Contents

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents......................................... CEBU OXYGEN & ACETYLENE CO., INC. vs. HON. PASCUAL A. BERCILLES.................... Salas v. Jarencio........................................................................................................... THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee, ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER vs. CITY OF OF INTERNAL

REVENUE,defendants-appellants.................................................................................. PHILIPPINE REFINING CO., INC., plaintiff-appellant, vs. FRANCISCO JARQUE............... B.H. BERKENKOTTER, plaintiff-appellant, vs. CU UNJIENG........................................... MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR.................................. DAVAO SAW MILL CO., INC., plaintiff-appellant, vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees...................................................................... CALTEX (PHILIPPINES) INC., petitioner, vs. CENTRAL BOARD OF ASSESSMENT

APPEALS and CITY ASSESSOR OF PASAY, respondents................................................. PRUDENTIAL BANK, petitioner, vs. HONORABLE DOMINGO D. PANIS,.................................. BENGUET CORPORATION, petitioner, vs. CENTRAL BOARD OF ASSESSMENT APPEALS,. SERG’S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE, INC., respondent...................................................................................

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 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.5On 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 ongoing 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 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 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.

As it is not a trier of facts. The instant case. PEA and AMARI have still to implement the Amended JVA. The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a new agreement. Moreover. Presidential approval does not resolve the constitutional issue or remove it from the ambit of judicial review. 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. AMARI seeks to acquire from PEA.20 Lastly. 1945 or earlier. In the instant case.21 Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts. however. 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.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. Besides. 1084 (charter of PEA) and Title III of CA No.22 The Court can resolve this case without determining any factual issue related to the case. The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367. 1999. Also.17 Also. In the instant case. We resolve . PEA is obligated to transfer to AMARI the latter's seventy percent proportionate share in the reclaimed areas as the reclamation progresses. Supervening events. and the public. a public corporation. 1987. whether intended or accidental. which prohibits the government from alienating lands of the public domain to private corporations. 141. it is the duty of the Court to enjoin its implementation. Thus. Judicial confirmation of imperfect title requires open. reclaimed lands and submerged areas for non-agricultural purposes by purchase under PD No. 141 ("CA No. to annul the effects of such unconstitutional contract. Under the Amended JVA. 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. the deadline for filing applications for judicial confirmation of imperfect title expired on December 31. and if already implemented.The Court's Ruling First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent events. exclusive and notorious occupation of agricultural lands of the public domain for at least thirty years since June 12. 1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in the renegotiations. perfecting and/or executing any new agreement with AMARI. or its counterpart provision in the 1973 Constitution. The principle of hierarchy of courts applies generally to cases involving factual questions." The petition also prays that the Court enjoin PEA from "privately entering into. Article XII of the 1987 Constitution. raises constitutional issues of transcendental importance to the public. 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. Likewise. Petitioner's principal basis in assailing the renegotiation of the JVA is its violation of Section 3." PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21. the Court cannot entertain cases involving factual issues. 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. the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench. The Amended JVA even allows AMARI to mortgage at any time the entirereclaimed area to raise financing for the reclamation project. continuous. bar. Certain undertakings by AMARI under the Amended JVA constitute the consideration for the purchase. All previous decisions of the Court involving Section 3. 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. the Office of the President has approved the Amended JVA on May 28. PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. the instant petition is a case of first impression. Even in cases where supervening events had made the cases moot. the instant case is a petition for mandamus which falls under the original jurisdiction of the Court under Section 5. 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. cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. 1999. the Court can still prevent the transfer of title and ownership of alienable lands of the public domain in the name of AMARI. if the Amended JVA runs counter to the Constitution.18 covered agricultural landssold to private corporations which acquired the lands from private parties. PEA has satisfied petitioner's prayer for a public disclosure of the renegotiations. 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. If the Amended JVA indeed violates the Constitution. Article VIII of the Constitution. Article XII of the Constitution. 141" for brevity).

was the result of a negotiated contract. PEA distinguishes the instant case from Tañada v. Thus. information which the Constitution and statutory law mandate PEA to disclose. 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. Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies. The thrust of the first issue is to compel PEA to disclose publicly information on the sale of government lands worth billions of pesos. when the subject of the case involved public interest. petitioner had the right to seek direct judicial intervention. He invokes several decisions of this Court which have set aside the procedural matter of locus standi.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. and this alone is determinative of this issue. Considering that PEA had an affirmative statutory duty to make the public disclosure. when the proceeding involves the assertion of a public right. In Chavez v. and was even in breach of this legal duty. 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. the petition raises matters of transcendental importance to the public. The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply with its constitutional duties.' Moreover.' and if they 'immediately affect the social. Thus.28 the Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the public. not of a public bidding. It also violates the rule that mandamus may issue only if there is no other plain. Tuvera23 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 Code24 and Section 1 of Commonwealth Act No. PEA failed to make this public disclosure because the original JVA. There are two constitutional issues involved here. Under Section 79 of the Government Auditing Code. PCGG. 63825 to publish the presidential decrees. xxx . petitioner emphasizes. PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information without first asking PEA the needed information. a government corporation. the principle of exhaustion of administrative remedies does not apply when the issue involved is a purely legal or constitutional question. if the issues raised are of 'paramount public interest. speedy and adequate remedy in the ordinary course of law. there is no actual controversy requiring the exercise of the power of judicial review. economic and moral well being of the people. The original JVA sought to dispose to AMARI public lands held by PEA. Second is the application of a constitutional provision intended to insure the equitable distribution of alienable lands of the public domain among Filipino citizens. First is the right of citizens to information on matters of public concern. In the instant case. PEA claims petitioner's direct resort to the Court violates the principle of exhaustion of administrative remedies. PEA claims it has no affirmative statutory duty to disclose publicly information about its renegotiation of the JVA. no need for the petitioners in Tañada to make an initial demand from the Office of the President. like the Amended JVA. compelling PEA to comply with a constitutional duty to the nation. PEA asserts that the Court must apply the principle of exhaustion of administrative remedies to the instant case in view of the failure of petitioner here to demand initially from PEA the needed information. such as in this case. the mere fact that he is a citizen satisfies the requirement of personal interest.26 the disposition of government lands to private parties requires public bidding. therefore. thus "Besides. The law obligated PEA to make this public disclosure even without demand from petitioner or from anyone.' 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. the matter of recovering the ill-gotten wealth of the Marcoses is an issue of 'transcendental importance to the public. There was. 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. PEA was under a positive legal duty to disclose to the public the terms and conditions for the sale of its lands. Moreover. Moreover. We rule that the principle of exhaustion of administrative remedies does not apply in the instant case.to exercise primary jurisdiction over the instant case.

therefore. Access to official records. transactions and decisions to citizens.to information and to the equitable diffusion of natural resources .In Tañada v. Section 7. 7. Jr. and papers pertaining to official acts. Because of the satisfaction of the two basic requisites laid down by decisional law to sustain petitioner's legal standing. Article II of the Constitution. a former solicitor general. a right then recognized in Section 6. the State adopts and implements a policy of full public disclosure of all its transactions involving public interest. 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. involves the enforcement of constitutional rights . in Albano v. 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. The right of the people to information on matters of public concern shall be recognized. documents and papers — a right guaranteed under Section 7. 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 requirement of personal interest is satisfied by the mere fact that petitioner is a citizen and. will be speculative and amount to nothing. Article III of the 1987 Constitution. or decisions. citizens can participate in public discussions leading to the formulation of government policies and their effective implementation. the petitioners sought to enforce their right to be informed on matters of public concern. Armed with the right information.e. while reiterating Tañada. Petitioner. shall be afforded the citizen. In the aforesaid case. and because it is sufficient that petitioner is a citizen and as such is interested in the execution of the laws. the people are regarded as the real parties in interest. In ruling for the petitioners' legal standing.' We concluded that. part of the general 'public' which possesses the right.30 – "An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the people. Yet. thus: "Sec. he need not show that he has any legal or special interest in the result of the action. As explained by the Court inValmonte v."29 for unless citizens have the proper information. If the government does not disclose its official acts. Subject to reasonable conditions prescribed by law. the instant petition is anchored on the right of the people to information and access to official records. even if expressed without any restraint. brought by a citizen. as well as to government research data used as basis for policy development. (1) the enforcement of a public right (2) espoused by a Filipino citizen. . Article IV of the 1973 Constitution. Belmonte. we said that while expenditure of public funds may not have been involved under the questioned contract for the development. .' Legaspi v." We rule that since the instant petition. This State policy is expressed in Section 28.matters of transcendental public importance. 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. Article III of the Constitution explains the people's right to information on matters of public concern in this manner: "Sec. the disclosure provision in the Constitution would constitute sufficient authority for upholding the petitioner's standing. as well as provide the people sufficient information to exercise effectively other constitutional rights. 'public interest [was] definitely involved considering the important role [of the subject contract] . management and operation of the Manila International Container Terminal. as a consequence. in the economic development of the country and the magnitude of the financial consideration involved. whatever citizens say. 28." (Emphasis supplied) These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the government. further declared that 'when a mandamus proceeding involves the assertion of a public right. is a Filipino citizen. we rule that the petition at bar should be allowed. Tuvera." (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. Civil Service Commission. the petitioner has the requisite locus standi. These twin provisions are also essential to hold public officials "at all times x x x accountable to the people.' Further. subject to such limitations as may be provided by law. An informed citizenry is essential to the existence and proper functioning of any democracy. they cannot hold public officials accountable for anything. i. and to documents. Similarly. transactions. Reyes. this open dialogue can be effective only to the extent . Fifth issue: whether the constitutional right to information includes official information on ongoing negotiations before a final agreement. These twin provisions are essential to the exercise of freedom of expression.

Mr. Otherwise.31 that in cases of on-going negotiations the right to information is limited to "definite propositions of the government. citing Chavez v. we believe that it is incumbent upon the PCGG and its officers. Ople: The 'transactions' used here. 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. which may be . Information.33 the Court ruled as follows: "Considering the intent of the framers of the Constitution. any citizen can demand from PEA this information at any time during the bidding process. While the evaluation or review is still on-going. PEA must. the minimum price and similar information." (Emphasis supplied) Contrary to AMARI's contention. transactions. the public's right to information attaches. and if one is consummated. or decisions" on the bids or proposals. subject only to reasonable safeguards on the national interest. the commissioners of the 1986 Constitutional Commission understood that the right to information "contemplates inclusion of negotiations leading to the consummation of the transaction.nêt Requiring a consummated contract will keep the public in the dark until the contract. Such information. once the committee makes its official recommendation." PEA asserts. and any citizen can access all the non-proprietary information leading to such definite proposition. Government officials will hesitate to express their real sentiments during deliberations if there is immediate public dissemination of their discussions. though. PEA must prepare all these data and disclose them to the public at the start of the disposition process."32 (Emphasis supplied) AMARI argues there must first be a consummated contract before petitioner can invoke the right. agreements. the people can never exercise the right if no contract is consummated. there arises a "definite proposition" on the part of the government. Suarez: Thank you. location. We must first distinguish between information the law on public bidding requires PEA to disclose publicly. However. to observe the same restrictions on disclosure of information in general. Only when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit. 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. does the Gentleman refer to the steps leading to the consummation of the contract. PCGG. These include the size. because the Government Auditing Code requires public bidding. I suppose is generic and therefore. Mr. There is need. and information the constitutional right to information requires PEA to release to the public." Also. Suarez: This contemplates inclusion of negotiations leading to the consummation of the transaction. it may be too late for the public to expose its defects. diplomatic or foreign relations. Presiding Officer.that the citizenry is informed and thus able to formulate its will intelligently. putting them under all kinds of pressure before they decide. on its own and without demand from anyone. Ople: Yes." Certainly. it can cover both steps leading to a contract and already a consummated contract. And when we say 'transactions' which should be distinguished from contracts. as well as other government representatives. Suarez. or does he refer to the contract itself? Mr. however. From this moment. long before the consummation of the contract. a consummated contract is not a requirement for the exercise of the right to information. as discussed earlier – such as on matters involving national security. AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing of the transaction. To support its contention. Before the consummation of the contract. of course.1âwphi1. AMARI cites the following discussion in the 1986 Constitutional Commission: "Mr. intelligence and other classified information. Requiring government officials to reveal their deliberations at the pre-decisional stage will degrade the quality of decision-making in government agencies. must pertain to definite propositions of the government. disclose to the public matters relating to the disposition of its property. If PEA fails to make this disclosure. or treaties or whatever. Mr. the terms and conditions of the disposition. In Chavez v. Mr. PCGG. 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." 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'. there are no "official acts. the parties qualified to bid. technical description and nature of the property being disposed of.

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. of reclaimed lands of the government to .34 The right only affords access to records. acquired and owned all lands and territories in the Philippines except those he disposed of by grant or sale to private individuals.42 The King. like internal deliberations of the Supreme Court and other collegiate courts. however. owned by the government and used in formulating government policies. incorporated the Regalian doctrine. which is now Article 420 of the Civil Code of 1950. a situation which the framers of the Constitution could not have intended. however. however. or executive sessions of either house of Congress. (2) documents and papers pertaining to official acts. abstracts. belong to the public domain. This kind of information cannot be pried open by a co-equal branch of government. documents and papers at his expense. 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. We can allow neither an emasculation of a constitutional right.grossly disadvantageous to the government or even illegal. but not the sale."43 Article 339 of the Civil Code of 1889.38 are recognized as confidential. the Philippine Commission enacted Act No. violate the Constitution. either by purchase or by grant. information affecting national security. that the constitutional right to information includes official information on on-going negotiations before a final contract. There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. We rule. summaries and the like relating to the renegotiation of the JVA. which courts have long recognized as confidential. ownership of all "lands. effectively truncating a basic right enshrined in the Bill of Rights.40 Congress has also prescribed other limitations on the right to information in several legislations. supporting. does not extend to matters recognized as privileged information under the separation of powers. terms of reference and other documents attached to such reports or minutes. as the sovereign ruler and representative of the people. military and diplomatic secrets and similar matters affecting national security and public order. all relating to the JVA.37 The right may also be subject to other limitations that Congress may impose by law. becomes a fait accompli. However. recommendations. therefore. The information. This negates the State policy of full transparency on matters of public concern. must constitute definite propositions by the government and should not cover recognized exceptions like privileged information. 1973 and 1987 Constitutions adopted the Regalian doctrine substituting. A frank exchange of exploratory ideas and assessments. The first category refers to any document that is part of the public records in the custody of government agencies or officials. Such a requirement will prevent the citizenry from participating in the public discussion of any proposedcontract. Legislative and Judicial power. The Regalian doctrine is the foundation of the time-honored principle of land ownership that "all lands that were not acquired from the Government. like rules specifying when and how to conduct the inspection and copying. whether raw. documents and papers.39 This is not the situation in the instant case. transactions and decisions. nor a retreat by the State of its avowed "policy of full disclosure of all its transactions involving public interest. collated or processed. as the owner of all lands and waters of the public domain. and (3) government research data used in formulating policies. correspondences. One who exercises the right must copy the records. 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. The third category refers to research data. Upon the Spanish conquest of the Philippines." namely: (1) official records." The right covers three categories of information which are "matters of public concern. the State. evidencing. reclaimed or to be reclaimed. minutes of meetings. On May 18. establishing. The second category refers to documents and papers recording. in lieu of the King. 1907.35 The right to information. free from the glare of publicity and pressure by interested parties. confirming. is essential to protect the independence of decision-making of those tasked to exercise Presidential. territories and possessions" in the Philippines passed to the Spanish Crown. The information that petitioner may access on the renegotiation of the JVA includes evaluation reports. The information does not cover Presidential conversations. justifying or explaining official acts. which means the opportunity to inspect and copy them. the right to information does not compel PEA to prepare lists. and information on investigations of crimes by law enforcement agencies before the prosecution of the accused. or discussions during closed-door Cabinet meetings which. transactions or decisions of government agencies or officials. 1654 which provided for the lease.41 Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands.36 The right does not also apply to information on military and diplomatic secrets. The 1935. legal and expert opinions.

fortresses. shall become the property of the party constructing such works. In contrast. such as roads. was not self-executing. such as walls. which authorized the lease. however. That belonging exclusively to the State which. 1936. and mines. without being of general public use. Lands reclaimed from the sea in consequence of works constructed by the State. Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property. which provided as follows: "Article 5. 141 continues to this day as the general law governing the classification and disposition of lands of the public domain. and shall cause plats and plans of such surveys to be prepared and filed with the Bureau of Lands. canals. That devoted to public use. Property of public dominion. with proper permission. 2. torrents. shores. unless otherwise provided by the terms of the grant of authority. or by the provinces. which authorized the lease. shall become a part of the private property of the State. or the executive department pursuant to law. and other works for the defense of the territory. riverbanks. property devoted to public service referred to property used for some specific public service and open only to those authorized to use the property. and that of a similar character. Article 339 of the Civil Code of 1889 defined property of public dominion as follows: "Art. Property of public dominion is – 1. on November 29. 141.45 Act No. also known as the Public Land Act. the National Assembly passed Commonwealth Act No. The Spanish Law of Waters of 1866 and the Civil Code of 1889 Under the Spanish Law of Waters of 1866. coves. (b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such parts of the lands so made or reclaimed as are not needed for public purposes will be leased for commercial and business purposes. the shores.corporations and individuals. is employed in some public service. but not the sale. but not the sale. to wit: "Art. . ports and bridges constructed by the State." Property devoted to public use referred to property open for use by the public. or in the development of the national wealth. 1654 of the Philippine Commission On May 8. 341.44 The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5. The salient provisions of this law were as follows: "Section 1." This provision. the Philippine Legislature approved Act No. This class of property constituted property of public dominion although employed for some economic or commercial activity to increase the national wealth. pueblos or private persons. provided the government issued the necessary permit and did not reserve ownership of the reclaimed land to the State. inlets and all waters within the maritime zone of the Spanish territory belonged to the public domain for public use. until granted to private individuals. 339. Section 2. of reclaimed lands of the government to corporations and individuals." Under the Spanish Law of Waters. rivers. 1919. when no longer devoted to public use or to the defense of the territory. 1907. 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. with the necessary streets and alleyways located thereon. roadsteads. The control and disposition of the foreshore as defined in existing law. On November 7. 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. land reclaimed from the sea belonged to the party undertaking the reclamation. (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. Later. 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. the Philippine Commission enacted Act No. x x x. but also to property not so used but employed to develop the national wealth. 2874. of reclaimed lands of the government to corporations and individuals. 1654 which regulated the lease of reclaimed and foreshore lands. The legislature. Property of public dominion referred not only to property devoted to public use. the Public Land Act. CA No. bays.

2874. and not otherwise. The Governor-General. Sec." (Emphasis supplied) Section 6 of Act No. (b). these reclaimed lands were available only for lease to private parties. Lands reclaimed from the sea by private parties with government permission remained private lands. being neither timber nor mineral land. 2874 of the Philippine Legislature On November 29. The lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the Government by dredging. 56. Act No. shall declare that the same are not necessary for the public service and are open to disposition under this chapter. Act No. Private parties could lease lands reclaimed by the government only if these lands were no longer needed for public purpose.xxx (e) The leases above provided for shall be disposed of to the highest and best bidder therefore. shall be classified as suitable for residential purposes or for commercial. and (c) of section fifty-six shall be disposed of to private parties by lease only and not otherwise. 58. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act. Act No. Section 7 of the Act empowered the Governor-General to "declare what lands are open to disposition or concession. the Governor-General. upon recommendation by the Secretary of Agriculture and Natural Resources. 6. Sec. 1919. 2874. 1654. 1654 made government reclaimed lands sui generis in that unlike other public lands which the government could sell to private parties. and shall be open to disposition or concession. shall be disposed of under the provisions of this chapter. The Act also vested in the government control and disposition of foreshore lands. industrial. 8. 1654 mandated public bidding in the lease of government reclaimed lands. or other means. subject to such regulations and safeguards as the Governor-General may by executive order prescribe. the Public Land Act. upon recommendation by the Secretary of Agriculture and Natural Resources." (Emphasis supplied) Act No. (b) Timber. xxx Sec. 55. shall from time to time declare what lands are open to disposition or concession under this Act." Sec. Only those lands shall be declared open to disposition or concession which have been officially delimited or classified x x x. and (c) Mineral lands. 1654 did not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. 1654 mandated that the government should retain title to all lands reclaimed by the government. as soon as the GovernorGeneral. (d) Lands not included in any of the foregoing classes. upon the recommendation of the Secretary of Agriculture and Natural Resources. 2874 authorized the Governor-General to "classify lands of the public domain into x x x alienable or disposable"47 lands. x x x. 7. Act No. Sec. Act No. The lands comprised in classes (a). filling. Any tract of land of the public domain which." Section 8 of the Act limited alienable or disposable . shall from time to time classify the lands of the public domain into – (a) Alienable or disposable. (c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers. or other productive purposes other than agricultural purposes. (b) Foreshore. For the purposes of the government and disposition of alienable or disposable public lands. did not repeal Section 5 of the Spanish Law of Waters of 1866. however. x x x. were as follows: "Sec. the Philippine Legislature enacted Act No. on reclaimed lands.46 The salient provisions of Act No.

as well as other lands. renewable for another 25 years.50 However. All these lands.49 Act No. a policy first enunciated in 1907 in Act No. of these lands to private parties. under Act No. All agricultural. Lands falling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to private parties. although subject to classification as disposable public agricultural lands. water supply. These provisions also empowered the GovernorGeneral to classify further such disposable lands of the public domain into government reclaimed. Dispositions under the 1935 Constitution On May 14. No private corporation or association may acquire. and mineral lands of the public domain. and only allowed the lease. foreshore lands. timber. Section 58 of Act No. or industrial uses other than the development of water power. or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years." Section 56 of Act No. subject to any existing right. Natural resources. concession. The State always reserved these lands for some future public service. These provisions vested upon the Governor-General the power to classify inalienable lands of the public domain into disposable lands of the public domain. the government could not sell government reclaimed. all forces of potential energy and other natural resources of the Philippines belong to the State. coal. 2874 did not authorize the reclassification of government reclaimed. being neither timber nor mineral lands. the 1935 Constitution took effect upon its ratification by the Filipino people." (Emphasis supplied) The 1935 Constitution barred the alienation of all natural resources except public agricultural lands. lease. 2874 categorically mandated that disposable lands of the public domain classified as government reclaimed. 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. 1935. Government reclaimed and marshy lands of the public domain. foreshore and marshy public lands for non-agricultural purposes retain their inherent potential as areas for public service. considered part of the State's natural resources. Government reclaimed. Section 2. 2874 stated that lands "disposable under this title48 shall be classified" as government reclaimed. except as to water rights for irrigation. 2874. 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. 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. commercial. Thus." The Governor-General. 2874. The 1935 Constitution. development. available only for lease for 25 years. that – "Section 1. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of Waters of 1866. foreshore and marshy lands "shall be disposed of to private parties by lease only and not otherwise. industrial or other productive non-agricultural purposes. Act No." Act No. Article XIII of the 1935 Constitution provided as follows: "Section 2. foreshore or marshy lands of the public domain. or hold public agricultural lands in excess of one thousand and twenty four hectares. foreshore and marshy lands of the public domain. lease. exploitation. and their disposition. or lease for the exploitation. petroleum. shall not be alienated. 2874 reiterated the State policy to lease and not to sell government reclaimed. foreshore and marshy lands to private parties. declared in Section 1. Article XIII. Lands reclaimed from the sea by private parties with government permission remained private lands. became inalienable by constitutional fiat. foreshore and marshy lands into other non-agricultural lands under Section 56 (d). government reclaimed and marshy lands. waters. The rationale behind this State policy is obvious. must formally declare that the lands were "not necessary for the public service. This is the reason the government prohibited the sale. unless the legislature passed a law allowing their sale. minerals. could only be leased and not sold to private parties because of Act No. as the only alienable or disposable lands of the public domain that the government could not sell to private parties. fisheries. as well as other non-agricultural lands. and no license. which were the only natural resources the State could alienate. renewable for another twenty-five years. before allowing the lease of these lands to private parties. with the exception of public agricultural land. Thus. Government reclaimed. 1654.lands only to those lands which have been "officially delimited and classified. in which cases beneficial use may be the measure and limit of the grant. nor may any . and other mineral oils. in adopting the Regalian doctrine. The government could alienate foreshore lands only after these lands were reclaimed and classified as alienable agricultural lands of the public domain. foreshore and marshy lands remained sui generis. must be suitable for residential. fell under the classification of public agricultural lands. however. or concession at the time of the inauguration of the Government established under this Constitution. foreshore and marshy lands. grant. development.

