIÑO-AQUINO, J.:
May public streets or thoroughfares be leased or licensed to market
stallholders by virtue of a city ordinance or resolution of the Metro
Manila Commission? This issue is posed by the petitioner, an
aggrieved Caloocan City resident who filed a special civil action
of mandamus  against the incumbent city mayor and city engineer,
to compel these city officials to remove the market stalls from
certain city streets which the aforementioned city officials have
designated as flea markets, and the private respondents
(stallholders) to vacate the streets.
On January 5, 1979, MMC Ordinance No. 79-02 was enacted by the
Metropolitan Manila Commission, designating certain city and
municipal streets, roads and open spaces as sites for flea markets.
Pursuant, thereto, the Caloocan City mayor opened up seven (7) flea
markets in that city. One of those streets was the "Heroes del '96"
where the petitioner lives. Upon application of vendors Rodolfo
Teope, Mila Pastrana, Carmen Barbosa, Merle Castillo, Bienvenido
Menes, Nancy Bugarin, Jose Manuel, Crisaldo Paguirigan, Alejandro
Castron, Ruben Araneta, Juanita and Rafael Malibaran, and others,
the respondents city mayor and city engineer, issued them licenses
to conduct vending activities on said street.
In 1987, Antonio Martinez, as OIC city mayor of Caloocan City,
caused the demolition of the market stalls on Heroes del '96, V.
Gozon and Gonzales streets. To stop Mayor Martinez' efforts to
clear the city streets, Rodolfo Teope, Mila Pastrana and other
stallowners filed an action for prohibition against the City of
Caloocan, the OIC City Mayor and the City Engineer and/or their
deputies (Civil Case No. C-12921) in the Regional Trial Court of
Caloocan City, Branch 122, praying the court to issue a writ of
preliminary injunction ordering these city officials to discontinue the
demolition of their stalls during the pendency of the action.
The court issued the writ prayed for. However, on December 20,
1987, it dismissed the petition and lifted the writ of preliminary
injunction which it had earlier issued. The trial court observed that:
A perusal of Ordinance 2, series of 1979 of the
Metropolitan Manila Commission will show on the
title itself that it is an ordinance ––
Authorizing and regulating the use
of certain city and/or municipal
streets, roads and open spaces
93
 within Metropolitan Manila as sites
for flea market and/or vending
areas, under certain terms and
conditions, subject to the approval
of the Metropolitan Manila
Commission,  and for other
purposes
which is further amplified in Section 2 of the said
ordinance, quoted hereunder:
Sec. 2. The streets, roads and open spaces to be
used as sites for flea markets (tiangge) or vending
areas; the design, measurement or specification of
the structures, equipment and apparatuses to be
used or put up; the allowable distances; the days
and time allowed for the conduct of the businesses
and/or activities herein authorized; the rates or fees
or charges to be imposed, levied and collected; the
kinds of merchandise, goods and commodities sold
and services rendered; and other matters and
activities related to the establishment, maintenance
and management and operation of flea markets and
vending areas, shall be determined and prescribed
by the mayors of the cities and municipalities in the
Metropolitan Manila where the same are
located, subject to the approval of the Metropolitan
Manila Commission  and consistent with the
guidelines hereby prescribed.
Further, it is so  provided  in the guidelines under the
said Ordinance No. 2 of the MMC that —
Sec. 6. In the establishment, operation,
maintenance and management of flea markets and
vending areas, the following guidelines, among
others, shall be observed:
xxx xxx xxx
(m) That the  permittee shall remove the equipment,
facilities and other appurtenances used by him in
the conduct of his business after the close or
termination of business hours.  (Emphasis ours; pp.
15-16, Rollo.)
The trial court found that Heroes del '96, Gozon and Gonzales
streets are of public dominion, hence, outside the commerce of
man:
The Heroes del '96 street, V. Gozon street and Gonzales street, being
of public dominion must, therefore, be outside of the commerce of
man. Considering the nature of the subject premises, the following
jurisprudence co/principles are applicable on the matter:
1) They cannot be alienated or leased or otherwise be the subject
matter of contracts. (Municipality of Cavite vs. Rojas, 30 Phil. 602);
2) They cannot be acquired by prescription against the state (Insular
Government vs. Aldecoa, 19 Phil. 505). Even municipalities can not
acquire them for use as communal lands against the state (City of
Manila vs. Insular Government, 10 Phil. 327);
3) They are not subject to attachment and execution (Tan Toco vs.
Municipal Council of Iloilo, 49 Phil. 52);
94
4) They cannot be burdened by any voluntary easement (2-II Colin &
Capitant 520) (Tolentino, Civil Code of the Phils., Vol. II, 1983 Ed. pp.
29-30).
In the aforecited case of Municipality of Cavite vs. Rojas, it was held
that  properties for public use may not be leased to private
individuals. Such a lease is null and void for the reason that a
municipal council cannot withdraw part of the plaza from public
use. If possession has already been given, the lessee must restore
possession by vacating it and the municipality must thereupon
restore to him any sums it may have collected as rent.
In the case of City of Manila vs. Gerardo Garcia, 19 SCRA 413, the
Supreme Court held:
The property being a public one, the Manila Mayors did not have
the authority to give permits, written or oral, to the squatters, and
that the permits granted are therefore considered null and void.
This doctrine was reiterated in the case of Baguio Citizens Action
Inc. vs. The City Council,  121 SCRA 368, where it was held that:
An ordinance legalizing the occupancy by squatters of public land is
null and void.
The authority of respondent Municipality of Makati to demolish the
shanties of the petitioner's members is mandated by
P.D. 772, and Sec. 1 of Letter of Instruction No. 19 orders certain
public officials, one of whom is the Municipal Mayor to remove all
illegal constructions including buildings on and along esteros and
river banks, those along railroad tracks and those built without
permits on public or private property (Zansibarian Residents
Association vs. Mun. of Makati, 135 SCRA 235). The City Engineer is
also among those required to comply with said Letter of Instruction.
The occupation and use of private individuals of sidewalks and other
public places devoted for public use constitute both public and
private nuisances and nuisance per se, and this applies to even case
involving the use or lease of public places under permits and
licenses issued by competent authority, upon the theory that such
holders could not take advantage of their unlawful permits and
license and claim that the land in question is a part of a public street
or a public place devoted to public use, hence, beyond the
commerce of man. (Padilla, Civil Code Annotated, Vol. II, p. 59, 6th
Ed., citing Umali vs. Aquino, IC. A. Rep. 339.)
From the aforequoted jurisprudence/principles, the
Court opines that defendants have the right to
demolish the subject stalls of the plaintiffs, more so
when Section 185, par. 4 of Batas Pambansa Blg.
337, otherwise known as the Local Government
Code provides that the City Engineer shall:
(4) . . .
(c) Prevent the encroachment of private buildings and fences on the
streets and public places;
xxx xxx xxx
(j) Inspect and supervise the construction, repair, removal and
safety of private buildings;
xxx xxx xxx
(k) With the previous approval of the City Mayor in each case, order
the removal of materials employed in the construction or repair of
any building or structures made in violation of law or ordinance, and
95
cause buildings and structures dangerous to the public to made
secure or torn down;
x x x           x x x         
xxx
Further, the Charter of the City of Caloocan,
Republic Act No. 5502, Art. VII, Sec. 27, par. g, 1 and
m, grants the City Engineer similar powers.
(Emphasis supplied; pp. 17-20, Rollo.)
However, shortly after the decision came out, the city
administration in Caloocan City changed hands. City Mayor Macario
Asistio, Jr., as successor of Mayor Martinez, did not pursue the
latter's policy of clearing and cleaning up the city streets.
Invoking the trial court's decision in Civil Case No. C-12921,
Francisco U. Dacanay, a concerned citizen, taxpayer and registered
voter of Barangay 74, Zone 7, District II of Caloocan City, who
resides on Heroes del '96 Street, one of the affected streets, wrote a
letter dated March 7, 1988 to Mayor Asistio, Jr., calling his attention
to the illegally-constructed stalls on Heroes del '96 Street and asked
for their demolition.
Dacanay followed up that letter with another one dated April 7,
1988 addressed to the mayor and the city engineer, Luciano Sarne,
Jr. (who replaced Engineer Arturo Samonte), inviting their attention
to the Regional Trial Court's decision in Civil Case No. 12921. There
was still no response.
Dacanay sought President Corazon C. Aquino's intervention by
writing her a letter on the matter. His letter was referred to the city
mayor for appropriate action. The acting Caloocan City secretary,
Asuncion Manalo, in a letter dated August 1, 1988, informed the
Presidential Staff Director that the city officials were still studying
the issue of whether or not to proceed with the demolition of the
market stalls.
Dacanay filed a complaint against Mayor Asistio and Engineer Sarne
(OMB-0-89-0146) in the Office of the OMBUDSMAN. In their letter-
comment dated April 3, 1989, said city officials explained that in
view of the huge number of stallholders involved, not to mention
their dependents, it would be harsh and inhuman to eject them
from the area in question, for their relocation would not be an easy
task.
In reply, Dacanay maintained that respondents have been derelict in
the performance of their duties and through manifest partiality
constituting a violation of Section 3(e) of R.A. 3019, have caused
undue injury to the Government and given unwarranted benefits to
the stallholders.
After conducting a preliminary investigation, the OMBUDSMAN
rendered a final evaluation and report on August 28, 1989, finding
that the respondents' inaction is purely motivated by their
perceived moral and social responsibility toward their constituents,
but "the fact remains that there is an omission of an act which
ought to be performed, in clear violation of Sections 3(e) and (f) of
Republic Act 3019."  (pp. 83-84, Rollo.) The OMBUDSMAN
recommended the filing of the corresponding information in court.
As the stallholders continued to occupy Heroes del '96 Street,
through the tolerance of the public respondents, and in clear
violation of the decision it Civil Case No. C-12921, Dacanay filed the
present petition for mandamus  on June 19, 1990, praying that the
public respondents be ordered to enforce the final decision in Civil
Case No. C-12921 which upheld the city mayor's authority to order
96
the demolition of market stalls on V. Gozon, Gonzales and Heroes
del '96 Streets and to enforce P.D. No. 772 and other pertinent laws.
On August 16, 1990, the public respondents, through the City Legal
Officer, filed their Comment' on the petition. The Office of the
Solicitor General asked to be excused from filing a separate
Comment in behalf of the public respondents. The City Legal Officer
alleged that the vending area was transferred to Heroes del '96
Street to decongest Malonzo Street, which is comparatively a busier
thoroughfare; that the transfer was made by virtue of Barangay
Resolution No. 30 s'78 dated January 15, 1978; that while the
resolution was awaiting approval by the Metropolitan Manila
Commission, the latter passed Ordinance No. 79-2, authorizing the
use of certain streets and open spaces as sites for flea markets
and/or vending areas; that pursuant thereto, Acting MMC Mayor
Virgilio P. Robles issued Executive Order No. 135 dated January 10,
1979, ordering the establishment and operation of flea markets in
specified areas and created the Caloocan City Flea Market Authority
as a regulatory body; and that among the sites chosen and
approved by the Metro Manila Commission, Heroes del '96 Street
has considered "most viable and progressive, lessening
unemployment in the city and servicing the residents with
affordable basic necessities."
The petition for mandamus  is meritorious.
There is no doubt that the disputed areas from which the private
respondents' market stalls are sought to be evicted are public
streets, as found by the trial court in Civil Case No. C-12921. A public
street is property for public use hence outside the commerce of
man (Arts. 420, 424, Civil Code). Being outside the commerce of
man, it may not be the subject of lease or other contract (Villanueva
et al. vs. Castañeda and Macalino, 15 SCRA 142, citing the
Municipality of Cavite vs. Rojas, 30 SCRA 602; Espiritu vs. Municipal
Council of Pozorrubio, 102 Phil. 869; and Muyot vs. De la Fuente, 48
O.G. 4860).
As the stallholders pay fees to the City Government for the right to
occupy portions of the public street, the City Government, contrary
to law, has been leasing portions of the streets to them. Such leases
or licenses are null and void for being contrary to law. The right of
the public to use the city streets may not be bargained away
through contract. The interests of a few should not prevail over the
good of the greater number in the community whose health, peace,
safety, good order and general welfare, the respondent city officials
are under legal obligation to protect.
The Executive Order issued by Acting Mayor Robles authorizing the
use of Heroes del '96 Street as a vending area for stallholders who
were granted licenses by the city government contravenes the
general law that reserves city streets and roads for public use.
Mayor Robles' Executive Order may not infringe upon the vested
right of the public to use city streets for the purpose they were
intended to serve: i.e., as arteries of travel for vehicles and
pedestrians. As early as 1989, the public respondents bad started to
look for feasible alternative sites for flea markets. They have had
more than ample time to relocate the street vendors.
WHEREFORE, it having been established that the petitioner and the
general public have a legal right to the relief demanded and that the
public respondents have the corresponding duty, arising from public
office, to clear the city streets and restore them to their specific
public purpose (Enriquez vs. Bidin, 47 SCRA 183; City of Manila vs.
Garcia et al., 19 SCRA, 413 citing Unson vs. Lacson, 100 Phil. 695),
the respondents City Mayor and City Engineer of Caloocan City or
their successors in office are hereby ordered to immediately enforce
and implement the decision in Civil Case No. C-1292 declaring that
Heroes del '96, V. Gozon, and Gonzales Streets are public streets for
97
public use, and they are ordered to remove or demolish, or cause to
be removed or demolished, the market stalls occupying said city
streets with utmost dispatch within thirty (30)days from notice of
this decision. This decision is immediately executory.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL
MANGLAPUS, as Secretary of Foreign Affairs, and CATALINO
MACARAIG, as Executive Secretary, respondents.

