Makati Leasing and Finance Corporation vs Wennever Texttile Mills

 
FACTS:
 
To obtain financial accommodations from Makati Leasing, Wearever Textile discounted and assigned several receivables under a
Receivable Purchase Agreement with Makati Leasing. To secure the collection of receivables, it executed a chattel mortgage over
several raw materials and a machinery – Artos Aero Dryer Stentering Range (Dryer). Wearever defaulted thus the properties
mortgaged were extrajudicially foreclosed. The sheriff, after the restraining order was lifted, was able to enter the premises of
Wearever and removed the drive motor of the Dryer. The CA reversed the order of the CFI, ordering the return of the drive motor
since it cannot be the subject of a replevin suit being an immovable bolted to the ground. Thus the case at bar.
 
ISSUE: Whether the dryer is an immovable property
 
HELD: NO. The SC relied on its ruling in Tumalad v. Vicencio, that if a house of strong materials can be the subject of a Chattel
Mortgage as long as the parties to the contract agree and no innocent 3rd party will be prejudiced then more so that a machinery
may treated as a movable since it is movable by nature and becomes immobilized only by destination. And treating it as a chattel
by way of a Chattel Mortgage, Wearever is estopped from claiming otherwise.
 
Serg‘s Products and Gaquiloy vs. PCI Leasing and Finance 338 SCRA 499
 
FACTS: PCI filed a case for collection of a sum of money as well as a writ of replevin for the
seizure of machineries, subject of a chattel mortgage executed by petitioner in favor of PCI. Machineries of petitioner
were seized and petitioner filed a motion for special protective order. It asserts that the machineries were real property and
could not be subject of a chattelmortgage.

Issue: Whether or not the machineries become real property by virtue of immobilization.

HELD: The machineries in question have become immobilized by destination because they are essential and principal

elements in the industry, and thus have become immovable in nature. Nonetheless, they are still proper subjects for a chattel
mortgage. Contracting parties may validly stipulate that a real property be considered as personal. After agreement, they are
consequently estopped from claiming otherwise.
 
TSAI V. CA Gr. No. 120098, October 2, 2001

FACTS: Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine Bank of Communications(PBCom), secured by a Real and
Chattel Mortgage over the lot where its factory stands, and the chattels located therein as enumerated in a schedule attached to
the mortgagec ontract. PBCom again granted a second loan to EVERTEX which was secured by a Chattel Mortgage over personal
properties similar to those listed in the first mortgage deed. During the execution of the second mortgage, EVERTEX purchased
various machines and equipment. Upon EVERTEX's failure to meet its obligation, PBCom, commenced extrajudicial foreclosure of
the mortgage. PBCom leased the entire factory premises to Ruby Tsai and sold to the same the factory, lock, stock and barrel
including the contested machineries. EVERTEX filed a complaint for annulment of sale, reconveyance, and damages against
PBCom, alleging that the extrajudicial foreclosure of subject mortgage was not valid, and that PBCom, without any legal or factual
basis, appropriated the contested properties which were not included in the Real and Chattel Mortgage of the first mortgage
contract nor in the second contract which is a Chattel Mortgage, and neither were those properties included in the Notice of
Sheriff's Sale.
ISSUE: Whether or not the machineries and equipment were personal properties
HELD: YES, the machineries and equipment are personal properties. The nature of the disputed machineries, i.e., that they were
heavy, bolted or cemented on the real property mortgaged does not make them ipso facto immovable under Article 415 (3)
and (5) of the New CivilCode. While it is true that the properties appear to be immobile, a perusal of the contract of Real and
Chattel Mortgage executed by the parties herein reveal their intent, that is - to treat machinery and equipment as chattels. If the
machineries in question were contemplated to be included in the real estate mortgage, there would have been no necessity to ink
a chattel mortgage specifically with a listing of the machineries covered thereby. Assuming that the properties in question
are immovable by nature, nothing detracts the parties from treating it as chattels to secure an obligation under the
principle of estoppel, where an immovable may be considered a personal property if there is a stipulation as when it is used as
security in the payment of an obligation where a chattel mortgage is executed over it.