(b) Timber. x x x. have ceased to be so. and is open to disposition or concession. 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. 141 read as follows: "Sec. and then declare them open to disposition or concession. foreshore and marshy lands of the public domain.53 for the purpose of their administration and disposition. shall be disposed of under the provisions of this chapter and not otherwise. being neither timber nor mineral land. or which. 8. 6. is intended to be used for residential purposes or for commercial. Any tract of land of the public domain which. 7 and 8 of CA No. and may at any time and in like manner transfer such lands from one class to another. may be leased to an individual. There must be no law reserving these lands for public or quasi-public uses. nor those on which a private right authorized and recognized by this Act or any other valid law may be claimed. 1936. shall from time to time classify the lands of the public domain into – (a) Alienable or disposable. the President must first officially classify these lands as alienable or disposable." Thus." Sections 6. Only those lands shall be declared open to disposition or concession which have been officially delimited and classified and. The salient provisions of CA No. nor in any manner become private property. or other productive purposes other than agricultural. which compiled the then existing laws on lands of the public domain. (c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers. 141 of the Philippine National Assembly On November 7.individual acquire such lands by purchase in excess of one hundred and forty hectares. and which have not been reserved for public or quasi-public uses. Sec. or by lease in excess of one thousand and twenty-four hectares. Section 7 of CA No. 141. On the contrary. are as follows: "Sec. the National Assembly approved Commonwealth Act No. and (c) Mineral lands. after the effectivity of the 1935 Constitution. 59. 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. (d) Lands not included in any of the foregoing classes. 58. industrial. Sec. the legislature did not repeal Section 58 of Act No. 7. which prior to such classification are inalienable and outside the commerce of man. before the government could alienate or dispose of lands of the public domain. Sec. also known as the Public Land Act. 2874 to open for sale to private parties government reclaimed and marshy lands of the public domain. 141 authorizes the President to "declare what lands are open to disposition or concession. CA No. . upon recommendation by the Secretary of Agriculture and Commerce. when practicable. (b) Foreshore. The President. or by homestead in excess of twenty-four hectares. shall from time to time declare what lands are open to disposition or concession under this Act. surveyed. not exceeding two thousand hectares. having been reserved or appropriated. The lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the Government by dredging. 141 states that the government can declare open for disposition or concession only lands that are "officially delimited and classified. nor appropriated by the Government. on government reclaimed. 141. as amended. Commonwealth Act No. 141 empowers the President to classify lands of the public domain into "alienable or disposable"52 lands of the public domain. filling. For the purposes of the administration and disposition of alienable or disposable public lands.51 Section 6 of CA No. or other means." (Emphasis supplied) Still. Lands adapted to grazing." Section 8 of CA No. upon the recommendation of the Secretary of Agriculture and Commerce. private corporation. or association. 141. the President.

in which case they would fall under the classification of government reclaimed lands. Section 60 of CA No. Foreshore lands became inalienable as natural resources of the State.54 unless a subsequent law amended or repealed these provisions. as the case may be. Section 58 of CA No. 141. Said law allowed only the 'leasing' of reclaimed land. first implemented in 1907 was thus reaffirmed in CA No. 2874 prohibiting the sale of government reclaimed. after the effectivity of the 1935 Constitution.56 These lands remained sui generis. upon recommendation of the Secretary of Agriculture and Natural Resources." (Emphasis supplied) Section 61 of CA No. Section 61 allowed only the lease of such lands to private parties. as the only alienable or disposable lands of the public domain the government could not sell to private parties. however. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act. foreshore and marshy alienable lands of the public domain. Section 60 of CA No. Court of Appeals. the Governor-General. But even then. The prohibition on the sale of foreshore lands. After the effectivity of the 1935 Constitution. Act 1654 mandated that the control and disposition of the foreshore and lands under water remained in the national government. however. commercial. 141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-agricultural lands under Section 59 (d)." The State policy prohibiting the sale to private parties of government reclaimed.55Justice Reynato S. Foreshore lands. Moreover. or those lands for nonagricultural purposes not classified as government reclaimed. As before. foreshore and marshy disposable lands for non-agricultural purposes must comply with Chapter IX. Since then and until now. and (c) of section fifty-nine shall be disposed of to private parties by lease only and not otherwise. x x x The area so leased or sold shall be such as shall. The government could sell to private parties only lands falling under Section 59 (d) of CA No. 141. foreshore and marshy disposable lands of the public domain. CA No. however. Puno summarized succinctly the law on this matter. corporation. 141 has remained in effect at present." (Emphasis supplied) As observed by Justice Puno in his concurring opinion. 141 expressly states that disposable lands of the public domain intended for residential. shall declare that the same are not necessary for the public service and are open to disposition under this chapter. government reclaimed and marshy disposable lands of the public domain continued to be only leased and not sold to private parties. 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. All these lands are intended for residential. industrial or other productive purposes other than agricultural "shall be disposed of under the provisions of this chapter and not otherwise. The land remained property of the State. So too are lands reclaimed by the government by dredging. became inalienable under the 1935 Constitution which only allowed the lease of these lands to qualified private parties. 141 readopted. the foreshore and lands under water were not to be alienated and sold to private parties. 141 declares that – "Sec. 141. industrial or other non-agricultural purposes. Title III of CA No. Section 58 of Act No. 60. 61. had first to determine that the land reclaimed was not necessary for the public service.Sec. be reasonably necessary for the purposes for which such . commercial. 141 after the 1935 Constitution took effect. The lands comprised in classes (a). as follows: "Foreshore lands are lands of public dominion intended for public use. 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. 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. 60. filling. unless reclaimed by the government and classified as agricultural lands of the public domain. became a constitutional edict under the 1935 Constitution." Under Section 10 of CA No. Any tract of land comprised under this title may be leased or sold. foreshore and marshy disposable lands of the public domain. Any disposition of government reclaimed. the term "disposition" includes lease of the land. in the judgment of the Secretary of Agriculture and Natural Resources. or association authorized to purchase or lease public lands for agricultural purposes." Before leasing. The disposition of the reclaimed land was only by lease. or other means. (b). x x x. 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. Sec. upon recommendation by the Secretary of Agriculture. This requisite must have been met before the land could be disposed of. as soon as the President. to any person. In his concurring opinion in the landmark case of Republic Real Estate Corporation v. "Commonwealth Act No.

municipality or branch or subdivision of the Government shall not be alienated. without being for public use. 141 provide as follows: "Sec. encumbered. donated. government reclaimed and marshy lands of the State. rivers. 67. 141. municipality or branch or subdivision of the Government for the purposes deemed by said entities conducive to the public interest. 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. shall form part of the patrimonial property of the State. banks. Private parties could still reclaim portions of the sea with government permission. 63. 141 constitutes by operation of law a lien on these lands." Thus. before the same could be classified as patrimonial property of the State. donations. 1654 and Act No.sale or lease is requested. Sections 63 and 67 require a public bidding. That this limitation shall not apply to grants. 141 did not repeal Section 5 of the Spanish Law of Waters of 1866. Sections 63 and 67 of CA No. Articles 420 and 422 of the Civil Code of 1950 state that – "Art." (Emphasis supplied) Thus. is governed by the applicable provisions of CA No. Otherwise. 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. x x x. and others of similar character. and adjudication shall be made to the highest bidder. are . and are intended for some public service or for the development of the national wealth. or transfers made to a province. 2874. One reason for the congressional authority is that Section 60 of CA No. The following things are property of public dominion: (1) Those intended for public use. the declaration of their being disposable. or transferred to a province. and shall not exceed one hundred and forty-four hectares: Provided.57 In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. Upon receipt of such authority. However. as well as the manner of their disposition. 141 mirrors the legislative authority required in Section 56 of Act No. Like the Civil Code of 1889. are intended for public service or the "development of the national wealth. 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. torrents. The lease or sale shall be made by oral bidding. when no longer intended for public use or for public service. Section 60 of CA No. These government units and entities should not just turn around and sell these lands to private parties in violation of constitutional or statutory limitations. 141. Art. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable lands of the public domain. canals. shores. the Civil Code of 1950 included as property of public dominion those properties of the State which. 141. Property of public dominion. even if not employed for public use or public service. The 1935 Constitution prohibited the alienation of all natural resources except public agricultural lands. Sec. the government must formally declare that the property of public dominion is no longer needed for public use or public service. roadsteads. the reclaimed land could become private land only if classified as alienable agricultural land of the public domain open to disposition under CA No. without being for public use.59 In the case of government reclaimed and marshy lands of the public domain. Whenever it is decided that lands covered by this chapter are not needed for public purposes. CA No. however. x x x. ports and bridges constructed by the State. 420. x x x. or otherwise disposed of in a manner affecting its title. CA No. 422. (2) Those which belong to the State. 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. 2874 before it. In the same manner. except when authorized by Congress: x x x. 141 exempted government units and entities from the maximum area of public lands that could be acquired from the State. such as roads." Again.but the land so granted.58 Like Act No." (Emphasis supplied) The congressional authority required in Section 60 of CA No. if developed to enhance the national wealth. 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.

60 If the land of public domain were neither timber nor mineral land. and resettlement lands of the public domain. Powers and functions of the Authority. Section 8. buildings. and private corporations became absolutely barred from acquiring any kind of alienable land of the public domain. foreshore and marshy alienable lands of the public domain. or association. 1084. and the conditions therefor. Both the 1935 and 1973 Constitutions. The Batasang Pambansa. administer. (c) To provide for. corporation. likewise adopted the Regalian doctrine. limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. homestead or grant. estates and other forms of real property. With the exception of agricultural." (Emphasis supplied) The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural. The 1973 Constitution. under the 1973 Constitution. and development requirements of the natural resources. minerals. The Authority shall. all forces of potential energy. 11. have the following powers and functions: . then President Ferdinand Marcos issued Presidential Decree No. such area may be increased by the Batasang Pambansa upon recommendation of the National Economic and Development Authority. fisheries. timber or forest lands and other timber or forest resources in excess of one hundred thousand hectares. Article XIV of the 1973 Constitution declared that – "Sec." However. renewable for not more than twenty-five years. in excess of twenty-four hectares. industrial or commercial. however. concession. dispose. lease and sell any and all kinds of lands. PD No. deal in. industrial or commercial. or leased to. wildlife. any qualified individual. natural resources shall not be alienated. commercial. 1084 Creating the Public Estates Authority On February 4. which took effect on January 17. including foreshore and submerged areas. taking into account conservation. the 1935 Constitution barred the alienation of all natural resources except "public agricultural lands. vests PEA with the following purposes and powers: "Sec. or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years. a wholly government owned and controlled corporation with a special charter. 5. or to acquire reclaimed land. owned. Dispositions under the 1973 Constitution The 1973 Constitution.classified as property of public dominion. coal. concession. in carrying out the purposes for which it is created. improve. petroleum and other mineral oils. 1977. by dredging. or industrial uses other than the development of water power. subdivide. The constitutional ban extended to all kinds of alienable lands of the public domain. it would fall under the classification of agricultural land of the public domain. 8. exploitation. 1084 creating PEA. Purpose. beneficial use may be the measure and the limit of the grant. However. Article XIV of the 1973 Constitution stated that – "Sec. 4. managed. 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. residential." In contrast. filling or other means. shall determine by law the size of land of the public domain which may be developed. and other natural resources of the Philippines belong to the State. No private corporation or association may hold by lease. residential and resettlement lands of the public domain. Section 11. and resettlement lands of the public domain. 141 applied only to government reclaimed. Private corporations. water supply. 1973. acquire. Only individuals could now acquire alienable lands of the public domain. or lease for the exploration. economical and beneficial utilization of the above properties. license or permit. therefore. Sec. fisheries. The Authority is hereby created for the following purposes: (a) To reclaim land. even if wholly owned by Philippine citizens. and no license. prohibited the alienation of all natural resources except agricultural lands of the public domain. were no longer allowed to acquire alienable lands of the public domain unlike in the 1935 Constitution. controlled and/or operated by the government. operate or administer such service as may be necessary for the efficient. while the statutory ban under CA No. development. ecological. All lands of the public domain. waters. in which cases. residential. the term "public agricultural lands" in the 1935 Constitution encompassed industrial. (b) To develop. except as to water rights for irrigation. private corporations could hold alienable lands of the public domain only through lease. held or acquired by." (Emphasis supplied) Thus. Sections 4 and 8 of PD No.

and not to exceed one thousand hectares in area. Hence. coal. any stream. developed. such legislative authority could only benefit private individuals. a fully owned government corporation. all forces of potential energy. which states – "Sec.141. except when authorized by Congress. like the 1935 and 1973 Constitutions before it. mineral lands. renewable for not more than twenty-five years. Agricultural lands of the public domain may be further classified by law according to the uses which they may be devoted. flume x x x." (Emphasis supplied) PD No. all other natural resources shall not be alienated. Nevertheless. watercourse. wildlife. x x x. Section 3. Foreshore areas are those covered and uncovered by the ebb and flow of the tide. Alienable lands of the public domain shall be limited to agricultural lands. has adopted the Regalian doctrine. for a period not exceeding twentyfive years. xxx (o) To perform such acts and exercise such functions as may be necessary for the attainment of the purposes and objectives herein specified. by law. Private corporations or associations may not hold such alienable lands of the public domain except by lease. the Congress shall determine. This legislative authority is necessary in view of Section 60 of CA No. and subject to the requirements of agrarian reform." (Emphasis supplied) . and national parks. minerals. With the exception of agricultural lands. Dispositions under the 1987 Constitution The 1987 Constitution. Citizens of the Philippines may lease not more than five hundred hectares. forest or timber. and development. and utilization of natural resources shall be under the full control and supervision of the State. Taking into account the requirements of conservation.61 Submerged areas are those permanently under water regardless of the ebb and flow of the tide. or branch or subdivision of the Government shall not be alienated. forests or timber." PD No. x x x. as it still applies now. or leased and the conditions therefor. 1084 expressly empowers PEA "to hold lands of the public domain" even "in excess of the area permitted to private corporations by statute. 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. there must be legislative authority empowering PEA to sell these lands. encumbered or otherwise disposed of in a manner affecting its title. All lands of the public domain. held. municipality. 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. x x x." (Emphasis supplied) Without such legislative authority. The exploration. ditch. or grant. and until today. fisheries. development. canal. The 1987 Constitution declares that all natural resources are "owned by the State. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Lands of the public domain are classified into agricultural. ecology. PEA could not sell but only lease its reclaimed foreshore and submerged alienable lands of the public domain. In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain. donated or transferred to a province. the size of lands of the public domain which may be acquired. flora and fauna. only to "private corporations and associations. PEA can hold title to private lands. and other natural resources are owned by the State. (j) To reclaim lands and to construct work across. waters. 60. classified as alienable lands open to disposition. Article XII of the 1987 Constitution state that – "Section 2. and further declared no longer needed for public service. as well as title to lands of the public domain. Sections 2 and 3. natural resources cannot be alienated. xxx (i) To hold lands of the public domain in excess of the area permitted to private corporations by statute. homestead.(a)To prescribe its by-laws. or otherwise. petroleum and other mineral oils. but the land so granted." and except for alienable agricultural lands of the public domain." Thus. The constitutional ban applied then. or acquire not more than twelve hectares thereof by purchase.62 Foreshore and submerged areas indisputably belong to the public domain63 and are inalienable unless reclaimed.

The Amended Joint Venture Agreement The subject matter of the Amended JVA. foreshore and marshy alienable lands of the public domain is still CA No. but this was introduced in the 1973 Constitution. The Constitution could have followed the limitations on individuals. 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. Like the 1973 Constitution. BERNAS: Mr. In effect." However. The Rationale behind the Constitutional Ban The rationale behind the constitutional ban on corporations from acquiring. namely: . This constitutional intent is safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public domain. The available alienable public lands are gradually decreasing in the face of an ever-growing population. If the farmland is registered in the name of a corporation. This. my questions have reference to page 3. An individual could own as many corporations as his means would allow him. Is that the intent of this provision? MR. if the constitutional intent is to prevent huge landholdings.The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations fromacquiring any kind of alienable land of the public domain. except through lease. The constitutional intent. BERNAS: In existing decisions involving the Iglesia ni Cristo. As in the 1935 and 1973 Constitutions. this provision did not exist under the 1935 Constitution. During the deliberations of the 1986 Constitutional Commission. If the constitutional intent is to encourage economic family-size farms. who could acquire not more than 24 hectares of alienable lands of the public domain under the 1973 Constitution. 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. under the 1973 and 1987 Constitutions.64 the Court explained the rationale behind this constitutional ban in this way: "Indeed. it prohibits private corporations from acquiring alienable public lands. In actual practice. Without the constitutional ban. is the practical benefit arising from the constitutional ban. line 5 which says: `No private corporation or association may hold alienable lands of the public domain except by lease. placing the land in the name of a corporation would be more effective in preventing the break-up of farmlands. In some of the cases decided in 1982 and 1983. This would prevent the continuing break-up of farmlands into smaller and smaller plots from one generation to the next. the Constitution could have simply limited the size of alienable lands of the public domain that corporations could acquire." (Emphasis supplied) In Ayog v. alienable lands of the public domain is not well understood. his heirs would inherit shares in the corporation instead of subdivided parcels of the farmland. FR. upon the death of the owner. it was indicated that the purpose of this is to prevent large landholdings. the general law governing the lease to private corporations of reclaimed. it would seem. thus: "FR. is to transfer ownership of only a limited area of alienable land of the public domain to a qualified individual. consists of three properties. the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area of alienable lands of the public domain. Vice-President. not to exceed one thousand hectares in area. and not more than 12 hectares under the 1987 Constitution. 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. the commissioners probed the rationale behind this ban. as stated in its second Whereas clause. Huge landholdings by corporations or private persons had spawned social unrest. one purpose of the constitutional prohibition against purchases of public agricultural lands by private corporations is to equitably diffuse land ownership or to encourage 'ownercultivatorship and the economic family-size farm' and to prevent a recurrence of cases like the instant case. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain.' If we recall. VILLEGAS: I think that is the spirit of the provision. the 1987 Constitution allows private corporations to hold alienable lands of the public domain only through lease. 141. Cusi. But it has not been very clear in jurisprudence what the reason for this is. since the vehicle to circumvent the constitutional intent is removed. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation.

AMARI and PEA will share. Metro Manila. authority and privilege to undertake the Project in accordance with the Master Development Plan.15 hectares are still submerged areas forming part of Manila Bay. "[A]t AMARI's option as approved by PEA. under the Amended JVA AMARI will acquire and own a maximum of 367. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas.129. the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for common areas. coal. respectively. in the proportion of 70 percent and 30 percent. 1995.84 hectares of the 750hectare reclamation project have been reclaimed." 2. shall then cause the issuance and delivery of the proper certificates of title covering AMARI's Land Share in the name of AMARI. at its own expense. and the rest of the 592." (Emphasis supplied) Indisputably. still to be reclaimed. and other natural resources are owned by the State. an additional 350 hectares more or less to regularize the configuration of the reclaimed area. and other mineral oils.200. the reclamation of the Freedom Islands. With the exception of agricultural lands." plus an option "granted to AMARI to subsequently reclaim another 350 hectares x x x. Only 157.894.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2 and 3. All lands of the public domain. fisheries. The Threshold Issue The threshold issue is whether AMARI."65 PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further reclamation of about 250 hectares x x x." and 3. petroleum. Article XII of the 1987 Constitution which state that: "Section 2.2 (c) of the Amended JVA provides that – "x x x." The Amended JVA is the product of a renegotiation of the original JVA dated April 25. rights and privileges to reclaim foreshore and submerged areas in Manila Bay.00 for PEA's "actual cost" in partially reclaiming the Freedom Islands. 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. Section 3. a private corporation."66 In short. PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI.441 square meters. Section 5.578. with a combined titled area of 1. x x x. Private corporations or associations may not hold such alienable lands of the public domain except by lease. Under the Amended JVA.2. will be issued in the name of AMARI. x x x Alienable lands of the public domain shall be limited to agricultural lands.5 hectares of reclaimed land which will be titled in its name. AMARI will reimburse PEA the sum of P1. thereby granting the Joint Venture the full and exclusive right. totaling 367. can acquire and own under the Amended JVA 367. PEA delegated to the unincorporated PEA-AMARI joint venture PEA's statutory authority. that if more than seventy percent (70%) of the titled area at any given time pertains to AMARI. totaling 592. minerals. AMARI will also complete. all forces of potential energy.1. In its Memorandum.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. AMARI will further shoulder all the reclamation costs of all the other areas. To implement the Amended JVA. xxx Section 3.67 PEA admits that – . 1995 and its supplemental agreement dated August 9. the Amended JVA covers a reclamation area of 750 hectares. Title to AMARI's share in the net usable area. when requested in writing by AMARI. PEA.559 square meters contiguous to the three islands. until such time when a corresponding proportionate area of additional land pertaining to PEA has been titled. x x x.421.5 hectares. provided. "[A]nother area of 2. waters. forests or timber. flora and fauna."(Emphasis supplied) Classification of Reclaimed Foreshore and Submerged Areas PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or disposable lands of the public domain. wildlife. all other natural resources shall not be alienated. x x x.15 hectares.

Ramos. PD No."72 The President has the authority to classify inalienable lands of the public domain into alienable or disposable lands of the public domain. PD No. a property of public dominion retains such character until formally declared otherwise.84 hectares comprising the partially reclaimed Freedom Islands. 7309. reclaimed lands are classified as alienable and disposable lands of the public domain: 'Sec. as amended). x x x. on April 9. Article XII of the 1987 Constitution. the Freedom Islands were no longer part of Manila Bay but part of the land mass. 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. Japan. However." (Emphasis supplied) PD No.'" (Emphasis supplied) Likewise. 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. At the time then President Aquino issued Special Patent No. 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. by virtue of which PEA. Moreover. 66 SCRA 481 [1975]. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co." As such. Aquino issued Special Patent No. 59. authorized the issuance of special land patents for lands reclaimed by PEA from the foreshore or submerged areas of Manila Bay. foreshore and submerged areas "shall not be alienated.73 the Executive Department attempted to sell the Roppongi property in Tokyo. The government had also completed the necessary surveys on these islands. the rights of ownership and disposition over reclaimed lands have been transferred to PEA. these reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some public or quasipublic use. 1085. 335 [1960]."Under the Public Land Act (CA 141. A property continues to be part of the public domain. PEA had already reclaimed the Freedom Islands although subsequently there were partial erosions on some areas. 3. Garcia. the Court still ruled that. which was acquired by the Philippine Government for use as the Chancery of the Philippine Embassy. 3517 in the name of PEA for the 157. these certificates of title are still in the name of PEA. or other means. On January 19. The constitutional provision prohibiting private corporations from holding public land. 141 provides that "only those lands shall be declared open to disposition or concession which have been officially delimited and classified. There must be a law or presidential proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or concession. 1977. may validly convey the same to any qualified person without violating the Constitution or any statute. under Article 42274of the Civil Code."69 The Legal Task Force concluded that – "D. waters x x x and other natural resources" and consequently "owned by the State. Art. XVII. In Laurel vs. issued on February 4. 1085. Thus. 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. the Legal Task Force68 constituted under Presidential Administrative Order No. by statutory authority. Article XII of the 1987 Constitution classifies lands of . The Freedom Islands are thus alienable or disposable lands of the public domain. Section 3. coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands." Under Section 2. 141. Subsequently. 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. 1999 the Register of Deeds of the Municipality of Paranaque issued TCT Nos. is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. open to disposition or concession to qualified parties. 1529 authorizing the issuance of certificates of title corresponding to land patents. v.71 Section 8 of CA No. filling. Bercilles. To this day. as owner. the foreshore and submerged areas of Manila Bay are part of the "lands of the public domain. 3517." unless they are classified as "agricultural lands" of the public domain. pursuant to Section 6 of CA No. 365 admitted in its Report and Recommendation to then President Fidel V. Although the Chancery had transferred to another location thirteen years earlier. does not apply to reclaimed lands whose ownership has passed on to PEA by statutory grant. 108 Phil. Director of Lands. The lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the government by dredging.70 1987 Constitution). 1988 then President Corazon C. except by lease (Sec. "[R]eclaimed lands are classified as alienable and disposable lands of the public domain. Conclusion Reclaimed lands are lands of the public domain.