98
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION
TRUST CHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL
ROSARIO, et al., as members of the PRINCIPAL AND BIDDING
COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF
PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin
respondents, their representatives and agents from proceeding with
the bidding for the sale of the 3,179 square meters of land at 306
Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February
21, 1990. We granted the prayer for a temporary restraining order
effective February 20, 1990. One of the petitioners (in G.R. No.
92047) likewise prayes for a writ of mandamus to compel the
respondents to fully disclose to the public the basis of their decision
to push through with the sale of the Roppongi property inspire of
strong public opposition and to explain the proceedings which
effectively prevent the participation of Filipino citizens and entities
in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were
heard by the Court on March 13, 1990. After G.R. No. 92047,  Ojeda
v. Secretary Macaraig, et al.  was filed, the respondents were
required to file a comment by the Court's resolution dated February
22, 1990. The two petitions were consolidated on March 27, 1990
when the memoranda of the parties in the Laurel case were
deliberated upon.
The Court could not act on these cases immediately because the
respondents filed a motion for an extension of thirty (30) days to file
comment in G.R. No. 92047, followed by a second motion for an
extension of another thirty (30) days which we granted on May 8,
1990, a third motion for extension of time granted on May 24, 1990
and a fourth motion for extension of time which we granted on June
5, 1990 but calling the attention of the respondents to the length of
time the petitions have been pending. After the comment was filed,
the petitioner in G.R. No. 92047 asked for thirty (30) days to file a
reply. We noted his motion and resolved to decide the two (2)
cases.
I
The subject property in this case is one of the four (4) properties in
Japan acquired by the Philippine government under the Reparations
Agreement entered into with Japan on May 9, 1956, the other lots
being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku,
Tokyo which has an area of approximately 2,489.96 square meters,
and is at present the site of the Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an
area of around 764.72 square meters and categorized as a
commercial lot now being used as a warehouse and parking lot for
the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho,
Shinohara, Nada-ku, Kobe, a residential lot which is now vacant.
99
The properties and the capital goods and services procured from the
Japanese government for national development projects are part of
the indemnification to the Filipino people for their losses in life and
property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at
$550 million would be payable in twenty (20) years in accordance
with annual schedules of procurements to be fixed by the Philippine
and Japanese governments (Article 2, Reparations Agreement). Rep.
Act No. 1789, the Reparations Law, prescribes the national policy on
procurement and utilization of reparations and development loans.
The procurements are divided into those for use by the government
sector  and those for private parties  in projects as the then National
Economic Council shall determine. Those intended for the private
sector shall be made available by sale to Filipino citizens or to one
hundred (100%) percent Filipino-owned entities in national
development projects.
The Roppongi property was acquired from the Japanese
government under the Second Year Schedule and listed under the
heading "Government Sector", through Reparations Contract No.
300 dated June 27, 1958. The Roppongi property consists of the
land and building "for the Chancery of the Philippine Embassy"
(Annex M-D to Memorandum for Petitioner, p. 503). As intended, it
became the site of the Philippine Embassy until the latter was
transferred to Nampeidai on July 22, 1976 when the Roppongi
building needed major repairs. Due to the failure of our government
to provide necessary funds, the Roppongi property has remained
undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former
Philippine Ambassador to Japan, Carlos J. Valdez, to make the
property the subject of a lease agreement with a Japanese firm -
Kajima Corporation — which shall construct two (2) buildings in
Roppongi and one (1) building in Nampeidai and renovate the
present Philippine Chancery in Nampeidai. The consideration of the
construction would be the lease to the foreign corporation of one
(1) of the buildings to be constructed in Roppongi and the two (2)
buildings in Nampeidai. The other building in Roppongi shall then be
used as the Philippine Embassy Chancery. At the end of the lease
period, all the three leased buildings shall be occupied and used by
the Philippine government. No change of ownership or title shall
occur. (See Annex "B" to Reply to Comment) The Philippine
government retains the title all throughout the lease period and
thereafter. However, the government has not acted favorably on
this proposal which is pending approval and ratification between
the parties. Instead, on August 11, 1986, President Aquino created a
committee to study the disposition/utilization of Philippine
government properties in Tokyo and Kobe, Japan through
Administrative Order No. 3, followed by Administrative Orders
Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296
entitling non-Filipino citizens or entities to avail of separations'
capital goods and services in the event of sale, lease or disposition.
The four properties in Japan including the Roppongi were
specifically mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the
government has been pushing, with great vigor, its decision to sell
the reparations properties starting with the Roppongi lot. The
property has twice been set for bidding at a minimum floor price of
$225 million. The first bidding was a failure since only one bidder
qualified. The second one, after postponements, has not yet
materialized. The last scheduled bidding on February 21, 1990 was
restrained by his Court. Later, the rules on bidding were changed
such that the $225 million floor price became merely a suggested
floor price.
100
The Court finds that each of the herein petitions raises distinct
issues. The petitioner in G.R. No. 92013 objects to the alienation of
the Roppongi property to anyone while the petitioner in G.R. No.
92047 adds as a principal objection the alleged unjustified bias of
the Philippine government in favor of selling the property to non-
Filipino citizens and entities. These petitions have been consolidated
and are resolved at the same time for the objective is the same - to
stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by
the Philippine Government?; and
(2) Does the Chief Executive, her officers and agents, have the
authority and jurisdiction, to sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning
the authority of the government to alienate the Roppongi property
assails the constitutionality of Executive Order No. 296 in making
the property available for sale to non-Filipino citizens and entities.
He also questions the bidding procedures of the Committee on the
Utilization or Disposition of Philippine Government Properties in
Japan for being discriminatory against Filipino citizens and Filipino-
owned entities by denying them the right to be informed about the
bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi
property and the related lots were acquired as part of the
reparations from the Japanese government for diplomatic and
consular use by the Philippine government. Vice-President Laurel
states that the Roppongi property is classified as one of public
dominion, and not of private ownership under Article 420 of the
Civil Code (See infra).
The petitioner submits that the Roppongi property comes under
"property intended for public service" in paragraph 2 of the above
provision. He states that being one of public dominion, no
ownership by any one can attach to it, not even by the State. The
Roppongi and related properties were acquired for "sites for
chancery, diplomatic, and consular quarters, buildings and other
improvements" (Second Year Reparations Schedule). The petitioner
states that they continue to be intended for a necessary service.
They are held by the State in anticipation of an opportune use.
(Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is
outside the commerce of man, or to put it in more simple terms, it
cannot be alienated nor be the subject matter of contracts (Citing
Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-
use of the Roppongi property at the moment, the petitioner avers
that the same remains property of public dominion so long as the
government has not used it for other purposes nor adopted any
measure constituting a removal of its original purpose or use.
The respondents, for their part, refute the petitioner's contention
by saying that the subject property is not governed by our Civil Code
but by the laws of Japan where the property is located. They rely
upon the rule of lex situs  which is used in determining the
applicable law regarding the acquisition, transfer and devolution of
the title to a property. They also invoke Opinion No. 21, Series of
1988, dated January 27, 1988 of the Secretary of Justice which used
the lex situs  in explaining the inapplicability of Philippine law
regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument
that the Civil Code is applicable, the Roppongi property has ceased
to become property of public dominion. It has become patrimonial
101
property because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now (Citing Article
422, Civil Code) and because the intention  by the Executive
Department and the Congress to convert it to private use  has been
manifested by overt acts, such as, among others: (1) the transfer of
the Philippine Embassy to Nampeidai (2) the issuance of
administrative orders for the possibility of alienating the four
government properties in Japan; (3) the issuance of Executive Order
No. 296; (4) the enactment by the Congress of Rep. Act No. 6657
[the Comprehensive Agrarian Reform Law] on June 10, 1988 which
contains a provision stating that funds may be taken from the sale
of Philippine properties in foreign countries; (5) the holding of the
public bidding of the Roppongi property but which failed; (6) the
deferment by the Senate in Resolution No. 55 of the bidding to a
future date; thus an acknowledgment by the Senate of the
government's intention to remove the Roppongi property from the
public service purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding Committee, et al., G.R.
No. 87478 which sought to enjoin the second bidding of the
Roppongi property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to
rule on the constitutionality of Executive Order No. 296. He had
earlier filed a petition in G.R. No. 87478 which the Court dismissed
on August 1, 1989. He now avers that the executive order
contravenes the constitutional mandate to conserve and develop
the national patrimony stated in the Preamble of the 1987
Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable
lands of the public domain to Filipino citizens. (Sections 2 and 3,
Article XII, Constitution; Sections 22 and 23 of Commonwealth Act
141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights,
privileges and concessions covering the national economy and
patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair
competition and trade practices;
(4) The guarantee of the right of the people to information on all
matters of public concern (Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or
entities not wholly owned by Filipino citizens of capital goods
received by the Philippines under the Reparations Act (Sections 2
and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all
transactions involving public interest (Section 28, Article III,
Constitution).
Petitioner Ojeda warns that the use of public funds in the execution
of an unconstitutional executive order is a misapplication of public
funds He states that since the details of the bidding for the
Roppongi property were never publicly disclosed  until February 15,
1990 (or a few days before the scheduled bidding), the bidding
guidelines are available only in Tokyo, and the accomplishment of
requirements and the selection of qualified bidders should be done
in Tokyo, interested Filipino citizens or entities owned by them did
not have the chance to comply with Purchase Offer Requirements
on the Roppongi. Worse, the Roppongi shall be sold for a minimum
price of $225 million from which price capital gains tax under
102
Japanese law of about 50 to 70% of the floor price would still be
deducted.
IV
The petitioners and respondents in both cases do not dispute the
fact that the Roppongi site and the three related properties were
through reparations agreements, that these were assigned to the
government sector and that the Roppongi property itself was
specifically designated under the Reparations Agreement to house
the Philippine Embassy.
The nature of the Roppongi lot as property for public service is
expressly spelled out. It is dictated by the terms of the Reparations
Agreement and the corresponding contract of procurement which
bind both the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless it is
convincingly shown that the property has become patrimonial. This,
the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the
commerce of man. It cannot be alienated. Its ownership is a special
collective ownership for general use and enjoyment, an application
to the satisfaction of collective needs, and resides in the social
group. The purpose is not to serve the State as a juridical person,
but the citizens; it is intended for the common and public welfare
and cannot be the object of appropration. (Taken from 3 Manresa,
66-69; cited in Tolentino, Commentaries on the Civil Code of the
Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of
private ownership.
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 others of similar character;
(2) Those which belong to the State, without being
for public use, and are intended for some public
service or for the development of the national
wealth.
ART. 421. All other property of the State, which is
not of the character stated in the preceding article,
is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of
Article 420 of the Civil Code as property belonging to the State and
intended for some public service.
Has the intention of the government regarding the use of the
property been changed because the lot has been Idle for some
years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for
actual Embassy service does not automatically convert it to
patrimonial property. Any such conversion happens only if the
property is withdrawn from public use (Cebu Oxygen and Acetylene
Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be
part of the public domain, not available for private appropriation or
103
ownership until there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v. Director of
Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned
public officials insinuating a change of intention. We emphasize,
however, that an abandonment of the intention to use the
Roppongi property for public service and to make it patrimonial
property under Article 422 of the Civil Code must be
definite Abandonment cannot be inferred from the non-use alone
specially if the non-use was attributable not to the government's
own deliberate and indubitable will but to a lack of financial support
to repair and improve the property (See Heirs of Felino Santiago v.
Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and
positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is
not relinquishment of the Roppongi property's original purpose.
Even the failure by the government to repair the building in
Roppongi is not abandonment since as earlier stated, there simply
was a shortage of government funds. The recent Administrative
Orders authorizing a study of the status and conditions of
government properties in Japan were merely directives for
investigation but did not in any way signify a clear intention to
dispose of the properties.
Executive Order No. 296, though its title declares an "authority to
sell", does not have a provision in its text expressly authorizing the
sale of the four properties procured from Japan for the government
sector. The executive order does not declare that the properties lost
their public character. It merely intends to make the
properties available  to foreigners and not to Filipinos alone in case
of a sale, lease or other disposition. It merely eliminates the
restriction under Rep. Act No. 1789 that reparations goods may be
sold only to Filipino citizens and one hundred (100%) percent
Filipino-owned entities. The text of Executive Order No. 296
provides:
Section 1. The provisions of Republic Act No. 1789,
as amended, and of other laws to the contrary
notwithstanding, the above-mentioned properties
can be made available for sale, lease or any other
manner of disposition to non-Filipino citizens or to
entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or
assumption that the Roppongi and the three other properties were
earlier converted into alienable real properties. As earlier stated,
Rep. Act No. 1789 differentiates the procurements for the
government sector and the private sector (Sections 2 and 12, Rep.
Act No. 1789). Only the private sector properties can be sold to end-
users who must be Filipinos or entities owned by Filipinos. It is this
nationality provision which was amended by Executive Order No.
296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides
as one of the sources of funds for its implementation, the proceeds
of the disposition of the properties of the Government in foreign
countries, did not withdraw the Roppongi property from being
classified as one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties which are
alienable and not to those reserved for public use or service. Rep
Act No. 6657, therefore, does not authorize the Executive
Department to sell the Roppongi property. It merely enumerates
possible sources of future funding to augment (as and when
needed) the Agrarian Reform Fund created under Executive Order
No. 299. Obviously any property outside of the commerce of man
cannot be tapped as a source of funds.
104
The respondents try to get around the public dominion character of
the Roppongi property by insisting that Japanese law and not our
Civil Code should apply.
It is exceedingly strange why our top government officials, of all
people, should be the ones to insist that in the sale of extremely
valuable government property, Japanese law and not Philippine law
should prevail. The Japanese law - its coverage and effects, when
enacted, and exceptions to its provision — is not presented to the
Court It is simply asserted that the lex loci rei sitae or Japanese law
should apply without stating what that law provides. It is a ed on
faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no
conflict of law situation exists. A conflict of law situation arises only
when: (1) There is a dispute over the title or ownership  of an
immovable, such that the capacity to take and transfer immovables,
the formalities of conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a conveyance, are to be
determined (See Salonga, Private International Law, 1981 ed., pp.
377-383); and (2) A foreign law on land ownership and its
conveyance is asserted to conflict with a domestic law on the same
matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title.
There is no question that the property belongs to the Philippines.
The issue is the authority of the respondent officials to validly
dispose of property belonging to the State. And the validity of the
procedures adopted to effect its sale. This is governed by Philippine
Law. The rule of lex situs  does not apply.
The assertion that the opinion of the Secretary of Justice sheds light
on the relevance of the lex situs  rule is misplaced. The opinion does
not tackle the alienability of the real properties procured through
reparations nor the existence in what body of the authority to sell
them. In discussing who are capable of acquiring the lots, the
Secretary merely explains that it is the foreign law which should
determine who can acquire the properties  so that the constitutional
limitation on acquisition of lands of the public domain to Filipino
citizens and entities wholly owned by Filipinos is inapplicable. We
see no point in belaboring whether or not this opinion is correct.
Why should we discuss who can acquire the Roppongi lot when
there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of
the recommendation by the investigating committee to sell the
Roppongi property was premature or, at the very least, conditioned
on a valid change in the public character of the Roppongi property.
Moreover, the approval does not have the force and effect of law
since the President already lost her legislative powers. The Congress
had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi
property is no longer of public dominion, there is another obstacle
to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which
the Government is a party. —  In cases in which the
Government of the Republic of the Philippines is a
party to any deed or other instrument conveying
the title to real estate or to any other property the
105
 value of which is in excess of one hundred thousand
pesos, the respective Department Secretary shall
prepare the necessary papers which, together with
the proper recommendations,  shall be submitted to
the Congress of the Philippines for approval by the
same. Such deed, instrument, or contract shall be
executed and signed by the President of the
Philippines on behalf of the Government of the
Philippines unless the Government of the
Philippines unless the authority therefor be
expressly vested by law in another officer.
(Emphasis supplied)
The requirement has been retained in Section 48, Book I of the
Administrative Code of 1987 (Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property.
— Whenever real property of the Government
is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the
government by the following:
(1) For property belonging to and titled in the name
of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic of the
Philippines but titled in the name of any political
subdivision or of any corporate agency or
instrumentality, by the executive head of the
agency or instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the
government on his or her own sole will. Any such conveyance must
be authorized and approved by a law enacted by the Congress. It
requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the
deferment of the sale of the Roppongi property does not withdraw
the property from public domain much less authorize its sale. It is a
mere resolution; it is not a formal declaration abandoning the public
character of the Roppongi property. In fact, the Senate Committee
on Foreign Relations is conducting hearings on Senate Resolution
No. 734 which raises serious policy considerations and calls for a
fact-finding investigation of the circumstances behind the decision
to sell the Philippine government properties in Japan.
The resolution of this Court in  Ojeda v. Bidding Committee, et al.,
supra,  did not pass upon the constitutionality of Executive Order
No. 296. Contrary to respondents' assertion, we did not uphold the
authority of the President to sell the Roppongi property. The Court
stated that the constitutionality of the executive order was not the
real issue and that resolving the constitutional question was
"neither necessary nor finally determinative of the case." The Court
noted that "[W]hat petitioner ultimately questions is the use of the
proceeds of the disposition of the Roppongi property." In
emphasizing that "the decision of the Executive to dispose of the
Roppongi property to finance the CARP ... cannot be questioned" in
view of Section 63 (c) of Rep. Act No. 6657, the Court did not
acknowledge the fact that the property became alienable nor did it
indicate that the President was authorized to dispose of the
Roppongi property. The resolution should be read to mean that in
case the Roppongi property is re-classified to be patrimonial and
alienable by authority of law, the proceeds of a sale may be used for
national economic development projects including the CARP.
106
Moreover, the sale in 1989 did not materialize. The petitions before
us question the proposed 1990 sale of the Roppongi property. We
are resolving the issues raised in these petitions, not the issues
raised in 1989.
Having declared a need for a law or formal declaration to withdraw
the Roppongi property from public domain to make it alienable and
a need for legislative authority to allow the sale of the property, we
see no compelling reason to tackle the constitutional issues raised
by petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions
unless these questions are properly raised in appropriate cases and
their resolution is necessary for the determination of the case
(People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a
constitutional question although properly presented by the record if
the case can be disposed of on some other ground such as the
application of a statute or general law (Siler v. Louisville and
Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v.
Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property
should not be sold:
The Roppongi property is not just like any piece of
property. It was given to the Filipino people in
reparation for the lives and blood of Filipinos who
died and suffered during the Japanese military
occupation, for the suffering of widows and orphans
who lost their loved ones and kindred, for the
homes and other properties lost by countless
Filipinos during the war. The Tokyo properties are a
monument to the bravery and sacrifice of the
Filipino people in the face of an invader; like the
monuments of Rizal, Quezon, and other Filipino
heroes, we do not expect economic or financial
benefits from them. But who would think of selling
these monuments? Filipino honor and national
dignity dictate that we keep our properties in Japan
as memorials to the countless Filipinos who died
and suffered. Even if we should become paupers we
should not think of selling them. For it would be as
if we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by
the Japanese government in atonement for its past
belligerence for the valiant sacrifice of life and limb
and for deaths, physical dislocation and economic
devastation the whole Filipino people endured in
World War II.
It is for what it stands for, and for what it could
never bring back to life, that its significance today
remains undimmed, inspire of the lapse of 45 years
since the war ended, inspire of the passage of 32
years since the property passed on to the Philippine
government.
Roppongi is a reminder that cannot — should not —
be dissipated ... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much
because of the inflated prices fetched by real property in Tokyo but
more so because of its symbolic value to all Filipinos — veterans and
civilians alike. Whether or not the Roppongi and related properties
107
will eventually be sold is a policy determination where both the
President and Congress must concur. Considering the properties'
importance and value, the laws on conversion and disposition of
property of public dominion must be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are

GRANTED. A writ of prohibition is issued enjoining the respondents
from proceeding with the sale of the Roppongi property in Tokyo,
Japan. The February 20, 1990 Temporary Restraining Order is made
PERMANENT.

SO ORDERED.

Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ.,

concur.

 
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L40474 August 29, 1975

CEBU OXYGEN & ACETYLENE CO., INC., petitioner,

vs.
HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th
Judicial District, and JOSE L. ESPELETA, Assistant Provincial Fiscal,
Province of Cebu, representing the Solicitor General's Office and
the Bureau of Lands, respondents.

108
Jose Antonio R Conde for petitioner.
Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant
Solicitor General Octavio R. Ramirez and Trial Attorney David R.
Hilario for respondents. .
CONCEPCION, Jr., J.:
This is a petition for the review of the order of the Court of First
Instance of Cebu dismissing petitioner's application for registration
of title over a parcel of land situated in the City of Cebu.
The parcel of land sought to be registered was only a portion of M.
Borces Street, Mabolo, Cebu City. On September 23, 1968, the City
Council of Cebu, through Resolution No. 2193, approved on October
3, 1968, declared the terminal portion of M. Borces Street, Mabolo,
Cebu City, as an abandoned road, the same not being included in
the City Development Plan.1 Subsequently, on December 19, 1968,
the City Council of Cebu passed Resolution No. 2755, authorizing
the Acting City Mayor to sell the land through a public
bidding.2 Pursuant thereto, the lot was awarded to the herein
petitioner being the highest bidder and on March 3, 1969, the City
of Cebu, through the Acting City Mayor, executed a deed of
absolute sale to the herein petitioner for a total consideration of
P10,800.00.3 By virtue of the aforesaid deed of absolute sale, the
petitioner filed an application with the Court of First instance of
Cebu to have its title to the land registered. 4
On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a
motion to dismiss the application on the ground that the property
sought to be registered being a public road intended for public use
is considered part of the public domain and therefore outside the
commerce of man. Consequently, it cannot be subject to
registration by any private individual.5
After hearing the parties, on October 11, 1974 the trial court issued
an order dismissing the petitioner's application for registration of
title.6 Hence, the instant petition for review.
For the resolution of this case, the petitioner poses the following
questions:
(1) Does the City Charter of Cebu City (Republic Act
No. 3857) under Section 31, paragraph 34, give the
City of Cebu the valid right to declare a road as
abandoned? and
(2) Does the declaration of the road, as abandoned,
make it the patrimonial property of the City of Cebu
which may be the object of a common contract?
(1) The pertinent portions of the Revised Charter of Cebu City
provides:
Section 31. Legislative Powers. Any provision of law
and executive order to the contrary
notwithstanding, the City Council shall have the
following legislative powers:
xxx xxx xxx
(34) ...; to close any city road, street or alley,
boulevard, avenue, park or square. Property thus
withdrawn from public servitude may be used or
conveyed for any purpose for which other real
109
 property belonging to the City may be lawfully used
or conveyed.
From the foregoing, it is undoubtedly clear that the City of Cebu is
empowered to close a city road or street. In the case of Favis vs.
City of Baguio,7 where the power of the city Council of Baguio City
to close city streets and to vacate or withdraw the same from public
use was similarly assailed, this court said:
5. So it is, that appellant may not challenge the city
council's act of withdrawing a strip of Lapu-Lapu
Street at its dead end from public use and
converting the remainder thereof into an alley.
These are acts well within the ambit of the power to
close a city street. The city council, it would seem to
us, is the authority competent to determine
whether or not a certain property is still necessary
for public use.
Such power to vacate a street or alley is
discretionary. And the discretion will not ordinarily
be controlled or interfered with by the courts,
absent a plain case of abuse or fraud or collusion.
Faithfulness to the public trust will be presumed. So
the fact that some private interests may be served
incidentally will not invalidate the vacation
ordinance.
Article 422 of the Civil Code expressly provides that "Property of
public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the
State."
Besides, the Revised Charter of the City of Cebu heretofore quoted,
in very clear and unequivocal terms, 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."
Accordingly, the withdrawal of the property in question from public
use and its subsequent sale to the petitioner is valid. Hence, the
petitioner has a registerable title over the lot in question.
WHEREFORE, the order dated October 11, 1974, rendered by the
respondent court in Land Reg. Case No. N-948, LRC Rec. No. N-
44531 is hereby set aside, and the respondent court is hereby
ordered to proceed with the hearing of the petitioner's application
for registration of title.
SO ORDERED.

(2) 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.

110
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-24661 February 28, 1974

BENJAMIN RABUCO, VENANCIO G. GUIRNALDA, LEODEGARIO

ALOBA, ELEUTERIO IBAÑES, ROGELIO ARAGONES, ASENCIO
ABANCO, BENEDICTO BAUTISTA, MAXIMO AQUINO, PAULINA
DALUMIAS, NENITA RAMOS, GUILLERMO VARIAS, EMELDA
ARELLANO, PEDRO BILBAO, ERNESTO BONBALES, ROSITA OCA
BAUTISTA, TERESITA ESTEBAN, JOSE BENJAMIN, LORENZO
BELDEVER, LEODEGARIO TUMLOS, PATRICIO MALATE, ANSELMO
CORTEJOS, ANACLETA ADUCA, SALOME BARCELONA, ENRICO
CELSO, IRENE CAMBA, MARIA COLLADO, RUFINO CANTIL,
ANANIAS CANILLO, MAXIMO DE CASTRO, CEFERINO SALAZAR,

111
PATRIA ANAYA, FELISA VELASCO, IGNACIO SARASPI, FLAVIO
DINAGUIT, REMEDIOS BAROMETRO, PEDRO GEBANIA, RUBEN
GEGABALEN, EMETRIO EDAÑO, LUCIANO ARAGONES, ADRIANO
ESTRELLADO, BONIFACIO EVARISTO, ISIDORO EDORIA, TIMOTEA
ECARUAN, BIENVENIDO COLLADO, CENON DAJUYA, RAFAELA
FERNANDEZ, ALFONSO FAUSTINO, AVELINO GARCIA, RICARDO
GUIRNALDA, FRANCISCO HENERAL, CARMEN KIONESALA,
FELICIANO LUMACTOD, DOLORES VILLACAMPA, NARCISO LIM,
EUFEMIO LEGASPI, MATILDE MABAQUIAO, EULOGIO VIÑA,
MACARIO ANTONIO, JEREMIAS DE LA CRUZ, MARTIN MANGABAN,
SIMEON MANGABA T., CARIDAD MER MILLA, FELIX MAHINAY,
NAPOLEON MARZAN, ISAIAS MANALASTAS, JOSEFA CORVERA,
JOSE APRUEDO, ARSENIO REYES, EUGENIA A. ONO, CORNELIO
OPOLENCIA, SEDECIAS PASCUA, ABUNDIO PAGUNTALAN,
ESPERANZA DE QUIROS, CRESENCIO SALEM, MOISES FERNANDEZ,
FORTUNATO GONZALES, SOCORRO R. VALEN, RODOLFO COLLADO,
VENERIO CELSO, GREGORIO DE LA CRUZ, CELSO ALCERA, NICOLAS
ARAGONES, JOSEFINA MANANSALA, ADELAIDA CALASIN , JOSE
AGUSTIN, TOMAS JOSEPH, MANUEL DADOR, SERGIO LIPATON,
ERNESTO SUMAYDING, MARCELINO DIOSO, MIGUEL ALCERA,
CRISANTA ENAMER, JUAN VIADO HILARION CHIOCO, EUROPIA
CABAHUG, VICTORIA DUERO, CONSORCIO ENOC, MAMERTO
GAMONIDO, BONIFACIO SABADO, MARIA INTROLIZO, HENRY
ENOLBA, REYNALDO LIM, FORTUNATO LIPON, ERNESTO MALLOS,
FLORENTINA PATRICIO, MAMERTO PALAPALA, RAMON DE
PERALTA, JOSE PARRAS, APOLINARIO YAP, JUAN ROQUE, FELIX
ROQUE, GLICERIA SALAZAR, MIGUELA SABIO, AGAPITO SAYAS,
PAULINO SARROZA, PACIFICO JUANICO, LIBERADO TULAWAN,
LIGAYA LAUS, ERNESTO VERZOSA, LEOPOLDO BERNALES, JAIME
VISTA, ISAIAS AMURAO, BENITA M. BARENG, and BRIGIDA
SANCHEZ, petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON
BAGATSING as CITY MAYOR OF MANILA, HON. LADISLAO J.
TOLENTINO, City Engineer of Manila, their agents, employees,
assistants and all persons acting under them; HON. BENJAMIN
GOZON, Administrator, Land Reform Authority substituted by HON
CONRADO ESTRELLA as Secretary of the Department of Agrarian
Reforms and his agents, employees, assistants and all persons
acting under his orders, respondent.1
G.R. No. L-24915 February 28, 1974
BENJAMIN RABUCO, et al., (the same co-petitioners in L-
24661), petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON
BAGATSING as CITY MAYOR OF MANILA, et al., (the same co-
respondents in L-24661), respondents.
G.R. No. L-24916 February 28, 1974
BENJAMIN RABUCO, et al. (the same co-petitioners in L-
24661), petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON
BAGATSING as CITY MAYOR OF MANILA, et al., (the same co-
respondents in L-24661), respondents-appellees.
Manuel D. Melotindos and Ricardo M. Guirnalda for petitioners.
Second Assistant City Fiscal Manuel T. Reyes for respondents.
TEEHANKEE, J.:p
112
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.
The origin and background of the cases at bar which deal with the
decisive issue of constitutionality of Republic Act 3120 enacted
on June 17, 1961, as raised by respondent mayor of Manila in
resisting petitioners' pleas that respondent mayor not only lacks the
authority to demolish their houses or eject them as tenants and
bona fide occupants of a parcel of land in San Andres, Malate 2 but is
also expressly prohibited from doing so by section 2 of the Act, may
be summarized from the Court of Appeals'3 certification of
resolution of May 31, 1965 as follows:
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.
The two cases were ordered "consolidated into one" since they
were "unavoidably interlaced." The appellate court, finding that the
constitutionality of Republic Act 3120 was "the dominant and
inextricable issue in the appeal" over which it had no jurisdiction
and that the trial court incorrectly "sidetracked" the issue,
thereafter certified the said cases to this Court, as follows:
The validity of Republic Act 3120 which was
seasonably posed in issue in the court below was
sidetracked by the trial court, thus:
The constitutionality of Republic Act
No. 3120 need not be passed upon
as the principal question in issue is
whether the houses of the
petitioners are public nuisances,
which the court resolved in the
affirmative. As a matter of fact even
if the petitioners were already the
owners of the land on which their
respected houses are erected, the
respondent city officials could cause
the removal thereof as they were
constructed in violation of city
ordinances and constitute public
nuisance.
It is significant to note, however, that what is
sought by the respondent City Mayor and City
113
Engineer of Manila is not only the demolition of the
petitioners' houses in the premises in controversy,
but their ejectment as well. Moreover, Republic Act
3120 does intend not only the dismissal of the
ejectment proceedings against the petitioners from
the land in controversy upon their motion, but as
well that any demolition order issued against them
shall also have to be dismissed. The law says:
Upon approval of this Act no
ejectment proceedings against any
tenants or bona fide occupant shall
be instituted and any proceedings
against any such tenant or bona
fide occupant shall be dismissed
upon motion of the
defendant. Provided, That any
demolition order directed against
any tenant or bona fide occupant
thereof, shall be dismissed. (Sec. 2,
R. A. 3120).
Indeed, the petitioners-appellants, who contended
in the court below that it was not necessary to
decide on the validity or constitutionality of the law,
now asseverate that 'Republic Act No. 3120
expressly prohibits ejectment and demolition of
petitioners' home.' The petitioners' argument in
their appeal to this Court runs as follows:
1. Petitioners-appellants are
entitled to the remedies of
injunction and mandamus, being
vested with lawful possession over
Lot 21-B, Block 610, granted by law,
Republic Act No. 3120.
2. Civil Case No. 56092 has not been
barred by any prior judgment, as
wrongly claimed by respondents-
appellees.
3. Ejectment and demolition against
petitioners-appellants are unlawful
and clearly prohibited by Republic
Act No. 3120.
The defense of the respondents Mayor and City
Engineer of Manila to arguments 2 and 3 is the
invalidity of the said Republic Act 3120 for being in
violation of the Constitutional prohibition against
the deprivation of property without due process of
law and without just compensation. So that even if
argument 2 interposed by the petitioners-
appellants should be rejected, still they may claim a
right, by virtue of the aforesaid provisions of
Republic Act 3120, to continue possession and
occupation of the premises and the lifting of the
order of demolition issued against them. The
constitutionality of the said Republic Act 3120,
therefore, becomes the dominant and inextricable
issue of the appeal.
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
114
Appeals which declared itself without jurisdiction over the principal
and decisive issue of constitutionality of Republic Act 3120.
The Court gave due course thereto and on August 17, 1965 issued
upon a P1,000 — bond the writ of preliminary injunction as prayed
for enjoining respondents "from demolishing and/or continuing to
demolish the houses of herein petitioners situated in Lot No. 21-B,
Block No. 610 of the Cadastral Survey of the City of Manila, or from
performing any act constituting an interference in or disturbance of
their present possession."
The records of two cases certified by the appellate court, L-24915
and L-24916, were eventually forwarded to this Court which per its
resolution of August 24, 1965 ordered that they be docketed and be
considered together with case L-24661.
In the early morning of April 19, 1970, a large fire of undetermined
origin gutted the Malate area including the lot on which petitioners
had built their homes and dwellings. Respondents city officials then
took over the lot and kept petitioners from reconstructing or
repairing their burned dwellings. At petitioners' instance, the Court
issued on June 17, 1970 a temporary restraining order enjoining
respondents city officials "from performing any act constituting an
interference in or disturbance of herein petitioners' possession of
Lot No. 21-B, Block No. 610, of the Cadastral Survey of the City of
Manila" as safeguarded them under the Court's subsisting
preliminary injunction of August 17, 1965.
The "dominant and inextricable issue" at bar, as correctly perceived
by the appellate court is the constitutionality of Republic Act 3120
whereby Congress converted the lot in question together with
another lot in San Andres, Malate "which are reserved as communal
property" into "disposable or alienable lands of the State to be
placed under the administration and disposal of the Land Tenure
Administration" for subdivision into small lots not exceeding 120
square meters per lot for sale on installment basis to the tenants or
bona fide occupants thereof6 and expressly prohibited ejectment
and demolition of petitioners' homes under section 2 of the Act as
quoted in the appellate court's certification resolution, supra.
The incidental issue seized upon by the trial court as a main issue for
"sidetracking" the decisive issue of constitutionality, to wit, that
petitioners' houses as they stood at the time of its judgment in 1965
"were constructed in violation of city ordinances and constituted
public nuisances" whose removal could be ordered "even if
petitioners were already the owners of the land on which their
respective houses are erected" has become moot with the burning
down of the petitioners' houses in the fire of April 19, 1970.
If the Act is invalid and unconstitutional for constituting deprivation
of property without due process of law and without just
compensation as contended by respondents city officials, then the
trial court's refusal to enjoin ejectment and demolition of
petitioners' houses may be upheld. Otherwise, petitioners' right
under the Act to continue possession and occupation of the
premises and to the lifting and dismissal of the order of demolition
issued against them must be enforced and the trial court's judgment
must be set aside.
Respondents city officials' contention that the Act must be stricken
down as unconstitutional for depriving the city of Manila of the lots
in question and providing for their sale in subdivided small lots to
bona fide occupants or tenants without payment of just
compensation is untenable and without basis, since the lots in
question are manifestly owned by the city in
its  public and governmental capacity and are therefore public
property over which Congress had absolute control as distinguished
from patrimonial property owned by it in
115
its  private or  proprietary capacity of which it could not be deprived
without due process and without just compensation. 7
Here, Republic Act 3120 expressly declared that the properties were
"reserved as communal property" and ordered their conversion into
"disposable and alienable lands of the State" for sale in small lots to
the bona fide occupants thereof. It is established doctrine that the
act of classifying State property calls for the exercise of wide
discretionary legislative power which will not be interfered with by
the courts.
The case of Salas vs. Jarencio8 wherein the Court upheld the
constitutionality of Republic Act 4118 whereby Congress in identical
terms as in Republic Act 3120 likewise converted another city lot
(Lot 1-B-2-B of Block 557 of the cadastral survey of Manila also in
Malate) which was reserved as communal property into disposable
land of the State for resale in small lots by the Land Tenure,
Administration to the bona fide occupants is controlling in the case
at bar.
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.
Accordingly, the legal situation is the same as if the State itself holds
the property and puts it to a different use" 9 and stressed that "the
property, as has been previously shown, was not acquired by the
City of Manila with its own funds in its private or proprietary
capacity. That it has in its name a registered title is not questioned,
but this title should be deemed to be held in trust for the State as
the land covered thereby was part of the territory of the City of
Manila granted by the sovereign upon its creation." 10
There as here, the Court holds that the Acts in question (Republic
Acts 4118 in Salas and Republic Act 3120 in the case at bar) were
intended to implement the social justice policy of the Constitution
and the government program of land for the landless and that they
were not "intended to expropriate the property involved but merely
to confirm its character as communal land of the State and to make
it available for disposition by the National Government: ... The
subdivision of the land and conveyane of the resulting subdivision
lots to the occupants by Congressional authorization
does not operate as an exercise of the power of eminent domain
without just compensation in violation of Section 1, subsection (2),
Article III of the Constitution, 11 but simply as a manifestation of
its right and  power to deal with state property." 12
Since the challenge of respondents city officials against the
constitutionality of Republic Act 3120 must fail as the City
was not deprived thereby of anything it owns by acquisition with its
private or corporate funds either under the due process clause or
under the eminent domain provisions of the Constitution, the
provisions of said Act must be enforced and petitioners are entitled
to the injunction as prayed for implementing the Act's prohibition
against their ejectment and demolition of their houses.
WHEREFORE, the appealed decision of the lower court (in Case No.
L-24916) is hereby set aside, and the preliminary injunction
heretofore issued on August 17, 1965 is hereby made permanent.
The respondent Secretary of Agrarian Reform as successor agency
of the Land Tenure Administration may now proceed with the due
116
implementation of Republic Act 3120 in accordance with its terms
and provisions. No costs.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 97764 August 10, 1992