MINDANAO BUS CO. V. CITY ASSESSOR DIGESTG.R. No. L-17870 29 September 1962

FACTS: Petitioner is a public utility company engaged in the transport of passengers and cargo by motor vehicles. Petitioner
likewise owned a land where it maintains a garage, a repair shop and blacksmith or carpentry shops. The machineries are placed
thereon in wooden and cement platforms. The City Assessor of CDO then assessed a P4,400 realty tax on said machineries and
repair equipment. Petitioner appealed on the ground that the same are not real properties.

ISSUE: Whether or not the machineries and equipment are considered immobilized and thus subject to a realty tax
HELD:NO. The Supreme Court held that said machineries and equipment are not subject to the assessment of real estate tax.

Art. 415
 of the NCC classifies the following as immovable property xxx (5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said industry or works; Said equipment are not considered immobilized as they are
merely incidental, not essential and principal to the business of the petitioner. The transportation business could be carried on
without repair or service shops of its rolling equipment as they can be repaired or services in another shop belonging to
another Aside from the element of essentiality the Art.415 (5) also requires that the industry or works be carried
on in a building or on a piece of land. As such, the equipment in question are not deemed real property and not subject to
realty tax, because the transportation business is not carried on in a building or permanently on a piece of land,
 as demanded by law.

REPUBLIC V. COURT OF APPEALS 281 SCRA 639

FACTS: Morato filed for a patent on a parcel of land located in Calauag, Quezon, which was approved, provided that the land
shall not be encumbered or alienated within a period of five years from the date of the issuance of the patent. Later on, the land
was established to be a portion of Calauag Bay, which was five to six feet deep during high tides and three feet deep on low tides.
The water level rose because of the ebb and flow of tides from the bay and the storms that frequently passed through the area.
Furthermore, it was observed by the Director of Lands from his investigation, that the land of Morato was leased to Advincula and
it was also mortgaged to Co. The government sought for the revocation of the patent issued. The trial court and appellate court
decided in favor of the respondents.

ISSUE: Whether or not the land granted under patent which was later on leased and mortgaged should be revert back to the
ownership of the State it being a foreshore land.

HELD: Yes, foreshore lands have been defined to be that part of the land which is between the high and low water and left dry by
the flux and reflux of the tides. This is the strip of land that lies between the high and low watermarks and that is alternatively wet
and dry according to the flow of the tide. Foreshore lands may not anymore be the subject of issuance of free patents. Under
property of public ownership or dominion are foreshore lands, as provided for in the Civil Code. It is to be noted that when the sea
moved towards the estate and the tide invaded it, the invaded property became foreshore land and passed to the realm of public
domain. In accordance with this land reclassification, the land can no longer be subject to a pending patent application and must
be returned to the State.
EVANGELISTA vs. ALTO SURETY & INSURANCE CO., INC. G.R. No. L-11139 April 23, 1958

FACTS:

On June 4, 1949, petitioner herein, Santos Evangelista, instituted Civil Case No. 8235 of the Court of First,
Instance of Manila for a sum of money. On the same date, he obtained a writ of attachment, which levied
upon a house, built by Rivera on a land situated in Manila and leased to him, by filing copy of said writ and the
corresponding notice of attachment with the Office of the Register of Deeds of Manila, on June 8, 1949. In due
course, judgment was rendered in favor of Evangelista, who, on October 8, 1951, bought the house at public
auction held in compliance with the writ of execution issued in said case. The corresponding definite deed of
sale was issued to him on October 22, 1952, upon expiration of the period of redemption. When Evangelista
sought to take possession of the house, Rivera refused to surrender it, upon the ground that he had leased the
property from the Alto Surety & Insurance Co., Inc. and that the latter is now the true owner of said property.
It appears that on May 10, 1952, a definite deed of sale of the same house had been issued to respondent, as
the highest bidder at an auction sale held, on September 29, 1950, in compliance with a writ of execution
issued in Civil Case No. 6268 of the same court for the sum of money, had been rendered in favor respondent
herein, as plaintiff therein. Hence, on June 13, 1953, Evangelista instituted the present action against
respondent and Ricardo Rivera, for the purpose of establishing his (Evangelista) title over said house, securing
possession thereof, apart from recovering damages. After due trial, the CFI Manila rendered judgment for
Evangelista, sentencing Rivera and Alto Surety to deliver the house in question to Evangelista and to pay him,
jointly and severally, P40 a month from Oct. 1952 until said delivery, plus costs.