This contract could not have converted the Freedom Islands into private lands of a private corporation. forest or timber. Until reclaimed from the sea. subject to the constitutional ban on private corporations from acquiring alienable lands of the public domain. Private parties could own the reclaimed land only if not "otherwise provided by the terms of the grant of authority. 1973. the reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the public domain. citing Article 5 of the Spanish Law of Waters of 1866. 3-A declared that – "The provisions of any law to the contrary notwithstanding. these submerged areas are. or in kind consisting of portions of the reclaimed land. pueblos or private persons. mineral. then it cannot be said that reclaimed lands are lands of the public domain which the State may not alienate. Article XII of the 1987 Constitution. 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. In particular." forming part of the public domain and consequently . 1973 with the Commissioner of Public Highways. mineral lands. Section 1 of PD No. revoked all laws authorizing the reclamation of areas under water and revested solely in the National Government the power to reclaim lands. issued on February 14. and in their present state are inalienable and outside the commerce of man. then a private corporation. 3-A." PD No. the reclamation of areas under water. and are inalienable pursuant to Section 2. 525. with proper permission. 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 no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866. agricultural lands of the public domain are the only natural resources that the State may alienate to qualified private parties. CA No. 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." This clearly meant that no one could reclaim from the sea without permission from the State because the sea is property of public dominion. All other natural resources. Payment to the contractor may be in cash. under the Constitution. These submerged areas are not covered by any patent or certificate of title. a private party receives compensation for reclamation services rendered to PEA. Thus. It also meant that the State could grant or withhold ownership of the reclaimed land because any reclaimed land. These lands must not be reserved for public or quasi-public purposes. Lands reclaimed from the sea in consequence of works constructed by the State.15 hectares which are still submerged and forming part of Manila Bay. "waters x x x owned by the State. or by the provinces." Under such contract. belonged to the State. 1979. shall be limited to the National Government or any person authorized by it under a proper contract. but also an additional 592. and national parks.the public domain into "agricultural. AMARI. Private parties may reclaim from the sea only under a contract with the National Government. shall become the property of the party constructing such works. Executive Order No. Under the 1987 Constitution. Presidential Decree No. private parties could reclaim from the sea only with "proper permission" from the State.78 Moreover. argues that "if the ownership of reclaimed lands may be given to the party constructing the works. There can be no dispute that these submerged areas form part of the public domain.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. unless otherwise provided by the terms of the grant of authority. such as the seas or bays." (Emphasis supplied) Under Article 5 of the Spanish Law of Waters of 1866."75 Article 5 of the Spanish Law of Waters reads as follows: "Article 5. designated PEA as the National Government's implementing arm to undertake "all reclamation projects of the government. like the sea from which it emerged. either by purchase or by grant. belong to the public domain. The Amended JVA covers not only the Freedom Islands."77 Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of public lands. AMARI claims that the Freedom Islands are private lands because CDCP. are "waters x x x owned by the State" forming part of the public domain. 141 requires that lands of the public domain must first be classified as alienable or disposable before the government can alienate them. issued on January 11." Being neither timber. (Emphasis supplied) x x x. reclaimed the islands under a contract dated November 20. whether foreshore or inland. 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. nor national park lands. There is no legislative or Presidential act classifying these submerged areas as alienable or disposable lands of the public domain open to disposition." which "shall be undertaken by the PEA or through a proper contract executed by it with any person or entity. and then declared no longer needed for public service.

xxx (14) Promulgate rules. Under Section 5 of PD No. DENR exercises "supervision and control over alienable and disposable public lands. exploration and utilization of the country's marine. under EO No. whether or not classified as alienable or disposable. cancel or cause to cancel such privileges upon failure. fees. charges. 525. by declaring that all lands reclaimed by PEA "shall belong to or be owned by the PEA. permits. [T]o construct. order.1âwphi1. maintain and operate such storm drains as may be necessary. The Revised Administrative Code of 1987. 1084 or EO No. development.inalienable. Only then can these reclaimed lands be considered alienable or disposable lands of the public domain and within the commerce of man. regulations and guidelines on the issuance of licenses. directing. DENR decides . mineral resources and. 525." Thus. utilities. 3A and PD No."80 (Emphasis supplied) As manager. 525."79 Since large portions of these reclaimed lands would obviously be needed for public service. Moreover. 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. in the process of exercising such control. Only when actually reclaimed from the sea can these submerged areas be classified as public agricultural lands. The Department shall: (1) x x x xxx (4) Exercise supervision and control over forest lands. 1084. impose appropriate taxes. Once reclaimed and transformed into public agricultural lands. and coordinating all reclamation projects for and on behalf of the National Government. concessions. utilization or gathering of such resources. buildings and/or any of its properties and to impose or collect fees or tolls for their use. the government may then officially classify these lands as alienable or disposable lands open to disposition. supervise and police our natural resources. which under the Constitution are the only natural resources that the State may alienate. freshwater. EO No. x x x. and brackish water and over all aquatic resources of the country and shall continue to oversee." 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. maintain and operate such systems of sanitary sewers as may be necessary. 4. subclassification. [T]o construct.1084. roads. rentals and any such form of levy and collect such revenues for the exploration.nêt Section 3 of EO No. reclaimed foreshore and submerged lands of the public domain would automatically become alienable once reclaimed by PEA. there must be a formal declaration segregating reclaimed lands no longer needed for public service from those still needed for public service. the functions of PEA include the following: "[T]o own or operate railroads." could not automatically operate to classify inalienable lands into alienable or disposable lands of the public domain." DENR also exercises "exclusive jurisdiction on the management and disposition of all lands of the public domain. in relation to PD No. and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity." The same section also states that "[A]ll reclamation projects shall be approved by the President upon recommendation of the PEA. 525 recognized PEA as the government entity "to undertake the reclamation of lands and ensure their maximum utilization in promoting public welfare and interests. the government may declare these lands no longer needed for public service. x x x. Otherwise. Powers and Functions. (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. noncompliance or violations of any regulation." Thus. tramways and other kinds of land transportation. alienable and disposable public lands. lease agreements and such other privileges concerning the development. and for all other causes which are in furtherance of the conservation of natural resources and supportive of the national interest. PEA became the primary implementing agency of the National Government to reclaim foreshore and submerged lands of the public domain. a later law than either PD No. 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. surveying and titling of lands in consultation with appropriate agencies. Thereafter. Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating. vests in the Department of Environment and Natural Resources ("DENR" for brevity) the following powers and functions: "Sec. conservator and overseer of the natural resources of the State." Thus.

conveyed and assigned to the ownership and administration of the Public Estates Authority established pursuant to PD No. In consideration of the foregoing transfer and assignment. Title I and Title III83of CA No. Official Authorized to Convey Real Property. or in any part of the country. Provided. 1085 and EO No. the Public Estates Authority shall issue in favor of the Republic of the Philippines the corresponding shares of stock in said entity with an . Jr. lands reclaimed by PEA remain inalienable lands of the public domain. Once DENR decides that the reclaimed lands should be so classified. Hence. or incident to. the Public Land Act. 141. Only such an official classification and formal declaration can convert reclaimed lands into alienable or disposable lands of the public domain. 141 and other applicable laws. Henceforth. however. Garcia. citing Section 60 of CA No. Absent two official acts – a classification that these lands are alienable or disposable and open to disposition and a declaration that these lands are not needed for public service. That the rights and interests of the Construction and Development Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected. In short. Whenever real property of the Government is authorized by law to be conveyed. We note that then DENR Secretary Fulgencio S. DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. 3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. DENR decides whether reclaimed lands of PEA should be classified as alienable under Sections 681 and 782 of CA No. encumbered. issued on February 4.86 the Court cited Section 48 of the Revised Administrative Code of 1987. like the Legal Task Force." (Emphasis supplied) PEA contends that PD No. Any such conveyance must be authorized and approved by a law enacted by the Congress.84 PEA's Authority to Sell Reclaimed Lands PEA. except when authorized by Congress: x x x. like foreshore or submerged areas of Manila Bay. 141. DENR is also empowered to classify lands of the public domain into alienable or disposable lands subject to the approval of the President. The Court declared that "It is not for the President to convey real property of the government on his or her own sole will. 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. the aforesaid contract between the Republic of the Philippines and the Construction and Development Corporation of the Philippines. 525 constitute the legislative authority allowing PEA to sell its reclaimed lands. the Court concluded that a law is needed to convey any real property belonging to the Government. much less patrimonial lands of PEA. Likewise. Clearly. the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of the Philippines (Department of Public Highways) arising from. 141. Factoran. or otherwise disposed of in a manner affecting its title. 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." Thus. much less patrimonial lands of PEA. PEA is tasked to develop. open to disposition under the Constitution. should be reclaimed or not. countersigned Special Patent No. On the other hand. DENR is vested with the power to authorize the reclamation of areas under water. This means that PEA needs authorization from DENR before PEA can undertake reclamation projects in Manila Bay. PEA. 48. 1085. the reclaimed lands shall be disposed of in accordance with CA No.whether areas under water. PD No. 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. 1084. It requires executive and legislative concurrence. sell or lease the reclaimed alienable lands of the public domain. 141. admits that reclaimed lands transferred to a branch or subdivision of the government "shall not be alienated. the deed of conveyance shall be executed in behalf of the government by the following: x x x. 1977. argues that as alienable or disposable lands of the public domain. which states that – "Sec."85 (Emphasis by PEA) In Laurel vs. while PEA is vested with the power to undertake the physical reclamation of areas under water. whether directly or through private contractors. 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. 1973 and/or any other contract or reclamation covering the same area is hereby transferred.

Any and all income that the PEA may derive from the sale. 1445. Section 3 of EO No. 525. 1084. 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. PEA may also sell its alienable or disposable lands of the public domain to private individuals since. 1085 would violate both the 1973 and 1987 Constitutions. 141. managed. including appropriate agreements with the Construction and Development Corporation of the Philippines. in the absence of a law exempting PEA from holding a public auction. 525 expressly states that PEA should dispose of its reclaimed lands "in accordance with the provisions of Presidential Decree No. Article XII of the 1987 Constitution expressly prohibits such sales. administer. The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such contracts or agreements. provides that "Sec. if found to be valueless or unsaleable. 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. 654. including government reclaimed lands. upon application of the officer accountable therefor. issued on February 14."87 (Emphasis supplied) There is.88 Special Patent No.89 which authorizes PEA "to determine the kind and manner of payment for the transfer" of its assets and properties. the provisions of PD No. Private corporations remain barred from acquiring any kind of alienable land of the public domain. 1445 mandates that – "Section 79." (Emphasis supplied) On the other hand. legislative authority granted to PEA to sell its lands. The legislative authority benefits only individuals. therefore. the government is required to sell valuable government property through public bidding. and further declared no longer needed for public service. 525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA. PEA may sell to private parties its patrimonial properties in accordance with the PEA charter free from constitutional limitations. lease or use of reclaimed lands shall be used in accordance with the provisions of Presidential Decree No. lease and sell any and all kinds of lands x x x owned. while EO No. PEA's charter. however. Section 79 of PD No. it may be destroyed in their presence. The requirement of public auction in the sale of reclaimed lands Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition." the charter of PEA. 1084. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA. Moreover. EO No. whether in kind and in installment. 141 requiring public auction. 1979. PEA must observe the provisions of Sections 63 and 67 of CA No. improve. as may be necessary to implement the above. or is no longer needed. be inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and. controlled and/or operated by the government. whether patrimonial or alienable lands of the public domain. Otherwise. as amended. If found to be . 654 merely authorizes PEA to decide the mode of payment. When government property has become unserviceable for any cause. 3517 expressly states that the patent is issued by authority of the Constitution and PD No. 3. there is no longer any statutory prohibition against such sales and the constitutional ban does not apply to individuals. with the legislative authority. 1084. The provision in PD No. dispose. 1085 or EO No. PEA. 1084. utilization or disposition in accordance with the provisions of Presidential Decree No. acquire. PD No. does not exempt PEA from the requirement of public auction. but does not authorize PEA to dispense with public auction. development. On the basis of such patents. expressly tasks PEA "to develop." EO No." There is no express authority under either PD No. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for its administration.issued value of said shares of stock (which) shall be deemed fully paid and non-assessable. Executive Order No. 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. 141 apply to the disposition of reclaimed alienable lands of the public domain unless otherwise provided by law." This is an acknowledgment that the provisions of CA No. otherwise known as the Government Auditing Code. subdivide. cannot sell any of its alienable or disposable lands of the public domain to private corporations since Section 3. PEA would have to conduct a public bidding in selling or leasing these lands. 525 for PEA to sell its reclaimed lands. "supplemented by Commonwealth Act No. under Section 79 of PD No. the Land Registration Commission shall issue the corresponding certificate of title. however. it shall. deal in.

such as. Section 302 of the Local Government Code. On December 23. . cited by PEA and AMARI as legislative authority to sell reclaimed lands to private parties." At the public auction sale. x x x xxx In case of land reclamation or construction of industrial estates. however. in which case the Commission on Audit must approve the selling price. enlarged the reclamation area to 750 hectares.90 The Commission on Audit implements Section 79 of the Government Auditing Code through Circular No. This circular emphasizes that government assets must be disposed of only through public auction. Repayment Scheme.84 hectares. Private corporations are barred from bidding at the auction sale of any kind of alienable land of the public domain. construction. Besides. Section 6 of RA No.95 is not a valid justification for a negotiated sale of 750 hectares. the original JVA dated April 25. the repayment plan may consist of the grant of a portion or percentage of the reclaimed land or the industrial estate constructed. only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and submerged alienable lands of the public domain. . 1991. 6957 ("BOT Law. authorizes local governments in land reclamation projects to pay the contractor or developer in kind consisting of a percentage of the reclaimed land. 1989. and a negotiated sale can be resorted to only in case of "failure of public auction. 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.92No one. more than three years before the signing of the original JVA on April 25. The economic situation in the country had greatly improved during the intervening period. a negotiated contract. subject to the constitutional requirements with respect to the ownership of the land: x x x. the failure of public bidding happened on December 10. 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. and Management of Infrastructure Projects by the Private Sector. or where the value of the property does not warrant the expense of publication. after advertising by printed notice in the Official Gazette.93 However." Even Republic Act No." for brevity). Financing. Operation. by notices posted for a like period in at least three public places in the locality where the property is to be sold. 1991. or for not less than three consecutive days in any newspaper of general circulation.94 The failure of public bidding on December 10. PEA originally scheduled a public bidding for the Freedom Islands on December 10. the Government Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation. x x x. even one that undertakes the physical reclamation of a government BOT project. the constitutional restrictions on land ownership automatically apply even though not expressly mentioned in the Local Government Code. because of the failure of the public bidding on December 10. 1995 covered not only the Freedom Islands and the additional 250 hectares still to be reclaimed. almost double the area publicly auctioned. 89-29691 dated January 27." It is only when the public auction fails that a negotiated sale is allowed.For the financing. 6." Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law. 1991. the grant of a portion or percentage of the reclaimed land. 1995. cannot acquire reclaimed alienable lands of the public domain in view of the constitutional ban. Construction. Reclamation under the BOT Law and the Local Government Code The constitutional prohibition in Section 3." (Emphasis supplied) A private corporation. involving only 407. 1991. In the event that the public auction fails. without need of another public bidding. also mentioned by PEA and AMARI. to wit: "Section 302. it also granted an option to AMARI to reclaim another 350 hectares. 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. Maintenance. under a 60-40 sharing of the additional reclaimed areas in favor of the winning bidder. 1994.valuable. submitted a bid. 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. 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. 6957 states – "Sec. The original JVA. recognizes the constitutional ban. but not limited to. PEA imposed a condition that the winning bidder should reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom Islands.

Act 496) and shall become registered lands. which governs the registration of grants or patents involving public lands. If the contractor or developer is an individual. the only patent and certificates of title issued are those in the name of PEA. may be conveyed to him in ownership in view of the legislative authority allowing such conveyance." 5. if a corporate entity. Department of Health. Sumail v. 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. PEA and AMARI contend that with the issuance of Special Patent No. In the instant case. 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. portions of the reclaimed land."3. Intermediate Appellate Court.8-hectare public land to serve as the site for the hospital buildings and other facilities of Mindanao Medical Center. dated October 9. Such land grant is constitutive of a 'fee simple' title or absolute title in favor of petitioner Mindanao Medical Center. 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. the 157. 1971. Thus. but once the patent is registered and a certificate of title is issued. and free patents were issued covering the same in favor of the private respondents. granted or conveyed to persons or to public or private corporations. not exceeding 12 hectares96 of non-agricultural lands. 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.101 where the Court stated – "Proclamation No. therefore. Article XII of the 1987 Constitution. The fifth case cited involves the registration under the Torrens System of a 12. PEA and AMARI cite the following rulings of the Court: 1.98 where the Court declared "After the registration and issuance of the certificate and duplicate certificate of title based on a public land patent. Bureau of Medical Services. 1956. the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein. Heirs of Gregorio Tengco v. of President Magsaysay legally effected a land grant to the Mindanao Medical Center.99 where the Court ruled "While the Director of Lands has the power to review homestead patents. This is the only way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3. 350. the said lots ceased to be part of the public domain and.Republic v. Court of Appeals.84 hectares comprising the Freedom Islands have become private lands of PEA.8-hectare public land in the name of Mindanao Medical Center under Section 122 of Act No. can only be paid with leaseholds on portions of the reclaimed land. of the whole lot. a government unit under the Department of Health. the contractor or developer." 4. the Director of Lands lost jurisdiction over the same. This fifth case is an example of a public land being registered under Act No." 2.100 where the Court held – "When the lots in dispute were certified as disposable on May 19." In short.'" The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titlesissued to private parties. 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. No patent or certificate . 3517 and the corresponding certificates of titles. 496. under either the BOT Law or the Local Government Code. he may do so only so long as the land remains part of the public domain and continues to be under his exclusive control. The National Government transferred the 12.97 where the Court held – "Once the patent was granted and the corresponding certificate of title was issued. Registration of lands of the public domain Finally. In support of their theory. Judge of CFI of Cotabato. The Court affirmed the registration of the 12.Thus. Manalo v. David. Lee Hong Hok v.8-hectare public land granted by the National Government to Mindanao Medical Center. 496 without the land losing its character as a property of public dominion. the same shall be brought forthwith under the operation of this Act (Land Registration Act. a wholly government owned corporation performing public as well as proprietary functions. validly sufficient for initial registration under the Land Registration Act. Heirs of Jose Aliwalas. Section 122 of the Act. which performed a public service." 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.

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.104Alienable lands of the public domain held by government 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 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 "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 deregistration of land from the Torrens System. Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National Government new certificates of title covering such expropriated lands. 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

PEA's Memorandum. Footnote 1 Section 4 of PD No. lands reclaimed by the government are sui generis. are to be distributed equitably among our ever-growing population. Thereafter. JJ. Vitug. such transfer is void for being contrary to Section 3. contracts whose "object or purpose is contrary to law. Sandoval-Gutierrez. We can now summarize our conclusions as follows: 1. the petition is GRANTED. Quisumbing. 1999. are alienable lands of the public domain. WHEREFORE. the Amended JVA violates glaringly Sections 2 and 3. such transfer is void for being contrary to Section 2. now covered by certificates of title in the name of PEA. concur. in its 2 3 . 3. Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain. Still. To insure such equitable distribution.J. Historically. 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. The 157. 2. there is no necessity to rule on this last issue. Only then can these lands qualify as agricultural 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. the 1973 and 1987 Constitutions have barred private corporations from acquiring any kind of alienable land of the public domain. or seek to circumvent the constitutional ban on alienation of lands of the public domain to private corporations. 3.15 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. Kapunan. Besides. PEA's Memorandum quoted extensively. Clearly. Under Article 1409112 of the Civil Code. Austria-Martinez. increasingly becoming scarce natural resources. Since the Amended JVA also seeks to transfer to AMARI ownership of 290. the government can classify the reclaimed lands as alienable or disposable. subject to the ownership limitations in the 1987 Constitution and existing laws. Mendoza. Article XII of the 1987 Constitution. In their present state. the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3. which are the only natural resources the government can alienate. The 592. PEA may only sell these lands to Philippine citizens." or whose "object is outside the commerce of men. Considering that the Amended JVA is null and void ab initio.156 hectares111 of still submerged areas of Manila Bay. PEA may reclaim these submerged areas. and this last issue involves a determination of factual matters.34 hectares110 of the Freedom Islands. Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly disadvantageous to the government.15 hectares of submerged areas are inalienable and outside the commerce of man. 1084.84 hectares of reclaimed lands comprising the Freedom Islands. Ynares-Santiago. Puno. the 592. Panganiban. and therefore declares the Amended JVA null and void ab initio. not available for sale to private parties unlike other alienable public lands. SO ORDERED. p.. PEA's Memorandum dated August 4. Since the Amended JVA seeks to transfer to AMARI. Bellosillo.disposable lands of the public domain. Those who attempt to dispose of inalienable natural resources of the State. do so at their own risk. the Court is not a trier of facts. Alienable lands of the public domain. Jr. The government can make such classification and declaration only after PEA has reclaimed these submerged areas. supra note 2 at 7.. a private corporation." The Court must perform its duty to defend and uphold the Constitution. Davide. and Corona. C." are "inexistent and void from the beginning. and further declare them no longer needed for public service. 4. Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.. Reclaimed lands retain their inherent potential as areas for public use or public service. ownership of 77. Article XII of the 1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the public domain.

12. Renato Cayetano. pp. Rollo. AMARI's Memorandum dated June 19. while PEA filed nine motions for extension of time (Rollo. 127. Villaflor v. 1998.. 32. Gonzales v. and Associate Solicitor Raymund I. Natividad v. of x x x the official acts of the legislature x x x. 1999. the Government Corporate Counsel. Paño." 24 25 Section 1 of CA No. and Romulo Mabanta Sayoc & De los Angeles Law Offices. Marcos. IAC and Roman Catholic Bishop of Lucena. without the introduction of evidence. p. the Statement of Facts in Senate Committee Report No. 59 SCRA 183 (1974 ). the Court did not apply the constitutional ban in the 1973 Constitution because the applicant corporation. IAC and Acme Plywood & Veneer Co. Virgilio C. 13 14 Petitioner's Memorandum dated July 6. 330 dated December 23.. 68. 114 SCRA 875 (1982). Manila Electric Co. 21 22 Chavez v. 16 Salonga v. supra note 2 at 9. v. 638 provides as follows: "There shall be published in the Official Gazette . CA and Iglesia. "A court shall take judicial notice. 134 SCRA 438 (1985). Cusi. 23 Article 2 of the Civil Code (prior to its amendment by EO No. Judge F. 3. 17 18 Section 11. 1999. Republic v. 89-296. CA and Nasipit Lumber Co. Villanueva and Iglesia ni Cristo. 139). although the sales patent was issued after the 1973 Constitution took effect. Enage. Dela Camara v. advised PEA that PEA could negotiate the sale of the 157. 136 SCRA 27 (1985). 1994. 119 SCRA 449 (1982). 1997. 4 5 PEA's Memorandum. Republic v. Biñan Development Co. Director of Lands v. unless it is provided otherwise. 560. AMARI filed three motions for extension of time to file comment (Rollo. See also Senate Committee Report No..Statement of Facts and the Case. 168 SCRA 165 (1988). 124 SCRA 460 (1983). p. pp. 65 SCRA 624 (1975 ). Article XIV. In Opinion No.2 (c) and (e) of the Amended JVA. Rule 129 of the Rules of Court which provides. 118 SCRA 492 (1982). Cruz de Mayo. with Solicitor General Ricardo P. citing COA Audit Circular No. 1999. 11 12 AMARI's Comment dated June 24. Inc. Cendana and Iglesia ni Cristo. Director of Lands v. PCGG. 41 SCRA 1 (1971 ). Aquino v. CA. 202 SCRA 493 (1991). 15 Represented by Azcuna Yorac Arroyo & Chua Law Offices. Enrile. Jr. Castro-Bartolome. 280 SCRA 297 (1997). Hermanos y Hermanas de Sta. 114 SCRA 799 (1982). 299 SCRA 744 (1998). 560 dated September 16.84-hectare Freedom Islands in view of the failure of the public bidding held on December 10. Republic v. had fully complied with all its obligations and even paid the full purchase price before the effectivity of the 1973 Constitution. Balanon-Corpuz. 48). 1073. Section 5.. 141 SCRA 21 (1986). 9 10 Report and Recommendation of the Legal Task Force. 16-17. x x x. Galvez. and Republic v.. 38. Ibid. p. AMARI's Memorandum dated June 19. 42. In Ayog v. Annex "B". p. Republic v. 1991 where there was not a single bidder. Rigodon signing PEA's Memorandum. Annex "C". 200) provided as follows: "Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette. Iglesia ni Cristo. 146 SCRA 509 (1986). 6 The existence of this report is a matter of judicial notice pursuant to Section 1. Abejo. Lood. Inc. 19 20 PD No. Assistant Solicitor General Azucena R." 7 8 Teofisto Guingona. pp. Director of Lands v. Represented by the Office of the Solicitor General. 128 SCRA 44 (1984).

See note 22. In the event that the public auction fails. loyalty. Article XI of the 1987 Constitution states as follows: "Public office is a public trust. PCGG. style of work. 150 SCRA 530 (1987).A. Note 22. 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. Vasquez.all important legislative acts and resolutions of the Congress of the Philippines. Jr. be inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and. adopting parents. 40 Section 270 of the National Internal Revenue Code punishes any officer or employee of the Bureau of Internal Revenue who divulges to any person. and all lands. Civil Service Commission. Almonte v. 7942 (Philippine Mining Act) requires the Department of Environment and Natural Resources to maintain the confidentiality of confidential information supplied by contractors who are parties to mineral agreements or financial and technical assistance agreements. Section 6 (j) of R. (1986). Ibid. integrity. Chavez v. 8504 (Philippine AIDS Prevention and Control Act) classifies as confidential the medical records of HIV patients. 31 32 33 34 35 36 37 38 39 People's Movement for Press Freedom. Valmonte v.A. and efficiency. 8800 (Safeguard Measures Act) prohibits the release to the public of confidential information submitted in evidence to the Tariff Commission. and natural parents. et al. If found to be valuable. Almonte v. or for not less than three consecutive days in any newspaper of general circulation. No. territories. after advertising by printed notice in the Official Gazette. upon application of the officer accountable therefor. Vol. En Banc Resolution dated April 13. by notices posted for a like period in at least three public places in the locality where the property is to be sold. Supra. or where the value of the property does not warrant the expense of publication. knowledge of which was acquired by him in the discharge of his official duties. Section 1. see note 36. and possessions not heretofore ceded away by our royal predecessors. ways. taking into consideration not only their present 42 . or confidential information regarding the business of any taxpayer. v. Raul Manglapus. or is no longer needed." 26 Paat v. all executive and administrative orders and proclamations. Chavez v. 84642. Vasquez. Section 94 (f) of R. 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. in order that after reserving before all what to us or to our viceroys. except as allowed by law. or estate of any taxpayer. still pertaining to the royal crown and patrimony. V. 266 SCRA 167 (1997). Aquino-Sarmiento v. having acquired full sovereignty over the Indies. except such as have no general applicability. see note 22. 193 SCRA 520 (1991). operation. or apparatus of any manufacturer or producer. or in our name. G. serve them with utmost responsibility. 27 28 See note 22. Public officers and employees must at all times be accountable to the people." 29 30 170 SCRA 256 (1989). 41 The Recopilacion de Leyes de las Indias declared that: "We. No.R. see note 22. 1988. No. 244 SCRA 286 (1995). Hon. Record of the Constitutional Commission. information regarding the business. Morato. x x x. PCGG. and commons in those places which are peopled. 24-25. it is our will that all lands which are held without proper and true deeds of grant be restored to us according as they belong to us. audiencias. Legaspi v. it shall. and governors may seem necessary for public squares. Quisumbing v. 203 SCRA 515 (1991). 170 SCRA 256 (1989). pp. Judge Gumban. Court of Appeals." Section 79 of the Government Auditing Codes provides as follows: "When government property has become unserviceable for any cause. No. No..A. act with patriotism and justice. Section 3 (n) of R. Belmonte. See Note 22. 8043 (Inter-Country Adoption Act) classifies as confidential the records of the adopted child.A. income. or by us. Section 14 of R. the secrets. it may be destroyed in their presence. if found to be valueless or unsaleable. and lead modest lives. pastures.