LEVY D. MACASIANO, Brigadier General/PNP Superintendent,

Metropolitan Traffic Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62,
Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF
PARAÑAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN FOR
SERVICE, respondents.

Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.

Manuel de Guia for Municipality of Parañaque.

117
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court
seeking the annulment of the decision of the Regional Trial Court of
Makati, Branch 62, which granted the writ of preliminary injunction
applied for by respondents Municipality of Parañaque and Palanyag
Kilusang Bayan for Service (Palanyag for brevity) against petitioner
herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed Ordinance
No. 86, Series of 1990 which authorized the closure of J. Gabriel,
G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets
located at Baclaran, Parañaque, Metro Manila and the
establishment of a flea market thereon. The said ordinance was
approved by the municipal council pursuant to MMC Ordinance No.
2, Series of 1979, authorizing and regulating 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.
On July 20, 1990, the Metropolitan Manila Authority approved
Ordinance No. 86, s. 1990 of the municipal council of respondent
municipality subject to the following conditions:
1. That the aforenamed streets are not used for
vehicular traffic, and that the majority of the
residents do not oppose the establishment of the
flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and
that the 2 meters on both sides of the road shall be
used by pedestrians;
3. That the time during which the vending area is to
be used shall be clearly designated;
4. That the use of the vending areas shall be
temporary and shall be closed once the reclaimed
areas are developed and donated by the Public
Estate Authority.
On June 20, 1990, the municipal council of Parañaque issued a
resolution authorizing Parañaque Mayor Walfrido N. Ferrer to enter
into contract with any service cooperative for the establishment,
operation, maintenance and management of flea markets and/or
vending areas.
On August 8, 1990, respondent municipality and respondent
Palanyag, a service cooperative, entered into an agreement
whereby the latter shall operate, maintain and manage the flea
market in the aforementioned streets 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.
On September 13, 1990, 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.
On October 16, 1990, petitioner Brig. General Macasiano wrote a
letter to respondent Palanyag giving the latter ten (10) days to
118
discontinue the flea market; otherwise, the market stalls shall be
dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag
filed with the trial court a joint petition for prohibition
and mandamus  with damages and prayer for preliminary injunction,
to which the petitioner filed his memorandum/opposition to the
issuance of the writ of preliminary injunction.
On October 24, 1990, the trial court issued a temporary restraining
order to enjoin petitioner from enforcing his letter-order of October
16, 1990 pending the hearing on the motion for writ of preliminary
injunction.
On December 17, 1990, the trial court issued an order upholding the
validity of Ordinance No. 86 s. 1990 of the Municipality' of
Parañaque and enjoining petitioner Brig. Gen. Macasiano from
enforcing his letter-order against respondent Palanyag.
Hence, this petition was filed by the petitioner thru the Office of the
Solicitor General alleging grave abuse of discretion tantamount to
lack or excess of jurisdiction on the part of the trial judge in issuing
the assailed order.
The sole issue to be resolved in this case is 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.
The Solicitor General, in behalf of petitioner, contends that
municipal roads are used for public service and are therefore public
properties; that as such, they cannot be subject to private
appropriation or private contract by any person, even by the
respondent Municipality of Parañaque. Petitioner submits that a
property already dedicated to public use cannot be used for another
public purpose and that absent a clear showing that the
Municipality of Parañaque has been granted by the legislature
specific authority to convert a property already in public use to
another public use, respondent municipality is, therefore, bereft of
any authority to close municipal roads for the establishment of a
flea market. Petitioner also submits that assuming that the
respondent municipality is authorized to close streets, it failed to
comply with the conditions set forth by the Metropolitan Manila
Authority for the approval of the ordinance providing for the
establishment of flea markets on public streets. Lastly, petitioner
contends that by allowing the municipal streets to be used by
market vendors the municipal council of respondent municipality
violated its duty under the Local Government Code to promote the
general welfare of the residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court
ruled:
. . . that Chanter II Section 10 of the Local
Government Code is a statutory grant of power
given to local government units, the Municipality of
Parañaque as such, is empowered under that law to
close its roads, streets or alley subject to limitations
stated therein (i.e., that it is in accordance with
existing laws and the provisions of this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi
Macasiano, though apparently within its power is in
fact an encroachment of power legally vested to the
municipality, precisely because when the
municipality enacted the ordinance in question —
119
 the authority of the respondent as Police
Superintendent ceases to be operative on the
ground that the streets covered by the ordinance
ceases to be a public thoroughfare. (pp. 33-
34, Rollo)
We find the petition meritorious. In resolving the question of
whether the disputed municipal ordinance authorizing the flea
market on the public streets is valid, it is necessary to examine the
laws in force during the time the said ordinance was enacted,
namely, Batas Pambansa Blg. 337, otherwise known as Local
Government Code, in connection with established principles
embodied in the Civil Code an property and settled jurisprudence on
the matter.
The property of provinces, cities and municipalities is divided into
property for public use and patrimonial property (Art. 423, Civil
Code). As to what consists of property for public use, Article 424 of
Civil Code states:
Art. 424. Property for public use, in the provinces,
cities and municipalities, consists of the provincial
roads, city streets, the squares, fountains, public
waters, promenades, and public works for public
service paid for by said provinces, cities or
municipalities.
All other property possessed by any of them is
patrimonial and shall be governed by this Code,
without prejudice to the provisions of special laws.
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena 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 (Province of Zamboanga del Norte v. City of
Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). 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. One such example of this authority given by
Congress to the local governments is the power to close roads as
provided in Section 10, Chapter II of the Local Government Code,
which states:
Sec. 10. Closure of roads. — A local government unit
may likewise, through its head acting pursuant to a
resolution of its sangguniang and in accordance
with existing law and the provisions of this Code,
close any barangay, municipal, city or provincial
road, street, alley, park or square. No such way or
place or any part of thereof shall be close without
indemnifying any person prejudiced thereby. A
property thus withdrawn from public use  may be
used or conveyed for any purpose for which other
real property belonging to the local unit concerned
might be lawfully used or conveyed. (Emphasis
ours).
However, the aforestated 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
120
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
(Article 422, Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al.,
G.R. No. L-40474, August 29, 1975, 66 SCRA 481). It is only then that
the respondent municipality can "use or convey them for any
purpose for which other real property belonging to the local unit
concerned might be lawfully used or conveyed" in accordance with
the last sentence of Section 10, Chapter II of Blg. 337, known as
Local Government Code. In one case, the City Council of Cebu,
through a resolution, declared the terminal road of M. Borces
Street, Mabolo, Cebu City as an abandoned road, the same not
being included in the City Development Plan. Thereafter, the City
Council passes another resolution authorizing the sale of the said
abandoned road through public bidding. We held therein that the
City of Cebu is empowered to close a city street and to vacate or
withdraw the same from public use. Such withdrawn portion
becomes patrimonial property which can be the object of an
ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles,
et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, 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. This limitation on the authority of the local
government over public properties has been discussed and settled
by this Court en banc in "Francisco V. Dacanay, petitioner v. Mayor
Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6,
1992." This Court ruled:
There is no doubt that the disputed areas from
which the private respondents' market stalls are
sought to be evicted are public streets, as found by
the trial court in Civil Case No. C-12921. A public
street is property for public use hence outside the
commerce of man (Arts. 420, 424, Civil Code). Being
outside the commerce of man, it may not be the
subject of lease or others contract (Villanueva, et al.
v. Castañeda and Macalino, 15 SCRA 142 citing the
Municipality of Cavite v. Rojas, 30 SCRA 602;
Espiritu v. Municipal Council of Pozorrubio, 102 Phil.
869; And Muyot v. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government
for the right to occupy portions of the public street,
the City Government, contrary to law, has been
leasing portions of the streets to them. Such leases
or licenses are null and void for being contrary to
law. The right of the public to use the city streets
may not be bargained away through contract. The
interests of a few should not prevail over the good
of the greater number in the community whose
health, peace, safety, good order and general
welfare, the respondent city officials are under legal
obligation to protect.
The Executive Order issued by acting Mayor Robles
authorizing the use of Heroes del '96 Street as a
vending area for stallholders who were granted
licenses by the city government contravenes the
general law that reserves city streets and roads for
121
 public use. Mayor Robles' Executive Order may not
infringe upon the vested right of the public to use
city streets for the purpose they were intended to
serve: i.e., as arteries of travel for vehicles and
pedestrians.
Even assuming,  in gratia argumenti, that respondent municipality
has the authority to pass the disputed ordinance, the same cannot
be validly implemented because it cannot be considered approved
by the Metropolitan Manila Authority due to non-compliance by
respondent municipality of the conditions imposed by the former
for the approval of the ordinance, to wit:
1. That the aforenamed streets are not used for
vehicular traffic, and that the majority of the
residents do(es) not oppose the establishment of
the flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and
that the 2 meters on both sides of the road shall be
used by pedestrians;
3. That the time during which the vending area is to
be used shall be clearly designated;
4. That the use of the vending areas shall be
temporary and shall be closed once the reclaimed
areas are developed and donated by the Public
Estate Authority. (p. 38, Rollo)
Respondent municipality has not shown any iota of proof that it has
complied with the foregoing conditions precedent to the approval
of the ordinance. The allegations of respondent municipality that
the closed streets were not used for vehicular traffic and that the
majority of the residents do not oppose the establishment of a flea
market on said streets are unsupported by any evidence that will
show that this first condition has been met. Likewise, the
designation by respondents of a time schedule during which the flea
market shall operate is absent.
Further, it is of public notice that the streets along Baclaran area are
congested with people, houses and traffic brought about by the
proliferation of vendors occupying the streets. To license and allow
the establishment of a flea market along J. Gabriel, G.G. Cruz,
Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran
would not help in solving the problem of congestion. We take note
of the other observations of the Solicitor General when he said:
. . . There have been many instances of emergencies
and fires where ambulances and fire engines,
instead of using the roads for a more direct access
to the fire area, have to maneuver and look for
other streets which are not occupied by stalls and
vendors thereby losing valuable time which could,
otherwise, have been spent in saving properties and
lives.
Along G.G. Cruz Street is a hospital, the St. Rita
Hospital. However, its ambulances and the people
rushing their patients to the hospital cannot pass
through G.G. Cruz because of the stalls and the
vendors. One can only imagine the tragedy of losing
a life just because of a few seconds delay brought
about by the inaccessibility of the streets leading to
the hospital.
122
 The children, too, suffer. In view of the occupancy
of the roads by stalls and vendors, normal
transportation flow is disrupted and school children
have to get off at a distance still far from their
schools and walk, rain or shine.
Indeed one can only imagine the garbage and litter
left by vendors on the streets at the end of the day.
Needless to say, these cause further pollution,
sickness and deterioration of health of the residents
therein. (pp. 21-22, Rollo)
Respondents do not refute the truth of the foregoing findings and
observations of petitioners. Instead, respondents want this Court to
focus its attention solely on the argument that the use of public
spaces for the establishment of a flea market is well within the
powers granted by law to a local government which should not be
interfered with by the courts.
Verily, the powers of a local government unit are not absolute. They
are subject to limitations laid down by toe Constitution and the laws
such as our Civil Code. Moreover, the exercise of such powers
should be subservient to paramount considerations of health and
well-being of the members of the community. Every local
government unit has the sworn obligation to enact measures that
will enhance the public health, safety and convenience, maintain
peace and order, and promote the general prosperity of the
inhabitants of the local units. Based on this objective, the local
government should refrain from acting towards that which might
prejudice or adversely affect the general welfare.
As what we have said in the Dacanay case, the general public have a
legal right to demand the demolition of the illegally constructed
stalls in public roads and streets and the officials of respondent
municipality have the corresponding duty arising from public office
to clear the city streets and restore them to their specific public
purpose.
The instant case as well as the Dacanay case, involves an ordinance
which is void and illegal for lack of basis and authority in laws
applicable during its time. However, at this point, We find it worthy
to note that Batas Pambansa Blg. 337, known as Local Government
Lode, has already been repealed by Republic Act No. 7160 known as
Local Government Code of 1991 which took effect on January 1,
1992. Section 5(d) of the new Code provides that rights and
obligations existing on the date of effectivity of the new Code and
arising out of contracts or any other source of prestation involving a
local government unit shall be governed by the original terms and
conditions of the said contracts or the law in force at the time such
rights were vested.
ACCORDINGLY, the petition is GRANTED and the decision of the
respondent Regional Trial Court dated December 17, 1990 which
granted the writ of preliminary injunction enjoining petitioner as
PNP Superintendent, Metropolitan Traffic Command from enforcing
the demolition of market stalls along J. Gabriel, G.G. Cruz,
Bayanihan, Lt. Garcia Extension and Opena streets is hereby
RESERVED and SET ASIDE.
SO ORDERED.
123
 EN BANC

G.R. No. L-301 April 7, 1948

CARLOS PALANCA, petitioner-appellee, vs. THE REPUBLIC OF THE

PHILIPPINES, movant-appellant.

Office of the Solicitor General Lorenzo M. Tañada and Solicitors

Pedro S. Reyes and Felix V. Makasiar for movant-appellant.
Roxas, Picazo, and Mejia for petitioner-appellee.
Vicente Sotto as amicus curiae.

PADILLA, J.:

In 1941 Carlos Palanca applied for citizenship under the provisions

of Commonwealth Act No. 473. Hearing on the petition was held
but no decree was entered because the Pacific War supervened. On
11 September 1944, the Court of First Instance of Manila under the
Japanese sponsored Republic of the Philippines entered a decree
granting the petition upon the evidence heard before the outbreak