On appeal taken by respondent, this decision was reversed by the Court of Appeals, which absolved said
respondent from the complaint, upon the ground that, although the writ of attachment in favor of Evangelista
had been filed with the Register of Deeds of Manila prior to the sale in favor of respondent, Evangelista did
not acquire thereby a preferential lien, the attachment having been levied as if the house in question were
immovable property, although in the opinion of the Court of Appeals, it is "ostensibly a personal property.

ISSUE:W/N a house constructed by the lessee of the land on which it is built, should be dealt with, for the
purpose of attachment, as immovable property.

HELD: The said house is not personal property, much less a debt, credit or other personal property not capable
of manual delivery, but immovable property. As explicitly held, in Laddera vs. Hodges (48 Off. Gaz., 5374), "a
true building (not merely superimposed on the soil) is immovable or real property, whether it is erected by the
owner of the land or by usufructuary or lessee. This is the doctrine of our Supreme Court in Leung Yee vs.
Strong Machinery Company, 37 Phil., 644. 

It is true that the parties to a deed of chattel mortgage may agree to consider a house as personal property for
purposes of said contract (Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil Co. of New York vs.
Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil., 464). However, this view is good only insofar as
the contracting parties are concerned. It is based, partly, upon the principle of estoppel. Neither this principle,
nor said view, is applicable to strangers to said contract. Much less is it in point where there has been no
contract whatsoever, with respect to the status of the house involved, as in the case at bar.

Enrique v. Vicente Orosa and Plaza Theatre

Facts: After agreeing to make an investment in Orosa’s theatre business and his assurance that he would be
personally liable for any account that the said construction might incur, Lopez delivered the lumber which was
used for the construction of the Plaza Theatre.  But of the total cost of the materials amounting to P62,255.85,
Lopez was paid only P20848.50.

Plaza Theatre was erected on a piece of land formerly owned by Orosa, and was acquired by the corporation.
As Lopez was pressing Orosa for payment of remaining unpaid obligation, the latter promised to obtain a bank
loan by mortgaging the properties of Plaza Theatre.  Unknown to Lopez, the corporation already got a loan
from a bank with Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the
land and building in favor of said company as counter-security.

Persistent demand from Lopez caused Orosa to execute an alleged “deed of assignment” of his 480 shares of
stock of Plaza Theatre, at P100 per share; and as the obligation still remain unsettled, Lopez filed a complaint
against Orosa and Plaza Theatre Inc, praying that xxx in case defendants fail to pay, the building and land
owned by corporation be sold at public auction, or the shares of the capital stock be sold, and the proceeds
thereof be applied to said indebtedness.

As a defense, Orosa contended that the shares of stocks were personal properties and cannot be made to
cover and satisfy the obligation.  it was thus prayed that he be declared exempted from payment of deficiency
in case the proceeds from the sale of properties are not enough.

The surety company, upon discovery that the land was already registered, file a petition to annotate the rights
and interests of the surety company over the said properties, which was opposed by Lopez who asserted that
he has preferred lien over the properties.

The two cases were heard jointly, and lower court held that Orosa were liable for the unpaid balance of the
cost of lumber used in the construction, and Lopez thus acquired materialman’s lien over it.  In making the
pronouncement that tyhe lien was merely confined to the building and did not extend to the land where it
was built, the trial jduge took into consideration that xxx codal provisions specifying that refection credits are
preferred could refer to buildings which are also classified as real properties upon which the refaction was
made.  Orosa were thus required to xxx with respect tohe building, said mortgage was subject to
materialmen’s lien in favor of Lopez.