Section 2 of CA No." See concurring opinion of Justice Reynato S. 935 (1909). which administration and disposition shall be governed by the laws at present in force or which may hereafter be enacted. was recognized by the laws of Spain. and after distributing to the natives what may be necessary for tillage and pasturage. at all events. 197 SCRA 13 (1991). but timber and mineral lands shall be governed by special laws and nothing in this Act provided shall be understood or construed to change or modify the administration and disposition of the lands commonly called "friar lands" and those which. Section 4 (a) of RA No. 41 Phil. 546. No." "disposition. Section 10 of CA No. Joven v. declared in Cariño: "Prescription is mentioned again in the royal cedula of October 15. Cariño v. 141. but the land so granted. it shall be sufficient if they shall show that ancient possession. Puno in Republic Real Estate Corporation v. did not cover reclaimed lands. Director of Lands. or other valuable right which in the opinion of the Chief of the Bureau of Public Lands would be prejudicial to the interests of the public. Jr.' It may be that this means possession from before 1700. 2874 provided as follows: "The words "alienation. 108 Phil. being privately owned. or transferred to a province. water." 46 Section 10 of Act No. but. 55 . Puno in Republic Real Estate Corporation v. or otherwise disposed of in a manner affecting its title. stream. x x x. 1754. or benefit of the lands of the public domain other than timber or mineral lands. donated. Lee.condition. Garcia. 43 44 Article 1 of the Spanish Law of Waters of 1866." 49 50 Krivenko v. This Act. is actually a species of a grant by the State." 51 Like Act No. lease." "disposition. lease. 2874. shall mean any of the methods authorized by this Act for the acquisition. 48 Section 57 of Act No. cited in 3 Philippine. use. all the rest of said lands may remain free and unencumbered for us to dispose of as we may wish. taking into account ecological. Insular Government. 79 Phil. As prescription. 2874 governed alienable lands of the public domain for agricultural purposes. 45 Act No. use. referring to lands in the possession of an occupant and of his predecessors-in-interest. 2874 provided as follows: "x x x. Register of Deeds." 47 Title II of Act No. 93 Phil." or "concession" as used in this Act." or "concession" as used in this Act. See concurring opinion of Justice Reynato S. Ignacio v. 461 (1947). 926. or branch or subdivision of the Government shall not be alienated. shall have delimited by law." 52 R. The exception mentioned in Cariño. 134 (1953). except when authorized by the legislature. we see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to lands over which Spain had only a paper sovereignty. speaking through Justice Oliver Wendell Holmes. Court of Appeals. Section 23 of this Act provided as follows: "x x x In no case may lands leased under the provisions of this chapter be taken so as to gain control of adjacent land. 187 SCRA 797 (1990). 141 defined the terms "alienation" and "disposition" as follows: "The words "alienation. the specific limits of the public domain. was also titled the Public Land Act. Court of Appeals. 299 SCRA 199 (1998). "No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act until Congress. municipality. 335 (1960)." 53 54 Covering Sections 58 to 68 of CA No. have reverted to or become the property of the Commonwealth of the Philippines. since time immemorial. or benefit of the lands of the public domain other than timber or mineral lands. even against the Crown lands. as a valid title by prescription. Laurel v. way." Seealso Republic v. 141 states as follows: "The provisions of this Act shall apply to the lands of the public domain. confirming them in what they now have and giving them more if necessary. 6657 (Comprehensive Agrarian Reform Law of 1988) states. 299 SCRA 199 (1998). but also their future and their probable increase. enacted on October 7. 'Where such possessors shall not be able to produce title deeds.A. while Title III of the same Act governed alienable lands of the public domain for non-agricultural purposes. shall mean any of the methods authorized by this Act for the acquisition. however. 6657 has suspended the authority of the President to reclassify forest or mineral lands into agricultural lands. Director of Lands. encumbered.. the principle is admitted. The United States Supreme Court. 299 SCRA 199 (1998). roadstead. developmental and equity considerations. Nevertheless. 1903. shore line.

Congress enacted R. 141. See notes 9. Dizon v. Rodriguez. 293 allowing the private sale of marshy alienable or disposable lands of the public domain to lessees who have improved and utilized the same as farms. 293. PEA's Memorandum. 41. Republic v. Rollo. Court of Appeals. x x x. 41 Phil. "Citizens and corporations of the United States shall enjoy in the Commonwealth of the Philippines all the civil rights of the citizens and corporations. p. p. 44. 10 & 11." 74 75 AMARI's Comment dated June 24. 496) provides that "liens. Emphasis supplied. commercial. Section 8 of CA No. subject to the original Ordinance appended to the 1935 Constitution stating. fishponds or other similar purposes for at least five years from the date of the lease contract with the government. 13 SCRA 705 (1965). claims or rights arising or existing under the laws and the Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of record" constitute statutory liens affecting the title. This was. This should read Article XII. 60 61 62 Insular Government v. Section 1 of RA No. 1529 (previously Section 39 of Act No. 730. Ibid. 505 (1911). thereof. see note 56. 53 Phil. Ibid. 3. shall be given preference to purchase at a private sale of which reasonable notice shall be given to him. 730 provided as follows: "Notwithstanding the provisions of Sections 61 and 67 of Commonwealth Act No." 56 Section 44 of PD No.. 1948. Republic Real Estate Corporation v. among others. Proclamation No. 141 which refers to marshy lands leased for residential. No. 293.nêt 57 RA No. 76 77 Cariño v. Cabangis. 141. 1952. 65 66 67 68 69 70 71 72 73 Article 422 of the Civil Code states as follows: "Property of public dominion. R. AMARI's Memorandum. Title III of CA No. when no longer needed for public use or public service. Article XIII of the 1935 Constitution limited the disposition and utilization of public agricultural lands to Philippine citizens or to corporations at least sixty percent owned by Philippine citizens. 85. 935 (1909). not more than one thousand square meters at a price to be fixed by the Director of Lands with the approval of the Secretary of Agriculture and Natural Resources. 1954. Annex "B". See note 60. issued by President Ramon Magsaysay on July 5. Insular Government. Annex "C". that until the withdrawal of United States sovereignty in the Philippines. Aldecoa. AMARI's Memorandum. 1998. see note 6. respectively.A. de Castillo. authorized the private sale of home lots to actual occupants of public lands not needed for public service. 58 59 See note 49. see note 12 at 3. 63 64 118 SCRA 492 (1982). industrial or other non-agricultural purposes. any Filipino citizen of legal age who is not the owner of a home lot in the municipality or city in which he resides and who had in good faith established his residence on a parcel of land of the Republic of the Philippines which is not needed for public service. shall form part of the patrimonial property of the State. No. see note 2 at 1 & 2. 163 SCRA 286 (1988). p. 187 SCRA 797 (1990). p. Government v. did not apply to marshy lands under Section 56 (c). 112 (1929).66 hectares of the public domain in Manila Bay "situated in the 78 . 19 Phil. on June 16.A.Section 1. reserved for "National Park purposes" 464. however." In addition. which took effect on June 18. however.1âwphi1. as amended by RA No. 20. Lat Vda.

48 SCRA 372 (1977)." which area. 90 Paragraph 2 (a) of COA Circular No. See note 73." 82 83 On "Lands for Residential. 1991. pp. authorized the sale of marshy lands under certain conditions. by Dewey Boulevard. fishpond. 293. may be sold to the lessees thereof under the provisions of Chapter Five of the said Act as soon as the President. and on the south and west. upon recommendation of the Secretary of Agriculture and Natural Resources. x x x. 946 (1955). See note 5. see note 2. 94 Senate Committee Report No. 96 97 96 Phil. 7. citing the Minutes of Meeting of the PEA Board of Directors held on December 19. 95 Section 3. Title XIV. 560 did not discuss this issue. Under Sections 2 and 3. shall from time to time declare what lands are open to disposition or concession under this Act. 1991. Chapter I. Commercial. 1084 86 87 R. 330. as appearing in the Minutes of the PEA Board of Directors Meeting held on May 30. 79 Fifth Whereas clause of EO No. shall declare that the same are not necessary for the public service. Island of Luzon. on the East. see note 2 at 45." 91 Senate Committee Report No." 84 85 PEA's Memorandum. Section 4. enacted on June 16. See note 63. 89-296. 6657 (Comprehensive Agrarian Reform Law) limits the ownership of "public or private agricultural land" to a maximum of five hectares per person. or similar purposes for at least five years from the date of the contract of lease. 299 SCRA 1999 (1998). 560. is "B]ounded on the North. Article XII of the 1987 Constitution." states that disposal through negotiated sale may be resorted to if "[T]here was a failure of public auction. 98 . 1991. Puno in Republic Real Estate Corporation v. as described in detail in the Proclamation. shall from time to time classify the lands of the public domain into – (a) Alienable or disposable." RA No. De Veyra. by Manila Bay. citing PEA Board Resolution No. p.A. PEA's Memorandum. 7-8. Senate Committee Report No. or Industrial and other Similar Purposes. 293 provided as follows: "The provisions of section sixty-one of Commonwealth Act Numbered One hundred and forty-one to the contrary notwithstanding. Court of Appeals. 1981. Section 1 of RA No. there is no showing that the Commission on Audit approved the price or consideration stipulated in the negotiated Amended JVA as required by Section 79 of the Government Auditing Code. upon recommendation by the Secretary of Agriculture and Commerce. 141 provides as follows: "For purposes of the administration and disposition of alienable or disposable public lands. Corporate Secretary. No. homestead or grant. 1948.A. 525. "national parks" are inalienable natural resources of the State. Section 4 (b) of PD No. the President. 80 Section 6 of CA No 141 provides as follows: "The President. 835. Section 6 of R." However. While PEA claims there was a failure of public bidding on December 10. No. per Certification of Jaime T. upon the recommendation of the Secretary of Agriculture and Commerce. 730 allows the private sale of home lots to actual occupants of public lands. Statement of Facts. by Manila Bay. marshy lands and lands under water bordering on shores or banks or navigable lakes or rivers which are covered by subsisting leases or leases which may hereafter be duly granted under the provisions of the said Act and are already improved and have been utilized for farming." See concurring opinion of Justice Reynato S. 88 89 Issued on February 26. 560. Article XII of the 1987 Constitution provides as follows: "x x x Citizens of the Philippines may x x x acquire not more than twelve hectares thereof by purchase. 92 93 Opinion No. on "Sale Thru Negotiation. 1991.cities of Manila and Pasay and the municipality of Paranaque. dated June 11. 89-296. Book IV. citing COA Audit Circular No. Province of Rizal." 81 Section 7 of CA No.

129 hectares.2 (c) of the Amended JVA. Article XIII of the 1935 Constitution. COA Audit Circular No. x x x. Avila v. The net usable area is the total land area of the Freedom Islands less 30 percent allocated for common areas. namely: First. 111 Article 1409 of the Civil Code provides as follows: "The following contracts are inexistent and void from the beginning: (1) Those whose cause. Thus. includes all kinds of disposal or divestment of government assets. Ayala Cia. L40474 August 29. Tapucar. speaks of "guidelines (which) shall be observed and adhered to in the divestment or disposal of property and other assets of all government entities/instrumentalities" and that "divestment shall refer to the manner or scheme of taking away. which is 70 percent of the net usable area of 110. 172 SCRA 795 (1989). 1529 states as follows: "Every registered owner receiving a certificate of title in pursuance of a decree of registration. BERCILLES Presiding Judge. HON.. 152 (1909). COA Audit Circular No." Under Section 103 of PD No. (4) Those whose object is outside the commerce of men." 112 G. use. and JOSE L." or "concession" as used in this Act. et al. PASCUAL A." 108 Section 79 of the Government Auditing Code. ESPELETA. AMARI's Memorandum. 10. Section 44 applies to certificates of title issued pursuant to a land patent granted by the government. see note 21 at 16. Jose Antonio R Conde for petitioner. 104 105 Section 2. No. withdrawing of an authority. Gutierrez. . object or purpose is contrary to law.R.99 168 SCRA 198 (1988). 14 SCRA 259 (1965). INC. 89296 dated January 27. 106 107 Section 10 of CA No. 13 SCRA 705 (1965). Province of Cebu. shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be subsisting. which is 70 percent of the net usable area of 414. or benefit of the lands of the public domain other than timber or mineral lands. Annex "B". 141 provides as follows: "Sec. Harty v. 109 The share of AMARI in the Freedom Islands is 77. shall mean any of the methods authorized by this Act for the acquisition.47 hectares. Section 5." "disposition. 86-264 dated October 16. claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of record.. Republic v. 110 The share of AMARI in the submerged areas for reclamation is 290.34 hectares. 1529. 1986 speaks of "guidelines (which) shall govern the general procedures on thedivestment or disposal of assets of government-owned and/or controlled corporations and their subsidiaries. vs. and every subsequent purchaser of registered land taking a certificate of title for value and in good faith. which requires public auction in the sale of government assets. Assistant Solicitor General Octavio R. Assistant Provincial Fiscal.Liens. Dizon v. 13 Phil.49 hectares." These COA Circulars implement Section 79 of the Government Auditing Code. Rodriguez. 73 SCRA 146 (1976). x x x. 14th Judicial District.. respondents. lease. The words "alienation. Jr. 100 101 102 103 Section 44 of PD No. representing the Solicitor General's Office and the Bureau of Lands." Likewise. depriving. Office of the Acting Solicitor General Hugo E. Branch XV. 1975 CEBU OXYGEN & ACETYLENE CO. Municipality of Victoria. power or title. x x x. 201 SCRA 148 (1991).

approved on October 3. So the fact that some private interests may be served incidentally will not invalidate the vacation ordinance. Faithfulness to the public trust will be presumed. it is undoubtedly clear that the City of Cebu is empowered to close a city road or street. the City Council of Cebu. These are acts well within the ambit of the power to close a city street. on December 19. 1969.. on October 11. authorizing the Acting City Mayor to sell the land through a public bidding. 1968. Borces Street. CONCEPCION. through Resolution No.Ramirez and Trial Attorney David R. 5 After hearing the parties. City of Baguio. On September 23. 4 On June 26. as abandoned. Consequently. Such power to vacate a street or alley is discretionary. shall form part of the patrimonial property of the State. through the Acting City Mayor..800. 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. the petitioner poses the following questions: (1) Does the City Charter of Cebu City (Republic Act No. the same not being included in the City Development Plan. Mabolo. And the discretion will not ordinarily be controlled or interfered with by the courts. give the City of Cebu the valid right to declare a road as abandoned? and (2) Does the declaration of the road.: 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.. it cannot be subject to registration by any private individual. Cebu City. 1 Subsequently. is the authority competent to determine whether or not a certain property is still necessary for public use. boulevard. as an abandoned road. paragraph 34. the City of Cebu. Hilario for respondents." Besides. Any provision of law and executive order to the contrary notwithstanding. 1968. For the resolution of this case. to close any city road.00. executed a deed of absolute sale to the herein petitioner for a total consideration of P10. this court said: 5. 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. when no longer intended for public use or for public service. 1974 the trial court issued an order dismissing the petitioner's application for registration of title. 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. 2 Pursuant thereto. 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. the lot was awarded to the herein petitioner being the highest bidder and on March 3. Cebu City. absent a plain case of abuse or fraud or collusion. 2755. it follows that such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract. Jr. 2193. the City Council of Cebu passed Resolution No. in very clear and unequivocal terms.. Article 422 of the Civil Code expressly provides that "Property of public dominion. the Revised Charter of the City of Cebu heretofore quoted. the instant petition for review. states that: "Property thus withdrawn from public servitude may be used or conveyed for any purpose for . 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. it would seem to us. The parcel of land sought to be registered was only a portion of M. 1974. park or square. . avenue. street or alley. In the case of Favis vs. Legislative Powers. the City Council shall have the following legislative powers: xxx xxx xxx (34) . 3857) under Section 31. J. From the foregoing. Borces Street. declared the terminal portion of M. The city council. 1968. the petitioner filed an application with the Court of First instance of Cebu to have its title to the land registered. 6 Hence. So it is. (2) Since that portion of the city street subject of petitioner's application for registration of title was withdrawn from public use. Mabolo. 3 By virtue of the aforesaid deed of absolute sale.

p. April 25. and the respondent court is hereby ordered to proceed with the hearing of the petitioner's application for registration of title. HILARION U.. 13. 5 Annex E. 6 Annex F. JARENCIO. 4118 unconstitutional and invalid in that it deprived the City of Manila of its property without due process and payment of just compensation. P. CONRADO F. rollo. rollo. Chavez for respondents-appellees. the Court renders judgment declaring Republic Act No. and the CITY OF MANILA. Fernando. rollo. the dispositive portion of which is as follows: WHEREFORE. as Presiding Judge of Branch XXIII. in his capacity as Governor of the Land Authority. JJ. Court of First Instance of Manila. Assistant Solicitor-General Antonio A. Hence. Office of the Solicitor General Felix V. Makalintal. 11. SCRA 1060. 80876 which he had issued in the name of the Land Tenure Administration and reinstate Transfer Certificate of Title No. Respondent Executive Secretary and Governor of the Land Authority are hereby restrained and enjoined from implementing the provisions of said law. the order dated October 11. rollo. 3 Annex C. J. 18. Ejercito and Felix C. 1972 Salas v. VILLEGAS. No. dated September 23.R. in his capacity as Register of Deeds of Manila. HON.respondents-appellees. p. rendered by the respondent court in Land Reg. p. Land Authority for petitionersappellants. 1969. 1 The facts necessary for a clear understanding of this case are as follows: .which other real property belonging to the City may be lawfully used or conveyed. Barredo and Aquino. Footnotes 1 Annex A.R. 15. Tan. and LORENZO GELLA. Torres. Branch XXIII.petitioners-appellants. the withdrawal of the property in question from public use and its subsequent sale to the petitioner is valid. in Civil Case No. Jarencio RAFAEL S. LRC Rec. the petitioner has a registerable title over the lot in question. ANTONIO J. No. 2 Annex B. N-44531 is hereby set aside. Pablo & Cipriano A. 4 Annex D. in his capacity as Executive Secretary. if that is feasible." Accordingly. 20. 67946. Solicitor Raul I. Makasiar. 1968. 12. Case No. concur. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer Certificate of Title No. or issue a new certificate of title for the same parcel of land in the name of the City of Manila. rollo. rollo. Goco and Magno B. 1974. SALAS. SO ORDERED. L-29910. Gregorio A. L-29788 August 30. Legal Staff. WHEREFORE. ESTRELLA. N-948. G. p. C. No.J. p. vs. ESGUERRA. 22547 in the name of the City of Manila which he cancelled. 7 G.:p This is a petition for review of the decision of the Court of First Instance of Manila. in his capacity as Mayor of the City of Manila.

adopted a resolution requesting His Excellency. San Andres. 5 The Bill having been passed by the House of Representatives. acting as a land registration court. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557. 191 was filed in the House of Representatives by then Congressman Bartolome Cabangbang seeking to declare the property in question as patrimonial property of the City of Manila.490. House Bill No. The explanatory note of the Bill gave the grounds for its enactment. On September 21. the same was thereafter sent to the Senate where it was thoroughly discussed. to request the feasibility of declaring the city property bounded by Florida. which states that the promotion of Social Justice to insure the well-being and economic security of all people should be the concern of the State. the President of the Philippines to consider the feasibility of declaring the City property bounded by Florida. rendered judgment in Case No. under Transfer Certificate of Title Nos. as evidenced by the Congressional Records for May 20. As a matter of fact.450 square meters as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. Block 557 of the Cadastral Survey of the City of Mani1a. .R. containing an area of 9. 111. on the same date. 4 Subsequently. On September 21. Therefore. to wit: In the particular case of the property subject of this bill. it will be to the best interest of society that the said property be used in one way or another. 4329 was cancelled and transfer certificates of title were issued in favor of Pura Villanueva for the portions purchased by her. the 4th Branch of the Court of First Instance of Manila. more or less. the City of Manila does not seem to have use thereof as a public communal property. declaring the City of Manila the owner in fee simple of a parcel of land known as Lot No. . was issued in the name of the City of Manila.8 square meters. with an area of 7. which is reserved as communal property into a disposable or alienable property of the State and to provide its subdivision and sale to bona fide occupants or tenants. We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises. the Municipal Board of Manila in its regular session unanimously adopted a resolution requesting the President of the Philippines and Congress of the Philippines the feasibility of declaring this property into disposable or alienable property of the State. There is therefore a precedent that this parcel of land could be subdivided and sold to bona fide occupants. and for other purposes. more or less. 1453. presided by then Vice-Mayor Antono J. 18. This parcel of land in question was originally an aggregate part of a piece of land with an area of 9. Pursuant to said judgment the Register of Deeds of Manila on August 21. 1960.. transmitted to the Senate and House of Representatives of the Congress of the Philippines. 1960. As a consequence of the transactions Original Certificate of Title No. approval of this Bill is strongly urged.689. with the following explanatory note: The accompanying bill seeks to convert one (1) parcel of land in the district of Malate. In view of the foregoing consideration and to insure fairness and justice to the present bona fide occupants thereof. Transfer Certificate of Title No.On February 24. issued in favor of the City of Manila. containing a total area of 7.L. it is but proper that the same be sold to them. and Nebraska Streets. G.O. 1924. 1920. Villegas. 4329 covering the aforementioned parcel of land. the Municipal Board of Manila. Since this property has been occupied for a long time by the present occupants thereof and since said occupants have expressed their willingness to buy the said property. This parcel of land will not serve any useful public project because it is bounded on all sides by private properties which were formerly parts of this lot in question. 1919. the City of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. Antonio Raquiza and Nicanor Yñiguez as House Bill No. Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth Declaration of Principles of the Constitution. 2 The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the Philippines by then Vice-Mayor Antonio J.10 square meters. 21974 in the name of the City of Manila was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 3 During the First Session of the Fifth Congress of the Philippines. Record No.689. 1. 25545 and 22547. On various dates in 1924. a resolution was adopted by the Municipal Board of Manila at its regular session held on September 21. 1960. with the information that the same resolution was.8 square meters. 1960. When the last sale to Pura Villanueva was effected on August 22. Original Certificate of Title No. a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel Cases.. Villegas on September 21. San Andres and Nebraska Streets as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof.

President. That any demolition order directed against any tenant or bona fide occupant shall be lifted. we approved a similar bill. none of which shall exceed one hundred and twenty square meters in area and sell the same on installment basis to the tenants or bona fide occupants thereof and to individuals. sold. I would not want to pretend to know more what is good for the City of Manila. That if the tenant or bona fide occupant of any given lot is not able to purchase the same. the late Mayor Lacson came here and protested against the approval. The Chairman of the Land Tenure Administration shall implement and issue such rules and regulations as may be necessary to carry out the provisions of this Act. situated in the District of Malate. That in fixing the price of each lot. Sec. and became Republic Act No. 1964. to be placed under the disposal of the Land Tenure Administration. Sec. the amount legally due shall be liquidated and shall be payable in twenty-four equal monthly installments from the date of liquidation. 7. That no person can purchase more than one lot: Provided. The bill was passed by the Senate. 2. if the tenant or bona fide occupant is in arrears in the payment of any rentals. Sec. Upon approval of this Act. But afterwards. approved by the President on June 20. 6. SENATOR FERNANDEZ: Mr. 4. Upon approval of this Act no ejectment proceedings against any tenant or bona fide occupant of the above lots shall be instituted and any ejectment proceedings pending in court against any such tenant or bona fide occupant shall be dismissed upon motion of the defendant: Provided. Sec. has already been eliminated in this present bill? SENATOR TOLENTINO: I understand Mr. The sum of one hundred fifty thousand pesos is appropriated out of any funds in the National Treasury not otherwise appropriated. further. in view of that manifestation and considering that Mayor Villegas and Congressman Albert of the Fourth District of Manila are in favor of the bill. No property acquired by virtue of this Act shall be transferred.1964. 8. the cost of subdivision and survey shall not be included. furthermore. finally. mortgaged. 4118. and the approval was reconsidered. The Land Tenure Administration shall subdivide the property into small lots. May I know whether the defect in the bill which we approved. or otherwise disposed of within a period of five years from the date full ownership thereof has been vested in the purchaser without the consent of the Land Tenure Administration. is hereby converted into disposal or alienable land of the State. That in the event of lease the rentals which may be charged shall not exceed eight per cent per annum of the assessed value of the property leased: And provided. President. still further. his widow and children shall succeed in all his rights and obligations with respect to his lot. President. 9. This Act shall take effect upon its approval. It reads as follows: Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila. Sec. in the order mentioned: Provided. President. PRESIDENT PRO-TEMPORE: The biII is approved on second reading after several Senetors said aye and nobody said nay. there being no objection. Sec. 3. it will be re called that when the late Mayor Lacson was still alive. Sec. 5. which shall not exceed twenty pesos per square meter. SENATOR TOLENTINO: Mr. he shall be given a lease from month to month until such time that he is able to purchase the lot: Provided. I move that we approve this bill on second reading. In the event of the death of the purchaser prior to the complete payment of the price of the lot purchased by him. that that has already been eliminated and that is why the City of Manila has no more objection to this bill. . City of Manila. That no down payment shall be required of tenants or bona fide occupants who cannot afford to pay such down payment: Provided. Sec. All laws or parts of laws inconsistent with this Act are repealed or modified accordingly. to carry out the purposes of this Act. pertinent portion of which is as follows: SENATOR FERNANDEZ: Mr. which is reserved as communal property.

and pursuant to the request of the occupants of the property involved. 22547. particularly the Governor of the Land Authority and the Register of Deeds of Manila. Antonio J. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu thereof Transfer Certificate of Title No. 8 With the presentation of Transfer Certificate of Title No. The request was duly granted with the knowledge and consent of the Office of the City Mayor. brought an action for injunction and/or prohibition with preliminary injunction to restrain. 1966. for on December 20. Yap. and praying for the declaration of Republic Act No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process of law and payment of just compensation. 80876 was issued in the name of the Land Tenure Administration (now Land Authority) pursuant to the provisions of Republic Act No. that in assigning these lands some lots were earmarked for strictly public purposes. which had been yielded as above stated by the. prohibit and enjoin the herein appellants. 4118 as unconstitutional. 4118. To implement the provisions of Republic Act No. to Mayor Antonio Villegas. a site for public buildings.Approved. June 20. Two issues are presented for determination. 9 But due to reasons which do not appear in the record. that in the case of common lands or "legua comunal". and that the reason for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's governmental functions. 7 With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. Villegas. thru then Deputy Governor Jose V. judgment was rendered by the trial court declaring Republic Act No. there was no such immediate acquisition of ownership by the pueblo. the Land Authority. that upon the establishment of a pueblo. 22547 in order to obtain title thereto in the name of the Land Authority. furnishing him with a copy of the proposed subdivision plan of said lot as prepared for the Republic of the Philippines for resale of the subdivision lots by the Land Authority to bona fide applicants. 1968. to wit: I. the City Mayor of Manila. that it came into existence as such when the City of Manila. that this circumstance confirms the fact that it was originally "communal" land alloted to the City of Manila by the Central Government not because it was needed in connection with its organization as a municipality but simply for the common use of its inhabitants.C. Transfer Certificate of Title (T. the parties waived the presentation of further evidence and submitted the case for decision. dated February 18. and the land though administered thereby. the City of Manila made a complete turn-about. on the resolution of which the decision in this case hinges. the former sovereign. Is the property involved private or patrimonial property of the City of Manila? II. a church site. from further implementing Republic Act No. 1965. did not automatically become its property in the absence of an express grant from the Central Government. which are all contained in the partial stipulation of facts submitted to the trial court and approved by respondent Judge. Is Republic Act No. The respondents were ordered to undo all that had been done to carry out the provisions of said Act and were restrained from further implementing the same. appellants maintain that the land involved is a communal land or "legua comunal" which is a portion of the public domain owned by the State. 4118. 1964. requested the City Treasurer of Manila.T. 4118. 1965. was founded under the laws of Spain. and its exercise of acts of ownership by selling parts thereof did not necessarily convert the land into a . or any pueblo or town in the Philippines for that matter. and ownership of these lots (for public purposes) immediately passed to the new municipality. City authorities to the Land Authority. It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had not been officially earmarked as a site for the erection of some public buildings. for the surrender and delivery to the former of the owner's duplicate of Transfer Certificate of Title No. 4118 valid and not repugnant to the Constitution? I. in his capacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation. As regards the first issue. 6 On March 2. With the foregoing antecedent facts. Yap of the Land Authority (which succeeded the Land Tenure Administration) addressed a letter. lands to serve as common pastures and for streets and roads. 4118. thru the City Mayor. through his Executive and Technical Adviser. On September 23. the administrative authority was required to allot and set aside portions of the public domain for a public plaza. acknowledged receipt of the proposed subdivision plan of the property in question and informed the Land Authority that his office would interpose no objection to the implementation of said law. then Deputy Governor Jose V. that the present City of Manila as successor of the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct over said land. provided that its provisions be strictly complied with.