124
of the war. However, the petitioner did not take the prescribed oath
as a condition precedent to the issuance of the certificate of
naturalization. After the reconstitution of the record of the
proceedings which had been destroyed as a result of the battle for
the liberalization of Manila, the petitioner took the oath and he was
issued certificate of naturalization No.
1000.chanroblesvirtualawlibrary chanrobles virtual law library
On 3 July 1945, the Solicitor General filed a motion which he
amended on 8 August, praying for the cancellation of the certificate
of naturalization issued to the petitioner, on the ground that the
latter does not and did not possess good moral character, that he
has not conducted himself in an "irreproachable manner in his
relation with the constituted government," that he is not loyal to
the Commonwealth Government of which he desires to be citizen,
and that citizenship being a political status, the decree granting it
entered by a court exercising judicial powers under the authority of
the enemy sponsored Government is null and
void.chanroblesvirtualawlibrary chanrobles virtual law library
At the hearing of the motion for cancellation, when Solicitor Pedro
S. Reyes was starting to present the evidence for the Government,
counsel for the petitioner asked leave of the court to be allowed to
prove that the petitioner is a Filipino citizen, and informed the court
that upon that ground he would join in the move to cancel the
certificate of naturalization issued to the petitioner (p. 17, t.s.n.).
The leave having been granted, counsel for petitioner submitted
evidence which shows that -
Carlos Palanca arrived in the Philippine in the year 1884 and that
since his arrival he continually resided in the City of Manila with the
exception of the occasion, in the year 1902, when he left the
Philippines for two months to attend the burial of his uncle Don
Carlos Palanca, which took place in China; that in 1894 he wanted to
marry a Filipina, and because the Archbishop of Manila had decreed
that a Chinaman, even if Christian, could not marry a native of the
Philippines, in that year (it must have been in 1893) he applied for
Spanish citizenship; that in connection with said application he
received from the Gobernadorcillo de Sangleyes the document
Exhibit A, dated January 19, 1894, wherein the petitioner, Carlos
Palanca was informed of the Royal Decree of the regent, the Queen
Maria Cristina, of November 30, 1893, by which he was granted
Spanish citizenship in accordance with the laws of the Monarchy,
which was to be effective upon giving his oath provided for in such
cases and after he shall have renounced his foreign allegiance; that
in addition to Exhibit A, petitioner also received and presented as
Exhibit B a notification to the Gobernadorcillo de Sangleyes from
the Secretaryship of the General Government whereby the former
was informed of the royal decree of the Regent, Queen Maria
Cristina, dated November 30, 1893, by which the applicant, Carlos
Palanca was granted the Spanish citizenship to enter into effect
upon his giving the corresponding oath (In this communication the
text of the Royal Decree is quoted); that on the day following the
receipt of Exhibit A, the petitioner repaired to Malacañang and
there gave his oath of allegiance and received the corresponding
certificate of Spanish citizenship, which was burned in his house at
Taft Avenue during the battle for liberation of Manila on the return
of the Americans in 1945; that Exhibit B was the communication
referred to as having been received by the Gobernadorcillo de
Sangleyes from the Secretaryship of the General Government; that
on February 4, 1894, and after having acquired the Spanish
citizenship, Carlos Palanca Tan Tiaojua (Quian Lay) married Cesarea
Cano Torres, native and resident of the District of Binondo, Manila
(Exhibit D); that from then on the petitioner, Carlos Palanca,
considered himself a Spanish subject, was registered as such in the
Spanish Consulate General in Manila and has as late as March 2,
1942, received from said Consulate Duplicate Certificate No. 548
issued by the Spanish Consul General, Jose del Castano (Exhibit C);
125
that because the petitioner, Carlos Palanca, believed himself to be a
Spanish subject and desirous of acquiring Filipino citizenship by
naturalization, he instituted this case in 1941, and when he married
on April 12, 1945, his present wife, Rosa Gonzales, prior to the
receipt of his Certificate of naturalization No. 1000, he made it
appear therein that he was of Spanish nationality; and that during
the course of his application for Filipino citizenship by
naturalization, he also adduced evidence to show that he had
acquired the Spanish nationality during the Spanish regime in these
Islands (Order of the Court of First Instance of Manila dated 7
January 1946.)
Holding that the petitioner is a Filipino citizen pursuant to section 4
of the Act of the Congress of 1 July 1902 and section 2 of the Act of
Congress of 29 August 1916, the trial court granted the motion for
cancellation of the certificate of naturalization issued to the
petitioner, not upon the grounds alleged in the motion but for the
reason that the certificate of naturalization was unnecessary. From
this order the Solicitor General in behalf of the Government
appeals.chanroblesvirtualawlibrary chanrobles virtual law library
It is earnestly urged by the Solicitor General that, because of the
second paragraph of Article IX of the Treaty of Paris which
stipulated that -
The civil rights and political status of the native inhabitants of the
territories hereby ceded to the United States shall be determined by
the Congress,
section 4 of the Act of Congress of 1 July 1902, which provides -
That all inhabitants of the Philippine Islands, continuing to reside
therein who were Spanish subjects on the eleventh day of April,
eighteen hundred and ninety-nine, and then resided in said
islands, ... shall be deemed and held to be citizens of the Philippine
Islands . . . .
and section 2 of the Act of Congress of 29 August 1916, which
provides -
That all inhabitants of the Philippine Islands who were Spanish
subjects on the eleventh day of April, eighteen hundred and ninety-
nine, and then resided in said Islands, ... shall be deemed and held
to be citizens of the Philippine Islands, . . . .
should be construed to refer not to all inhabitants of the Philippine
Islands but only to native inhabitants thereof. Stated differently, the
term "all inhabitants" means native inhabitants only, according to
the interpretation and contention of the Solicitor General. The
provisions of the Acts of Congress quoted above do not have the
import given them by the Solicitor General, even if they were
construed in connection with the second paragraph of Article IX of
the Treaty of Paris also quoted above. By the Treaty of Paris, Spain
ceded to the United States the territory known as the Philippine
Islands. There was no need of stipulating on the future political
status of the inhabitants of the Philippine Islands thus ceded, except
perhaps on the status of those who might choose to preserve their
allegiance to Spain (Article IX, par. 1, Treaty of Paris), because the
power and authority to determine the political status of said
inhabitants was inherently vested in the United States. There could
be no limitation upon the power and authority to determine the
political status of said inhabitants by the United States, and for that
reason the enactment of a law by the latter declaring that all
inhabitants of the Philippine Islands, who were Spanish subjects on
the 11th day of April, 1899, and then resided therein, are citizens
thereof, cannot be construed to contravene the treaty stipulation
referred to. The plenipotentiaries of Spain who signed the Treaty of
Paris could not have been solicitous only about the future political
126
status of her subjects residing in the Philippine Islands who were
not born in Spain. If Spain had allowed her subjects born in Spain
who were residing in the Philippines Islands to become citizens of
the latter upon their failure to preserve their allegiance to her
(Spain), it could not have been her intention not to allow her
subjects residing in the Philippine Islands who were not born in
Spain to become citizens of the country of their residence, in the
same way that she allowed her subjects born in Spain and residing
in the Philippine Islands to become citizens of the latter, or, by
failing to stipulate on their future political status, to make them
citizens of their country of origin, the citizenship of which they had
renounced by becoming Spanish subjects. There seems to be no
doubt that the lack of treaty stipulation regarding Spanish subjects
residing in the Philippine Islands, who were not born in Spain, was
merely due to an oversight. It was not deliberate for the purpose of
reverting them to the citizenship of their country of origin, for a
change of citizenship must be voluntary or by an act, express or
implied, of the citizen or subject. Hence, it may safely be asserted
that the second paragraph of Article IX of the Treaty of Paris is not a
limitation upon the power of the United States to determine the
political status of all inhabitants of the Philippines who were Spanish
subjects on the 11th day of April 1899 and continued to reside
therein. There being no limitation, as there could be none, the
petitioner, who was an inhabitant of the Philippine Islands and a
naturalized subject of Spain on the 11th day of April 1899, is a
Filipino citizen, by virtue of the provisions of section 4 of the Act of
congress of 1 July 1902 and of section 2 of the Act of congress of 29
August 1916. under the Constitution he is also a citizen of the
Philippines because he was such at the time of the adoption of the
Constitution.chanroblesvirtualawlibrary chanrobles virtual law
library
Before the enactment of Commonwealth Act No. 63, as amended,
there was no law providing for causes which may result in the
forfeiture of Philippine citizenship, but international law recognizes
expatriation, naturalization in a foreign country, military service
rendered in and for another country, and marriage of a female
citizen to a
foreigner - to cite some instances - as causes which may give rise to
the loss of citizenship. The evidence does not show that the
petitioner had expatriated himself, that he had been naturalized in a
foreign country, or that he had rendered military service in and for
another country. Except an absence of two months in 1902 he has
never been out of the
Philippines.chanroblesvirtualawlibrary chanrobles virtual law library
His holding out as Spanish subject, as shown in his two marriage
certificates (Exhibits D and F) and his registration in the Spanish
Consulate as such subject, has been satisfactorily explained. He only
came to know after he had filed his petition for naturalization that,
under the Treaty of Paris and the Acts of congress of the United
States already referred to, he is a Filipino citizen. A proof thereof is
his application for citizenship in 1941. But his mistake or
misapprehension as to his citizenship is not a sufficient cause or
reason under the law for the forfeiture of his Philippine citizenship.
Neither may such mistake or misapprehension constitute
estoppel.chanroblesvirtualawlibrary chanrobles virtual law library
The motion for cancellation is based upon the provisions of section
18 (a) of Commonwealth Act No. 473. But the trial court ordered
the cancellation of the petitioner's certificate of naturalization, not
because he had obtained it fraudulently or illegally, but because he
does not need it, as he is a Filipino citizen. Upon the facts
established, it cannot be held that the petitioner secured his
certificate of naturalization fraudulently or illegally. Thus, under the
law invoked by the Solicitor General, the cancellation prayed for
cannot be granted for lack of evidence to show fraud or illegality on
the part of the petitioner in the obtainment of the certificate of
127
naturalization. At most, the certificate may be held illegal because it
was issued pursuant to a decree entered by a court exercising
judicial powers under the authority of the enemy sponsored
Republic of the Philippines. Logically, however, the cancellation was
correctly ordered, because a Filipino citizen need not apply for such
citizenship by naturalization or have a certificate of naturalization to
be citizen of the Philippine Islands of which he is already a
citizen.chanroblesvirtualawlibrary chanrobles virtual law library

The order appealed from is affirmed, without costs.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 185023               August 24, 2011

CITY OF PASIG, REPRESENTED BY THE CITY TREASURER and THE

CITY ASSESSOR, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT, Respondent.

DECISION

CARPIO, J.:

128
 The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules
of Court. The petition challenges the 17 October 2008 Decision 2 of
the Court of Appeals in CA-G.R. SP No. 97498, affirming the 6
November 2006 Decision3 of the Regional Trial Court (RTC), National
Capital Judicial Region, Pasig City, Branch 155, in SCA No. 2901.
The Facts
Mid-Pasig Land Development Corporation (MPLDC) owned two
parcels of land, with a total area of 18.4891 hectares, situated in
Pasig City. The properties are covered by Transfer Certificate of Title
(TCT) Nos. 337158 and 469702 and Tax Declaration Nos. E-030-
01185 and E-030-01186 under the name of MPLDC. Portions of the
properties are leased to different business establishments.
In 1986, the registered owner of MPLDC, Jose Y. Campos (Campos),
voluntarily surrendered MPLDC to the Republic of the Philippines.
On 30 September 2002, the Pasig City Assessor’s Office sent MPLDC
two notices of tax delinquency for its failure to pay real property tax
on the properties for the period 1979 to 2001 totaling
₱256,858,555.86. In a letter dated 29 October 2002, Independent
Realty Corporation (IRC) President Ernesto R. Jalandoni (Jalandoni)
and Treasurer Rosario Razon informed the Pasig City Treasurer that
the tax for the period 1979 to 1986 had been paid, and that the
properties were exempt from tax beginning 1987.
In letters dated 10 July 2003 and 8 January 2004, the Pasig City
Treasurer informed MPLDC and IRC that the properties were not
exempt from tax. In a letter dated 16 February 2004, MPLDC
General Manager Antonio Merelos (Merelos) and Jalandoni again
informed the Pasig City Treasurer that the properties were exempt
from tax. In a letter dated 11 March 2004, the Pasig City Treasurer
again informed Merelos that the properties were not exempt from
tax.
On 20 October 2005, the Pasig City Assessor’s Office sent MPLDC a
notice of final demand for payment of tax for the period 1987 to
2005 totaling ₱389,027,814.48. On the same day, MPLDC paid
₱2,000,000 partial payment under protest.
On 9 November 2005, MPLDC received two warrants of levy on the
properties. On 1 December 2005, respondent Republic of the
Philippines, through the Presidential Commission on Good
Government (PCGG), filed with the RTC a petition for prohibition
with prayer for issuance of a temporary restraining order or writ of
preliminary injunction to enjoin petitioner Pasig City from
auctioning the properties and from collecting real property tax.
On 2 December 2005, the Pasig City Treasurer offered the
properties for sale at public auction. Since there was no other
bidder, Pasig City bought the properties and was issued the
corresponding certificates of sale.
On 19 December 2005, PCGG filed with the RTC an amended
petition for certiorari, prohibition and mandamus against Pasig City.
PCGG prayed that: (1) the assessments for the payment of real
property tax and penalty be declared void; (2) the warrants of levy
on the properties be declared void; (3) the public auction be
declared void; (4) the issuance of certificates of sale be declared
void; (5) Pasig City be prohibited from assessing MPLDC real
property tax and penalty; (6) Pasig City be prohibited from collecting
real property tax and penalty from MPLDC; (7) Pasig City be ordered
to assess the actual occupants of the properties real property tax
and penalty; and (8) Pasig City be ordered to collect real property
tax and penalty from the actual occupants of the properties.
129
 The RTC’s Ruling
In its 6 November 2006 Decision, the RTC granted the petition for
certiorari, prohibition and mandamus. The RTC held:
The primordial issue to be resolved in the present case is whether or
not respondent City of Pasig, through the City Treasurer and the City
Assessor, acted with grave abuse of discretion amounting to lack or
excess of jurisdiction when it assessed, levied and sold in public
auction the "payanig" properties for non-payment of real property
taxes.
However, before dwelling on the merits of the main issue, certain
matters need to be addressed by the Court, to wit:
1. Does the Court have jurisdiction over the instant
petition?
2. Who owns the so-called "payanig" properties that were
subjected to payment of real property taxes by respondent?
The Court maintains that it is not precluded from assuming
jurisdiction over the instant amended petition which involves the
legality of the assailed actions by respondent in assessing and
collecting real property tax on the properties owned by the Republic
of the Philippines. It is a jurisprudential doctrine that the issue is
purely legal when the authority of the respondent to assess and
collect real property taxes on the subject properties is being
questioned (Ty vs. Trampe, 250 SCRA 500).
xxxx
In the instant proceeding, there is no dispute that the properties are
surrendered ill-gotten wealth of former President Marcos. As such,
the same assumes [sic] a public character and thus belongs [sic] to
the Republic of the Philippines. x x x
xxxx
Hence, upon the voluntary surrender by Jose Y. Campos, the
controlling owner of Mid-Pasig and Independent Realty
Corporation, of the "payanig" properties to PCGG, a clear admission
that these properties were part of the ill-gotten wealth of former
President Marcos was already evident. As such, there was already
constructive reconveyance to the State, which immediately placed
these reconveyed properties under the control and stewardship of
the PCGG as representative of the Republic of the Philippines.
Under such special circumstance, these voluntary surrendered
properties had already belonged to the State.
xxxx
Premised on the foregoing, the "payanig" properties, being part of
the recovered ill-gotten wealth of President Marcos, and therefore
are owned by the State itself, are exempt from payment of real
property taxes. It is only when the beneficial use of said properties
has been granted to a taxable person that the same may be subject
to imposition of real property tax.
Furthermore, in real estate taxation, the unpaid tax attaches to the
property and is chargeable against the taxable person who had
actual or beneficial use and possession of it regardless of whether or
not he is the owner (Testate Estate of Concordia T. Lim vs. City of
Manila, 182 SCRA 482).
In the instant case, the taxable persons being referred to are the
lessees occupying and/or doing business therein and have beneficial
use over portions within the "payanig" properties.
130
xxxx
Consequently, there can be no iota of doubt that respondent City of
Pasig abused its discretion by committing the acts sought to be
annulled herein despite knowledge of the fact that ownership over
the subject properties belong to petitioner. But what is more
appalling in the instant action is that such abuse was capriciously
committed by respondent City of Pasig against the sovereign State
itself from where that atxing local government unit derives its very
existence. The spring cannot rise higher than its source.
xxxx
In sum, the acts of respondent in assessing real property taxes on
properties owned and controlled by the Republic of the Philippines,
in collecting taxes from Mid-Pasig in lieu of the actual occupants or
beneficial users of certain portions thereof, and in auctioning said
properties in favor of respondent, followed by the corresponding
certificate of sale, are all unequivocally tainted with grave abuse of
discretion amounting to lack or excess of jurisdiction.
WHEREFORE, in the light of the foregoing, the instant Amended
Petition is hereby GRANTED.
Accordingly, the following acts of respondent are hereby ANNULLED
and SET ASIDE.
1. the assessment dated September 30, 2002 for the
payment of real property taxes and penalties made by the
City of Pasig on two (2) parcels of land covered by TCT No.
337158 and TCT No. 469702 registered under the name of
Mid-Pasig;
2. the warrants of levy dated November 8, 2005 issued
thereon by the City of Pasig;
3. the subsequent public auction sale of subject properties
held on December 2, 2005 followed by the issuance of the
corresponding Certificate of Sale;
FURTHER, the City of Pasig is hereby PROHIBITED from further:
1. Assessing real property taxes and penalties charges [sic]
on the said properties;
2. Collecting said taxes and penalty charges from the State;
3. Disposing or encumbering the subject properties or any
portion thereof;
FURTHER, the City of Pasig is hereby COMMANDED:
1. To return or effect the refund of the amount of Two
Million Pesos (Php 2,000,000.00) paid under protest by Mid-
Pasig Land Development Corporation on October 20, 2005,
or credit the same amount to any outstanding tax liability
that said corporation may have with the City of Pasig; and
2. To assess and collect from the actual occupants or
beneficial users of the subject properties, and not from the
State, whatever real property taxes and penalties that may
be due on the respective areas occupied by them.
SO ORDERED.4
Pasig City appealed to the Court of Appeals.
131
 The Court of Appeals’ Ruling
In its 31 March 2008 Decision,5 the Court of Appeals set aside the
RTC’s 6 November 2006 Decision. The Court of Appeals held:
We find nothing in PCGG’s petition that supports its claim regarding
Pasig City’s alleged grave abuse of discretion. It is undisputed that
the subject parcels of land are registered in the name of Mid-Pasig,
a private entity. Although the government, through the PCGG have
[sic] sequestered Mid-Pasig and all its assets including the subject
parcels of land, the sequestration per se, did not operate to convert
Mid-Pasig and its properties to public property. "The power of the
PCGG to sequester property claimed to be ‘ill-gotten’ means to place
or cause to be placed under its possession or control said property,
or any building or office wherein any such property and any records
pertaining thereto may be found, including ‘business enterprises and
entities’ — for the purpose of preventing the destruction,
concealment or dissipation of, and otherwise conserving and
preserving the same — until it can be determined, through
appropriate judicial proceedings, whether the property was in truth
‘ill-gotten,’ i.e., acquired through or as a result of improper or illegal
use of or the conversion of funds belonging to the Government or
any of its branches, instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of official position,
authority, relationship, connection or influence, resulting in unjust
enrichment of the ostensible owner and great damage and prejudice
to the State." x x x As such, prior to a valid court declaration the
"PCGG cannot perform acts of strict ownership of  [sic] sequestered
property. It is a mere conservator." In view thereof and the fact that
Mid-Pasig and its properties have not been validly declared by the
Sandiganbayan as "ill-gotten" wealth, the same are not yet public
properties. The PCGG even admitted that the transfer certificates of
title covering the subject parcels of land in the name of Mid-Pasig
have not been cancelled due to an order of the Sandiganbayan. The
trial court also found that the subject parcels of land are the subject
of litigation between Ortigas and Company Limited Partnership and
the PCGG in Civil Case No. 0093 pending before the Sandiganbayan.
These facts clearly show that the Sandiganbayan has not validly
declared yet that the subject parcels of land are "ill-gotten" wealth.
If so, they cannot be claimed yet as properties of the State: they
remain properties of a private entity. Thus, Pasig City through its
City Assessor and City Treasurer did not act with grave abuse of
discretion when it issued real property tax assessment on the
subject parcels of land.
Even admitting that the subject parcels of land are already owned