Lopez tried to secure a modification of decision in so far as it declared that lien did not extend to the land, but
was denied by court.  Hence, the appeal.

Issue:Whether a materialmen’s lien for the value of materials used in the construction of building attaches to
said structure alone, and does not extend to the land on which building is adhered to.

Held:Yes.  Such lien attaches to structure alone, and does not extend to the land where the building is.

In view of employment of the phrase, “real estate or immovable property”, and in as much as said provision
does not contain any specification delimiting the lien to the building, said article must be construed as to
embrace both the land and building or the structure adhering thereto.  SC cannot subscribe to this view, for
while it is true that real estate connotes land and building constructed thereon, it is obvious that the inclusion
of the building, separate and distinct from the land, in the enumeration of what may constitute real properties
could mean only one thing – that the building is by itself an immovable property.  Moreover, in view of the
absence of any specific provision of law to the contrary, a building is an immovable property, irrespective of
whether or not said structure and the land on which it is adhered to belong to the same owner.

A close examination of the provision of the Civil Code reveals that the law gives preference to unregistered
refectionary credits only with respect to the real estate upon the refection or work was made.  The conclusion
is that it must be that the lien so created attaches merely to the immovable property for the construction or
repair of which the obligation was incurred.  Therefore, the lien in favor of appellant for the unpaid value of
the lumber used in construction of the building attaches only to said structure and to no other property of the
obligors.

Yap vs. Tañada

Doctrine: Article 415, par. 3 of the Civil Code considers and immovable property as “everything attached to an
immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the
material or deteriorating the object.” The pump does not fit this description. It could be, and was, in
fact,separated from Yap’s premises without being broken of suffering deterioration. Obviously, the separation
or removal of the pump involved nothing more complicated that the loosening of bolts or dismantling of other
fasteners.
Facts: The case began in the City Court of Cebu with the filing of Goulds Pumps International (Phil), Inc. of a
complaint against Yap and his wife seeking recovery of P1,459.30, representing the balance of the price and
installation cost of a water pump in the latter’s premises. The Court rendered judgment in favor of herein
respondent after they presented evidence ex-parte due to failure of petitioner Yap to appear before the Court.
Petitioner then appealed to the CFI, particularly to the sale of Judge Tanada. For again failure to appear for
pre-trial, Yap was declared in default. He filed for a motion for reconsideration which was denied by Judge
Tanada. On October 15, 1969, Tanada granted Gould’s Motion for Issuance of Writ of Execution. Yap forthwith
filed an Urgent Motion for Reconsideration of the said Order. In the meantime, the Sheriff levied on the water
pump in question and by notice scheduled the execution sale thereof. But in view of the pendency of Yap’s
motion, suspension of sale was directed by Judge Tanada. It appears, however, that this was not made known
to the Sheriff whocontinued with the auction sale and sold the property to the highest bidder, Goulds.
Because of such, petitioner filed a Motion to Set Aside Execution Sale and to Quash Alias Writ of Execution.
One of his arguments was that the sale was made without the notice required by Sec. 18, Rule 29 of the New
Rules of Court, “i.e. notice by publication in case of execution of sale of real property, the pump and its
accessories being immovable because attached to the ground with the character of permanency.” Such
motion was denied by the CFI.
Issue: Whether or not the pump and its accessories are immovable property
Held: No. The water pump and its accessories are NOT immovable properties. The argument of Yap that the
water pump had become immovable property by its being installed in his residence is untenable. Article 415,
par. 3 of the Civil Code considers and immovable property as “everything attached to an immovable in a fixed
manner, in such a way that it cannot be separated therefrom without breaking the material or deteriorating
the object.” The pump does not fit this description. It could be, and was, in fact,separated from Yap’s premises
without being broken of suffering deterioration. Obviously, the separation or removal of the pump involved
nothing more complicated that the loosening of bolts or dismantling of other fasteners.