The Courts holds otherwise. 424 of the same code provides that properties for public use consist of provincial roads. city streets. change or destroy municipal corporations. such designation is conclusive upon the courts. 1920 in favor of the City of Manila after the land in question was registered in the City's favor. however. Under Sec. municipal streets. 60. cities and municipalities are divided into properties for public use and patrimonial property. fountains. does it. like a city is a governmental agent of the State with authority to govern a limited portion of its territory or to administer purely local affairs in a given political subdivision. and oblige them to give effect? It is emphatically the province and duty of the judicial department to say what the law is . however. transfer them from one classification to another and declare them disposable or not. Congress has the power to classify 'land of the public domain'. shall be conclusive upon and against all persons including the Insular Government and all the branches there .. promenades and public works for public service paid for by said province. therefore. so that the court must either decide that case conformable to the constitution. which read thus: The respondents (petitioners-appellants herein) contend. Upon the other hand. Madison. All other property possessed by any of them is patrimonial. however. If an act of the legislature. This contention is not entirely correct or accurate. The Torrens Title expressly states that the City of Manila was the owner in 'fee simple' of the said land. The respondents. 2 L. Respondents contend that Congress has declared the land in question to be 'communal' and.. repugnant to the constitution. provinces and municipalities in their 'patrimonial' capacity. When a statute is assailed as unconstitutional the Courts have the power and authority to inquire into the question and pass upon it. that Congress has the exclusive power to create. bind the courts. It simply means that the power of the people is superior to both and that when the will of the legislature. and this classification is conclusive upon the courts. that the property in question is communal property. as amended. appellees argue by simply quoting portions of the appealed decision of the trial court. the squares. stands in opposition to that of the . ed.patrimonial property of the City of Manila nor divest the State of its paramount title. the court must determine which of these conflicting rules governs the case. without compensation. and the extent of its authority is strictly delimited by the grant of power conferred by the State. Such power does not. extend to properties which are owned by cities. This has long ago been settled in Marbury vs. Appellants further argue that a municipal corporation. and that since Congress. does not invade the vested rights of the City. among other defenses. 4329 issued on August 21. This contention is. notwithstanding its validity. 324 of the Civil Code provides that properties of provinces. This is of the very essence of unconstitutional judicial duty.. in the exercise of its wide discretionary powers has seen fit to classify the land in question as communal.. Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is superior to the legislative power. Art.. cities or municipalities. public waters. the mere transfer of such land by an act of the legislature from one class of public land to another.. Appellants finally argue that Republic Act No. The Municipal Board had no authority to do that. the decree of confirmation and registration in favor of the City of Manila . if both the law and the constitution apply to a particular case. disproved by Original Certificate of Title No. that even if We admit that legislative control over municipal corporations is not absolute and even if it is true that the City of Manila has a registered title over the property in question. The erroneous assumption by the Municipal Board of Manila that the land in question was communal land did not make it so. when the United States Supreme Court speaking thru Chief Justice Marshall held: . So if a law be in opposition to the constitution. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the City of Manila. that if the City of Manila feels that this is wrong and its interests have been thereby prejudiced.. the matter should be brought to the attention of Congress for correction. disregarding the law. is void. Art.. contend that Congress had the power and authority to declare that the land in question was 'communal' land and the courts have no power or authority to make a contrary finding. declared in statutes. 4118 has treated the land involved as one reserved for communal use. the Courts certainly owe it to a coordinate branch of the Government to respect such determination and should not interfere with the enforcement of the law. There is nothing in the said certificate of title indicating that the land was 'communal' land as contended by the respondents. 38 of the Land Registration Act.

even without compensation to the city. having plenary control of the local municipality. The case is controlled by the further rule that the legislature. The Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be granted by the Government for communal purposes. Lacson. like that which the Constitution protects in the individual as precludes legislative interferences. . when it comes to property of the municipality which it did not acquire in its private or corporate capacity with its own funds. And when it acquires property in its private capacity. 100 Phil. For the establishment. 216. City. excepting those acquired with its own funds in its private or corporate capacity. for the erection of the church. the municipal building or the casa real. It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the legislature. the legal situation is the same as if the State itself holds the property and puts it to a different use (2 McQuilin.. Power. Accordingly. declared in the Constitution. has the right to authorize or direct the expenditures of money in its treasury. 327). whether it be for governmental or proprietary purposes.. the Ayuntamiento de Manila. Book VI. for a particular purpose. it acts like an ordinary person capable of entering into contracts or making transactions for the transmission of title or other real rights. therefore. Recopilacion de las Leyes de Indios). for any legitimate municipal purpose. 197. as well as of the lands whick were to constitute the common pastures. 2nd 241). the judges ought to be governed by the Constitution rather than by the statutes.. the municipality being but a subdivision or instrumentality thereof for purposes of local administration. 10 Phil. or to order and direct a distribution thereof upon a division of the territory into separate municipalities . There is one outstanding factor that should be borne in mind in resolving the character of the land involved. it must have done so under any of the modes established by law for the acquisition of ownership and other real rights. of new pueblos the administrative authority of the province. was not violative of the due process clause of the American Federal Constitution. Nevertheless.people. Originally the municipality owned no patrimonial property except those that were granted by the State not for its public but for private use. Insular Government. Armatage. of its creation and of all its affairs. then. and propios of the municipality and the streets and roads which were to intersect the new town were laid out. Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the laws of Spain (Law VII. et al. People vs. Here it did so in obedience to the constitutional mandate of promoting social justice to insure the well-being and economic security of the people. until granted. to any part of the public domain for use as communal lands. and. 518. 25 Ill. the ultimate title remained in the sovereign (City of Manila vs. . for such control must not be exercised to the extent of depriving persons of their property or rights without due process of law. 56 Miss. could validly acquire property in its corporate or private capacity. It is true that the City of Manila as well as its predecessor. upon proper petition. 220) (Emphasis supplied) It may. The Supreme Court of Minnessota in Monagham vs. . has not shown by any shred of evidence in what manner it acquired said land as its private or patrimonial property. such property is held in trust for the State for the benefit of its inhabitants. 27. among others. in representation of the Governor General. 17 Phil. 15 N. and before alloting the lands among the new settlers. said: . When it comes to acquisition of land. or in a manner impairing the obligations of contracts. W. the legislature can transfer its administration and disposition to an agency of the National Government to be disposed of according to its discretion. (Municipality of Catbalogan vs. a special demarcation was made of the places which were to serve as the public square of the pueblo. Armatage. p. following the accepted doctrine on the dual character — public and private — of a municipal corporation. Title III. 187. but.. designated the territory for their location and extension and the metes and bounds of the same.. although declared by the Cadastral Court as owner in fee simple. and it is that the City of Manila. As remarked by the supreme court of . no rights therein passed to the municipalities. as a matter of right.Municipal Corporations. 695). State Board (of Education) vs. citing Monagham vs. the presumption is that such land came from the State upon the creation of the municipality (Unson vs. in any event.. In the absence of a title deed to any land claimed by the City of Manila as its own. 218 Minn. showing that it was acquired with its private or corporate funds. supra. and as sites for the public buildings. Other properties it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal corporation pertains. though raised. The local municipality has no such vested right in or to its public funds. Director of Lands. for after all it owes its creation to it as an agent for the performance of a part of its public work. It holds such lands subject to the paramount power of the legislature to dispose of the same. True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property devoted to public use. 3rd Ed.. be laid down as a general rule that regardless of the source or classification of land in the possession of a municipality. The municipalities of the Philippines were not entitled..

Mutuc. at its own good will and pleasure. no infringement of constitutional rights is allowed. 2440. 37 Md. 4118. Sections 1. the repugnancy of that law to the Constitution must be clear and unequivocal. L-20387. 705). 45 O. does not violate the Fourteenth Amendment to the Constitution of the United States.. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits. requested "His Excellency the President of the Philippines to consider the feasibility of declaring the city property bounded by Florida. 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. through the Director of Lands. 22 SCRA 1334. That it has in its name a registered title is not questioned. in authorizing the transfer of the use and possession of the municipal airport to the commission without compensation to the city or to the park board.. pp. et al. to inspect. was not acquired by the City of Manila with its own funds in its private or proprietary capacity. 25545 and 25547. The property. vs. as has been previously shown." (See Annex E. 180: "It is of the essence of such a corporation. 121. 1453 which became Republic Act No. Record of the Case) [Emphasis Supplied] The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by . represented by the Solicitor General. the state not being bound by the mistakes and/or negligence of its officers. 1 and 2) of the Constitution which ordain that "private property shall not be taken for public use without just compensation. p. Ten Yu. In support thereof reliance is placed on the ruling in Province of Zamboanga del Norte vs. That the National Government. Sehner. To declare a law unconstitutional. The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). "by converting the land in question — which is the patrimonial property of the City of Manila into disposable alienable land of the State and placing it under the disposal of the Land Tenure Administration — violates the provisions of Article III (Secs. No. II . and direct the corporation. in the cadastral proceedings did not contest the claim of the City of Manila that the land is its property. viewed in the light of Article III. does not detract from its character as State property and in no way divests the legislature of its power to deal with it as such. et al. 1960. 703.R. the statute allows it to be done (Morfe vs." We therefore hold that c. Go Ching. for even if a law is aimed at the attainment of some public good. reads in part as follows: Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth Declaration of Principles of the Constitution which states that "the promotion of social justice to insure the well-being and economic security of all people should be the concern of the State. vs. Republic Act No. March 28. presided by then Vice-Mayor Antonio Villegas.Maryland in Mayor vs. But it would be simply begging the question to classify the land in question as such. containing an area of 7. the Municipal Board. No. 2. 4118 was intended to implement the social justice policy of the Constitution and the Government program of "Land for the Landless". This brings Us to the second question as regards the validity of Republic Act No. Partial Stipulation of Facts. its funds. that the government has the sole right as trustee of the public interest. 4118.450 square meters. One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over said land when by its resolution of September 20. City of Zamboanga. There is no quarrel over this rule if it is undisputed that the property sought to be taken is in reality a private or patrimonial property of the municipality or city. G.500. The trial court declared Republic Act No. Jan. That situation does not obtain in this case as the law assailed does not in any manner trench upon the constitution as will hereafter be shown. 22 SCRA 424). subsection (1) and (2) of the Constitution which ordain that no person shall be deprived of his property without due process of law and that no private property shall be taken for public use without just compensation. 31. et al. Civil Case No. which holds that Congress cannot deprive a municipality of its private or patrimonial property without due process of law and without payment of just compensation since it has no absolute control thereof." We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises.G. 1. 24 Phil.R. Dinglasan. 4118 unconstitutional for allegedly depriving the City of Manila of its property without due process of law and without payment of just compensation. CFI. regulate. and franchises. The explanatory note of House Bill No. No. 1968. control. 1968. and that no person shall be deprived of life. as patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. San Andres and Nebraska Streets. 4118. under Transfer Certificate of Title Nos. G. 67945. The act of classifying State property calls for the exercise of wide discretionary legislative power and it should not be interfered with by the courts. The respondent Court held that Republic Act No. liberty or property without due process of law". Manila. It is now well established that the presumption is always in favor of the constitutionality of a law (U S.

. Records. took no part. Consequently. concur. Makalintal. Castro. In the last analysis the land in question pertains to the State and the City of Manila merely acted as trustee for the benefit of the people therein for whom the State can legislate in the exercise of its legitimate powers. suffer from any constitutional infirmity. 4118. Teehankee and Antonio. Concepcion. 1965. JJ. the Courts possess no power to grant that relief. 1965. Zaldivar. The conclusion of the respondent court that Republic Act No. to the City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the Republic of the Philippines for subdivision and resale by the Land Authority to bona fide applicants. page 142. 35 Phil. Municipality of Luzuriaga vs. dated February 18. the then Deputy Governor of the Land Authority sent a letter. 4118 converted a patrimonial property of the City of Manila into a parcel of disposable land of the State and took it away from the City without compensation is. Director of Lands. . 327. Fernando. Without costs. 10 Phil. therefore. The subdivision of the land and conveyance 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. the appealed decision is hereby reversed. Rollo. 6 Annex "J". If it were its patrimonial property why should the City of Manila be requesting the President to make representation to the legislature to declare it as such so it can be disposed of in favor of the actual occupants? There could be no more blatant recognition of the fact that said land belongs to the State and was simply granted in usufruct to the City of Manila for municipal purposes. The certificate of title over the property in the name of the City of Manila was accordingly cancelled and another issued to the Land Tenure Administration after the voluntary surrender of the City's duplicate certificate of title by the City Treasurer with the knowledge and consent of the City Mayor. City of Manila vs. but simply as a manifestation of its right and power to deal with state property. page 122. either under the due process clause or under the eminent domain provisions of the Constitution. which is fatal to its claim since the Congress did not do as bidden. Records. Barredo and Makasiar. All such acts were done in recognition by the City of Manila of the right and power of the Congress to dispose of the land involved." On March 2. page 128. 193). 4 Annex "F" to the Partial Stipulation of Facts. 4118 was never 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: And this was done at the instance or upon the request of the City of Manila itself. the Mayor of Manila. If it failed to get from the Congress the concession it sought of having the land involved given to it as its patrimonial property. no presumption of State grant of ownership in favor of the City of Manila may be acquiesced in to justify the claim that it is its own private or patrimonial property (Municipality of Tigbauan vs.. subsection (2). Footnotes 1 Pages 79-80. 4118 without any obstacle from the respondents. Republic Act No. and petitioners shall proceed with the free and untrammeled implementation of Republic Act No. Records. WHEREFORE. Republic Act No. 4118 does not." The foregoing sequence of events. clearly indicate a pattern of regularity and observance of due process in the reversion of the property to the National Government. To implement the provisions of Republic Act No. JJ. unfounded. page l23. Article III of the Constitution. It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form of a legally approved resolution. page 121. Records. Director of Lands. 24 Phil..J.the City's own official act. through his Executive and Technical Adviser. 3 Annex "E-1" to the Partial Stipulation of Facts. 5 Annex "F-1". C. 798. the City of Manila was not deprived of anything it owns. 2 Annex "E" to the Partial Stipulation of Facts. Records. But since the City did not actually use said land for any recognized public purpose and allowed it to remain idle and unoccupied for a long time until it was overrun by squatters. therefore. Insular Government. acknowledged receipt of the subdivision plan and informed the Land Authority that his Office "will interpose no objection to the implementation of said law provided that its provisions are strictly complied with.

.P...... T....................... Republic Act 286 was approved creating the municipality of Molave and making it the capital of Zamboanga Province....... Trade School 2 ............................................... 1 said properties were being utilized as follows — No......7 Annex "K". High School Playground 9 .... Burleighs 1 ...... No........ pursuant to Commonwealth Act 39.... of Lots Use 1 ...244...... J....... Commonwealth Act 39 was approved converting the Municipality of Zamboanga into Zamboanga City...............: Prior to its incorporation as a chartered city.. the funds............... BENGZON......... G............. Lood....... vacant It appears that in 1945............. vs............. fixed the value of the properties and buildings in question left by Zamboanga Province in Zamboanga City at P1............................ CITY OF ZAMBOANGA........ 1949.... Hospital Site 3 ....................defendants-appellants................... J....... page 145. On May 26.... plaintiff-appellee............. San Roque 23 ................ 1952. upon the recommendation of the Auditor General........... On October 12............................. 6 of that law provided: Upon the approval of this Act. 9 Annexes "A" and "N"... As far as can be gleaned from the records............ the Municipality of Zamboanga used to be the provincial capital of the then Zamboanga Province.. Curuan School 1 . Sarmiento... 50 of the Act also provided that — Buildings and properties which the province shall abandon upon the transfer of the capital to another place will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General. Capitol Site 3 ............... M.................. Hydro-Electric Site (Magay) 1 ..... Sec......... ...... 1948............... pages 148-150....................... Leprosarium 1 .... As to how the assets and obligations of the old province were to be divided between the two new ones... located in the City of Zamboanga and covered individually by Torrens certificates of title in the name of Zamboanga Province..... Fortugaleza.294............... SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE... 3 On June 6.... Yap & Associates for plaintiff-appellee.... L-24440 March 28............. 1968 THE PROVINCE OF ZAMBOANGA DEL NORTE....R..00......... Burleigh School 2 .... Records... Records.. pages 145-147.. Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur.......... 8 Annexes "L" and "L-1"....... Records... Office of the Solicitor General for defendants-appellants........ The properties and buildings referred to consisted of 50 lots and some buildings constructed thereon. 2 Subsequently. the capital of Zamboanga Province was transferred to Dipolog. Sec.. assets and other properties and the obligations of the province of Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines....... or on June 16... the Appraisal Committee formed by the Auditor General................ 1936....... School Site 3 .......

05 in lump sum with 6% interest per annum.61% for Zamboanga del Sur. issued a ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-indiviso) of the properties mentioned in Sec. 1962. and declaring permanent the preliminary mandatory injunction issued on June 8.46 has already been returned to it. (c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum of P57. and is entitled to the price thereof. Consequently. It is SO ORDERED. On August 12. Zamboanga City admits that since the enactment of Republic Act 3039.46 to defendant City.05 payable by Zamboanga City.05 shall have been fully paid. in favor of the said City of Zamboanga. the dispositive portion of which reads: WHEREFORE. by order of the President. This ruling revoked the previous Cabinet Resolution of July 13.46 taken from it out of the internal revenue allotment of Zamboanga del Norte. the lower court granted plaintiff province's motion. the Secretary of Finance and the Commissioner of Internal Revenue.373. on July 12. Subsequently. This constrained plaintiff-appellee Zamboanga del Norte to file on March 5.220. on January 11.46. Over defendants' opposition. 1961. all aggregating P57. properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are hereby transferred. judgment is hereby rendered declaring Republic Act No. and again for the first quarter of the fiscal year 1960-1961. 3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private properties. trial was held. The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the quarter ending March 31.00. After defendants filed their respective answers. judgment was rendered.220.373. and (d) The latter be ordered to continue paying the balance of P704. 1960. However.05 payment thereof to be deducted from its regular quarterly internal revenue allotment equivalent to 25% thereof every quarter until said amount shall have been fully paid.220. .030. ordering defendant City of Zamboanga to pay to the plaintiff the sum of P704.39% for Zamboanga del Norte and 45. ordering defendant Secretary of Finance to direct defendant Commissioner of Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte until said sum of P704. (Stressed for emphasis). a complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City. 1962. P43. 1959.220. On June 4. 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for P1. 1962. then for the quarter ending June 30.220. when the provincial capital of the then Zamboanga Province was transferred to Dipolog. payable by Zamboanga City. 1960. but prior to the perfection of defendants' appeal. dismissing the counterclaim of defendant City of Zamboanga. 50 of Commonwealth Act 39 by providing that — All buildings. or P704.39% of P1. ordered the Commissioner of Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return to Zamboanga City the sum of P57.05 in full. 1955. plaintiff province filed a motion to reconsider praying that Zamboanga City be ordered instead to pay the P704. On March 17.Pursuant thereto.373.294. Republic Act 3039 was approved amending Sec. was credited to the province of Zamboanga del Norte. 50 of Commonwealth Act 39. consisting of 50 parcels of land and the improvements thereon under certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of Zamboanga. 1961.05 due it. effective as of 1945. No costs are assessed against the defendants.05 in quarterly installments of 25% of its internal revenue allotments. (b) Plaintiff's rights and obligations under said law be declared. pursuant to the order of the Court dated June 4.244. on June 17. Zamboanga del Norte therefore became entitled to 54.00. 1963. 1962. The deductions. The defendants then brought the case before Us on appeal. in partial payment of the P764. It was prayed that: (a) Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property without due process and just compensation. ordering plaintiff Zamboanga del Norte to execute through its proper officials the corresponding public instrument deeding to defendant City of Zamboanga the 50 parcels of land and the improvements thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter of the aforesaid sum of P704.11 of the P57. apportioned the assets and obligations of the defunct Province of Zamboanga as follows: 54.220.220.373. the total value of the lots and buildings in question. the lower court ordered the issuance of preliminary injunction as prayed for. the Executive Secretary. free of charge. the Secretary of Finance. the Auditor General.

(Stressed for emphasis). such public works must be for free and indiscriminate use by anyone. all the properties in question. public waters. of which a province is one. Republic Act 3039 is valid insofar as it affects the lots used as capitol site. city streets. DIRECTOR OF LANDS. applying the norm obtaining under the principles constituting the law of Municipal Corporations. 423 and 424 which provide:1äwphï1. 423.. municipal streets. in the provinces. school sites and its grounds. that rule may be invoked only as to property which is used distinctly for public purposes. For. must be used in classifying the properties in question? The Civil Code classification is embodied in its Arts. The property of provinces. and municipalities. 11where it was stated that ". promenades. could be considered as patrimonial properties of the former Zamboanga province. 9 it was held that the capitol site and the school sites in municipalities constitute their patrimonial properties. Director of Lands. without prejudice to the provisions of special laws. and the school sites will be considered patrimonial for they are not for public use. the lower court must be affirmed except with regard to the two (2) lots used as playgrounds. But if the property is owned in its private or proprietary capacity. CANTOS 13 held squarely that a municipal lot which had always been devoted to school purposes is one dedicated to public use and is not patrimonial property of a municipality. This result is understandable because. On the other hand. 7 The playgrounds. and municipalities is divided into property for public use and patrimonial property. devoted for governmental purposes like local administration. MUNICIPAL COUNCIL OF ILOILO 12 held that municipal properties necessary for governmental purposes are public in nature. the matter involved here is the extent of legislative control over the properties of a municipal corporation. we will. They would fall under the phrase "public works for public service" for it has been held that under theejusdem generis rule. the rest remain patrimonial. the hospital and leprosarium sites. consists of the provincial roads. the property is public and Congress has absolute control over it. the Rules anyway authorize the conversion of the proceedings to an ordinary action. (3) MUNICIPALITY OF BATANGAS VS. Under this norm. Following this classification. dependent on the use to which it is intended and devoted. And it cannot be said that its actuation was without jurisprudential precedent for in Municipality of Catbalogan v. 424. just like the preceding enumerated properties in the first paragraph of Art 424. however. fountains. The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity.e. police stations and concrete structures with the corresponding lots used as markets were declared exempt from execution and attachment since they were not patrimonial properties. the public school. it is enough that the property be held and. cities.Brushing aside the procedural point concerning the property of declaratory relief filed in the lower court on the assertion that the law had already been violated and that plaintiff sought to give it coercive effect. all those of the 50 properties in question which are devoted to public service are deemed public. presume a grant from the States in favor of the municipality. cities.. 6 The capacity in which the property is held is. such as for the municipal court house. public education. cities.ñët ART. properties for public service in the municipalities are not classified as public. i.. The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. as indicated by the wording. Applying the above cited norm. All other property possessed by any of them is patrimonial and shall be governed by this Code. 5 We proceed to the more important and principal question of the validity of Republic Act 3039. would fit into this category. 8 and in Municipality of Tacloban v. hospital and leprosarium sites and the high school playground sites — a total of 24 lots — since these were held by the former Zamboanga province in its governmental capacity and therefore are subject to the absolute control of Congress. unlike in the classification regarding State properties. The municipality cannot be deprived of it without due process and payment of just compensation. to be considered public. the auto trucks used by the municipality for street sprinkling. in the absence of proof to the contrary. the squares. etc.. This was the norm applied by the lower court. Now.. where the municipality has occupied lands distinctly for public purposes. the public market. and public works for public service paid for by said provinces. Said lots considered as public property are . however. or other necessary municipal building. 10 Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. or municipalities. Even the capital site. Assuming then the Civil Code classification to be the chosen norm. which of two norms. but. Director of Lands. Property for public use. since assuming the same to be true. except the two (2) lots used as High School playgrounds." (2) VIUDA DE TANTOCO V.. that of the Civil Code or that obtaining under the law of Municipal Corporations. Thus. public health. then it is patrimonial and Congress has no absolute control. the police patrol automobile. ART.