by the State, we still see no grave abuse of discretion on the part of
Pasig City when it issued the challenged tax assessment, for it is well
settled that the test of exemptions from taxation is the use of the
property for purposes mentioned in the Constitution. The owner of
the property does not matter. Even if he is not a tax-exempt entity,
as long as the property is being used for religious, charitable or
educational purposes, the property is exempt from tax. Conversely,
even if the government owns the property, if the beneficial use
thereof has been granted, for consideration or otherwise, to a
taxable person, the property is subject to tax. Here, the PCGG
admitted that portions of the subject properties were leased to
private entities engaged in commercial dealings. As well, the trial
court found that lessees occupy different areas of the subject
parcels of land beginning 1992 until 2005. Therefore, considering
that portions of the subject parcels of land are used for commercial
purposes, the duty imposed by law to owners and administrators of
real property to declare the same for tax purposes and the fact that
the tax declarations over the subject parcels of land are in the name
of Mid-Pasig, again, Pasig City did not act with grave abuse of
discretion when it issued the challenged tax assessment.
132
The foregoing snowball to one conclusion — the allegations in
PCGG’s petition imputing grave abuse of discretion on the part of
Pasig City, acting through the City Assessor and City Treasurer, in
the assessment and collection of the taxes were made in order to
justify the filing of the petition for certiorari, prohibition and
mandamus with the trial court.
The extraordinary remedies of certiorari, prohibition and mandamus
may be resorted to only when there is no other plain, available,
speedy and adequate remedy in the course of law. Where
administrative remedies are available, petitions for the issuance of
these peremptory writs do not lie in order to give the administrative
body the opportunity to decide the matter by itself correctly and to
prevent unnecessary and premature resort to courts.
Republic Act No. 7160 or the Local Government Code of 1991,
clearly sets forth the administrative remedies available to a taxpayer
or real property owner who is not satisfied with the assessment or
reasonableness of the real property tax sought to be collected. The
Supreme Court outlined said remedies, to wit:
Should the taxpayer/real property owner question the excessiveness
or reasonableness of the assessment, Section 252 directs that the
taxpayer should first pay the tax due before his protest can be
entertained. There shall be annotated on the tax receipts the words
"paid under protest." It is only after the taxpayer has paid the tax
due that he may file a protest in writing within thirty days from
payment of the tax to the Provincial, City or Municipal Treasurer,
who shall decide the protest within sixty days from receipt. In no
case is the local treasurer obliged to entertain the protest unless the
tax due has been paid.
If the local treasurer denies the protest or fails to act upon it within
the 60-day period provided for in Section 252, the taxpayer/real
property owner may then appeal or directly file a verified petition
with the LBAA within sixty days from denial of the protest or receipt
of the notice of assessment, as provided in Section 226 of R.A. No.
7160[.]
And, if the taxpayer is not satisfied with the decision of the LBAA, he
may elevate the same to the CBAA, which exercises exclusive
jurisdiction to hear and decide all appeals from the decisions, orders
and resolutions of the Local Boards involving contested assessments
of real properties, claims for tax refund and/or tax credits or
overpayments of taxes. An appeal may be taken to the CBAA by
filing a notice of appeal within thirty days from receipt thereof.
From the Central Board Assessment Appeals, the dispute may then
be taken to the Court of Tax Appeals by filing a verified petition for
review under Rule 42 of the Revised Rules of Court; to the Court of
tax Appeals en banc; and finally to the Supreme Court via a petition
for review on certiorari pursuant to Rule 45 of the Revised Rules of
Court.
We are not convinced with PCGG’s stance that their recourse of
filing the petition for certiorari, prohibition and mandamus before
the trial court is proper as they are questioning not merely the
correctness of the tax assessment but the actions of Pasig City,
through its City Assessor and City Treasurer, which were done in
grave abuse of discretion amounting to lack or excess of jurisdiction.
The well-established rule is that allegations in the complaint and the
character of the relief sought determine the nature of an action. A
perusal of the petition before the trial court plainly shows that what
is actually being assailed is the correctness of the assessments made
by the City Assessor of Pasig City on the subject parcels of land.
PCGG claims, among others, that: 1) the subject parcels of land are
exempt from real property taxation as they are public property; 2)
133
even if the subject parcels of land are subject to tax, as the
beneficial use thereof was granted to private persons and entities,
only the portion thereof used for commerce is subject to tax and the
users thereof are the ones liable to pay the tax; and 3) the right of
Pasig City to collect the real property taxes pertaining to 1987 to
1998 has already prescribed. These claims essentially involve
questions of fact, which are improper in a petition for certiorari,
prohibition and mandamus; hence, the petition should have been
brought, at the very first instance, to the Local Board Assessment
Appeals, which has authority to rule on the objections of any
interested party who is not satisfied with the action of the assessor.
Under the doctrine of primacy of administrative remedies, an error
in the assessment must be administratively pursued to the exclusion
of ordinary courts whose decisions would be void for lack of
jurisdiction.
Granting that the assessor’s authority and the legality of the
assessment are indeed an issue, the proper remedy is a suit for the
refund of the real property tax after paying the same under protest.
It must be pointed out that in order for the trial court to resolve the
instant petition, the issues of the correctness of the tax assessment
and collection must also necessarily be dealt with; hence, a petition
for certiorari, prohibition and mandamus is not the proper remedy.
x x x [T]he resolution of the issues raised in the instant case involve
examination and determination of relevant and material facts, i.e.
facts relating to the ownership of the subject parcels of land, the
portion of the subject parcel of land used for commercial purposes
and the identities of the lessees and the users thereof. Since
resolution of factual issues is not allowed in a petition for certiorari,
prohibition and mandamus, the trial court is precluded from
entertaining the petition.
Finally, Section 252 of the R.A. No. 7160 requires payment under
protest in assailing real property tax assessment. Even an appeal
shall not suspend the collection of the atx assessed without
prejudice to a later adjustment pending the outcome of the appeal.
This principle is consistent with the time-honored principle that
taxes are the lifeblood of the nation. But the PCGG failed to pay the
tax assessment prior to questioning it before the trial court; hence,
the trial court should have dismissed PCGG’s petition in line with the
Supreme Court pronouncement that a trial court has no jurisdiction
to entertain a similar petition absent payment under protest.
In conclusion and taking all the foregoing into account, we hold that
the trial court had no jurisdiction to take cognizance and decide
PCGG petition for certiorari, prohibition and mandamus; the trial
court should have dismissed the petition.6
PCGG filed a motion for reconsideration. In its 17 October 2008
Decision, the Court of Appeals reversed itself. The Court of Appeals
held:
At the outset, although as a rule, administrative remedies must first
be exhausted before ersort to judicial action can prosper, there is a
well-settled exception in cases where the controversy does not
involve questions of fact but only of law. We find that the Republic
has shown a cause for the application of the foregoing exception.
Essentially, the Republic has raised a pure question of law —
whether or not the City of Pasig has the power to impose real
property tax on the subject properties, which are owned by the
State. It bears stressing that the Republic did not raise any question
concerning the amount of the real property tax or the
determination thereof. Thus, having no plain, speedy, and adequate
remedy in law, the Republic correctly resorted to judicial action via
the petition for certiorari, prohibition, and mandamus, to seek
redress.
134
We are convinced that the subject properties were not sequestered
by the government so as to amount to a deprivation of property
without due process of law; instead, they were voluntarily
surrendered to the State by Campos, a self-admitted crony of the
then President Marcos. The relinquishment of the subject
properties to the State as ill-gotten wealth of Marcos, as recognized
by the Supreme Court, makes a judicial declaration that the same
were ill-gotten unnecessary. By virtue of said relinquishment, the
State correctly exercised dominion over the subject properties.
Indubitably, the subject properties, being ill-gotten wealth, belong
to the State. x x x By its nature, ill-gotten wealth is owned by the
State. As a matter of fact, the Republic continues to exercise
dominion over the subject properties. 7
Hence, the present petition.
Issues
Pasig City raises as issues that the lower courts erred in granting
PCGG’s petition for certiorari, prohibition and mandamus and in
ordering Pasig City to assess and collect real property tax from the
lessees of the properties.
The Court’s Ruling
The petition is partly meritorious.
As correctly found by the RTC and the Court of Appeals, the
Republic of the Philippines owns the properties. Campos voluntarily
surrendered MPLDC, which owned the properties, to the Republic of
the Philippines. In Republic of the Philippines v. Sandiganbayan,8 the
Court stated:
x x x Jose Y. Campos, "a confessed crony of former President
Ferdinand E. Marcos," voluntarily surrendered or turned over to the
PCGG the properties, assets and corporations he held in trust for
the deposed President. Among the corporations he surrendered
were the Independent Realty Corporation and the Mid-Pasig Land
Development Corporation.9
In Republic of the Philippines v. Sandiganbayan,10 the Court stated:
The antecedent facts are stated by the Solicitor General as follows:
xxxx
"3. Sometime in the later part of August 1987, defendant Jose D.
Campos, Jr., having been served with summons on August 5, 1987,
filed with the respondent Court an undated ‘Manifestation and
Motion to Dismiss Complaint with Respect to Jose D. Campos’
praying that he be removed as party defendant from the complaint
on the grounds that he had ‘voluntarily surrendered or turned over
any share in his name on [sic] any of the corporations referred to,
aside from disclaiming any interest, ownership or right thereon to
the Government of the Republic of the Philippines’ and that he was
‘entitled to the immunity granted by the Presidential Commission
on Good Government pursuant to Executive Order No. 14, under
the Commission’s Resolution dated May 28, 1986 to Mr. Jose Y.
Campos and his family’ he ‘being a member of the immediate family
of Jose Y. Campos.’
xxxx
In the instant case, the PCGG issued a resolution dated May 28,
1986, granting immunity from both civil and criminal prosecutions
to Jose Y. Campos and his family. The pertinent provisions of the
resolution read as follows:
135
"3.0. In consideration of the full cooperation of Mr. Jose Y. Campos
to this Commission, his voluntary surrender of the properties and
assets disclosed and declared by him to belong to deposed
President Ferdinand E. Marcos to the Government of the Republic
of the Philippines, his full, complete and truthful disclosures, and his
commitment to pay a sum of money as determined by the
Philippine Government, this Commission has decided and agreed:
xxxx
Undoubtedly, this resolution embodies a compromise agreement
between the PCGG on one hand and Jose Y. Campos on the other.
Hence, in exchange for the voluntary surrender of the ill-gotten
properties acquired by the then President Ferdinand E. Marcos and
his family which were in Jose Campos’ control, the latter and his
family were given full immunity in both civil and criminal
prosecutions. x x x
xxxx
By virtue of the PCGG’s May 28, 1986 resolution, Jose Campos, Jr.
was given full immunity from both civil and criminal prosecutions in
exchange for the "full cooperation of Mr. Jose Y. Campos to this
Commission, his voluntary surrender of the properties and assets
disclosed and declared by him to belong to deposed President
Ferdinand E. Marcos to the Government of the Republic of the
Philippines, his full, complete and truthful disclosures, and his
commitment to pay a sum of money as determined by the
Philippine Government." In addition, Campos, Jr. had already
waived and surrendered to the Republic his registered equity
interest in the Marcos/Romualdez corporations involved in the civil
case.11
Even as the Republic of the Philippines is now the owner of the
properties in view of the voluntary surrender of MPLDC by its
former registered owner, Campos, to the State, such transfer does
not prevent a third party with a better right from claiming such
properties in the proper forum. In the meantime, the Republic of
the Philippines is the presumptive owner of the properties for
taxation purposes.
Section 234(a) of Republic Act No. 7160 states that properties
owned by the Republic of the Philippines are exempt from real
property tax "except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person."
Thus, the portions of the properties not leased to taxable entities
are exempt from real estate tax while the portions of the properties
leased to taxable entities are subject to real estate tax. The law
imposes the liability to pay real estate tax on the Republic of the
Philippines for the portions of the properties leased to taxable
entities. It is, of course, assumed that the Republic of the Philippines
passes on the real estate tax as part of the rent to the lessees.
In Philippine Fisheries Development Authority v. Central Board of
Assessment Appeals,12 the Court held:
In the 2007 case of Philippine Fisheries Development Authority v.
Court of Appeals, the Court resolved the issue of whether the PFDA
is a government-owned or controlled corporation or an
instrumentality of the national government. In that case, the City of
Iloilo assessed real property taxes on the Iloilo Fishing Port
Complex (IFPC), which was managed and operated by PFDA. The
Court held that PFDA is an instrumentality of the government and
is thus exempt from the payment of real property tax, thus:
The Court rules that the Authority is not a GOCC but an
instrumentality of the national government which is generally
136
exempt from payment of real property tax. However, said
exemption does not apply to the portions of the IFPC which the
Authority leased to private entities. With respect to these
properties, the Authority is liable to pay property tax. Nonetheless,
the IFPC, being a property of public dominion cannot be sold at
public auction to satisfy the tax delinquency.
xxxx
This ruling was affirmed by the Court in a subsequent PFDA case
involving the Navotas Fishing Port Complex, which is also managed
and operated by the PFDA. In consonance with the previous
ruling, the Court held in the subsequent PFDA case that the PFDA is
a government instrumentality not subject to real property tax
except those portions of the Navotas Fishing Port Complex that
were leased to taxable or private persons and entities for their
beneficial use.
Similarly, we hold that as a government instrumentality, the PFDA is
exempt from real property tax imposed on the Lucena Fishing Port
Complex, except those portions which are leased to private persons
or entities.13 (Emphasis supplied)
In Government Service Insurance System v. City Treasurer of the City
of Manila,14 the Court held:
x x x The tax exemption the property of the Republic or its
instrumentalities carries ceases only if, as stated in Sec. 234(a) of
the LGC of 1991, "beneficial use thereof has been granted, for a
consideration or otherwise, to a taxable person." GSIS, as a
government instrumentality, is not a taxable juridical person under
Sec. 133(o) of the LGC. GSIS, however, lost in a sense that status
with respect to the Katigbak property when it contracted its
beneficial use to MHC, doubtless a taxable person. Thus, the real
estate tax assessment of Php 54,826,599.37 covering 1992 to 2002
over the subject Katigbak property is valid insofar as said tax
delinquency is concerned as assessed over said
property.15 (Emphasis supplied)
In Manila International Airport Authority v. Court of Appeals,16 the
Court held:
x x x Section 234(a) of the Local Government Code states that real
property owned by the Republic loses its tax exemption only if the
"beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person." MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the
local Government Code. Thus, even if we assume that the Republic
has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to
real estate tax.
However, portions of the Airport Lands and Buildings that MIAA
leases to private entities are not exempt from real estate tax. For
example, the land area occupied by hangars that MIAA leases to
private corporations is subject to real estate tax. In such a case,
MIAA has granted the beneficial use of such land area for a
consideration to a taxable person and therefore such land area is
subject to real estate tax.17 (Emphasis supplied)
In Lung Center of the Philippines v. Quezon City,18 the Court held:
x x x While portions of the hospital are used for the treatment of
patients and the dispensation of medical services to them, whether
paying or non-paying, other portions thereof are being leased to
private individuals for their clinics and a canteen. Further, a portion
of the land is being leased to a private individual for her business
enterprise under the business name "Elliptical Orchids and Garden
137
Center." Indeed, the petitioner’s evidence shows that it collected
₱1,136,483.45 as rentals in 1991 and ₱1,679,999.28 for 1992 from
the said lessees.
Accordingly, we hold that the portions of the land leased to private
entities as well as those parts of the hospital leased to private
individuals are not exempt from such taxes. On the other hand, the
portions of the land occupied by the hospital and portions of the
hospital used for its patients, whether paying or non-paying, are
exempt from real property taxes.19 (Emphasis supplied)
Article 420 of the Civil Code classifies as properties of public
dominion those that are "intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads" and those that "are intended for some
public service or for the development of the national wealth."
Properties of public dominion are not only exempt from real estate
tax, they are exempt from sale at public auction. In Heirs of Mario
Malabanan v. Republic,20 the Court held that, "It is clear that
property of public dominion, which generally includes property
belonging to the State, cannot be x x x subject of the commerce of
man."21
In Philippine Fisheries Development Authority v. Court of
Appeals,22 the Court held:
x x x [T]he real property tax assessments issued by the City of Iloilo
should be upheld only with respect to the portions leased to private
persons. In case the Authority fails to pay the real property taxes
due thereon, said portions cannot be sold at public auction to
satisfy the tax delinquency. In Chavez v. Public Estates Authority it
was held that reclaimed lands are lands of the public dominion and
cannot, without Congressional fiat, be subject of a sale, public or
private x x x.
In the same vein, the port built by the State in the Iloilo fishing
complex is a property of the public dominion and cannot therefore
be sold at public auction. Article 420 of the Civil Code, provides:
"Article 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 others of similar character;
2. Those which belong to the State, without being for public
use, and are intended for some public service or for the
development of the national wealth."
The Iloilo fishing port which was constructed by the State for
public use and/or public service falls within the term "port" in the
aforecited provision. Being a property of public dominion the same
cannot be subject to execution or foreclosure sale. In like manner,
the reclaimed land on which the IFPC is built cannot be the object of
a private or public sale without Congressional
authorization.23 (Emphasis supplied)
In Manila International Airport Authority,24 the Court held:
x x x [T]he Airport Lands and Buildings of MIAA are properties
devoted to public use and thus are properties of public dominion.
Properties of public dominion are owned by the State or the
Republic. Article 420 of the Civil Code provides:
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 others of similar character;
138
 (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.
The term "ports x x x constructed by the Sate" includes airports and
seaports. The Airport Lands and Buildings of MIAA are intended for
public use, and at the very least intended for public service.
Whether intended for public use or public service, the Airport Lands
and Buildings are properties of public dominion. As properties of
public dominion, the the Airport lands and Buildings are owned by
the Republic and thus exempt from real estate tax under Section
234(a) of the Local Government Code.
xxxx
Under Article 420 of the Civil Code, the Airport Lands and Buildings
of MIAA, being devoted to public use, are properties of public
dominion and thus owned by the State or the Republic of the
Philippines. Article 420 specifically mentions "ports x x x constructed
by the State," which includes public airports and seaports, as
properties of public dominion and owned by the Republic. As
properties of public dominion owned by the Republic, there is no
doubt whatsoever that the Airport Lands and Buildings are expressly
exempt from real estate tax under Section 234(a) of the local
Government Code. This Court has also repeatedly ruled that
properties of public dominion are not subject to execution or
foreclosure sale.25 (Emphasis supplied)lawphi1
In the present case, the parcels of land are not properties of public
dominion because they are not "intended for public use, such as
roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads." Neither are they "intended for
some public service or for the development of the national wealth."
MPLDC leases portions of the properties to different business
establishments. Thus, the portions of the properties leased to
taxable entities are not only subject to real estate tax, they can also
be sold at public auction to satisfy the tax delinquency.
In sum, only those portions of the properties leased to taxable
entities are subject to real estate tax for the period of such leases.
Pasig City must, therefore, issue to respondent new real property
tax assessments covering the portions of the properties leased to
taxable entities. If the Republic of the Philippines fails to pay the
real property tax on the portions of the properties leased to taxable
entities, then such portions may be sold at public auction to satisfy
the tax delinquency.
WHEREFORE, the petition is PARTIALLY GRANTED. The Court SETS
ASIDE the 17 October 2008 Decision of the Court of Appeals in CA-
G.R. SP No. 97498 and declares VOID the 30 September 2002 real
property tax assessment issued by Pasig City on the subject
properties of Mid-Pasig Land Development Corporation, the 8
November 2005 warrants of levy on the properties, and the 2
December 2005 auction sale. Pasig City is DIRECTED to issue to
respondent new real property tax assessments covering only the
portions of the properties actually leased to taxable entities, and
only for the period of such leases. Interests and penalties on such
new real property tax assessment shall accrue only after receipt of
such new assessment by respondent.
SO ORDERED.
139
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 100709 November 14, 1997

REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF

LANDS, petitioner,
vs.
COURT OF APPEALS, JOSEFINA L. MORATO, SPOUSES NENITA CO
and ANTONIO QUILATAN AND THE REGISTER OF DEEDS OF
QUEZON PROVINCE, respondents.

PANGANIBAN, J.:

140
Will the lease and/or mortgage of a portion of a realty acquired
through free patent constitute sufficient ground for the nullification
of such land grant? Should such property revert to the State once it
is invaded by the sea and thus becomes foreshore land?
The Case
These are the two questions raised in the petition before us
assailing the Court of Appeals' 1 Decision in CA-G.R. CV No. 02667
promulgated on June 13, 1991 which answered the said questions in
the negative. 2 Respondent Court's dismissed 3 petitioner's appeal
and affirmed in toto the decision of the Regional Trial Court 4 of
Calauag, Quezon, dated December 28, 1983 in Civil Case No. C-608.
In turn, the Regional Trial Court's decision dismissed petitioner's
complaint for cancellation of the Torrens Certificate of Title of
Respondent Morato and for reversion of the parcel of land subject
thereof of the public domain.
The Facts
The petition of the solicitor general, representing the Republic of
the Philippines, recites the following facts: 5
Sometime in December, 1972, respondent Morato
filed a Free Patent Application No. III-3-8186-B on a
parcel of land with an area of 1,265 square meters
situated at Pinagtalleran, Calauag, Quezon. On
January 16, 1974, the patent was approved and the
Register of Deeds of Quezon at Lucena City issued
on February 4, 1974 Original Certificate of Title No.
P-17789. Both the free paten and the title
specifically mandate that the land shall not
be alienated nor encumbered within five years from
the date of the issuance of the patent (Sections 118
and 124 of CA No. 141, as amended).
Subsequently, the District Land Officer in Lucena
City, acting upon reports that respondent Morato
had encumbered the land in violation of the
condition of the patent, conducted an investigation.
Thereafter, it was established that the subject land
is a portion of the Calauag Bay, five (5) to six (6) feet
deep under water during high tide and two (2) feet
deep at low tide, and not suitable to vegetation.
Moreover, on October 24, 1974, a portion of the
land was mortgaged by respondent Morato to
respondents Nenita Co and Antonio Quilatan for
P10,000.00 (pp. 2, 25, Folder of Exhibits). The
spouses Quilatan constructed a house on the land.
Another portion of the land was leased to Perfecto
Advincula on February 2, 1976 at P100.00 a month,
where a warehouse was constructed.
On November 5, 1978, petitioner filed an amended
complaint against respondents Morato, spouses
Nenita Co and Antonio Quilatan, and the Register of
Deeds of Quezon for the cancellation of title and
reversion of a parcel of land to the public domain,
subject of a free patent in favor of respondent
Morato, on the grounds that the land is a foreshore
land and was mortgaged and leased within the five-
year prohibitory period (p. 46, Records).
After trial, the lower court, on December 28, 1983,
rendered a decision dismissing petitioner's
complaint. In finding for private respondents, the
lower court ruled that there was no violation of the
141
 5-year period ban against alienating or encumbering
the land, because the land was merely leased and
not alienated. It also found that the mortgage to
Nenita Co and Antonio Quilatan covered only the
improvement and not the land itself.
On appeal, the Court of Appeals affirmed the decision of the trial
court. Thereafter, the Republic of the Philippines filed the present
petition. 6
The Issues
Petitioner alleges that the following errors were committed by
Respondent Court: 7
I Phil. 498 (1960); Lopez v. Padilla, (G.R. No. L-27559,
Respondent court erred in holding that the patent
granted and certificate of title issued to Respondent
Morato cannot be cancelled and annulled since the
certificate of title becomes indefeasible after one
year from the issuance of the title.
II
Respondent Court erred in holding that the
questioned land is part of a disposable public land
and not a foreshore land.
The Court's Ruling
The petition is meritorious.
First Issue:  Indefeasibility of a Free Patent Title
In resolving the first issue against petitioner, Respondent Court
held: 8
. . . As ruled in Heirs of Gregorio Tengco vs. Heirs of
Jose Alivalas, 168 SCRA 198. ". . . The rule is well-
settled that an original certificate of title issued on
the strength of a homestead patent partakes of the
nature of a certificate of title issued in a judicial
proceeding, as long as the land disposed of is really
part of the disposable land of the public domain,
and becomes indefeasible and incontrovertible
upon the expiration of one year from the date of
promulgation of the order of the Director of Lands
for the issuance of the patent. (Republic v. Heirs of
Carle, 105 Phil. 1227 (1959); Ingaran v. Ramelo, 107
May 18, 1972, 45 SCRA 44). A homestead patent,
one registered under the Land Registration Act,
becomes as indefeasible as a Torrens Title.
(Pamintuan v. San Agustin, 43 Phil. 558 (1982); El
Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Duran v.
Oliva, 113 Phil. 144 (1961); Pajomayo v. Manipon,
G.R. No. L-33676, June 30, 1971, 39 SCRA 676). (p.
203).
Again, in Lopez vs. Court of Appeals, 169 SCRA 271,
citing Iglesia ni Cristo v. Hon. Judge, CFI of Nueva
Ecija, Branch I, (123 SCRA 516 (1983)
and Pajomayo, et al. v. Manipon, et al. (39 SCRA 676
(1971) held that once a homestead patent granted
in accordance with the Public Land Act is registered
pursuant to Section 122 of Act 496, the certificate of
title issued in virtue of said patent has the force and
142
 effect of a Torrens Title issued under the Land
Registration Act.
Indefeasibility of the title, however, may not bar the
State, thru the Solicitor General, from filing an
action for reversion, as ruled in Heirs
of Gregorio Tengco v. Heirs of Jose Aliwalas, (supra),
as follows:
But, as correctly pointed out by the respondent
Court of Appeals, Dr. Aliwalas' title to the property
having become incontrovertible, such may no
longer be collaterally attacked. If indeed there had
been any fraud or misrepresentation in obtaining
the title, an action for reversion instituted by the
Solicitor General would be the proper remedy (Sec.
101, C.A. No. 141; Director of Lands v. Jugado, G.R.
No. L-14702, May 21, 1961, 2 SCRA 32; Lopez v.
Padilla, supra). (p. 204).
Petitioner contends that the grant of Free Patent (IV-3) 275 and the
subsequent issuance of Original Certificate of Title No. P-17789 to
Respondent Josefina L. Morato were subject to the conditions
provided for in Commonwealth Act (CA) No. 141. It alleges that on
October 24, 1974, or nine (9) months and eight (8) days after the
grant of the patent, mortgaged a portion of the land" to Respondent
Nenita Co, who thereafter constructed a house thereon. Likewise,
on February 2, 1976 and "within the five-year prohibitory period,"
Respondent Morato "leased a portion of the land to Perfecto
Advincula at a monthly rent of P100.00 who, shortly thereafter,
constructed a house of concrete materials on the subject
land."9 Further, petitioner argues that the defense of indefeasibility
of title is "inaccurate." The original certificate of title issued to
Respondent Morato "contains the seeds of its own cancellation":
such certificate specifically states on its face that "it is subject to the
provisions of Sections 118, 119, 121, 122, 124 of CA No. 141, as
amended." 10
Respondent Morato counters by stating that although a "portion of
the land was previously leased," it resulted "from the fact that
Perfecto Advincula built a warehouse in the subject land without
[her] prior consent." The mortgage executed over the improvement
"cannot be considered a violation of the said grant since it can never
affect the ownership." 11 She states further:
. . . . the appeal of the petitioner was dismissed not
because of the principle of indefeasibility of title but
mainly due to failure of the latter to support and
prove the alleged violations of respondent Morato.
The records of this case will readily show that
although petitioner was able to establish that
Morato committed some acts during the prohibitory
period of 5 years, a perusal thereof will also show
that what petitioner was able to prove never
constituted a violation of the grant. 12
Respondent-Spouses Quilatan, on the other hand, state that the
mortgage contract they entered into with Respondent Morato "can
never be considered as [an] 'alienation' inasmuch as the ownership
over the property remains with the owner." 13 Besides, it is the
director of lands and not the Republic of the Philippines who is the
real party in interest in this case, contrary to the provision of the
Public Land Act which states that actions for reversion should be
instituted by the solicitor general in the name of Republic of the
Philippines. 14
We find for petitioner.
143
Quoted below are relevant sections of Commonwealth Act No. 141,
otherwise known as the Public Land Act:
Sec. 118. Except in favor of the Government or any
of its branches, units or institutions, or legally
constituted banking corporations, lands acquired
under free patent or homestead provisions shall not
be subject to encumbrance or alienation from the
date of the approval of the application and for a
term of five years from and after the date of
issuance of the patent or grant nor shall they
become liable to the satisfaction of any debt
contracted prior to the expiration of said period;
but the improvements or crops on the land may be
mortgaged or pledged to qualified persons,
associations, or corporations.
No alienation, transfer, or conveyance of any
homestead after five years and before twenty-five
years after issuance of title shall be valid without
the approval of the Secretary of Agriculture and
Natural Resources, which approval shall not be
denied except on constitutional and legal grounds.
(As amended by Com. Act No. 456, approved June 8,
1939.)
xxx xxx xxx
Sec. 121. Except with the consent of the grantee
and the approval of the Secretary of Agriculture and
Natural Resources, and solely for educational,
religious, or charitable purposes or for a right of
way, no corporation, association, or partnership
may acquire or have any right, title, interest, or
property right whatsoever to any land granted
under the free patent, homestead, or individual sale
provisions of this Act or to any permanent
improvement on such land. (As amended by Com.
Act No. 615, approved May 5, 1941)
Sec. 122. No land originally acquired in any manner
under the provisions of this Act, nor any permanent
improvement on such land, shall be encumbered,
alienation or transferred, except to persons,
corporations, association, or partnerships who may
acquire lands of the public domain under this Act or
to corporations organized in the Philippines
authorized therefore by their charters.
Except in cases of hereditary successions, no land or
any portion thereof originally acquired under the
free patent, homestead, or individual sale
provisions of this Act, or any permanent
improvement on such land, shall be transferred or
assigned to any individual, nor shall such land or any
permanent improvement thereon be leased to such
individual, when the area of said land, added to that
of this own, shall exceed one hundred and forty-
four hectares. Any transfer, assignment, or lease
made in violation hereto shall be null and void. (As
amended by Com Act No. 615, Id.).
xxx xxx xxx
Sec. 124. Any acquisition, conveyance, alienation,
transfer, or other contract made or executed in
violation of any of the provisions of sections one
hundred and eighteen, one hundred and twenty,
144
 one hundred and twenty-one, one hundred and
twenty-two, and one hundred and twenty-three of
this Act  shall be unlawful and null and void from its
execution and shall produce the effect of annulling
and cancelling the grant, title, patent, or permit
originally issued, recognized or confirmed, actually
or presumatively, and cause the reversion of the
property and its improvements to the State.
(Emphasis supplied)
The foregoing legal provisions clearly proscribe the encumbrance of
a parcel of land acquired under a free patent or homestead within
five years from the grant of such patent. Furthermore, such
encumbrance results in the cancellation of the grant and the
reversion of the land to the public domain. Encumbrance has been
defined as "[a]nything that impairs the use or transfer of property;
anything which constitutes a burden on the title; a burden or charge
upon property; a claim or lien upon property." It may be a "legal
claim on an estate for the discharge of which the estate is liable;
and embarrassment of the estate or property so that it cannot be
disposed of without being subject to it; an estate, interest, or right
in lands, diminishing their value to the general owner; a liability
resting upon an estate." 15 Do the contracts of lease and mortgage
executed within five (5) years from the issuance of the patent
constitute an "encumbrance" and violate the terms and conditions
of such patent? Respondent Court answered in the negative: 16
From the evidence adduced by both parties, it has
been proved that the area of the portion of the
land, subject matter of the lease contract (Exh. "B")
executed by and between Perfecto Advincula and
Josefina L. Morato is only 10 x 12 square meters,
where the total area of the land granted to Morato
is 1,265 square meters. It is clear from this that the
portion of the land leased by Advincula does not
significantly affect Morato's ownership and
possession. Above all, the circumstances under
which the lease was executed do not reflect a
voluntary and blatant intent to violate the
conditions provided for in the patent issued in her
favor. On the contrary, Morato was compelled to
enter into that contract of lease
out of sympathy and the goodness of her heart to
accommodate a fellow man. . . .
It is indisputable, however, that Respondent Morato cannot fully
use or enjoy the land during the duration of the lease contract. This
restriction on the enjoyment of her property sufficiently meets the
definition of an encumbrance under Section 118 of the Public Land
Act, because such contract "impairs the use of the property" by the
grantee. In a contract of lease which is consensual, bilateral,
onerous and commutative, the owner temporarily grants the use of
his or her property to another who undertakes to pay rent
therefor. 17 During the term of the lease, the grantee of the patent
cannot enjoy the beneficial use of the land leased. As already
observed, the Public Land Act does not permit a grantee of a free
patent from encumbering any portion of such land. Such
encumbrance is a ground for the nullification of the award.
Morato's resort to equity, i.e. that the lease was executed allegedly
out of the goodness of her heart without any intention of violating
the law, cannot help her. Equity, which has been aptly described as
"justice outside legality," is applied only in the absence of, and
never against, statutory law or judicial rules of procedure. Positive
rules prevail over all abstract arguments based on equity contra
legem. 18
145
Respondents failed to justify their position that the mortgage should
not be considered an encumbrance. Indeed, we do not find any
support for such contention. The questioned mortgage falls squarely
within the term "encumbrance" proscribed by Section 118 of the
Public Land Act. 19 Verily, a mortgage constitutes a legal limitation
on the estate, and the foreclosure of such mortgage would
necessarily result in the auction of the property. 20
Even if only part of the property has been sold or alienated within
the prohibited period of five years from the issuance of the patent,
such alienation is a sufficient cause for the reversion of the whole
estate to the State. As a condition for the grant of a free patent to
an applicant, the law requires that the land should not be
encumbered, sold or alienated within five years from the issuance
of
the patent. The sale or the alienation of part of the homestead
violates that condition. 21
The prohibition against the encumbrance — lease and mortgage
included — of a homestead which, by analogy applies to a free
patent, is mandated by the rationale for the grant, viz.: 22
It is well-known that the homestead laws were
designed to distribute disposable agricultural lots of
the State to land-destitute citizens for their home
and cultivation. Pursuant to such benevolent
intention the State prohibits the sale or
incumbrance of the homestead (Section 116) within
five years after the grant of the patent. After that
five-year period the law impliedly permits alienation
of the homestead; but in line with the primordial
purpose to favor the homesteader and his family
the statute provides that such alienation or
conveyance (Section 117) shall be subject to the
right of repurchase by the homesteader, his widow
or heirs within five years. This section 117 is
undoubtedly a complement of section 116. It aims
to preserve and keep in the family of the
homesteader that portion of public land which the
State had gratuitously given to him. It would,
therefore, be in keeping with this fundamental idea
to hold, as we hold, that the right to repurchase
exists not only when the original homesteader
makes the conveyance, but also when it is made by
his widow or heirs. This construction is clearly
deducible from the terms of the statute.
By express provision of Section 118 of Commonwealth Act 141 and
in conformity with the policy of the law, any transfer or alienation of
a free patent or homestead within five years from the issuance of
the patent is proscribed. Such transfer nullifies said alienation and
constitutes a cause for the reversion of the property to the State.
The prohibition against any alienation or encumbrance of the land
grant is a proviso attached to the approval of every
application. 23 Prior to the fulfillment of the requirements of law,
Respondent Morato had only an inchoate right to the property;
such property remained part of the public domain and, therefore,
not susceptible to alienation or encumbrance. Conversely, when a
"homesteader has complied with all the terms and conditions which
entitled him to a patent for [a] particular tract of public land, he
acquires a vested interest therein and has to be regarded an
equitable owner thereof." 24 However, for Respondent Morato's title
of ownership over the patented land to be perfected, she should
have complied with the requirements of the law, one of which was
to keep the property for herself and her family within the prescribed
period of five (5) years. Prior to the fulfillment of all requirements of
the law, Respondent Morato's title over the property was
146
incomplete. Accordingly, if the requirements are not complied with,
the State as the grantor could petition for the annulment of the
patent and the cancellation of the title.
Respondent Morato cannot use the doctrine of the indefeasibility of
her Torrens title to bar the state from questioning its transfer or
encumbrance. The certificate of title issued to her clearly stipulated
that its award was "subject to the conditions provided for in
Sections 118, 119, 121, 122 and 124 of Commonwealth Act (CA) No.
141." Because she violated Section 118, the reversion of the
property to the public domain necessarily follows, pursuant to
Section 124.
Second Issue:  Foreshore Land
Revert to the Public Domain
There is yet another reason for granting this petition.
Although Respondent Court found that the subject land was
foreshore land, it nevertheless sustained the award thereof to
Respondent Morato: 25
First of all, the issue here is whether the land in
question, is really part of the foreshore lands. The
Supreme Court defines foreshore land in the case
of Republic vs. Alagad, 169 SCRA 455, 464, as
follows:
Otherwise, where the rise in water
level is due to, the "extraordinary"
action of nature, rainful, for
instance, the portions inundated
thereby are not considered part of
the bed or basin of the body of
water in question. It cannot
therefore be said to be foreshore
land but land outside of the public
dominion, and land capable of
registration as private property.
A foreshore land, on the other hand
has been defined as follows:
. . . that part of (the land) which is between high
and low water and left dry by the flux and reflux of the tides . . . .
(Republic vs. C.A., Nos. L-43105, L-43190, August 31, 1984, 131
SCRA 532; Government vs. Colegio de San Jose, 53 Phil 423)
The strip of land that lies between the high and low water marks
and that is alternatively wet and dry according to the flow of the
tide. (Rep. vs. CA, supra, 539).
The factual findings of the lower court regarding the nature of the
parcel of land in question reads:
Evidence disclose that the marginal area of the land radically
changed sometime in 1937 up to 1955 due to a strong earthquake
followed by frequent storms eventually eroding the land. From 1955
to 1968, however, gradual reclamation was undertaken by the
lumber company owned by the Moratos. Having thus restored the
land thru mostly human hands employed by the lumber company,
the area continued to be utilized by the owner of the sawmill up to
the time of his death in 1965. On or about March 17, 1973, there
again was a strong earthquake unfortunately causing destruction to
hundreds of residential houses fronting the Calauag Bay including
the Santiago Building, a cinema house constructed of concrete
materials. The catastrophe totally caused the sinking of a concrete
147
bridge at Sumulong river also in the municipality of Calauag,
Quezon.
On November 13, 1977 a typhoon code named "Unding" wrought
havoc as it lashed the main land of Calauag, Quezon causing again
great erosion this time than that which the area suffered in 1937.
The Court noted with the significance of the newspaper clipping
entitled "Baryo ng Mangingisda Kinain ng Dagat" (Exh. "11").
x x x           x x x          x x x
Evidently this was the condition of the land when on or about
December 5, 1972 defendant Josefina L. Morato filed with the
Bureau of Lands her free patent application. The defendant Josefina
Morato having taken possession of the land after the demise of Don
Tomas Morato, she introduced improvement and continued
developing the area, planted it to coconut tree. Having applied for a
free patent, defendant had the land area surveyed and an approved
plan (Exh. "9") based on the cadastral survey as early as 1927 (Exh.
"10") was secured. The area was declared for taxation purposes in
the name of defendant Josefina Morato denominated as Tax
Declaration No. 4115 (Exh. "8") and the corresponding realty taxes
religiously paid as shown by Exh. "8-A"). (pp. 12-14, DECISION).
Being supported by substantial evidence and for failure of the
appellant to show cause which would warrant disturbance, the
aforecited findings of the lower court, must be respected.
Petitioner correctly contends, however, that Private Respondent
Morato cannot own foreshore land:
Through the encroachment or erosion by the ebb and flow of the
tide, a portion of the subject land was invaded by the waves and sea
advances. During high tide, at least half of the land (632.5 square
meters) is 6 feet deep under water and three (3) feet deep during
low tide. The Calauag Bay shore has extended up to a portion of the
questioned land.
While at the time of the grant of free patent to respondent Morato,
the land was not reached by the water, however, due to gradual
sinking of the land caused by natural calamities, the sea advances
had permanently invaded a portion of subject land. As disclosed at
the trial, through the testimony of the court-appointed
commissioner, Engr. Abraham B. Pili, the land was under water
during high tide in the month of August 1978. The water margin
covers half of the property, but during low tide, the water is about a
kilometer (TSN, July 19, 1979, p. 12). Also, in 1974, after the grant of
the patent, the land was covered with vegetation, but it
disappeared in 1978 when the land was reached by the tides (Exh.
"E-1", "E-14"). In fact, in its decision dated December 28, 1983, the
lower court observed that the erosion of the land was caused by
natural calamities that struck the place in 1977 (Cf. Decision, pp. 17-
18). 26
Respondent-Spouses Quilatan argue, however, that it is "unfair and
unjust if Josefina Morato will be deprived of the whole property just
because a portion thereof was immersed in water for reasons not
her own doing." 27
As a general rule, findings of facts of the Court of Appeals are
binding and conclusive upon this Court, unless such factual findings
are palpably unsupported by the evidence on record or unless the
judgment itself is based on a misapprehension of facts. 28 The
application for a free patent was made in 1972. From the
undisputed factual findings of the Court of Appeals, however, the
land has since become foreshore. Accordingly, it can no longer be
subject of a free patent under the Public Land Act. Government of
148
the Philippine Islands vs. Cabañgis  29 explained the rationale for this
proscription:
Article 339, subsection 1, of the Civil Code, reads:
Art. 339. Property of public ownership is —
1. That devoted to public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by
the State, riverbanks, shores, roadsteads, and that
of a similar character.
xxx xxx xxx
Article 1, case 3, of the law of Waters of August 3,
1866, provides as follows:
Art. 1. The following are part of the national domain
open to public use.
xxx xxx xxx
3. The Shores. By the shore is understood that space
covered and uncovered by the movement of the
tide. Its interior or terrestrial limit is the line
reached by the highest equinoctal tides. Where the
tides are not appreciable, the shore begins on the
land side at the line reached by the sea during
ordinary storms or tempests.
In the case of Aragon vs. Insular Government (19
Phil. 223), with reference to article 339 of the Civil
Code just quoted, this Court said:
We should not be understood, by this decision, to
hold that in a case of gradual encroachment or
erosion by the ebb and flow of the tide, private
property may not become "property of public
ownership." as defined in article 339 of the code,
where it appear that the owner has to all intents
and purposes abandoned it and permitted it to be
totally destroyed, so as to become a part of the
"playa" (shore of the sea), "rada" (roadstead), or
the like. . . .
In the Enciclopedia Juridica Española, volume XII,
page 558, we read the following:
With relative frequency the opposite phenomenon
occurs; that is, the sea advances and private
properties are permanently invaded by the waves,
and in this case they become part of the shore or
breach. The then pass to the public domain, but the
owner thus dispossessed does not retain any right
to the natural products resulting from their new
nature; it is a de facto case of eminent domain, and
not subject to indemnity.
In comparison, Article 420 of the Civil Code provides:
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 others of similar character;
149
 (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.

When the sea moved towards the estate and the tide invaded it, the
invaded property became foreshore land and passed to the realm of
the public domain. In fact, the Court in Government
vs. Cabangis 30 annulled the registration of land subject of cadastral
proceedings when the parcel subsequently became foreshore
land. 31 In another case, the Court voided the registration decree of
a trial court and held that said court had no jurisdiction to award
foreshore land to any private person or entity. 32 The subject land in
this case, being foreshore land, should therefore be returned to the
public domain. Republic of the Philippines
SUPREME COURT
WHEREFORE, the petition is GRANTED. This Court hereby REVERSES Manila
and SETS ASIDE the assailed Decision of Respondent Court and
ORDERS the CANCELLATION of Free Patent No. (IV-3) 275 issued to FIRST DIVISION
Respondent Morato and the subsequent Original Certificate of Title
No. P-17789. The subject land therefore REVERTS to the State. No G. R. No. L-41001 September 30, 1976
costs.
MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER
SO ORDERED. OF THE ELKS, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and
TARLAC DEVELOPMENT CORPORATION, respondents.

No. L-41012 September 30, 1976

TARLAC DEVELOPMENT CORPORATION, petitioner,

vs.
HONORABLE COURT OF APPEALS, CITY OF MANILA, LODGE NO.