Machinery & Engineering Supplies vs. CA

Doctrine: The special civil action of replevin is applicable only to personal property. When the machinery and
equipment in question appeared to be attached to the land, particularly to the concrete foundation of said
premises, in a fixed manner, in such a way that the former could not be separated from the latter without
breaking the material or deterioration of the object, it had become an immovable property under Art. 415(3).
Facts: Herein petitioner filed a complaint for replevin in the CFI of Manila against Ipo Limestone Co., and Dr.
Antonio Villarama, for the recovery of the machineries and equipments sold and delivered to said defendants
at their factory in Barrio Bigti, Norzagaray, Bulacan. The respondent judge issued an order, commanding
Provincial Sheriff of Bulacan to seize and take immediate possession of the properties specified in the order.
Two deputy sheriffs of Bulacan, Ramon S. Roco(president of Machinery), and a crew of technical men and
laborers proceeded to Bigti, for the purpose of carrying the court’s order into effect. Leonardo Contreras,
Manager of the respondent Company, and Pedro Torres, in charge thereof, met the deputy sheriffs, and
Contreras handed to them a letter addressed to Atty. Palad (ex-officio Provincial Sheriff of Bulacan), protesting
against the seizure of the properties in question, on the ground that they are not personal properties.
Later on, they went to the factory. Roco’s attention was called to the fact that the equipments could not
possibly be dismantled without causing damages or injuries to the wooden frames attached to them. But Roco
insisted in dismantling the equipments on his own responsibility, alleging that the bond was posted for such
eventuality, the deputy sheriffs directed that some of the supports thereof be cut.

The defendant Company filed an urgent motion for the return of the properties seized by the deputy sheriffs.
On the same day, the trial court issued an order, directing the Provincial Sheriff of Bulacan to return the
machineries to the place where they were installed. The deputy sheriffs returned the properties seized, by
depositing them along the road, near the quarry, of the defendant Company, at Bigti, without the benefit of
inventory and without re-installing them in their former position and replacing the destroyed posts, which
rendered their use impracticable.

The trial court ordered Roco to furnish the Provincial Sheriff with the necessary funds, technical men, laborers,
equipments and materials. Roco raised the issue to the CA; a writ of preliminary injunction was issued but the
CA subsequently dismissed for lack of merit. A motion for reconsideration was denied.

Issue: Whether or not the machineries and equipments were personal properties and, therefore, could be
seized by replevin.
Held: No. The special civil action known as replevin, governed by the Rules of Court, is applicable only to
“personal property.” When the sheriff repaired to the premises of respondent company, the machinery and
equipment in question appeared to be attached to the land, particularly to the concrete foundation of said
premises, in a fixed manner, in such a way that the former could not be separated from the latter “without
breaking the material or deterioration of the object.” Hence, in order to remove said outfit, it became
necessary, not only to unbolt the same, but, also, to cut some of its wooden supports. Moreover, said
machinery and equipment were “intended by the owner of the tenement for an industry” carried on said
immovable and tended “directly to meet the needs of the said industry.” For these reasons, they were already
immovable property pursuant to paragraphs 3 and 5 of Article 415 of the Civil Code.
Mr. Ramon Roco, insisted “on the dismantling of at his own responsibility,” stating that, precisely, “that is the
reason why plaintiff posted a bond.” In this manner, petitioner clearly assumed the corresponding risks. It is
well settled that, when restitution of what has been ordered, the goods in question shall be returned in
substantially the same condition as when taken. It follows that petitioner must also do everything necessary to
the reinstallation of said property in conformity with its original condition.