......................................................... Leprosarium 170 ............. Burleigh 173 ............................................................... Burleigh 178 ................. Curuan School 926 ........................ still the buildings constitute mere accessories to the lands.................................. ..................... ......................... and partake of the nature of the same............. ............................ ............................................ ................ ........................................................................................ Considering however the fact that said buildings must have been erected even before 1936 when Commonwealth Act 39 was enacted and the further fact that provinces then had no power to authorize construction of buildings such as those in the case at bar at their own expense........ ............... .. Use Mydro.......... Leprosarium 927 .......................................................................... Burleigh 172-C ................... which are public in nature............................... governmental purposes......... Congress could very well dispose of said buildings in the same manner that it did with the lots in question.................................................................................... they follow the nature of said lands..... Magay San Roque Burleigh 15 Vacant " " " " . Hospital Site ................................................................. The province then — and its successors-ininterest — are not really deprived of the benefits thereof............................ Lot Number 177 ............................................................................................................ 183 .................................................... Hospital Site ..... as per records appearing herein and in the Bureau of Lands... ....................... the records do not disclose whether they were constructed at the expense of the former Province of Zamboanga........ .... School Site High School 168 .............. ...................................................... Said lots are: 5577 13198 5569 5558 5559 5560 5561 5563 TCT Number ......... though located in the city.................................................... Hence........ there is sufficient basis for holding that said eight lots constitute the appurtenant grounds of the Burleigh schools....................................... ....................................... ............... ... ........................... Burleigh We noticed that the eight Burleigh lots above described are adjoining each other and in turn are between the two lots wherein the Burleigh schools are built......... 14 it can be assumed that said buildings were erected by the National Government................ .............................. public........................ Trade School High School 167 ................................................................................ ..................................... Regarding the several buildings existing on the lots above-mentioned........... ... Hence....................................... . Play-ground (O.............. School Site .......... But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26 remaining lots which are patrimonial properties since they are not being utilized for distinctly.................................................. Burleigh 171-A ...................................................... ..................................................................... i............................................ will not be for the exclusive use and benefit of city residents for they could be availed of also by the provincial residents......... 127-0 .................................................................................. School Site . . Burleigh School 180 ........ .......................................... .................. Leprosarium 925 .........) ........ 169 ..T.... 4-B 149 1224 1226 1225 434-A-1 171 Use ............. ................... But even assuming that provincial funds were used............................................... using national funds............................... and so. ....... Hospital Site .............. ......... 191 .............. ..... Play-ground 157 & 158 ............... Burleigh 174 ......................e... Burleigh School 172-B .............. Moreover............... 188 ........................................... said buildings..........the following: TCT Number 2200 2816 3281 3282 3283 3748 5406 5564 5567 5583 6181 11942 11943 11944 5557 5562 5565 5570 5571 5572 5573 5585 5586 5587 Lot Number ........................................ ................................... 186 . Burleigh 171-B ................................ .. 175 ................................. ..................................... Burleigh 172-A ........................ Capitol Site .............................C..................

......................................... 16 We are more inclined to uphold this latter view. ............................................................ .................... The controversy here is more along the domains of the Law of Municipal Corporations — State vs................... ........ the fact that these 26 lots are registered strengthens the proposition that they are truly private in nature........................... particularly pars.................... .... cannot be paid in lump sum.......... 1949...... .. Hence.030......................... in the amount of plaintiff's 54........ 5 and 6......... ............ the principles........ . if any................." For purpose of this article............. Province — than along that of Civil Law.......... that the 24 lots used for governmental purposes are also registered is of no significance since registration cannot convert public property to private.. the classification of properties other than those for public use in the municipalities as patrimonial under Art....................... except as to the P43.......................... .................... .. Hence.............. .. ... .. On the other hand....... It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's 54........ ...... Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is without merit................... the decision appealed from is hereby set aside and another judgment is hereby ........................................ .. 50......... negative laches... however... 7....................... ..... it could not have validly affected a completed act............ .......................... this Court is not inclined to hold that municipal property held and devoted to public service is in the same category as ordinary private property............ .. " " " " " " " " " " " " " " " " " " Moreover.. Moreover..... ..39% share in the 26 properties which are patrimonial in nature................ ................ the Cabinet resolved transfer said properties practically for free to Zamboanga City.......373........ All the foregoing.......... ............ ................................................. The consequences are dire....... Since the law did not provide for retroactivity................. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to justify lump sum payment is inapplicable since there has been so far in legal contemplation no complete delivery of the lots in question.................... the cause of action in favor of the defunct Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the properties in question............. Zamboanga del Norte was able to get a reconsideration of the Cabinet Resolution in 1959..... ................. In fact.......... said share to computed on the basis of the valuation of said 26 properties as contained in Resolution No. the amount of P43................ The return of said amount to defendant was without legal basis....... and not in lump sum.... Art.... 424 of the Civil Code — is "............... Plaintiff brought suit in 1962....................... While in 1951............ of the Appraisal Committee formed by the Auditor General......... As ordinary private properties..................... they can be levied upon and attached............................ 10 and 11 of the first cause of action recited in the complaint 17 clearly shows that the relief sought was merely the continuance of the quarterly payments from the internal revenue allotments of defendant City. ...... ...... the classification of municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classification in this particular case.......................................... ......... the old province was dissolved.....5566 5568 5574 5575 5576 5578 5579 5580 5581 5582 5584 5588 5589 5590 5591 5592 5593 7379 .... The titles to the registered lots are not yet in the name of defendant Zamboanga City................. .........................39% share in the 26 lots should then be paid by defendant City in the same manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue.............................11 should be immediately returned by defendant City to plaintiff province.............................. The remaining balance................46 had already been made... ............11 already returned to defendant City....... ............................. WHEREFORE.......... Sec... .. obtaining under the Law of Municipal Corporations can be considered as "special laws". 176 179 196 181-A 181-B 182 197 195 159-B 194 190 184 187 189 192 193 185 4147 .... partial payments were effected subsequently and it was only after the passage of Republic Act 3039 in 1961 that the present controversy arose... Plaintiff's prayer........................................... Plaintiff's share................030... ....................... 1961 after a partial payment of P57..................... read together with pars......... As successor-in-interest to more than half of the properties involved....... Lastly......................... Republic Act 3039 took effect only on June 17.... a reconsideration thereof was seasonably sought.................... ........ dated March 26. .... without prejudice to the provisions of special laws..... They can even be acquired thru adverse possession — all these to the detriment of the local community................ .............. Under Commonwealth Act 39..... ... In 1952........

62 C. pp. Makalintal. 6.. 3. 1963. Gonzales.. 3rd ed. Castro. 91 Phil.L.J. op. INC. Angeles and Fernando.39% share in the 26 patrimonial properties.J. C... L-17573.030. 24 Phil.11 which the former took back from the latter out of the sum of P57. Apr. 15 16 Republic v. 17 G.entered as follows:. Municipal Corporations. J. Law on Public Corporations. concur. Reyes. that provinces. is on leave. L-13687.." (Stressed for emphasis) This law was approved and took effect on June 19. Hodges V. NWSA. 52. Footnotes 1 See Record on Appeal. 1935 PHILIPPINE REFINING CO. Rule 64. FRANCISCO JARQUE . 8. 8 9 10 11 12 13 It was only in Republic Act 2264. The Committee report itself was not submitted as evidence Exhibit C. cities and municipalities were ".. 426. Municipality of Naguilian v. 1963. Sioson. Actg. 6 7 Cebu City v. financed by the provincial city and municipal funds or any other fund borrowed from or advanced by private third parties .. after deducting therefrom the sum of P57.. on the basis of Resolution No. 1962. by way of quarterly payments from the allotments of defendant City. Record on Appeal. 5th ed. City of Iloilo. Rules of Court. Nov.. last paragraph. Martin. 17 Phil. 1949 of the Appraisal Committee formed by the Auditor General... Sec.J. 1962 ed. supra. plaintiff-appellant. No. 2 3 4 5 2 McQuillin.R.46 previously paid to the latter. 437-439. (1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the amount of P43. pp. L18452. Concepcion. 514. NWSA.B. June 30.. 14 This could not be considered as forming part of the appurtenant grounds of the Burleigh school sites since the records here and in the Bureau of Lands show that this lot is set apart from the other Burleigh lots.46. Nov. Gonzales. 29. JJ. 13. L-41506 March 25. 124. cit. 31-32. supra. in the manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue.. 29. Sanchez. op cit. Sec. Dizon. No costs.373. Zaldivar. See Exhibit C. and (2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiff's 54. 4-6. 1959. 8-9. L-12892. 191-196. 29-30. authorized to undertake and carry out any public works projects. 216. 1962.373. So ordered. 17 Phil. vs. 7 dated March 26. Martin Public Corporation. 30.. 49 Phil. without the intervention of the Department of Public Works and Communications... C.

Vessels are considered personal property under the civil law.. G. 1932. A motion was presented by counsel for the appellant in which it was asked that the case be heard and determined by the court sitting in banc because the admiralty jurisdiction of the court was involved. Neither of the first two mortgages had appended an affidavit of good faith. vessels are personal property although occasionally referred to as a peculiar kind of personal property. and ABOITIZ & CO. 1932. Arroyo vs. 13 Phil. when a petition was filed with the Court of First Instance of Cebu in which it was prayed that Francisco Jarque be declared an insolvent debtor.: First of all the reason why the case has been decided by the court in banc needs explanation. Rivera [1917]. is unenforceable against third persons.G. D. [1922].) Similarly under the common law. and does not. the seven assigned errors will be overruled. therefore.. City of Gloucester [1917]. Atlantic Maritime Co vs. In so doing we believe that the trial judge acted advisedly.. (Reynolds vs. or again within the thirty-day period before the institution of insolvency proceedings. J.. (Code of Commerce. 1000. supra. includes the requirement of an affidavit of good faith appended to the mortgage and recorded therewith. Yu de Sane. And finally counsel would have us make rulings on points entirely foreign to the issues of the case. 54 Phil. McVean and Vicente L. and this motion was granted in regular course. (Giberson vs. Faelnar for appellee. article 585. in describing what shall be deemed sufficient to constitute a good chattel mortgage. it appears that on varying dates the Philippine Refining Co. 96 Am.. but no reason is shown for holding this article not in force. 1508. Yu de Sane [1930].) Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity. 924. the costs of this instance to be paid by the appellant. E. 216. 92.. and Provincial Sheriff of Occidental Negros [1923]. The mere mortgage of a ship is a contract entered into by the parties to it without reference to navigation or perils of the sea. Banco Español-Filipino [1909]. 511. Perkins and Brady for appellant. These documents were recorded in the record of transfers and incumbrances of vessels for the port of Cebu and each was therein denominated a "chattel mortgage". (Bogart vs. N. The absence of the affidavit vitiates a mortgage as against creditors and subsequent encumbrancers. but this mortgage was not registered in the customs house until May 17. 37 Phil..J. These proceedings were begun on June 2.) Coming now to the merits. . which it is not desirable to do since those principles were confirmed after due liberation and constitute a part of the commercial law of the Philippines. but it is essential that a record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at the port of entry. Yap Tico & Co. Benedicto de Tarrosa vs. also. In effect appellant asks us to find that the documents appearing in the record do not constitute chattel mortgages or at least to gloss over the failure to include the affidavit of good faith made a requisite for a good chattel mortgage by the Chattel Mortgage Law.) Indeed.. 1932. Nielson [1903]. 117 N. Jureidini Bros. and Francisco Jarque executed three mortgages on the motor vessels Pandan and Zaragoza.) Since the term "personal property" includes vessels. they are subject to mortgage agreeably to the provisions of the Chattel Mortgage Law.) As a consequence a chattel mortgage of a vessel wherein the affidavit of good faith required by the Chattel Mortgage Law is lacking. Rep. (58 C. The third mortgage contained such an affidavit. 753.. or within the period of thirty days prior to the commencement of insolvency proceedings against Francisco Jarque. JOSE COROMINAS.. As neither the facts nor the law remains in doubt. confer admiralty jurisdiction.. Inc. 17 How.) The only difference between a chattel mortgage of a vessel and a chattel mortgage of other personalty is that it is not now necessary for a chattel mortgage of a vessel to be noted n the registry of the register of deeds. there was nothing to disclose in what capacity the said M. Counsel would further have us revise doctrines heretofore announced in a series of cases.JOSE COROMINAS. 399. Ingalls. N. On further investigation it appears that this was error. Hontiveros declined to order the foreclosure of the mortgages. which soon thereafter was granted. Judge Jose M.) The Chattell Mortgage Law in its section 5. A. 72. Vicente Pelaez and DeWitt. section 2. Brink. MALCOLM. it has heretofore been accepted without discussion that a mortgage on a vessel is in nature a chattel mortgage. defendants.appellee. M. On these facts. A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of deeds on May 12. (McMicking vs. Brink signed. Steamboat John Jay [1854]. Arroyo vs. Thos.. with the result that an assignment of all the properties of the insolvent was executed in favor of Jose Corominas. 429. in his capacity as assignee of the estate of the insolvent Francisco Jarque.. F. but on the contrary sustained the special defenses of fatal defectiveness of the mortgages. while the last mentioned mortgage was subscribed by Francisco Jarque and M. Counsel would further have us disregard article 585 of the Code of Commerce. 44 Phil. N. Judgment affirmed. (Act No. 46 Phil. (Rubiso and Gelito vs.

and the amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain. Inc.A. B. with costs.710 to B. Street.H. 1877. Pampanga. and Goddard. Berkenkotter.. it could produce 250. sugar-cane mill. telephone line. JJ. which is raised in the first assignment of alleged error.. No appearance for the other appellees. Having agreed to said proposition made in a letter dated October 5. It is admitted by the parties that on April 26.. the herein defendants Cu Unjieng e Hijos. BERKENKOTTER. steel railway. owner of the sugar central situated in Mabalacat. B.. is whether or not the lower court erred in declaring that the additional machinery and equipment. improvements.R. 1927. No. with the declarations. Inc. In support of his appeal. Berkenkotter had a credit of P22. president of said corporation. steel railway. Green. and limitations established by law. and rents not collected when the obligation falls due. Cu Unjieng e Hijos.. utensils and whatever forms part or is necessary complement of said sugar-cane mill..A. In the case of Bischoff vs. Araneta. A mortgage includes all natural accessions. proposed to the plaintiff. 1926. telephone line. this court laid shown the following doctrine: 1.H.000 offering as security the additional machinery and equipment acquired by said B. defendants-appellees. 1935 B. In order to carry out this plan. Berkenkotter. dismissing said plaintiff's complaint against Cu Unjiengs e Hijos et al. Imperial. C.Avanceña. B.H. 538). the Mabalacat Sugar Co. president of the Mabalacat Sugar Co. Furthermore. from the judgment of the Court of First Instance of Manila. purchased the additional machinery and equipment now in litigation. The first question to be decided in this appeal. whether the estate continues in the possession of the person who mortgaged it or whether it passes into the hands of a third person.H. J. Pomar and Compañia General de Tabacos (12 Phil. YEK TONG LIN FIRE AND MARINE INSURANCE COMPANY. B.750. With the loan of P25. growing fruits. Green. the appellant assigns six alleged errors as committed by the trial court in its decision in question which will be discussed in the course of this decision.J.. B. Villanueva (18 Phil. 1926. ART. G... the Mabalacat Sugar Co. so that instead of milling 150 tons daily.000 against said corporation for unpaid salary. Butte. VILLA-REAL. On June 10. shortly after said mortgage had been constituted. MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF PAMPANGA. B. Vickers.A. REALTY. as improvement incorporated with the central are subject to the mortgage deed executed in favor of the defendants Cu Unjieng e Hijos. delivered the sum of P1. Green. cited with approval in the case of Cea vs. Briones and Martinez for appellant. CU UNJIENG E HIJOS. Inc. the total amount supplied by him to said B. plaintiff-appellant. vs. Berkenkotter. 1927. The estimated cost of said additional machinery and equipment was approximately P100. on October 9th of the same year. together with whatever additional equipment acquired with said loan. 1926 (Exhibit E).. the Mabalacat Sugar Co. Villa-Real." On October 5. apparatus. Inc. concur. to advance the necessary amount for the purchase of said machinery and equipment. Hull. MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND FIXTURES. a loan secured by a first mortgage constituted on two parcels and land "with all its buildings. Zaragoza and Araneta for appellees Cu Unjieng e Hijos. Abad Santos..A.: This is an appeal taken by the plaintiff. Green and installed in the sugar central after the execution of the original mortgage deed. 690). Green failed to obtain said loan.A. L-41643 July 31. amplifications. Inc. B.A. Article 1877 of the Civil Code provides as follows.. obtained from the defendants. promising to reimburse him as soon as he could obtain an additional loan from the mortgagees. president of the Mabalacat Sugar Co. improvements..000.750 and said credit of P22. Green having been P25. — . on April 27. decided to increase the capacity of its sugar central by buying additional machinery and equipment...H. applied to Cu Unjieng e Hijos for an additional loan of P75. now existing or that may in the future exist is said lots.000.

) 2. with costs to the appellant.A. finding no error in the appealed judgment. 199 U...A.. subject to the right of the defendants Cu Unjieng e Hijos under the first mortgage. Inc. INCLUSION OR EXCLUSION OF MACHINERY. For the foregoing considerations. and while the mortgage constituted on said sugar central to Cu Unjieng e Hijos remained in force. (2) that the fact that the purchaser of the new machinery and equipment has bound himself to the person supplying him the purchase money to hold them as security for the payment of the latter's credit. the latter became owner of said machinery and equipment. R.. If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.. the fact that B. in lieu of the other of less capacity existing therein. that in case B.. constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon (article 1877. otherwise B.A.. liquid containers. . was not permanent in character inasmuch as B. and to refrain from mortgaging or otherwise encumbering them does not alter the permanent character of the incorporation of said machinery and equipment with the central. only the right of redemption of the vendor Mabalacat Sugar Co. and 1877 of the Civil Code. 110 and 111 of the Mortgage Law. Berkenkotter to hold said machinery and equipment as security for the payment of the latter's credit and to refrain from mortgaging or otherwise encumbering them until Berkenkotter has been fully reimbursed therefor. as a loan. after the incorporation thereof with the mortgaged sugar central. it is affirmed in all its parts. Green. could not have offered them to the plaintiff as security for the payment of his credit. although they may have been placed there after the mortgage was constituted. Wherefore.. of the Civil Code gives the character of real property to "machinery. it is indispensable that the exclusion thereof be stipulated between the contracting parties. are also included. that in a mortgage of real estate. Inc. Green bound himself to the plaintiff B. vs. as essential and principal elements of a sugar central. in proposing to him to advance the money for the purchase thereof. paragraph 5. we are of the opinion and so hold: (1) That the installation of a machinery and equipment in a mortgaged sugar central. does not vest the creditor with ownership of said machinery and equipment but simply with the right of redemption. all objects permanently attached to a mortgaged building or land. with which the decisions of the courts of the United States are in accord. Supreme Court in the matter of Royal Insurance Co. ETC.H.S..A. and (3) that the sale of the machinery and equipment in question by the purchaser who was supplied the purchase money. therefore. in the sugar central with which said machinery and equipment had been incorporated.S. Green. Furthermore. as such president. Green should fail to obtain an additional loan from the defendants Cu Unjieng e Hijos. to the person who supplied the money. liquidator. Inasmuch as the central is permanent in character. was transferred thereby. is not incompatible with the permanent character of the incorporation of said machinery and equipment with the sugar central of the Mabalacat Sugar Co. the improvements on the same are included. without them the sugar central would be unable to function or carry on the industrial purpose for which it was established. buildings. ID. instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry. Exhibit E. when it was stated in the mortgage that the improvements. said machinery and equipment would become security therefor. Upon acquiring the machinery and equipment in question with money obtained as loan from the plaintiffappellant by B. the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent. The appellant contends that the installation of the machinery and equipment claimed by him in the sugar central of the Mabalacat Sugar Company. Ct. 353]. Inc. converted them into real property by reason of their purpose. Green. established by the Civil Code and also by the Mortgage Law.. as nothing could prevent B. ID. it cannot be said that their incorporation therewith was not permanent in character because. So ordered.. for its sugar industry. made it appear in the letter. decision of U. (Arts. for the purpose of carrying out the industrial functions of the latter and increasing production. said B. Miller. and Amadeo [26 Sup. As to the alleged sale of said machinery and equipment to the plaintiff and appellant after they had been permanently incorporated with sugar central of the Mabalacat Sugar Co. and machinery that existed thereon were also comprehended... Inc.. Rep.A. Civil Code). Inc.It is a rule. Article 334.A.. in lieu of another of less capacity. Green binding himself not to mortgage nor encumber them to anybody until said plaintiff be fully reimbursed for the corporation's indebtedness to him.A. — In order that it may be understood that the machinery and other objects placed upon and used in connection with a mortgaged estate are excluded from the mortgage. Green from giving them as security at least under a second mortgage. Inc. 46. as president of the Mabalacat Sugar Co.

appearing in the attached photograph. appearing in the attached photograph. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks. over its authorized lines in the Island of Mindanao. 5. and with these machineries which are placed therein. 3. 1962 MINDANAO BUS COMPANY. marked Annex "B". Case No. appearing in the attached photograph. and (g) D-Engine Waukesha-M-Fuel. a repair shop. (f) Battery charger (Tungar charge machine) appearing in the attached photograph. marked Annex "G". That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks. so petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment. G.400 petitioner's abovementioned equipment. blacksmith and carpentry shops. Davao City and Kibawe. Respondent City Assessor of Cagayan de Oro City assessed at P4. Sabellina for respondents. 4. thru their respective counsels agreed to the following stipulation of facts: 1. It maintains Branch Offices and/or stations at Iligan City. (d) Black and Decker Grinder.respondents. marked Annex "E". . Imperial. L-17870 September 29. In the Court of Tax Appeals the parties submitted the following stipulation of facts: Petitioner and respondents. Binamira. Butte. appearing in the attached photograph. body constructed. 710 holding that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and repair equipment hereunder referred to. Pagadian. and Goddard.R. Lanao. concur. The Board of Tax Appeals of the City sustained the city assessor. 2. J.: This is a petition for the review of the decision of the Court of Tax Appeals in C. Barria and Irabagon for petitioner. its TPU trucks are made. petitioner. JJ. Zamboanga del Sur. collecting rates approved by the Public Service Commission.T. marked Annex "F". marked Annex "C".A. That the machineries sought to be assessed by the respondent as real properties are the following: (a) Hobart Electric Welder Machine. (b) Storm Boring Machine. marked Annex "D".Malcolm.. Vicente E. That petitioner has its main office and shop at Cagayan de Oro City. Bukidnon Province. That these machineries are sitting on cement or wooden platforms as may be seen in the attached photographs which form part of this agreed stipulation of facts. marked Annex "A". LABRADOR. appearing in the attached photograph. vs. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not realty. (c) Lathe machine with motor. No. and same are repaired in a condition to be serviceable in the TPU land transportation business it operates. (e) PEMCO Hydraulic Press. appearing in the attached photograph. THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City.

as essential and principle elements of a sugar central. gives the character of real property to "machinery. converted them into real property by reason of their purpose.1awphîl. cash registers. etc. those movable which become immobilized by destination because they are essential and principal elements in the industry for those which may not be so considered immobilized because they are merely incidental. 521. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code. for these businesses can continue or carry on their functions without these equity comments. and having denied a motion for reconsideration.6. Respondents contend that said equipments. but the delivery trucks and adding machines which they usually own and use and are found within their industrial compounds are merely incidental and retain their movable nature. not essential and principal.) So that movable equipments to be immobilized in contemplation of the law must first be "essential and principal elements" of an industry or works without which such industry or works would be "unable to function or carry on the industrial purpose for which it was established. the Supreme Court said: Article 344 (Now Art. to date.. 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. therefore. by reason of their being intended or destined for use in an industry. — The following are immovable properties: xxx xxx xxx (5) Machinery. are immobilized because they are essential to said industries.. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned assessments are valid." If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co. pressure pumps. etc. are merely incidentals and are not and should not be considered immobilized by destination. jeep-wagons. Similarly. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power to assess and levy real estate taxes on machineries is further restricted by section 31. tho movable. not essential and principle municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks. which are incidentals. 3. and holding that pursuant thereto the movable equipments are taxable realties. and 4. They can be moved around and about in petitioner's repair shop. are immobilized by destination. The Tax Court erred in denying petitioner's motion for reconsideration. That these machineries have never been or were never used as industrial equipments to produce finished products for sale. the tools and equipments in question in this instant case are. (Emphasis ours. without them the sugar central would be unable to function or carry on the industrial purpose for which it was established. though movable in nature. usually found and used in hotels. machineries of breweries used in the manufacture of liquor and soft drinks. receptacles. In the case of B. not essentials.) Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms.nèt The Court of Tax Appeals having sustained the respondent city assessor's ruling. petitioner brought the case to this Court assigning the following errors: 1. 663. They are merely incidentals — acquired as movables and used only for expediency to . 415. it cannot be said that their incorporation therewith was not permanent in character because. and thus retain their movable nature. Berkenkotter vs. (Emphasis ours. Thus. the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent. 2. Airline companies use forklifts. and which tend directly to meet the needs of the said industry or works. Cu Unjieng. typewriters. liquid containers. etc. by their nature. Inasmuch as the central is permanent in character. 415). theaters. On the other hand. and that said tools. restaurants. instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry.. parts and the like offered to the general public indiscriminately for business or commercial purposes for which petitioner has never engaged in. paragraph (5) of the Civil Code. H. nor to repair machineries. Inc. IBM machines. for its sugar and industry. 61 Phil. in lieu of the other of less capacity existing therein." We may here distinguish. equipments or machineries are immovable taxable real properties. paragraph (c) of Republic Act No. in accordance with paragraph 5 of Article 415 of the New Civil Code which provides: Art.