150
761, BENEVOLENT AND PROTECTIVE ORDER OF ELKS,
INC., respondents.
CASTRO, C.J.:têñ.£îhqwâ£
STATEMENT OF THE CASE AND STATEMENTOF THE FACTS
These two cases are petitions on certiorari to review the decision
dated June 30, 1975 of the Court of Appeals in CA-G.R. No. 51590-R
entitled "Tarlac Development Corporation vs. City of Manila, and
Manila Lodge No. 761, Benevolent and Protective Order of Elks,
Inc.," affirming the trial court's finding in Civil Case No. 83009 that
the property subject of the decision a quo  is a "public park or
plaza."
On June 26, 1905 the Philippine Commission enacted Act No. l360
which authorized the City of Manila to reclaim a portion of Manila
Bay. The reclaimed area was to form part of the Luneta extension.
The Act provided that the reclaimed area "Shall be the property of
the City of Manila" and that "the City of Manila is hereby authorized
to set aside a tract of the reclaimed land formed by the Luneta
extension x x x at the north end not to exceed five hundred feet by
six hundred feet in size, for a hotel site, and to lease the same, with
the approval of the Governor General, to a responsible person or
corporation for a term not exceed ninety-nine years."
Subsequently, the Philippine Commission passed on May 18, 1907
Act No. 1657, amending Act No. 1360, so as to authorize the City of'
Manila either to lease or to sell the portion set aside as a hotel site.
The total area reclaimed was a little over 25 hectares. The City of
Manila applied for the registration of the reclaimed area, and on
January 20, 1911, O.C.T. No. 1909 was issued in the name of the City
of Manila. The title described the registered land as "un terreno
conocido con el nombre de Luneta Extension, situato en el distrito
de la Ermita x x x." The registration was "subject, however to such of
the incumbrances mentioned in Article 39 of said law (Land
Registration Act) as may be subsisting" and "sujeto a las
disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto
tambein a los contratos de venta, celebrados y otorgados por la
Ciudad de Manila a favor del Army and Navy Club y la Manila Lodge
No. 761, Benevolent and Protective Order of Elks, fechados
respectivamente, en 29 de Diciembre de 1908 y 16 de Enero de
1909." 1
On July 13, 1911 the City of Manila, affirming a prior sale dated
January 16, 1909 cancelled 5,543.07 square meters of the reclaimed
area to the Manila Lodge No. 761, Benevolent and Protective Order
of Elks of the U.S.A. (BPOE, for short) on the basis of which TCT No.
2195 2 was issued to the latter over the Marcela de terreno que es
parte de la Luneta Extension, Situada en el Distrito le la Ermita ... ."
At the back of this title vas annotated document 4608/T-1635,
which in part reads as follows: "que la citada Ciusdad de Manila
tendra derecho a su opcion, de recomparar la expresada propiedad
para fines publicos solamete in cualquier tiempo despues de
cincuenta anos desde el 13 le Julio le 1911, precio de la misma
propiedad, mas el valor que entonces tengan las mejoras."
For the remainder of the Luneta Extension, that is, after segregating
therefrom the portion sold to the Manila Lodge No. 761, PBOE, a
new Certificate of Title No. 2196 3 was issued on July 17, 1911 to the
City of Manila.
Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07
square meters to the Elks Club, Inc., to which was issued TCT No.
67488. 4 The registered owner, "The Elks Club, Inc.," was later
151
changed by court oder to "Manila Lodge No. 761, Benevolent and
Protective Order of Elks, Inc."
In January 1963 the BPOE. petitioned the Court of First Instance of
Manila, Branch IV, for the cancellation of the right of the City of
Manila to repurchase the property This petition was granted on
February 15, 1963.
On November 19, 1963 the BPOE sold for the sum of P4,700,000 the
land together with all the improvements thereon to the Tarlac
Development Corporation (TDC, for short) which paid P1,700.000 as
down payment and mortgaged to the vendor the same realty to
secure the payment of the balance to be paid in quarterly
installments.5 At the time of the sale,, there was no annotation of
any subsisting lien on the title to the property. On December 12,
1963 TCT No. 73444 was issued to TDC over the subject land still
described as "UNA PARCELA DE TERRENO, que es parte de la Luneta
Extension, situada en el Distrito de Ermita ... ."
In June 1964 the City of Manila filed with the Court of First Instance
of Manila a petition for the reannotation of its right to repurchase;
the court, after haering, issued an order, dated November 19, 1964,
directing the Register of Deeds of the City of Manila to
reannotate in toto  the entry regarind the right of the City of Manila
to repurchase the property after fifty years. From this order TDC and
BPOE appealed to this Court which on July 31, 1968 affirmed in G.R.
Nos. L-24557 and L-24469 the trial court's order of reannotation,
but reserved to TDC the right to bring another action for the
clarification of its rights.
As a consequence of such reservation, TDC filed on April 28, 1971
against the City of Manila and the Manila Lodge No. 761, BPOE, a
complaint, docketed as Civil Case No. 83009 of the Court of First
Instance of Manila, containing three causes of action and praying -
a) On the first cause of action, that the plaintiff TDC be declared to
have purchased the parcel of land now in question with the
buildings and improvements thereon from the defendant BPOE for
value and in good faith, and accordingly ordering the cancellation of
Entry No. 4608/T-1635 on Transfer Certificate of Title No. 73444 in
the name of the Plaintiff;
b) On the second cause of action, ordering the defendant City of
Manila to pay the plaintiff TDC damages in the sum of note less than
one hundred thousand pesos (P100,000.00);
c) On the third cause of action, reserving to the plaintiff TDC the
right to recover from the defendant BPOE the amounts mentioned
in par. XVI of the complaint in accordance with Art. 1555 of the Civil
Code, in the remote event that the final judgment in this case
should be that the parcel of land now in question is a public park;
and
d) For costs, and for such other and further relief as the Court may
deem just and equitable. 6
Therein defendant City of Manila, in its answer dated May 19, 1971,
admitted all the facts alleged in the first cause of action except the
allegation that TDC purchased said property "for value and in good
faith," but denied for lack of knowledge or information the
allegations in the second and third causes of action. As, special and
affirmative defense, the City of Manila claimed that TDC was not a
purchaser in good faith for it had actual notice of the City's right to
repurchase which was annotated at the back of the title prior to its
cancellation, and that, assuming arguendo  that TDC had no notice
of the right to repurchase, it was, nevertheless, under obligation to
investigate inasmuch as its title recites that the property is a part of
the Luneta extension. 7
152
The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971,
admitted having sold the land together with the improvements
thereon for value to therein plaintiff which was in good faith, but
denied for lack of knowledge as to their veracity the allegations
under the second cause of action. It furthermore admitted that TDC
had paid the quarterly installments until October l5, 1964 but
claimed that the latter failed without justifiable cause to pay the
subsequent installments. It also asserted that it was a seller for
value in good faith without having misrepresented or concealed
tacts relative to the title on the property. As counterclaim, Manila
Lodge No. 761 (BPOE) sought to recover the balance of the purchase
price plus interest and costs. 8
On June 15, 1971 TDC answered the aforesaid counterclaim,
alleging that its refusal to make further payments was fully
justified.9
After due trial the court a quo  rendered on July 14, 1972 its decision
finding the subject land to be part of the "public park or plaza" and,
therefore, part of the public domain. The court consequently
declared that the sale of the subject land by the City of Manila to
Manila Lodge No. 761, BPOE, was null and void; that plaintiff TDC
was a purchaser thereof in g faith and for value from BPOE and can
enforce its rights against the latter; and that BPOE is entitled to
recover from the City of Manila whatever consideration it had 'paid
the latter. 'The dispositive part of the decision reads: ñé+.£ªwph!1
WHEREFORE, the Court hereby declares that the
parcel of land formerly covered by Transfer
Certificate of Title Nos 2195 and 67488 in the name
of BPOE and now by Transfer Certificate of Title No.
73444 in the name of Tarlac Development
Corporation is a public' park or plaza, and,
consequently, instant complaint is dimissed,
without pronouncement as to costs.
In view of the reservation made by plaintiff Tarlac
Development Corporation to recover from
defendant BPOE the amounts mentioned in
paragraph XVI of the complaint in accordance with
Article 1555 of the Civil Code, the Court makes no
pronouncement on this point. 10
From said decision the therein plaintiff TDC as well as the defendant
Manila Lodge No. 761, BPOE, appealed to the Court of Appeals.
In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No.
761, BPOE, avers that the trial court committed the following errors,
namely:
1. In holding that the property subject of the action is not
patrimonial property of the City of Manila; and
2. In holding that the Tarlac Development Corporation may recover
and enforce its right against the defendant BPOE. 11
The Tarlac Development Corporation, on the other hand, asserts
that the trial court erred:
(1) In finding that the property in question is or was a public park
and in consequently nullifying the sale thereof by the City of Manila
to BPOE;
(2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil.
602, and Government vs. Cabangis, 53 Phil. 112, to the case at bar;
and
153
(3) In not holding that the plaintiff-appellant is entitled to ,recover
damages from the defendant City of Manila. 12
Furthermore, TDC as appellee regarding the second assignment of
error raised by BPOE, maintained that it can recover and enforce its
rigth against BPOE in the event that the land in question is declared
a public park or part thereof.13
In its decision promulgated on June 30, 1975, the Court of Appeals
concur ed in the findings and conclusions of the lower court upon
the ground that they are supported by he evidence and are in
accordance with law, and accordingly affirmed the lower court's
judgment.
Hence, the present petitions for review on certiorari.
G.R. No. L-41001
The Manila Lodge No. 761, BPOE, contends, in its petition for review
on certiorari docketed as G.R. No. L-41001, that the Court of
Appeals erred in (1) disregarding the very enabling acts and/or
statutes according to which the subject property was, and still is,
patrimonial property of the City of Manila and could therefore be
sold and/or disposed of like any other private property; and (2) in
departing from the accepted and usual course of judicial
proceedings when it simply made a general affirmance of the
court a quo's  findings and conclusions without bothering to discuss
or resolve several vital points stressed by the BPOE in its assigned
errrors. 14
G.R. No. L-41012
The Tarlac Development Corporation, in its petition for review on
certiorari docketed as G.R. No. L-41012, relies on the following
grounds for the allowance of its petition:
1. that the Court of Appeals did not correctly interpret Act No. 1360,
as amended by Act No. 1657, of the Philippine Commission; and
2. that the Court of Appeals has departed from the accepted and
usual course of judicial proceedings in that it did not make its own
findings but simply recited those of the lower court. 15
ISSUES AND ARGUMENTS
FIRST ISSUE
Upon the first issue, both petitioners claim that the property subject
of the action, pursuant to the provisions of Act No. 1360, as
amended by Act No. 1657, was patrimonial property of the City of
Manila and not a park or plaza.
Arguments of Petitioners
In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that
"there appears to be some logic in the conclusion" of the Court of
Appeals that "neither Act No. 1360 nor Act No. 1657 could have
meant to supply the City of Manila the authority to sell the subject
property which is located at the south end not the north — of the
reclaimed area." 16 It argues, however, that when Act No. 1360, as
amended, authorized the City of Manila to undertake the
construction of the Luneta extension by reclaimed land from the
Manila Bay, and declared that the reclaimed land shall be the
"property of the City of Manila," the State expressly granted the
ownership thereof to the City of Manila which. consequently. could
enter into transactions involving it; that upon the issuance of O.C.T.
154
No. 1909, there could he no doubt that the reclaimed area owned
by the City was its patrimonial property;" that the south end of the
reclaimed area could not be for public use for. as argued by TDC a
street, park or promenade can be property for public use pursuant
to Article 344 of the Spanish Civil Code only when it has already
been so constructed or laid out, and the subject land, at the time it
was sold to the Elk's Club, was neither actually constructed as a
street, park or promenade nor laid out as a street, park or
promenade;" that even assuming that the subject property was at
the beginning property of public dominion, it was subsequently
converted into patrimonial property pursuant to Art. 422 of the Civil
Code, inasmuch as it had never been used, red or utilized since it
was reclaimed in 1905 for purpose other than this of an ordinary
real estate for sale or lease; that the subject property had never
been intended for public use, is further shown by the fact that it was
neither included as a part of the Luneta Park under Plan No. 30 of
the National Planning Commission nor considered a part of the
Luneta National Park (now Rizal Park) by Proclamation No. 234
dated December 19, 1955 of President Ramon Magsaysay or by
Proclamation Order No. 274 dated October 4, 1967 of President
Ferdinand E. Marcos;" 19 that, such being the case, there is no
reason why the subject property should -not be considered as
having been converted into patrimonial property, pursuant to the
ruling in Municipality vs. Roa  7 Phil. 20, inasmuch as the City of
Manila has considered it as its patrimonial property not only
bringing it under the operation of the Land Registration Act but also
by disposing of it; 20 and that to consider now the subject property
as a public plaza or park would not only impair the obligations of the
parties to the contract of sale (rated July 13, 1911, but also
authorize deprivation of property without due process of law. 21
G.R. No. L-410112
In L-41012, the petitioner TDC stresses that the principal issue is the
interpretation of Act No. 1360, as amended by. Act No. 1657 of the
Philippine Commission, 22 and avers that inasmuch as Section 6 of
Act No. 1360, as amended by Act 1657, provided that the
reclamation of the Luneta extension was to be paid for out of the
funds of the City of Manila which was authorized to borrow
P350,000 "to be expended in the construction of Luneta Extension,"
the reclaimed area became "public land" belonging to the City of
Manila that spent for the reclamation, conformably to the holding
in  Cabangis,23 and consequently, said land was subject to sale and
other disposition; that the Insular Government itself considered the
reclaimed Luneta extension as patrimonial property subject to
disposition as evidenced by the fact that See. 3 of Act 1360 declared
that "the land hereby reclaimed shall be the property of the City of
Manila;" that this property cannot be property for public use for
according to Article 344 of the Civil Code, the character of property
for public use can only attach to roads and squares that have
already been constructed or at least laid out as such, which
conditions did not obtain regarding the subject land, that Sec. 5 of
Act 1360 authorized the City of Manila to lease the northern part of
the reclaimed area for hotel purposes; that Act No. 1657
furthermore authorized the City of Manila to sell the same; 24 that
the express statutory authority to lease or sell the northern part of
the reclaimed area cannot be interpreted to mean that the
remaining area could not be sold inasmuch as the purpose of the
statute was not merely to confer authority to sell the northern
portion but rather to limit the city's power of disposition thereof, to
wit: to prevent disposition of the northern portion for any purpose
other than for a hotel site that the northern and southern ends of
the reclaimed area cannot be considered as extension of the Luneta
for they lie beyond the sides of the original Luneta when extended
in the direction of the sea, and that is the reason why the law
authorized the sale of the northern portion for hotel purposes, and,
155
for the same reason, it is implied that the southern portion could
likewise be disposed of.26
TDC argues likewise that there are several items of uncontradicted
circumstantial evidence which may serve as aids in construing the
legislative intent and which demonstrate that the subject property
is patrimonial in nature, to wit: (1) Exhibits "J" and "J-1", or Plan No.
30 of the National Planning Commission showing the Luneta and its
vicinity, do not include the subject property as part of the Luneta
Park; (2) Exhibit "K", which is the plan of the subject property
covered by TCT No. 67488 of BPOE, prepared on November 11,
1963, indicates that said property is not a public park; (3) Exhibit
"T", which is a certified copy of Proclamation No. 234 issued on
December 15, 1955 is President Magsaysay, and Exhibit "U" which is
Proclamation Order No. 273 issued on October 4, 1967 by President
Marcos, do not include the subject property in the Luneta Park-, (4)
Exhibit "W", which is the location plan of the Luneta National Park
under Proclamations Nos. 234 and 273, further confirms that the
subject property is not a public park; and (5) Exhibit "Y", which is a
copy of O.C.T. No. 7333 in the name of the United States of America
covering the land now occupied by the America covering the land
now occupied by the American Embassy, the boundaries of which
were delineated by the Philippine Legislature, states that the said
land is bounded on the northwest by properties of the Army and
Navy Club (Block No. 321) and the Elks Club (Block No. 321), and this
circumstance shows that even the Philippine Legislature recognized
the subject property as private property of the Elks Club. 27
TDC furthermore contends that the City of Manila is estopped from
questioning the validity of the sale of the subject property that it
executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for
several reasons, namely: (1) the City's petition for the reannotation
of Entry No. 4608/T-1635 was predicated on the validity of said sale;
(2) when the property was bought by the petitioner TDC it was not a
public plaza or park as testified to by both Pedro Cojuanco,
treasurer of TDC, and the surveyor, Manuel Añoneuvo, according to
whom the subject property was from all appearances private
property as it was enclosed by fences; (3) the property in question
was cadastrally surveyed and registered as property of the Elks Club,
according to Manuel Anonuevo; (4) the property was never used as
a public park, for, since the issuance of T.C.T. No. 2165 on July 17,
1911 in the name of the Manila Lodge NO. 761, the latter used it as
private property, and as early as January 16, 1909 the City of Manila
had already executed a deed of sale over the property in favor of
the Manila Lodge No. 761; and (5) the City of Manila has not
presented any evidence to show that the subject property has ever
been proclaimed or used as a public park. 28
TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot
apply to the subject land, for Com. Act No. 141 took effect on
December 1, 1936 and at that time the subject land was no longer
part of the part of the public domain. 29
TDC also stresses that its rights as a purchaser in good faith cannot
be disregarded, for the mere mention in the certificate of title that
the lot it purchased was "part of the Luneta extension" was not a
sufficient warning that tile title to the City of Manila was invalid; and
that although the trial court, in its decision affirmed by the Court of
Appeals, found the TDC -to has been an innocent purchaser for
value, the court disregarded the petitioner's rights as such
purchaser that relied on Torrens certificate of title. 30
The Court, continues the petitioner TDC erred in not holding that
the latter is entitled to recover from the City of Manila damages in
the amount of P100,000 caused by the City's petition for-
reannotation of its right to repurchase.
DISCUSSION AND RESOLUTION OF FIRST ISSUE
156
It is a cardinal rule of statutory construction that courts must give
effect to the general legislative intent that can be discovered from
or is unraveled by the four corners of the statute, 31 and in order to
discover said intent, the whole statute, and not only a particular
provision thereof, should be considered. 32 It is, therefore, necessary
to analyze all the provisions of Act No. 1360, as amended, in order
to unravel the legislative intent.
Act No. 1360 which was enacted by the Philippine Commission on
June 26, 1905, as amended by Act No. 1657 enacted on May 18,
1907, authorized the "construction of such rock and timber
bulkheads or sea walls as may be necessary for the making of an
extension to the Luneta" (Sec. 1 [a]), and the placing of the material
dredged from the harbor of Manila "inside the bulkheads
constructed to inclose the Luneta extension above referred to" (Sec.
1 [a]). It likewise provided that the plan of Architect D. H. Burnham
as "a general outline for the extension and improvement of the
Luneta in the City of Manila" be adopted; that "the reclamation
from the Bay of Manila of the land included in said projected Luneta
extension... is hereby authorized and the land thereby reclaimed
shall be the property of the City of Manila" (Sec. 3); that "the City of
Manila is hereby authorized to set aside a tract of the reclaimed
land formed by the Luneta extension authorized  by this Act  at the
worth end  of said tract, not to exceed five hundred feet by six
hundred feet in size, for a hotel site, and to lease the same  with the
approval of the Governor General, ... for a term not exceeding
ninety-nine years; that "should the Municipal Board ... deem it
advisable it is hereby authorized to advertise for sale to sell said
tract of land ... ;" "that said tract shall be used for hotel purposes as
herein prescribed, and shall not be devoted to any other purpose or
object whatever;" "that should the grantee x x x fail to maintain on
said tract a first-class hotel x x x then the title to said tract of land
sold, conveyed, and transferred, and shall not be devoted to any
other purpose or object whatever;" "that should the grantee x x x
fail to maintain on said tract a first-class hotel x x x then the title to
said tract of land sold, conveyed, and transferred to the grantee
shall revert to the City of Manila, and said City of Manila shall
thereupon become entitled to immediate possession of said tract of
land" (Sec. 5); that the construction of the rock and timber
bulkheads or sea wall "shall be paid for out of the funds of the City
of Manila, but the area to be reclaimed by said proposed Luneta
extension shall be filled, without cost to the City of Manila, with
material dredged from Manila Bay at the expense of the Insular
Government" (Sec. 6); and that "the City of Manila is hereby
authorized to borrow from the Insular Government ... the sum of
three hundred thousand pesos, to be expended in the construction
of Luneta extension provided for by paragraph (a) of section one
hereof" (Sec.7).
The grant made by Act No. 1360 of the reclaimed land to the City of
Manila is a grant of "public" nature, the same having been made to
a local political subdivision. Such grants have always
been  strictly  construed against the grantee.33 One compelling
reason given for the strict interpretation of a public grant is that
there is in such grant a gratuitous donation of, public money or
resources which results in an unfair advantage to the grantee and
for that reason, the grant should be narrowly restricted in favor of
the public.34 This reason for strict interpretation obtains relative to
the aforesaid grant, for, although the City of Manila was to pay for
the construction of such work and timber bulkheads or sea walls as
may be necessary for the making of the Luneta extension, the area
to be reclaimed would be filled at the expense of the Insular
Government and without cost to the City of Manila, with material
dredged from Manila Bay. Hence, the letter of the statute should be
narrowed to exclude maters which if included would defeat the
policy of the legislation.
157
The reclaimed area, an extension to the Luneta, is declared to be
property of the City of Manila. Property, however, is either of public
ownership or of private ownership. 35 What kind of property of the
City is the reclaimed land? Is it of public ownership (dominion) or of
private ownership?
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its
patrimonial property, the City could, by virtue of its ownership,
dispose of the whole reclaimed area without need
of  authorization  to do so from the lawmaking body. Thus Article
348 of the Civil Code of Spain provides that "ownership is the right
to enjoy and dispose of a thing without further limitations than
those established by law." 36 The right to dispose (jus disponendi) of
one's property is an attribute of ownership. Act No. 1360, as
amended, however, provides by necessary implication, that the City
of Manila could not dispose of the reclaimed area without
being authorized  by the lawmaking body. Thus the statute provides
that "the City of Manila is hereby authorized to set aside a tract ... at
the north end, for a hotel site, and to lease the same ... should the
municipal board ... deem it advisable, it is hereby authorized  ...to
sell said tract of land ... " (Sec. 5). If the reclaimed area were
patrimonial property of the City, the latter could dispose of it
without need of the authorization provided by the statute, and the
authorization to set aside ... lease ... or sell ... given by the statute
would indeed be superfluous. To so construe the statute s to render
the term "authorize," which is repeatedly used by the statute,
superfluous would violate the elementary rule of legal hermeneutics
that effect must be given to every word, clause, and sentence of the
statute and that a statute should be so interpreted that no part
thereof becomes inoperative or superfluous. 37 To authorize means
to empower, to give a right to act. 38 Act No. 1360 furthermore
qualifies the verb it authorize" with the adverb "hereby," which
means "by means of this statue or section," Hence without the
authorization expressly given by Act No. 1360, the City of Manila
could not lease or sell even the northern portion; much less could it
dispose of the whole reclaimed area. Consequently, the reclaimed
area was granted to the City of Manila, not as its patrimonial
property. At most, only the northern portion reserved as a hotel site
could be said to be patrimonial property for, by express statutory
provision it could be disposed of, and the title  thereto would revert
to the City should the grantee fail to comply with the terms
provided by the statute.
TDC however, contends that the purpose of the authorization
provided in Act No. 1360 to lease or sell was really to limit the City's
power of disposition. To sustain such contention is to beg the
question. If the purpose of the law was to limit the City's power of
disposition then it is necessarily assumed that the City had already
the power to dispose, for if such power did not exist, how could it
be limited? It was precisely Act 1360 that gave the City the power to
dispose for it was hereby authorized by lease of sale. Hence, the City
of Manila had no power to dispose of the reclaimed land had such
power not been granted by Act No. 1360, and the purpose of the
authorization was to empower the city to sell or lease the northern
part and not, as TDC claims, to limit only the power to dispose.
Moreover, it is presumed that when the lawmaking body enacted
the statute, it had full knowledge of prior and existing laws and
legislation on the subject of the statute and acted in accordance or
with respect thereto.39 If by another previous law, the City of Manila
could already dispose of the reclaimed area, which it could do if
such area were given to it as its patrimonial property, would it then
not be a superfluity for Act No. 1360 to  authorize the City to dispose
of the reclaimed land? Neither has petitioner TDC pointed to any
other law that authorized the City to do so, nor have we come
across any. What we do know is that if the reclaimed land were
patrimonial property, there would be no need of giving special
158
authorization to the City to dispose of it. Said authorization was
given because the reclaimed land was not intended to be
patrimonial property of the City of Manila, and without the express
authorization to dispose of the northern portion, the City could not
dispose of even that part.
Secondly, the reclaimed area is an "extension to the Luneta in the
City of Manila." 40 If the reclaimed area is an extension of the
Luneta, then it is of the same nature or character as the old Luneta.
Anent this matter, it has been said that a power to extend (or
continue an act or business) cannot authorize a transaction that is
totally distinct. 41 It is not disputed that the old Luneta is a public
park or plaza and it is so considered by Section 859 of the Revised
Ordinances of the City of Manila.42 Hence the "extension to the
Luneta" must be also a public park or plaza and for public use.
TDC, however, contends that the subject property cannot be
considered an extension of the old Luneta because it is outside of
the limits of the old Luneta when extended to the sea. This is a
strained interpretation of the term "extension," for an "extension,"
it has been held, "signifies enlargement in any direction — in length,
breadth, or circumstance." 43
Thirdly, the reclaimed area was formerly a part of the manila Bay. A
bay is nothing more than an inlet of the sea. Pursuant to Article 1 of
the Law of Waters of 1866, bays, roadsteads, coast sea, inlets and
shores are parts of the national domain open to public use. These
are also property of public ownership devoted to public use,
according to Article 339 of the Civil Code of Spain.
When the shore or part of the bay is reclaimed, it does not lose its
character of being property for public use, according
to  Government of the Philippine Islands vs. Cabangis.44 The
predecessor of the claimants in this case was the owner of a big
tract of land including the lots in question. From 1896 said land
began to wear away due to the action of the waters of Manila Bay.
In 1901 the lots in question became completely submerged in water
in ordinary tides. It remained in such a state until 1912 when the
Government undertook the dredging of the Vitas estuary and
dumped the Sand and - silt from estuary on the low lands
completely Submerged in water thereby gradually forming the lots
in question. Tomas Cabangis took possession thereof as soon as
they were reclaimed hence, the claimants, his successors in interest,
claimed that the lots belonged to them. The trial court found for the
claimants and the Government appealed. This Court held that when
the lots became a part of the shore. As they remained in that
condition until reclaimed by the filling done by the Government,
they belonged to the public domain. for public use .4' Hence, a part
of the shore, and for that purpose a part of the bay, did not lose its
character of being for public use after it was reclaimed.
Fourthly, Act 1360, as amended, authorized the lease or sale of the
northern portion of the reclaimed area as a hotel sites. The subject
property is not that northern portion authorized to be leased or
sold; the subject property is the southern portion. Hence, applying
the rule of expresio unius est exlusio alterius, the City of Manila was
not authorized to sell the subject property. The application of this
principle of statutory construction becomes the more imperative in
the case at bar inasmuch as not only must the public grant of the
reclaimed area to the City of Manila be, as above stated, strictly
construed against the City of Manila, but also because a grant of
power to a municipal corporation, as happens in this case where the
city is author ized to lease or sell the northern portion of the Luneta
extension, is strictly limited to such as are expressly or impliedly
authorized or necessarily incidental to the objectives of the
corporation.
159
Fifthly, Article 344 of the Civil Code of Spain provides that to
property of public use, in provinces and in towns, comprises the
provincial and town roads, the squares streets fountains, and public
waters the promenades, and public works of general service paid for
by such towns or provinces." A park or plaza, such as the extension
to the Luneta, is undoubtedly comprised in said article.
The petitioners, however, argue that, according to said Article 344,
in order that the character of property for public use may be so
attached to a plaza, the latter must be actually constructed or at
least laid out as such, and since the subject property was not yet
constructed as a plaza or at least laid out as a plaza when it was sold
by the City, it could not be property for public use. It should be
noted, however, that properties of provinces and towns for public
use are governed by the same principles as properties of the same
character belonging to the public domain. 46 In order to be property
of public domain an intention to devote it to public use is
sufficient. 47 The, petitioners' contention is refuted by Manresa
himself who said, in his comments", on Article 344, that: ñé+.
£ªwph!1
Las plazas, calles y paseos publicos correspondent
sin duda aiguna aldominio publico municipal ),
porque se hallan establecidos sobre suelo municipal
y estan destinadas al uso de todos Laurent presenta
tratando de las plazas, una question relativa a si
deben conceptuarse como de dominio publico los
lugares vacios libres, que se encuenttan en los
Municipios rurales ... Laurent opina contra
Pioudhon que toda vez que estan al servicio de
todos pesos lugares, deben considerable publicos y
de dominion publico. Realmente, pala decidir el
punto, bastara siempre fijarse en el destino real y
efectivo de los citados lugares, y si este destino
entraña un uso comun de todos, no hay duda que
son de dominio publico municipal si no
patrimoniales.
It is not necessary, therefore, that a plaza be already constructed of-
laid out as a plaza in order that it be considered property for public
use. It is sufficient that it be intended to be such In the case at bar, it
has been shown that the intention of the lawmaking body in giving
to the City of Manila the extension to the Luneta was not a grant to
it of patrimonial property but a grant for public use as a plaza.
We have demonstrated ad satietatem  that the Luneta extension as
intended to be property of the City of Manila for public use. But,
could not said property-later on be converted, as the petitioners
contend, to patrimonial property? It could be. But this Court has
already said, in Ignacio vs. The Director of Lands, 49 the executive
and possibly the legislation department that has the authority and
the power to make the declaration that said property, is no longer
required for public use, and until such declaration i made the
property must continue to form paint of the public domain. In the
case at bar, there has been no such explicit or unequivocal
declaration It should be noted, furthermore, anent this matter, that
courts are undoubted v not. primarily called upon, and are not in a
position, to determine whether any public land is still needed for
the purposes specified in Article 4 of the Law of Waters . 50
Having disposed of the petitioners' principal arguments relative to
the main issue, we now pass to the items of circumstantial evidence
which TDC claims may serve as aids in construing the legislative
intent in the enactment of Act No. 1360, as amended. It is
noteworthy that all these items of alleged circumstantial evidence
are acts far removed in time from the date of the enactment of Act
No.1360 such that they cannot be considered contemporaneous
with its enactment. Moreover, it is not farfetched that this mass of
160
circumstantial evidence might have been influenced by the
antecedent series of invalid acts, to wit: the City's having obtained
over the reclaimed area OCT No. 1909 on January 20,1911; the sale
made by the City of the subject property to Manila Lodge No. 761;
and the issuance to the latter of T.C.T. No. 2195. It cannot gainsaid
that if the subsequent acts constituting the circumstantial evidence
have been base on, or at least influenced, by those antecedent
invalid acts and Torrens titles S they can hardly be indicative of the
intent of the lawmaking body in enacting Act No. 1360 and its
amendatory act.
TDC claims that Exhs. "J," "J-l" "K," "T," "U," "W" and "Y" show that
the subject property is not a park.
Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed
development" dated May 14, 1949, were prepared by the National
Urban Planning Commission of the Office of the President. It cannot
be reasonably expected that this plan for development of the
Luneta should show that the subject property occupied by the
ElksClub is a public park, for it was made 38 years after the sale to
the Elks, and after T.C.T. No. 2195 had been issued to Elks. It is to be
assumed that the Office of the President was cognizant of the
Torrens title of BPOE. That the subject property was not included as
a part of the Luneta only indicated that the National Urban Planning
Commission that made the plan knew that the subject property was
occupied by Elks and that Elks had a Torrens title thereto. But this in
no way proves that the subject property was originally intended to
be patrimonial property of the City of Manila or that the sale to Elks
or that the Torrens-title of the latter is valid.
Exhibit "K" is the "Plan of land covered by T.C.T . No ----, as prepared
for Tarlac Development Company." It was made on November 11,
1963 by Felipe F. Cruz, private land surveyor. This surveyor is
admittedly a surveyor for TDC. 51 This plan cannot be expected to
show that the subject property is a part of the Luneta Park, for he
plan was made to show the lot that "was to be sold to petitioner."
This plan must have also assumed the existence of a valid title to the
land in favor of Elks.
Exhibits "T" and "U" are copies of Presidential Proclamations No.
234 issued on November 15, 1955 and No. 273 issued on October 4,
1967, respectively. The purpose of the said Proclamations was to
reserve certain parcels of land situated in the District of Ermita, City
of Manila, for park site purposes. Assuming that the subject
property is not within the boundaries of the reservation, this cannot
be interpreted to mean that the subject property was not originally
intended to be for public use or that it has ceased to be such.
Conversely, had the subject property been included in the
reservation, it would mean, if it really were private property, that
the rights of the owners thereof would be extinguished, for the
reservations was "subject to private rights, if any there be." That the
subject property was not included in the reservation only indicates
that the President knew of the existence of the Torrens titles
mentioned above. The failure of the Proclamations to include the
subject property in the reservation for park site could not change
the character of the subject property as originally for public use and
to form part of the Luneta Park. What has been said here applies to
Exhibits "V", "V-1" to "V-3," and "W" which also refer to the area
and location of the reservation for the Luneta Park.
Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935,
covering the lot where now stands the American Embassy
[Chancery]. It states that the property is "bounded ... on the
Northwest by properties of Army and Navy Club (Block No.321) and
Elks Club (Block No. 321)." Inasmuch as the said bounderies
delineated by the Philippine Legislature in Act No. 4269, the
petitioners contend that the Legislature recognized and conceded
the existence of the Elks Club property as a primate property (the
161
property in question) and not as a public park or plaza. This
argument is non sequitur plain and simple Said Original Certificate
of Title cannot be considered as an incontrovertible declaration that
the Elks Club was in truth and in fact the owner of such boundary
lot. Such mention as boundary owner is not a means of acquiring
title nor can it validate a title that is null and void.
TDC finally claims that the City of Manila is estopped from
questioning the validity of the sale it executed on July 13,'1911
conconveying the subject property to the Manila Lodge No. 761,
BPOE. This contention cannot be seriously defended in the light of
the doctrine repeatedly enunciated by this Court that the
Government is never estopped by mistakes or errors on the pan of
its agents, and estoppel does not apply to a municipal corporation
to validate a contract that is prohibited by law or its against
Republic policy, and the sale of July 13, 1911 executed by the City of
Manila to Manila Lodge was certainly a contract prohibited by law.
Moreover, estoppel cannot be urged even if the City of Manila
accepted the benefits of such contract of sale and the Manila Lodge
No. 761 had performed its part of the agreement, for to apply the
doctrine of estoppel against the City of Manila in this case would be
tantamount to enabling it to do indirectly what it could not do
directly. 52
The sale of the subject property executed by the City of Manila to
the Manila Lodge No. 761, BPOE, was void and inexistent for lack of
subject matter. 53 It suffered from an incurable defect that could not
be ratified either by lapse of time or by express ratification. The
Manila Lodge No. 761 therefore acquired no right by virtue of the
said sale. Hence to consider now the contract inexistent as it always
has seen, cannot be, as claimed by the Manila Lodge No. 761, an
impairment of the obligations of contracts, for there was it,
contemplation of law, no contract at all.
The inexistence of said sale can be set up against anyone who
asserts a right arising from it, not only against the first vendee, the
Manila Lodge No. 761, BPOE, but also against all its suceessors,
including the TDC which are not protected the doctrine of bona fide
ii purchaser without notice, being claimed by the TDC does not
apply where there is a total absence of title in the vendor, and the
good faith of the purchaser TDC cannot create title where none
exists. 55
The so-called sale of the subject property having been executed, the
restoration or restitution of what has been given is order 56
SECOND ISSUE
The second ground alleged in support of the instant petitions for
review on certiorari is that the Court of Appeals has departed from
the accepted and usual course of judicial proceedings as to call for
an exercise of the power of supervision. TDC in L-41012, argues that
the respondent Court did not make its own findings but simply
recited those of the lower court and made a general affirmance,
contrary to the requirements of the Constitution; that the
respondent Court made glaring and patent mistakes in recounting
even the copied findings, palpably showing lack of deliberate
consideration of the matters involved, as, for example, when said
court said that Act No. 1657 authorized the City of Manila to set
aside a portion of the reclaimed land "formed by the Luneta
Extension of- to lease or sell the same for park purposes;" and that
respondent Court. further more, did not resolve or dispose of any of
the assigned errors contrary to the mandate of the Judiciary Act.. 57
The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the
reasons warranting review, that the Court of Appeals departed from
the accepted and usual course of Judicial proceedings by simply
making a general affirmance of the court a quo  findings without
162
bothering to resolve several vital points mentioned by the BPOE in
its assigned errors. 58