PEOPLE'S BANK AND TRUST CO. vs. DAHICAN LUMBER COMPANYG.R. No. L-17500 May 16, 1967
Facts: On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed
to do business in the Philippines sold and assigned all its rights in the Dahican Lumber concession to Dahican
Lumber Company - hereinafter referred to as DALCO - for the total sum of $500,000.00, of which only the
amount of $50,000.00 was paid. Thereafter, to develop the concession, DALCO obtained various loans from
the People's Bank & Trust Company amounting, as of July 13, 1950, toP200,000.00. In addition, DALCO
obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of Washington D.C.,
evidenced by five promissory notes of $50,000.00 each, maturing on different dates, executed by both DALCO
and the Dahican America Lumber Corporation, a foreign corporation and a stockholder of DALCO,As security
for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of the BANK a deed
of mortgage covering five parcels of land situated in the province of Camarines Norte together with all the
buildings and other improvements existing thereon and all the personal properties of the mortgagor located in
its place of business in the municipalities of Mambulao and Capalonga, Camarines Norte. On the same date,
DALCO executed a second mortgage on the same properties in favor of ATLANTIC to secure payment of the
unpaid balance of the sale price of the lumber concession amounting to the sum of $450,000.00. Both deeds
contained a provision extending the mortgage lien to properties to be subsequently acquired by the
mortgagor. Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In
addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares
of DAMCO to secure the same obligation. Upon DALCO's and DAMCO's failure to pay the fifth promissory
note upon its maturity, the BANK paid the same to the Export-Import Bank of Washington D.C., and the latter
assigned to the former its credit and the first mortgage securing it. Subsequently, the BANK gave DALCO and
DAMCO up to April 1, 1953 to pay the overdue promissory note.c 

 After July 13, 1950 - the date of execution of the mortgages mentioned above - DALCO purchased
various machineries, equipment, spare parts and supplies in addition to, or in replacement of some of those
already owned and used by it on the date aforesaid. Pursuant to the provision of the mortgage deeds quoted
theretofore regarding "after acquired properties," the BANK requested DALCO to submit complete lists of said
properties but the latter failed to do so. In connection with these purchases, there appeared in the books of
DALCO as due to Connell Bros. Company (Philippines) - a domestic corporation who was acting as the general
purchasing agent of DALCO -the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.chan On
December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose, passed a
resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by CONNELL and
DAMCO to it. On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said
agreements be cancelled but CONNELL and DAMCO refused to do so. As a result, on February 12, 1953;
ATLANTIC and the BANK, commenced foreclosure proceedings in the Court of First Instance of Camarines
Norte against DALCO and DAMCO. Upon motion of the parties the Court, on September 30, 1953, issued an
order transferring the venue of the action to the Court of First Instance of Manila. On August 30, 1958, upon
motion of all the parties, the Court ordered the sale of all the machineries, equipment and supplies of DALCO,
and the same were subsequently sold for a total consideration of P175,000.00 which was deposited in court
pending final determination of the action. By a similar agreement one-half (P87,500.00) of this amount was
considered as representing the proceeds obtained from the sale of the "undebated properties" (those not
claimed by DAMCO and CONNELL), and the other half as representing those obtained from the sale of the
"after acquired properties".
ISSUE: WON the "after acquired properties" were subject to the deeds of mortgage mentioned heretofore.
Assuming that they are subject thereto. WON the mortgages are valid and binding on the properties aforesaid
inspite of the fact that they were not registered in accordance with the provisions of the Chattel Mortgage
Law.

HELD: Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every
nature and description taken in exchange or replacement, as well as all buildings, machineries, fixtures, tools,
equipments, and other property that the mortgagor may acquire, construct, install, attach; or use in, to upon,
or in connection with the premises - that is, its lumber concession - "shall immediately be and become subject
to the lien" of both mortgages in the same manner and to the same extent as if already included therein at the
time of their execution. Such stipulation is neither unlawful nor immoral, its obvious purpose being to
maintain, to the extent allowed by circumstances, the original value of the properties given as security.Article
415 does not define real property but enumerates what are considered as such, among them being
machinery,receptacles, instruments or replacements intended by owner of the tenement for an industry or
works which may be carried onin a building or on a piece of land, and shall tend directly to meet the needs of
the said industry or works. On the strength of theabove-quoted legal provisions, the lower court held that
inasmuch as "the chattels were placed in the real propertiesmortgaged to plaintiffs, they came within the
operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil Code". In thepresent case, the
characterization of the "after acquired properties" as real property was made not only by one but by
bothinterested parties. There is, therefore, more reason to hold that such consensus impresses upon the
properties the characterdetermined by the parties who must now be held in estoppel to question it.