and which tend directly to meet the needs of the said industry or works. (Civil Code of the Phil. barrio of Tigatu. involves the determination of the nature of the properties described in the complaint. CASTILLO and DAVAO LIGHT & POWER CO. Bautista Angelo. the "machinery.. and as a consequence absolved the defendants from the complaint. 415. L-40411 August 7. Cu Unjieng. Paredes. the land upon which the business was conducted belonged to another person.. The law that governs the determination of the question at issue is as follows: Art. Regala... receptacles. defendantsappellees. with costs against the plaintiff. we hold that the equipments in question are not absolutely essential to the petitioner's transportation business. The Davao Saw Mill Co. In the contract of lease between the sawmill company and the owner of the land there appeared the following provision: . vs. before the war. J. took no part. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant. So ordered. the decision subject of the petition for review is hereby set aside and the equipment in question declared not subject to assessment as real estate for the purposes of the real estate tax. G. 1935 DAVAO SAW MILL CO. is the holder of a lumber concession from the Government of the Philippine Islands. therefore. and petitioner's business is not carried on in a building. Said equipments may not.J.R. C. WHEREFORE. plaintiff-appellant.. tenement or on a specified land. Ferrier for appellees.. However. The following are immovable property: xxx xxx xxx (5) Machinery. But in the case at bar the equipments in question are destined only to repair or service the transportation business. as demanded by the law. The trial judge found that those properties were personal in nature. On the land the sawmill company erected a building which housed the machinery used by it.L. No. MALCOLM.W.. Province of Davao. Thus in the case of Berkenkotter vs. Padilla. as petitioner has carried on. Some of the implements thus used were clearly personal property. INC.B.: The issue in this case. J. supra. so said equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil Code. which is not carried on in a building or permanently on a piece of land. Bengzon. liquid containers.) Aside from the element of essentiality the above-quoted provision also requires that the industry or works be carried on in a building or on a piece of land. 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. Without costs. Even without such tools and equipments. It has operated a sawmill in the sitio of Maa. A sawmill would also be installed in a building on land more or less permanently. The transportation business could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to another.. Resuming what we have set forth above. and instruments or implements" are found in a building constructed on the land. Arsenio Suazo and Jose L.facilitate and/or improve its service. the conflict concerning machines which were placed and mounted on foundations of cement. municipality of Davao. without such equipments. Reyes. and the sawing is conducted in the land or building. J. Concepcion and Barrera JJ. concur. Inc. APRONIANO G. as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties on appeal... JJ. its business may be carried on. be deemed real property. Dizon and Makalintal. INC.

wherein the Davao Light & Power Co. and appellees the last mentioned paragraph. instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade of industry. Following the Code Napoleon. also." Numerous illustrations are given in the fifth subdivision of section 335. roads and constructions of all kinds adhering to the soil. but also attributes immovability in some cases to property of a movable nature. Indeed the bidder. is in point.. Article 334. of the Civil Code. "may be immovable either by their own nature or by their destination or the object to which they are applicable. unless such person acted as the agent of the owner. As connecting up with the facts. recapitulating the things which. however not necessary to spend overly must time in the resolution of this appeal on side issues. vessels. however. instruments or implements intended by the owner of the tenements for the industrial or works that they may carry on in any building or upon any land and which tend directly to meet the needs of the said industry or works... proceeded to take possession of the machinery and other properties described in the corresponding certificates of sale executed in its favor by the sheriff of Davao. because of the destination to which it is applied. in the event the party of the second part should leave or abandon the land leased before the time herein stipulated. a writ of execution issued thereon. which was the plaintiff in that action. furnishes the key to such a situation. "Things. It is. moreover. of New Yorkvs. It must further be pointed out that while not conclusive. a judgment was rendered in favor of the plaintiff in that action against the defendant in that action. 518 et seq. paragraphs 1 and 5. 630). In the first place. may be immobilized. buildings. the Porto Rican Code treats as immovable (real) property." says section 334 of the Porto Rican Code. Inc.. xxx xxx xxx 5. real property consists of — 1. it must again be pointed out that the appellant should have registered its protest before or at the time of the sale of this property. it was held that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. whether obiter dicta or not. but intended by a lessee for use in a building erected on the land by the latter to be returned to the lessee on the expiration or abandonment of the lease.. In the opinion written by Chief Justice White. to and inclusive of article 534.. the improvements and buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had expired: Provided. it was in part said: To determine this question involves fixing the nature and character of the property from the point of view of the rights of Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived by them from the execution levied on the machinery placed by the corporation in the plant. and the defendant herein having consummated the sale. a usufructuary. 44 Phil. articles 516. it should further be explained that the Davao Saw Mill Co.) So far as the subject-matter with which we are dealing — machinery placed in the plant — it is plain. was the defendant. the characterization of the property as chattels by the appellant is indicative of intention and impresses upon the property the character determined by the parties. Jaramillo ( [1923]. According to the Code. though in themselves movable. not only land and buildings. has on a number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third persons. In another action.. We entertain no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts. whose knowledge of the Civil Law is well known. but not when so placed by a tenant. all the improvements and buildings introduced and erected by the party of the second part shall pass to the exclusive ownership of the party of the first part without any obligation on its part to pay any amount for said improvements and buildings. both under the provisions of the Porto . Inc. Machinery. Saw. that is. That the machineries and accessories are not included in the improvements which will pass to the party of the first part on the expiration or abandonment of the land leased. In this connection the decision of this court in the case of Standard Oil Co. which is as follows: "Machinery. A similar question arose in Puerto Rico. machinery not intended by the owner of any building or land for use in connection therewith. and on appeal being taken to the United States Supreme Court. or any person having only a temporary right. No third party claim was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein. personal property. One of such persons is the appellee by assignment from the original mortgages.That on the expiration of the period agreed upon. Land. and the properties now in question were levied upon as personalty by the sheriff. was the plaintiff and the Davao." (See also Code Nap. liquid containers. Appellant emphasizes the first paragraph. It is machinery which is involved. Mill Co.. Inc.

Laurent.) Finding no reversible error in the record. The city assessor described the said equipment and machinery in this manner: A gasoline service station is a piece of lot where a building or shed is erected. air compressors and tireflators. This is done to prevent conflagration because gasoline and other combustible oil are very inflammable. AQUINO. (Valdes vs. 225 U. 5. xxx xxx xxx The machinery levied upon by Nevers & Callaghan. The controversial underground tank. water pumps. Central Altagracia [192]. a water tank if there is any is placed in one corner of the lot. This underground tank is connected with a steel pipe to the gasoline pump and the gasoline pump is commonly placed or constructed under the shed. the judgment appealed from will be affirmed. 12. 9. (Demolombe. No. that is. in its gas stations located on leased land.. he could not.: This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. Aubry et Rau. as pointed out by Demolombe. But in the concrete immobilization took place because of the express provisions of the lease under which the Altagracia held. water tanks. Villa-Real. and decisions quoted in Fuzier-Herman ed. and the exercise of that right did not in a legal sense conflict with the claim of Valdes. depository of gasoline or crude oil. upon the fact that one only having a temporary right to the possession or enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing it by an act of immobilization to become the property of another. elevated tank.) The distinction rests. J. 1982 CALTEX (PHILIPPINES) INC. G. No. as regards Nevers & Callaghan. Under such conditions the tenant in putting in the machinery was acting but as the agent of the owner in compliance with the obligations resting upon him. deprived the tenant of any right to charge against the lessor the cost such machinery. petitioner. Code Napoleon under articles 522 et seq. car washer.S. since the lease in substance required the putting in of improved machinery. concur. 447. is dug deep about six feet more or less. car hoists. as the result of his obligations under the lease. movable property. Tit. No. 203.Rican Law and of the Code Napoleon. that which was placed in the plant by the Altagracia Company. that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. It follows that abstractly speaking the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose its character of movable property and become immovable by destination. therefore. truck hoists.R. JJ. a few meters away from the shed. for the purpose of collecting his debt. car hoists are placed in an adjacent shed. proceed separately against. The machines and equipment consists of underground tanks. Tit. elevated water tanks. Butte. computing pumps. Such result would not be accomplished. since as to him the property was a part of the realty which. it follows that they had the right to levy on it under the execution upon the judgment in their favor. and Goddard. by the placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right.. and it was expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner without compensation to the lessee. and the immobilization of the machinery which resulted arose in legal effect from the act of the owner in giving by contract a permanent destination to the machinery. an air compressor is attached in the wall of the shed or at the concrete wall fence. Tit. 2. L-50466 May 31. Imperial. The footing of the . Section 164. being. respondents. p.. CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY. vs. the costs of this instance to be paid by the appellant. gasoline pumps. 58.

It is stipulated in the lease contract that the operators. The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is not correct. a copy of which was received by its lawyer on April 2. the underground gasoline tank. The building or shed. 52. which was composed of Secretary of Finance Cesar Virata as chairman. does not become the owner of the machines and equipment installed therein. denying Caltex's motion for reconsideration. Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment Appeals shall become final and executory after the lapse of fifteen days from the receipt of its decision by the appellant. 464. shall return to Caltex the machines and equipment in good condition as when received. 1125 created the Tax Court in 1954. (pp. On May 2. When Republic act No. for the tenement we consider in this particular case are (is) the pavement covering the entire lot which was constructed by the owner of the gasoline station and the improvement which holds all the properties under question. 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision and for a declaration that t he said machines and equipment are personal property not subject to realty tax (p. the car hoist under a separate shed. The assessor appealed to the Central Board of Assessment Appeals. The Board.. it is clear they are. Section 7(3) of that law in providing that the Tax Court had jurisdiction to review by appeal decisions of provincial or city boards of assessment appeals had in mind the local boards of assessment appeals but not the Central Board of Assessment Appeals which under the Real Property Tax Code has appellate jurisdiction over decisions of the said local boards of assessment appeals and is. The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its resolution of January 12. a petition for reconsideration may be filed. 1974.. The pavement covering the entire lot of the gasoline service station. Rollo). 1978. the recourse resorted to herein by . the only remedy available for seeking a review by this Court of the decision of the Central Board of Assessment Appeals is the special civil action of certiorari. The city board of tax appeals ruled that they are personalty. the air compressor. in the same category as the Tax Court. Rollo). Caltex retains the ownership thereof during the term of the lease. Jr.10 annually (p. 1977 that the said machines and equipment are real property within the meaning of sections 3(k) & (m) and 38 of the Real Property Tax Code. the elevated water tank. equipments and apparatus are allowed by Caltex (Philippines) Inc. The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease agreement or receipt. then to the electric motor which electric motor is placed under the shed. So to say that the gasoline pumps. Rollo).541. Acting Secretary of Justice Catalino Macaraig. ordinary wear and tear excepted. so with the water tank it is connected also by a steel pipe to the pavement. . 1979. Presidential Decree No. upon demand. The lessor of the land. they are attached and affixed to the pavement and to the improvement. as well as all the improvements. and Secretary of Local Government and Community Development Jose Roño. which took effect on June 1. Consequently. concrete fence and pavement and the lot where they are all placed or erected. Within that fifteen-day period. held in its decision of June 3. and evidence that the gasoline underground tank is attached and connected to the shed or building through the pipe to the pump and the pump is attached and affixed to the cement pad and pavement covered by the roof of the building or shed. 58-60. The Code does not provide for the review of the Board's decision by this Court. water pumps and underground tanks are outside of the service station. therefore.pump is a cement pad and this cement pad is imbedded in the pavement under the shed. machines. The underground gasoline tank is attached to the shed by the steel pipe to the pump. and to consider only the building as the service station is grossly erroneous. As to whether the subject properties are attached and affixed to the tenement. The realty tax on said equipment amounts to P4. there was as yet no Central Board of Assessment Appeals. and that the definitions of real property and personal property in articles 415 and 416 of the Civil Code are not applicable to this case. The city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable realty. all of them used in the pursuance of the gasoline service station business formed the entire gasoline servicestation. where the gas station is located. neon lights signboard. 16.

mechanical contrivances. as well as the installations and appurtenant service facilities. In the Davao Saw Mills case the question was whether the machinery mounted on foundations of cement and installed by the lessee on leased land should be regarded as real property forpurposes of execution of a judgment against the lessee. "It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property" (Standard Oil Co. cities and municipalities an annual ad valorem tax on real property. including land. beauty or utility or to adapt it for new or further purposes. The steel towers were considered personalty because they were attached to square metal frames by means of bolts and could be moved from place to place when unscrewed and dismantled. Castillo. together with all other equipment designed for or essential to its manufacturing. of New York vs. Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant but not when so placed by a tenant. machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.— There shall be levied. Inc. costing labor or capital and intended to enhance its value. 3[f]. Notes 40 and 41). Court of Appeals. and other improvements" not specifically exempted in section 3 thereof.Caltex (Philippines). vs. and which have been attached or affixed permanently to the gas station site or embedded therein. are taxable improvements and machinery within the meaning of the Assessment Law and the Real Property Tax Code. a usufructuary. the questioned decision and resolution of the Central Board of Assessment Appeals are . 38. amounting to more than mere repairs or replacement of waste. where in a replevin case machinery was treated as realty). This case is also easily distinguishable from Board of Assessment Appeals vs. WHEREFORE. 119 Phil.J. 501). buildings. unless such person acted as the agent of the owner (Davao Saw Mill Co. for without them the gas station would be useless. Section 2 of the Assessment Law provides that the realty tax is due "on real property. appliances and apparatus attached to the real estate.. instruments. 96 Phil. 630. m) Machinery — shall embrace machines. buildings. 181-2.S. as appurtenances to the gas station building or shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station. City Assessor. This Court sustained the sheriff's action. the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas station and pavement (which are indubitably taxable realty) should be subject to the realty tax. Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair shop of a bus company which were held to be personal property not subject to realty tax (Mindanao Bus Co. (Compare with Machinery & Engineering Supplies. This provision is reproduced with some modification in the Real Property Tax Code which provides: SEC. Assessment Law). 44 Phil. The Code contains the following definitions in its section 3: k) Improvements — is a valuable addition made to property or an amelioration in its condition. This question is different from the issue raised in the Davao Saw Mill case. That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes real property by destination. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code. industrial or agricultural purposes (See sec. Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty (84 C. such as land. 633). The issue is whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax. assessed and collected in all provinces. where Meralco's steel towers were considered poles within the meaning of paragraph 9 of its franchise which exempts its poles from taxation. Here. The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city assessor's is imposition of the realty tax on Caltex's gas station and equipment. vs. The sheriff treated the machinery as personal property. Incidence of Real Property Tax. machinery. 70. It includes the physical facilities available for production. Inc. Manila Electric Co. 116 Phil. vs. 328. We hold that the said equipment and machinery. Jaramillo. 61 Phil 709). or any person having only a temporary right.

00.290. issued by the Assessor of Olongapo City with an assessed value of P35. 720. This building is the only improvement of the lot.00. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in favor of petitioner bank are null and void. containing an area of 465 sq. A 2-STOREY. Court of First Instance of Zambales and Olongapo City. Hon. Ardoin Street EAST: By 37 Canda Street. sheets. Magcale and Teodula Baluyut Magcale secured a loan in the sum of P70. and Abad Santos. To secure payment of this loan. took no part. cylindrical monuments of the Bureau of Lands as visible limits.: This is a petition for review on certiorari of the November 13. FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE. Olongapo City. No. JJ. respondents. 1987 PRUDENTIAL BANK. concur. PARAS. 1971.000.. Jr. Guerrero.affirmed. De Castro and Escolin. . 2.R. SO ORDERED. East Bajac-Bajac. " also Exhibit "1" for defendant). i. ( Exhibit "A.. Ardoin Street SOUTH: By No. on November 19. g. as follows: A first class residential land Identffied as Lot No. more or less. L-50008 August 31. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above property is erected.860. Magcale and Teodula Baluyut-Magcale vs.. 2. G. and WEST: By Ardoin Street. 21109. declared and assessed in the name of FERNANDO MAGCALE under Tax Duration No. vs. and more particularly described and bounded. Barredo (Chairman). Concepcion. plaintiffs-spouses Fernando A. PANIS. m. plaintiffs executed in favor of defendant on the aforesaid date a deed of Real Estate Mortgage over the following described properties: l. more or less. The undisputed facts of this case by stipulation of the parties are as follows: .. Presiding Judge of Branch III. 2443-0 entitled "Spouses Fernando A. (Ts-308. residential building with warehouse spaces containing a total floor area of 263 sq. under a roofing of cor. All corners of the lot marked by conc. Olongapo Townsite Subdivision) Ardoin Street. 6. 1978 Decision * of the then Court of First Instance of Zambales and Olongapo City in Civil Case No. petitioner. 19595 issued by the Assessor of Olongapo City with an assessed value of P1.00 from the defendant Prudential Bank. JJ. bounded on the NORTH: By No. generally constructed of mixed hard wood and concrete materials. declared and assessed in the name of FERNANDO MAGCALE under Tax Declaration No. SEMI-CONCRETE. The petition for certiorari is dismissed for lack of merit. meters. Ramon Y. HONORABLE DOMINGO D. No costs. J.

which order was complied with the Resolution dated May 18. resolved to require the respondents to comment (Ibid. 54-62). possessory rights over which were mortgaged to defendant Prudential Bank.. 1972. and upon application of said defendant. petitioner filed its Memorandum (Ibid. 1979 (Ibid. on May 2. 1979.. On the basis of the aforesaid Patent. Rollo. 1973. the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is cancelled. in a Decision dated November 3.1973. (Ibid. 101-112). 1978. pp. 63). the petition was given due course and the parties were required to submit simultaneously their respective memoranda. the Motion for Reconsideration was denied for lack of merit. 41-53)..1979 (Ibid... 114). and in an Order dated January 10. pp.. p. On May 2.Apart from the stipulations in the printed portion of the aforestated deed of mortgage. petitioner filed its Reply on June 2. in a Resolution dated March 9. Thereafter. 1979. p." also Exhibit "2" for defendant). for the defendant City Sheriff to desist from going with the scheduled public auction sale (Exhibit "D"). On April 24.00. on May 15. as follows: AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or issued by the Bureau of Lands." (Decision. 35). Consequent to the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant City Sheriff on April 12. . petitioner filed a Motion for Reconsideration (Ibid. this time in Olongapo City. P. 4776 over the parcel of land. The auction sale aforesaid was held despite written request from plaintiffs through counsel dated March 29. 65). 100). the instant petition (Ibid. 1973. (Ibid. 29-31).. Original Certificate of Title No. 1979 (Ibid. 1979. From the aforequoted stipulation. 1978. To secure payment of this additional loan. p.. 158). there appears a rider typed at the bottom of the reverse side of the document under the lists of the properties mortgaged which reads. pp. shall be released in favor of the herein Mortgage.000. or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources. 1979. pp. p.. 1971. this case was considered submitted for decision (Ibid. In a Resolution dated August 10. were mortgaged to it. 1979 (Ibid. 5-28). and upon its transcription in the Registration Book of the Province of Zambales.1979. Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of Zambales on November 23. Respondent Court. while private respondents filed their Memorandum on August 1. pp. possessory rights over which. by the Ex-Oficio Register of Deeds of Zambales. plaintiffs executed in favor of the said defendant another deed of Real Estate Mortgage over the same properties previously mortgaged in Exhibit "A. opposed by private respondents on January 5.. This second deed of Real Estate Mortgage was likewise registered with the Registry of Deeds. The first Division of this Court. On July 18. p. in favor of plaintiffs. On December 14. pp. the Secretary of Agriculture issued Miscellaneous Sales Patent No. 1978 declared the deeds of Real Estate Mortgage as null and void (Ibid. P-2554 was issued in the name of Plaintiff Fernando Magcale. in the Resolution dated June 13. Civil Case No." (Exhibit "B. 2443-0. the deeds of Real Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed. 116-144). plaintiffs secured an additional loan from defendant Prudential Bank in the sum of P20. it is obvious that the mortgagee (defendant Prudential Bank) was at the outset aware of the fact that the mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot. which title with annotation. 1978 (Exhibit "E").. Hence. pp.. For failure of plaintiffs to pay their obligation to defendant Bank after it became due. 146-155).

Thus. an event which takes effect only on the issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc. May 30. despite its reference to encumbrance or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does not mention anything regarding the improvements existing thereon. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF MISCELLANEOUS SALES PATENT NO.. De Leon. 120. Iya. 122 and 124 of the Public Land Act and Section 2 of Republic Act 730. 2554 was issued in the name of private respondent Fernando Magcale on May 15. it is evident that the mortgage executed by private respondent on his own building which was erected on the land belonging to the government is to all intents and purposes a valid mortgage. we apply our earlier rulings because we believe that as in pari delicto may not be invoked to defeat the policy of the State neither may the doctrine of .. The answer is in the affirmative. Coming back to the case at bar. 1973 for an additional loan of P20. Such a mortgage would be still a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land (Leung Yee vs. Meer. falls squarely under the prohibitions stated in Sections 121. 1958. et al. L-14702. P-2554 ON MAY 15. Likewise. 28. Relative thereto..1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. AND 2. buildings. This petition is impressed with merit. Nonetheless. Jurado. 96 Phil. "it is obvious that the inclusion of "building" separate and distinct from the land. In the same manner. Petitioner points out that private respondents. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID. p. 110 Phil. this Court ruled that. 122). Director of Lands vs. Associated Inc. and is therefore null and void. vs. (Memorandum for Petitioner.. Marcos. In the enumeration of properties under Article 415 of the Civil Code of the Philippines. 1961. as aforestated that the original mortgage deed on the 2-storey semi-concrete residential building with warehouse and on the right of occupancy on the lot where the building was erected. 644). P-2554. after physically possessing the title for five years. It is therefore without question that the original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land. 28." (Lopez vs. may be validly transferred or conveyed as in a deed of mortgage (Vda. 1972. 49).. Director of Lands vs. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. Miscellaneous Sales Patent No. Strong Machinery Co. 122 and 124 of the Public Land Act.. Inc. As to restrictions expressly mentioned on the face of respondents' OCT No. 1971. has held: . refer to land already acquired under the Public Land Act. in the absence of stipulation of the improvements thereon. Rollo. 4776 ON APRIL 24.1958). 37 Phil. voluntarily surrendered the same to the bank in 1977 in order that the mortgaged may be annotated. the Court. while it is true that a mortgage of land necessarily includes. L-10837-38. But it is a different matter. and Surety Co. 3 SCRA 438 [1961]). Feb. 122 and 123 of Commonwealth Act 141.00 which was registered with the Registry of Deeds of Olongapo City on the same date. p. still a building by itself may be mortgaged apart from the land on which it has been built. 1972 UNDER ACT NO. Pena "Law on Natural Resources". it is evident that such mortgage executed after the issuance of the sales patent and of the Original Certificate of Title. May 23. vs. 515. in said provision of law can only mean that a building is by itself an immovable property. petitioner raised the following issues: 1. thereby implicitly authorizing Prudential Bank to cause the annotation of said mortgage on their title. it will be noted that Sections 121. without requiring the bank to get the prior approval of the Ministry of Natural Resources beforehand. in recently ruling on violations of Section 124 which refers to Sections 118. this Court has also established that possessory rights over said properties before title is vested on the grantee. also a restriction appearing on the face of private respondent's title has likewise no application in the instant case. L10817-18. However.In its Memorandum. as regards the second mortgage executed over the same properties on May 2. the records show. on the basis of which OCT No. 4776 on the land was issued on April 24. 1971 and registered under the provisions of Act 3344 with the Register of Deeds of Zambales on November 23.000. Under the foregoing considerations. de Bautista vs. 730. Jr. 1972. Orosa. was executed on November 19. The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another. et al. or any improvement thereon and therefore have no application to the assailed mortgage in the case at bar which was executed before such eventuality. Section 2 of Republic Act No..

J. Inc. the appeal was dismissed mainly on the ground of the petitioner's "failure to pay the realty taxes that fell due during the pendency of the appeal. The assessment was appealed to the Board of Assessment Appeals of the Province of Zambales. No. In its decision dated March 22. concur. It has been imposed on the petitioner's tailings dam and the land thereunder over its protest.00. PROVINCIAL ASSESSOR OF ZAMBALES.estoppel give a validating effect to a void contract. (P. validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19 Am. pp. Cruz and Gancayco.. the Board reversed the dismissal of the appeal but. private respondents themselves declare that they are not denying the legitimacy of their debts and appear to be open to new negotiations under the law (Comment. (Arsenal vs.. J. Sayoc & De los Angeles for petitioner. 802).00 is valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20. JJ. the decision of the Court of First Instance of Zambales & Olongapo City is hereby MODIFIED. PROVINCE OF ZAMBALES.. Any new transaction.. 1993 BENGUET CORPORATION. Indeed. It is not within the competence of any citizen to barter away what public policy by law was to preserve (Gonzalo Puyat & Sons.304.: The realty tax assessment involved in this case amounts to P11. 1990. respondents. PREMISES CONSIDERED. 106041 January 29. BOARD OF ASSESSMENT APPEALS OF ZAMBALES. Romulo. It is a construction adhered to the soil which cannot be separated or detached without breaking the material or causing destruction on the land upon which it is attached. vs. SO ORDERED. agreed that "the tailings dam and the lands submerged thereunder (were) subject to realty tax. would be subject to whatever steps the Government may take for the reversion of the land in its favor.319. 95-96). and MUNICIPALITY OF SAN MARCELINO. Panis. Jur. De los Amas and Alino supra).D. Rollo.R.000. Teehankee.00 is null and void. IAC. on the merits. CENTRAL BOARD OF ASSESSMENT APPEALS. Buenaventura. The immovable nature of the dam as an improvement determines its character as real property. 1 one of the herein respondents. 143 SCRA 54 [1986]). It should not preclude new contracts that may be entered into between petitioner bank and private respondents that are in accordance with the requirements of the law." The petitioner seasonably elevated the matter to the Central Board of Assessment Appeals. Narvasa. Mabanta. . without prejudice to any appropriate action the Government may take against private respondents. Footnotes * Penned by Judge Domingo D. vs." For purposes of taxation the dam is considered as real property as it comes within the object mentioned in paragraphs (a) and (b) of Article 415 of the New Civil Code. 464). CRUZ. . This pronouncement covers only the previous transaction already alluded to and does not pass upon any new contract between the parties (Ibid). G. as in the case at bar. On August 24. hence taxable under Section 38 of the Real Property Tax Code.000. it is generally considered that as between parties to a contract. C. The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said properties as taxable improvements. declaring that the Deed of Real Estate Mortgage for P70. After all. petitioner. 1988. however.

however. by itself it cannot be considered an improvement separately assessable. and (3) as regards the petitioner's liability for penalties for non-declaration of the tailings dam and the submerged lands for realty tax purposes: (a) that where a tax is not paid in an honest belief that it is not due.e. that the P50. we find no cause to disturb the market value applied by Respondent Appellee Provincial Assessor of Zambales on the properties of PetitionerAppellant Benguet Corporation covered by Tax Declaration Nos. This petition for certiorari now seeks to reverse the above ruling. Hence. this Board cannot accede to the request for tax exemption in the absence of a law authorizing the same. to be in accordance with the Schedule of Market Values for Zambales which was reviewed and allowed for use by the Ministry (Department) of Finance in the 1981-1982 general revision. (c) that at the end of the mining operation of the petitioner corporation in the area. (b) that the valuation of the tailings dam should be based on its incidental use by petitioner as a water reservoir and not on the alleged cost of construction of the dam and the annual build-up expense. More particularly. The petitioner does not dispute that the tailings dam may be considered realty within the meaning of Article 415.. The principal contention of the petitioner is that the tailings dam is not subject to realty tax because it is not an "improvement" upon the land within the meaning of the Real Property Tax Code. 002-0260 and 002-0266. (f) that the installation and utilization of the tailings dam as a pollution control device is a requirement imposed by law. .Although the dam is partly used as an anti-pollution device. (e) that the tailings dam is an environmental pollution control device for which petitioner must be commended rather than penalized with a realty tax assessment. (d) that the building of the dam has stripped the property of any commercial value as the property is submerged under water wastes from the mine. (c) that the "residual value formula" used by the Provincial Assessor and adopted by respondent CBAA is arbitrary and erroneous. no penalty shall be collected in addition to the basic tax. It insists. covered by Tax Declaration Nos. it is claimed — (1) as regards the tailings dam as an "improvement": (a) that the tailings dam has no value separate from and independent of the mine. the tailings dam will benefit the local community by serving as an irrigation facility. (2) as regards the valuation of the tailings dam and the submerged lands: (a) that the subject properties have no market value as they cannot be sold independently of the mine. No serious attempt was made by PetitionerAppellant Benguet Corporation to impugn its reasonableness. (b) that no other mining companies in the Philippines operating a tailings dam have been made to declare the dam for realty tax purposes. (b) that it is an integral part of the mine. hence. i. 002-0260 and 0020266. xxx xxx xxx We find the appraisal on the land submerged as a result of the construction of the tailings dam. that the dam cannot be subjected to realty tax as a separate and independent property because it does not constitute an "assessable improvement" on the mine although a considerable sum may have been spent in constructing and maintaining it.00 per square meter applied by Respondent-Appellee Provincial Assessor is indeed excessive and unconscionable.