COMMENTS ON SECOND ISSUE

We have shown in our discussion of the first issue that the decision
of the trial court is fully in accordance with law. To follows that
when such decision was affirmed by the Court of Appeals, the
affirmance was likewise in accordance with law. Hence, no useful
purpose will be served in further discussing the second issue.

CONCLUSION

ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012

are denied for lack of merit, and the decision of the Court of
Appeals of June 30, 1975, is hereby affirmed, at petitioner's cost.
Republic of the Philippines
Makasiar, Munoz Palma and Martin, JJ., concur.1äwphï1.ñët SUPREME COURT
Manila

EN BANC

G.R. No. 179987               September 3, 2013

HEIRS OF MARIO MALABANAN, (Represented by Sally A.

Malabanan), Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

RESOLUTION

BERSAMIN, J.:

163
For our consideration and resolution are the motions for
reconsideration of the parties who both assail the decision
promulgated on April 29, 2009, whereby we upheld the ruling of the
Court of Appeals (CA) denying the application of the petitioners for
the registration of a parcel of land situated in Barangay Tibig, Silang,
Cavite on the ground that they had not established by sufficient
evidence their right to the registration in accordance with either
Section 14(1) or Section 14(2) of Presidential Decree No. 1529
(Property Registration Decree).
Antecedents
The property subject of the application for registration is a parcel of
land situated in Barangay Tibig, Silang Cavite, more particularly
identified as Lot 9864-A, Cad-452-D, with an area of 71,324-square
meters. On February 20, 1998, applicant Mario Malabanan, who had
purchased the property from Eduardo Velazco, filed an application
for land registration covering the property in the Regional Trial
Court (RTC) in Tagaytay City, Cavite, 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.1
To prove that the property was an alienable and disposable land of
the public domain, Malabanan presented during trial a certification
dated June 11, 2001 issued by the Community Environment and
Natural Resources Office (CENRO) of the Department of
Environment and Natural Resources (DENR), which reads:
This is to certify that the parcel of land designated as Lot No. 9864
Cad 452-D, Silang Cadastre as surveyed for Mr. Virgilio Velasco
located at Barangay Tibig, Silang, Cavite containing an area of
249,734 sq. meters as shown and described on the Plan Ap-04-
00952 is verified to be within the Alienable or Disposable land per
Land Classification Map No. 3013 established under Project No. 20-
A and approved as such under FAO 4-1656 on March 15, 1982. 2
After trial, on December 3, 2002, the RTC rendered judgment
granting Malabanan’s application for land registration, disposing
thusly:
WHEREFORE, this Court hereby approves this application for
registration and thus places under the operation of Act 141, Act 496
and/or P.D. 1529, otherwise known as Property Registration Law,
the lands described in Plan Csd-04-0173123-D, Lot 9864-A and
containing an area of Seventy One Thousand Three Hundred Twenty
Four (71,324) Square Meters, as supported by its technical
description now forming part of the record of this case, in addition
to other proofs adduced in the name of MARIO MALABANAN, who
is of legal age, Filipino, widower, and with residence at Munting Ilog,
Silang, Cavite.
Once this Decision becomes final and executory, the corresponding
decree of registration shall forthwith issue.
SO ORDERED.3
The Office of the Solicitor General (OSG) appealed the judgment to
the CA, arguing that Malabanan had failed to prove that the
property belonged to the alienable and disposable land of the public
domain, and that the RTC erred in finding that he had been in
possession of the property in the manner and for the length of time
required by law for confirmation of imperfect title.
On February 23, 2007, the CA promulgated its decision reversing the
RTC and dismissing the application for registration of Malabanan.
164
Citing the ruling in Republic v. Herbieto (Herbieto), 4 the CA declared
that under Section 14(1) of the Property Registration Decree, any
period of possession prior to the classification of the land as
alienable and disposable was inconsequential and should be
excluded from the computation of the period of possession. Noting
that the CENRO-DENR certification stated that the property had
been declared alienable and disposable only on March 15, 1982,
Velazco’s possession prior to March 15, 1982 could not be tacked
for purposes of computing Malabanan’s period of possession.
Due to Malabanan’s intervening demise during the appeal in the CA,
his heirs elevated the CA’s decision of February 23, 2007 to this
Court through a petition for review on certiorari.
The petitioners assert that the ruling in Republic v. Court of Appeals
and Corazon Naguit5 (Naguit) remains the controlling doctrine
especially if the property involved is agricultural land. In this regard,
Naguit ruled that any possession of agricultural land prior to its
declaration as alienable and disposable could be counted in the
reckoning of the period of possession to perfect title under the
Public Land Act (Commonwealth Act No. 141) and the Property
Registration Decree. They point out that the ruling in Herbieto, to
the effect that the declaration of the land subject of the application
for registration as alienable and disposable should also date back to
June 12, 1945 or earlier, was a mere obiter dictum considering that
the land registration proceedings therein were in fact found and
declared void ab initio for lack of publication of the notice of initial
hearing.
The petitioners also rely on the ruling in Republic v. T.A.N.
Properties, Inc.6 to support their argument that the property had
been ipso jure converted into private property by reason of the
open, continuous, exclusive and notorious possession by their
predecessors-in-interest of an alienable land of the public domain
for more than 30 years. According to them, what was essential was
that the property had been "converted" into private property
through prescription at the time of the application without regard
to whether the property sought to be registered was previously
classified as agricultural land of the public domain.
As earlier stated, we denied the petition for review on certiorari
because Malabanan failed to establish by sufficient evidence
possession and occupation of the property on his part and on the
part of his predecessors-in interest since June 12, 1945, or earlier.
Petitioners’ Motion for Reconsideration
In their motion for reconsideration, the petitioners submit that the
mere classification of the land as alienable or disposable should be
deemed sufficient to convert it into patrimonial property of the
State. Relying on the rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and Republic v. T.A.N. Properties,
Inc.,9 they argue that the reclassification of the land as alienable or
disposable opened it to acquisitive prescription under the Civil
Code; that Malabanan had purchased the property from Eduardo
Velazco believing in good faith that Velazco and his predecessors-in-
interest had been the real owners of the land with the right to
validly transmit title and ownership thereof; that consequently, the
ten-year period prescribed by Article 1134 of the Civil Code, in
relation to Section 14(2) of the Property Registration Decree,
applied in their favor; and that when Malabanan filed the
application for registration on February 20, 1998, he had already
been in possession of the land for almost 16 years reckoned from
1982, the time when the land was declared alienable and disposable
by the State.
The Republic’s Motion for Partial Reconsideration
165
The Republic seeks the partial reconsideration in order to obtain a
clarification with reference to the application of the rulings in Naguit
and Herbieto.
Chiefly citing the dissents, the Republic contends that the decision
has enlarged, by implication, the interpretation of Section 14(1) of
the Property Registration Decree through judicial legislation. It
reiterates its view that an applicant is entitled to registration only
when the land subject of the application had been declared
alienable and disposable since June 12, 1945 or earlier.
Ruling
We deny the motions for reconsideration.
In reviewing the assailed decision, we consider to be imperative to
discuss the different classifications of land in relation to the existing
applicable land registration laws of the Philippines.
Classifications of land according to ownership
Land, which is an immovable property,10 may be classified as either
of public dominion or of private ownership. 11 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.12 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.13 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, 14 all lands of the public
domain belong to the State.15 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. 16
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. 17
Classifications of public lands
according to alienability
Whether or not land of the public domain is alienable and
disposable primarily rests on the classification of public lands made
under the Constitution. Under the 1935 Constitution, 18 lands of the
public domain were classified into three, namely, agricultural,
timber and mineral.19 Section 10, Article XIV of the 1973
Constitution classified lands of the public domain into seven,
specifically, agricultural, industrial or commercial, residential,
resettlement, mineral, timber or forest, and grazing land, with the
reservation that the law might provide other classifications. The
1987 Constitution adopted the classification under the 1935
Constitution into agricultural, forest or timber, and mineral, but
added national parks.20 Agricultural lands may be further classified
by law according to the uses to which they may be devoted. 21 The
identification of lands according to their legal classification is done
exclusively by and through a positive act of the Executive
Department.22
Based on the foregoing, the Constitution places a limit on the type
of public land that may be alienated. Under Section 2, Article XII of
166
the 1987 Constitution, only agricultural lands of the public domain
may be alienated; all other natural resources may not be.
Alienable and disposable lands of the State fall into two categories,
to wit: (a) patrimonial lands of the State, or those classified as lands
of private ownership under Article 425 of the Civil Code, 23 without
limitation; and (b) lands of the public domain, or the public lands as
provided by the Constitution, but with the limitation that the lands
must only be agricultural. Consequently, lands classified as forest or
timber, mineral, or national parks are not susceptible of alienation
or disposition unless they are reclassified as agricultural. 24 A positive
act of the Government is necessary to enable such
reclassification,25 and the exclusive prerogative to classify public
lands under existing laws is vested in the Executive Department, not
in the courts.26 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. 27 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.
Disposition of alienable public lands
Section 11 of the Public Land Act (CA No. 141) provides the manner
by which alienable and disposable lands of the public domain, i.e.,
agricultural lands, can be disposed of, to wit:
Section 11. Public lands suitable for agricultural purposes can be
disposed of only as follows, and not otherwise:
(1) For homestead settlement;
(2) By sale;
(3) By lease; and
(4) By confirmation of imperfect or incomplete titles;
(a) By judicial legalization; or
(b) By administrative legalization (free patent).
The core of the controversy herein lies in the proper interpretation
of Section 11(4), in relation to Section 48(b) of the Public Land Act,
which expressly requires possession by a Filipino citizen of the land
since June 12, 1945, or earlier, viz:
Section 48. The following-described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such
lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance of
the province where the land is located for confirmation of their
claims and the issuance of a certificate of title thereafter, under the
Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive, and notorious
possession and occupation of alienable and disposable lands of the
public domain, under a bona fide claim of acquisition of ownership,
167
since June 12, 1945, or earlier, immediately preceding the filing of
the applications for confirmation of title, except when prevented by
war or force majeure. These shall be conclusively presumed to have
performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title under the provisions of this
chapter. (Bold emphasis supplied)
Note that Section 48(b) of the Public Land Act used the words "lands
of the public domain" or "alienable and disposable lands of the
public domain" to clearly signify that lands otherwise classified, i.e.,
mineral, forest or timber, or national parks, and lands of patrimonial
or private ownership, are outside the coverage of the Public Land
Act. What the law does not include, it excludes. The use of the
descriptive phrase "alienable and disposable" further limits the
coverage of Section 48(b) to only the agricultural lands of the public
domain as set forth in Article XII, Section 2 of the 1987 Constitution.
Bearing in mind such limitations under the Public Land Act, the
applicant must satisfy the following requirements in order for his
application to come under Section 14(1) of the Property Registration
Decree,28 to wit:
1. The applicant, by himself or through his predecessor-in-
interest, has been in possession and occupation of the
property subject of the application;
2. The possession and occupation must be open,
continuous, exclusive, and notorious;
3. The possession and occupation must be under a bona fide
claim of acquisition of ownership;
4. The possession and occupation must have taken place
since June 12, 1945, or earlier; and
5. The property subject of the application must be an
agricultural land of the public domain.
Taking into consideration that the Executive Department is vested
with the authority to classify lands of the public domain, Section
48(b) of the Public Land Act, in relation to Section 14(1) of the
Property Registration Decree, presupposes that the land subject of
the application for registration must have been already classified as
agricultural land of the public domain in order for the provision to
apply. Thus, absent proof that the land is already classified as
agricultural land of the public domain, the Regalian Doctrine applies,
and overcomes the presumption that the land is alienable and
disposable as laid down in Section 48(b) of the Public Land Act.
However, emphasis is placed on the requirement that the
classification required by Section 48(b) of the Public Land Act is
classification or reclassification of a public land as agricultural.
The dissent stresses that the classification or reclassification of the
land as alienable and disposable agricultural land should likewise
have been made on June 12, 1945 or earlier, because any
possession of the land prior to such classification or reclassification
produced no legal effects. It observes that the fixed date of June 12,
1945 could not be minimized or glossed over by mere judicial
interpretation or by judicial social policy concerns, and insisted that
the full legislative intent be respected.
We find, however, that the choice of June 12, 1945 as the reckoning
point of the requisite possession and occupation was the sole
prerogative of Congress, the determination of which should best be
left to the wisdom of the lawmakers. Except that said date qualified
the period of possession and occupation, no other legislative intent
appears to be associated with the fixing of the date of June 12,
1945. Accordingly, the Court should interpret only the plain and
literal meaning of the law as written by the legislators.
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Moreover, an examination of Section 48(b) of the Public Land Act
indicates that Congress prescribed no requirement that the land
subject of the registration should have been classified as agricultural
since June 12, 1945, or earlier. As such, the applicant’s imperfect or
incomplete title is derived only from possession and occupation
since June 12, 1945, or earlier. This means that the character of the
property subject of the application as alienable and disposable
agricultural land of the public domain determines its eligibility for
land registration, not the ownership or title over it.
Alienable public land held by a possessor, either personally or
through his predecessors-in-interest, openly, continuously and
exclusively during the prescribed statutory period is converted to
private property by the mere lapse or completion of the period. 29 In
fact, by virtue of this doctrine, corporations may now acquire lands
of the public domain for as long as the lands were already converted
to private ownership, by operation of law, as a result of satisfying
the requisite period of possession prescribed by the Public Land
Act.30 It is for this reason that the property subject of the application
of Malabanan need not be classified as alienable and disposable
agricultural land of the public domain for the entire duration of the
requisite period of possession.
To be clear, then, the requirement that the land should have been
classified as alienable and disposable agricultural land at the time of
the application for registration is necessary only to dispute the
presumption that the land is inalienable.
The declaration that land is alienable and disposable also serves to
determine the point at which prescription may run against the
State. The imperfect or incomplete title being confirmed under
Section 48(b) of the Public Land Act is title that is acquired by reason
of the applicant’s possession and occupation of the alienable and
disposable agricultural land of the public domain. Where all the
necessary requirements for a grant by the Government are
complied with through actual physical, open, continuous, exclusive
and public possession of an alienable and disposable land of the
public domain, the possessor is deemed to have acquired by
operation of law not only a right to a grant, but a grant by the
Government, because it is not necessary that a certificate of title be
issued in order that such a grant be sanctioned by the courts. 31
If one follows the dissent, the clear objective of the Public Land Act
to adjudicate and quiet titles to unregistered lands in favor of
qualified Filipino citizens by reason of their occupation and
cultivation thereof for the number of years prescribed by law 32 will
be defeated. Indeed, we should always bear in mind that such
objective still prevails, as a fairly recent legislative development
bears out, when Congress enacted legislation (Republic Act No.
10023)33 in order to liberalize stringent requirements and
procedures in the adjudication of alienable public land to qualified
applicants, particularly residential lands, subject to area
limitations.34
On the other hand, if a public land is classified as no longer intended
for public use or for the development of national wealth by
declaration of Congress or the President, thereby converting such
land into patrimonial or private land of the State, the applicable
provision concerning disposition and registration is no longer
Section 48(b) of the Public Land Act but the Civil Code, in
conjunction with Section 14(2) of the Property Registration
Decree.35 As such, prescription can now run against the State.
To sum up, we now observe the following rules relative to the
disposition of public land or lands of the public domain, namely:
(1) As a general rule and pursuant to the Regalian Doctrine,
all lands of the public domain belong to the State and are
169
inalienable. Lands that are not clearly under private
ownership are also presumed to belong to the State and,
therefore, may not be alienated or disposed;
(2) The following are excepted from the general rule, to wit:
(a) Agricultural lands of the public domain are
rendered alienable and disposable through any of
the exclusive modes enumerated under Section 11
of the Public Land Act. If the mode is judicial
confirmation of imperfect title under Section 48(b)
of the Public Land Act, the agricultural land subject
of the application needs only to be classified as
alienable and disposable as of the time of the
application, provided the applicant’s possession and
occupation of the land dated back to June 12, 1945,
or earlier. Thereby, a conclusive presumption that
the applicant has performed all the conditions
essential to a government grant arises, 36 and the
applicant becomes the owner of the land by virtue
of an imperfect or incomplete title. By legal fiction,
the land has already ceased to be part of the public
domain and has become private property. 37
(b) Lands of the public domain subsequently
classified or declared as no longer intended for
public use or for the development of national
wealth are removed from the sphere of public
dominion and are considered converted into
patrimonial lands or lands of private ownership that
may be alienated or disposed through any of the
modes of acquiring ownership under the Civil Code.
If the mode of acquisition is prescription, whether
ordinary or extraordinary, proof that the land has
been already converted to private ownership prior
to the requisite acquisitive prescriptive period is a
condition sine qua non in observance of the law
(Article 1113, Civil Code) that property of the State
not patrimonial in character shall not be the object
of prescription.
To reiterate, then, the 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.1âwphi1
WHEREFORE, the Court DENIES the petitioners' Motion for
Reconsideration and the respondent's Partial Motion for
Reconsideration for their lack of merit.
SO ORDERED.
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