 
Laurel vs. Garcia
Doctrine: 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.
Facts: The subject Roppongi property is one of the four properties in Japan acquired by the Philippine government under the
Reparations Agreement entered into with Japan on 9 May 1956, the other lots being the Nampeidai Property (site of Philippine
Embassy Chancery), the Kobe Commercial Property (Commercial lot used as warehouse and parking lot of consulate staff), and
the Kobe Residential Property (a vacant residential lot).
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 20 years in accordance with
annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement).

The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed under the
heading “Government Sector”, through Reparations Contract 300 dated 27 June 1958. The Roponggi property consists of the
land and building “for the Chancery of the Philippine Embassy.” As intended, it became the site of the Philippine Embassy until
the latter was transferred to Nampeidai on 22 July 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.

During the incumbency of President Aquino, a proposal was made by former Philippine Ambassador to Japan, Carlos J. Valdez,
to lease the subject property to Kajima Corporation, a Japanese firm, in exchange of the construction of 2 buildings in
Roppongi, 1 building in Nampeidai, and the renovation of the Philippine Chancery in Nampeidai. The Government did not act
favorably to said proposal, but instead, on 11 August 1986, President Aquino created a committee to study the disposition or
utilization of Philippine government properties in Tokyo and Kobe though AO-3, and AO 3-A to 3-D. On 25 July 1987, the
President issued EO 296 entitling non-Filipino citizens or entities to avail of reparations’ 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.

Two petitions for prohibition were filed seeking to enjoin respondents, their representatives and agents from proceeding with
the bidding for the sale of the 3,179 sq. m. of land at 306 Ropponggi, 5-Chome Minato-ku, Tokyo, Japan scheduled on 21
February 1990; the temporary restaining order of which was granted by the court on 20 February 1990. In G.R. No. 92047, a
writ of mandamus was prayed for 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 inspite of strong public opposition and to explain the proceedings which
effectively prevent the participation of Filipino citizens and entities in the bidding process.

Issues: Can the Roppongi property and others of its kind be alienated by the Philippine Government?
Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property?
Held: No. The Roppongi property was acquired together with the other properties through reparation agreements. They were
assigned to the government sector and that the Roppongi property was specifically designated under the agreement to house the
Philippine embassy. It is of public dominion unless it is convincingly shown that the property has become patrimonial. The
respondents have failed to do so.
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 payment, in application to the satisfaction of collective needs, and resides in the
social group. The purpose is not to serve the State as the juridical person but the citizens; it is intended for the common and
public welfare and cannot be the object of appropriation.

The fact that the Roppongi site has not been used for a long time for actual Embassy service doesn’t automatically convert it to
patrimonial property. Any such conversion happens only if the property is withdrawn from public use. 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.
Chavez v Public Estate Authority

Doctrine: In the hands of the government agency tasked and authorized to dispose of alienable or disposable lands
of the public domain, these lands are still public, not private lands.

The Public Estates Authority (PEA) is the central implementing agency tasked to undertake reclamation
projects nationwide. It took over the leasing and selling functions of the DENR (Department of
Environmental and Natural Resources) insofar as reclaimed or about to be reclaimed foreshore lands are
concerned.
PEA sought the transfer to the Amari Coastal Bay and Development Corporation, a private corporation, of
the ownership of 77.34 hectares of the Freedom Islands. PEA also sought to have 290.156 hectares of
submerged areas of Manila Bay to Amari.
ISSUE: Whether or not the transfer is valid.
HELD: No. To allow vast areas of reclaimed lands of the public domain to be transferred to Amari 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.
The Supreme Court affirmed that 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. The
592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public
domain. The transfer (as embodied in a joint venture agreement) to AMARI, a private corporation,
ownership of 77.34 hectares of the Freedom Islands, 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. Furthermore, since the Amended JVA also seeks to transfer to Amari ownership of
290.156 hectares 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.