It is also duty bound to allow the free use of forest products within the concession for the personal use of individuals residing in or within the vicinity of the land. are taxable improvements and machinery within the meaning of the Assessment Law and the Real Property Tax Code. where this Court considered the dikes and gates constructed by the taxpayer in connection with a fishpond operation as integral parts of the fishpond. enhancing its utility and rendering it useful to the oil industry. while the road was constructed by appellee primarily for its use and benefit. 963). 114 SCRA 273). the privilege is not exclusive.] Inc. . (Flax-Pond Water Co. We hold that while the two storage tanks are not embedded in the land. nevertheless. Santos (105 Phil. City of Lynn. (MERALCO Securities Industrial Corp. Hixon (164 Pacific 498). . also from the United States. the realty tax was not imposed not because the road was an integral part of the lumber concession but because the government had the right to use the road to promote its varied activities. Provincial Government of Surigao (100 Phil. an American case. There is also ample jurisprudence to support this view. 470. it cannot be disputed that the ownership of the road that was constructed by appellee belongs to the government by right of accession not only because it is inherently incorporated or attached to the timber land . It is undeniable that the two tanks have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by MERALCO for its operations. 2. It was held that: Whatever value they have is connected with and in fact is an integral part of the mine itself. Kendrick v. it is clear that the same cannot be the subject of assessment within the meaning of Section 2 of C. v. Just as much so as any shaft which descends into the earth or an underground incline. . It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline. where this Court did not impose a realty tax on the road primarily for two reasons: In the first place. although in part is for its benefit. . The primary function of the dam is to receive. (Caltex [Phil. appellee cannot prevent the use of portions of the concession for homesteading purposes. Since. (Manila Electric Co. Bislig Bay Lumber Co. involving a road constructed by the timber concessionaire in the area. Municipality of Cotabato v. 742). On the other hand. In other words. 3. which is then recycled for use in the plant. . v. This case involved drain tunnels constructed by plaintiff when it expanded its mining operations downward. where it was declared that the reservoir dam went with and formed part of the reservoir and that the dam would be "worthless and useless except in connection with the outlet canal. CBAA. as appurtenances to the gas station building or shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station. the petitioner cites the following cases: 1. . In the second place. the road in question cannot be considered as an improvement which belongs to appellee. the government has practically reserved the rights to use the road to promote its varied activities.E. but also because upon the expiration of the concession said road would ultimately pass to the national government. the Solicitor General argues that the dam is an assessable improvement because it enhances the value and utility of the mine. resulting in a constantly increasing flow of water in the said mine. The said equipment and machinery. tunnel.To support its theory. . retain and hold the water coming from the operations of the mine. CBAA. 16 N. . The pipeline system in question is indubitably a construction adhering to the soil. 114 SCRA 296). . . Twin Lakes Reservoir Co." 4.A. (144 Pacific 884). v. Ontario Silver Mining Co. 303). and it also enables the petitioner to impound water. v. or drift would be which was used in connection with the mine. thus: . 114 SCRA 261). for without them the gas station would be useless and which have been attached or affixed permanently to the gas station site or embedded therein. Apparently. be considered as improvements on the land. No. . . The tax upon the dam was properly assessed to the plaintiff as a tax upon real estate. and the water rights in the reservoir represent and include whatever utility or value there is in the dam and headgates. for . they may. v. as above shown. CBAA. v. .

Curiously. Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property Tax Code defines improvement as follows: (k) Improvements — is a valuable addition made to property or an amelioration in its condition. buildings. even if the petitioner's mine is shut down or ceases operation. and that for such reasons they were properly assessed by the respondent taxing district as improvements. it would appear that whether a structure constitutes an improvement so as to partake of the status of realty would depend upon the degree of permanence intended in its construction and use. 415. such as lands. the Kendrick case is also not applicable because it involved water reservoir dams used for different purposes and for the benefit of the surrounding areas. Atlantic City. From the definitions and the cases cited above. The term has also been interpreted as "artificial alterations of the physical condition of the ground that arereasonably permanent in character. And as the petitioner itself points out.A. which were indispensable to the successful development and extraction of the minerals therein. machinery and other improvements" not specifically exempted in Section 3 thereof. the petitioner can now impound and recycle water without having to spend for the building of a water reservoir. The Court is convinced that the subject dam falls within the definition of an "improvement" because it is permanent in character and it enhances both the value and utility of petitioner's mine. otherwise known as the Assessment Law. in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object.The oil tanks are structures within the statute. In fact. just as vigorously contends that at the end of the mining operation the tailings dam will serve the local community as an irrigation facility. the pertinent portions of which state: Art. provides that the realty tax is due "on the real property. By contrast. the petitioner's mining operation can still be carried out because the primary function of the dam is merely to receive and retain the wastes and water coming from the mine. including land. There is no allegation that the water coming from the dam is the sole source of water for the mining operation so as to make the dam an integral part of the mine. As correctly observed by the CBAA. thereby implying that it can exist independently of the mine. machinery and other improvements affixed or attached to real property. 271) The Real Property Tax Code does not carry a definition of "real property" and simply says that the realty tax is imposed on "real property. Moreover. the petitioner. as a result of the construction of the dam. The following are immovable property. the immovable nature of the dam defines its character as real property under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the Real Property Tax Code." In the absence of such a definition. beauty or utility or to adopt it for new or further purposes. the dam may still be used for irrigation of the surrounding areas. Even without the tailings dam. 470. costing labor or capital and intended to enhance its value.00 per square meter made by the Provincial Assessor is excessive and that his use of the "residual value formula" is arbitrary and . This is not true in the present case. the tailings dam in question is being used exclusively for the benefit of the petitioner. while vigorously arguing that the tailings dam has no separate existence. The expression "permanent" as applied to an improvement does not imply that the improvement must be used perpetually but only until the purpose to which the principal realty is devoted has been accomplished. buildings. buildings and constructions of all kinds adhered to the soil. 15 A 2d. It is sufficient that the improvement is intended to remain as long as the land to which it is annexed is still used for the said purpose. A reading of that section shows that the tailings dam of the petitioner does not fall under any of the classes of exempt real properties therein enumerated. The Court will also reject the contention that the appraisal at P50. (1) Lands. (Standard Oil Co. No. again unlike in the Ontario case." 2 The Court notes that in the Ontario case the plaintiff admitted that the mine involved therein could not be operated without the aid of the drain tunnels. of New Jersey v. that they are designed and used by the owner as permanent improvement of the free hold. amounting to more than mere repairs or replacement of waste. xxx xxx xxx (3) Everything attached to an immovable in a fixed manner. Section 2 of C. we apply Article 415 of the Civil Code.

JJ. Bidin.00 per square meter applied by Respondent-Appellee Provincial Assessor is indeed excessive and unconscionable. J. it will then be covered by another dike or stage. 274.. 2 Francisco. Zambales. the petition is DISMISSED for failure to show that the questioned decision of respondent Central Board of Assessment Appeals is tainted with grave abuse of discretion except as to the imposition of penalties upon the petitioner which is hereby SET ASIDE.e. It is clear that it has not done so for the purpose of evading or delaying the payment of the questioned tax. the stage covered is still there and still exists and since only one face of the dike is filled. 002-0260 and 0020266. Jr. The only exception to this rule is where it is clearly shown that the administrative body has committed grave abuse of discretion calling for the intervention of this Court in the exercise of its own powers of review. Davide. It is so ordered. Jr.erroneous. covered by Tax Declaration Nos. We disagree. which is fifty (50. Griño-Aquino. p. however. # Footnotes 1 Secretary of Finance Jesus Estanislao as chairman with Secretary of Justice Franklin M. Costs against the petitioner..00) pesos per square meter for third class industrial land (TSN. took no part. Hence.. 002-0260 and 002-0266. Padilla. has developed expertise in the resolution of assessment problems. 2nd Ed. Hence." There is no need for this time-wasting procedure. Santos as members. . The CBAA held that this "is an entirely new matter that petitioner can take up with the Provincial Assessor (and) can be the subject of another protest before the Local Board or a negotiation with the local sanggunian .. we find no cause to disturb the market value applied by Respondent-Appellee Provincial Assessor of Zambales on the properties of PetitionerAppellant Benguet Corporation covered by Tax Declaration Nos. Nocon. i. Drilon and Secretary of Local Government Luis T. Romero. that the P50. which. Feliciano. Respondent Provincial Assessor explained the use of the "residual value formula" as follows: A 50% residual value is applied in the computation because. . we hold that the petitioner is not subject to penalty for its non-declaration of the tailings dam and the submerged lands for realty tax purposes. concur. while it is true that when slime fills the dike. Narvasa.. No serious attempt was made by Petitioner-Appellant Benguet Corporation to impugn its reasonableness. the CBAA gave the following justification: We find the appraisal on the land submerged as a result of the construction of the tailings dam.. 50% or the other face is unutilized. to be in accordance with the Schedule of Market Values for San Marcelino. because of the nature of its functions and its frequent exercise thereof.. page 17. Regalado. Jr.. which was raised by the petitioner for the first time only on appeal. It has been the long-standing policy of this Court to respect the conclusions of quasi-judicial agencies like the CBAA. Melo and Campos. The Court may resolve the issue in this petition instead of referring it back to the local authorities. July 5. We have studied the facts and circumstances of this case as above discussed and find that the petitioner has acted in good faith in questioning the assessment on the tailings dam and the land submerged thereunder. and in case of an adverse decision by either the Local Board or the local sanggunian. Vol. In sustaining this formula. There is no such showing in the case at bar. Philippine Mining Law. 1. 1989) and Schedule of Market Values for Zambales which was reviewed and allowed for use by the Ministry (Department) of Finance in the 1981-1982 general revision. WHEREFORE. . (it can) elevate the same to this Board for appropriate action. Bellosillo.J. Gutierrez. C. with the ruling of respondent CBAA that it cannot take cognizance of the issue of the propriety of the penalties imposed upon it.

1998. petitioners filed a motion for special protective order (Annex ‘C’). they went to [the CA] via an original action for certiorari. 1998 is hereby LIFTED. GOQUIOLAY. the sheriff proceeded to petitioner’s factory. “On March 24. 1998 Order. praying for a directive for the sheriff to defer enforcement of the writ of replevin. “On March 25. petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil Code. the parties’ agreement to the contrary notwithstanding. respondent judge issued a writ of replevin (Annex ‘B’) directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. J. “On April 7. They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the contracts in which the alleged agreement [were] embodied [were] totally sham and farcical. Rizal and to return to their original place whatever immobilized machineries or equipments he may have removed.”[9] The Facts The undisputed facts are summarized by the Court of Appeals as follows:[10] “On February 13. praying that the deputy sheriff be enjoined “from seizing immobilized or other real properties in (petitioners’) factory in Cainta. The writ of preliminary injunction issued on June 15.” Ruling of the Court of Appeals Citing the Agreement of the parties.[7] The March 18. petitioners. It also ruled that the “words of . PCI LEASING AND FINANCE.”[4] In its February 18. the assailed Order dated February 18. 1999 Decision[1] of the Court of Appeals (CA)[2] in CA-GR SP No. They argued that to give effect to the agreement would be prejudicial to innocent third parties. “On April 6. 1998 in Civil Case No. and SERGIO T.R.. INC. such property is a proper subject of a writ of replevin obtained by the other contracting party. No. 1999 Resolution[3] denying reconsideration.G. Inc. 1998 and Resolution dated March 31. (“PCI Leasing” for short) filed with the RTC-QC a complaint for [a] sum of money (Annex ‘E’). in implementation of said writ. August 22. The decretal portion of the CA Decision reads as follows: “WHEREFORE. not owned. 137705. “On March 6. the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties. on the ground that the properties [were] still personal and therefore still subject to seizure and a writ of replevin. 1998 Resolution[8] denied petitioners’ Motion for Special Protective Order. 1998. 1998. the appellate court held that the subject machines were personal property. invoking the power of the court to control the conduct of its officers and amend and control its processes.. but was prevented by the workers from taking the rest. 1998.: After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable. Q-98-33500. Hence. vs. premises considered. by petitioners. respondent PCI Leasing and Finance. 1998. PANGANIBAN. respondent. The Case Before us is a Petition for Review on Certiorari assailing the January 6. “This motion was opposed by PCI Leasing (Annex ‘F’). 47332 and its February 26. with an application for a writ of replevin docketed as Civil Case No. 1998. INC. seized one machinery with [the] word that he [would] return for the other machineries. upon an ex-parte application of PCI Leasing. Q-98-33500 are hereby AFFIRMED.[5] the Regional Trial Court (RTC) of Quezon City (Branch 218)[6] issued a Writ of Seizure. and that they had only been leased. a party is estopped from subsequently claiming otherwise. He was able to take two more. 2000 SERG’S PRODUCTS. “In their Reply.

.... receptacles.. This conclusion finds support in the very title of the Petition...”[12] In the main...[11] The Issues In their Memorandum..... 3. the Court deems it proper to remove. militate against a contrary characterization.x x x” In the present case. this Petition.. 415... As a preliminary matter... they were essential and principal elements of their chocolate-making industry.. the Court will resolve whether the said machines are personal.......... Preliminary Matter:Procedural Questions Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65 of the Rules of Court. because they were in fact real property.. Serious policy considerations.. and which tend directly to meet the needs of the said industry or works. ...... and [its] validity is attacked by the other – a matter x x x which respondent court is in the best position to determine.............. In this light.. There is no question that the present recourse is under Rule 45. It further alleges that the Petition erroneously impleaded Judge Hilario Laqui as respondent. petitioners submit the following issues for our consideration: “A..” it ruled that he “should have realized the import of the document he signed... necessitating presentation of evidence by both parties.....x x x. which is “Petition for Review on Certiorari. Whether or not the contract between the parties is a loan or a lease.... the Court will also address briefly the procedural points raised by respondent.”[13] While Judge Laqui should not have been impleaded as a respondent..... Article 415 of the Civil Code enumerates immovable or real property as follows: “ART........ although each of them was movable or personal property on its own.. Order.” Observing that Petitioner Goquiolay was an experienced businessman who was “not unfamiliar with the ways of the trade...[15] Section 3 thereof reads: “SEC. to accord merit to this petition would be to preempt the trial court in ruling upon the case below.... The contract is being enforced by one. The issues raised herein are proper subjects of a full-blown trial. since the merits of the whole matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of the [RTC] in issuing the assailed Order and Resolution. not immovable... Hence... Indisputably......[14] substantial justice requires that such lapse by itself should not warrant the dismissal of the present Petition......... Main Issue: Nature of the Subject Machinery Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC...Upon the filing of such affidavit and approval of the bond. they argue....x x x (5) Machinery....... 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. the court shall issue an order and the corresponding writ of replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody......” Hence. Whether or not the machineries purchased and imported by SERG’S became real property by virtue of immobilization. Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.. The following are immovable property: x x x.the contract are clear and leave no doubt upon the true intention of the contracting parties....... motu proprio..” On the other hand...x x x.. The Court’s Ruling The Petition is not meritorious..... B...... -.. property which may be a proper subject of a writ of replevin....” The CA further held: “Furthermore.. the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land... the name of Judge Laqui from the caption of the present case. x x x.....

[23] In any event. there is no showing that any specific third party would be adversely affected. A resolution of these questions.1 of the Agreement reads as follows:[21] “12.[26] These arguments are unconvincing. not personal.”[25] In their Reply to respondent’s Comment. while the parties are bound by the Agreement. Hence. intended to treat the same as such. personal property notwithstanding that the PROPERTY or any part thereof may now be. the Court noted that the remedy of defendants under Rule 60 was either to post a counter-bond or to question the sufficiency of the plaintiff’s bond. They were not allowed. is effectively a resolution of the merits of the case. Validity of the Lease Agreement In their Memorandum. they are proper subjects of the Writ of Seizure. the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor. and shall at all times be and remain. Indeed. the Lease Agreement clearly provides that the machines in question are to be considered as personal property. yet by ceding.[24] Submitting documents supposedly showing that they own the subject machines. or permanently resting upon. there is absolutely no reason why a machinery. Pertinent portions of the Court’s ruling are reproduced hereunder: “x x x. The Court ruled: “In other words. may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby. Section 12. that our holding -. was a proper subject of a writ of replevin because it was treated as personal property in a contract.that the machines should be deemed personal property pursuant to the Lease Agreement – is good only insofar as the contracting parties are concerned. petitioners are correct in arguing that the said machines are real. It should be stressed. selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel. Under the circumstances. The validity and the nature of the contract are the lis mota of the civil action pending before the RTC. The Court ruled: “x x x.”[16] In that sense. however. a party to a contract is ordinarily precluded from denying the truth of any material fact found therein. in any manner affixed or attached to or embedded in.[27] the Court explained that the policy under Rule 60 was that questions involving title to the subject property – questions which petitioners are now raising -. petitioners contend that the Agreement is a loan and not a lease. or at least. as .should be determined in the trial.[19] the Court upheld the intention of the parties to treat a house as a personal property because it had been made the subject of a chattel mortgage. they further allege that the Agreement is invalid.[17] Be that as it may. or hereafter become. therefore.1 The PROPERTY is. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage. petitioners are estopped from denying the characterization of the subject machines as personal property. Specifically. they should be threshed out in the trial. or attached in any manner to what is permanent. petitioners also argue in their Petition that the Agreement suffers from “intrinsic ambiguity which places in serious doubt the intention of the parties and the validity of the lease agreement itself. third persons acting in good faith are not affected by its stipulation characterizing the subject machinery as personal.” Applying Tumalad. CA. so that they should not now be allowed to make an inconsistent stand by claiming otherwise. Hence.[18] After agreeing to such stipulation. In that case. real property or any building thereon. like what was involved in the above Tumalad case.” Clearly then.” In the present case. Wearever Textile Mills[20] also held that the machinery used in a factory and essential to the industry. Although there is no specific statement referring to the subject house as personal property. as in the present case. to invoke the title to the subject property. however. v.all of them have become “immobilized by destination because they are essential and principal elements in the industry. If a house of strong materials. in La Tondeña Distillers v. Under the principle of estoppel. they are consequently estopped from claiming otherwise. which is movable in its nature and becomes immobilized only by destination or purpose. in Tumalad v. the Court in Makati Leasing and Finance Corp. Vicencio. property pursuant to Article 415 (5) of the Civil Code. we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure. The Court has held that contracting parties may validly stipulate that a real property be considered as personal. not in the proceedings involving the issuance of the Writ of Seizure. may not be likewise treated as such. [22] Hence.

the Deed of Chattel Mortgage. [1] [2] . SO ORDERED. should not be blamed on this Court. pp. pp. in double the value of the property as stated in the applicant’s affidavit for the delivery thereof to the applicant. 1999.in proceedings on preliminary attachment or injunction. these questions require a determination of facts and a presentation of evidence. Amador F. [7] Rollo.” The Court rejected the argument and relied on the Deed. but can only be a ground for rendering said contract voidable. [3] Rollo.[29] Reliance on the Lease Agreement It should be pointed out that the Court in this case may rely on the Lease Agreement.” WHEREFORE. both of which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45. [9] Motion for Special Protective Order. Makati Leasing and Finance Corporation[30] is also instructive on this point. if they come true. Villarama Jr. by a proper action in court. which had ironically been instituted by respondent. -. and by serving a copy bond on the applicant. p. As earlier discussed. and Martin S. Brawner (Division acting chairman). JJ. The provision states: “SEC. Laqui. 189. Costs against petitioners. upon receipt by this Court of the petitioners’ Memorandum signed by Atty.”[28] Besides. but on the petitioners for failing to avail themselves of the remedy under Section 5 of Rule 60. ruling as follows: “x x x. 177-180. and for the payment of such sum to him as may be recovered against the adverse party. There is nothing on record to show that the mortgage has been annulled. p. with the concurrence of Justices Eloy R. for nothing on record shows that it has been nullified or annulled. at any time before the delivery of the property to the applicant. and thereby put at issue the matter of the title or right of possession over the specific chattel being replevied. he cannot immediately require the return of the property. x x x” Alleged Injustice Committed on the Part of Petitioners Petitioners contend that “if the Court allows these machineries to be seized. pp.”[31] They also allege that the seizure would nullify all efforts to rehabilitate the corporation. pp. pp. 177-178. which was signed by Atty. pp. In fact. Bello Jr. or of the surety or sureties thereon. but if he does not so object. p. petitioners assailed it first only in the RTC proceedings. concur. 78-79. Moreover. 5. or annullable pursuant to Article 1390 of the new Civil Code. such fact alone does not render a contract void ab initio.If the adverse party objects to the sufficiency of the applicant’s bond. had been filed earlier on September 29. which characterized the subject machinery as personal property. Penned by Justice Romeo A. 76-77. Neither is it disclosed that steps were taken to nullify the same. rollo. p. rollo. Return of property. Purisima. 3-4. which allows the filing of a counter-bond. 1-2. the above-mentioned consequences. Petitioners’ arguments do not preclude the implementation of the Writ. Victor Basilio N. Brioso Jr. law and jurisprudence support its propriety. [10] CA Decision. 179. was also assailed because respondent had allegedly been required “to sign a printed form of chattel mortgage which was in a blank form at the time of signing. In that case. Rollo. [8] Rollo. 23-24. the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. and Gonzaga-Reyes. if such delivery be adjudged. 1999. 356. he may.. [5] Rollo. De Leon of Antonio R. rollo. even granting that the charge is true. 3. (Chairman). Accordingly. Verily. pp. [6] Presided by Judge Hilario L. [11] The case was deemed submitted for resolution on October 21. require the return thereof. of Perez & Calima Law Offices. Respondent’s Memorandum. [4] CA Decision. by filing with the court where the action is pending a bond executed to the applicant. Melo. it must be presumed valid and binding as the law between the parties. the policy apparently being that said matter should be ventilated and determined only at the trial on the merits. then its workers would be out of work and thrown into the streets. Bautista & Partners. Vitug.

12. [19] 41 SCRA 143. per De Castro. CA. 1952. p. 262. supra. 301. . [23] Vitug. 153. rollo. 133 SCRA 800. Standard Oil Co. [24] Petitioners’ Memorandum. 3. Castillo. 1963. [21] Rollo. 103 Phil. Pineda. 91 Phil. 70. 1935. Davao Sawmill Co. 1954. Manarang v.” [15] BA Finance v. 18. [16] Mindanao Bus Co. September 29. CA. p. Chief of Staff. 1967. CA. 96 Phil. rollo. “without impleading the lower courts or judges thereof either as petitioners or respondents. per Reyes. 248 SCRA 549. Navarro v. Filinvest Credit v.. [17] People’s Bank & Trust Co. [26] Reply. v. July 5. City Assessor and Treasurer. 258 SCRA 102. Burgos v. per Labrador. 301. J. 1992. p. Rule 45 of the Rules of Court. p. 9 SCRA 631. [27] 209 SCRA 553. 1923. per Narvasa. 1984. rollo. v. 16. 6 SCRA 197. August 7. [22] Evangelista v. rollo. Section 1. 567. CA. p. J. JBL. p. 376. p. v. 1984. People’s Bank & Trust Co. 1962.. p. 133 SCRA 572. CJ. See also Vitug. 10. [28] Ibid. [30] Supra. 1997. 381. Machinery Engineering Supply v.[12] [13] [14] Petitioners’ Memorandum. 1995. 630. February 26. May 16. v. 268 SCRA 703. 1983. Compendium of Civil Law and Jurisprudence. November 30. December 26. [31] Petition. supra. May 16. June 8. [25] Petition. pp. p. 7. v. September 27. 8. Ofilada. April 23. 109. p. 1958. 300. September 30. [20] 122 SCRA 296. rollo. 20 SCRA 84. 531. Dahican Lumber. 100-101. 61 Phil. Encarnacion. 99 Phil. Luna v. 1986 ed. [29] See Fuentes v. p. October 29. J. 709. June 30. [18] Chua Peng Hian v. Alto Surety and Insurance Co. March 16. 1971. May 18. 99-100. 1956. Dahican Lumber. 44 Phil. 401. 1996. December 19. Jaranillo. p. pp. Section 4 (a) of Rule 45 provides that the petition shall state the full name of the parties. Court of Appeals.